GAINESVILLE, Ga., April 18, 2007 (PRIME NEWSWIRE) -- GB&T Bancshares, Inc. (Nasdaq:GBTB), a multi-bank holding company operating seven community banks in fast-growing markets surrounding metropolitan Atlanta, reported a 13.2 percent increase in first quarter 2007 net income to $3.7 million, compared with $3.3 million for the 2006 first quarter. Diluted earnings per share for the first quarter of 2007 were $0.26 compared with $0.25 reported for the year-earlier quarter, up 4.0 percent.
First quarter 2007 results reflect strong loan growth year over year due to a combination of organic growth from within GB&T's existing markets as well as the acquisition of Mountain Bancshares, Inc. in April 2006. Earnings growth was partially offset by net interest margin pressures and increased operating expenses. Earnings per share further reflect a 9.6 percent increase in weighted average diluted shares, primarily from the issuance of 1.1 million shares of GB&T's common stock in connection with the acquisition of Mountain Bancshares, Inc.
Richard A. Hunt, President and CEO of GB&T Bancshares, commented, "Our recent quarter was a good one, with growth in both loans and profitability; however, recent events have given us pause. The problem credits that surfaced earlier this year at HomeTown Bank, one of our seven affiliate banks, helped us to reconsider priorities for our Company. We realized that as a first step, we needed to strengthen our internal controls and build a stronger framework to sustain our growth into future years.
"We have hired a highly-regarded consulting firm, Sheshunoff Management Services, to review and make recommendations pertaining to our internal controls. The consultants will be reviewing our system of internal controls and making specific recommendations as to steps we need to implement to prevent a situation like what happened at HomeTown Bank from occurring again," Mr. Hunt said. He added that the Sheshunoff consultants expect to begin work immediately.
Concerning the special loan reserve announced in February 2007 for HomeTown Bank, Mr. Hunt noted that significant progress has been made and that he is confident that the Company is now adequately reserved. "Sid Sims, our Chief Credit Officer, has been diligent in leading an aggressive loan collection process," Hunt noted, adding "Sid and his team have conducted extensive reviews of our loan portfolio and have met with major borrowers."
"We are comfortable with the reserves that we have made at HomeTown Bank," Mr. Sims reports. "We have assigned all loans for which we have concern to an experienced loan workout specialist from within our Company. It is his responsibility to draft an action plan for the remediation of each loan. We are also conducting loan review meetings and fully expect to see progress from this effort beginning in the second quarter of this year."
At a meeting held on April 16, 2007, the board of directors of GB&T Bancshares declared a second quarter cash dividend of $0.095 per share on the Company's common stock, an increase of 5.6 percent over the prior-year quarter. The dividend is payable on May 14, 2007, to stockholders of record at the close of business on April 26, 2007.
Total revenue, on a fully tax equivalent basis, defined as net interest income plus other income, increased 13.9 percent, from $18.0 million reported in the first quarter of 2006, to $20.5 million for the current quarter. Net interest income grew 14.2 percent, to $17.7 million, reflecting 18.5 percent growth in average earning assets as compared to the first quarter of 2006, partially offset by a 16 basis point decline in the net interest margin to 4.19 percent. "Our net interest margin has remained reasonably strong this far into the cycle," added Mr. Hunt, "and it appears that we may be bottoming out above the four percent level. The margin declined by only four basis points from the previous quarter."
Other income for the first quarter of 2007 was $2.8 million, an increase of 11.9 percent compared with $2.5 million reported for the first quarter of 2006. Service charges on deposit accounts, the largest contributor to fee income, declined marginally by 2.2 percent over the prior-year quarter to $1.5 million. Mortgage origination fees and other operating income together increased by $327,000 or 34.7 percent, offsetting the modest decrease in service charges on deposit accounts.
With an increased emphasis on mortgage originations, Mr. Hunt announced that the Company was in the process of establishing a mortgage subsidiary, GB&T Mortgage. "With our organization having 32 offices in some of the nation's fast growing communities, it became apparent that we could be doing a better job in providing home loans in these areas," he noted. "We will soon announce the hiring of a seasoned mortgage banker who also possesses commercial bank experience and has assisted other banking companies in the formation of a mortgage banking subsidiary. When we look at the new home loan and refinance market in our banking franchise, we can see the feasibility of entering into this new venture. We also expect to add mortgage originators in some affiliates where we haven't had them previously. However, we don't intend to change any credit risk profile, as we anticipate locking in rates prior to any loan closings, just as we do now."
Other expense for the first quarter of 2007 rose $2.1 million, or 18.0 percent, to $13.9 million as compared to the first quarter of 2006. Salaries and employee benefits expense, the largest component of other expense, accounted for nearly half of the increase, up $1.1 million, or 14.7 percent. The majority of the 51 full-time equivalent employees were added with the Mountain Bancshares, Inc. acquisition; the remaining $788,000 or 26.8 percent year-over-year increase reflects other miscellaneous expense. The efficiency ratio was 67.0 percent for the first quarter of 2007 compared with 64.5 percent for the prior-year first quarter.
Total assets were $1.9 billion at March 31, 2007, an increase of 18.1 percent over the past twelve months. Excluding the $165.5 million of assets acquired with Mountain Bancshares, Inc., organic asset growth was $131.0 million, or 8.0 percent.
Loans increased $251.0 million from March 31, 2006, or 19.7 percent, to $1.5 billion at March 31, 2007. The acquisition of Mountain Bancshares accounted for $107.5 million of loan growth. Excluding this acquisition, organic loan growth was 11.3 percent. The majority of loan growth over the past twelve months has come from construction lending, which now accounts for approximately 50 percent of GB&T's loan portfolio. Total deposits at March 31, 2007 were $1.5 billion, an increase of $237.0 million or 18.6 percent from year-ago levels. Exclusive of the Mountain Bancshares acquisition, deposits increased 8.9 percent.
Mr. Hunt continued, "We added to our loan loss reserve in the restatement of 2006 earnings to account for the issues uncovered at HomeTown Bank. We now have returned to what we consider to be more normal provision and net charge-off levels this quarter. We have already begun the process of tightening internal controls, implementing more stringent credit administration policies, and centralizing our loan approval and documentation processes with the goal of ensuring that similar incidents do not occur."
Net charge-offs for the first quarter of 2007 were $565,000, or 0.15 percent of average loans (annualized) compared with $3.5 million for the fourth quarter of 2006, or 0.95 percent (annualized), and $276,000, or 0.09 percent (annualized), for the first quarter of 2006. Nonperforming assets at March 31, 2007 were $34.5 million, or 1.79 percent of total assets, compared with $30.2 million, or 1.59 percent at December 31, 2006, and $10.5 million, or 0.64 percent, at March 31, 2006. Loan loss reserves at March 31, 2007, were 1.64 percent of total loans compared to 1.65 at December 31, 2006 and 1.08 percent at March 31, 2006.
Stockholders' equity at March 31, 2007, was $236.3 million, a twelve-month increase of $34.6 million, or 17.1 percent. Stockholders' equity was 12.2 percent of period-end assets, and capital ratios are well within the range for "well-capitalized" banks. Mr. Hunt added, "I believe we will emerge from this chapter a stronger bank, better prepared for growth, and focused on matters that enhance our value to shareholders."
About GB&T Bancshares, Inc.
Based in Gainesville, Georgia, GB&T Bancshares, Inc. is a multi-bank holding company operating seven community banks: Gainesville Bank & Trust, United Bank & Trust, Community Trust Bank, HomeTown Bank of Villa Rica, First National Bank of the South, First National Bank of Gwinnett, and Mountain State Bank. As of March 31, 2007, GB&T Bancshares had total assets of $1.9 billion, with 32 banking offices located in 14 Georgia counties. GB&T Bancshares' common stock is listed on the Nasdaq Global Select Market under the symbol "GBTB.'' Visit the Company's web site at: http://www.gbtbancshares.com for additional information.
Forward-Looking Statements
Some of the statements in this press release, including, without limitation, statements regarding projected growth and profitability, perceived improvement in efficiencies and in internal controls, loan loss reserves, loan portfolio, net interest margin, revenue growth and other statements regarding our future results of operations are "forward-looking statements" within the meaning of the federal securities laws. In addition, when we use words like "anticipate", "believe", "intend", "expect", "estimate", "could", "should", "plan", "will", and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our current beliefs and assumptions. Factors that may cause actual results to differ materially from those expressed or implied by such forward-looking statements include, among others, the following possibilities: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) changes in the interest rate environment may reduce margins or the volumes or values of loans held or made by us; (3) general economic conditions may be less favorable than expected (both generally and in our markets), resulting in, among other things, a deterioration in credit quality and/or a reduction in demand for credit; (4) economic, governmental or other factors may prevent the projected population and commercial growth in the counties in which we operate; (5) legislative or regulatory changes, including changes in accounting standards, may adversely affect the businesses in which we are engaged; (6) costs or difficulties related to the integration of our businesses may be greater than expected; (7) deposit attrition, customer loss or revenue loss following the acquisitions may be greater than expected; (8) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than us; and (9) adverse changes may occur in the equity markets. Many of these factors are beyond our ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. We disclaim any obligation to update or revise any forward-looking statements contained in this release.
G B & T Bancshares Inc.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Unaudited)
(Dollars in thousands except per share amounts)
--------------- --------- --------- --------- --------- ---------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
2007 2006 2006 2006 2006
--------------- --------- --------- --------- --------- ---------
EARNINGS
Net interest
income (fully
tax
equivalent) $ 17,718 18,171 18,397 17,374 15,517
Provision for
loan loss $ 911 11,475 1,789 1,274 1,206
Other income $ 2,756 2,675 2,764 2,611 2,463
Other expense $ 13,863 12,977 12,860 12,578 11,744
Net income $ 3,710 (1,925) 4,215 3,954 3,277
Non-recurring
(income)/expense
(after-tax) $ 0 0 0 0 0
Operating
income $ 3,710 (1,925) 4,215 3,954 3,277
PER SHARE DATA
Basic earnings
per share $ 0.26 (0.14) 0.30 0.29 0.26
Diluted earnings
per share $ 0.26 (0.13) 0.30 0.28 0.25
Operating diluted
earnings per
share $ 0.26 (0.13) 0.30 0.28 0.25
Book value per
share $ 16.67 16.51 16.66 16.41 15.59
Tangible book
value per
share $ 10.14 9.95 10.05 9.74 10.45
Cash dividend
per share $ 0.090 0.090 0.090 0.090 0.085
PERFORMANCE RATIOS
Return on average
assets 0.79% -0.40% 0.90% 0.91% 0.83%
Return on average
tangible assets 0.83% -0.42% 0.95% 0.95% 0.87%
Return on average
equity 6.40% -3.22% 7.21% 7.23% 6.60%
Return on average
tangible equity 10.56% -5.29% 12.02% 11.72% 9.87%
Net interest
margin (fully
tax equivalent) 4.19% 4.23% 4.38% 4.43% 4.35%
Other expense /
Average assets 2.94% 2.71% 2.75% 2.88% 2.98%
Efficiency Ratio 66.96% 61.34% 59.84% 62.03% 64.48%
Other income/Total
operating
revenue 13.54% 12.96% 13.10% 13.11% 13.74%
MARKET DATA
Market value
per share --
Period end $ 18.13 22.17 21.05 21.76 22.35
Market as a %
of book 1.09 1.34 1.26 1.33 1.43
Cash dividend
yield 1.99% 1.62% 1.71% 1.65% 1.52%
Common stock
dividend payout
ratio 34.62% -69.23% 30.00% 32.14% 34.00%
Period-end common
shares
outstanding
(000) 14,174 14,132 14,054 13,926 12,939
Common stock
market
capitalization
($ Millions) $ 256.97 313.30 295.83 303.03 289.18
CAPITAL &
LIQUIDITY
RATIOS
Period-end equity
to assets 12.24% 12.28% 12.48% 12.49% 12.34%
Period-end tangible
equity to tangible
assets 7.82% 7.78% 7.92% 7.81% 8.62%
Total risk-based
capital ratio N/A 12.12% 12.31% 12.26% 13.57%
Average loans
to average
deposits 101.04% 99.86% 99.18% 100.92% 101.48%
ASSET QUALITY
Net charge-
offs $ 565 3,520 526 607 276
(Ann.) Net loan
charge-offs/
Average loans 0.152% 0.948% 0.146% 0.178% 0.090%
Nonaccrual
loans $ 30,246 14,790 14,934 13,819 7,114
Foreclosed
assets $ 4,221 4,673 3,047 4,229 3,348
90-day past
dues $ 10 10 12 7 --
Nonperforming
assets/ Total
assets** 1.79% 1.59% 0.96% 0.99% 0.64%
Allowance for
loan losses/
Total loans 1.64% 1.65% 1.15% 1.09% 1.08%
Allowance for
loan losses/
Nonperforming
assets** 72.58% 81.59% 92.93% 85.63% 130.98%
END OF PERIOD
BALANCES
Total loans, net
of unearned
fees $1,524,746 1,497,701 1,457,873 1,421,176 1,273,719
Total assets $1,931,227 1,900,376 1,876,062 1,829,700 1,634,741
Total
deposits $1,513,444 1,480,168 1,457,237 1,414,029 1,276,456
Total
stockholders'
equity $ 236,347 233,338 234,196 228,470 201,769
Full-time
equivalent
employees 505 505 497 475 454
AVERAGE BALANCES
Total loans,
net of un-
earned fees $1,504,256 1,472,742 1,432,361 1,366,170 1,244,261
Total interest-
earning
assets $1,715,447 1,706,123 1,666,388 1,573,013 1,447,571
Total assets $1,915,556 1,902,510 1,856,968 1,748,798 1,596,879
Total
deposits $1,488,800 1,474,740 1,444,246 1,353,758 1,226,141
Total interest-
bearing
liabilities $1,507,626 1,470,151 1,437,952 1,343,727 1,220,332
Total stock-
holders'
equity $ 235,182 237,313 231,831 219,387 201,292
** Nonperforming assets includes nonaccrual loans, other impaired
loans, foreclosed assets and 90-day past dues.
The following table provides a detailed analysis of Non-GAAP
measures.
Reconciliation Table
(Dollars in thousands)
--------------- --------- --------- --------- --------- ---------
1st Qtr 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr
2007 2006 2006 2006 2006
--------------- --------- --------- --------- --------- ---------
Book value
per share $ 16.67 16.51 16.66 16.41 15.59
Effect of
intangible
assets per
share $ (6.53) (6.56) (6.61) (6.67) (5.14)
Tangible book
value per
share $ 10.14 9.95 10.05 9.74 10.45
Return on
average assets 0.79% -0.40% 0.90% 0.91% 0.83%
Effect of
intangible
assets 0.04% -0.02% 0.05% 0.04% 0.04%
Return on
average
tangible
assets 0.83% -0.42% 0.95% 0.95% 0.87%
Return on
average equity 6.40% -3.22% 7.21% 7.23% 6.60%
Effect of
intangible
assets 4.16% -2.07% 4.81% 4.49% 3.27%
Return on
average
tangible
equity 10.56% -5.29% 12.02% 11.72% 9.87%
Period end
equity to
assets 12.24% 12.28% 12.48% 12.49% 12.34%
Effect of
intangible
assets -4.42% -4.50% -4.56% -4.68% -3.72%
Period-end
tangible equity
to tangible
assets 7.82% 7.78% 7.92% 7.81% 8.62%
GB&T Bancshares, Inc. and Subsidiaries
Consolidated Statements of Condition
3/31/2007 3/31/2006
Assets (in thousands): (Unaudited) (Unaudited)
Cash and due from banks $ 24,266 $ 22,925
Interest-bearing deposits in banks 1,932 810
Federal funds sold 4,378 21,661
Securities available-for-sale 215,022 182,385
Restricted equity securities, at cost 9,888 9,366
Loans, net of unearned income 1,524,746 1,273,719
Less allowance for loan losses 25,022 13,703
---------- ----------
Loans, net 1,499,724 1,260,016
---------- ----------
Premises and equipment, net 41,375 36,707
Goodwill 87,116 61,164
Intangible assets 5,440 5,400
Other assets 42,086 34,307
---------- ----------
Total assets $1,931,227 $1,634,741
========== ==========
Liabilities and Stockholders' Equity
(in thousands):
Deposits:
Noninterest-bearing $ 152,293 $ 170,130
Interest-bearing demand & savings 452,360 424,466
Time deposits 908,791 681,860
---------- ----------
Total deposits 1,513,444 1,276,456
Federal funds purchased and securities sold
under repurchase agreements 31,975 18,008
Federal Home Loan Bank advances 98,411 90,811
Other borrowings 641 652
Other liabilities 20,511 17,147
Subordinated debt 29,898 29,898
---------- ----------
Total liabilities 1,694,880 1,432,972
---------- ----------
Stockholders' equity:
Capital stock 186,876 159,140
Retained earnings 50,583 45,588
Accumulated other comprehensive loss (1,112) (2,959)
---------- ----------
Total stockholders' equity 236,347 201,769
---------- ----------
Total liabilities and
stockholders' equity $1,931,227 $1,634,741
========== ==========
GB&T Bancshares, Inc. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
Three months ended March 31,
2007 2006
-----------------------------
(Dollars in thousands, except
per share amounts)
Interest income:
Loans, including fees $32,157 $24,532
Taxable securities 2,308 1,912
Nontaxable securities 261 117
Federal funds sold 108 99
Interest-bearing deposits in banks 26 8
------- -------
Total interest income 34,860 26,668
------- -------
Interest expense:
Deposits 15,131 9,432
Federal funds purchased and securities
sold under repurchase agreements 393 224
Federal Home Loan Bank advances 1,099 963
Other borrowings 642 587
------- -------
Total interest expense 17,265 11,206
------- -------
Net interest income 17,595 15,462
Provision for loan losses 911 1,206
------- -------
Net interest income after
provision for loan losses 16,684 14,256
------- -------
Other income:
Service charges on deposit accounts 1,487 1,521
Mortgage origination fees 714 525
Insurance commissions -- 2
Gain on sale of securities -- --
Other operating income 555 415
------- -------
Total other income 2,756 2,463
------- -------
Other expense:
Salaries and employee benefits 8,238 7,180
Net occupancy and equipment expense 1,902 1,629
Other operating expenses 3,723 2,935
------- -------
Total other expense 13,863 11,744
------- -------
Income before income taxes 5,577 4,975
Income tax expense 1,867 1,698
------- -------
Net income $ 3,710 $ 3,277
======= =======
Earnings per share:
Basic $ 0.26 $ 0.26
======= =======
Diluted $ 0.26 $ 0.25
======= =======
Weighted average shares:
Basic 14,159 12,856
======= =======
Diluted 14,378 13,121
======= =======
Cash dividends per common share $ 0.090 $ 0.085
======= =======
GB&T Bancshares, Inc.
Yield Analysis - March 31, 2007 For the Three Months Ended
(Dollars in thousands) March 31, 2007
--------------------------------
Average Yields
balances Interest /Rates
--------------------------------
Assets
Interest earning assets:
Taxable securities $202,119 $ 2,308 4.63%
Nontaxable securities* 24,807 384 6.28%
Federal funds sold 8,638 108 5.07%
Interest bearing deposits in
banks 1,801 26 5.85%
Loans, net of unearned income 1,478,082 32,157 8.82%
------------------------
Total interest earning assets $1,715,447 $ 34,983 8.27%
------------------------
Noninterest earning assets:
Unrealized gains (losses) on
securities (2,638)
Allowance for loan losses (24,956)
Nonaccrual loans 26,174
Cash and due from banks 24,132
Other assets 177,397
--------------------------------
Total noninterest earning
assets 200,109
--------------------------------
Total assets $1,915,556
--------------------------------
Liabilities & Shareholders' Equity
Interest bearing liabilities:
Interest bearing demand &
savings $ 446,821 3,535 3.21%
Time 889,410 11,596 5.29%
Borrowings 171,395 2,134 5.05%
------------------------
Total interest bearing
liabilities 1,507,626 17,265 4.64%
------------------------
Noninterest bearing liabilities &
shareholders' equity:
Noninterest bearing deposits 152,569
Other liabilities 20,179
Shareholders' equity 235,182
--------------------------------
Total liabilities &
shareholders' equity $1,915,556
--------------------------------
Interest rate differential 3.63%
--------------------------------
Net interest income* 17,718
--------------------------------
Net interest margin* 4.19%
--------------------------------
--------------------------------
For the Three Months Ended
March 31, 2006
--------------------------------
Average Yields
balances Interest /Rates
--------------------------------
Assets
Interest earning assets:
Taxable securities $ 190,059 $ 1,912 4.08%
Nontaxable securities* 10,332 172 6.75%
Federal funds sold 9,458 99 4.25%
Interest bearing deposits in
banks 666 8 4.87%
Loans, net of unearned income 1,237,056 24,532 8.04%
------------------------
Total interest earning assets $1,447,571 $ 26,723 7.49%
------------------------
Noninterest earning assets:
Unrealized gains (losses) on
securities (4,147)
Allowance for loan losses (13,018)
Nonaccrual loans 7,205
Cash and due from banks 22,855
Other assets 136,413
--------------------------------
Total noninterest earning
assets 149,308
--------------------------------
Total assets $1,596,879
--------------------------------
Liabilities & Shareholders' Equity
Interest bearing liabilities:
Interest bearing demand &
savings $ 412,978 2,646 2.60%
Time 654,117 6,786 4.21%
Borrowings 153,237 1,774 4.70%
------------------------
Total interest bearing
liabilities 1,220,332 11,206 3.72%
------------------------
Noninterest bearing liabilities &
shareholders' equity:
Noninterest bearing deposits 159,046
Other liabilities 16,209
Shareholders' equity 201,292
--------------------------------
Total liabilities &
shareholders' equity $1,596,879
--------------------------------
Interest rate differential 3.77%
--------------------------------
Net interest income* 15,517
--------------------------------
Net interest margin* 4.35%
--------------------------------
*fully tax equivalent