* Integration of Prairie Financial Corporation Successfully Completed Resulting in Improved Earning Asset Mix -- Commercial Loans Percentage of Earning Assets Increases From 42 Percent to 50 Percent * Strong Fee Growth -- Deposit Service Charges Increase 28 Percent From First Quarter of 2007 -- Debit Card Interchange Fees Increase 19 Percent * Net Interest Income Increases $3.2 Million -- Margin is 3.40 Percent * Credit Quality Stable -- Net Charge-Offs are 22 Basis Points * Commercial Loan Growth Continues -- Up $45 Million or 17.8 Percent Annualized From First Quarter excluding Chicago
EVANSVILLE, Ind., July 17, 2007 (PRIME NEWSWIRE) -- Integra Bank Corporation (Nasdaq:IBNK) today reported net income for the second quarter of 2007 of $8.3 million, an increase of $1.0 million or 13.3% over first quarter 2007 results. The Company acquired Prairie Financial Corporation on April 9, 2007, and issued 3.1 million shares of Integra common stock in that transaction. Diluted earnings per share were $0.41 for both the first and second quarters of 2007. Returns on assets and equity were 1.04% and 10.71% for the second quarter of 2007, as compared to 1.12% and 12.62% for the first quarter of 2007.
Second quarter 2007 results included increases in net-interest income of $3.2 million and non-interest income of $0.7 million, and a decrease in the provision for loan losses of $0.3 million, offset by an increase in non-interest expense of $1.7 million and an increase in tax expense of $1.6 million.
"We are pleased with the successful integration of the former Prairie Financial Corporation during the second quarter and the completion of our new banking center in Union, Kentucky," stated Mike Vea, Chairman, President and CEO. "The Prairie acquisition immediately improved our earning asset mix and is consistent with our goal of entering higher growth markets. We look forward to introducing our retail strategies in Chicago and building upon the strong commercial real estate lending niche that currently exists. The July opening of a second banking center in Northern Kentucky will help us build on the success we have had with our Florence branch, which opened in 2005, as well as further accelerate our commercial and business banking efforts in the greater Cincinnati region."
The results for the first quarter included a gain on the sale of mortgage servicing rights of $0.6 million and gains on called securities of $0.2 million, offset by severance-related expenses of $0.3 million and non-routine legal and professional expenses of $0.4 million incurred in connection with collection activities. The first quarter also included recognition of an expected income tax refund of $0.9 million plus accrued interest of $0.2 million.
Integration of Prairie Financial Corporation
The Company acquired Prairie Financial Corporation on April 9, 2007. Prairie's banking subsidiary, Prairie Bank & Trust Co., merged into Integra's banking subsidiary, Integra Bank N.A., as part of the transaction. The integration of the former Prairie offices into the Company's operations was completed during the second quarter.
The Company issued 3.1 million shares of common stock and paid $34.8 million cash in the transaction. It financed the cash portion of the merger consideration with the proceeds of a $20 million private offering of floating rate trust preferred securities and a $20 million five-year term loan extended as part of a new $35 million credit facility established on April 1, 2007.
The integration process included centralization of backroom support areas, including data processing, as well as early stage implementation of the Company's retail banking strategies in the Chicago market.
Second quarter 2007 results include $0.2 million of one-time acquisition related expenses.
Commercial Loan Growth Continues
Higher yielding commercial loan average balances were 49.7% of earning assets for the second quarter of 2007, compared to 42.3% for the first quarter of 2007. Commercial loan average balances, exclusive of the Chicago market, increased $45.4 million during the second quarter, as compared to the preceding quarter, a 17.8% annualized growth rate. This growth came in the areas of commercial real estate, Cincinnati commercial, business banking, and agricultural lending.
Consumer loan average balances, exclusive of the Chicago market, decreased $6.7 million, or 6.4% annualized, and included a $7.3 million decline in indirect consumer loans, which have not been originated since December 2006. Residential mortgage loan balances, exclusive of the Chicago market, declined $14.2 million, or 16.6% annualized. Both the indirect and residential mortgage reductions were in line with the company's strategy to improve its earning asset mix.
Net Interest Margin and Net Interest Income
The net interest margin was 3.40% for the second quarter of 2007, compared to 3.48% for the first quarter of 2007, while net interest income increased $3.2 million.
The yield on earning assets increased by 25 basis points to 7.01%. The improved yield was driven by the improved asset mix, including the yields on commercial loans acquired in the Prairie acquisition, higher loan fees, and higher yields on commercial loans existing at Integra prior to the Prairie acquisition.
The decrease in the net interest margin is attributed mainly to a 34 basis point increase in the cost of interest bearing liabilities to 4.02%, coupled with lower than expected growth of non-interest bearing and lower cost interest bearing checking account balances. Funding costs increased as a result of replacing $102.5 million of fixed rate long-term debt with a coupon of 2.64% that matured in March with other funding sources at market rates, which resulted in a 12 basis point decline in the margin. In addition, time deposit rates increased 18 basis points. Finally, additional interest costs were incurred in connection with the cash portion of the Prairie acquisition. A major component of the increase in time deposit rates was the pricing of time deposits acquired in the Prairie acquisition, which should decline as the Company implements funding strategies to replace those deposits with lower costing sources from other regions within its footprint.
Non-Interest Income
Second quarter 2007 non-interest income was $9.9 million, an increase of $0.7 million, or 7.8%, from the first quarter of 2007. Deposit service charges increased $1.2 million, or 28.2% and debit card interchange fees increased $0.2 million, or 18.9%. Chicago customers contributed $0.3 million of the increase in deposit service charges. The first quarter of 2007 included several non-routine gains, including a gain on the sale of Integra's mortgage servicing rights portfolio of $0.6 million, gains on securities which were called of $0.2 million, and $0.2 million of interest income accrued on expected tax refunds.
Non-Interest Expense
Second quarter 2007 non-interest expense was $21.9 million, a $1.7 million or 8.4% increase from the first quarter of 2007. This included higher personnel expenses of $0.9 million, higher occupancy expense of $0.3 million and higher intangible asset amortization of $0.2 million, offset by lower professional fees of $0.2 million. It also included $0.2 million of one-time acquisition related expenses. Non-interest expense for the new Chicago region in the second quarter was $1.4 million.
Credit Quality
The provision for loan losses was $0.5 million for the second quarter of 2007, compared to $0.7 million for the first quarter. Net charge-offs totaled $1.2 million, resulting in a net charge-off ratio of 0.22% for the quarter, compared to $0.7 million or 0.17% for the quarter ended March 31, 2007. Net charge-offs exceeded the provision by $0.7 million. Specific loan reserves declined by $0.9 million due to the charge-off of a $0.5 million fully reserved credit and full payoffs of two credits carrying specific reserves.
The allowance for loan losses at June 30, 2007 was 192% of non-performing and 1.19% of total loans, compared to 239% and 1.18% at March 31, 2007. The ratio of non-performing loans to total loans at June 30, 2007 was 0.62% compared to 0.50% at March 31, 2007. The increase in non-performing loans was due entirely to non-performing loans acquired as part of the Prairie acquisition.
Income Taxes
The effective tax rate for the second quarter of 2007 was 25.4%, compared to the 14.9% for the first quarter of 2007. Income tax expense for the first quarter included the accrual of an expected tax refund of $0.9 million. The effective tax rate for the remainder of 2007 is expected to approximate that of the second quarter.
Capital
Integra's capital ratios all remain strong and within the regulatory requirements for being well capitalized as well as Integra's internal policy guidelines.
Dividend and Share Repurchase Plan
On June 20, 2007, the Company announced an increase in the regular quarterly cash dividend to $0.18 per share, from $0.17 per share, an increase of 5.8%. The increased dividend was paid on July 6, 2007 to shareholders of record on July 2, 2007.
The Company also announced that it had renewed and increased its common stock repurchase program. Integra may purchase approximately an additional 515,000 shares, or a maximum aggregate purchase amount of $12.5 million, through June 30, 2008. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, and other market conditions.
Conference Call
Integra executive management will hold a conference call to discuss the contents of this news release, business highlights and its financial outlook, on, Tuesday, July 17, 2007, at 8:00 a.m. CDT. The telephone number for the conference call is (800) 559-2403. The conference call will also be available by webcast at http://www.integrabank.com/webcasts, as will the accompanying presentation slides.
About Integra
Headquartered in Evansville, Indiana, Integra Bank Corporation is the parent of Integra Bank N.A. As of June 30, 2007, Integra has $3.2 billion in total assets and operates 79 banking centers and 134 ATMs at locations in Indiana, Kentucky, Illinois and Ohio. Moody's Investors Service has assigned an investment grade rating of A3 for Integra Bank's long-term deposits. Integra Bank Corporation's Corporate Governance Quotient (CGQ) rating as of July 1, 2007, has IBNK outperforming 93.3% of the companies in the Russell 3000 Index and 93.3% of the companies in the banking group. This rating is updated monthly by Institutional Shareholder Services and measures public companies' corporate governance performance to a set of corporate governance factors that reflects the current regulatory environment. Integra Bank Corporation's common stock is listed on the Nasdaq Global Market under the symbol IBNK. Additional information may be found at Integra's web site, www.integrabank.com.
The Integra Bank Corporation logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3858
Safe Harbor
Certain statements made in this release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this release, the words "may," "will," "should," "would," "anticipate," "expect," "plan," "believe," "intend," and similar expressions identify forward-looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from the results, performance or achievements expressed or implied by such forward-looking statements. Such factors include: risks relating to changes in interest rates; risks of default on and concentration of loans within our portfolio; the possible insufficiency of our allowance for loan losses, regional economic conditions; competition; governmental regulation and supervision; failure or circumvention of our internal controls; reliance on Integra Bank to fund dividends to our shareholders; disruption of business or dilution of shareholder value as a result of mergers or acquisitions; our ability to retain key personnel; failure or disruption of our information systems; technological change; and other factors described in our periodic reports filed with the SEC. We undertake no obligation to revise or update these risks, uncertainties and other factors except as may be set forth in our periodic reports.
Summary Operating Results Data
Here is a summary of Integra's second quarter 2007 operating results:
Diluted net income per share of $0.41 for second quarter 2007 -- Compared with $0.41 for first quarter 2007 -- Compared with $0.42 for second quarter 2006 Return on assets of 1.04% for second quarter 2007 -- Compared with 1.12% for first quarter 2007 -- Compared with 1.09% for second quarter 2006 Return on equity of 10.71% for second quarter 2007 -- Compared with 12.62% for first quarter 2007 -- Compared with 13.24% for second quarter 2006 Net interest margin of 3.40% for second quarter 2007 -- Compared with 3.48% for first quarter 2007 -- Compared with 3.42% for second quarter 2006 Allowance for loan losses of $26.4 million or 1.19% of loans at June 30, 2007 -- Compared with $21.2 million or 1.18% at March 31, 2007 -- Compared with $21.0 million or 1.17% at June 30, 2006 -- Equaled 191.6% of non-performing loans at June 30, 2007, compared with 238.8% at March 31, 2007 and 275.8% at June 30, 2006 Non-performing loans of $13.8 million or 0.62% of loans at June 30, 2007 -- Compared with $8.9 million or 0.50% of loans at March 31, 2007 -- Compared with $7.6 million or 0.43% at June 30, 2006 Annualized net charge-off rate of 0.22% for second quarter 2007 -- Compared with 0.17% for first quarter 2007 -- Compared with 0.69% for second quarter 2006
INTEGRA BANK CORPORATION UNAUDITED CONSOLIDATED BALANCE SHEETS (In thousands, except share data) June 30, December 31, June 30, ASSETS 2007 2006 2006 --------------------------------------------------------------------- Cash and due from banks $ 72,058 $ 65,400 $ 78,700 Federal funds sold and other short-term investments 3,744 3,998 2,598 Loans held for sale (at lower of cost or market value) 5,437 1,764 667 Securities available for sale 609,145 614,718 652,821 Regulatory stock 25,967 24,410 30,659 Loans: Commercial loans 1,467,730 1,018,930 1,001,252 Consumer loans 426,086 421,957 426,202 Mortgage loans 324,411 350,089 365,321 Less: Allowance for loan losses (26,390) (21,155) (21,043) --------------------------------------------------------------------- Net loans 2,191,837 1,769,821 1,771,732 Premises and equipment 51,497 46,157 48,298 Goodwill 119,775 44,491 44,491 Other intangible assets 12,561 6,832 7,298 Other assets 122,341 106,888 106,244 --------------------------------------------------------------------- TOTAL ASSETS $3,214,362 $2,684,479 $2,743,508 ===================================================================== LIABILITIES Deposits: Non-interest-bearing demand $ 281,028 $ 252,851 $ 265,036 Savings & interest checking 510,559 497,548 519,640 Money market 394,844 296,732 297,149 Certificates of deposit and other time deposits 1,229,188 906,721 963,526 --------------------------------------------------------------------- Total deposits 2,415,619 1,953,852 2,045,351 Short-term borrowings 207,863 217,518 198,863 Long-term borrowings 242,759 254,521 255,929 Other liabilities 31,808 23,114 19,892 --------------------------------------------------------------------- TOTAL LIABILITIES 2,898,049 2,449,005 2,520,035 SHAREHOLDERS' EQUITY Preferred stock - 1,000 shares authorized - None outstanding Common stock - $1.00 stated value - 29,000 shares authorized 20,629 17,794 17,539 Additional paid-in capital 206,114 135,054 129,061 Retained earnings 97,326 88,355 88,790 Accumulated other comprehensive income (loss) (7,756) (5,729) (11,917) --------------------------------------------------------------------- TOTAL SHAREHOLDERS' EQUITY 316,313 235,474 223,473 --------------------------------------------------------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $3,214,362 $2,684,479 $2,743,508 =====================================================================
INTEGRA BANK CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except for per share data) Three Months Ended June 30, March 31, Dec. 31, Sept. 30, June 30, 2007 2007 2006 2006 2006 --------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans and leases $41,486 $32,130 $32,860 $32,836 $31,077 Interest and dividends on securities 7,495 7,289 7,521 7,817 7,861 Dividends on regulatory stock 281 346 328 298 447 Interest on loans held for sale 45 28 31 44 34 Interest on federal funds sold and other investments 60 49 62 40 23 --------------------------------------------------------------------- Total interest income 49,367 39,842 40,802 41,035 39,442 INTEREST EXPENSE Interest on deposits 20,017 14,684 15,138 14,901 13,329 Interest on short-term borrowings 2,264 2,018 2,147 2,418 2,249 Interest on long-term borrowings 3,519 2,811 2,889 2,899 3,121 --------------------------------------------------------------------- Total interest expense 25,800 19,513 20,174 20,218 18,699 --------------------------------------------------------------------- NET INTEREST INCOME 23,567 20,329 20,628 20,817 20,743 Provision for loan losses 455 735 18,091 950 859 --------------------------------------------------------------------- Net interest income after provision for loan losses 23,112 19,594 2,537 19,867 19,884 NON-INTEREST INCOME --------------------------------------------------------------------- Service charges on deposit accounts 5,408 4,218 4,842 4,946 5,036 Trust income 602 614 595 576 558 Debit card income-interchange 1,064 895 954 809 800 Other service charges and fees 1,133 1,204 939 976 1,066 Securities gains (losses) 56 166 589 (13) 1 Gain (Loss) on sale of other assets 60 539 6 (39) 35 Other 1,608 1,579 1,518 1,951 1,621 --------------------------------------------------------------------- Total non-interest income 9,931 9,215 9,443 9,206 9,117 NON-INTEREST EXPENSE --------------------------------------------------------------------- Salaries and employee benefits 11,693 10,765 9,564 10,003 9,960 Occupancy 2,388 2,107 2,143 1,971 2,071 Equipment 822 824 813 898 856 Professional fees 893 1,137 859 614 762 Communication and transportation 1,303 1,171 1,218 1,235 1,222 Other 4,771 4,163 4,263 3,878 4,389 --------------------------------------------------------------------- Total non-interest expense 21,870 20,167 18,860 18,599 19,260 --------------------------------------------------------------------- Income before income taxes 11,173 8,642 (6,880) 10,474 9,741 Income taxes expense (benefit) 2,840 1,286 (4,280) 2,274 2,351 --------------------------------------------------------------------- NET INCOME (LOSS) $ 8,333 $ 7,356 $(2,600) $ 8,200 $ 7,390 --------------------------------------------------------------------- Earnings per share: Basic $ 0.41 $ 0.42 $ (0.15) $ 0.47 $ 0.42 Diluted 0.41 0.41 (0.15) 0.46 0.42 Weighted average shares outstanding: Basic 20,331 17,678 17,697 17,589 17,466 Diluted 20,407 17,786 17,864 17,752 17,562
INTEGRA BANK CORPORATION UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (In thousands, except for per share data) Three Months Ended Six Months Ended June 30, June 30, ----------------------------------------- 2007 2006 2007 2006 --------------------------------------------------------------------- INTEREST INCOME Interest and fees on loans and leases $41,486 $31,077 $73,616 $59,808 Interest and dividends on securities 7,495 7,861 14,784 15,599 Dividends on regulatory stock 281 447 627 853 Interest on loans held for sale 45 34 73 65 Interest on federal funds sold and other investments 60 23 109 231 --------------------------------------------------------------------- Total interest income 49,367 39,442 89,209 76,556 INTEREST EXPENSE Interest on deposits 20,017 13,329 34,701 24,382 Interest on short-term borrowings 2,264 2,249 4,282 4,009 Interest on long-term borrowings 3,519 3,121 6,330 7,304 --------------------------------------------------------------------- Total interest expense 25,800 18,699 45,313 35,695 --------------------------------------------------------------------- NET INTEREST INCOME 23,567 20,743 43,896 40,861 Provision for loan losses 455 859 1,190 1,253 --------------------------------------------------------------------- Net interest income after provision for loan losses 23,112 19,884 42,706 39,608 NON-INTEREST INCOME --------------------------------------------------------------------- Service charges on deposit accounts 5,408 5,036 9,626 9,091 Trust income 602 558 1,216 1,190 Debit card income-interchange 1,064 800 1,959 1,538 Other service charges and fees 1,133 1,066 2,337 2,240 Securities gains (losses) 56 1 222 1 Gain on sale of other assets 60 35 599 126 Other 1,608 1,621 3,187 2,992 --------------------------------------------------------------------- Total non-interest income 9,931 9,117 19,146 17,178 NON-INTEREST EXPENSE --------------------------------------------------------------------- Salaries 11,693 9,960 22,458 20,423 Occupancy 2,388 2,071 4,495 4,068 Equipment 822 856 1,646 1,701 Professional fees 893 762 2,030 1,482 Communication and transportation 1,303 1,222 2,474 2,480 Other 4,771 4,389 8,934 8,264 --------------------------------------------------------------------- Total non-interest expense 21,870 19,260 42,037 38,418 --------------------------------------------------------------------- Income before income taxes 11,173 9,741 19,815 18,368 Income taxes expense (benefit) 2,840 2,351 4,126 4,421 --------------------------------------------------------------------- NET INCOME (LOSS) $ 8,333 $ 7,390 $15,689 $13,947 --------------------------------------------------------------------- Earnings per share: Basic $ 0.41 $ 0.42 $ 0.83 $ 0.80 Diluted 0.41 0.42 0.82 0.80 Weighted average shares outstanding: Basic 20,331 17,466 19,012 17,450 Diluted 20,407 17,562 19,107 17,543
INTEGRA BANK CORPORATION SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA (In thousands, except for per share data) June 30, March 31, 2007 2007 ----------- ----------- EARNINGS DATA Net Interest Income (tax-equivalent) $ 24,366 $ 20,945 Net Income (Loss) 8,333 7,356 Basic Earnings Per Share 0.41 0.42 Diluted Earnings Per Share 0.41 0.41 Dividends Declared 0.18 0.17 Book Value 15.33 13.51 Tangible Book Value 8.92 10.61 PERFORMANCE RATIOS Return on Assets 1.04% 1.12% Return on Equity 10.71 12.62 Net Interest Margin (tax-equivalent) 3.40 3.48 Tier 1 Capital to Risk Assets 9.41 11.01 Capital to Risk Assets 11.76 12.71 Tangible Equity to Tangible Assets 5.97 7.20 Efficiency Ratio 62.65 66.46 AT PERIOD END Assets $3,214,362 $2,656,211 Interest-Earning Assets 2,862,520 2,415,717 Commercial Loans 1,467,730 1,040,004 Consumer Loans 426,086 412,576 Mortgage Loans 324,411 337,480 Total Loans 2,218,227 1,790,060 Deposits 2,415,619 1,995,728 Valuable Core Deposits (1) 1,186,431 1,045,708 Interest-Bearing Liabilities 2,585,213 2,141,347 Shareholders' Equity 316,313 238,707 Unrealized Gains (Losses) on Market Securities (FASB 115) (6,848) (3,294) AVERAGE BALANCES Assets $3,198,981 $2,658,785 Interest-Earning Assets (2) 2,866,946 2,417,417 Commercial Loans 1,425,439 1,021,373 Consumer Loans 427,419 416,532 Mortgage Loans 340,430 342,344 Total Loans 2,193,288 1,780,249 Deposits 2,435,682 1,980,454 Valuable Core Deposits (1) 1,183,732 1,045,390 Interest-Bearing Liabilities 2,572,178 2,148,320 Shareholders' Equity 312,063 236,333 Basic Shares 20,331 17,678 Diluted Shares 20,407 17,786 December 31, September 30, June 30, 2006 2006 2006 ------------ ------------- ----------- EARNINGS DATA Net Interest Income (tax-equivalent) $ 21,286 $ 21,490 $ 21,413 Net Income (Loss) (2,600) 8,200 7,390 Basic Earnings Per Share (0.15) 0.47 0.42 Diluted Earnings Per Share (0.15) 0.46 0.42 Dividends Declared 0.17 0.17 0.17 Book Value 13.23 13.48 12.74 Tangible Book Value 10.35 10.57 9.79 PERFORMANCE RATIOS Return on Assets (0.38)% 1.19% 1.09% Return on Equity (4.26) 14.06 13.24 Net Interest Margin (tax-equivalent) 3.41 3.41 3.42 Tier 1 Capital to Risk Assets 10.80 11.23 10.49 Capital to Risk Assets 12.51 12.95 12.20 Tangible Equity to Tangible Assets 6.99 7.04 6.38 Efficiency Ratio 61.80 59.81 62.32 AT PERIOD END Assets $2,684,479 $2,711,306 $2,743,508 Interest-Earning Assets 2,435,866 2,465,926 2,479,520 Commercial Loans 1,018,930 1,013,833 1,001,252 Consumer Loans 421,957 424,468 426,202 Mortgage Loans 350,089 360,714 365,321 Total Loans 1,790,976 1,799,015 1,792,775 Deposits 1,953,852 1,991,865 2,045,351 Valuable Core Deposits (1) 1,047,131 1,031,071 1,081,825 Interest-Bearing Liabilities 2,173,040 2,199,431 2,235,107 Shareholders' Equity 235,474 238,708 223,473 Unrealized Gains (Losses) on Market Securities (FASB 115) (4,879) (5,747) (11,917) AVERAGE BALANCES Assets $2,707,539 $2,724,641 $2,725,810 Interest-Earning Assets (2) 2,469,010 2,487,752 2,485,345 Commercial Loans 1,028,889 1,010,665 983,921 Consumer Loans 423,325 425,651 423,646 Mortgage Loans 355,412 361,837 366,965 Total Loans 1,807,626 1,798,153 1,774,532 Deposits 2,016,184 2,025,797 2,011,242 Valuable Core Deposits (1) 1,040,335 1,036,043 1,047,196 Interest-Bearing Liabilities 2,187,665 2,219,894 2,216,384 Shareholders' Equity 242,248 231,330 223,905 Basic Shares 17,697 17,589 17,466 Diluted Shares 17,864 17,752 17,562 (1) Defined as money market, demand deposit and savings accounts. (2) Includes securities available for sale at amortized cost.
INTEGRA BANK CORPORATION SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA-con't (In thousands, except ratios and yields) June 30, March 31, Dec. 31, Sept. 30, June 30, 2007 2007 2006 2006 2006 -------- -------- -------- -------- -------- ASSET QUALITY Non-Performing Assets: Non Accrual Loans $ 12,975 $ 8,816 $ 8,625 $ 7,844 $ 7,511 Loans 90+ Days Past Due 801 49 228 54 120 -------- -------- -------- -------- -------- Non-Performing Loans 13,776 8,865 8,853 7,898 7,631 Other Real Estate Owned 3,563 1,246 936 779 719 -------- -------- -------- -------- -------- Non-Performing Assets $ 17,339 $ 10,111 $ 9,789 $ 8,677 $ 8,350 ======== ======== ======== ======== ======== Allowance for Loan Losses: Beginning Balance $ 21,165 $ 21,155 $ 21,403 $ 21,043 $23,234 Allowance Associated with Acquisition 5,982 -- -- -- -- Provision for Loan Losses 455 735 18,091 950 859 Recoveries 426 348 463 343 629 Loans Charged Off (1,638) (1,073) (18,802) (933) (3,679) -------- -------- -------- -------- -------- Ending Balance $ 26,390 $ 21,165 $ 21,155 $ 21,403 $ 21,043 ======== ======== ======== ======== ======== Ratios: Allowance for Loan Losses to Loans 1.19% 1.18% 1.18% 1.19% 1.17% Allowance for Loan Losses to Average Loans 1.20 1.19 1.17 1.19 1.19 Allowance to Non-performing Loans 191.57 238.75 238.96 270.99 275.76 Non-performing Loans to Loans 0.62 0.50 0.49 0.44 0.43 Non-performing Assets to Loans and Other Real Estate Owned 0.78 0.56 0.55 0.48 0.47 Net Charge-Off Ratio 0.22 0.17 4.03 0.13 0.69 NET INTEREST MARGIN Yields (tax- equivalent) Loans 7.52% 7.25% 7.18% 7.21% 6.98% Securities 5.16 5.17 5.17 5.13 5.02 Regulatory Stock 4.36 5.68 5.05 4.40 5.71 Other Earning Assets 4.60 5.92 5.68 6.58 4.86 -------- -------- -------- -------- -------- Total Earning Assets 7.01 6.76 6.64 6.63 6.43 Cost of Funds Interest Bearing Deposits 3.73 3.44 3.41 3.34 3.06 Other Interest Bearing Liabilities 5.45 4.64 4.64 4.66 4.54 Total Interest Bearing Liabilities 4.02 3.68 3.65 3.60 3.37 -------- -------- -------- -------- -------- Total Interest Expense to Earning Assets 3.61 3.28 3.23 3.22 3.01 -------- -------- -------- -------- -------- Net Interest Margin 3.40% 3.48% 3.41% 3.41% 3.42% ======== ======== ======== ======== ======== (1) Defined as money market, demand deposit and savings accounts. (2) Includes securities available for sale at amortized cost.