MACON, Ga., July 25, 2007 (PRIME NEWSWIRE) -- Security Bank Corporation (Nasdaq:SBKC) today announced its financial results for the second quarter and six months ended June 30, 2007.
Summary
* Net income of $6.1 million for the second quarter was unchanged when compared to the second quarter of 2006 * Diluted earnings per share of $0.31 for the second quarter of the current year compared to $0.36 in the same quarter of 2006 * Net interest margin declined to 4.11% for the second quarter versus 4.22% for the first quarter * Sequential quarter loan growth of $77.3 million or approximately 15% on an annualized basis * Nonperforming assets increased to $54.7 million at the end of the second quarter from $42.5 million at end of the first quarter. However, we believe substantive progress has been made on NPA's after the end of the second quarter * Earnings guidance for 2007 lowered to a range of $1.31 to $1.35
Earnings Summary
Net income for the second quarter of 2007 was unchanged at $6.1 million, compared to the second quarter of 2006. Diluted earnings per share were $0.31 versus $0.36 for the same quarter of 2006, a decrease of 13.9%. The decrease in diluted earnings per share is primarily due to a lower net interest margin, a higher loan loss provision and higher collection expenses versus the second quarter of a year ago. For the six months ended June 30, 2007, net income increased 14.7% to $12.9 million compared to the same period of 2006, but on a diluted per share basis declined 7% to $0.66 per diluted share from the same period of 2006.
The Company's annualized returns on average tangible equity and average assets for the second quarter of 2007 were 13.42% and 0.97%, respectively, compared to 18.81% and 1.28%, respectively, for the second quarter of 2006. For the six months ended June 30, 2007, the annualized returns on average tangible equity and average assets were 14.57% and 1.05%, respectively, versus 19.30% and 1.26% for the same period in 2006.
Rett Walker, Security Bank Corporation President and CEO, remarked, "A weak housing market, in particular a housing market in Atlanta that we believe has dramatically weakened in the last 90 days, is creating strong earnings headwinds for us in the short run. What's critical for us during this challenging period is that we continue to take a long-term view of our business and run our community banking business accordingly every day."
Balance Sheet
Loans receivable were $2.1 billion at June 30, 2007, up from $1.5 billion at June 30, 2006, an increase of 40%. Excluding acquisitions, loans increased $357.3 million or 24% since June 30, 2006.
Total deposits were $2.2 billion at June 30, 2007, an increase of 37% from $1.6 billion at June 30, 2006. Excluding acquisitions, deposits increased $348.8 million or 22% since June 30, 2006. Total assets increased 35% to $2.7 billion at June 30, 2007, compared to $2.0 billion at June 30, 2006. Excluding acquisitions, total assets increased $389.3 million or 19.7%, compared to June 30, 2006.
Shareholders' equity increased $56.9 million to $314.7 million, an increase of 22% compared to June 30, 2006. The primary reason for the increase was common stock issued in the acquisition of Homestead Bank during the third quarter of 2006, which contributed approximately $37.5 million of the increase. The remaining increase of $19.4 million is primarily attributable to earnings, net of dividends paid.
Net Interest Income
Net interest income for the second quarter of 2007 was $23.4 million, an increase of 23% when compared to the second quarter of 2006. The increase is primarily the result of the continued growth in the Company's loan portfolio, both from organic growth and growth from acquisitions. The net interest margin (on a fully tax-equivalent basis ("FTE")) was 4.11% for the quarter ended June 30, 2007, compared to 4.52% for the comparable period one year ago and 4.22% for the first quarter of 2007. The decrease in the net interest margin in the second quarter of 2007 as compared to the first quarter of 2007 is the result of the increase in nonperforming assets (see "Asset Quality" section below) which reduced the margin by approximately 22 basis points as well as the aforementioned negative effects of loan pricing and fees. For the six months ended June 30, 2007, the net interest margin (FTE) was 4.16% compared to 4.53% for the six months ended June 30, 2006.
Noninterest Income and Expense
Noninterest income for the second quarter of 2007 was $4.6 million compared to the $4.9 million recognized during the second quarter of 2006. The decrease resulted from decreases in mortgage banking income and other noninterest income of $162,000 and $193,000, respectively.
Noninterest expense for the second quarter of 2007 was $16.4 million, an increase of 20% over the second quarter 2006 level of $13.6 million. The increase is primarily attributable to a $1.3 million increase in salaries and benefits, which is the direct result of the Company's organic growth and growth from the acquisition of Homestead Bank during 2006. Furthermore, the increase is related to increased costs with respect to foreclosed property expense ($532,000), director's fees ($177,000) and software amortization ($138,000). The remainder of the increase is spread over various expense categories.
Asset Quality
During the quarter ended June 30, 2007, the Company moved properties totaling approximately $15.8 million to other real estate owned. As a result, total nonperforming assets (nonaccrual loans and other real estate owned) at June 30, 2007 were $54.7 million, or 2.59% of total loans plus other real estate owned compared to 2.11% and 1.27% at the end of the first quarter of 2007 and the second quarter of 2006, respectively. In addition, the Company charged off approximately $1.3 million in loans receivable resulting in net charge-offs to average loans of 0.24% annualized for the second quarter of 2007. Net charge-offs to average loans was 0.10% annualized for the second quarter of 2006. For the first six months of 2007, net charge-offs to average loans were 0.14% on annualized basis. The allowance for loan losses was $24.1 million, or 1.15% of loans receivable at June 30, 2007, up from $18.2 million at June 30, 2006. The increase in the allowance for loan losses is primarily attributable to growth in the Company's loan portfolio and management's assessment of the current risks in the loan portfolio.
Rett Walker, President and CEO, commenting on the increase in nonperforming assets: "We are disappointed with the increase in nonperforming assets for the quarter, however we also recognize that residential construction and A&D activity is slowing dramatically, particularly in the Metro Atlanta market. Some of our builders and developers are feeling this slow down and as a result are not performing on their loans. While the current real estate environment has resulted in a net addition to the overall level of NPA's in the second quarter, we believe we are continuing to take appropriate action on problem credits and to recognize problems early. After quarter end and at the present time, we have entered into or are negotiating contracts to dispose of approximately $11 million of other real estate owned at what we believe to be a minimal loss."
2007 Earnings Guidance
Based on its current expectations, management is reducing its previously announced earnings guidance for 2007 from a range of $1.51 to $1.55 down to a range of $1.31 to $1.35. In reducing earnings guidance, management has modified its assumptions relating to the following factors:
* The net interest margin is projected to be in the range of 3.9% to 4.1% for the balance of 2007 versus the previous estimate of 4.1% to 4.3% due to competitive pricing pressures on loans and higher than previously anticipated nonperforming assets over the second half of the year * A reduction in the Company's projected loan growth over the second half of the year to a more sustainable range of 10% to 12% * Higher than originally estimated provision for loan losses due to higher than previously expected nonperforming assets. Net charge-offs for 2007 are expected to increase from our previous estimate of 14 basis points to 20 basis points
Rett Walker, commenting on the lowered earnings guidance remarked, "We are operating in a difficult period where the cyclical effects of a weak housing market are having a profound impact on our earnings in the short run. However, we will continue to manage our banking operations with a long-term perspective. Based on this long-term view we believe we have a dynamic and strong institution and believe that the combination of our state's strong demographics, our seasoned management team with incentive compensation tied to double digit EPS growth, our dedicated employees who are focused on customer service and our solid fundamental approach to the banking business all bode well for Security Bank's success over the long run."
Other Information
Security Bank Corporation management will host a conference call to discuss these results at 8:30 AM Eastern Daylight Time on Thursday, July 26, 2007. This call is open to all interested parties. From locations within the United States, the call-in number is 877-407-8031 (201-689-8031 from outside the United States). Please call in 10 minutes prior to the beginning of the conference call and ask for the Security Bank Corporation conference call.
A recorded playback of the conference call will be available by calling 877-660-6853, (201-612-7415 from outside the United States) from approximately 12:00 PM EDT, Thursday, July 26th, until 11:59 PM EDT Thursday, August 2, 2007. The reservation numbers for this playback are Account #286 and Conference ID # 246819.
This press release, including the attached selected unaudited financial tables, which are a part of this release, contains financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures are "tangible book value", "return on average tangible equity", "net operating income", and "operating earnings per diluted share." Security Bank's management uses these non-GAAP measures in its analysis of Security Bank's performance.
Tangible book value is defined as total equity reduced by recorded intangible assets, net of related deferred tax benefits. Tangible book value per share is defined as tangible book value divided by total common shares outstanding. This measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of the company. For companies such as Security Bank that have engaged in multiple business combinations, purchase accounting requires the recording of significant amounts of goodwill related to such transactions. Return on average tangible equity is defined as earnings for the period (annualized for the quarterly period or year-to-date period, as applicable) divided by average equity reduced by average goodwill and other intangible assets, net of related deferred tax benefits. Security Bank's management includes this measure because it believes that it is important when measuring the Company's performance exclusive of the effects of goodwill and other intangibles recorded in recent acquisitions, and this measure is used by many investors as part of their analysis of Security Bank.
Further, Non-GAAP measures typically adjust GAAP performance measures to exclude the effects of significant gains, losses or expenses that are unusual in nature and not expected to recur. Other non-GAAP financial measures included in this release are referred to as "net operating income" and "operating earnings per diluted share", which exclude losses on the sale of investment securities and gains on the early prepayment of advances with the Federal Home Loan Bank. Since these items and their impact on the Company's performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of the Company's core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the "Reconciliation Table" in the attached schedules for a more detailed analysis of these non-GAAP performance measures and the most directly comparable GAAP measures.
About Security Bank Corporation
Based in Macon, Georgia, Security Bank Corporation is a multi-bank holding company with assets of $2.7 billion at June 30, 2007. Security Bank Corporation operates 6 community banks with banking offices located throughout middle Georgia, coastal Georgia and north metropolitan Atlanta. In addition, Security Bank Corporation operates an interim real estate and development lender and traditional mortgage originator, Fairfield Financial Services, Inc., with offices throughout Georgia.
Security Bank Corporation common stock is traded on the NASDAQ Global Select Market under the ticker symbol "SBKC."
You may obtain copies of all documents that Security Bank files with the Securities and Exchange Commission, free of charge, at the SEC's website at www.sec.gov. In addition, copies of these documents may also be obtained from us without charge by directing a written request to Security Bank Corporation, 4219 Forsyth Road, Macon, Georgia 31210, attention: Chief Financial Officer.
Safe Harbor
This press release contains forward-looking statements as defined by federal securities laws, including statements about Security Bank's earnings projections, its financial outlook and assumptions, the current business environment and real estate markets, the proposed closing of the First Commerce transaction, and Security Bank's long-term prospects, among others. Statements contained in this press release that are not historical facts are forward-looking statements. Forward-looking statements may address issues involving significant risks, uncertainties, estimates and assumptions made by management. Security Bank's ability to accurately project results or predict the effects of future plans or strategies is inherently limited. Although Security Bank believes that the expectations and estimates reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Please refer to Security Bank Corporation's public filings with the Securities and Exchange Commission for a summary of important factors that could affect Security Bank Corporation's financial results and operations and its forward-looking statements. Security Bank Corporation does not intend to and assumes no responsibility, except as required by law, for updating or revising any forward-looking statements contained in this press release, whether as a result of new information, changes in assumptions, future events or otherwise.
Security Bank Corporation Selected Consolidated Financial Data (Dollars in Thousands, except Per Share Amounts) Unaudited Quarters Ended Six Months Ended June 30, June 30, % % 2007 2006 Change 2007 2006 Change ---- ---- ------ ---- ---- ------ EARNINGS SUMMARY: Net interest income $23,383 $19,072 22.6% 46,160 35,785 29.0% Provision for Loan Losses 2,000 739 170.6% 3,260 1,369 138.1% Noninterest Income 4,603 4,917 -6.4% 9,725 9,834 -1.1% Noninterest Expense 16,397 13,614 20.4% 32,315 26,495 22.0% Provision for Income Taxes 3,489 3,546 -1.6% 7,424 6,525 13.8% Net Income 6,100 6,090 0.2% 12,886 11,230 14.7% PER COMMON SHARE: Basic earnings $ 0.32 $ 0.36 -11.1% $ 0.67 $ 0.72 -6.9% Diluted earnings 0.31 0.36 -13.9% 0.66 $ 0.71 -7.0% Cash dividends declared 0.088 0.075 16.7% 0.18 0.15 16.7% Book value 16.38 14.71 11.3% 16.38 14.71 11.3% Tangible book value 9.54 8.66 10.2% 9.54 8.66 10.2% KEY PERFORMANCE RATIOS (a): Return on average tangible equity (b) 13.42% 18.81% 14.57% 19.30% Return on average assets 0.97% 1.28% 1.05% 1.26% Efficiency ratio 58.59% 56.75% 57.82% 58.08% Net interest margin (FTE) 4.11% 4.52% 4.16% 4.53% Net charge- offs to average loans 0.24% 0.10% 0.15% 0.08% BALANCE SHEET SUMMARY - END OF PERIOD Investment securities $ 219,185 $ 163,378 34.2% Loans Held for Resale 9,052 12,201 -25.8% Loans, gross 2,094,254 1,500,963 39.5% Allowance for loan losses 24,108 18,190 32.5% Total assets 2,672,177 1,974,376 35.3% Deposits 2,161,078 1,576,009 37.1% Other borrowed money 177,873 132,495 34.2% Shareholders' equity 314,687 257,780 22.1% ASSET QUALITY - END OF PERIOD Nonaccrual loans $ 35,450 $ 17,269 105.3% Loans 90 Days Past Due and Accruing -- -- 0.0% Other real estate owned 19,229 1,817 958.3% Total nonper- forming assets 54,679 19,086 186.5% Allowance for loan losses /NPA's 44.09% 95.31% Allowance for loan losses /loans 1.15% 1.21% (a) Annualized based on number of days in the period, except efficiency ratio (b) Calculation of this measure is illustrated in the attached GAAP to non-GAAP reconciliation Security Bank Corporation Average Balance Sheet and Net Interest Income Analysis (Dollars in Thousands) Unaudited Quarter Ended Six Months Ended June 30, 2007 June 30, 2007 Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ------- ------- ------ ------- ------- ----- ASSETS Earning assets: Interest- bearing deposits and fed funds sold $ 33,042 $ 431 5.23% $ 41,998 $ 1,105 5.31% Investment securities 195,031 2,538 5.22% 194,642 5,044 5.23% Loans Held for Resale 8,728 156 7.17% 6,654 229 6.94% Loans 2,052,273 45,138 8.82% 2,001,849 88,006 8.87% Other earning assets 1,238 24 7.78% 1,238 47 7.66% Total earning assets 2,290,312 48,287 8.46% 2,246,381 94,431 8.48% Non-earning assets 238,830 239,095 ------------ ----------- Total assets $ 2,529,142 $ 2,485,476 ============ ========== LIABILITIES AND SHAREHOLDERS' EQUITY Interest-bearing liabilities: Savings and interest- bearing transaction $ 537,322 $ 4,837 3.61% $ 529,867 $ 9,436 3.59% Time deposits 1,350,602 17,923 5.32% 1,323,090 34,709 5.29% Other borrowings 135,959 2,032 5.99% 130,805 3,903 6.02% Total interest- bearing liabil- ities 2,023,883 24,792 4.91% 1,983,762 48,048 4.88% Noninterest- bearing liabilities: Noninterest bearing deposits 168,589 166,931 Other noninterest- bearing liabilities 22,793 23,485 Total liabil- ities $ 2,215,265 $ 2,174,178 ------------ ----------- Shareholders' Equity 313,877 311,298 ------------ ----------- Total liabilities and shareholders' equity $ 2,529,142 $ 2,485,476 =========== =========== Interest rate spread 3.55% 3.60% Net interest income $ 23,495 $ 46,383 Net interest margin (FTE) 4.11% 4.16% Security Bank Corporation (SBKC) Selected Financial Information (Amounts in thousands, except per share data) 2007 ------------------------- 2nd Quarter 1st Quarter ------------------------- Period-End Balance Sheet ------------------------ Total Assets $2,672,177 $2,541,603 Total Securities 219,185 191,945 Mortgage Loans held for Sale 9,052 8,341 Loans: Commercial: Real-Estate (5) 843,477 932,971 Construction/A&D (5) 892,315 703,703 All Other 134,031 154,406 Residential: Real-Estate 152,726 152,217 Construction/A&D 28,329 28,470 All Other 43,376 45,230 Total Loans 2,094,254 2,016,997 Allowance for loan losses 24,108 23,336 Other Assets: Other earning assets: 84,060 78,319 Total Earning Assets: 2,406,551 2,295,602 Intangibles: Goodwill 128,601 128,553 Core-Deposit 4,617 4,863 Deposits: Demand Deposits 171,427 176,658 Interest bearing deposits 1,989,651 1,842,431 Total Deposits 2,161,078 2,019,089 Fed Funds purchased & repo agreements 58,985 59,065 Other borrowed funds 118,888 129,888 Common Equity 314,687 311,729 ===================================================================== Average Balance Sheet --------------------- Total Assets $2,529,142 $2,441,326 Total Securities 195,031 194,248 Mortgage Loans held for Sale 8,728 4,557 Loans: Commercial: Real-Estate 890,191 937,948 Construction/A&D 781,274 627,003 Other 152,784 156,406 Residential: Real-Estate 152,519 151,018 Construction/A&D 28,848 29,134 Other 46,657 49,355 Total Loans 2,052,273 1,950,864 Other assets: Other earning assets: 34,280 52,292 Total Earning Assets: 2,290,312 2,201,961 Deposits: Demand Deposits 168,589 165,255 Interest bearing deposits Savings 16,810 16,612 NOW 375,605 367,657 Money Market 144,907 138,060 Time deposits greater than $100,000 833,758 779,136 Time deposits less than $100,000 516,844 516,137 Total Deposits 2,056,513 1,982,857 Fed Funds purchased & repo agreements 43,682 34,158 Other borrowed funds 92,277 91,436 Common Equity 313,877 308,691 ===================================================================== Income Statement ---------------- Interest Income $ 48,175 $ 46,033 Interest Expense 24,792 23,256 Net Interest Income 23,383 22,777 Loan loss provision 2,000 1,260 Service charges on deposit accounts 2,376 2,098 Mortgage banking revenues 1,271 1,039 Securities Gains (Losses) -- 2 Other income 956 1,983 Total noninterest income 4,603 5,122 Salaries and benefits 9,094 9,551 Occupancy and equipment 1,547 1,488 Other noninterest expense 5,756 4,879 Total noninterest expense 16,397 15,918 Pre-tax earnings 9,589 10,721 Income Taxes 3,489 3,935 Net income $ 6,100 $ 6,786 Basic earnings per share (3) $ 0.32 $ 0.35 Diluted earnings per share (3) 0.31 0.35 Operating diluted earnings per share (3), (4) 0.31 0.35 End of period shares outstanding (3) 19,212,139 19,181,241 Weighted average diluted shares o/s (3) 19,463,979 19,456,857 Tax equivalent adjustment 112 111 Net interest income (FTE) 23,495 22,888 Effective Tax Rate 36.39% 36.70% ===================================================================== Stock and related per share data: (3) ------------------------------------- Book value $ 16.38 $ 16.25 Tangible book value 9.54 9.39 Dividends declared per share 0.0875 0.0875 ===================================================================== Other Key Ratios/Data: ---------------------- Return on average tangible equity (2), (4) 13.42% 15.78% Return on average assets (2) 0.97% 1.13% Net interest margin (FTE) (2) 4.11% 4.22% Efficiency ratio (FTE) 58.36% 56.83% Tangible Equity/Tangible Assets (4) 7.21% 7.48% ===================================================================== Loan Performance Data: ---------------------- Nonaccrual loans $ 35,450 $ 39,139 Loans 90 Days Past Due and Accruing -- -- Other real estate owned (ORE) 19,229 3,403 Total nonperforming assets 54,679 42,542 Net charge-offs 1,228 260 Allowance for loan losses/NPA's 44.09% 54.85% Allowance for loan losses/loans 1.15% 1.16% NPA's/Loans plus ORE 2.59% 2.11% Nonperforming assets/total assets 2.05% 1.67% Net charge-offs to average loans (1) 0.24% 0.05% ===================================================================== 2006 ---------------------------------------------------------- Dec. 31/ 4th 3rd 2nd 1st YTD Quarter Quarter Quarter Quarter ---------------------------------------------------------- Period-End Balance Sheet ------------- Total Assets $2,494,071 $2,494,071 $2,314,913 $1,974,376 $1,912,841 Total Securities 229,940 229,940 211,005 163,378 146,932 Mortgage Loans held for Sale 8,878 8,878 8,947 12,201 7,776 Loans: Commercial: Real- Estate(5) 916,919 916,919 884,417 705,072 699,215 Construc- tion/A&D (5) 602,712 602,712 553,296 460,131 430,585 All Other 152,289 152,289 125,468 115,968 103,396 Residential: Real- Estate 150,398 150,398 151,559 151,633 155,031 Construc- tion/A&D 30,262 30,262 30,332 32,057 30,376 All Other 48,521 48,521 45,892 36,102 51,089 Total Loans 1,901,101 1,901,101 1,790,964 1,500,963 1,469,692 Allowance for loan losses 22,336 22,336 21,477 18,190 17,812 Other Assets: Other earning assets: 97,808 97,808 49,612 82,265 78,567 Total Earning Assets: 2,237,727 2,237,727 2,060,528 1,758,807 1,702,967 Intangibles: Goodwill 127,984 127,984 131,162 103,014 102,659 Core-Deposit 5,110 5,110 5,356 4,907 5,129 Deposits: Demand Deposits 178,967 178,967 173,129 172,023 168,235 Interest bearing deposits 1,791,960 1,791,960 1,659,876 1,403,986 1,362,149 Total De- posits 1,970,927 1,970,927 1,833,005 1,576,009 1,530,384 Fed Funds purchased & repo agreements 50,917 50,917 35,819 20,030 18,271 Other borrowed funds 124,688 124,688 123,988 112,465 125,665 Common Equity 306,408 306,408 302,273 257,780 217,641 ===================================================================== Average Balance Sheet ------------- Total Assets $2,028,906 $2,368,642 $2,157,297 $1,906,800 $1,673,006 Total Securities 173,665 216,433 183,291 151,542 142,473 Mortgage Loans held for Sale 6,576 6,064 7,015 8,011 5,200 Loans: Commercial: Real- Estate 760,925 894,885 818,912 701,309 624,990 Construc- tion/A&D 490,964 600,693 524,265 450,386 385,784 Other 116,591 136,109 122,750 109,873 93,284 Residential: Real- Estate 153,480 151,938 151,332 153,272 157,463 Construc- tion/A&D 27,767 29,520 30,658 30,279 20,480 Other 49,781 51,282 49,191 49,693 52,788 Total Loans 1,599,508 1,864,427 1,697,108 1,494,812 1,334,789 Other Assets: Other earning assets: 35,756 37,051 39,313 45,829 20,624 Total Earning Assets: 1,815,505 2,123,975 1,926,727 1,700,194 1,503,086 Deposits: Demand Deposits 166,190 169,410 172,393 166,941 155,181 Interest bearing deposits Savings 19,268 17,085 18,645 20,359 21,036 NOW 310,624 358,114 335,152 307,630 240,033 Money Market 127,456 146,241 132,302 103,540 127,480 Time deposits greater than $100K 571,992 688,977 608,483 542,530 445,970 Time deposits less than $100K 423,708 506,804 471,973 386,389 325,379 Total De- posits 1,619,238 1,886,631 1,738,948 1,527,389 1,315,079 Fed Funds purchased & repo agreements 29,874 45,112 26,036 23,230 24,608 Other borrowed funds 108,997 108,338 89,927 102,493 136,740 Common Equity 252,004 304,362 283,937 235,731 182,219 ===================================================================== Income Statement ---------------- Interest Income $ 148,081 $ 44,415 $ 40,669 $ 34,214 $ 28,783 Interest Expense 68,647 22,353 19,082 15,142 12,070 Net Interest Income 79,434 22,062 21,587 19,072 16,713 Loan loss provision 4,468 1,873 1,226 739 630 Service charges on deposit accounts 9,162 2,336 2,387 2,335 2,104 Mortgage banking revenues 4,922 1,007 1,231 1,433 1,251 Securities Gains (Losses) (1,601) (1,331) (270) -- -- Other income 5,423 1,074 1,638 1,149 1,562 Total non- interest income 17,906 3,086 4,986 4,917 4,917 Salaries and benefits 32,376 8,313 8,497 7,804 7,762 Occupancy and equip- ment 5,622 1,471 1,396 1,459 1,296 Other non- interest expense 17,604 4,891 4,539 4,351 3,823 Total non- interest expense 55,602 14,675 14,432 13,614 12,881 Pre-tax earnings 37,270 8,600 10,915 9,636 8,119 Income Taxes 13,878 3,378 3,975 3,546 2,979 Net income $ 23,392 $ 5,222 $ 6,940 $ 6,090 $ 5,140 Basic earnings per share (3) $ 1.36 $ 0.26 $ 0.38 $ 0.36 $ 0.36 Diluted earnings per share (3) 1.33 0.26 0.37 0.36 0.35 Operating diluted earnings per share (3), (4) 1.38 0.31 0.37 0.36 0.35 End of period shares out- standing (3) 19,166,314 19,166,314 19,161,507 17,519,112 15,782,125 Weighted average diluted shares o/s (3) 17,564,990 19,528,891 18,971,126 16,910,380 14,784,856 Tax equivalent adjustment 414 106 107 100 101 Net interest income (FTE) 79,848 22,168 21,694 19,172 16,814 Effective Tax Rate 37.24% 39.28% 36.42% 36.80% 36.69% ===================================================================== Stock and related per share data: (3) --------------- Book value $ 15.99 $ 15.99 $ 15.78 $ 14.71 $ 13.79 Tangible book value 8.99 8.99 8.76 8.66 7.08 Dividends declared per share 0.30 0.0750 0.075 0.075 0.075 ===================================================================== Other Key Ratios/Data: ------------ Return on average tangible equity (2), (4) 16.53% 12.19% 17.13% 18.81% 19.92% Return on average assets (2) 1.15% 0.87% 1.28% 1.28% 1.25% Net interest margin (FTE) (2) 4.40% 4.14% 4.47% 4.52% 4.54% Efficiency ratio (FTE) 56.88% 58.11% 54.09% 56.51% 59.27% Tangible Equity/Tan- gible Assets (4) 7.42% 7.42% 7.70% 8.12% 6.19% ===================================================================== Loan Performance Data: ----------------- Nonaccrual loans $ 34,401 $ 34,401 $ 16,946 $ 17,269 $ 8,171 Loans 90 Days Past Due and Accruing -- -- -- -- -- Other real estate owned (ORE) 2,775 2,775 1,867 1,817 2,488 Total non- performing assets 37,176 37,176 18,813 19,086 10,659 Net charge- offs 2,362 1,014 789 361 198 Allowance for loan losses/NPAs 60.08% 60.08% 114.16% 95.31% 167.11% Allowance for loan losses/ loans 1.18% 1.18% 1.20% 1.21% 1.21% NPAs/Loans plus ORE 1.95% 1.95% 1.05% 1.27% 0.72% Nonperforming assets/total assets 1.49% 1.49% 0.81% 0.97% 0.56% Net charge- offs to average loans (1) 0.15% 0.22% 0.18% 0.10% 0.06% ===================================================================== 2005 ------------------------------------------------- YTD 4th Quarter 3rd Quarter 2nd Quarter ------------------------------------------------- Period-End Balance Sheet ------------------ Total Assets $1,662,413 $1,662,413 $1,345,566 $1,329,629 Total Securities 150,986 150,986 121,374 122,763 Mortgage Loans held for Sale 5,562 5,562 9,372 7,413 Loans: Commercial: Real-Estate (5) 609,010 609,010 418,020 423,720 Construction/ A&D (5) 334,114 334,114 316,701 309,270 All Other 95,688 95,688 137,879 126,290 Residential: Real-Estate 163,874 163,874 118,679 116,119 Construction/A&D 19,750 19,750 19,371 20,041 All Other 49,683 49,683 53,420 46,285 Total Loans 1,272,119 1,272,119 1,064,070 1,041,725 Allowance for loan losses 16,148 16,148 13,628 13,264 Other Assets: Other earning assets: 41,330 41,330 23,928 45,141 Total Earning Assets: 1,469,997 1,469,997 1,218,744 1,217,042 Intangibles: Goodwill 74,582 74,582 49,677 50,507 Core-Deposit 4,687 4,687 1,498 1,580 Deposits: Demand Deposits 156,698 156,698 137,295 121,600 Interest bearing deposits 1,134,555 1,134,555 949,084 952,487 Total Deposits 1,291,253 1,291,253 1,086,379 1,074,087 Fed Funds purchased & repo agreements 43,876 43,876 10,052 5,714 Other borrowed funds 128,265 128,265 100,207 94,007 Common Equity 179,305 179,305 140,408 137,019 ===================================================================== Average Balance Sheet --------------------- Total Assets $1,238,033 $1,353,208 $1,326,590 $1,184,441 Total Securities 116,110 117,857 123,002 115,694 Mortgage Loans held for Sale 6,726 6,754 8,769 6,132 Loans: Commercial: Real-Estate 432,199 472,728 423,215 420,250 Construction/A&D 284,620 331,779 319,456 270,505 Other 99,034 102,402 134,147 87,386 Residential: Real-Estate 116,890 119,560 117,944 115,347 Construction/A&D 18,883 19,189 19,539 18,662 Other 45,900 45,985 50,465 44,783 Total Loans 997,526 1,091,643 1,064,766 956,933 Other Assets: Other earning assets: 16,840 17,800 17,327 18,467 Total Earning Assets: 1,137,202 1,234,054 1,213,864 1,097,226 Deposits: Demand Deposits 119,867 131,616 122,600 116,899 Interest bearing deposits Savings 19,969 18,648 19,646 20,821 NOW 158,264 198,465 175,373 141,396 Money Market 80,640 78,800 83,961 81,233 Time deposits greater than $100,000 317,143 355,908 349,889 304,208 Time deposits less than $100,000 305,609 312,576 324,000 298,644 Total Deposits 1,001,492 1,096,013 1,075,469 963,201 Fed Funds purchased & repo agreements 16,295 19,704 12,224 15,899 Other borrowed funds 83,754 86,260 89,601 76,511 Common Equity 126,461 141,576 138,246 118,365 ===================================================================== Income Statement ---------------- Interest Income $ 78,192 $ 22,860 $ 21,444 $ 18,023 Interest Expense 27,839 8,864 7,976 6,162 Net Interest Income 50,353 13,996 13,468 11,861 Loan loss provision 2,833 630 624 804 Service charges on deposit accounts 7,351 1,940 1,956 1,858 Mortgage banking revenues 4,539 1,040 1,333 1,207 Securities Gains (Losses) (6) -- -- -- Other income 4,719 1,117 1,121 1,517 Total noninterest income 16,603 4,097 4,410 4,582 Salaries and benefits 22,811 6,044 6,115 5,598 Occupancy and equipment 3,785 1,048 985 906 Other noninterest expense 12,032 3,485 3,156 2,828 Total noninterest expense 38,628 10,577 10,256 9,332 Pre-tax earnings 25,495 6,886 6,998 6,307 Income Taxes 9,310 2,507 2,509 2,397 Net income $ 16,185 $ 4,379 $ 4,489 $ 3,910 Basic earnings per share (3) $ 1.31 $ 0.34 $ 0.36 $ 0.32 Diluted earnings per share (3) 1.27 0.33 0.33 0.32 Operating diluted earnings per share (3), (4) 1.27 0.33 0.33 0.32 End of period shares out- standing (3) 14,386,960 14,386,960 12,911,550 12,851,640 Weighted average diluted shares o/s (3) 12,736,544 13,316,163 13,218,030 12,374,075 Tax equivalent adjustment 324 81 79 82 Net interest income (FTE) 50,677 14,077 13,547 11,943 Effective Tax Rate 36.52% 36.41% 35.85% 38.00% ===================================================================== Stock and related per share data: (3) ------------------- Book value $ 12.46 $ 12.46 $ 10.87 $ 10.66 Tangible book value 7.08 7.08 6.94 6.65 Dividends declared per share 0.26 0.065 0.065 0.065 ===================================================================== Other Key Ratios/Data: --------------------- Return on average tangible equity (2), (4) 19.30% 19.15% 20.46% 19.64% Return on average assets (2) 1.31% 1.28% 1.34% 1.32% Net interest margin (FTE) (2) 4.46% 4.53% 4.43% 4.37% Efficiency ratio (FTE) 57.42% 58.20% 57.11% 56.47% Tangible Equity/ Tangible Assets (4) 6.42% 6.42% 6.93% 6.69% ===================================================================== Loan Performance Data: Nonaccrual loans $ 6,997 $ 6,997 $ 5,746 $ 5,200 Loans 90 Days Past Due and Accruing -- -- -- 59 Other real estate owned (ORE) 2,394 2,394 1,722 1,467 Total nonper- forming assets 9,391 9,391 7,468 6,726 Net charge-offs 1,219 321 260 317 Allowance for loan losses/NPAs 171.95% 171.95% 182.49% 197.20% Allowance for loan losses/loans 1.27% 1.27% 1.28% 1.27% NPA's/Loans plus ORE 0.74% 0.74% 0.70% 0.64% Nonperforming assets/ total assets 0.56% 0.56% 0.56% 0.51% Net charge-offs to average loans (1) 0.12% 0.12% 0.10% 0.13% ===================================================================== (1) Annualized (2) The actual number of days in the period were used to annualize income (3) Adjusted for 2-for-1 stock split effective May 27, 2005 (4) Calculation of this measure is illustrated in the attached GAAP to non-GAAP reconciliation (5) During quarter ended 6/30/07, certain loans were reclassified between these two categories and thus the resulting quarterly change is not meaningful 2007 -------------------------- 2nd Quarter 1st Quarter ----------- ----------- Reconciliation Table- GAAP to non-GAAP: -------------------------------------- Book Value per share $ 16.38 $ 16.25 Effect of intangible assets per share (6.84) (6.86) Tangible book value $ 9.54 $ 9.39 Equity $ 314,687 $ 311,729 Intangible assets 133,218 133,416 Less tax effect of Core-Deposit Intangible (38%) (1,754) (1,848) Tangible equity $ 183,223 $ 180,161 Assets $2,672,177 $2,541,603 Intangible assets 131,464 131,568 Tangible assets $2,540,713 $2,410,035 Equity/Assets 11.78% 12.27% Effect of intangible assets -4.57% -4.79% Tangible Equity/Tangible Assets 7.21% 7.48% Average Equity $ 313,877 $ 308,691 Average Intangible assets 133,363 136,228 Less tax effect of Core-Deposit Intangible (38%) (1,813) (1,896) Average tangible equity $ 182,327 $ 174,359 Net Income (a) $ 24,467 $ 27,521 Return on average tangible equity 13.42% 15.78% Diluted earnings per share $ 0.31 $ 0.35 Effect of securities (gains) losses, net of tax -- -- Effect of prepayment of FHLB advances, net of tax -- -- Diluted operating earnings per share $ 0.31 $ 0.35 Net income $ 6,100 $ 6,786 Effect of securities (gains) losses, net of tax -- (1) Effect of prepayment of FHLB advances, net of tax -- -- Net operating income $ 6,100 $ 6,785 2006 ---------------------------------------------------------- Dec 31/ 4th 3rd 2nd 1st YTD Quarter Quarter Quarter Quarter ---------- ---------- ---------- ---------- ---------- Reconciliation Table- GAAP to non-GAAP: -------------- Book Value per share $ 15.99 $ 15.99 $ 15.78 $ 14.71 $ 13.79 Effect of intangible assets per share (7.00) (7.00) (7.02) (6.05) (6.71) Tangible book value $ 8.99 $ 8.99 $ 8.76 $ 8.66 $ 7.08 Equity $ 306,408 $ 306,408 $ 302,273 $ 257,780 $ 217,641 Intangible assets 133,094 133,094 136,518 107,921 107,788 Less tax effect of Core-Deposit Intangible (38%) (1,942) (1,942) (2,035) (1,865) (1,949) Tangible equity $ 175,256 $ 175,256 $ 167,790 $ 151,724 $ 111,802 Assets $2,494,071 $2,494,071 $2,314,913 $1,974,376 $1,912,841 Intangible assets 131,152 131,152 134,483 106,056 105,839 Tangible assets $2,362,919 $2,362,919 $2,180,430 $1,868,320 $1,807,002 Equity/Assets 12.29% 12.29% 13.06% 13.06% 11.38% Effect of intangible assets -4.87% -4.87% -5.36% -4.94% -5.19% Tangible Equity/Tan- gible Assets 7.42% 7.42% 7.70% 8.12% 6.19% Average Equity $ 252,004 $ 304,362 $ 283,937 $ 235,731 $ 182,219 Average Intangible assets 112,385 136,443 125,227 107,763 79,313 Less tax effect of Core-Deposit Intangible (38%) (1,921) (2,001) (2,006) (1,918) (1,754) Average tangible equity $ 141,540 $ 169,920 $ 160,716 $ 129,886 $ 104,660 Net Income (a) $ 23,392 $ 20,718 $ 27,534 $ 24,427 $ 20,846 Return on average tangible equity 16.53% 12.19% 17.13% 18.81% 19.92% Diluted earnings per share $ 1.33 $ 0.26 $ 0.37 $ 0.36 $ 0.35 Effect of securities (gains) losses, net of tax 0.06 0.05 0.01 -- -- Effect of prepayment of FHLB advances, net of tax (0.01) -- (0.01) -- -- Diluted operating earnings per share $ 1.38 $ 0.31 $ 0.37 $ 0.36 $ 0.35 Net income $ 23,392 $ 5,222 $ 6,940 $ 6,090 $ 5,140 Effect of securities (gains) losses, net of tax 980 808 172 -- -- Effect of prepayment of FHLB advances, net of tax (174) -- (174) -- -- Net operating income $ 24,198 $ 6,030 $ 6,938 $ 6,090 $ 5,140 2005 ---------------------------------------------------- Dec 31/YTD 4th Quarter 3rd Quarter 2nd Quarter ---------- ----------- ----------- ----------- Reconciliation Table- GAAP to non-GAAP: --------------------- Book Value per share $ 12.46 $ 12.46 $ 10.87 $ 10.66 Effect of intan- gible assets per share (5.38) (5.39) (3.93) (4.01) Tangible book value $ 7.08 $ 7.08 $ 6.94 $ 6.65 Equity $ 179,305 $ 179,305 $ 140,408 $ 137,019 Intangible assets 79,269 79,269 51,175 52,087 Less tax effect of Core-Deposit Intangible (38%) (1,781) (1,781) (569) (600) Tangible equity $ 101,817 $ 101,817 $ 89,802 $ 85,532 Assets $1,662,413 $1,662,413 $1,345,566 $1,329,629 Intangible assets 77,488 77,488 50,606 51,487 Tangible assets $1,584,925 $1,584,925 $1,294,960 $1,278,142 Equity/Assets 10.79% 10.79% 10.43% 10.31% Effect of intan- gible assets -4.36% -4.36% -3.50% -3.61% Tangible Equity/ Tangible Assets 6.42% 6.42% 6.93% 6.69% Average Equity $ 126,461 $ 141,576 $ 138,246 $ 118,365 Average Intangible assets 43,025 51,446 51,782 38,851 Less tax effect of Core-Deposit Intangible (38%) (429) (571) (587) (337) Average tangible equity $ 83,865 $ 90,701 $ 87,051 $ 79,851 Net Income (a) $ 16,185 $ 17,373 $ 17,810 $ 15,685 Return on average tangible equity 19.30% 19.15% 20.46% 19.64% Diluted earnings per share $ 1.27 $ 0.33 $ 0.33 $ 0.32 Effect of securities (gains) losses, net of tax -- -- -- -- Effect of prepay- ment of FHLB advances, net of tax -- -- -- -- Diluted operating earnings per share $ 1.27 $ 0.33 $ 0.33 $ 0.32 Net income $ 16,185 $ 4,379 $ 4,489 $ 3,910 Effect of securities (gains) losses, net of tax 4 -- -- -- Effect of prepay- ment of FHLB advances, net of tax -- -- -- -- Net operating income $ 16,189 $ 4,379 $ 4,489 $ 3,910 (a) The actual number of days in the period were used to annualize income