* Net Income Per Diluted Share Was $0.24 * Non-Performing Loans Increase to 1.28% of Total Loans From 0.98% in Fourth Quarter 2007 * Provision for Loan Losses Increases $1.4 Million From Fourth Quarter of 2007 * Net Interest Margin Declines 19 Basis Points to 3.23% Following 200 Basis Points of Fed Interest Rate Cuts * Commercial Loan Growth Remains Strong At 16% Annualized From Fourth Quarter of 2007 -- Low Cost Deposit Growth Also Strong At 15%
EVANSVILLE, Ind., April 14, 2008 (PRIME NEWSWIRE) -- Integra Bank Corporation (Nasdaq:IBNK) today reported net income for the first quarter of 2008 of $5.0 million, a decline of $0.8 million or 14.5% from the fourth quarter of 2007. Diluted earnings per share were $0.24, compared to $0.28 for the fourth quarter of 2007, a decline of 14.3%. Returns on assets and equity were 0.59% and 5.99% for the first quarter of 2008, as compared to 0.69% and 6.99% for the fourth quarter of 2007.
Comparisons in this release are from the first quarter of 2008 to the fourth quarter of 2007. The Company believes that the April 2007 acquisition of Prairie Financial Corporation and the recent dramatic change in credit conditions make comparisons to the fourth quarter of 2007 more meaningful than comparisons to the first quarter of 2007.
First quarter 2008 results, as compared to fourth quarter 2007, included increases in the provision for loan losses of $1.4 million, non-interest expense of $0.8 million, and income taxes of $0.8 million, as well as a decrease in net interest income of $1.1 million. An increase in non-interest income of $3.2 million partially offset these changes. Net interest income was $23.5 million for the first quarter of 2008, compared to $24.7 million for the fourth quarter of 2007, while the net interest margin decreased 19 basis points to 3.23%. Commercial loans increased $63.4 million, or 16.2% annualized. This increase in loan volume partially offset the decline in the net interest margin that occurred largely due to decreases in commercial loan interest rates which are tied to market rates. The Federal Reserve lowered the key interbank borrowing rate by 200 basis points during the first quarter of 2008. Non-interest income was $10.7 million for the first quarter of 2008, compared to $7.5 million for the preceding quarter. Fourth quarter 2007 non-interest income included a $2.7 million other-than-temporary impairment (OTTI) charge. The allowance to total loans increased 4 basis points to 1.22% while net charge-offs increased 15 basis points to 0.40%. Non-performing assets increased $7.7 million, or 30.2%, while the allowance to non-performing loans decreased from 120% to 95%.
"Our earnings for the first quarter were below our expectations, largely as a result of our increased provision for loan losses," stated Mike Vea, Chairman, President and CEO. "Nonetheless, we were pleased with several components of our first quarter results. Our loan and low cost deposit growth rates were very strong in what is a very tough, declining economic environment. Additionally, our fee income exceeded our expectations in what is typically a low quarter for fee income," Vea added.
"In the current economic environment, which appears to be a twenty year credit correction cycle, credit quality, liquidity and capital are the key items of focus," Vea commented. "During the first quarter, we charged off $1.4 million from one floor plan lending relationship. This charge-off comprised 24 basis points of the 40 basis points of net charge-offs we recorded during the quarter. As we stated in January, the majority of our current credit weakness is from our Chicago residential homebuilder portfolio and we continue to believe we are adequately secured within that portfolio," added Vea.
Commercial and Direct Consumer Loan Growth Continues
Higher yielding commercial loan average balances increased $63.4 million during the first quarter, as compared to the preceding quarter, a 16.2% annualized growth rate. Growth was broadly based, coming primarily from commercial real estate, as well as from the company's Cincinnati, Evansville and Chicago markets. Commercial loan average balances were 54.4% of earning assets for the first quarter of 2008, up from 53.2% for the fourth quarter of 2007, and up from 42.3% for the first quarter of 2007.
Direct consumer and home equity loan average balances increased $2.2 million in the first quarter, or 2.8% annualized. The increases in commercial, consumer and home equity loans more than offset planned declines of $5.1 million in indirect consumer loans and residential mortgage loans of $22.7 million. 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 3.23% for the first quarter of 2008, a 19 basis point decline from the fourth quarter of 2007. A decrease in the yield on earning assets of 0.63% to 6.37% exceeded the decrease in the cost of interest bearing liabilities of 0.48% to 3.47%. Net interest income decreased $1.1 million, or 4.6%, to $23.5 million. Increases in higher yielding average commercial loan balances of $63.4 million or 16.2% annualized and low cost deposits of $28.4 million, or 14.6% annualized, only partially offset the impact of floating rate assets repricing more quickly than floating rate liabilities as fed funds rates declined 200 basis points during the quarter.
"While our net interest margin declined as a result of the rate cuts that occurred during the last two quarters, we expect the margin to rebound during the last three quarters of the year as our liabilities reprice and catch up with our assets that reprice more quickly," stated Mike Vea. "The amount and timing of any future rate cuts remains uncertain and will impact us, as well as the rest of the banking industry, particularly if those cuts are significant," added Vea.
Non-Interest Income
Non-interest income was $10.7 million for the first quarter of 2008, an increase of $3.2 million, or 42.4% from the fourth quarter of 2007. The fourth quarter of 2007 included an other-than-temporary impairment charge of $2.7 million. Service charges on deposit accounts decreased $0.6 million, or 11.1%, driven by seasonally lower overdraft fee income. This decrease was more than offset by increases in annuity income, which increased $0.3 million or 113.9%, and an increase in positive mark-to-market adjustments on trading securities and free standing derivatives of $0.8 million. During the quarter, the company sold all securities in its investment portfolio that it had classified as trading.
Non-Interest Expense
Non-interest expense was $24.1 million for the first quarter of 2008, an increase of $0.8 million, or 3.2% from the fourth quarter of 2007. Increases in personnel expense of $0.3 million and loan and real estate owned expenses of $0.3 million, as well as a $0.4 million check kiting loss, were partially offset by a $0.5 million decline in professional fees.
Credit Quality
The provision for loan losses was $3.6 million for the first quarter of 2008, compared to $2.3 million for the fourth quarter of 2007. Net charge-offs for the first quarter totaled $2.3 million, compared to $1.4 million in the fourth quarter of 2007. Net charge-offs and the provision for loan losses for the first quarter of 2008 include a $1.4 million loss on an automobile dealer floor plan. The net charge-off ratio for the first quarter of 2008 was 40 basis points, which includes the floor plan charge-off of 24 basis points. This compares to 25 basis points in net charge-offs for the fourth quarter of 2007.
The allowance for loan losses at March 31, 2008, was 95% of non-performing and 1.22% of total loans, compared to 120% and 1.18% at December 31, 2007. The ratio of non-performing loans to total loans at March 31, 2008, was 1.28%, compared to 0.98% at December 31, 2007. Non-performing loans in the company's Chicago region represented approximately 60% of the company's total non-performing loans at both March 31, 2008 and December 31, 2007. Non-performing loans increased $7.4 million from December 31, 2007, while other real estate owned increased $0.3 million.
"Our credit exposure continues to come primarily from our residential builder construction portfolio, which is located predominately in our Chicago region," stated Mike Vea. "As we stated in January, we continue to believe that these loans are adequately secured. Losses from work outs within the builder portfolio during the first quarter were less than one basis point of net charge-offs. We continue to expect future losses to be in line with the expectations we had in January," added Vea.
Income Taxes
The effective tax rate for the first quarter of 2008 was 23.5%, compared to 20.2% for all of 2007. Income tax expense for 2007 included receipt of a federal income tax refund of $0.9 million. The effective rate for the year, exclusive of that refund, would have been 22.5%.
Capital
Integra's capital ratios remain strong, are within the regulatory requirements for being well capitalized as well as within internal policy guidelines, and were basically unchanged from December 31, 2007.
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, April 15, 2008, at 8:00 a.m. CDT. The telephone number for the conference call is (877) 591-4949, confirmation code 2131324. The conference call will also be available by webcast at http://www.integrabank.com.
About Integra
Headquartered in Evansville, Indiana, Integra Bank Corporation is the parent of Integra Bank N.A. As of March 31, 2008, Integra has $3.4 billion in total assets and operates 80 banking centers and 135 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 April 1, 2008, has IBNK outperforming 97.1% of the companies in the Russell 3000 Index and 97.0% 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. Factors that might cause such a difference include, but are not limited to: (1) the impact of the current slowing economy, including disruptions in the housing and credit markets, either national or in the markets in which Integra does business; (2) changes in the interest rate environment that reduce net interest margin; (3) charge-offs and loan loss provisions; (4) the ability of Integra to maintain required capital levels and adequate sources of funding and liquidity; (5) changes and trends in capital markets; (6) competitive pressures among depository institutions that increase significantly; (7) effects of critical accounting policies and judgments; (8) changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies; (9) legislative or regulatory changes or actions, or significant litigation that adversely affect Integra or the business in which Integra is engaged; (10) ability to attract and retain key personnel; (11) ability to secure confidential information through the use of computer systems and telecommunications network; and (12) the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity, 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 first quarter 2008 operating results:
Net income of $5.0 million for first quarter 2008
* Compared with $5.8 million for the fourth quarter 2007
* Compared with $7.4 million for first quarter 2007
Diluted net income per share of $0.24 for first quarter 2008
* Compared with $0.28 for the fourth quarter 2007
* Compared with $0.41 for first quarter 2007
Return on assets of 0.59% for first quarter 2008
* Compared with 0.69% for fourth quarter 2007
* Compared with 1.12% for first quarter 2007
Return on equity of 5.99% for first quarter 2008
* Compared with 6.99% for fourth quarter 2007
* Compared with 12.62% for first quarter 2007
Net interest margin of 3.23% for first quarter 2008
* Compared with 3.42% for fourth quarter 2007
* Compared with 3.48% for first quarter 2007
Allowance for loan losses of $28.6 million or 1.22% of loans at
March 31, 2008
* Compared with $27.3 million or 1.18% at December 31, 2007
* Compared with $21.2 million or 1.18% at March 31, 2007
* Equaled 95.1% of non-performing loans at March 31, 2008, compared
with 120.3% at December 31, 2007 and 238.8% at March 31, 2007
Non-performing loans of $30.1 million or 1.28% of loans at
March 31, 2008
* Compared with $22.7 million or 0.98% of loans at December 31, 2007
* Compared with $8.9 million or 0.50% at March 31, 2007
Annualized net charge-off rate of 0.40% for first quarter 2008
* Compared with 0.25% for fourth quarter 2007
* Compared with 0.17% for first quarter 2007
INTEGRA BANK CORPORATION
UNAUDITED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
March 31, Dec. 31, March 31,
ASSETS 2008 2007 2007
---------------------------------------------------------------------
Cash and due from banks $ 81,156 $ 72,360 $ 58,474
Federal funds sold and other
short-term investments 3,992 3,630 3,996
Loans held for sale (at lower of
cost or market value) 6,480 5,928 1,311
Securities available for sale 632,758 582,954 595,988
Securities held for trading -- 53,782 --
Regulatory stock 29,181 29,179 24,362
Loans:
Commercial loans 1,660,472 1,604,785 1,040,004
Consumer loans 419,577 423,481 412,576
Mortgage loans 260,701 283,112 337,480
Less: Allowance for loan losses (28,590) (27,261) (21,165)
---------------------------------------------------------------------
Net loans 2,312,160 2,284,117 1,768,895
Premises and equipment 50,228 50,552 45,964
Goodwill 122,824 123,050 44,491
Other intangible assets 11,221 11,652 6,599
Other assets 151,324 132,922 106,131
---------------------------------------------------------------------
TOTAL ASSETS $ 3,401,324 $ 3,350,126 $ 2,656,211
=====================================================================
LIABILITIES
Deposits:
Non-interest-bearing demand $ 295,942 $ 265,554 $ 250,474
Savings & interest checking 555,844 516,925 492,171
Money market 390,610 401,098 303,063
Certificates of deposit and other
time deposits 1,065,727 1,156,560 950,020
---------------------------------------------------------------------
Total deposits 2,308,123 2,340,137 1,995,728
Short-term borrowings 367,022 272,270 208,667
Long-term borrowings 360,754 376,707 187,426
Other liabilities 33,561 33,208 25,683
---------------------------------------------------------------------
TOTAL LIABILITIES 3,069,460 3,022,322 2,417,504
SHAREHOLDERS' EQUITY
Preferred stock - 1,000 shares
authorized - None outstanding
Common stock - $1.00 stated value
- 29,000 shares authorized 20,657 20,650 17,675
Additional paid-in capital 207,332 206,991 132,465
Retained earnings 104,961 104,913 92,706
Accumulated other comprehensive
income (loss) (1,086) (4,750) (4,139)
---------------------------------------------------------------------
TOTAL SHAREHOLDERS' EQUITY 331,864 327,804 238,707
---------------------------------------------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $ 3,401,324 $ 3,350,126 $ 2,656,211
=====================================================================
INTEGRA BANK CORPORATION
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except for per share data)
Three Months Ended
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
---------------------------------------------------------------------
INTEREST INCOME
Interest and fees
on loans and leases $ 38,782 $ 43,217 $ 43,586 $ 41,486 $ 32,130
Interest and
dividends on
securities
available for sale 7,267 7,313 7,294 7,495 7,289
Interest on
securities held for
trading 525 364 -- -- --
Dividends on
regulatory stock 376 345 314 281 346
Interest on loans
held for sale 103 85 77 45 28
Interest on federal
funds sold and
other investments 38 60 56 60 49
---------------------------------------------------------------------
Total interest income 47,091 51,384 51,327 49,367 39,842
INTEREST EXPENSE
Interest on deposits 16,392 19,251 19,790 20,017 14,684
Interest on short-
term borrowings 2,166 2,501 2,648 2,264 2,018
Interest on long-
term borrowings 5,015 4,977 4,191 3,519 2,811
---------------------------------------------------------------------
Total interest
expense 23,573 26,729 26,629 25,800 19,513
---------------------------------------------------------------------
NET INTEREST INCOME 23,518 24,655 24,698 23,567 20,329
Provision for loan
losses 3,634 2,280 723 455 735
---------------------------------------------------------------------
Net interest income
after provision for
loan losses 19,884 22,375 23,975 23,112 19,594
NON-INTEREST INCOME
---------------------------------------------------------------------
Service charges on
deposit accounts 4,699 5,283 5,408 5,408 4,218
Trust income 559 587 588 602 614
Debit card income-
interchange 1,243 1,284 1,136 1,064 895
Other service
charges and fees 1,579 1,039 1,286 1,133 1,204
Securities gains
(losses) 24 (2,718) 219 56 166
Gain (Loss) on sale
of other assets -- 48 (5) 60 539
Other 2,630 2,015 1,755 1,608 1,579
---------------------------------------------------------------------
Total non-interest
income 10,734 7,538 10,387 9,931 9,215
NON-INTEREST EXPENSE
---------------------------------------------------------------------
Salaries and
employee benefits 12,394 12,104 11,319 11,693 10,765
Occupancy 2,560 2,461 2,474 2,388 2,107
Equipment 928 965 832 822 824
Professional fees 984 1,509 1,073 893 1,137
Communication and
transportation 1,456 1,466 1,490 1,303 1,171
Other 5,799 4,866 5,054 4,771 4,163
---------------------------------------------------------------------
Total non-interest
expense 24,121 23,371 22,242 21,870 20,167
---------------------------------------------------------------------
Income before income
taxes 6,497 6,542 12,120 11,173 8,642
Income taxes expense 1,524 727 2,914 2,840 1,286
---------------------------------------------------------------------
NET INCOME $ 4,973 $ 5,815 $ 9,206 $ 8,333 $ 7,356
---------------------------------------------------------------------
Earnings per share:
Basic $ 0.24 $ 0.28 $ 0.45 $ 0.41 $ 0.42
Diluted 0.24 0.28 0.45 0.41 0.41
Weighted average
shares outstanding:
Basic 20,537 20,535 20,527 20,331 17,678
Diluted 20,544 20,542 20,545 20,407 17,786
INTEGRA BANK CORPORATION
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA
(In thousands, except for per share data)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
---------- ---------- ---------- ---------- ----------
EARNINGS DATA
Net Interest
Income (tax-
equivalent) $ 24,268 $ 25,436 $ 25,495 $ 24,366 $ 20,945
Net Income
(Loss) 4,973 5,815 9,206 8,333 7,356
Basic Earnings
Per Share 0.24 0.28 0.45 0.41 0.42
Diluted
Earnings Per
Share 0.24 0.28 0.45 0.41 0.41
Dividends
Declared 0.18 0.18 0.18 0.18 0.17
Book Value 16.07 15.87 15.74 15.33 13.51
Tangible Book
Value 9.58 9.35 9.19 8.92 10.61
PERFORMANCE
RATIOS
Return on
Assets 0.59% 0.69% 1.13% 1.04% 1.12%
Return on
Equity 5.99 6.99 11.34 10.71 12.62
Net Interest
Margin (tax-
equivalent) 3.23 3.42 3.52 3.40 3.48
Tier 1
Capital to
Risk Assets 9.40 9.34 9.30 9.41 11.01
Capital to
Risk Assets 11.54 11.52 11.52 11.76 12.71
Tangible
Equity to
Tangible
Assets 6.05 6.01 5.96 5.97 7.20
Efficiency
Ratio 67.73 64.20 61.09 62.65 66.46
AT PERIOD END
Assets $3,401,324 $3,350,126 $3,317,320 $3,214,362 $2,656,211
Interest-
Earning
Assets 3,013,161 2,986,851 2,933,165 2,862,520 2,415,717
Commercial
Loans 1,660,472 1,604,785 1,572,013 1,467,730 1,040,004
Consumer
Loans 419,577 423,481 422,737 426,086 412,576
Mortgage
Loans 260,701 283,112 305,238 324,411 337,480
Total Loans 2,340,750 2,311,378 2,299,988 2,218,227 1,790,060
Deposits 2,308,123 2,340,137 2,383,953 2,415,619 1,995,728
Low Cost
Deposits (1) 851,786 782,479 779,234 791,587 742,645
Interest-
Bearing
Liabilities 2,739,957 2,723,560 2,664,101 2,585,213 2,141,347
Shareholders'
Equity 331,864 327,804 325,090 316,313 238,707
Unrealized
Gains
(Losses) on
Market
Securities
(FASB 115) (334) (3,600) (4,171) (6,848) (3,294)
AVERAGE
BALANCES
Assets $3,374,579 $3,320,443 $3,232,918 $3,198,981 $2,658,785
Interest-
Earning
Assets (2) 3,017,241 2,964,101 2,882,412 2,866,946 2,417,417
Commercial
Loans 1,640,194 1,576,840 1,501,430 1,425,439 1,021,373
Consumer
Loans 420,365 423,197 423,607 427,419 416,532
Mortgage
Loans 272,500 295,186 313,535 340,430 342,344
Total Loans 2,333,059 2,295,223 2,238,572 2,193,288 1,780,249
Deposits 2,328,697 2,375,759 2,377,662 2,435,682 1,980,454
Low Cost
Deposits (1) 808,935 780,531 794,157 799,513 738,439
Interest-
Bearing
Liabilities 2,734,006 2,683,304 2,595,245 2,572,178 2,148,320
Shareholders'
Equity 333,799 330,136 322,028 312,063 236,333
Basic Shares 20,537 20,535 20,527 20,331 17,678
Diluted
Shares 20,544 20,542 20,545 20,407 17,786
(1) Defined as interest checking, demand deposit and savings
accounts.
(2) Includes securities available for sale and held for trading at
amortized cost.
INTEGRA BANK CORPORATION
SUMMARY OF SELECTED CONSOLIDATED FINANCIAL DATA-con't
(In thousands, except ratios and yields)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2008 2007 2007 2007 2007
--------- --------- --------- --------- ---------
ASSET QUALITY
Non-Performing Assets:
Non Accrual Loans $ 27,517 $ 18,549 $ 14,543 $ 12,975 $ 8,816
Loans 90+ Days Past
Due 2,544 4,118 1,508 801 49
--------- --------- --------- --------- ---------
Non-Performing Loans 30,061 22,667 16,051 13,776 8,865
Other Real Estate
Owned 3,267 2,923 4,016 3,563 1,246
--------- --------- --------- --------- ---------
Non-Performing
Assets $ 33,328 $ 25,590 $ 20,067 $ 17,339 $ 10,111
========= ========= ========= ========= =========
Allowance for Loan
Losses:
Beginning Balance $ 27,261 $ 26,401 $ 26,390 $ 21,165 $21,155
Allowance Associated
with Acquisition -- -- -- 5,982 --
Provision for
Loan Losses 3,634 2,280 723 455 735
Recoveries 448 236 362 426 348
Loans Charged Off (2,753) (1,656) (1,074) (1,638) (1,073)
--------- --------- --------- --------- ---------
Ending Balance $ 28,590 $ 27,261 $ 26,401 $ 26,390 $ 21,165
========= ========= ========= ========= =========
Ratios:
Allowance for Loan
Losses to Loans 1.22% 1.18% 1.15% 1.19% 1.18%
Allowance for Loan
Losses to Average
Loans 1.23 1.19 1.18 1.20 1.19
Allowance to
Non-performing Loans 95.11 120.27 164.48 191.57 238.75
Non-performing
Loans to Loans 1.28 0.98 0.70 0.62 0.50
Non-performing Assets
to Loans and Other
Real Estate Owned 1.42 1.11 0.87 0.78 0.56
Net Charge-Off Ratio 0.40 0.25 0.13 0.22 0.17
NET INTEREST MARGIN
Yields (tax-equivalent)
Loans 6.61% 7.41% 7.67% 7.52% 7.25%
Securities 5.28 5.34 5.28 5.16 5.17
Regulatory Stock 5.15 4.73 4.80 4.36 5.68
Other Earning Assets 4.93 5.59 6.16 4.60 5.92
--------- --------- --------- --------- ---------
Total Earning Assets 6.37 7.00 7.19 7.01 6.76
Cost of Funds
Interest Bearing
Deposits 3.21 3.63 3.75 3.73 3.44
Other Interest
Bearing Liabilities 4.19 5.06 5.35 5.45 4.64
Total Interest
Bearing Liabilities 3.47 3.95 4.07 4.02 3.68
--------- --------- --------- --------- ---------
Total Interest
Expense to
Earning Assets 3.14 3.58 3.67 3.61 3.28
--------- --------- --------- --------- ---------
Net Interest Margin 3.23% 3.42% 3.52% 3.40% 3.48%
========= ========= ========= ========= =========