SAVANNAH, Ga., April 22, 2008 (PRIME NEWSWIRE) -- The Savannah Bancorp, Inc. (Nasdaq:SAVB) reported net income for the first quarter 2008 of $1,704,000 compared to $2,311,000 in the first quarter 2007. Net income per diluted share was 29 cents compared to 39 cents per diluted share in the first quarter of 2007, a decrease of 26 percent. The decline in first quarter earnings results primarily from a higher provision for loan losses and a lower net interest margin in 2008 as compared to 2007.
First quarter 2008 earnings include revenues and expenses of the previously announced acquisition of Minis & Co., Inc. ("Minis") on August 31, 2007. Minis is a registered investment advisory firm based in Savannah, Georgia with approximately $500 million in assets under management. Minis provides fee-only investment services and operates as a separate subsidiary of the Company.
Total assets increased 11 percent to $946 million at March 31, 2008, up $98 million from $848 million a year earlier. Loans, excluding loans held for sale, were $835 million compared to $730 million one year earlier, an increase of 14 percent. Deposits totaled $771 million and $712 million at March 31, 2008 and 2007, respectively, an increase of 8 percent.
The allowance for loan losses was $12,128,000, or 1.45 percent of loans at March 31, 2008 compared to $9,220,000 or 1.26 percent of total loans a year earlier. Nonperforming assets were $19,536,000 or 2.33 percent of total loans and other real estate at March 31, 2008 compared to $2,012,000 or 0.28 percent at March 31, 2007. First quarter net charge-offs were $1,806,000 compared to net charge-offs of $234,000 in the same period in 2007. The provision for loan losses for the first quarter of 2008 was $1,070,000 compared to $500,000 for the first quarter of 2007.
John Helmken, President and CEO, said, "Our earnings, capital and loan loss reserves remain strong. During the first quarter, we completed some loan workout situations without significant losses, however, we also booked a loan loss provision of $1.1 million and charged-off $1.8 million based on our current period analysis of the nonperforming and impaired loans. The loss provisions for the charged-off loans were recorded in the fourth quarter 2007. Nonperforming loans were approximately level for the first quarter 2008 versus the fourth quarter 2007, but were substantially higher than the first quarter 2007. While we continue to commit the resources and senior management oversight to our loan portfolio, the level of future charge-offs and loan loss provisions will be determined, to some degree, by the timing and extent of the recovery in our local real estate markets, especially the Hilton Head and Bluffton areas."
Helmken added, "The vast majority of our resources are focused on attracting prospects and retaining customers who are not impacted significantly by the slow real estate market. Many businesses and professionals -- our primary customer and prospect base -- are doing very well. We are and want to continue to be their bank. We continue to be pleased to be located on the southeast Atlantic coast with a major port and transportation hub as well as outstanding health care, military and education professionals and institutions."
Net interest income decreased 1.3 percent in the first quarter 2008 over the first quarter 2007. First quarter net interest margin declined to 3.70 percent in 2008 from 4.17 percent in 2007 primarily due to lower loan market rates, competitive deposit pricing and growth in higher cost deposits. The first quarter 2008 net interest margin was consistent with the 3.72 percent margin for the fourth quarter 2007, despite a 200 basis point decline in the federal funds target rate.
Noninterest income increased $711,000, or 68 percent in the first quarter of 2008 versus the same period in 2007 due to higher trust and investment management fees of $548,000 and a non-operating hedging related gain of $284,000 partially offset by $147,000 in lower mortgage related income.
Noninterest expense increased to $6,150,000, up $1,003,000 or 19 percent in the first quarter 2008 compared to the first quarter 2007. First quarter 2008 noninterest expense included $344,000 of expenses related to Minis. Noninterest expense also included $140,000 of higher FDIC insurance premiums and approximately $180,000 of costs related to other real estate and loan costs. The remainder of the increase was due to higher personnel, occupancy and equipment, and other expense.
Today, the Board of Directors approved a regular quarterly cash dividend of 12.5 cents per share payable on May 19, 2008 to shareholders of record on May 2, 2008.
The Savannah Bancorp, Inc. ("SAVB"), a bank holding company for The Savannah Bank, N.A. ("Savannah"), Bryan Bank & Trust (Richmond Hill, Georgia) ("Bryan"), Harbourside Community Bank (Hilton Head Island, SC) ("Harbourside") and Minis & Co., Inc., is headquartered in Savannah, Georgia and began operations in 1990. Its primary businesses include loan, deposit, trust, asset management, and mortgage origination services provided to customers.
Forward-Looking Statements
This press release contains statements that constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements identified by words or phrases such as "potential," "opportunity," "believe," "expect," "anticipate," "current," "intention," "estimate," "assume," "outlook," "continue," "seek," "plans," "achieve," and similar expressions, or future or conditional verbs such as "will," "would," "should," "could," "may" or similar expressions. These statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. There can be no assurance that these transactions will occur or that the expected benefits associated therewith will be achieved. A number of important factors could cause actual results to differ materially from those contemplated by our forward-looking statements in this press release. Many of these factors are beyond our ability to control or predict. These factors include, but are not limited to, those found in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise.
The Savannah Bancorp, Inc. and Subsidiaries First Quarter Financial Highlights March 31, 2008 and 2007 ($ in thousands, except share data) (Unaudited) Balance Sheet Data at % March 31 2008 2007 Change --------------------------------------------------------------------- Total assets $ 945,637 $ 848,292 11 Interest-earning assets 886,485 812,702 9.1 Loans 834,734 730,387 14 Allowance for loan losses 12,128 9,220 32 Non-accruing loans 16,915 400 NM Loans past due 90 days - accruing 596 990 (40) Other real estate owned 2,025 622 226 Net charge-offs 1,806 234 NM Deposits 771,263 712,170 8.3 Interest-bearing liabilities 771,824 674,522 14 Shareholders' equity 78,885 68,501 15 Allowance for loan losses to total loans 1.45% 1.26% 15 Nonperforming assets to total loans and other real estate owned 2.33% 0.28% 732 Loan to deposit ratio 108.23% 102.56% 5.5 Equity to assets 8.34% 8.08% 3.2 Tier 1 capital to risk-weighted assets 10.29% 11.24% (8.5) Total capital to risk-weighted assets 11.54% 12.49% (7.6) Outstanding shares 5,931 5,790 2.4 Book value per share $ 13.30 $ 11.83 12 Tangible book value per share $ 12.93 $ 11.83 9.3 Market value per share $ 17.50 $ 27.00 (35) Performance Data for the First Quarter --------------------------------------------------------------------- Net income $ 1,704 $ 2,311 (26) Return on average assets 0.73% 1.12% (35) Return on average equity 8.76% 13.90% (37) Net interest margin 3.70% 4.17% (11) Efficiency ratio 62.54% 55.78% 12 Per share data: Net income - basic $ 0.29 $ 0.40 (28) Net income - diluted $ 0.29 $ 0.39 (26) Dividends $ 0.125 $ 0.120 4.2 Average shares (000s): Basic 5,928 5,782 2.5 Diluted 5,951 5,890 1.0 The Savannah Bancorp, Inc. and Subsidiaries Consolidated Balance Sheets March 31, 2008 and 2007 ($ in thousands, except share data) (Unaudited) March 31, -------------------------------------------------------------------- 2008 2007 -------------------------------------------------------------------- Assets Cash and due from banks $ 14,816 $ 16,890 Federal funds sold 4,998 20,176 Interest-bearing deposits 2,344 2,786 -------------------------------------------------------------------- Cash and cash equivalents 22,158 39,852 Securities available for sale, at fair value (amortized cost of $60,529 in 2008 and $57,918 in 2007) 62,367 57,785 Loans held for sale 793 1,835 Loans, net of allowance for loan losses of $12,128 in 2008 and $9,220 in 2007 822,606 721,167 Premises and equipment, net 8,237 6,274 Other real estate owned 2,025 622 Bank-owned life insurance 6,044 5,813 Goodwill and other intangible assets, net 3,626 -- Other assets 17,781 14,944 -------------------------------------------------------------------- Total assets $ 945,637 $ 848,292 ==================================================================== Liabilities Deposits: Noninterest-bearing $ 86,329 $ 98,663 Interest-bearing demand 117,854 112,490 Savings 16,060 18,917 Money market 208,531 170,039 Time deposits 342,489 312,061 -------------------------------------------------------------------- Total deposits 771,263 712,170 Short-term borrowings 64,685 37,480 FHLB advances - long-term 11,895 13,225 Subordinated debt 10,310 10,310 Other liabilities 8,599 6,606 -------------------------------------------------------------------- Total liabilities 866,752 779,791 -------------------------------------------------------------------- Shareholders' equity Common stock, par value $1 per share: authorized 20,000,000 shares; issued 5,931,008 and 5,790,376 shares in 2008 and 2007, respectively 5,931 5,790 Preferred stock, par value $1 per share: authorized 10,000,000 shares, none issued -- -- Additional paid-in capital 38,327 35,801 Retained earnings 31,474 27,299 Treasury stock, 318 in 2008 and 2007 (4) (4) Accumulated other comprehensive income (loss), net 3,157 (385) -------------------------------------------------------------------- Total shareholders' equity 78,885 68,501 -------------------------------------------------------------------- Total liabilities and shareholders' equity $ 945,637 $ 848,292 ==================================================================== The Savannah Bancorp, Inc. and Subsidiaries Consolidated Statements of Income For the Three Months and Five Quarters Ending March 31, 2008 and 2007 ($ in thousands, except per share data) --------------------------------------------------------------------- (Unaudited) --------------------------------------------------------------------- For the Three Months Ended --------------------------------------------------------------------- March 31, 2008 ----------------------- % First 2008 2007 Chg Quarter --------------------------------------------------------------------- Interest and dividend income Loans, including fees $ 14,211 $ 14,351 (1.0) $ 14,211 Loans held for sale 12 34 (65) 12 Investment securities 782 620 26 782 Deposits with banks 67 83 (19) 67 Federal funds sold 53 172 (69) 53 -------------------------------------------- -------- Total interest and dividend income 15,125 15,260 (0.9) 15,125 -------------------------------------------- -------- Interest expense Deposits 6,124 6,092 0.5 6,124 Short-term borrowings 881 828 6.4 881 FHLB advances 49 164 (70) 49 -------------------------------------------- -------- Total interest expense 7,054 7,084 (0.4) 7,054 -------------------------------------------- -------- Net interest income 8,071 8,176 (1.3) 8,071 Provision for loan losses 1,070 500 114 1,070 -------------------------------------------- -------- Net interest income after the provision for loan losses 7,001 7,676 (8.8) 7,001 -------------------------------------------- -------- Noninterest income Service charges on deposits 387 347 12 387 Mortgage related income, net 63 210 (70) 63 Trust and asset management fees 724 176 311 724 Other operating income 588 325 85 588 Gain (loss) on sale of OREO 1 (6) NM 1 -------------------------------------------- -------- Total noninterest income 1,763 1,052 68 1,763 -------------------------------------------- -------- Noninterest expense Salaries and employee benefits 3,473 2,964 17 3,473 Occupancy and equipment 889 758 17 889 Information technology 393 425 (7.5) 393 Other operating expense 1,395 1,000 40 1,395 -------------------------------------------- -------- Total noninterest expense 6,150 5,147 19 6,150 -------------------------------------------- -------- Income before income taxes 2,614 3,581 (27) 2,614 Income tax expense 910 1,270 (28) 910 -------------------------------------------- -------- Net income $ 1,704 $ 2,311 (26) $ 1,704 ============================================ ======== Net income per share: Basic $ 0.29 $ 0.40 (28) $ 0.29 ============================================ ======== Diluted $ 0.29 $ 0.39 (26) $ 0.29 ============================================ ======== Average basic shares (000s) 5,928 5,783 2.5 5,928 Average diluted shares (000s) 5,951 5,890 1.0 5,951 Performance Ratios Return on average equity 8.76% 13.90% (37) 8.76% Return on average assets 0.73% 1.12% (35) 0.73% Net interest margin 3.70% 4.17% (11) 3.70% Efficiency ratio 62.54% 55.78% 12 62.54% Average equity 78,210 67,434 16 78,210 Average assets 934,756 834,033 12 934,756 Average interest- earning assets 876,022 799,678 9.5 876,022 --------------------------------------------------------------------- (Unaudited) --------------------------------------------------------------------- 2007 Q1-08/ Fourth Third Second First Q1-07 Quarter Quarter Quarter Quarter % --------------------------------------------------------------------- Interest and dividend income Loans, including fees $ 15,016 $ 15,196 $ 14,872 $ 14,351 (1.0) Loans held for sale 14 15 35 34 (65) Investment securities 767 794 726 620 26 Deposits with banks 100 44 119 83 (19) Federal funds sold 45 130 125 172 (69) ------------------------------------------------------------ Total interest and dividend income 15,942 16,179 15,877 15,260 (0.9) ------------------------------------------------------------ Interest expense Deposits 6,881 6,963 6,479 6,092 0.5 Short-term borrowings 935 860 831 828 6.4 FHLB advances 46 48 155 164 (70) ------------------------------------------------------------ Total interest expense 7,862 7,871 7,465 7,084 (0.4) ------------------------------------------------------------ Net interest income 8,080 8,308 8,412 8,176 (1.3) Provision for loan losses 3,145 635 395 500 114 ------------------------------------------------------------ Net interest income after the provision for loan losses 4,935 7,673 8,017 7,676 (8.8) ------------------------------------------------------------ Noninterest income Service charges on deposits 349 339 348 347 12 Mortgage related income, net 98 141 166 210 (70) Trust and asset management fees 769 379 189 176 311 Other operating income 315 305 297 325 85 Gain (loss) on sale of OREO (38) -- -- (6) NM ------------------------------------------------------------ Total noninterest income 1,493 1,164 1,000 1,052 68 ------------------------------------------------------------ Noninterest expense Salaries and employee benefits 3,125 2,919 2,838 2,964 17 Occupancy and equipment 958 796 782 758 17 Information technology 422 388 381 425 (7.5) Other operating expense 1,285 1,073 1,025 1,000 40 ------------------------------------------------------------ Total noninterest expense 5,790 5,176 5,026 5,147 19 ------------------------------------------------------------ Income before income taxes 638 3,661 3,991 3,581 (27) Income tax expense 285 1,280 1,400 1,270 (28) ------------------------------------------------------------ Net income $ 353 $ 2,381 $ 2,591 $ 2,311 (26) ============================================================ Net income per share: Basic $ 0.06 $ 0.41 $ 0.44 $ 0.40 (28) ============================================================ Diluted $ 0.06 $ 0.40 $ 0.44 $ 0.39 (26) ============================================================ Average basic shares (000s) 5,923 5,862 5,824 5,782 2.5 Average diluted shares (000s) 5,968 5,928 5,899 5,890 1.0 Performance Ratios Return on average equity 1.83% 13.04% 14.94% 13.90% (37) Return on average assets 0.15% 1.08% 1.23% 1.12% (35) Net interest margin 3.72% 3.95% 4.13% 4.17% (11) Efficiency ratio 60.48% 54.65% 53.40% 55.78% 12 Average equity 74,447 72,436 69,583 67,434 16 Average assets 910,785 875,532 855,989 834,033 12 Average interest- earning assets 865,430 837,586 821,253 799,678 9.5 Capital Resources The banking regulatory agencies have adopted capital requirements that specify the minimum level for which no prompt corrective action is required. In addition, the FDIC assesses FDIC insurance premiums based on certain "well-capitalized" risk-based and equity capital ratios. As of March 31, 2008, the Company and the Subsidiary Banks exceeded the minimum requirements necessary to be classified as "well-capitalized." Total tangible equity capital for the Company was $76.7 million, or 8.11 percent of total assets at March 31, 2008. The table below includes the regulatory capital ratios for the Company and each Subsidiary Bank along with the minimum capital ratio and the ratio required to maintain a well-capitalized regulatory status. ($ in thousands) Well- Harbour- Capital- Company Savannah Bryan side Minimum ized --------------------------------------------------------------------- Qualifying Capital Tier 1 capital $82,102 $51,499 $18,811 $8,123 -- -- Total capital 92,106 58,096 21,181 9,104 -- -- Leverage Ratios Tier 1 capital to average assets 8.78% 8.29% 8.83% 8.77% 4.00% 5.00% Risk-based Ratios Tier 1 capital to risk- weighted assets 10.29% 9.78% 9.93% 10.45% 4.00% 6.00% Total capital to risk- weighted assets 11.54% 11.04% 11.18% 11.71% 8.00% 10.00% Tier 1 and total capital at the Company level includes $10 million of subordinated debt issued to the Company's nonconsolidated subsidiaries. Total capital also includes the allowance for loan losses up to 1.25 percent of risk-weighted assets. The capital ratios are significantly above the well-capitalized threshold. The Company currently has access to approximately $13 million of trust preferred borrowings and to the capital markets, if needed, to maintain the well-capitalized status of the Subsidiary Banks. However, due to the recent events in the capital markets, the cost of trust preferred borrowings has increased from three-month LIBOR plus 150 basis points to the same index plus 300 to 350 basis points. The Savannah Bancorp, Inc. and Subsidiaries Allowance for Loan Losses and Nonperforming Loans (Unaudited) 2008 2007 ------------------------------------------------------- First Fourth Third Second First Quarter Quarter Quarter Quarter Quarter ------------------------------------------------------- ($ in thousands) Allowance for loan losses Balance at beginning of period $12,864 $ 9,842 $ 9,517 $ 9,220 $ 8,954 Provision for loan losses 1,070 3,145 635 395 500 Net charge -offs (1,806) (123) (310) (98) (234) ------------------------------------------------------- Balance at end of period $12,128 $12,864 $ 9,842 $ 9,517 $ 9,220 ======================================================= As a % of loans 1.45% 1.59% 1.26% 1.27% 1.26% As a % of nonper- forming loans 69.26% 73.83% 145.68% 490.82% 663.31% As a % of nonper- forming assets 62.08% 65.85% 124.46% 366.74% 458.25% Net charge- offs as a % of average loans(a) 0.90% 0.07% 0.17% 0.05% 0.13% Risk element assets Nonaccruing loans $16,915 $14,663 $ 5,028 $ 1,895 $ 400 Loans past due 90 days - accruing 596 2,761 1,728 44 990 Restruc- tured loans -- -- -- -- -- ------------------------------------------------------- Total non- performing loans 17,511 17,424 6,756 1,939 1,390 Other real estate owned 2,025 2,112 1,152 656 622 ------------------------------------------------------- Total nonper- forming assets $19,536 $19,536 $ 7,908 $ 2,595 $ 2,012 ======================================================= Nonper- forming loans as a % of loans 2.10% 2.24% 0.87% 0.26% 0.19% Nonper- forming assets as a % of loans and other real estate owned 2.33% 2.51% 1.01% 0.34% 0.28% Nonper- forming assets as a % of capital(b) 21.47% 21.92% 9.30% 3.26% 2.59% (a) Annualized (b) Capital includes the allowance for loan losses The Savannah Bancorp, Inc. & Subsidiaries Loan Concentration Schedule March 31, 2008 and December 31, 2007 % % of % of Dollar ($ in thousands) 3/31/08 Total 12/31/07 Total Change --------------------------------------------------------------------- Non-residential real estate Owner-occupied $ 132,397 16 $ 118,714 15 12 Non owner-occupied 131,164 16 118,904 15 10 Construction 28,087 3 33,923 4 (17) Commercial land and lot development 41,767 5 38,127 5 9.5 ------------------------------------------------------------ Total non-residential real estate 333,415 40 309,668 39 7.7 ------------------------------------------------------------ Residential real estate Owner-occupied - 1-4 family 81,878 10 83,828 10 (2.3) Non owner- occupied -1-4 family 116,979 14 114,992 14 1.7 Construction 59,517 7 57,541 7 3.4 Residential land and lot development 108,163 13 109,718 14 (1.4) Home equity lines 43,620 5 43,322 5 0.7 ------------------------------------------------------------ Total residential real estate 410,157 49 409,401 50 0.2 ------------------------------------------------------------ Total real estate loans 743,572 89 719,069 89 3.4 Commercial 73,487 9 71,370 9 3.0 Consumer 17,982 2 18,692 2 (3.8) Unearned fees, net (307) -- (480) -- (36) ------------------------------------------------------------ Total loans, net of unearned fees $ 834,734 100 $ 808,651 100 3.2 ===================================================================== The Savannah Bancorp, Inc. and Subsidiaries Average Balance Sheet and Rate/Volume Analysis - First Quarter, 2008 and 2007 Average Balance Average Rate ------------------------------------ QTD QTD QTD QTD 3/31/08 3/31/07 3/31/08 3/31/07 -------------------------------------------------------------------- ($ in thousands) (%) Assets $ 6,910 $ 6,195 3.89 5.43 Interest-bearing deposits 58,423 51,186 5.23 4.79 Investments - taxable 1,916 1,940 5.44 7.94 Investments - non-taxable 6,598 13,230 3.22 5.27 Federal funds sold 734 1,652 6.56 8.35 Loans held for sale 801,441 725,475 7.11 8.03 Loans (c) ------------------- 876,022 799,678 6.93 7.76 Total interest-earning assets ------------- 58,734 34,355 Noninterest-earning assets ------------------- $934,756 $834,033 Total assets =================== Liabilities and equity Deposits $115,485 $109,131 1.56 2.01 NOW accounts 15,990 18,391 0.88 0.99 Savings accounts 135,539 132,016 2.75 4.09 Money market accounts Money market accounts- 51,667 17,882 3.89 5.56 institutional 146,914 117,174 5.10 5.29 CDs, $100M or more 69,871 80,100 4.41 4.76 CDs, broker 129,993 119,332 4.85 4.97 Other time deposits ------------------- 665,459 594,026 3.69 4.16 Total interest-bearing deposits 5,733 13,272 3.43 5.01 FHLB advances - long-term 83,349 49,352 3.33 5.14 Short-term borrowings 10,310 10,310 7.39 7.99 Subordinated debt ------------------- Total interest-bearing 764,851 666,960 3.70 4.31 Liabilities ------------- 83,522 93,132 Noninterest-bearing deposits 8,173 6,507 Other liabilities 78,210 67,434 Shareholders' equity ------------------- $934,756 $834,033 Liabilities and equity =================== 3.23 3.45 Interest rate spread ============= 3.70 4.17 Net interest margin ============= Net interest income $111,171 $132,718 Net earning assets =================== $748,981 $687,158 Average deposits =================== 3.28 3.60 Average cost of deposits ============= 107% 106% Average loan to deposit ratio =================== Taxable-Equivalent (a) Variance Interest (b) Attributable to ------------------ --------------- QTD QTD Vari- 3/31/08 3/31/07 ance Rate Volume --------------------------------------------------------------------- ($ in thousands) ($ in thousands) Assets Interest-bearing deposits $ 67 $ 83 $ (16) $ (24) $ 8 Investments - taxable 762 605 157 56 101 Investments - non-taxable 26 38 (12) (12) -- Federal funds sold 53 172 (119) (68) (51) Loans held for sale 12 34 (22) (7) (15) Loans (c) 14,213 14,367 (154) (1,664) 1,510 -------------------------- Total interest- earning assets 15,133 15,299 (166) (1,655) 1,489 ----------------------------------------------- Noninterest-earning assets Total assets Liabilities and equity Deposits NOW accounts 449 542 (93) (122) 29 Savings accounts 35 45 (10) (5) (5) Money market accounts 930 1,331 (401) (441) 40 Money market accounts institutional 501 245 256 (74) 330 CDs, $100M or more 1,867 1,527 340 (56) 396 CDs, broker 769 940 (171) (70) (101) Other time deposits 1,573 1,462 111 (36) 147 -------------------------- Total interest- bearing deposits 6,124 6,092 32 (696) 728 FHLB advances - long-term 49 164 (115) (52) (63) Short-term borrowings 691 625 66 (223) 289 Subordinated debt 190 203 (13) (15) 2 -------------------------- Total interest- bearing Liabilities 7,054 7,084 (30) (1,014) 984 ----------------------------------------------- Noninterest-bearing deposits Other liabilities Shareholders' equity Liabilities and equity Interest rate spread Net interest margin Net interest income $ 8,079 $ 8,215 $ (136) $ (641) $ 505 =============================================== (a) This table shows the changes in interest income and interest expense for the comparative periods based on either changes in average volume or changes in average rates for interest-earning assets and interest-bearing liabilities. Changes which are not solely due to rate changes or solely due to volume changes are attributed to volume. (b) The taxable equivalent adjustment results from tax exempt income less non-deductible TEFRA interest expense and was $8 and $39 in the first quarter 2008 and 2007. (c) Average nonaccruing loans have been excluded from total average loans and categorized in noninterest-earning assets.