PASO ROBLES, Calif., July 23, 2008 (PRIME NEWSWIRE) -- Heritage Oaks Bancorp (Nasdaq:HEOP), the parent company of Heritage Oaks Bank, today reported earnings for the second quarter of 2008. After a $2.8 million provision for loan losses, Heritage Oaks earned $691,000, or $0.09 per diluted share for the second quarter, compared to $1.8 million, or $0.26 per diluted share, in the second quarter of 2007. For the first six months of 2008, net income was $2.4 million, or $0.30 per diluted share, compared to $3.3 million, or $0.47 per diluted share, in the first six months of 2007. The earnings per share calculation is impacted by both the decrease in earnings for the quarter as well as the October 2007 acquisition of Business First National Bank of Santa Barbara, in which, Heritage Oaks Bank issued 850,213 shares, resulting in an 11.4% increase in the number of average diluted shares outstanding compared to the second quarter of 2007.
"The continued changes in the national economy affected the entire banking industry, as well as the local markets that we serve. While loan and core deposit growth remains strong year-over-year as well as over the previous quarter, we have not been immune to asset quality deterioration," stated Lawrence P. Ward, President and CEO. "We believe our actions to strengthen our allowance for loan losses and address credit quality issues immediately is prudent for our future success. Even with these aggressive steps to meet credit quality concerns, our second quarter and year-date-results show that we remain well positioned for growth in our attractive markets."
Second Quarter 2008 Highlights:
* Net income was $691,000, or $0.09 per diluted share. * Net interest income increased 32% to $9.6 million compared to the same quarter a year ago. * Revenues advanced 31% to $11.3 million compared to the same quarter a year ago. * Core deposits increased 33% over a year ago, and represent 73% of total deposits. * Gross loans grew 43% to $660 million compared to a year ago. * Net interest margin was 5.28%. * Second quarter provision for ALLL $2.8 million.
Asset Quality
"Management has and will continue to perform an extensive review of the loan portfolio in an effort to identify any problem credits. Additionally, we formed a special assets division in March, to oversee all problem credits," said Ward. "As a result, as of June 30, 2008, all non performing loans (NPLs) have been written down and are now being carried at their fair market value." Based on the current economic outlook, the Bank believes it has taken a very aggressive position with respect to the adequacy of the loan loss reserve. "The large provision during the second quarter was partly based on identified credits which have been accounted for as of June 30, as well as our desire to build our reserve based on these very uncertain economic times" said Ward.
Non-performing assets increased to $13.7 million, or 1.71% of total assets at June 30, 2008, compared to $1.5 million, or 0.20% of total assets, at the end of the previous quarter and $555,000, or 0.09% of total assets a year earlier. Heritage Oaks recorded a $2.8 million provision for loan losses in the second quarter of 2008, compared to a $240,000 provision for loan losses in the previous quarter and $170,000 in the second quarter a year ago. For the first six months of the year it added $3.0 million to its provision for loan losses compared to only $310,000 in the first six months of 2007. The loan loss reserve now represents 1.23% of total loans outstanding, up from 0.99% at the end of the first quarter, 2008.
During the second quarter of 2008, the Bank moved into OREO one credit of just under $200,000. The foreclosed property had previously been accounted for as a non performing loan and had been written down to its fair market value. No additional charge off was required at the time the property was moved into OREO. Another credit of $50,000 was written down to $29,000 at the time the Bank took possession of the property securing the loan. The Bank received a cash offer to sell the underlying property early in July and on July 21, the Bank closed on the sale and booked a net recovery of $15,000.
Loans on non-accrual status totaled $13.4 million at June 30, 2008 compared to $1.5 million at March 31, 2008. In May 2008, the Company reported in an 8-K filing with the SEC, an increase in non-accrual loans of approximately $11 million. All loans on non-accrual are carried at fair value pursuant to FASB 114. As of June 30, 2008, non-accruing loans consist of the following:
1. Nine loans in the approximate amount of $10.4 million to
three borrowers all representing single family spec
construction loans located in various coastal communities
along the Central Coast.
2. Five loans in the approximate amount of $2.3 million all
secured by commercial real estate and single family residences.
3. Eight loans in the approximate amount of $700,000 to five
borrowers that are collateralized by various business assets
and personal collateral.
Credit quality is consistently monitored and Management has implemented additional precautionary actions that include but are not limited to pro-actively identifying credit weaknesses earlier in the collection cycle, increasing the oversight frequency of watch list credits and devoting additional internal resources to monitoring those credits.
The allowance for loan losses were $8.1 million, or 1.23% of total loans outstanding at June 30, 2008, compared to $6.3 million, or 0.99% of total loans outstanding at March 31, 2008, and $4.5 million, or 0.98% of total loans outstanding, at June 30, 2007. The Bank took a total provision for loan losses during the second quarter of 2008 in the amount of $2.8 million. $1.4 million of the increase over last year is attributable to the credit from the purchase of Business First. During the second quarter 2008, the Bank charged off a total of $1.023 million and recognized total recoveries in the amount of $72 thousand. Of the total dollars charged off during the second quarter of 2008, the Bank charged off two C&I loans in the amount of just under $500 thousand. The balance of the losses, approximately $530 thousand, was the result of obtaining new appraisals on spec construction loans that had been placed on non-accrual status.
Heritage Oaks Bank has no direct exposure to subprime mortgage lending and very little exposure for speculative construction for single family residences.
Balance Sheet
Loan growth was strong for the quarter, with the largest increase in commercial and industrial loans, which increased 16% at June 30, 2008, compared to March 31, 2008. "Throughout the second quarter, we have chosen not to originate single family spec construction loans, nor do we see this as a viable product for the foreseeable future. Additionally, the Bank continues to employ stringent lending standards, remaining very selective in the types of loans we choose to fund." Ward said.
Net loans grew 3% over the prior quarter and 43% year-over year. Net loans were $650 million at June 30, 2008, compared to $454 million a year earlier, with the Business First acquisition accounting for approximately 27% of total net loan growth on a year over year basis. The loans added from Business First are primarily real estate loans, all of which have undergone a thorough due diligence by the Bank's internal credit department. During the quarter ended June 30, 2008, approximately $200 thousand of loans acquired from Business First were charged off. This represents only 0.02% of total assets. At June, 30, 2008, no loans acquired in the acquisition of Business First were on non-accrual status.
Total assets increased 36% to a record $800 million at June 30, 2008, compared to $590 million a year earlier.
"We are constantly looking for ways to expand our banking products in an effort to grow core deposits," said Ward. "During the second quarter we began offering a new electronic demand deposit interest bearing account and we introduced our successful variable interest rate money market account to our Santa Barbara market. We believe these new products, as well as the products we already have in place will help us grow core deposit to fund future loan growth."
Total deposits grew 30% to $635 million at June 30, 2008, compared to $489 million a year ago. The Business First acquisition accounted for 27% of total deposit growth on a year over year basis. Core deposits increased 33% to $462 million at June 30, 2008, compared to $347 million a year ago, and now represent 73% of total deposits. Time deposits of $100,000 or more increased significantly, largely due to the addition of $30 million of brokered certificates of deposit during the quarter, which were at an average rate of 3.33%. Heritage Oaks reduced its Federal Home Loan Bank (FHLB) borrowings by $5.0 million during the second quarter of 2008.
Operating Results
The net interest margin was 5.28% for the second quarter, compared to 5.33% during the preceding quarter and 5.56% for the second quarter a year ago. For the first six months of the year the net interest margin was 5.31%, compared to 5.61% for the first six months of 2007. "Our margin compressed compared to the preceding quarter, as we felt the full impact of the 200 basis point decrease in the Fed Funds rate by the Federal Reserve during the first three months of 2008," Ward said. "However, core deposit growth contributed to keeping our margin above peer levels."
Total revenues, consisting of net interest income before the provision for loan losses and non-interest income, climbed 31% to $11.3 million in the second quarter, from $8.6 million in the second quarter of 2007. For the first six months of the year total revenues increased 30% to $21.9 million, compared to $16.9 million in the first six months of 2007. Net interest income grew 32% to $9.6 million in the second quarter compared to $7.3 million in the second quarter a year ago. Year-to-date, net interest income increased 31% to $18.7 million compared to $14.3 million in the first half of 2007. Interest and fees on loans increased 15% for the second quarter compared to the second quarter a year ago while interest expense decreased 16% for the second quarter compared to the second quarter a year ago.
Noninterest income was up 26% for the quarter and 22% year-to-date, compared to the respective periods a year ago, largely due to the Visa IPO income of $275,000 in the second quarter, as well as a substantial increase in service charges on deposit accounts, which rose 22% during the quarter and 24% year-to-date, compared to the respective periods last year. Total noninterest income was $1.8 million for the second quarter compared to $1.4 million for the second quarter a year ago and year-to-date noninterest income was $3.2 million compared to $2.6 million for the same period a year ago.
Non interest expense decreased in the second quarter of 2008 compared to the preceding quarter, largely due to decreases in Salaries and Related as well as Other non interest expense. "During the second quarter we reorganized our executive team, eliminating one position which should result in improved efficiencies in the second half of the year." stated Ward. "Total non-interest expense was $7.5 million for the second quarter compared to $7.6 million in the previous quarter and $5.6 million in the second quarter a year ago. Year-to-date, total non-interest expense was $15.1 million compared to $11.3 million during the same period a year earlier.
"Even with the reduction of non interest expenses in the second quarter of 2008, the Bank did recognize over $200,000 in non recurring Salaries expenses as a result of the reorganization and about $125,000 non recurring Other non interest expenses. Non interest expenses for the second quarter 2008 are up when compared to the same reporting period a year ago, with a majority of the increase directly related to our larger organization due to the acquisition of Business First," said Ward.
Performance Measures and Capital Adequacy
At June 30, 2008, the acquisition of Business First accounts for the addition of nearly $150 million in assets along with $13.8 million in equity over that which was reported at June 30, 2007. As a result, return on average assets was 0.35% in the second quarter of 2008 compared to 1.25% in the second quarter of 2007. For the first half of the year, return on average assets was 0.62%, compared to 1.17% for the first half of 2007. Return on average equity was 3.84% for the second quarter compared to 13.84% in the second quarter a year ago, and 6.66% for the first half of the year, compared to 13.0% in the first half of 2007. The Business First acquisition is expected to be accretive to earnings per share by the end of 2008.
The efficiency ratio was 66.31% in the second quarter of 2008 compared to 72.17% in the previous quarter and 64.32% in the second quarter a year ago. For the first half of the year the efficiency ratio was 69.14% compared to 66.55% in the first half of 2007. The efficiency ratio measures operating expenses as a percent of revenues.
As a result of the acquisition of Business First, shareholders' equity increased 35% to $70.9 million at June 30, 2008, compared to $52.5 million a year ago. Book value per share was $9.19 at June 30, 2008, compared to $7.72 per share a year earlier and tangible book value per share was $7.23 at June 30, 2008, compared to $6.89 a year earlier.
Heritage Oaks has over $68.8 million in Tier I capital and $77.1 million in Total Risk Based capital and remains "well capitalized" by regulatory standards with a Risk Adjusted capital ratio of 10.83% and a Tier One capital ratio of 8.87%. Additionally, Heritage Oaks owns neither Fannie Mae or Freddie Mac common or preferred stock.
About the Company
Heritage Oaks Bancorp is the holding company for Heritage Oaks Bank which operates as Heritage Oaks Bank and Business First, a division of Heritage Oaks Bank. Heritage Oaks Bank has its headquarters plus one branch offices in Paso Robles, two branch offices in San Luis Obispo, single branch offices in Cambria, Arroyo Grande, Atascadero, Templeton, San Miguel and Morro Bay and three branch offices in Santa Maria. Heritage Oaks Bank conducts commercial banking business in San Luis Obispo County and Northern Santa Barbara County. The Business First division has two branch offices in Santa Barbara. Visit Heritage Oaks Bancorp on the Web at www.heritageoaksbancorp.com.
Statements concerning future performance, developments or events, expectations for growth and income forecasts, and any other guidance on future periods, constitute forward-looking statements that are subject to a number of risks and uncertainties. Actual results may differ materially from stated expectations. Specific factors include, but are not limited to the ability to successfully integrate the operations of Business First National Bank, increased profitability, continued growth, the Bank's beliefs as to the adequacy of its existing and anticipated allowances for loan losses, beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the Bank's operations, interest rates and financial policies of the United States government, general economic conditions and California's energy crisis. Additional information on these and other factors that could affect financial results are included in Heritage Oaks Bancorp's Securities and Exchange Commission filings. If any of these risks or uncertainties materialize or if any of the assumptions underlying such forward-looking statements proves to be incorrect, Heritage Oaks Bancorp's results could differ materially from those expressed in, implied or projected by such forward-looking statements. Heritage Oaks Bancorp assumes no obligation to update such forward-looking statements.
Heritage Oaks Bancorp
Consolidated Statements of Income
(dollars in thousands except share data)
For the Three Months Ended Percentage Change Vs.
--------------------------------- ---------------------
6/30/2008 3/31/2008 6/30/2007 3/31/2008 6/30/2007
(unaudited)
----------------------------------------------------------------------
Interest Income:
Interest and
fees on
loans $ 11,732 $ 12,091 $ 10,214 -3.0% 14.9%
Investment
securities 794 656 437 21.0% 81.7%
Federal funds
sold and
commercial
paper 45 67 162 -32.8% -72.2%
Time
certificates
of deposit 3 3 10 0.0% -70.0%
----------------------------------------------------------------------
Total
interest
income 12,574 12,817 10,823 -1.9% 16.2%
----------------------------------------------------------------------
Interest Expense:
NOW accounts 162 93 43 74.2% 276.7%
MMDA accounts 823 1,282 946 -35.8% -13.0%
Savings
accounts 35 131 23 -73.3% 52.2%
Time deposits
of $100K
or more 525 680 301 -22.8% 74.4%
Other time
deposits 674 900 1,276 -25.1% -47.2%
Other
borrowed
funds 766 611 976 25.4% -21.5%
----------------------------------------------------------------------
Total
interest
expense 2,985 3,697 3,565 -19.3% -16.3%
----------------------------------------------------------------------
Net interest
income before
provision for
loan losses 9,589 9,120 7,258 5.1% 32.1%
Provision for
loan losses 2,775 240 170 1056.3% 1532.4%
----------------------------------------------------------------------
Net interest
income after
provision for
loan losses 6,814 8,880 7,088 -23.3% -3.9%
----------------------------------------------------------------------
Non Interest
Income:
Service
charges on
deposit
accounts 837 772 686 8.4% 22.0%
Other income 882 667 705 32.2% 25.1%
Gain on sale
of investment
securities 37 -- -- -- --
----------------------------------------------------------------------
Total non-
interest
income 1,756 1,439 1,391 22.0% 26.2%
----------------------------------------------------------------------
Non-Interest
Expense:
Salaries and
employee
benefits 4,021 4,225 3,194 -4.8% 25.9%
Occupancy and
equipment 1,129 1,139 706 -0.9% 59.9%
Other
expenses 2,348 2,256 1,663 4.1% 41.2%
----------------------------------------------------------------------
Total non-
interest
expenses 7,498 7,620 5,563 -1.6% 34.8%
----------------------------------------------------------------------
Income before
provision for
income taxes 1,072 2,699 2,916 -60.3% -63.2%
Provision for
income taxes 381 1,024 1,116 -62.8% -65.9%
----------------------------------------------------------------------
Net income $ 691 $ 1,675 $ 1,800 -58.7% -61.6%
======================================================================
Average basic
shares
outstanding 7,705,174 7,694,546 6,754,321
Average diluted
shares
outstanding 7,830,390 7,851,831 7,027,090
Basic earnings
per share $ 0.09 $ 0.22 $ 0.27
Fully diluted
earnings per
share $ 0.09 $ 0.21 $ 0.26
Heritage Oaks Bancorp
Consolidated Statements of Income
(dollars in thousands except share data)
Percentage
(unaudited) (unaudited) Change
For the Six Months Ended Vs.
----------------------- ---------
6/30/2008 6/30/2007 6/30/2007
---------------------------------------------------------------------
Interest Income:
Interest and fees on loans $ 23,823 $ 20,029 18.9%
Investment securities 1,450 885 63.8%
Federal funds sold and commercial
paper 112 193 -42.0%
Time certificates of deposit 6 18 -66.7%
---------------------------------------------------------------------
Total interest income 25,391 21,125 20.2%
---------------------------------------------------------------------
Interest Expense:
NOW accounts 255 71 259.2%
MMDA accounts 2,105 1,613 30.5%
Savings accounts 166 47 253.2%
Time deposits of $100K or more 1,205 510 136.3%
Other time deposits 1,574 2,488 -36.7%
Other borrowed funds 1,377 2,105 -34.6%
---------------------------------------------------------------------
Total interest expense 6,682 6,834 -2.2%
---------------------------------------------------------------------
Net interest income before
provision for loan losses 18,709 14,291 30.9%
Provision for loan losses 3,015 310 872.6%
---------------------------------------------------------------------
Net interest income after provision
for loan losses 15,694 13,981 12.3%
---------------------------------------------------------------------
Non Interest Income:
Service charges on deposit
accounts 1,609 1,299 23.9%
Other income 1,549 1,324 17.0%
Gain on sale of investment
securities 37 -- --
---------------------------------------------------------------------
Total non-interest income 3,195 2,623 21.8%
---------------------------------------------------------------------
Non-Interest Expense:
Salaries and employee benefits 8,246 6,444 28.0%
Occupancy and equipment 2,268 1,421 59.6%
Other expenses 4,604 3,391 35.8%
---------------------------------------------------------------------
Total non-interest expenses 15,118 11,256 34.3%
---------------------------------------------------------------------
Income before provision for income
taxes 3,771 5,348 -29.5%
Provision for income taxes 1,405 2,037 -31.0%
---------------------------------------------------------------------
Net income $ 2,366 $ 3,311 -28.5%
=====================================================================
Average basic shares outstanding 7,699,860 6,728,840
Average diluted shares outstanding 7,841,144 7,018,270
Basic earnings per share $ 0.31 $ 0.49
Fully diluted earnings per share $ 0.30 $ 0.47
Heritage Oaks Bancorp
Consolidated Balance Sheets
(dollars in thousands except share data)
(unaudited)(unaudited) (audited) (unaudited)
--------------------------------------------
6/30/2008 3/31/2008 12/31/2007 6/30/2007
--------------------------------------------------------------
Assets
Cash and due
from banks $ 27,346 $ 22,217 $ 23,254 $ 20,945
Federal funds
sold 15,660 3,670 23,165 43,505
--------------------------------------------------------------
Total cash
and cash
equivalents 43,006 25,887 46,419 64,450
--------------------------------------------------------------
Interest
bearing
deposits with
other banks 131 330 330 318
Securities
available for
sale 57,064 54,829 47,556 36,018
Federal Home
Loan Bank
Stock, at cost 5,401 3,402 3,045 3,119
Loans held
for sale 1,246 2,759 902 3,329
Loans, net (1) 649,928 631,722 605,342 453,900
Property,
premises and
equipment 6,524 6,228 6,390 5,057
Bank owned life
insurance 10,527 10,420 9,923 9,621
Deferred tax
assets 5,799 5,159 5,290 4,656
Goodwill 11,541 11,538 10,911 4,864
Core deposit
intangible 4,121 4,336 4,551 971
Other real
estate and
owned 197 -- -- --
Other assets 4,600 4,596 4,895 3,562
--------------------------------------------------------------
Total assets $ 800,085 $ 761,206 $ 745,554 $ 589,865
==============================================================
Liabilities
Deposits:
Non-interest
bearing demand $ 168,589 $ 155,621 $ 153,684 $ 153,485
Savings, NOW,
and money
market 293,799 302,970 317,911 193,720
Time deposits
of $100K or
more 79,756 47,069 75,966 44,141
Time deposits
under $100K 92,374 84,795 97,247 97,761
--------------------------------------------------------------
Total
deposits 634,518 590,455 644,808 489,107
--------------------------------------------------------------
FHLB advances
and other
borrowings 71,500 76,505 8,000 30,000
Securities sold
under
agreements to
repurchase 2,718 2,217 1,936 1,358
Junior
subordinated
debentures 13,403 13,403 13,403 8,248
Other
liabilities 7,074 7,658 7,957 8,631
--------------------------------------------------------------
Total
liabilities 729,213 690,238 676,104 537,344
--------------------------------------------------------------
Stockholders'
equity
Common stock,
no par value;
20,000,000
shares
authorized;
issued and
outstanding:
7,709,929;
7,703,030;
7,683,829
and 6,800,223
June 30, 2008;
March 31, 2008;
December 31,
2007 and
June 30, 2007,
respectively 48,456 48,811 43,996 30,072
Additional paid
in capital 839 785 672 520
Retained
earnings 22,140 21,009 24,598 22,096
Accumulated
other
comprehensive
income (563) 363 184 (167)
--------------------------------------------------------------
Total
stockholders'
equity 70,872 70,968 69,450 52,521
--------------------------------------------------------------
Total
liabilities
and
stockholders'
equity $ 800,085 $ 761,206 $ 745,554 $ 589,865
==============================================================
Percentage Change Vs.
---------------------------------------
3/31/2008 12/31/2007 6/30/2007
-------------------------------------------------------------
Assets
Cash and due
from banks 23.1% 17.6% 30.6%
Federal funds
sold 326.7% -32.4% -64.0%
-------------------------------------------------------------
Total cash
and cash
equivalents 66.1% -7.4% -33.3%
-------------------------------------------------------------
Interest
bearing
deposits with
other banks -60.3% -60.3% -58.8%
Securities
available for
sale 4.1% 20.0% 58.4%
Federal Home
Loan Bank
Stock, at cost 58.8% 77.4% 73.2%
Loans held
for sale -54.8% 38.1% -62.6%
Loans, net (1) 2.9% 7.4% 43.2%
Property,
premises and
equipment 4.8% 2.1% 29.0%
Bank owned life
insurance 1.0% 6.1% 9.4%
Deferred tax
assets 12.4% 9.6% 24.5%
Goodwill 0.0% 5.8% 137.3%
Core deposit
intangible -5.0% -9.4% 324.4%
Other real
estate and
owned -- -- --
Other assets 0.1% -6.0% 29.1%
-------------------------------------------------------------
Total assets 5.1% 7.3% 35.6%
=============================================================
Liabilities
Deposits:
Non-interest
bearing demand 8.3% 9.7% 9.8%
Savings, NOW,
and money
market -3.0% -7.6% 51.7%
Time deposits
of $100K or
more 69.4% 5.0% 80.7%
Time deposits
under $100K 8.9% -5.0% -5.5%
-------------------------------------------------------------
Total
deposits 7.5% -1.6% 29.7%
-------------------------------------------------------------
FHLB advances
and other
borrowings -6.5% 793.8% 138.3%
Securities sold
under
agreements to
repurchase 22.6% 40.4% 100.1%
Junior
subordinated
debentures 0.0% 0.0% 62.5%
Other
liabilities -7.6% -11.1% -18.0%
-------------------------------------------------------------
Total
liabilities 5.6% 7.9% 35.7%
-------------------------------------------------------------
Stockholders'
equity
Common stock, no par
value; 20,000,000
shares authorized;
issued and
outstanding:
7,709,929;
7,703,030;
7,683,829 and
6,800,223
June 30, 2008;
March 31, 2008;
December 31, 2007
and June 30, 2007,
respectively -0.7% 10.1% 61.1%
Additional paid
in capital 6.9% 24.9% 61.3%
Retained
earnings 5.4% -10.0% 0.2%
Accumulated
other
comprehensive
income -255.1% -406.0% -237.1%
-------------------------------------------------------------
Total
stockholders'
equity -0.1% 2.0% 34.9%
-------------------------------------------------------------
Total
liabilities
and
stockholders'
equity 5.1% 7.3% 35.6%
=============================================================
(1) Loans are net of deferred loan fees of $1,756; $1,833; $1,732;
$1,559 and allowance for loan losses of $8,128; $6,305; $6,143;
$4,520 for June 30, 2008, March 31, 2008, December 31, 2007, and
June 30, 2007 respectively.
Additional Financial Information
(dollars in thousands)
For the Quarters Ended
------------------------------------------
LOANS 6/30/2008 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Real Estate Secured:
Multi-family residential $ 14,457 $ 12,344 $ 12,779 $9,286
Residential 1 to 4 family 26,466 26,214 24,326 6,104
Home equity lines of credit 19,220 17,200 17,470 9,330
Commercial 268,612 275,821 274,266 218,480
Farmland 10,652 9,671 11,557 11,240
Commercial:
Commercial and industrial 154,456 133,211 134,178 86,301
Agriculture 12,747 12,480 11,367 11,757
Other 814 790 535 382
Construction:
Single family residential 9,708 9,944 10,239 7,962
Single family residential
- Spec. 16,565 18,200 18,718 13,527
Tract 2,317 3,225 1,664 --
Multi-family 9,482 9,331 9,054 5,037
Hospitality 21,401 19,371 16,784 13,130
Commercial 27,565 28,922 30,677 38,185
Land 55,555 54,278 31,064 23,157
Installment loans
to individuals 7,792 7,733 7,977 5,711
All other loans
(including overdrafts) 2,003 1,125 562 390
---------------------------------------------------------------------
Total gross loans $659,812 $639,860 $613,217 $459,979
---------------------------------------------------------------------
Deferred loan fees 1,756 1,833 1,732 1,559
Allowance for loan losses 8,128 6,305 6,143 4,520
---------------------------------------------------------------------
Net loans $649,928 $631,722 $605,342 $453,900
=====================================================================
Loans held for sale $ 1,246 $ 2,759 $ 902 $ 3,329
For the Quarters Ended
------------------------------------------
ALLOWANCE FOR LOAN LOSSES 6/30/2008 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Balance, beginning
of period $ 6,305 $ 6,143 $ 4,720 $ 4,312
Provision expense 2,775 240 140 170
Credit losses charged
against allowance (1,024) (78) (213) (19)
Recoveries of loans
previously charged off 72 -- 115 57
Credit from purchase of
Business First Bank -- -- 1,381 --
---------------------------------------------------------------------
Balance, end of period $ 8,128 $ 6,305 $ 6,143 $ 4,520
=====================================================================
Net ( charge-offs )
/ recoveries $ (952) $ (78) $ (98) $ 38
Net charge-offs / average
loans outstanding 0.14% 0.01% 0.02% -0.01%
Allowance for loan losses /
total loans outstanding 1.23% 0.99% 1.00% 0.98%
For the Quarters Ended
------------------------------------------
NON-PERFORMING ASSETS 6/30/2008 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Loans on non-accrual status $ 13,414 $ 1,544 $ 338 $ 555
Loans more than 90 days
delinquent, still accruing 93 -- -- --
---------------------------------------------------------------------
Total non-performing loans 13,507 1,544 338 555
---------------------------------------------------------------------
Other real estate owned
(OREO) 197 -- -- --
---------------------------------------------------------------------
Total non-performing
assets $ 13,704 $ 1,544 $ 338 $ 555
=====================================================================
Total non-performing assets
to total assets 1.71% 0.20% 0.05% 0.09%
For the Quarters Ended
------------------------------------------
DEPOSITS 6/30/2008 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Non-interest bearing demand $168,589 $155,621 $153,684 $153,485
---------------------------------------------------------------------
Interest-bearing demand 83,387 79,248 69,558 57,288
Regular savings accounts 23,067 23,840 41,599 23,240
Money market accounts 187,345 199,882 206,754 113,192
---------------------------------------------------------------------
Total interest-bearing
transaction & savings
accounts 293,799 302,970 317,911 193,720
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Time deposits 172,130 131,864 173,213 141,902
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Total deposits $634,518 $590,455 $644,808 $489,107
=====================================================================
Percentage Change Vs.
-------------------------------
LOANS 3/31/2008 12/31/2007 6/30/2007
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Real Estate Secured:
Multi-family residential 17.1% 13.1% 55.7%
Residential 1 to 4 family 1.0% 8.8% 333.6%
Home equity lines of credit 11.7% 10.0% 106.0%
Commercial -2.6% -2.1% 22.9%
Farmland 10.1% -7.8% -5.2%
Commercial:
Commercial and industrial 15.9% 15.1% 79.0%
Agriculture 2.1% 12.1% 8.4%
Other 3.0% 52.1% 113.1%
Construction:
Single family residential -2.4% -5.2% 21.9%
Single family residential - Spec. -9.0% -11.5% 22.5%
Tract -28.2% 39.2% --
Multi-family 1.6% 4.7% 88.2%
Hospitality 10.5% 27.5% 63.0%
Commercial -4.7% -10.1% -27.8%
Land 2.4% 78.8% 139.9%
Installment loans to individuals 0.8% -2.3% 36.4%
All other loans (including overdrafts) 78.0% 256.4% 413.6%
----------------------------------------------------------------------
Total gross loans 3.1% 7.6% 43.4%
----------------------------------------------------------------------
Deferred loan fees -4.2% 1.4% 12.6%
Allowance for loan losses 28.9% 32.3% 79.8%
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Net loans 2.9% 7.4% 43.2%
=====================================================================
Loans held for sale -54.8% 38.1% -62.6%
Percentage Change Vs.
-------------------------------
ALLOWANCE FOR LOAN LOSSES 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Balance, beginning of period 2.6% 33.6% 46.2%
Provision expense 1056.3% 1882.1% 1532.4%
Credit losses charged against
allowance 1212.8% 380.8% 5289.5%
Recoveries of loans previously
charged off -- -37.4% 26.3%
Credit from purchase of Business
First Bank -- -- --
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Balance, end of period 28.9% 32.3% 79.8%
=====================================================================
Net ( charge-offs ) / recoveries 1120.5% 871.4% 2605.3%
Net charge-offs / average loans
outstanding 1059.3% 624.6% 1891.4%
Allowance for loan losses / total
loans outstanding 25.0% 23.0% 25.4%
Percentage Change Vs.
-------------------------------
NON-PERFORMING ASSETS 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Loans on non-accrual status 768.8% 3868.6% 2316.9%
Loans more than 90 days delinquent,
still accruing -- -- --
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Total non-performing loans 774.8% 3896.2% 2333.7%
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Other real estate owned (OREO) -- -- --
---------------------------------------------------------------------
Total non-performing assets 787.6% 3954.4% 2369.2%
=====================================================================
Total non-performing assets to
total assets 744.4% 3678.1% 1720.4%
Percentage Change Vs.
-------------------------------
DEPOSITS 3/31/2008 12/31/2007 6/30/2007
---------------------------------------------------------------------
Non-interest bearing demand 8.3% 9.7% 9.8%
---------------------------------------------------------------------
Interest-bearing demand 5.2% 19.9% 45.6%
Regular savings accounts -3.2% -44.5% -0.7%
Money market accounts -6.3% -9.4% 65.5%
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Total interest-bearing transaction
& savings accounts -3.0% -7.6% 51.7%
---------------------------------------------------------------------
Time deposits 30.5% -0.6% 21.3%
---------------------------------------------------------------------
Total deposits 7.5% -1.6% 29.7%
=====================================================================
Three Months Ended Six Months Ended
----------------------------------- -----------------
PROFITABILITY /
PERFORMANCE
RATIOS 6/30/08 3/31/08 12/31/07 6/30/07 6/30/08 6/30/07
---------------------------------------------------------------------
Operating
efficiency 66.31% 72.17% 67.26% 64.32% 69.14% 66.55%
Return on average
equity 3.84% 9.55% 11.65% 13.84% 6.66% 12.99%
Return on average
tangible equity 4.92% 12.32% 14.51% 15.58% 8.56% 14.66%
Return on average
assets 0.35% 0.91% 1.11% 1.25% 0.62% 1.17%
Other operating
income to
average assets 0.89% 0.78% 0.80% 0.96% 0.84% 0.93%
Other operating
expense to
average assets 3.81% 4.12% 3.84% 3.86% 3.96% 3.99%
Net interest
income to
average assets 4.88% 4.93% 4.91% 5.03% 4.90% 5.07%
Non-interest
income to total
net revenue 15.48% 13.63% 14.08% 16.08% 14.59% 15.51%
ASSET QUALITY AND
CAPITAL RATIOS
Non-performing
loans to total
gross loans 2.05% 0.24% 0.06% 0.12%
Non-performing
loans as a % of
ALLL 166.18% 24.49% 5.50% 12.28%
Non-performing
loans to primary
capital 19.06% 2.18% 0.49% 1.06%
Leverage ratio 8.87% 9.30% 9.60% 9.58%
Tier I Risk-Based
Capital Ratio 9.66% 9.82% 10.08% 10.64%
Total Risk-Based
Capital Ratio 10.83% 10.76% 11.04% 11.55%
AVERAGE BALANCES For the For the
AND RATES Three Months Ended Six Months Ended
(dollars in ---------------------------------- ----------------
thousands) 6/30/08 3/31/08 12/31/07 6/30/07 6/30/08 6/30/07
---------------------------------------------------------------------
Average invest-
ments $ 64,298 $ 55,596 $ 50,525 $ 40,575 $ 59,949 $ 40,878
Average federal
funds sold 9,249 8,013 18,137 13,198 8,631 7,834
Average loans 656,917 623,981 585,484 469,719 640,449 465,297
---------------------------------------------------------------------
Average earning
assets 730,464 687,590 654,146 523,492 709,029 514,009
---------------------------------------------------------------------
Average non-
earning assets 67,083 62,769 61,090 59,619 64,924 58,630
Average for
loan losses (6,475) (6,204) (5,932) (4,417) (6,339) (4,299)
---------------------------------------------------------------------
Average assets $791,072 $744,155 $709,304 $578,694 $767,614 $568,340
=====================================================================
Average non-inte-
rest bearing de-
mand deposits $152,927 $144,108 $151,483 $138,696 $148,518 $139,878
Average interest
bearing de-
posits 448,341 457,943 458,143 315,031 453,142 299,958
Average other
borrowings 109,667 63,287 23,634 66,979 86,477 71,895
Average non-inte-
rest bearing
liabilities 7,856 8,247 8,701 5,818 8,051 5,218
---------------------------------------------------------------------
Average
liabilities 718,791 673,585 641,961 526,524 696,188 516,949
---------------------------------------------------------------------
Average equity 72,281 70,570 67,343 52,170 71,426 51,391
---------------------------------------------------------------------
Average
liabilities
and equity $791,072 $744,155 $709,304 $578,694 $767,614 $568,340
=====================================================================
Interest rate
yield on loans 7.18% 7.79% 8.36% 8.72% 7.48% 8.68%
Interest rate
yield on
investments 4.99% 4.77% 4.79% 4.42% 4.88% 4.45%
Interest rate
yield on federal
funds sold 1.96% 3.36% 4.55% 4.92% 2.61% 4.97%
Interest rate
yield on inte-
rest earnings
assets 6.92% 7.50% 7.98% 8.29% 7.20% 8.29%
Interest rate
expense on
deposits 1.48% 2.06% 2.61% 2.29% 1.77% 2.17%
Interest rate
expense on other
borrowings 2.81% 3.88% 6.11% 5.84% 3.20% 5.90%
Interest rate
expense on
interest bearing
liabilities 2.15% 2.85% 3.60% 3.74% 2.49% 3.71%
Average equity
to average assets 9.14% 9.48% 9.49% 9.02% 9.30% 9.04%
Net interest
margin 5.28% 5.33% 5.33% 5.56% 5.31% 5.61%