PASO ROBLES, Calif., Oct. 17, 2008 (GLOBE NEWSWIRE) -- Heritage Oaks Bancorp (Nasdaq:HEOP), the parent company of Heritage Oaks Bank, today reported that following a $3.2 million provision for loan losses, it earned $534,000, or $0.07 per diluted share for the third quarter of 2008, compared to $1.6 million, or $0.23 per diluted share, in the third quarter a year ago. For the first nine months of 2008, net income was $2.9 million, or $0.37 per diluted share, compared to $4.9 million, or $0.70 per diluted share, in the first nine months of 2007. Earnings per share was impacted by the October 2007 acquisition of Business First National Bank of Santa Barbara, in which Heritage Oaks Bank issued 850,213 shares, resulting in an 12% increase in the number of average diluted shares outstanding compared to the third quarter of 2007.
"Our core business remains sound as is evidenced by our improving efficiency ratio," stated Lawrence P. Ward, President and CEO. "Although our increased provision for loan losses put a drag on earnings, our strong operating results allowed us to take a large provision while still remaining profitable. We will continue to move away from balance sheet growth and focus on asset quality and capital preservation, as we work through these credit quality issues."
"Principally due to the diversity of the various industries within the Company's footprint, our market area, while not unaffected by economic fluctuations, specifically those related to real estate valuations, has historically experienced less volatility in economic activity when compared to many other areas of California," added Ward. "The economy in our primary markets of San Luis Obispo and Santa Barbara Counties have not been immune to the negative impacts as reflected in both national and state economies, however, the premium wine industry coupled with pristine coastal communities and lakes for water sports promote vibrant tourism that has developed substantially over the past decade and has helped sustain our local economy," Ward added.
Third Quarter 2008 Highlights:
* Net income was $534,000, or $0.07 per diluted share. * Net interest income increased 30% to $9.5 million compared to the third quarter a year ago. * Net interest margin was 5.18%. * Added $3.2 million to the Allowance for Loan and Lease Losses (ALLL). * Remains well capitalized with total Risk-Based capital of 10.92%.
Asset Quality
"We will continue to maintain diligent oversight of the loan portfolio in an effort to identify problem credits. Additionally, we formed a special assets division in March, to oversee all problem credits," said Ward. Based on the current economic outlook, the bank believes it has taken a very aggressive position with respect to the adequacy of the allowance for loan loss. "The large provision during the second and third quarter was partly based on identified potential problem credits which have been accounted for as of September 30, 2008, as well as our desire to build our reserve based on these very uncertain economic times," said Ward.
Non-performing assets increased to $22.6 million, or 2.87% of total assets at September 30, 2008, compared to $13.7 million, or 1.71% of total assets, at the end of the previous quarter. Heritage Oaks recorded a $3.2 million provision for loan losses in the third quarter of 2008, compared to a $2.8 million provision for loan losses in the previous quarter. For the first nine months of the year it added $6.2 million to its provision for loan losses compared to only $520,000 in the first nine months of 2007. The loan loss reserve now represents 1.55% of total loans outstanding, up from 1.23% at the end of the second quarter of 2008.
During the second quarter of 2008, the bank moved one credit of just under $200,000 into OREO. The foreclosed property had previously been accounted for as a non performing loan and had been written down to its fair market value where it remained as of September 30, 2008. No additional charge off was required at the time the property was moved into OREO. Heritage Oaks is currently marketing this property and there has been some activity at the listed price with interested parties.
Loans on non-accrual status totaled $22.4 million at September 30, 2008 compared to $13.4 million at June 30, 2008. All loans on non-accrual are either carried at fair value or have a specific valuation allowance. As of September 30, 2008, non-accruing loans consist of the following (all amounts are approximate):
$13.2 million (update to loans previously reported at June 30, 2008):
* Nine loans totaling $10.2 million to three borrowers all
representing single family spec construction loans located in
various coastal communities along the Central Coast. During the
third quarter, approximately $717,000 was charged off on two of
these loans to reflect an updated value analysis. Most of these
projects are near completion and there has been some activity in
regard to market interest on certain of the properties.
* Five loans totaling $2.3 million secured by commercial real
estate and single family residences. The borrowers continue to
work with management on these loans.
* Seven loans totaling $658,000 to four borrowers that are
collateralized by various business assets and personal collateral.
During the third quarter, one loan in the amount of $12,000 was
charged off with a net loss of $6,000. Principal reductions of
$30,000 were received on the remaining seven loans. The
borrowers continue to work with management on these loans.
$9.2 million (loans added to non-accrual during 3Q08):
* Seven loans totaling $854,000 to three borrowers that are
collateralized by various business assets and personal collateral.
One loan contains an SBA guarantee of $265,000 and management is
carrying a valuation allowance of approximately $552 thousand on
the remaining credits in this group. The SBA guaranteed loan is
in the process of liquidation and the remaining loans are in the
process of collection.
* Three loans totaling $8.4 million to two borrowers that are
secured by real estate were added to non-accrual during September
2008. One loan for $2.5 million is secured by property located in
a coastal community of the Central Coast and is being carried at
the analyzed fair value. The remaining two loans are secured by
numerous commercial and farm properties within the bank's primary
market area. At this time, the bank has created a valuation
allowance of approximately $1.8 million pending completion of
our analysis of the entire relationship and receipt of current
property values.
"We are consistently monitoring our credit quality, and have implemented additional precautionary actions that include pro-actively identifying credit weaknesses early in the collection cycle, increasing the oversight frequency of watch list credits and devoting additional internal resources to monitoring those credits," added Ward.
The allowance for loan loss was $10.4 million, or 1.55% of total loans outstanding at September 30, 2008, compared to $8.1 million, or 1.23% of total loans outstanding at June 30, 2008. The provision for loan losses during the third quarter of 2008 was $3.2 million. During the third quarter 2008, the bank charged off a total of $1.0 million and recognized total recoveries in the amount of $55,000. Of the total dollars charged off during the third quarter of 2008, Heritage Oaks charged off several C&I loans in the amount of just under $316,000. The balance of the losses, approximately $717,000, was the result of updated value analysis on spec construction loans that were on non-accrual status.
Heritage Oaks Bank has no direct exposure to sub-prime mortgage lending and minimal exposure for speculative construction for single family residences that has not already been identified as non-performing.
Capital Position
Heritage Oaks has over $69.6 million in Tier I capital and $78.6 million in Total Risk Based capital and remains "well capitalized" by regulatory standards with a Risk Adjusted capital ratio of 10.92% and a Tier One capital ratio of 9.67%. Heritage Oaks owns neither Fannie Mae nor Freddie Mac common or preferred stock.
Shareholders' equity increased 32% to $71.0 million at September 30, 2008, compared to $53.9 million a year ago, as a result of the acquisition of Business First. Book value per share was $9.20 at September 30, 2008, compared to $7.93 per share a year earlier and tangible book value per share was $7.35 at September 30, 2008, compared to $7.07 a year earlier.
Balance Sheet
"We continue to see good loan demand in our markets. While we are still making new loans, we remain very selective in the types of loans we choose to originate," Ward said. "Our underwriting criteria remains very conservative and we are requiring borrowers to inject more capital into projects. Earlier this year, we chose not to originate single family speculative construction loans and have no plans to lend in this segment in the near future."
Net loans grew 1% over the prior quarter and 40% year-over year. Net loans were $654 million at September 30, 2008, compared to $650 million at June 30, 2008 and $469 million at September 30, 2007, with the Business First acquisition accounting for approximately 93% 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 Heritage Oak's internal credit department. During the third quarter of 2008, $221 thousand of loans acquired from Business First were charged off, which represents 0.03% of total assets.
"The decrease in deposits on a linked quarter basis is largely due to disintermediation of funds into our CDARS program," said Ward. "With recent uncertainty caused by an increase in bank failures, customers are more aware of FDIC insurance levels and in addition to the use of programs like CDARS, have been re-deploying deposits to ensure FDIC coverage. While this has created some funds to leave the bank, there is an increase in new money, as well. We are, however, noticing lower balances kept in most account types. We anticipate that this situation could experience a positive change with the very recently announced FDIC unlimited deposit account coverage on Demand Deposit Accounts and the increase from $100,000 to $250,000 for all types of accounts. " CDARS is an acronym for the Certificate of Deposit Account Registry Service, which enables depositors to have larger insured deposits above the FDIC stated maximums.
Total deposits were $589 million at September 30, 2008, compared to $635 million at June 30, 2008, and $496 million a year ago. The Business First acquisition accounted for 66% of total deposit growth on a year over year basis. Although core deposits were down $37 million on a linked quarter basis, they represent 72% of total deposits. Time deposits of $100,000 or more decreased on a linked quarter basis due to $10.0 million in brokered CDs maturing that were not replaced.
The Bank continues to concentrate on efforts to increase core deposits in order to rely less on secondary funding sources, but has chosen not to engage in irrational deposit pricing in an effort to not only maintain the net interest margin, but also to build a deposit base based on customer relationship. The Bank has in place alternative funding sources in the form of Federal Home Loan Bank (the "FHLB") borrowing availability and brokered MM and CD funds. At September 30, 2008, these available sources accounted for approximately $73 million and $59 million with the FHLB and brokered MM funding, respectively. In addition, the Bank has access to brokered CDs with an internal policy limitation of 10% of total assets.
Net Interest Margin
The net interest margin was 5.18% for the third quarter, compared to 5.28% during the preceding quarter and 5.44% for the third quarter a year ago. Year-to-date, the net interest margin was 5.26%, compared to 5.53% for the first nine months of 2007. "Although our margin came under pressure again this quarter, we consistently manage to maintain our margin above peer levels due to the strength in our strong core deposit base," said Ward. "We are actively working to manage the balance sheet in the context of current capital and funding capabilities. We continue to focus on quality loans and core deposits, which has effectively kept our margin in the 5% range, despite the rapidly changing interest rate environment."
Operating Results
Total revenues, consisting of net interest income before the provision for loan losses and non-interest income, were $11.0 million in the third quarter, compared to $11.3 million in the second quarter of 2008 and $8.6 million in the third quarter of 2007. For the first nine months of the year total revenues increased 29% to $32.9 million, compared to $25.6 million in the first nine months of 2007. Net interest income was $9.5 million in the third quarter compared to $9.6 million in the previous quarter and $7.3 million in the third quarter a year ago. Year-to-date, net interest income increased 31% to $28.2 million compared to $21.6 million in the first nine months of 2007. Interest and fees on loans increased 17% for the third quarter compared to the third quarter a year ago but were unchanged from the previous quarter while interest expense decreased 15% for the third quarter compared to the third quarter a year ago, and increased 0.9% from the previous quarter.
Noninterest income was $1.5 million for the third quarter compared to $1.8 million in the previous quarter and $1.3 million in the third quarter a year ago. Second quarter noninterest income included Visa IPO income of $275,000. For the first nine months of 2008, noninterest income increased 20% to $4.7 million compared to $3.9 million in the first nine months of 2007. The increase year-over-year was largely a result of the increase in service charges on deposit accounts, which rose 36% for the quarter and 28% year-to-date, compared to the respective periods last year.
Non interest expense decreased in the third quarter of 2008 compared to the preceding quarter, largely due to decreases in salaries that are the result of implementation of efficiency projects within back office functions and in part due to the elimination of a position on the executive team, which took place during the second quarter. Total non-interest expense was $7.1 million for the third quarter compared to $7.5 million in the previous quarter and $5.8 million in the third quarter a year ago. Year-to-date, total non-interest expense was $22.2 million compared to $17.0 million during the same period a year earlier. A majority of the increase year-to-date was related to the Business First acquisition.
Performance Measures
At September 30, 2008, the acquisition of Business First accounts for the addition of $100 million in assets along with $13.8 million in equity over that which was reported at September 30, 2007. These factors along with the significant loan loss provisions in 2008 resulted in a return on average equity of 2.94% for the third quarter compared to 12.09% in the third quarter a year ago, and 5.41% for the first nine months of the year, compared to 12.68% in the first nine months of 2007. The return on average assets was 0.27% in the third quarter of 2008 compared to 1.12% in the third quarter of 2007. Year-to-date, return on average assets was 0.50%, compared to 1.16% for the first nine months of 2007. "Performance measures have been negatively impacted by the need to focus on asset quality and the preservation of capital in this unprecedented economic time," Ward stated.
Operating expenses in the third quarter improved to 3.59% of average assets, compared to 3.81% in the preceding quarter and 3.97% in the third quarter a year ago. The efficiency ratio improved to 64.40% in the third quarter of 2008 compared to 66.31% in the previous quarter and 66.89% in the third quarter a year ago. For the first nine months of the year the efficiency ratio was 67.55% compared to 66.67% in the first nine months of 2007. The efficiency ratio measures operating expenses as a percent of revenues.
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 office 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, the ongoing financial crisis in the United States, and the response of the federal and state government and our regulators thereto, 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 Balance Sheets
(dollars in thousands except share data)
Percentage Change
(unaudited)(unaudited)(unaudited) Vs.
---------------------------------------------------
9/30/2008 6/30/2008 9/30/2007 6/30/2008 9/30/2007
---------------------------------------------------------------------
Assets
Cash and due
from banks $ 18,914 $ 27,346 $ 20,316 -30.8% -6.9%
Federal funds sold 8,835 15,660 14,260 -43.6% -38.0%
---------------------------------------------------------------------
Total cash and
cash equivalents 27,749 43,006 34,576 -35.5% -19.7%
---------------------------------------------------------------------
Interest bearing
deposits with
other banks 119 131 1,718 -9.2% -93.1%
Securities
available for sale 52,634 57,064 34,854 -7.8% 51.0%
Federal Home Loan
Bank Stock, at cost 5,006 5,401 2,171 -7.3% 130.6%
Loans held for sale 2,955 1,246 902 137.2% 227.6%
Loans, net (1) 654,403 649,928 468,966 0.7% 39.5%
Property, premises
and equipment 6,769 6,524 5,017 3.8% 34.9%
Bank owned
life insurance 10,631 10,527 9,716 1.0% 9.4%
Deferred tax assets 7,085 5,799 4,964 22.2% 42.7%
Goodwill 11,541 11,541 4,865 0.0% 137.2%
Core deposit
intangible 3,906 4,121 883 -5.2% 342.4%
Other real
estate owned 197 197 -- -- --
Other assets 4,940 4,600 4,058 7.4% 21.7%
---------------------------------------------------------------------
Total assets $787,935 $800,085 $572,690 -1.5% 37.6%
=====================================================================
Liabilities
Deposits
Non-interest
bearing demand $155,267 $168,589 $130,221 -7.9% 19.2%
Savings, NOW, and
money market 269,744 293,799 215,576 -8.2% 25.1%
Time deposits of
$100K or more 75,657 79,756 50,666 -5.1% 49.3%
Time deposits
under $100K 88,583 92,374 99,847 -4.1% -11.3%
---------------------------------------------------------------------
Total deposits 589,251 634,518 496,310 -7.1% 18.7%
---------------------------------------------------------------------
Short term FHLB
borrowing 96,500 71,500 -- 35.0% --
Long term
FHLB borrowing 10,000 -- -- -- --
Securities sold
under agreements
to repurchase 1,235 2,718 1,464 -54.6% -15.6%
Junior subordinated
debentures 13,403 13,403 13,403 -- --
Other liabilities 6,592 7,074 7,663 -6.8% -14.0%
---------------------------------------------------------------------
Total liabilities 716,981 729,213 518,840 -1.7% 38.2%
---------------------------------------------------------------------
Stockholders' equity
Common stock, no
par value;
20,000,000 shares
authorized; issued
and outstanding:
7,709,600;
7,709,929 and
6,793,136 September
30, 2008; June 30,
2008; and September
30, 2007,
respectively 48,456 48,456 29,976 0.0% 61.6%
Additional paid
in capital 947 839 600 12.9% 57.8%
Retained earnings 22,675 22,140 23,205 2.4% -2.3%
Accumulated other
comprehensive
income (1,124) (563) 69 99.6% -1729.0%
---------------------------------------------------------------------
Total stockholders'
equity 70,954 70,872 53,850 0.1% 31.8%
---------------------------------------------------------------------
Total liabilities
and stockholders'
equity $787,935 $800,085 $572,690 -1.5% 37.6%
=====================================================================
(1) Loans are net of deferred loan fees of $1,647; $1,756; $1,941
and allowance for loan losses of $10,350; $8,128; $4,720 for
September 30, 2008, June 30, 2008, and September 30, 2007
respectively.
Heritage Oaks Bancorp
Consolidated Statements of Income
(dollars in thousands except share data)
(unaudited) (unaudited) (unaudited)
For the Three Percentage Change
Months Ended Vs.
---------------------------------- ------------------
9/30/2008 6/30/2008 9/30/2007 6/30/2008 9/30/2007
---------------------------------------------------------------------
Interest Income
Interest and
fees on loans $ 11,731 $ 11,732 $ 10,058 0.0% 16.6%
Investment
securities 786 794 426 -1.0% 84.5%
Federal funds
sold and
commercial
paper 18 45 385 -60.0% -95.3%
Time
certificates
of deposit 1 3 1 -66.7% 0.0%
---------------------------------------------------------------------
Total
interest
income 12,536 12,574 10,870 -0.3% 15.3%
---------------------------------------------------------------------
Interest Expense
NOW accounts 88 162 55 -45.7% 60.0%
MMDA accounts 773 823 1,216 -6.1% -36.4%
Savings
accounts 25 35 21 -28.6% 19.0%
Time deposits
of $100K or
more 620 525 610 18.1% 1.6%
Other time
deposits 702 674 1,229 4.2% -42.9%
Other borrowed
funds 803 766 411 4.8% 95.4%
---------------------------------------------------------------------
Total
interest
expense 3,011 2,985 3,542 0.9% -15.0%
---------------------------------------------------------------------
Net interest
income before
provision for
loan losses 9,525 9,589 7,328 -0.7% 30.0%
Provision for
loan losses 3,200 2,775 210 15.3% 1423.8%
---------------------------------------------------------------------
Net interest
income after
provision for
loan losses 6,325 6,814 7,118 -7.2% -11.1%
---------------------------------------------------------------------
Non Interest
Income
Service charges
on deposit
accounts 878 837 645 4.9% 36.1%
Other income 635 882 664 -28.0% -4.4%
Gain on sale of
investment
securities -- 37 -- -100.0% --
---------------------------------------------------------------------
Total
non-interest
income 1,513 1,756 1,309 -13.8% 15.6%
---------------------------------------------------------------------
Non-Interest
Expense
Salaries and
employee
benefits 3,651 4,021 3,238 -9.2% 12.8%
Occupancy and
equipment 1,076 1,129 830 -4.7% 29.6%
Other expenses 2,381 2,348 1,709 1.4% 39.3%
---------------------------------------------------------------------
Total
non-interest
expenses 7,108 7,498 5,777 -5.2% 23.0%
---------------------------------------------------------------------
Income before
provision for
income taxes 730 1,072 2,650 -31.9% -72.5%
Provision for
income taxes 196 381 1,022 -48.6% -80.8%
---------------------------------------------------------------------
Net income $ 534 $ 691 $ 1,628 -22.7% -67.2%
=====================================================================
Average basic
shares
outstanding 7,709,600 7,705,174 6,796,286
Average diluted
shares
outstanding 7,798,321 7,830,390 7,013,070
Basic earnings
per share $ 0.07 $ 0.09 $ 0.24
Fully diluted
earnings
per share $ 0.07 $ 0.09 $ 0.23
Heritage Oaks Bancorp
Consolidated Statements of Income
(dollars in thousands except share data)
(unaudited) (unaudited)
For the Nine Percentage
Months Ended Change Vs.
---------------------- ----------
9/30/2008 9/30/2007 9/30/2007
---------------------------------------------------------------------
Interest Income
Interest and fees on loans $ 35,554 $ 30,087 18.2%
Investment securities 2,236 1,324 68.9%
Federal funds sold and
commercial paper 130 577 -77.5%
Time certificates of deposit 7 7 0.0%
---------------------------------------------------------------------
Total interest income 37,927 31,995 18.5%
---------------------------------------------------------------------
Interest Expense
NOW accounts 343 126 172.2%
MMDA accounts 2,878 2,830 1.7%
Savings accounts 191 69 176.8%
Time deposits of $100K or more 1,825 1,120 62.9%
Other time deposits 2,276 3,716 -38.8%
Other borrowed funds 2,180 2,516 -13.4%
---------------------------------------------------------------------
Total interest expense 9,693 10,377 -6.6%
---------------------------------------------------------------------
Net interest income before
provision for loan losses 28,234 21,618 30.6%
Provision for loan losses 6,215 520 1095.2%
---------------------------------------------------------------------
Net interest income after
provision for loan losses 22,019 21,098 4.4%
---------------------------------------------------------------------
Non Interest Income
Service charges on
deposit accounts 2,487 1,944 27.9%
Other income 2,184 1,988 9.9%
Gain on sale of
investment securities 37 -- --
---------------------------------------------------------------------
Total non-interest income 4,708 3,932 19.7%
---------------------------------------------------------------------
Non-Interest Expense
Salaries and employee benefits 11,897 9,681 22.9%
Occupancy and equipment 3,344 2,251 48.6%
Other expenses 6,985 5,101 36.9%
---------------------------------------------------------------------
Total non-interest expenses 22,226 17,033 30.5%
---------------------------------------------------------------------
Income before provision
for income taxes 4,501 7,997 -43.7%
Provision for income taxes 1,601 3,058 -47.6%
---------------------------------------------------------------------
Net income $ 2,900 $ 4,939 -41.3%
=====================================================================
Average basic shares outstanding 7,703,107 6,751,322
Average diluted shares outstanding 7,832,815 7,013,986
Basic earnings per share $ 0.38 $ 0.73
Fully diluted earnings per share $ 0.37 $ 0.70
Percentage
For the Quarters Ended Change Vs.
---------------------------- --------------
9/30/ 6/30/ 9/30/ 6/30/ 9/30/
LOANS 2008 2008 2007 2008 2007
----------------------------------------------------------------------
Real Estate Secured
Multi-family residential $ 13,997 $ 14,457 $ 7,450 -3.2% 87.9%
Residential 1 to 4
family 29,031 26,466 5,788 9.7% 401.6%
Home equity lines of
credit 22,247 19,220 8,916 15.7% 149.5%
Commercial 281,269 268,612 228,264 4.7% 23.2%
Farmland 10,630 10,652 12,340 -0.2% -13.9%
Commercial
Commercial and
industrial 151,323 154,456 88,732 -2.0% 70.5%
Agriculture 13,059 12,747 12,675 2.4% 3.0%
Other 662 814 340 -18.7% 94.7%
Construction
Single family residential 12,897 9,708 9,435 32.8% 36.7%
Single family residential
- Spec 17,469 16,565 11,466 5.5% 52.4%
Tract 1,999 2,317 -- -13.7% --
Multi-family 7,803 9,482 7,867 -17.7% -0.8%
Hospitality 14,177 21,401 11,254 -33.8% 26.0%
Commercial 25,624 27,565 34,376 -7.0% -25.5%
Land 55,704 55,555 30,656 0.3% 81.7%
Installment loans to
individuals 7,889 7,792 5,580 1.2% 41.4%
All other loans (including
overdrafts) 620 2,003 488 -69.0% 27.0%
----------------------------------------------------------------------
Total gross loans $666,400 $659,812 $475,627 1.0% 40.1%
----------------------------------------------------------------------
Deferred loan fees 1,647 1,756 1,941 -6.2% -15.1%
Allowance for loan
losses 10,350 8,128 4,720 27.3% 119.3%
----------------------------------------------------------------------
Net loans $654,403 $649,928 $468,966 0.7% 39.5%
======================================================================
Loans held for sale $ 2,955 $ 1,246 $ 902 137.2% 227.6%
For the Nine
For the Quarters Ended Months Ended
------------------------- ----------------
9/30/ 6/30/ 9/30/ 9/30/ 9/30/
ALLOWANCE FOR LOAN LOSSES 2008 2008 2007 2008 2007
---------------------------------------------------------------------
Balance, beginning of
period $ 8,128 $ 6,305 $ 4,520 $ 6,143 $ 4,081
Provision expense 3,200 2,775 210 6,215 520
Credit losses charged
against allowance (1,033) (1,024) (16) (2,135) (36)
Recoveries of loans
previously charged off 55 72 6 127 155
Credit from purchase of
Business First Bank -- -- -- -- --
---------------------------------------------------------------------
Balance, end of period $10,350 $ 8,128 $ 4,720 $10,350 $ 4,720
=====================================================================
Net (charge-offs) /
recoveries $ (978) $ (952) $ (10) $(2,008)
Net (charge-offs)
recoveries / average
loans outstanding 0.15% 0.14% 0.00% 0.30%
Allowance for loan losses
/ total loans outstanding 1.55% 1.23% 0.99%
Percentage
For the Quarters Ended Change Vs.
------------------------- ----------------
9/30/ 6/30/ 9/30/ 6/30/ 9/30/
NON-PERFORMING ASSETS 2008 2008 2007 2008 2007
---------------------------------------------------------------------
Loans on non-accrual
status $22,390 $13,414 $ 641 66.9% 3393.0%
Loans more than 90 days
delinquent, still
accruing -- 93 -- -100.0% --
---------------------------------------------------------------------
Total non-performing
loans 22,390 13,507 641 65.8% 3393.0%
---------------------------------------------------------------------
Other real estate owned
(OREO) 197 197 -- 0.0% --
---------------------------------------------------------------------
Total non-performing
assets $22,587 $13,704 $ 641 64.8% 3423.7%
=====================================================================
Total non-performing
assets to total assets 2.87% 1.71% 0.11% 67.4% 2461.1%
Percentage
For the Quarters Ended Change Vs.
---------------------------- --------------
9/30/ 6/30/ 9/30/ 6/30/ 9/30/
DEPOSITS 2008 2008 2007 2008 2007
---------------------------------------------------------------------
Non-interest bearing
demand $155,267 $168,589 $130,221 -7.9% 19.2%
---------------------------------------------------------------------
Interest-bearing demand 71,601 83,387 56,931 -14.1% 25.8%
Regular savings accounts 22,484 23,067 21,606 -2.5% 4.1%
Money market accounts 175,659 187,345 137,039 -6.2% 28.2%
---------------------------------------------------------------------
Total interest-bearing
transaction & savings
accounts 269,744 293,799 215,576 -8.2% 25.1%
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Time deposits 144,011 141,903 150,513 1.5% -4.3%
Brokered deposits 20,229 30,227 -- -33.1% --
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Total deposits $589,251 $634,518 $496,310 -7.1% 18.7%
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Nine Months
Three Months Ended Ended
------------------------- ----------------
PROFITABILITY / 9/30/ 6/30/ 9/30/ 9/30/ 9/30/
PERFORMANCE RATIOS 2008 2008 2007 2008 2007
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Operating efficiency 64.40% 66.31% 66.89% 67.55% 66.67%
Return on average equity 2.94% 3.84% 12.09% 5.41% 12.68%
Return on average
tangible equity 3.71% 4.92% 13.54% 6.90% 14.25%
Return on average assets 0.27% 0.35% 1.12% 0.50% 1.16%
Other operating income to
average assets 0.76% 0.89% 0.90% 0.81% 0.92%
Other operating expense
to average assets 3.59% 3.81% 3.97% 3.83% 3.99%
Net interest income to
average assets 4.81% 4.88% 5.04% 4.87% 5.06%
Non-interest income to
total net revenue 13.71% 15.48% 15.16% 14.29% 15.39%
ASSET QUALITY AND CAPITAL
RATIOS
Non-performing loans to
total gross loans 3.36% 2.05% 0.13%
Non-performing loans as a
% of ALLL 216.33% 166.18% 13.58%
Non-performing loans as a
% of total assets 2.84% 1.69% 0.11%
Non-performing loans to
primary capital 31.56% 19.06% 1.19%
Leverage ratio 9.01% 8.87% 10.69%
Tier I Risk-Based Capital
Ratio 9.67% 9.66% 11.65%
Total Risk-Based Capital
Ratio 10.92% 10.83% 12.58%
AVERAGE BALANCES AND RATES
(dollars in thousands)
Nine Months
For the Three Months Ended Ended
---------------------------- ------------------
9/30/ 6/30/ 9/30/ 9/30/ 9/30/
2008 2008 2007 2008 2007
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Average investments $ 60,474 $ 64,298 $ 38,166 $ 60,125 $ 39,964
Average federal
funds sold 3,342 9,249 29,447 6,855 15,117
Average loans 667,441 656,917 466,749 649,511 468,007
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Average earning
assets 731,257 730,464 534,362 716,491 523,088
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Average non-earning
assets 65,230 67,083 46,858 65,028 52,443
Average for loan
losses (8,664) (6,475) (4,600) (7,120) (4,401)
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Average assets $787,823 $791,072 $576,620 $774,399 $571,130
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Average non-interest
bearing demand
deposits $155,582 $152,927 $133,432 $150,890 $137,706
Average interest
bearing deposits 442,799 448,341 353,845 449,669 318,118
Average other
borrowings 109,721 109,667 26,804 94,282 56,700
Average non-interest
bearing liabilities 7,585 7,856 9,098 7,894 6,525
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Average liabilities 715,687 718,791 523,179 702,735 519,049
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Average equity 72,136 72,281 53,441 71,664 52,081
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Average liabilities
and equity $787,823 $791,072 $576,620 $774,399 $571,130
=====================================================================
Interest rate yield
on loans 6.99% 7.18% 8.55% 7.31% 8.60%
Interest rate yield
on investments 5.18% 4.99% 4.44% 4.98% 4.45%
Interest rate yield
on federal funds
sold 2.14% 1.96% 5.19% 2.53% 5.10%
Interest rate yield
on interest earnings
assets 6.82% 6.92% 8.07% 7.07% 8.18%
Interest rate expense
on deposits 1.47% 1.48% 2.55% 1.67% 2.31%
Interest rate expense
on other borrowings 2.91% 2.81% 6.08% 3.09% 5.93%
Interest rate expense
on interest bearing
liabilities 2.17% 2.15% 3.69% 2.38% 3.70%
Average equity to
average assets 9.16% 9.14% 9.27% 9.25% 9.12%
Net interest margin 5.18% 5.28% 5.44% 5.26% 5.53%