BELLINGHAM, Wash., April 30, 2009 (GLOBE NEWSWIRE) -- Horizon Financial Corp. (Nasdaq:HRZB), the bank holding company for Horizon Bank ("Bank"), today reported that a $40.0 million provision for loan losses contributed to a net loss of $25.7 million, or $2.15 per share, for the fiscal fourth quarter ended March 31, 2009. The net loss totaled $33.4 million, or $2.79 per share, including a $65.0 million loan loss provision for the year ended March 31, 2009.
"Fiscal 2009 was one of the most challenging years on record, and the regional and national recession is likely to continue to present challenges to our asset quality. We continue to make significant progress in de-leveraging our balance sheet, diversifying our loan portfolio and maintaining strong liquidity," said Rich Jacobson, Chief Executive Officer. "Despite the difficult environment, we generated net revenues (net-interest income plus non-interest income) in excess of non-interest expenses, resulting in pre-tax, pre-provision income of $11.1 million for the fiscal year ended March 31, 2009.
"The recent increase in home sales in most of our markets during the quarter ended March 31, 2009, was a positive sign. We believe residential real estate values, however, will likely test the market as the excess inventory of newly built homes, including those owned by other regional banks, come onto the market in the coming months," said Jacobson. "As a result of our impairment analysis of our loan portfolio and measurement of the accounting estimate for probable losses, we charged off $26.3 million in loans during the fourth quarter and recorded a $40.0 million provision for loan losses. We continue to work diligently with our borrowers to complete those projects in process and we do not expect to fund new construction or development projects until region-wide housing inventories decline. Net commercial real estate loans in our portfolio have declined more than $100.0 million in the past year, with construction and land development loans balances down $77.7 million."
Net loans receivable declined $63.5 million during the fourth quarter of fiscal 2009, following a $52.5 million decrease in net loans receivable in the immediate prior quarter. "The decline in loan totals was a direct result of our efforts to de-leverage our balance sheet by aggressively selling loans and charging off the appropriate amount of each loan that we do not expect to recover," Jacobson noted.
Capital Ratios, Liquidity and Credit Quality
Horizon Bank was adequately capitalized by regulatory standards as of March 31, 2009, with both its tangible common equity to assets and leverage ratios at 6.34%. Tier 1 capital to risk adjusted assets was 7.29% and the total risk-based capital ratio was 8.58% at March 31, 2009. "We intend to improve our capital levels to comply with our recent agreement with our regulators by continuing to de-leverage our balance sheet. In addition, we anticipate returning to the equity markets for additional capital when market conditions improve," said Jacobson.
"We continue to maintain strong liquidity with a sound mix of funding sources, including growth in core deposits, potential sale of investments and loans, and our lines of credit with the Federal Home Loan Bank and Federal Reserve Bank," Jacobson noted. "The extension of FDIC insurance to all non-interest bearing deposits and the increased limit to $250,000 from $100,000 per account has brought insurance coverage to the vast majority of our deposits."
Total non-performing assets were $104.7 million, or 7.13% of total assets at March 31, 2009, up from $83.7 million, or 5.69% of total assets at December 31, 2008, and $12.3 million, or 0.88% of total assets at March 31, 2008. Non-performing loans increased to $85.4 million, or 7.35% of gross loans at March 31, 2009, from $66.9 million, or 5.52% of gross loans at December 31, 2008, and $11.6 million, or 0.97% of gross loans at March 31, 2008.
"The increase in non-performing assets was primarily related to commercial land development loans in Snohomish and Pierce Counties," said Greg Spear, Chief Financial Officer. "While we believe the majority of our builders have sound financial foundations and are committing additional resources to their development projects, the downturn in the housing market has significantly affected our customers. We are working with these customers to reduce housing inventories, using a variety of options, including short sales. Together with our capital position and the increased allowance for loan losses, we believe we have the flexibility to aggressively address our non-performing assets."
"We recorded net charge offs during the quarter ended March 31, 2009, of $26.3 million to bring carrying values down to a level we believe properly recognizes the permanence of the losses in some loans and accurately reflects current market conditions," stated Spear.
The allowance for loan losses was $39.0 million, or 3.47% of net loans at March 31, 2009, compared to $25.3 million, or 2.13% of net loans at December 31, 2008, and $19.1 million, or 1.60% of net loans a year ago.
The following table summarizes our non-performing assets by category and county at March 31, 2009:
Non-performing Assets Whatcom Skagit Snohomish King
--------------------------------------
(dollars in 000s)
1-4 Family residential $ 100 $ 381 $ 640 $ --
1-4 Family construction -- -- 605 --
--------------------------------------
Subtotal 100 381 1,245 --
Commercial land development 10,138 162 32,040 --
Commercial construction 362 1,371 6,763 12,568
Multi family residential -- -- -- --
Commercial real estate -- -- -- --
Commercial loans -- -- 721 1,497
Home equity secured 73 249 -- --
Other consumer loans 17 -- -- --
--------------------------------------
Subtotal 10,590 1,782 39,524 14,065
Total nonperforming assets $ 10,690 $ 2,163 $ 40,769 $ 14,065
======================================
Percent of total assets 10% 2% 39% 14%
Pierce Thurston Total
----------------------------
1-4 Family residential $ -- $ -- $ 1,121 1%
1-4 Family construction 2,095 -- 2,700 3%
----------------------------
Subtotal 2,095 -- 3,821 4%
Commercial land development 15,586 2,286 60,212 57%
Commercial construction 11,625 3,994 36,683 35%
Multi family residential -- -- -- 0%
Commercial real estate -- -- -- 0%
Commercial loans 33 -- 2,251 2%
Home equity secured 1,345 -- 1,667 2%
Other consumer loans -- -- 17 0%
----------------------------
Subtotal 28,589 6,280 100,830 96%
Total nonperforming assets $ 30,684 $ 6,280 $104,651 100%
============================
Percent of total assets 29% 6% 100%
Balance Sheet Review
Total assets were $1.47 billion at March 31, 2009, relatively unchanged from the immediate prior quarter and up 5% from $1.39 billion at March 31, 2008. Net loans declined to $1.12 billion at March 31, 2009, compared to $1.19 billion at December 31, 2008, and March 31, 2008. Commercial real estate loans, including commercial construction and land development, continue to make up the majority of the portfolio representing 64% of net loans at March 31, 2009, down from 69% a year ago. Commercial business loans represent 17%, residential loans represent 13%, and consumer loans represent 6% of net loans, at the end of the fiscal year. "We are seeing strong demand for mortgage refinancing, but overall commercial loan demand has declined in connection with the slowing economy," noted Jacobson.
The investment and mortgage-backed securities portfolio totaled $66.9 million at March 31, 2009. "During fiscal 2009, we took a write down of $309,000 as a result of "other than temporary impairment" ("OTTI") on private-label mortgage-backed securities we received from the in-kind distribution of the Shay AMF family of mutual funds. There were no OTTI charges taken in the fourth quarter," said Spear.
"Last quarter, we completed a valuation of our goodwill asset and concluded it was necessary to charge-off the entire goodwill asset, which increased our other expenses for the year by $545,000," said Spear.
Total deposits increased 18% year-over-year to $1.22 billion at March 31, 2009, compared to $1.20 billion at December 31, 2008, and $1.04 billion at March 31, 2008. Core deposits, including transaction accounts and certificates of deposit under $100,000, increased 5% year-over-year and 2% from the prior quarter. "We have been very pleased with the continued support we have received from our customers," stated Jacobson. Core deposits comprise 54% of total deposits. Other deposits include Jumbo CDs (over $100,000), which totaled $303.3 million, or 25% of deposits, up from $290.2 million in the immediate prior quarter and $287.3 million a year ago. Brokered CDs, including CDARs deposits, totaled $261.4 million compared to $250.7 million in the prior quarter and $121.0 million a year ago. "As we continue to de-leverage our balance sheet, we intend to reduce our reliance on wholesale funding sources, including brokered deposits."
Stockholders' equity was $93.0 million at March 31, 2009, compared to $118.3 million at December 31, 2008 and $128.3 million a year ago. At March 31, 2009, book value was $7.76 per share, compared to $9.88 per share at December 31, 2008, and $10.79 per share a year earlier. Tangible book value was $7.75 per share compared to $9.86 per share in the immediate prior quarter and $10.72 per share a year ago.
Review of Operations
Net revenue (net interest income plus non-interest income) was $8.5 million in the fourth quarter of fiscal 2009 compared to $14.6 million for the comparable quarter in fiscal 2008. Net revenue for the fiscal year 2009 was $44.7 million down from $60.6 million in fiscal 2008.
Net interest income declined 45% to $6.9 million in the current quarter compared to $12.4 million for the year ago quarter. Net interest income in the fiscal year 2009 declined 29% to $38.3 million from $53.6 million in fiscal 2008, with the yield on earning assets at 5.79% down from 8.17% in the prior fiscal year. "The decline in net interest income was largely due to the loss in interest income from the rise in non-performing loans," stated Spear. Also contributing to the decline in net interest income was the lower yield on earning assets, reflecting the declining yields on approximately 28% of the loan portfolio which is tied to the prime rate. Lower yields were partially offset by a lower cost on interest bearing liabilities, reflecting the general decline in interest rates over the last year. Total interest expense declined 16% in the current quarter to $9.4 million, from $11.1 million for the fiscal fourth quarter a year ago. For fiscal 2009, total interest expense was $39.4 million, down 16% from $46.6 million a year ago.
The provision for loan losses was $40.0 million in the fourth quarter of fiscal 2009, $10.0 million in the immediate prior quarter and $2.0 million in the fourth quarter of fiscal 2008. In the current fiscal year, the provision for loan losses was $65.0 million compared to $4.1 million for the prior fiscal year. As indicated above, the increased loan loss provisions in fiscal 2009 are a result of a variety of factors, including the regional housing market and its adverse impact on our loan portfolio, particularly in the construction and land development categories.
The increase in mortgage refinancing created by falling mortgage interest rates helped to boost fee income from the sale of one-to-four family mortgage loans in the last quarter of the fiscal year. Non-interest income was $1.6 million in the fourth quarter of fiscal 2009, compared to $1.0 million in the third quarter of fiscal 2009 and $2.2 million in the fourth quarter of fiscal 2008. For fiscal 2009, non-interest income was $6.3 million compared to $7.0 million in fiscal 2008. Non-interest income in fiscal 2008 included a $480,000 gain on investment securities compared to a $500,000 loss in fiscal 2009.
Non-interest expense increased 15% to $9.5 million in the fourth quarter of fiscal 2009, from $8.3 million in the third quarter of fiscal 2009, and 35% from the year ago quarter. For the fiscal year, non-interest expenses increased 15% to $33.6 million from $29.2 million in fiscal 2008. These increases reflect higher costs for managing the other real estate owned portfolio, increased FDIC insurance premiums, additional other expenses related to credit quality, the charge-off of the goodwill asset and increased legal and accounting fees. The reduction in force completed in the prior quarter contributed to a drop of 6% in compensation costs as compared to the prior quarter and 3% from the same quarter a year ago.
With higher costs and lower revenues, the efficiency ratio (defined as non-interest expense divided by the sum of net interest income and non-interest income) was 112.00% for the quarter ended March 31, 2009, as compared to 81.08% for the quarter ended December 31 2008 and 48.21% for the same period last year. The efficiency ratio was 75.13% for the 2009 fiscal year compared to 48.12% for the last fiscal year.
The net interest margin was 2.03% in the fourth quarter of fiscal 2009, a decrease of 74 basis points from 2.77% in the immediate prior quarter and down 185 basis points from 3.88% in the same period a year ago. For the year, the net interest margin was 2.86%, down 151 basis points from 4.37% in fiscal 2008. The reversal of interest for non-accrual loans accounted for 39 basis points of the decline in the fourth quarter of fiscal 2009 and 36 basis points for the year.
The yield on earning assets declined in the fourth quarter of fiscal 2009 to 4.79% from 5.73% in the prior quarter and 7.36% in the fourth quarter a year ago. In the fourth quarter of fiscal 2009, the cost of interest-bearing liabilities was 2.77%, compared to 3.02% in the preceding quarter and 3.60% for the fourth quarter of fiscal 2008. In fiscal 2009, the yield on earning assets was 5.79% down from 8.17% a year ago and the cost of interest bearing liabilities was 2.99% down from 3.93% a year ago.
Conference Call and Industry Conference Information
Management will host a conference call later today, April 30, 2009, at 1:30 pm PDT (4:30 pm EDT) to discuss the fourth quarter and fiscal 2009 year end results. The live call can be accessed by dialing (303) 262-2053 or on the web at www.horizonbank.com. The replay can be heard at www.horizonbank.com.
Horizon Financial will also be presenting at the D.A. Davidson 11th Annual Financial Services Conference on May 6 and 7, at the Bell Harbor Conference Center, Seattle, WA. Rich Jacobson and Greg Spear are scheduled to present on Thursday, May 7th at 3:00 p.m. PDT. Copies of the slide presentation will be available at www.horizonbank.com.
Horizon Financial Corp. is a $1.47 billion, state-chartered bank holding company headquartered in Bellingham, Washington. Its primary subsidiary, Horizon Bank, maintains a regional banking presence that has been serving customers for 87 years, and operates 18 full-service offices, four commercial loan centers and four real estate loan centers throughout Whatcom, Skagit, Snohomish and Pierce Counties in Washington.
Economic data was derived from reports by the Washington State Employment Security Department, Labor Market and Economic Analysis at www.workforceexplorer.com, the Economic Forecaster at www.economicforecaster.com, Marple's Pacific Northwest Letter at www.marples.com, and other real estate data at www.wcrer.wsu.edu and http://www.nwrealestate.com/nwrpub/common/news.cfm.
Safe Harbor Statement: Except for the historical information in this news release, the matters described herein are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs, results of examinations by our banking regulators and our ability to comply with the regulatory agreement with our regulators, our ability to increase our capital and manage our liquidity, our ability to manage loan delinquency rates, the ability to successfully expand existing relationships, deposit pricing and the ability to gather low-cost deposits, success in new markets and expansion plans, expense management and the efficiency ratio, expanding or maintaining the net interest margin, interest rate risk, the local and national economic environment, and other risks and uncertainties discussed from time to time in Horizon Financial's filings with the Securities and Exchange Commission ("SEC"). Accordingly, undue reliance should not be place on forward- looking statements. These forward-looking statements speak only as of the date of this release. Horizon undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the SEC report of Horizon, particularly its Form 10-K for the fiscal year ended March 31, 2008 and its Form 10-Q filings for the quarters ended June 30, 2008, September 30, 2008 and December 31, 2008 for meaningful cautionary language discussion why actual results may vary from those anticipated by management.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in 000s, except share data)
Quarter Quarter Quarter
Ended Three Ended One Ended
Mar 31, Month Dec 31, Year Mar 31,
2009 Change 2008 Change 2008
--------------------------------------------------------------------
Interest income:
Interest on
loans $ 15,432 -16% $ 18,363 -32% $ 22,637
Interest and
dividends on
securities 843 -2% 862 -7% 906
----------- ----------- -----------
Total
interest
income 16,275 -15% 19,225 -31% 23,543
Interest
expense:
Interest on
deposits 8,593 -4% 8,927 -7% 9,215
Interest on
borrowings 801 -21% 1,019 -58% 1,914
----------- ----------- -----------
Total
interest
expense 9,394 -6% 9,946 -16% 11,129
----------- ----------- -----------
Net interest
income 6,881 -26% 9,279 -45% 12,414
Provision for
loan losses 40,000 300% 10,000 1900% 2,000
----------- ----------- -----------
Net interest
income
(loss)
after
provision
for loan
losses (33,119) 4493% (721) -418% 10,414
Non-interest
income:
Service fees 854 14% 747 -6% 909
Net gain on
sales of
loans -
servicing
released 402 396% 81 110% 191
Net gain
(loss) on
sales of
loans -
servicing
retained 9 N/A -- -94% 158
Net gain
(loss) on
investment
securities -- -100% (302) -100% 480
Other
non-interest
income 372 -18% 451 -22% 475
----------- ----------- -----------
Total
non-interest
income 1,637 68% 977 -26% 2,213
Non-interest
expense:
Compensation
and employee
benefits 3,861 -6% 4,103 -3% 3,962
Building
occupancy 1,230 4% 1,180 2% 1,205
REO/collection
expense 1,445 196% 488 3424% 41
FDIC insurance 306 34% 228 993% 28
Data
processing 247 2% 243 1% 244
Advertising 11 -93% 152 -95% 200
Other
non-interest
expense 2,441 27% 1,921 78% 1,371
----------- ----------- -----------
Total
non-interest
expense 9,541 15% 8,315 35% 7,051
Income (loss)
before
provision for
income taxes (41,023) N/A (8,059) N/A 5,576
Provision
(Benefit) for
income taxes (15,362) N/A (2,939) N/A 1,804
----------- ----------- -----------
Net Income
(Loss) $ (25,661) N/A $ (5,120) N/A $ 3,772
=========== =========== ===========
Earnings per
share :
Basic earnings
(loss) per
share $ (2.15) N/A $ (0.43) N/A $ 0.32
Diluted
earnings
(loss) per
share N/A N/A N/A N/A $ 0.31
Weighted
average shares
outstanding:
Basic 11,950,796 0% 11,970,478 0% 11,943,021
Common stock
equivalents -- N/A -- N/A 81,437
----------- ----------- -----------
Diluted 11,950,796 0% 11,970,478 -1% 12,024,458
=========== =========== ===========
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited) (in 000s, except per share data)
Twelve Months Twelve Months
Ended Ended
March 31, March 31,
2009 Change 2008
--------------------------------------------------------------------
Interest income:
Interest on loans $ 74,049 -23% $ 96,320
Interest and dividends on
securities 3,616 -8% 3,923
----------- -----------
Total interest income 77,665 -23% 100,243
Interest expense:
Interest on deposits 34,606 -9% 38,073
Interest on borrowings 4,748 -45% 8,572
----------- -----------
Total interest expense 39,354 -16% 46,645
----------- -----------
Net interest income 38,311 -29% 53,598
Provision for loan losses 65,000 1485% 4,100
----------- -----------
Net interest income (loss)
after provision for loan losses (26,689) -154% 49,498
Non-interest income:
Service fees 3,379 -6% 3,601
Net gain on sales of loans -
servicing released 833 -2% 848
Net gain on sales of loans -
servicing retained 6 -97% 176
Net gain (loss) on investment
securities (500) -204% 480
Other non-interest income 2,631 36% 1,939
----------- -----------
Total non-interest income 6,349 -10% 7,044
Non-interest expense:
Compensation and employee
benefits 16,804 1% 16,595
Building occupancy 4,711 0% 4,698
REO/collection expense 2,578 1491% 162
FDIC insurance 793 602% 113
Data processing 975 2% 957
Advertising 601 -26% 812
Other non-interest expense 7,093 21% 5,843
----------- -----------
Total non-interest expense 33,555 15% 29,180
Income (loss) before provision
for income taxes (53,895) N/A 27,362
Provision (Benefit) for income taxes (20,529) N/A 8,949
----------- -----------
Net Income (Loss) $ (33,366) N/A $ 18,413
=========== ===========
Earnings per share :
Basic earnings (loss) per share $ (2.79) N/A $ 1.52
Diluted earnings (loss) per share N/A N/A $ 1.51
Weighted average shares outstanding:
Basic 11,945,835 -1% 12,097,615
Common stock equivalents -- -100% 99,168
----------- -----------
Diluted 11,945,835 -2% 12,196,783
=========== ===========
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited) (in 000s, except share data)
Three One
March 31, Month Dec 31, Year March 31,
2009 Change 2008 Change 2008
--------------------------------------------------------------------
Assets:
Cash and due
from banks $ 17,881 -24% $ 23,391 -20% $ 22,412
Interest-
bearing
deposits 126,159 56% 80,869 4232% 2,912
Investment
securities -
available
for sale 28,083 -1% 28,425 -32% 41,241
Mortgage-
backed
securities -
available
for sale 38,782 -3% 39,954 -1% 39,100
Mortgage-
backed
securities -
held to
maturity 8 -11% 9 -73% 30
Federal Home
Loan Bank
stock 7,247 0% 7,247 -18% 8,867
Loans held
for sale 4,745 129% 2,072 79% 2,644
Gross loans
receivable 1,162,641 -4% 1,212,479 -4% 1,210,592
Reserve for
loan losses (38,981) 54% (25,309) 104% (19,114)
----------- ----------- -----------
Net loans
receivable 1,123,660 -5% 1,187,170 -6% 1,191,478
Investment
in real
estate in a
joint venture 17,985 1% 17,879 2% 17,567
Accrued
interest and
dividends
receivable 6,629 0% 6,598 -16% 7,916
Property and
equipment,
net 26,195 -2% 26,691 -6% 27,778
Net deferred
income tax
assets 15,164 126% 6,698 143% 6,253
Income tax
receivable 12,442 119% 5,694 NA --
Other real
estate owned 19,227 15% 16,791 2835% 655
Other assets 23,764 4% 22,824 2% 23,325
----------- ----------- -----------
Total
assets $ 1,467,971 0% $ 1,472,312 5% $ 1,392,178
=========== =========== ===========
Liabilities:
Deposits $ 1,229,764 3% $ 1,195,424 18% $ 1,038,792
Other
borrowed
funds 114,348 -11% 128,968 -41% 192,343
Borrowing
related to
investment
in real
estate in a
joint venture 24,440 2% 23,942 9% 22,448
Accounts
payable and
other
liabilities 4,093 13% 3,625 -29% 5,746
Advances by
borrowers
for taxes
and insurance 377 93% 195 -9% 414
Deferred
compensation 1,923 5% 1,837 -1% 1,944
Income tax
payable -- NA -- -100% 2,174
----------- ----------- -----------
Total
liabili-
ties $ 1,374,945 2% $ 1,353,991 9% $ 1,263,861
Stockholders'
equity:
Serial
preferred
stock, $1.00
par value;
10,000,000
shares
authorized;
none issued or
outstanding $ -- $ -- $ --
Common stock,
$1.00 par
value;
30,000,000
shares
authorized;
11,980,796,
11,976,669, and
11,892,208
shares
outstanding 11,981 0% 11,977 1% 11,892
Additional
paid-in
capital 51,298 0% 51,210 1% 50,597
Retained
earnings 28,333 -48% 53,994 -56% 63,906
Accumulated
other
comprehensive
income 1,414 24% 1,140 -26% 1,922
----------- ----------- -----------
Total stock-
holders'
equity 93,026 -21% 118,321 -28% 128,317
----------- ----------- -----------
Total
liabilities
and stock-
holders'
equity $ 1,467,971 0% $ 1,472,312 5% $ 1,392,178
=========== =========== ===========
Intangible
assets:
Goodwill $ -- NA $ -- -100% $ 545
Mortgage
servicing
asset 201 -12% 229 -21% 254
----------- ----------- -----------
Total
intangible
assets $ 201 -12% $ 229 -75% $ 799
=========== =========== ===========
LOANS (unaudited) March 31, Dec 31, March 31,
(in 000s) 2009 2008 2008
--------------------------------------------------------------------
1-4 Mortgage
1-4 Family
residential $ 167,048 $ 167,737 $ 165,824
1-4 Family
construction 28,290 35,500 35,303
Participations
sold (42,853) (48,943) (54,269)
---------- ---------- ----------
Subtotal 152,485 154,294 146,858
Commercial land
development 186,580 201,683 183,827
Commercial
construction 222,207 263,113 302,708
Multi family
residential 51,970 42,722 45,049
Commercial real
estate 281,481 273,906 300,109
Commercial loans 201,973 209,072 177,685
Home equity
secured 58,228 59,538 47,351
Other consumer
loans 7,717 8,151 7,005
---------- ---------- ----------
Subtotal 1,010,156 1,058,185 1,063,734
---------- ---------- ----------
Subtotal 1,162,641 1,212,479 1,210,592
Less:
Reserve for
loan losses (38,981) (25,309) (19,114)
---------- ---------- ----------
Net loans
receivable $1,123,660 $1,187,170 $1,191,478
========== ========== ==========
Net residential
loans $ 149,625 13% $ 152,502 13% $ 145,565 12%
Net commercial
loans 193,687 17% 203,760 17% 174,263 15%
Net commercial
real estate
loans 716,743 64% 764,714 64% 818,215 69%
Net consumer
loans 63,605 6% 66,194 6% 53,435 4%
--------------- --------------- ---------------
$1,123,660 100% $1,187,170 100% $1,191,478 100%
=============== =============== ===============
DEPOSITS
(unaudited) March 31, Dec 31, March 31,
(in 000s) 2009 2008 2008
--------------------------------------------------------------------
Core Deposits
Savings $ 15,850 1% $ 17,677 1% $ 17,933 2%
Checking 83,286 7% 76,626 6% 72,434 7%
Checking - non
interest
bearing 80,103 6% 90,376 8% 70,438 7%
Money market 133,022 11% 154,021 13% 183,063 17%
Certificates of
Deposit under
$100,000 352,785 29% 315,827 27% 286,657 27%
--------------- --------------- ---------------
Subtotal 665,046 54% 654,527 55% 630,525 60%
Other Deposits
Certificates of
Deposit
$100,000 and
above 303,308 25% 290,227 24% 287,281 28%
Brokered
Certificates
of Deposit 232,703 19% 239,353 20% 120,986 12%
CDARS Deposits 28,707 2% 11,317 1% -- 0%
--------------- --------------- ---------------
Total Other
Deposits 564,718 46% 540,897 45% 408,267 40%
--------------- --------------- ---------------
Total $1,229,764 100% $1,195,424 100% $1,038,792 100%
=============== =============== ===============
WEIGHTED AVERAGE INTEREST RATES:
Twelve Twelve
Quarter Quarter Quarter Months Months
Ended Ended Ended Ended Ended
March 31, Dec 31, March 31, March 31, March 31,
(unaudited) 2009 2008 2008 2009 2008
--------------------------------------------------------------------
Yield on loans 5.25% 5.97% 7.60% 6.06% 8.47%
Yield on investments 1.86% 3.08% 4.16% 3.04% 4.39%
---- ---- ---- ---- ----
Yield on interest-
earning assets 4.79% 5.73% 7.36% 5.79% 8.17%
Cost of deposits 2.81% 3.07% 3.61% 3.03% 3.83%
Cost of borrowings 2.39% 2.66% 3.56% 2.71% 4.44%
---- ---- ---- ---- ----
Cost of interest-
bearing
liabilities 2.77% 3.02% 3.60% 2.99% 3.93%
AVERAGE BALANCES
Twelve Twelve
Quarter Quarter Quarter Months Months
Ended Ended Ended Ended Ended
(unaudited) March 31, Dec 31, March 31, March 31, March 31,
(in 000s) 2009 2008 2008 2009 2008
--------------------------------------------------------------------
Loans $1,176,795 $1,229,327 $1,192,023 $1,221,081 $1,137,051
Investments 181,631 111,800 87,138 119,052 89,324
---------- ---------- ---------- ---------- ----------
Total
interest-
earning
assets 1,358,426 1,341,127 1,279,161 1,340,133 1,226,375
Deposits 1,224,033 1,163,647 1,020,979 1,140,659 992,866
Borrowings 133,950 153,579 214,973 175,111 193,272
---------- ---------- ---------- ---------- ----------
Total
interest-
bearing
liabili-
ties $1,357,983 $1,317,226 $1,235,952 1,315,770 1,186,138
Average
assets $1,470,142 $1,461,806 $1,391,746 $1,446,282 $1,340,698
Average
stock-
holders'
equity $ 105,673 $ 120,236 $ 128,128 $ 117,849 $ 126,762
CONSOLIDATED FINANCIAL RATIOS
Twelve Twelve
Quarter Quarter Quarter Months Months
Ended Ended Ended Ended Ended
March 31, Dec 31, March 31, March 31, March 31,
(unaudited) 2009 2008 2008 2009 2008
--------------------------------------------------------------------
Return on
average
assets -6.98% -1.40% 1.08% -2.31% 1.37%
Return on
average
equity -97.13% -17.03% 11.77% -28.31% 14.53%
Efficiency
ratio 112.00% 81.08% 48.21% 75.13% 48.12%
Net
interest
spread 2.02% 2.71% 3.76% 2.80% 4.24%
Net
interest
margin 2.03% 2.77% 3.88% 2.86% 4.37%
Equity-to-
assets
ratio 6.34% 8.04% 9.22%
Book value
per
share $ 7.76 $ 9.88 $ 10.79
Tangible
book value
per
share $ 7.75 $ 9.86 $ 10.72
RESERVE FOR LOAN LOSSES
Twelve Twelve
Quarter Quarter Quarter Months Months
Ended Ended Ended Ended Ended
(unaudited) March 31, Dec 31, March 31, March 31, March 31,
(in 000s) 2009 2008 2008 2009 2008
--------------------------------------------------------------------
Balance at
beginning
of
period $ 25,309 $ 25,579 $ 17,891 $ 19,114 $ 15,889
Provision
for loan
losses 40,000 10,000 2,000 65,000 4,100
Charge
offs -
net of
recoveries (26,328) (10,270) (777) (45,133) (875)
---------- ---------- ---------- ---------- ----------
Balance at
end of
period $ 38,981 $ 25,309 $ 19,114 $ 38,981 $ 19,114
Reserves/
Gross
Loans
Receivable 3.35% 2.09% 1.58%
Reserves/
Net Loans
Receivable 3.47% 2.13% 1.60%
NON-PERFORMING ASSETS
(unaudited)
(dollars March 31, Dec 31, March 31,
in 000s) 2009 2008 2008
--------------------------------------------
Accruing
loans -
90 days
past due $ 500 $ 5,643 $ --
Non-accrual
loans 84,924 61,288 11,608
---------- ---------- ----------
Total non-
performing
loans $ 85,424 $ 66,931 $ 11,608
Total non-
performing
loans/
gross loans 7.35% 5.52% 0.97%
Real estate
owned $ 19,227 $ 16,791 $ 655
---------- ---------- ----------
Total non-
performing
assets $ 104,651 $ 83,722 $ 12,263
Total non-
performing
assets/
total
assets 7.13% 5.69% 0.88%