MADISON, Wis., Nov. 13, 2009 (GLOBE NEWSWIRE) -- Today Anchor BanCorp Wisconsin Inc. (Nasdaq:ABCW) announced its second quarter results indicating a net loss of $72.0 million, or $3.56 per common share, for the quarter ended September 30, 2009. This compares with a net loss of $62.9 million for the previous quarter and $23.3 million for the same quarter last year.
Overview
* Net loss of $3.56 per share for the quarter. * Net loan charge-offs decline more than 56 percent versus the previous quarter. * Non-core branch closures and other cost savings measures to generate more than $2 million in annual expense reductions. * The construction and development loan portfolio declined more than 100 basis points during the quarter to 11.78 percent of total loans as of September 30, 2009. * Average core deposits grew more than $9.2 million during the quarter.
More Stringent Credit Standards Drive Loan Loss Provisions
The main component of the second quarter loss was a $60.9 million loan loss provision. The results were also impacted by related factors, including legal expenditures associated with increased foreclosure activity and a $7.1 million write-down in the value of Other Real Estate Owned property.
"This quarter's losses were mainly comprised of additional provisions for loan losses, which is a result of the measures we've put in place to aggressively scrutinize our loan portfolio in the face of the continued challenging environment, especially with respect to real estate development," said AnchorBank CEO Chris Bauer. The allowance for loan losses increased 96 basis points for the quarter to 4.59 percent of total loans.
More stringent credit analysis, standards and monitoring are a direct result of improvements made in processes and staff changes in the Credit Administration. These changes include the addition of Martha Hayes as Senior Vice President, Chief Credit Officer; Kurt Reindl as 1st Vice President of Credit Administration and Scott Ciano as 1st Vice President of Special Assets. All three bring substantial experience in working in the areas of credit administration, collections and the management of troubled assets.
"The improvements we have made in our credit operations are clearly beginning to show results. For example, early stage delinquencies fell $20.8 million, or 26.5 percent, since the beginning of the fiscal year," said Bauer.
Actual Loan Charge-Offs Decline Substantially
"Charge-offs decreasing by more than 56 percent from the previous fiscal quarter is an indication that these aggressive measures are successfully purging our loan portfolio of the loans that fail to meet our stricter quality standards," Bauer added.
Despite the loss, the bank reported a reduction in the charge-offs of non-performing assets from $68.1 million in charge-offs in the first fiscal quarter to $29.7 million in charge-offs for the quarter ending September 30, 2009.
Cost Reduction Efforts Continue
The bank has also shown progress in substantially reducing core operating expenses, including:
* Ten percent reduction in staff positions compared with the same period in 2008. * Closure of three non-core branches in August 2009, saving approximately $1 million in annual operating expenses. * Suspension of the employee 401(k) match, which will create a projected annualized savings of approximately $1.3 million.
"Management is taking specific additional actions which we anticipate will significantly reduce core operating expenses," added Bauer.
While non-interest expenses rose to $40.8 million for the second quarter, versus $30.2 million for the same period in the prior year, this increase was substantially attributable to credit-related expenses (meaning expenses associated with collection efforts and carrying non-performing assets) as well as an increase in FDIC insurance premiums. Excluding these factors, non-interest expenses would have been down slightly over the previous year.
Balance Sheet Strategies
Total assets declined by 5.9 percent as compared with September 30, 2008, to $4.6 billion, including $28.9 million in loans held for sale comprised principally of single family mortgages generated during the quarter but which had not yet been sold on the secondary market.
"We continue to pursue the securitization and sale of loans as well as sales of non-core branches to further reduce our balance sheet," said Bauer. "These measures will help position AnchorBank to achieve the capital ratios required of us and will go a long way to ensure the continued soundness of AnchorBank."
Sales of loans, investments and mortgage-related securities generated net gains of $3.2 million during the quarter versus a net loss of $1.1 million on such sales for the same period last year.
Additionally, the construction and development portfolio declined by $61.7 million, or 12.3 percent, during the second quarter, reducing real estate development loans to 11.78 percent of loans from 13.01 percent.
Deposits Grow
Deposits grew 11.7 percent to $3.7 billion as of September 30, 2009, as compared to the same date last year. Benefiting from a stable interest rate environment, total interest expense declined 3.6 percent versus last year to $23.0 million despite the increase in deposits.
Average core deposits grew more than $9.2 million during the quarter. "The increase in deposit levels is indicative of the strength of our core franchise and our customer relationships, despite the challenges we face in certain segments of our business mix," commented Bauer.
Capital Levels
As a result of the second quarter loss, ABCW is undercapitalized at the bank level, according to the terms of the Order to Cease and Desist by the Office of Thrift Supervision. However, the bank's Tier 1 capital remains adequately capitalized according to traditional regulatory standards, and the bank continues to reduce its balance sheet through loan sales and other strategies. The bank's total loan portfolio was decreased by $222 million in the second quarter, with a fiscal year-to-date reduction of more than $600 million in total assets.
The sum of AnchorBank's regulatory bank capital and reserves was $404.5 million at the beginning of the quarter and $369.3 million at the end of the quarter. Potential future credit losses can ultimately be absorbed from these sources. The bank's liquidity position continues to be strong, exceeding $734 million at September 30, 2009.
A copy of the financials is attached to this press release.
About Anchor BanCorp Wisconsin Inc.
Anchor BanCorp's stock is traded on the NASDAQ exchange under the symbol ABCW. AnchorBank fsb, the wholly-owned subsidiary, has more than 70 offices. All are located in Wisconsin.
For More Information
For more information, contact Dale Ringgenberg, CFO, or Chris Bauer, CEO, at (608) 252-1810.
Forward-Looking Statements
This news release contains certain forward-looking statements based on unaudited financial statements, results of operations and business of Anchor BanCorp. This includes any statements regarding management's plans, objectives or goals for future operations, products or services, and forecasts of its revenues, earnings or other measures of performance. Forward-looking statements are subject to various factors which could cause actual results to differ materially from these estimates. These factors include changes in general economic conditions, deposit flows, loan demand, asset quality, competition, legislation or regulation and accounting principles, policies or guidelines affecting reports filed with the Securities and Exchange Commission for financial and business information regarding Anchor BanCorp, including information which could affect Anchor BanCorp's forward-looking statements. Outcomes related to such statements are subject to numerous risk factors and uncertainties, including those listed in the company's Annual Report filed on Form 10-K.
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ANCHOR BANCORP WISCONSIN INC.
FINANCIAL HIGHLIGHTS
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(Dollars in thousands - except per share amounts)
(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
-------------------- --------------------
2009 2008 2009 2008
-------------------- --------------------
Operations Data:
Net interest income $ 18,939 $ 29,954 $ 43,854 $ 63,375
Provision for loan
losses 60,900 46,964 131,300 56,364
Net gain on sale of
loans 1,062 808 12,465 3,051
Other non-interest
income 9,796 7,439 17,953 17,005
Non-interest expense 40,791 30,167 77,855 56,958
Loss before income tax
benefit (71,894) (38,930) (134,883) (29,891)
Income tax benefit -- (15,618) -- (12,052)
Net loss (71,894) (23,312) (134,883) (17,839)
(Income) loss
attributable to non-
controlling interest in
real estate
partnerships (85) 13 -- 52
Preferred stock
dividends and discount
accretion (3,228) -- (6,472) --
Net loss available to
common equity of Anchor
BanCorp (75,207) (23,299) (141,355) (17,787)
Selected Financial Ratios
(1):
Yield on earning assets 4.62% 5.59% 4.71% 5.82%
Cost of funds 3.00 3.00 2.89 3.11
Interest rate spread 1.62 2.59 1.82 2.71
Net interest margin 1.58 2.62 1.79 2.74
Return on average assets (5.71) (1.89) (5.22) (0.72)
Return on average equity (222.48) (27.69) (162.12) (10.44)
Average equity to
average assets 2.57 6.84 3.22 6.88
Non-interest expense to
average assets 3.23 2.45 3.01 2.30
Per Share:
Basic earnings (loss)
per common share $ (3.56) $ (1.11) $ (6.68) $ (0.85)
Diluted earnings (loss)
per common share (3.56) (1.11) (6.68) (0.85)
Dividends per common
share -- 0.10 -- 0.28
Book value per common
share (1.34) 14.76 (1.34) 14.76
September 30,
------------------------ Percent
2009 2008 Change
------------------------ -----------
Financial Condition:
Total assets $ 4,637,712 $ 4,928,074 -5.9%
Loans receivable, net
Held for sale 28,904 4,099 605.1
Held for investment 3,506,464 4,069,369 (13.8)
Investment securities
available for sale, at fair
value 24,833 112,778 (78.0)
Mortgage-related securities
available for sale, at fair
value 449,177 273,766 64.1
Mortgage-related securities
held to maturity, at
amortized cost 44 55 (20.0)
Deposits and accrued interest 3,739,997 3,349,335 11.7
Other borrowed funds 759,479 1,210,562 (37.3)
Stockholders' equity 81,075 317,501 (74.5)
Allowance for loan losses 170,664 64,614 164.1
Non-performing assets 453,510 184,754 145.5
--------------------------------
(1) Annualized when appropriate.
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ANCHOR BANCORP WISCONSIN INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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Sept. 30, March 31,
2009 2009
(Unaudited)
----------------------
(In Thousands)
Assets
Cash and cash equivalents $ 370,022 $ 433,826
Investment securities available for sale, at
fair value 24,833 77,684
Mortgage-related securities available for
sale, at fair value 449,177 407,301
Mortgage-related securities held to
maturity, at amortized cost 44 50
Loans receivable, net
Held for sale 28,904 161,964
Held for investment 3,506,464 3,896,439
Foreclosed properties and repossessed
assets, net 38,431 52,563
Real estate held for development and sale 2,042 16,120
Office properties and equipment 47,396 48,123
Deferred tax asset, net of valuation
allowance -- 16,202
Accrued interest and other assets 170,399 162,783
---------- ----------
Total assets $4,637,712 $5,273,055
========== ==========
Liabilities and Stockholders' Equity
Deposits
Non-interest bearing $ 295,096 $ 274,392
Interest bearing and accrued interest 3,444,901 3,649,435
---------- ----------
Total deposits and accrued interest 3,739,997 3,923,827
Other borrowed funds 759,479 1,078,392
Other liabilities 57,161 56,704
---------- ----------
Total liabilities 4,556,637 5,058,923
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Preferred stock, $.10 par value, 5,000,000
shares authorized, 110,000 shares issued
and outstanding 77,900 74,185
Common stock, $.10 par value, 100,000,000
shares authorized, 25,363,339 shares issued 2,536 2,536
Additional paid-in capital 109,317 109,327
Retained earnings (deficit), substantially
restricted (7,645) 134,234
Accumulated other comprehensive loss (1,366) (6,337)
Treasury stock (3,773,547 and 3,793,554
shares, respectively), at cost (94,155) (94,744)
Deferred compensation obligation (5,512) (5,480)
---------- ----------
Total Anchor BanCorp stockholders' equity 81,075 213,721
---------- ----------
Non-controlling interest in real estate
partnerships -- 411
---------- ----------
Total liabilities and stockholders'
equity $4,637,712 $5,273,055
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ANCHOR BANCORP WISCONSIN INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
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(Unaudited)
Three Months Ended Six Months Ended
September 30, September 30,
2009 2008 2009 2008
--------- --------- --------- ---------
(In Thousands - except per share amounts)
Interest income:
Loans $ 49,551 $ 59,450 $ 103,341 $ 125,161
Mortgage-related
securities 5,174 3,687 10,750 7,355
Investment
securities and
Federal Home Loan
Bank stock 299 780 770 1,581
Interest-bearing
deposits 361 71 630 399
--------- --------- --------- ---------
Total interest
income 55,385 63,988 115,491 134,496
Interest expense:
Deposits 23,040 23,898 47,173 50,740
Other borrowed funds 13,406 10,136 24,464 20,381
--------- --------- --------- ---------
Total interest
expense 36,446 34,034 71,637 71,121
--------- --------- --------- ---------
Net interest income 18,939 29,954 43,854 63,375
Provision for loan
losses 60,900 46,964 131,300 56,364
--------- --------- --------- ---------
Net interest income
(loss) after
provision for loan
losses (41,961) (17,010) (87,446) 7,011
Non-interest income:
Loan servicing
income 669 1,414 487 2,614
Credit enhancement
income 319 479 696 896
Service charges on
deposits 4,146 4,134 7,975 7,993
Investment and
insurance
commissions 798 1,073 1,602 2,254
Net gain on sale of
loans 1,062 808 12,465 3,051
Net gain (loss) on
sale of investments
and mortgage-
related securities 2,108 (1,902) 3,613 (1,902)
Net impairment
losses recognized
in earnings (186) -- (399) --
Other revenue from
real estate
partnership
operations 1,482 1,032 2,393 2,505
Other 460 1,209 1,586 2,645
--------- --------- --------- ---------
Total non-interest
income 10,858 8,247 30,418 20,056
Non-interest expense:
Compensation 14,026 14,665 28,316 27,972
Occupancy 2,647 2,557 5,060 4,973
Federal insurance
premiums 1,407 162 4,837 260
Furniture and
equipment 2,092 2,067 4,142 4,193
Data processing 1,689 1,823 3,621 3,635
Marketing 642 741 1,015 1,327
Other expenses from
real estate
partnership
operations 2,208 1,724 3,659 3,915
Net expense - REO
operations 7,245 1,952 11,177 2,141
Mortgage servicing
rights impairment
recovery (6) -- (1,350) --
Foreclosure cost
advance impairment -- -- 3,708 --
Other 8,841 4,476 13,670 8,542
--------- --------- --------- ---------
Total non-interest
expense 40,791 30,167 77,855 56,958
--------- --------- --------- ---------
Loss before income
tax benefit (71,894) (38,930) (134,883) (29,891)
Income tax benefit -- (15,618) -- (12,052)
--------- --------- --------- ---------
Net loss (71,894) (23,312) (134,883) (17,839)
(Income) loss
attributable to
non-controlling
interest in real
estate partnerships (85) 13 -- 52
--------- --------- --------- ---------
Preferred stock
dividends and
discount accretion (3,228) -- (6,472) --
--------- --------- --------- ---------
Net loss available
to common equity
of Anchor BanCorp $ (75,207) $ (23,299) $(141,355) $ (17,787)
========= ========= ========= =========
Earnings (loss) per
common share:
Basic $ (3.56) $ (1.11) $ (6.68) $ (0.85)
Diluted (3.56) (1.11) (6.68) (0.85)