SAN JOSE, Calif., Oct. 22, 2009 (GLOBE NEWSWIRE) -- Heritage Commerce Corp (Nasdaq:HTBK), parent company of Heritage Bank of Commerce, reported today a third quarter 2009 net loss allocable to common shareholders of $2.7 million, or $(0.23) per diluted common share. The third quarter of 2009 reflects a $7.1 million provision for loan losses and $599,000 in dividends and discount accretion on preferred stock. In the third quarter a year ago, the Company reported net income of $2.4 million, or $0.21 per diluted common share. For the first nine months of 2009, net loss allocable to common shareholders was $13.2 million, or $(1.12) per diluted common share, compared to net income of $1.1 million, or $0.09 per diluted common share, for the same period a year ago.
"We continue to see strong demand for Small Business Administration loans, and improvement in the secondary market for SBA loans allowed us to sell some of these loans, contributing to our third quarter and year-to-date noninterest income in 2009. We also saw solid sales activity in our residential housing portfolios, resulting in a continued reduction in our land and construction loan portfolio," said Walter Kaczmarek, President and Chief Executive Officer. "Additionally, we have seen our net interest margin improve for the second consecutive quarter and our nonperforming loans remained relatively flat in the third quarter. These factors helped in reducing our loss in the third quarter significantly from the second quarter. Our capital ratios improved and continue to exceed regulatory well-capitalized standards," Mr. Kaczmarek noted.
Third Quarter Developments
* The net interest margin increased 7 basis points to 3.62% in the third quarter of 2009 from 3.55% in the second quarter of 2009. * Heritage Bank of Commerce remains well-capitalized with a leverage ratio of 9.82%, a tier 1 risk-based capital ratio of 11.24%, and a total risk-based capital ratio of 12.51% at September 30, 2009. * On a consolidated basis, the Company remains well-capitalized with a leverage ratio of 10.08%, a tier 1 risk-based capital ratio of 11.55%, and a total risk-based capital ratio of 12.82% at September 30, 2009. * The Company has tangible common equity to tangible assets of 6.69% at September 30, 2009. * Total assets were $1.37 billion at September 30, 2009, a decrease of 10% from a year ago and a decrease of 5% over the past quarter. * Gains on sale of SBA loans contributed $643,000 to noninterest income in both the third quarter and nine months ended September 30, 2009. * Loans, excluding loans held-for-sale, decreased 13% to $1.08 billion at September 30, 2009 from $1.25 billion a year ago and decreased 7% from $1.16 billion at June 30, 2009. * Land and construction loans decreased $33.4 million to $197.4 million, or 18% of the total loan portfolio compared to $230.8 million or 20% of total loans at June 30, 2009. * Nonperforming assets decreased $3.5 million to $58.2 million, or 4.26% of total assets, from $61.7 million, or 4.30% of total assets at June 30, 2009. * The allowance for loan losses increased to $29.0 million, or 2.68% of total loans, compared to $22.3 million, or 1.79%, a year ago, and decreased from $31.4 million, or 2.70%, at June 30, 2009. * Net charge-offs increased to $9.6 million in the third quarter of 2009, compared to $129,000 in the third quarter of 2008 and $3.2 million in the second quarter of 2009. * The Federal Reserve Bank completed the field work portion of its regularly scheduled examination of Heritage Commerce Corp and Heritage Bank of Commerce in September 2009.
Balance Sheet, Capital Management and Credit Quality
At September 30, 2009, the Company's assets totaled $1.37 billion, compared to $1.51 billion a year ago and $1.44 billion at June 30, 2009. Loans, excluding loans held-for-sale, totaled $1.08 billion at September 30, 2009, compared to $1.25 billion at September 30, 2008 and $1.16 billion at June 30, 2009. SBA loans not held-for-sale, which are included in commercial loans or owner occupied commercial real estate loans, totaled $88.6 million at September 30, 2009, compared to $104.9 million a year ago.
Commercial and industrial loans account for 38% of the total loan portfolio. Commercial real estate loans account for another 38% of the portfolio, of which 51% were owner occupied by businesses. Land and construction loans decreased to 18% of the portfolio. Consumer and home equity loans account for the remaining 6% of the total. "We continue to see progress in the re-balancing of our loan portfolio, particularly in our reduction of land and construction loans," said Mr. Kaczmarek.
The securities portfolio of $96.6 million at September 30, 2009 consisted primarily of U.S. government sponsored entities' debt securities, short-term U.S. Treasury securities, mortgage-backed securities, collateralized mortgage obligations, and municipal bonds. "All of our mortgage-backed securities and collateralized mortgage obligations are issued by U.S. government sponsored entities. These high quality securities investments are managed to provide maximum liquidity," commented Mr. Kaczmarek.
Nonperforming assets decreased to $58.2 million at September 30, 2009 from $61.7 million at June 30, 2009. Nonperforming assets were $25.1 million at September 30, 2008. Nonperforming assets were 4.26% of total assets at September 30, 2009, 4.30% at June 30, 2009 and 1.66% at September 30, 2008. At September 30, 2009, land and construction loans were 52% of nonperforming assets, commercial and industrial loans were 20%, commercial real estate loans were 13%, SBA loans were 10% and other real estate owned ("OREO") was 5%.
Total OREO was $3.0 million at September 30, 2009 and $3.1 million at June 30, 2009. In the third quarter of 2009, three properties moved from nonaccrual status into OREO and four OREO properties were sold. The sales consisted of two SBA properties, one commercial real estate parcel and one land and construction property resulting in a loss of $44,000 in the third quarter of 2009.
The allowance for loan losses at September 30, 2009 was $29.0 million, or 2.68% of total loans, and 52.4% of nonperforming loans, while the allowance for loan losses a year ago was $22.3 million, or 1.79% of total loans, and 92.6% of nonperforming loans. The allowance for loan losses at June 30, 2009, was $31.4 million, or 2.70% of total loans, and 53.5% of nonperforming loans.
Deposits totaled $1.12 billion at September 30, 2009, compared to $1.19 billion at September 30, 2008 and $1.16 billion at June 30, 2009. Savings and money market deposits decreased $76.3 million, or 19%, from September 30, 2008. The decreases in savings and money market deposits were primarily due to lower balances in title insurance company, escrow, and real estate exchange facilitators' accounts. At September 30, 2009, title insurance company, escrow, and real estate exchange facilitators' accounts were $32.9 million, compared to $82.5 million at September 30, 2008. Time deposits $100,000 and over decreased $33.8 million, or 20% from September 30, 2008 and $36.3 million, or 21%, from June 30, 2009, primarily due to a reduction of public funds.
Heritage Bank of Commerce is a member of the Certificate of Deposit Account Registry Service ("CDARS") program. The CDARS program allows customers with deposits in excess of FDIC insured limits to obtain coverage on time deposits through a network of banks within the CDARS program. Deposits gathered through this program have been considered brokered deposits under regulatory guidelines. Deposits in the CDARS program totaled $41.4 million at September 30, 2009, and $14.2 million at June 30, 2009. There were no deposits in the CDARS program at September 30, 2008.
Shareholders' equity was $173.4 million, or $11.44 book value per common share, at September 30, 2009, compared to $144.3 million, or $12.21 book value per common share, a year ago. The increase in shareholders' equity was due to the issuance of $40 million in preferred stock to the U.S. Treasury as a participant in its Capital Purchase Program during the fourth quarter of 2008. Shareholders' equity was $174.6 million, or $11.55 book value per common share, at June 30, 2009. The Company's consolidated leverage ratio at September 30, 2009, was 10.08%, compared to 8.48% at September 30, 2008, and 9.96% at June 30, 2009.
Operating Results
Operating results in 2009 compared to 2008 have been adversely impacted by net interest margin compression, reversals of interest income on nonaccrual loans and a higher provision for loan losses.
Net interest income decreased to $11.6 million for the third quarter of 2009 from $13.0 million for the third quarter of 2008 and remained flat compared to the second quarter of 2009. The net interest margin was 3.62% for the third quarter of 2009, compared to 3.83% for the third quarter a year ago and 3.55% for the second quarter of 2009. The 7 basis point increase in the net interest margin for the third quarter of 2009 compared to the second quarter of 2009 was primarily due to the higher average loan yields (a 14 basis points improvement) and a four basis points decline in the average cost of funds. The decrease in the net interest margin from the third quarter of 2008 was primarily the result of the 175 basis point decline in short-term interest rates from October 8, 2008 through December 16, 2008.
Noninterest income was $2.4 million for the third quarter of 2009, compared to $1.7 million for the third quarter of 2008 and $1.6 million for the second quarter of 2009. In the first nine months of 2009, noninterest income was $5.6 million, compared to $5.0 million in the first nine months a year ago. The increase in noninterest income in third quarter and first nine months of 2009 compared to the same periods in 2008 was primarily due to $643,000 in gains on sales of SBA loans.
The Company had a provision for loan losses of $7.1 million for the third quarter of 2009, compared to $1.6 million for the third quarter of 2008, and $10.7 million for the second quarter of 2009. The Company had a provision for loan losses of $28.3 million for the nine months ended September 30, 2009 and $11.0 million for the nine months ended September 30, 2008. The significant increase in provision for loan losses in 2009 reflects a higher volume of classified and nonperforming loans and an increase in loan charge-offs caused by challenging conditions in commercial lending and the residential housing market, turmoil in the financial markets, and the prolonged downturn in the overall economy.
Noninterest expense was $10.7 million for the third quarter of 2009, compared to $10.4 million in the third quarter of 2008 and $12.1 million in the second quarter of 2009. In the first nine months of 2009, noninterest expense was $34.2 million, compared to $32.0 million in the first nine months a year ago. Deposit insurance premiums and regulatory assessments were $631,000 in the third quarter of 2009, compared to $238,000 in the third quarter of 2008, and $1.2 million in the second quarter of 2009, which included a $657,000 charge for the FDIC special assessment levied on all FDIC insured banks. Professional fees were $691,000 in the third quarter of 2009, compared to $468,000 in the third quarter of 2008, and $1.2 million in the second quarter of 2009. Higher professional fees in the second quarter of 2009 related to problem loans and a branch acquisition transaction that was terminated.
The income tax benefit for the quarter ended September 30, 2009 was $1.8 million, as compared to an income tax expense of $309,000 in the third quarter a year ago, and an income tax benefit of $4.1 million in the second quarter of 2009. The negative effective income tax rates are due to the loss before income taxes. The difference in the effective tax rate compared to the combined federal and state statutory tax rate of 42% is primarily the result of the Company's investment in life insurance policies whose earnings are not subject to taxes, tax credits related to investments in low income housing limited partnerships, and interest income from tax-free municipal securities.
The efficiency ratio was 76.89% in the third quarter of 2009, compared to 70.56% in the third quarter of 2008 and 90.90% in the second quarter of 2009. The efficiency ratio for the first nine months of 2009 increased to 85.38% from 72.48% a year ago. The efficiency ratio increased in 2009 primarily due to compression of the net interest margin and an increase in noninterest expense, as discussed above.
Recent Regulatory Examination
The Company also announced that the Federal Reserve Board ("FRB") recently completed the field work portion of its regularly scheduled examination in September 2009. As a result of the Company's losses in 2009, primarily due to higher provisions for loan losses because of credit quality deterioration, the Company expects to enter into a written agreement with the FRB. The agreement will require the Company to develop an updated strategic plan to improve the quality of assets, maintain adequate capital and ensure sustained earnings, and to take some other actions to improve our appraisal policies, capital planning and liquidity contingency funding plan. The Company will also be required to request the approval of the FRB prior to incurring or increasing any debt, paying dividends on common and preferred stock, paying interest on trust preferred securities, repurchasing capital stock and making certain changes to its directors or senior executive officers. The Company believes the FRB will be finalizing the written agreement within the next 60 to 90 days.
Heritage Commerce Corp, a bank holding company established in February 1998, is the parent company of Heritage Bank of Commerce, established in 1994 and headquartered in San Jose with full-service branches in Los Gatos, Fremont, Danville, Pleasanton, Walnut Creek, Morgan Hill, Gilroy, Mountain View, and Los Altos. Heritage Bank of Commerce is an SBA Preferred Lender with Loan Production Offices in Sacramento, Oakland and Santa Rosa, California. For more information, please visit www.heritagecommercecorp.com.
Forward Looking Statement Disclaimer
Forward-looking statements are based on management's knowledge and belief as of today and include information concerning the Company's possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Company's ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements. The forward-looking statements could be affected by many factors, including but not limited to: (1) our ability to attract new deposits and loans; (2) local, regional, and national economic conditions and events and the impact they may have on us and our customers; (3) risks associated with concentrations in real estate related loans; (4) increasing levels of classified assets, including non-performing assets, which could adversely affect our earnings and liquidity; (5) market interest rate volatility; (6) stability of funding sources and continued availability of borrowings; (7) changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth and constrain our activities, including the terms of an anticipated written agreement to be entered into by the Company and the Board of Governors of the Federal Reserve System; (8) significant decline in the market value of the Company that could result in an impairment of goodwill; (9) our ability to raise capital or incur debt on reasonable terms; (10) regulatory limits on the Heritage Bank of Commerce's ability to pay dividends to the Company; (11) effectiveness of the Emergency Economic Stabilization Act of 2008, the American Recovery and Reinvestment Act of 2009 and other legislative and regulatory efforts to help stabilize the U.S. financial markets; (12) future legislative or administrative changes to the U.S. Treasury Capital Purchase Program enacted under the Emergency Economic Stabilization Act of 2008; (13) the impact of the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009 and related rules and regulations on our business operations and competitiveness, including the impact of executive compensation restrictions, which may affect our ability to retain and recruit executives in competition with other firms who do not operate under those restrictions; and (14) our success in managing the risks involved in the foregoing items. For a discussion of factors which could cause results to differ, please see the Company's reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission and the Company's press releases. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
CONSOLIDATED INCOME STATEMENTS
(in $000's, unaudited)
Percent
For the Three Months Ended: Change From:
---------------------------------- ----------------
Sept. 30, June 30, Sept. 30, June 30, Sept.30,
2009 2009 2008 2009 2008
---------------------------------------------------- ----------------
Interest Income $ 15,495 $ 15,824 $ 19,197 -2% -19%
Interest Expense 3,872 4,135 6,151 -6% -37%
-----------------------------------
Net Interest
Income 11,623 11,689 13,046 -1% -11%
Provision for
Loan Losses 7,129 10,704 1,587 -33% 349%
-----------------------------------
Net Interest
Income after
Provision for
Loan Losses 4,494 985 11,459 356% -61%
Noninterest
Income:
Gain on Sale of
Loans 643 -- -- N/A N/A
Servicing
Income 382 408 491 -6% -22%
Increase in
Cash Surrender
Value of Life
Insurance 420 415 416 1% 1%
Service Charges
and Other Fees
on Deposit
Accounts 557 537 505 4% 10%
Other 348 241 276 44% 26%
-----------------------------------
Total Noninterest
Income 2,350 1,601 1,688 47% 39%
-----------------------------------
Noninterest
Expense:
Salaries and
Employee
Benefits 5,730 5,643 5,665 2% 1%
Professional
Fees 691 1,229 468 -44% 48%
Deposit
Insurance
Premiums and
Regulatory
Assessments 631 1,220 238 -48% 165%
Occupancy and
Equipment 1,005 972 1,348 3% -25%
Other 2,687 3,016 2,678 -11% 0%
-----------------------------------
Total Noninterest
Expense 10,744 12,080 10,397 -11% 3%
-----------------------------------
Income (Loss)
Before Income
Taxes (3,900) (9,494) 2,750 59% -242%
Income Tax
Expense
(Benefit) (1,824) (4,113) 309 -56% -690%
-----------------------------------
Net Income
(Loss) $ (2,076) $ (5,381) $ 2,441 61% -185%
Dividends and
Discount
Accretion
on Preferred
Stock (599) (591) -- 1% N/A
-----------------------------------
Net Income (Loss)
Allocable to
Common
Shareholders $ (2,675) $ (5,972) $ 2,441 55% -210%
===================================
PER COMMON SHARE
DATA
(unaudited)
Basic Earnings
(Loss) Per
Share $ (0.23) $ (0.51) $ 0.21 54% -210%
Diluted Earnings
(Loss) Per
Share $ (0.23) $ (0.51) $ 0.21 54% -210%
Common Shares
Outstanding at
Period-End 11,820,509 11,820,509 11,820,509 0% 0%
Book Value Per
Share $ 11.44 $ 11.55 $ 12.21 -1% -6%
Tangible Book
Value Per Share $ 7.47 $ 7.56 $ 8.18 -1% -9%
KEY FINANCIAL
RATIOS
(unaudited)
Annualized Return
on Average Equity -4.67% -11.90% 6.78% 61% -169%
Annualized Return
on Average
Tangible Equity -6.38% -16.08% 10.15% 60% -163%
Annualized Return
on Average Assets -0.58% -1.48% 0.65% 61% -189%
Annualized Return
on Average
Tangible Assets -0.60% -1.53% 0.67% 61% -190%
Net Interest
Margin 3.62% 3.55% 3.83% 2% -6%
Efficiency Ratio 76.89% 90.90% 70.56% -15% 9%
AVERAGE BALANCES
(in $000's,
unaudited)
Average Assets $1,411,954 $1,457,162 $1,499,734 -3% -6%
Average
Tangible
Assets $1,364,926 $1,409,973 $1,452,044 -3% -6%
Average
Earning
Assets $1,272,341 $1,320,604 $1,353,730 -4% -6%
Average Loans
Held-for-Sale $ 17,596 $ 225 -- 7709% N/A
Average Total
Loans $1,131,654 $1,206,254 $1,231,931 -6% -8%
Average
Deposits $1,153,103 $1,150,220 $1,191,151 0% -3%
Average Demand
Deposits
- Noninterest
Bearing $ 267,528 $ 255,011 $ 261,578 5% 2%
Average Interest
Bearing
Deposits $ 885,575 $ 895,209 $ 929,573 -1% -5%
Average Interest
Bearing
Liabilities $ 937,212 $ 992,010 $1,066,264 -6% -12%
Average Equity $ 176,198 $ 181,396 $ 143,318 -3% 23%
Average Tangible
Equity $ 129,170 $ 134,207 $ 95,628 -4% 35%
For the Nine
Months Ended:
-----------------------
Sept. 30, Sept. 30, Percent
2009 2008 Change
----------------------- -------
Interest Income $ 47,351 $ 57,791 -18%
Interest Expense 12,888 18,673 -31%
-----------------------
Net Interest
Income 34,463 39,118 -12%
Provision for
Loan Losses 28,253 11,037 156%
-----------------------
Net Interest
Income after
Provision for
Loan Losses 6,210 28,081 -78%
Noninterest
Income:
Gain on Sale of
Loans 643 -- N/A
Servicing
Income 1,210 1,347 -10%
Increase in
Cash Surrender
Value of Life
Insurance 1,248 1,232 1%
Service Charges
and Other Fees
on Deposit
Accounts 1,665 1,457 14%
Other 808 958 -16%
-----------------------
Total Noninterest
Income 5,574 4,994 12%
-----------------------
Noninterest
Expense:
Salaries and
Employee
Benefits 17,831 17,694 1%
Professional
Fees 2,833 2,112 34%
Deposit
Insurance
Premiums and
Regulatory
Assessments 2,590 626 314%
Occupancy and
Equipment 2,893 3,511 -18%
Other 8,038 8,031 0%
-----------------------
Total
Noninterest
Expense 34,185 31,974 7%
-----------------------
Income (Loss)
Before Income
Taxes (22,401) 1,101 -2135%
Income Tax Expense
(Benefit) (10,990) 39 -28279%
-----------------------
Net Income
(Loss) $ (11,411) $ 1,062 -1174%
Dividends and
Discount
Accretion
on Preferred
Stock (1,776) -- N/A
-----------------------
Net Income (Loss)
Allocable to
Common
Shareholders $ (13,187) $ 1,062 -1342%
=======================
PER COMMON SHARE
DATA
(unaudited)
Basic Earnings
(Loss) Per
Share $ (1.12) $ 0.09 -1344%
Diluted Earnings
(Loss) Per
Share $ (1.12) $ 0.09 -1344%
Common Shares
Outstanding at
Period-End 11,820,509 11,820,509 0%
Book Value Per
Share $ 11.44 $ 12.21 -6%
Tangible Book
Value Per Share $ 7.47 $ 8.18 -9%
KEY FINANCIAL
RATIOS
(unaudited)
Annualized Return
on Average Equity -8.43% 0.95% -987%
Annualized Return
on Average
Tangible Equity -11.40% 1.39% -920%
Annualized Return
on Average Assets -1.05% 0.10% -1150%
Annualized Return
on Average
Tangible Assets -1.09% 0.10% -1190%
Net Interest
Margin 3.51% 4.04% -13%
Efficiency Ratio 85.38% 72.48% 18%
AVERAGE BALANCES
(in $000's,
unaudited)
Average Assets $1,450,959 $1,443,641 1%
Average Tangible
Assets $1,403,771 $1,395,761 1%
Average Earning
Assets $1,314,599 $1,292,758 2%
Average Loans
Held-for-Sale $ 6,005 -- N/A
Average Total
Loans $1,191,034 $1,159,535 3%
Average
Deposits $1,155,586 $1,154,705 0%
Average Demand
Deposits
- Noninterest
Bearing $ 258,725 $ 257,054 1%
Average Interest
Bearing
Deposits $ 896,861 $ 897,651 0%
Average Interest
Bearing
Liabilities $ 981,581 $1,008,692 -3%
Average Equity $ 180,975 $ 150,110 21%
Average Tangible
Equity $ 133,787 $ 102,230 31%
CONSOLIDATED BALANCE SHEETS
Percent
End of Period: Change From:
----------------------------------- ----------------
(in $000's, Sept. 30, June 30, Sept. 30, June 30, Sept. 30
unaudited) 2009 2009 2008 2009 2008
---------------------------------------------------- ----------------
ASSETS
Cash and Due
from Banks $ 42,105 $ 31,315 $ 35,718 34% 18%
Federal Funds
Sold 150 150 100 0% 50%
Securities
Available-for-
Sale,at Fair
Value 96,618 101,837 107,565 -5% -10%
Loans
Held-for-Sale,
Including
Deferred Costs 21,976 20,506 -- 7% N/A
Loans:
Commercial
Loans 414,441 457,981 532,367 -10% -22%
Real Estate-
Mortgage 405,486 412,430 405,897 -2% 0%
Real Estate-
Land and
Construction 197,374 230,798 253,134 -14% -22%
Home Equity 51,768 55,372 51,981 -7% 0%
Consumer Loans 11,476 3,596 5,549 219% 107%
-----------------------------------
Loans 1,080,545 1,160,177 1,248,928 -7% -13%
Deferred Loan
Costs, net 1,023 1,489 1,412 -31% -28%
-----------------------------------
Total Loans,
Including
Deferred
Costs 1,081,568 1,161,666 1,250,340 -7% -13%
Allowance for
Loan Losses (28,976) (31,398) (22,323) -8% 30%
-----------------------------------
Net Loans 1,052,592 1,130,268 1,228,017 -7% -14%
Company Owned
Life Insurance 41,897 41,476 40,236 1% 4%
Premises &
Equipment, net 9,182 9,312 9,318 -1% -1%
Goodwill 43,181 43,181 43,181 0% 0%
Intangible
Assets 3,750 3,910 4,407 -4% -15%
Accrued Interest
Receivable and
Other Assets 56,159 55,069 43,339 2% 30%
-----------------------------------
Total Assets $1,367,610 $1,437,024 $1,511,881 -5% -10%
===================================
LIABILITIES AND
SHAREHOLDERS' EQUITY
Liabilities:
Deposits
Demand Deposits
-Noninterest
Bearing $ 250,515 $ 258,464 $ 257,739 -3% -3%
Demand
Deposits
-Interest
Bearing 139,919 134,318 139,377 4% 0%
Savings and
Money Market 324,611 331,444 400,863 -2% -19%
Time Deposits,
Under $100 43,559 43,772 34,792 0% 25%
Time Deposits,
$100 and Over 134,533 170,858 168,361 -21% -20%
Time Deposits -
CDARS 41,418 14,216 -- 191% N/A
Time
Deposits
Brokered 181,819 210,475 185,052 -14% -2%
-----------------------------------
Total Deposits 1,116,374 1,163,547 1,186,184 -4% -6%
Securities Sold
under Agreement
to Repurchase 25,000 30,000 35,000 -17% -29%
Note payable -- -- 15,000 N/A -100%
Other Short-
term Borrowing -- 15,000 80,000 -100% -100%
Notes Payable
To Subsidiary
Grantor Trusts 23,702 23,702 23,702 0% 0%
Accrued Interest
Payable and
Other
Liabilities 29,111 30,193 27,711 -4% 5%
-----------------------------------
Total
Liabilities 1,194,187 1,262,442 1,367,597 -5% -13%
Shareholders'
Equity:
Preferred
Stock, Net 38,159 38,070 -- 0% N/A
Common Stock 79,884 79,524 76,490 0% 4%
Accumulated
Other
Comprehensive
Income (Loss) (2,183) (3,250) (3,694) -33% -41%
Retained
Earnings 57,563 60,238 71,488 -4% -19%
-----------------------------------
Total
Shareholders'
Equity 173,423 174,582 144,284 -1% 20%
-----------------------------------
Total
Liabilities
and
Shareholders'
Equity $1,367,610 $1,437,024 $1,511,881 -5% -10%
===================================
CREDIT
QUALITY DATA
(in $000's,
unaudited)
Nonaccrual
Loans $ 55,120 $ 57,889 $ 23,095 -5% 139%
Loans Over 90
Days Past Due
and Still
Accruing 144 786 1,016 -82% -86%
-----------------------------------
Total
Nonperforming
Loans 55,264 58,675 24,111 -6% 129%
Other Real
Estate Owned 2,973 3,062 970 -3% 206%
-----------------------------------
Total
Nonperforming
Assets $ 58,237 $ 61,737 $ 25,081 -6% 132%
===================================
Net Charge-offs $ 9,551 $ 3,206 $ 129 198% 7304%
Allowance for
Loan Losses to
Total Loans 2.68% 2.70% 1.79% -1% 50%
Allowance for
Loan Losses to
Nonperforming
Loans 52.43% 53.51% 92.58% -2% -43%
Nonperforming
Assets to
Total Assets 4.26% 4.30% 1.66% -1% 157%
Nonperforming
Loans to
Total Loans 5.11% 5.05% 1.93% 1% 165%
OTHER PERIOD-END
STATISTICS
(unaudited)
Shareholders'
Equity / Total
Assets 12.68% 12.15% 9.54% 4% 33%
Tangible Common
Equity /
Tangible
Assets 6.69% 6.43% 6.60% 4% 1%
Loan to Deposit
Ratio 96.88% 99.84% 105.41% -3% -8%
Noninterest
Bearing
Deposits /
Total Deposits 22.44% 22.21% 21.73% 1% 3%
Leverage Ratio 10.08% 9.96% 8.48% 1% 19%
NET INTEREST INCOME
AND NET INTEREST MARGIN
For the Three Months Ended For the Three Months Ended
September 30, 2009 September 30, 2008
--------------------------- ----------------------------
Interest Average Interest Average
(in $000's, Average Income/ Yield/ Average Income/ Yield/
unaudited) Balance Expense Rate Balance Expense Rate
-------------------- --------- ------- ---------- -------- ------
Assets:
Loans,
gross $1,149,250 $ 14,727 5.08% $1,231,931 $ 17,919 5.79%
Securities 100,439 754 2.98% 119,582 1,267 4.22%
Interest
bearing
deposits
in other
financial
institutions 21,347 14 0.26% 182 1 2.19%
Federal
funds
sold 1,305 -- 0.00% 2,035 10 1.95%
---------- --------- ---------- --------
Total
interest
earning
assets 1,272,341 15,495 4.83% 1,353,730 19,197 5.64%
--------- --------
Cash and
due from
banks 24,665 34,234
Premises
and
equipment,
net 9,276 9,185
Goodwill
and other
intangible
assets 47,028 47,690
Other
assets 58,644 54,895
---------- ----------
Total
assets $1,411,954 $1,499,734
========== ==========
Liabilities and
shareholders' equity:
Deposits:
Demand,
interest
bearing $ 133,301 74 0.22% $ 144,809 308 0.85%
Savings
and
money
market 332,922 589 0.70% 415,826 1,624 1.55%
Time
deposits,
under
$100 43,527 240 2.19% 33,893 224 2.63%
Time
deposits,
$100
and over 141,401 646 1.81% 170,045 1,138 2.66%
Time
deposits
Brokered 234,424 1,679 2.84% 165,000 1,617 3.90%
Notes
payable
to
subsidiary
grantor
trusts 23,702 476 7.97% 23,702 527 8.85%
Securities
sold under
agreement
to
repurchase 27,663 168 2.41% 35,000 264 3.00%
Note
payable -- -- N/A 14,315 100 2.78%
Other
short-term
borrowings 272 -- 0.00% 63,674 349 2.18%
---------- --------- ---------- --------
Total
interest
bearing
liabil-
ities 937,212 3,872 1.64% 1,066,264 6,151 2.29%
--------- --------
Demand,
noninterest
bearing 267,528 261,578
Other
liabil-
ities 31,016 28,574
---------- ----------
Total
liabil-
ities 1,235,756 1,356,416
Share-
holders'
equity 176,198 143,318
---------- ----------
Total
liabilities
and
share-
holders'
equity $1,411,954 $1,499,734
========== ==========
Net
interest
income
/margin $ 11,623 3.62% $ 13,046 3.83%
========= ========
NET INTEREST INCOME
AND NET INTEREST MARGIN
For the Nine Months Ended For the Nine Months Ended
September 30, 2009 September 30, 2008
--------------------------- ----------------------------
Interest Average Interest Average
(in $000's, Average Income/ Yield/ Average Income/ Yield/
unaudited) Balance Expense Rate Balance Expense Rate
-------------------- --------- ------- ---------- -------- ------
Assets:
Loans,
gross $1,197,039 $ 44,619 4.98% $1,159,535 $ 53,524 6.17%
Securities 105,886 2,711 3.42% 129,570 4,201 4.33%
Interest
bearing
deposits
in other
financial
institu-
tions 11,130 21 0.25% 571 10 2.34%
Federal
funds sold 544 -- 0.00% 3,082 56 2.43%
---------- --------- ---------- --------
Total
interest
earning
assets 1,314,599 47,351 4.82% 1,292,758 57,791 5.97%
--------- --------
Cash and
due from
banks 24,138 36,085
Premises
and
equipment,
net 9,374 9,200
Goodwill
and other
intangible
assets 47,188 47,880
Other
assets 55,660 57,718
---------- ----------
Total
assets $1,450,959 $1,443,641
========== ==========
Liabilities and
shareholders' equity:
Deposits:
Demand,
interest
bearing $ 134,576 252 0.25% $ 149,451 1,276 1.14%
Savings
and
money
market 342,156 2,043 0.80% 453,146 6,375 1.88%
Time
deposits,
under
$100 44,740 794 2.37% 34,340 815 3.17%
Time
deposits,
$100
and over 162,601 2,239 1.84% 163,793 3,891 3.17%
Time
deposits
Brokered 212,788 5,324 3.35% 96,921 2,928 4.04%
Notes
payable
to
subsidiary
grantor
trusts 23,702 1,463 8.25% 23,702 1,610 9.07%
Securities
sold under
agreement
to
repurchase 30,110 638 2.83% 31,033 674 2.90%
Note payable 3,388 82 3.24% 8,646 184 2.84%
Other
short-term
borrowings 27,520 53 0.26% 47,660 920 2.58%
---------- --------- ---------- --------
Total
interest
bearing
liabil-
ities 981,581 12,888 1.76% 1,008,692 18,673 2.47%
--------- --------
Demand,
noninterest
bearing 258,725 257,054
Other
liabil-
ities 29,678 27,785
---------- ----------
Total
liabil-
ities 1,269,984 1,293,531
Share-
holders'
equity 180,975 150,110
---------- ----------
Total
liabil-
ities
and
share-
holders'
equity $1,450,959 $1,443,641
========== ==========
Net
interest
income
/margin $ 34,463 3.51% $ 39,118 4.04%
========= ========