MADISON, Wis., Feb. 5, 2010 (GLOBE NEWSWIRE) -- Today Anchor BanCorp Wisconsin Inc. (ABCW) (Nasdaq:ABCW) announced its third quarter results indicating a net loss of $9.0 million, or $0.58 per common share, for the quarter ended December 31, 2009. This compares with a net loss of $72.0 million for the previous quarter and $167.1 million for the quarter ended December 31, 2008.
Overview
- Net loss declined 95 percent from one year ago and 84 percent from the previous quarter.
- Loan loss provisions declined nearly 83 percent from the previous quarter and were down nearly 89 percent from a year ago.
- ABCW has entered into agreements with Badger Anchor Holdings, LLC ("Badger Holdings"), pursuant to which Badger Holdings will make an investment of up to 483,333,333 shares of common stock at $0.60 per share, for an aggregate equity investment of up to $290 million. In addition, Badger Holdings will extend a term loan of $110 million to ABCW.
Loan Loss Provision and Non-performing Assets
The third quarter loss was driven by a $10.5 million loan loss provision; however, the quarter's loan loss provision declined $50.4 million from the previous quarter and $82.5 million for the quarter ended December 31, 2008.
"Despite the third quarter loss, we continue to make progress toward upgrading our credit quality standards, strategically repositioning our balance sheet and, most importantly, returning the bank to profitability," said ABCW President and CEO Chris Bauer. "These results show signs that we're moving in the right direction."
Non-performing assets of AnchorBank, fsb, ABCW's wholly owned subsidiary, decreased by $109.1 million, a 24 percent decrease from the second fiscal quarter, reflecting some improvement in certain customers' ability to make payments under restructured terms and conditions. However, these loans continue to be included in impaired loans. Notwithstanding the decrease, non-performing assets remain at a historically elevated level and the bank's concentrated exposure in certain loan portfolios, including construction and land loan portfolios, is dependent upon stabilization of economic conditions and real estate values.
The bank reported a 44 percent reduction in the charge-offs of non-performing assets from $29.7 million in charge-offs in the second quarter to $16.6 million in charge-offs for the quarter ending December 31, 2009.
Non-Interest Income Increases
The bank's non-interest income increased $4.8 million, or nearly 44 percent, over the previous quarter and $6.1 million, or 64 percent, over the same period last year. Income was driven by gains on the sales of loans, mortgage-backed securities and other investments during the quarter.
Cost Reduction Progress Continues
Despite FDIC insurance premiums more than doubling since the previous quarter, non-interest expenses decreased $4.3 million from the second quarter.
"This decline in non-interest expenses is a credit to our increased emphasis on optimizing core operating efficiencies, however, we believe that unusual costs such as loan collection expenses, legal fees and consulting fees related to addressing credit quality concerns mask the full scope of the progress we have been making," said Bauer.
Foreclosure cost expenses, legal and consulting fees related to addressing credit quality concerns accounted for $4.8 million of non-interest expense during the quarter. FDIC insurance premiums rose to $3.1 million for the quarter. Together these items accounted for 21.6 percent of non-interest expense during the quarter.
Balance Sheet Continues Planned Reduction
Total assets declined more than 15 percent since March 31, 2009, to $4.5 billion. Loans, net of allowances, declined 13.2 percent during the same period.
During the third quarter, ABCW announced a definitive agreement for the sale of 11 AnchorBank branches in Northwestern Wisconsin to Royal Credit Union of Eau Claire, Wis., in order to further shrink assets, improve capital ratios and reduce core operating expenses. While ABCW originally estimated that the transaction would close by March 31, 2010, the size and complexity of the deal have resulted in a revised timeline that anticipates the sale of these branches from AnchorBank to Royal Credit Union during the quarter ended June 30, 2010. The transaction is subject to regulatory approval and customary closing conditions.
Capital Levels and Plans for Recapitalization in 2010
As a result of the third quarter loss, ABCW remains undercapitalized at the bank level according to the terms of the Order to Cease and Desist by the Office of Thrift Supervision. Being undercapitalized subjects the Bank to several operating restrictions including increased premiums for deposit insurance, prior approval from the FDIC in order to access brokered deposits, and causing the Bank to be subject to increased scrutiny by the Office of Thrift Supervision
The following actions are being taken in an effort to improve the holding company's capital position:
- Continued reduction of balance sheet through loan sales and other strategies
- Sale of 11 non-core branches planned to close in first half of 2010
- Improvement of profitability through continued cost reduction initiatives
- Entering into agreements with Badger Anchor Holdings, LLC ("Badger Holdings"), pursuant to which Badger Holdings will make an investment of up to 483,333,333 shares of common stock at $0.60 per share, for an aggregate equity investment of up to $290 million, and the extension of a term loan by Holdings to ABCW of $110 million, which loan will be convertible into additional shares of ABCW's common stock at the option of Holdings. Consummation of the transactions contemplated by the agreements is subject to a number of conditions including ABCW shareholder approval. ABCW and Badger Holdings are working toward obtaining anticipated approval and completion of the transaction in the first half of 2010.
The bank's liquidity position exceeded $633 million at December 31, 2009.
A copy of the financial statements for the quarter ended December 31, 2009 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.
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.
| ANCHOR BANCORP WISCONSIN INC. | ||||
| FINANCIAL HIGHLIGHTS | ||||
| (Dollars in thousands - except per share amounts) | ||||
| (Unaudited) | ||||
| Three Months Ended | Nine Months Ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| Operations Data: | ||||
| Net interest income | $22,333 | $32,707 | $66,187 | $96,082 |
| Provision for loan losses | 10,456 | 92,970 | 141,756 | 149,334 |
| Net gain (loss) on sale of loans | 2,805 | (228) | 15,270 | 2,823 |
| Real estate investment partnership revenue | -- | 1,836 | -- | 1,836 |
| Other non-interest income | 12,816 | 7,905 | 30,769 | 24,910 |
| Real estate investment partnership cost of sales | -- | 1,191 | -- | 1,191 |
| Other non-interest expense | 36,488 | 117,066 | 114,343 | 174,024 |
| Loss before income taxes | (8,990) | (169,007) | (143,873) | (198,898) |
| Income tax expense (benefit) | 3 | (1,899) | 3 | (13,951) |
| Net loss | (8,993) | (167,108) | (143,876) | (184,947) |
| Income attributable to non-controlling interest in real estate partnerships | -- | (150) | -- | (98) |
| Preferred stock dividends and discount accretion | (3,228) | -- | (9,700) | -- |
| Net loss available to common equity of Anchor BanCorp | (12,221) | (167,258) | (153,576) | (185,045) |
| Selected Financial Ratios (1): | ||||
| Yield on earning assets | 4.92% | 5.69% | 4.79% | 5.78% |
| Cost of funds | 2.79 | 2.81 | 2.86 | 3.01 |
| Interest rate spread | 2.13 | 2.88 | 1.93 | 2.77 |
| Net interest margin | 2.05 | 2.88 | 1.87 | 2.79 |
| Return on average assets | (0.79) | (13.72) | (3.86) | (5.01) |
| Return on average equity | (50.16) | (242.66) | (139.97) | (77.80) |
| Average equity to average assets | 1.57 | 5.66 | 2.76 | 6.44 |
| Non-interest expense to average assets | 3.19 | 9.70 | 3.07 | 4.74 |
| Per Share: | ||||
| Basic loss per common share | $(0.58) | $(7.96) | $(7.26) | $(8.82) |
| Diluted loss per common share | (0.58) | (7.96) | (7.26) | (8.82) |
| Dividends per common share | -- | 0.01 | -- | 0.29 |
| Book value per common share | (2.25) | 6.80 | (2.25) | 6.80 |
| December 31, | Percent | |||
| 2009 | 2008 | Change | ||
| Financial Condition: | ||||
| Total assets | $4,458,587 | $4,798,847 | -7.1% | |
| Loans receivable, net | ||||
| Held for sale | 35,640 | 32,139 | 10.9 | |
| Held for investment | 3,383,246 | 3,948,065 | (14.3) | |
| Investment securities available for sale, at fair value | 17,396 | 75,657 | (77.0) | |
| Mortgage-related securities available for sale, at fair value | 448,025 | 280,014 | 60.0 | |
| Mortgage-related securities held to maturity, at amortized cost | 42 | 52 | (19.2) | |
| Deposits and accrued interest | 3,598,185 | 3,413,449 | 5.4 | |
| Other borrowed funds | 759,479 | 1,152,112 | (34.1) | |
| Stockholders' equity | 61,155 | 146,662 | (58.3) | |
| Allowance for loan losses | 164,494 | 122,571 | 34.2 | |
| Non-performing assets | 344,362 | 410,695 | (16.2) | |
| (1) Annualized when appropriate. | ||||
| ANCHOR BANCORP WISCONSIN INC. | ||
| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | ||
| December 31, | March 31, | |
| 2009 | 2009 | |
| (Unaudited) | ||
| (In Thousands) | ||
| Assets | ||
| Cash and cash equivalents | $332,288 | $433,826 |
| Investment securities available for sale, at fair value | 17,396 | 77,684 |
| Mortgage-related securities available for sale, at fair value | 448,025 | 407,301 |
| Mortgage-related securities held to maturity, at amortized cost | 42 | 50 |
| Loans receivable, net | ||
| Held for sale | 35,640 | 161,964 |
| Held for investment | 3,383,246 | 3,896,439 |
| Foreclosed properties and repossessed assets, net | 40,420 | 52,563 |
| Real estate held for development and sale | 2,013 | 16,120 |
| Office properties and equipment | 46,136 | 48,123 |
| Federal Home Loan Bank stock--at cost | 54,829 | 54,829 |
| Deferred tax asset, net of valuation allowance | -- | 16,202 |
| Accrued interest and other assets | 98,552 | 107,954 |
| Total assets | $4,458,587 | $5,273,055 |
| Liabilities and Stockholders' Equity | ||
| Deposits | ||
| Non-interest bearing | $278,914 | $274,392 |
| Interest bearing and accrued interest | 3,319,271 | 3,649,435 |
| Total deposits and accrued interest | 3,598,185 | 3,923,827 |
| Other borrowed funds | 759,479 | 1,078,392 |
| Other liabilities | 39,768 | 56,704 |
| Total liabilities | 4,397,432 | 5,058,923 |
|
Preferred stock, $.10 par value, 5,000,000 shares authorized, 110,000 shares issued and outstanding |
79,753 | 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 | 109,133 | 109,327 |
| Retained earnings (deficit), substantially restricted | (22,543) | 134,234 |
| Accumulated other comprehensive loss | (11,267) | (6,337) |
|
Treasury stock (3,674,222 and 3,793,554 shares, respectively), at cost |
(90,932) | (94,744) |
| Deferred compensation obligation | (5,525) | (5,480) |
| Total Anchor BanCorp stockholders' equity | 61,155 | 213,721 |
| Non-controlling interest in real estate partnerships | -- | 411 |
| Total liabilities and stockholders' equity | $4,458,587 | $5,273,055 |
| ANCHOR BANCORP WISCONSIN INC. | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
| (Unaudited) | ||||
| Three Months Ended | Nine Months Ended | |||
| December 31, | December 31, | |||
| 2009 | 2008 | 2009 | 2008 | |
| (In Thousands - except per share amounts) | ||||
| Interest income: | ||||
| Loans | $48,545 | $60,042 | $151,886 | $185,203 |
| Mortgage-related securities | 4,617 | 3,743 | 15,367 | 11,099 |
| Investment securities and Federal Home Loan Bank stock | 184 | 818 | 954 | 2,398 |
| Interest-bearing deposits | 208 | 70 | 838 | 469 |
| Total interest income | 53,554 | 64,673 | 169,045 | 199,169 |
| Interest expense: | ||||
| Deposits | 21,278 | 21,602 | 68,451 | 72,342 |
| Other borrowed funds | 9,943 | 10,364 | 34,407 | 30,745 |
| Total interest expense | 31,221 | 31,966 | 102,858 | 103,087 |
| Net interest income | 22,333 | 32,707 | 66,187 | 96,082 |
| Provision for loan losses | 10,456 | 92,970 | 141,756 | 149,334 |
| Net interest income (loss) after provision for loan losses | 11,877 | (60,263) | (75,569) | (53,252) |
| Non-interest income: | ||||
| Real estate investment partnership revenue | -- | 1,836 | -- | 1,836 |
| Loan servicing income | 1,038 | 1,244 | 1,525 | 3,859 |
| Credit enhancement income | 293 | 481 | 989 | 1,377 |
| Service charges on deposits | 3,949 | 3,966 | 11,924 | 11,959 |
| Investment and insurance commissions | 1,070 | 971 | 2,672 | 3,225 |
| Net gain (loss) on sale of loans | 2,805 | (228) | 15,270 | 2,823 |
| Net gain (loss) on sale of investments and mortgage-related securities | 5,783 | (1,396) | 9,396 | (3,298) |
| Net impairment losses recognized in earnings | (346) | -- | (745) | -- |
| Other revenue from real estate partnership operations | -- | 1,707 | 2,393 | 4,212 |
| Other | 1,029 | 932 | 2,615 | 3,576 |
| Total non-interest income | 15,621 | 9,513 | 46,039 | 29,569 |
| Non-interest expense: | ||||
| Compensation | 12,340 | 13,755 | 40,656 | 41,727 |
| Real estate investment partnership cost of sales | -- | 1,191 | -- | 1,191 |
| Occupancy | 2,427 | 2,328 | 7,487 | 7,302 |
| Federal insurance premiums | 3,093 | 624 | 7,930 | 884 |
| Furniture and equipment | 1,836 | 2,189 | 5,978 | 6,382 |
| Data processing | 1,914 | 1,858 | 5,535 | 5,493 |
| Marketing | 542 | 727 | 1,557 | 2,055 |
| Other expenses from real estate partnership operations | 211 | 7,170 | 3,870 | 11,085 |
| REO operations - net expense | 5,867 | 8,038 | 17,044 | 10,179 |
| Mortgage servicing rights impairment recovery | (415) | 2,535 | (1,765) | 2,535 |
| Foreclosure cost advance impairment | -- | -- | 3,708 | -- |
| Goodwill impairment | -- | 72,181 | -- | 72,181 |
| Other | 8,673 | 5,661 | 22,343 | 14,201 |
| Total non-interest expense | 36,488 | 118,257 | 114,343 | 175,215 |
| Loss before income taxes | (8,990) | (169,007) | (143,873) | (198,898) |
| Income tax expense (benefit) | 3 | (1,899) | 3 | (13,951) |
| Net loss | (8,993) | (167,108) | (143,876) | (184,947) |
| Income attributable to non-controlling interest in real estate partnerships | -- | (150) | -- | (98) |
| Preferred stock dividends and discount accretion | (3,228) | -- | (9,700) | -- |
| Net loss available to common equity of Anchor BanCorp | $(12,221) | $ (167,258) | $ (153,576) | $ (185,045) |
| Loss per common share: | ||||
| Basic | $(0.58) | $(7.96) | $(7.26) | $(8.82) |
| Diluted | (0.58) | (7.96) | (7.26) | (8.82) |