BELLEVUE, Wash, Feb. 25, 2015 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. (OTCQB:FDNB), the holding company for Foundation Bank, today reported that for the full year 2014, Foundation earned $1.1 million, or $0.29 per diluted share, compared to $7.1 million, or $2.02 per diluted share in 2013. Income before provision for income tax was $1.6 million in 2014, compared to $1.5 million in 2013. Book value per share increased to $9.73 at December 31, 2014, compared to $9.21 per share a year ago.
Following a $772,000 provision for loan losses in the fourth quarter, Foundation reported it lost $131,000, or $0.04 per diluted share in the fourth quarter of 2014. This compares to earnings of $303,000, or $0.09 per diluted share in the preceding quarter. Following a $5.6 million reversal of its deferred tax asset, Foundation earned $5.2 million, or $1.48 per diluted share in the fourth quarter a year ago.
"In 2014 we were successful with growing core deposits, which allowed us to roll off wholesale CDs and grow investments. However, net income for the quarter was impacted by the increase in the loan loss provision and as well as elevated expenses related to foreclosed assets," said Diane Dewbrey, President and CEO. "We continue to see opportunities for both loan and deposit growth in the greater Puget Sound market and will look to grow the balance sheet, while steadily working our way through the remaining stages of this credit cycle."
Fourth Quarter 2014 Highlights:
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Fourth quarter net interest margin improved 28 basis points to 3.89%, compared to 3.61% in the preceding quarter.
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Allowance for loan losses increased to 1.98% of gross loans, compared to 1.84% three months earlier.
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Total non-accrual loans were $12.5 million at December 31, 2014, compared to $11.8 million three months earlier and $16.1 million a year earlier.
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Non-interest bearing demand deposits increased 13.1%, compared to a year ago and represent 41.0% of deposits.
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Core deposits (which exclude time deposits) represent 95.6% of total deposits at December 31, 2014.
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Book value per share increased to $9.73 per share at December 31, 2014, compared to $9.71 per share three months earlier and $9.21 per share a year ago.
- The ratio of tangible common equity to tangible assets was 8.6% at December 31, 2014, compared to 8.7% at September 30, 2014 and 8.9% a year ago.
Asset Quality
"We are continuing to manage asset quality and have made progress over the past year in selling foreclosed assets. In 2014, we recovered over $1.0 million on loan and foreclosed asset recoveries. The economy in Western Washington is performing well, but we are still seeing the residual effects from the last downturn and continue to work with our clients to return non-performing assets to earning status. During the quarter we boosted our loan loss provision to account for new loan growth and realized net recoveries for the second consecutive quarter," said Dewbrey.
Foundation recorded a $772,000 provision for loan losses in the fourth quarter, compared to no provision in the preceding quarter and $1.0 million in the fourth quarter a year ago.
Foundation categorizes borrowers who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations as restructured loans. As of December 31, 2014, Foundation held $7.6 million in performing restructured loans that were paying as agreed but are included in non-accrual loans. Total non-accrual loans were $12.5 million at December 31, 2014, compared to $11.8 million three months earlier and $16.1 million a year earlier, representing a year over decrease of 22.4%.
Non-performing assets (NPAs), consisting of non-accrual loans, Other Real Estate Owned (OREO) and past due loans over 90 days, decreased to $19.8 million, or 5.1% of total assets at December 31, 2014 compared to $22.2 million, or 5.6% of total assets at September 30, 2014 and $23.9 million, or 6.6% of total assets a year ago.
Foreclosed assets including OREO and Other Property Owned (OPO) totaled $7.3 million at December 31, 2014, compared to $10.5 million at September 30, 2014, and $7.3 million at December 31, 2013. OREO consists of six properties.
Balance Sheet Review
Gross loans were $283.2 million at December 31, 2014, compared to $282.1 million a year ago. Commercial real estate (CRE) loans totaled $172.0 million at December 31, 2014, and comprise 60.7% of the total loan portfolio. Business loans secured by the property on which the business operates are classified as owner occupied CRE. Of the total loan portfolio, owner occupied CRE loans comprised $49.1 million or 17.3% and construction and land loans represented 4.5%. The commercial and industrial (C&I) portfolio represented 36.0% of the total loan portfolio.
"We have been very deliberate in developing new client relationships to grow our core deposits over the last year," said Dewbrey. Total deposits increased 7.0% to $342.6 million at December 30, 2014, compared to $320.0 million a year earlier. Non-interest bearing demand deposits increased 13.1% compared to a year ago. Total transaction accounts represent 51.7%, money market and savings accounts represent 43.8% and CDs comprise 4.5% of the total deposit portfolio at year end.
Core deposits (which exclude time deposits) represent 95.5% of total deposits at December 31, 2014, compared to 86.9% of total deposits a year earlier.
Total stockholder equity increased to $34.4 million at December 31, 2014, compared to $32.5 million a year ago. Book value per share increased to $9.73 at December 31, 2014, compared to $9.21 a year ago. Foundation's common equity to total assets (common equity ratio) remained strong at 8.6% at December 31, 2014.
Results of Operations
Foundation's fourth quarter net interest margin was 3.89%, compared to 3.61% in the preceding quarter and 3.96% in the fourth quarter a year ago. For all of 2014, Foundation's net interest margin was 3.78% compared to 3.98% in 2013.
Foundation's fourth quarter net interest income before provision for loan losses increased 8.8% to $3.7 million, compared to $3.4 million in the fourth quarter a year ago. For the full year, net interest income increased 2.7% to $13.6 million, compared to $13.3 million in 2013. Non-interest income increased 44.4% to $182,000 in the fourth quarter compared to $126,000 in the fourth quarter a year ago. The increase includes a $53,000 gain on sale of securities during the current quarter. For all of 2014, non-interest income increased 14.4% to $788,000, compared to $689,000 in 2013.
Total non-interest expense increased to $3.4 million in the fourth quarter of 2014, compared to $3.0 million in the preceding quarter and $2.9 million in the fourth quarter one year ago. The increase is partially attributable to higher costs associated with foreclosed assets. For the year, Foundation's total non-interest expense was $12.0 million, compared to $10.7 million in 2013.
Capital
Foundation Bank continues to remain well capitalized by regulatory guidelines. Capital ratios for the Bank are presented as follows:
| Dec 31, 2014 | Sep 30, 2014 | Dec 31, 2013 | |
| Tier 1 Leverage (to average assets) | 9.54% | 9.94% | 10.39% |
| Tier 1 risk-based (to risk-weighted assets) | 12.78% | 12.62% | 12.60% |
| Total risk-based (to risk-weighted assets) | 14.04% | 13.88% | 13.86% |
About the Company
Foundation Bancorp (FDNB) is a bank holding company based in Bellevue, Washington, that operates Foundation Bank, a locally-owned, full service, state chartered commercial bank. Foundation Bank has been serving the greater Puget Sound region since 2000.
Safe Harbor Statement. This release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices; levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
| CONSOLIDATED STATEMENTS OF CONDITION | |||
| (Unaudited) (dollars in 000's) | |||
| December 31, 2014 | September 30, 2014 | December 31, 2013 | |
| Assets | |||
| Cash and Due from Banks | $ 11,245 | $ 8,805 | $ 10,613 |
| Interest-Bearing Deposits in Banks | 33,976 | 27,739 | 28,238 |
| Investments | 60,719 | 59,669 | 33,459 |
| Loans Held for Sale | -- | -- | 233 |
| Loans | 283,173 | 286,299 | 282,110 |
| Allowance for Loan Losses | (5,615) | (5,258) | (5,258) |
| Loans, net | 277,558 | 281,041 | 276,852 |
| Leaseholds and Equipment, net | 640 | 703 | 836 |
| Foreclosed Assets | 7,280 | 10,468 | 7,268 |
| Accrued Interest Receivable and Other Assets | 6,730 | 6,612 | 7,191 |
| Total Assets | $ 398,148 | $ 395,037 | $ 364,690 |
| Liabilities | |||
| Noninterest-Bearing Demand Deposits | $ 140,460 | $ 140,830 | $ 124,226 |
| Interest-Bearing Checking and Savings Accounts | 37,515 | 37,350 | 15,900 |
| Money Market Accounts | 149,367 | 155,860 | 138,005 |
| Certificates of Deposit | 15,251 | 15,340 | 41,901 |
| Total Deposits | 342,593 | 349,380 | 320,032 |
| Borrowings | 17,340 | 8,723 | 9,595 |
| Other Liabilities | 3,851 | 2,692 | 2,578 |
| Total Liabilities | 363,784 | 360,795 | 332,205 |
| Stockholders' Equity | |||
| Common Stock (1) | $ 3,530 | $ 3,526 | $ 3,526 |
| Additional Paid-in Capital | 38,921 | 38,881 | 38,706 |
| Retained Earnings (Deficit) | (8,059) | (7,929) | (9,118) |
| Accumulated Other Comprehensive (Loss) Income | (28) | (236) | (629) |
| Total Stockholders' Equity | 34,364 | 34,242 | 32,485 |
| Total Liabilities and Stockholders' Equity | $ 398,148 | $ 395,037 | $ 364,690 |
| (1) $1 Par Value, Shares Authorized 25,000,000, issued and outstanding 3,529,976, 3,526,264 and 3,526,064 respectively. | |||
| Book Value per Share | $ 9.73 | $ 9.71 | $ 9.21 |
| Common Equity Ratio | 8.6% | 8.7% | 8.9% |
| CONSOLIDATED STATEMENTS OF INCOME | |||||
| (Unaudited) (dollars in 000's, except per | For the Quarter Ended | For the Twelve Months Ended | |||
| share amounts) | December 31, 2014 | September 30, 2014 | December 31, 2013 | December 31, 2014 | December 31, 2013 |
| Interest Income | |||||
| Loans, Including Fees | $ 3,778 | $ 3,376 | $ 3,483 | $ 13,818 | $ 13,875 |
| Investments | 295 | 228 | 181 | 901 | 580 |
| Other | 23 | 33 | 13 | 94 | 60 |
| Total Interest Income | 4,096 | 3,637 | 3,677 | 14,813 | 14,515 |
| Interest Expense | |||||
| Deposits | 213 | 218 | 210 | 848 | 918 |
| Borrowings | 137 | 54 | 74 | 324 | 317 |
| Total Interest Expense | 350 | 272 | 284 | 1,172 | 1,235 |
| Net Interest Income Before Provision | 3,746 | 3,365 | 3,393 | 13,641 | 13,280 |
| Provision for Loan Losses | (772) | -- | (1,000) | (772) | (1,700) |
| Net Interest Income After Provision for Loan Losses | 2,974 | 3,365 | 2,393 | 12,869 | 11,580 |
| Noninterest Income | |||||
| Service Fees | 122 | 119 | 111 | 471 | 452 |
| OTTI on Investments | (5) | -- | (35) | (5) | (41) |
| Gain on Sale of Loans | 6 | 2 | 39 | 197 | 203 |
| Gain on Sale of Securities | 53 | -- | -- | 96 | -- |
| Other Noninterest Income | 6 | 5 | 10 | 29 | 75 |
| Total Noninterest Income | 182 | 126 | 125 | 788 | 689 |
| Noninterest Expense | |||||
| Salaries and Employee Benefits | 1,401 | 1,420 | 1,218 | 5,644 | 5,245 |
| Occupancy and Equipment | 320 | 311 | 324 | 1,266 | 1,257 |
| Data Processing | 182 | 181 | 177 | 729 | 640 |
| Legal | 167 | 110 | 139 | 530 | 530 |
| Professional | 31 | 20 | 67 | 168 | 265 |
| Loan Expenses | 65 | 58 | 240 | 234 | 472 |
| FDIC/State Assessments | 135 | 133 | 96 | 513 | 562 |
| Foreclosed Assets, Net | 454 | 113 | 137 | 478 | (139) |
| Insurance | 57 | 60 | 59 | 237 | 231 |
| City and State Taxes | 80 | 89 | 68 | 294 | 296 |
| Other | 488 | 530 | 348 | 1,958 | 1,383 |
| Total Noninterest Expense | 3,380 | 3,025 | 2,873 | 12,051 | 10,742 |
| Income (Loss) Before Provision for Income Tax | (224) | 466 | (355) | 1,606 | 1,527 |
| Provision for Income Tax | (93) | 163 | (5,572) | 548 | (5,572) |
| NET INCOME (LOSS) | $ (131) | $ 303 | $ 5,217 | $ 1,058 | $ 7,099 |
| Return on average equity | -1.48% | 3.48% | 73.20% | 3.09% | 25.69% |
| Return on average assets | -0.13% | 0.31% | 5.81% | 0.28% | 2.03% |
| Net interest margin | 3.89% | 3.61% | 3.96% | 3.78% | 3.98% |
| Efficiency ratio | 87.30% | 86.86% | 81.98% | 86.47% | 80.36% |
| Diluted earning (loss) per avg. share | $ (0.04) | $ 0.09 | $ 1.48 | $ 0.29 | $ 2.02 |
| Loan to deposit ratio | 82.59% | 81.88% | 88.02% | ||
| Book value per share | $ 9.73 | $ 9.71 | $ 9.21 | ||
| SELECTED INFORMATION | Quarter Ended | ||||
| Dec 31, | Sept 30, | June 30, | Mar 31, | Dec 31, | |
| 2014 | 2014 | 2014 | 2014 | 2013 | |
| Bank Only | |||||
| Risk Based Capital Ratio | 14.04% | 13.88% | 13.97% | 14.22% | 13.86% |
| Leverage Ratio | 9.54% | 9.94% | 10.32% | 10.50% | 10.39% |
| C&I Loans to Loans | 35.96% | 35.05% | 35.89% | 33.20% | 37.18% |
| Real Estate Loans to Loans | 60.75% | 61.67% | 61.45% | 64.38% | 60.24% |
| Consumer Loans to Loans | 0.19% | 0.17% | 0.14% | 0.15% | 0.15% |
| Allowance for Loan Losses (000's) | $ 5,615 | $ 5,258 | $ 5,030 | $ 5,093 | $ 5,258 |
| Allowance for Loan Losses to Loans | 1.98% | 1.84% | 1.80% | 1.82% | 1.86% |
| Total Noncurrent Loans to Loans | 4.43% | 4.11% | 5.45% | 5.73% | 5.90% |
| Nonperforming assets to assets | 5.60% | 6.44% | 6.65% | 5.89% | 6.30% |
| Net Charge-Offs (Recoveries) (000's) | $ (415) | $ (228) | $ 63 | $ 165 | $ 653 |
| Net Charge-Offs in Qtr to Avg Total Loans | -0.15% | -0.08% | 0.02% | 0.06% | 0.23% |