BELLEVUE, Wash., April 20, 2016 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. (OTCPink:FDNB), (Foundation or Company), the holding company for Foundation Bank, today reported earnings of $743,000 in the first quarter of 2016, an increase of 122% compared to $334,000 in the first quarter a year ago. “Our strong first quarter profits and improved net interest margin are a direct result of the actions we implemented at the end of 2015 to reduce non-performing assets and position the Bank for improved profitability,” said Randy Cloes, CFO. “At the end of the fourth quarter we took significant charge offs and write downs related to the sale and disposal of foreclosed assets. These actions reduced our non-performing assets by 66% and provided meaningful cost savings from reduced legal fees. These transactions improved our profitability in the current quarter.”
After preferred dividends, net income available to common shareholders for the first quarter was $490,000, or $0.14 per diluted share, compared to a net loss of $1.6 million, or $0.45 per share, in the preceding quarter and a net income of $320,000, or $0.06 per diluted share, in the first quarter of 2015.
First Quarter 2016 Highlights:
- Earnings per diluted share were $0.14 in the first quarter of 2016 compared to $0.06 in the first quarter of 2015.
- Allowance for loan losses was 1.92% of gross loans.
- Total non-accrual loans decreased 45.6% to $7.4 million at March 31, 2016, and total non-performing assets declined 66.0% to $7.4 million at quarter-end compared to a year earlier. Excluding performing restructured loans, non-accrual loans were $5.1 million, or 1.7% of total loans, at March 31, 2016.
- The Bank had no foreclosed assets at March 31, 2016.
- Non-interest bearing demand deposits increased 7.8%, compared to a year ago and represent 45.8% of deposits.
- Core client deposits represent 100% of total deposits at March 31, 2016.
- The ratio of tangible common equity to tangible assets (common equity ratio) was 7.5% at March 31, 2016.
Asset Quality
Foundation categorizes borrowers who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations as restructured loans. As of March 31, 2016, Foundation held $3.7 million in performing restructured loans that were paying as agreed, but are included in non-accrual loans. Total non-accrual loans decreased 2.0% to $7.4 million at March 31, 2016, compared to $7.5 million three months earlier and decreased 45.6% compared to $13.6 million a year earlier. Excluding performing restructured loans, non-accrual loans were $5.1 million, or 1.7% of total loans at March 31, 2016.
At March 31, 2016, there were no foreclosed assets, compared to foreclosed assets, including Other Real Estate Owned (OREO) and Other Property Owned (OPO), of $3.9 million at December 31, 2015, and $8.1 million a year ago. “All of our remaining OREO was sold during the first quarter of 2016, and we reduced net charge offs to just $37,000 in the first quarter compared to $128,000 a year ago,” said Cloes.
Non-performing assets (NPAs), consisting of non-accrual loans, OREO, OPO and past due loans over 90 days, decreased 35.2% to $7.4 million, or 1.7% of total assets at March 31, 2016 compared to $11.4 million, or 2.6% of total assets, at December 31, 2015 and decreased 65.9% compared to $21.7 million, or 5.0% of total assets a year ago.
Balance Sheet Review
Total assets were $422.4 million at March 31, 2016, compared to $431.7 million a year earlier and $446.5 million at December 31, 2015. The total loan portfolio, excluding loans held for sale, was up 5.9% to $299.3 million at March 31, 2016, compared to $282.6 million a year ago, and increased 4.0% compared to $287.8 million three months earlier. Commercial real estate (CRE) loans totaled $110.6 million at March 31, 2016, and comprise 36.9% of total loans. 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 $55.4 million or 18.5% and construction and land loans represented 6.5% at March 31, 2016. The commercial and industrial (C&I) portfolio represented 35.1% of the total loan portfolio at March 31, 2016.
“Total deposits were down during the quarter, primarily due to several large depositors seeking other investment opportunities,” said Cloes. Foundation’s total deposits were $367.5 million at March 31, 2016, compared to $368.1 million a year earlier. Core client deposits represented 100% of total deposits at quarter-end 2016. Non-interest bearing demand deposits increased 7.8% compared to a year ago. Total transaction accounts represent 53.2%, money market and savings accounts represent 44.5%, and certificates of deposits (CDs) represent only 2.2% of the total deposit portfolio at March 31, 2016. The ratio of loans to deposits increased to 80.9% at March 31, 2016 compared to 73.6% last quarter.
Total stockholder equity was $46.8 million at March 31, 2016, compared to $49.2 million a year ago. Book value per share for the common shareholder was $8.88 at March 31, 2016, compared to $9.61 a year ago, before discovery of the significant fraud event noted earlier. The common equity ratio remained strong at 7.5% at March 31, 2016.
Results of Operations
Foundation’s fourth quarter net interest margin was 3.58%, a six basis point improvement compared to the preceding quarter and an eleven basis point improvement compared to the first quarter a year ago.
First quarter net interest income before provision for loan losses increased 13.5% to $3.8 million, compared to $3.3 million in the first quarter a year ago. Non-interest income more than doubled to $474,000 in the first quarter compared to $171,000 in the first quarter a year ago. The increase was primarily due to Bank Owned Life Insurance and recoveries on previously written off property. The gain on sale of loans also contributed to the overall increase.
“Aside from some residual expenses associated with write downs related to the sale and disposal of foreclosed assets, we maintained tight control over our operating expenses. By moving out our non-performing assets and associated expenses, we have a clean balance sheet and a strong platform for the rest of 2016,” said Cloes. Foundation’s first quarter total non-interest expense was $3.2 million, compared to $6.2 million in the preceding quarter and $3.0 million in the first quarter one year ago.
Capital
Foundation Bank continues to remain well capitalized by regulatory guidelines. Capital ratios for the Bank are presented as follows:
| Mar 31, 2016 | Dec 31, 2015 | Mar 31, 2015 | |||||||
| Tier 1 Leverage (to average assets) | 10.35 | % | 9.74 | % | 10.88 | % | |||
| Tier 1 Risk-Based (to risk-weighted assets) | 12.31 | % | 12.19 | % | 12.93 | % | |||
| Tier 1 Common Capital (CET1) | 12.31 | % | 12.19 | % | 12.19 | % | |||
| Total Risk-Based (to risk-weighted assets) | 13.57 | % | 13.33 | % | 14.19 | % | |||
In the first quarter of 2015, Foundation raised $15 million in new equity to fund future growth. The equity was through a private placement of convertible preferred shares.
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. Foundation Bancorp 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 except per share amounts) | |||||||||
| March 31, 2016 | December 31, 2015 | March 31, 2015 | |||||||
| Assets | |||||||||
| Cash and Due from Banks | $ | 8,004 | $ | 8,819 | $ | 11,668 | |||
| Interest-Bearing Deposits in Banks | 8,608 | 45,540 | 58,045 | ||||||
| Investments | 92,888 | 85,647 | 60,292 | ||||||
| Loans Held for Sale | - | 407 | - | ||||||
| Loans | 299,263 | 287,769 | 282,564 | ||||||
| Allowance for Loan Losses | (5,737 | ) | (5,774 | ) | (5,488 | ) | |||
| Loans, net | 293,526 | 281,995 | 277,076 | ||||||
| Leaseholds and Equipment, net | 484 | 532 | 617 | ||||||
| Foreclosed Assets | - | 3,861 | 8,105 | ||||||
| Bank Owned Life Insurance | 11,423 | 11,330 | 10,045 | ||||||
| Accrued Interest Receivable and Other Assets | 7,425 | 8,411 | 5,851 | ||||||
| Total Assets | $ | 422,358 | $ | 446,542 | $ | 431,699 | |||
| Liabilities | |||||||||
| Noninterest-Bearing Demand Deposits | $ | 168,401 | $ | 174,735 | $ | 156,199 | |||
| Interest-Bearing Checking | |||||||||
| and Savings Accounts | 28,653 | 34,037 | 21,076 | ||||||
| Money Market Accounts | 162,364 | 172,327 | 175,558 | ||||||
| Certificates of Deposit | 8,111 | 9,100 | 15,249 | ||||||
| Total Deposits | 367,529 | 390,199 | 368,082 | ||||||
| Borrowings | 6,186 | 7,246 | 9,143 | ||||||
| Other Liabilities | 1,868 | 3,938 | 5,294 | ||||||
| Total Liabilities | 375,583 | 401,383 | 382,519 | ||||||
| Stockholders' Equity | |||||||||
| Preferred Stock (1) | 15 | 15 | 15 | ||||||
| Common Stock (2) | 3,577 | 3,560 | 3,556 | ||||||
| Additional Paid-in Capital | 52,562 | 52,520 | 52,996 | ||||||
| Retained Earnings (Deficit) | (10,026 | ) | (10,516 | ) | (7,739 | ) | |||
| Accumulated Other Comprehensive (Loss) Income | 647 | (420 | ) | 352 | |||||
| Total Stockholders’ Equity | 46,775 | 45,159 | 49,180 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 422,358 | $ | 446,542 | $ | 431,699 | |||
| (1) $1 Par Value, Shares Authorized 1,000,000, issued and outstanding 15,000, 15,000 and 15,000 respectively. | |||||||||
| (2) $1 Par Value, Shares Authorized 25,000,000, issued and outstanding 3,576,738, 3,559,738, and 3,555,976 respectively. | |||||||||
| Book Value per Share, Common Stock | $ | 8.88 | $ | 8.47 | $ | 9.61 | |||
| Common Equity Ratio | 7.5 | % | 6.8 | % | 7.9 | % | |||
| CONSOLIDATED STATEMENTS OF INCOME | |||||||||
| (Unaudited) (dollars in 000's, except per | For the Quarter Ended | ||||||||
| share amounts) | March 31, 2016 | December 31, 2015 | March 31, 2015 | ||||||
| Interest Income | |||||||||
| Loans, Including Fees | $ | 3,471 | $ | 3,517 | $ | 3,338 | |||
| Investments | 480 | 469 | 301 | ||||||
| Other | 46 | 35 | 28 | ||||||
| Total Interest Income | 3,997 | 4,021 | 3,667 | ||||||
| Interest Expense | |||||||||
| Deposits | 170 | 189 | 204 | ||||||
| Borrowings | 39 | 45 | 125 | ||||||
| Total Interest Expense | 209 | 234 | 329 | ||||||
| Net Interest Income Before Provision | 3,788 | 3,787 | 3,338 | ||||||
| Provision for Loan Losses | - | - | - | ||||||
| Net Interest Income | |||||||||
| After Provision for Loan Losses | 3,788 | 3,787 | 3,338 | ||||||
| Noninterest Income | |||||||||
| Service Fees | 103 | 118 | 116 | ||||||
| OTTI on Investments | - | - | 45 | ||||||
| Bank Owned Life Insurance | 92 | 99 | - | ||||||
| Gain on Sale of Loans | 73 | 7 | 2 | ||||||
| Gain on Sale of Securities | - | - | - | ||||||
| Other Noninterest Income | 206 | 5 | 8 | ||||||
| Total Noninterest Income | 474 | 229 | 171 | ||||||
| Noninterest Expense | |||||||||
| Salaries and Employee Benefits | 1,654 | 2,089 | 1,568 | ||||||
| Occupancy and Equipment | 259 | 268 | 211 | ||||||
| Data Processing | 186 | 197 | 187 | ||||||
| Legal | 132 | 268 | 238 | ||||||
| Professional | 21 | 22 | 22 | ||||||
| Loan Expenses | 81 | 53 | 82 | ||||||
| FDIC/State Assessments | 161 | 162 | 149 | ||||||
| Foreclosed Assets, Net | 17 | 2,235 | 63 | ||||||
| Insurance | 58 | 51 | 57 | ||||||
| City and State Taxes | 67 | 65 | 63 | ||||||
| Other | 533 | 759 | 379 | ||||||
| Total Noninterest Expense | 3,169 | 6,169 | 3,019 | ||||||
| Income (Loss) Before Provision | |||||||||
| (Benefit) for Income Tax | 1,093 | (2,153 | ) | 490 | |||||
| Provision (Benefit) for Income Tax | 350 | (788 | ) | 156 | |||||
| NET INCOME (LOSS) | $ | 743 | $ | (1,365 | ) | $ | 334 | ||
| Preferred dividends | 253 | 253 | 14 | ||||||
| NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ | 490 | $ | (1,618 | ) | $ | 320 | ||
| Return on average equity | 6.27 | % | -19.55 | % | 3.71 | % | |||
| Return on average assets | 0.44 | % | -1.43 | % | 0.31 | % | |||
| Net interest margin | 3.58 | % | 3.52 | % | 3.47 | % | |||
| Efficiency ratio | 79.88 | % | 153.85 | % | 86.15 | % | |||
| Basic earning (loss) per avg. share | $ | 0.14 | $ | (0.45 | ) | $ | 0.06 | ||
| Diluted earning (loss) per avg. share (1) | $ | 0.15 | $ | - | $ | 0.07 | |||
| Weighted avg common shares outstanding | 3,571,133 | 3,556,640 | 3,555,976 | ||||||
| Weighted avg dilutive shares outstanding | 5,113,499 | 5,109,778 | 5,106,649 | ||||||
| Loan to deposit ratio | 80.86 | % | 73.63 | % | 74.89 | % | |||
| (1) Common stock equivalents are not included if there is a loss to common shareholders as the shares were antidilutive. | |||||||||
| SELECTED INFORMATION | Quarter Ended | ||||||||||||||||||||
| Mar 31 | Dec 31 | Sept 30 | June 30 | Mar 31, | |||||||||||||||||
| 2016 | 2015 | 2015 | 2015 | 2015 | |||||||||||||||||
| Bank Only | |||||||||||||||||||||
| Risk Based Capital Ratio | 13.57 | % | 13.33 | % | 13.22 | % | 13.64 | % | 14.19 | % | |||||||||||
| Leverage Ratio | 10.35 | % | 9.74 | % | 9.70 | % | 10.01 | % | 10.88 | % | |||||||||||
| C&I Loans to Loans | 35.20 | % | 36.53 | % | 37.55 | % | 37.75 | % | 35.05 | % | |||||||||||
| Real Estate Loans to Loans | 62.01 | % | 60.93 | % | 60.29 | % | 59.57 | % | 61.73 | % | |||||||||||
| Consumer Loans to Loans | 0.14 | % | 0.22 | % | 0.08 | % | 0.08 | % | 0.15 | % | |||||||||||
| Allowance for Loan Losses (000's) | $ | 5,737 | $ | 5,774 | $ | 5,692 | $ | 5,580 | $ | 5,488 | |||||||||||
| Allowance for Loan Losses to Loans | 1.92 | % | 2.01 | % | 1.91 | % | 1.95 | % | 1.94 | % | |||||||||||
| Total Noncurrent Loans to Loans | 2.46 | % | 2.61 | % | 3.70 | % | 3.78 | % | 4.80 | % | |||||||||||
| Nonperforming assets to assets | 2.29 | % | 3.09 | % | 4.34 | % | 4.93 | % | 5.59 | % | |||||||||||
| Net Charge-Offs (Recoveries) (000's) | $ | 38 | $ | (83 | ) | $ | (112 | ) | $ | 2,904 | $ | 128 | |||||||||
| Net Charge-Offs (Recoveries) in Qtr | |||||||||||||||||||||
| to Avg Total Loans | 0.01 | % | -0.03 | % | -0.04 | % | 1.02 | % | 0.05 | % | |||||||||||