EVERETT, Wash., Oct. 21, 2008 (GLOBE NEWSWIRE) -- Cascade Financial Corporation (Nasdaq:CASB), parent company of Cascade Bank, today reported third quarter earnings of $0.38 per diluted share and year to date earnings of $0.90 prior to an Other Than Temporary Impairment (OTTI) charge on Fannie Mae and Freddie Mac preferred shares. Excluding the OTTI charge, third quarter net income was $4.7 million and year to date net income was $10.9 million. Following an after-tax charge of $11.3 million for OTTI on its investments in Fannie Mae and Freddie Mac preferred shares after the U.S. Government placed these companies into conservatorship, Cascade reported a loss of $6.6 million, or $0.55 per diluted share, in the third quarter of 2008, compared to earnings of $3.8 million, or $0.31 per diluted share, in the third quarter a year ago. For the first nine months of 2008 with the OTTI charge, Cascade reported a loss of $372,000, or $0.03 per diluted share on a fully-reported GAAP basis, compared to earnings of $11.5 million, or $0.94 per diluted share, in the first nine months of 2007.
On September 9, 2008, Cascade reported that as of June 30, 2008 it owned preferred shares issued by Fannie Mae ($10.2 million book value) and Freddie Mac ($8.4 million book value) with a combined adjusted book value of approximately $18.6 million. As of September 30, 2008, the fair market value of these securities was $1.3 million. With an amortized cost basis for the securities of $18.6 million, Cascade recorded a pre-tax OTTI charge of $17.3 million, resulting in a net charge of $11.3 million to third quarter 2008 earnings.
Operating 9 Months 9 Months
Results Qtr. Ended Ended Ended
($000's) 9/30/08 9/30/07 Change 9/30/08 9/30/07 Change
Total income $13,910 $12,402 12% $36,911 $37,055 0%
Total expense 7,162 6,724 7% 21,347 19,695 8%
Net income
before taxes 6,748 5,678 19% 15,564 17,360 -10%
Income tax
expense 2,097 1,892 11% 4,666 5,826 -20%
Net income
before OTTI 4,651 3,786 23% 10,898 11,534 -6%
OTTI net of tax
adjustment 11,270 -- NM 11,270 -- NM
------ ------ ------ ------
Net (loss)
income after
OTTI $(6,619) $ 3,786 $ (372) $11,534
"Although our quarterly and year-to-date results were hampered by the OTTI charge from our Fannie and Freddie securities, our operating results during the third quarter were strong," stated Carol K. Nelson, President and CEO. "Net interest income increased 19% from the third quarter a year ago and 12% from the second quarter of 2008 while non-interest income grew 20% over the third quarter a year ago as checking fees were 32% higher than the same quarter last year. Additionally, loan and deposit totals again hit record levels.
"Another positive development in the third quarter was the improvement in our credit metrics," said Nelson. "Our non-performing loans total was cut in half, our allowance for loan losses (ALLL) grew by nine basis points, our net charge-offs were modest and the coverage of our ALLL to non-performing loans improved. We continue to build our allowance for loan losses, adding $1.3 million during the third quarter, bringing the year to date provision to $4.8 million. This compares to $350,000 in the third quarter of 2007 and $850,000 for the nine months ended September 30, 2007."
3Q08 Financial Highlights: (compared to 3Q07)
* Net interest income increased 19%. * Non-interest income increased 20% * Total loans increased 13% to $1.21 billion. * Total deposits grew 9% to $993 million, while personal checking account balances grew 57%. * Strong growth in new checking accounts resulted in 32% growth in checking fees. * Total assets increased 12% to $1.55 billion.
3Q08 Credit Quality Improvements: (compared to 2Q08)
* Nonperforming loans (NPLs) declined by 51% to $15.7 million. * NPLs were 1.29% of total loans, compared to $32.0 million or 2.68% of total loans three months earlier. * Nonperforming assets were 1.10% of total assets compared to 2.07% at June 30, 2008. * Net charge-offs were $43,000 for the quarter.
Loan Portfolio
Compared to a year ago, total loans increased 13% to $1.21 billion at September 30, 2008, from $1.08 billion at September 30, 2007. Total loans outstanding increased $18.2 million for the quarter ended September 30, 2008 from June 30, 2008, or 8% on an annualized basis. Cascade has not engaged in the practice of subprime residential lending and the loan portfolio does not contain any such loans.
"We continue to slow new construction and land development lending. However, the construction balances have grown as construction draws are honored and currently exceed payoffs," said Lars Johnson, Chief Financial Officer. Construction loans outstanding grew 13% to $404 million at September 30, 2008, compared to $356 million a year ago. Business loans increased 2% over the same period to $473 million. Commercial real estate loans were flat at $120 million. Permanent multifamily loans increased substantially from year ago levels to $74.5 million, partly as a result of the reclassifications from multifamily construction as projects were completed. Home equity and consumer loans increased 6% to $29.7 million, while residential loans grew 18% to $112 million.
The following table shows loans in each category: (9/30/08 compared to 6/30/08 and 9/30/07)
LOANS September 30, June 30, September 30, One Year
($ in 000s) 2008 2008 2007 Change
Business $ 473,213 $ 486,876 $ 464,314 2%
R/E Construction 403,569 391,765 356,064 13%
Commercial R/E 119,787 117,043 119,890 0%
Multifamily 74,535 63,905 11,506 548%
Home equity/
consumer 29,659 29,250 28,089 6%
Residential 112,283 106,043 95,559 18%
---------- ---------- ---------- ----
Total loans $1,213,046 $1,194,882 $1,075,422 13%
Credit Quality
"Asset quality metrics improved significantly during the third quarter, and equally important, no major relationships were added to our non-performing list during the quarter," said Robert Disotell, Chief Credit Officer. "However, the Puget Sound housing market remains weak and will present challenges. Therefore, we continue to monitor our entire loan portfolio, but especially our construction and land acquisition and development portfolio, to act upon deteriorating credits in a timely manner."
Nonperforming loans (NPLs) decreased 51% during the quarter to $15.7 million which represented 1.29% of total loans at September 30, 2008, compared to 2.68% three months earlier. NPLs were $32.0 million at the end of the preceding quarter and $625,000 at the end of September 2007. Net charge-offs (NCOs) were only $43,000 during the quarter compared to $448,000 in the second quarter of 2008 and $302,000 in the third quarter of 2007.
During the third quarter, approximately $11.6 million of non-performing loans were reduced through the assumption by a qualified purchaser of two loans secured by residential real estate developments located in Snohomish County. Also, during the quarter $1.4 million was transferred to Real Estate Owned (REO), $1.0 million was written off, and a $2.1 million loan was returned to accrual status.
Nonperforming assets were 1.10% of total assets, compared to 2.07% at the end of the preceding quarter, and 0.05% a year ago. The provision for loan losses was $1.3 million for the second quarter, exceeding NCOs of $43,000. The total allowance for loan losses, which includes an allowance for off-balance sheet loan commitments, totaled $14.6 million at quarter-end, equal to 1.21% of total loans compared to 1.12% at June 30, 2008 and 1.06% as of September 30, 2007.
Loans delinquent 31-90 days totaled $171,000, or 0.01% of total loans at September 30, 2008, compared to $1.2 million, or 0.10% at June 30, 2008. All loans over 90 days delinquent are on non-accrual status.
Capital Management
Cascade remains well capitalized for regulatory purposes with a Tier 1 Capital ratio of 7.87% and Risk Based Capital of 10.40% as of September 30, 2008. Stockholders' equity was $119 million, the same as at the end of September 2007. Book value per share was $9.87 at quarter-end compared to $9.89 a year ago. Tangible book value was $7.79 per share at the end of the quarter, the same as at the end of September 2007.
On October 2, 2008, Cascade reduced its third quarter cash dividend to $0.045 per share from $0.09 per share in the second quarter of 2008. The dividend will be paid on October 29, to shareholders of record on October 15, 2008. "Our decision to reduce the dividend was thoroughly and thoughtfully reviewed. The decision considered many factors, including capital adequacy, earnings, payout ratios and yield to our shareholders. We believe that conserving capital through a reduction in the dividend is in the best long-term interest of our shareholders and will help ensure that Cascade maintains its well-capitalized position," said Nelson.
Cascade did not repurchase stock during the first nine months of 2008, under Cascade's existing repurchase plan. To preserve capital, Cascade has no plans to repurchase stock in the near future.
Investment Portfolio
The investment portfolio increased $30.0 million from the prior year but was down $17.8 million from the end of the previous quarter due to the write down of the Fannie Mae and Freddie Mac preferred securities. The investment portfolio consists solely of triple A rated mortgage backed securities and U.S. Government Agency securities. It contains no collateralized debt obligations or securities secured by subprime loans.
Deposit Growth
"Despite stiff competition in our local markets, our continued marketing and sales management efforts directed at core deposit products has resulted in dramatic growth in our checking account balances. These deposits grew by $31.1 million year-over-year and $6.6 million on a sequential quarter basis," said Nelson. "Personal checking account balances grew by 57% or $33.0 million over the course of the year and even though business checking was virtually flat, total checking balances grew by 22% over the past twelve months, resulting in a 32% increase in checking account fees in the third quarter compared to the same period last year. We saw a decline in our public sector money market accounts as municipalities reduced balances to meet their cash flow requirements and consolidated balances in the State Investment Pool. We are monitoring the effect on CD pricing in our market now that Washington Mutual has been acquired by J.P. Morgan Chase. We hope the takeover will result in more reasonable pricing for all of us in the community banking space."
The following table shows deposits in each category: (9/30/08 compared to 6/30/08 and 9/30/07)
DEPOSITS September 30, June 30, September 30, One Year
($ in 000s) 2008 2008 2007 Change
Personal checking
accounts $ 90,772 $ 77,591 $ 57,740 57%
Business checking
accounts 82,485 89,071 84,451 -2%
Savings and MMDA 266,560 340,911 330,031 -19%
CDs 552,688 482,988 434,503 27%
-------- -------- -------- ----
Total deposits $992,505 $990,561 $906,725 9%
Operating Results
Net interest income for the third quarter increased 19% to $12.8 million, compared to $10.8 million for the third quarter of 2007. Total other income increased 20% to $2.3 million for the quarter, compared to $1.9 million in the third quarter a year ago. The steady and large growth in checking fees led to the increases in other income from both the previous quarter and the year ago quarter.
Total other expense, excluding the OTTI charge, was up 7% to $7.2 million in the third quarter of 2008, compared to $6.7 million in the same quarter last year, largely due to a $156,000 decline in deferral of loan expenses as fewer loans were made so fewer costs were deferred. Higher FDIC insurance premiums of $160,000, increased depreciation of $74,000 with a new branch and $45,000 for higher state B&O taxes also contributed to increased other expense. Personnel costs were actually down on a net basis as salaries were up $203,000 but bonuses were down $253,000.
The efficiency ratio was 47.2% in the third quarter of 2008 (excluding the OTTI charge) compared to 52.7% in the same quarter a year ago, and 51.1% for the first nine months of the year compared to 52.0% in the same period last year.
Net interest income increased 8% to $34.8 million during the first nine months of 2008 compared to $32.1 million in the first nine months of 2007. Total other income increased 20% to $7.0 million for the first nine months of 2008 compared to $5.8 million in the first nine months of 2007, largely due to the increase in checking fees, which were up $801,000 for the year to date period. Income from Bank owned life insurance (BOLI) grew as Cascade added $5 million of BOLI in December 2007 and transferred the majority of the existing policies to a new, higher yielding structure. In terms of earnings comparisons, the $396,000 gain on the sale of securities in the first nine months of 2008 partially offset the net gains from the implementation of FAS 159 in the first half a year ago. Total other income in the first nine months of 2007 had a number of items that were incurred in light of the implementation of FAS 159 in April 2007, including a $569,000 gain on the termination of FHLB advances which offset a $431,000 net loss on the sale of securities. Year-to-date, total other expenses (excluding the OTTI charge) increased 8% to $21.3 million compared to $19.7 million in the first nine months of 2007. The increase was largely due to additional expenses related to the new Burlington and Shoreline branches during the first nine months of the year.
Net Interest Margin & Interest Rate Risk
Cascade's net interest margin improved 15 basis points to 3.52% for the third quarter of 2008, compared to the third quarter a year ago. "Our yield on earning assets dropped 62 basis points from the third quarter a year ago, but the cost of liabilities decreased by 98 basis points," said Johnson. "The 36 basis point improvement in spread produced only a 15 basis point improvement in margin with a lower ratio of interest-bearing assets to total assets in 3Q08 due to the increase in nonperforming loans and the purchase of $5 million of additional BOLI in December 2007."
The net interest margin was 3.17% in the second quarter of 2008. "Approximately 31 basis points of the improvement from 2Q08 to 3Q08 was due to the recapture of interest on the nonperforming loans assumed during the quarter which provided approximately $1.0 million in additional interest income," added Johnson. "On the other hand, the loss of the dividend on the Freddie Mac preferred stock cost $150,000 in interest income or 4 basis points in margin. Excluding the above two items, the third quarter margin would have been in the 3.25% range."
For the first nine months of 2008 the net interest margin was 3.24% compared to 3.33% in the first nine months of 2007.
3Q08 2Q08 1Q08 4Q07 3Q07 2Q07 1Q07 4Q06 3Q06
----------------------------------------------------
Asset yield 6.67% 6.31% 6.62% 7.20% 7.29% 7.30% 7.17% 7.03% 6.95%
Liability cost 3.44% 3.51% 4.03% 4.32% 4.42% 4.39% 4.38% 4.26% 4.15%
Spread 3.23% 2.80% 2.59% 2.88% 2.87% 2.91% 2.79% 2.77% 2.80%
Margin 3.52% 3.17% 3.02% 3.38% 3.37% 3.37% 3.26% 3.23% 3.24%
"With credit spreads widening we are seeking to increase our return on new and renewing credits. Many banks in our area still offer very aggressive rates on their CDs despite Fed rate cuts, which will continue to exert pressure in the market," Johnson said. "We anticipate our net interest margin to be within a range of 3.10% to 3.35% in the next quarter."
Conference Call
Cascade's management team will host a conference call on Wednesday, October 22, 2008 at 11:00 a.m. PT (2:00 p.m. ET). Interested investors may listen to the call live or via replay at www.cascadebank.com under shareholder information. Investment professionals are invited to dial (303) 262-2211 to participate in the live call. A telephone replay of the call will be available for a month at (303) 590-3000, using passcode 11119713#.
About Cascade Financial
Established in 1916, Cascade Bank, the only operating subsidiary of Cascade Financial Corporation, is a state chartered commercial bank headquartered in Everett, Washington. Cascade Bank has proudly served the Puget Sound region for over 90 years and operates 21 full service branches in Everett, Lynnwood, Marysville, Mukilteo, Shoreline, Smokey Point, Issaquah, Clearview, Woodinville, Lake Stevens, Bellevue, Snohomish, North Bend and Burlington.
In September 2008, President and CEO Carol K. Nelson was named to U.S. Banker magazine's list of "25 Women to Watch" in its annual ranking of the 25 Most Powerful Women in Banking and Finance. In June 2008, Cascade was ranked #44 on the Seattle Times' Northwest 100, a list of public companies. In January 2008 Cascade was ranked #10 on Washington CEO magazine's list of Top 25 Washington Banks. In July 2007, Cascade was named to Sandler O'Neill's Bank and Thrift Sm-All Stars - Class of 2007, which recognized Cascade as one of the top 24 best performing small capitalization institutions from a field of 610 publicly traded banks and thrifts in the U.S. with market capitalizations less than $2 billion. In making their selections, Sandler focused on growth, profitability, credit quality and capital strength.
Non-GAAP Financial Measures
This news release contains certain non-GAAP financial measures in addition to results presented in accordance with Generally Accepted Accounting Principles ("GAAP"). These measures include return on tangible equity and tangible book value per share, efficiency ratio and earnings per share before OTTI. These measures should not be construed as a substitute for GAAP measures; they should be read and used in conjunction with Cascade's GAAP financial information. A reconciliation of the included non-GAAP financial measures to GAAP measures is included elsewhere in this release.
Forward-Looking Statements
Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Reform Act. CASB's actual results may differ materially from those included in the forward-looking statements. Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "intend," "may increase," "may fluctuate," and similar expressions or future or conditional verbs such as "will," "should," "would," and "could." These forward-looking statements involve risks and uncertainties including, but not limited to, economic conditions, portfolio growth, the credit performance of the portfolios, including bankruptcies, and seasonal factors; changes in general economic conditions including the performance of financial markets, the performance of coal and coal related industries, prevailing inflation and interest rates, realized gains from sales of investments, gains from asset sales, and losses on commercial lending activities; results of various investment activities; the effects of competitors' pricing policies, of changes in laws and regulations on competition and of demographic changes on target market populations' savings and financial planning needs; industry changes in information technology systems on which we are highly dependent; failure of acquisitions to produce revenue enhancements or cost savings at levels or within the time frames originally anticipated or unforeseen integration difficulties; the adoption of CASB of an FFIEC policy that provides guidance on the reporting of delinquent consumer loans and the timing of associated credit charge-offs for financial institution subsidiaries; and the resolution of legal proceedings and related matters. In addition, the banking industry in general is subject to various monetary and fiscal policies and regulations, which include those determined by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and state regulators, whose policies and regulations could affect CASB's results. These statements are representative only on the date hereof, and CASB undertakes no obligation to update any forward-looking statements made.
BALANCE SHEET
(Dollars in thousands
except per share Three One
amounts) Sept. 30, June 30, Month Sept. 30, Year
(Unaudited) 2008 2008 Change 2007 Change
---------- ---------- ------ ---------- ------
Cash and due from
banks $ 12,822 $ 13,921 -8% $ 14,246 -10%
Interest-bearing
deposits 611 1,850 -67% 7,380 -96%
Securities available-
for-trading -- -- NM 17,009 -100%
Securities available-
for-sale 102,313 123,630 -17% 112,671 -9%
Securities held-to-
maturity 140,615 137,065 3% 83,689 68%
Federal Home Loan
Bank stock 11,920 11,920 0% 11,920 0%
---------- ---------- ----------
Total securities 254,848 272,615 -7% 225,289 13%
---------- ---------- ----------
Loans
Business 473,213 486,876 -3% 464,314 2%
R/E construction 403,569 391,765 3% 356,064 13%
Commercial real
estate 119,787 117,043 2% 119,890 0%
Multifamily 74,535 63,905 17% 11,506 548%
Home equity/consumer 29,659 29,250 1% 28,089 6%
Residential 112,283 106,043 6% 95,559 18%
---------- ---------- ----------
Total loans 1,213,046 1,194,882 2% 1,075,422 13%
Deferred loan fees (3,248) (3,471) -6% (3,695) -12%
Allowance for loan
losses (14,531) (13,318) 9% (11,258) 29%
---------- ---------- ----------
Loans, net 1,195,267 1,178,093 1% 1,060,469 13%
---------- ---------- ----------
REO and other
repossessed assets 1,446 25 NM -- NM
Premises and
equipment 15,676 15,778 -1% 14,219 10%
Bank owned life
insurance 23,388 23,133 1% 18,483 27%
Deferred tax asset 8,437 3,015 180% 2,461 243%
Other assets 14,173 14,041 1% 12,448 14%
Goodwill 24,585 24,585 0% 24,585 0%
Core deposit
intangible, net 529 564 -6% 669 -21%
---------- ---------- ----------
Total assets $1,551,782 $1,547,620 0% $1,380,249 12%
========== ========== ==========
Deposits
Personal checking
accounts $ 90,772 $ 77,591 17% $ 57,740 57%
Business checking
accounts 82,485 89,071 -7% 84,451 -2%
---------- ---------- ----------
Total checking
accounts 173,257 166,662 4% 142,191 22%
Savings and money
market accounts 266,560 340,911 -22% 330,031 -19%
Certificates of
deposit 552,688 482,988 14% 434,503 27%
---------- ---------- ----------
Total deposits 992,505 990,561 0% 906,725 9%
---------- ---------- ----------
FHLB advances 255,000 250,000 2% 197,000 29%
Securities sold under
agreement to
repurchase 150,983 145,641 4% 120,618 25%
Jr. Sub. Deb. (Trust
Preferred Securities) 15,465 15,465 0% 15,465 0%
Jr. Sub. Deb. (Trust
Preferred
Securities), at
fair value 10,535 10,924 -4% 11,541 -9%
Other liabilities 8,194 9,381 -13% 10,019 -18%
---------- ---------- ----------
Total liabilities 1,432,682 1,421,972 1% 1,261,368 14%
---------- ---------- ----------
Stockholders' equity
Common stock and
paid in capital 40,857 40,669 0% 40,397 1%
Retained earnings 79,753 87,456 -9% 79,010 1%
Accumulated other
comprehensive loss,
net (1,510) (2,477) -39% (526) 187%
---------- ---------- ----------
Total stockholders'
equity 119,100 125,648 -5% 118,881 0%
---------- ---------- ----------
Total liabilities and
stockholders' equity $1,551,782 $1,547,620 0% $1,380,249 12%
========== ========== ==========
INCOME STATEMENT
(Dollars in thousands
except per share Three One
amounts) Sept. 30, June 30, Month Sept. 30, Year
(Unaudited) 2008 2008 Change 2007 Change
-------- ------- ------ ------- ------
Interest income $ 24,345 $22,793 7% $23,378 4%
Interest expense 11,508 11,348 1% 12,568 -8%
-------- ------- -------
Net interest income 12,837 11,445 12% 10,810 19%
Provision for loan
losses 1,250 1,200 4% 350 257%
-------- ------- -------
Net interest income
after provision for
loan losses 11,587 10,245 13% 10,460 11%
Other income
Checking fees 1,328 1,277 4% 1,005 32%
Service fees 280 313 -11% 265 6%
Bank owned life
insurance 271 259 5% 203 33%
(Loss)/gain on sale
of securities (87) 19 -558% 28 -411%
Gain on sale of
loans 36 45 -20% 46 -22%
Fair value gains 389 193 102% 281 38%
Other 106 111 -5% 114 -7%
-------- ------- -------
Total other income 2,323 2,217 5% 1,942 20%
-------- ------- -------
Total income 13,910 12,462 12% 12,402 12%
-------- ------- -------
Compensation expense 3,789 3,609 5% 3,551 7%
Other operating
expenses 3,373 3,642 -7% 3,173 6%
-------- ------- -------
7,162 7,251 -1% 6,724 7%
OTTI charge 17,338 -- NM -- NM
-------
Total other expense 24,500 7,251 238% 6,724 264%
-------- ------- -------
Net income before
(benefit) provision
for income tax (10,590) 5,211 -303% 5,678 -287%
(Benefit) provision
for income tax (3,971) 1,577 -352% 1,892 -310%
-------- ------- -------
Net (loss) income $ (6,619) $ 3,634 -282% $ 3,786 -275%
======== ======= =======
EARNINGS PER SHARE
INFORMATION
Earnings per share,
basic $ (0.55) $ 0.30 -282% $ 0.32 -274%
Earnings per share,
diluted $ (0.55) $ 0.30 -282% $ 0.31 -276%
Earnings per share,
basic excluding
OTTI(1) $ 0.39 $ 0.30 28% $ 0.32 22%
Earnings per share,
diluted excluding
OTTI(1) $ 0.38 $ 0.30 28% $ 0.31 24%
(1) Excludes after-tax charge of $11,270 for OTTI on investments in
Fannie Mae and Freddie Mac preferred stock.
Weighted average
number of shares
outstanding
Basic 12,059,480 12,047,927 12,009,440
Diluted 12,140,168 12,162,848 12,233,781
INCOME STATEMENT
(Dollars in thousands Nine Months Ended
except per share amounts) September 30, September 30, One Year
(Unaudited) 2008 2007 Change
---------- ---------- ------
Interest income $ 70,152 $ 69,799 1%
Interest expense 35,395 37,721 -6%
---------- ----------
Net interest income 34,757 32,078 8%
Provision for loan losses 4,840 850 469%
---------- ----------
Net interest income after
provision for loan losses 29,917 31,228 -4%
Other income
Checking fees 3,640 2,839 28%
Service fees 825 794 4%
Bank owned life insurance 790 598 32%
Gain/(loss)on sale
of securities 396 (431) -192%
Gain on sale of loans 119 167 -29%
Fair value gains 887 934 -5%
Gain on FHLB advances -- 569 -100%
Other 337 357 -6%
---------- ----------
Total other income 6,994 5,827 20%
---------- ----------
Total income 36,911 37,055 0%
---------- ----------
Compensation expense 11,039 10,246 8%
Other operating expenses 10,308 9,449 9%
---------- ----------
21,347 19,695 8%
OTTI charge 17,338 -- NM
---------- ----------
Total other expense 38,685 19,695 96%
---------- ----------
Net income before (benefit)
provision for income tax (1,774) 17,360 -110%
(Benefit) provision for
income tax (1,402) 5,826 -124%
---------- ----------
Net (loss) income $ (372) $ 11,534 -103%
========== ==========
EARNINGS PER SHARE INFORMATION
Earnings per share, basic $ (0.03) $ 0.96 -103%
Earnings per share, diluted $ (0.03) $ 0.94 -103%
Earnings per share, basic
excluding OTTI (1) $ 0.90 $ 0.96 -5%
Earnings per share, diluted
excluding OTTI (1) $ 0.90 $ 0.94 -4%
(1) Excludes after-tax charge of $11,270 for OTTI on investments in
Fannie Mae and Freddie Mac preferred stock
Weighted average number of
shares outstanding
Basic 12,047,700 12,055,024
Diluted 12,168,009 12,307,001
(Dollars in thousands except per share amounts)(Unaudited)
Quarter Ended Nine Months Ended
PERFORMANCE MEASURES Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
AND RATIOS 2008 2008 2007 2008 2007
------- ------- ------- ------- -------
Return on average
equity -20.58% 11.57% 12.75% -0.39% 13.27%
Return on average
tangible equity -25.75% 14.36% 16.36% -0.49% 16.90%
Return on
average assets -1.69% 0.96% 1.12% -0.03% 1.13%
Efficiency ratio (1) 47.24% 53.07% 52.73% 51.13% 51.96%
Net interest margin 3.52% 3.17% 3.37% 3.24% 3.33%
(1) Excludes after-tax charge of $11,270 for OTTI on investments in
Fannie Mae and Freddie Mac preferred stock.
Quarter Ended
AVERAGE BALANCES Sept. 30, June 30, Sept. 30,
2008 2008 2007
----------- ----------- -----------
Average assets $ 1,556,771 $ 1,527,947 $ 1,344,189
Average earning assets 1,452,526 1,453,058 1,272,810
Average total loans 1,201,676 1,173,781 1,029,487
Average deposits 988,905 968,873 870,616
Average equity 127,936 126,384 117,861
Average tangible equity 102,804 101,219 92,586
Sept. 30, June 30, Sept. 30,
EQUITY ANALYSIS 2008 2008 2007
----------- ----------- -----------
Total equity $ 119,100 $ 125,648 $ 118,881
Less: goodwill and intangibles 25,114 25,149 25,254
----------- ----------- -----------
Tangible equity $ 93,986 $ 100,499 93,627
Common stock outstanding 12,071,032 12,047,927 12,023,685
Book value per common share $ 9.87 $ 10.43 $ 9.89
Tangible book value per share $ 7.79 $ 8.34 $ 7.79
Capital/asset ratio
(inc. jr. sub deb) 9.29% 9.73% 10.42%
Capital/asset ratio
(Tier 1, inc. jr. sub deb) 7.87% 8.41% 9.03%
Risk based capital/risk
weighted asset ratio 10.40% 10.67% 10.57%
Tangible cap/asset ratio
(ex. jr. sub deb) 6.16% 6.60% 7.10%
(Dollars in thousands except per share amounts)(Unaudited)
ASSET QUALITY Sept. 30, June 30, Sept. 30,
2008 2008 2007
---------- ---------- ----------
Nonperforming loans (NPLs) $ 15,697 $ 32,019 $ 625
Nonperforming loans/
total loans 1.29% 2.68% 0.06%
Real estate/repossessed
assets owned $ 1,446 $ 25 --
Nonperforming assets $ 17,143 $ 32,044 625
Nonperforming assets/
total assets 1.10% 2.07% 0.05%
Net loan charge-offs in
the quarter $ 43 $ 448 $ 302
Net charge-offs/total loans 0.00% 0.04% 0.03%
Allowance for loan losses 14,531 13,318 $ 11,258
Plus: Allowance for off
balance sheet commitments 107 113 $ 136
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Total allowance for
loan losses 14,638 13,431 $ 11,394
Total allowance for loan
losses/total loans 1.21% 1.12% 1.06%
Total allowance for loan
losses/nonperforming loans 93% 42% 1823%
Quarter Ended
Sept. 30, June 30, Sept. 30,
INTEREST SPREAD ANALYSIS 2008 2008 2007
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Yield on loans 6.82% 6.52% 7.84%
Yield on investments 5.38% 5.54% 4.93%
Yield on earning assets 6.67% 6.31% 7.29%
Cost of deposits 2.59% 2.74% 4.02%
Cost of FHLB advances 4.30% 4.30% 4.45%
Cost of other borrowings 4.73% 4.29% 3.23%
Cost of jr. sub. debentures 8.00% 8.03% 7.71%
Cost of interest bearing
liabilities 3.44% 3.51% 4.42%
Net interest spread 3.23% 2.80% 2.87%
Net interest margin 3.52% 3.17% 3.37%