BOCA RATON, Fla., Feb. 13, 2009 (GLOBE NEWSWIRE) -- Sun American Bancorp (the "Company") (Nasdaq:SAMB), the bank holding company for Sun American Bank (the "Bank"), today reported a net loss for the year of $54.5 million or $5.29 per diluted share. In the fourth quarter of 2008 the net loss was $50.8 million or $4.96 per diluted share. The fourth quarter loss for 2008 was driven by non-cash charges of $49.4 million comprised of a goodwill impairment charge of $43 million and a $6.4 million non-cash deferred tax valuation allowance. The goodwill impairment and the deferred tax asset allowance have no impact on ongoing operations and did not affect the Company's regulatory capital, well capitalized status, cash or liquidity. Excluding the goodwill impairment charge and deferred tax valuation allowance, the net loss was $5.1 million for the year and $1.4 million for the fourth quarter after the impact of loan loss provisions of $8.5 million and $2.3 million in the year and fourth quarter respectively. Excluding the goodwill impairment charge, deferred tax valuation allowance and loan loss provision, there would have been operating income of $3.4 million for the year and $1.1 million for the fourth quarter.
Robert Nichols, Chief Financial Officer stated that 'Similar to many banks in 2008, the Company completed its annual evaluation of its goodwill and intangible assets for impairment and, in the current market environment, determined that the fair value of the Company was less than its net equity which required the impairment charge. The Company also analyzed its deferred tax assets and determined that it no longer met the requirements under SFAS No. 109, Accounting for Income Taxes to continue to recognize future tax loss benefits. Accordingly the Company recorded a valuation allowance in an amount equal to its net deferred tax assets resulting in a $6.4 million charge to earnings. These one time write offs are non-cash accounting charges and have no impact on the Company's nor the Bank's cash, liquidity or regulatory capital ratios. The Bank remains well capitalized as measured by regulatory requirements."
2008 Financial Highlights
Balance Sheet
-- Total assets grew $13.0 million or 2.2% in the year. -- Net loans grew $27 million or 6% in the year. -- Total deposits grew $63 million or 16% in the year. -- Non-performing assets increased to $29.8 million or 4.4% of assets at December 31, 2008 from $7.3 million or 1.26% of assets at December 31, 2007. -- Allowance for loan losses was 1.12% of total loans after charge offs of $9.6 million in the year. -- Tangible capital as a percentage of tangible assets was 7.22% -- Tangible book value per share was $4.16 at December 31, 2008 compared to $4.96 at December 31, 2007.
Income Statement
-- Net loss for 2008 was $54.5 million and was $50.8 million in the fourth quarter. -- Loan loss provisions for the year were $8.5 million compared to $4.5 million in 2007. -- Loan loss provisions in the fourth quarter were $2.3 million compared to $4.3 million in the fourth quarter of 2007. -- Net interest margin ("NIM") was 3.44% for 2008, compared to 4.06% for 2007. -- Operating expenses (excluding the write off of goodwill) decreased by $1.6 million or 7% in 2008 compared to 2007.
Michael Golden, Chairman, Chief Executive Officer and President of Sun American Bank, stated, "As we are all aware we are in the middle of unprecedented times of what is mostly likely the worst economic down turn since the Great Depression. Our financial results certainly reflect those conditions and will more than likely continue to do so in the near future. We are working diligently with our investment banking firm Keefe, Bruyette & Woods, Inc. to strengthen our balance sheet and regulatory capital ratios. We are facing many challenges during these difficult times but we have not lost our focus to improve our operating performance."
Capital
-- Sun American Bank is well capitalized at year end with Total, Tier 1 and Leverage Capital ratios of 10.98%, 9.86% and 8.30% respectively. This compares to the regulatory requirements for a well capitalized financial institution of 10%, 6% and 5% respectively.
Liquidity
-- The Bank's deposit base remains as a stable source to fund loan and investment requirements. Core deposits account for 66% of the total deposits. The average cost of funds at December 31, 2008 was 3.12% compared to 3.82% at December 31, 2007.
Operating Results
The Company's quarterly net interest income was $3.7 million compared to $4.7 million in the fourth quarter a year ago. This decrease was largely due to interest reversals on non-accruing loans and higher levels of non accruing loans in the quarter. In addition, the average loan portfolio yield decreased from 8.35% in 2007 to 6.99% in 2008. Comparatively, average overall cost of funds decreased from 4.70% for 2007 to 3.59% for 2008.
The NIM for 2008 was 3.44% compared to 4.06% for 2008. The compression of net interest margin in 2008 was due to higher levels of non-performing loans, interest reversals and due to the highly competitive deposit market in 2008.
For the fourth quarter of 2008, the Company recorded $2.3 million in provision for loan losses in response to higher levels of non-performing assets associated with collateral dependent commercial real estate loans. The comparative provision for loan loss for the three months ended September 30, 2008 was $2.2 million and for the fourth quarter of 2007 was $4.4 million. The Company recognized gains on sales of securities of $981,000 in the fourth quarter of 2008 compared to nothing in the fourth quarter of 2007. Operating expenses decreased to $4.9 million for the fourth quarter of 2008, from $5.4 million in the fourth quarter of 2007. The reduction in expenses is attributed to savings associated with staff reduction initiatives, lower compensation costs and reduced premises costs due to closure of two branches in 2008.
For the year ended December 31, 2008, the Company recorded $8.5 million in provision for loan losses again in response to rising levels of non-performing assets associated with collateral dependent commercial real estate loans, compared to a provision of $4.5 million in 2007. The NIM was at 3.44% for 2008 compared to 4.06% for 2007. Net interest income totaled $18.3 million for 2008, compared to $19.9 million for 2007.
Operating expenses (excluding the write off of goodwill and intangible assets) decreased to $20.5 million for 2008, from $22.1 million for 2007. The reduction in expenses is attributed to savings associated with staff reduction initiatives, lower incentive compensation costs and reduced occupancy costs.
Balance Sheet Activity
The Company ended the year with assets of $590.9 million up $13.0 million or 2.2% from $577.9 million at December 31, 2007.
Net loans were $467 million at December 31, 2008, an increase of 6% from $440 million at December 31, 2007.
Total non-performing assets were $29.8 million at December 31, 2008, compared to $7.3 million at December 31, 2007. The ratio of non-performing assets as a percentage of total assets increased to 4.4% at December 31, 2008 from 1.26% at December 31, 2007.
The total allowance for loan losses was $5.6 million at December 31, 2008 after taking charge offs of $9.6 million in the year including $3.3 million of charge offs in the fourth quarter of 2008. This compared to an allowance of $6.5 million at December 31, 2007. The allowance for loan losses as a percentage of the total loan portfolio was 1.12% at December 31, 2008, compared to 1.46% at December 31, 2007. Prior to the fourth quarter loan charge offs the allowance for loan losses was $8.9 million which represented 1.88% of the total loan portfolio.
Non-loan assets declined by $13.9 million in 2008 primarily due to the write off of $43 million of goodwill and intangible assets and the $6.4 million write off of deferred tax assets. These decreases were offset by an increase in investment securities of $27 million.
Total deposits of $443.5 million at December 31, 2008 had increased by $63 million or 16% from December 31, 2007.
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SUN AMERICAN BANCORP CONSOLIDATED BALANCE SHEETS December 31, December 31, 2008 2007 ------------- ------------- (Unaudited) (Audited) ASSETS Cash and due from financial institutions $ 5,371,609 $ 8,109,917 Federal funds sold 11,189,000 -- ------------- ------------- Total cash and cash equivalents 16,560,609 8,109,917 Securities available for sale 30,285,750 5,778,655 Securities held to maturity (fair value 2008 - $54,170,963, 2007 - $50,940,402) 52,752,317 50,306,758 Loans, net of allowance for loan losses of $5,621,532 and $6,503,508 466,959,119 439,961,953 Federal Reserve Bank stock 3,018,150 3,180,900 Federal Home Loan Bank stock 3,740,600 4,658,500 Accrued interest receivable 2,656,414 2,698,469 Premises and equipment, net 9,991,118 11,211,441 Goodwill -- 42,362,255 Intangibles -- 2,719,538 Other assets 4,963,019 6,884,053 ------------- ------------- $ 590,927,096 $ 577,872,439 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Non-interest bearing $ 43,116,630 $ 50,098,536 Interest bearing 400,371,612 330,608,180 ------------- ------------- Total deposits 443,488,242 380,706,716 Securities sold under agreements to repurchase 35,916,706 14,983,655 Federal Home Loan Bank advances 58,000,000 78,000,000 Notes payable 7,528,871 2,703,155 ------------- ------------- Accrued expenses and other liabilities 3,268,828 3,660,365 ------------- ------------- Total liabilities 548,202,647 480,053,891 Minority interest 14,087 27,359 Stockholders' equity Preferred Stock, $0.01 par value; 5,000,000 shares authorized: Series A - 93,750 issued and outstanding at December 31, 2008 None issued and outstanding at December 31,2007 375,000 -- Common stock, $.025 par value; 20,000,000 shares authorized; 10,934,944 issued and 10,230,466 shares outstanding at December 31, 2008 10,934,944 issued and 10,632,434 shares outstanding at December 31, 2007 273,374 273,374 Additional paid-in capital 106,864,390 105,728,957 Accumulated deficit (60,576,158) (6,025,754) Treasury stock, 704,478 shares at December 31, 2008, 302,510 shares at December 31, 2007 (3,574,046) (1,990,641) Accumulated other comprehensive loss (652,198) (194,747) ------------- ------------- Total stockholders' equity 42,710,362 97,791,189 ------------- ------------- $ 590,927,096 $ 577,872,439 ============= =============
SUN AMERICAN BANCORP CONSOLIDATED STATEMENTS OF INCOME Twelve Months Ended Three Months Ended -------------------------- -------------------------- December 31, December 31, December 31, December 31, 2008 2007 2008 2007 ------------ ------------ ------------ ------------ (unaudited) (audited) (unaudited) (unaudited) Interest and dividend income Loans, including fees $ 31,009,391 $ 34,069,909 $ 7,096,021 $ 8,571,029 Securities 4,326,888 3,588,166 1,137,121 945,950 Federal funds sold and repurchase agreements 162,291 718,338 52,465 6,708 ------------ ------------ ------------ ------------ 35,498,570 38,376,413 8,285,607 9,523,687 Interest expense Deposits 13,939,792 16,544,432 3,716,341 3,897,183 Other 3,245,015 1,901,078 866,448 928,003 ------------ ------------ ------------ ------------ 17,184,807 18,445,510 4,582,789 4,825,186 ------------ ------------ ------------ ------------ Net interest income 18,313,763 19,930,903 3,702,818 4,698,501 Provision for loan losses 8,545,414 4,519,966 2,345,975 4,364,272 ------------ ------------ ------------ ------------ Net interest income after provision for loan losses 9,768,349 15,410,937 1,356,843 334,229 Noninterest income Service charges on deposit accounts 1,779,548 1,991,058 378,391 521,943 Net gains (losses) on sales of securities 981,176 (11,924) 981,176 (384) ------------ ------------ ------------ ------------ 2,760,724 1,979,134 1,359,567 521,559 Noninterest expense Salaries and employee benefits 9,432,666 10,134,466 2,190,068 2,293,952 Occupancy and equipment 5,359,905 5,831,182 1,307,805 1,530,436 Data processing 805,234 1,187,340 138,393 268,062 Professional services 1,105,327 1,424,568 350,180 445,350 Insurance 613,366 603,868 169,570 177,214 Advertising 116,113 132,328 24,089 57,167 Amortization of intangibles 800,033 794,443 193,906 229,853 Other 2,250,172 1,971,524 560,751 386,459 ------------ ------------ ------------ ------------ Core noninterest expenses 20,482,816 22,079,719 4,934,762 5,388,493 ------------ ------------ ------------ ------------ Goodwill and intangible impairment 43,045,683 -- 43,045,683 -- ------------ ------------ ------------ ------------ Total noninterest expenses 63,528,499 22,079,719 47,980,445 5,388,493 ------------ ------------ ------------ ------------ Loss before income taxes and minority interest (50,999,426) (4,689,648) (45,264,035) (4,532,705) Minority interest in net income of subsidiary (13,156) (15,293) (12,466) (683) ------------ ------------ ------------ ------------ Loss before provision for income taxes (50,986,270) (4,704,941) (45,251,569) (4,533,388) ------------ ------------ ------------ ------------ Income tax (expense) benefit (3,557,887) 1,594,626 (5,509,515) 1,673,029 ------------ ------------ ------------ ------------ Net loss $(54,544,157) $(3,110,315) $(50,761,084) $(2,860,359) ============ ============ ============ ============ Basic loss per share: $ (5.29) $ (0.29) $ (4.96) $ (0.27) Diluted loss per share: $ (5.29) $ (0.29) $ (4.96) $ (0.27) Weighted average number of common shares, basic 10,320,415 10,733,017 10,230,466 10,649,360 Weighted average number of common shares, diluted 10,320,415 10,733,017 10,230,466 10,649,360 SUN AMERICAN BANCORP AVERAGE BALANCE SHEET For the years ended December 31, ------------------------------------------------- 2008 2007 ----------------------- ------------------------ Avg. Avg. Average Interest Yield/ Average Interest Yield/ Balance (3) Rate Balance (3) Rate -------- -------- ----- -------- -------- ----- (Dollars in Thousands) Assets: Interest-earning assets: Investments(1) $ 77,851 $ 4,328 5.56% $ 69,177 $ 3,659 5.29% Federal funds sold 10,622 162 1.53 13,528 647 4.79 Net loans: Commercial loans(2) 26,979 1,507 5.58 33,409 3,035 9.08 Commercial real estate loans(2) 301,299 21,920 7.28 268,480 22,515 8.39 Consumer loans(2) 4,337 310 7.14 4,747 395 8.33 Residential real estate loans(2) 79,905 5,313 6.65 77,087 6,437 8.35 Home equity and other loans(2) 30,942 1,959 6.33 24,316 1,688 6.94 -------- -------- -------- -------- Net loans(2) 443,462 31,009 6.99 408,039 34,070 8.35 -------- -------- -------- -------- Total interest earning assets 531,935 35,499 6.67 490,744 38,376 7.82 -------- -------- -------- -------- Noninterest- earning assets 95,616 68,540 -------- -------- Total assets $627,551 $559,284 ======== ======== Liabilities and Stockholders' Equity: Interest-bearing liabilities: Deposits: NOW accounts $ 54,516 $ 1,275 2.34% $ 88,520 $ 3,529 3.99% Money market accounts 45,605 1,358 2.98 64,894 2,908 4.48 Savings accounts 30,583 926 3.03 18,252 686 3.76 Certificates of deposit 249,118 10,381 4.17 181,268 9,421 5.20 -------- -------- -------- -------- Total interest- bearing deposits 379,822 13,940 3.67 352,934 16,544 4.69 Federal funds purchased, securities sold under repurchase agreements and other 30,006 988 3.29 4,957 203 4.10 Federal Home Loan Bank advances 63,424 2,022 3.19 34,026 1,664 4.89 Other borrowed money 5,719 227 3.97 483 34 7.07 -------- -------- ----- -------- -------- ----- Total interest- bearing liabilities 478,970 17,177 3.59 392,400 18,445 4.70 -------- -------- ----- -------- -------- ----- Noninterest bearing liabilities 54,957 66,384 Stockholders' equity 93,624 100,500 -------- -------- Total liabilities and stockholders' equity 627,551 $559,284 ======== ======== Net interest income and net yield on interest-earning assets $ 18,322 3.44% $ 19,931 4.06% ======== ===== ======== ===== (1) Includes investment securities, Federal Reserve Bank stock and Federal Home Loan Bank stock. (2) Excludes loans for which the accrual of interest has been suspended. (3) Includes fee income on loans.