GREENWOOD, S.C., April 28, 2011 (GLOBE NEWSWIRE) -- Community Capital Corporation (Nasdaq:CPBK) reports operating results for the three months and quarter ended March 31, 2011.
- Merger with Park Sterling Corporation (Nasdaq:PSTB) announced on March 31, 2011
- Net income was $1.0 million for the quarter, resulting in an annualized ROA of 0.64%
- Although significant cash liquidity continues to be maintained, net interest margin increased 16 basis points from 3.26% for the quarter ended December 31, 2010 to 3.42% for the quarter ended March 31, 2011
- Noninterest bearing deposits comprised 22.35% of total deposits at March 31, 2011 versus 17.54% at March 31, 2010
- Capital levels remained above regulatory requirements to be considered "well capitalized" as the total risk based capital ratio increased to 12.73% at March 31, 2011 from 12.17% at December 31, 2010, and the Tier 1 leverage capital ratio grew to 8.31% at March 31, 2011 from 7.77% at December 31, 2010
- Nonperforming asset and nonperforming loan totals have declined versus December 31, 2010 and March 31, 2010 levels
- Allowance for loan losses coverage to nonaccrual loans was 56.05% at March 31, 2011, and allowance for loan losses coverage to gross loans remained above 3%
- Wealth Management Group assets increased 28.10% to $693 million at March 31, 2011 versus $541 million at March 31, 2010
Community Capital Corporation today reported net income for the three months ended March 31, 2011 of $1,022,000, or $0.10 per diluted share, compared to net income of $1,600,000, or $0.16 per diluted share, for the same period in 2010. The company recorded provision for loan losses of $600,000 during the first quarter of 2011 compared to $1.6 million during the first quarter of 2010.
Total assets decreased $96,702,000, or 12.97%, to $649,135,000 at March 31, 2011 from $745,837,000 as of March 31, 2010, and decreased $6,799,000, or 1.04%, from $655,934,000 at December 31, 2010. Total loans decreased $84,032,000, or 15.31%, to $464,978,000 at March 31, 2011 from $549,010,000 at March 31, 2010, and decreased $14,415,000, or 3.01%, from $479,393,000 at December 31, 2010. Total deposits decreased $91,481,000, or 15.81%, to $487,015,000 at March 31, 2011 from $578,496,000 at March 31, 2010, and decreased $8,167,000, or 1.65%, from $495,182,000 at December 31, 2010.
William G. Stevens, President and Chief Executive Officer of Community Capital Corporation stated, "We are pleased to report a stabilizing trend in asset quality, coupled with an increasing net interest margin and higher capital ratios. Additionally, we continue to grow noninterest income, primarily via our Wealth Management area. While our first quarter ROA does not exceed the 1% level we achieved a few years ago, our earnings performance should compare favorably to our southeastern peers.
"Our board and management team are working toward the completion of our announced merger with Park Sterling Corporation, which is expected to occur during the third quarter of 2011. It is more and more evident that the individual visions of each company are very similar and we believe that combining forces with Park Sterling Corporation will result in the realization of both."
ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT
In connection with the proposed merger referenced above, Park Sterling Corporation ("Park Sterling") will file with the Securities and Exchange Commission (the "SEC") a Registration Statement on Form S-4 that will include a Proxy Statement of Community Capital Corporation (the "Company") and a Prospectus of Park Sterling, as well as other relevant documents concerning the proposed transaction. SHAREHOLDERS ARE STRONGLY URGED TO READ THE REGISTRATION STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION REGARDING THE PROPOSED MERGER. A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about the Company and Park Sterling, may be obtained after their filing at the SEC's Internet site (http://www.sec.gov). In addition, free copies of documents filed with the SEC may be obtained on the respective websites of the Company and Park Sterling at www.capitalbanksc.com and www.parksterlingbank.com.
Participants in Solicitation
The Company and Park Sterling and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the Company's shareholders in connection with this transaction. Information about the directors and executive officers of the Company and Park Sterling and information about other persons who may be deemed participants in this solicitation will be included in the Proxy Statement/Prospectus. Information about the Company's executive officers and directors can be found in the Company's Form 10-K/A for the year ended December 31, 2010 filed with the SEC on April 26, 2011. Information about Park Sterling's executive officers and directors can be found in Park Sterling's definitive proxy statement in connection with its 2011 Annual Meeting of Shareholders filed with the SEC on April 12, 2011.
About Community Capital Corporation
Community Capital Corporation is the parent company of CapitalBank, which operates 18 community oriented branches throughout upstate South Carolina and offers a full array of banking services, including a diverse wealth management group. Additional information on CapitalBank's locations and the products and services offered are available at www.capitalbanksc.com. The Company's shares are traded on NASDAQ under the symbol CPBK.
About Park Sterling Corporation
Park Sterling Corporation is the holding company for Park Sterling Bank, headquartered in Charlotte, North Carolina. Park Sterling Bank's primary focus is to provide banking services to small and mid-sized businesses, owner occupied and income producing real estate owners, professionals, and other customers doing business or residing within its target areas. Park Sterling Bank is committed to building a banking franchise across the Carolinas and Virginia that is noted for sound risk management, superior client service and exceptional client relationships. For further information, visit www.parksterlingbank.com. Park Sterling's shares are traded on NASDAQ under the symbol PSTB.
Cautionary Note Regarding Forward-Looking Statements
This release contains forward-looking statements about the Company which we believe are within the meaning of the Private Securities Litigation Reform Act of 1995. This release contains certain forward-looking statements with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company and statements about the proposed merger with Park Sterling. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "will," "would," "should," "could" or "may" or words of similar meaning. These forward-looking statements, by their nature, are subject to risks and uncertainties. There are a number of important factors that could cause future results to differ materially from historical performance and these forward-looking statements. Factors that might cause such a difference include, but are not limited to: (1) the potential that loan charge-offs may exceed the allowance for loan losses or that such allowance will be increased as a result of factors beyond our control; (2) our ability and success in resolving troubled loans; (3) adverse conditions in the stock market, the public debt market, and other capital markets (including changes in interest rate conditions); (4) changes in deposit rates, the net interest margin, and funding sources; (5) the strength of the U.S. economy in general and the strength of the local economies in which we conduct operations may be different than expected resulting in, among other things, a deterioration in credit quality or a reduced demand for credit, including the resultant effect on our loan portfolio and allowance for loan losses; (6) changes in the U.S. legal and regulatory framework, including the effect of recent financial reform legislation on the banking industry; (7) or dependence on senior management; (8) competition from existing financial institutions operating in our market areas as well as the entry into such areas of new competitors with greater resources, broader branch networks and more comprehensive services; (9) risks inherent in making loans including repayment risks and value of collateral; (10) fluctuations in consumer spending and saving habits; (11) the demand for our products and services; (12) the challenges and uncertainties in the implementation of our expansion and development strategies; (13) the adequacy of expense projections and estimates of impairment loss; (14) unanticipated regulatory or judicial proceedings; (15) the timely development and acceptance of products and services, including products and services offered through alternative delivery channels such as the Internet; and (16) the potential failure to obtain shareholder and regulatory approval for the merger with Park Sterling or to satisfy other conditions to the merger on the terms set forth in the merger agreement or within the proposed timeframes.
Additional factors that could cause our results to differ materially from those described in the forward-looking statements can be found in the Company's reports (such as Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K) filed with the SEC and available at the SEC's Internet site (http://www.sec.gov). All references to financial information as of December 31, 2010 are derived from our Annual Report on Form 10-K for the year ended December 31, 2010. All subsequent written and oral forward-looking statements concerning the Company or any person acting on its behalf is expressly qualified in its entirety by the cautionary statements above. We do not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made.
| SUMMARY CONSOLIDATED FINANCIAL DATA | |||
| Financial Highlights | Three Months | Three Months | Three Months |
| (Dollars in thousands, except per share data) | Ended | Ended | Ended |
| March 31 | December 31 | March 31 | |
| 2011 | 2010 | 2010 | |
| Earnings Summary | (Unaudited) | (Unaudited) | (Unaudited) |
| Interest income | $6,941 | $7,219 | $8,258 |
| Interest expense | 2,014 | 2,198 | 2,932 |
| Net interest income | 4,927 | 5,021 | 5,326 |
| Provision for loan losses | 600 | 12,000 | 1,600 |
| Noninterest income | 2,116 | 2,160 | 3,347 |
| Noninterest expense | 4,997 | 5,908 | 4,787 |
| Income (loss) before taxes | 1,446 | (10,727) | 2,286 |
| Income tax expense (benefit) | 424 | (3,767) | 686 |
| Net income (loss) | $1,022 | $(6,960) | $1,600 |
| Per Shares Ratios: | |||
| Basic earnings (loss) per share | $0.10 | $(0.70) | $0.16 |
| Diluted earnings (loss) per share | $0.10 | $(0.70) | $0.16 |
| Book value per share | $4.86 | $4.73 | $5.55 |
| Common Share Data: | |||
| Outstanding at period end | 10,060,777 | 10,016,648 | 9,921,321 |
| Weighted average outstanding | 10,017,607 | 9,971,939 | 9,852,026 |
| Diluted weighted average outstanding | 10,036,146 | 9,971,939 | 9,894,888 |
| Capital Ratios: | |||
| Tier 1 leverage ratio | 8.31% | 7.77% | 8.43% |
| Tier 1 risk-based capital ratio | 11.46% | 10.89% | 11.67% |
| Total risk-based capital ratio | 12.73% | 12.17% | 12.94% |
| Tangible equity to tangible assets (period end) | 7.39% | 7.12% | 7.19% |
| Balance Sheet Highlights | |||
| (Dollars in thousands) | |||
| Average Balances: | |||
| Total assets | $650,381 | $677,334 | $749,768 |
| Earning assets | 590,229 | 615,280 | 685,008 |
| Loans | 475,989 | 497,550 | 560,249 |
| Deposits | 488,673 | 509,186 | 582,109 |
| Interest bearing deposits | 381,610 | 408,113 | 471,191 |
| Noninterest bearing deposits | 107,063 | 101,073 | 110,918 |
| Other borrowings | 95,400 | 95,400 | 95,400 |
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 |
| Shareholders' equity | 48,549 | 55,316 | 54,396 |
| Performance Ratios: | |||
| Return on average assets | 0.64% | (4.08)% | 0.87% |
| Return on average shareholders' equity | 8.53% | (49.92)% | 11.93% |
| Net interest margin (fully tax equivalent at 38%) | 3.42% | 3.26% | 3.19% |
| Efficiency ratio | 72.77% | 81.89% | 59.44% |
| Asset Quality: | |||
| Nonperforming loans | $26,964 | $27,531 | $32,628 |
| Other real estate | 13,691 | 13,496 | 8,833 |
| Total nonperforming assets | 40,655 | 41,027 | 42,755 |
| Total impaired loans | 34,420 | 39,385 | 77,469 |
| Total performing troubled debt restructurings | 948 | 3,436 | 13,307 |
| Net charge-offs/write-downs | 2,654 | 8,148 | 1,742 |
| Net charge-offs/write-downs to average loans | 0.56% | 1.64% | 0.31% |
| Allowance for loan losses to nonperforming loans | 56.05% | 62.35% | 41.32% |
| Nonperforming loans to total loans | 5.80% | 5.74% | 6.18% |
| Nonperforming assets to total assets | 6.26% | 6.25% | 5.73% |
| Allowance for loan losses to period end loans | 3.25% | 3.58% | 2.55% |
| Other Selected Ratios: | |||
| Average equity to average assets | 7.46% | 8.17% | 7.26% |
| Average loans to average deposits | 97.40% | 97.71% | 96.24% |
| Average loans to average earning assets | 80.64% | 80.87% | 81.79% |
| Balance Sheet Data | |||
| (Dollars in thousands) | Period Ended | Period Ended | Period Ended |
| March 31 | December 31 | March 31 | |
| 2011 | 2010 | 2010 | |
| (Unaudited) | (Unaudited) | ||
| Assets: | |||
| Cash and cash equivalents: | |||
| Cash and due from banks | $11,079 | $9,315 | $10,384 |
| Interest bearing deposit accounts | 43,580 | 27,860 | 60,002 |
| Total cash and cash equivalents | 54,659 | 37,175 | 70,386 |
| Investment securities: | |||
| Securities held-for-sale | 67,197 | 74,025 | 67,764 |
| Securities held-to-maturity | - | - | 160 |
| Nonmarketable equity securities | 9,416 | 9,626 | 10,364 |
| Total investment securities | 76,613 | 83,651 | 78,288 |
| Loans held for sale | 1,781 | 5,516 | 1,396 |
| Loans receivable | 464,978 | 479,393 | 549,010 |
| Allowance for loan losses | (15,112) | (17,165) | (14,018) |
| Other real estate owned | 13,691 | 13,496 | 8,833 |
| Premises and equipment, net | 15,153 | 15,342 | 15,931 |
| Prepaid expenses | 2,857 | 3,349 | 4,548 |
| Intangible assets | 1,162 | 1,259 | 1,560 |
| Cash surrender value of life insurance | 17,569 | 17,397 | 16,861 |
| Deferred tax asset | 8,469 | 8,992 | 5,955 |
| Income tax receivable | 3,104 | 3,158 | 1,640 |
| Other assets | 4,211 | 4,371 | 5,447 |
| Total assets | $649,135 | $655,934 | $745,837 |
| Liabilities and shareholders' equity: | |||
| Deposits: | |||
| Noninterest bearing | $108,844 | $103,080 | $101,462 |
| Interest bearing | 378,171 | 392,102 | 477,034 |
| Total deposits | 487,015 | 495,182 | 578,496 |
| FHLB advances | 95,400 | 95,400 | 95,400 |
| Junior subordinated debentures | 10,310 | 10,310 | 10,310 |
| Other liabilities | 7,535 | 7,638 | 6,574 |
| Total liabilities | $600,260 | $608,530 | $690,780 |
| Shareholders' equity: | |||
| $10,721 | $10,721 | $10,721 | |
| Common stock: $1 par value; 20 million shares authorized | |||
| Nonvested restricted stock | (84) | (116) | (293) |
| Capital surplus | 64,161 | 64,679 | 65,906 |
| Accumulated other comprehensive income (loss) | (165) | (460) | 444 |
| Retained earnings (deficit) | (16,168) | (17,189) | (10,105) |
| Treasury stock, at cost | (9,590) | (10,231) | (11,616) |
| Total shareholders' equity | 48,875 | 47,404 | 55,057 |
| Total liabilities and shareholders' equity | $649,135 | $655,934 | $745,837 |
| Income Statement Data | Three Months Ended | Three Months Ended | Three Months Ended |
| (Dollars in thousands) | March 31 | December 31 | March 31 |
| 2011 | 2010 | 2010 | |
| (Unaudited) | (Unaudited) | (Unaudited) | |
| Interest income: | |||
| Interest and fees on loans | $6,405 | $6,722 | $7,500 |
| Interest on investment securities | 520 | 458 | 736 |
| Interest on federal funds sold and interest-bearing deposits | 16 | 38 | 22 |
| Total interest income | 6,941 | 7,218 | 8,258 |
| Interest expense: | |||
| Interest on deposits | 1,002 | 1,171 | 1,930 |
| Interest on borrowings | 1,012 | 1,027 | 1,002 |
| Total interest expense | 2,014 | 2,198 | 2,932 |
| Net interest income | 4,927 | 5,020 | 5,326 |
| Provision for loan losses | 600 | 12,000 | 1,600 |
| Net interest income (loss) after provision | 4,327 | (6,980) | 3,726 |
| Non-interest income: | |||
| Service charges on deposit accounts | 375 | 408 | 482 |
| Gain on sale of loans held for sale | 427 | 648 | 298 |
| Fees from brokerage services | 76 | 116 | 64 |
| Income from fiduciary activities | 530 | 508 | 472 |
| Gain on sale of securities held-for-sale | 224 | 6 | 683 |
| Other operating income | 484 | 474 | 1,348 |
| Total non-interest income | 2,116 | 2,160 | 3,347 |
| Non-interest expense: | |||
| Salaries and employee benefits | 2,572 | 2,650 | 2,439 |
| Net occupancy expense | 335 | 302 | 322 |
| Amortization of intangible assets | 97 | 101 | 103 |
| Furniture and equipment expense | 168 | 174 | 203 |
| FDIC banking assessments | 479 | 454 | 346 |
| Net cost of operation of other real estate owned | 159 | 884 | 40 |
| Other operating expenses | 1,187 | 1,343 | 1,334 |
| Total noninterest expense | 4,997 | 5,908 | 4,787 |
| Income (loss) before taxes | 1,446 | (10,728) | 2,286 |
| Income tax expense (benefit) | 424 | (3,768) | 686 |
| Net income (loss) | $1,022 | $(6,960) | $1,600 |
| Loan Composition: | March 31, 2011 | December 31, 2010 | March 31, 2010 | |||
| (Dollars in thousands) | Balance | Percent | Balance | Percent | Balance | Percent |
| Commercial and agricultural | $37,428 | 8.05% | $39,720 | 8.28% | $38,487 | 7.01% |
| Real estate – construction | 90,245 | 19.41% | 99,076 | 20.67% | 128,110 | 23.33% |
| Real estate – mortgage and commercial | 277,512 | 59.68% | 279,560 | 58.32% | 312,246 | 56.88% |
| Home equity | 40,764 | 8.77% | 42,167 | 8.79% | 46,548 | 8.48% |
| Consumer – Installment | 17,855 | 3.84% | 17,636 | 3.68% | 22,344 | 4.07% |
| Other | 1,174 | 0.25% | 1,234 | 0.26% | 1,275 | 0.23% |
| Total | $464,978 | 100.00% | $479,393 | 100.00% | $549,010 | 100.00% |
| Deposits: | March 31, 2011 | December 31, 2010 | March 31, 2010 | |||
| (Dollars in thousands) | Balance | Percent | Balance | Percent | Balance | Percent |
| Noninterest bearing demand | $108,844 | 22.35% | $103,080 | 20.82% | $101,462 | 17.54% |
| Interest bearing demand | 64,319 | 13.21% | 63,024 | 12.73% | 64,367 | 11.13% |
| Money market and savings | 173,464 | 35.62% | 175,890 | 35.52% | 175,471 | 30.33% |
| Brokered deposits | 7,849 | 1.61% | 7,849 | 1.58% | 25,880 | 4.47% |
| Certificates of deposit | 132,539 | 27.21% | 145,339 | 29.35% | 211,316 | 36.53% |
| Total | $487,015 | 100.00% | $495,182 | 100.00% | $578,496 | 100.00% |
| Wealth Management Group | March 31, 2011 | December 31, 2010 | March 31, 2010 |
|
Fiduciary and Related Services: (Dollars in thousands, except number of accounts) |
|||
| Market value of accounts | $692,969 | $658,502 | $540,791 |
| Market value of discretionary accounts | $228,271 | $219,628 | $201,320 |
| Market value of non-discretionary accounts | $464,698 | $438,874 | $339,471 |
| Total number of accounts | 1,538 | 1,473 | 1,505 |
| Yield/Rate Analysis QTD | Three Months Ended | ||
| March 31, 2011 | |||
| Average | Yield/ | ||
| (Dollars in thousands) | Balance | Interest | Rate |
| ASSETS | |||
| Loans(1)(3) | $475,989 | $6,411 | 5.46% |
| Securities, taxable(2) | 62,630 | 365 | 2.36% |
| Securities, nontaxable(2)(3) | 10,407 | 157 | 6.12% |
| Nonmarketable Equity Securities | 9,495 | 41 | 1.75% |
| Fed funds sold and other (incl. FHLB) | 31,708 | 16 | 0.20% |
| Total earning assets | 590,229 | $6,990 | 4.80% |
| Non-earning assets | 60,152 | ||
| Total assets | $650,381 | ||
| LIABILITIES AND | |||
| STOCKHOLDERS' EQUITY | |||
| Transaction accounts | $192,505 | $396 | 0.83% |
| Regular savings accounts | 42,814 | 81 | 0.77% |
| Certificates of deposit | 146,291 | 525 | 1.46% |
| FHLB Advances | 95,400 | 817 | 3.47% |
| Junior subordinate debentures | 10,310 | 195 | 7.67% |
| Total interest-bearing liabilities | 487,320 | $2,014 | 1.67% |
| Non-interest bearing liabilities | 114,512 | ||
| Stockholders' equity | 48,549 | ||
| Total liabilities & equity | $650,381 | ||
| Net interest income/ | |||
| interest rate spread | $4,976 | 3.13% | |
| Net yield on earning assets | 3.42% | ||
| Yield/Rate Analysis QTD | Three Months Ended | ||
| December 31, 2010 | |||
| Average | Yield/ | ||
| (Dollars in thousands) | Balance | Interest | Rate |
| ASSETS | |||
| Loans(1)(3) | $497,550 | $6,729 | 5.37% |
| Securities, taxable(2) | 56,175 | 336 | 2.37% |
| Securities, nontaxable(2)(3) | 10,918 | 122 | 4.43% |
| Nonmarketable Equity Securities | 9,772 | 33 | 1.34% |
| Fed funds sold and other (incl. FHLB) | 40,864 | 39 | 0.38% |
| Total earning assets | $615,279 | $7,259 | 4.68% |
| Non-earning assets | 62,055 | ||
| Total assets | $677,334 | ||
| LIABILITIES AND | |||
| STOCKHOLDERS' EQUITY | |||
| Transaction accounts | $204,400 | $397 | 0.77% |
| Regular savings accounts | 42,942 | 100 | 0.92% |
| Certificates of deposit | 160,771 | 674 | 1.66% |
| FHLB Advances | 95,400 | 833 | 3.46% |
| Junior subordinate debt | 10,310 | 194 | 7.47% |
| Total interest-bearing liabilities | $513,823 | $2,198 | 1.70% |
| Non-interest bearing liabilities | 98,195 | ||
| Stockholders' equity | 55,316 | ||
| Total liabilities & equity | $667,334 | ||
| Net interest income/ | |||
| interest rate spread | $5,061 | 2.98% | |
| Net yield on earning assets | 3.26% | ||
| Yield/Rate Analysis QTD | |||
|
Three Months Ended March 31, 2010 |
|||
| Average | Yield/ | ||
| (Dollars in thousands) | Balance | Interest | Rate |
| ASSETS | |||
| Loans(1)(3) | $560,249 | $7,506 | 5.43% |
| Securities, taxable(2) | 54,697 | 536 | 3.97% |
| Securities, nontaxable(2)(3) | 15,827 | 233 | 5.97% |
| Nonmarketable Equity Securities | 10,267 | 31 | 1.22% |
| Fed funds sold and other (incl. FHLB) | 43,968 | 22 | 0.20% |
| Total earning assets | 685,008 | $8,328 | 4.93% |
| Non-earning assets | 64,760 | ||
| Total assets | $749,768 | ||
| LIABILITIES AND | |||
| STOCKHOLDERS' EQUITY | |||
| Transaction accounts | $190,446 | $552 | 1.18% |
| Regular savings accounts | 43,175 | 138 | 1.30% |
| Certificates of deposit | 237,570 | 1,240 | 2.12% |
| FHLB Advances | 95,400 | 823 | 3.50% |
| Junior subordinate debentures | 10,310 | 179 | 7.04% |
| Total interest-bearing liabilities | 576,901 | $2,932 | 2.06% |
| Non-interest bearing liabilities | 118,471 | ||
| Stockholders' equity | 54,396 | ||
| Total liabilities & equity | $749,768 | ||
| Net interest income/ | |||
| interest rate spread | $5,396 | 2.87% | |
| Net yield on earning assets | 3.19% | ||
| (1) The effect of loans in nonaccrual status and fees collected is not significant to the computations. | |||
| (2) Average investment securities exclude the valuation allowance on securities available-for-sale. | |||
| (3) Fully tax-equivalent basis at 38% tax rate for nontaxable securities and loans. | |||