BELLEVUE, Wash., May 4, 2015 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. (OTCQB:FDNB), the holding company for Foundation Bank, today reported that it earned $334,000 in the first quarter of 2015 compared to $536,000 in the first quarter a year ago. Net income available to common shareholders after dividends for preferred stock was $320,000. Earnings were $0.06 per diluted share in the first quarter of 2015 compared to $0.15 per diluted share, in the first quarter of 2014. Book value per share was $9.61 at March 31, 2015, compared to $9.50 per share a year ago.
"Our first quarter profitability was less than it was in the year ago quarter, primarily due to one-time costs for problem asset workouts. These are legacy workouts that should be nearing resolution in 2015," said Diane Dewbrey, President and CEO. "Also, in the first quarter the Bancorp raised $15 million in new equity which will fund future growth. The equity was through a private placement of convertible preferred shares. As can be seen by our balance sheet, deposits continue to contribute to our increasing asset size. This will allow us continue to meet the growing needs of our existing and future clients in the business community."
First Quarter 2015 Highlights:
- Raised $15 million of new capital to strengthen capital position.
- Net income available to common shareholders was $320,000.
- Core client deposits (which exclude wholesale deposits) increased over $62.2 million or 20.7% over the same quarter last year.
- Allowance for loan losses remained strong at 1.94% of gross loans.
- Total non-accrual loans were $13.6 million at March 31, 2015, compared to $15.9 million a year earlier.
- Non-interest bearing demand deposits increased 22.4%, compared to a year ago and represent 42.4% of deposits.
- Core deposits represent 98.5% of total deposits at March 31, 2015.
- Book value per share increased to $9.61 per share at March 31, 2015, compared to $9.50 per share a year ago.
- The ratio of tangible common equity to tangible assets was 7.9% at March 31, 2015.
Asset Quality
"With our non-accrual portfolio, several loans are secured by commercial property which is in excess of our value being carried on the books. Part of the resolution process for these types of loans is to liquidate the property without having to initiate a foreclosure which usually results in extended time for clearing. Thus, we believe over the course of this year, a few of these properties will liquidate and will result in noticeable reductions in the non-accrual portfolio. It has been the Bank's position to optimize collection of these loans which in some cases can result in extended timing for collection," said Dewbrey.
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, 2015, Foundation held $5.0 million in performing restructured loans that were paying as agreed but are included in non-accrual loans. Total non-accrual loans were $13.6 million at March 31, 2015, compared to $12.5 million three months earlier and $15.9 million a year earlier, representing a year-over-year decrease of 14.6%.
Non-performing assets (NPAs), consisting of non-accrual loans, Other Real Estate Owned (OREO), Other Property Owned (OPO) and past due loans over 90 days, were $21.7 million, or 5.0% of total assets at March 31, 2015 compared to $19.8 million, or 5.0% of total assets at December 31, 2014 and $22.6 million, or 6.2% of total assets a year ago.
Foreclosed assets including OREO and OPO totaled $8.1 million at March 31, 2015, compared to $7.3 million at December 31, 2014, and $6.6 million at March 31, 2014. OREO consisted of seven properties at quarter end.
Foundation recorded no provision for loan losses in the first quarter, compared to a $772,000 provision in the preceding quarter and no provision in the first quarter a year ago.
Balance Sheet Review
Loan originations totaled $15.0 million in the first quarter of 2015, offset by an almost equal amount of loan payoffs and reductions. Consequently the loan portfolio was up only slightly at $282.6 million at March 31, 2015, compared to $280.0 million a year ago. Commercial real estate (CRE) loans totaled $174.4 million at March 31, 2015, and comprise 61.7% 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 $48.9 million or 17.3% and construction and land loans represented 5.3%. The commercial and industrial (C&I) portfolio represented 35.0% of the total loan portfolio.
"Deposit growth has been robust as we are actively developing new client relationships to bring new accounts to the Bank and to expand existing product acceptance with our current customers," said Dewbrey. Total deposits increased 14.2% to $368.1 million at March 31, 2015, compared to $322.3 million a year earlier. Non-interest bearing demand deposits increased 22.4% compared to a year ago. Total transaction accounts represent 48.3%, money market and savings accounts represent 47.5%, and CDs comprise 4.1% of the total deposit portfolio at March 31, 2015.
Core deposits represent 98.5% of total deposits at March 31, 2015, compared to 90.1% of total deposits a year earlier.
Foundation's total stockholder equity increased to $49.2 million at March 31, 2015, compared to $33.5 million a year ago. Book value per share increased to $9.61 at March 31, 2015, compared to $9.50 a year ago and common equity to total assets (common equity ratio) remained strong at 7.9% at March 31, 2015.
Results of Operations
Foundation's first quarter net interest margin was 3.71%, compared to 3.89% in the preceding quarter and 3.91% in the first quarter a year ago. "The increase in on balance sheet liquidity from strong deposit growth has put temporary downward pressure on our margin," noted Diane. "As we deploy this into investments and loans, the margin should show improvement." First quarter net interest income before provision for loan losses was $3.3 million, which was nearly unchanged compared to the first quarter a year ago. Non-interest income was $171,000 in the first quarter compared to $262,000 in the first quarter a year ago. The decline was largely due to a decrease in SBA loan premium income.
First quarter total non-interest expense decreased to $3.0 million, compared to $3.4 million in the preceding quarter but increased when compared to $2.7 million in the first quarter one year ago. The increase is partially attributable to higher costs associated with foreclosed assets and personnel changes with additional focus on sales.
Capital
Foundation Bank continues to remain well capitalized by regulatory guidelines. Capital ratios for the Bank are presented as follows:
Mar 31, 2015 | Dec 31, 2014 | Mar 31, 2014 | |
Tier 1 Leverage (to average assets) | 10.88% | 9.54% | 10.50% |
Tier 1 risk-based (to risk-weighted assets) | 12.93% | 12.78% | 12.97% |
Tier 1 Common Capital (CET1) | 12.93% | -- | -- |
Total risk-based (to risk-weighted assets) | 14.19% | 14.04% | 14.22% |
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) | |||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |
Assets | |||
Cash and Due from Banks | $ 11,668 | $ 11,245 | $ 12,762 |
Interest-Bearing Deposits in Banks | 58,045 | 33,976 | 31,713 |
Investments | 60,292 | 60,720 | 33,051 |
Loans | 282,564 | 283,173 | 279,958 |
Allowance for Loan Losses | (5,488) | (5,615) | (5,093) |
Loans, net | 277,076 | 277,558 | 274,865 |
Leaseholds and Equipment, net | 617 | 640 | 787 |
Foreclosed Assets | 8,105 | 7,280 | 6,581 |
Bank Owned Life Insurance | 10,045 | -- | -- |
Accrued Interest Receivable and Other Assets | 5,851 | 6,729 | 6,640 |
Total Assets | $ 431,699 | $ 398,148 | $ 366,399 |
Liabilities | |||
Noninterest-Bearing Demand Deposits | $ 156,198 | $ 140,460 | $ 127,627 |
Interest-Bearing Checking and Savings Accounts | 22,076 | 37,515 | 23,312 |
Money Market Accounts | 174,560 | 149,367 | 139,387 |
Certificates of Deposit | 15,248 | 15,251 | 31,938 |
Total Deposits | 368,082 | 342,593 | 322,264 |
Borrowings | 9,143 | 17,341 | 8,521 |
Other Liabilities | 5,294 | 3,851 | 2,133 |
Total Liabilities | 382,519 | 363,785 | 332,918 |
Stockholders' Equity | |||
Preferred Stock (1) | 15 | -- | -- |
Common Stock (2) | 3,556 | 3,530 | 3,526 |
Additional Paid-in Capital | 52,996 | 38,921 | 38,763 |
Retained Earnings (Deficit) | (7,739) | (8,060) | (8,581) |
Accumulated Other Comprehensive (Loss) Income | 352 | (28) | (227) |
Total Stockholders' Equity | 49,180 | 34,363 | 33,481 |
Total Liabilities and Stockholders' Equity | $ 431,699 | $ 398,148 | $ 366,399 |
(1) $1 Par Value, Shares Authorized 1,000,000, issued and outstanding 15,000, 0 and 0 respectively. | |||
(2) $1 Par Value, Shares Authorized 25,000,000, issued and outstanding 3,555,976, 3,529,976 and 3,526,264 respectively. | |||
Book Value per Share, Common Stock | $ 9.61 | $ 9.73 | $ 9.50 |
Common Equity Ratio | 7.9% | 8.6% | 9.1% |
CONSOLIDATED STATEMENTS OF INCOME | |||
(Unaudited) (dollars in 000's, except per share amounts) | For the Quarter Ended | ||
March 31, 2015 | December 31, 2014 | March 31, 2014 | |
Interest Income | |||
Loans, Including Fees | $ 3,338 | $ 3,778 | $ 3,366 |
Investments | 301 | 295 | 182 |
Other | 28 | 23 | 13 |
Total Interest Income | 3,667 | 4,096 | 3,561 |
Interest Expense | |||
Deposits | 204 | 213 | 206 |
Borrowings | 125 | 137 | 69 |
Total Interest Expense | 329 | 350 | 275 |
Net Interest Income Before Provision | 3,338 | 3,746 | 3,286 |
Provision for Loan Losses | -- | (772) | -- |
Net Interest Income | |||
After Provision for Loan Losses | 3,338 | 2,974 | 3,286 |
Noninterest Income | |||
Service Fees | 116 | 122 | 108 |
Bank Owned Life Insurance | 45 | -- | -- |
OTTI on Investments | -- | (5) | -- |
Gain on Sale of Loans | 2 | 6 | 144 |
Gain on Sale of Securities | -- | 53 | -- |
Other Noninterest Income | 8 | 6 | 10 |
Total Noninterest Income | 171 | 182 | 262 |
Noninterest Expense | |||
Salaries and Employee Benefits | 1,568 | 1,401 | 1,435 |
Occupancy and Equipment | 211 | 320 | 325 |
Data Processing | 187 | 182 | 176 |
Legal | 238 | 167 | 117 |
Professional | 22 | 31 | 36 |
Loan Expenses | 82 | 65 | 47 |
FDIC/State Assessments | 140 | 135 | 119 |
Foreclosed Assets, Net | 63 | 454 | (67) |
Insurance | 57 | 57 | 60 |
City and State Taxes | 63 | 80 | 63 |
Other | 388 | 488 | 412 |
Total Noninterest Expense | 3,019 | 3,380 | 2,723 |
Income (Loss) Before Provision for Income Tax | 490 | (224) | 825 |
Provision for Income Tax | 156 | (93) | 289 |
NET INCOME (LOSS) | $ 334 | $ (131) | $ 536 |
Preferred dividends | 14 | -- | -- |
NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS | $ 320 | $ (131) | $ 536 |
Return on average equity | 3.71% | -1.48% | 6.51% |
Return on average assets | 0.31% | -0.13% | 0.60% |
Net interest margin | 3.47% | 3.89% | 3.91% |
Efficiency ratio | 86.15% | 87.30% | 84.76% |
Diluted earning (loss) per avg. share | $ 0.06 | $ (0.04) | $ 0.15 |
Weighted avg dilutive shares outstanding | 5,106,649 | 3,665,973 | 3,542,152 |
Loan to deposit ratio | 74.89% | 82.59% | 86.80% |
SELECTED INFORMATION | Quarter Ended | ||||
Mar 31, | Dec 31, | Sept 30, | June 30, | Mar 31, | |
2015 | 2014 | 2014 | 2014 | 2014 | |
Bank Only | |||||
Risk Based Capital Ratio | 14.19% | 14.04% | 13.88% | 13.97% | 14.22% |
Leverage Ratio | 10.88% | 9.54% | 9.94% | 10.32% | 10.50% |
C&I Loans to Loans | 35.05% | 35.96% | 35.05% | 35.89% | 33.20% |
Real Estate Loans to Loans | 61.73% | 60.75% | 61.67% | 61.45% | 64.38% |
Consumer Loans to Loans | 0.15% | 0.19% | 0.17% | 0.14% | 0.15% |
Allowance for Loan Losses (000's) | $ 5,488 | $ 5,615 | $ 5,258 | $ 5,030 | $ 5,093 |
Allowance for Loan Losses to Loans | 1.94% | 1.98% | 1.84% | 1.80% | 1.82% |
Total Noncurrent Loans to Loans | 4.80% | 4.43% | 4.11% | 5.45% | 5.73% |
Nonperforming assets to assets | 5.59% | 5.60% | 6.44% | 6.65% | 5.89% |
Net Charge-Offs (Recoveries) (000's) | $ 128 | $ (415) | $ (228) | $ 63 | $ 165 |
Net Charge-Offs in Qtr to Avg Total Loans | 0.05% | -0.15% | -0.08% | 0.02% | 0.06% |