EVERETT, Wash., Jan. 27, 2009 (GLOBE NEWSWIRE) -- Cascade Financial Corporation (Nasdaq:CASB), parent company of Cascade Bank, today reported it earned $2.5 million, or $0.19 per diluted share, in the fourth quarter of 2008, compared to record earnings of $4.0 million, or $0.33 per diluted share in the fourth quarter a year ago. Fourth quarter results include a $2.4 million loan loss provision compared to $500,000 for the same quarter last year. This provision boosted the total allowance for loan losses to total loans ratio to 1.31%, in response to an increase in nonperforming loans and continued weakening in the local housing market.
"Cascade had strong operating growth in 2008, with pre-tax, pre-provision, pre-OTTI earnings up 8%. Additionally, Cascade was profitable for the quarter and the full year of 2008 despite the Fed's 175 basis point drop in the target Fed Funds rate during the fourth quarter and the increase in our nonperforming loans," stated Carol K. Nelson, President and CEO. "Operating results for the fourth quarter and the full year were below the record setting earnings from the respective periods a year ago due to additions to the provision for loan losses and the Other Than Temporary Impairment (OTTI) charge during the third quarter. Despite the increase in the loan loss provision, Cascade is surviving the downturn in the economy better than many of our peers, which is evidenced by our nonperforming assets to total assets ratio."
"We continue to take a conservative credit stance, and loans on nonaccrual status increased by $24.6 million during the quarter to $40.3 million. The increase came primarily from two residential real estate builder/developer relationships," added Nelson. Nonperforming loans (NPLs) represented 3.20% of total loans at December 31, 2008, compared to 1.29% or $15.7 million at the end of the preceding quarter and $1.5 million at the end of 2007.
For 2008, net income was $2.1 million, or $0.15 per diluted share, compared to record earnings of $15.5 million, or $1.27 per diluted share, in 2007. The loan loss provision for the year was $7.2 million versus $1.4 million in 2007.
CASCADE FINANCIAL Year ended Year ended %Change
CORPORATION ($ in 000's) 12/31/08 12/31/07
Pre-tax, pre-provision,
pre-OTTI earnings $ 26,229 $ 24,279 8%
Provision for loan losses 7,240 1,350 436%
OTTI 17,338 -- NM
(Benefit) provision for
income tax (439) 7,383 NM
------------------------
Net profit after taxes $ 2,090 $ 15,546 -87%
As previously reported, Cascade owns preferred shares issued by Fannie Mae ($10.2 million of original book value) and Freddie Mac ($8.4 million of original book value) with a combined original book value of approximately $18.6 million. Following the placement of these two Government Sponsored Enterprises into Conservatorship and the decline in the market value of these securities, Cascade recorded a pre-tax OTTI charge of $17.3 million, resulting in a non-cash net charge of $11.3 million to third quarter 2008 earnings. Excluding the OTTI charge, 2008 net income would have been $13.4 million, or $1.09 per diluted share.
"Solid loan growth and our demonstrated ability to expand our checking account balances indicates that our basic business remains strong. With the issuance of senior preferred stock to the U.S. Treasury in November, our capital position was fortified. We are well positioned to weather this challenging economic environment, and take advantage of some of the opportunities created by dislocations in the market," said Nelson.
2008 Financial Highlights: (compared to 2007) -------------------------- * Issued $39 million in preferred stock under the US Treasury Capital Purchase Program. * Risk Based Capital Ratio increased to 13.26%, Tier 1 Capital Ratio increased to 10.30%. * Net income was $2.1 million for the year. * Total loans increased 14% to $1.26 billion. * Total deposits grew 11% to $1.01 billion. * Checking account balances increased 35%. * Strong growth in new checking accounts resulted in 27% growth in checking fees. * Total assets increased 16% to $1.64 billion.
Loan Portfolio
Compared to a year ago, total loans increased 14% to $1.26 billion at December 31, 2008, from $1.11 billion at December 31, 2007. Cascade has not engaged in the practice of subprime residential lending and the loan portfolio does not contain any such loans.
"The issuance of preferred shares has enabled Cascade to increase its lending," said Lars Johnson, Chief Financial Officer. "We grew loans by $45.2 million for the quarter ended December 31, 2008 from September 30, 2008, or 16% on an annualized basis. This compared to net loan growth of $18.2 million in third quarter 2008. The largest growth has been in single family mortgages."
Construction loans outstanding grew 6% to $407 million at December 31, 2008, compared to $382 million a year ago. Business loans increased 4% over the same period to $485 million. Commercial real estate loans increased 2% to $123 million. Permanent multifamily loans increased substantially from year ago levels to $86.9 million, partly as a result of the reclassifications from multifamily construction as projects were completed and met rental goals. Home equity and consumer loans increased 11% to $30.8 million, while residential loans grew 28% to $126 million.
The following table shows loans in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
One
Year
LOANS ($ in 000's) December 31, September 30, December 31, Change
2008 2008 2007
Business $ 485,060 $ 473,213 $ 468,453 4%
R/E Construction 406,505 403,569 381,810 6%
Commercial R/E 122,951 119,787 120,421 2%
Multifamily 86,864 74,535 11,397 662%
Home equity/consumer 30,772 29,659 27,688 11%
Residential 126,089 112,283 98,384 28%
----------- ----------- ----------- ----
Total loans $ 1,258,241 $ 1,213,046 $ 1,108,153 14%
Credit Quality
"The Puget Sound housing market remains weak and continues to present challenges," said Robert Disotell, Chief Credit Officer. "We continuously monitor the credit quality of loans in the portfolio and believe the additions to our nonperforming loan totals are prudent. We believe the risk management practices we have in place help us to act quickly in the early identification of deteriorating credits."
Nonperforming loans (NPLs) increased during the quarter to $40.3 million, which represented 3.20% of total loans at December 31, 2008, compared to 1.29% three months earlier. NPLs were $15.7 million at the end of the preceding quarter and $1.5 million at the end of December 2007.
The following table shows nonperforming loans in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
# of # of
NONPERFORMING LOANS Dec. 31, relationships Sept. 30, relationships
($ in 000's) 2008 2008
Construction $38,972 6 $15,195 4
Business 1,149 2 288 1
Residential 155 1 155 1
Consumer 2 1 59 1
------- ------------ ------- -------------
Total
nonperforming
loans $40,278 10 $15,697 7
# of
NONPERFORMING LOANS Dec. 31, relationships
($ in 000's) 2007
Construction $ -- --
Business 1,522 4
Residential -- --
Consumer 1 1
Total ------- -------------
nonperforming
loans $ 1,523 5
"We continue to build our allowance for loan losses with a provision expense of $2.4 million during the fourth quarter compared to net charge-offs (NCOs) of $506,000, and added $7.2 million to the allowance for loan losses for the year versus NCOs of $2.5 million in 2008," added Disotell. Net charge-offs were $43,000 in the previous quarter and $99,000 in the fourth quarter a year ago.
During the fourth quarter, $4.4 million was transferred to Real Estate Owned (REO) and sold resulting in no additional net charge-offs. As of December 31, 2008, REO was $1.4 million, which was unchanged from September 30, 2008.
Nonperforming assets were 2.55% of total assets at December 31, 2008, compared to 1.10% at the end of the preceding quarter, and 0.11% a year ago. This compares to a ratio of 3.16% for all Washington State Commercial Banks at September 30, 2008 (the most current data published). The total allowance for loan losses, which includes a $93,000 allowance for off-balance sheet loan commitments, totaled $16.5 million at quarter-end, equal to 1.31% of total loans compared to 1.21% at September 30, 2008, and 1.06% as of December 31, 2007.
Loans delinquent 31-90 days totaled $9.0 million, or 0.73% of total loans at December 31, 2008, compared to $171,000, or 0.01% of total loans at September 30, 2008 and $544,000, or 0.05% of total loans at December 31, 2007. This compares to a ratio of 2.10% for all Washington State Commercial Banks at September 30, 2008, (the most current data published). All loans over 90 days delinquent are on non-accrual status. The increase in the level of delinquencies was primarily attributed to one real estate construction lending relationship totaling $5.5 million and one commercial real estate loan in the amount of $1.9 million.
Capital Management
On November 24, 2008, Cascade completed its $39 million capital raise as a participant in the U.S. Treasury Department's Capital Purchase Program. Under the terms of the transaction the company issued 38,970 shares of Series A Fixed-Rate Cumulative Perpetual Preferred Stock, and a warrant to purchase 863,442 shares of the company's common stock at an exercise price of $6.77 per share.
"The additional capital infusion enabled us to provide increased credit to businesses and consumers in our market area," said Nelson. "As the industry undergoes change, we expect there will be increased opportunities. This additional capital also adds flexibility when considering strategic opportunities that meet our disciplined criteria."
Cascade remains well capitalized for regulatory purposes with a Tier 1 Capital ratio of 10.30% and Risk Based Capital of 13.26% as of December 31, 2008. Book value per common share was $10.23 at year-end compared to $10.15 a year ago. Tangible book value was $8.15 per common share at year-end, compared to $8.06 a year ago.
In October 2008, Cascade announced a 50% reduction in its fourth quarter cash dividend to $0.045 per common share. "The decision to conserve capital through a reduction in the dividend is in the best long-term interest of our shareholders and will help ensure that Cascade continues to maintain its well capitalized position," added Nelson.
Deposit Growth
"We continued to successfully grow our total checking account balances, which were up $13.6 million, or 8% on a sequential quarter basis and up $48.7 million, or 35% for the year," said Nelson. "Personal checking account balances grew by 76% or $44.0 million over the course of the year and business checking balances grew 6% or $4.7 million during the same time period. The growth in checking balances resulted in a 27% increase in checking account fees in 2008 compared to 2007. The reductions in money market account balances were primarily from the public sector and the termination of a sweep account agreement with a money center bank. These outflows were offset by higher CD balances."
The following table shows deposits in each category: (12/31/08 compared to 9/30/08 and 12/31/07)
One
Year
DEPOSITS ($ in 000's) Dec. 31, Sept. 30, Dec. 31, Change
2008 2008 2007
Personal checking accounts $ 102,123 $ 90,772 $ 58,126 76%
Business checking accounts 84,720 82,485 80,064 6%
---------- ---------- ----------
Total checking accounts 186,843 173,257 138,190 35%
Savings and MMDA 204,035 266,560 327,264 -38%
CDs 615,904 552,688 439,442 40%
---------- ---------- ---------- ---
Total deposits $1,006,782 $ 992,505 $ 904,896 11%
Operating Results
Net interest income for the fourth quarter was $11.1 million, compared to $11.3 million for the fourth quarter of 2007. Total other income increased 9% to $1.9 million for the quarter, compared to $1.7 million in the fourth quarter a year ago, as checking fees were 23% higher than the same quarter last year. On a sequential quarter basis, decreased checking fees and lower FAS 159 fair value gains led to a decline in non-interest income.
Total other expense was $7.2 million in the fourth quarter of 2008, up just 3% from the same quarter last year. Compensation expense was down 7% from the prior quarter due to substantially reduced bonus payments, and up just 5% for the year.
The efficiency ratio was 55.3% in the fourth quarter of 2008 compared to 53.5% in the same quarter a year ago, and 52.1% for 2008 compared to 52.4% for 2007.
For the full year, net interest income increased 6% to $45.9 million compared to $43.4 million in 2007. Total other income increased 17% to $8.9 million in 2008 compared to $7.6 million in 2007, largely due to the increase in checking fees, which were up $1.0 million to $4.8 million for the year. A $398,000 net gain on the sale of corporate debt from the securities portfolio augmented 2008 income compared to a $435,000 loss on the sale of securities and a $569,000 gain on the termination of advances during 2007. Both the gains and losses in 2007 were primarily related to FAS 159 restructuring during the first half of 2007. Income from Bank Owned Life Insurance (BOLI) grew as Cascade added $4.0 million of BOLI in December 2007, and transferred the majority of the existing policies to a new, higher yielding structure at the same time.
Total other expenses (excluding the OTTI charge) increased 7% to $28.5 million in 2008 compared to $26.7 million in 2007. Total compensation costs were up $727,000. Salary and bonus costs included in compensation expense were flat at $12.5 million in 2008 and 2007. The primary cause of the increase in reported expense was a lower level of deferred fees associated with loan originations of $307,000. Other operating expenses were up $1.1 million year over year with the largest increase due to FDIC insurance premiums of $633,000 and the costs associated with the new Burlington branch which opened in May 2008.
Net Interest Margin & Interest Rate Risk
Cascade's net interest margin declined to 3.01% for the fourth quarter of 2008 compared to 3.38% for the fourth quarter a year ago. "The income reversal associated with the placement of a net additional $24.6 million on non-accrual, as well as the175 basis point drop in the Fed funds rate, reduced our net interest margin during the fourth quarter," said Johnson. "Our yield on earning assets dropped 60 basis points compared to the previous quarter, and the cost of liabilities decreased by 11 basis points."
The net interest margin was 3.52% in the third quarter of 2008. "Approximately 31 basis points of the 3.52% margin in the third quarter was due to the recapture of interest on nonperforming loans that were paid off during the quarter, which provided approximately $1.0 million in additional interest income," added Johnson. For the full year, the net interest margin was 3.20% compared to 3.34% in 2007.
4Q08 3Q08 2Q08 1Q08 4Q07 3Q07 2Q07 1Q07 4Q06
----------------------------------------------------
Asset yield 6.07% 6.67% 6.31% 6.62% 7.20% 7.29% 7.30% 7.17% 7.03%
Liability cost 3.33% 3.44% 3.51% 4.03% 4.32% 4.42% 4.39% 4.38% 4.26%
Spread 2.74% 3.23% 2.80% 2.59% 2.88% 2.87% 2.91% 2.79% 2.77%
Margin 3.01% 3.52% 3.17% 3.02% 3.38% 3.37% 3.37% 3.26% 3.23%
Conference Call
Cascade's management team will host a conference call on Wednesday, January 28, 2009, at 11:00 a.m. PST (2:00 p.m. EST). Interested investors may listen to the call live or via replay at www.cascadebank.com under shareholder information. Investment professionals are invited to dial (800) 218-0204 to participate in the live call. A telephone replay of the call will be available for a month at (303) 590-3000, using passcode 11123778#.
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.
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, 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 Three One
share Dec. 31, Sept. 30, Month Dec. 31, Year
amounts 2008 2008 Change 2007 Change
(Unaudited) ---------- ---------- ---------- ---------- ----------
ASSETS
Cash and due
from banks $ 11,859 $ 12,822 -8% $ 12,911 -8%
Interest-
bearing depo-
sits/Fed
funds sold 41,607 611 6710% 1,619 2470%
Securities
available-for
-sale 123,678 102,313 21% 82,860 49%
Securities
held-to-
maturity 120,594 140,615 -14% 137,238 -12%
Federal Home
Loan Bank
(FHLB) stock 11,920 11,920 0% 11,920 0%
---------- ---------- ----------
Total
securities 256,192 254,848 1% 232,018 10%
---------- ---------- ----------
Loans
Business 485,060 473,213 3% 468,453 4%
R/E con-
struction 406,505 403,569 1% 381,810 6%
Commercial
R/E 122,951 119,787 3% 120,421 2%
Multifamily 86,864 74,535 17% 11,397 662%
Home equity
/consumer 30,772 29,659 4% 27,688 11%
Residential 126,089 112,283 12% 98,384 28%
---------- ---------- ----------
Total loans 1,258,241 1,213,046 4% 1,108,153 14%
Deferred
loan fees (3,069) (3,248) -6% (3,724) -18%
Allowance
for loan
losses (16,439) (14,531) 13% (11,653) 41%
---------- ---------- ----------
Loans, net 1,238,733 1,195,267 4% 1,092,776 13%
---------- ---------- ----------
REO and other
repossessed
assets 1,446 1,446 0% -- NM
Premises and
equipment 15,463 15,676 -1% 14,160 9%
Bank owned
life insu-
rance 23,638 23,388 1% 22,658 4%
Deferred tax
asset 9,828 8,437 16% 1,574 524%
Other assets 13,475 14,173 -5% 14,653 -8%
Goodwill 24,585 24,585 0% 24,585 0%
Core deposit
intangible,
net 493 529 -7% 634 -22%
---------- ---------- ----------
Total
assets $1,637,319 $1,551,782 6% $1,417,588 16%
========== ========== ==========
LIABILITIES
AND EQUITY
Liabilities:
Deposits
Personal
checking
accounts $ 102,123 $ 90,772 13% $ 58,126 76%
Business
checking
accounts 84,720 82,485 3% 80,064 6%
---------- ----------
Total
checking
accounts 186,843 173,257 8% 138,190 35%
Savings and
money
market
accounts 204,035 266,560 -23% 327,264 -38%
Certificates
of deposit 615,904 552,688 11% 439,442 40%
---------- ---------- ----------
Total deposits 1,006,782 992,505 1% 904,896 11%
---------- ---------- ----------
FHLB advances 249,000 255,000 -2% 231,000 8%
Federal
Reserve
borrowings 40,000 30,000 33% -- NM
Securities
sold under
agreement to
repurchase 146,390 120,983 21% 120,625 21%
Jr. Sub. Deb.
(Trust
Preferred
Securities) 15,465 15,465 0% 15,465 0%
Jr. Sub. Deb.
(Trust
Preferred
Securities),
at fair
value 10,510 10,535 0% 11,422 -8%
Other
liabilities 9,050 8,194 10% 12,084 -25%
---------- ---------- ----------
Total
liabilities 1,477,197 1,432,682 3% 1,295,492 14%
--------- ---------- ----------
Equity:
Senior
preferred
stock 36,616 -- NM -- NM
Common
stockholders'
equity:
Common stock
and paid in
capital 40,901 40,857 0% 40,442 1%
Retained
earnings 80,876 79,753 1% 82,169 -2%
Warrants
issued to US
Treasury 2,389 -- NM -- NM
Accumulated
other compre-
hensive loss,
net (660) (1,510) -56% (515) 28%
---------- ---------- ----------
Total common
stockholders'
equity 123,506 119,100 4% 122,096 1%
---------- ---------- ----------
Total
equity 160,122 119,100 34% 122,096 31%
---------- ---------- ----------
Total
liabilities
and equity $1,637,319 $1,551,782 6% $1,417,588 16%
========== ========== ==========
INCOME STATEMENT
(Dollars in Quarter Quarter Quarter
thousands Ended Ended Three Ended One
except per Dec. 31, Sept. 30, Month Dec. 31, Year
share amounts 2008 2008 Change 2007 Change
---------- ---------- ---------- ---------- ----------
(Unaudited)
Interest
income $ 22,419 $ 24,345 -8% $ 24,137 -7%
Interest
expense 11,291 11,508 -2% 12,820 -12%
---------- ---------- ----------
Net interest
income 11,128 12,837 -13% 11,317 -2%
Provision for
loan losses 2,400 1,250 92% 500 380%
---------- ---------- ----------
Net interest
income after
provision for
loan losses 8,728 11,587 -25% 10,817 -19%
---------- ---------- ----------
Other income
Checking
fees 1,208 1,328 -9% 980 23%
Service
fees 266 280 -5% 267 0%
Bank owned
life insu-
rance 266 271 -2% 205 30%
Gain/(loss)
on sale of
securities 2 (87) NM (4) NM
Gain on
sale of
loans 9 36 -75% 32 -72%
Fair value
gains 25 389 -94% 147 -83%
Other 114 106 8% 112 2%
---------- ---------- ----------
Total other
income 1,890 2,323 -19% 1,739 9%
---------- ---------- ----------
Total income 10,618 13,910 -24% 12,556 -15%
---------- ---------- ----------
Compensation
expense 3,505 3,789 -7% 3,571 -2%
Other opera-
ting expenses 3,688 3,373 9% 3,416 8%
OTTI charge -- 17,338 NM -- NM
---------- ---------- ----------
Total other
expense 7,193 24,500 -71% 6,987 3%
---------- ---------- ----------
Net income
before
provision
(benefit)
for income
tax 3,425 (10,590) NM 5,569 -38%
Provision
(benefit) for
income tax 964 (3,971) NM 1,557 -38%
---------- ---------- ----------
Net income
(loss) $ 2,461 $ (6,619) NM $ 4,012 -39%
---------- ---------- ----------
Dividends/
senior pre-
ferred stock $ 216 $ -- NM $ -- NM
Income avail-
able for
common stock
holders $ 2,245 $ (6,619) NM $ 4,012 -44%
========== ========== ==========
EARNINGS
(LOSS) PER
SHARE
INFORMATION
Earnings
(loss) per
share,
basic $ 0.19 $ (0.55) NM $ 0.33 -44%
Earnings
(loss) per
share,
diluted $ 0.19 $ (0.55) NM $ 0.33 -44%
Weighted
average
number of
shares out-
standing
Basic 12,071,032 12,059,480 12,023,685
Diluted 12,119,401 12,140,168 12,218,248
Quarter Quarter Quarter
PERFORMANCE Ended Ended Ended
MEASURES AND Dec. 31, Sept. 30, Dec. 31,
RATIOS 2008 2008 2007
---------- ---------- ----------
Return on
average
common equity 7.33% -20.58% 13.11%
Return on
average
tangible
common equity 9.22% -25.75% 16.70%
Return on
average
assets 0.62% -1.69% 1.14%
Efficiency
ratio* 55.25% 47.24% 53.52%
Net interest
margin 3.01% 3.52% 3.38%
INCOME STATEMENT Year Ended One
(Dollars in thousands except per Dec. 31, Dec. 31, Year
share amouounts 2008 2007 Change
---------- ---------- ----------
(Unaudited)
Interest income $ 92,571 $ 93,935 -1%
Interest expense 46,686 50,540 -8%
---------- ----------
Net interest income 45,885 43,395 6%
Provision for loan losses 7,240 1,350 436%
---------- ----------
Net interest income after provision
for loan losses 38,645 42,045 -8%
---------- ----------
Other income
Checking fees 4,848 3,820 27%
Service fees 1,092 1,059 3%
Bank owned life insurance 1,056 803 32%
Gain/(loss) on sale of securities 398 (435) NM
Gain on sale of loans 128 199 -36%
Fair value gains 912 1,081 -16%
Gain on FHLB advances -- 569 NM
(Loss)gain on sale of real estate (3) -- NM
Other 453 470 -4%
---------- ----------
Total other income 8,884 7,566 17%
---------- ----------
Total income 47,529 49,611 -4%
---------- ----------
Compensation expense 14,544 13,817 5%
Other operating expenses 13,996 12,865 9%
OTTI charge 17,338 -- NM
---------- ----------
Total other expense 45,878 26,682 72%
---------- ----------
Net income before (benefit)
provision for income tax 1,651 22,929 -93%
(Benefit) provision for income tax (439) 7,383 NM
---------- ----------
Net income $ 2,090 $ 15,546 -87%
---------- ----------
Dividends/senior preferred stock $ 216 $ -- NM
Income available for common stock
holders $ 1,874 $ 15,546 -88%
========== ==========
EARNINGS PER SHARE INFORMATION
Earnings per share, basic $ 0.16 $ 1.29 -88%
Earnings per share, diluted $ 0.15 $ 1.27 -88%
Weighted average number of shares
outstanding
Basic 12,053,084 12,047,792
Diluted 12,159,174 12,284,854
Year Ended
PERFORMANCE MEASURES AND RATIOS Dec. 31, Dec. 31,
2008 2007
---------- ----------
Return on average common equity 1.49% 13.23%
Return on average tangible common
equity 1.87% 16.88%
Return on average assets 0.14% 1.13%
Efficiency ratio* 52.11% 52.36%
Net interest margin 3.20% 3.34%
*Excludes OTTI charge
(Dollars in thousands except per share amounts)(Unaudited)
AVERAGE Quarter Ended Year Ended
BALANCES Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2008 2008 2007 2008 2007
---------- ---------- ---------- ---------- ----------
Average
assets $1,580,279 $1,556,771 $1,401,036 $1,534,458 $1,370,309
Average
earning
assets 1,469,312 1,452,526 1,330,129 1,435,055 1,297,462
Average total
loans 1,226,143 1,201,676 1,095,490 1,183,072 1,046,093
Average
deposits 979,591 988,905 896,043 966,316 881,136
Average equity
(including sr
preferred
stock) 137,164 127,936 121,359 129,083 117,534
Average common
equity
(excluding sr
preferred
stock 122,513 127,936 121,359 125,400 117,534
Average tan-
gible common
equity
(excluding sr
preferred
stock) 97,416 102,804 96,122 100,251 92,095
Dec. 31, Sept. 30, Dec. 31,
ASSET QUALITY 2008 2008 2007
---------- ---------- ----------
Nonperforming
loans (NPLs) $ 40,278 $ 15,697 $ 1,523
Nonperforming
loans/total
loans 3.20% 1.29% 0.14%
Real estate/
repossessed
assets owned $ 1,446 $ 1,446 $ --
Nonperforming
assets $ 41,724 $ 17,143 $ 1,523
Nonperforming
assets/total
assets 2.55% 1.10% 0.11%
Net loan
charge-offs
in the
quarter $ 506 $ 43 $ 99
Net charge-
offs in the
quarter/total
loans 0.04% 0.00% 0.01%
Allowance for
loan losses $ 16,439 $ 14,531 $ 11,653
Plus: Allow-
ance for off-
balance sheet
commitments 93 107 142
---------- ---------- ----------
Total allow-
ance for loan
losses $ 16,532 $ 14,638 $ 11,795
Total allow-
ance for loan
losses/total
loans 1.31% 1.21% 1.06%
Total allow-
ance for loan
losses/non-
performing
loans 41% 93% 774%
EQUITY Dec. 31, Sept. 30, Dec. 31,
ANALYSIS 2008 2008 2007
---------- ---------- ----------
Total equity $ 160,122 $ 119,100 $ 122,096
Less: senior
preferred
stock 36,616 -- --
---------- ---------- ----------
Total common
equity 123,506 119,100 122,096
Less: goodwill
and intangi-
bles 25,078 25,114 25,219
---------- ---------- ----------
Tangible
common
equity $ 98,428 $ 93,986 $ 96,877
Common stock
outstanding 12,071,032 12,071,032 12,023,685
Book value per
common share $ 10.23 $ 9.87 $ 10.15
Tangible book
value per
common share $ 8.15 $ 7.79 $ 8.06
Capital/asset
ratio (inc.
jr. sub deb) 11.31% 9.29% 10.38%
Capital/asset
ratio (Tier
1, inc. jr.
sub deb) 10.30% 7.87% 8.90%
Tangible cap/
asset ratio
(ex. jr. sub
deb and pref.
stock) 6.01 6.16% 7.04%
Risk based
capital/risk
weighted
asset ratio 13.26% 10.40% 10.80%
INTEREST Quarter Ended Year Ended
SPREAD Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
ANALYSIS 2008 2008 2007 2008 2007
---------- ---------- ---------- ---------- ----------
Yield on total
loans 6.16% 6.82% 7.64% 6.59% 7.80%
Yield on
investments 5.35% 5.38% 5.15% 5.51% 4.89%
Yield on earn-
ing assets 6.07% 6.67% 7.20% 6.45% 7.24%
Cost of
deposits 2.53% 2.59% 3.91% 2.82% 4.00%
Cost of FHLB
advances 4.18% 4.30% 4.38% 4.26% 4.53%
Cost of Fed-
eral Reserve
borrowings 1.08% 2.37% 0.00% 1.92% 0.00%
Cost of
securities
sold under
agreement to
repurchase 5.01% 5.32% 3.25% 4.80% 2.75%
Cost of jr.
sub.
debentures 8.12% 8.00% 7.80% 8.02% 7.77%
Cost of
interest-
bearing
liabilities 3.33% 3.44% 4.32% 3.57% 4.38%
Net interest
spread 2.74% 3.23% 2.88% 2.88% 2.86%
Net interest
margin 3.01% 3.52% 3.38% 3.20% 3.34%