BELLINGHAM, Wash., Aug. 3, 2009 (GLOBE NEWSWIRE) -- Horizon Financial Corp. (Nasdaq:HRZB) ("Horizon"), the bank holding company for Horizon Bank, today reported a $35.5 million provision for loan losses and $19.4 million deferred tax asset valuation allowance, which contributed to a net loss of $45.7 million, or $3.81 loss per share, for the fiscal quarter ended June 30, 2009, which is the first quarter of Horizon's fiscal year. This compares to net income of $2.0 million, or $0.17 per diluted share, in the first quarter of fiscal 2009, and a net loss of $25.7 million or $2.15 loss per share for the quarter ended March 31, 2009. The current period losses have reduced capital levels and resulted in both the holding company and its subsidiary bank to be considered "significantly undercapitalized" by regulatory definition. "We continue to face challenging economic conditions and are disappointed with the losses over the past year, as well as the increase in our non-performing assets," said Rich Jacobson, President and Chief Executive Officer. "Updated real estate appraisals and market research we utilize to value the underlying collateral for our problem loans reflect the unfortunate conditions that real estate prices continue to be adversely impacted in our Pacific Northwest markets. As a result, we once again set aside an increased provision for loan losses to absorb losses in our loan portfolio. The impact of the higher levels of provision for loan losses, the elevated levels of loan charge-offs, the deferred tax asset valuation allowance and the rising costs associated with loan workout expenses are the primary contributors to our current quarter loss."
At June 30, 2009, Horizon had $19.4 million in a deferred income tax asset, which is comprised of tax affected cumulative temporary differences; largely from the provision for loan losses. "We considered all the evidence available in our evaluation of the net deferred tax asset, including the tax carry-back and carry-forward benefits. Based on this analysis we concluded that it is more likely than not that the majority of the net deferred tax assets may not be available as a benefit in future periods; therefore, we recognized a $19.4 million valuation allowance to fully reserve the deferred tax asset," stated Greg Spear, Chief Financial Officer.
"Our results for the quarter ended June 30, 2009 show the continuing progress we are making in shrinking our loan portfolio and diversifying our balance sheet while building core deposits and reducing our brokered deposits. These actions have improved our liquidity position," continued Jacobson. "The recent increase in home sales in most of our markets during the first half of calendar year 2009 has helped move housing inventory and supported our strategy to reduce loan balances. If the home is competitively priced, buyers are making offers and contracts are closing. Net commercial real estate loans in our portfolio have declined more than $178 million in the past year, with construction and land development loans balances comprising $151.2 million or 85% of this amount."
Net loans receivable declined $88.9 million during the first quarter of fiscal 2010, which was the result of loan sales and principal paydowns totaling $35.5 million, loan charge-offs totaled $23.3 million, $17.6 million of loans became real estate owned and the allowance for loan losses increased by a net amount of $12.5 million. This trend is consistent with our prior quarter when net loans receivable were reduced by $63.5 million, resulting from loan sales and principal paydowns totaling $8.1 million, loan charge-offs totaled $26.5 million, $15.2 million of loans became real estate owned and the allowance for loan losses increased by a net amount of $13.7 million. "We are continuing to aggressively de-leverage our balance sheet by appropriately pricing our real estate inventory and working with our builders to do the same," Jacobson noted.
Capital Ratios, Liquidity and Credit Quality
As of June 30, 2009, Horizon Bank fell below the minimum level required to be adequately capitalized by regulatory standards. The total risk based capital ratio was 5.28% compared to the 8.0% level required to be considered adequately capitalized. As of June 30, 2009, the Bank's Tier 1 leverage ratio was 3.17% and the Tier 1 risk based capital ratio was 3.97%, compared to the 4.0% level required for both ratios to be adequately capitalized. "The elevated provisions for loan losses in the current and prior quarters contributed to significant losses on our income statements, which reduced our regulatory capital levels. We continue to work with a sense of urgency toward the goal of adding capital in order to improve these ratios," said Jacobson. "We are encouraged by the very recent influx of new capital into the local market, and hope that this proves to be a trend and not an anomaly."
"Our liquidity has improved with a decreasing reliance on brokered deposits and a diverse mix of funding sources, including core deposit growth, potential sale of investments and loans, and our lines of credit with the Federal Home Loan Bank and Federal Reserve Bank," Jacobson noted. "The higher deposit insurance coverage limits from the FDIC continues to support our focus on core deposit growth. In addition, a substantial majority of our deposit customers are fully insured." During the current quarter, we increased our core deposits by $4.8 million; non-core deposits declined by $62.4 million due to the scheduled maturities and reduced balances in brokered CDs, CDARS deposits and CDs greater than $100,000.
Total non-performing assets were $138.4 million, or 10.17% of total assets at June 30, 2009, up from $104.7 million, or 7.13% of total assets at March 31, 2009, and $38.6 million, or 2.67% of total assets at June 30, 2008.
"The increase in non-performing assets continues to reflect the distress in the commercial land development and construction segment of our markets, with more than 80% of the total non-performing portfolio in these two categories," said Steve Hoekstra, Commercial Loan Manager. "At June 30, 2009, more than 40% of our commercial land and development loans were non-performing. We are continuing to work with our customers to reduce housing inventories, using a variety of options, including short sales. We are working through these assets expeditiously. When circumstances warrant, we are increasing our allowance for loan losses and are continuing to charge off the appropriate amount of each loan that we do not expect to recover."
"We are cautiously optimistic from this quarter's decline in 30-89 day delinquent loans, which declined to $29.4 million at June 30, 2009, from $83.9 million at March 31, 2009," stated Spear. "We will continue to monitor the changes in delinquent loans to determine whether the recent decline indicates a positive trend for problem assets moving through the system."
Net charge-offs during the first quarter of fiscal 2010 were $23.0 million compared to $26.3 million in the immediate prior quarter and $3.0 million in the first quarter a year ago. The allowance for loan losses was $51.5 million, or 4.98% of net loans at June 30, 2009, compared to $39.0 million, or 3.47% of net loans at March 31, 2009, and $19.1 million, or 1.54% of net loans a year ago.
The following table summarizes Horizon's non-performing assets by category and county at June 30, 2009:
Non-performing Assets Whatcom Skagit Snohomish King
(dollars in 000s) -------------------------------------
1-4 Family residential $ 3,226 $ -- $ 425 $ --
1-4 Family construction 382 -- 601 --
-------------------------------------
Subtotal 3,608 -- 1,026 --
Commercial land development 8,559 162 30,577 5,149
Commercial construction 278 920 4,963 19,348
Multi family residential -- -- -- --
Commercial real estate 1,993 5,628 8,250 --
Commercial loans 190 350 -- --
Home equity secured 73 96 55 --
Other consumer loans 70 5 -- --
-------------------------------------
Subtotal 11,163 7,161 43,845 24,497
Total non-performing assets $14,771 $ 7,161 $44,871 $24,497
=====================================
Percent of total
non-performing assets 11% 5% 32% 18%
Non-performing Assets Pierce Other Total
(dollars in 000s) ---------------------------
1-4 Family residential $ 1,990 $ -- $ 5,641 4%
1-4 Family construction 1,095 -- 2,078 2%
-------------------------------------
Subtotal 3,085 -- 7,719 6%
Commercial land development 14,835 10,898 70,180 51%
Commercial construction 12,845 3,750 42,104 31%
Multi family residential -- -- -- 0%
Commercial real estate -- -- 15,871 11%
Commercial loans -- -- 540 0%
Home equity secured 1,732 -- 1,956 1%
Other consumer loans -- -- 75 0%
-------------------------------------
Subtotal 29,412 14,648 130,726 94%
Total non-performing assets $32,497 $14,648 $138,445 100%
===========================
Percent of total
non-performing assets 23% 11% 100%
Balance Sheet Review
Total assets were $1.36 billion at June 30, 2009, a decline from $1.47 billion from the immediate prior quarter and down from $1.45 billion at June 30, 2008. Net loans totaled $1.03 billion, compared to $1.12 billion at March 31, 2009, and $1.25 billion year ago. Commercial real estate loans, including commercial construction and land development, continue to comprise the majority of the portfolio representing 63% of net loans at June 30, 2009, down from 67% a year ago. Commercial business loans represented 18%, residential loans represented 13%, and consumer loans represented 6% of net loans, at the end of the first fiscal quarter. "We are continuing to experience above average demand for mortgage refinancing as a result of the low interest rate environment, but overall demand for commercial loans has declined in connection with the slowing economy," noted Jacobson.
The Bank's interest bearing deposits represent available cash including its own account at the Federal Reserve Bank of San Francisco to meet daily obligations. Interest bearing deposits totaled $117.9 million at June 30, 2009, down slightly from $126.2 million at March 31, 2009, but up significantly from $2.8 million at June 30, 2008. The growth in interest bearing deposits from June 30, 2008, was a result of the strategy to enhance liquidity, accomplished in part by utilizing brokered deposits and by paying very competitive retail deposit rates in our local markets.
The investment securities portfolio totaled $63.4 million at the June 30, 2009, primarily consisting of U.S. Government agency bonds, municipal securities, equities and government guaranteed mortgage backed securities. The remaining balance of the portfolio consists primarily of private-label mortgage-backed securities, which totaled $1.0 million at June 30, 2009 and incurred an "other than temporary impairment" ("OTTI") charge in the amount of $204,000 during the quarter due to credit related impairment related to redemption of the Shay AMF family of mutual funds.
Total deposits were $1.17 billion at June 30, 2009, compared to $1.23 billion at March 31, 2009, and $1.10 billion at June 30, 2008. Core deposits, including transaction accounts and certificates of deposit under $100,000, increased 4% year-over-year and 1% from the prior quarter. "Our customers have been supportive and continue to bring their deposits to us," stated Jacobson. "We intend to reduce our reliance on brokered deposits as we continue to de-leverage our balance sheet." Core deposits comprise 57% of total deposits. Other deposits include Jumbo CDs (over $100,000), which totaled $290.4 million, or 25% of deposits, which were down from $303.3 million in the immediate prior quarter and $300.8 million a year ago. Brokered CDs, including CDARs deposits, totaled $211.9 million compared to $261.4 million in the prior quarter and $153.8 million a year ago.
Stockholders' equity was $47.2 million at June 30, 2009, compared to $93.0 million at March 31, 2009, and $127.4 million a year ago. At June 30, 2009, tangible book value was $3.93 per share, compared to $7.75 per share at March 31, 2009, and $10.63 per share a year earlier.
Review of Operations
Net revenue (net interest income plus non-interest income) was $7.2 million in the first quarter of fiscal 2010, with interest income down 32% and interest expense down 12% compared to a year ago. In the first quarter of fiscal 2009, net revenue was $13.5 million. Loans that became non-performing have reduced interest income by $1.7 million in the current quarter.
Net interest income declined $5.7 million, or approximately 50% to $5.6 million in the current quarter compared to $11.2 million from the year ago quarter, reflecting lower yields on earnings assets from declining interest rates, the reduction in earnings assets and interest reversals associated with non-performing loans. The yield on earning assets in the fiscal first quarter of 2010 was 4.53% down from 6.48% the same quarter in the year prior. Lower yields were partially offset by a lower cost on interest bearing liabilities, moving with the general decline in interest rates over the last year. Total interest expense declined 12% in the current quarter to $9.0 million, from $10.2 million for the fiscal first quarter a year ago. The cost of interest-bearing liabilities was 2.72% in the first quarter of fiscal 2010 compared to 3.18% in the same quarter a year ago. The effect of the changes in the yield on earning assets and the cost on interest bearing liabilities resulted in a decrease in our net interest margin by 167 basis points to 1.73% in the first quarter of fiscal 2010 from 3.40% for the same period a year ago. The reversal of interest income from non-accrual loans was responsible for 54 basis points of the decline. "Our net interest margin was also affected by our strategy to maintain above average levels of on-balance sheet liquidity and by holding brokered deposits that are now more expensive than current rates since they were acquired in the prior fiscal years, as well as paying competitive retail deposit rates in our local markets during the past six months," Spear said.
The provision for loan losses was $35.5 million in the first quarter of fiscal 2010, compared to $40.0 million in the immediate prior quarter and $3.0 million in the first quarter of fiscal 2009. "The continued high level of provisioning for loan losses was necessary to restore the allowance for loan losses on the balance sheet for charge-offs processed and to ensure adequate reserves are available for probable loan losses. Many of the appraisals we rely upon for valuing collateral dependent loans in our problem loan portfolio reflect significantly lower valuations from a year ago. In the past year, we have more than doubled the total allowance for loan losses in order to reflect management's estimate for loan losses," Spear noted.
Above average demand for mortgage refinancing continued in the first quarter of fiscal 2010 as mortgage interest rates remain at historically low levels. The gains on sale of one-to-four family mortgage loans in the first fiscal quarter of 2010 increased 20% from the prior quarter and more than doubled from a year ago, and helped offset the $204,000 OTTI charge on private label mortgage-backed securities. Non-interest income was $1.6 million in the first quarter of fiscal 2010, compared to $1.6 million in the fourth quarter of fiscal 2009 and $2.3 million in the first quarter of fiscal 2009, which included a $579,000 gain on security sales.
Non-interest expense increased to $12.3 million in the first quarter of fiscal 2010, from $9.5 million in the fourth quarter of fiscal 2009, and $7.6 million in the year ago quarter. These increases reflect higher costs for managing the real estate owned portfolio, increased FDIC insurance premiums and additional other expenses related to credit quality, including increased legal and accounting fees. In addition to higher ongoing premiums, the FDIC also levied a special assessment on all insured deposits in the quarter and Horizon Bank's assessment totaled approximately $660,000. The reduction in force completed last year contributed to a drop of 13% in compensation costs as compared to the prior quarter and 25% from the same quarter a year ago. "We are extremely grateful for our employees, who are working harder to reduce overhead costs while maintaining very high standards for service and quality," Jacobson noted.
Progress on Regulatory Agreement
As reported in our March 2, 2009, Form 8-K filing with the SEC, Horizon Bank entered into a formal agreement with our regulators. This agreement became effective March 3, 2009, and contained target dates to achieve certain objectives, as outlined in the Form 8-K filing and Horizon's Form 10-K filing for its fiscal year ended March 31, 2009. "We are pleased to report that all of the requirements that were due within 90 days were completed on-time and submitted to our regulators," said Jacobson. "Also included in the agreement is a requirement to reduce our balances of loans which were classified during our most recent regulatory examination as "substandard" and "doubtful" to specified levels within 270 days. We intend to meet this requirement in advance of the 270 day target date. The agreement also contains a requirement to increase our Tier 1 capital ratio to 10% within 270 days. At June 30, 2009, Horizon Bank's Tier 1 capital was $45.3 million, representing 3.17% of average assets. As stated earlier in this news release, we are working to bring in additional capital to meet the 10% regulatory requirement, in accordance with the terms of the agreement."
Conference Call and Industry Conference Information
Management will host a conference call tomorrow morning, August 4, 2009, at 7:30 a.m. PDT (10:30 a.m. EDT) to discuss the first quarter results. The live call can be accessed by dialing 1-480-629-9835 or on the web at www.horizonbank.com.
Horizon is scheduled to present at the Rodman and Renshaw Conference in New York City, held on September 9-11, 2009. Copies of the slide presentation will be available at www.horizonbank.com.
Horizon Financial Corp. is a $1.36 billion, bank holding company headquartered in Bellingham, Washington. Its primary subsidiary, Horizon Bank, maintains a regional banking presence that has been serving customers for 87 years, and operates 18 full-service offices, four commercial loan centers and four real estate loan centers throughout Whatcom, Skagit, Snohomish and Pierce Counties in Washington.
Economic data was derived from reports by the Washington State Employment Security Department, Labor Market and Economic Analysis at www.workforceexplorer.com, the Economic Forecaster at www.economicforecaster.com, and the Northwest Multiple Listing Service.
Safe Harbor Statement: Except for the historical information in this news release, the matters described herein are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties that could cause actual results to differ materially. Such risks and uncertainties include: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs, results of examinations by our banking regulators and our ability to comply with the regulatory agreement with our regulators, our ability to increase our capital and manage our liquidity, our ability to manage loan delinquency rates, the ability to successfully expand existing relationships, deposit pricing and the ability to gather low-cost deposits, success in new markets and expansion plans, expense management and the efficiency ratio, expanding or maintaining the net interest margin, interest rate risk, the local and national economic environment, and other risks and uncertainties discussed from time to time in Horizon's filings with the Securities and Exchange Commission ("SEC"). Accordingly, undue reliance should not be placed on forward-looking statements. These forward-looking statements speak only as of the date of this release. Horizon undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the occurrence of unanticipated events. Investors are encouraged to read the SEC report of Horizon, particularly its Form 10-K for the fiscal year ended March 31, 2009 for meaningful cautionary language discussion why actual results may vary from those anticipated by management.
CONSOLIDATED
STATEMENTS OF
INCOME Quarter Quarter Quarter
(unaudited) (in Ended Three Ended One Ended
000s, except June 30, Month Mar 31, Year June 30,
share data) 2009 Change 2009 Change 2008
---------------------------------------------------------------------
Interest income:
Interest on
loans $ 13,684 -11% $ 15,432 -33% $ 20,446
Interest and
dividends on
securities 864 2% 843 -10% 961
------------ ------------ ------------
Total inter-
est income 14,548 -11% 16,275 -32% 21,407
Interest expense:
Interest on
deposits 8,257 -4% 8,593 -4% 8,587
Interest on
borrowings 725 -9% 801 -54% 1,593
------------ ------------ ------------
Total inter-
est expense 8,982 -4% 9,394 -12% 10,180
------------ ------------ ------------
Net interest
income 5,566 -19% 6,881 -50% 11,227
Provision for
loan losses 35,521 -11% 40,000 1084% 3,000
------------ ------------ ------------
Net interest
income
(loss) after
provision
for loan
losses (29,955) -10% (33,119) -464% 8,227
Non-interest
income:
Service fees 830 -3% 854 -14% 960
Net gain on
sales of loans
- servicing
released 481 20% 402 136% 204
Net gain on
sales of loans
- servicing
retained 4 -56% 9 N/A --
Net gain on
sales of
investment
securities -- N/A -- -100% 579
Other than
temporary
impairment on
investment
securities (204) N/A -- N/A --
Other 477 28% 372 -8% 516
------------ ------------ ------------
Total non-
interest
income 1,588 -3% 1,637 -30% 2,259
Non-interest
expense:
Compensation
and employee
benefits 3,376 -13% 3,861 -25% 4,503
Building
occupancy 1,086 -12% 1,230 -4% 1,126
REO/collection
expense 4,503 212% 1,445 5198% 85
FDIC insurance 1,768 478% 306 3829% 45
Data processing 260 5% 247 7% 244
Advertising 139 1164% 11 -37% 219
Other expenses 1,138 -53% 2,441 -17% 1,363
------------ ------------ ------------
Total non-
interest
expense 12,270 29% 9,541 62% 7,585
Income (loss)
before provision
for income taxes (40,637) -1% (41,023) -1501% 2,901
Provision
(benefit) for
income taxes (14,336) -7% (15,362) -1727% 881
Deferred tax
valuation allow-
ance 19,400 N/A -- N/A --
------------ ------------ ------------
Net Income
(Loss) $ (45,701) 78% $ (25,661) -2362% $ 2,020
============ ============ ============
Earnings per
share:
Basic earnings
(loss) per
share $ (3.81) 77% $ (2.15) -2341% $ 0.17
Diluted
earnings
(loss) per
share $ (3.81) 77% $ (2.15) -2341% $ 0.17
Weighted average
shares outstand-
ing:
Basic 11,981,529 0% 11,950,796 1% 11,893,813
Common stock
equivalents -- N/A -- -100% 71,965
------------ ------------ ------------
Diluted 11,981,529 0% 11,950,796 0% 11,965,778
============ ============ ============
CONSOLIDATED
STATEMENTS OF
FINANCIAL
CONDITION
(unaudited) (in Three One
000s, except June 30, Month March 31, Year June 30,
share data) 2009 Change 2009 Change 2008
---------------------------------------------------------------------
Assets:
Cash and due
from banks $ 17,523 -2% $ 17,881 -27% $ 24,095
Interest-
bearing
deposits 117,876 -7% 126,159 4064% 2,831
Investment
securities
Available for
sale, at
fair value 63,420 -5% 66,865 -18% 77,166
Held to
maturity, at
amortized
cost 8 0% 8 -47% 15
Federal Home
Loan Bank
stock 7,247 0% 7,247 -28% 10,015
Loans held for
sale 2,982 -37% 4,745 29% 2,314
Gross loans
receivable 1,086,275 -7% 1,162,641 -14% 1,264,740
Reserve for
loan losses (51,499) 32% (38,981) 169% (19,149)
------------ ------------ ------------
Net loans
receivable 1,034,776 -8% 1,123,660 -17% 1,245,591
Investment in
real estate
joint venture 18,087 1% 17,985 2% 17,704
Accrued
interest and
dividends
receivable 6,345 -4% 6,629 -12% 7,179
Property and
equipment, net 25,733 -2% 26,195 -6% 27,351
Net deferred
income tax
assets -- -100% 15,164 -100% 7,012
Income tax
receivable 21,018 69% 12,442 N/A --
Real estate
owned 22,537 17% 19,227 715% 2,764
Other assets 23,483 -1% 23,764 -1% 23,614
------------ ------------ ------------
Total assets $ 1,361,035 -7% $ 1,467,971 -6% $ 1,447,651
============ ============ ============
Liabilities:
Deposits $ 1,172,178 -5% $ 1,229,764 7% $ 1,096,754
Other borrowed
funds 109,456 -4% 114,348 -43% 192,987
Borrowing
related to
investment in
real estate
joint venture 24,500 0% 24,440 7% 22,983
Accounts
payable and
other liabili-
ties 5,763 41% 4,093 15% 5,020
Advances by
borrowers for
taxes and
insurance 172 -54% 377 -8% 186
Deferred
compensation 1,726 -10% 1,923 -10% 1,917
Income tax
payable -- N/A -- -100% 374
------------ ------------ ------------
Total
liabilities $ 1,313,795 -4% $ 1,374,945 0% $ 1,320,221
Stockholders'
equity:
Serial prefer-
red stock,
$1.00 par
value;
10,000,000
shares
authorized;
none issued or
outstanding $ -- $ -- $ --
Common stock,
$1.00 par
value;
30,000,000
shares
authorized;
11,994,945,
11,980,796,
and 11,917,113
shares outsta-
nding 11,995 0% 11,981 1% 11,917
Additional
paid-in
capital 51,155 0% 51,298 1% 50,706
Retained
earnings
(deficit) (17,368) -161% 28,333 -127% 64,318
Accumulated
other compre-
hensive income 1,458 3% 1,414 198% 489
------------ ------------ ------------
Total stock-
holders'
equity 47,240 -49% 93,026 -63% 127,430
------------ ------------ ------------
Total liabi-
lities and
stockhold-
ers' equity $ 1,361,035 -7% $ 1,467,971 -6% $ 1,447,651
============ ============ ============
Intangible
assets:
Goodwill $ -- N/A $ -- -100% $ 545
Mortgage
servicing
asset 158 -21% 201 -34% 240
------------ ------------ ------------
Total
intangible
assets $ 158 -21% $ 201 -80% $ 785
============ ============ ============
LOANS
(unaudited) (in June 30, March 31, June 30,
000s) 2009 2009 2008
---------------------------------------------------------------------
1-4 Mortgage
1-4 Family
residential $ 153,005 $ 167,048 $ 167,788
1-4 Family
construction 21,396 28,290 37,719
Participations
sold (34,006) (42,853) (51,330)
------------ ------------ ------------
Subtotal 140,395 152,485 154,177
Commercial land
development 171,198 186,580 171,316
Commercial
construction 183,579 222,207 334,380
Multi family
residential 55,180 51,970 44,890
Commercial real
estate 278,928 281,481 296,682
Commercial loans 193,307 201,973 201,381
Home equity
secured 54,387 58,228 53,110
Other consumer
loans 9,301 7,717 8,804
------------ ------------ ------------
Subtotal 945,880 1,010,156 1,110,563
------------ ------------ ------------
Subtotal 1,086,275 1,162,641 1,264,740
Less:
Reserve for
loan losses (51,499) (38,981) (19,149)
------------ ------------ ------------
Net loans
receivable $ 1,034,776 $ 1,123,660 $ 1,245,591
============ ============ ============
Net residential
loans $ 136,680 13% $ 149,625 13% $ 152,880 12%
Net commercial
loans 182,117 18% 193,687 17% 197,676 16%
Net commercial
real estate
loans 655,616 63% 716,743 64% 834,142 67%
Net consumer
loans 60,363 6% 63,605 6% 60,893 5%
----------------- ----------------- -----------------
$ 1,034,776 100% $ 1,123,660 100% $ 1,245,591 100%
================= ================= =================
DEPOSITS
(unaudited) (in June 30, March 31, June 30,
000s) 2009 2009 2008
---------------------------------------------------------------------
Core Deposits
Savings $ 15,980 1% $ 15,850 1% $ 17,660 2%
Checking 81,349 7% 83,286 7% 71,382 7%
Checking - non
interest
bearing 92,988 8% 80,103 6% 78,981 7%
Money market 125,586 11% 133,022 11% 184,925 17%
Certificates of
Deposit under
$100,000 353,910 30% 352,785 29% 289,183 26%
----------------- ----------------- -----------------
Subtotal 669,813 57% 665,046 54% 642,131 59%
Other Deposits
Certificates of
Deposit
$100,000 and
above 290,440 25% 303,308 25% 300,801 27%
Brokered
Certificates
of Deposit 211,925 18% 261,410 21% 153,822 14%
----------------- ----------------- -----------------
Total Other
Deposits 502,365 43% 564,718 46% 454,623 41%
----------------- ----------------- -----------------
Total $ 1,172,178 100% $ 1,229,764 100% $ 1,096,754 100%
================= ================= =================
WEIGHTED AVERAGE
INTEREST RATES: Quarter Ended Quarter Ended Quarter Ended
(unaudited) June 30, 2009 March 31, 2009 June 30, 2008
---------------------------------------------------------------------
Yield on loans 4.96% 5.25% 6.64%
Yield on investments 1.91% 1.86% 4.32%
-------------- -------------- --------------
Yield on interest-
earning assets 4.53% 4.79% 6.48%
Cost of deposits 2.76% 2.81% 3.25%
Cost of borrowings 2.31% 2.39% 2.86%
-------------- -------------- --------------
Cost of interest-
bearing liabilities 2.72% 2.77% 3.18%
AVERAGE BALANCES Quarter Ended Quarter Ended Quarter Ended
(unaudited) (in 000s) June 30, 2009 March 31, 2009 June 30, 2008
---------------------------------------------------------------------
Loans $ 1,104,725 $ 1,176,795 $ 1,231,792
Investments 180,972 181,631 89,019
-------------- -------------- --------------
Total interest-
earning assets 1,285,697 1,358,426 1,320,811
Deposits 1,196,743 1,224,033 1,056,157
Borrowings 125,627 133,950 222,470
-------------- -------------- --------------
Total interest-
bearing liabilities $ 1,322,370 $ 1,357,983 $ 1,278,627
Average assets $ 1,414,503 $ 1,470,142 $ 1,419,914
Average stockholders'
equity $ 70,133 $ 105,673 $ 127,873
CONSOLIDATED
FINANCIAL RATIOS Quarter Ended Quarter Ended Quarter Ended
(unaudited) June 30, 2009 March 31, 2009 June 30, 2008
---------------------------------------------------------------------
Return on average assets -12.92% -6.98% 0.57%
Return on average equity -260.65% -97.13% 6.32%
Efficiency ratio 171.51% 112.00% 56.25%
Net interest spread 1.81% 2.02% 3.30%
Net interest margin 1.73% 2.03% 3.40%
Equity-to-assets ratio 3.47% 6.34% 8.80%
Book value per share $ 3.94 $ 7.76 $ 10.69
Tangible book value
per share $ 3.93 $ 7.75 $ 10.63
RESERVE FOR LOAN LOSSES
(unaudited) Quarter Ended Quarter Ended Quarter Ended
(dollars in 000s) June 30, 2009 March 31, 2009 June 30, 2008
---------------------------------------------------------------------
Balance at beginning of
period $ 38,981 $ 25,309 $ 19,114
Provision for loan
losses 35,521 40,000 3,000
Charge offs - net of
recoveries (23,003) (26,328) (2,965)
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Balance at end of
period $ 51,499 $ 38,981 $ 19,149
Reserves/Gross Loans
Receivable 4.74% 3.35% 1.51%
Reserves/Net Loans
Receivable 4.98% 3.47% 1.54%
NON-PERFORMING ASSETS
(unaudited)
(dollars in 000s) June 30, 2009 March 31, 2009 June 30, 2008
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Accruing loans -
90 days past due $ 14 $ 500 $ --
Non-accrual loans 115,894 84,924 35,819
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Total non-performing
loans $ 115,908 $ 85,424 $ 35,819
Total non-performing
loans/net loans 11.20% 7.35% 2.88%
Real estate owned $ 22,537 $ 19,227 $ 2,764
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Total non-performing
assets $ 138,445 $ 104,651 $ 38,583
Total non-performing
assets/total assets 10.17% 7.13% 2.67%
Trouble debt
restructured loans $ 29,039 $ 26,383 $ --