MACON, Ga., July 29, 2008 (PRIME NEWSWIRE) -- Security Bank Corporation (Nasdaq:SBKC) today reported a net operating loss of $17.8 million for the second quarter ended June 30, 2008, compared with net income of $6.1 million for the second quarter of 2007. Including the previously announced pre-tax goodwill impairment charge of $109.7 million, the net loss for the second quarter increased to $121.4 million. Diluted earnings per share before goodwill impairment for the second quarter of 2008 reflected a loss of $0.77 per share compared to diluted earnings of $0.31 per share for the comparable year ago period. The decrease in operating diluted earnings per share for the second quarter of 2008 is primarily driven by a $30 million provision for loan losses and the decrease in net interest income due to higher levels of problem credits.
Security Bank Corporation's tangible book value decreased to $7.00 per share at June 30, 2008 compared with $9.54 per share at June 30, 2007. Tangible equity to tangible assets was 5.69% at June 30, 2008 versus 7.21% at June 30, 2007, and all bank subsidiaries were in the highest capital category of "well-capitalized" as defined by regulatory standards at the end of the second quarter of 2008. Total risk based capital was 11.7% at the end of the second quarter, with over $38 million in excess capital over the 10% "well-capitalized" level.
Rett Walker, Security Bank Corporation's President and CEO, remarked, "Industry conditions remain challenging; however, our management team continues to execute our strategic plan that focuses on preserving capital, maintaining liquidity, improving asset quality and reducing noninterest expenses. We raised over $68 million of capital in the first half of 2008 to ensure that our banks remain classified as 'well-capitalized.' We believe we have identified problem credits and have taken appropriate action to charge-off or write down these credits, all while substantially increasing our allowance for loan losses to 2.3% of loans. We are encouraged to see that the growth in problem credits has slowed, with incremental growth in nonperforming assets on a sequential basis at $27 million for the second quarter compared with $143 million for the first quarter of 2008. Moreover, past due loans have declined dramatically, down $65 million from just 90 days ago to $11 million or 0.5% of loans. We realize that 2008 will continue to be a difficult year for us and the entire banking industry, but we remain confident that our focus on exceptional customer service, our leading market position in the stable middle Georgia market, and the opportunity to participate in the recovery of the Atlanta market will restore long-term shareholder value."
Asset Quality
Nonperforming assets ("NPAs" or nonaccrual loans and other real estate owned, "OREO") at the end of second quarter 2008 were $249 million, or 11.3% of total loans plus OREO compared to 10.0% at the end of the first quarter of 2008. While Security Bank Corporation sold $12 million of OREO during the second quarter of 2008, new properties totaling approximately $39 million were moved to OREO from nonaccrual loans. Approximately $70 million of loans were placed on nonaccrual status. In addition, Security Bank Corporation charged-off approximately $32 million (net) in loans receivable resulting in net charge-offs to average loans of 5.9% annualized for the second quarter of 2008. Net charge-offs to average loans were 0.2% annualized for the second quarter of 2007. Security Bank increased its allowance for loan losses to $48.5 million, or 2.26% of loans receivable at June 30, 2008, up from $24.1 million or 1.15% at June 30, 2007.
Balance Sheet
Loans receivable were $2.14 billion at June 30, 2008, up from $2.10 billion at June 30, 2007, an increase of 2%. On a sequential basis, loans declined 7% annualized with 3% annualized growth in our middle and coastal Georgia markets, offsetting 9% annualized declines in the Atlanta market and a 42% annualized decline in Security Real Estate Services, Inc.
Total deposits were $2.46 billion at June 30, 2008, an increase of 14% from $2.16 billion at June 30, 2007. Total assets increased 8% to $2.88 billion at June 30, 2008, compared to $2.67 billion at June 30, 2007.
Tangible shareholders' equity at June 30, 2008 declined by approximately $21 million to $163 million compared to June 30, 2007, reflecting net operating losses of $48 million and $6 million in dividends paid, which was partly offset by approximately $28 million in capital raised in a rights offering in the first quarter of 2008, net of reduced equity as a result of shares purchased during the latter part of 2007 under a share repurchase program.
Net Interest Income
Net interest income for the second quarter of 2008 was $13.8 million, a decrease of 41% from $23.4 million when compared to the second quarter of 2007. The decrease is primarily the result of slower growth in Security Bank Corporation's loan portfolio in addition to a decline in the net interest margin. The net interest margin (on a fully tax-equivalent basis) was 2.13% for the quarter ended June 30, 2008, compared to 4.11% for the comparable period one year ago and 2.34% for the first quarter of 2008. The decrease in the net interest margin in the second quarter of 2008 as compared to the first quarter of 2008 was the result of our asset sensitive balance sheet and the 225 basis point decline in interest rates in 2008.
Noninterest Income and Expense
Noninterest income for the second quarter of 2008 increased 7% to $5.1 million compared to the second quarter of 2007 due primarily to a $0.9 million increase in other income reflecting the impact of marking-to-market the stock appreciation rights recently issued in conjunction with the $40.0 million debt issuance.
Noninterest expense for the second quarter of 2008 was $17.6 million, an increase of $l.0 million, or 6% over the second quarter 2007 level of $16.5 million. Excluding increases in foreclosure expenses, losses on sales of OREO and FDIC insurance premiums, noninterest expense was down $1.4 million or 8.5% over the second quarter 2007 level. The decline in controllable noninterest expense was primarily due to $1.0 million of reduced salary and benefits expense from lower incentive compensation and reduced headcount through attrition of staff.
2008 Outlook
Management's outlook for 2008 assumes no further deterioration but rather a continuation of the challenging industry environment resulting from the cyclical downturn in the Atlanta residential real estate construction and development market. We expect NPAs to stabilize in the latter part of 2008 and look for a moderation in the provision for loan loss to a range of $35 million to $45 million for the second half of 2008 versus the $72 million recorded during the first half of 2008. Similarly, net charge-offs are expected to be in a range of approximately $20 million to $25 million for the second half of 2008 versus $56 million recognized in the first six months of 2008. The net interest margin is projected to show modest improvement by year-end. We intend to proactively manage our balance sheet to preserve capital, which should result in a decline in loans for the second half of 2008 of 3% to 5%, with modest growth in middle and coastal Georgia markets offset by declines in Security Real Estate Services and Atlanta.
Other Information
Security Bank Corporation's management will host a conference call to discuss these results at 10:00 AM Eastern Daylight Savings Time on Wednesday, July 30, 2008. This call is open to all interested parties. From locations within the United States the call-in number is 800.860.2442 (412.858.4600 from outside the United States). Please call in 10 minutes prior to the beginning of the conference call and ask for Security Bank Corporation.
A recorded playback of the conference call will be available for one week by calling 877.344.7529, or 412.317.0088 from outside the United States. The passcode for this playback is 420896#.
This press release, including the attached selected unaudited financial tables, which are a part of this release, contains financial information determined by methods other than in accordance with generally accepted accounting principles ("GAAP"). These non-GAAP financial measures are "net operating income (loss)," "operating earnings," "tangible book value," "tangible equity to tangible assets" and "return on average tangible equity." Security Bank's management uses these non-GAAP measures in its analysis of Security Bank's performance.
Net operating income (loss) is defined as net income adjusted for significant, typically nonrecurring income and expenses. Operating earnings are defined as net income adjusted for significant, typically nonrecurring income and expenses. Security Bank Corporation's management includes these measures because it believes it is helpful in measuring the Company's performance from core operations absent the impact the usually nonrecurring items such as asset impairments, gains/losses on investment sales and prepayments of borrowed money. Tangible book value is defined as total equity reduced by recorded intangible assets, net of related deferred tax benefits. Tangible book value per share is defined as tangible book value divided by total common shares outstanding. This measure is important to many investors in the marketplace who are interested in changes from period to period in book value per share exclusive of changes in intangible assets. Goodwill, an intangible asset that is recorded in a purchase business combination, has the effect of increasing total book value while not increasing the tangible assets of the company. For companies such as Security Bank Corporation that have engaged in multiple business combinations, purchase accounting requires the recording of significant amounts of goodwill related to such transactions. Tangible equity to tangible assets is the ratio of tangible equity defined as total equity reduced by recorded intangible assets, net of related deferred tax benefits, to tangible assets defined as total assets reduced by recorded intangible assets, net of related deferred tax benefits. Tangible equity to tangible assets is an important measure of Security Bank Corporation's capital strength without the effects of purchase accounting as noted above. Return on average tangible equity is defined as earnings for the period (annualized for the quarterly period or year-to-date period, as applicable) divided by average equity reduced by average goodwill and other intangible assets, net of related deferred tax benefits. Security Bank Corporation's management includes this measure because it believes that it is important when measuring the Company's performance exclusive of the effects of goodwill and other intangibles recorded in recent acquisitions, and many investors use this measure as part of their analysis of Security Bank Corporation.
These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the "Reconciliation Table" in the attached schedules for a more detailed analysis of these non-GAAP measures and the most directly comparable GAAP measures.
About Security Bank Corporation
Based in Macon, Georgia, Security Bank Corporation is a multi-bank holding company with assets of $2.9 billion at June 30, 2008. Security Bank Corporation operates six community banks with banking offices located throughout middle Georgia, coastal Georgia and north metropolitan Atlanta. In addition, Security Bank Corporation operates an interim real estate and development lender and traditional mortgage originator, Security Real Estate Services, Inc., with offices throughout Georgia.
Security Bank Corporation common stock is traded on the NASDAQ Global Select Market under the ticker symbol "SBKC." You may obtain copies of all documents that Security Bank files with the Securities and Exchange Commission, free of charge, at the SEC's website at www.sec.gov. In addition, copies of these documents may also be obtained from us without charge by directing a written request to Security Bank Corporation, 4219 Forsyth Road, Macon, Georgia 31210, Attention: Investor Relations.
Safe Harbor
This press release contains forward-looking statements as defined by federal securities laws, including statements about Security Bank's loan loss provisions, capital adequacy, dividend reduction, net charge-offs, non-performing assets, net interest margin changes, the overall economic cycle and its impact on real estate values in Security Bank Corporation's markets, loan growth, introduction and success of new products and Security Bank Corporation's long-term prospects, among others. Statements contained in this press release that are not historical facts are forward-looking statements. Forward-looking statements may address issues involving significant risks, uncertainties, estimates and assumptions made by management. Security Bank Corporation's ability to accurately project results or predict the effects of future plans or strategies is inherently limited. Although Security Bank Corporation believes that the expectations and estimates reflected in its forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Please refer to Security Bank Corporation's public filings with the Securities and Exchange Commission for a summary of important factors that could affect Security Bank Corporation's financial results and operations and its forward-looking statements. Security Bank Corporation does not intend to and assumes no responsibility, except as required by law, for updating or revising any forward-looking statements contained in this press release, whether as a result of new information, changes in assumptions, future events or otherwise.
Security Bank Corporation
Selected Consolidated Financial Data
(Dollars in Thousands, except Per Share Amounts)
Unaudited
Quarters Ended Six Months Ended
June 30, June 30,
% %
2008 2007 Change 2008 2007 Change
---- ---- ------ ---- ---- ------
OPERATING
EARNINGS
SUMMARY:
Net
interest
income $ 13,776 $ 23,383 -41.1% $ 28,575 $46,160 -38.1%
Provision
for loan
losses 30,383 2,000 1419.2% 72,582 3,260 2126.4%
Noninterest
income 5,090 4,750 7.2% 10,952 9,842 11.3%
Foreclosed
property
expenses 1,266 546 131.9% 2,592 762 240.2%
Losses
(gains) on
sales of
ORE 1,570 164 857.3% 1,844 134 1276.1%
Other
non-
interest
expense 14,717 15,834 -7.1% 30,024 31,536 -4.8%
Income
taxes (11,243) 3,489 -422.2% (25,490) 7,424 -443.3%
Net
operating
income
(loss) (17,827) 6,100 -392.2% (42,025) 12,886 -426.1%
PER COMMON
SHARE:
Basic
operating
earnings
(loss) $ (0.77) $ 0.32 -340.6% $ (1.95) $ 0.67 -391.0%
Diluted
operating
earnings
(loss) (0.77) 0.31 -348.4% (1.95) 0.66 -395.5%
Cash
dividends
declared 0.044 0.088 -50.0% 0.131 0.175 -25.1%
Book value 7.88 16.38 -51.9% 7.88 16.38 -51.9%
Tangible
book value 7.00 9.54 -26.6% 7.00 9.54 -26.6%
KEY
PERFOR-
MANCE
RATIOS(a):
Return on
average
tangible
equity,
operating -40.43% 13.42% -46.88% 14.57%
Return on
average
assets,
operating -2.49% 0.97% -2.97% 1.05%
Efficiency
ratio 78.01% 56.28% 75.96% 56.31%
Net
interest
margin
(FTE) 2.13% 4.11% 2.23% 4.16%
Net charge-
offs to
average
loans 5.91% 0.24% 5.16% 0.15%
BALANCE
SHEET
SUMMARY -
END OF
PERIOD
Investment
securi-
ties $ 342,994 $ 219,185 56.5%
Loans Held
for sale 6,192 9,052 -31.6%
Loans
receivable 2,142,262 2,094,254 2.3%
Allowance
for loan
losses 48,452 24,108 101.0%
Total
assets 2,877,383 2,672,177 7.7%
Deposits 2,455,626 2,161,078 13.6%
Other
borrowed
money 216,424 177,873 21.7%
Share-
holders'
equity 183,285 314,687 -41.8%
Tangible
equity to
tangible
assets 5.69% 7.21% -21.0%
ASSET
QUALITY -
END OF
PERIOD
Nonaccrual
loans $ 186,139 $ 35,450 425.1%
Loans 90
Days Past
Due and
Accruing -- -- 0.0%
Other real
estate
owned 62,814 19,229 226.7%
Total
nonperfor-
ming
assets 248,953 54,679 355.3%
Allowance
for loan
losses/
NPA's 19.46% 44.09%
Allowance
for loan
losses/
loans 2.26% 1.15%
(a) Income annualized based on number of days in the period, except
efficiency ratio
NOTE: Refer to the attached GAAP to non-GAAP reconciliation for the
calculation of operating earnings
Security Bank Corporation
Average Balance Sheet and Net Interest Income Analysis
(Dollars in Thousands)
Unaudited
Quarter Ended Six Months
June 30, 2008 June 30, 2008
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
------- ------- ---- ------- ------- ----
ASSETS
Earning assets:
Interest-
bearing
deposits and
fed funds
sold $ 99,104 $ 500 2.03% $ 74,549 $ 923 2.49%
Investment
securities 348,677 3,909 4.51% 322,535 7,228 4.51%
Loans Held for
Resale 4,782 75 6.31% 5,339 167 6.29%
Loans 2,154,371 33,201 6.20% 2,174,231 70,136 6.49%
Other earning
assets 1,238 19 6.17% 1,238 42 6.82%
Total earning
assets 2,608,172 37,704 5.81% 2,577,892 78,496 6.12%
Non-earning
assets 269,432 268,555
---------- ----------
Total assets $2,877,604 $2,846,447
========== ==========
LIABILITIES AND
SHAREHOLDERS'
EQUITY
Interest-bearing
liabilities:
Savings and
interest-
bearing
transaction $ 488,757 $ 2,697 2.22% $ 498,654 $ 6,272 2.53%
Time deposits 1,705,410 18,835 4.44% 1,671,569 39,205 4.72%
Other
borrowings 211,594 2,381 4.53% 191,352 4,379 4.60%
Total
interest-
bearing
liabilities 2,405,761 23,913 4.00% 2,361,575 49,856 4.25%
Noninterest-
bearing
liabilities:
Noninterest
bearing
deposits 162,222 158,859
Other
noninterest-
bearing
liabilities 3,041 15,617
Total
liabilities $2,571,024 $2,536,051
---------- ----------
Shareholders'
Equity 306,580 310,396
---------- ----------
Total
liabilities
and
shareholders'
equity $2,877,604 $2,846,447
========== ==========
Interest rate
spread 1.81% 1.87%
Net interest
income $13,791 $28,640
Net interest
margin (FTE) 2.13% 2.23%
Security Bank Corporation (SBKC)
Selected Financial Information
(Amounts in thousands, except per share data)
2008 2007
-----------------------------------
2nd 1st Dec. 31/
Quarter Quarter YTD
----------------------------------
Period-End Balance Sheet
------------------------
Total Assets $2,877,383 $2,818,477 $2,833,071
Total Securities 342,994 306,018 305,399
Mortgage Loans held for Sale 6,192 5,759 7,605
Loans:
Commercial Real-Estate 983,733 963,384 947,371
Construction/A&D(2) 772,179 862,532 898,690
Personal Real-Estate 160,878 157,040 158,244
Other 225,472 198,601 178,008
Total Loans 2,142,262 2,181,557 2,182,313
Allowance for loan losses 48,452 49,749 31,698
Other earning assets 95,903 26,704 14,866
Total Earning Assets 2,587,351 2,520,038 2,510,183
Other Real Estate 62,814 35,749 28,175
Intangibles:
Goodwill 18,373 128,074 128,571
Core-Deposit 3,647 3,879 4,125
Deposits:
Demand Deposits 172,610 164,842 158,759
Interest bearing deposits 2,283,016 2,144,829 2,139,946
Total Deposits 2,455,626 2,309,671 2,298,705
Fed Funds purchased & repo
agreements 36,084 31,328 68,417
Other borrowed funds 180,340 138,738 137,910
Common Equity 183,285 309,876 306,693
=====================================================================
Average Balance Sheet
---------------------
Total Assets $2,877,604 $2,818,622 $2,591,947
Total Securities 348,677 296,395 216,610
Mortgage Loans held for Sale 4,782 5,896 6,328
Loans:
Commercial Real-Estate 974,558 958,903 907,729
Construction/A&D 802,453 875,131 825,302
Personal Real-Estate 157,616 158,069 153,682
Other 219,744 201,989 195,286
Total Loans 2,154,371 2,194,092 2,081,999
Other earning assets 100,342 55,246 36,866
Total Earning Assets 2,608,172 2,551,629 2,341,803
Other Real Estate 53,994 33,299 15,970
Deposits:
Demand Deposits 162,222 155,389 163,712
Interest bearing deposits
Savings 15,741 14,979 16,005
NOW 376,409 382,597 373,522
Money Market 96,607 110,976 145,619
Time deposits greater than
$100,000 1,067,626 1,061,895 892,248
Time deposits less than
$100,000 637,784 575,833 521,923
Total Deposits 2,356,389 2,301,669 2,113,029
Fed Funds purchased & repo
agreements 39,601 44,745 43,881
Other borrowed funds 171,993 130,379 100,430
Common Equity 306,580 313,635 313,504
=====================================================================
Operating Earnings
------------------
Interest Income $ 37,689 $ 40,742 $ 192,840
Interest Expense 23,913 25,943 102,316
Net Interest Income 13,776 14,799 90,524
Loan loss provision 30,383 42,199 32,660
Service charges on deposit
accounts 2,253 2,287 9,363
Mortgage banking revenues 799 1,002 4,475
Securities Gains (Losses) 1 2,034 (3)
Other income 2,037 539 5,146
Total noninterest income 5,090 5,862 18,981
Salaries and benefits 8,080 8,736 35,061
Occupancy and equipment 1,501 1,549 6,189
Foreclosed Property Expenses 1,266 1,326 2,879
Losses (Gains) on Sales of ORE 1,570 274 1,944
Other noninterest expense 5,136 5,022 21,001
Total noninterest expense 17,553 16,907 67,074
Pre-tax operating earnings (loss) (29,070) (38,445) 9,771
Income Taxes (11,243) (14,247) 3,183
Operating income (loss) $ (17,827) $ (24,198) $ 6,588
Operating earnings (loss) per
share-basic $ (0.77) $ (1.22) $ 0.35
Operating earnings (loss) per
share-diluted (0.77) (1.22) 0.34
End of period shares outstanding 23,248,585 23,233,634 18,912,264
Weighted average diluted shares
o/s 23,235,668 19,810,520 19,225,069
Tax equivalent adjustment 15 50 445
Net interest income (FTE) 13,791 14,849 90,969
Effective Tax Rate 38.68% 37.06% 32.58%
=====================================================================
Stock and related per share data:
---------------------------------
Book value $ 7.88 $ 13.34 $ 16.22
Tangible book value 7.00 7.72 9.28
Dividends declared per share 0.0438 0.0875 0.35
=====================================================================
Other Key Ratios/Data:
----------------------
Return on average tangible
equity(1),(3) -40.43% -56.13% 3.63%
Return on average assets(1),(3) -2.49% -3.45% 0.25%
Net interest margin (FTE)(1) 2.13% 2.34% 3.88%
Efficiency ratio (FTE) 92.97% 81.63% 61.00%
Tangible Equity/Tangible Assets 5.69% 6.67% 6.50%
=====================================================================
Loan Performance Data:
----------------------
Nonaccrual loans $ 186,139 $ 186,520 $ 50,635
Loans 90 Days Past Due and
Accruing -- 68 242
Other real estate (ORE) 62,814 35,749 28,175
Total nonperforming assets 248,953 222,337 79,052
Net charge-offs 31,680 24,148 23,298
Reversal of Interest 1,268 3,028 1,874
Forfeited Interest from NPA's 4,259 2,741 4,435
Allowance for loan losses/NPA's 19.46% 22.38% 40.10%
Allowance for loan losses/loans 2.26% 2.28% 1.45%
NPA's/Loans plus ORE 11.29% 10.03% 3.58%
Nonperforming assets/total assets 8.65% 7.89% 2.79%
Net charge-offs to average
loans(1) 5.91% 4.43% 1.12%
=====================================================================
2007
----------------------------------------------
4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter
----------------------------------------------
Period-End Balance
Sheet
------------------
Total Assets $2,833,071 $2,723,986 $2,672,177 $2,541,603
Total Securities 305,399 227,694 219,185 191,945
Mortgage Loans held
for Sale 7,605 8,867 9,052 8,341
Loans:
Commercial
Real-Estate 959,671 900,969 843,477 932,971
Construction/A&D(2) 886,390 921,321 920,644 703,703
Personal Real-Estate 158,244 155,508 152,726 180,687
Other 178,008 187,414 177,407 199,636
Total Loans 2,182,313 2,165,212 2,094,254 2,016,997
Allowance for loan
losses 31,698 27,132 24,108 23,336
Other earning assets 14,866 59,968 84,060 78,319
Total Earning Assets 2,510,183 2,461,741 2,406,551 2,295,602
Other Real Estate 28,175 23,891 19,229 3,403
Intangibles:
Goodwill 128,571 128,571 128,601 128,553
Core-Deposit 4,125 4,371 4,617 4,863
Deposits:
Demand Deposits 158,759 161,749 171,427 176,658
Interest bearing
deposits 2,139,946 2,029,351 1,989,651 1,842,431
Total Deposits 2,298,705 2,191,100 2,161,078 2,019,089
Fed Funds purchased &
repo agreements 68,417 81,995 58,985 59,065
Other borrowed funds 137,910 121,388 118,888 129,888
Common Equity 306,693 312,036 314,687 311,729
=====================================================================
Average Balance Sheet
---------------------
Total Assets $2,745,087 $2,648,300 $2,529,142 $2,441,326
Total Securities 256,061 220,379 195,031 194,248
Mortgage Loans held
for Sale 5,647 6,367 8,728 4,557
Loans:
Commercial
Real-Estate 939,330 863,915 890,191 937,948
Construction/A&D 912,693 918,328 810,122 627,003
Personal Real-Estate 156,468 154,652 152,519 180,152
Other 189,580 186,717 199,441 205,761
Total Loans 2,198,071 2,123,612 2,052,273 1,950,864
Other earning assets 28,184 33,016 34,280 52,292
Total Earning Assets 2,487,963 2,383,374 2,290,312 2,201,961
Other Real Estate 25,502 27,061 8,081
Deposits:
Demand Deposits 159,891 161,225 168,589 165,255
Interest bearing
deposits
Savings 15,104 15,513 16,810 16,612
NOW 373,274 377,448 375,605 367,657
Money Market 147,908 151,428 144,907 138,060
Time deposits greater
than $100,000 1,003,681 949,323 833,758 779,136
Time deposits less
than $100,000 531,107 523,421 516,844 516,137
Total Deposits 2,230,965 2,178,358 2,056,513 1,982,857
Fed Funds purchased &
repo agreements 55,528 41,945 43,682 34,158
Other borrowed funds 125,342 92,383 92,277 91,436
Common Equity 315,791 316,060 313,877 308,691
=====================================================================
Operating Earnings
------------------
Interest Income $ 48,989 $ 49,643 $ 48,175 $ 46,033
Interest Expense 27,406 26,862 24,792 23,256
Net Interest Income 21,583 22,781 23,383 22,777
Loan loss provision 20,000 9,400 2,000 1,260
Service charges on
deposit accounts 2,533 2,356 2,376 2,098
Mortgage banking
revenues 995 1,170 1,271 1,039
Securities Gains
(Losses) -- (5) -- 2
Other income 1,011 1,079 1,103 1,953
Total noninterest
income 4,539 4,600 4,750 5,092
Salaries and benefits 7,564 8,852 9,094 9,551
Occupancy and equipment 1,595 1,559 1,547 1,488
Foreclosed Property
Expenses 1,339 778 546 216
Losses (Gains) on
Sales of ORE 1,435 375 164 (30)
Other noninterest
expense 5,650 5,495 5,193 4,663
Total noninterest
expense 17,583 17,059 16,544 15,888
Pre-tax operating
earnings (loss) (11,461) 922 9,589 10,721
Income Taxes (4,588) 347 3,489 3,935
Operating income
(loss) $ (6,873) $ 575 $ 6,100 $ 6,786
Operating earnings
(loss) per
share-basic $ (0.36) $ 0.03 $ 0.32 $ 0.35
Operating earnings
(loss) per
share-diluted (0.36) 0.03 0.31 0.35
End of period shares
outstanding 18,912,264 18,889,227 19,212,139 19,181,241
Weighted average
diluted shares o/s 18,958,448 19,184,272 19,463,979 19,456,857
Tax equivalent
adjustment 112 110 112 111
Net interest income
(FTE) 21,695 22,891 23,495 22,888
Effective Tax Rate 40.03% 37.64% 36.39% 36.70%
=====================================================================
Stock and related per
share data:
---------------------
Book value $ 16.22 $ 16.52 $ 16.38 $ 16.25
Tangible book value 9.28 9.57 9.54 9.39
Dividends declared per
share 0.0875 0.0875 0.0875 0.0875
=====================================================================
Other Key Ratios/Data:
----------------------
Return on average
tangible equity(1),(3) -14.77% 1.24% 13.42% 15.78%
Return on average
assets(1),(3) -0.99% 0.09% 0.97% 1.13%
Net interest margin
(FTE)(1) 3.46% 3.81% 4.11% 4.22%
Efficiency ratio (FTE) 67.02% 62.05% 58.57% 56.78%
Tangible Equity/
Tangible Assets 6.50% 6.97% 7.21% 7.48%
=====================================================================
Loan Performance Data:
----------------------
Nonaccrual loans $ 50,635 $ 41,492 $ 35,450 $ 39,139
Loans 90 Days Past Due
and Accruing 242 -- -- --
Other real estate (ORE) 28,175 23,891 19,229 3,403
Total nonperforming
assets 79,052 65,383 54,679 42,542
Net charge-offs 15,434 6,376 1,228 260
Reversal of Interest 796 915 268 (105)
Forfeited Interest
from NPA's 1,281 1,405 970 779
Allowance for loan
losses/NPA's 40.10% 41.50% 44.09% 54.85%
Allowance for loan
losses/loans 1.45% 1.25% 1.15% 1.16%
NPA's/Loans plus ORE 3.58% 2.99% 2.59% 2.11%
Nonperforming assets/
total assets 2.79% 2.40% 2.05% 1.67%
Net charge-offs to
average loans(1) 2.79% 1.19% 0.24% 0.05%
=====================================================================
(1) The actual number of days in the period were used to annualize
income
(2) At June 30, 2008 the portfolio of $772.2 million is comprised of
$496.9 million residential loans and $275.3 million commercial
loans.
(3) Calculated on an operating basis
NOTE: Refer to the attached GAAP to non-GAAP reconciliation for the
calculation of operating earnings
Security Bank Corporation (SBKC)
GAAP Reconciliation Table
(Amounts in thousands, except per share data)
2008 2007
----------------------------------
2nd 1st Dec 31/
Quarter Quarter YTD
----------------------------------
Reconciliation Table- GAAP to
non-GAAP:
-----------------------------
Book Value per share $ 7.88 $ 13.34 $ 16.22
Effect of intangible assets per
share (0.88) (5.62) (6.94)
----------------------------------
Tangible book value $ 7.00 $ 7.72 $ 9.28
Equity $ 183,285 $ 309,876 $ 306,693
Intangible assets 22,020 131,953 132,696
Less tax effect of Core-Deposit
Intangible (38%) (1,386) (1,474) (1,568)
----------------------------------
Tangible equity $ 162,651 $ 179,397 $ 175,565
Assets $2,877,383 $2,818,477 $2,833,071
Intangible assets 20,634 130,479 131,129
----------------------------------
Tangible assets $2,856,749 $2,687,998 $2,701,942
Equity/Assets 6.37% 10.99% 10.83%
Effect of intangible assets -0.68% -4.32% -4.33%
----------------------------------
Tangible Equity/Tangible Assets 5.69% 6.67% 6.50%
Average Equity $ 306,580 $ 313,635 $ 313,504
Average Intangible assets 130,657 132,599 133,878
Less tax effect of Core-Deposit
Intangible (38%) (1,440) (1,533) (1,763)
----------------------------------
Average tangible equity $ 177,363 $ 182,569 $ 181,389
Net operating Income (loss) $ (17,827) $ (25,478) $ 6,590
Return on average tangible equity,
operating(a) -40.43% -56.13% 3.63%
Diluted operating earnings (loss)
per share $ (0.77) $ (1.28) $ 0.34
Effect of securities gains
(losses), net of tax (0.00) 0.06 --
Effect of prepayment of FHLB
advances, net of tax -- -- --
Goodwill impairment, net of tax (4.46) -- --
----------------------------------
Diluted earnings (loss) per share $ (5.23) $ (1.22) $ 0.34
Net operating income (loss) $ (17,827) $ (25,478) $ 6,590
Effect of securities gains
(losses), net of tax 1 1,280 (2)
Effect of prepayment of FHLB
advances, net of tax -- -- --
Goodwill impairment, net of tax (103,619) -- --
----------------------------------
Net income (loss) $ (121,445) $ (24,198) $ 6,588
2007
----------------------------------------------
4th 3rd 2nd 1st
Quarter Quarter Quarter Quarter
----------------------------------------------
Reconciliation Table-
GAAP to non-GAAP:
--------------------
Book Value per share $ 16.22 $ 16.52 $ 16.38 $ 16.25
Effect of intangible
assets per share (6.94) (6.95) (6.84) (6.86)
----------------------------------------------
Tangible book value $ 9.28 $ 9.57 $ 9.54 $ 9.39
Equity $ 306,693 $ 312,036 $ 314,687 $ 311,729
Intangible assets 132,696 132,942 133,218 133,416
Less tax effect of
Core-Deposit
Intangible (38%) (1,568) (1,661) (1,754) (1,848)
----------------------------------------------
Tangible equity $ 175,565 $ 180,755 $ 183,223 $ 180,161
Assets $2,833,071 $2,723,986 $2,672,177 $2,541,603
Intangible assets 131,129 131,281 131,464 131,568
----------------------------------------------
Tangible assets $2,701,942 $2,592,705 $2,540,713 $2,410,035
Equity/Assets 10.83% 11.46% 11.78% 12.27%
Effect of intangible
assets -4.33% -4.49% -4.57% -4.79%
----------------------------------------------
Tangible Equity/
Tangible Assets 6.50% 6.97% 7.21% 7.48%
Average Equity $ 315,791 $ 316,060 $ 313,877 $ 308,691
Average Intangible
assets 132,849 133,117 133,363 136,228
Less tax effect of
Core-Deposit
Intangible (38%) (1,626) (1,720) (1,813) (1,896)
----------------------------------------------
Average tangible
equity $ 184,568 $ 184,663 $ 182,327 $ 174,359
Net operating Income
(loss) $ (6,873) $ 578 $ 6,100 $ 6,785
Return on average
tangible equity,
operating(a) -14.77% 1.24% 13.42% 15.78%
Diluted operating
earnings (loss) per
share $ (0.36) $ 0.03 $ 0.31 $ 0.35
Effect of securities
gains (losses), net
of tax -- -- -- --
Effect of prepayment
of FHLB advances, net
of tax -- -- -- --
Goodwill impairment,
net of tax -- -- -- --
----------------------------------------------
Diluted earnings (loss)
per share $ (0.36) $ 0.03 $ 0.31 $ 0.35
Net operating income
(loss) $ (6,873) $ 578 $ 6,100 $ 6,785
Effect of securities
gains (losses), net
of tax -- (3) -- 1
Effect of prepayment
of FHLB advances, net
of tax -- -- -- --
Goodwill impairment,
net of tax -- -- -- --
----------------------------------------------
Net income (loss) $ (6,873) $ 575 $ 6,100 $ 6,786
(a) The actual number of days in the period were used to annualize
income