EVERETT, Wash., April 26, 2011 (GLOBE NEWSWIRE) -- Cascade Financial Corporation ("Cascade Financial") (Nasdaq:CASB), the parent company of Cascade Bank, today reported financial results for the first quarter ended March 31, 2011, which included improvements in overall credit quality metrics and an increase in net interest margin. Cascade Financial's net loss totaled $2.6 million for the first quarter ended March 31, 2011, compared to a net loss of $8.0 million in the preceding quarter. The provision for loan losses for the quarter was $2.6 million, a 53.6% decrease from the provision of $5.5 million in the preceding quarter.
Including accruals for preferred stock dividends and accretion of issuance discount on preferred stock issued to the U.S. Treasury, Cascade Financial reported a first quarter net loss attributable to common stockholders of $3.3 million, or $0.27 per diluted common share, compared to a net loss of $8.6 million, or $0.70 per diluted common share, in the preceding quarter and a net loss of $32.8 million, or $2.69 per diluted common share, for the first quarter a year ago. Dividend accruals on preferred stock issued to the U.S. Treasury under the Capital Purchase Program for the first quarter of 2011 totaled $522,000, and the accretion of the issuance discount on preferred stock for the quarter was $119,000.
Significant items for the first quarter of 2011 include:
-
Cascade Financial, Cascade Bank and Opus Bank announced the signing of a definitive merger agreement;
-
Net loss totaled $2.6 million compared to a net loss of $8.0 million in the preceding quarter;
-
Provision for loan losses was $2.6 million, a 53.6% decrease on a sequential quarter basis;
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Net charge-offs were $2.9 million, a 50.9% decrease on a sequential quarter basis;
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Nonperforming assets to total assets declined to 4.63% from 5.51% on a sequential quarter basis;
-
Total allowance for loan losses increased to 2.64% of total loans, up from 2.62% three months earlier and 2.26% a year ago;
-
A reduction in average interest rates paid on interest checking and CDs combined to reduce the cost of deposits by 10 basis points compared to the preceding quarter;
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Net interest margin was 2.66%, a 14 basis point improvement on a sequential quarter basis; and
- Total risk-based capital ratio was 9.83%.
Over the past 18 months, Cascade Financial investigated alternatives to raise capital in response to increased capital ratios mandated by bank regulators. As a result of these efforts, on March 4, 2011, Cascade Financial announced that Cascade Financial, Cascade Bank and Opus Bank, Irvine, CA, entered into an agreement and plan of reorganization, providing for Opus Bank to acquire Cascade Financial and its principal operating subsidiary, Cascade Bank, and for the merger of Cascade Bank into Opus Bank. Under the agreement, holders of Cascade Financial common stock will receive approximately $0.45 cash per share outstanding, subject to customary closing conditions. Cascade Financial's shareholders will be asked to approve the agreement with Opus Bank at a special meeting of shareholders on May 31, 2011. The transaction is expected to close in the latter part of the second quarter of 2011.
"The economic recession severely impacted the Snohomish County area and Cascade Bank," stated Carol K. Nelson, President and CEO. "After carefully considering all options, the Board of Directors and management determined Cascade Bank needed to substantially increase its capital base to meet regulatory requirements and remain competitive. The merger with Opus Bank was the best option for our shareholders, customers and employees."
Asset Quality
Nonperforming loans declined during the quarter to $35.2 million, or 3.59% of total loans at March 31, 2011, compared to $48.1 million, or 4.82% of total loans in the preceding quarter. Real Estate Owned (REO) decreased to $32.3 million at March 31, 2011, compared to $34.4 million three months earlier. Nonperforming assets were $67.5 million or 4.63% of total assets at March 31, 2011, compared to $82.5 million or 5.51% at the end of the preceding quarter, and $124.1 million or 7.34% a year ago.
The first quarter provision for loan losses was $2.6 million, with net charge-offs of $2.9 million. The provision for loan losses was $5.5 million for the preceding quarter and $31.3 million for the first quarter a year ago. The total allowance for loan losses now stands at $25.8 million, or 2.64% of total loans at quarter end, compared to $26.2 million, or 2.62% of total loans at December 31, 2010, and $26.1 million, or 2.26% of total loans a year ago.
The following table shows nonperforming loans versus total loans in each category:
| Balance at | Nonperforming | NPL as a % | |
| LOAN PORTFOLIO ($ in 000's) | 3/31/2011 | Loans (NPL) | of Loans |
| Business | $ 392,233 | $ 2,818 | 0.7% |
| R/E construction | |||
| Spec construction | 23,033 | 8,502 | 36.9% |
| Land acquisition and development/land | 57,235 | 2,607 | 4.6% |
| Commercial R/E construction | 2,332 | -- | 0.0% |
| Total R/E construction | 82,600 | 11,109 | 13.4% |
| Commercial R/E | 190,191 | 17,958 | 9.4% |
| Multifamily | 89,461 | -- | 0.0% |
| Home equity/consumer | 29,270 | 746 | 2.5% |
| Residential | 196,389 | 2,560 | 1.3% |
| Total loans | $ 980,144 | $ 35,191 | 3.6% |
Nonperforming loans totaled $35.2 million at March 31, 2011 and continued to be centered in real estate construction and commercial real estate loans. Of total nonperforming loans, real estate construction loans were $11.1 million and commercial real estate loans were $18.0 million. The nonperforming real estate construction category consists of eight borrower relationships, the two largest of which totaled $7.6 million and $2.4 million, respectively. The larger relationship is a loan for 70 completed condominiums in Tacoma, Washington, and the $2.4 million relationship includes loans for 17 finished lots and three completed spec homes in Lynnwood, Washington. Two borrower relationships/loans comprise the nonperforming commercial real estate loans, which include one retail center in Lacey, Washington, and one office building in Seattle, Washington.
"During the first quarter of 2011, a total of $3.7 million in loans were placed on nonaccrual status, $11.5 million were converted to REO status, $2.1 million were paid off and $3.0 million were charged-off in connection with updated real estate appraisals or evaluations during the period," said Rob Disotell, EVP and Chief Credit Officer. "The pace of loans moving to nonaccrual status has slowed steadily over the past four quarters."
The following table reflects loans placed on nonaccrual status for each of the last four quarters:
| NONPERFORMING LOANS ($ in 000's) | 1Q2011 | 4Q 2010 | 3Q 2010 | 2Q 2010 | 1Q 2010 |
| Additions | $3,722 | $7,406 | $16,676 | $24,727 | $39,301 |
The following table shows the migration of nonperforming loans through the portfolio in each category (3/31/11 compared to 12/31/10):
| Additions | Paydowns | Charge-offs | ||||
| Balance at | during | during | during | Transfers | Balance at | |
| NONPERFORMING LOANS ($ in 000's) | 3/31/11 | quarter | quarter | quarter (1) | to REO | 12/31/10 |
| Business | $ 2,818 | $ 543 | $ (874) | $ (1,169) | $ (29) | $ 4,347 |
| R/E construction | ||||||
| Spec construction | 8,502 | 70 | (659) | (614) | -- | 9,705 |
| Land acquisition and development/land | 2,607 | 991 | (487) | (745) | -- | 2,848 |
| Total R/E construction | 11,109 | 1,061 | (1,146) | (1,359) | -- | 12,553 |
| Commercial R/E | 17,958 | 600 | (83) | 51 | (10,962) | 28,352 |
| Multifamily | -- | -- | -- | -- | -- | -- |
| Home equity/consumer | 746 | 429 | (9) | (245) | (477) | 1,048 |
| Residential | 2,560 | 1,089 | (23) | (304) | -- | 1,798 |
| Total | $ 35,191 | $ 3,722 | $ (2,135) | $ (3,026) | $ (11,468) | $ 48,098 |
| (1) Excludes $52 related to overdrawn checking accounts and recoveries of $204. | ||||||
The following table shows the change in REO during the quarter:
| Additions | ||||||
| Balance at | during | Capitalized | Paydowns/ | Writedowns/ | Balance at | |
| REO ($ in 000's) | 3/31/11 | quarter | Costs | Sales | Loss | 12/31/10 |
| R/E construction | ||||||
| Residential construction | $ 363 | $ -- | $ 124 | $ -- | $ -- | $ 239 |
| Land acquisition & development/land | 13,262 | 29 | 144 | (9,401) | (1,216) | 23,706 |
| Total R/E construction | 13,625 | 29 | 268 | (9,401) | (1,216) | 23,945 |
| Commercial R/E | 15,521 | 10,962 | 165 | (55) | (525) | 4,974 |
| Multifamily | 1,438 | -- | 18 | (182) | (116) | 1,718 |
| Residential | 1,727 | 477 | 36 | (2,146) | (415) | 3,775 |
| Total | $ 32,311 | $ 11,468 | $ 487 | $ (11,784) | $ (2,272) | $ 34,412 |
"We continue to make strong progress in reducing nonperforming assets (nonperforming loans plus REO). Total nonperforming assets were down 18.2% from the prior quarter and 45.6% below the same quarter last year. Nonperforming assets totaled $67.5 million, or 4.63% of total assets, compared to $124.1 million, or 7.34% of total assets, a year ago," said Disotell.
Loans delinquent 31-89 days and still accruing totaled $11.1 million, or 1.13% of total loans at March 31, 2011, compared to $2.9 million, or 0.29% of total loans at December 31, 2010, and $3.5 million, or 0.30% of total loans at March 31, 2010. All of the delinquent loans totaling $11.1 million at March 31, 2011 were in the 30-59 day category and included $5.7 million in business loans, $3.9 million in residential loans, and $1.4 million in commercial real estate with the remainder in consumer loans. Cascade Bank had two loans totaling $145,000 that were 90 days or more past due and still accruing interest at March 31, 2011.
Loan Portfolio
Cascade Bank's focus has been on reducing its real estate construction loan exposure and as a result total loans decreased from a year ago. The decrease was accomplished through reducing new real estate construction loan origination except in a few cases where a new loan would improve Cascade Bank's position on an existing loan, and by working through the existing real estate construction portfolio to secure payoffs and accelerating the foreclosure process on problem loans where borrowers did not have the financial capacity to repay their loans. At March 31, 2011, real estate construction loans were 8.4% of total loans, compared to 17.8% at March 31, 2010. Total loans decreased 15.2%, or $175.8 million, on a year-over-year basis to $980.1 million at March 31, 2011.
The following table shows the changes in the loan portfolio in each category (3/31/11 compared to 12/31/10 and 3/31/10):
| LOAN PORTFOLIO ($ in 000's) |
March 31, 2011 |
December 31, 2010 |
March 31, 2010 |
One Year Change |
| Business | $ 392,233 | $ 400,047 | $ 457,426 | -14.3% |
| R/E construction | ||||
| Spec construction | 23,033 | 25,303 | 52,098 | -55.8% |
| Land acquisition and development/land | 57,235 | 54,142 | 108,402 | -47.2% |
| Multifamily/custom construction | -- | -- | 12,905 | -100.0% |
| Commercial R/E construction | 2,332 | 2,333 | 31,996 | -92.7% |
| Total R/E construction | 82,600 | 81,778 | 205,401 | -59.8% |
| Commercial R/E | 190,191 | 201,885 | 183,027 | 3.9% |
| Multifamily | 89,461 | 89,350 | 89,920 | -0.5% |
| Home equity/consumer | 29,270 | 29,964 | 31,274 | -6.4% |
| Residential | 196,389 | 194,677 | 188,930 | 3.9% |
| Total loans | $ 980,144 | $ 997,701 | $ 1,155,978 | -15.2% |
Business loans decreased 14.3% from the prior year to $392.2 million at March 31, 2011. The decline in business loans is primarily the result of lower demand by customers in the current economic environment and is also due to Cascade Bank limiting loan growth to conserve capital. Total real estate construction loans outstanding decreased 59.8% to $82.6 million at March 31, 2011, compared to $205.4 million a year ago. Within this category, spec construction declined 55.8% to $23.0 million and land acquisition and development/land decreased 47.2% to $57.2 million at March 31, 2011, compared to one year ago. Commercial real estate loans increased 3.9% from the prior year to $190.2 million at March 31, 2011. Multifamily loans decreased 0.5% from the prior year to $89.5 million at March 31, 2011. Home equity and consumer loans decreased 6.4% to $29.3 million, while residential loans grew 3.9% to $196.4 million at March 31, 2011, compared to a year ago.
Further details on changes during the first quarter are as follows:
| Balance at | Additions/ | Payments/ | Reclassifi-- | Transfers | Balance at | ||
| LOANS ($ in 000's) | 3/31/2011 | Advances | Payoffs | cations | Charge-offs (1) | to REO | 12/31/2010 |
| Business | $ 392,233 | $ 46,512 | $ (52,487) | $ (641) | $ (1,169) | $ (29) | $ 400,047 |
| R/E construction | |||||||
| Spec construction | 23,033 | 892 | (2,146) | (402) | (614) | -- | 25,303 |
| Land acquisition and development/land | 57,235 | 6,733 | (2,917) | 22 | (745) | -- | 54,142 |
| Commercial R/E construction | 2,332 | -- | (1) | -- | -- | -- | 2,333 |
| Total R/E construction | 82,600 | 7,625 | (5,064) | (380) | (1,359) | -- | 81,778 |
| Commercial R/E | 190,191 | 600 | (1,383) | -- | 51 | (10,962) | 201,885 |
| Multifamily | 89,461 | 70 | (368) | 409 | -- | -- | 89,350 |
| Home equity/consumer | 29,270 | 1,731 | (1,681) | (22) | (245) | (477) | 29,964 |
| Residential | 196,389 | 5,395 | (4,013) | 634 | (304) | -- | 194,677 |
| Total loans | 980,144 | 61,933 | (64,996) | -- | (3,026) | (11,468) | 997,701 |
| Deferred loan fees | (3,879) | 55 | -- | -- | -- | -- | (3,934) |
| Allowance for loan losses | (25,782) | (2,550) | -- | -- | 2,874 | -- | (26,106) |
| Loans, net | $ 950,483 | $ 59,438 | $ (64,996) | $ -- | $ (152) | $ (11,468) | $ 967,661 |
| (1) Excludes $52 related to overdrawn checking accounts and recoveries of $204. | |||||||
Investment Portfolio and Liquidity
The investment portfolio increased $4.5 million year-over-year, and decreased $3.8 million from the preceding quarter, to $296.6 million at March 31, 2011. Interest-earning deposits, including deposits at the Federal Reserve Bank, were $108.8 million at March 31, 2011, down from $127.5 million the preceding quarter and $152.4 million a year earlier as Cascade Financial reduced its excess liquidity.
On October 21, 2010, Cascade Financial announced that it had successfully completed a series of balance sheet restructuring transactions which improved its financial position. The transactions included the restructuring of Cascade Financial's securities portfolio, prepayment and/or modification of Cascade Financial's Federal Home Loan Bank (FHLB) advances, and the purchase of interest rate caps designed to protect both the net interest margin and stockholders' equity from potential future rising interest rates. These transactions helped to improve Cascade Financial's net interest margin and regulatory capital position.
Deposits
Total deposits were $1.07 billion at March 31, 2011 compared to $1.17 billion a year ago and $1.11 billion at December 31, 2010. Personal checking balances were down $1.8 million for the quarter and $118.1 million for the year. The change in personal checking balances year-over-year was due to successful cross-sell efforts and moving Main Street checking balances into lower interest rate savings and MMDA accounts. Business checking balances were down $14.4 million on a year-over-year basis partially due to a planned reduction in public funds checking accounts that require 100% collateralization. Savings and money market balances increased $48.8 million, or 36.6% on a year-over-year basis. The growth is net of a decline in public funds money market accounts which also require 100% collateralization. CDs decreased $19.4 million, or 3.4% on a year-over-year basis and decreased $43.1 million for the quarter primarily due to planned runoff of brokered CDs as required by the Consent Order that Cascade Bank entered into with its regulators.
The following table shows deposits in each category (3/31/11 compared to 12/31/10 and 3/31/10):
| One Year | ||||||||
| DEPOSITS ($ in 000's) | March 31, 2011 | December 31, 2010 | March 31, 2010 | Change | ||||
| Personal checking accounts | $ 235,492 | $ 237,263 | $ 353,610 | -33.4% | ||||
| Business checking accounts | 101,693 | 100,303 | 116,090 | -12.4% | ||||
| Total checking accounts | 337,185 | 337,566 | 469,700 | -28.2% | ||||
| Savings and MMDA | 181,980 | 176,945 | 133,188 | 36.6% | ||||
| CDs | 549,922 | 593,043 | 569,370 | -3.4% | ||||
| Total deposits | $ 1,069,087 | $ 1,107,554 | $ 1,172,258 | -8.8% |
Capital
Total stockholders' equity was $54.6 million as of March 31, 2011, compared to $58.5 million at December 31, 2010. Book value was $1.39 per common share at March 31, 2011, and tangible book value was $1.37 per common share. Cascade Financial had a total risk-based capital ratio of 9.83% and a Tier 1 capital ratio of 5.46% as of March 31, 2011.
Operating Results
Net interest income for the first quarter was down 8.9% to $8.8 million, compared to $9.7 million for the first quarter of 2010, due primarily to a decline in the loan portfolio and lower yields on securities available-for-sale. Total other income was $1.8 million for the quarter, compared to $1.9 million for the first quarter a year ago.
Total other expenses were $10.7 million in the first quarter of 2011, compared to $9.2 million in the first quarter of 2010. The increase was primarily due to the $1.6 million increase in REO expenses, write-downs and losses.
For the quarter, total compensation and employee benefits were down $269,000, or 7.3% as compared to the same quarter in 2010. Within this category, employee salary expense was down $203,000, or 6.6%, and director's compensation expense was down $15,000, or 11.4%. The reduction in employee salary expense was related to an 8.0% reduction in the number of total employees during the past 12 months.
Net Interest Margin
Cascade Financial's net interest margin was 2.66% for the first quarter of 2011, compared to 2.52% in the immediate prior quarter and 2.60% for the first quarter a year ago. The yield on earning assets increased by 3 basis points compared to the preceding quarter, while the cost of interest-bearing liabilities declined by 9 basis points. The increase in the yield on earning assets compared to the prior quarter was due to an increase in the yield on total loans and investment securities and also due to lower cash balances.
"In addition to lower deposit costs, the balance sheet restructuring during the second half of 2010 had a positive impact on our net interest margin by utilizing low-yielding cash balances at the Federal Reserve Bank to prepay higher cost FHLB advances and restructuring the remaining advances to further reduce funding costs," said Debra L. Johnson, EVP and Chief Financial Officer.
The following table depicts Cascade Financial's yield on earning assets, its cost of funds on paying liabilities and the resulting spread and margin:
| 1Q11 | 4Q10 | 3Q10 | 2Q10 | 1Q10 | 4Q09 | 3Q09 | 2Q09 | 1Q09 | |
| Asset yield | 4.70% | 4.67% | 4.62% | 4.89% | 5.13% | 5.35% | 5.60% | 5.63% | 5.83% |
| Liability cost | 2.14% | 2.23% | 2.44% | 2.46% | 2.60% | 2.65% | 2.63% | 2.74% | 3.02% |
| Spread | 2.56% | 2.44% | 2.18% | 2.43% | 2.53% | 2.70% | 2.97% | 2.89% | 2.81% |
| Margin | 2.66% | 2.52% | 2.26% | 2.49% | 2.60% | 2.79% | 3.03% | 3.01% | 3.03% |
About Cascade Financial
Established in 1916, Cascade Bank, the only operating subsidiary of Cascade Financial, is a state chartered commercial bank headquartered in Everett, Washington. Cascade Bank maintains an "Outstanding" CRA rating and has proudly served the Puget Sound region for over 90 years. Cascade Bank operates 22 full service branches in Everett, Lynnwood, Marysville, Mukilteo, Shoreline, Smokey Point, Issaquah, Clearview, Woodinville, Lake Stevens, Bellevue, Snohomish, North Bend, Burlington and Edmonds.
In November 2010, Cascade Bank was named Favorite Snohomish County Company (with fewer than 250 employees) in NW.Jobs.com's People's Picks campaign for the second year in a row. In April 2011, Cascade Bank was ranked #10 on the Puget Sound Business Journal's list of largest Washington state 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 tangible book value per share, efficiency ratio and tangible capital/assets ratio. These measures should not be construed as a substitute for GAAP measures; they should be read and used in conjunction with Cascade Financial'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
This news release contains statements that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are provided to assist in the understanding of anticipated future financial results. However, such forward-looking statements involve risks and uncertainties relating to interest rates, approval and completion of the merger with Opus Bank, regulatory enforcement actions to which Cascade Financial and Cascade Bank are currently and may in the future be subject, inability to attract and retain deposits, changes in capital classifications, changes in the level of nonperforming assets and charge-offs, and general market risks. For a discussion of certain factors that may cause such forward-looking statements to differ materially from Cascade Financial's actual results, see the company's Annual Report on Form 10-K for the year ended December 31, 2010, and other reports filed with the Securities and Exchange Commission. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.
| BALANCE SHEET | Quarter | Year | |||
| (Dollars in thousands) | Mar. 31, 2011 | Dec. 31, 2010 | Change | Mar. 31, 2010 | Change |
| (Unaudited) | |||||
| Assets | |||||
| Cash on hand and in banks | $ 4,486 | $ 3,871 | 15.9% | $ 4,371 | 2.6% |
| Interest-earning deposits | 108,794 | 127,464 | -14.6% | 152,440 | -28.6% |
| Securities available-for-sale, fair value | 232,277 | 234,606 | -1.0% | 247,240 | -6.1% |
| Securities held-to-maturity, amortized cost | 52,419 | 53,912 | -2.8% | 32,956 | 59.1% |
| Federal Home Loan Bank (FHLB) stock | 11,920 | 11,920 | 0.0% | 11,920 | 0.0% |
| Total securities | 296,616 | 300,438 | -1.3% | 292,116 | 1.5% |
| Loans | |||||
| Business | 392,233 | 400,047 | -2.0% | 457,426 | -14.3% |
| R/E construction | 82,600 | 81,778 | 1.0% | 205,401 | -59.8% |
| Commercial R/E | 190,191 | 201,885 | -5.8% | 183,027 | 3.9% |
| Multifamily | 89,461 | 89,350 | 0.1% | 89,920 | -0.5% |
| Home equity/consumer | 29,270 | 29,964 | -2.3% | 31,274 | -6.4% |
| Residential | 196,389 | 194,677 | 0.9% | 188,930 | 3.9% |
| Total loans | 980,144 | 997,701 | -1.8% | 1,155,978 | -15.2% |
| Deferred loan fees | (3,879) | (3,934) | 1.4% | (3,872) | -0.2% |
| Allowance for loan losses | (25,782) | (26,106) | 1.2% | (26,003) | 0.8% |
| Loans, net | 950,483 | 967,661 | -1.8% | 1,126,103 | -15.6% |
| Real estate owned (REO) | 32,311 | 34,412 | -6.1% | 27,394 | 17.9% |
| Premises and equipment, net | 13,127 | 13,325 | -1.5% | 14,268 | -8.0% |
| Bank owned life insurance, net | 25,736 | 25,489 | 1.0% | 24,759 | 3.9% |
| Goodwill | -- | -- | N/A | 12,885 | -100.0% |
| Prepaid FDIC insurance premiums | 2,210 | 2,968 | -25.5% | 6,071 | -63.6% |
| Federal income tax receivable | -- | -- | N/A | 13,420 | -100.0% |
| Other assets | 23,442 | 22,706 | 3.2% | 16,434 | 42.6% |
| Total assets | $ 1,457,205 | $ 1,498,334 | -2.7% | $ 1,690,261 | -13.8% |
| Liabilities | |||||
| Deposits | |||||
| Personal checking accounts | $ 235,492 | $ 237,263 | -0.7% | $ 353,610 | -33.4% |
| Business checking accounts | 101,693 | 100,303 | 1.4% | 116,090 | -12.4% |
| Total checking accounts | 337,185 | 337,566 | -0.1% | 469,700 | -28.2% |
| Savings and money market accounts | 181,980 | 176,945 | 2.8% | 133,188 | 36.6% |
| Certificates of deposit | 549,922 | 593,043 | -7.3% | 569,370 | -3.4% |
| Total deposits | 1,069,087 | 1,107,554 | -3.5% | 1,172,258 | -8.8% |
| FHLB advances | 159,000 | 159,000 | 0.0% | 239,000 | -33.5% |
| Securities sold under agreement to repurchase | 145,000 | 145,000 | 0.0% | 146,065 | -0.7% |
| Junior subordinated debentures | 15,465 | 15,465 | 0.0% | 15,465 | 0.0% |
| Junior subordinated debentures, fair value | 1,500 | 1,500 | 0.0% | 3,341 | -55.1% |
| Other liabilities | 12,508 | 11,363 | 10.1% | 9,879 | 26.6% |
| Total liabilities | 1,402,560 | 1,439,882 | -2.6% | 1,586,008 | -11.6% |
| Stockholders' equity | |||||
| Preferred stock | 37,607 | 37,488 | 0.3% | 37,150 | 1.2% |
| Common stock and paid in capital | 44,065 | 44,055 | 0.0% | 43,841 | 0.5% |
| (Accumulated deficit) retained earnings | (21,253) | (17,965) | -18.3% | 22,047 | -196.4% |
| Accumulated other comprehensive (loss) gain | (5,774) | (5,126) | -12.6% | 1,215 | -575.2% |
| Total stockholders' equity | 54,645 | 58,452 | -6.5% | 104,253 | -47.6% |
| Total liabilities and stockholders' equity | $ 1,457,205 | $ 1,498,334 | -2.7% | $ 1,690,261 | -13.8% |
| STATEMENT OF OPERATIONS | Quarter Ended | Quarter Ended | Quarter | Quarter Ended | Year |
| (Dollars in thousands, except share and per share amounts) | Mar. 31, 2011 | Dec. 31, 2010 | Change | Mar. 31, 2010 | Change |
| (Unaudited) | |||||
| Interest income | $ 15,612 | $ 16,242 | -3.9% | $ 19,131 | -18.4% |
| Interest expense | 6,788 | 7,482 | -9.3% | 9,444 | -28.1% |
| Net interest income | 8,824 | 8,760 | 0.7% | 9,687 | -8.9% |
| Provision for loan losses | 2,550 | 5,500 | -53.6% | 31,290 | -91.9% |
| Net interest income (loss) after provision for loan losses | 6,274 | 3,260 | 92.5% | (21,603) | 129.0% |
| Other income | |||||
| Checking fees | 1,209 | 1,309 | -7.6% | 1,263 | -4.3% |
| Service fees | 252 | 241 | 4.6% | 233 | 8.2% |
| Bank owned life insurance, net | 247 | 225 | 9.8% | 237 | 4.2% |
| Gain on sales/calls of securities | -- | 3,998 | -100.0% | 28 | -100.0% |
| Gain on sale of loans | -- | 19 | -100.0% | 26 | -100.0% |
| Fair value gains | -- | 1,841 | -100.0% | -- | N/A |
| Other | 111 | 162 | -31.5% | 125 | -11.2% |
| Total other income | 1,819 | 7,795 | -76.7% | 1,912 | -4.9% |
| Total income (loss) | 8,093 | 11,055 | -26.8% | (19,691) | 141.1% |
| Other expenses | |||||
| Compensation & employee benefits | 3,411 | 3,389 | 0.6% | 3,680 | -7.3% |
| Occupancy & equipment | 932 | 929 | 0.3% | 1,016 | -8.3% |
| FDIC insurance | 771 | 1,051 | -26.6% | 853 | -9.6% |
| Business insurance | 341 | 386 | -11.7% | 376 | -9.3% |
| Legal | 374 | 384 | -2.6% | 162 | 130.9% |
| B&O taxes | 248 | 351 | -29.3% | 263 | -5.7% |
| REO expenses, writedowns & losses | 2,587 | 4,956 | -47.8% | 994 | 160.3% |
| FHLB prepayment penalty | -- | 4,808 | -100.0% | -- | N/A |
| Other operating expenses | 2,076 | 2,150 | -3.4% | 1,893 | 9.7% |
| Total other expenses | 10,740 | 18,404 | -41.6% | 9,237 | 16.3% |
| Net loss before provision for federal income tax | (2,647) | (7,349) | 64.0% | (28,928) | 90.8% |
| Provision for federal income tax | -- | 654 | -100.0% | 3,211 | -100.0% |
| Net loss | (2,647) | (8,003) | 66.9% | (32,139) | 91.8% |
| Dividends on preferred stock | 522 | 515 | 1.4% | 499 | 4.6% |
| Accretion of issuance discount on preferred stock | 119 | 114 | 4.4% | 112 | 6.3% |
| Loss attributable to common stockholders | $ (3,288) | $ (8,632) | 61.9% | $ (32,750) | 90.0% |
| NET LOSS PER COMMON SHARE INFORMATION | |||||
| Net loss per common share, basic | $ (0.27) | $ (0.70) | 61.4% | $ (2.69) | 90.0% |
| Net loss per common share, diluted | $ (0.27) | $ (0.70) | 61.4% | $ (2.69) | 90.0% |
| Weighted average number of common shares outstanding | |||||
| Basic | 12,271,529 | 12,271,529 | 12,165,167 | ||
| Diluted | 12,271,529 | 12,271,529 | 12,165,167 |
| (Dollars in thousands, except share and per share amounts) | |||
| (Unaudited) | |||
| Quarter Ended | |||
| PERFORMANCE MEASURES AND RATIOS | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Return on average common stockholders' equity | -63.77% | -110.26% | -137.53% |
| Return on average tangible common stockholders' equity* | -64.36% | -111.07% | -159.35% |
| Return on average assets | -0.91% | -2.25% | -7.74% |
| Efficiency ratio | 100.91% | 111.17% | 79.64% |
| Net interest margin | 2.66% | 2.52% | 2.60% |
| *Non-GAAP measurement | |||
| Quarter Ended | |||
| AVERAGE BALANCES | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Average assets | $ 1,472,514 | $ 1,524,157 | $ 1,715,524 |
| Average earning assets | 1,345,884 | 1,380,489 | 1,512,046 |
| Average total loans | 986,119 | 1,036,558 | 1,196,091 |
| Average deposits | 1,082,490 | 1,116,588 | 1,169,309 |
| Average stockholders' equity (including preferred stock) | 58,439 | 68,477 | 133,652 |
| Average common stockholders' equity (excluding preferred stock) | 20,910 | 31,060 | 96,574 |
| Average tangible common stockholders' equity (excluding | 20,719 | 30,834 | 83,353 |
| preferred stock and goodwill and intangibles) | |||
| STOCKHOLDERS' EQUITY ANALYSIS | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Total stockholders' equity | $ 54,645 | $ 58,452 | $ 104,253 |
| Less: preferred stock | 37,607 | 37,488 | 37,150 |
| Total common stockholders' equity | 17,038 | 20,964 | 67,103 |
| Less: goodwill and intangibles | 176 | 211 | 13,202 |
| Tangible common stockholders' equity | $ 16,862 | $ 20,753 | $ 53,901 |
| Common stock outstanding | 12,271,529 | 12,271,529 | 12,171,529 |
| Book value per common share | $ 1.39 | $ 1.71 | $ 5.51 |
| Tangible book value per common share | $ 1.37 | $ 1.69 | $ 4.43 |
| (Dollars in thousands) | |||
| (Unaudited) | |||
| ASSET QUALITY | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Nonperforming loans (NPLs) | $ 35,191 | $ 48,098 | $ 96,719 |
| Nonperforming loans/total loans | 3.59% | 4.82% | 8.37% |
| REO | $ 32,311 | $ 34,412 | $ 27,394 |
| Nonperforming assets | $ 67,502 | $ 82,510 | $ 124,113 |
| Nonperforming assets/total assets | 4.63% | 5.51% | 7.34% |
| Net loan charge-offs in the quarter | $ 2,874 | $ 5,859 | $ 31,187 |
| Net charge-offs in the quarter/total loans | 0.29% | 0.59% | 2.70% |
| Allowance for loan losses | $ 25,782 | $ 26,106 | $ 26,003 |
| Plus: Allowance for off-balance sheet commitments | 50 | 50 | 69 |
| Total allowance for loan losses | $ 25,832 | $ 26,156 | $ 26,072 |
| Total allowance for loan losses/total loans | 2.64% | 2.62% | 2.26% |
| Total allowance for loan losses/nonperforming loans | 73.41% | 54.38% | 26.96% |
| Capital/asset ratio (including junior subordinated debentures) | 5.13% | 5.32% | 7.66% |
| Capital/asset ratio (Tier 1, including junior subordinated debentures) | 5.46% | 5.55% | 6.75% |
| Tangible cap/asset ratio (excluding preferred stock and goodwill & intangibles) | 1.16% | 1.39% | 3.21% |
| Total risk-based capital/risk-weighted asset ratio | 9.83% | 9.98% | 11.00% |
| Quarter Ended | |||
| INTEREST SPREAD ANALYSIS (AVERAGE YIELDS) | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Yield on interest-earning deposits | 0.24% | 0.29% | 0.22% |
| Yield on total loans | 5.72% | 5.58% | 5.48% |
| Yield on investments | 2.30% | 2.20% | 4.14% |
| Yield on earning assets | 4.70% | 4.67% | 5.13% |
| Cost of deposits | 1.07% | 1.17% | 1.47% |
| Cost of FHLB advances | 3.25% | 3.57% | 4.35% |
| Cost of Federal Reserve borrowings | 0.00% | 0.00% | 0.25% |
| Cost of securities sold under agreement to repurchase | 5.95% | 5.95% | 5.94% |
| Cost of junior subordinated debentures | 12.85% | 11.16% | 10.68% |
| Cost of interest-bearing liabilities | 2.14% | 2.23% | 2.60% |
| Net interest spread | 2.56% | 2.44% | 2.53% |
| Net interest margin | 2.66% | 2.52% | 2.60% |
| RECONCILIATION TO NON-GAAP FINANCIAL MEASURES* | |||
| (Dollars in thousands) | |||
| (Unaudited) | |||
| Quarter Ended | |||
| AVERAGE TANGIBLE COMMON STOCKHOLDERS' EQUITY | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Loss attributable to common stockholders | $ (3,288) | $ (8,632) | $ (32,750) |
| Average stockholders' equity | $ 58,439 | $ 68,477 | $ 133,652 |
| Less: average preferred stock | 37,529 | 37,417 | 37,078 |
| Average common stockholders' equity | 20,910 | 31,060 | 96,574 |
| Less: average goodwill and intangibles | 191 | 226 | 13,221 |
| Average tangible common stockholders' equity (excluding preferred stock | $ 20,719 | $ 30,834 | $ 83,353 |
| and goodwill and intangibles) | |||
| Return on average tangible common stockholders' equity (annualized) | -64.36% | -111.07% | -159.35% |
| Quarter Ended | |||
| EFFICIENCY RATIO | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Total other expenses | $ 10,740 | $ 18,404 | $ 9,237 |
| Net interest income | $ 8,824 | $ 8,760 | $ 9,687 |
| Other income | 1,819 | 7,795 | 1,912 |
| Total income | $ 10,643 | $ 16,555 | $ 11,599 |
| Efficiency ratio | 100.91% | 111.17% | 79.64% |
| TANGIBLE COMMON STOCKHOLDERS' EQUITY | Mar. 31, 2011 | Dec. 31, 2010 | Mar. 31, 2010 |
| Total assets | $ 1,457,205 | $ 1,498,334 | $ 1,690,261 |
| Less: goodwill and intangibles | 176 | 211 | 13,202 |
| Total tangible assets | $ 1,457,029 | $ 1,498,123 | $ 1,677,059 |
| Total stockholders' equity | $ 54,645 | $ 58,452 | $ 104,253 |
| Less: preferred stock | 37,607 | 37,488 | 37,150 |
| Total common stockholders' equity | 17,038 | 20,964 | 67,103 |
| Less: goodwill and intangibles | 176 | 211 | 13,202 |
| Tangible common stockholders' equity | $ 16,862 | $ 20,753 | $ 53,901 |
| Tangible cap/asset ratio (excluding preferred stock | |||
| and goodwill and intangibles) | 1.16% | 1.39% | 3.21% |
| *Management believes that the presentation of non-GAAP results provides useful information | |||
| to investors regarding the effects on the Company's reported results of operations. | |||