Exhibit 99.1
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CONTACTS: Rich Jacobson, President & CEO Kelli Holz, Interim CFO 360.733.3050 | NEWS RELEASE |
Horizon Financial Reports Second Quarter Fiscal 2010 Results and Form 10-Q Filing
BELLINGHAM, WA – November 9, 2009 – Horizon Financial Corp. (NASDAQ GS: HRZB) (“Horizon”), the bank holding company for Horizon Bank, today reported a net loss of $35.1 million, or $2.93 per share, for the second quarter of fiscal 2010, and a net loss of $80.8 million, or $6.74 per share, for the six months ended September 30, 2009. The loss for the quarter reflects a $29.0 million provision for loan losses, $4.1 million from losses on real estate owned and collection related expenses, along with $1.5 million in FDIC insurance premiums. Horizon had a net loss of $4.6 million, or $0.39 per share, and $2.6 million, or $0.22 per share, for the quarter and six months ended September 30, 2008.
The current period losses have reduced capital levels significantly and resulted in both the holding company and its subsidiary bank being considered “critically undercapitalized,” with the Bank’s total risk based capital ratio falling to 1.98%, Tier 1 leverage ratio at 0.77% and the Tier 1 risk based capital ratio at 0.99% as of September 30, 2009.
For a full discussion of Horizon’s financial results and operating condition, and the consequences to the Bank of being critically undercapitalized, investors are encouraged to read the report on Form 10-Q for the quarter ended September 30, 2009, that was filed today with the SEC.
“Subsequent to the quarter ended September 30, 2009, Congress passed legislation relating to recovering taxes paid in prior years. The new law regarding expanding the application of net operating losses, both for future and past earnings, is a positive development for us,” said Rich Jacobson, President and Chief Executive Officer. “The new law, passed and signed last week, will allow us to reverse a valuation allowance and recognize in earnings a tax benefit of $17.9 million in the third fiscal quarter. Under the new tax law, companies will be permitted to carry back 2008 or 2009 losses to reduce taxable income for the past five years and obtain a refund of taxes already paid. A refund for the fifth year would be subject to a 50% reduction. In addition, companies can carry forward previous year losses for up to 20 years, using the tax credit against future income. This change to our balance sheet would have placed our capital situation at ‘significantly undercapitalized’ at September 30, 2009, rather than ‘critically undercapitalized.’ Capital ratios under the new tax treatment would have shown the total risk based capital ratio at 3.92% rather than the reported 1.98%, Tier 1 leverage ratio at 2.09% rather than the reported 0.77% and the Tier 1 risk based capital ratio at 2.64% rather than 0.99% as of September 30, 2009.”
HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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“We continue to work through our non-performing asset challenges while working with investment bankers to raise new capital,” said Jacobson. “However, no assurances can be made that we will be successful in this regard.
“As part of our balance sheet management process, we are deleveraging our balance sheet and have increased liquidity to meet the needs of our customers,” Jacobson continued. Cash, interest bearing deposits and investment securities totaled $221 million, which is almost double the level of liquid investments on the balance sheet a year ago. Net loans are down $302 million, or 24% year-over-year. Of the reduction, $204 million is in the commercial construction portfolio, which is down 60% from a year ago, and $41 million is in the land development portfolio, which is down 23% from one year ago. “As a result of continued declining market values for the collateral supporting our real estate loan portfolio, we once again set aside an elevated provision for loan losses. This continued deterioration of the housing market and the economy has materially adversely affected our business, liquidity and financial results.”
Core deposits (excluding brokered CDs and CDs over $100,000) increased 7% year over year and helped replace $47 million in matured brokered CDs which, based on our agreement with our regulators, cannot be renewed. Total deposits increased 2% to $1.17 billion at September 30, 2009 from $1.15 billion at September 30, 2008. "All of our team members recognize the value of core deposits to our franchise, and I am very pleased with their efforts to work to maintain FDIC insurance coverage for our customers. Any customer who has questions regarding their account insurance is encouraged to contact their local Horizon office,” said Jacobson.
Total non-performing assets were $128.4 million, or 9.88% of total assets at September 30, 2009, an improvement from $138.4 million, or 10.17% of total assets at June 30, 2009, and up from $80.2 million, or 5.53% of total assets at September 30, 2008. Net charge-offs during the second quarter of fiscal 2010 were $44.6 million compared to $23.0 million in the immediate prior quarter and $5.6 million in the second fiscal quarter a year ago. The allowance for loan losses was $35.9 million, or 3.83% of net loans at September 30, 2009, down from $51.5 million or 4.98% of net loans at June 30, 2009, and up from $25.6 million, or 2.06% of net loans a year ago.
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
HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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to our regulators,” said Jacobson. “Also included in the agreement is a requirement to reduce our balances of loans which were classified during our September 2008 regulatory examination as “substandard” and “doubtful” to specified levels within 270 days of the effective date of the agreement. As of the date of this release, we have met the requirement to reduce substandard loans to the target levels set forth in the agreement, and are within $1.0 million of the target for doubtful loans. As a result, 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 September 30, 2009, Horizon Bank’s Tier 1 capital was $10.4 million, representing 0.77% of average assets. The Bank is working to bring in additional capital to meet the 10% regulatory requirement, in accordance with the terms of the agreement, however no reassurances can be made that it will be successful in this regard. In addition, due to the significant reduction in capital levels over the past year, which has resulted in both the holding company and our subsidiary bank to be considered “critically undercapitalized,” Horizon expects its regulators to initiate additional remedial actions as discussed in more detail in its Form 10-Q for the quarter ended September 30, 2009. Also discussed in the Form 10-Q is Horizon’s and Horizon Bank’s ability to continue as a going concern.
Horizon Financial Corp. is a $1.30 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.
Included in Horizon's SEC filing of Form 10-Q for the second fiscal quarter of 2009 is additional financial information and discussion relating to the financial results as of September 30, 2009. This filing is located at http://www.horizonbank.com or a copy can be requested by e-mail at investorrelations@horizonbank.com.
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. These forward-looking statements are based on the Corporation’s expectations and are subject to risks and uncertainties that cannot be predicted or quantified and are beyond the Corporation’s control, including the potential that (1) the Corporation may not be able to continue as a going concern and (2) because of our critically undercapitalized status, our regulators may initiate additional enforcement actions against us, which could include placing the Bank under conservatorship or into receivership. Although we believe that our plans, intentions and expectations, as reflected in these forward-looking statements are reasonable, we can give no assurance that these plans, intentions or expectations will be achieved or
HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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realized. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to:: the risk that the Bank will be subject to other remedies and other sanctions as result of being critically undercapitalized under a Prompt Corrective Action (“PCA”) or because the Corporation is not able to improve its capital position; the possibility that the Bank will not be unable to comply with the conditions imposed by the Order, including but not limited to its ability to increase capital, reduce non-performing assets and reduce its reliance on brokered certificates of deposit, or to comply with statutory obligations applicable to critically undercapitalized institutions under PCA or to comply with other regulatory requirements which could result in the imposition of further enforcement action imposing additional restrictions on our operations or other remedies and sanctions at any time; 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 and its Form 10-Q filings for the quarters ended June 30, 2009 and September 30, 2009 for meaningful cautionary language discussion why actual results may vary from those anticipated by management.
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HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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| CONSOLIDATED STATEMENTS OF INCOME | Quarter Ended | | Three Month | | Quarter Ended | | One Year | | Quarter Ended |
| (unaudited) (in 000s, except share data) | Sept 30, 2009 | | Change | | June 30, 2009 | | Change | | Sept 30, 2008 |
| Interest income: | | | | | | | | | | |
| Interest on loans | | $ 12,813 | | -6% | | $ 13,684 | | -35% | | $ 19,808 |
| Interest and dividends on securities | 816 | | -6% | | 864 | | -14% | | 949 |
| Total interest income | | 13,629 | | -6% | | 14,548 | | -34% | | 20,757 |
| | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | |
| Interest on deposits | | 7,932 | | -4% | | 8,257 | | -7% | | 8,500 |
| Interest on borrowings | | 701 | | -3% | | 725 | | -47% | | 1,334 |
| Total interest expense | | 8,633 | | -4% | | 8,982 | | -12% | | 9,834 |
| Net interest income | | 4,996 | | -10% | | 5,566 | | -54% | | 10,923 |
| | | | | | | | | | | | |
| Provision for loan losses | | 29,000 | | -18% | | 35,521 | | 142% | | 12,000 |
| Net interest loss after provision for loan losses | (24,004) | | -20% | | (29,955) | | 2129% | | (1,077) |
| | | | | | | | | | | | |
| Non-interest income (loss): | | | | | | | | | | |
| Service fees | | | 681 | | -18% | | 830 | | -17% | | 819 |
| Net gain (loss) on sales of loans | (98) | | -121% | | 477 | | -168% | | 144 |
| Net loss on sales and impairment of real estate owned | (2,044) | | -1% | | (2,064) | | 510% | | (335) |
| Net loss on sales of investment securities | (54) | | N/A | | - | | -93% | | (777) |
| Other than temporary impairment on investment securities | (1) | | -100% | | (204) | | N/A | | - |
| Other non-interest income | | 456 | | -1% | | 462 | | -65% | | 1,288 |
| Total non-interest income (loss) | (1,060) | | 112% | | (499) | | -193% | | 1,139 |
| | | | | | | | | | | | |
| Non-interest expense: | | | | | | | | | | |
| Compensation and employee benefits | 3,624 | | 7% | | 3,376 | | -16% | | 4,337 |
| Building occupancy | | 1,086 | | 0% | | 1,086 | | -8% | | 1,175 |
| REO/collection expense | | 2,040 | | -16% | | 2,439 | | 890% | | 206 |
| FDIC insurance | | 1,452 | | -18% | | 1,768 | | 579% | | 214 |
| Data processing | | 244 | | -6% | | 260 | | 1% | | 241 |
| Advertising | | | 140 | | 1% | | 139 | | -36% | | 219 |
| Other non-interest expense | 1,767 | | 55% | | 1,138 | | 27% | | 1,387 |
| Total non-interest expense | 10,353 | | 1% | | 10,206 | | 33% | | 7,779 |
| | | | | | | | | | | | |
| Loss before provision for income taxes | (35,417) | | -13% | | (40,660) | | 359% | | (7,717) |
| Current benefit for income taxes | (12,791) | | -11% | | (14,336) | | 311% | | (3,109) |
| Deferred tax valuation allowance | 12,503 | | -36% | | 19,400 | | N/A | | - |
| Net loss | | | (35,129) | | -23% | | (45,724) | | 662% | | (4,608) |
| Less: Net loss attributable to noncontrolling interests | (15) | | 0% | | (15) | | 400% | | (3) |
| Net loss attributable to Horizon Financial Corp. | $ (35,114) | | -23% | | $ (45,709) | | 663% | | $ (4,605) |
| | | | | | | | | | | | |
| Earnings per share : | | | | | | | | | | |
| Basic loss per share | | $ (2.93) | | -23% | | $ (3.81) | | 651% | | $ (0.39) |
| Diluted loss per share | | $ (2.93) | | -23% | | $ (3.81) | | 651% | | $ (0.39) |
| | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | |
| Basic | | | 11,995,279 | | 0% | | 11,981,529 | | 0% | | 11,940,064 |
| Common stock equivalents | - | | N/A | | - | | N/A | | - |
| Diluted | | | 11,995,279 | | 0% | | 11,981,529 | | 0% | | 11,940,064 |
| | | | | | | | | | | | |
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HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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| | | | | | | |
| CONSOLIDATED STATEMENTS OF INCOME | Six Months Ended | | | | Six Months Ended | |
| (unaudited) (in 000s, except per share data) | Sept 30, 2009 | | Change | | Sept 30, 2008 | |
| Interest income: | | | | | | | |
| Interest on loans | | $ 26,497 | | -34% | | $ 40,254 | |
| Interest and dividends on securities | 1,681 | | -12% | | 1,910 | |
| Total interest income | | 28,178 | | -33% | | 42,164 | |
| | | | | | | | | |
| Interest expense: | | | | | | | |
| Interest on deposits | | 16,189 | | -5% | | 17,087 | |
| Interest on borrowings | | 1,427 | | -51% | | 2,927 | |
| Total interest expense | | 17,616 | | -12% | | 20,014 | |
| Net interest income | | 10,562 | | -52% | | 22,150 | |
| | | | | | | | | |
| Provision for loan losses | | 64,521 | | 330% | | 15,000 | |
| Net interest income (loss) after provision for loan losses | (53,959) | | -855% | | 7,150 | |
| | | | | | | | | |
| Non-interest income (loss): | | | | | | | |
| Service fees | | | 1,511 | | -15% | | 1,779 | |
| Net gain on sales of loans | 387 | | 11% | | 348 | |
| Net loss on sales and impairment of real estate owned | (4,108) | | 1126% | | (335) | |
| Net loss on sales of investment securities | (54) | | -73% | | (198) | |
| Other than temporary impairment on investment securities | (205) | | N/A | | - | |
| Other | | | 918 | | -49% | | 1,800 | |
| Total non-interest income (loss) | (1,551) | | -146% | | 3,394 | |
| | | | | | | | | |
| Non-interest expense: | | | | | | | |
| Compensation and employee benefits | 7,000 | | -21% | | 8,840 | |
| Building occupancy | | 2,172 | | -6% | | 2,301 | |
| REO/collection expense | | 4,479 | | 1340% | | 311 | |
| FDIC insurance | | 3,220 | | 1143% | | 259 | |
| Data processing | | 504 | | 4% | | 485 | |
| Advertising | | | 279 | | -36% | | 438 | |
| Other expenses | | 2,905 | | 6% | | 2,730 | |
| Total non-interest expense | 20,559 | | 34% | | 15,364 | |
| | | | | | | | | |
| Loss before provision for income taxes | (76,069) | | 1478% | | (4,820) | |
| Current benefit for income taxes | (27,127) | | 1118% | | (2,228) | |
| Deferred tax valuation allowance | 31,903 | | N/A | | - | |
| Net loss | | | (80,845) | | 3019% | | (2,592) | |
| Less: Net loss attributable to noncontrolling interests | (30) | | 329% | | (7) | |
| Net loss attributable to Horizon Financial Corp. | $ (80,815) | | 3026% | | $ (2,585) | |
| | | | | | | | | |
| Earnings per share : | | | | | | | |
| Basic loss per share | | $ (6.74) | | N/A | | $ (0.22) | |
| Diluted loss per share | | $ (6.74) | | N/A | | $ (0.22) | |
| | | | | | | | | |
| Weighted average shares outstanding: | | | | | | |
| Basic | | | 11,988,442 | | 1% | | 11,917,065 | |
| Common stock equivalents | - | | N/A | | - | |
| Diluted | | | 11,988,442 | | 1% | | 11,917,065 | |
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HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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| CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION | | Three Month | | | | One Year | | |
| (unaudited) (in 000s, except share data) | | Sept 30, 2009 | | Change | | June 30, 2009 | | Change | | Sept 30, 2008 |
| Assets: | | | | | | | | | | |
| Cash and due from banks | | $ 10,636 | | -39% | | $ 17,523 | | -52% | | $ 22,117 |
| Interest-bearing deposits | | 148,406 | | 26% | | 117,876 | | 689% | | 18,816 |
| Investment securities | | | | | | | | | | |
| Available for sale, at fair value | | 62,009 | | -2% | | 63,420 | | -13% | | 71,686 |
| Held to maturity, at amortized cost | | - | | -100% | | 8 | | -100% | | 10 |
| Federal Home Loan Bank stock | | 7,247 | | 0% | | 7,247 | | -16% | | 8,580 |
| Loans held for sale | | 1,253 | | -58% | | 2,982 | | -16% | | 1,496 |
| Gross loans receivable | | 973,992 | | -10% | | 1,086,275 | | -23% | | 1,265,275 |
| Reserve for loan losses | | (35,941) | | -30% | | (51,499) | | 41% | | (25,579) |
| Net loans receivable | | 938,051 | | -9% | | 1,034,776 | | -24% | | 1,239,696 |
| Investment in real estate joint venture | | 18,164 | | 0% | | 18,087 | | 2% | | 17,742 |
| Accrued interest and dividends receivable | | 4,543 | | -28% | | 6,345 | | -35% | | 6,942 |
| Property and equipment, net | | 25,257 | | -2% | | 25,733 | | -7% | | 27,142 |
| Net deferred income tax assets | | - | | N/A | | - | | -100% | | 7,304 |
| Income tax receivable | | 21,018 | | 0% | | 21,018 | | 411% | | 4,111 |
| Real estate owned | | 40,117 | | 78% | | 22,537 | | 2058% | | 1,859 |
| Other assets | | 23,399 | | 0% | | 23,483 | | -2% | | 23,798 |
| Total assets | | $ 1,300,100 | | -4% | | $ 1,361,035 | | -10% | | $ 1,451,299 |
| | | | | | | | | | | |
| Liabilities: | | | | | | | | | | |
| Deposits | | $ 1,174,020 | | 0% | | $ 1,172,178 | | 2% | | $ 1,147,278 |
| Other borrowed funds | | 84,029 | | -23% | | 109,456 | | -45% | | 151,571 |
| Borrowing related to investment in real estate joint venture | | 24,500 | | 0% | | 24,500 | | 5% | | 23,404 |
| Accounts payable and other liabilities | | 2,725 | | -52% | | 5,644 | | -39% | | 4,461 |
| Advances by borrowers for taxes and insurance | | 348 | | 102% | | 172 | | -6% | | 372 |
| Deferred compensation | | 1,701 | | -1% | | 1,726 | | -11% | | 1,905 |
| Total liabilities | | $ 1,287,323 | | -2% | | $ 1,313,676 | | -3% | | $ 1,328,991 |
| | | | | | | | | | | |
| Stockholders' equity: | | | | | | | | | | |
| Serial preferred 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; | | | | | | | | | |
| 11,995,504, 11,994,945, and 11,960,371 shares outstanding | | 11,996 | | 0% | | 11,995 | | 0% | | 11,960 |
| Additional paid-in capital | | 51,167 | | 0% | | 51,155 | | 0% | | 51,086 |
| Retained earnings (deficit) | | (52,482) | | 202% | | (17,368) | | -189% | | 59,115 |
| Accumulated other comprehensive income (loss) | | 1,992 | | 37% | | 1,458 | | -20020% | | (10) |
| Noncontrolling interests | | 104 | | -13% | | 119 | | -34% | | 157 |
| Total stockholders' equity | | 12,777 | | -73% | | 47,359 | | -90% | | 122,308 |
| Total liabilities and stockholders' equity | | $ 1,300,100 | | -4% | | $ 1,361,035 | | -10% | | $ 1,451,299 |
| | | | | | | | | | | |
| Intangible assets: | | | | | | | | | | |
| Goodwill | | $ - | | N/A | | $ - | | -100% | | $ 545 |
| Mortgage servicing asset | | 153 | | -3% | | 158 | | -35% | | 235 |
| Total intangible assets | | $ 153 | | -3% | | $ 158 | | -80% | | $ 780 |
| | | | | | | | | | | |
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HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
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LOANS (unaudited) (in 000s) | Sept 30, 2009 | | | June 30, 2009 | | | Sept 30, 2008 | |
| 1-4 Mortgage | | | | | | | | |
| 1-4 Family residential | $ 144,603 | | | $ 153,005 | | | $ 157,502 | |
| 1-4 Family construction | 18,169 | | | 21,396 | | | 37,877 | |
| Participations sold | (32,683) | | | (34,006) | | | (50,198) | |
| Subtotal | 130,089 | | | 140,395 | | | 145,181 | |
| | | | | | | | | |
| Commercial land development | 137,030 | | | 171,198 | | | 177,600 | |
| Commercial construction | 136,214 | | | 183,579 | | | 339,774 | |
| Multi family residential | 57,190 | | | 55,180 | | | 44,522 | |
| Commercial real estate | 278,346 | | | 278,928 | | | 286,728 | |
| Commercial loans | 176,368 | | | 193,307 | | | 207,348 | |
| Home equity secured | 52,418 | | | 54,387 | | | 56,047 | |
| Other consumer loans | 6,337 | | | 9,301 | | | 8,075 | |
| Subtotal | 843,903 | | | 945,880 | | | 1,120,094 | |
| Subtotal | 973,992 | | | 1,086,275 | | | 1,265,275 | |
| Less: | | | | | | | | |
| Reserve for loan losses | (35,941) | | | (51,499) | | | (25,579) | |
| Net loans receivable | $ 938,051 | | | $ 1,034,776 | | | $ 1,239,696 | |
| | | | | | | | | |
| Net residential loans | $ 128,628 | 14% | | $ 136,680 | 13% | | $ 143,555 | 12% |
| Net commercial loans | 167,936 | 18% | | 182,117 | 18% | | 202,271 | 16% |
| Net commercial real estate loans | 583,689 | 62% | | 655,616 | 63% | | 831,123 | 67% |
| Net consumer loans | 57,798 | 6% | | 60,363 | 6% | | 62,747 | 5% |
| | $ 938,051 | 100% | | $ 1,034,776 | 100% | | $ 1,239,696 | 100% |
| | | | | | | | | |
| | | | | | | | | |
DEPOSITS (unaudited) (in 000s) | Sept 30, 2009 | | | June 30, 2009 | | | Sept 30, 2008 | |
| Core Deposits | | | | | | | | |
| Savings | $ 15,977 | 1% | | $ 15,980 | 1% | | $ 18,135 | 2% |
| Checking | 83,920 | 7% | | 81,349 | 7% | | 75,633 | 6% |
| Checking - non interest bearing | 93,679 | 8% | | 92,988 | 8% | | 65,365 | 6% |
| Money market | 114,941 | 10% | | 125,586 | 11% | | 179,714 | 16% |
| Certificates of Deposit under $100,000 | 361,326 | 31% | | 353,910 | 30% | | 289,945 | 25% |
| Subtotal | 669,843 | 57% | | 669,813 | 57% | | 628,792 | 55% |
| | | | | | | | | |
| Other Deposits | | | | | | | | |
| Certificates of Deposit $100,000 and above | 315,838 | 27% | | 290,440 | 25% | | 283,015 | 24% |
| Brokered Certificates of Deposit | 188,339 | 16% | | 211,925 | 18% | | 235,471 | 21% |
| Total Other Deposits | 504,177 | 43% | | 502,365 | 43% | | 518,486 | 45% |
| | | | | | | | | |
| Total | $ 1,174,020 | 100% | | $ 1,172,178 | 100% | | $ 1,147,278 | 100% |
| | | | | | | | | |
| WEIGHTED AVERAGE INTEREST RATES: | Quarter Ended | | Quarter Ended | | Quarter Ended | | Six Months Ended | | Six Months Ended |
| (unaudited) | | Sept 30, 2009 | | June 30, 2009 | | Sept 30, 2008 | | Sept 30, 2009 | | Sept 30, 2008 |
| Yield on loans | 5.10% | | 4.96% | | 6.36% | | 5.03% | | 6.50% |
| Yield on investments | 1.55% | | 1.91% | | 4.05% | | 1.72% | | 4.18% |
| Yield on interest-earning assets | 4.49% | | 4.53% | | 6.20% | | 4.51% | | 6.34% |
| | | | | | | | | | | |
| Cost of deposits | 2.69% | | 2.76% | | 3.04% | | 2.73% | | 3.14% |
| Cost of borrowings | 2.34% | | 2.31% | | 2.92% | | 2.33% | | 2.89% |
| Cost of interest-bearing liabilities | 2.66% | | 2.72% | | 3.02% | | 2.69% | | 3.10% |
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HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
Page 9
| AVERAGE BALANCES | Quarter Ended | | Quarter Ended | | Quarter Ended | | Six Months Ended | | Six Months Ended |
| (unaudited) (in 000s) | Sept 30, 2009 | | June 30, 2009 | | Sept 30, 2008 | | Sept 30, 2009 | | Sept 30, 2008 |
| Loans | | $ 1,004,674 | | $ 1,104,524 | | $ 1,246,410 | | $ 1,054,599 | | $ 1,239,101 |
| Investments | | 210,467 | | 180,972 | | 93,757 | | 195,719 | | 91,388 |
| Total interest-earning assets | 1,215,141 | | 1,285,496 | | 1,340,167 | | 1,250,318 | | 1,330,489 |
| | | | | | | | | | | |
| Deposits | | 1,177,285 | | 1,196,743 | | 1,118,799 | | 1,187,014 | | 1,087,478 |
| Borrowings | | 119,698 | | 125,627 | | 182,656 | | 122,663 | | 202,563 |
| Total interest-bearing liabilities | $ 1,296,983 | | $ 1,322,370 | | $ 1,301,455 | | $ 1,309,677 | | $ 1,290,041 |
| | | | | | | | | | | |
| Average assets | $ 1,330,567 | | $ 1,414,503 | | $ 1,449,475 | | $ 1,376,369 | | $ 1,430,376 |
| Average stockholders' equity | $ 30,068 | | $ 70,192 | | $ 124,790 | | $ 51,054 | | $ 125,966 |
| CONSOLIDATED FINANCIAL RATIOS | Quarter Ended | | Quarter Ended | | Quarter Ended | | Six Months Ended | | Six Months Ended | |
| (unaudited) | | Sept 30, 2009 | | June 30, 2009 | | Sept 30, 2008 | | Sept 30, 2009 | | Sept 30, 2008 | |
| Return on average assets | -10.56% | | -12.92% | | -1.27% | | -11.74% | | -0.36% | |
| Return on average equity | -467.13% | | -260.43% | | -14.76% | | -316.59% | | -4.10% | |
| Efficiency ratio | 263.02% | | 201.10% | | 64.49% | | 228.15% | | 60.15% | |
| Net interest spread | 1.82% | | 1.81% | | 3.17% | | 1.82% | | 3.24% | |
| Net interest margin | 1.64% | | 1.73% | | 3.26% | | 1.69% | | 3.33% | |
| Equity-to-assets ratio | 0.98% | | 3.48% | | 8.43% | | | | | |
| Book value per share | $ 1.07 | | $ 3.95 | | $ 10.23 | | | | | |
| Tangible book value per share | $ 1.05 | | $ 3.94 | | $ 10.16 | | | | | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| RESERVE FOR LOAN LOSSES | Quarter Ended | | Quarter Ended | | Quarter Ended | | Six Months Ended | | Six Months Ended | |
| (unaudited) (dollars in 000s) | Sept 30, 2009 | | June 30, 2009 | | Sept 30, 2008 | | Sept 30, 2009 | | Sept 30, 2008 | |
| Balance at beginning of period | $ 51,499 | | $ 38,981 | | $ 19,149 | | $ 38,981 | | $ 19,114 | |
| Provision for loan losses | 29,000 | | 35,521 | | 12,000 | | 64,521 | | 15,000 | |
| Charge offs - net of recoveries | (44,558) | | (23,003) | | (5,570) | | (67,561) | | (8,535) | |
| Balance at end of period | $ 35,941 | | $ 51,499 | | $ 25,579 | | $ 35,941 | | $ 25,579 | |
| Reserves/Gross Loans Receivable | 3.69% | | 4.74% | | 2.02% | | | | | |
| Reserves/Net Loans Receivable | 3.83% | | 4.98% | | 2.06% | | | | | |
| | | | | | | | | | | | |
| NON-PERFORMING ASSETS | | | | | | | | | | |
| (unaudited) (dollars in 000s) | Sept 30, 2009 | | June 30, 2009 | | Sept 30, 2008 | | | | | |
| Accruing loans - 90 days past due | $ 47 | | $ 14 | | $ 589 | | | | | |
| Non-accrual loans | 88,242 | | 115,894 | | 77,781 | | | | | |
| Total non-performing loans | $ 88,289 | | $ 115,908 | | $ 78,370 | | | | | |
| Total non-performing loans/net loans | 9.41% | | 11.20% | | 6.32% | | | | | |
| Real estate owned | $ 40,117 | | $ 22,537 | | $ 1,859 | | | | | |
| Total non-performing assets | $ 128,406 | | $ 138,445 | | $ 80,229 | | | | | |
| Total non-performing assets/total assets | 9.88% | | 10.17% | | 5.53% | | | | | |
| Troubled debt restructured loans | $ 29,188 | | $ 29,039 | | $ - | | | | | |
(more)
HRZB Reports Second Quarter Fiscal 2010 Results
November 9, 2009
Page 10
| NON-PERFORMING ASSETS | | | | | | | | |
| (unaudited) (dollars in 000s) | Whatcom | Skagit | Snohomish | King | Pierce | Other | Total | Percent |
| | | | | | | | | |
| 1-4 Family residential | $ 3,056 | $ - | $ 62 | $ - | $ 1,990 | $ - | $ 5,108 | 4% |
| 1-4 Family construction | - | 253 | 191 | - | 544 | - | 988 | 1% |
| Subtotal | 3,056 | 253 | 253 | - | 2,534 | - | 6,096 | 5% |
| | | | | | | | | |
| Commercial land development | 7,119 | 162 | 25,110 | 3,773 | 8,426 | 12,047 | 56,637 | 44% |
| Commercial construction | 296 | 212 | 5,348 | 12,042 | 18,923 | 2,396 | 39,217 | 31% |
| Multi family residential | - | - | - | - | - | - | - | 0% |
| Commercial real estate | 1,990 | 5,148 | 11,831 | - | 2,094 | - | 21,063 | 16% |
| Commercial loans | 1 | 719 | 2,735 | - | 148 | - | 3,603 | 3% |
| Home equity secured | 85 | 82 | - | - | 1,620 | - | 1,787 | 1% |
| Other consumer loans | 3 | - | - | - | - | - | 3 | 0% |
| Subtotal | 9,494 | 6,323 | 45,024 | 15,815 | 31,211 | 14,443 | 122,310 | 95% |
| | | | | | | | | |
| Total non-performing assets | $ 12,550 | $ 6,576 | $ 45,277 | $ 15,815 | $ 33,745 | $ 14,443 | $ 128,406 | 100% |
| | | | | | | | | |
| Percent of total non-performing | | | | | | | | |
| assets | 10% | 5% | 35% | 13% | 26% | 11% | 100% | |
