Exhibit 99.1
Harrington West Announces Financial Results for the June 2008 Quarter
SOLVANG, Calif.--(BUSINESS WIRE)--Harrington West Financial Group, Inc. (Nasdaq:HWFG), the holding company for Los Padres Bank, FSB (LPB) and its division, Harrington Bank, today announced a $131 thousand loss or 2 cents per share on a diluted basis in the June 2008 quarter compared to $1.2 million or 21 cents per diluted share, respectively, in the June 2007 quarter. For the first six months of 2008, HWFG reported a loss of $3.4 million or 58 cents per diluted share compared to net income of $3.1 million or 54 cents per diluted share in the same period a year ago. The net loss for the first six months of 2008 was due to a net mark-to-market after-tax loss of $4.5 million on HWFG’s AAA-rated commercial mortgage backed securities (CMBS) total rate of return (TROR) swaps, CMBS securities, related hedges, and other securities, which occurred in the March 2008 quarter. These losses resulted as spreads on mortgage securities widened greatly and prices declined due to the extremely adverse liquidity and credit conditions. In the June 2008 quarter, the remaining CMBS related positions and hedges of borrowings for CMBS were fully disposed of at an after-tax gain of $1.3 million, as spreads partially recovered by early June.
Los Padres Bank remained well capitalized at June 30, 2008 by federal regulations. On April 23, 2008, HWFG completed its previously announced private placement of common stock, raising $4.3 million in proceeds by selling 550 thousand shares at $7.75 per share. $2.2 million of this offering closed as of March 31, 2008, and $2.1 million closed on April 23, 2008, after receiving regulatory approval for a rebuttal of control filing. Book value per share was $6.83 at June 30, 2008 compared to $6.96 at March 31, 2008. Book value reflects the net loss for the period plus the net changes in the mark-to-market values of HWFG’s available for sale securities portfolio and LIBOR-based cash flow hedges.
HWFG’s Board of Directors has temporarily suspended the regular quarterly common stock dividend to build capital levels. The Board will re-evaluate this decision quarterly, based on income trends and the success of its initiatives to increase capital ratios with an emphasis on limited dilution through selected asset reduction and margin expansion strategies.
Financial Performance Analysis
The net loss in the June 2008 quarter of $131 thousand was comprised of the following:
- $1.1 million of core banking income after-tax (net interest income after provision for loan losses plus banking fee income less operating expense),
- $1.3 million net after-tax gain on the disposition of all of HWFG’s CMBS, CMBS derivatives, and hedges of their related borrowings,
- $653 thousand after-tax gain on both the sale of HWFG’s real estate investment in Hawaii and the sale of $16.0 million of single-family mortgage loans,
- $1.6 million after-tax write-down of real estate owned, and
- $1.5 million after-tax other-than-temporary impairment loss on securities available for sale.
These financial results are detailed as follows:
Net Interest Income
Net interest income was $7.3 million in the June 2008 quarter compared to $7.6 million in the June 2007 quarter and $7.7 million in the March 2008 quarter. Net interest margin in the June 2008 quarter was 2.37% compared to 2.60% and 2.85% in the March 2008 and June 2007 quarter, respectively. The decline in net interest income and margin in the June 2008 quarter and for the first six months of 2008 can be attributed to the short-term lag between the re-pricing of HWFG’s Prime and LIBOR based loans and securities and the re-pricing of its certificate of deposit (CD) accounts. So far in 2008, Prime and LIBOR rates have declined by approximately 2.25% on approximately $550 million of loans and securities, while over $600 million of HWFG’s CD’s re-price throughout 2008. Furthermore, the rotation for part of the June 2008 quarter from off balance sheet AAA-rated CMBS TROR swaps to on balance sheet AAA-rated CMBS securities resulted in a temporary dilution of net interest margin from the addition of lower margin leverage. HWFG estimates that approximately half of the net interest margin decline in the June 2008 quarter of 23 bps results from the temporary leverage in AAA-rated CMBS securities (on balance sheet) rather than CMBS TROR swaps (off balance sheet), and the other half of the decline is related to the lag in re-pricing of floating rate loans and securities relative to CD's. HWFG expects improvement in net interest margin in the latter half of 2008 as the full effect of the CD repricing is realized and a positive mix change results from the reduction of securities.
Banking Fees
Banking fee and other income was $935 thousand in the June 2008 quarter compared to $1.1 and $1.0 million in the June 2007 and March 2008 quarters, respectively. This decline in the June 2008 quarter was due to a lower crediting (interest) rate and total return (which has since rebounded in the September 2008 quarter) on its cash surrender value of life insurance investment, and lower mortgage brokerage fees in the weak mortgage banking environment. Deposit and Harrington Wealth Management fees continued to grow from the comparable quarters. A summary of banking fee and other income is illustrated in the following chart:
| Banking Fee & Other Income |
| (Dollars in thousands) |
| |
| | June 2008
Quarter | | June 2007
Quarter | | %
Change | | | June 2008 YTD | | June 2007
YTD | | %
Change | |
| Banking Fee Type | | | | | | | | | | | |
| Mortgage Brokerage Fee, Prepayment Penalties & Other Loan Fees | $ | 188 | | $ | 270 | | (30.4 | %) | | $ | 335 | | $ | 510 | | (34.3 | %) |
| Deposit, Other Retail Banking Fees & Other Fee Income | | 442 | | | 413 | | 7.0 | % | | | 882 | | | 809 | | 9.0 | % |
| Harrington Wealth Management Fees | | 256 | | | 241 | | 6.2 | % | | | 509 | | | 478 | | 6.5 | % |
| Increase in Cash Surrender Value of Life Insurance, net | | 49 | | | 206 | | (76.2 | %) | | | 242 | | | 407 | | (40.5 | %) |
| Total Banking Fee & Other Income | $ | 935 | | $ | 1,130 | | (17.3 | %) | | $ | 1,968 | | $ | 2,204 | | (10.7 | %) |
Operating Expenses
Operating expenses were controlled in the June 2008 quarter at $6.1 million compared to $5.7 million in the June 2007 quarter and $6.1 million in the March 2008 quarter. Operating expenses were virtually unchanged from the March 2008 quarter, as incentive and benefit compensation was reduced, and the deferral of loan costs increased with the nature and size of the loan production. These benefits were offset by the full staffing of the new Surprise, Arizona banking center and its related costs, as well as higher real estate owned (REO) expenses. For the first six months of 2008, operating expenses were $12.2 million compared to $11.4 million in the same period in 2007. The increase in expenses for the year-to-date period is attributed to increases in FDIC insurance expense as Los Padres Bank’s insurance premium credit was fully used, other insurance costs, start-up and operating costs for the Surprise banking center, and expenses to maintain and manage its REO.
Loans
Net loan balances were $802.5 million at June 30, 2008, compared to $799.1 million and $759.4 million at March 31, 2008 and June 30, 2007, respectively. In the June 2008 quarter, HWFG sold $16.0 million of low spread earning single family mortgage loans for a $255 thousand gain. The loan portfolio, net of these sold loans, grew $20.1 million in the June 2008 quarter. HWFG has curtailed acquisition and development lending in the current 2008 quarter, given the current real estate environment, and has increased loan spreads, based on its credit analysis and the current level of market spreads. The trends in the loan portfolio are shown in the following table:
| | HWFG Net Loan Growth and Mix | |
| | (Dollars in millions) | |
| | | |
| | June 30, 2008 | | December 31, 2007 | | June 30, 2007 | |
| Loan Type | | Total | | % of Total | | Total | | % of Total | | Total | | % of Total | |
| Commercial Real Estate | | $ | | 269.6 | | | 33.2 | % | | $ | | 266.3 | | | 33.6 | % | | $ | | 249.7 | | | 32.6 | % | |
| Multi-family Real Estate | | | | 90.3 | | | 11.1 | % | | | | 82.7 | | | 10.4 | % | | | | 81.6 | | | 10.6 | % | |
| Construction (1) | | | | 139.6 | | | 17.2 | % | | | | 126.5 | | | 16.0 | % | | | | 126.1 | | | 16.4 | % | |
| Single-family Real Estate | | | | 119.0 | | | 14.7 | % | | | | 125.5 | | | 15.9 | % | | | | 114.4 | | | 14.9 | % | |
| Commercial and Industrial Loans | | | | 118.2 | | | 14.6 | % | | | | 117.8 | | | 14.9 | % | | | | 119.3 | | | 15.5 | % | |
| Unimproved Land | | | | 45.5 | | | 5.6 | % | | | | 45.3 | | | 5.7 | % | | | | 49.4 | | | 6.4 | % | |
| Consumer Loans | | | | 26.0 | | | 3.2 | % | | | | 24.5 | | | 3.1 | % | | | | 24.5 | | | 3.2 | % | |
| Other Loans (2) | | | | 3.2 | | | 0.4 | % | | | | 2.8 | | | 0.4 | % | | | | 2.8 | | | 0.4 | % | |
| Total Gross Loans | | | | 811.4 | | | 100.0 | % | | | | 791.4 | | | 100.0 | % | | | | 767.8 | | | 100.0 | % | |
| Allowance for loan loss | | | | (6.8 | ) | | | | | | (6.4 | ) | | | | | | (6.1 | ) | | | |
| Deferred fees | | | | (1.6 | ) | | | | | | (1.9 | ) | | | | | | (1.9 | ) | | | |
| Discounts/Premiums | | | | (0.5 | ) | | | | | | (0.5 | ) | | | | | | (0.4 | ) | | | |
| Net Loans Receivable | | $ | | 802.5 | | | | | $ | | 782.6 | | | | | $ | | 759.4 | | | | |
| | | | | | | | | | | | | | | | | | | | | | |
(1) Includes loans collateralized by residential, commercial and land properties. (2) Includes loans collateralized by deposits and consumer line of credit loans. |
Asset Quality
The level and nature of classified loans remained relatively stable at June 30, 2008 compared to March 31, 2008. The total pool of classified loans has ranged from $7 to $16 million over the last several quarters, with $11.0 million in non-accrual loans and real-estate owned (REO) at June 30, 2008 compared to $12.0 million at March 31, 2008 and $3.3 million at December 31, 2007. During the June 2008 quarter, $6.7 million of HWFG’s non-accrual loans migrated to REO and were written down by $2.6 million to $4.1 million, leaving $6.9 million in non-accrual loans. Of this write-down, $2.5 million pertains to a group of single family rental properties (with a $4.9 million loan balance at foreclosure) in the Kansas City metro in low to moderate income areas that were neglected by the borrower. Upon acquisition of the properties, HWFG has taken aggressive management action to refurbish selected properties and increase rental income for future sale of the properties. In the June 2008 quarter, HWFG recorded specific and general valuation allowances for loan losses of $400 thousand, bringing the allowance for loan losses to $6.8 million, or .85% of loans.
Deposits
Retail and commercial deposits (net of California State CD’s of $75.6 million and Brokered CD’s of $30.1 million) were $794.0 million at June 30, 2008 compared to $804.6 million and $770.9 million at March 31, 2008 and June 30, 2007, respectively. Retail and commercial deposits decreased by $10.6 million or 1.3% in the June 2008 quarter, as HWFG sought to re-price its maturing Certificates of Deposit (CD) at attractive rates and rotate CD accounts to its PowerUp program to increase interest margin in future periods. The PowerUp program combines a checking account requiring an automatic transaction with an attractively priced money market account and other relationship benefits. The PowerUp account had $133.5 million in balances at June 30, 2008, up $46.7 million in the quarter. The cost of all deposits was 3.2% at June 30, 2008, down 52 bps for the June 2008 quarter and 100 bps for the year-to-date period.
In May 2008, HWFG opened its Surprise, Arizona banking center, the third center in the Phoenix metro and the seventeenth throughout all of its markets. HWFG has two parcels for the future development of banking centers in the Phoenix metro in Gilbert, Arizona and the Deer Valley Airpark. The development of these banking centers in the future will be dependent upon HWFG’s financial performance and the entitlement requirements.
Investments
HWFG’s available for sale (AFS) investment portfolio was $290.0 million at June 30, 2008 compared to $331.4 million at March 31, 2008 and $351.5 million at December 31, 2007. By the end of the June 2008 quarter, HWFG sold all of its CMBS securities and related CMBS total rate of return swaps and hedges as spreads tightened by early June. This reduction coupled with quarterly pay-down of its other mortgage securities of approximately $15 million accounted for the decline in the AFS portfolio in the June 2008 quarter. HWFG analyzes the mortgage portfolio’s performance to reasonably determine whether all principal and interest can be earned over the life of the securities. This analysis indicates that the portfolio, despite the weak housing environment, is performing. The portfolio remains highly rated with over 78% of the portfolio rated AA or higher by all agencies rating the securities. In the June quarter, however, $17 million of mortgage securities were downgraded by the rating agencies with these securities having at least one of three ratings below investment grade, raising the total of securities in this category to $24 million. As a result of the downgrades and based on current guidance, 7 securities with a book value of $6.6 million were determined to be other than temporarily impaired and written down by $2.4 million. HWFG continues to believe the market prices of its mortgage securities portfolio do not reflect the expected cash flow performance, and the mark-to-market loss reflected in equity of approximately $4.50 per share will recover to a material extent as spreads tighten and/or principal is returned at par. However, a further severe weakening of the real estate markets could alter this expectation, and therefore, no assurances can be given to the extent of any recoveries or further mark- to-market changes.
Closing Comments
In commenting on the June 2008 quarter, Craig J. Cerny, Chairman and CEO, stated “The banking environment and credit markets remain very challenging but HWFG made strides in the quarter to return the Company to profitability, reduce the volatility of earnings from derivative CMBS mortgage investments, and reduced the investment portfolio to increase capital levels. Management is focused on reducing deposit costs and building core deposits to increase its net interest margin, while it aggressively manages credit risk and any problem assets presented by the current environment. We believe these steps will help to improve core profitability and capital levels over future quarters, while we continue to evaluate alternatives to increase capital ratios with an emphasis on limited dilution.”
Harrington West Financial Group, Inc. is a $1.2 billion, diversified, financial institution holding company for Los Padres Bank and its division Harrington Bank. HWFG operates 17 full service banking offices on the central coast of California, Scottsdale, Arizona, and the Kansas City metro. The Company also owns Harrington Wealth Management Company, a trust and investment management company with $182.8 million in assets under management or custody.
This Release includes "forward-looking statements" within the meaning of Section 27A of the Securities Act. All of the statements contained in the Release, other than statements of historical fact, should be considered forward-looking statements, including, but not limited to, those concerning (i) the Company's strategies, objectives and plans for expansion of its operations, products and services, and growth of its portfolio of loans, investments and deposits, (ii) the Company's beliefs and expectations regarding actions that may be taken by regulatory authorities having oversight of the operation, (iii) the Company's beliefs as to the adequacy of its existing and anticipated allowances for loan and real estate losses, (iv) the Company's beliefs and expectations concerning future operating results, (v) the Company’s beliefs and expectations regarding the future performance of the real estate or mortgage markets, and (vi) other factors referenced in the Company’s filings with the Securities and Exchange Commission. Although the Company believes the expectations reflected in those forward-looking statements are reasonable, it can give no assurance that those expectations will prove to have been correct. Investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are not intended to give any assurance as to future results. The Company undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) |
| | | |
(In thousands, except per share data) | |
| |
| | Quarter Ended | Six Months Ended |
| | Jun. 30, 2008 | Jun. 30, 2007 | Jun. 30, 2008 | Jun. 30, 2007 |
| | | | | | | | | |
| Interest income | | $ | 18,457 | | $ | 19,314 | | $ | 38,022 | | $ | 38,633 | |
| Interest expense | | | 11,195 | | | 11,690 | | | 23,046 | | | 23,330 | |
| Net interest income | | | 7,262 | | | 7,624 | | | 14,976 | | | 15,303 | |
| Provision for loan losses | | | 400 | | | 100 | | | 900 | | | 200 | |
Net interest income after provision for loan losses | | | | | |
| | 6,862 | | | 7,524 | | | 14,076 | | | 15,103 | |
| Non-interest income: | | | | | |
| Gain/loss on sale of AFS | | | (295 | ) | | (1,004 | ) | | 1,107 | | | (1,004 | ) |
| Income (loss) from trading assets | | | 6 | | | 1 | | | (8,663 | ) | | 6 | |
| Other-than-temporary loss | | | (2,412 | ) | | - | | | (2,482 | ) | | - | |
| Gain on termination of cash flow hedge | | | 2,338 | | | - | | | 2,338 | | | - | |
| Loss on write-down of real estate owned | | | (2,603 | ) | | - | | | (2,603 | ) | | - | |
| Other gain | | | 1,048 | | | - | | | 1,049 | | | - | |
| Increase in cash surrender value of insurance | | | | | |
| | | 49 | | | 206 | | | 242 | | | 407 | |
| Banking fee & other income | | | 886 | | | 924 | | | 1,726 | | | 1,797 | |
| | Non-interest income | | | (983 | ) | | 127 | | | (7,286 | ) | | 1,206 | |
| Non-interest Expense: | | | | | |
| Salaries and employee benefits | | | 3,261 | | | 3,235 | | | 6,797 | | | 6,511 | |
| Premises and equipment | | | 1,023 | | | 969 | | | 2,016 | | | 1,918 | |
| Insurance premiums | | | 227 | | | 86 | | | 439 | | | 171 | |
| Marketing | | | 143 | | | 117 | | | 239 | | | 231 | |
| Computer services | | | 290 | | | 228 | | | 546 | | | 448 | |
| Professional fees | | | 170 | | | 204 | | | 305 | | | 466 | |
| Office expenses and supplies | | | 218 | | | 205 | | | 427 | | | 418 | |
| Other | | | | 752 | | | 703 | | | 1,425 | | | 1,281 | |
| Non-interest expense | | | 6,084 | | | 5,747 | | | 12,194 | | | 11,444 | |
| Income (loss) before income taxes | | | (205 | ) | | 1,904 | | | (5,404 | ) | | 4,865 | |
| Provision for income tax expense (benefit) | | | (74 | ) | | 708 | | | (2,027 | ) | | 1,813 | |
| Net income (loss) | | $ | (131 | ) | $ | 1,196 | | $ | (3,377 | ) | $ | 3,052 | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| Per share: | | | | | | |
| Net income - basic | | $ | (0.02 | ) | $ | 0.22 | | $ | (0.58 | ) | $ | 0.55 | |
| Net income - diluted | | $ | (0.02 | ) | $ | 0.21 | | $ | (0.58 | ) | $ | 0.54 | |
| Weighted average shares used in Basic EPS calculation | | | | | |
| | 6,131,243 | | | 5,546,653 | | | 5,860,739 | | | 5,531,530 | |
| Weighted average shares used in Diluted EPS calculation | | | | | |
| | 6,131,243 | | | 5,653,321 | | | 5,860,739 | | | 5,643,337 | |
| Cash dividends per share paid | | $ | 0.07 | | $ | 0.43 | | $ | 0.20 | | $ | 0.55 | |
| Book value at period-end | | $ | 6.83 | | $ | 12.42 | | $ | 6.83 | | $ | 12.42 | |
| Tangible Book Value at period end | | $ | 5.84 | | $ | 11.28 | | $ | 5.84 | | $ | 11.28 | |
| Ending shares | | | 6,131,243 | | | 5,546,653 | | | 6,131,243 | | | 5,546,653 | |
| | | | | | | | |
| Financial ratios | | | | | |
| Return on average assets | | | (0.04 | %) | | 0.43 | % | | (0.55 | %) | | 0.54 | % |
| Return on average equity | | | (1.16 | %) | | 6.86 | % | | (14.78 | %) | | 8.87 | % |
| Average equity to average assets (leverage ratio) | | | | | |
| | 3.60 | % | | 6.21 | % | | 3.69 | % | | 6.11 | % |
| Net interest margin | | | 2.37 | % | | 2.85 | % | | 2.48 | % | | 2.84 | % |
| Efficiency ratio | | | 74.22 | % | | 65.65 | % | | 71.97 | % | | 65.37 | % |
| | | | | | | | | | | | | |
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) | |
| |
(In thousands, except per share data) | |
| |
| | Quarter Ended | | Six Months Ended | |
| | Jun. 30, 2008 | | Jun. 30, 2007 | | Jun. 30, 2008 | | Jun. 30, 2007 | |
| | | | | | | | | |
Period averages | | | | | | | | | |
| Total assets | | $ | | 1,264,534 | | $ | | 1,127,078 | | $ | | 1,245,729 | | $ | | 1,135,955 | |
| Securities and trading assets | | $ | | 351,089 | | $ | | 286,013 | | $ | | 346,534 | | $ | | 293,613 | |
| Total loans, net of allowance | | $ | | 805,870 | | $ | | 760,855 | | $ | | 797,473 | | $ | | 760,559 | |
| Total earning assets | | $ | | 1,227,326 | | $ | | 1,074,255 | | $ | | 1,207,128 | | $ | | 1,082,042 | |
| Total deposits | | $ | | 895,029 | | $ | | 737,673 | | $ | | 876,123 | | $ | | 734,904 | |
| Total equity | | $ | | 45,503 | | $ | | 69,959 | | $ | | 45,954 | | $ | | 69,423 | |
| | | | | | | | | | | | | | | | | |
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) |
| | | | |
(In thousands, except per share data) |
| |
| | | Quarter Ended |
| Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, |
| | | 2008 | 2008 | 2007 | 2007 | 2007 |
| | | | | | | |
| Interest income | $ | 18,457 | | $ | 19,565 | | $ | 21,249 | | $ | 20,242 | | $ | 19,314 | |
| Interest expense | | 11,195 | | | 11,850 | | | 12,740 | | | 12,200 | | | 11,690 | |
| Net interest income | | 7,262 | | | 7,715 | | | 8,509 | | | 8,042 | | | 7,624 | |
| Provision for loan losses | | 400 | | | 500 | | | 250 | | | 200 | | | 100 | |
| Net interest income after provision for loan losses | | | | | |
| 6,862 | | | 7,215 | | | 8,259 | | | 7,842 | | | 7,524 | |
| Non-interest income: | | | | | |
| Gain/(loss) on sale of AFS | | (295 | ) | | 1,402 | | | - | | | - | | | (1,004 | ) |
| Income (loss) from trading assets | | 6 | | | (8,670 | ) | | (2,424 | ) | | (378 | ) | | 1 | |
| Other-than-temporary loss | | (2,412 | ) | | (70 | ) | | (247 | ) | | (1,906 | ) | | - | |
| Gain on termination of cash flow hedge | | 2,338 | | | - | | | - | | | - | | | - | |
| Loss on write-down of real estate owned | | (2,603 | ) | | - | | | - | | | - | | | - | |
| Other gain (loss) | | 1,048 | | | 1 | | | (1 | ) | | - | | | - | |
| Increase in cash surrender value of insurance | | | | | |
| | 49 | | | 193 | | | 257 | | | 209 | | | 206 | |
| Banking fee & other income | | 886 | | | 840 | | | 870 | | | 787 | | | 924 | |
| | Non-interest income | | (983 | ) | | (6,304 | ) | | (1,545 | ) | | (1,288 | ) | | 127 | |
| Non-interest Expense: | | | | | |
| Salaries and employee benefits | | 3,261 | | | 3,536 | | | 3,341 | | | 3,308 | | | 3,235 | |
| Premises and equipment | | 1,023 | | | 993 | | | 983 | | | 975 | | | 969 | |
| Insurance premiums | | 227 | | | 212 | | | 83 | | | 83 | | | 86 | |
| Marketing | | 143 | | | 96 | | | 105 | | | 84 | | | 117 | |
| Computer services | | 290 | | | 256 | | | 263 | | | 239 | | | 228 | |
| Professional fees | | 170 | | | 135 | | | 132 | | | 162 | | | 204 | |
| Office expenses and supplies | | 218 | | | 209 | | | 178 | | | 195 | | | 205 | |
| Other | | 752 | | | 673 | | | 649 | | | 703 | | | 703 | |
| Non-interest expense | | 6,084 | | | 6,110 | | | 5,734 | | | 5,749 | | | 5,747 | |
| Income (loss) before income taxes | | (205 | ) | | (5,199 | ) | | 980 | | | 805 | | | 1,904 | |
| Provision for income tax expense (benefit) | | (74 | ) | | (1,953 | ) | | 361 | | | 307 | | | 708 | |
| Net income (loss) | $ | (131 | ) | $ | (3,246 | ) | $ | 619 | | $ | 498 | | $ | 1,196 | |
| | | | | | | |
| | | | | | | |
| Per share: | | | | | |
| Net income - basic | $ | (0.02 | ) | $ | (0.58 | ) | $ | 0.11 | | $ | 0.09 | | $ | 0.22 | |
| Net income - diluted | $ | (0.02 | ) | $ | (0.58 | ) | $ | 0.11 | | $ | 0.09 | | $ | 0.21 | |
| Weighted average shares used in Basic EPS calculation | | | | | |
| 6,131,243 | | | 5,590,236 | | | 5,553,612 | | | 5,550,353 | | | 5,546,653 | |
| Weighted average shares used in Diluted EPS calculation | | | | | |
| 6,131,243 | | | 5,590,236 | | | 5,618,784 | | | 5,642,512 | | | 5,653,321 | |
| Cash dividends per share paid | $ | 0.07 | | $ | 0.13 | | $ | 0.13 | | $ | - | | $ | 0.43 | |
| Book value at period-end | $ | 6.83 | | $ | 6.96 | | $ | 9.91 | | $ | 11.42 | | $ | 12.42 | |
| Tangible Book value at period-end | $ | 5.84 | | $ | 5.96 | | $ | 8.79 | | $ | 10.30 | | $ | 11.28 | |
| Ending shares | | 6,131,243 | | | 6,131,243 | | | 5,554,003 | | | 5,552,803 | | | 5,546,653 | |
| | | | | | | |
| Financial ratios | | | | | |
| Return on average assets | | (0.04 | %) | | (1.06 | %) | | 0.20 | % | | 0.17 | % | | 0.43 | % |
| Return on average equity | | (1.16 | %) | | (28.14 | %) | | 4.09 | % | | 2.97 | % | | 6.86 | % |
| Average equity to average assets (leverage ratio) | | | | | |
| 3.60 | % | | 3.78 | % | | 4.93 | % | | 5.75 | % | | 6.21 | % |
| Net interest margin | | 2.37 | % | | 2.60 | % | | 2.94 | % | | 2.95 | % | | 2.85 | % |
| Efficiency ratio | | 74.22 | % | | 69.84 | % | | 59.51 | % | | 63.61 | % | | 65.65 | % |
| | | | | | | | | | | | | | | |
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) |
| | | | | | | | |
(In thousands, except per share data) |
| |
| | | Quarter Ended |
| Jun. 30, | Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, |
| | | 2008 | 2008 | 2007 | 2007 | 2007 |
| | | | | | | |
| Period averages | | | | | |
| Total assets | $ | 1,264,534 | | $ | 1,226,937 | | $ | 1,217,491 | | $ | 1,155,236 | | $ | 1,127,078 | |
| Securities and trading assets | $ | 351,089 | | $ | 341,984 | | $ | 360,894 | | $ | 311,510 | | $ | 286,013 | |
| Total loans, net of allowance | $ | 805,870 | | $ | 789,079 | | $ | 771,991 | | $ | 763,000 | | $ | 760,855 | |
| Total earning assets | $ | 1,227,326 | | $ | 1,186,936 | | $ | 1,169,141 | | $ | 1,103,848 | | $ | 1,074,255 | |
| Total deposits | $ | 895,029 | | $ | 857,215 | | $ | 819,257 | | $ | 794,246 | | $ | 737,673 | |
| Total equity | $ | 45,503 | | $ | 46,402 | | $ | 60,000 | | $ | 66,430 | | $ | 69,959 | |
| | | | | | | |
| Balance sheet at period-end | | | | | |
| Cash and due from banks | $ | 18,636 | | $ | 24,599 | | $ | 14,433 | | $ | 17,331 | | $ | 18,524 | |
| Investments and fed funds sold | | 291,022 | | | 335,206 | | | 353,829 | | | 356,677 | | | 287,357 | |
| Loans held for sale | | - | | | 16,654 | | | - | | | - | | | - | |
| Loans, before allowance for loan losses | | 809,385 | | | 789,366 | | | 789,072 | | | 772,340 | | | 765,506 | |
| Allowance for loan losses | | (6,847 | ) | | (6,945 | ) | | (6,446 | ) | | (6,308 | ) | | (6,113 | ) |
| Goodwill and core deposit intangibles | | 6,074 | | | 6,136 | | | 6,198 | | | 6,244 | | | 6,307 | |
| Other assets | | 83,405 | | | 79,052 | | | 66,316 | | | 62,009 | | | 58,925 | |
| Total assets | $ | 1,201,675 | | $ | 1,244,068 | | $ | 1,223,402 | | $ | 1,208,293 | | $ | 1,130,506 | |
| | | | | | | |
| Interest bearing deposits | $ | 855,900 | | $ | 831,033 | | $ | 786,263 | | $ | 778,465 | | $ | 723,652 | |
| Non-interest bearing deposits | | 43,813 | | | 49,000 | | | 50,070 | | | 47,222 | | | 47,248 | |
| Other borrowings | | 252,125 | | | 308,148 | | | 322,755 | | | 311,501 | | | 282,931 | |
| Other liabilities | | 7,939 | | | 13,237 | | | 9,272 | | | 7,667 | | | 7,805 | |
| Shareholders' equity | | 41,898 | | | 42,650 | | | 55,042 | | | 63,438 | | | 68,870 | |
| Total liabilities and shareholders' equity | $ | 1,201,675 | | $ | 1,244,068 | | $ | 1,223,402 | | $ | 1,208,293 | | $ | 1,130,506 | |
| | | | | | | |
Asset quality and capital - at period-end | | | | | |
| Non-accrual loans &/or past due 90 days | $ | 6,891 | | $ | 12,032 | | $ | 3,283 | | $ | 2,162 | | $ | 1,948 | |
| Other real estate owned, net | | 4,135 | | | - | | | - | | | - | | | - | |
| Total non-performing assets | $ | 11,026 | | $ | 12,032 | | $ | 3,283 | | $ | 2,162 | | $ | 1,948 | |
| | | | | | | |
| Allowance for losses to loans | | 0.85 | % | | 0.86 | % | | 0.82 | % | | 0.82 | % | | 0.80 | % |
| Non-performing loans to total loans | | 1.36 | % | | 1.49 | % | | 0.42 | % | | 0.28 | % | | 0.25 | % |
| Non-performing assets to total assets | | 0.92 | % | | 0.97 | % | | 0.27 | % | | 0.18 | % | | 0.17 | % |
| | | | | | | | | | | | | | | |
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) |
| | | | | | | |
| | | | Three Months Ended | | Three Months Ended |
| (In thousands) | June 30, 2008 | | June 30, 2007 |
| | | | Balance | | Income | | Rate (6) | | Balance | | Income | | Rate (6) |
| Interest earning assets: | | | | | | | | | | | |
| Loans receivable (1) | $ | 805,870 | | $ | 13,671 | | 6.80 | % | | $ | 760,855 | | $ | 15,080 | | 7.94 | % |
| FHLB stock | | 14,236 | | | 210 | | 5.93 | % | | | 13,689 | | | 149 | | 4.37 | % |
| Securities and trading account assets (2) | | 386,999 | | | 4,529 | | 4.68 | % | | | 287,358 | | | 4,011 | | 5.58 | % |
| Cash and cash equivalents (3) | | 20,221 | | | 47 | | 0.93 | % | | | 12,353 | | | 74 | | 2.40 | % |
| | Total interest earning assets | | 1,227,326 | | | 18,457 | | 6.02 | % | | | 1,074,255 | | | 19,314 | | 7.20 | % |
| Non-interest-earning assets | | 37,208 | | | | | | | 52,823 | | | | |
| | | Total assets | $ | 1,264,534 | | | | | | $ | 1,127,078 | | | | |
| | | | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | |
| | NOW and money market accounts | $ | 164,232 | | $ | 1,042 | | 2.55 | % | | $ | 100,540 | | $ | 665 | | 2.65 | % |
| | Passbook accounts and certificates of deposit | | | | | | | | | | | |
| | | 686,836 | | | 6,787 | | 3.97 | % | | | 589,713 | | | 7,134 | | 4.85 | % |
| | | Total deposits | | 851,068 | | | 7,829 | | 3.70 | % | | | 690,253 | | | 7,799 | | 4.53 | % |
| | | | | | | | | | | | | | |
| FHLB advances (4) | | 245,013 | | | 2,710 | | 4.45 | % | | | 233,363 | | | 2,946 | | 5.06 | % |
| Reverse repurchase agreements | | 41,614 | | | 311 | | 2.96 | % | | | 54,467 | | | 426 | | 3.09 | % |
| Other borrowings (5) | | 25,774 | | | 345 | | 5.30 | % | | | 25,774 | | | 519 | | 7.97 | % |
| | | Total interest-bearing liabilities | | 1,163,469 | | | 11,195 | | 3.85 | % | | | 1,003,857 | | | 11,690 | | 4.65 | % |
| Non-interest-bearing deposits | | 43,961 | | | | | | | 47,420 | | | | |
| Non-interest-bearing liabilities | | 11,601 | | | | | | | 5,842 | | | | |
| | | Total liabilities | | 1,219,031 | | | | | | | 1,057,119 | | | | |
| Stockholders' equity | | 45,503 | | | | | | | 69,959 | | | | |
| Total liabilities and stockholders' equity | $ | 1,264,534 | | | | | | $ | 1,127,078 | | | | |
| Net interest-earning assets (liabilities) | $ | 63,857 | | | | | | $ | 70,398 | | | | |
| | | | | | | | | | | | | | |
| Net interest income/interest rate spread | | | $ | 7,262 | | 2.17 | % | | | | $ | 7,624 | | 2.55 | % |
| Net interest margin | | | | | 2.37 | % | | | | | | 2.85 | % |
| Ratio of average interest-earning assets to average interest-bearing liabilities | | | | | | | | | | | |
| | | | 105.49 | % | | | | | | 107.01 | % |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| 1) Balance includes non-accrual loans. Income includes fees earned on loans originated and accretion of deferred loan fees. |
| |
| 2) Consists of securities classified as available for sale, held to maturity and trading account assets. Excludes SFAS 115 adjustments to fair value, which are included in other non-interest earning assets. |
|
| |
| 3) Consists of cash due from banks and federal funds sold. |
| |
| 4) Interest on FHLB advances is net of hedging costs. Hedging costs include interest income and expense and ineffectiveness adjustments for cash flow hedges. The Company uses pay-fixed, receive floating LIBOR swaps to hedge the short term repricing characteristics of the floating FHLB advances. |
|
|
| |
| 5) Consists of other subordinated debt. |
| |
| 6) Annualized. |
| |
Consolidated Financial Data – Harrington West Financial Group, Inc. (unaudited) |
| | | | | | | |
| | | | Six Months Ended | | Six Months Ended |
| (In thousands) | June 30, 2008 | | June 30, 2007 |
| | | | Balance | | Income | | Rate (6) | | Balance | | Income | | Rate (6) |
| Interest earning assets: | | | | | | | | | | | |
| Loans receivable (1) | $ 797,473 | | $ 27,871 | | 7.00% | | $ 760,559 | | $ 30,073 | | 7.93% |
| FHLB stock | 13,356 | | 375 | | 5.65% | | 14,166 | | 367 | | 5.22% |
| Securities and trading account assets (2) | 377,308 | | 9,654 | | 5.12% | | 295,095 | | 8,043 | | 5.45% |
| Cash and cash equivalents (3) | 18,991 | | 122 | | 1.29% | | 12,222 | | 150 | | 2.47% |
| | Total interest earning assets | 1,207,128 | | 38,022 | | 6.31% | | 1,082,042 | | 38,633 | | 7.16% |
| Non-interest-earning assets | 38,601 | | | | | | 53,913 | | | | |
| | | Total assets | $ 1,245,729 | | | | | | $ 1,135,955 | | | | |
| | | | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | |
| | NOW and money market accounts | $ 145,089 | | $ 1,870 | | 2.59% | | $ 102,259 | | $ 1,350 | | 2.66% |
| | Passbook accounts and certificates | | | | | | | | | | | |
| | | of deposit | 686,328 | | 14,442 | | 4.23% | | 584,238 | | 14,027 | | 4.84% |
| | | Total deposits | 831,417 | | 16,312 | | 3.95% | | 686,497 | | 15,377 | | 4.52% |
| | | | | | | | | | | | | | |
| FHLB advances (4) | 239,935 | | 5,257 | | 4.41% | | 238,674 | | 6,005 | | 5.07% |
| Reverse repurchase agreements | 45,975 | | 699 | | 3.01% | | 59,533 | | 915 | | 3.06% |
| Other borrowings (5) | 25,774 | | 778 | | 5.97% | | 25,774 | | 1,033 | | 7.97% |
| | | Total interest-bearing liabilities | 1,143,101 | | 23,046 | | 4.04% | | 1,010,478 | | 23,330 | | 4.63% |
| Non-interest-bearing deposits | 44,706 | | | | | | 48,407 | | | | |
| Non-interest-bearing liabilities | 11,968 | | | | | | 7,647 | | | | |
| | | Total liabilities | 1,199,775 | | | | | | 1,066,532 | | | | |
| Stockholders' equity | 45,954 | | | | | | 69,423 | | | | |
| Total liabilities and stockholders' equity | $ 1,245,729 | | | | | | $ 1,135,955 | | | | |
| Net interest-earning assets (liabilities) | $ 64,027 | | | | | | $ 71,564 | | | | |
| | | | | | | | | | | | | | |
| Net interest income/interest rate spread | | | $ 14,976 | | 2.27% | | | | $ 15,303 | | 2.53% |
| Net interest margin | | | | | 2.48% | | | | | | 2.84% |
| Ratio of average interest-earning assets to | | | | | | | | | | | |
| average interest-bearing liabilities | | | | | 105.60% | | | | | | 107.08% |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
| 1) Balance includes non-accrual loans. Income includes fees earned on loans originated and accretion of deferred loan fees. |
| |
| 2) Consists of securities classified as available for sale, held to maturity and trading account assets. Excludes SFAS 115 adjustments to fair value, which are included in other non-interest earning assets. |
|
| |
| 3) Consists of cash due from banks and federal funds sold. |
| |
| 4) Interest on FHLB advances is net of hedging costs. Hedging costs include interest income and expense and ineffectiveness adjustments for cash flow hedges. The Company uses pay-fixed, receive floating LIBOR swaps to hedge the short term repricing characteristics of the floating FHLB advances. |
| |
| 5) Consists of other subordinated debt. |
| |
| 6) Annualized. |
CONTACT:
Harrington West Financial Group, Inc.
For information contact:
Craig J. Cerny 480/596-6555
For share transfer information contact:
Lisa F. Watkins 805/688-6644
