Exhibit 99.1
PRESS RELEASE
PacWest Bancorp
(NASDAQ: PACW)
Contact: | Matthew P. Wagner | Victor R. Santoro |
| Chief Executive Officer | Executive Vice President and |
| 10250 Constellation Boulevard | Chief Financial Officer |
| Suite 1640 | 10250 Constellation Boulevard |
| Los Angeles, CA 90067 | Suite 1640 |
|
| Los Angeles, CA 90067 |
Phone: | 310-728-1020 | 310-728-1021 |
Fax: | 310-201-0498 | 310-201-0498 |
FOR IMMEDIATE RELEASE | April 16, 2009 |
PACWEST BANCORP ANNOUNCES RESULTS FOR THE FIRST QUARTER OF 2009
—Net Earnings of $1.4 Million or $0.05 Per Diluted Share—
—Core Deposits Grow $108.2 Million—
—Total Tangible Capital Ratio Increases To 9.67%—
—Credit Loss Reserve at 1.95% of Net Loans—
—Board of Directors Declares Quarterly Dividend of $0.01 Per Share—
San Diego, California . . . PacWest Bancorp (Nasdaq: PACW) today announced net earnings for the first quarter of 2009 were $1.4 million, or $0.05 per diluted share, compared to net earnings of $9.6 million, or $0.34 per diluted share, for the fourth quarter of 2008. The decrease in net earnings compared to the fourth quarter of 2008 resulted mostly from lower net interest income, higher provision for credit losses and higher noninterest expense.
The Company also announced today that on April 15, 2009, its Board of Directors declared a quarterly cash dividend of $0.01 per common share payable on May 29, 2009, to stockholders of record at the close of business on May 15, 2009. The dividend reduction from $0.32 per share, most recently paid on February 27, 2009, reflects the Company’s focus on preserving its high capital position in the current economic environment.
1
FIRST QUARTER RESULTS
|
| First |
| Fourth |
| ||
In thousands, except per share data and percentages |
| Quarter |
| Quarter |
| ||
|
|
|
|
|
| ||
Net earnings |
| $ | 1,445 |
| $ | 9,621 |
|
Diluted earnings per share |
| $ | 0.05 |
| $ | 0.34 |
|
Return on average assets |
| 0.13 | % | 0.85 | % | ||
Return on average equity |
| 1.27 | % | 10.15 | % | ||
Efficiency ratio |
| 71.0 | % | 59.1 | % | ||
Net interest margin |
| 4.71 | % | 4.77 | % | ||
|
|
|
|
|
| ||
At quarter end: |
|
|
|
|
| ||
Allowance for credit losses to loans, net of unearned income |
| 1.95 | % | 1.72 | % | ||
Tangible common equity (TCE) ratios: |
|
|
|
|
| ||
Consolidated Company |
| 9.67 | % | 7.54 | % | ||
Pacific Western Bank |
| 10.54 | % | 10.23 | % |
The decrease in net earnings of $8.2 million between the first quarter of 2009 and the fourth quarter of 2008 is due mainly to the combination of lower net interest income ($1.1 million after tax), higher provision for credit losses ($3.0 million after tax), and higher noninterest expense ($3.0 million after tax). The increase in the efficiency ratio in the first quarter of 2009 compared to the fourth quarter of 2008 was due mostly to the combined effects of lower net interest income, lower noninterest income and higher noninterest expenses. The increase in the capital ratios was due to the January 14, 2009 closing of the $100.0 million common stock investment of CapGen Financial Group.
Matt Wagner, Chief Executive Officer, commented, “During the first quarter we closed the CapGen investment, integrated the acquired deposit base of Security Pacific Bank and continued to focus on core deposit growth and managing our loan portfolio. As we continue to generate earnings in the current environment, our core profitability allows us to withstand a healthy credit loss provision and also maintain high capital levels.”
Mr. Wagner continued, “We are actively lending in our marketplace and are pleased with the Bank’s new loan generation and continued advances on existing commitments. Given the current environment, we remain cautious and vigilant in exercising our conservative underwriting standards. While we expect economic challenges to continue, our core deposit growth, increased capital position, and earnings power position us well.”
Vic Santoro, Executive Vice President and Chief Financial Officer, stated, “Both our positive earnings and the CapGen investment further enhanced our capital levels such that the Company’s and Pacific Western Bank’s TCE ratios were a strong 9.67% and 10.54% at March 31, 2009. To position the Bank in response to the current interest rate environment, we continued to runoff the acquired brokered and higher-cost Security Pacific Bank deposits while at the same time building on-balance sheet liquidity. More notable, however, was the $108 million core deposit growth during the quarter, especially in the noninterest-bearing category. The combined strength of our capital levels and credit loss reserve allows us to take advantage of opportunities as they arise.”
2
BALANCE SHEET CHANGES
Total loans, net of unearned income, decreased $63.6 million on a net basis to $3.9 billion during the first quarter of 2009. Although the loan portfolio shows a net decrease during the quarter, the Bank was active in its lending markets with advances on existing loan commitments and new loans totaling $237.7 million.
Total deposits decreased $74.4 million during the first quarter. When brokered and money desk deposits are excluded, however, our core deposits increased $108.2 million, with $58.4 million of such increase in the noninterest-bearing category. At March 31, 2009, noninterest-bearing deposits totaled $1.2 billion and represented 36.0% of total deposits. Brokered and money desk deposits totaled $167.4 million at March 31, 2009 compared to $350.0 million at December 31, 2008. The March 31 balance includes $44.7 million of brokered and money desk deposits acquired in the November 2008 Security Pacific Bank (SPB) deposit acquisition and $122.7 million of Pacific Western Bank wholesale CDs.
NET INTEREST INCOME
Net interest income totaled $48.8 million for the first quarter of 2009 compared to $50.7 million for the fourth quarter of 2008. Loan interest income declined $4.7 million in the first quarter due to lower average balances and increased nonaccrual loans. Interest expense decreased $3.1 million in the first quarter and resulted from rate cuts on existing accounts and runoff of the higher-rate SPB deposits.
NET INTEREST MARGIN
Our net interest margin for the first quarter of 2009 was 4.71%, a decrease of 6 basis points when compared to the fourth quarter of 2008 net interest margin of 4.77%. The decrease in the net interest margin is due mostly to lower investment and loan yields offset somewhat by lower deposit cost. The investment securities portfolio yield declined during the first quarter of 2009 to 3.79% due mostly to lower income on FHLB stock. The lower loan yield is due to the level of market interest rates and higher nonaccrual loans. Deposit cost was favorably impacted during the first quarter of 2009 by rate reductions put into effect and runoff of higher-cost SPB deposits.
The net interest margin was 4.81% in January, 4.68% in February and 4.64% in March. The yield on average loans was 6.37% for the first quarter of 2009 compared to 6.69% for the fourth quarter of 2008; the loan yield for the month of March was 6.22%. Net reversals of interest income on nonaccrual loans negatively impacted both loan yield and net interest margin for the month of March by 16 basis points.
Deposit pricing led to a 34 basis point decrease in the cost of interest bearing deposits to 1.71% for the first quarter and a 21 basis point decrease in our all-in deposit cost to 1.12%. On a monthly basis, all-in deposit costs were 1.18% in January, 1.13% in February and 1.05% in March. Our relatively low cost of deposits is driven by demand deposit balances, which averaged 34% of average total deposits during the first quarter of 2009. The overall cost of interest-bearing liabilities was 2.13% for the first quarter of 2009, down 32 basis points from the fourth quarter of 2008 due mostly to lower deposit costs. The cost of interest-bearing liabilities decreased to 1.99% in March 2009 from 2.42% in December 2008.
3
NONINTEREST INCOME
Noninterest income for the first quarter of 2009 totaled $6.1 million compared to $6.5 million in the fourth quarter of 2008. The decrease is due to lower deposit account service charges, lower commissions and fees, and lower appreciation of Bank-owned life insurance policies (BOLI). Deposit account service charges decreased due to fewer activity charges, including NSF fees. Other commissions and fees were lower due to a decrease in loan servicing income, other loan income and foreign exchange fees. The decrease in BOLI income was due to a lower crediting rate earned during the first quarter when compared to the fourth quarter of 2008 and lower BOLI asset balances. Other noninterest income increased $332,000 due to $536,000 of life insurance proceeds received during the quarter of which approximately $383,000 is not taxable.
NONINTEREST EXPENSE
Noninterest expense increased $5.2 million to $39.0 million for first quarter of 2009 from $33.8 million for the fourth quarter of 2008. As described below, noninterest expense in the fourth quarter of 2008 was reduced by $4.5 million related to a performance-based restricted stock amortization adjustment. When this item is excluded, the first quarter increase in total noninterest expense was $650,000 when compared to the fourth quarter. Such increase is due mostly to the reorganization and lease charges of $1.2 million related to a first quarter 2009 reduction in force, premises costs related to the planned second quarter closing of two banking offices and additional rent for a discontinued acquired office. Insurance and assessments increased $450,000 quarter over quarter due to increased FDIC insurance costs. OREO costs increased $249,000 due to the combination of lower gain on sale of OREO, higher write-downs and lower operating costs.
Noninterest expense includes amortization of time-based and performance-based restricted stock, which is included in compensation, and intangible asset amortization. Amortization of time-based and performance-based restricted stock totaled $2.2 million for the first quarter of 2009. In the fourth quarter of 2008 we reversed $4.5 million of accumulated amortization for certain performance stock awards when we concluded it was improbable that the financial targets required for vesting of such awards would be met. Excluding the performance-based restricted stock amortization adjustment, restricted stock amortization totaled $1.8 million for the fourth quarter of 2008. Amortization expense for all time-based and performance-based restricted stock awards is estimated to be $8.1 million for 2009. Intangible asset amortization totaled $2.2 million for the first quarter of 2009 and $2.3 million for the fourth quarter of 2008 and is estimated to be $9.2 million for 2009. The 2009 estimates of both restricted stock award expense and intangible asset amortization are subject to change.
TAXES
The effective tax rate for the first quarter of 2009 was 23.3% compared to 34.3% for the fourth quarter of 2008. The effective tax rates are generally lower than the blended Federal and State statutory rate of 42.0% due to tax credits on certain investments and other tax-exempt income. The first quarter of 2009 effective tax rate was lower than that of the prior quarter as the proportion of tax-exempt income to pretax income was higher in the first quarter of 2009.
CREDIT QUALITY
The credit loss provision for the first quarter of 2009 of $14.0 million was based on our reserve methodology and considered, among other factors, net charge-offs, the level and trends of classified, criticized, past due and nonaccrual loans, general market conditions and portfolio concentrations. At March 31, 2009, the allowance for credit losses totaled $76.6 million and represented 1.95% of loans net of unearned income compared to $68.8 million and 1.72% at the end of December.
4
Our loan portfolio continues to experience pressure from the economic trends in southern California as indicated by the level of net charge-offs and the increases in nonaccrual loans and nonperforming assets. We expect that such pressures will continue in 2009.
Nonperforming assets include nonaccrual loans and other real estate owned (OREO) and totaled $186.2 million at the end of March compared to $104.8 million at the end of December. OREO totaled $47.7 million at the end of March compared to $41.3 million at the end of December. The increase in OREO is due to 7 additions totaling $12.0 million, an increase in the valuation reserve of $535,000 and 6 sales totaling $5.1 million. The ratio of nonperforming assets to loans and OREO increased to 4.69% at March 31, 2009 from 2.60% at December 31, 2008.
The types of loans included in the nonaccrual and accruing loans past due between 30 and 89 days categories as of March 31, 2009 and December 31, 2008 follow:
|
| Nonaccrual loans |
| Accruing and over 30 |
| ||||||||
|
| Balance as of |
| ||||||||||
Loan category |
| 3/31/09 |
| 12/31/08 |
| 3/31/09 |
| 12/31/08 |
| ||||
|
| (Dollars in thousands) |
| ||||||||||
|
|
|
|
|
|
|
|
|
| ||||
SBA 504 |
| $ | 3,869 |
| $ | 5,308 |
| $ | 2,699 |
| $ | — |
|
SBA 7(a) and Express |
| 10,173 |
| 7,544 |
| 738 |
| 2,330 |
| ||||
Residential construction |
| 44,778 |
| 14,738 |
| 22,893 |
| 5,342 |
| ||||
Commercial real estate |
| 22,782 |
| 11,081 |
| 13,442 |
| 26,674 |
| ||||
Commercial construction |
| 14,875 |
| 1,298 |
| — |
| 3,956 |
| ||||
Commercial |
| 18,255 |
| 20,325 |
| 2,543 |
| 2,298 |
| ||||
Commercial land |
| 1,641 |
| — |
| — |
| 142 |
| ||||
Residential other |
| 18,896 |
| 86 |
| 743 |
| 457 |
| ||||
Residential land |
| 1,257 |
| 1,665 |
| — |
| — |
| ||||
Residential multifamily |
| 301 |
| — |
| — |
| 3,292 |
| ||||
Other, including foreign |
| 1,670 |
| 1,425 |
| 640 |
| 1,133 |
| ||||
|
| $ | 138,497 |
| $ | 63,470 |
| $ | 43,698 |
| $ | 45,624 |
|
The net increase in nonaccrual loans during the first quarter is composed of additions of $99.8 million, repayments and payoffs of $9.7 million, charge-offs of $3.3 million, and foreclosures of $11.8 million. The increase in nonaccrual loans included 7 residential construction loans totaling $36.6 million, 5 commercial real estate loans totaling $16.8 million, 3 commercial construction loans totaling $14.3 million, and 2 loans in the residential other category totaling $18.0 million. Approximately $13.2 million of the increase in the nonaccrual residential construction category was attributed to three borrowers involved in the construction of high-end single-family residences located in the Desert region. In addition, a $19.4 million 28-unit condo project with excess land for future development located in Costa Mesa was placed in nonaccrual status. The increase in nonaccrual commercial real estate loans was centered in 3 properties: one office building for $3.6 million located in the Inland Empire and a retail project for $4.9 million and a golf course for $4.6 million located in the Desert region. The nonaccrual commercial
5
construction loan increase is related to 2 completed office buildings in the Desert region and a 4-unit industrial building located in southeast San Diego. The increase in the nonaccrual residential other loan category relates to one borrowing relationship with an underlying collateral pool that includes two lots and a home located on a high-end country club and two high-end coastal homes in San Diego County.
Included in the nonaccrual loans at the end of March are $14.0 million of SBA related loans representing 10% of total nonaccrual loans at that date. The SBA 504 loans are secured by first trust deeds on owner-occupied business real estate with loan-to-value ratios of generally 50% or less at the time of origination. SBA 7(a) loans are secured by borrowers’ real estate and/or business assets and are covered by an SBA guarantee of up to 85% of the loan amount. The SBA guaranteed portion on the 7(a) and Express loans shown above is $8.4 million. At March 31, 2009, the SBA loan portfolio totaled $161.8 million and was composed of $119.9 million in SBA 504 loans and $41.9 million in SBA 7(a) and Express loans.
Loans accruing and over 30 days past due decreased $1.9 million during the first quarter The increase in the residential construction category is due mostly to a $13.1 million loan for an in-fill single family lot development loan in the South Bay area of Los Angeles County and a project for an $8.8 million high-end single family residential development in the Desert region. The decline in the commercial real estate category is due mostly to two loans for $8.6 million transferred to nonaccrual status and one loan for $4.4 million that was brought current.
Our exposure to nonowner-occupied residential construction loans was reduced by $2.6 million during the first quarter to $231.1 million at the end of March. The reduction was due mostly to a combination of foreclosures and charge-offs of $6.5 million and net advances for new loans and existing commitments of $3.9 million.
Twelve nonowner-occupied residential construction loans totaling approximately $40.3 million were on nonaccrual status at March 31, 2009. The details of the nonowner-occupied residential construction loan portfolio as of the dates indicated follow:
|
| As of March 31, 2009 |
| As of December 31, 2008 |
| |||||||
Loan Category |
| Balance |
| Number of loans |
| Average loan balance |
| Balance |
| |||
|
| (Dollars in thousands) |
| |||||||||
|
|
|
|
|
|
|
|
|
| |||
Residential land acquisition and development |
| $ | 58,420 |
| 23 |
| $ | 2,540 |
| $ | 57,308 |
|
Residential nonowner-occupied single family |
| 86,574 |
| 30 |
| 2,886 |
| 94,067 |
| |||
Unimproved residential land |
| 48,814 |
| 13 |
| 3,755 |
| 50,163 |
| |||
Residential multifamily |
| 37,341 |
| 10 |
| 3,734 |
| 32,184 |
| |||
|
| $ | 231,149 |
| 76 |
| $ | 3,041 |
| $ | 233,722 |
|
Our largest loan portfolio concentration is the real estate mortgage category, which includes loans secured by commercial and residential real estate. The following table presents our real estate mortgage loan portfolio as of the dates indicated.
6
Loan Category |
| At March 31, 2009 |
| At December 31, 2008 |
| ||
|
| (Dollars in thousand) |
| ||||
Commercial real estate mortgage |
|
|
|
|
| ||
100% owner-occupied |
| $ | 362,428 |
| $ | 376,975 |
|
Nonowner-occupied office building, industrial and warehouse facilities |
| 1,880,215 |
| 1,861,868 |
| ||
Total commercial real estate mortgage |
| 2,242,643 |
| 2,238,843 |
| ||
|
|
|
|
|
| ||
Residential real estate mortgage: |
|
|
|
|
| ||
Multi-family |
| 103,329 |
| 107,377 |
| ||
Single family owner-occupied |
| 91,004 |
| 91,532 |
| ||
Single family nonowner-occupied |
| 45,814 |
| 35,337 |
| ||
Total residential real estate mortgage |
| 240,147 |
| 234,246 |
| ||
Total real estate mortgage |
| $ | 2,482,790 |
| $ | 2,473,089 |
|
REGULATORY CAPITAL MEASURES ARE ABOVE THE WELL-CAPITALIZED MINIMUMS
PacWest and its wholly-owned banking subsidiary, Pacific Western Bank, each remained well capitalized at March 31, 2009 as shown in the following table.
|
| Minimum |
| Actual |
| ||
|
| Well |
| Pacific |
| Company |
|
|
| Capitalized |
| Western |
| Consolidated |
|
Tier 1 leverage capital ratio |
| 5.00 | % | 10.76 | % | 12.67 | % |
Tier 1 risk-based capital ratio |
| 6.00 | % | 11.20 | % | 13.17 | % |
Total risk-based capital |
| 10.00 | % | 12.45 | % | 14.43 | % |
Tangible common equity (TCE) ratio |
| — |
| 10.54 | % | 9.67 | % |
EARNINGS PER SHARE
On January 1, 2009, FSP EITF 03-06-1, Determining Whether Instruments Granted in Share-Based Payment Transactions are Participating Securities became effective for us. This pronouncement clarified that all outstanding unvested share-based payment awards that contain rights to nonforfeitable dividends are considered participating securities and are included in the two-class method of determining basic and diluted earnings per shares. All our unvested restricted stock participates with our common stockholders in dividends. Application of the new standard results in a reduction of net earnings available to common stockholders and lower earnings per share when compared to the previous requirements. The new standard’s effect on both basic and diluted earnings per share for the fourth quarter of 2008 was a reduction of $0.01 to $0.34 from $0.35. There was no effect on the net loss per share for the first quarter of 2008.
7
ABOUT PACWEST BANCORP
PacWest Bancorp is a bank holding company with $4.5 billion in assets as of March 31, 2009, with one wholly-owned banking subsidiary, Pacific Western Bank. Through 61 full-service community banking branches, Pacific Western provides commercial banking services, including real estate, construction and commercial loans, to small and medium-sized businesses. Pacific Western’s branches are located in Los Angeles, Orange, Riverside, San Diego and San Bernardino Counties. Through its subsidiary BFI Business Finance and its divisions First Community Financial and Pacific Western SBA Lending, Pacific Western also provides working capital financing to growing companies located throughout the Southwest, primarily in the states of Arizona, California and Texas. Additional information regarding PacWest Bancorp is available on the Internet at www.pacwestbancorp.com. Information regarding Pacific Western Bank is also available on the Internet at www.pacificwesternbank.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking information about PacWest that is intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of the Company. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, implied or projected by, such forward-looking statements. Risks and uncertainties include, but are not limited to: lower than expected revenues; credit quality deterioration or a pronounced and sustained reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; increased competitive pressure among depository institutions; the Company’s ability to complete future acquisitions, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies within expected time-frames or at all; the possibility that personnel changes will not proceed as planned; the cost of additional capital is more than expected; a change in the interest rate environment reduces interest margins; asset/liability repricing risks and liquidity risks; pending legal matters may take longer or cost more to resolve or may be resolved adversely to the Company; general economic conditions, either nationally or in the market areas in which the Company does or anticipates doing business, are less favorable than expected; environmental conditions, including natural disasters, may disrupt our business, impede our operations, negatively impact the values of collateral securing the Company’s loans or impair the ability of our borrowers to support their debt obligations; the economic and regulatory effects of the continuing war on terrorism and other events of war, including the war in Iraq; legislative or regulatory requirements or changes adversely affecting the Company’s business; and changes in the securities markets; regulatory approvals for any capital activities cannot be obtained on the terms expected or on the anticipated schedule; and, other risks that are described in PacWest’s public filings with the U.S. Securities and Exchange Commission (the “SEC”). If any of these risks or uncertainties materializes or if any of the assumptions underlying such forward-looking statements proves to be incorrect, PacWest’s results could differ materially from those expressed in, implied or projected by such forward-looking statements. PacWest assumes no obligation to update such forward-looking statements.
For a more complete discussion of risks and uncertainties, investors and security holders are urged to read PacWest Bancorp’s annual report on Form 10-K, quarterly reports on Form 10-Q and other reports filed by PacWest with the SEC. The documents filed by PacWest with the SEC may be obtained at PacWest Bancorp’s website at www.pacwestbancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from PacWest by directing a request to: PacWest Bancorp c/o Pacific Western Bank, 275 North Brea Boulevard, Brea, CA 92821. Attention: Investor Relations. Telephone 714-671-6800.
8
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
|
| March 31, |
| Dsecember 31, |
| ||
|
| (In thousands, except share data) |
| ||||
Assets: |
|
|
|
|
| ||
Cash and due from banks |
| $ | 118,009 |
| $ | 100,925 |
|
Federal funds sold |
| — |
| 165 |
| ||
Total cash and cash equivalents |
| 118,009 |
| 101,090 |
| ||
|
|
|
|
|
| ||
Interest-bearing deposits in financial institutions |
| 95,758 |
| 58,780 |
| ||
|
|
|
|
|
| ||
Federal Home Loan Bank stock, at cost |
| 33,782 |
| 33,782 |
| ||
Securities available-for-sale, at estimated fair value |
| 141,106 |
| 121,577 |
| ||
Total securities |
| 174,888 |
| 155,359 |
| ||
|
|
|
|
|
| ||
Loans, net of unearned income |
| 3,924,285 |
| 3,987,891 |
| ||
Allowance for loan losses |
| (71,361 | ) | (63,519 | ) | ||
Net loans |
| 3,852,924 |
| 3,924,372 |
| ||
|
|
|
|
|
| ||
Premises and equipment |
| 24,202 |
| 24,675 |
| ||
Other real estate owned, net |
| 47,673 |
| 41,310 |
| ||
Intangible assets |
| 37,675 |
| 39,922 |
| ||
Cash surrender value of life insurance |
| 66,198 |
| 70,588 |
| ||
Other assets |
| 78,743 |
| 79,406 |
| ||
Total assets |
| $ | 4,496,070 |
| $ | 4,495,502 |
|
|
|
|
|
|
| ||
Liabilities and Stockholders’ Equity: |
|
|
|
|
| ||
Liabilities: |
|
|
|
|
| ||
Noninterest-bearing deposits |
| $ | 1,223,884 |
| $ | 1,165,485 |
|
Interest-bearing deposits |
| 2,176,932 |
| 2,309,730 |
| ||
Total deposits |
| 3,400,816 |
| 3,475,215 |
| ||
|
|
|
|
|
| ||
Accrued interest payable and other liabilities |
| 46,302 |
| 64,567 |
| ||
Borrowings |
| 450,000 |
| 450,000 |
| ||
Subordinated debentures |
| 129,946 |
| 129,994 |
| ||
Total liabilities |
| 4,027,064 |
| 4,119,776 |
| ||
|
|
|
|
|
| ||
Stockholders’ Equity |
| 469,006 |
| 375,726 |
| ||
Total Liabilities and Stockholders’ Equity |
| $ | 4,496,070 |
| $ | 4,495,502 |
|
|
|
|
|
|
| ||
Shares outstanding (including 1,267,405 shares at March 31, 2009 and 1,309,586 shares at December 31, 2008, underlying unvested stock awards) |
| 32,326,505 |
| 28,516,106 |
| ||
|
|
|
|
|
| ||
Tangible book value per share |
| $ | 13.34 |
| $ | 11.78 |
|
Book value per share |
| $ | 14.51 |
| $ | 13.18 |
|
9
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
|
| Quarters Ended |
| |||||||
|
| 3/31/09 |
| 12/31/08 |
| 3/31/08 |
| |||
|
| (In thousands, except per share data) |
| |||||||
Interest income: |
|
|
|
|
|
|
| |||
Interest and fees on loans |
| $ | 61,847 |
| $ | 66,507 |
| $ | 75,653 |
|
Interest on federal funds sold |
| — |
| 75 |
| 40 |
| |||
Interest on time deposits in other financial institutions |
| 61 |
| 176 |
| 3 |
| |||
Interest on investment securities |
| 1,546 |
| 1,707 |
| 1,701 |
| |||
Total interest income |
| 63,454 |
| 68,465 |
| 77,397 |
| |||
|
|
|
|
|
|
|
| |||
Interest expense: |
|
|
|
|
|
|
| |||
Interest expense on deposits |
| 9,320 |
| 11,416 |
| 11,821 |
| |||
Interest expense on borrowings |
| 3,582 |
| 4,217 |
| 5,307 |
| |||
Interest expense on subordinated debentures |
| 1,779 |
| 2,107 |
| 2,409 |
| |||
Total interest expense |
| 14,681 |
| 17,740 |
| 19,537 |
| |||
Net interest income before provision for credit losses |
| 48,773 |
| 50,725 |
| 57,860 |
| |||
Provision for credit losses |
| 14,000 |
| 8,800 |
| 26,000 |
| |||
Net interest income after provision for credit losses |
| 34,773 |
| 41,925 |
| 31,860 |
| |||
|
|
|
|
|
|
|
| |||
Noninterest income: |
|
|
|
|
|
|
| |||
Service charges on deposit accounts |
| 3,149 |
| 3,420 |
| 3,224 |
| |||
Other commissions and fees |
| 1,685 |
| 2,062 |
| 1,519 |
| |||
Gain (loss) on sale of loans |
| — |
| — |
| 269 |
| |||
Increase in cash surrender value of life insurance |
| 439 |
| 584 |
| 587 |
| |||
Other income |
| 808 |
| 476 |
| 870 |
| |||
Total noninterest income |
| 6,081 |
| 6,542 |
| 6,469 |
| |||
|
|
|
|
|
|
|
| |||
Noninterest expense: |
|
|
|
|
|
|
| |||
Compensation |
| 19,331 |
| 15,088 |
| 18,846 |
| |||
Occupancy |
| 6,386 |
| 6,410 |
| 5,870 |
| |||
Data processing |
| 1,628 |
| 1,590 |
| 1,543 |
| |||
Other professional services |
| 1,524 |
| 1,688 |
| 1,415 |
| |||
Business development |
| 725 |
| 789 |
| 756 |
| |||
Communications |
| 693 |
| 766 |
| 824 |
| |||
Insurance and assessments |
| 1,598 |
| 1,148 |
| 540 |
| |||
Other real estate owned, net |
| 997 |
| 748 |
| (26 | ) | |||
Intangible asset amortization |
| 2,247 |
| 2,332 |
| 2,530 |
| |||
Reorganization and lease charges |
| 1,215 |
| — |
| — |
| |||
Goodwill write-off |
| — |
| — |
| 275,000 |
| |||
Other |
| 2,625 |
| 3,260 |
| 2,914 |
| |||
Total noninterest expense |
| 38,969 |
| 33,819 |
| 310,212 |
| |||
(Loss) earnings before income taxes |
| 1,885 |
| 14,648 |
| (271,883 | ) | |||
Income taxes |
| 440 |
| 5,027 |
| 840 |
| |||
Net (loss) earnings |
| $ | 1,445 |
| $ | 9,621 |
| $ | (272,723 | ) |
|
|
|
|
|
|
|
| |||
Per share information |
|
|
|
|
|
|
| |||
(Loss) earnings per share: |
|
|
|
|
|
|
| |||
Basic (loss) earnings per share |
| $ | 0.05 |
| $ | 0.34 |
| $ | (10.05 | ) |
Diluted (loss) earnings per share |
| $ | 0.05 |
| $ | 0.34 |
| $ | (10.05 | ) |
10
UNAUDITED AVERAGE BALANCE SHEETS
|
| Quarters Ended |
| |||||||
|
| 3/31/09 |
| 12/31/08 |
| 3/31/08 |
| |||
|
| (Dollars in thousands) |
| |||||||
Average Assets: |
|
|
|
|
|
|
| |||
Loans, net of unearned income |
| $ | 3,938,322 |
| $ | 3,952,872 |
| $ | 4,019,224 |
|
Investment securities |
| 165,333 |
| 142,494 |
| 143,379 |
| |||
Federal funds sold |
| 260 |
| 29,702 |
| 5,032 |
| |||
Interest-bearing deposits in financial institutions |
| 92,271 |
| 104,800 |
| 324 |
| |||
Average earning assets |
| 4,196,186 |
| 4,229,868 |
| 4,167,959 |
| |||
Other assets |
| 284,628 |
| 274,687 |
| 1,030,130 |
| |||
Average total assets |
| $ | 4,480,814 |
| $ | 4,504,555 |
| $ | 5,198,089 |
|
|
|
|
|
|
|
|
| |||
Average Liabilities and Stockholders’ Equity: |
|
|
|
|
|
|
| |||
Average liabilities |
|
|
|
|
|
|
| |||
Noninterest-bearing deposits |
| $ | 1,163,059 |
| $ | 1,208,085 |
| $ | 1,273,173 |
|
|
|
|
|
|
|
|
| |||
Interest checking |
| 349,908 |
| 338,434 |
| 369,841 |
| |||
Money market accounts |
| 841,410 |
| 858,971 |
| 1,089,672 |
| |||
Savings |
| 123,005 |
| 117,278 |
| 104,905 |
| |||
Time deposits |
| 899,666 |
| 899,264 |
| 413,712 |
| |||
Interest-bearing deposits |
| 2,213,989 |
| 2,213,947 |
| 1,978,130 |
| |||
Average deposits |
| 3,377,048 |
| 3,422,032 |
| 3,251,303 |
| |||
Subordinated debentures |
| 129,975 |
| 130,025 |
| 137,829 |
| |||
Borrowings |
| 451,608 |
| 536,370 |
| 620,349 |
| |||
Other liabilities |
| 61,882 |
| 38,919 |
| 50,207 |
| |||
Average liabilities |
| 4,020,513 |
| 4,127,346 |
| 4,059,688 |
| |||
Average equity |
| 460,301 |
| 377,209 |
| 1,138,401 |
| |||
Average liabilities and stockholders’ equity |
| $ | 4,480,814 |
| $ | 4,504,555 |
| $ | 5,198,089 |
|
|
|
|
|
|
|
|
| |||
Yield Analysis: |
|
|
|
|
|
|
| |||
Average earning assets |
| $ | 4,196,186 |
| $ | 4,229,868 |
| $ | 4,167,959 |
|
Yield |
| 6.13 | % | 6.44 | % | 7.47 | % | |||
Average interest-bearing deposits |
| $ | 2,213,989 |
| $ | 2,213,947 |
| $ | 1,978,130 |
|
Cost |
| 1.71 | % | 2.05 | % | 2.40 | % | |||
Average deposits |
| $ | 3,377,048 |
| $ | 3,422,032 |
| $ | 3,251,303 |
|
Cost |
| 1.12 | % | 1.33 | % | 1.46 | % | |||
Average interest-bearing liabilities |
| $ | 2,795,572 |
| $ | 2,880,342 |
| $ | 2,736,308 |
|
Cost |
| 2.13 | % | 2.45 | % | 2.87 | % | |||
Average subordinated debentures |
| 129,975 |
| 130,025 |
| 137,829 |
| |||
Cost |
| 5.55 | % | 6.45 | % | 7.03 | % | |||
Average borrowings |
| 451,608 |
| 536,370 |
| 620,349 |
| |||
Cost |
| 3.22 | % | 3.13 | % | 3.44 | % | |||
Average interest sensitive liabilities |
| $ | 3,958,631 |
| $ | 4,088,427 |
| $ | 4,009,481 |
|
Cost |
| 1.50 | % | 1.73 | % | 1.96 | % | |||
|
|
|
|
|
|
|
| |||
Interest spread |
| 4.00 | % | 3.99 | % | 4.60 | % | |||
Net interest margin |
| 4.71 | % | 4.77 | % | 5.58 | % |
11
DEPOSITS (unaudited)
|
| As of the Dates Indicated |
| |||||||
|
| 3/31/09 |
| 12/31/08 |
| 3/31/08 |
| |||
|
| (Dollars in thousands) |
| |||||||
Transaction accounts: |
|
|
|
|
|
|
| |||
Demand deposits |
| $ | 1,223,884 |
| $ | 1,165,485 |
| $ | 1,277,302 |
|
Interest checking |
| 359,551 |
| 342,241 |
| 373,145 |
| |||
Total transaction accounts |
| 1,583,435 |
| 1,507,726 |
| 1,650,447 |
| |||
Non-transaction accounts: |
|
|
|
|
|
|
| |||
Money market |
| 890,558 |
| 837,873 |
| 1,165,336 |
| |||
Savings |
| 116,550 |
| 124,603 |
| 100,505 |
| |||
Time deposits under $100,000 |
| 400,084 |
| 611,083 |
| 136,476 |
| |||
Time deposits over $100,000 |
| 410,189 |
| 393,930 |
| 266,379 |
| |||
Total non-transaction accounts |
| 1,817,381 |
| 1,967,489 |
| 1,668,696 |
| |||
Total deposits |
| $ | 3,400,816 |
| $ | 3,475,215 |
| $ | 3,319,143 |
|
LOAN CONCENTRATION (unaudited)
|
| As of the Dates Indicated |
| |||||||||||||
|
| 3/31/09 |
| 12/31/08 |
| 9/30/08 |
| 6/30/08 |
| 3/31/08 * |
| |||||
|
| (Dollars in thousands) |
| |||||||||||||
Loan Category: |
|
|
|
|
|
|
|
|
|
|
| |||||
Domestic: |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
| $ | 779,971 |
| $ | 845,410 |
| $ | 803,717 |
| $ | 833,376 |
| $ | 855,228 |
|
Real estate-construction |
| 583,709 |
| 579,884 |
| 608,968 |
| 623,605 |
| 661,782 |
| |||||
Commercial real estate-mortgage |
| 2,482,790 |
| 2,473,089 |
| 2,437,593 |
| 2,361,529 |
| 2,361,365 |
| |||||
Consumer |
| 38,615 |
| 44,938 |
| 41,671 |
| 47,500 |
| 47,506 |
| |||||
Foreign: |
|
|
|
|
|
|
|
|
|
|
| |||||
Commercial |
| 44,955 |
| 50,918 |
| 49,153 |
| 46,096 |
| 48,737 |
| |||||
Other |
| 2,126 |
| 2,245 |
| 2,323 |
| 1,861 |
| 906 |
| |||||
Total gross loans, including loans held for sale |
| $ | 3,932,166 |
| $ | 3,996,484 |
| $ | 3,943,425 |
| $ | 3,913,967 |
| $ | 3,975,524 |
|
*Commercial and commercial real estate-mortgage categories include loans held for sale.
12
COMPONENTS OF ALLOWANCE FOR CREDIT LOSSES, NONPERFORMING ASSETS AND CREDIT QUALITY MEASURES (Unaudited)
|
| As of the Dates Indicated |
| |||||||
|
| 3/31/09 |
| 12/31/08 |
| 3/31/08 |
| |||
|
| (Dollars in thousands) |
| |||||||
ALLOWANCE FOR CREDIT LOSSES: |
|
|
|
|
|
|
| |||
Allowance for loan losses |
| $ | 71,361 |
| $ | 63,519 |
| $ | 60,199 |
|
Reserve for unfunded loan commitments |
| 5,271 |
| 5,271 |
| 8,671 |
| |||
Allowance for credit losses |
| $ | 76,632 |
| $ | 68,790 |
| $ | 68,870 |
|
|
|
|
|
|
|
|
| |||
NONPERFORMING ASSETS: |
|
|
|
|
|
|
| |||
Nonaccrual loans |
| $ | 138,497 |
| $ | 63,470 |
| $ | 31,955 |
|
Other real estate owned |
| 47,673 |
| 41,310 |
| 6,055 |
| |||
Total nonperforming assets |
| $ | 186,170 |
| $ | 104,780 |
| $ | 38,010 |
|
|
|
|
|
|
|
|
| |||
Allowance for credit losses to loans, net of unearned income |
| 1.95 | % | 1.72 | % | 1.76 | % | |||
Allowance for credit losses to nonaccrual loans |
| 55.33 | % | 108.38 | % | 215.5 | % | |||
Nonperforming assets to total loans, including loans held for sale, and other real estate owned |
| 4.69 | % | 2.60 | % | 0.96 | % | |||
Nonaccrual loans to total loans, including loans held for sale |
| 3.53 | % | 1.59 | % | 0.81 | % |
ALLOWANCE FOR CREDIT LOSSES ROLLFORWARD AND NET CHARGE-OFF MEASUREMENT (unaudited)
|
| As of or for the: |
| |||||||
|
| Quarter Ended |
| Year Ended |
| Quarter Ended |
| |||
|
| 3/31/09 |
| 12/31/08 |
| 3/31/08 |
| |||
|
| (Dollars in thousands) |
| |||||||
Balance at beginning of period |
| $ | 68,790 |
| $ | 61,028 |
| $ | 61,028 |
|
Loans charged-off: |
|
|
|
|
|
|
| |||
Commercial |
| (1,881 | ) | (7,664 | ) | (108 | ) | |||
Real estate-construction |
| (1,572 | ) | (24,998 | ) | (18,335 | ) | |||
Real estate-mortgage |
| (2,738 | ) | (2,617 | ) | (68 | ) | |||
Consumer |
| (216 | ) | (3,947 | ) | (38 | ) | |||
Foreign |
| (368 | ) | (349 | ) | — |
| |||
Total loans charged-off |
| (6,775 | ) | (39,575 | ) | (18,549 | ) | |||
|
|
|
|
|
|
|
| |||
Recoveries on loans charged-off: |
|
|
|
|
|
|
| |||
Commercial |
| 303 |
| 971 |
| 356 |
| |||
Real estate-construction |
| — |
| 88 |
| — |
| |||
Real estate-mortgage |
| 190 |
| 412 |
| 26 |
| |||
Consumer |
| 110 |
| 47 |
| 9 |
| |||
Foreign |
| 14 |
| 19 |
| — |
| |||
Total recoveries on loans charged-off |
| 617 |
| 1,537 |
| 391 |
| |||
Net charge-offs |
| (6,158 | ) | (38,038 | ) | (18,158 | ) | |||
Provision for credit losses |
| 14,000 |
| 45,800 |
| 26,000 |
| |||
Balance at end of period |
| $ | 76,632 |
| $ | 68,790 |
| $ | 68,870 |
|
|
|
|
|
|
|
|
| |||
Annualized net charge-offs to average loans |
| 0.63 | % | 0.96 | % | 1.82 | % |
Contact information:
Matt Wagner, Chief Executive Officer, (310) 728-1020
Vic Santoro, Executive Vice President and CFO, (310) 728-1021
13