March 3, 2008
Edward J. Swotek, Senior Vice President
Immediately
LINCOLN, NE – March 3, 2008 — TierOne Corporation (NASDAQ-GSM: TONE) (“Company”), the holding company for TierOne Bank (“Bank”), reported a net loss of $18.0 million, or $1.05 per diluted share, for the three months ended December 31, 2007 compared to net income of $10.9 million, or $0.63 per diluted share, for the three months ended December 31, 2006.
For the fiscal year ended December 31, 2007, the Company reported a net loss of $12.1 million, or $0.70 per diluted share, compared to net income for the year ended December 31, 2006 of $41.3 million, or $2.41 per diluted share.
The results for the three- and twelve-month periods ended December 31, 2007 were primarily impacted by provisions for loan losses of $38.9 million and $68.1 million recorded for each respective period compared to $1.8 million and $6.1 million for the same periods in 2006. The provisions for loan losses recorded during 2007 were primarily attributable to an increase in nonperforming residential construction, land development and commercial construction loans.
“Unprecedented pressures on the nation’s equity, housing, credit and economic markets in 2007 have significantly impacted much of the financial sector and TierOne has not been immune to these issues,” said Gilbert G. Lundstrom, chairman and chief executive officer. “We have taken a number of steps to address these challenges and will continue to adjust our business model as the current economic conditions warrant.”
For the three months ended December 31, 2007, net interest income totaled $24.9 million, a decrease of 20.1 percent, compared to $31.2 million in net interest income for the comparable period in 2006. Net interest income for the year ended December 31, 2007 declined 7.7 percent to $116.1 million compared to $125.9 million in 2006. The decline in net interest income for the three-month period ended December 31, 2007 was primarily attributable to a reduction in interest income generated by net loan receivables as a result of a declining interest rate environment and increased levels of nonperforming loans. The decline in net interest income for the year ended December 31, 2007 was primarily related to the increased interest expense arising from increased time and core deposit balances and the interest rates paid on these deposits.
Net interest margin and average interest rate spread for the three months ended December 31, 2007 were 3.04 percent and 2.63 percent, respectively, compared to 3.96 percent and 3.56 percent, respectively, for the same period in 2006. For the year ended December 31, 2007, net interest margin and average interest rate spread were 3.58 percent and 3.15 percent, respectively, compared to 4.07 percent and 3.72 percent, respectively, for 2006. The Bank’s increased core deposit balances and interest rates paid combined with the increased levels of nonperforming loans were the primary contributors to lower net interest margins and average interest rate spreads during 2007 as compared to 2006.
Noninterest income for the three months ended December 31, 2007 was $8.5 million, a decrease of 0.8 percent, compared to $8.6 million earned during the same period in 2006. Noninterest income in the fourth quarter of 2007 was positively impacted by a $461,000 increase in deposit and debit card-related fees and service charges combined with a $390,000 increase in gains on loans held for sale. These increases were offset by a quarter-over-quarter reduction in other noninterest income primarily related to a $1.0 million gain on the sale of two Kansas branch offices recorded during the three months ended December 31, 2006.
For the year ended December 31, 2007, total noninterest income amounted to $30.3 million, an increase of 4.3 percent, compared to $29.1 million earned during 2006. The annual increase in noninterest income was primarily attributable to a $1.4 million increase in deposit and debit card-related fees and service charges combined with a $760,000 increase in gains on loans held for sale. These increases in 2007 were offset by a reduction in other noninterest income following a $1.0 million gain on sale of two Kansas branch offices in late 2006.
For the three months ended December 31, 2007, noninterest expense increased 10.8 percent to $22.5 million compared to $20.3 million for the same period in 2006. The quarter-over-quarter increase in noninterest expense was primarily attributable to a $1.0 million increase in legal expenses, a $700,000 charge for the Bank’s proportionate share of potential liabilities in connection with a VISA U.S.A. Inc. antitrust lawsuit, an increase of $434,000 in advertising expenses, $400,000 in expenses related to the proposed acquisition of the Company by CapitalSource Inc. (“CapitalSource”) and an increase of $390,000 in salaries and employee benefits. The fourth quarter increase in noninterest expense was partially reduced by a $1.6 million right-of-offset exercised by the Bank which thereby resulted in a recovery of previously charged-off receivables associated with TransLand Financial Services, Inc. (“TransLand”), a Florida-based mortgage brokerage firm.
Noninterest expense for the year ended December 31, 2007 was $94.5 million, an increase of 15.6 percent, compared to $81.8 million in 2006. Contributing to the increase in annual noninterest expense were increases of $3.2 million in salaries and employee benefits; $3.1 million, net of recoveries, associated with a write-off of receivables due from TransLand; and $1.9 million of expense related to the proposed transaction with CapitalSource.
The Bank maintains a corporate policy of not participating in subprime residential real estate lending or negative amortizing mortgage products. The Office of Thrift Supervision (“OTS”), the Bank’s federal regulatory agency, defines subprime loans as loans to borrowers displaying one or more credit risk characteristics including lending to a borrower with a credit bureau risk score (“FICO”) of 660 or below. Furthermore, the Bank has not participated in collateralized loan obligations (“CLO”), collateralized debt obligations (“CDO”), structured investment vehicles (“SIV”) or asset-backed commercial paper (“ABCP”).
As a result of deteriorating economic conditions in the latter half of 2007, the Company experienced increasing issues with asset quality. At December 31, 2007, nonperforming loans totaled $128.5 million, or 4.32 percent of net loans, compared to $30.1 million, or 0.99 percent of net loans, at December 31, 2006. Nonperforming assets were $134.9 million, or 3.81 percent of total assets, at December 31, 2007 compared to $35.3 million, or 1.03 percent of total assets, at year-end 2006. The increase in 2007 nonperforming loans and assets primarily related to increased levels of nonperforming residential construction, land development and commercial construction loans.
Due to the continued erosion of housing values and increased housing inventory in several markets throughout the country, especially in Florida, the Company began experiencing rising levels of nonperforming residential construction loans. As previously disclosed, the Company has a group of residential construction loans it purchased from TransLand which were primarily located in the Cape Coral area of southwest Florida. In the face of challenging economic conditions, the Bank was able to reduce its total residential construction loan disbursements for TransLand-related homebuyers by 49.1 percent to $58.5 million, prior to recording loan charge-offs, at December 31, 2007 compared to $114.9 million at year-end 2006.
At December 31, 2007, nonperforming residential construction loans totaled $57.7 million of which $26.5 million related to TransLand. During the fourth quarter of 2007, the Bank charged off $25.5 million of TransLand residential construction loans, due in large part to a decline in the estimated fair value of undeveloped residential lots, and set up additional provisions for loan losses relating to the loans acquired from TransLand. To facilitate loan disposition, a team of Bank lending specialists has been assigned to work specifically on TransLand-related loans. These duties have included the coordination of construction activities, arranging financing and the initiation of loan recovery efforts. At the current time, the Bank is also pursuing all available legal remedies against delinquent borrowers.
The Bank’s nonperforming land development loans at December 31, 2007 totaled $38.7 million (consisting of eight residential land development properties) compared to $4.7 million at December 31, 2006. Of the eight nonperforming development properties, three were located in the Las Vegas, Nevada area amounting to $30.4 million, one project in Colorado at $5.7 million, two projects in the Minneapolis, Minnesota area at $2.3 million and two projects in Florida at $300,000. The three Las Vegas properties were added to the nonperforming list in the fourth quarter of 2007. At the current time, the Bank is actively engaged in discussions with the developers or guarantors of these loans for purposes of bringing the loans current or developing workout solutions.
Nonperforming commercial construction loans totaled $19.2 million at December 31, 2007 compared to $50,000 one year ago. The $19.2 million nonperforming commercial construction loans at year-end 2007 consisted of one upscale condominium construction project adjacent to a golf course located in a suburban area of Las Vegas, Nevada. The Bank provided funding to construct 33 units, of which 23 units are under contract for purchase, within the planned 113-unit development. The units funded by the Bank have been completed and the balance of the remaining units are in various stages of construction. Following the builder’s voluntary bankruptcy filing, a trustee was appointed by the court and the trustee is identifying local builders and sales agents to complete the project and sell the remaining units.
Charged-off loans, net of recoveries, were $28.5 million and $32.0 million for the three- and twelve-month periods ended December 31, 2007, respectively, compared to $993,000 and $3.8 million for the same periods in 2006. Included within the loans charged off during the fourth quarter of 2007 were $25.7 million of residential construction loans primarily related to TransLand.
The Company recorded provisions for loan losses of $38.9 million and $68.1 million for the three- and twelve-month periods ended December 31, 2007, respectively, compared to $1.8 million and $6.1 million for the comparable periods in 2006. The Company’s total allowance for loan losses was $66.5 million at December 31, 2007 compared to $33.1 million at year-end 2006. The allowance for loan losses as a percent of net loans was 2.24 percent at December 31, 2007 compared to 1.09 percent one year ago.
In light of current market conditions, the Bank has taken a number of steps related to the realignment of certain credit administration functions, including the addition of personnel with extensive depth and expertise in credit analysis, and continues to tighten credit policies.
Total assets at December 31, 2007 were $3.5 billion, an increase of $107.0 million or 3.1 percent, compared to $3.4 billion at year-end 2006. The year-over-year increase in total assets was primarily attributable to a $154.7 million increase in cash and cash equivalents offset by a $74.0 million decline in net loan receivables.
Total liabilities increased $114.3 million, or 3.7 percent, to $3.2 billion at December 31, 2007 compared to $3.1 billion one year ago. The increase in 2007 liabilities primarily resulted from a $378.2 million increase in total deposits offset by a $273.1 million decline in FHLBank advances and other borrowings. In anticipation of a possible acquisition by CapitalSource, the level of deposit growth achieved in 2007 was primarily generated by increased marketing efforts in the Company’s primary bank market area without the infusion of any brokered time deposits. The Bank has not had any brokered time deposits since October 2006.
Stockholders’ equity totaled $345.9 million at December 31, 2007, a decrease of $7.3 million, or 2.1 percent, compared to $353.3 million at December 31, 2006. A $17.1 million decrease in retained earnings, resulting from a $12.1 million net loss for the year, offset by a $7.3 million increase in capital contributed to the overall 2007 decline in shareholders’ equity.
During the three months ended December 31, 2007, the Company repurchased 1,256 shares of its common stock to support employee benefit programs. For the year ended December 31, 2007, the Company repurchased 8,367 total shares. When permissible under the provisions of the merger agreement and Securities and Exchange Commission guidelines, over 1.5 million shares remain eligible for repurchase under the Company’s Board-approved stock buyback plan.
Shareholders of record at December 14, 2007 were paid an $0.08 per share quarterly cash dividend on December 31, 2007. The December payment brought total dividends paid in 2007 to $0.31 per share and represented the sixteenth consecutive quarterly cash dividend paid to shareholders.
The Bank’s tangible, core and risk-based capital levels continue to exceed all federally mandated regulatory requirements. The Bank has consistently been recognized as “well capitalized” by the federal government; the highest rating awarded to federally insured financial institutions.
TierOne Corporation is the parent company of TierOne Bank, a $3.5 billion federally chartered savings bank and the largest publicly-traded financial institution headquartered in Nebraska. Founded in 1907, TierOne Bank offers customers a wide variety of full-service consumer, commercial and agricultural banking products and services through a network of 69 banking offices located in Nebraska, Iowa and Kansas and nine loan production offices located in Arizona, Colorado, Florida, Minnesota, Nevada and North Carolina.
Statements contained in this news release which are not historical facts may be forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Factors which could result in material variations include, but are not limited to, changes in interest rates or other competitive factors which could affect net interest margins, net interest income and noninterest income; changes in demand for loans, deposits and other financial services in the Company’s market area; changes in asset quality and general economic conditions; unanticipated issues associated with the execution of the Company’s strategic plan, including issues associated with the growth of a more diversified loan portfolio; unanticipated issues associated with increases in the levels of losses, customer bankruptcies, claims and assessments; unanticipated issues that may arise relative to loan loss provisions and charge-offs in connection with the Company’s loan portfolio and the resolution of the TransLand matter; issues affecting the Company’s proposed acquisition by CapitalSource Inc., including that conditions precedent to the merger (including receipt of regulatory approval) may not be satisfied or the merger agreement may be terminated pursuant to its terms, as well as other factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. These factors should be considered in evaluating the forward-looking statements and undue reliance should not be placed on such statements. The Company undertakes no obligation to update these forward-looking statements to reflect events or circumstances that occur after the date on which such statements were made.
| (Dollars in thousands, except per share data) | December 31, 2007 | December 31, 2006 | ||||||
|---|---|---|---|---|---|---|---|---|
| ASSETS | ||||||||
| Cash and due from banks | $ | 79,561 | $ | 86,808 | ||||
| Federal funds sold | 161,900 | -- | ||||||
| Total cash and cash equivalents | 241,461 | 86,808 | ||||||
| Investment securities: | ||||||||
| Held to maturity, at cost which approximates fair value | 70 | 90 | ||||||
| Available for sale, at fair value | 130,481 | 105,000 | ||||||
| Mortgage-backed securities, available for sale, at fair value | 6,689 | 12,272 | ||||||
| Loans receivable: | ||||||||
| Net loans (includes loans held for sale of $9,348 and $19,285 | ||||||||
| at December 31, 2007 and 2006, respectively) | 2,976,129 | 3,050,160 | ||||||
| Allowance for loan losses | (66,540 | ) | (33,129 | ) | ||||
| Net loans after allowance for loan losses | 2,909,589 | 3,017,031 | ||||||
| FHLBank Topeka stock, at cost | 65,837 | 62,022 | ||||||
| Premises and equipment, net | 38,028 | 39,821 | ||||||
| Accrued interest receivable | 21,248 | 23,023 | ||||||
| Goodwill | 42,101 | 42,228 | ||||||
| Other intangible assets, net | 6,744 | 8,391 | ||||||
| Mortgage servicing rights (lower of cost or market), net | 14,530 | 12,467 | ||||||
| Other assets | 61,346 | 22,016 | ||||||
| Total assets | $ | 3,538,124 | $ | 3,431,169 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits | $ | 2,430,544 | $ | 2,052,343 | ||||
| FHLBank Topeka advances and other borrowings | 689,288 | 962,376 | ||||||
| Advance payments from borrowers for taxes, insurance and | ||||||||
| other escrow funds | 30,205 | 27,203 | ||||||
| Accrued interest payable | 6,269 | 6,620 | ||||||
| Accrued expenses and other liabilities | 35,870 | 29,344 | ||||||
| Total liabilities | 3,192,176 | 3,077,886 | ||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, $0.01 par value. 10,000,000 shares | ||||||||
| authorized; none issued | -- | -- | ||||||
| Common stock, $0.01 par value. 60,000,000 shares authorized; | ||||||||
| 18,058,946 and 18,041,413 shares issued at December 31, 2007 | ||||||||
| and 2006, respectively | 226 | 226 | ||||||
| Additional paid-in capital | 366,042 | 358,733 | ||||||
| Retained earnings, substantially restricted | 94,988 | 112,111 | ||||||
| Treasury stock, at cost; 4,516,129 and 4,533,662 shares at | ||||||||
| December 31, 2007 and 2006, respectively | (105,008 | ) | (105,406 | ) | ||||
| Unallocated common stock held by Employee Stock | ||||||||
| Ownership Plan | (10,159 | ) | (11,664 | ) | ||||
| Accumulated other comprehensive loss, net | (141 | ) | (717 | ) | ||||
| Total stockholders’ equity | 345,948 | 353,283 | ||||||
| Total liabilities and stockholders’ equity | $ | 3,538,124 | $ | 3,431,169 | ||||
| For the Three Months Ended December 31, | For the Year Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | 2007 | 2006 | 2007 | 2006 | ||||||||||
| Interest income: | ||||||||||||||
| Loans receivable | $ | 51,541 | $ | 56,394 | $ | 220,046 | $ | 214,727 | ||||||
| Investment securities | 2,857 | 2,474 | 11,134 | 9,075 | ||||||||||
| Other interest-earning assets | 1,512 | 6 | 2,841 | 85 | ||||||||||
| Total interest income | 55,910 | 58,874 | 234,021 | 223,887 | ||||||||||
| Interest expense: | ||||||||||||||
| Deposits | 22,894 | 17,204 | 81,981 | 60,227 | ||||||||||
| FHLBank Topeka advances and other borrowings | 8,091 | 10,483 | 35,920 | 37,792 | ||||||||||
| Total interest expense | 30,985 | 27,687 | 117,901 | 98,019 | ||||||||||
| Net interest income | 24,925 | 31,187 | 116,120 | 125,868 | ||||||||||
| Provision for loan losses | 38,917 | 1,763 | 68,101 | 6,053 | ||||||||||
| Net interest income (loss) after provision | ||||||||||||||
| for loan losses | (13,992 | ) | 29,424 | 48,019 | 119,815 | |||||||||
| Noninterest income: | ||||||||||||||
| Fees and service charges | 6,372 | 5,962 | 23,621 | 22,230 | ||||||||||
| Debit card fees | 928 | 733 | 3,420 | 2,736 | ||||||||||
| Income (loss) from real estate operations, net | 25 | (148 | ) | (445 | ) | (268 | ) | |||||||
| Net gain (loss) on sales of: | ||||||||||||||
| Investment securities | -- | -- | -- | 21 | ||||||||||
| Loss on impairment of securities | (188 | ) | -- | (188 | ) | -- | ||||||||
| Loans held for sale | 908 | 518 | 2,844 | 2,084 | ||||||||||
| Real estate owned | (40 | ) | (69 | ) | (225 | ) | (135 | ) | ||||||
| Other operating income | 480 | 1,558 | 1,310 | 2,416 | ||||||||||
| Total noninterest income | 8,485 | 8,554 | 30,337 | 29,084 | ||||||||||
| Noninterest expense: | ||||||||||||||
| Salaries and employee benefits | 12,985 | 12,595 | 52,291 | 49,064 | ||||||||||
| Occupancy, net | 2,307 | 2,227 | 9,520 | 8,912 | ||||||||||
| Data processing | 636 | 552 | 2,443 | 2,200 | ||||||||||
| Advertising | 1,251 | 817 | 5,041 | 4,455 | ||||||||||
| Other operating expense | 5,344 | 4,130 | 25,202 | 17,138 | ||||||||||
| Total noninterest expense | 22,523 | 20,321 | 94,497 | 81,769 | ||||||||||
| Income (loss) before income taxes | (28,030 | ) | 17,657 | (16,141 | ) | 67,130 | ||||||||
| Income tax expense (benefit) | (10,006 | ) | 6,768 | (4,074 | ) | 25,815 | ||||||||
| Net income (loss) | $ | (18,024 | ) | $ | 10,889 | $ | (12,067 | ) | $ | 41,315 | ||||
| Net income (loss) per common share, basic | $ | (1.07 | ) | $ | 0.66 | $ | (0.72 | ) | $ | 2.50 | ||||
| Net income (loss) per common share, diluted | $ | (1.05 | ) | $ | 0.63 | $ | (0.70 | ) | $ | 2.41 | ||||
| Dividends declared per common share | $ | 0.08 | $ | 0.07 | $ | 0.31 | $ | 0.27 | ||||||
| Average common shares outstanding, basic (000’s) | 16,838 | 16,582 | 16,719 | 16,494 | ||||||||||
| Average common shares outstanding, diluted (000’s) | 17,200 | 17,221 | 17,184 | 17,147 | ||||||||||
| (Dollars in thousands) | December 31, 2007 | December 31, 2006 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Financial and Other Data: | ||||||||||||||
| Total assets | $ | 3,538,124 | $ | 3,431,169 | ||||||||||
| Cash and cash equivalents | 241,461 | 86,808 | ||||||||||||
| Investment securities: | ||||||||||||||
| Held to maturity, at cost which approximates fair value | 70 | 90 | ||||||||||||
| Available for sale, at fair value | 130,481 | 105,000 | ||||||||||||
| Mortgage-backed securities, available for sale, at fair value | 6,689 | 12,272 | ||||||||||||
| Loans receivable: | ||||||||||||||
| Loans held for sale | 9,348 | 19,285 | ||||||||||||
| Total loans receivable | 3,333,516 | 3,662,950 | ||||||||||||
| Unamortized premiums, discounts and deferred loan fees | 9,451 | 5,602 | ||||||||||||
| Loans in process | (376,186 | ) | (637,677 | ) | ||||||||||
| Net loans | 2,976,129 | 3,050,160 | ||||||||||||
| Allowance for loan losses | (66,540 | ) | (33,129 | ) | ||||||||||
| Net loans after allowance for loan losses | 2,909,589 | 3,017,031 | ||||||||||||
| Deposits | 2,430,544 | 2,052,343 | ||||||||||||
| FHLBank Topeka advances and other borrowings | 689,288 | 962,376 | ||||||||||||
| Stockholders’ equity | 345,948 | 353,283 | ||||||||||||
Nonperforming loans | 128,490 | 30,050 | ||||||||||||
| Nonperforming assets | 134,895 | 35,314 | ||||||||||||
| Allowance for loan losses | 66,540 | 33,129 | ||||||||||||
| Nonperforming loans as a percentage of net loans | 4.32 | % | 0.99 | % | ||||||||||
| Nonperforming assets as a percentage of total assets | 3.81 | % | 1.03 | % | ||||||||||
| Allowance for loan losses as a percentage of | ||||||||||||||
| nonperforming loans | 51.79 | % | 110.25 | % | ||||||||||
| Allowance for loan losses as a percentage of net loans | 2.24 | % | 1.09 | % | ||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Selected Operating Ratios: | 2007 | 2006 | 2007 | 2006 | ||||||||||
| Average yield on interest-earning assets | 6.83 | % | 7.47 | % | 7.21 | % | 7.24 | % | ||||||
| Average rate on interest-bearing liabilities | 4.20 | % | 3.91 | % | 4.06 | % | 3.52 | % | ||||||
| Average interest rate spread | 2.63 | % | 3.56 | % | 3.15 | % | 3.72 | % | ||||||
| Net interest margin | 3.04 | % | 3.96 | % | 3.58 | % | 4.07 | % | ||||||
| Average interest-earning assets to average | ||||||||||||||
| interest-bearing liabilities | 111.10 | % | 111.39 | % | 111.80 | % | 110.95 | % | ||||||
| Total noninterest expense to average assets | 2.56 | % | 2.42 | % | 2.72 | % | 2.48 | % | ||||||
| Efficiency ratio (1) | 66.25 | % | 50.07 | % | 63.40 | % | 51.64 | % | ||||||
| Return on average assets | -2.05 | %; | 1.30 | % | -0.35 | % | 1.25 | % | ||||||
| Return on average equity | -19.70 | % | 12.48 | % | -3.30 | % | 12.48 | % | ||||||
| Average equity to average assets | 10.39 | % | 10.38 | % | 10.56 | % | 10.04 | % | ||||||
| Return on tangible equity (2) | -22.56 | % | 14.45 | % | -3.78 | % | 14.59 | % | ||||||
| (1) | Efficiency ratio is calculated as total noninterest expense, less amortization expense of intangible assets, as a percentage of the sum of net interest income and noninterest income. |
| (2) | Return on tangible equity is calculated as annualized net income as a percentage of average stockholders’ equity adjusted for goodwill and other intangible assets. |
| Three Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | 132,883 | 1,512 | 4.55 | % | 478 | 6 | 5.26 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities (1) | 211,744 | 2,783 | 5.26 | 173,450 | 2,340 | 5.40 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities (1) | 7,300 | 74 | 4.05 | 13,412 | 134 | 4.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable (2) | 2,924,805 | 51,541 | 7.05 | 2,965,929 | 56,394 | 7.61 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 3,276,732 | 55,910 | 6.83 | % | 3,153,269 | 58,874 | 7.47 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 246,457 | 209,350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 3,523,189 | 3,362,619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | 312,907 | 885 | 1.13 | % | 342,269 | 996 | 1.16 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | 168,801 | 1,542 | 3.65 | 46,444 | 57 | 0.49 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Money market accounts | 356,416 | 2,667 | 2.99 | 387,918 | 2,908 | 3.00 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 1,408,287 | 17,800 | 5.06 | 1,114,746 | 13,243 | 4.75 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 2,246,411 | 22,894 | 4.08 | 1,891,377 | 17,204 | 3.64 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FHLBank Topeka advances and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| other borrowings | 702,991 | 8,091 | 4.60 | 939,343 | 10,483 | 4.46 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,949,402 | 30,985 | 4.20 | % | 2,830,720 | 27,687 | 3.91 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing accounts | 139,956 | 123,185 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 67,841 | 59,793 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 3,157,199 | 3,013,698 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 365,990 | 348,921 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | 3,523,189 | 3,362,619 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest-earning assets | 327,330 | 322,549 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income; average interest rate spread | 24,925 | 2.63 | % | 31,187 | 3.56 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin (3) | 3.04 | % | 3.96 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 111.10 | % | 111.39 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Includes securities available for sale and held to maturity. Investment securities also includes FHLBank Topeka stock. |
| (2) | Includes nonperforming loans during the respective periods. Calculated net of unamortized premiums, discounts and deferred fees, loans in process and allowance for loan losses. |
| (3) | Equals net interest income (annualized) divided by average interest-earning assets. |
| Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2007 | 2006 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (Dollars in thousands) | Average Balance | Interest | Average Yield/Rate | Average Balance | Interest | Average Yield/Rate | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Federal funds sold | 59,189 | 2,841 | 4.80 | % | 1,934 | 85 | 4.40 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities (1) | 199,199 | 10,748 | 5.40 | 167,587 | 8,422 | 5.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Mortgage-backed securities (1) | 9,309 | 386 | 4.15 | 16,200 | 653 | 4.03 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Loans receivable (2) | 2,976,069 | 220,046 | 7.39 | 2,904,606 | 214,727 | 7.39 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-earning assets | 3,243,766 | 234,021 | 7.21 | % | 3,090,327 | 223,887 | 7.24 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-earning assets | 225,003 | 205,289 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 3,468,769 | 3,295,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing checking accounts | 326,545 | 3,692 | 1.13 | % | 361,056 | 4,147 | 1.15 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Savings accounts | 90,036 | 2,427 | 2.70 | 51,643 | 263 | 0.51 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Money market accounts | 385,210 | 11,699 | 3.04 | 393,807 | 11,102 | 2.82 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Time deposits | 1,287,195 | 64,163 | 4.98 | 1,085,350 | 44,715 | 4.12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing deposits | 2,088,986 | 81,981 | 3.92 | 1,891,856 | 60,227 | 3.18 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| FHLBank Topeka advances and | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| other borrowings | 812,360 | 35,920 | 4.42 | 893,420 | 37,792 | 4.23 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 2,901,346 | 117,901 | 4.06 | % | 2,785,276 | 98,019 | 3.52 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest-bearing accounts | 135,617 | 119,394 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 65,659 | 59,929 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 3,102,622 | 2,964,599 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | 366,147 | 331,017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | 3,468,769 | 3,295,616 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest-earning assets | 342,420 | 305,051 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income; average interest rate spread | 116,120 | 3.15 | % | 125,868 | 3.72 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest margin (3) | 3.58 | % | 4.07 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average interest-earning assets to average interest-bearing liabilities | 111.80 | % | 110.95 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (1) | Includes securities available for sale and held to maturity. Investment securities also includes FHLBank Topeka stock. |
| (2) | Includes nonperforming loans during the respective periods. Calculated net of unamortized premiums, discounts and deferred fees, loans in process and allowance for loan losses. |
| (3) | Equals net interest income divided by average interest-earning assets. |
The following table shows the composition of our loan portfolio by type of loan at the dates indicated.
| December 31, 2007 | December 31, 2006 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands) | Amount | % | Amount | % | ||||||||||||
| Real estate loans: | ||||||||||||||||
| One-to-four family residential (1) | $ | 314,623 | 9.41 | % | $ | 339,080 | 9.21 | % | ||||||||
| Second mortgage residential | 95,477 | 2.86 | 120,510 | 3.27 | ||||||||||||
| Multi-family residential | 106,678 | 3.19 | 148,922 | 4.05 | ||||||||||||
| Commercial real estate | 370,910 | 11.10 | 396,620 | 10.77 | ||||||||||||
| Land and land development | 473,346 | 14.16 | 494,887 | 13.44 | ||||||||||||
| Residential construction | 513,560 | 15.36 | 780,991 | 21.21 | ||||||||||||
| Commercial construction | 540,797 | 16.18 | 491,997 | 13.36 | ||||||||||||
| Agriculture | 91,068 | 2.72 | 68,459 | 1.86 | ||||||||||||
| Total real estate loans | 2,506,459 | 74.98 | 2,841,466 | 77.17 | ||||||||||||
| Business | 252,712 | 7.56 | 220,669 | 5.99 | ||||||||||||
| Agriculture - operating | 100,365 | 3.00 | 94,455 | 2.56 | ||||||||||||
| Warehouse mortgage lines of credit | 86,081 | 2.58 | 112,645 | 3.06 | ||||||||||||
| Consumer loans: | ||||||||||||||||
| Home equity | 72,517 | 2.17 | 71,476 | 1.94 | ||||||||||||
| Home equity line of credit | 120,465 | 3.60 | 130,071 | 3.53 | ||||||||||||
| Home improvement | 46,045 | 1.38 | 55,513 | 1.51 | ||||||||||||
| Automobile | 87,079 | 2.60 | 87,575 | 2.38 | ||||||||||||
| Other | 71,141 | 2.13 | 68,365 | 1.86 | ||||||||||||
| Total consumer loans | 397,247 | 11.88 | 413,000 | 11.22 | ||||||||||||
| Total loans | 3,342,864 | 100.00 | % | 3,682,235 | 100.00 | % | ||||||||||
| Unamortized premiums, discounts | ||||||||||||||||
| and deferred loan fees | 9,451 | 5,602 | ||||||||||||||
| Loans in process (2) | (376,186 | ) | (637,677 | ) | ||||||||||||
| Net loans | 2,976,129 | 3,050,160 | ||||||||||||||
| Allowance for loan losses | (66,540 | ) | (33,129 | ) | ||||||||||||
| Net loans after allowance for loan losses | 2,909,589 | 3,017,031 | ||||||||||||||
| (1) Includes loans held for sale | $ | 9,348 | $ | 19,285 | ||||||||||||
| (2) Loans in process represents the undisbursed portion of construction and land development loans. | ||||||||||||||||
| CONTACT: | Edward J. Swotek, Senior Vice President Investor Relations Department (402)473-6250 investorrelations@tieronecorp.com |
# # #
