Exhibit 99.1
Contact: | | Daniel M. Quinn | | Paul W. Taylor |
| | President & Chief Executive Officer | | E.V.P. & Chief Financial Officer |
| | 1331 Seventeenth Street, Suite 300 | | 1331 Seventeenth Street, Suite 300 |
| | Denver, CO 80202 | | Denver, CO 80202 |
| | 303/313-6736 | | 303/293-5563 |
FOR IMMEDIATE RELEASE:
Centennial Bank Holdings, Inc. Announces 2007 Year End and Fourth Quarter Financial Results
· Takes Fourth Quarter Non-Cash Goodwill Impairment Charge
· Non-Cash Goodwill Impairment Charge Does Not Impact Cash Flow, Liquidity or Regulatory Capital – the Company Remains Well-Capitalized
Denver, Colorado (January 30, 2008) – Centennial Bank Holdings, Inc. (Nasdaq: CBHI) today announced a fourth quarter $142.2 million non-cash goodwill impairment charge related to its prior acquisitions. As a result of this non-cash charge, the Company reported a net loss for the year ended December 31, 2007 of $138.1 million, or $2.60 per share, compared to net income of $24.4 million, or $0.42 per basic and diluted share, in the prior year. The non-cash goodwill impairment charge also caused a net loss of $138.2 million, or $2.68 per share, for the three months ended December 31, 2007, as compared to net income of $5.4 million, or $0.10 per basic and diluted share in the fourth quarter 2006.
Dan Quinn, Centennial Bank Holdings President and CEO, stated, “As with similar impairment charges recently announced by several banks, the goodwill impairment is solely a non-cash accounting charge and it has absolutely no impact on the holding company’s or our bank subsidiary’s cash flow, liquidity or regulatory capital. Just as importantly, this accounting charge has no impact whatsoever on our ability to continue to serve our customers at the high level that they expect and deserve. Guaranty Bank and Trust Company remains a well-capitalized and fundamentally sound institution dedicated to high touch customer service.”
Mr. Quinn continued, “While market conditions and the current environment dictated that we adjust our goodwill, the magnitude of the impairment does not detract from the continued success of our efforts to strategically reposition Centennial Bank Holdings. The fourth quarter saw the continued reduction of credit risk in our portfolio, as Commercial loans increased 6% while Construction and Land Development loans declined 19% and now make up only 13% of our loans. Our lower risk profile, combined with continued improvements in our funding mix and expense management, create a solid foundation for future success.”
Without the impact of the non-cash goodwill impairment charge and $5.4 million of after-tax intangible asset amortization, cash net income for the year ended December 31, 2007 was $9.5 million, or $0.18 per basic and diluted share. This compares to cash net income of $31.7 million, or
$0.55 per basic and diluted share, in 2006, which excludes $7.3 million of after-tax intangible asset amortization.
Fourth quarter 2007 cash net income was $5.3 million, or $0.10 per basic and diluted share, which excludes after-tax intangible asset amortization of $1.3 million and the goodwill impairment charge. Excluding after-tax intangible asset amortization of $1.8 million, fourth quarter 2006 cash net income was $7.3 million, or $0.13 per basic and diluted share.
The Company’s results for 2007 declined largely due to the non-cash goodwill impairment charge discussed above. Additionally, the provision for loan losses was $24.7 million in 2007, as compared to $4.3 million in 2006, an increase of $20.4 million. The provision for loan losses for the fourth quarter 2007 was $3.0 million, as compared to $2.7 million in the fourth quarter 2006. The overall increase of the provision in 2007 is due to a decline in overall general economic conditions in 2007, as well as a result of adopting a more aggressive credit management philosophy during the second quarter 2007, including the implementation of an accelerated disposition strategy. This strategy led to a sale of $47.9 million of nonperforming and classified loans on October 31, 2007. As a result of the adoption of this philosophy and the subsequent sale of certain problem credits, the Company had $26.9 million of net charge-offs during 2007. Other factors causing a decline in income from the prior year include a $6.5 million charge in the second quarter 2007 related to the settlement of a lawsuit and a $1.0 million charge for costs associated with the merger of the Company’s two subsidiary banks.
The comparability of the Company’s financial information is also affected by the sale of Collegiate Peaks Bank on November 1, 2006, which had been classified as held for sale.
Company Remains Well-Capitalized
The Company remains well-capitalized for regulatory capital purposes at December 31, 2007. In addition to exceeding the requirements to be a well capitalized institution, the regulatory capital ratios improved from the prior quarter as follows:
| | Ratio at
December 31,
2007 | | Ratio at
September 30,
2007 | | Minimum Capital
Requirement | | Minimum
Requirement for
“Well
Capitalized”
Institution | |
| | | | | | | | | |
Total Risk-Based Capital Ratio | | 10.9 | % | 10.4 | % | 8.00 | % | 10.00 | % |
Tier 1 Risk Based Capital Ratio | | 9.6 | % | 9.2 | % | 4.00 | % | 6.00 | % |
Leverage Ratio | | 8.6 | % | 8.6 | % | 4.00 | % | 5.00 | % |
Goodwill Impairment Analysis
Under current accounting guidance, goodwill recorded as a result of acquisitions is not amortized. Instead, companies are required to evaluate goodwill for impairment at least annually. This impairment testing requires that the fair value of the reporting unit be assessed as of the testing date. Generally, an impairment may be recorded if the value of the reporting unit is less than its carrying cost. Common valuation practices include using benchmarks of the current market multiples of peer
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group companies, in addition to a discounted cash flow analysis. Lower market valuations for banking institutions in the latter part of 2007 had a direct negative impact on the Company’s valuation. For example, the NASDAQ America’s Community Bankers Index (^ACBQ), of which the Company is a part, declined by 25% during 2007. Other contributing factors to a decrease in the Company’s fourth quarter 2007 valuation include the weakening of the credit market and the decline in real estate values, particularly in Northern Colorado.
Key Financial Measures
| | Quarter Ended | | Year Ended | |
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2006 | |
Earnings (loss) per share- basic & diluted | | $ | (2.68 | ) | $ | 0.03 | | $ | 0.10 | | $ | (2.60 | ) | $ | 0.42 | |
Cash earnings per share-basic &diluted | | $ | 0.10 | | $ | 0.05 | | $ | 0.13 | | $ | 0.18 | | $ | 0.55 | |
Return on average assets | | (22.09 | )% | 0.23 | % | 0.78 | % | (5.29 | )% | 0.86 | % |
Return on tangible average assets (cash) | | 0.98 | % | 0.51 | % | 1.23 | % | 0.43 | % | 1.32 | % |
Net Interest Margin | | 4.75 | % | 4.82 | % | 5.12 | % | 4.93 | % | 5.35 | % |
Efficiency Ratio (excludes intangible asset charges) | | 57.91 | % | 57.66 | % | 60.01 | % | 67.01 | % | 61.35 | % |
Net Interest Income and Margin
| | Quarter Ended | | Year Ended | |
| | December 31,
2007 | | September 30,
2007 | | December
31,2006 | | December 31,
2007 | | December 31,
2006 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Net interest income | | $ | 24,184 | | $ | 25,236 | | $ | 27,907 | | $ | 102,249 | | $ | 116,197 | |
Interest rate spread | | 3.77 | % | 3.84 | % | 4.14 | % | 3.94 | % | 4.48 | % |
Net interest margin | | 4.75 | % | 4.82 | % | 5.12 | % | 4.93 | % | 5.35 | % |
Net interest margin, fully tax equivalent | | 4.88 | % | 4.97 | % | 5.27 | % | 5.08 | % | 5.49 | % |
| | | | | | | | | | | | | | | | |
The $13.9 million decrease in net interest income in 2007 as compared to 2006 is due both to a reduction in net interest margin and lower interest-earning assets. The 42 basis point decrease in margin caused a $9.1 million decline in net interest income, whereas the $99.0 million decline in average interest-earning assets had a $4.8 million negative effect on net interest margin. This decline in average interest-earning assets was part of a strategic initiative to reduce our concentration risk, primarily in construction and land development loans. Overall yield on earning assets declined by 11 basis points in 2007 from 2006, while cost of funds increased by 43 basis points, causing the 54 basis point decrease in the interest rate spread. The increase in the cost of funds was mostly due to higher costs on time deposits due to competition. Although interest rate spread decreased by 54 basis points, net interest margin declined only by 42 basis points. The primary cause for the smaller impact on overall net interest margin is the relatively high level of noninterest bearing deposits. Noninterest bearing deposits averaged 24.9 percent of total deposits during 2007.
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For the fourth quarter 2007, the Company’s net interest income decreased by $3.7 million from the same period in 2006. Approximately $2.3 million of this decline is attributable to a lower net interest margin and $1.4 million is due to lower earning assets. The decrease in net interest margin is due to lower yields on earning assets as the cost of funds declined by twelve basis points in the fourth quarter 2007 as compared to the fourth quarter 2006. Although the cost of time deposits increased, rates on repurchase agreements fell in the fourth quarter 2007 as compared to the same period in 2006.
Noninterest Income
The following table presents noninterest income as of the dates indicated.
| | Quarter Ended | | Year Ended December 31, | |
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | 2007 | | 2006 | |
| | (In thousands) | |
Noninterest income: | | | | | | | | | | | |
Customer service and other fees | | $ | 2,267 | | $ | 2,390 | | $ | 2,137 | | $ | 9,509 | | $ | 10,385 | |
Loss on sale of securities | | — | | — | | (5 | ) | — | | (4 | ) |
Gain (loss) on sale of loans | | — | | — | | (55 | ) | — | | 719 | |
Other | | 665 | | 230 | | 449 | | 1,187 | | 1,617 | |
Total noninterest income | | $ | 2,932 | | $ | 2,620 | | $ | 2,526 | | $ | 10,696 | | $ | 12,717 | |
Customer service and other fees have remained relatively flat in the fourth quarter 2007 as compared to both the third quarter 2007 and fourth quarter 2006. On an annual basis, customer service and other fees decreased by $0.9 million, or 8.4%, in 2007 as compared to 2006 primarily due partly to a $0.5 million decline in loan placement fees due to the discontinuation of the Company’s residential mortgage group at the end of the third quarter 2006. Further, there was a $0.5 million decline in service and analysis charges due mostly to higher earnings credit rates on compensating balances.
Noninterest Expense
The following table presents noninterest expense as of the dates indicated.
| | Quarter Ended | | Year Ended | |
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2006 | |
| | (In thousands) | |
Noninterest expense: | | | | | | | | | | | |
Salaries and employee benefits | | $ | 8,442 | | $ | 9,039 | | $ | 10,662 | | $ | 39,179 | | $ | 46,185 | |
Occupancy expense | | 1,781 | | 1,855 | | 2,040 | | 7,813 | | 7,977 | |
Furniture and equipment | | 1,205 | | 1,188 | | 1,176 | | 4,864 | | 4,859 | |
Impairment of goodwill | | 142,210 | | — | | — | | 142,211 | | — | |
Amortization of intangible assets | | 2,132 | | 2,143 | | 2,960 | | 8,665 | | 11,815 | |
Other general and administrative | | 4,278 | | 3,980 | | 4,384 | | 23,824 | | 20,072 | |
Total noninterest expense | | $ | 160,048 | | $ | 18,205 | | $ | 21,222 | | $ | 226,556 | | $ | 90,908 | |
| | | | | | | | | | | |
Efficiency ratio | | 57.91 | % | 57.66 | % | 60.01 | % | 67.01 | % | 61.35 | % |
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Without the $142.2 million non-cash goodwill impairment charge in the fourth quarter 2007, overall noninterest expense for 2007 was $84.3 million. This amount is $6.6 million lower than in 2006, which is the primary cause for the decline in the efficiency ratio (the efficiency ratio excludes charges for intangible assets). The largest reduction in noninterest expense for the year ended December 31, 2007 as compared to the prior year relates to salaries and employee benefits. Salaries declined by $7.0 million, or 15.2%, in 2007 as compared to 2006. This decline was mostly driven by a $5.0 million decrease in bonus and incentive expense, as well as a $1.4 million decrease in base salary and overtime. The reduction in base salary is due to an eleven percent decline in full-time equivalent employees as a result of the continuing focus on the appropriate level of staff for each business unit.
Other general and administrative expenses increased by $3.8 million in 2007 as compared to 2006. This increase is mostly due to the $6.5 million charge in the second quarter 2007 as a result of the settlement of a lawsuit, as well as a $1.0 million charge related to costs associated with the merger of the Company’s subsidiary banks. Without these charges, other expenses would have declined by $3.7 million. The largest portion of this decline relates to $1.8 million of expenses for the management transition in the second quarter 2006. The remainder of the decline is due to the intense scrutiny on expense management in 2007, with declines in professional fees and advertising, business development and other office-related expenses.
For the fourth quarter 2007, noninterest expense was $17.8 million without the goodwill impairment charge, a decrease of $3.4 million from the fourth quarter 2006, and a decrease of $0.4 million from the third quarter 2007. The decline from the same period in 2006 is mostly due to a $2.2 million reduction in salaries and employee benefits attributable to lower bonuses and incentives, as well as fewer employees. Other decreases in noninterest expense from the fourth quarter 2006 include a $0.8 million decrease in amortization costs on intangible assets and a $0.3 million decline in occupancy expense.
Balance Sheet
| | December 31,
2007 | | September 30,
2007 | | %
Change | | December 31,
2006 | | %
Change | |
| | (Dollars in thousands, except per share amounts) | |
Total loans, net of unearned discount | | $ | 1,781,647 | | $ | 1,819,188 | | (2.1 | )% | $ | 1,947,487 | | (8.5 | )% |
Allowance for loan losses | | (25,711 | ) | (23,979 | ) | 7.2 | % | (27,899 | ) | (7.8 | )% |
Total assets | | 2,371,664 | | 2,617,153 | | (9.4 | )% | 2,720,600 | | (12.8 | )% |
Average assets, quarter-to-date | | 2,482,352 | | 2,626,913 | | (5.5 | )% | 2,783,375 | | (10.8 | )% |
Total deposits | | 1,799,507 | | 1,915,932 | | (6.1 | )% | 1,960,105 | | (8.2 | )% |
Book value per share | | $ | 7.96 | | $ | 10.44 | | (23.8 | )% | $ | 10.30 | | (22.7 | )% |
Tangible book value per share | | $ | 2.57 | | $ | 2.50 | | 2.8 | % | $ | 2.71 | | (5.2 | )% |
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At December 31, 2007, the Company had total assets of $2.4 billion, or $348.9 million less than the total assets at December 31, 2006. A major part of this decline was a $150.9 million decline in intangible assets due to the goodwill impairment charge and amortization of other intangibles. Total loans, including loans held for sale, declined by $165.3 million at the end of 2007 as compared to December 31, 2006. Approximately $47.9 million of this decline in loans is attributable to the sale of certain impaired and classified loans in October 2007.
Further, the Company continues to employ its strategy of reducing its concentration of residential construction and land development loans. Partially offsetting this decrease is an increase in middle-market and energy loans. The December 31, 2007 energy and middle-market loan portfolio balances grew by $123.6 million from December 31, 2006, while total residential and commercial construction and land development loans decreased by $193.0 million.
The balances of total residential and commercial construction and land development loans were as follows:
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | December 31,
2005 | |
| | (Dollars in thousands) | |
Construction and Land Development: | | | | | | | | | |
Loan balances - Northern Colorado | | $ | 67,234 | | $ | 100,817 | | $ | 206,414 | | $ | 279,361 | |
Loan balances - All Other Areas | | 167,413 | | 189,774 | | 221,051 | | 251,355 | |
Total Construction and Land Development Loans | | $ | 234,647 | | $ | 290,591 | | $ | 427,465 | | $ | 530,716 | |
Percent of Total Loan Portfolio | | 13 | % | 16 | % | 22 | % | 26 | % |
Total deposits at December 31, 2007 decreased by $160.6 million from December 31, 2006. Approximately $97.5 million, or 51% of this decline, is from a decrease in time deposits due to a strategic decision to mitigate the impact of margin compression. Overall, the Company maintained high levels of noninterest bearing deposits as these balances declined by just 0.5% at December 31, 2007, as compared to the end of 2006. Most of the remainder of the decline in deposits is attributable to lower interest-bearing demand deposits.
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Asset Quality
The following table presents selected asset quality data (excluding loans held for sale) as of the dates indicated.
| | December 31,
2007 | | September 30,
2007 | | June 30,
2007 | | March 31,
2007 | | December 31,
2006 | |
| | (Dollars in thousands) | |
| | | | | | | | | | | |
Nonaccrual loans, not restructured | | $ | 19,309 | | $ | 16,831 | | $ | 35,515 | | $ | 31,940 | | $ | 32,852 | |
Accruing loans past due 90 days or more | | 527 | | 9 | | 122 | | 323 | | 3 | |
| | | | | | | | | | | |
Total nonperforming loans (NPLs) | | 19,836 | | 16,840 | | 35,637 | | 32,263 | | 32,855 | |
Other real estate owned | | 3,517 | | 3,401 | | 1,385 | | 861 | | 1,207 | |
| | | | | | | | | | | |
Total nonperforming assets (NPAs) | | $ | 23,353 | | $ | 20,241 | | $ | 37,022 | | $ | 33,124 | | $ | 34,062 | |
Total NPLs held for sale | | 100 | | 12,758 | | — | | — | | — | |
Total NPAs | | $ | 23,453 | | $ | 32,999 | | $ | 37,022 | | $ | 33,124 | | $ | 34,062 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 25,711 | | $ | 23,979 | | $ | 35,594 | | $ | 27,492 | | $ | 27,899 | |
| | | | | | | | | | | |
Selected ratios: | | | | | | | | | | | |
NPLs not held for sale to loans, net of unearned discount | | 1.11 | % | 0.93 | % | 1.88 | % | 1.69 | % | 1.69 | % |
NPAs not held for sale to total assets | | 0.98 | % | 0.77 | % | 1.40 | % | 1.23 | % | 1.25 | % |
Allowance for loan losses to NPAs not held for sale | | 110.10 | % | 118.47 | % | 96.14 | % | 83.00 | % | 81.91 | % |
Allowance for loan losses to NPLs not held for sale | | 129.61 | % | 142.39 | % | 99.88 | % | 85.21 | % | 84.92 | % |
Allowance for loan losses to loans, net of unearned discount | | 1.44 | % | 1.32 | % | 1.88 | % | 1.46 | % | 1.43 | % |
Nonperforming assets decreased by $10.6 million, or 31.2%, at December 31, 2007 as compared to December 31, 2006. This decrease was mostly due to the sale of certain nonperforming and classified loans on October 31, 2007.
Similarly, the decrease in nonperforming loans over the fourth quarter 2006 was mostly due to the sale of a portfolio of nonperforming and classified loans. These loans were classified as held for sale effective September 30, 2007 and written down to their estimated market value. Excluding the loans held for sale at the end of the third quarter 2007, nonperforming assets increased by $3.1 million due mostly to loans in Northern Colorado.
The Company took a fourth quarter 2007 provision for loan losses of $3.0 million, compared to $8.0 million in the third quarter 2007 and $2.6 million in the fourth quarter 2006. The decline from the prior quarter is primarily attributable to the additional provision taken in the third quarter 2007 as a result of the Company’s decision to sell a large portion of its nonperforming and classified credits in a bulk sale.
The allowance for loan losses to total loans outstanding was 1.44% at December 31, 2007, as compared to 1.32% at September 30, 2007 and 1.43% at December 31, 2006.
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Stock Repurchase Programs
At December 31, 2007, the Company had 1,349,858 shares remaining under its previously existing stock repurchase programs. The remaining shares will be acquired from time to time either in the open market or in privately negotiated transactions in accordance with applicable regulations of the Securities and Exchange Commission. During the fourth quarter 2007, the Company repurchased 1,265,553 shares at a cost of $6.5 million, or an average price of $5.13 per share. Cumulative shares repurchased for the year ended December 31, 2007 are 4,618,438 at a cost of $33.4 million, or an average price of $7.22 per share. As of December 31, 2007, the Company had 52,616,991 shares outstanding, including 1,651,345 shares of unvested stock awards.
Merger of Subsidiary Banks
On January 1, 2008, the Company consummated the previously announced merger of its subsidiary banks. As a result, Centennial Bank Holdings now has a single bank subsidiary, Guaranty Bank and Trust Company.
Both banks will operate separately until the close of business on February 15, 2008. At that time, the signage on the Centennial Bank of the West branches will change to Guaranty Bank and Trust Company and customers of both banks will have access to the merged Guaranty Bank’s 36 branch network throughout the Colorado Front Range.
Non-GAAP Financial Measures
This press release includes non-GAAP financial measures related to the income statement, including cash net income (loss), cash earnings (loss) per share and return on average tangible assets (cash), which exclude from income the non-cash goodwill impairment charge in the fourth quarter 2007 and the after-tax impact of intangible asset amortization expense. There is no tax effect of the non-cash goodwill impairment charge under current accounting guidance.
This press release also includes non-GAAP financial measures related to tangible assets, including return on average tangible assets (cash) and tangible book value. These items exclude the average and actual intangible assets, respectively.
The Company discloses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of the Company’s core financial performance. Management believes that these non-GAAP financial measures allow for additional transparency and are used by some investors, analysts and other users of the Company’s financial information as performance measures. These non-GAAP financial measures are presented for supplemental informational purposes only for understanding the Company’s operating results and should not be considered a substitute for financial information presented in accordance with GAAP. These non-GAAP financial measures presented by the Company may be different from non-GAAP financial measures used by other companies.
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| | Quarter Ended | | Year Ended | |
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2006 | |
| | (Dollars in thousands, except per share data) | |
GAAP net income (loss) | | $ | (138,210 | ) | $ | 1,503 | | $ | 5,443 | | $ | (138,092 | ) | $ | 24,418 | |
Add: Impairment of goodwill | | 142,210 | | — | | — | | 142,210 | | — | |
Add: Amortization of intangible assets | | 2,132 | | 2,143 | | 2,960 | | 8,665 | | 11,815 | |
Less: Income tax effect | | (810 | ) | (815 | ) | (1,125 | ) | (3,294 | ) | (4,491 | ) |
Cash net income | | $ | 5,322 | | $ | 2,831 | | $ | 7,278 | | $ | 9,489 | | $ | 31,742 | |
| | | | | | | | | | | |
Weighted average shares – diluted | | 51,559,554 | | 52,742,028 | | 56,161,626 | | 53,109,307 | | 57,636,365 | |
| | | | | | | | | | | |
Earnings (loss) per share – diluted | | $ | (2.68 | ) | $ | 0.03 | | $ | 0.10 | | $ | (2.60 | ) | $ | 0.42 | |
Add: Impairment and amortization of intangible assets (after tax effect) | | 2.78 | | 0.02 | | 0.03 | | 2.78 | | 0.13 | |
Cash earnings per share | | $ | 0.10 | | $ | 0.05 | | $ | 0.13 | | $ | 0.18 | | $ | 0.55 | |
| | | | | | | | | | | |
Return on tangible net assets (cash) | | | | | | | | | | | |
Cash net income | | $ | 5,322 | | $ | 2,831 | | $ | 7,278 | | $ | 9,489 | | $ | 31,742 | |
| | | | | | | | | | | |
Average total assets | | $ | 2,482,352 | | $ | 2,626,913 | | $ | 2,783,375 | | $ | 2,611,972 | | $ | 2,850,533 | |
Less average intangible assets | | (331,082 | ) | (429,045 | ) | (434,369 | ) | (406,012 | ) | (439,018 | ) |
Average tangible assets | | $ | 2,151,270 | | $ | 2,197,868 | | $ | 2,349,006 | | $ | 2,205,960 | | $ | 2,411,515 | |
| | | | | | | | | | | |
Return on average assets - GAAP net income divided by total average assets | | -22.09 | % | 0.23 | % | 0.78 | % | -5.29 | % | 0.86 | % |
| | | | | | | | | | | |
Return on average tangible assets (cash) - cash net income divided by average tangible assets | | 0.98 | % | 0.51 | % | 1.23 | % | 0.43 | % | 1.32 | % |
The following Non-GAAP schedule reconciles the book value per share to the tangible book value per share as of the dates indicated:
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | |
| | (Dollars in thousands, except per share amounts) | |
Tangible Book Value per Share | | | | | | | |
Stockholders’ equity | | $ | 418,654 | | $ | 562,656 | | $ | 589,459 | |
Intangible assets | | (283,681 | ) | (428,024 | ) | (434,557 | ) |
Tangible equity | | $ | 134,973 | | $ | 134,632 | | $ | 154,902 | |
| | | | | | | |
Number of shares outstanding | | 52,616,991 | | 53,870,812 | | 57,236,795 | |
| | | | | | | |
Book value per share | | $ | 7.96 | | $ | 10.44 | | $ | 10.30 | |
| | | | | | | |
Tangible book value per share | | $ | 2.57 | | $ | 2.50 | | $ | 2.71 | |
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About Centennial Bank Holdings, Inc.
Centennial Bank Holdings, Inc. is a bank holding company that operates 36 branches in Colorado through a single bank, Guaranty Bank and Trust Company. The bank provides banking and other financial services including real estate, construction, commercial and industrial, energy, consumer and agricultural loans throughout its targeted Colorado markets to consumers and small to medium-sized businesses, including the owners and employees of those businesses. The bank also provides trust services, including personal trust administration, estate settlement, investment management accounts and self-directed IRAs. More information about Centennial Bank Holdings, Inc. can be found at www.cbhi.com.
Forward-Looking Statements
Certain statements contained in this press release, including, without limitation, statements containing the words “believes”, “anticipates”, “intends”, “expects”, and words of similar import, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economic and business conditions in those areas in which the Company operates; demographic changes; competition; fluctuations in interest rates; continued ability to attract and employ qualified personnel; costs and uncertainties related to the outcome of pending litigation; changes in business strategy or development plans; changes that occur in the securities markets; changes in governmental legislation or regulation; changes in credit quality; the availability of capital to fund the expansion of the Company’s business; economic, political and global changes arising from natural disasters; the war on terrorism; conflicts in the Middle East; and additional “Risk Factors” referenced in the Company’s most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, as supplemented from time to time. When relying on forward-looking statements to make decisions with respect to the Company, investors and others are cautioned to consider these and other risks and uncertainties. The Company can give no assurance that any goal or plan or expectation set forth in forward-looking statements can be achieved and readers are cautioned not to place undue reliance on such statements, which speak only as of the date made. The forward-looking statements are made as of the date of this press release, and the Company does not intend, and assumes no obligation, to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
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CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES |
Unaudited Consolidated Balance Sheets |
| | December 31,
2007 | | December 31,
2006 | |
| | (In thousands) | |
Assets | | | | | |
Cash and due from banks | | $ | 51,611 | | $ | 45,409 | |
Federal funds sold | | 745 | | 4,211 | |
Cash and cash equivalents | | 52,356 | | 49,620 | |
Securities available for sale, at fair value | | 118,964 | | 157,260 | |
Securities held to maturity | | 14,889 | | 11,217 | |
Bank stocks, at cost | | 32,464 | | 31,845 | |
Total investments | | 166,317 | | 200,322 | |
| | | | | |
Loans, net of unearned discount | | 1,781,647 | | 1,947,487 | |
Less allowance for loan losses | | (25,711 | ) | (27,899 | ) |
Net loans | | 1,755,936 | | 1,919,588 | |
Loans, held for sale | | 492 | | — | |
Premises and equipment, net | | 69,981 | | 74,166 | |
Other real estate owned and foreclosed assets | | 3,517 | | 1,207 | |
Goodwill | | 250,748 | | 392,958 | |
Other intangible assets, net | | 32,933 | | 41,599 | |
Other assets | | 39,384 | | 41,140 | |
Total assets | | $ | 2,371,664 | | $ | 2,720,600 | |
| | | | | |
Liabilities and Stockholders’ Equity | | | | | |
Liabilities: | | | | | |
Deposits: | | | | | |
Noninterest-bearing demand | | $ | 515,299 | | $ | 517,612 | |
Interest-bearing demand | | 732,156 | | 777,579 | |
Savings | | 71,944 | | 87,265 | |
Time | | 480,108 | | 577,649 | |
Total deposits | | 1,799,507 | | 1,960,105 | |
Securities sold under agreements to repurchase and federal fund purchases | | 23,617 | | 25,469 | |
Borrowings | | 63,715 | | 67,632 | |
Subordinated debentures | | 41,239 | | 41,239 | |
Interest payable and other liabilities | | 24,932 | | 36,696 | |
Total liabilities | | 1,953,010 | | 2,131,141 | |
| | | | | |
Stockholders’ equity: | | | | | |
Common stock | | 64 | | 64 | |
Additional paid-in capital | | 617,611 | | 614,489 | |
Shares to be issued for deferred compensation obligations | | 573 | | 775 | |
Retained earnings (deficit) | | (95,196 | ) | 42,896 | |
Accumulated other comprehensive income (loss) | | (1,472 | ) | 809 | |
Treasury Stock | | (102,926 | ) | (69,574 | ) |
Total stockholders’ equity | | 418,654 | | 589,459 | |
Total liabilities and stockholders’ equity | | $ | 2,371,664 | | $ | 2,720,600 | |
11
CENTENNIAL BANK HOLDINGS, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
| | Three Months Ended December 31, | | Year Ended December 31, | |
| | 2007 | | 2006 | | 2007 | | 2006 | |
| | (In thousands, except per share data) | |
Interest income: | | | | | | | | | |
Loans, including fees | | $ | 36,020 | | $ | 41,238 | | $ | 153,214 | | $ | 163,830 | |
Investment securities: | | | | | | | | | |
Taxable | | 669 | | 661 | | 2,515 | | 2,868 | |
Tax-exempt | | 1,102 | | 1,449 | | 5,193 | | 4,869 | |
Dividends | | 429 | | 460 | | 1,853 | | 1,805 | |
Federal funds sold and other | | 322 | | 73 | | 914 | | 409 | |
Total interest income | | 38,542 | | 43,881 | | 163,689 | | 173,781 | |
Interest expense: | | | | | | | | | |
Deposits | | 12,576 | | 13,374 | | 53,594 | | 47,337 | |
Federal funds purchased and repurchase agreements | | 213 | | 369 | | 1,390 | | 1,274 | |
Borrowings | | 627 | | 1,285 | | 2,700 | | 5,307 | |
Subordinated debentures | | 942 | | 946 | | 3,756 | | 3,666 | |
Total interest expense | | 14,358 | | 15,974 | | 61,440 | | 57,584 | |
Net interest income | | 24,184 | | 27,907 | | 102,249 | | 116,197 | |
Provision for loan losses | | 3,025 | | 2,724 | | 24,666 | | 4,290 | |
Net interest income, after provision for loan losses | | 21,159 | | 25,183 | | 77,583 | | 111,907 | |
Noninterest income: | | | | | | | | | |
Customer service and other fees | | 2,267 | | 2,137 | | 9,509 | | 10,385 | |
Gain (loss) on sale of securities | | — | | (5 | ) | — | | (4 | ) |
Gain (loss) on sale of loans | | — | | (55 | ) | — | | 719 | |
Other | | 665 | | 449 | | 1,187 | | 1,617 | |
Total noninterest income | | 2,932 | | 2,526 | | 10,696 | | 12,717 | |
Noninterest expense: | | | | | | | | | |
Salaries and employee benefits | | 8,442 | | 10,662 | | 39,179 | | 46,185 | |
Occupancy expense | | 1,781 | | 2,040 | | 7,813 | | 7,977 | |
Furniture and equipment | | 1,205 | | 1,176 | | 4,864 | | 4,859 | |
Impairment of goodwill | | 142,210 | | — | | 142,211 | | — | |
Amortization of intangible assets | | 2,132 | | 2,960 | | 8,665 | | 11,815 | |
Other general and administrative | | 4,278 | | 4,384 | | 23,824 | | 20,072 | |
Total noninterest expense | | 160,048 | | 21,222 | | 226,556 | | 90,908 | |
Income (loss) before income taxes | | (135,957 | ) | 6,487 | | (138,277 | ) | 33,716 | |
Income tax expense (benefit) | | 2,253 | | 2,163 | | (185 | ) | 11,286 | |
Income (loss) from continuing operations | | (138,210 | ) | 4,324 | | (138,092 | ) | 22,430 | |
Income from discontinued operations, net of tax | | — | | 1,119 | | — | | 1,988 | |
Net income (loss) | | $ | (138,210 | ) | $ | 5,443 | | $ | (138,092 | ) | $ | 24,418 | |
| | | | | | | | | |
Earnings (loss) per share–basic: | | | | | | | | | |
Income (loss) from continuing operations | | $ | (2.68 | ) | $ | 0.08 | | $ | (2.60 | ) | $ | 0.39 | |
Income (loss) from discontinued operations, net of tax | | — | | 0.02 | | — | | 0.03 | |
Net income (loss) | | (2.68 | ) | 0.10 | | (2.60 | ) | 0.42 | |
Earnings (loss) per share–diluted: | | | | | | | | | |
Income (loss) from continuing operations | | $ | (2.68 | ) | $ | 0.08 | | $ | (2.60 | ) | $ | 0.39 | |
Income (loss) from discontinued operations, net of tax | | — | | 0.02 | | — | | 0.03 | |
Net income (loss) | | (2.68 | ) | 0.10 | | (2.60 | ) | 0.42 | |
Weighted average shares outstanding-basic | | 51,559,554 | | 55,985,528 | | 53,109,307 | | 57,539,986 | |
Weighted average shares outstanding-diluted | | 51,559,554 | | 56,161,626 | | 53,109,307 | | 57,636,365 | |
12
Centennial Bank Holdings, Inc. and Subsidiaries
Unaudited Consolidated Average Balance Sheets
| | QTD Average | | YTD Average | |
| | December 31,
2007 | | September 30,
2007 | | December 31,
2006 | | December 31,
2007 | | December 31,
2006 | |
| | (In thousands) | |
Assets | | | | | | | | | | | |
Interest earning assets | | | | | | | | | | | |
Loans, net of unearned discount | | $ | 1,823,363 | | $ | 1,871,939 | | $ | 1,959,629 | | $ | 1,871,703 | | $ | 1,978,003 | |
Securities | | 178,218 | | 189,526 | | 199,665 | | 188,850 | | 188,642 | |
Other earning assets | | 19,715 | | 16,326 | | 3,616 | | 13,016 | | 5,496 | |
Average earning assets | | 2,021,296 | | 2,077,791 | | 2,162,910 | | 2,073,569 | | 2,172,141 | |
Other assets | | 461,056 | | 549,122 | | 620,465 | | 538,404 | | 678,392 | |
| | | | | | | | | | | |
Total average assets | | $ | 2,482,352 | | $ | 2,626,913 | | $ | 2,783,375 | | $ | 2,611,973 | | $ | 2,850,533 | |
| | | | | | | | | | | |
Liabilities and Stockholders’ Equity | | | | | | | | | | | |
Average liabilities: | | | | | | | | | | | |
Average deposits: | | | | | | | | | | | |
Noninterest-bearing deposits | | $ | 487,805 | | $ | 458,143 | | $ | 512,091 | | $ | 476,876 | | $ | 519,893 | |
Interest-bearing deposits | | 1,391,045 | | 1,460,366 | | 1,456,982 | | 1,435,779 | | 1,463,664 | |
Average deposits | | 1,878,850 | | 1,918,509 | | 1,969,073 | | 1,912,655 | | 1,983,557 | |
Other interest-bearing liabilities | | 112,402 | | 112,298 | | 164,240 | | 118,979 | | 172,018 | |
Other liabilities | | 23,220 | | 26,848 | | 58,183 | | 28,807 | | 97,467 | |
Total average liabilities | | 2,014,472 | | 2,057,655 | | 2,191,496 | | 2,060,441 | | 2,253,042 | |
Average stockholders’ equity | | 467,880 | | 569,258 | | 591,879 | | 551,532 | | 597,491 | |
Total average liabilities and stockholders’ equity | | $ | 2,482,352 | | $ | 2,626,913 | | $ | 2,783,375 | | $ | 2,611,973 | | $ | 2,850,533 | |
13
Centennial Bank Holdings, Inc.
Unaudited Credit Quality Measures
| | Quarter Ended | |
| | December 31,
2007 | | September 30,
2007 | | June 30,
2007 | | March 31,
2007 | | December 31,
2006 | |
| | (Dollars in thousands) | |
Nonaccrual loans and leases, not held for sale | | $ | 19,309 | | $ | 16,831 | | $ | 35,515 | | $ | 31,940 | | $ | 32,852 | |
Accruing loans past due 90 days or more not held for sale | | 527 | | 9 | | 122 | | 323 | | 3 | |
Other real estate owned | | 3,517 | | 3,401 | | 1,385 | | 861 | | 1,207 | |
Total nonperforming assets not held for sale | | $ | 23,353 | | $ | 20,241 | | $ | 37,022 | | $ | 33,124 | | $ | 34,062 | |
| | | | | | | | | | | |
Nonperforming loans held for sale | | 100 | | 12,758 | | — | | — | | — | |
Total nonperforming assets | | $ | 23,453 | | $ | 32,999 | | $ | 37,022 | | $ | 33,124 | | $ | 34,062 | |
| | | | | | | | | | | |
Nonperforming loans not held for sale | | $ | 19,836 | | $ | 16,840 | | $ | 35,637 | | $ | 32,263 | | $ | 32,855 | |
Other impaired loans | | 3,492 | | 510 | | 20,208 | | 8,079 | | 5,978 | |
Total impaired loans not held for sale | | 23,328 | | 17,350 | | 55,845 | | 40,342 | | 38,833 | |
Allocated allowance for loan losses | | (4,283 | ) | (4,028 | ) | (14,113 | ) | (7,673 | ) | (8,028 | ) |
Net investment in impaired loans | | $ | 19,045 | | $ | 13,322 | | $ | 41,732 | | $ | 32,669 | | $ | 30,805 | |
| | | | | | | | | | | |
Charged-off loans | | $ | 1,729 | | $ | 20,079 | | $ | 5,473 | | $ | 1,692 | | $ | 1,088 | |
Recoveries | | (436 | ) | (438 | ) | (809 | ) | (436 | ) | (366 | ) |
Net recoveries (charge-offs) | | $ | 1,293 | | $ | 19,641 | | $ | 4,664 | | $ | 1,256 | | $ | 722 | |
| | | | | | | | | | | |
Provision for loan loss | | $ | 3,025 | | $ | 8,026 | | $ | 12,766 | | $ | 849 | | $ | 2,641 | |
| | | | | | | | | | | |
Allowance for loan losses | | $ | 25,711 | | $ | 23,979 | | $ | 35,594 | | $ | 27,492 | | $ | 27,899 | |
Allowance on unfunded commitments | | 522 | | 586 | | 610 | | 572 | | 411 | |
Total allowance for credit losses | | $ | 26,233 | | $ | 24,565 | | $ | 36,204 | | $ | 28,064 | | $ | 28,310 | |
| | | | | | | | | | | |
Allowance for loan losses to loans, net of unearned discount | | 1.44 | % | 1.32 | % | 1.88 | % | 1.46 | % | 1.43 | % |
Allowance for loan losses to nonaccrual loans not held for sale | | 133.16 | % | 142.47 | % | 100.22 | % | 86.07 | % | 84.92 | % |
Allowance for loan losses to nonperforming assets not held for sale | | 110.10 | % | 118.47 | % | 96.14 | % | 83.00 | % | 81.91 | % |
Allowance for loan losses to nonperforming loans not held for sale | | 129.61 | % | 142.39 | % | 99.88 | % | 85.21 | % | 84.92 | % |
| | | | | | | | | | | |
Nonperforming assets not held for sale to loans, net of unearned discount, and other real estate owned | | 1.31 | % | 1.11 | % | 1.96 | % | 1.76 | % | 1.75 | % |
Annualized net charge-offs (recoveries) to average loans | | 0.28 | % | 4.16 | % | 0.99 | % | 0.27 | % | 0.15 | % |
Nonaccrual loans not held for sale to loans, net of unearned discount | | 1.08 | % | 0.93 | % | 1.88 | % | 1.69 | % | 1.69 | % |
14
