Exhibit 99.1
FNB United Corp. Reports Earnings for Second Quarter of 2008
Asset Quality Improves; Goodwill Reduced
ASHEBORO, N.C.--(BUSINESS WIRE)--FNB United Corp. (NASDAQ:FNBN), the holding company for CommunityONE Bank, N.A., and its wholly owned subsidiary, Dover Mortgage Company, today reported second quarter profits for the quarter ended June 30, 2008. FNB United earned $140,000, or $0. 01 per diluted share, in the second quarter of 2008, compared to $3.7 million, or $0.33 per diluted share, in the second quarter a year ago. The second quarter of 2008 results include the impact of the Company’s election to take a non-cash goodwill impairment charge of $1.8 million, or $0.16 per diluted share, related to Dover Mortgage Company, as discussed below. This charge has no impact on tangible equity or regulatory capital ratios since goodwill is already excluded from these measures. Operating earnings for the second quarter was $1.9 million, or $.17 per share. For the first six months of 2008, net income was $2.5 million, or $0.21, per diluted share, compared to $7.4 million, or $0.66 per diluted share, in the first half of 2007. Operating earnings for the first six months of 2008, excluding the goodwill reduction, was $4.26 million, or $.37 per share. FNB United has $215 million in shareholders’ equity and each of FNB United and CommunityONE Bank is “well capitalized” by regulatory capital standards.
“Our second quarter and year to date operating performance is a result of reduced interest rate margins, supported by overall improvements in asset quality as well as a continued focus on improved efficiencies,” said Michael Miller, President and CEO. “We worked past due and impaired loans down to lower levels during the second quarter, and will continue to work diligently on improving asset quality. In addition, we are focused on improving efficiencies through cost cutting plans, which we are in the process of implementing and will be ongoing in the third and fourth quarters. We believe we will see significant financial benefits of these efficiencies beginning in 2009; which will be instrumental in improving our operating expense ratios.”
“Because of the uncertainties in the economy, we are monitoring asset growth and other key performance measures to preserve capital,” added Miller. “During the quarter our loan production moderated as compared to the robust loan growth we experienced in the second half of 2007 and the first quarter of 2008. Going forward we expect to experience moderate loan growth funded with deposits.”
During the second quarter of 2008, FNB United commenced an impairment evaluation of the Dover Mortgage goodwill as a result of changes in the Dover business model, which included the discontinuance of certain offices which were not accretive to earnings. The Company elected to take a goodwill impairment charge of $1.8 million (pre-tax and after-tax), and this non-cash charge has been recorded as a component of noninterest expense for the second quarter. “Dover is far better structured to succeed in today’s mortgage market,” Mike Miller said. “It is well-positioned to take advantage of its 20+ year experience in FHA and government-backed mortgages, along with its menu of conforming and reverse mortgages.”
Year to Date 2008 Highlights
- Operating income was $4.26 million, or $0.37 per diluted share.
- Net interest margin was 3.54%, compared to 4.11% for the first half of 2007.
- Loans held for investment increased 16.4% year-over-year, to $1.56 billion.
- Total deposits have increased to $1.49 billion at June 30, 2008, from $1.44 billion at December 31, 2007, an annualized increase of 6.0%.
- Nonperforming assets, at 0.90% of total assets, have trended down for three consecutive quarters.
On June 30, 2008, CommunityONE entered into a subordinated debt loan agreement, providing for a $15 million subordinated term loan that is unsecured and intended to qualify as Tier 2 capital. The loan will mature on June 30, 2015 and bears interest at three-month LIBOR plus 3.50%.
Also, on May 27, 2008, FNB United entered into a revolving credit facility in the original principal amount of $10 million. Proceeds of this revolving credit facility will be used for general corporate purposes, including supporting the capital needs of CommunityONE. The revolving credit facility bears interest at three-month LIBOR plus 1.50% per annum and will mature on May 22, 2009. As of June 30, 2008, the entire balance of $10 million is available.
Credit Quality
FNB United continues to focus on credit quality and as a result nonperforming assets (NPAs) have decreased compared to the previous quarter. At June 30, 2008, total nonperforming assets were $18.4 million, or 0.90% of total assets, a decrease from $20.5 million, or 1.01% of total assets, three months earlier. Nonperforming assets were $14.7 million, or 0.79%, of total assets at June 30, 2007. Net chargeoffs were 0.19% of average loans outstanding for the quarter ended June 30, 2008, compared to 0.16% in the year ago period.
“We continue to monitor the credit risk and quality of our loan portfolio as well as the current economic conditions and believe we are well positioned to limit credit losses as we move through this challenging period. We are pleased that past due loans are significantly reduced from a year ago,” said Miller. FNB United has not originated any subprime real estate loans and has no subprime mortgage backed securities exposure in its investment portfolio.
FNB United recorded a $1.4 million provision to its allowance for loan losses in the second quarter of 2008, of which $630,000 was directly related to second quarter loan growth. This compares to a $1.5 million provision in the previous quarter and $476,000 in the second quarter a year ago. For the first six months of the year it added $2.9 million to its allowance for loan losses, of which $1.5 million was related to loan growth, compared to $1.0 million in the first six months of 2007. The allowance for loan losses was $18.8 million, or 1.20% of loans held for investment, at June 30, 2008, compared to $18.2 million, or 1.18%, at the end of the preceding quarter and $15.7 million, or 1.16%, at the end of June 2007.
Balance Sheet
Assets increased 10.4% to $2.06 billion at June 30, 2008, compared to $1.86 billion a year earlier. Loans held for investment increased 16.4%, to $1.56 billion at quarterend, compared to $1.34 billion a year earlier.
“We continue to focus on core deposit growth by expanding our deposit banking products,” said Miller. “In September 2007 we began offering a new transaction deposit product to help shift our deposit emphasis to transaction accounts, such as checking and money market accounts, from certificates of deposits. Already we are seeing improvements in our transaction account balances.” Total deposits were $1.49 billion at the end of June 2008, compared to $1.45 billion a year earlier. Transaction deposits increased 6% to $679 million at June 30, 2008, compared to $642 million at the end of June 2007, and now represent 46% of total deposits, compared to 44% of total deposits 12 months earlier. Certificates of deposit increased to $807 million, from $804 million a year ago. Brokered certificates of deposits were $12.1 million as of June 30, 2008.
Shareholders’ equity increased 1%, to $214.9 million, compared to $212.5 million a year earlier. Book value per share was $18.81 at June 30, 2008, from $18.68 a year earlier, and tangible book value per share was $8.78 at quarterend, compared to $8.35 a year earlier.
Net Interest Margin
FNB United’s significant loan growth in late 2007 and early 2008 did not immediately translate into higher interest income as asset rates declined more rapidly than liability rates over the same period. The yield on earnings assets declined to 6.38% in the second quarter of 2008, from 7.96% a year earlier. The cost of funds was 3.27% and 4.30%, respectively, for the same periods.
“The 158 basis point decline in the yield on earning assets, offset somewhat by the 103 basis point decline in the cost of interest-bearing liabilities, yielded greater than a 50 basis point decline in the net interest margin for the second quarter of 2008, compared to the second quarter a year ago,” said Miller. “As a result of our mix of our interest-bearing assets and liabilities, our balance sheet is asset sensitive, and the impact of falling rates had a quicker impact on interest income than interest expense. This effect is expected to moderate as deposits reprice in coming quarters.” The net interest margin was 3.40% for the second quarter of the year, compared to 4.07% for the same period a year ago.
Income Statement
Net interest income before the provision for loan losses for the second quarter of 2008 was $14.9 million, compared to $16.1 million for the second quarter a year ago. For the first six months of 2008, net interest income before the provision for loan losses was $30.4 million, compared to $31.9 million for the first six months of 2007. Noninterest income was $4.6 million for the second quarter, compared to $5.4 million in the second quarter a year ago. Year-to-date noninterest income was $9.4 million, compared to $10.3 million a year ago. The decline was largely due to lower service charges on deposit accounts and a decrease in mortgage loan sales income.
For the second quarter of 2008, noninterest expense was $17.1 million, compared to $15.4 million in the preceding quarter and $15.3 million in the second quarter a year ago. For the first six months of the year, noninterest expense was $32.5 million, compared to $29.9 million in the first half of 2007. The increase was primarily related to the $1.8 million goodwill impairment charge.
About the Company
FNB United Corp. is the Asheboro, North Carolina-based bank holding company for CommunityONE Bank, N.A., and the bank’s subsidiary, Dover Mortgage Company. Opened in 1907, CommunityONE (MyYesBank.com) operates 43 offices in 35 communities throughout central, southern and western North Carolina. Through these companies, FNB United offers a complete line of consumer, mortgage and business banking services, including loan, deposit, cash management, wealth management and internet banking services.
This news release may contain forward-looking statements regarding future events. Forward-looking statements often address our expected future business and financial performance, and often contain words such as “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” or “will.” These statements are only predictions and are subject to risks and uncertainties that could cause the actual events or results to differ materially. These risks and uncertainties include risks of managing our growth, changes in financial markets, changes in real estate markets, regulatory changes, changes in interest rates, changes in economic conditions being less favorable than anticipated, and loss of deposits and loan demand to other financial institutions. Additional information concerning factors that could cause actual results to be materially different from those in the forward-looking statements is contained in FNB United’s filings with the Securities and Exchange Commission. FNB United does not assume any obligation to update these forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
RESULTS OF OPERATIONS |
(In thousands except share and per share data) |
| | | | | | | | | | | | | | |
| | Quarters Ended | | Percent Change |
| | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 | | June 30,
2007 | | March 31,
2008 | | June 30,
2007 |
| | | | | | | | | | | | | | |
| INTEREST INCOME: | | | | | | | | | | | | | | |
| Interest and fees on loans | | $ 25,858 | | $ 27,537 | | $ 29,160 | | $ 29,281 | | $ 28,569 | | -6% | | -9% |
| Interest and dividends on investments securities: | | | | | | | | | | | | | | |
| Taxable income | | 1,959 | | 2,134 | | 2,145 | | 2,298 | | 2,231 | | -8% | | -12% |
| Non-taxable income | | 503 | | 527 | | 532 | | 520 | | 491 | | -5% | | 2% |
| Other interest income | | 5 | | 12 | | 44 | | 49 | | 423 | | -58% | | -99% |
| Total interest income | | 28,325 | | 30,210 | | 31,881 | | 32,148 | | 31,714 | | -6% | | -11% |
| INTEREST EXPENSE: | | | | | | | | | | | | | | |
| Deposits | | 10,622 | | 11,806 | | 13,063 | | 13,488 | | 13,245 | | -10% | | -20% |
| Borrowed funds | | 2,754 | | 2,974 | | 3,090 | | 2,661 | | 2,410 | | -7% | | 14% |
| Total interest expense | | 13,376 | | 14,780 | | 16,153 | | 16,149 | | 15,655 | | -9% | | -15% |
| Net interest income before provision for loan losses | | 14,949 | | 15,430 | | 15,728 | | 15,999 | | 16,059 | | -3% | | -7% |
| | | | | | | | | | | | | | |
| PROVISION FOR LOAN LOSSES | | 1,383 | | 1,514 | | 3,044 | | 1,470 | | 476 | | -9% | | 191% |
| Net interest income after provision for loan losses | | 13,566 | | 13,916 | | 12,684 | | 14,529 | | 15,583 | | -3% | | -13% |
| NONINTEREST INCOME: | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | 2,137 | | 2,084 | | 2,434 | | 2,249 | | 2,279 | | 3% | | -6% |
| Mortgage loan sales | | 804 | | 1,423 | | 887 | | 1,150 | | 1,368 | | -43% | | -41% |
| Cardholder and merchant services income | | 638 | | 480 | | 393 | | 441 | | 537 | | 33% | | 19% |
| Trust and investment services | | 468 | | 463 | | 418 | | 436 | | 461 | | 1% | | 2% |
| Other service charges, commissions and fees | | 335 | | 113 | | 62 | | 280 | | 319 | | 196% | | 5% |
| Bank owned life insurance | | 235 | | 249 | | 254 | | 240 | | 215 | | -6% | | 9% |
| Gain on sale of credit card portfolio | | - | | - | | - | | 1,302 | | - | | - | | - |
| Other income | | (64) | | 45 | | 345 | | 380 | | 199 | | -242% | | -132% |
| Total noninterest income | | 4,553 | | 4,857 | | 4,793 | | 6,478 | | 5,378 | | -6% | | -15% |
| | | | | | | | | | | | | | |
| NONINTEREST EXPENSE: | | | | | | | | | | | | | | |
| Salaries and employee benefits | | 8,908 | | 8,699 | | 8,042 | | 8,509 | | 8,199 | | 2% | | 9% |
| Net occupancy expense | | 1,350 | | 1,299 | | 1,383 | | 1,351 | | 1,390 | | 4% | | -3% |
| Furniture and equipment expense | | 1,121 | | 1,136 | | 1,114 | | 1,166 | | 1,247 | | -1% | | -10% |
| Data processing services | | 726 | | 457 | | 527 | | 386 | | 470 | | 59% | | 54% |
| Goodwill impairment | | 1,800 | | - | | 358 | | - | | - | | - | | - |
| Other expense | | 3,223 | | 3,777 | | 4,260 | | 4,045 | | 4,015 | | -15% | | -20% |
| Total noninterest expense | | 17,128 | | 15,368 | | 15,684 | | 15,457 | | 15,321 | | 11% | | 12% |
| Income before provision for income taxes | | 991 | | 3,405 | | 1,793 | | 5,550 | | 5,640 | | -71% | | -82% |
| | | | | | | | | | | | | | |
| PROVISION FOR INCOME TAXES | | 851 | | 1,082 | | 542 | | 1,884 | | 1,949 | | -21% | | -56% |
| NET INCOME | | $ 140 | | $ 2,323 | | $ 1,251 | | $ 3,666 | | $ 3,691 | | -94% | | -96% |
| Earnings per common share: | | | | | | | | | | | | | | |
| Basic | | $ 0.01 | | $ 0.20 | | $ 0.11 | | $ 0.32 | | $ 0.33 | | -94% | | -96% |
| Diluted | | $ 0.01 | | $ 0.20 | | $ 0.11 | | $ 0.32 | | $ 0.33 | | -94% | | -96% |
| | | | | | | | | | | | | | |
| Cash dividends per common share | | $ 0.15 | | $ 0.15 | | $ 0.15 | | $ 0.15 | | $ 0.15 | | - | | - |
| | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | |
| Basic | | 11,386,767 | | 11,386,767 | | 11,368,423 | | 11,335,672 | | 11,318,908 | | | | |
| Diluted | | 11,386,767 | | 11,386,767 | | 11,368,423 | | 11,352,625 | | 11,343,367 | | | | |
RESULTS OF OPERATIONS |
(In thousands except share and per share data) |
| |
| | Year to Date | | |
| | June 30,
2008 | | June 30,
2007 | | Percent Change |
| INTEREST INCOME: | | | | | | |
| Interest and fees on loans | | $ | 53,394 | | | $ | 56,438 | | -5 | % |
| Interest and dividends on investments securities: | | | | | | |
| Taxable income | | | 4,094 | | | | 3,887 | | 5 | % |
| Non-taxable income | | | 1,030 | | | | 1,045 | | -1 | % |
| Other interest income | | | 17 | | | | 1,241 | | -99 | % |
| Total interest income | | | 58,535 | | | | 62,611 | | -7 | % |
| INTEREST EXPENSE: | | | | | | |
| Deposits | | | 22,428 | | | | 26,043 | | -14 | % |
| Borrowed funds | | | 5,728 | | | | 4,684 | | 22 | % |
| Total interest expense | | | 28,156 | | | | 30,727 | | -8 | % |
| Net interest income before provision for loan losses | | | 30,379 | | | | 31,884 | | -5 | % |
| | | | | | |
| PROVISION FOR LOAN LOSSES | | | 2,897 | | | | 1,000 | | 190 | % |
| Net interest income after provision for loan losses | | | 27,482 | | | | 30,884 | | -11 | % |
| NONINTEREST INCOME: | | | | | | |
| Service charges on deposit accounts | | | 4,221 | | | | 4,329 | | -2 | % |
| Mortgage loan sales | | | 2,227 | | | | 2,506 | | -11 | % |
| Cardholder and merchant services income | | | 1,119 | | | | 1,044 | | 7 | % |
| Trust and investment services | | | 931 | | | | 832 | | 12 | % |
| Other service charges, commissions and fees | | | 448 | | | | 656 | | -32 | % |
| Bank owned life insurance | | | 486 | | | | 451 | | 8 | % |
| Other income | | | (19 | ) | | | 502 | | -104 | % |
| Total noninterest income | | | 9,413 | | | | 10,320 | | -9 | % |
| NONINTEREST EXPENSE: | | | | | | |
| Salaries and employee benefits | | | 17,607 | | | | 16,618 | | 6 | % |
| Net occupancy expense | | | 2,649 | | | | 2,569 | | 3 | % |
| Furniture and equipment expense | | | 2,257 | | | | 2,360 | | -4 | % |
| Data processing services | | | 1,183 | | | | 1,002 | | 18 | % |
| Goodwill impairment | | | 1,800 | | | | - | | - | |
| Other expense | | | 7,003 | | | | 7,353 | | -5 | % |
| Total noninterest expense | | | 32,499 | | | | 29,902 | | 9 | % |
| Income before provision for income taxes | | | 4,396 | | | | 11,302 | | -61 | % |
| | | | | | |
| PROVISION FOR INCOME TAXES | | | 1,933 | | | | 3,859 | | -50 | % |
| | | | | | |
| NET INCOME | | $ | 2,463 | | | $ | 7,443 | | -67 | % |
| | | | | | |
| Earnings per common share: | | | | | | |
| Basic | | $ | 0.21 | | | $ | 0.66 | | -67 | % |
| Diluted | | $ | 0.21 | | | $ | 0.66 | | -67 | % |
| | | | | | |
| Cash dividends per common share | | $ | 0.15 | | | $ | 15.17 | | -99 | % |
| | | | | | |
| Weighted average shares outstanding: | | | | | | |
| Basic | | | 11,386,767 | | | | 11,291,270 | | |
| Diluted | | | 11,386,767 | | | | 11,319,427 | | |
| | | | | | |
| Shares repurchased during the period | | | - | | | | - | | |
FINANCIAL CONDITION |
(In thousands except share and per share data) |
| | | | | | | | | | | | | | | |
| | As of | | Percent Change |
| | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept 30,
2007 | | June 30,
2007 | | March 31,
2008 | | June 30,
2007 |
| | | | | | | | | | | | | | | |
ASSETS | | | | | | | | | | | | | | |
| Cash and due from banks | | $ 36,728 | | $ 38,333 | | $ 37,739 | | $ 38,537 | | $ 34,844 | | -4% | | 5% |
| Interest-bearing bank balances | | 198 | | 220 | | 836 | | 1,527 | | 1,729 | | -10% | | -89% |
| Federal funds sold | | 500 | | 532 | | 542 | | 247 | | 317 | | -6% | | 58% |
| Securities available for sale | | 186,213 | | 203,598 | | 161,809 | | 197,885 | | 200,141 | | -9% | | -7% |
| Securities held to maturity | | 25,360 | | 28,030 | | 35,650 | | 36,263 | | 38,418 | | -10% | | -34% |
| | | | | | | | | | | | | | | |
| Loans held for sale | | 19,875 | | 15,121 | | 17,586 | | 21,653 | | 27,123 | | 31% | | -27% |
| | | | | | | | | | | | | | | |
| Loans held for investment | | 1,574,942 | | 1,541,119 | | 1,446,116 | | 1,382,917 | | 1,352,576 | | 2% | | 16% |
| Allowance for loan losses | | (18,845) | | (18,215) | | (17,381) | | (16,116) | | (15,705) | | 3% | | 20% |
| Net loans held for investment | | 1,556,097 | | 1,522,904 | | 1,428,735 | | 1,366,801 | | 1,336,871 | | 2% | | 16% |
| Property and equipment, net | | 49,926 | | 48,059 | | 46,614 | | 46,525 | | 45,882 | | 4% | | 9% |
| Goodwill | | 108,395 | | 110,195 | | 110,195 | | 110,553 | | 110,553 | | -2% | | -2% |
| Core deposit premiums | | 6,161 | | 6,362 | | 6,564 | | 6,766 | | 6,968 | | -3% | | -12% |
| Other assets | | 65,567 | | 61,929 | | 60,236 | | 66,789 | | 60,561 | | 6% | | 8% |
| Total assets | | $ 2,055,020 | | $ 2,035,283 | | $ 1,906,506 | | $ 1,893,546 | | $ 1,863,407 | | 1% | | 10% |
| | | | | | | | | | | | | | | |
LIABILITIES | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | |
| Noninterest-bearing | | $ 164,066 | | $ 167,511 | | $ 158,564 | | $ 159,400 | | $ 163,339 | | -2% | | 0% |
| Interest-bearing deposits: | | | | | | | | | | | | | | |
| Demand, savings, and money market deposits | | 514,885 | | 471,733 | | 464,731 | | 468,219 | | 477,867 | | 9% | | 8% |
| Time deposits of $100,000 or more | | 375,854 | | 409,678 | | 375,419 | | 377,709 | | 364,697 | | -8% | | 3% |
| Other time deposits | | 430,724 | | 436,727 | | 442,328 | | 446,771 | | 439,427 | | -1% | | -2% |
| | | 1,485,529 | | 1,485,649 | | 1,441,042 | | 1,452,099 | | 1,445,330 | | 0% | | 3% |
| Retail repurchase agreements | | 32,297 | | 35,815 | | 29,133 | | 30,528 | | 28,181 | | -10% | | 15% |
| Federal Home Loan Bank advances | | 202,418 | | 192,413 | | 131,790 | | 114,253 | | 64,602 | | 5% | | 213% |
| Federal funds purchased | | 28,000 | | 28,000 | | 13,500 | | - - | | 8,950 | | 0% | | 213% |
| Subordinated debt | | 15,000 | | - - | | - - | | - - | | - - | | - - | | - - |
| Junior subordinated debentures | | 57,307 | | 56,673 | | 56,702 | | 61,802 | | 83,884 | | 1% | | -32% |
| Other liabilities | | 19,587 | | 19,591 | | 18,083 | | 19,933 | | 19,988 | | 0% | | -2% |
| Total liabilities | | 1,840,138 | | 1,818,141 | | 1,690,250 | | 1,678,615 | | 1,650,935 | | 1% | | 11% |
| | | | | | | | | | | | | | | |
SHAREHOLDERS' EQUITY | | | | | | | | | | | | | | |
| Common stock | | 28,563 | | 28,563 | | 28,567 | | 28,439 | | 28,432 | | 0% | | 0% |
| Surplus | | 114,478 | | 114,293 | | 114,119 | | 113,488 | | 113,282 | | 0% | | 1% |
| Retained earnings | | 73,449 | | 74,452 | | 74,199 | | 74,659 | | 72,701 | | -1% | | 1% |
| Accumulated other comprehensive income (loss) | | (1,608) | | (166) | | (629) | | (1,655) | | (1,943) | | 869% | | -17% |
| Total shareholders' equity | | 214,882 | | 217,142 | | 216,256 | | 214,931 | | 212,472 | | -1% | | 1% |
| | | $ 2,055,020 | | $ 2,035,283 | | $ 1,906,506 | | $ 1,893,546 | | $ 1,863,407 | | 1% | | 10% |
| | | | | | | | | | | | | | | |
| Shares Issued: | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | |
| Shares outstanding at end of period | | 11,425,052 | | 11,425,052 | | 11,426,902 | | 11,375,667 | | 11,372,738 | | 0% | | 0% |
| | | | | | | | | | | | | | | |
| Book value per share (1) | | $ 18.81 | | $ 19.01 | | $ 18.93 | | $ 18.89 | | $ 18.68 | | -1% | | 1% |
| Tangible book value per share (1) | | $ 8.78 | | $ 8.80 | | $ 8.71 | | $ 8.58 | | $ 8.35 | | 1% | | 5% |
| | | | | | | | | | | | | | | |
| (1) | - Calculation is based on number of shares outstanding at the end of the period rather than weighted average shares outstanding |
| ADDITIONAL FINANCIAL INFORMATION |
| (Dollars in thousands) |
| (Rates / Ratios Annualized) |
| |
| | Quarters Ended | | Six Months Ended |
| OPERATING PERFORMANCE: | | June 30, 2008 | | March 31, 2008 | | Dec. 31, 2007 | | Sept. 30, 2007 | | June 30, 2007 | | June 30, 2008 | | June 30, 2007 |
| | | | | | | | | | | | | | |
| Average loans | | $ 1,577,769 | | $ 1,506,582 | | $ 1,418,743 | | $ 1,388,623 | | $ 1,355,601 | | $ 1,542,519 | | $ 1,344,256 |
| Average securities | | 227,524 | | 215,382 | | 226,246 | | 242,318 | | 258,519 | | 221,605 | | 254,824 |
Average noninterest-earning assets | | 240,741 | | 238,301 | | 238,343 | | 240,041 | | 241,316 | | 239,321 | | 243,934 |
| Total average assets | | $ 2,046,034 | | $ 1,960,265 | | $ 1,883,332 | | $ 1,870,982 | | $ 1,855,436 | | $ 2,003,445 | | $ 1,843,014 |
| | | | | | | | | | | | | | |
| Average interest-bearing deposits | | $ 1,322,218 | | $ 1,294,588 | | $ 1,286,667 | | $ 1,282,758 | | $ 1,285,315 | | $ 1,308,402 | | $ 1,278,023 |
| Average noninterest bearing deposits | | 164,611 | | 157,436 | | 159,056 | | 159,082 | | 162,707 | | 161,377 | | 159,367 |
| Average borrowings | | 323,305 | | 271,323 | | 201,502 | | 195,179 | | 174,143 | | 297,291 | | 173,680 |
| Average noninterest-earning liabilities | | 18,447 | | 19,202 | | 19,755 | | 19,911 | | 21,592 | | 18,790 | | 21,509 |
| Total average liabilities | | 1,828,581 | | 1,742,549 | | 1,666,980 | | 1,656,930 | | 1,643,757 | | 1,785,860 | | 1,632,579 |
| Total average stockholders' equity | | 217,453 | | 217,716 | | 216,352 | | 214,052 | | 211,679 | | 217,584 | | 210,435 |
| Total average liabilities and equity | | $ 2,046,034 | | $ 1,960,265 | | $ 1,883,332 | | $ 1,870,982 | | $ 1,855,436 | | $ 2,003,444 | | $ 1,843,014 |
| | | | | | | | | | | | | | |
| Interest rate yield on loans | | 6.60% | | 7.37% | | 8.17% | | 8.38% | | 8.47% | | 6.97% | | 8.48% |
| Interest rate yield on securities | | 4.84% | | 5.52% | | 5.27% | | 5.15% | | 5.29% | | 5.17% | | 5.33% |
| Interest rate yield on interest-earning assets | | 6.38% | | 7.13% | | 7.77% | | 7.90% | | 7.96% | | 6.75% | | 7.98% |
| | | | | | | | | | | | | | |
| Interest rate expense on deposits | | 3.23% | | 3.67% | | 4.03% | | 4.17% | | 4.13% | | 3.45% | | 4.11% |
| Interest rate expense on borrowings | | 3.43% | | 4.41% | | 6.08% | | 5.41% | | 5.55% | | 3.87% | | 5.44% |
| Interest rate expense on interest-bearing liabilities | | 3.27% | | 3.80% | | 4.31% | | 4.34% | | 4.30% | | 3.53% | | 4.27% |
| | | | | | | | | | | | | | |
| Interest rate spread | | 3.11% | | 3.34% | | 3.46% | | 3.57% | | 3.66% | | 3.22% | | 3.71% |
| | | | | | | | | | | | | | |
| Net interest margin | | 3.40% | | 3.68% | | 3.88% | | 3.97% | | 4.07% | | 3.54% | | 4.11% |
| | | | | | | | | | | | | | |
| Other operating income / Average assets | | 0.90% | | 1.00% | | 1.01% | | 1.37% | | 1.17% | | 0.94% | | 1.13% |
| | | | | | | | | | | | | | |
| Other operating expense / Average assets | | 3.37% | | 3.15% | | 3.30% | | 3.28% | | 3.32% | | 3.25% | | 3.27% |
| | | | | | | | | | | | | | |
Efficiency ratio (other operating expense / revenue) | | 87.83% | | 75.75% | | 76.43% | | 68.77% | | 71.47% | | 81.67% | | 70.85% |
| | | | | | | | | | | | | | |
| Return on average assets | | 0.03% | | 0.48% | | 0.26% | | 0.78% | | 0.80% | | 0.25% | | 0.81% |
| | | | | | | | | | | | | | |
| Return on average tangible assets | | 0.03% | | 0.51% | | 0.26% | | 0.83% | | 0.85% | | 0.26% | | 0.87% |
| Return on average equity | | 0.26% | | 4.29% | | 2.29% | | 6.79% | | 7.01% | | 2.28% | | 7.13% |
| Return on average tangible equity | | 0.56% | | 9.24% | | 2.29% | | 15.05% | | 15.85% | | 4.90% | | 16.26% |
| | | | | | | | | | | | | | |
| Average equity / Average assets | | 10.63% | | 11.11% | | 11.49% | | 11.44% | | 11.41% | | 10.86% | | 11.42% |
| ADDITIONAL FINANCIAL INFORMATION |
(Dollars in thousands) |
| |
| | As of / For the Quarters Ended | | As of / For the Six Months Ended |
| | | | | | | | | | | | | | |
NONPERFORMING ASSETS: | | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 |
| Loans on nonaccrual status | | $ 12,390 | | $ 13,924 | | $ 16,022 | | $ 9,500 | | $ 8,460 | | $ 12,390 | | $ 8,460 |
| Loans more than 90 days delinquent, still on accrual | | 260 | | 2,445 | | 2,686 | | 2,400 | | 3,140 | | 260 | | 3,140 |
| Total nonperforming loans | | 12,650 | | 16,369 | | 18,708 | | 11,900 | | 11,600 | | 12,650 | | 11,600 |
| Real estate owned (OREO) / Repossessed assets | | 5,772 | | 4,119 | | 2,862 | | 5,000 | | 3,100 | | 5,772 | | 3,100 |
| Total nonperforming assets | | $ 18,422 | | $ 20,488 | | $ 21,570 | | $ 16,900 | | $ 14,700 | | $ 18,422 | | $ 14,700 |
| Total nonperforming assets / Total assets | | 0.90% | | 1.01% | | 1.13% | | 0.89% | | 0.79% | | 0.90% | | 0.79% |
| | | | | | | | | | | | | | |
CHANGE IN THE ALLOWANCE FOR LOAN LOSSES: | | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 |
| Balance, beginning of period | | $ 18,215 | | $ 17,381 | | $ 16,116 | | $ 15,705 | | $ 15,757 | | $ 17,381 | | $ 15,943 |
| Provision | | 1,383 | | 1,514 | | 3,044 | | 1,470 | | 476 | | 2,897 | | 1,000 |
| Recoveries of loans previously charged off | | 352 | | 366 | | 350 | | 378 | | 503 | | 718 | | 991 |
| Loans charged-off | | (1,106) | | (1,046) | | (2,129) | | (1,135) | | (1,031) | | (2,152) | | (2,229) |
| Net (charge-offs) recoveries | | (754) | | (680) | | (1,779) | | (757) | | (528) | | (1,434) | | (1,238) |
| Allowance adjustment for loans sold | | - | | - | | - | | (302) | | - | | - | | - - |
| Balance, end of period | | $ 18,844 | | $ 18,215 | | $ 17,381 | | $ 16,116 | | $ 15,705 | | $ 18,844 | | $ 15,705 |
| | | | | | | | | | | | | | |
| Net chargeoffs / Average loans outstanding (annualized) | | 0.19% | | 0.18% | | 0.50% | | 0.22% | | 0.16% | | 0.19% | | 0.18% |
| Allowance for loan losses / Loans held for investment | | 1.20% | | 1.18% | | 1.20% | | 1.17% | | 1.16% | | 1.20% | | 1.16% |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | | |
DEPOSITS | | June 30,
2008 | | March 31,
2008 | | Dec. 31,
2007 | | Sept. 30,
2007 | | June 30,
2007 | | June 30,
2008 | | June 30,
2007 |
| Noninterest-bearing | | $ 164,066 | | $ 167,511 | | $ 158,564 | | $ 159,400 | | $ 163,339 | | $ 164,066 | | $ 163,339 |
| Interest-bearing transaction deposits: | | | | | | | | | | | | | | |
| Checking | | 173,974 | | 173,137 | | 163,275 | | 160,763 | | 169,152 | | 173,974 | | 169,152 |
| Money Market | | 298,585 | | 256,349 | | 260,307 | | 263,198 | | 260,353 | | 298,585 | | 260,353 |
| Savings | | 41,833 | | 42,247 | | 41,149 | | 44,257 | | 48,360 | | 41,833 | | 48,360 |
| Total interest-bearing transaction deposits | | 514,392 | | 471,733 | | 464,731 | | 468,218 | | 477,865 | | 514,392 | | 477,865 |
| Interest-bearing time deposits | | 807,071 | | 846,406 | | 817,747 | | 824,481 | | 804,125 | | 807,071 | | 804,125 |
| Total deposits | | $ 1,485,529 | | $ 1,485,650 | | $ 1,441,042 | | $ 1,452,099 | | $ 1,445,329 | | $ 1,485,529 | | $ 1,445,329 |
CONTACT:
FNB United Corp.
Mark Severson, CFO, 336-626-8351
