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NEWS RELEASE
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FOR IMMEDIATE RELEASE Contact: James Smessaert, President
April 30, 2001 Arthur Thompson, Chief Financial Officer
Telephone: (414) 290-7900
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Glendale, Wisconsin -- (April 30, 2001) Ledger Capital Corp. (NASDAQ: LEDG),
the holding company of Ledger Bank SSB, announced today earnings for the three
and nine months ended March 31, 2001. As stated in Ledger Capital Corp.'s 2000
Form 10-K/A Annual Report, the Company expected to realize lower earnings for
fiscal 2001 due to a negative interest rate gap position and higher non-interest
expenses related to expanded sales and branch activities, primarily the opening
of the new Glendale banking center. The Company also announced today it has
restated its financial statements for fiscal 2000 and the first two quarters of
fiscal 2001 as a result of an underaccrual of interest income on certain
purchased commercial real estate and multi-family residential loans.
For the three months ended March 31, 2001, net income decreased to $513,000
compared to net income of $678,000 for the three months ended March 31, 2000.
Diluted earnings per share decreased to $0.21 for the three months ended
March 31, 2001, compared to $0.26 for the three months ended March 31, 2000. Net
income and diluted earnings per share for the nine months ended March 31, 2001
also decreased to $1.8 million and $0.72, respectively, from $2.4 million and
$0.90, respectively, for the nine months ended March 31, 2000. However, the
Company's diluted book value per share increased to $14.82 at March 31, 2001
from $12.73 at March 31, 2000.
Net interest income decreased $392,000 to $2.9 million for the three months
ended March 31, 2001 from $3.3 million during the same period in the prior year.
For the nine months ended March 31, 2001, net interest income decreased $1.1
million to $8.6 million from $9.7 million during the same period last year. The
decreases in net interest income were primarily due to decreases in the net
interest margin to 2.39% and 2.32% for the three and nine months ended March 31,
2001, respectively, from 2.55% and 2.62% for the three and nine months ended
March 31, 2000, respectively. The decreases in net interest margin are primarily
due to the Company's negative interest rate gap position and the generally
higher interest rate environment in first half of fiscal year 2001 compared to
the prior year.
"Higher funding costs and increased non-interest expense resulting from our name
change and new banking center introduction have resulted in a decrease in net
income. Interest rates were generally higher in calendar 2000, with recent
declines in market interest rates occuring at the beginning of calendar 2001.
Given our current gap position and the repricing lag of our assets and
liabilities, we anticipate an improvement next quarter in net interest income as
compared to the previous two quarters assuming current market interest rates
stabilize or decline further. However, notwithstanding the projected improvement
in net interest income on a consecutive quarter basis, the Company continues to
anticipate lower net income for fiscal 2001 as compared to the previous year,"
said James Smessaert, President and CEO of Ledger Capital Corp. "In addition, as
we stated to our shareholders in our Fiscal 2000 Annual Report, we believe the
strategic benefits of the expanded branch and sales activities will have a
long-term positive impact on the Company's results of operations and franchise
value."
Non-interest income increased for the three and nine months ended March 31,
2001. For the quarter ended March 31, 2001, non-interest income increased to
$573,000 from $89,000 for the prior period. For the nine months ended March 31,
2001, non-interest income increased to $1.4 million from $883,000 for the nine
months ended March 31, 2000. The largest component of the increase in
non-interest income was an increase of 126.9% in gain on the sale of loans to
$590,000 for the nine months ended March 31, 2001 from $260,000 for the nine
months ended March 31, 2000. The increase in the gain on sale of loans
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Ledger Capital Corp.
April 30, 2001
Page 2
was attributable to an increase in one-to-four family residential mortgage loans
sold that were originated in the Bank's primary market area.
Non-interest expense increased for the three months ended March 31, 2001 to
$2.5 million from $2.1 million for the three months ended March 31, 2000. For
the nine months ended March 31, 2001, non-interest expense increased to $6.9
million from $6.5 million for the nine months ended March 31, 2000. Management
currently anticipates that non-interest expense will increase in the last
quarter of fiscal 2001 primarily due to the added marketing and staffing costs
of the new Glendale banking center.
Total assets at March 30, 2001 decreased $12.9 million to $507.1 million from
$520.0 million at June 30, 2000. The decrease in total assets is primarily due
to a decrease in loans receivable which decreased $28.1 million to $364.2
million at March 31, 2001 from $392.3 million at June 30, 2000. For the nine
months ended March 31, 2001, the Company originated and purchased $83.8 million
in loans, received $83.9 million in loan repayments and sold $41.4 million in
one-to-four family mortgage loans in the secondary market.
Non-performing loans increased to $5.5 million at March 31, 2001 from $1.9
million at June 30, 2000. The primary reason for the increase was two delinquent
commercial loans to one borrower with an aggregate balance of $2.1 million and
one delinquent commercial real estate loan with a balance of $1.4 million. The
commercial loans are collateralized by fixtures and equipment of a resort
property located outside of the Bank's primary lending area, operating under the
protection of Chapter 11 of the bankruptcy laws. The commercial real estate loan
is collateralized by retail business office real estate located outside of the
Bank's primary lending area, operating under the protection of Chapter 11 of the
bankruptcy laws. Management currently believes the underlying value of the
properties and the Bank's collateral positions are sufficient to cover the
Bank's loan balances. Therefore, the Company has determined that no loss is
probable at this time.
Ledger Capital Corp. also announced today that the Company is restating its
financial statements for the fiscal year ended June 30, 2000 and the first two
quarters of the current fiscal year, September 30, 2000 and December 31, 2000.
The restatements were the result of the discovery of a mathematical error in the
way in which interest income was being accrued on certain purchased commercial
real estate mortgage and multi-family residential mortgage loans. The error
resulted from an inadvertent erroneous set-up of the loans in the Company's
outsourced data processing system. The error resulted in the underaccrual of
interest income on such loans during the applicable periods.
The effect of the restatement for the fiscal year ended June 30, 2000 was an
increase in interest income of $543,000, an increase in non-interest expense of
$146,000, for additional compensation required to be accrued under the Company's
Annual Incentive Plan, and an increase in net income of $241,000 or $0.09 per
share. The effect of the restatement for the six months ended December 31, 2000
was an increase in interest income of $314,000 and an increase in net income of
$190,000 or $0.07 per share. The effects of these restatements are reflected in
more detail on the attached -- "Restated Financial Data Schedule".
The Company believes that the restatements were both necessary and consistent
with generally accepted accounting principles, and the restatements in the
Company's books and records are fully reflected in the audited financial
statements contained in the Company's amended annual report on Form 10-K/A for
the fiscal year ended June 30, 2000, which was filed with the Securities and
Exchange Commission today. The Company also amended and filed today the
quarterly reports on Form 10-Q/A for the three quarters in the fiscal year ended
June 30, 2000 and for the two quarters previously filed in the current fiscal
year, September 30, 2000 and December 31, 2000.
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Ledger Capital Corp.
April 30, 2001
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Ledger Capital Corp., with $507.1 million in assets at March 31, 2001, is the
holding company of Ledger Bank SSB, which is the sixth largest savings bank in
the Milwaukee area. Founded in 1919, Ledger Bank SSB operates four full-service
offices in Milwaukee and Waukesha counties including its new banking center in
Glendale, Wisconsin.
Certain matters discussed in this press release are "forward-looking statements"
intended to qualify for the safe harbors from liability established by the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements include words and phrases such as "will likely result," "are expected
to," "will continue," "is anticipated," "estimate," "project," "intends to" or
similar expressions. Similarly, statements that describe the Company's future
plans, objectives or goals are also forward-looking statements. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date of this press
release, and to advise readers that various factors could affect the Company's
financial performance and could cause actual results for future periods to
differ materially from those anticipated or projected. Such factors include, but
are not limited to: (I) general market interest rates, (ii) general economic
conditions, (iii) legislative/regulatory changes, (iv) monetary and fiscal
policies of the U.S. Treasury and Federal Reserve, (v) changes in the quality or
composition of the Company's loan and investment portfolios, (vi) demand for
loan products, (vii) deposit flow, (viii) competition, (ix) demand for financial
services in the Company's markets, and (x) changes in accounting principles,
policies or guidelines.
# # #
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LEDGER CAPITAL CORP. AND SUBSIDIARY
RESTATED FINANCIAL DATA SCHEDULE (DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED, SIX MONTHS
---------------------- ENDED
SEPT. 30, DEC. 31, DEC. 31,
2000 2000 2000
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Restated interest income $10,103 $9,993 $20,096
Previously reported $9,966 $9,816 $19,782
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Increase in interest income $137 $177 $314
Restated net income $655 $601 $1,256
Previously reported $572 $494 $1,066
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Increase in net income $83 $107 $190
Restated diluted earnings per share $0.26 $0.24 $0.50
Previously reported $0.23 $0.20 $0.43
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Increase in diluted earnings per share $0.03 $0.04 $0.07
THREE MONTHS ENDED,
------------------------------------------------ FISCAL
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, YEAR
1999 1999 2000 2000 2000
--------- -------- -------- -------- --------
Restated interest income $8,874 $9,755 $10,173 $10,180 $38,982
Previously reported $8,751 $9,694 $10,016 $9,978 $38,439
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Increase in interest income $123 $61 $157 $202 $543
Restated non-interest expense $2,196 $2,199 $2,082 $2,060 $8,537
Previously reported $2,160 $2,163 $2,045 $2,023 $8,391
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Increase in non-interest expense $36 $36 $37 $37 $146
Restated net income $808 $924 $678 $835 $3,245
Previously reported $755 $911 $604 $734 $3,004
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Increase in net income $53 $13 $74 $101 $241
Restated diluted earnings per share $0.29 $0.35 $0.26 $0.33 $1.23
Previously reported $0.28 $0.34 $0.23 $0.29 $1.14
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Increase in diluted earnings per share $0.01 $0.01 $0.03 $0.04 $0.09
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LEDGER CAPITAL CORP. AND SUBSIDIARY
FINANCIAL HIGHLIGHTS (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
-------------------------- -------------------------
OPERATING DATA: 2001 2000 2001 2000
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(RESTATED) (RESTATED)
Total interest income $9,755 $10,173 $29,851 $28,802
Total interest expense 6,863 6,889 21,288 19,068
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Net interest income 2,892 3,284 8,563 9,734
Provision for loan losses 150 337 330 627
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Net interest income after provision
for loan losses 2,742 2,947 8,233 9,107
Non-interest income 573 89 1,383 883
Non-interest expense 2,536 2,082 6,932 6,478
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Income before income tax expense 779 954 2,684 3,512
Income taxes 266 276 915 1,102
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Net income $513 $678 $1,769 $2,410
========= ========= ========= =========
Earnings per share $0.22 $0.27 $0.74 $0.93
Earnings per share diluted $0.21 $0.26 $0.72 $0.90
Average diluted outstanding shares 2,417,329 2,583,977 2,470,973 2,668,526
Dividends per share 0.05 0.05
Dividend payout ratio 22.73 18.52
Price/earnings ratio, end of period 10.48x 7.68x
Stock price to book value per share -
diluted, end of period 74.22% 75.30%
CASH EARNINGS:
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Net Income $513 678 $1,769 2,410
Non-cash amortization of stock plans,
net of tax effect 57 66 172 219
========= ========= ========= =========
Cash Earnings 570 744 1,941 2,629
Cash EPS - basic 0.24 0.30 0.81 1.01
Cash EPS - diluted 0.24 0.29 0.79 0.99
PERFORMANCE RATIOS:
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Return on average equity 5.84% 8.10% 6.94% 9.49%
Return on average assets 0.41% 0.51% 0.47% 0.62%
Net interest margin 2.39% 2.55% 2.32% 2.62%
Net interest spread 1.99% 2.19% 1.87% 2.31%
Non-interest income to average assets 0.46% 0.07% 0.37% 0.23%
Non-interest expense to average assets 2.02% 1.58% 1.83% 1.68%
JUNE 30, MAR. 31,
MAR. 31, 2000 2000
FINANCIAL CONDITION: 2001 (RESTATED) (RESTATED)
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Total assets $507,113 $519,971 $514,375
Loans receivable, net 364,246 392,306 375,077
Loans Held for Sale 4,934 1,122 13,775
Securities available for sale 81,397 74,259 78,080
Mortgage-backed and related securities 12,465 15,017 15,627
FHLB stock 8,355 7,760 7,627
Cash and cash equivalents 21,931 16,559 10,486
Deposits 315,823 345,318 331,796
FHLB advances and other borrowings 146,120 132,040 141,784
Shareholders' equity 35,829 33,596 32,906
Shareholders' equity to total assets 7.07% 6.46% 6.40%
Book value per share -basic $15.30 $13.69 $13.09
-diluted $14.82 $13.33 $12.73
ASSET QUALITY INFORMATION:
Non-performing loans $5,455 $1,870 $2,156
Non-performing investment securities 0 0 0
Foreclosed real estate 1,389 1,114 960
Non-performing assets 6,844 2,984 3,116
Non-performing loans to gross loans 1.45% 0.45% 0.54%
Allowance for loan losses to gross loans 0.87% 0.78% 0.81%
Allowance for loan losses to non-performing loans 59.85% 171.26% 148.86%
Allowance for loan losses $3,264 $3,201 $3,209
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LEDGER CAPITAL CORP. AND SUBSIDIARY
RESTATED FINANCIAL DATA SCHEDULE (DOLLARS IN THOUSANDS,EXCEPT PER SHARE DATA)
THREE MONTHS
ENDED, SIX MONTHS
---------------------- ENDED
SEPT. 30, DEC. 31, DEC. 31,
2000 2000 2000
---------- --------- ----------
Restated interest income $10,103 $9,993 $20,096
Previously reported interest income $9,966 $9,816 $19,782
------- ------ -------
Increase in interest income $137 $177 $314
Restated net income $655 $601 $1,256
Previously reported net income $572 $494 $1,066
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Increase in net income $83 $107 $190
Restated diluted earnings per share $0.26 $0.24 $0.50
Previously reported diluted earnings per share $0.23 $0.20 $0.43
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Increase in diluted earnings per share $0.03 $0.04 $0.07
THREE MONTHS ENDED,
------------------------------------------------ FISCAL
SEPT. 30, DEC. 31, MAR. 31, JUNE 30, YEAR
1999 1999 2000 2000 2000
----------- -------- -------- -------- --------
Restated interest income $8,874 $9,755 $10,173 $10,180 $38,982
Previously reported interest income $8,751 $9,694 $10,016 $9,978 $38,439
------ ------ ------- ------- -------
Increase in interest income $123 $61 $157 $202 $543
Restated non-interest expense $2,196 $2,199 $2,082 $2,060 $8,537
Previously reported non-interest expense $2,160 $2,163 $2,045 $2,023 $8,391
------ ------ ------- ------- -------
Increase in non-interest expense $36 $36 $37 $37 $146
Restated net income $808 $924 $678 $835 $3,245
Previously reported net income $755 $911 $604 $734 $3,004
------ ------ ------- ------- -------
Increase in net income $53 $13 $74 $101 $241
Restated diluted earnings per share $0.29 $0.35 $0.26 $0.33 $1.23
Previously reported diluted earnings per share $0.28 $0.34 $0.23 $0.29 $1.14
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Increase in diluted earnings per share $0.01 $0.01 $0.03 $0.04 $0.09