Exhibit 99.1
FNB United Earns Record First Quarter
Profits Fueled by Strong Loan and Deposit Growth
ASHEBORO, N.C.--(BUSINESS WIRE)--April 20, 2007--FNB United Corp.
(NASDAQ: FNBN), the holding company for First National Bank and Trust
Company and Dover Mortgage Company, today reported that strong loan
and deposit growth, both organically and through its acquisitions of
United Financial and Integrity Financial Corporation, contributed to a
57% increase in net interest income and a 63% increase in its loan
portfolio for the first quarter ended March 31, 2007 compared to the
same period the prior year. Net income increased 40% to $3.8 million,
or $0.33 per diluted share, in the first quarter of 2007, compared to
$2.7 million, or $0.42 per diluted share, in the first quarter of
2006.
"First quarter profits, per our plan, strongly reflect the
initiatives commenced in 2006 to streamline our operations and improve
efficiencies," said Michael Miller, President. "We continue to be on
track with progress in the integration of our mergers from last year,
and we are taking care to do things right in order to foster
shareholder value. Numerous efficiency-related projects and growth
initiatives are underway and we look forward to seeing the fruits of
these labors in the second half of 2007."
First quarter 2007 Highlights (compared to first quarter 2006)
-- Net income increased 40% to $3.8 million.
-- Net interest income before provision for loan losses grew
57% to $15.8 million.
-- Revenues advanced 53% to $20.8 million.
-- Total deposits increased 72% to $1.47 billion.
-- Non-interest-bearing deposits increased 53%.
-- Loans increased 63% to $1.32 billion.
Balance Sheet
"Loan production for the quarter was strong and the major
components of the loan portfolio showed significant growth over the
prior year's balances," Miller said. "Compared to a year ago, we
increased commercial real estate loans 63%, construction loans 69%,
commercial business loans 81%, and residential real estate loans 47%.
A portion of the production was offset by the payout of a large
commercial credit."
Gross loans increased $519 million, or 63%, to $1.34 billion at
March 31, 2007, compared to $821 million a year earlier. "The loans
added from United Financial and Integrity have undergone a thorough
underwriting by our lenders and credit administrators to make sure
they conform to our standards," added Miller.
Total deposits increased $615 million, or 72%, to $1.47 billion at
March 31, 2007, compared to $851 million at the end of March 2006.
Non-interest bearing deposits increased 53% at quarter-end compared to
a year earlier. Interest-bearing transaction and savings accounts
increased 100% during the twelve months ending March 31, 2007, while
certificates of deposit increased 63%. "We have seen a shift towards
certificates of deposits as interest rates have risen to a level
customers find attractive; however, we continue to have significant
success in adding lower-cost transaction and savings accounts as
well," noted Miller.
Assets increased 69% to $1.87 billion at March 31, 2007, from
$1.11 billion a year earlier. Book value per share improved to $18.54
at March 31, 2007, from $16.27 a year earlier, and tangible book value
per share was $8.13 at quarter-end, compared to $11.16 a year earlier.
Operating Results
Total revenues (net interest income before the provision for loan
losses plus non-interest income) increased 53% to $20.8 million in the
first quarter compared to $13.6 million in the like quarter a year
ago. The net interest margin was 4.15% for the first quarter,
unchanged from the preceding quarter, but down from 4.25% in the first
quarter a year ago.
First quarter net interest income increased 57% to $15.8 million,
with interest income rising 80% and interest expense increasing 114%.
Non-interest income increased 41% to $4.9 million compared to $3.5
million in the first quarter a year ago. The increase was largely due
to the jump in deposit account fees, which were up 45% from the first
quarter a year ago.
For the first quarter of 2007, noninterest expense was $14.6
million, compared to $16.2 million in the preceding quarter and $9.4
million in the first quarter a year ago. "Our noninterest expense was
up significantly over last year due to the expanded size of the bank
resulting from our acquisitions," said Miller. "We anticipate
additional merger-related expenditures during the next few quarters
including replacement of signage, office supplies and some remaining
systems conversions. In addition, we are near the conclusion of a
branding study to determine the advisability of adopting a new bank
name this year. Currently, the merged bank operates under its existing
four trade names, First National Bank and Trust Company, First Gaston
Bank, Catawba Valley Bank and Northwestern Bank, over the near-term.
Regardless of what we do, the YES YOU CAN(R) and YES WE CAN(R)
trademarks owned by First National will continue to be utilized."
Provision for loan losses
In the first quarter of 2007, FNB United added $524,000 to its
provision for loan losses compared to $77,000 in the same period of
2006. The allowance for loan losses was $15.8 million, or 1.20% of
loans held for investment at March 31, 2007 compared to $9.7 million
or 1.21% a year earlier. As of March 31, 2007, nonperforming assets
were $15.8 million, or 0.85% of total assets, compared to $14.5
million or .80% of total assets at December 31, 2006 and $10.9
million, or 0.98% of total assets at March 31, 2006.
Performance Ratios
Return on average assets and return on average equity were 0.83%
and 7.28%, respectively, for the first quarter of 2007 compared to
0.99% and 10.40 % for the first quarter of 2006. Return on tangible
assets and equity (calculated by deducting average goodwill and core
deposit premiums from average equity and from average assets) were
0.89% and 16.72%, respectively for the first quarter of 2007.
FNB United Corp. is the central North Carolina-based bank holding
company for First National Bank and Trust Company (including its
divisions, First Gaston Bank, Catawba Valley Bank and Northwestern
Bank) and Dover Mortgage Company. Opened in 1907, First National
(MyYesBank.com) operates 26 community Yes! Banks, five community
offices as First Gaston Bank (firstgaston.com), six community offices
as Catawba Valley Bank (catawbavalleybank.com) and six community
offices as Northwestern Bank of Wilkesboro (nwesternbank.com). Dover
Mortgage Company operates nine mortgage production offices. Through
its subsidiaries, 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 contains forward-looking statements, including
estimates of future operating results and other forward-looking
financial information for FNB United. These estimates constitute
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995 and involve various risks and
uncertainties. Actual results may differ materially due to such
factors as: (1) expected cost savings from the mergers not
materializing within the expected time frame; (2) revenues following
the mergers not meeting expectations; (3) competitive pressures among
financial institutions increasing significantly; (4) costs or
difficulties related to the integration of the businesses of FNB
United, United Financial and Integrity being greater than anticipated;
(5) general economic conditions being less favorable than anticipated;
and (6) changes in accounting principles, policies or guidelines; (7)
changes in the securities markets; (8) legislation or regulatory
changes adversely affecting the business in which the FNB United will
be engaged; and (9) other economic, competitive, governmental,
regulatory and technological factors affecting FNB United specifically
or the banking industry or economy generally. 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 Quarters Ended Percent Change
- --------------- ------------------------------------- ----------------
( In thousands March 31, December 31, March 31, December- March-
except share 2007 2006 2006 06 06
and per share
data )
------------ ------------ ----------- --------- ------
INTEREST
INCOME:
Interest and
fees on
loans $ 27,870 $ 27,633 $ 15,206 1% 83%
Interest and
dividends on
investments
securities:
Taxable
income 1,656 1,269 1,296 30% 28%
Non-taxable
income 553 536 460 3% 20%
Other
interest
income 818 1,052 164 -22% 399%
------------ ------------ -----------
Total
interest
income 30,897 30,490 17,126 1% 80%
INTEREST
EXPENSE:
Deposits 12,798 12,267 5,503 4% 133%
Borrowed
funds 2,274 2,347 1,542 -3% 47%
------------ ------------ -----------
15,072 14,614 7,045 3% 114%
------------ ------------ -----------
Net interest
income
before
provision
for loan
losses 15,825 15,876 10,081 0% 57%
PROVISION FOR
LOAN LOSSES 524 220 77 138% 581%
------------ ------------ -----------
Net interest
income 15,301 15,656 10,004 -2% 53%
Noninterest
Income
Service
charges on
deposit
accounts 2,050 2,386 1,418 -14% 45%
Mortgage loan
sales 1,138 1,343 963 -15% 18%
Cardholder
and merchant
services
income 507 512 369 -1% 37%
Trust and
investment
services 371 481 293 -23% 27%
Other service
charges,
commissions
and fees 336 244 249 38% 35%
Bank owned
life
insurance 236 597 159 -60% 48%
Factoring
operations 122 117 - 4% n/a
Other income 182 2 59 9000% 208%
------------ ------------ -----------
4,942 5,682 3,510 -13% 41%
------------ ------------ -----------
Total other
operating
income
(loss) 4,942 5,682 3,510 -13% 41%
OTHER OPERATING
EXPENSE:
Salary and
employee
benefits 8,419 7,741 5,270 9% 60%
Net occupancy
expense 1,178 1,238 602 -5% 96%
Furniture and
equipment
expense 1,113 1,051 645 6% 73%
Data
processing
services 532 436 593 22% -10%
Goodwill
impairment - 1,625 - -100% n/a
Other expense 3,338 4,134 2,305 -19% 45%
------------ ------------ -----------
Total other
operating
expense 14,580 16,225 9,415 -10% 55%
------------ ------------ -----------
Income (loss)
before
provision
for income
taxes 5,663 5,113 4,099 11% 38%
PROVISION FOR
INCOME TAXES 1,910 2,115 1,422 -10% 34%
------------ ------------ -----------
NET INCOME $ 3,753 $ 2,998 $ 2,677 25% 40%
============ ============ ===========
Earnings per
common share
Basic $ 0.33 $ 0.27 $ 0.42 24% -21%
Diluted $ 0.33 $ 0.27 $ 0.42 25% -20%
Cumulative
dividends
declared per
common share $ 0.15 $ 0.17 $ 0.15 -12% 0%
Weighted
average shares
outstanding
Basic 11,263,325 11,196,885 6,380,077
Diluted 11,295,221 11,287,752 6,445,107
Shares
repurchased
during the
period - - -
FINANCIAL
CONDITION Quarters Ended Percent Change
- --------------- ------------------------------------- ----------------
( In thousands March 31, December 31, March 31, December- March-
except share 2007 2006 2006 06 06
and per share
data )
------------ ------------ ----------- --------- ------
ASSETS
- ---------------
Cash and due
from banks $ 38,905 $ 35,225 $ 20,751 10% 87%
Interest-
bearing bank
balances 10,757 42,929 1,207
Federal funds
sold 50,130 30,186 17,829
Securities
available for
sale 182,552 128,945 114,689 42% 59%
Securities held
to maturity 42,318 42,870 43,593 -1% -3%
Loans
receivable:
Held for
sale 26,497 20,862 16,215 27% 63%
Held for
portfolio 1,313,168 1,301,840 804,495 1% 63%
Allowance
for loan
losses (15,757) (15,926) (9,713) -1% 62%
------------ ------------ -----------
1,323,908 1,306,776 810,997 1% 63%
Property and
equipment, net 45,780 45,691 25,422 0% 80%
Goodwill and
other
intangibles,
net 110,961 110,956 31,389 0% 254%
Core deposit
premiums 7,173 7,378 1,285 -3% 458%
Other assets 61,920 66,618 39,353 -7% 57%
------------ ------------ -----------
$ 1,874,404 $ 1,817,574 $1,106,515 3% 69%
============ ============ ===========
LIABILITIES
- ---------------
Deposits:
Non-
interest-
bearing $ 161,909 $ 158,856 $ 105,823 2% 53%
Interest-
bearing
deposits:
Demand 174,014 177,434 109,456 -2% 59%
Money
market 255,051 235,404 81,209 8% 214%
Savings 50,938 50,517 48,983 1% 4%
Time
deposits 823,800 798,720 505,089 3% 63%
------------ ------------ -----------
1,465,712 1,420,931 850,560 3% 72%
Retail
repurchase
agreements 27,225 23,161 15,642 18% 74%
Federal Home
Loan Bank
advances 65,866 65,825 84,676 0% -22%
Other borrowed
funds 83,439 78,032 39,559 7% 111%
Other
liabilities 21,739 21,957 12,143 -1% 79%
------------ ------------ -----------
1,663,981 1,609,906 1,002,580 3% 66%
STOCKHOLDERS'
EQUITY
- ---------------
Common stock 28,371 28,235 15,968 0% 78%
Surplus 112,872 112,213 23,870 1% 373%
Retained
earnings 70,716 68,662 64,429 3% 10%
Accumulated
other
comprehensive
income(loss) (1,536) (1,442) (332) 7% 363%
------------ ------------ -----------
210,423 207,668 103,935 1% 102%
------------ ------------ -----------
$ 1,874,404 $ 1,817,574 $1,106,515 3% 69%
============ ============ ===========
Shares Issued:
Shares
outstanding at
end of period 11,348,201 11,293,992 6,387,146 0% 78%
============ ============ ===========
Book value per
share (1) $ 18.54 $ 18.39 $ 16.27 1% 13%
Tangible book
value per
share (1) $ 8.13 $ 7.91 $ 11.16 3% -29%
Consolidated
Tier 1
leverage
capital ratio 7.24% 7.16% 8.63% 1% -17%
(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 Percent Change
thousands ) Quarters Ended from
----------------------------------- ----------------
March 31, December 31, March 31, December- March-
2007 2006 2006 06 06
----------- ------------- --------- --------- ------
LOANS ( including
loans held for
sale ):
- -----------------
Commercial real
estate $ 324,277 $ 304,546 $198,516 6% 63%
Multifamily real
estate 37,316 34,048 18,783 10% 99%
Commercial &
multifamily
construction (1) 43,883 n/a n/a n/a n/a
One- to four-
family
construction (1) 86,051 n/a n/a n/a n/a
Land and land
development (1) 117,425 n/a n/a n/a n/a
Construction
loans (1) - 278,124 146,548 -100% -100%
Commercial
business 307,753 310,130 169,858 -1% 81%
Agricultural
business
including
secured by
farmland 20,097 16,708 11,805 20% 70%
One- to four-
family real
estate 367,631 340,044 250,069 8% 47%
Consumer 35,232 39,102 25,131 -10% 40%
----------- ------------- ---------
Total loans
outstanding $1,339,665 $1,322,702 $820,710 1% 63%
=========== ============= =========
(1) Construction loan individual categories not available prior to
3/31/07
NON-PERFORMING March 31, December 31, March 31, December- March-
ASSETS: 2007 2006 2006 06 06
- -------------------- --------- ------------ --------- --------- ------
Loans on non-accrual
status $10,176 $ 8,282 $ 8,549 23% 19%
Loans more than 90
days delinquent,
still on accrual 2,594 2,852 1,551 -9% 67%
--------- ------------ ---------
Total non-performing
loans 12,770 11,134 10,100 15% 26%
Real estate owned (
REO ) / Repossessed
assets 3,073 3,361 767 -9% 301%
--------- ------------ ---------
Total non-
performing
assets $15,843 $14,495 $10,867 9% 46%
========= ============ =========
Total non-performing
assets / Total
assets 0.85% 0.80% 0.98% 6% -14%
Quarters Ended Percent Change
-------------------------------- ----------------
CHANGE IN THE
ALLOWANCE FOR LOAN March 31, December 31, March 31, December- March-
LOSSES: 2007 2006 2006 06 06
- -------------------- --------- ------------ --------- --------- ------
Balance, beginning
of period $16,620 $16,318 $9,945 $ 2% 67%
Provision 524 220 77 138% 581%
Adjustment for
reserve for
unfunded
commitments (677) (694) (247) -2% 174%
Recoveries of loans
previously charged
off 488 642 487 -24% 0%
Loans charged-off (1,198) (560) (549) 114% 118%
--------- ------------ ---------
Net ( charge-offs
) recoveries (710) 82 (62) -966% 1045%
--------- ------------ ---------
Balance, end of
period $15,757 $15,926 $9,713 -1% 62%
========= ============ =========
Net charge-offs /
Average loans
outstanding
(annualized) 0.21% (0.03%) 0.03% -953% 597%
Allowance for loan
losses / Loans held
for investment 1.20% 1.22% 1.21% -2% -1%
DEPOSITS March 31, December 31, March 31, December- March-
2007 2006 2006 06 06
- ------------------ ----------- ------------ --------- --------- ------
Non-interest-
bearing $ 161,908 $ 158,856 $105,823 2% 53%
Interest-bearing
checking 174,014 177,434 109,456 -2% 59%
Regular savings
accounts 50,938 50,517 48,983 1% 4%
Money market
accounts 255,051 235,404 81,209 8% 214%
----------- ------------ ---------
Interest-bearing
transaction &
savings accounts 641,911 622,211 345,471 3% 86%
Interest-bearing
certificates 823,800 798,720 505,089 3% 63%
----------- ------------ ---------
Total deposits $1,465,711 $1,420,931 $850,560 3% 72%
==================================
ADDITIONAL
FINANCIAL
INFORMATION
( Dollars in
thousands )
( Rates / Ratios
Annualized )
Percent Change
Quarters Ended from
------------------------------------ ----------------
OPERATING March 31, December 31, March 31, December- March-
PERFORMANCE: 2007 2006 2006 06 06
- ---------------- ----------- ------------ ----------- --------- ------
Average loans $1,330,199 $1,311,120 $ 809,513 1% 64%
Average
securities and
deposits 251,093 240,935 176,890 4% 42%
Average non-
interest-
earning assets 246,303 245,269 105,470 0% 134%
----------- ------------ -----------
Total average
assets $1,827,595 $1,797,324 $1,091,873 2% 67%
=========== ============ ===========
Average
interest-
bearing
deposits $1,270,650 $1,243,478 $ 736,984 2% 72%
Average non-
interest
bearing
deposits 155,990 160,666 99,438 -3% 57%
Average
borrowings 170,629 168,963 140,478 1% 21%
Average non-
interest-
earning
liabilities 21,148 13,144 10,590 61% 100%
----------- ------------ -----------
Total average
liabilities 1,618,417 1,586,251 987,490 2% 64%
Total average
stockholders'
equity 209,178 211,073 104,383 -1% 100%
----------- ------------ -----------
`
Total average
liabilities
and equity $1,827,595 $1,797,324 $1,091,873 2% 67%
=========== ============ ===========
Interest rate
yield on loans 8.51% 8.38% 7.63%
Interest rate
yield on
securities and
deposits 5.37% 5.18% 4.95%
Interest rate
yield on
interest-
earning
assets 8.01% 7.88% 7.15%
----------- ------------ -----------
Interest rate
expense on
deposits 4.08% 3.91% 3.03%
Interest rate
expense on
borrowings 5.40% 5.51% 4.45%
Interest rate
expense on
interest-
bearing
liabilities 4.24% 4.10% 3.26%
----------- ------------ -----------
Interest rate
spread 3.77% 3.78% 3.89%
=========== ============ ===========
Net interest
margin 4.15% 4.15% 4.25%
=========== ============ ===========
Other operating
income /
Average assets 1.10% 1.25% 1.30%
Other operating
expense /
Average assets 3.24% 3.58% 3.50%
Efficiency ratio
( other
operating
expense /
revenue ) 70.21% 75.26% 69.27%
Return on
average assets 0.83% 0.66% 0.99%
Return on
tangible assets 0.89% 0.71% 1.02%
Return on
average equity 7.28% 5.64% 10.40%
Return on
tangible equity 16.72% 12.83% 15.14%
Average equity /
Average assets 11.45% 11.74% 9.56%
CONTACT: FNB United Corp.
Robert O. Bratton, 336-318-7883