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Press Release - First State Bancorporation (FSNM-NASDAQ) |
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“We believe that we have a unique franchise that operates in four states that have great growth trends and generally very solid economic conditions. We have proven that our business model is simple, yet very effective. We think we can continue to grow profitably and provide the kind of long term return that our shareholders expect. The growth potential for us now is not going to come just from New Mexico as it did in the past, but from the markets in Colorado, Utah and Arizona, which are huge...” (FSNM) - H. Patrick Dee (Interview published May 25, 2007) |
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First State Reports First Quarter Earnings
04/28/2008 ALBUQUERQUE, N.M.--(BUSINESS WIRE)-- First State Bancorporation ("First State") (NASDAQ:FSNM): OVERVIEW:
-- Earnings for the quarter of $3.9 million, down 39% from last
year's quarter.
-- Diluted earnings per share for the quarter of $0.19, down 39%
from last year's quarter.
-- Loan growth continues to be strong, growing $69 million in the
first quarter, an 11% annualized growth rate.
-- Net interest margin for the quarter of 4.12%, compared to
4.70% for the first quarter of 2007, and 4.44% for the fourth
quarter of 2007.
-- Provision for loan losses for the quarter of $3.9 million,
compared to $2.0 million for the first quarter of 2007, and
$3.7 million for the fourth quarter of 2007.
INCOME STATEMENT HIGHLIGHTS:
(Unaudited-$ in thousands, except share and First Quarter Ended
per share amounts) March 31,
2008 2007
----------- -----------
Interest income $ 52,969 $ 52,553
Interest expense 21,564 21,413
----------- -----------
Net interest income 31,405 31,140
Provision for loan losses (3,900) (2,044)
----------- -----------
Net interest income after provision for loan
losses 27,505 29,096
Non-interest income 6,284 5,890
Non-interest expense 27,833 24,941
----------- -----------
Income before income taxes 5,956 10,045
Income tax expense 2,031 3,567
----------- -----------
Net income $ 3,925 $ 6,478
=========== ===========
Basic earnings per share $ 0.19 $ 0.31
Diluted earnings per share $ 0.19 $ 0.31
Weighted average basic shares outstanding 20,135,032 20,840,839
Weighted average diluted shares outstanding 20,157,739 21,099,978
FINANCIAL RATIOS:
First Quarter Ended
March 31,
(unaudited) 2008 2007
---------- ---------
Return on average assets 0.46% 0.88%
Return on average equity 4.99% 8.41%
Efficiency ratio 73.85% 67.35%
Operating expenses to average assets 3.28% 3.40%
Net interest margin 4.12% 4.70%
Average equity to average assets 9.28% 10.49%
Leverage ratio 8.47% 9.40%
Total risk based capital ratio 10.70% 10.78%
First State Bancorporation ("First State") (NASDAQ:FSNM) today announced first quarter 2008 earnings of $3.9 million compared to $6.5 million for 2007, a decrease of 39.4%. Earnings per diluted share were $0.19 compared to $0.31 per diluted share for the same quarter in 2007, a decrease of 38.7%. On March 1, 2007, First State completed the acquisition and merger of Front Range Capital Corporation and its subsidiary, Heritage Bank ("Front Range") for $72 million in cash. BALANCE SHEET HIGHLIGHTS: (Unaudited - $ in thousands March 31, December 31, March 31, except per share amounts) 2008 2007 2007 ---------------------------------- ---------- ------------ ----------- Total assets $3,460,038 $3,424,203 $3,288,708 Total loans 2,610,192 2,541,210 2,405,127 Investment securities 493,772 516,404 480,099 Deposits 2,580,601 2,574,687 2,502,467 Non-interest bearing deposits 466,447 485,419 498,624 Interest bearing deposits 2,114,154 2,089,268 2,003,843 Borrowings 349,988 301,613 253,160 Shareholders' equity 316,144 310,862 309,244 Book value per share $15.72 $15.47 $14.91 Tangible book value per share $8.52 $8.23 $8.10 (Unaudited - $ in thousands except $ Change from $ Change from per share amounts) December 31, 2007 March 31, 2007 ------------------------------------ ----------------- -------------- Total assets $35,835 $171,330 Total loans 68,982 205,065 Investment securities (22,632) 13,673 Deposits 5,914 78,134 Non-interest bearing deposits (18,972) (32,177) Interest bearing deposits 24,886 110,311 Borrowings 48,375 96,828 Shareholders' equity 5,282 6,900 Book value per share $0.25 $0.81 Tangible book value per share $0.29 $0.42 "We have experienced another quarter of solid loan growth," commented Michael R. Stanford, President and Chief Executive Officer. "We are clearly in the midst of a very challenging economic cycle for banks. We have been through these cycles before and are confident that we are taking the necessary steps to emerge as an even stronger organization at the end of this cycle," continued Stanford. Net interest income was $31.4 million for the first quarter of 2008 compared to $31.1 million for the same quarter of 2007. First State's net interest margin was 4.12% and 4.70% for the first quarters of 2008 and 2007, respectively. The net interest margin for the fourth quarter of 2007 was 4.44%. The decrease in the net interest margin is primarily due to the Federal Reserve Bank lowering the federal funds target rate by 300 basis points over the past seven months which led to a similar decrease in the prime lending rate. The net interest margin has also been negatively impacted by the need to utilize borrowings to fund the loan growth which has continued to outpace deposit growth. Due to the level of non-accrual loans this quarter, the reversal of interest on these loans has had a negative impact on the net interest margin as well. In conjunction with the Federal Reserve Bank's lower target rates, we have lowered selected deposit rates, but remain competitive in the markets we serve. The rates on our FHLB short-term borrowings and our securities sold under agreements to repurchase have decreased, in conjunction with the Federal Reserve Bank's lower target rates. The cost of our junior subordinated debentures, which are indexed to LIBOR, has also decreased in comparison to the three months ended March 31, 2007 and the year ended December 31, 2007, as the majority of the debentures have repriced. The extent of future changes in our net interest margin will depend on the amount and timing of any further Federal Reserve Bank rate changes, the level of borrowings needed to fund loan growth, our ability to manage the cost of interest-bearing liabilities, and our ability to stay competitive in the markets we serve. ALLOWANCE FOR LOAN
LOSSES:
(Unaudited - $ in Quarter ended Year ended Quarter ended
thousands) March 31, 2008 December 31, 2007 March 31, 2007
-------------- ----------------- --------------
Balance beginning of
period $ 31,712 $ 23,125 $23,125
Provision for loan
losses 3,900 10,267 2,044
Net charge-offs (1,116) (4,638) (394)
Allowance related to
acquired loans - 2,958 3,138
-------------- ----------------- --------------
Balance end of period $ 34,496 $ 31,712 $27,913
============== ================= ==============
Allowance for loan
losses to total
loans held for
investment 1.33% 1.26% 1.18%
Allowance for loan
losses to non-
performing loans 69% 103% 78%
NON-PERFORMING ASSETS:
(Unaudited - $ in
thousands) March 31, 2008 December 31, 2007 March 31, 2007
-------------- ----------------- --------------
Accruing loans - 90
days past due $553 $2 $187
Non-accrual loans 49,748 30,736 35,575
-------------- ----------------- --------------
Total non-performing
loans $50,301 $30,738 $35,762
Other real estate
owned 16,551 18,107 17,241
-------------- ----------------- --------------
Total non-performing
assets $66,852 $48,845 $53,003
============== ================= ==============
Potential problem
loans $71,862 $63,961 $42,311
Total non-performing
assets to total
assets 1.93% 1.43% 1.61%
First State's provision for loan losses was $3.9 million for the first quarter of 2008 compared to $2.0 million for the same quarter of 2007. The increase is primarily a result of an increase in net charge-offs, an increase in non-performing loans, and continued growth of the portfolio. First State's allowance for loan losses was 1.33% and 1.18% of total loans held for investment at March 31, 2008 and March 31, 2007, respectively. "While we are disappointed in the increase in non-performing assets this quarter, we continue to believe that the value of the real estate collateral supporting most of our non-performing loans will limit the ultimate losses we experience," stated H. Patrick Dee, Executive Vice President and Chief Operating Officer. "We continue to aggressively work problem loans as soon as they are identified. For the first quarter, net charge-offs, at an annualized rate of 17 basis points of average loans, were down slightly from the fourth quarter of 2007," continued Dee. NON-INTEREST INCOME:
(Unaudited - $ in thousands) First Quarter Ended
March 31,
2008 2007 $Change % Change
--------------------------------------
Service charges on deposit
accounts $2,745 $2,142 $603 28%
Other banking service fees 247 223 24 11
Credit and debit card
transaction fees 937 887 50 6
Check imprint income 176 177 (1) (1)
Gain (loss) on investment
securities (236) 42 (278) (662)
Gain on sale of mortgage loans 1,247 1,449 (202) (14)
Income on cash surrender value
of bank-owned life insurance 457 354 103 29
Other 711 616 95 15
---------- -------- -------- ---------
$6,284 $5,890 $394 7%
========== ======== ======== =========
Non-interest income for the first quarter of 2008 was $6.3 million, compared to $5.9 million for the first quarter of 2007, an increase of approximately $394,000 or 7%. The increase in service charges on deposit accounts is due to an increase in NSF fees charged per occurrence, an increase in account analysis fees, increased volume enhanced by the Front Range acquisition, and a reduction in fees waived from deposit accounts. The loss on investment securities includes a $333,000 unrealized loss on FHLMC preferred stock, recorded as an "other than temporary" impairment in accordance with generally accepted accounting principles. This stock is held in the available for sale portfolio and was acquired as part of the acquisition of Front Range Capital Corporation in March 2007, at which time it was valued at approximately $953,000. These high yielding, fixed-rate securities are rated AA- and Aa3 by S&P and Moody's, respectively, and are held by hundreds of bank and thrifts. We do not believe that the current market price of these securities reflects their near-term potential, but current market conditions make it difficult to accurately forecast the time period required for the security to fully recover. Therefore, the "other than temporary" impairment is warranted. The decrease in gain on sale of mortgage loans is primarily due to reduced volumes reflecting the nationwide slow down in the residential mortgage market. NON-INTEREST EXPENSE:
(Unaudited - $ in thousands) First Quarter Ended
March 31,
2008 2007 $Change % Change
--------------------------------------
Salaries and employee benefits $13,517 $12,260 $1,257 10%
Occupancy 4,025 3,241 784 24
Data processing 1,549 1,548 1 -
Equipment 2,144 1,849 295 16
Legal, accounting, and
consulting 576 621 (45) (7)
Marketing 747 948 (201) (21)
Telephone 493 503 (10) (2)
Supplies 240 334 (94) (28)
Delivery 280 287 (7) (2)
Other real estate owned 561 186 375 201
FDIC insurance premiums 465 63 402 638
Amortization of intangibles 640 434 206 47
Check imprint expense 154 174 (20) (11)
Other 2,442 2,493 (51) (2)
----------- ------- -------- ---------
$27,833 $24,941 $2,892 12%
=========== ======= ======== =========
Non-interest expenses were $27.8 million and $24.9 million for the quarters ended March 31, 2008 and 2007, respectively, and represent an increase of $2.9 million or 12%. The increase in salaries and benefits is primarily due to the acquisition of Front Range, normal compensation increases for job performance, an increase in accrued incentives, and an increase in self-insured medical and dental claims. This increase was partially offset by a decrease in expenses related to temporary help and to a decrease in other personnel expenses related to 2007 retention bonuses for Front Range employees that did not recur in 2008. The increase in occupancy expense reflects the acquisition of Front Range, the lease of space in Phoenix for two new branches, and a new branch location in Albuquerque. The increase in equipment expense is primarily due to the acquisition of Front Range. The decrease in marketing expense is primarily due to a decrease in direct advertising costs in conjunction with our expense reduction initiative. The increase in other real estate owned is primarily due to the write-down of a property and an increase in taxes and insurance. The $151,000 write-down occurred in conjunction with an offer to purchase a property that was previously held for future expansion and development by Front Range, reflecting the property's estimated net realizable value. The increase in taxes and insurance is commensurate with the increase in other real estate owned that occurred beginning with the Front Range acquisition on March 1, 2007. The increase in FDIC insurance premiums is due to new FDIC assessment rates that took effect at the beginning of 2007. These rates are significantly higher than the previous assessment rates. The new assessment system allowed eligible insured depository institutions to share a one-time assessment credit pool, which offset premiums for a period of time. First Community Bank's share of the credit was used up in the third quarter of 2007. The increase in amortization of intangibles reflects the acquisition of Front Range. In conjunction with its first quarter earnings release, First State will host a conference call to discuss these results, which will be simulcast over the Internet on Monday, April 28, 2008 at 5:00 p.m. Eastern Time. To listen to the call and view the slide presentation, visit www.fcbnm.com, Investor Relations. The conference call will be available for replay beginning April 28, 2008 through May 7, 2008 at www.fcbnm.com, Investor Relations. On Friday, April 25, 2008, First State's Board of Directors declared a quarterly dividend of $0.09 per share. The dividend will be paid to shareholders of record on May 7, 2008, payable June 4, 2008. First State Bancorporation is a New Mexico-based commercial bank holding company (NASDAQ:FSNM). First State provides services, through its subsidiary First Community Bank, to customers from a total of 61 branches located in New Mexico, Colorado, Utah and Arizona. On Friday, April 25, 2008, First State's stock closed at $11.77 per share. The following table provides selected information for average balances and average yields for the quarters ended March 31, 2008 and March 31, 2007: First Quarter Ended First Quarter Ended
March 31, 2008 March 31, 2007
Average Average Average Average
AVERAGE BALANCES: Balance Yield Balance Yield
---------------------------------------
(Unaudited - $ in thousands)
Loans $2,558,587 7.42% $2,181,198 8.68%
Investment securities 500,683 4.58% 495,783 4.66%
Interest-bearing deposits
with other banks and federal
funds sold
8,222 3.67% 12,245 5.53%
Total interest-earning assets 3,067,492 6.95% 2,689,226 7.93%
Total interest-bearing
deposits 2,089,306 3.28% 1,788,966 3.61%
Borrowings 313,424 4.17% 247,935 5.93%
Total interest-bearing
liabilities 2,612,574 3.32% 2,210,464 3.93%
Non interest-bearing demand
accounts 458,648 441,859
Equity 316,651 312,409
Total assets $3,412,119 $2,978,917
The following tables provide information regarding loans and deposits for the quarter ended March 31, 2008 and 2007, and the year ended December 31, 2007: LOANS:
(Unaudited - $ in
thousands) March 31, 2008 December 31, 2007 March 31, 2007
---------------- ----------------- ----------------
Commercial $ 354,723 13.6% $ 342,141 13.5% $ 321,977 13.4%
Real estate -
commercial 963,664 36.9% 967,322 38.1% 837,564 34.8%
Real estate - one-
to four-family 242,302 9.3% 235,015 9.2% 242,474 10.1%
Real estate -
construction 982,847 37.6% 928,582 36.5% 907,710 37.7%
Consumer and other 45,905 1.8% 47,372 1.9% 57,784 2.4%
Mortgage loans
available for
sale 20,751 0.8% 20,778 0.8% 20,546 0.9%
Other loans
available for
sale - - % - - % 17,072 0.7%
---------------- ----------------- ----------------
Total $2,610,192100.0% $2,541,210100.0% $2,405,127100.0%
================ ================= ================
DEPOSITS:
(Unaudited - $
in thousands) March 31, 2008 December 31, 2007 March 31, 2007
----------------- ----------------- -----------------
Non-interest
bearing $466,447 18.1% $485,419 18.9% $498,624 19.9%
Interest-
bearing demand 331,089 12.8% 336,914 13.1% 353,694 14.1%
Money market
savings
accounts 474,247 18.4% 355,889 13.8% 363,081 14.5%
Regular savings 109,610 4.2% 107,096 4.2% 124,107 5.0%
Certificates of
deposit less
than $100,000 486,482 18.9% 490,741 19.1% 451,504 18.1%
Certificates of
deposit
greater than
$100,000 712,726 27.6% 798,628 30.9% 711,457 28.4%
---------- ------ ---------- ------ ---------- ------
Total $2,580,601 100.0% $2,574,687 100.0% $2,502,467 100.0%
========== ====== ========== ====== ========== ======
Certain statements in this news release are 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 (the "Exchange Act"). These statements are based on management's current expectations or predictions of future results or events. We make these forward-looking statements in reliance on the safe harbor provisions provided under the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical fact, included in this news release which relate to performance, development or activities that we expect or anticipate will or may happen in the future, are forward-looking statements. The discussions regarding our growth strategy, expansion of operations in our markets, acquisitions, competition, loan and deposit growth, timing of new branch openings, and response to consolidation in the banking industry include forward-looking statements. Other forward-looking statements may be identified by the use of forward-looking words such as "believe," "expect," "may," "might," "will," "should," "seek," "could," "approximately," "intend," "plan," "estimate," or "anticipate" or the negative of those words or other similar expressions. Forward-looking statements involve inherent risks and uncertainties and are based on numerous assumptions. They are not guarantees of future performance. A number of important factors could cause actual results to differ materially from those in the forward-looking statement. Some factors include changes in interest rates, local business conditions, government regulations, loss of key personnel or inability to hire suitable personnel, faster or slower than anticipated growth, economic conditions, our competitors' responses to our marketing strategy or new competitive conditions, and competition in the geographic and business areas in which we conduct our operations. Forward-looking statements contained herein are made only as of the date made, and we do not undertake any obligation to update them to reflect events or circumstances after the date of this report to reflect the occurrence of unanticipated events. Because forward-looking statements involve risks and uncertainties, we caution that there are important factors, in addition to those listed above, that may cause actual results to differ materially from those contained in the forward-looking statements. These factors are included in our Form 10K for the year ended December 31, 2007, as filed with the Securities and Exchange Commission. First State's news releases and filings with the Securities and Exchange Commission are available through the Investor Relations section of First State's website at www.fcbnm.com. Source: First State Bancorporation Contact: First State Bancorporation H. Patrick Dee, 505-241-7102 Christopher C. Spencer, 505-241-7154 >
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