Integra Bank Corporation Q2 2010 Earnings Conference Call Transcript

Integra Bank Corporation Q2 2010 Earnings Conference Call Transcript
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Integra Bank Corporation (IBNK)

Q2 2010 Earnings Conference Call

July 29, 2010, 10:00 AM ET

Executives

Michael Alley - Chairman, CEO

Mike Carroll - EVP, CFO

John Key - EVP, Chief Credit & Risk Officer

Roger Duncan - EVP of Retail & Business Banking

Analysts

Stephen Geyen - Stifel Nicolaus

Michael Cohen - Arrowhawk Capital Partners

Presentation

Operator

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Previous Statements by IBNK
» Integra Bank Corporation Q1 2010 Earnings Call Transcript
» Integra Bank Corporation Q4 2009 Earnings Call Transcript
» Integra Bank Corporation Q2 2009 Earnings Call Transcript

Welcome to the Integra Bank Corporation's second quarter 2010 earnings conference call. This call is being recorded. The company intends to use its website, www.integrabank.com, as a means of disclosing materials, non-public information and for complying with the disclosure obligations under SEC regulation RD. Such disclosures will be included in the company's website under the heading News and Events.

Accordingly, investors should monitor such portions of the company's website in addition to following the company's press releases, SEC filings and public conference calls and webcasts. Before we begin, the company would like to note that statements made in the course of this conference call that are not based on historical fact are forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995.

The risk factors and cautionary statements in the forward-looking statements are detailed in the company's filings with the Securities and Exchange Commission and in the press release issued earlier today. The company makes no commitment to update any forward-looking statements based on new information, future events or otherwise.

Please note that a replay of this call will be available for 30 days through our website at www.integrabank.com or by telephone at 1-800-642-1687 pass code 89997242. Today's conference call will be presented by Mr. Michael Alley, Chairman and Chief Executive Officer of Integra Bank Corporation and other executive officers.

Following the presentation we will open the call to questions. At this time, I'll turn the call over to Mr. Alley. Please go ahead, Mr. Alley.

Michael Alley

Well, thank you, [Karen]. Good morning and thank you for joining us on Integra Bank Corporation's conference call for the second quarter of 2010. I'm Mike Alley, Chairman and CEO of Integra, and with me today are Mike Carroll, Executive Vice President and our Chief Financial Officer; John Key, Executive Vice President and Chief Credit and Risk Officer; and Roger Duncan, Executive Vice President of Retail and Business Banking.

Our comments today will refer to the financial information in our earnings report that we released a short time ago including our progress in executing our strategy to shrink our footprint, increase our capital levels, reduce our credit risk and return to profitability.

I will discuss the high-level results and provide an update on our strategic accomplishments; John Key will discuss our asset quality and anticipated trends; Mike Carroll will provide details of our earnings performance and financial condition; Roger Duncan will provide an overview of our core community banking activities; and then we will open the call to questions.

The net loss for the second quarter of 2010 was $10.2 million or $0.49 per diluted share compared to $53.9 million or $2.61 per diluted share for the first quarter of 2010. This loss was driven primarily by the provision for loan losses which was $16.9 million, a decrease of $35.8 million from $52.7 million in the first quarter.

The provision was partially offset by securities gains of $3.4 million and deposit premiums from the second quarter branch sales of $4.4 million. The loss and loan loss provision was the lowest we have reported since the second quarter of 2008.

We are pleased with the progress we made during the second quarter in executing multiple elements of our recovery strategy. During the quarter, we completed the branch and loan transaction with United Community Bank and the Sicilian Bank, announced two additional branch and loan sale transactions and continued working on the First Security Bank transaction.

We actually closed the sale of five Kentucky branches to First Security on July 22 and expect to close the sale of the Indiana branches to First Security and the other two pending branch and loan sale transactions during the third quarter.

We also reduced commercial real estate loan balances by $91.1 million or 9.9% from March 31, executed additional expense reduction initiatives, maintained a solid liquidity position and deposit base, made significant progress in preparing our customers for the adoption of Regulation E and increased Integra Bank's risk-based capital ratios, maintaining adequately capitalized status.

We made significant progress during the second quarter in the area of credit quality. We experienced moderation in the growth of non-performing assets and new specific reserves from recent quarters and substantially lower levels of provisions and charge-offs.

We continued to enhance the staff in our workout group and are pleased with their progress in executing our more aggressive problem asset disposition strategies. We remain focused on reducing our level of non-performing assets, improving our capital and liquidity and increasing the operating income of our core community banking franchise.

Later, John Key will provide a detailed overview of our credit quality, discuss how the new problem asset disposition strategy we adopted in the first quarter aided our efforts in the second quarter and give an update on our ongoing efforts to address our non-performing assets.

Non-performing assets, including securities, were $265.1 million at June 30, an increase of $6.6 million from March 31 while delinquencies decreased three basis points to 1.58% of total loans. Net charge-offs were $12.2 million during the second quarter of 2010, a decrease of $27.2 million from the first quarter and the lowest level since the third quarter of 2008.

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