First Security Group, Inc. (NASDAQ: FSGI), today reported a net loss available to common shareholders of $2.7 million, or $0.17 per diluted share for the second quarter of 2010.

The economic slowdown continues to produce elevated credit costs for many financial institutions including First Security. The provision for loan and lease losses combined with other asset quality expenses significantly impacted the second quarter 2010 results.

Highlights
  • Strategic Initiatives: First Security continues to implement initiatives to improve asset quality, return to profitability and better position the Company for greater opportunities in the future. The necessary resources are being devoted to develop and execute the strategic initiatives.
  • Capital: First Security remains committed to maintaining appropriate capital levels. The tangible equity to tangible assets ratio as of June 30, 2010 was 10.17 percent.
  • Liquidity: First Security’s balance sheet is fortified with liquid assets to fund future contractual obligations and prudent investments, such as loans to credit worthy customers. As of June 30, 2010, First Security held over $230 million in an interest bearing account at the Federal Reserve Bank of Atlanta.

“Important work is underway and, in some cases, completed, to better position First Security for short-term challenges and long-term opportunities,” said Rodger B. Holley, Chairman, CEO and President of First Security. “First Security, along with many other banks, is addressing credit issues related to the national and regional economic slowdown and the corresponding increase in unemployment. Although we currently face headwinds due to the current economic environment, we are still focused on First Security’s goal of being the community bank of choice in each market that we serve.”

First Security is reengineering to enhance centralized oversight and control while maintaining local knowledge of its markets and thus strengthening First Security’s commitment to superior customer service. Credit functions have been aligned by retail and commercial lines of business with dedicated credit officers and staff supporting each portfolio. Loan underwriting, collections and loan document areas have been centralized to ensure consistency, increase effectiveness and provide higher levels of operational efficiencies.

Second Quarter Overview

For the second quarter of 2010, net interest income totaled $9.0 million, a decline of 7.4 percent on a linked quarter basis and a decline of 14.7 percent from the second quarter of 2009. Year to date, net interest income declined by 10.1 percent to $18.6 million from the first six months of 2009. These declines can be primarily attributed to the Bank’s decision to proactively reduce the size of the loan portfolio to remove certain credit risks from the balance sheet.

Non-interest income for the second quarter of 2010 increased $254 thousand, or 11.0 percent, to $2.6 million from the first quarter of 2010. On a linked quarter basis, total deposit fees increased by $48 thousand to $1.0 million, and point of sale fees associated with the Bank’s debit cards increased by $54 thousand to $340 thousand over the same period. Year to date, non-interest income declined by 4.6 percent to $4.9 million from the first six months of 2009.

Non-interest expense in the second quarter of 2010 totaled $12.0 million, up $2.1 million from the first quarter of 2010. Asset quality costs, which include losses, write-downs and holding costs associated with other real estate owned and repossessions, increased $1.6 million in the second quarter of 2010 compared to the linked quarter. FDIC insurance and professional fees also significantly increased. Year to date, non-interest expense increased to $21.9 million, a 12.9 percent increase over the first six months of 2009.

Salaries and benefits expense declined by 5.0 percent in the second quarter of 2010 compared to the linked quarter and 7.2 percent on a year over year basis. The number of full-time equivalent employees declined to 333 as of June 30, 2010, from 353 a year ago and 345 at the end of the first quarter of 2010.

Economic uncertainty, higher unemployment rates and reduced consumer spending have created financial challenges for many owner-managed businesses and individuals, resulting in an increase in non-performing loans. From March 31, 2010, non-accrual loans and leases increased $8.0 million to $58.3 million at the end of the second quarter of 2010; the largest categories of non-accrual loans included: construction and development (C&D) loans with $18.1 million, commercial and industrial (C&I) loans with $17.5 million, and residential real estate loans with $8.9 million. During the same time period, other real estate owned declined $546 thousand to $18.4 million; and repossessed assets declined $1.5 million to $1.9 million. Additional detail on asset quality is available in the supplemental data following the financial highlights.

As of June 30, 2010, the allowance for loan and lease losses was $26.8 million, or 3.15 percent of total loans, compared to $26.1 million, or 2.88 percent of total loans, as of March 31, 2010. Net charge-offs totaled $2.8 million, or 1.29 percent (annualized) of average loans during the second quarter of 2010.

First Security continues its strategic focus of reducing certain balance sheet risks while also working to support the economic growth of the region by meeting the loan needs of credit worthy businesses and consumers. At the same time, the Bank’s employees in customer service and sales positions have observed a decline in loan demand due to continued economic weakness in the local markets.

During the second quarter of 2010, loan balances declined by $54.2 million, or 6.0 percent on a linked quarter basis. Most categories declined, and the reduction was concentrated in C&I loans, which declined by 15.1 percent to $117.3 million, and C&D loans, which declined by 9.3 percent to $113.9 million.

First Security’s loan portfolio consists of in-market loans originated throughout its branch network. The loan portfolio is well diversified with 32.1 percent in 1-4 family residential, 29.0 percent in commercial real estate, 13.8 percent in C&I and 13.3 percent in C&D. Additional detail on the loan portfolio is available in the supplemental data following the financial highlights.

First Security continues to assess its capital levels and is maintaining the flexibility to raise additional capital as appropriate. Management believes that banks with higher capital levels will be better positioned to take advantage of opportunities as the economy improves. Stockholders’ equity at the end of the second quarter of 2010 was $137.1 million, and common stockholders’ equity was $105.6 million.

In the area of liquidity, First Security continued to strengthen its balance sheet and improve its loan to deposit ratio. As of June 30, 2010, the loan to deposit ratio was 73.0 percent, compared to 75.4 percent as of March 31, 2010 and 93.8 percent as of June 30, 2009. The decline in loans created additional excess liquidity to fund future contractual obligations and prudent investments, including investment securities and loans to credit-worthy customers.

At June 30, 2010, total deposits were $1.2 billion, an increase of $133.2 million, or 12.9 percent on a year over year basis. Core deposits increased to $624.6 million at the end of the second quarter of 2010, an increase of $3.4 million from the same period in 2009. Interest bearing demand deposit accounts increased by 5.3 percent to $67.1 million, and savings and money market accounts increased by 9.5 percent to $172.6 million. Non-interest bearing demand deposit accounts declined by 0.7 percent to $152.3 million, and certificates of deposit of less than $100 thousand declined by 5.7 percent to $232.6 million.

Appointment to Board of Directors

During the second quarter, Mr. Ralph E. Mathews, Jr. joined the Board of Directors of First Security Group. An upstanding member of the Chattanooga community for decades, Mathews has been well known by several of First Security’s officers and directors for a number of years. In addition, he has been a customer and shareholder of First Security for the last ten years. Mathews brings extensive experience in real estate and general construction services, which will be valuable in his new position given the current mix of First Security’s loan portfolio. With 38 years of experience as a general contractor in Chattanooga, Mathews’ understanding of the market area will also be an asset to the Board.

Webcast and Conference Call Information

First Security’s executive management team will host a conference call and simultaneous webcast on Thursday, July 29, 2010, at 3:00 PM Eastern Daylight Time to discuss second quarter results. The webcast can be accessed live on First Security’s website, www.FSGBank.com on the Corporate Information/Investor Relations page. A replay will be available approximately two hours after the live conference call ends, and will be archived on First Security’s website for one month.

About First Security Group, Inc.

First Security Group, Inc. is a bank holding company headquartered in Chattanooga, Tennessee, with $1.3 billion in assets. Founded in 1999, First Security’s community bank subsidiary, FSGBank, N.A. has 38 full-service banking offices along the interstate corridors of eastern and middle Tennessee and northern Georgia. In Dalton, Georgia, FSGBank operates under the name of Dalton Whitfield Bank; along the Interstate 40 corridor in Tennessee, FSGBank operates under the name of Jackson Bank & Trust. FSGBank provides retail and commercial banking services, trust and investment management, mortgage banking, financial planning and internet banking services ( www.FSGBank.com).

Non-GAAP Financial Measures

This press release contains financial information determined by methods other than in accordance with generally accepted accounting principles in the United States of America (GAAP). First Security’s management uses these “non-GAAP” measures in its analysis of First Security’s performance. Non-GAAP measures typically adjust GAAP performance measures to exclude the effects of charges, expenses and gains related to the consummation of mergers and acquisitions, and costs related to the integration of merged entities. These non-GAAP measures may also exclude other significant gains, losses or expenses that are unusual in nature and not expected to recur. Since these items and their impact on First Security’s performance are difficult to predict, management believes presentations of financial measures excluding the impact of these items provide useful supplemental information that is important for a proper understanding of the operating results of First Security’s core business. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies.

Forward-Looking Statements

This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1993) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors, referred to from time to time in filings made by First Security with the Securities and Exchange Commission. First Security undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.

Public companies, from time to time, become aware of rumors concerning their business. Investors are cautioned that in this age of instant communication and internet access, it may be important to avoid relying on rumors and unsubstantiated information. First Security complies with Federal and State law applicable to disclosure of information. Investors may be at significant risk in relying on unsubstantiated information from other sources.
           
 
First Security Group, Inc. and Subsidiary
Consolidated Balance Sheets

June 30, 2010
December 31, 2009 June 30, 2009
(in thousands, except share data)          
(unaudited) (unaudited)
 
ASSETS
Cash & Due from Banks $ 8,960 $ 23,220 $ 20,908
Federal Funds Sold and Securities Purchased under Agreements to Resell
  -     -     -  
Cash and Cash Equivalents   8,960     23,220     20,908  
Interest-Bearing Deposits in Banks   232,720     152,616     12,354  
Securities Available-for-Sale   153,031     143,045     137,494  
Loans Held for Sale 2,713 1,225 3,806
Loans   848,639     950,793     964,687  
Total Loans 851,352 952,018 968,493
Less: Allowance for Loan and Lease Losses   26,830     26,492     19,275  
  824,522     925,526     949,218  
Premises and Equipment, net   32,274     33,157     33,948  
Goodwill   -     -     27,156  
Intangible Assets   1,685     1,918     2,139  
Other Assets   80,313     74,352     55,176  
TOTAL ASSETS $ 1,333,505   $ 1,353,834   $ 1,238,393  
 
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 152,284 $ 151,174 $ 153,345
Interest-Bearing Demand 67,122 62,429 63,720
Savings and Money Market Accounts 172,588 177,543 157,560
Certificates of Deposit of less than $100 thousand 232,646 244,312 246,652
Certificates of Deposit of $100 thousand or more 189,066 207,465 204,133
Brokered Deposits   352,545     339,750     207,636  
Total Deposits 1,166,251 1,182,673 1,033,046
Federal Funds Purchased and Securities Sold under Agreements to Repurchase
19,347 17,911 20,538
Security Deposits 961 1,376 1,558
Other Borrowings 85 94 102
Other Liabilities   9,745     10,181     10,686  
Total Liabilities   1,196,389     1,212,235     1,065,930  
STOCKHOLDERS' EQUITY

Preferred Stock - no par value 10,000,000 shares authorized; 33,000 issued as of June 30, 2010, December 31, 2009 and June 30, 2009
31,525 31,339 31,158

Common Stock - $.01 par value 150,000,000 shares authorized as of June 30, 2010; 50,000,000 shares authorized as of December 31, 2009 and June 30, 2009; 16,418,327 issued as of June 30, 2010, December 31, 2009 and June 30, 2009
114 114 114
Paid-In Surplus 111,623 111,964 111,933
Common Stock Warrants 2,006 2,006 2,006
Unallocated ESOP Shares (5,518 ) (6,193 ) (6,602 )
(Accumulated Deficit) Retained Earnings (8,144 ) (3,823 ) 28,262
Accumulated Other Comprehensive Income   5,510     6,192     5,592  
Total Stockholders' Equity   137,116     141,599     172,463  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,333,505   $ 1,353,834   $ 1,238,393  

               
 
 
First Security Group, Inc. and Subsidiary
Consolidated Income Statements
Three Months Ended Year-to-Date
June 30, June 30,
(in thousands except per share amounts)       2010         2009         2010         2009  
(unaudited) (unaudited) (unaudited) (unaudited)
INTEREST INCOME
Loans, including fees $ 12,731 $ 14,524 $ 26,181 $ 29,397
Debt Securities - taxable 994 1,154 2,084 2,338
Debt Securities - non-taxable 349 400 727 804
Other   216     21     339     35  
Total Interest Income   14,290     16,099     29,331     32,574  
 
INTEREST EXPENSE
Interest-Bearing Demand Deposits 50 50 95 101
Savings Deposits and Money Market Accounts 356 399 764 871
Certificates of Deposit of less than $100 thousand 1,248 1,900 2,591 3,949
Certificates of Deposit of $100 thousand or more 1,097 1,644 2,291 3,404
Brokered Deposits 2,456 1,488 4,710 3,253
Other   122     118     244     259  
Total Interest Expense   5,329     5,599     10,695     11,837  
 
NET INTEREST INCOME 8,961 10,500 18,636 20,737
Provision for Loan and Lease Losses   3,544     6,196     7,919     11,189  
NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES
  5,417     4,304     10,717     9,548  
 
NON-INTEREST INCOME
Service Charges on Deposit Accounts 1,048 1,170 2,048 2,317

Gain on Sales of Available-for-Sale Securities, net
- - 57 -
Other   1,510     1,474     2,757     2,778  

Total Non-interest Income
  2,558     2,644     4,862     5,095  
 
NON-INTEREST EXPENSE
Salaries and Employee Benefits 4,703 5,043 9,651 10,400
Expense on Premises and Fixed Assets, net of rental income 1,373 1,512 2,756 3,032
Other   5,907     3,337     9,448     5,920  

Total Non-interest Expense
  11,983     9,892     21,855     19,352  
 
LOSS BEFORE INCOME TAX BENEFIT (4,008 ) (2,944 ) (6,276 ) (4,709 )
Income Tax Benefit   (1,812 )   (1,536 )   (2,966 )   (2,449 )
NET LOSS   (2,196 )   (1,408 )   (3,310 )   (2,260 )
Preferred Stock Dividends 412 413 825 784
Accretion on Preferred Stock Discount   94     87     186     164  
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (2,702 ) $ (1,908 ) $ (4,321 ) $ (3,208 )
 
 
NET LOSS PER COMMON SHARE:
Net Loss Per Common Share - basic $ (0.17 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
Net Loss Per Common Share - diluted $ (0.17 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
Dividends Declared Per Common Share $ - $ 0.01 $ - $ 0.06
 
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING
BASIC 15,715 15,503 15,682 15,537
DILUTED 15,715 15,503 15,682 15,537

 
 
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
                 
 
(in thousands, except per share amounts and full-time equivalent employees)
 
 
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter Year-to-Date Year-to-Date
  2010     2010     2009     2009     2009   June 30, 2010   June 30, 2009
 
Earnings:
Net interest income $ 8,961 $ 9,675 $ 10,572 $ 10,900 $ 10,500 $ 18,636 $ 20,737
Provision for loan and lease losses $ 3,544 $ 4,375 $ 4,846 $ 9,280 $ 6,196 $ 7,919 $ 11,189
Non-interest income $ 2,558 $ 2,304 $ 2,503 $ 2,737 $ 2,644 $ 4,862 $ 5,095
Non-interest expense $ 11,983 $ 9,872 $ 11,516 $ 37,363 $ 9,892 $ 21,855 $ 19,352
Dividends and accretion on preferred stock $ 506 $ 505 $ 504 $ 502 $ 500 $ 1,011 $ 948

Net loss available to common stockholders
$ (2,702 ) $ (1,619 ) $ (3,135 ) $ (28,631 ) $ (1,908 ) $ (4,321 ) $ (3,208 )
 
Earnings - Normalized
Non-interest expense, excluding goodwill impairment $ 11,983 $ 9,872 $ 11,516 $ 10,207 $ 9,892 $ 21,855 $ 19,352

Net loss available to common stockholders, excluding goodwill impairment
$ (2,702 ) $ (1,619 ) $ (3,135 ) $ (3,869 ) $ (1,908 ) $ (4,321 ) $ (3,208 )
 
Per Share Data:

Net loss available to common stockholders, basic
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.28 ) $ (0.21 )

Net loss available to common stockholders, diluted
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
Cash dividends declared on common shares $ - $ - $ 0.01 $ 0.01 $ 0.01 $ - $ 0.06
Book value per common share $ 6.43 $ 6.61 $ 6.72 $ 6.94 $ 8.61 $ 6.43 $ 8.61
Tangible book value per common share $ 6.33 $ 6.50 $ 6.60 $ 6.82 $ 6.82 $ 6.33 $ 6.82
 
Per Share Data - Normalized:

Net loss, excluding goodwill impairment, basic
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.28 ) $ (0.21 )

Net loss, excluding goodwill impairment, diluted
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
 
Performance Ratios:
Return on average assets -0.80 % -0.48 % -1.00 % -9.30 % -0.61 % -0.64 % -0.50 %
Return on average common equity -10.02 % -5.85 % -10.90 % -80.88 % -5.28 % -7.91 % -4.42 %
Return on average tangible assets -0.80 % -0.48 % -1.00 % -9.52 % -0.62 % -0.64 % -0.52 %
Return on average tangible common equity -10.18 % -5.95 % -11.09 % -101.66 % -6.63 % -8.04 % -5.55 %
Net interest margin, taxable equivalent 2.93 % 3.17 % 3.67 % 3.96 % 3.77 % 3.05 % 3.70 %
Efficiency ratio 104.03 % 82.41 % 88.08 % 273.98 % 75.26 % 93.01 % 74.91 %
Non-interest income to net interest income and non-interest income 22.21 % 19.23 % 19.14 % 20.07 % 20.12 % 20.69 % 19.72 %
 
Performance Ratios - Normalized:
Return on average assets, excluding goodwill impairment -0.80 % -0.48 % -1.00 % -1.26 % -0.61 % -0.64 % -0.50 %
Return on average common equity, excluding goodwill impairment -10.02 % -5.85 % -10.90 % -10.93 % -5.28 % -7.91 % -4.42 %
Return on average tangible assets, excluding goodwill impairment -0.80 % -0.48 % -1.00 % -1.29 % -0.62 % -0.64 % -0.52 %
Return on average tangible common equity, excluding goodwill impairment -10.18 % -5.95 % -11.09 % -13.74 % -6.63 % -8.04 % -5.55 %
 
Capital & Liquidity:
Total equity to total assets 10.28 % 10.23 % 10.46 % 12.07 % 13.93 % 10.28 % 13.93 %
Tangible equity to tangible assets 10.17 % 10.11 % 10.33 % 11.92 % 11.84 % 10.17 % 11.84 %
Tangible common equity to tangible assets 7.80 % 7.81 % 8.01 % 9.32 % 9.26 % 7.80 % 9.26 %
Total loans to total deposits 73.00 % 75.36 % 80.50 % 94.60 % 93.75 % 73.00 % 93.75 %
 
Asset Quality:
Net charge-offs $ 2,810 $ 4,760 $ 4,034 $ 2,862 $ 6,944 $ 7,570 $ 9,288
Net loans charged-off to average loans, annualized 1.29 % 2.04 % 1.68 % 1.18 % 2.82 % 1.68 % 1.87 %
Non-accrual loans $ 58,339 $ 50,305 $ 45,454 $ 31,463 $ 26,782 $ 58,339 $ 26,782
Other real estate owned $ 18,387 $ 18,933 $ 16,017 $ 14,206 $ 12,930 $ 18,387 $ 12,930
Repossessed assets $ 1,921 $ 3,466 $ 3,881 $ 2,050 $ 1,473 $ 1,921 $ 1,473
Non-performing assets (NPA) $ 78,647 $ 72,704 $ 65,352 $ 47,719 $ 41,185 $ 78,647 $ 41,185
NPA to total assets 5.90 % 5.31 % 4.83 % 3.97 % 3.33 % 5.90 % 3.33 %
Loans 90 days past due $ 342 $ 3,993 $ 4,524 $ 3,377 $ 3,373 $ 342 $ 3,373
NPA + loans 90 days past due to total assets 5.92 % 5.60 % 5.16 % 4.25 % 3.60 % 5.92 % 3.60 %
Non-performing loans (NPL) $ 58,681 $ 54,298 $ 49,978 $ 34,840 $ 30,155 $ 58,681 $ 30,155
NPL to total loans 6.89 % 6.00 % 5.25 % 3.61 % 3.11 % 6.89 % 3.11 %
Allowance for loan and lease losses to total loans 3.15 % 2.88 % 2.78 % 2.66 % 1.99 % 3.15 % 1.99 %
Allowance for loan and lease losses to NPL 45.72 % 48.07 % 53.01 % 73.73 % 63.92 % 45.72 % 63.92 %
 
Period End Balances:
Loans $ 851,352 $ 905,512 $ 952,018 $ 964,295 $ 968,493 $ 851,352 $ 968,493
Allowance for loan and lease losses $ 26,830 $ 26,101 $ 26,492 $ 25,686 $ 19,275 $ 26,830 $ 19,275
Intangible assets $ 1,685 $ 1,800 $ 1,918 $ 2,012 $ 29,295 $ 1,685 $ 29,295
Assets $ 1,333,505 $ 1,368,970 $ 1,353,834 $ 1,202,908 $ 1,238,393 $ 1,333,505 $ 1,238,393
Deposits $ 1,166,251 $ 1,201,645 $ 1,182,673 $ 1,019,287 $ 1,033,046 $ 1,166,251 $ 1,033,046
Common stockholders' equity $ 105,591 $ 108,574 $ 110,260 $ 113,941 $ 141,305 $ 105,591 $ 141,305
Total stockholders' equity $ 137,116 $ 140,005 $ 141,599 $ 145,189 $ 172,463 $ 137,116 $ 172,463
Common stock market capitalization $ 31,523 $ 35,463 $ 39,075 $ 63,209 $ 62,388 $ 31,523 $ 62,388
Full-time equivalent employees 333 345 347 348 353 333 353
Common shares outstanding 16,418 16,418 16,418 16,418 16,418 16,418 16,418
 
Average Balances:
Loans $ 873,418 $ 931,566 $ 960,744 $ 966,677 $ 984,210 $ 902,332 $ 992,039
Intangible assets $ 1,748 $ 1,864 $ 1,955 $ 28,941 $ 29,365 $ 1,805 $ 29,431
Earning assets $ 1,252,396 $ 1,266,707 $ 1,168,774 $ 1,115,542 $ 1,142,338 $ 1,259,512 $ 1,155,161
Assets $ 1,348,653 $ 1,362,204 $ 1,258,592 $ 1,231,926 $ 1,258,363 $ 1,355,391 $ 1,272,289
Deposits $ 1,181,077 $ 1,189,482 $ 1,081,372 $ 1,024,105 $ 1,047,865 $ 1,185,257 $ 1,061,514
Common stockholders' equity $ 107,882 $ 110,782 $ 115,012 $ 141,600 $ 144,476 $ 109,323 $ 145,029
Total stockholders' equity $ 139,345 $ 142,152 $ 146,280 $ 172,779 $ 175,568 $ 140,740 $ 174,199
Common shares outstanding, basic - wtd 15,715 15,649 15,582 15,543 15,503 15,682 15,537
Common shares outstanding, diluted - wtd 15,715 15,649 15,584 15,543 15,503 15,682 15,537

               
 
 
Non-GAAP Reconciliation Table
 
 
(in thousands, except per share data)
 
2nd Quarter 1st Quarter 4th Quarter 3rd Quarter 2nd Quarter Year-to-Date Year-to-Date
  2010     2010     2009     2009     2009   June 30, 2010   June 30, 2009
 
Return on average assets -0.80 % -0.48 % -1.00 % -9.30 % -0.61 % -0.64 % -0.50 %
Effect of intangible assets   -     -     -     -0.22 %   -0.01 %   -     -0.02 %
Return on average tangible assets   -0.80 %   -0.48 %   -1.00 %   -9.52 %   -0.62 %   -0.64 %   -0.52 %
 
Return on average assets -0.80 % -0.48 % -1.00 % -9.30 % -0.61 % -0.64 % -0.50 %
Effect of goodwill impairment   -     -     -     8.04 %   -     -     -  
Return on average assets, excluding goodwill impairment -0.80 % -0.48 % -1.00 % -1.26 % -0.61 % -0.64 % -0.50 %
Effect of average intangible assets   -     -     -     -0.03 %   -0.01 %   -     -0.02 %
Return on average tangible assets, excluding goodwill impairment   -0.80 %   -0.48 %   -1.00 %   -1.29 %   -0.62 %   -0.64 %   -0.52 %
 
Return on average common equity -10.02 % -5.85 % -10.90 % -80.88 % -5.28 % -7.91 % -4.42 %
Effect of goodwill impairment   -     -     -     69.95 %   -     -     -  
Return on average common equity, excluding goodwill impairment -10.02 % -5.85 % -10.90 % -10.93 % -5.28 % -7.91 % -4.42 %
Effect on average intangible assets   -0.16 %   -0.10 %   -0.19 %   -2.81 %   -1.35 %   -0.13 %   -1.13 %
Return on average tangible common equity, excluding goodwill impairment   -10.18 %   -5.95 %   -11.09 %   -13.74 %   -6.63 %   -8.04 %   -5.55 %
 
Total equity to total assets 10.28 % 10.23 % 10.46 % 12.07 % 13.93 % 10.28 % 13.93 %
Effect of intangible assets   -0.11 %   -0.12 %   -0.13 %   -0.15 %   -2.09 %   -0.11 %   -2.09 %
Tangible equity to tangible assets 10.17 % 10.11 % 10.33 % 11.92 % 11.84 % 10.17 % 11.84 %
Effect of preferred stock   -2.37 %   -2.30 %   -2.32 %   -2.60 %   -2.58 %   -2.37 %   -2.58 %
Tangible common equity to tangible assets   7.80 %   7.81 %   8.01 %   9.32 %   9.26 %   7.80 %   9.26 %
 
Non-interest expense $ 11,983 $ 9,872 $ 11,516 $ 37,363 $ 9,892 $ 21,855 $ 19,352
Impairment of goodwill   -     -     -     (27,156 )   -     -     -  
Non-interest expense, excluding goodwill impairment $ 11,983   $ 9,872   $ 11,516   $ 10,207   $ 9,892   $ 21,855   $ 19,352  
 

Net loss available to common stockholders
$ (2,702 ) $ (1,619 ) $ (3,135 ) $ (28,631 ) $ (1,908 ) $ (4,321 ) $ (3,208 )
Effect of goodwill impairment, net of $2,394 tax effect   -     -     -     24,762     -     -     -  

Net loss available to common stockholders, excluding goodwill impairment
$ (2,702 ) $ (1,619 ) $ (3,135 ) $ (3,869 ) $ (1,908 ) $ (4,321 ) $ (3,208 )
 
Total stockholders' equity $ 137,116 $ 140,005 $ 141,599 $ 145,189 $ 172,463 $ 137,116 $ 172,463
Effect of preferred stock   (31,525 )   (31,431 )   (31,339 )   (31,248 )   (31,158 )   (31,525 )   (31,158 )
Common stockholders' equity $ 105,591   $ 108,574   $ 110,260   $ 113,941   $ 141,305   $ 105,591   $ 141,305  
 
Average assets $ 1,348,653 $ 1,362,204 $ 1,258,592 $ 1,231,926 $ 1,258,363 $ 1,355,391 $ 1,272,289
Effect of average intangible assets   (1,748 )   (1,864 )   (1,955 )   (28,941 )   (29,365 )   (1,805 )   (29,431 )
Average tangible assets $ 1,346,905   $ 1,360,340   $ 1,256,637   $ 1,202,985   $ 1,228,998   $ 1,353,586   $ 1,242,858  
 
Average total stockholders' equity $ 139,345 $ 142,152 $ 146,280 $ 172,779 $ 175,568 $ 140,740 $ 174,199
Effect of average preferred stock   (31,463 )   (31,370 )   (31,268 )   (31,179 )   (31,092 )   (31,417 )   (29,170 )
Average common stockholders' equity 107,882 110,782 115,012 141,600 144,476 109,323 145,029
Effect of average intangible assets   (1,748 )   (1,864 )   (1,955 )   (28,941 )   (29,365 )   (1,805 )   (29,431 )
Average tangible common stockholders' equity $ 106,134   $ 108,918   $ 113,057   $ 112,659   $ 115,111   $ 107,518   $ 115,598  
 
Per Share Data
Book value per common share $ 6.43 $ 6.61 $ 6.72 $ 6.94 $ 8.61 $ 6.43 $ 8.61
Effect of intangible assets   (0.10 )   (0.11 )   (0.12 )   (0.12 )   (1.79 )   (0.10 )   (1.79 )
Tangible book value per common share $ 6.33   $ 6.50   $ 6.60   $ 6.82   $ 6.82   $ 6.33   $ 6.82  
 

Net loss available to common stockholders, basic
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
Effect of goodwill impairment, net of tax   -     -     -     1.59     -     -     -  

Net loss, excluding goodwill impairment, basic
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
 

Net loss available to common stockholders, diluted
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (1.84 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
Effect of goodwill impairment, net of tax   -     -     -     1.59     -     -     -  

Net loss, excluding goodwill impairment, diluted
$ (0.17 ) $ (0.10 ) $ (0.20 ) $ (0.25 ) $ (0.12 ) $ (0.28 ) $ (0.21 )
 
 
Supplemental Data (in thousands)
 
Net interest income, tax equivalent $ 9,162 $ 9,892 $ 10,804 $ 11,126 $ 10,729 $ 19,052 $ 21,198
Impairment of goodwill $ - $ - $ - $ 27,156 $ - $ - $ -
Amortization of intangibles $ 115 $ 118 $ 94 $ 127 $ 129 $ 233 $ 264

Gain on sales of available-for-sale securities, net
$ - $ (57 ) $ - $ - $ - $ (57 ) $ -

Gains on sales of foreclosed and repossessed property, leased equipment, premises and equipment and loans
$ (104 ) $ (60 ) $ (138 ) $ (70 ) $ (146 ) $ (164 ) $ (216 )
Losses on sales of foreclosed and repossessed property and premises and equipment $ 383 $ 292 $ 313 $ 149 $ 82 $ 675 $ 141
Write-downs on foreclosed and repossessed property and other assets $ 1,337 $ 6 $ 198 $ 120 $ 205 $ 1,343 $ 387
Mortgage loan and related fees $ 236 $ 149 $ 199 $ 385 $ 199 $ 385 $ 441
 
Loans by Type
Loans secured by real estate-
Residential 1-4 family $ 273,030 $ 278,695 $ 281,354 $ 284,811 $ 288,836 $ 273,030 $ 288,836
Commercial 247,009 255,174 259,819 233,692 225,790 247,009 225,790
Construction 113,877 125,603 153,144 176,570 183,623 113,877 183,623
Multi-family and Farmland   40,550     41,314     37,960     37,461     33,847     40,550     33,847  
Total loans secured by real estate   674,466     700,786     732,277     732,534     732,096     674,466     732,096  
Commercial loans 117,279 138,156 146,016 148,473 150,472 117,279 150,472
Consumer installment loans 42,262 45,564 48,927 51,866 54,261 42,262 54,261
Leases, net of unearned income 13,006 17,405 19,730 24,679 26,784 13,006 26,784
Other   4,339     3,601     5,068     6,743     4,880     4,339     4,880  
Total loans $ 851,352   $ 905,512   $ 952,018   $ 964,295   $ 968,493   $ 851,352   $ 968,493  

Supplemental Data (continued)
Asset Quality Information
                   
 
2nd Quarter 2nd Quarter 1st Quarter 1st Quarter 4th Quarter 4th Quarter 3rd Quarter 3rd Quarter 2nd Quarter 2nd Quarter
  2010     2010   2010     2010   2009     2009   2009   2009   2009   2009
(in thousands) (units) (in thousands) (units) (in thousands) (units) (in thousands) (units) (in thousands) (units)
Non-Accrual Loans and Leases - Activity
Beginning Balance $ 50,305 203 $ 45,454 187 $ 31,463 106 $ 26,782 91 $ 26,706 70
Additions 15,525 16,701 20,378 11,837 9,643
Reductions   (7,491 )       (11,850 )       (6,387 )       (7,156 )       (9,567 )    
Ending Balance $ 58,339     259 $ 50,305     203 $ 45,454     187 $ 31,463     106 $ 26,782     91
 
Non-Accrual Loans and Leases - Classification
Construction/Development Loans $ 18,120 46 $ 13,950 33 $ 13,706 36 $ 10,583 15 $ 8,706 9
Residential Real Estate Loans 8,910 62 7,392 53 6,059 52 3,758 32 3,713 30
Commercial Real Estate Loans 7,050 30 6,903 26 6,156 26 2,162 11 4,595 16
Commercial & Industrial Loans 17,501 46 16,234 39 15,397 38 8,432 25 3,160 15
Commercial Leases 4,690 58 3,943 37 2,389 20 5,064 21 5,126 16
Consumer and Other Loans   2,068     17   1,883     15   1,747     15   1,464     2   1,482     5
Total $ 58,339     259 $ 50,305     203 $ 45,454     187 $ 31,463     106 $ 26,782     91
 
 
Other Real Estate Owned - Activity
Beginning Balance $ 18,933 109 $ 16,017 85 $ 14,206 68 $ 12,930 61 $ 11,309 49
Additions 6,274 3,866 4,415 5,599 4,522
Reductions   (6,820 )       (950 )       (2,604 )       (4,323 )       (2,901 )    
Ending Balance $ 18,387     123 $ 18,933     109 $ 16,017     85 $ 14,206     68 $ 12,930     61
 
Other Real Estate Owned - Classification
Construction/Development Loans $ 8,103 58 $ 7,725 50 $ 6,243 37 $ 6,339 31 $ 7,187 38
Residential Real Estate Loans 5,689 46 5,638 41 5,132 34 3,688 25 2,657 14
Commercial Real Estate Loans   4,595     19   5,570     18   4,642     14   4,179     12   3,086     9
Total $ 18,387     123 $ 18,933     109 $ 16,017     85 $ 14,206     68 $ 12,930     61
 
 
Loans 90 Days Past Due - Classification
Construction/Development Loans $ - - $ 1,018 3 $ 30 1 $ 532 3 $ 94 4
Residential Real Estate Loans 134 2 820 8 653 6 1,145 19 795 12
Commercial Real Estate Loans - - 845 3 239 2 108 2 41 1
Commercial & Industrial Loans 194 6 615 4 12 1 67 4 59 6
Commercial Leases - - 564 10 3,522 47 1,307 36 2,308 24
Consumer and Other Loans   14     3   131     17   68     16   218     19   76     10
Total $ 342     11 $ 3,993     45 $ 4,524     73 $ 3,377     83 $ 3,373     57
 
 
Repossessed Assets - Activity
Beginning Balance $ 3,466 214 $ 3,881 188 $ 2,050 163 $ 1,473 56 $ 1,864 63
Additions 709 1,383 3,588 1,978 810
Reductions   (2,254 )       (1,798 )       (1,757 )       (1,401 )       (1,201 )    
Ending Balance $ 1,921     57 $ 3,466     214 $ 3,881     188 $ 2,050     163 $ 1,473     56

Copyright Business Wire 2010

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