First Security Group Announces Fourth Quarter Results

First Security Group, Inc. (NASDAQ: FSGI), today reported a net loss available to common shareholders of $11.8 million, or $0.75 per diluted share for the quarter ending December 31, 2010, and a net loss of $46.4 million, or $2.95 per diluted share for the year. For 2010, First Security recorded $33.6 million in provision for loan and lease losses and established a $24.6 million valuation allowance for deferred taxes.

“All of us in senior management appreciate the support of shareholders and customers and the dedication of our employees. Knowing their level of commitment makes the most recent operating results all the more disappointing,” said Rodger B. Holley, Chairman and Chief Executive Officer of First Security. “Continued procedural improvements, led by our new President and Chief Operating Officer Gene Coffman, are underway. Mr. Coffman is managing the bank on a day-to-day basis and will continue spearheading our change initiatives.”

To better position First Security for short-term stability and long-term success, several important management changes have taken place over the past year. In addition to the hiring of the president and chief operating officer, an experienced chief credit officer joined the Bank in the second quarter of 2010 to oversee credit administration. The positions of chief risk officer, retail banking president and commercial banking president were also created and filled during 2010.

These organizational changes provide centralized oversight and control. Market executives were also appointed to maintain local knowledge and uphold the Bank’s commitment to superior customer service. Operationally, loan underwriting, collections and loan document areas have been centralized. Additionally, the marketing and sales of foreclosed residential and commercial properties has been outsourced to selective local and regional real estate firms. These changes ensure consistency, increase effectiveness and provide higher levels of operational efficiencies.

Fourth Quarter Overview

For the fourth quarter of 2010, net interest income totaled $7.9 million, a decline of 2.8 percent on a linked quarter basis and a decline of 25.2 percent from the fourth quarter of 2009. On a year-over-year basis, net interest income declined by 17.8 percent to $34.7 million in 2010. Lower net interest income is primarily attributed to decreased interest income from reductions in the loan portfolio and increased interest costs associated with higher levels of brokered deposits, partially offset by reductions in interest expense on customer deposits.

Non-interest income for the fourth quarter of 2010 totaled $2.2 million, 6.9 percent lower than the third quarter of 2010, and 10.6 percent lower than the fourth quarter of 2009. On a linked quarter basis, most of the $167 thousand decline was due to reduced mortgage loan and related fee income. For 2010, non-interest income was $9.5 million, compared to $10.3 million in 2009. This decline was primarily due to $730 thousand less in total deposit fees and a $171 thousand reduction in gains on sales of assets.

Non-interest expense in the fourth quarter of 2010 declined to $11.1 million, from $12.5 million in the third quarter of 2010, and $12.1 million in the fourth quarter of 2009. Full-time equivalent employees declined to 311 as of December 31, 2010, from 325 at the end of the third quarter and 347 a year ago. Accordingly, salary and benefit expense declined by 6.2% on a linked quarter basis and 6.5% for the year. Expenses associated with nonperforming assets, including write-downs, losses and holding costs, totaled $1.6 million in the fourth quarter of 2010 and $6.3 million for the year.

In the fourth quarter of 2010, the provision for loan and lease losses declined to $7.2 million, from $18.4 million in the third quarter of 2010. The provision of $33.6 million for 2010 was 32.3% higher than the provision for 2009.

Economic uncertainty, higher unemployment rates and reduced consumer spending have created financial challenges for many owner-managed businesses and individuals. As of December 31, 2010, the allowance for loan and lease losses was $24.0 million or 3.30 percent of total loans, compared to $25.3 million, or 3.26 percent of total loans, as of September 30, 2010. Net charge-offs totaled $8.5 million, or 4.49 percent of average loans on an annualized basis during the fourth quarter of 2010.

From September 30, 2010, non-accrual loans and leases declined $1.0 million to $54.1 million at the end of the fourth quarter of 2010; the largest categories were construction and development (C&D) with $25.6 million, commercial real estate (CRE) loans with $10.0 million, and residential real estate with $8.9 million. During the same time period, other real estate owned increased $1.5 million to $24.4 million; and repossessed assets declined $466 thousand to $763 thousand. Additional detail on asset quality is available in the supplemental data following the financial highlights.

During the fourth quarter of 2010, loan balances declined by $50.3 million, or 6.5 percent (25.9 percent annualized) on a linked quarter basis. Most categories declined, and the reduction was concentrated in C&D loans, which declined by 17.3 percent (69.3 percent annualized) to $84.2 million, and CRE loans, which declined by 4.5 percent (17.9 percent annualized) to $226.4 million.

First Security’s loan portfolio consists of in-market loans originated throughout its branch network. The loan portfolio is well diversified with 34.7 percent in 1-4 family residential, 31.1 percent in CRE, 11.6 percent in C&D and 11.4 percent in commercial and industrial. Additional detail on the loan portfolio is available in the supplemental data following the financial highlights.

At December 31, 2010, deposits totaled $1.0 billion, a decline of $134.0 million, or 11.3 percent on a year over year basis. The majority of the decline was in the certificates of deposits with jumbo CDs declining $54.3 million and retail CDs declining $38.6 million over the last year. Noninterest bearing and interest bearing demand deposit accounts were stable.

First Security continues to consider a variety of strategic alternatives intended to achieve and maintain elevated capital ratios. Stockholders’ equity at the end of the fourth quarter of 2010 was $93.4 million, and common stockholders’ equity was $61.7 million. As of December 31, 2010, FSGBank was below the elevated capital ratios required by the Office of the Comptroller of the Currency, but continued to maintain capital ratios above the thresholds established for well-capitalized institutions under federal regulatory guidelines. In the area of liquidity, First Security maintains an elevated level of cash to fund prudent loans and future contractual obligations.

“The organizational changes made in 2010 have positioned us to return our focus to the business of banking,” said Ralph E. “Gene” Coffman, Jr., President and Chief Operating Officer. “While our special assets department continues to work to reduce nonperforming assets, our lenders are focused on meeting the needs of our credit worthy customers here in east Tennessee and north Georgia. We are committed to redoubling our efforts to implement our core strategies of addressing and improving asset quality, being the community bank of choice and returning to profitability.”

Webcast and Conference Call Information

First Security’s executive management team will host a conference call and simultaneous webcast on Thursday, January 27, 2011, at 3:00 PM Eastern Standard Time to discuss fourth 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 $1.2 billion in assets. Founded in 1999, First Security’s community bank subsidiary, FSGBank, N.A. has 37 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.

Note Regarding Forward Looking Statements

Some of our statements contained in this release are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” “will,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared.

These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to the following: deterioration in the financial condition of borrowers; changes in loan underwriting, credit review or loss reserve policies; the failure of assumptions underlying the establishment of reserves for possible loan losses; changes in political and economic conditions; changes in financial market conditions; fluctuations in markets for equity, fixed-income, commercial paper and other securities, which could affect availability, market liquidity levels, and pricing; governmental monetary and fiscal policies, as well as legislative and regulatory changes; First Security’s participation or lack of participation in governmental programs; First Security’s lack of participation in a “stress test” under the Federal Reserve’s Supervisory Capital Assessment Program; the effects of competition from other commercial banks, thrifts, and other financial institutions; and the effect of any mergers, acquisitions or other transactions, to which we or our subsidiary may from time to time be a party.

Many of these risks are beyond our ability to control or predict, and you are cautioned not to put undue reliance on such forward-looking statements. First Security does not intend to update or reissue any forward-looking statements contained in this release as a result of new information or other circumstances that may become known to First Security.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Note. Our actual results may differ significantly from those we discuss in these forward-looking statements.

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
December 31, December 31,
(in thousands, except share data)   2010   2009
(unaudited)
 
ASSETS
Cash & Due from Banks $ 8,298 $ 23,220

Federal Funds Sold and Securities Purchased under Agreements to Resell
  -     -  
Cash and Cash Equivalents   8,298     23,220  
Interest-Bearing Deposits in Banks   200,621     152,616  
Securities Available-for-Sale   154,165     143,045  
Loans Held for Sale 2,556 1,225
Loans   724,535     950,793  
Total Loans 727,091 952,018
Less: Allowance for Loan and Lease Losses   24,000     26,492  
  703,091     925,526  
Premises and Equipment, net   30,814     33,157  
Goodwill   -     -  
Intangible Assets   1,461     1,918  
Other Assets   70,098     73,917  
TOTAL ASSETS $ 1,168,548   $ 1,353,399  
 
LIABILITIES
Deposits
Noninterest-Bearing Demand $ 149,323 $ 151,174
Interest-Bearing Demand 63,838 62,429
Savings and Money Market Accounts 161,873 177,543
Certificates of Deposit of less than $100 thousand 205,675 244,312
Certificates of Deposit of $100 thousand or more 153,138 207,465
Brokered Deposits   314,876     339,750  
Total Deposits 1,048,723 1,182,673

Federal Funds Purchased and Securities Sold under Agreements to Repurchase
15,933 17,911
Security Deposits 732 1,376
Other Borrowings 77 94
Other Liabilities   9,709     10,181  
Total Liabilities   1,075,174     1,212,235  
STOCKHOLDERS' EQUITY
Preferred Stock - no par value 10,000,000 authorized; 33,000 issued as of December 31, 2010 and December 31, 2009 31,718 31,339
Common Stock - $.01 par value 150,000,000 shares authorized as of December 31, 2010; 50,000,000 shares authorized as of December 31, 2009; 16,418,327 issued as of December 31, 2010 and December 31, 2009 114 114
Paid-In Surplus 111,344 111,964
Common Stock Warrants 2,006 2,006
Unallocated ESOP Shares (5,218 ) (6,193 )
Accumulated Deficit (50,629 ) (4,258 )
Accumulated Other Comprehensive Income   4,039     6,192  
Total Stockholders' Equity   93,374     141,164  
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,168,548   $ 1,353,399  

 
First Security Group, Inc. and Subsidiary
Consolidated Statements of Income
       
Three Months Ended Year-to-Date
December 31, December 31,
(in thousands except per share amounts)   2010   2009   2010   2009
(unaudited) (unaudited) (unaudited)
INTEREST INCOME
Loans, including fees $ 11,028 $ 13,913 $ 49,118 $ 57,772
Debt Securities - taxable 860 1,120 3,870 4,555
Debt Securities - non-taxable 349 408 1,411 1,608
Other   146     34     517     72  
Total Interest Income   12,383     15,475     54,916     64,007  
 
INTEREST EXPENSE
Interest Bearing Demand Deposits 44 44 186 190
Savings Deposits and Money Market Accounts 312 413 1,417 1,668
Certificates of Deposit of less than $100 thousand 951 1,496 4,673 7,183
Certificates of Deposit of $100 thousand or more 788 1,331 4,049 6,265
Brokered Deposits 2,260 1,492 9,429 5,970
Other   118     127     481     522  
Total Interest Expense   4,473     4,903     20,235     21,798  
 
NET INTEREST INCOME 7,910 10,572 34,681 42,209
Provision for Loan and Lease Losses   7,189     4,935     33,613     25,404  

NET INTEREST INCOME AFTER PROVISION FOR LOAN AND LEASE LOSSES
721 5,637 1,068 16,805
 
NON-INTEREST INCOME
Service Charges on Deposit Accounts 913 1,141 3,912 4,642

Gain on Sales of Available-for-Sale Securities, net
- - 57 -
Other   1,324     1,362     5,534     5,693  
Total Non-interest Income   2,237     2,503     9,503     10,335  
 
NON-INTEREST EXPENSE
Salaries and Employee Benefits 4,488 4,943 18,926 20,246
Expense on Premises and Fixed Assets, net of rental income 1,338 1,366 5,525 5,891
Impairment of Goodwill - - - 27,156
Other   5,244     5,823     20,783     15,554  
Total Non-interest Expense   11,070     12,132     45,234     68,847  
 
LOSS BEFORE INCOME TAX PROVISION (8,112 ) (3,992 ) (34,663 ) (41,707 )
Income Tax Expense (Benefit)   3,218     (926 )   9,679     (8,252 )
NET LOSS   (11,330 )   (3,066 )   (44,342 )   (33,455 )
Preferred Stock Dividends 412 413 1,650 1,609
Accretion on Preferred Stock Discount   98     91     379     345  
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS $ (11,840 ) $ (3,570 ) $ (46,371 ) $ (35,409 )
 
 
NET LOSS PER SHARE:
Net Loss Per Share - basic $ (0.75 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Net Loss Per Share - diluted $ (0.75 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Dividends Declared Per Common Share $ - $ 0.01 $ - $ 0.08
 
WEIGHTED AVERAGE SHARES OUTSTANDING
BASIC 15,808 15,582 15,740 15,550
DILUTED 15,808 15,584 15,740 15,550

           
First Security Group, Inc. and Subsidiary
Consolidated Financial Highlights
(unaudited)
 
 
 
(in thousands, except per share amounts and full-time equivalent employees)
 
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Year-to-Date Year-to-Date
2010 2010 2010 2010 2009 December 31, 2010 December 31, 2009
 
Earnings:
Net interest income $ 7,910 $ 8,135 $ 8,961 $ 9,675 $ 10,572 $ 34,681 $ 42,209
Provision for loan and lease losses $ 7,189 $ 18,415 $ 3,634 $ 4,375 $ 4,935 $ 33,613 $ 25,404
Non-interest income $ 2,237 $ 2,404 $ 2,558 $ 2,304 $ 2,503 $ 9,503 $ 10,335
Non-interest expense $ 11,070 $ 12,512 $ 11,780 $ 9,872 $ 12,132 $ 45,234 $ 68,847
Dividends and accretion on preferred stock $ 510 $ 508 $ 506 $ 505 $ 504 $ 2,029 $ 1,954
Net loss available to common stockholders $ (11,840 ) $ (30,280 ) $ (2,632 ) $ (1,619 ) $ (3,570 ) $ (46,371 ) $ (35,409 )
 
Earnings - Normalized
Non-interest expense, excluding goodwill impairment $ 11,070 $ 12,512 $ 11,780 $ 9,872 $ 12,132 $ 45,234 $ 41,691
Net loss available to common stockholders, excluding goodwill impairment $ (11,840 ) $ (30,280 ) $ (2,632 ) $ (1,619 ) $ (3,570 ) $ (46,371 ) $ (10,647 )
 
Per Share Data:
Net loss available to common stockholders, basic $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Net loss available to common stockholders, diluted $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Cash dividends declared on common shares $ - $ - $ - $ - $ 0.01 $ - $ 0.08
Book value per common share $ 3.76 $ 4.58 $ 6.41 $ 6.59 $ 6.69 $ 3.76 $ 6.69
Tangible book value per common share $ 3.67 $ 4.49 $ 6.31 $ 6.48 $ 6.57 $ 3.67 $ 6.57
 
Per Share Data - Normalized:
Net loss, excluding goodwill impairment, basic $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (0.68 )
Net loss, excluding goodwill impairment, diluted $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (0.68 )
 
Performance Ratios:
Return on average assets -3.91 % -9.26 % -0.78 % -0.48 % -1.13 % -3.55 % -2.81 %
Return on average common equity -63.93 % -115.65 % -9.80 % -5.87 % -12.42 % -46.81 % -25.92 %
Return on average tangible assets -3.92 % -9.27 % -0.78 % -0.48 % -1.14 % -3.55 % -2.86 %
Return on average tangible common equity -65.27 % -117.48 % -9.96 % -5.97 % -12.63 % -47.62 % -31.00 %
Net interest margin, taxable equivalent 2.87 % 2.72 % 2.93 % 3.17 % 3.67 % 2.92 % 3.75 %
Efficiency ratio 109.10 % 118.72 % 102.27 % 82.41 % 92.79 % 102.38 % 131.03 %
Non-interest income to net interest income and non-interest income 22.05 % 22.81 % 22.21 % 19.23 % 19.14 % 21.51 % 19.67 %
 
Performance Ratios - Normalized:
Return on average assets, excluding goodwill impairment -3.91 % -9.26 % -0.78 % -0.48 % -1.13 % -3.55 % -0.85 %
Return on average common equity, excluding goodwill impairment -63.93 % -115.65 % -9.80 % -5.87 % -12.42 % -46.81 % -7.79 %
Return on average tangible assets, excluding goodwill impairment -3.92 % -9.27 % -0.78 % -0.48 % -1.14 % -3.55 % -0.86 %
Return on average tangible common equity, excluding goodwill impairment -65.27 % -117.48 % -9.96 % -5.97 % -12.63 % -47.62 % -9.32 %
 
Capital & Liquidity:
Total equity to total assets 7.99 % 8.57 % 10.26 % 10.20 % 10.43 % 7.99 % 10.43 %
Tangible equity to tangible assets 7.88 % 8.46 % 10.14 % 10.08 % 10.30 % 7.88 % 10.30 %
Tangible common equity to tangible assets 5.16 % 5.92 % 7.78 % 7.78 % 7.98 % 5.16 % 7.98 %
Total loans to total deposits 69.33 % 69.90 % 73.00 % 75.36 % 80.50 % 69.33 % 80.50 %
 
Asset Quality:
Net charge-offs $ 8,503 $ 19,918 $ 2,900 $ 4,760 $ 4,123 $ 36,081 $ 16,273
Net loans charged-off to average loans, annualized 4.49 % 9.67 % 1.33 % 2.04 % 1.72 % 4.27 % 1.66 %
Non-accrual loans $ 54,082 $ 55,083 $ 58,339 $ 50,305 $ 45,454 $ 54,082 $ 45,454
Other real estate owned $ 24,399 $ 22,888 $ 17,795 $ 18,228 $ 15,312 $ 24,399 $ 15,312
Repossessed assets $ 763 $ 1,229 $ 1,921 $ 3,466 $ 3,881 $ 763 $ 3,881
Non-performing assets (NPA) $ 79,244 $ 79,200 $ 78,055 $ 71,999 $ 64,647 $ 79,244 $ 64,647
NPA to total assets 6.78 % 6.35 % 5.85 % 5.26 % 4.78 % 6.78 % 4.78 %
Loans 90 days past due $ 4,838 $ 6,025 $ 342 $ 3,993 $ 4,524 $ 4,838 $ 4,524
NPA + loans 90 days past due to total assets 7.20 % 6.84 % 5.88 % 5.55 % 5.11 % 7.20 % 5.11 %
Non-performing loans (NPL) $ 58,920 $ 61,108 $ 58,681 $ 54,298 $ 49,978 $ 58,920 $ 49,978
NPL to total loans 8.10 % 7.86 % 6.89 % 6.00 % 5.25 % 8.10 % 5.25 %
Allowance for loan and lease losses to total loans 3.30 % 3.26 % 3.15 % 2.88 % 2.78 % 3.30 % 2.78 %
Allowance for loan and lease losses to NPL 40.73 % 41.43 % 45.72 % 48.07 % 53.01 % 40.73 % 53.01 %
 
Period End Balances:
Loans $ 727,091 $ 777,418 $ 851,352 $ 905,512 $ 952,018 $ 727,091 $ 952,018
Allowance for loan and lease losses $ 24,000 $ 25,320 $ 26,830 $ 26,101 $ 26,492 $ 24,000 $ 26,492
Intangible assets $ 1,461 $ 1,570 $ 1,685 $ 1,800 $ 1,918 $ 1,461 $ 1,918
Assets $ 1,168,548 $ 1,246,391 $ 1,333,140 $ 1,368,535 $ 1,353,399 $ 1,168,548 $ 1,353,399
Deposits $ 1,048,723 $ 1,112,204 $ 1,166,251 $ 1,201,645 $ 1,182,673 $ 1,048,723 $ 1,182,673
Common stockholders' equity $ 61,657 $ 75,226 $ 105,226 $ 108,139 $ 109,825 $ 61,657 $ 109,825
Total stockholders' equity $ 93,374 $ 106,846 $ 136,751 $ 139,570 $ 141,164 $ 93,374 $ 141,164
Common stock market capitalization $ 14,776 $ 18,388 $ 31,523 $ 35,463 $ 39,075 $ 14,776 $ 39,075
Full-time equivalent employees 311 325 333 345 347 311 347
Common shares outstanding 16,418 16,418 16,418 16,418 16,418 16,418 16,418
 
Average Balances:
Loans $ 757,204 $ 823,753 $ 873,418 $ 931,566 $ 960,744 $ 845,945 $ 977,758
Intangible assets $ 1,521 $ 1,634 $ 1,748 $ 1,864 $ 1,955 $ 1,691 $ 22,382
Earning assets $ 1,122,078 $ 1,212,994 $ 1,252,396 $ 1,266,707 $ 1,168,589 $ 1,213,145 $ 1,150,337
Assets $ 1,210,362 $ 1,308,616 $ 1,348,219 $ 1,361,769 $ 1,258,587 $ 1,306,831 $ 1,258,662
Deposits $ 1,077,407 $ 1,144,201 $ 1,181,077 $ 1,189,482 $ 1,081,372 $ 1,147,724 $ 1,057,090
Common stockholders' equity $ 74,080 $ 104,731 $ 107,448 $ 110,347 $ 115,007 $ 99,067 $ 136,598
Total stockholders' equity $ 105,734 $ 136,288 $ 138,911 $ 141,717 $ 146,275 $ 130,579 $ 166,803
Common shares outstanding, basic - wtd 15,808 15,785 15,715 15,649 15,582 15,740 15,550
Common shares outstanding, diluted - wtd 15,808 15,785 15,715 15,649 15,584 15,740 15,550

 
Non-GAAP Reconciliation Table
             
 
(in thousands, except per share data)
 
4th Quarter 3rd Quarter 2nd Quarter 1st Quarter 4th Quarter Year-to-Date Year-to-Date
2010 2010 2010 2010 2009 December 31, 2010 December 31, 2009
 
Return on average assets -3.91 % -9.26 % -0.78 % -0.48 % -1.13 % -3.55 % -2.81 %
Effect of intangible assets   -0.01 %   -0.01 %   -     -     -0.01 %   -     -0.05 %
Return on average tangible assets   -3.92 %   -9.27 %   -0.78 %   -0.48 %   -1.14 %   -3.55 %   -2.86 %
 
Return on average assets -3.91 % -9.26 % -0.78 % -0.48 % -1.13 % -3.55 % -2.81 %
Effect of goodwill impairment   -     -     -     -     -     -     1.96 %
Return on average assets, excluding goodwill impairment -3.91 % -9.26 % -0.78 % -0.48 % -1.13 % -3.55 % -0.85 %
Effect of average intangible assets   -0.01 %   -0.01 %   -     -     -0.01 %   -     -0.01 %
Return on average tangible assets, excluding goodwill impairment   -3.92 %   -9.27 %   -0.78 %   -0.48 %   -1.14 %   -3.55 %   -0.86 %
 
Return on average common equity -63.93 % -115.65 % -9.80 % -5.87 % -12.42 % -46.81 % -25.92 %
Effect of goodwill impairment   -     -     -     -     -     -     18.13 %
Return on average common equity, excluding goodwill impairment -63.93 % -115.65 % -9.80 % -5.87 % -12.42 % -46.81 % -7.79 %
Effect on average intangible assets   -1.34 %   -1.83 %   -0.16 %   -0.10 %   -0.21 %   -0.81 %   -1.53 %
Return on average tangible common equity, excluding goodwill impairment   -65.27 %   -117.48 %   -9.96 %   -5.97 %   -12.63 %   -47.62 %   -9.32 %
 
Total equity to total assets 7.99 % 8.57 % 10.26 % 10.20 % 10.43 % 7.99 % 10.43 %
Effect of intangible assets   -0.11 %   -0.11 %   -0.12 %   -0.12 %   -0.13 %   -0.11 %   -0.13 %
Tangible equity to tangible assets 7.88 % 8.46 % 10.14 % 10.08 % 10.30 % 7.88 % 10.30 %
Effect of preferred stock   -2.72 %   -2.54 %   -2.36 %   -2.30 %   -2.32 %   -2.72 %   -2.32 %
Tangible common equity to tangible assets   5.16 %   5.92 %   7.78 %   7.78 %   7.98 %   5.16 %   7.98 %
 
Non-interest expense $ 11,070 $ 12,512 $ 11,780 $ 9,872 $ 12,132 $ 45,234 $ 68,847
Impairment of goodwill   -     -     -     -     -     -     (27,156 )
Non-interest expense, excluding goodwill impairment $ 11,070   $ 12,512   $ 11,780   $ 9,872   $ 12,132   $ 45,234   $ 41,691  
 
Net loss available to common stockholders $ (11,840 ) $ (30,280 ) $ (2,632 ) $ (1,619 ) $ (3,570 ) $ (46,371 ) $ (35,409 )
Effect of goodwill impairment, net of $2,394 tax effect   -     -     -     -     -     -     24,762  
Net loss available to common stockholders, excluding goodwill impairment $ (11,840 ) $ (30,280 ) $ (2,632 ) $ (1,619 ) $ (3,570 ) $ (46,371 ) $ (10,647 )
 
Total stockholders' equity $ 93,374 $ 106,846 $ 136,751 $ 139,570 $ 141,164 $ 93,374 $ 141,164
Effect of preferred stock   (31,717 )   (31,620 )   (31,525 )   (31,431 )   (31,339 )   (31,717 )   (31,339 )
Common stockholders' equity $ 61,657   $ 75,226   $ 105,226   $ 108,139   $ 109,825   $ 61,657   $ 109,825  
 
Average assets $ 1,210,362 $ 1,308,616 $ 1,348,219 $ 1,361,769 $ 1,258,587 $ 1,306,831 $ 1,258,662
Effect of average intangible assets   (1,521 )   (1,634 )   (1,748 )   (1,864 )   (1,955 )   (1,691 )   (22,382 )
Average tangible assets $ 1,208,841   $ 1,306,982   $ 1,346,471   $ 1,359,905   $ 1,256,632   $ 1,305,140   $ 1,236,280  
 
Average total stockholders' equity $ 105,734 $ 136,288 $ 138,911 $ 141,717 $ 146,275 $ 130,579 $ 166,803
Effect of average preferred stock   (31,654 )   (31,557 )   (31,463 )   (31,370 )   (31,268 )   (31,512 )   (30,205 )
Average common stockholders' equity 74,080 104,731 107,448 110,347 115,007 99,067 136,598
Effect of average intangible assets   (1,521 )   (1,634 )   (1,748 )   (1,864 )   (1,955 )   (1,691 )   (22,382 )
Average tangible common stockholders' equity $ 72,559   $ 103,097   $ 105,700   $ 108,483   $ 113,052   $ 97,376   $ 114,216  
 
Per Share Data
Book value per common share $ 3.76 $ 4.58 $ 6.41 $ 6.59 $ 6.69 $ 3.76 $ 6.69
Effect of intangible assets   (0.09 )   (0.09 )   (0.10 )   (0.11 )   (0.12 )   (0.09 )   (0.12 )
Tangible book value per common share $ 3.67   $ 4.49   $ 6.31   $ 6.48   $ 6.57   $ 3.67   $ 6.57  
 
Net loss available to common stockholders, basic $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Effect of goodwill impairment, net of tax   -     -     -     -     -     -     1.60  
Net loss, excluding goodwill impairment, basic $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (0.68 )
 
Net loss available to common stockholders, diluted $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (2.28 )
Effect of goodwill impairment, net of tax   -     -     -     -     -     -     1.60  
Net loss, excluding goodwill impairment, diluted $ (0.75 ) $ (1.92 ) $ (0.17 ) $ (0.10 ) $ (0.23 ) $ (2.95 ) $ (0.68 )
 
 
Supplemental Data (in thousands)
 
Net interest income, tax equivalent $ 8,107 $ 8,326 $ 9,162 $ 9,892 $ 10,804 $ 35,484 $ 43,128
Impairment of goodwill $ - $ - $ - $ - $ - $ - $ 27,156
Amortization of intangibles $ 108 $ 116 $ 115 $ 118 $ 94 $ 457 $ 485
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 $ (40 ) $ (49 ) $ (104 ) $ (60 ) $ (138 ) $ (253 ) $ (424 )
Losses on sales of foreclosed and repossessed property and premises and equipment $ 399 $ 88 $ 383 $ 292 $ 313 $ 1,162 $ 603
Write-downs on foreclosed and repossessed property and other assets $ 824 $ 1,575 $ 1,134 $ 6 $ 814 $ 3,539 $ 1,321
Mortgage loan and related fees $ 205 $ 319 $ 236 $ 149 $ 199 $ 909 $ 1,025
 
Loans by Type
Loans secured by real estate-
Residential 1-4 family $ 252,026 $ 258,579 $ 273,030 $ 278,695 $ 281,354 $ 252,026 $ 281,354
Commercial 226,357 236,991 247,009 255,174 259,819 226,357 259,819
Construction 84,232 101,870 113,877 125,603 153,144 84,232 153,144
Multi-family and Farmland   36,393     37,816     40,550     41,314     37,960     36,393     37,960  
Total loans secured by real estate   599,008     635,256     674,466     700,786     732,277     599,008     732,277  
Commercial loans 82,807 91,637 117,279 138,156 146,016 82,807 146,016
Consumer installment loans 33,860 37,884 42,262 45,564 48,927 33,860 48,927
Leases, net of unearned income 7,916 10,139 13,006 17,405 19,730 7,916 19,730
Other   3,500     2,502     4,339     3,601     5,068     3,500     5,068  
Total loans $ 727,091   $ 777,418   $ 851,352   $ 905,512   $ 952,018   $ 727,091   $ 952,018  

 
Supplemental Data (continued)
Asset Quality Information
                           
 
4th Quarter 4th Quarter 3rd Quarter 3rd Quarter 2nd Quarter 2nd Quarter 1st Quarter 1st Quarter 4th Quarter 4th Quarter
2010   2010 2010   2010 2010   2010 2010   2010 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 $ 55,083 259 $ 58,339 259 $ 50,305 203 $ 45,454 187 $ 31,463 106
Additions 12,686 26,583 15,525 16,701 20,378
Reductions   (13,687 )       (29,839 )       (7,491 )       (11,850 )       (6,387 )    
Ending Balance $ 54,082     273 $ 55,083     259 $ 58,339     259 $ 50,305     203 $ 45,454     187
 
Non-Accrual Loans and Leases - Classification
Construction/Development Loans $ 25,586 56 $ 30,225 60 $ 18,120 46 $ 13,950 33 $ 13,706 36
Residential Real Estate Loans 8,906 84 7,113 58 8,910 62 7,392 53 6,059 52
Commercial Real Estate Loans 10,007 30 7,327 25 7,050 30 6,903 26 6,156 26
Commercial & Industrial Loans 4,228 26 4,886 31 17,501 46 16,234 39 15,397 38
Commercial Leases 3,459 59 3,541 59 4,690 58 3,943 37 2,389 20
Consumer and Other Loans   1,896     18   1,991     26   2,068     17   1,883     15   1,747     15
Total $ 54,082     273 $ 55,083     259 $ 58,339     259 $ 50,305     203 $ 45,454     187
 
 
Other Real Estate Owned - Activity
Beginning Balance $ 22,888 142 $ 17,795 123 $ 18,228 109 $ 15,312 85 $ 14,206 68
Additions 3,100 7,096 6,274 3,866 4,415
Reductions   (1,589 )       (2,003 )       (6,707 )       (950 )       (3,309 )    
Ending Balance $ 24,399     150 $ 22,888     142 $ 17,795     123 $ 18,228     109 $ 15,312     85
 
Other Real Estate Owned - Classification
Construction/Development Loans $ 10,821 67 $ 10,510 64 $ 8,103 58 $ 7,505 50 $ 6,023 37
Residential Real Estate Loans 8,266 63 7,789 60 5,186 46 5,153 41 4,647 34
Commercial Real Estate Loans   5,312     20   4,589     18   4,506     19   5,570     18   4,642     14
Total $ 24,399     150 $ 22,888     142 $ 17,795     123 $ 18,228     109 $ 15,312     85
 
 
Loans 90 Days Past Due - Classification
Construction/Development Loans $ 3 1 $ 507 4 $ - - $ 1,018 3 $ 30 1
Residential Real Estate Loans 403 8 1,881 3 134 2 820 8 653 6
Commercial Real Estate Loans 3,256 5 1,024 1 - - 845 3 239 2
Commercial & Industrial Loans 409 7 2,237 13 194 6 615 4 12 1
Commercial Leases 82 6 308 4 - - 564 10 3,522 47
Consumer and Other Loans   685     17   68     10   14     3   131     17   68     16
Total $ 4,838     44 $ 6,025     35 $ 342     11 $ 3,993     45 $ 4,524     73
 
 
Repossessed Assets - Activity
Beginning Balance $ 1,229 29 $ 1,921 57 $ 3,466 214 $ 3,881 188 $ 2,050 163
Additions 636 727 709 1,383 3,588
Reductions   (1,102 )       (1,419 )       (2,254 )       (1,798 )       (1,757 )    
Ending Balance $ 763     54 $ 1,229     29 $ 1,921     57 $ 3,466     214 $ 3,881     188

Copyright Business Wire 2010

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