NewBridge Bancorp Reports Net Income Of $1.4 Million For The Fourth Quarter And $4.7 Million For The Year

NewBridge Bancorp ( NASDAQ: NBBC), parent of NewBridge Bank, today reported results for the three and twelve month periods ended December 31, 2011.

For the three months ended December 31, 2011, net income totaled $1.4 million compared to $1.1 million for the quarter ended December 31, 2010. After dividends and accretion on preferred stock, the Company reported net income available to common shareholders of $714,000, or $0.04 per diluted share for the quarter ended December 31, 2011. For the prior year fourth quarter, net income available to common shareholders totaled $391,000, or $0.02 per diluted share. For the twelve months ended December 31, 2011, net income totaled $4.7 million, which compares to net income of $3.4 million for the prior year. After dividends and accretion on preferred stock, the Company reported net income available to common shareholders of $1.8 million, or $0.11 per diluted share, compared to $461,000, or $0.03 per diluted share in 2010.

Pressley A. Ridgill, President and Chief Executive Officer of NewBridge Bancorp, commented: “Our operating results for the December quarter and year were excellent considering the difficult economic environment. The credit trends continued to improve, our efficiency initiatives were effective and our net interest margin climbed to a robust 4.25%. We have been profitable for nine consecutive quarters, and for the second consecutive year. Our operating results closely tracked our profit plan, both before and after credit related costs. Excluding credit costs and securities gains, pre-tax operating income totaled $28.0 million, which is $138,000 higher than prior year results, even though average earning assets fell $170.6 million from the prior year. Our return on average assets before tax and credit costs climbed from 1.64% in 2010 to 1.71% in 2011. For the December quarter, our income before tax, securities gains and credit costs was $8.0 million, or a 1.85% annualized return on average assets.”

Mr. Ridgill continued, “During the second half of 2011, we announced the opening of three new loan production offices in Raleigh, Asheboro and Morganton, North Carolina in order to bolster the Company’s lending opportunities. I am pleased to announce that the early returns from these offices are encouraging. At December 31, these offices had $11.0 million in loan balances and over $40.0 million of loans in various stages of approval. We believe this strategy plays an important role in reversing the Company’s trends in loan production.”

Net interest income

Net interest income declined $525,000 or 3.1%, to $16.6 million for the quarter compared to $17.1 million a year ago. For the twelve-month period ending December 31, 2011, net interest income declined $2.3 million to $67.1 million. The Company’s average earning assets for the year declined $170.6 million from the prior year, primarily in loans, which declined $134.8 million to an average balance of $1.27 billion. The average balance of investment securities also fell $25.6 million to $305.1 million for the year. The net interest margin improved 22 basis points over the prior year to 4.22%, which partially offset the decline in net interest income due to fewer earning assets. For the three month period ended December 31, 2011, the net interest margin climbed to 4.25%, which compares favorably to the prior year three-month period margin of 4.00%. The improved margin for the three and twelve month periods is due primarily to lower cost on deposits.

Balance Sheet

Total deposits increased $19.8 million for the year to $1.42 billion after considering the $54.1 million of deposits sold in May as part of our Harrisonburg, VA sale of operations. Core deposits, defined as noninterest bearing demand accounts, savings, NOW and money market deposit accounts, increased 7.1%, or $67.9 million, during the year. Growth in core deposits would have been greater during the year had the Company not transferred $24.9 million of core deposits in its sale of the Harrisonburg operations. At December 31, 2011, core deposit accounts totaled 72% of the Company’s total deposits, or $1.025 billion, and had a weighted average interest rate of 0.40%, down 20 basis points from the prior year end. The Company continues to focus on growing profitable, low-cost core deposits. Time deposits declined $102.2 million for the year to $393.4 million at December 31, 2011. Brokered and wholesale deposits were $43.6 million at December 31, 2011. For the fourth quarter, the weighted average cost of interest bearing deposits was 0.63%.

Loans held for investment declined $17.0 million to $1.20 billion during the fourth quarter of 2011. For the year, loan balances have declined $60.5 million. New portfolio loan production totaled $65.4 million for the three-months and $219.3 million for the twelve-months ended December 31, 2011.

Investment securities increased $42.4 million to $337.8 million during the fourth quarter. The Company had a net unrealized gain in its investment portfolio at December 31, 2011 of $808,000. As of that date, the weighted average duration was 3.21 years and the weighted average yield was 4.23%.

The Company’s available liquidity was extensive during the fourth quarter due primarily to the Company’s strong core deposit mix, coupled with modest lending opportunities. Available borrowings, unencumbered investments and access to wholesale deposits exceeded $500 million at December 31, 2011. Brokered and wholesale deposits totaled 3.1% of deposits at December 31, 2011.

Shareholders’ equity declined $2.5 million for the year to $163.4 million, due primarily to a $4.8 million decrease in comprehensive income resulting from a fair market value actuarial change in the Company’s pension obligation as well as changes in the fair market value of the Company’s investment portfolio. The Company’s pension plan was frozen in 2007, so no new obligations are being formed under the plan. A precipitous drop in long term interest rates, however, changed actuarial estimates about the funding status of the plan. The change in the value of the funding status was reflected as a charge against the Company’s comprehensive income. In addition, during the fourth quarter of 2011, the Company made an adjustment to deferred tax assets and retained earnings to correct an immaterial misstatement of deferred tax assets arising from the merger in 2007. Prior period amounts have been restated accordingly. The correction increased deferred taxes and retained earnings by $2.7 million in all periods.

Noninterest Income

Excluding gains and losses on sales of securities and other real estate owned (“OREO”), noninterest income declined $339,000 to $4.3 million for the three months ending December 31, 2011, and declined $1.3 million for the year. Retail and mortgage revenue totaled $3.1 million for the quarter, but was a combined $598,000 lower than the prior year quarter. For the year, mortgage banking and retail banking revenue was lower by $2.4 million or approximately 20%. This revenue stream was negatively impacted by ongoing regulatory changes, changes in consumer behavior, and a lower level of mortgage production.

Losses on sales and writedowns of OREO declined by $418,000 for the quarter ended December 31, 2011 to $1.4 million from $1.8 million for the quarter ended December 31, 2010. For the year, OREO losses and writedowns totaled $5.2 million, compared to $5.5 million in 2010.

Security gains totaled $2.0 million for the twelve-month period ending December 31, 2011, a decline of $1.6 million from the prior year.

Noninterest Expense

Noninterest expense declined $1.2 million, or 8%, to $13.5 million for the fourth quarter compared to $14.7 million for the prior year’s fourth quarter, and declined $1.4 million from the third quarter of 2011, which included non-recurring expense of $435,000, principally severance-related. The quarter ended December 31, 2011 benefitted from a reduction in the Company’s actuarial estimate of employee health care liability and other one-time items that netted to approximately $400,000. The lower noninterest expense in the December quarter was due in large part to lower personnel costs related to the efficiency study initiative conducted earlier this year. Excluding other real estate owned cost, the operating efficiency percentage improved to 61.80% for the December quarter from 66.11% for the same period a year ago. FDIC insurance premiums declined in the December quarter due to an improvement in the FDIC’s assessment rating for our Company.

Asset Quality

Nonperforming loans declined 6.7% or $2.9 million during the quarter and 19.9% or $10.1 million for the year to $40.5 million at December 31, 2011. Since the peak level at June 30, 2009, nonperforming loans have declined 37% or $23.5 million. Nonperforming loans represent 3.38% of total loans held for investment. Including other real estate owned (OREO), which increased $4.1 million during the quarter, total nonperforming assets increased $1.2 million to $71.1 million, or 4.10% of total assets, at December 31, 2011. The duration of property held in OREO averaged 14 months at year end. During 2011, $11.6 million of property was sold out of OREO, the Company recorded $5.1 million in writedowns and $122,000 was realized as a net loss on sales. Troubled debt restructured loans totaled $14.9 million of the $40.5 million of nonperforming loans. Accruing restructured loans totaled $7.4 million and non-accruing restructured loans totaled $7.5 million. The Company evaluates all troubled debt restructured loans at the time of the restructure for impairment, which typically results in the asset being moved to non-accrual. The Company’s highest risk and most closely monitored non-performing assets are non-accruing loans excluding troubled debt restructures. These loans totaled $25.6 million at December 31, 2011, down $34.4 million, or 57%, since June 30, 2009. Impaired and potential problem loans (or total classified loans) continued to rise until the September quarter of 2010. Over the last five quarters, potential problem credits have declined 24.5%, or $41.6 million. In the fourth quarter of 2011, the classified loan balances declined 7%, or $8.4 million, from $136.9 million. The expected default rates and the anticipated loss given default experience remains around 4% of the potential problem portfolio.

The allowance for credit losses totaled $28.8 million at December 31, 2011, or 2.39% of loans held for investment, an increase of approximately $1.1 million from the previous quarter end September 30, 2011. The increase in reserves is due primarily to an increase in specific reserves. The Company’s allowance for loan loss consists of general reserves totaling 86% and specific reserves totaling 14%, compared to 93% general and 7% specific at September 30, 2011. The Company’s allowance for credit loss as a percentage of nonperforming loans (“the coverage percentage”) increased to 71.16% in the December 2011 quarter, compared to 63.9% at September 30, 2011 and 56.8% at December 31, 2010. The majority of estimated losses from the Company’s $40.5 million of non-performing loans have been previously recognized through charge-offs. Consequently, the Company’s allowance for loan loss is generally applicable to the inherent losses within the Company’s watch list and other performing loans portfolio. Since the current adverse credit cycle began in 2007, the Company has charged off $139.3 million of loans and OREO, or 8.6% of our highest/peak level of loan balances.

The Company is materially below the FFIEC high CRE concentration guidelines in land acquisition, development and construction (the “AD&C portfolio”) loans as well as total commercial real estate loans. At December 31, 2011, the Company’s concentrations were 39% of tier 1 regulatory capital and 134% of total regulatory capital, respectively, which compares favorably to the published interagency regulatory guidance of 100% and 300%, respectively. The AD&C portfolio totaled $65.4 million at December 31, 2011 and includes just $30.9 million of speculative residential construction and residential acquisition and development loans. This portfolio is largely graded as impaired or potential problem loans.

Outlook

Mr. Ridgill stated “Our financial results for 2011 and 2010 closely tracked our profit plan, both before and after credit related costs. This gives me great confidence in stating that our 2012 plan is conservative and achievable. We anticipate solid core earnings enhancement primarily from a continued decline in credit related costs and a lower base of operating expenses. While the margin will be under pressure in the coming year due to assets maturing and repricing, we anticipate higher earning assets from an increase in the investment portfolio and some positive momentum in loan growth. While the current strategy to progress organically is a priority; we believe it is also likely that other paths will be available to us in the coming year. The Company’s capital levels are strong and provide us with many options. We are excited by the opportunity of the coming year and look forward to providing you with timely progress reports.”

Non-GAAP Financial Information

In addition to results presented in accordance with U.S. generally accepted accounting principles (“GAAP”), this press release includes non-GAAP financial measures such as the operating efficiency percentage and pre-tax, pre-securities gains and pre-credit related operating income. The Company believes these non-GAAP financial measures provide additional information that is useful to investors in understanding its underlying performance, business, and performance trends and such measures help facilitate performance comparisons with others in the banking industry. Non-GAAP measures have inherent limitations, are not required to be uniformly applied, and are not audited. Readers should be aware of these limitations and should be cautious to their use of such measures. To mitigate these limitations, the Company has procedures in place to ensure that these measures are calculated using the appropriate GAAP or regulatory components in their entirety and to ensure that its performance is properly reflected to facilitate consistent period-to-period comparisons. Although management believes the above non-GAAP financial measures enhance investors’ understanding of the Company’s business and performance, these non-GAAP measures should not be considered in isolation, or as a substitute for GAAP basis financial measures.

Please refer to the Non-GAAP Measures section later in this release for additional information.

About NewBridge Bancorp

NewBridge Bancorp is the bank holding company for NewBridge Bank, a full service, state-chartered community bank headquartered in Greensboro, North Carolina. The stock of NewBridge Bancorp trades on the NASDAQ Global Select Market under the symbol “NBBC.”

As one of the largest community banks in the state, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services, including retail and commercial banking, private banking, wealth management, and mortgage banking. NewBridge Bank has assets of approximately $1.7 billion with 30 banking offices throughout North Carolina.

Disclosures About Forward Looking Statements

The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of NewBridge and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to, the financial success or changing conditions or strategies of NewBridge’s customers or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in NewBridge’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge undertakes no obligation to revise or update these statements following the date of this release.

FINANCIAL SUMMARY
         
 
Three Months ended December 31, 2011 Three Months ended December 31, 2010
Average Interest Income/ Average Yield/ Average Interest Income/ Average Yield/
Balance expense Rate Balance expense Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
Loans receivable $1,220,133 $15,820 5.14% $1,358,187 $17,869 5.22%
Investment securities 315,519 3,444 4.33% 292,321 3,423 4.65%
Other earning assets 24,005 16 0.26% 53,634 42 0.31%
Total earning Assets 1,559,657 19,280 4.90% 1,704,142 21,334 4.97%
Non-earning Assets 153,218 134,826
Total Assets $1,712,875 19,280 $1,838,968 21,334
 
Interest-Bearing Liabilities
Deposits $1,240,660 1,980 0.63% $1,321,383 3,118 0.94%
Borrowings 116,781 606 2.06% 163,018 1,033 2.51%
Total Interest-Bearing Liabilities 1,357,441 2,586 0.76% 1,484,401 4,151 1.11%
Noninterest-bearing deposits 171,909 167,879
Other liabilities 17,849 18,401
Shareholders' equity 165,676 168,287
Total Liabilities and
Shareholders' equity $1,712,875 2,586 $1,838,968 4,151
Net Interest Income $16,694 $17,183
Net Interest Margin 4.25% 4.00%
Interest Rate Spread 4.15% 3.86%
  Twelve Months ended December 31, 2011   Twelve Months ended December 31, 2010
Average   Interest Income/   Average Yield/ Average   Interest Income/   Average Yield/
Balance expense Rate Balance expense Rate
(Fully taxable equivalent basis, dollars in thousands)  
Earning Assets
Loans receivable $1,271,790 $65,871 5.18% $1,406,624 $74,795 5.32%
Investment securities 305,061 13,887 4.55% 330,634 16,519 5.00%
Other earning assets 24,270 60 0.25% 34,496 96 0.28%
Total earning Assets 1,601,121 79,818 4.99% 1,771,754 91,410 5.16%
Non-earning Assets 148,688 139,003
Total Assets $1,749,809 79,818 $1,910,757 91,410
 
Interest-Bearing Liabilities
Deposits $1,258,551 9,493 0.75% $1,359,593 14,960 1.10%
Borrowings 141,935 2,826 1.99% 199,429 5,494 2.75%
Total Interest-Bearing Liabilities 1,400,486 12,319 0.88% 1,559,022 20,454 1.31%
Noninterest-bearing deposits 166,077 164,958
Other liabilities 16,909 17,591
Shareholders' equity 166,337 169,186
Total Liabilities and
Shareholders' equity $1,749,809 12,319 $1,910,757 20,454
Net Interest Income $67,499 $70,956
Net Interest Margin 4.22% 4.00%
Interest Rate Spread 4.11% 3.85%

FINANCIAL SUMMARY
 
2011 2010
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Period-end Balances
(Dollars in thousands)
Assets $1,734,564 $1,702,660 $1,738,559 $1,784,383 $1,809,891
Loans held for investment 1,199,998 1,217,058 1,244,288 1,254,630 1,260,585
Loans held for sale 7,922 6,894 2,754 77,584 76,994
Investment securities 337,811 295,461 292,898 276,458 325,129
Earning assets 1,572,094 1,549,932 1,593,857 1,617,735 1,668,303
Noninterest-bearing deposits 172,351 167,689 161,703 165,534 161,734
Savings deposits 40,876 40,097 40,937 41,510 38,898
NOW accounts 441,292 423,258 423,445 445,455 440,190
Money market accounts 370,773 363,340 365,109 336,784 316,608
Time deposits 393,384 401,287 435,895 466,013 495,565
Interest-bearing liabilities 1,379,799 1,347,756 1,354,956 1,439,236 1,465,735
Shareholders' equity 163,386 167,278 166,701 164,116 165,918
 
Asset Quality Data
(Dollars in thousands)
Nonperforming loans:
Commercial nonaccrual loans, not restructured $ 15,773 $ 17,477 $ 17,839 $ 18,528 $ 23,453
Commercial nonaccrual loans, which
have been restructured 7,489 9,870 11,042 12,215 11,190
Non-commercial nonaccrual loans 9,852 8,922 10,383 11,680 8,537
Total nonaccrual loans 33,114 36,269 39,264 42,423 43,180
Loans past due 90 days or more and
still accruing 14 26 65 31 27
Accruing restructured loans 7,406 7,167 8,351 7,532 7,378
Total nonperforming loans 40,534 43,462 47,680 49,986 50,585
Other real estate owned 30,587 26,469 25,729 26,329 26,718
Total nonperforming assets $71,121 $69,931 $73,409 $76,315 $77,303
Restructured loans, performing 4,888 4,577 0 0 0
Net chargeoffs 3,153 3,736 4,037 5,768 11,438
Allowance for credit losses 28,844 27,750 28,040 29,057 28,752
Allowance for credit losses to total loans 2.39 % 2.27 % 2.25 % 2.18 % 2.15 %
Nonperforming loans to loans held for investment 3.38 3.57 3.83 3.98 4.01
Nonperforming assets to total assets 4.10 4.11 4.22 4.28 4.27
Nonperforming loans to total assets 2.34 2.55 2.74 2.80 2.79
Net charge-off percentage (annualized) 1.03 1.20 1.23 1.84 3.63
Allowance for credit losses to nonperforming loans 71.16 63.85 58.81 58.13 56.84
 
Loans identified as impaired $ 32,591 $ 33,827 $ 37,483 $ 36,497 $ 38,303
Other nonperforming loans 7,943 9,635 10,197 13,489 12,282
Total nonperforming loans 40,534 43,462 47,680 49,986 50,585
Other potential problem loans 87,959 93,459 97,141 96,509 110,924
Total impaired and potential problem loans $128,493 $136,921 $144,821 $146,495 $161,509
 
Gross loan chargeoffs, and writedowns and losses
on other real estate owned to peak loans

during the credit cycle beginning January 1, 2007:
2007 2008 2009 2010 2011 TOTAL
Gross loan chargeoffs
Commercial $ 5,052 $ 5,046 $ 11,232 $ 9,052 $ 5,821 $ 36,203
Real estate - construction 825 7,339 12,227 5,379 3,985 29,755
Real estate - mortgage 1,300 5,012 10,110 7,260 6,046 29,728
Consumer 2,235 5,071 4,925 2,829 1,358 16,418
Other 0 0 0 6,200 1,387 7,587
Total gross loan chargeoffs $ 9,412 $ 22,468 $ 38,494 $ 30,720 $ 18,597 $ 119,691
Other real estate owned writedowns and losses 4,001 3,571 1,294 5,508 5,238 19,612
Total chargeoffs, writedowns and losses $ 13,413 $ 26,039 $ 39,788 $ 36,228 $ 23,835 $ 139,303
 
Peak loans at September 30, 2008 $ 1,626,504
Chargeoffs, writedowns and losses to peak loans 8.56

FINANCIAL SUMMARY
   
 
Three Months ended December 31 Twelve Months Ended December 31
 
2011 2010 2011 2010
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
Loans $15,819 $17,869 $65,871 $74,795
Investment securities 3,347 3,361 13,514 15,022
Other 16 42 60 96
Total interest income 19,182 21,272 79,445 89,913
Interest expense:
Deposits 1,980 3,118 9,493 14,960
Borrowings from the FHLB 271 448 1,178 3,087
Other 335 585 1,648 2,407
Total interest expense 2,586 4,151 12,319 20,454
Net interest income 16,596 17,121 67,126 69,459
Provision for credit losses 4,247 4,636 16,785 21,252
Net interest income after provision for credit losses 12,349 12,485 50,341 48,207
Noninterest income:
Retail banking 2,414 2,667 9,925 11,592
Mortgage banking services 640 985 1,728 2,438
Wealth management services 625 592 2,499 2,133
Gain on sale of investment securities - - 2,026 3,637
Writedowns and loss on sale of real estate
acquired in settlement of loans (1,368) (1,786) (5,238) (5,508)
Bank-owned life insurance 370 218 1,385 865
Other 239 165 830 658
Total noninterest income 2,920 2,841 13,155 15,815
Noninterest expense
Personnel 6,308 7,152 28,806 29,897
Occupancy 944 979 3,987 4,189
Furniture and equipment 860 1,134 3,644 4,644
Technology and data processing 972 1,100 3,942 4,501
Legal and professional 860 705 2,892 3,028
FDIC insurance 372 858 2,399 3,491
Real estate acquired in settlement of loans 596 327 1,830 1,426
Other 2,590 2,449 9,869 9,713
Total noninterest expense 13,502 14,704 57,369 60,889
Income before income taxes 1,767 622 6,127 3,133
Income taxes 323 (498) 1,449 (247)
Net income 1,444 1,120 4,678 3,380
Dividends and accretion on preferred stock (730) (729) (2,918) (2,919)
Net income (loss) available to common shareholders $714 $391 $1,760 $461
Net income (loss) per share - basic $0.05 $0.02 $0.11 $0.03
Net income (loss) per share - diluted $0.04 $0.02 $0.11 $0.03
 
Other Data
 
Return on average assets 0.33 % 0.24 % 0.36 % 0.24 %
Return on average equity 3.46 2.64 3.76 2.67
Net yield on earning assets 4.25 4.00 4.22 4.00
Efficiency (excluding OREO items and securities gains) 55.02 65.80 63.84 66.74
Average loans to assets 71.23 73.86 72.68 73.62
Average loans to deposits 86.38 91.20 89.27 92.26
Average noninterest - bearing deposits
to total deposits 12.17 11.27 11.66 10.82
Average equity to assets 9.67 9.15 9.51 8.85
Total capital as a percentage of total risk weighted assets 14.55 13.13 14.55 13.13
Tangible common equity as a percentage
of total risk weighted assets 8.28 7.27 8.28 7.27

INVESTMENT PORTFOLIO
     
(Dollars in thousands) As of December 31, 2011
Amortized Gross Gross Estimated Average Average
Cost Unrealized gain Unrealized loss Fair value Yield (%) Duration (years)
US Agency $ 39,000 $ 147 $ - $ 39,147 2.79 % 1.06
Mortgage backed securities 31,917 2,926 - 34,843 5.21 3.55
Collateralized mortgage obligations 23,599 168 (332 ) 23,435 4.69 2.03
Commercial mortgage backed securities 30,169 153 (33 ) 30,289 3.47 4.43
Covered bonds 61,414 1,243 (131 ) 62,526 5.25 2.12
Corporate bonds 118,573 385 (4,282 ) 114,676 3.77 3.98
Municipal obligations 19,371 425 (288 ) 19,508 5.76 * 5.37
Federal Home Loan Bank stock 7,185 - - 7,185
Other   5,775   427   -     6,202
Total 337,003 5,874 (5,066 ) 337,811 4.23 3.21
 
* Fully taxable equivalent basis

COMMON STOCK DATA
         
 
 
2011 2010
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
 
Market value:
End of period $3.87 $3.90 $4.58 $4.96 $4.70
High 4.20 4.99 5.13 5.50 5.00
Low 3.30 3.53 4.21 4.54 3.40
Book value 7.09 7.34 7.30 7.14 7.25
Tangible book value 6.85 7.09 7.04 6.86 6.96
Average shares outstanding 15,655,868 15,655,868 15,655,868 15,655,868 15,655,868
Average diluted shares outstanding 16,163,509 16,467,550 16,521,391 16,697,944 16,252,427

NON-GAAP MEASURES
         
 
Pre-tax, pre-securities gains and
pre-credit related operating income
Three Months ended December 31, 2011 Twelve Months Ended December 31, 2011
 
Net income $1,444 $4,678
Income taxes 323 1,449
Real estate acquired in settlement of loans expense 596 1,830
Writedowns and loss on sale of real estate
acquired in settlement of loans 1,368 5,238
Less gain on sale of investment securities - (2,026 )
Provision for credit losses 4,247   16,785  
Pre-tax and pre-credit related operating income $7,978   $27,954  
 
 
Operating efficiency percentage
Three Months ended December 31, 2011 Three Months Ended December 31, 2010
 
Total noninterest expense $13,502 $14,704
Less real estate acquired in settlement of loans expense (596 ) (327 )
Numerator for calculation of operating efficiency (A) $12,906   $14,377  
 
Net interest income $16,596 $17,121
Total noninterest income 2,920 2,841
Writedowns and loss on sale of real estate
acquired in settlement of loans 1,368   1,786  
Denominator for calculation of operating efficiency (B) $20,884   $21,748  
 
Operating efficiency percentage (A/B) 61.80 % 66.11 %

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