BELLEVUE, Wash., Feb. 6, 2014 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. (OTCBB:FDNB), the holding company for Foundation Bank, today reported that it earned $5.2 million, or $1.48 per diluted share, in the fourth quarter of 2013, compared to $551,000, or $0.16 per diluted share, in the fourth quarter a year ago. For the full year, Foundation's earnings increased substantially to $7.1 million, or $2.02 per diluted share, compared to $2.2 million, or $0.62 per diluted share, in 2012. Foundation's results for the quarter ending December 31, 2013 include a $5.6 million tax benefit as a result of the reversal of its deferred tax asset valuation allowance, which was partially offset by a $1.0 million provision for loan losses. This compares to a $700,000 provision for loan losses in the preceding quarter and no provision in the fourth quarter a year ago.
"As a result of continued operating improvements and profitability, we reversed all of the valuation allowance against our deferred tax asset. This decision reflects our confidence in the sustainability of our future profitability as well," said Diane Dewbrey, President and CEO. "Additionally, operating expenses continue to decline at a steady pace, as we reduce legal costs and other expense related to non-performing assets. Our outlook for 2014 looks prosperous, as we continue to make meaningful progress with reducing problem assets and focus on growing our loan portfolio."
Fourth Quarter 2013 Highlights:
- Net income was $5.2 million, or $1.48 per diluted share, in the fourth quarter of 2013 compared to $551,000, or $0.16 per diluted share, in the fourth quarter a year ago.
- Net interest margin ended the year at 3.98%, compared to 4.01% in the preceding year and 3.91% in the fourth quarter a year ago.
- Total non-interest expense decreased 10.8% to $2.9 million in the fourth quarter of 2013, compared to $3.2 million in the fourth quarter a year ago.
- Recorded a $1.0 million provision for loan losses during the fourth quarter, following net charge-offs of $654,000.
- Allowance for loan losses increased to 1.86% of gross loans compared to 1.74% three months earlier.
- Non-performing assets (NPAs), consisting of non-accrual loans, loans past due 90+ days and foreclosed assets, declined to $23.9 million, or 6.6% of total assets, at December 31, 2013 compared to $24.8 million, or 6.8% of total assets, three months earlier.
- Gross loans were $282.1 million at year-end compared to $288.9 million a year ago.
- Non-interest bearing demand deposits increased 11.8% compared to a year ago and represent 38.8% of total deposits at December 31, 2013.
The overall credit quality of the loan portfolio continued to show steady improvements year-over-year with fewer loans rated Special Mention or worse.
"We categorize borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations as restructured loans," said Dewbrey. At December 31, 2013, Foundation held $10.5 million in performing restructured loans that were included in nonaccrual loans. Total non-accrual loans declined to $16.1 million at December 31, 2013 compared to $16.8 million three months earlier and $17.6 million a year earlier.
Non-performing assets (NPAs), consisting of non-accrual loans, OREO and performing trouble debt restructured, were $22.9 million, or 6.3% of total assets at December 31, 2013 compared to $23.5 million, or 6.4% of total assets at September 30, 2013 and $30.3 million, or 8.3% of total assets, a year ago. Of the non-performing assets, foreclosed assets (Other Real Estate Owned (OREO) and Other Property Owned (OPO)) accounted for $7.3 million at December 31, 2013, compared to $7.4 million at September 30, 2013. "OREO balances, excluding OPO were $6.1 million, and consist of 7 properties. A single property located on Lake Washington accounts for 60% of the total and is currently under contract for sale and expected to close in the third quarter of 2014," said Dewbrey. Of the total amount in OREO, Foundation is receiving rent/lease payments on $3.8 million.
"We booked a $1.0 million provision for loan losses during the quarter which increased reserves as a percent of loans to 1.86% from 1.74% in the prior quarter," said Dewbrey. In the preceding quarter, Foundation recorded a $700,000 loan loss provision and in the fourth quarter a year ago recorded no provision for loan losses. For the full year Foundation recorded a $1.7 million loan loss provision, compared to no loan loss provision recorded for all of 2012.
Charge-offs during the fourth quarter of 2013 totaled $654,000 compared to charge-offs of $1.2 million in the preceding quarter and recoveries of $286,000 in the fourth quarter a year ago. "Most of the current quarter's charge-off amount was for loans that we have a high expectation of some recovery on," noted Dewbrey.
Balance Sheet Review
Foundation's gross loans were $282.1 million at December 31, 2013 compared to $288.9 million a year ago. Commercial real estate (CRE) loans totaled $170.0 million at December 31, 2013 and comprise 60.3% of the total loan portfolio. Business loans secured by the property on which the business operates are classified as owner occupied CRE. Owner occupied CRE loans comprised $46.5 million or 16.5% of the total CRE portfolio. The C&I portfolio represented 37.1% of the total loan portfolio and construction and land loans represented 7.1% of the total loan portfolio.
Total deposits declined 1.7% to $320.0 million at December 31, 2013, compared to $325.5 million a year earlier. Non-interest bearing demand deposits increased 11.8% compared to a year ago. Total transaction accounts represent 44%, money market and savings accounts represent 43% and CDs comprise 13% of the total deposit portfolio at December 31, 2013.
Core deposits, (which exclude time deposits) represent 86.9% of total deposits at December 31, 2013, compared to 82.1% of total deposits a year earlier.
Total shareholder equity increased 23.5% to $32.5 million at December 31, 2013, compared to $26.3 million a year ago. Book value per share increased to $9.21 at the end of the year compared to $7.47 at December 31, 2012. Foundation's common equity ratio was 8.9% at December 31, 2013.
Results of Operations
"The net interest margin contracted slightly compared to the preceding quarter, but improved 5 basis points compared to the fourth quarter a year ago, despite continued downward pressure on loan yields," said Dewbrey. Fourth quarter interest margin was 3.96%, compared to 4.00% in the preceding quarter and 3.91% in the fourth quarter a year ago. For the year, net interest margin was 3.98% compared to 4.01% in 2012.
Foundation's fourth quarter net interest income before provision for loan losses increased 2.3% to $3.4 million, compared to $3.3 million in the fourth quarter a year ago. For all of 2013, Foundation's net interest income before provision increased modestly to $13.3 million, compared to $13.2 million in 2012.
Primarily as a result of the decline in gain on sale of loans, non-interest income was $125,000 in the fourth quarter of 2013, compared to $454,000 in the fourth quarter a year ago. For the full year, non-interest income was $690,000 compared to $1.3 million in 2012.
Foundation's total non-interest expense decreased 10.8% to $2.9 million in the fourth quarter, compared to $3.2 million in the fourth quarter a year ago. For all of 2013, non-interest expense declined 12.4% to $10.7 million compared to $12.3 million a year earlier. The decrease in non-interest expense both for the quarter and for the year-over-year period was primarily due to lower legal expenses and lower costs associated with foreclosed assets.
Foundation Bank continues to remain well capitalized by regulatory guidelines. Capital ratios for the Bank are presented as follows:
|Dec 31, 2013||Sep 30, 2013||Dec 31, 2012|
|Tier 1 Leverage (to average assets)||10.39%||10.11%||9.56%|
|Tier 1 risk-based (to risk-weighted assets)||12.60%||12.51%||11.39%|
|Total risk-based (to risk-weighted assets)||13.86%||13.77%||12.66%|
About the Company
Foundation Bancorp (FDNB) is a bank holding company based in Bellevue, Washington, that operates Foundation Bank, a locally-owned, full service, state chartered commercial bank. Foundation Bank has been serving the greater Puget Sound region since 2000.
Safe Harbor Statement. This release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) 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. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
|CONSOLIDATED STATEMENTS OF CONDITION|
|(Unaudited) (dollars in 000's)|
|December 31, 2013||September 30, 2013||December 31, 2012|
|Cash and Due from Banks||$ 10,613||$ 16,000||$ 12,657|
|Interest-Bearing Deposits in Banks||28,239||32,292||33,965|
|Loans Held for Sale||233||545||192|
|Allowance for Loan Losses||(5,258)||(4,911)||(9,373)|
|Leaseholds and Equipment, net||836||891||609|
|Accrued Interest Receivable and Other Assets||7,192||1,714||3,149|
|Total Assets||$ 364,691||$ 365,216||$ 364,307|
|Noninterest-Bearing Demand Deposits||$ 124,226||$ 128,077||$ 111,135|
|Interest-Bearing Checking and Savings Accounts||15,901||17,218||27,892|
|Money Market Accounts||138,004||130,686||128,243|
|Certificates of Deposit||41,901||49,625||58,223|
|Common Stock (1)||3,526||3,522||3,522|
|Additional Paid-in Capital||38,706||38,719||38,703|
|Retained Earnings (Deficit)||(9,118)||(14,341)||(16,217)|
|Accumulated Other Comprehensive (Loss) Income||(628)||(293)||287|
|Total Stockholders' Equity||32,486||27,607||26,295|
|Total Liabilities and Stockholders' Equity||$ 364,691||$ 365,216||$ 364,307|
|(1) $1 Par Value, Shares Authorized 25,000,000, issued and outstanding 3,526,064, 3,522,359 and 3,522,341 respectively.|
|Book Value per Share||9.21||7.84||7.47|
|Common Equity Ratio||8.9%||7.6%||7.2%|
|CONSOLIDATED STATEMENTS OF INCOME|
|(Unaudited) (dollars in 000's)||For the Year Ended||For the Twelve Months Ended|
|December 31, 2013||September 30, 2013||December 31, 2012||December 31, 2013||December 31, 2012|
|Loans, including Fees||$ 3,484||$ 3,571||$ 3,498||$ 13,875||$ 13,832|
|Total Interest Income||3,677||3,727||3,685||14,515||14,865|
|Total Interest Expense||284||305||368||1,235||1,693|
|Net Interest Income Before Provision||3,393||3,422||3,317||13,280||13,172|
|Provision for Loan Losses||(1,000)||(700)||--||(1,700)||--|
|Net Interest Income|
|After Provision for Loan Losses||2,393||2,722||3,317||11,580||13,172|
|Deposit Account and Service Fees||59||61||75||252||277|
|OTTI on Investments||(35)||--||--||(41)||(14)|
|Gain on Sale of Loans||39||108||290||203||376|
|Gain on Sale of Securities||--||--||--||--||361|
|Other Noninterest Income||62||72||89||276||266|
|Total Noninterest Income||125||241||454||690||1,266|
|Salaries and Employee Benefits||1,218||1,273||1,379||5,245||4,931|
|Occupancy and Equipment||324||332||293||1,257||1,126|
|Foreclosed Assets, Net||137||(4)||465||(139)||1,043|
|City and State Taxes||68||70||82||296||322|
|Total Noninterest Expense||2,873||2,600||3,220||10,743||12,256|
|Income (Loss) Before Provision for Income Tax||(355)||363||551||1,527||2,182|
|Provision for Income Tax||(5,572)||--||--||(5,572)||--|
|NET INCOME||$ 5,217||$363||$ 551||$ 7,099||$ 2,182|
|Return on average equity||73.20%||5.18%||8.28%||25.69%||8.59%|
|Return on average assets||5.81%||0.40%||0.62%||2.03%||0.64%|
|Net Interest Margin||3.96%||4.00%||3.91%||3.98%||4.01%|
|Diluted Earning Per Avg. Share||$ 1.48||$0.10||$ 0.16||$ 2.02||$ 0.62|
|Loan to deposit ratio||88.02%||86.13%||88.35%|
|Book value per share||$ 9.21||$7.84||$ 7.47|
|SELECTED INFORMATION||Quarter Ended|
|Dec 31,||Sept 30,||June 30,||Mar 31,||Dec 31,|
|Risk Based Capital Ratio||13.86%||13.77%||13.76%||13.31%||12.66%|
|C&I Loans to Loans||37.18%||37.30%||34.24%||32.54%||33.91%|
|Real Estate Loans to Loans||60.24%||59.42%||62.82%||66.13%||64.67%|
|Consumer Loans to Loans||0.15%||0.25%||0.24%||0.36%||0.28%|
|Allowance for Loan Loss Reserves (000's)||$ 5,258||$ 4,911||$ 5,388||$ 9,385||$ 9,373|
|Allowance for Loan Loss Reserves to Loans||1.86%||1.74%||1.92%||3.24%|
|Total Noncurrent Loans to Loans||5.90%||6.15%||6.01%||7.69%||6.08%|
|Nonperforming assets to assets||6.30%||6.44%||7.53%||9.25%||8.33%|
|Net Charge-Offs (Recoveries) (000's)||$ 653||$ 1,177||$ 3,997||$ (12)||$ (286)|
|Net Charge-Offs in Qtr to Avg Total Loans||0.23%||0.42%||1.42%||0.00%||-0.10%|
CONTACT: Randy Cloes, EVP & CFO 425 691 5014 www.foundationbank.comSource:Foundation Bancorp