BELLEVUE, Wash., Oct. 22, 2012 (GLOBE NEWSWIRE) -- Foundation Bancorp, Inc. (OTCBB:FDNB), the holding company for Foundation Bank, today reported it earned $696,000, or $0.20 per diluted share, in the third quarter of 2012 compared to a net loss of $304,000, or $0.20 per diluted share, in the third quarter a year ago. For the first nine months of 2012, Foundation Bancorp earned $1.6 million, or $0.46 per diluted share, compared to a net loss of $2.0 million, or $1.32 per diluted share, for the comparable period in 2011.
Third Quarter 2012 Highlights:
- Foundation Bancorp's stock became listed on the Over-The-Counter Bulletin Board under the ticker symbol of FDNB.
- Fifth consecutive quarterly reduction in non-performing assets [non-accrual loans and other real estate owned (OREO)] with a quarter-over-quarter reduction of 12.7%.
- Return on average equity of 8.7% year to date.
- Loan growth of 14.6% year to date, excluding non-accrual loans, with continued growth in the third quarter of 6.7% over the prior quarter.
- Deposits remain strong with core client deposits up $43.0 million or 18.5% year to date. Non-interest bearing deposits remain strong at 38.5% of core deposits compared to 34.4% at year-end 2011.
- Third quarter net interest margin was 3.81% compared to 4.12% in the preceding quarter and 3.66% in the third quarter a year ago. The margin contraction was driven by continued loan yield pressure from loan refinancing and yield pressures in the market place.
"During the quarter we increased net interest income by growing both loans and deposits, despite the continued pressure on loan yields. As we continue to manage legal costs and OREO related expenses, profitability strengthened even further," said Diane Dewbrey, President and CEO. "We are excited to have been approved by FINRA for trading on the Bulletin Board. Initially it will take a little time to become known by investors but as we move forward, trading the stock will become easier. This is a strategic move for our shareholders and is expected to add liquidity for the stock."
Non-performing assets (NPAs) made up of non-accrual loans and OREO decreased $3.8 million during the quarter and were down $10.0 million (22.3%) year to date. Since the third quarter last year NPAs have decreased $12.1 million or 31.4%. As a percent of total assets, NPAs are down to 7.5% from 11.1% during the same period last year. Assets classified as performing but internally risk rated special mention and substandard also saw continued improvement year over year with a 35.9% reduction. The loan portfolio continues to post steady improvement year over year. "It should be noted that $14.5 million, or 80.3%, of the loans classified as NPA are paying as agreed on a revised schedule," Dewbrey added.
Gross loans posted an increase of $22.2 million, or 8.5% year to date. However, excluding non-accrual loans, net loans were up $34.1 million, or 14.6% year to date. Commercial real estate (CRE) loans posted the strongest growth in the quarter. Business loans that are secured by the property on which the business operates are classified as CRE. These owner occupied CRE loans amounted to $43.1 million or 27.3% of total CRE. However, construction and land loans remained static while the financing of completed commercial buildings increased. As a percent of total loans, C&I remained at 36% for the quarter compared to 32% at year-end 2011.
Due to the $2.4 million reduction of high cost wholesale deposits during the quarter, total deposits posted a slight decrease to $314.3 million. Compared to $315.5 at the end of June, client deposits remained fairly stable. Excluding wholesale deposits year to date, deposits are up $43 million or 18.6%. Wholesale deposits have declined to $39.5 million or 12.5% of total deposits which is down from 18.2% of total deposits at year end 2011. Non-interest bearing demand deposits remained strong at 33.8% of gross deposits compared to 28.3% at year-end 2011.
Capital remained strong, even as the size of Foundation increased which puts downward pressure on capital ratios. Capital ratios for the Bank are presented as follows:
|Sept 30, 2012||June 30, 2012||Sept 30, 2011|
|Tier 1 Leverage (to average assets)||9.38%||9.58%||8.33%|
|Tier 1 risk-based (to risk-weighted assets)||11.14%||11.48%||9.97%|
|Total risk-based (to risk-weighted assets)||12.41%||12.76%||11.26%|
Results of Operations
Net income for the quarter and year to date were improved primarily from large reductions in non-interest expenses. Net interest income before provision was also improved in the current quarter and year to date. Net interest income (NIM) was improved at 3.81% this quarter compared to 3.76% during the same quarter last year. Year to date NIM was 4.03% compared to 3.66% last year. There is downward pressure on loan yields and NIM was down at 3.81% in the third quarter compared to 4.12% in the first and second quarters.
Non-interest income was down for the quarter compared to the same quarter last year, primarily as a result of other real estate owned (OREO) asset sales that occurred in the third quarter a year ago. Without the one-time asset sales, non-interest income would be comparable to the prior quarter. An other than temporary impairment (OTTI) write down was recognized in the current quarter on a single investment that has resulted in all OTTI write downs in prior quarters. Currently the book value of this investment is $745,000.
Non-interest expense was down 29% or $1.2 million over the comparable quarter last year. Year to date improvement is 18%. These improvements have come primarily as a result of reductions in legal costs and OREO expenses. Legal costs are improved as a result fewer legal hours related to problem loan workout costs.
Boosted by earnings and the $6.9 million capital raise completed in the first quarter of 2012, total shareholder equity increased 23.5% to $25.8 million at September 30, 2012, compared to $20.9 million a year ago. Book value per share was $7.31 at September 30, 2012. Foundation's tangible common equity ratio was 7.3% at quarter's end.
Safe Harbor Statement. This release contains comments or information that constitutes forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulation; changes in tax laws; changes in prices; levies and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national and local economy; and other factors, including risk factors. The Company undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
|CONSOLIDATED STATEMENTS OF OPERATIONS|
|(Unaudited) (dollars in 000's)||For the Three Months Ended||For the Nine Months Ended|
|September 30, 2012||September 30, 2011||September 30, 2012||September 30, 2011|
|Loans, including Fees||$ 3,446||$ 3,697||$ 10,334||$ 11,221|
|Total Interest Income||3,659||4,044||11,180||12,372|
|Total Interest Expense||405||795||1,325||2,681|
|Net Interest Income Before Provision||3,254||3,249||9,855||9,691|
|Provision for Loan Losses||--||--||--||(1,174)|
|Net Interest Income|
|After Provision for Loan Losses||3,254||3,249||9,855||8,517|
|Deposit Account and Service Fees||70||63||201||194|
|OTTI on Investments||(14)||--||(14)||(27)|
|Other Noninterest Income||256||422||1,020||941|
|Total Noninterest Income||312||485||1,207||1,108|
|Salaries and Employee Benefits||1,287||1,192||3,869||3,665|
|Occupancy and Equipment||218||224||638||646|
|Professional and Legal||164||154||610||529|
|OREO Expense and Write-Downs||149||292||721||1,858|
|City and State Taxes||86||79||240||251|
|Total Noninterest Expense||2,870||4,038||9,432||11,637|
|Income/(Loss) Before Provision for Income Tax||696||(304)||1,630||(2,012)|
|Provision/(Benefit) for Income Tax||--||--||--||--|
|NET INCOME/(LOSS)||$ 696||$ (304)||$ 1,630||$ (2,012)|
|Return on average equity||10.92%||-5.56%||8.71%||-12.19%|
|Return on average assets||0.79%||-0.34%||0.64%||-0.74%|
|Net Interest Margin||3.81%||3.76%||4.03%||3.66%|
|Basic Earning Per Share||$ 0.20||$ (0.20)||$ 0.46||$ (1.32)|
|Loan to deposit ratio||90.10%||89.24%|
|Book value per share||$ 7.31||$ 13.65|
|CONSOLIDATED STATEMENTS OF CONDITION|
|(Unaudited) (dollars in 000's)|
|September 30, 2012||December 31, 2011||September 30, 2011|
|Cash and Due from Banks||$ 13,384||$ 10,272||$ 11,825|
|Interest-Bearing Deposits in Banks||20,245||10,831||19,172|
|Loans Held for Sale||--||493||--|
|Allowance for Loan Losses||(9,087)||(11,115)||(13,537)|
|Leaseholds and Equipment, net||573||629||671|
|Other Real Estate Owned (OREO)||8,382||6,701||8,586|
|Accrued Interest Receivable and Other Assets||5,322||4,343||5,473|
|Total Assets||$ 353,498||$ 319,482||$ 348,690|
|Noninterest-Bearing Demand Deposits||$ 106,501||$ 80,137||$ 70,754|
|Interest-Bearing Checking and Savings Accounts||22,567||15,718||17,754|
|Money Market Accounts||125,993||115,865||124,512|
|Certificates of Deposit||59,230||71,254||98,708|
|Common Stock (1)||3,522||3,377||1,527|
|Additional Paid-in Capital||38,702||38,323||34,052|
|Retained Earnings (Deficit)||(16,768)||(18,399)||(15,408)|
|Accumulated Other Comprehensive Income||307||469||677|
|Total Stockholders' Equity||25,763||23,770||20,848|
|Total Liabilities and Stockholders' Equity||$ 353,498||$ 319,482||348,690|
|(1) $1 Par Value, Shares Authorized 25,000,000, Issued and outstanding 3,522,341, 3,376,455 and 1,527,245 respectively.|
|SELECTED INFORMATION||Quarter Ended|
|Sept 30,||June 30,||Mar. 31,||Dec. 31,||Sept. 30,|
|Risk Based Capital Ratio||12.41%||12.76%||12.74%||12.60%||11.26%|
|C&I Loans to Loans||37.13%||34.10%||33.90%||32.83%||32.95%|
|Real Estate Loans to Loans||61.33%||64.11%||64.10%||65.03%||64.74%|
|Consumer Loans to Loans||0.33%||0.29%||0.37%||0.33%||0.52%|
|Allowance for Loan Loss Reserves (000's)||$ 9,087||$ 9,459||$ 10,788||$ 11,115||$ 13,537|
|Allowance for Loan Loss Reserves to Loans||3.19%||3.48%||4.12%||4.22%||4.83%|
|Total Noncurrent Loans to Loans||6.34%||8.08%||9.22%||11.31%||10.75%|
|Nonperforming assets to assets||8.75%||9.83%||11.29%||13.12%||12.45%|
|Net Charge-Offs (000's)||$ 371||$ 1,329||$ 327||$ 5,010||$ 2,210|
|Net Charge-Offs in Qtr to Avg Total Loans||0.13%||0.50%||0.12%||1.85%||0.78%|