OAK HARBOR, Wash., Apr 26, 2012 (BUSINESS WIRE) ?
Washington Banking Company
/quotes/zigman/70734/quotes/nls/wbco WBCO
+0.22%
, the holding company
for Whidbey Island Bank, today reported improving profitability and
moderate loan growth for the first quarter of 2012 and announced plans
for future expansion. Net income increased to $4.8 million, or $0.31 per
diluted share, in the first quarter ended March 31, 2012, up 13% from
$4.2 million, or $0.28 per diluted share in the preceding quarter. In
the first quarter of 2011, which included a final preferred dividend
payment of $1.1 million, net income totaled $4.1 million and net income
available to common shareholders was $3.0 million, or $0.19 per diluted
share.
?With the Puget Sound economic recovery finally starting to gain
traction, we are again seeing growth in our commercial loan portfolio,?
said Jack Wagner, President and Chief Executive Officer. ?We are
implementing several additional growth strategies this summer, including
expanding our branch footprint to the east side of Lake Washington to
serve the greater Bellevue-Kirkland-Redmond part of King County. This
expansion is contiguous to our existing footprint and provides us the
ability to deploy talent into a market that is growing.?
First Quarter 2012 Financial Highlights (as of, or for the period
ended March 31, 2012)
?
Net interest margin (NIM) grew 39 basis points to 5.81% from 5.42% in
the year ago quarter.
?
On a consolidated basis, Total Risk-Based Capital to risk-adjusted
assets was 19.94% compared to 19.04% a year ago. The FDIC requires a
minimum of 10% Total Risk-Based Capital ratio to be considered
well-capitalized.
?
Nonperforming non-covered assets/total assets improved to 1.42%,
compared to 1.44% in the preceding quarter and 2.04% a year ago.
Classified loans declined to $97.3 million at March 31, 2012, from
$103.0 million at December 31, 2011.
?
Tangible book value per common share increased to $10.94, compared to
$9.88 a year ago.
?
Low cost demand, money market, savings and NOW accounts totaled $963.5
million and make up 65% of total deposits.
?
Loan loss reserves were 2.20% of non-covered loans, and 2.33% a year
ago.
?
The interest income generated from the loan portfolios in the
FDIC-assisted acquisitions contributed $9.9 million to first quarter
revenues, up from $8.3 million in the first quarter a year ago.
?
Return on average assets was 1.15% and return on average common equity
was 11.16%, annualized.
Regional and Acquisitions Update
?The acquisitions made in 2010 continue to be solidly profitable,
although we anticipate the impact of the accounting for these
transactions will start to be less impactful in the coming years. The
resolution of the acquired loan portfolios continue to progress, with
net covered loans down 5% for the quarter, 25% year-over-year and 34%
since the peak in the third quarter of 2010,? stated Rick Shields, Chief
Financial Officer.
?Similarly, the FDIC indemnification asset declined 7% in the quarter,
37% year-over-year and is down 51% from its peak,? Shields continued.
?In addition to the clawback adjustment of $1.6 million booked primarily
in the fourth quarter of 2011, the FDIC indemnification asset was
written down by $3.0 million in the first quarter of 2012, $3.6 million
in the fourth quarter of 2011 and $1.3 million in the first quarter a
year ago.? Covered loans, which are loans that are subject to a loss
share arrangement with the FDIC as a result of the two assisted
transactions, are shown as a separate line item of the balance sheet and
are not included in the net loan totals. Covered loans are also not
included in any of the reported credit quality metrics, as they are
accounted for separately under generally accepted accounting principles
(GAAP). Both the FDIC indemnification asset and the covered loan
portfolio will decline over time, as the loans mature, pay off, or are
otherwise resolved.
?As the economy recovers, the potential for FDIC acquisitions continues
to diminish, yet traditional merger and acquisition activity has not
returned,? said Bryan McDonald, Whidbey Island Bank?s President. ?While
we believe there may be opportunities to acquire healthy banks down the
road, we have decided to expand organically by opening a new branch on
the Eastside of Seattle. This area has a healthy and dynamic business
climate, and we are confident this new location will be a solid addition
to our franchise.?
Credit Quality
Nonperforming, non-covered loans (NPLs) increased by $240,000 during the
first quarter to $22.3 million and decreased by $7.2 million from the
year ago quarter, with residential construction loans in Skagit, Whatcom
and Island Counties continuing to be the primary areas of stress. The
ratio of NPLs/total non-covered loans was 2.73% at the end of the first
quarter compared to 2.72% in the preceding quarter and 3.57% a year ago.
Nonperforming, non-covered assets (NPA)/total assets were 1.42% compared
to 1.44% in the preceding quarter and 2.04% a year ago. Non-covered
other real estate owned (OREO) was $1.8 million, down 7% from the
preceding quarter and down 62% from a year ago. Distribution of
nonperforming, non-covered assets is shown in the following table:
Non-Covered NPA by location Island County King County San Juan County Skagit County Snohomish County Whatcom County Total Percent of total Non-Covered NPA by loan type ---------------- -------------- ---------------- ---------------- ----------------- ---------------- ----------- ---------------------------------------------- (dollars in 000s) 3/31/2012 Commercial loans $ - $ - $ 285 $ 2,431 $ 51 $ 304 $ 3,071 12.71 % Real estate mortgage loans: One-to-four family residential 433 933 - 168 - 502 2,036 8.42 % Multi-family and commercial 841 951 937 726 769 95 4,319 17.87 % Real estate construction loans: One-to-four family residential 1,867 - - 5,585 - 4,827 12,279 50.80 % Multi-family and commercial - - - - 100 - 100 0.41 % Consumer loans: Direct 535 - - - - - 535 2.21 % Other Real Estate Owned 588 - - 842 - 400 1,830 7.57 % ----- ----- ----- ----- ----- ----- ------ ---------------------- ---------------------- Total $ 4,264 $ 1,884 $ 1,222 $ 9,752 $ 920 $ 6,128 $ 24,170 100.00 % ==== ===== === ===== ===== ===== ==== ===== ===== ===== ==== ===== = ====== ====================== ====================== Percent of total Non-Covered NPA by location 17.64 % 7.79 % 5.06 % 40.35 % 3.81 % 25.35 % 100.00 %
?We maintained the provision for loan losses at $2.0 million in the
first quarter, level with the fourth quarter of 2011 and down from $3.0
million in the first quarter a year ago,? said Shields. The allowance
for loan losses was $18.0 million, or 2.20% of non-covered loans. Total
net charge-offs declined in the first quarter to $2.0 million, or 1.01%
of average total loans on an annualized basis, from $2.9 million, or
1.41% of average loans in the preceding quarter and $2.6 million, or
1.26% of average loans, in the first quarter a year ago.
Balance Sheet
Total assets were $1.70 billion at March 31, 2012, up slightly from
$1.67 billion in the preceding quarter and $1.68 billion a year ago.
Total non-covered loans were $818.7 million compared to $812.8 million
at December 31, 2011, and $826.7 million at March 31, 2011. The
non-covered loan portfolio is well diversified with commercial and
industrial loans making up 19% and residential mortgages accounting for
5% of the portfolio. Owner-occupied commercial real estate loans
represent approximately 25% of the portfolio and non-owner occupied
commercial real estate loans account for approximately 21% of loans.
Indirect consumer loans account for 10% of the portfolio and other
consumer loans account for 9%. Construction and land development loans
for residential properties represent 7% and commercial construction and
land development loans represent 4% of the portfolio.
Net covered loans totaled $255.0 million and covered OREO totaled $26.0
million at March 31, 2012, compared to $268.2 million and $26.6 million,
respectively, three months earlier, as resolution of the covered
portfolio continued to progress.
The mix of total deposits continued to improve while the level of total
deposits was relatively stable at $1.49 billion at March 31, 2012.
Noninterest-bearing demand deposits increased 11% in the quarter and 29%
year-over-year, representing 16% of total deposits. Year-over-year,
money market accounts were down 12% at $323.6 million, comprising 22% of
total deposits; time deposits declined 18% to $522.5 million and
accounted for 35% of total deposits. Core deposits, excluding time
deposits over $100,000, represented 85% of all deposits.
Shareholders? equity increased 2% in the quarter and 11% year-over-year,
due to the strong earnings generated during the past twelve months.
Tangible shareholder equity totaled $168.7 million, or $10.94 per share
at March 31, 2012, compared to $9.88 a year ago.
Operating Results
Revenue (fully tax-equivalent net interest income before provision for
loan losses plus noninterest income) for the first quarter was $22.9
million, compared to $22.6 million in the preceding quarter and $23.3
million in the first quarter a year ago. In the first quarter of 2012,
net interest income, before the provision for loan losses, increased 2%
to $21.3 million from the linked quarter of $20.9 million and grew 10%
from $19.3 million a year ago.
Collections on the covered asset portfolio generated $629,000 in gains
on disposition of those assets, which was more than offset by a $3.0
million change in the FDIC indemnification asset in the first quarter of
2012. In the preceding quarter, noninterest income was augmented by $2.2
million in the gain on disposition of covered assets and offset by $3.6
million related to the change in the FDIC indemnification asset. In
addition, gain on sale of investment securities contributed $342,000 to
first quarter revenues; there was no gain on sale of investment
securities in the linked quarter or the year ago quarter.
Washington Banking?s net interest margin increased 18 basis points from
the preceding quarter to 5.81% from 5.63% and expanded 39 basis points
from 5.42% in the year ago quarter. ?Contributions from the acquired
loan portfolio, which had an average yield of 15.1% during the first
quarter of 2012, enhanced margins this quarter. The impact of the
acquired loans will gradually decline as it shrinks as a percent of our
overall portfolio and organic growth in loans at current market rates
accelerates,? Shields noted. The cost of funds also declined by 4 basis
points during the quarter to 0.63%, and was down by 19 basis points
year-over-year.
First quarter operating expenses decreased 4% from the preceding quarter
and 3% year over year. ?At the end of 2011, we reversed the $400,000
bonus accrual for the year because, while our earnings were good, we did
not meet our production goals for the year,? McDonald noted. ?We are
optimistic about reaching our targets this year and accrued $500,000 in
the first quarter in anticipation of a 2012 bonus payout. Overall our
core operations are becoming more efficient, with total overhead
expenses at $13.7 million in the first quarter compared to $14.1 million
in the first quarter last year.? The efficiency ratio improved to 59.72%
in the first quarter of 2012 compared to 60.40% in the first quarter of
2011.
In a separate release today, Washington Banking announced it will pay a
quarterly cash dividend of $0.14 per common share. ?We implemented a
two-tiered approach in determining the appropriate amount of cash to
return to shareholders. We are considering six cents as our ?basic?
dividend and then adding a variable amount that will equate to a total
dividend payout not to exceed 50% of quarterly earnings,? Wagner noted.
?Our board will continue to evaluate dividends each quarter based on
capital requirements, market opportunities and other operating
considerations.?
Conference Call Information
Management will host a conference call on Friday, April 27, at 10:00
a.m. Pacific time (1:00 p.m. ET) to discuss the results. This call will
also be broadcast live via the internet. Investment professionals and
all current and prospective shareholders are invited to access the live
call by dialing (480) 629-9692 at 10:00 a.m. Pacific Time for conference
ID #4529007. To listen to the call online, either live or archived,
visit the Investor Relations page of Whidbey Island Bank?s website at
www.wibank.com .
ABOUT WASHINGTON BANKING COMPANY
Washington Banking Company is a bank holding company based in Oak
Harbor, Washington, that operates Whidbey Island Bank, a state-chartered
full-service commercial bank. Founded in 1961, Whidbey Island Bank
provides various deposit, loan and investment services to meet
customers? financial needs. With its two FDIC-assisted acquisitions in
2010, Whidbey Island Bank currently operates 30 full-service branches
located in six counties in Northwestern Washington. In 2009, Washington
Banking was added to the Russell 2000 Index, a subset of the Russell
3000 Index. Both indices are widely used by professional money managers
as benchmarks for investment strategies. Washington Banking was the only
company in the Pacific Northwest that ranked in the top 100 best
performing community banks between $500 million and $5 billion in assets
by SNL Financial in 2010, and joined the Keefe, Bruyette Woods 2010
Bank Honor Roll, based on its superior 10-year track record.
FORWARD-LOOKING STATEMENTS
This news release contains forward-looking statements that are
subject to risks and uncertainties. These forward-looking
statements describe management?s expectations regarding future events
and developments such as future operating results, availability of
acquisition opportunities, growth in loans and deposits, credit quality
and loan losses, opening of new branches and continued success of the
Company?s business plan. Readers should not place undue reliance
on forward-looking statements, which reflect management?s views only as
of the date hereof. The words ?anticipate,? ?expect,? ?will,?
?believe,? and words of similar meaning are intended, in part, to help
identify forward-looking statements. Future events are difficult
to predict, and the expectations described above are subject to risk and
uncertainty that may cause actual results to differ materially. In
addition to discussions about risks and uncertainties set forth from
time to time in the Company?s filings with the Securities and Exchange
Commission, factors that may cause actual results to differ materially
from those contemplated in these forward-looking statements include,
among others: (1) local and national general and economic
condition; (2) changes in interest rates and their impact on net
interest margin; (3) competition among financial institutions; (4)
legislation or regulatory requirements; (5) the ability to realize the
efficiencies expected from investment in personnel and infrastructure;
and (6) the ability to open new locations. Washington Banking Company
does not undertake to update forward-looking statements to reflect
circumstances or events that occur after the date the forward-looking
statements were made. Any such statements are made in reliance on
the safe harbor protections provided under the Securities Exchange Act
of 1934, as amended.
www.wibank.com
CONSOLIDATED STATEMENTS OF INCOME (unaudited) Quarter Ended Quarter Ended Three Quarter Ended One -------------------------------------------------------------- ($ in thousands, except per share data) March 31, December 31, Month March 31, Year 2012 2011 Change 2011 Change ---------- ---------- --------- ---------- --------- Interest Income Non-covered Loans $ 11,753 $ 12,090 -3 % $ 12,640 -7 % Covered Loans 9,868 9,397 5 % 8,310 19 % Taxable Investment Securities 1,356 1,243 9 % 793 71 % Tax Exempt Securities 255 253 1 % 210 21 % Other 51 59 -14 % 45 13 % -------------------------------------------------------------- ---------- ---------- ---- --- ---------- ---- --- Total Interest Income 23,283 23,042 1 % 21,998 6 % Interest Expense Deposits 1,845 2,043 -10 % 2,591 -29 % Junior Subordinated Debentures 136 128 6 % 120 13 % -------------------------------------------------------------- ---------- ---------- ---- --- ---------- ---- --- Total Interest Expense 1,981 2,171 -9 % 2,711 -27 % Net Interest Income 21,302 20,871 2 % 19,287 10 % Provision for Loan Losses, Noncovered Loans 2,000 2,000 0 % 3,000 -33 % Recovery for Loan Losses, Covered Loans - (132) -100 % - NA -------------------------------------------------------------- ---------- ---------- ---- ---- --- ---------- --------- Net Interest Income after Provision for Loan Losses 19,302 19,003 2 % 16,287 19 % Noninterest Income Service Charges and Fees 893 934 -4 % 963 -7 % Electronic Banking Income 896 842 6 % 693 29 % Investment Products 362 237 53 % 222 63 % Gain on Sale of Investment Securities, Net 342 - NA - NA Bank Owned Life Insurance Income 61 66 -8 % 80 -24 % Income from the Sale of Loans 705 440 60 % 338 109 % SBA Premium Income 87 69 26 % 121 -28 % Change in FDIC Indemnification Asset (2,991) (3,602) -17 % (1,316) 127 % Gain on Disposition of Covered Assets 629 2,208 -72 % 2,218 -72 % Other Income 313 233 34 % 413 -24 % -------------------------------------------------------------- ---------- ---------- ---- --- ---------- ---- --- Total Noninterest Income 1,297 1,427 -9 % 3,732 -65 % Noninterest Expense Compensation and Employee Benefits 7,334 6,458 14 % 6,819 8 % Occupancy and Equipment 1,729 1,655 4 % 1,667 4 % Office Supplies and Printing 413 378 9 % 432 -4 % Data Processing 528 498 6 % 470 12 % Consulting and Professional Fees 243 305 -20 % 444 -45 % Intangible Amortization 126 147 -14 % 157 -20 % Merger Related Expenses - - NA 119 -100 % FDIC Premiums 336 349 -4 % 589 -43 % FDIC Clawback Liability 40 1,576 -97 % - NA Non-covered OREO Repossession Expenses 374 159 135 % 300 25 % Covered OREO Repossession Expenses 574 572 0 % 770 -25 % Other 1,958 2,196 -11 % 2,289 -14 % -------------------------------------------------------------- ---------- ---------- ---- --- ---------- ---- --- Total Noninterest Expense 13,655 14,293 -4 % 14,056 -3 % Income Before Provision for Income Tax 6,944 6,137 13 % 5,963 16 % Provision for Income Tax 2,171 1,898 14 % 1,887 15 % -------------------------------------------------------------- ---------- ---------- ---- --- ---------- ---- --- Net Income 4,773 4,239 13 % 4,076 17 % Preferred Dividends - - NA 1,084 -100 % -------------------------------------------------------------- ---------- ---------- --------- ---------- ---- --- Net Income Available to Common Shareholders $ 4,773 $ 4,239 13 % $ 2,992 60 % ============================================================== === ========== ==== ========== ==== === === ========== ==== === Earnings per Common Share -------------------------------------------------------------- Net Income per Share, Basic $ 0.31 $ 0.28 11 % $ 0.20 55 % ============================================================== === ========== ==== ========== ==== === === ========== ==== === Net Income per Share, Diluted $ 0.31 $ 0.28 11 % $ 0.19 63 % ============================================================== === ========== ==== ========== ==== === === ========== ==== === Average Number of Common Shares Outstanding 15,409,000 15,366,000 15,329,000 Fully Diluted Average Common and Equivalent Shares Outstanding 15,441,000 15,400,000 15,467,000
CONSOLIDATED BALANCE SHEETS Three One (unaudited) -------------------------------------------------- ($ in thousands except per share data) March 31, December 31, Month March 31, Year 2012 2011 Change 2011 Change --------- --------- -------- --------- ---------- Assets Cash and Due from Banks $ 22,010 $ 25,399 -13 % $ 24,349 -10 % Interest-Bearing Deposits with Banks 109,154 80,514 36 % 102,237 7 % Fed Funds Sold - - NA 1,100 -100 % -------------------------------------------------- --------- --------- -------- --------- ----- --- Total Cash and Cash Equivalents 131,164 105,913 24 % 127,686 3 % Investment Securities Available for Sale 322,784 297,874 8 % 183,378 76 % FHLB Stock 7,576 7,576 0 % 7,576 0 % Loans Held for Sale 10,011 22,421 -55 % 3,455 190 % Loans Receivable 818,650 812,830 1 % 826,736 -1 % Less: Allowance for Loan Losses (17,993) (18,032) 0 % (19,238) -6 % -------------------------------------------------- --------- --- --------- ---- --- --- --------- --- ----- --- Non-covered Loans, Net 800,657 794,798 1 % 807,498 -1 % Covered Loans, Net Allowance for Loan Losses 255,020 268,211 -5 % 340,290 -25 % Premises and Equipment, Net 37,426 37,492 0 % 37,715 -1 % Bank Owned Life Insurance 17,573 17,513 0 % 17,282 2 % Goodwill and Other Intangible Assets, Net 5,088 5,214 -2 % 5,679 -10 % Other Real Estate Owned 1,830 1,976 -7 % 4,845 -62 % Covered Other Real Estate Owned 25,973 26,622 -2 % 28,826 -10 % FDIC Indemnification Asset 60,898 65,586 -7 % 96,863 -37 % Other Assets 20,596 19,417 6 % 22,294 -8 % -------------------------------------------------- --------- --------- --- --- --------- ----- --- Total Assets $ 1,696,596 $ 1,670,613 2 % $ 1,683,387 1 % ================================================== === ========= ==== ========= === === === ========= ===== === Liabilities and Shareholders' Equity Deposits: Noninterest-Bearing Demand $ 242,568 $ 219,250 11 % $ 188,583 29 % NOW Accounts 293,819 276,288 6 % 204,836 43 % Money Market 323,645 327,256 -1 % 367,940 -12 % Savings 103,462 99,882 4 % 96,389 7 % Time Deposits 522,531 543,668 -4 % 636,765 -18 % -------------------------------------------------- --------- --------- --- --- --------- ----- --- Total Deposits 1,486,025 1,466,344 1 % 1,494,513 -1 % Junior Subordinated Debentures 25,774 25,774 0 % 25,774 0 % Other Liabilities 11,040 7,744 43 % 5,975 85 % -------------------------------------------------- --------- --------- --- --- --------- ----- --- Total Liabilities 1,522,839 1,499,862 2 % 1,526,262 0 % Shareholders' Equity: Common Stock (no par value) Authorized 35,000,000 Shares: Issued and Outstanding 15,419,472 at 3/31/12, 15,398,197 at 12/31/11 and 15,333,073 at 3/31/11 84,853 84,564 0 % 83,869 1 % Retained Earnings 86,031 83,107 4 % 73,533 17 % Accumulated Other Comprehensive Income (Loss) 2,873 3,080 -7 % (277) -1137 % -------------------------------------------------- --------- --------- --- --- --------- --- ----- --- Total Shareholders' Equity 173,757 170,751 2 % 157,125 11 % -------------------------------------------------- --------- --------- --- --- --------- ----- --- Total Liabilities and Shareholders' Equity $ 1,696,596 $ 1,670,613 2 % $ 1,683,387 1 % ================================================== === ========= ==== ========= === === === ========= ===== ===
FINANCIAL STATISTICS (unaudited) Quarter Ended Quarter Ended Quarter Ended Quarter Ended ($ in thousands, except per share data) March 31, December 31, September 30, March 31, 2012 2011 2011 2011 --------- --------- --------- --------- Revenue (1) (2) $ 22,864 $ 22,562 $ 21,765 $ 23,270 -------------------------------------------- Averages -------------------------------------------- Total Assets $ 1,665,597 $ 1,670,572 $ 1,687,418 $ 1,687,670 Non-covered Loans and Loans Held for Sale 826,528 830,519 828,367 835,122 Covered Loans 262,580 274,463 287,232 352,663 Interest Earning Assets 1,493,322 1,488,674 1,485,875 1,461,034 Deposits 1,459,296 1,472,059 1,491,112 1,496,404 Common Shareholders' Equity 171,975 166,933 163,486 159,458 Financial Ratios -------------------------------------------- Return on Average Assets, Annualized 1.15 % 1.01 % 0.85 % 0.98 % Return on Average Common Equity, Annualized(3) 11.16 % 10.07 % 8.80 % 7.61 % Efficiency Ratio (2) 59.72 % 63.35 % 63.44 % 60.40 % Yield on Earning Assets (2) 6.34 % 6.21 % 6.08 % 6.18 % Cost of Interest Bearing Liabilities 0.63 % 0.67 % 0.74 % 0.82 % Net Interest Spread 5.71 % 5.54 % 5.34 % 5.36 % Net Interest Margin (2) 5.81 % 5.63 % 5.43 % 5.42 % Tangible Book Value Per Share (4) $ 10.94 $ 10.75 $ 10.51 $ 9.88 Tangible Common Equity (4) 9.97 % 9.94 % 9.64 % 9.03 % March 31, December 31, September 30, March 31, Regulatory Requirements ------------------------------------------- 2012 2011 2011 2011 Adequately- capitalized Well- capitalized --------- --------- --------- --------- ------------------------ ------------------ Period End Total Risk-Based Capital Ratio - Consolidated (5) 19.94 % 19.73 % 19.43 % 19.04 % 8.00 % N/A Tier 1 Risk-Based Capital Ratio - Consolidated (5) 18.69 % 18.47 % 18.17 % 17.78 % 4.00 % N/A Tier 1 Leverage Ratio - Consolidated (5) 11.49 % 11.16 % 10.82 % 10.46 % 4.00 % N/A -------------------------------------------- --------- --- --------- ---- --------- ---- --------- --- Total Risk-Based Capital Ratio - Whidbey Island Bank (5) 19.32 % 19.09 % 18.82 % 18.44 % 8.00 % 10.00 % Tier 1 Risk-Based Capital Ratio - Whidbey Island Bank (5) 18.07 % 17.84 % 17.56 % 17.18 % 4.00 % 6.00 % Tier 1 Leverage Ratio - Whidbey Island Bank (5) 11.10 % 10.77 % 10.46 % 10.10 % 4.00 % 5.00 % --------------------------------------------------------- --------- --- --------- ---- --------- ---- --------- --- (1) Revenue is the fully tax-equivalent net interest income before provision for loan losses plus noninterest income. (2) Fully tax-equivalent is a non-GAAP performance measurement that management believes provides investors with a more accurate picture of the net interest margin, revenue and efficiency ratio for comparative purposes. The calculation involves grossing up interest income on tax-exempt loans and investments by an amount that makes it comparable to taxable income. (3) Return on average common equity is adjusted for preferred stock dividends. (4) Please see the reconciliations of shareholders' equity to tangible common equity and total assets to tangible assets, and the related measures that appear elsewhere in this release. (5) Capital ratios for the most recent period are an estimate pending filing of the Company's regulatory reports.
NON-COVERED ASSET QUALITY (unaudited) Quarter Ended Quarter Ended Quarter Ended --------------------------------------------------------------------- ($ in thousands, except per share data) March 31, December 31, March 31, 2012 2011 2011 ------- ------- ------- Allowance for Non-Covered Loan Losses Activity: Balance at Beginning of Period $ 18,032 $ 18,936 $ 18,812 Indirect Loans: Charge-offs (291) (324) (348) Recoveries 135 110 136 --------------------------------------------------------------------- ------- ------- ------- Indirect Net Charge-offs (156) (214) (212) Other Loans: Charge-offs (1,942) (2,872) (2,551) Recoveries 59 182 189 --------------------------------------------------------------------- ------- ------- ------- Other Net charge-offs (1,883) (2,690) (2,362) Total Net Charge-offs (2,039) (2,904) (2,574) Provision for loan losses, non-covered loans 2,000 2,000 3,000 --------------------------------------------------------------------- ------- ------- ------- Balance at End of Period $ 17,993 $ 18,032 $ 19,238 ===================================================================== ==== ======= ==== ======= ==== ======= Net Charge-offs to Average Loans: Indirect Loans Net Charge-Offs, to Avg Indirect Loans, Annualized (1) 0.77 % 1.00 % 0.93 % Other Loans Net Charge-Offs, to Avg Other Loans, Annualized (1) 1.04 % 1.46 % 1.30 % Net Charge-offs to Average Total Loans (1) 1.01 % 1.41 % 1.26 % March 31, December 31, March 31, 2012 2011 2011 ------- ------- ------- Nonperforming Non-Covered Assets --------------------------------------------------------------------- Nonperforming Non-Covered Loans (2) $ 22,340 $ 22,100 $ 29,520 Non-Covered Other Real Estate Owned 1,830 1,976 4,845 --------------------------------------------------------------------- ------- ------- ------- Total Nonperforming Non-Covered Assets $ 24,170 $ 24,076 $ 34,365 ===================================================================== ==== ======= ==== ======= ==== ======= Nonperforming Non-Covered Loans to Total Non-Covered Loans (1) 2.73 % 2.72 % 3.57 % Nonperforming Non-Covered Assets to Total Assets 1.42 % 1.44 % 2.04 % Allowance for Loan Losses to Nonperforming Non-Covered Loans 80.54 % 81.59 % 65.17 % Allowance for Loan Losses to Non-Covered Loans 2.20 % 2.22 % 2.33 % Non-Covered Loan Composition --------------------------------------------------------------------- Commercial $ 156,594 $ 150,386 $ 147,436 Real Estate Mortgages One-to-Four Family Residential 38,987 40,331 46,764 Commercial 378,355 370,782 350,817 Real Estate Construction One-to-Four Family Residential 56,963 58,810 68,877 Commercial 31,236 31,546 38,568 Consumer Indirect 78,809 80,396 88,413 Direct 75,838 78,726 83,662 Deferred Costs 1,868 1,853 2,199 --------------------------------------------------------------------- ------- ------- ------- Total Non-Covered Loans $ 818,650 $ 812,830 $ 826,736 ===================================================================== ==== ======= ==== ======= ==== ======= Time Deposit Composition --------------------------------------------------------------------- Time Deposits $100,000 and more $ 217,422 $ 229,741 $ 262,783 All other time deposits 291,886 305,753 365,841 Brokered Deposits CDARS (Certificate of Deposit Account Registry Service) 13,223 8,174 8,141 --------------------------------------------------------------------- ------- ------- ------- Total Time Deposits $ 522,531 $ 543,668 $ 636,765 ===================================================================== ==== ======= ==== ======= ==== ======= (1) Excludes Loans Held for Sale. (2) Nonperforming loans includes nonaccrual loans plus accruing loans 90 or more days past due.
Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted
accounting principles in the United States of America (GAAP) this press
release presents certain non-GAAP financial measures. Management
believes that certain non-GAAP financial measures provide investors with
information useful in understanding the Company?s financial performance;
however, readers of this report are urged to review these non-GAAP
measures in conjunction with the GAAP results as reported.
Operating earnings are not a measure of performance calculated in
accordance with GAAP. However, management believes that operating
earnings are an important indication of our ability to generate earnings
through the Company?s fundamental banking business. Since operating
earnings exclude the effects of certain items that are unusual and/or
difficult to predict, management believes that operating earnings
provide useful supplemental information to both management and investors
in evaluating the Company?s financial results.
Operating earnings should not be considered in isolation or as a
substitute for net income. Cash flows from operating activities, or
other income or cash flow statement data calculated in accordance with
GAAP. Moreover, the manner in which the Company calculates operating
earnings may differ from that of other companies reporting measures with
similar names.
The following table provides the reconciliation of the Company?s GAAP
earnings to operating earnings (non-GAAP) for the periods presented:
Quarter Ended March 31, December 31, March 31, 2012 2011 2011 ----- ------ ----- GAAP Earnings Available to Common Shareholders $ 4,773 $ 4,239 $ 2,992 Provision for Income Tax 2,171 1,898 1,887 -------------------------------------------------- ----- ------ ----- GAAP Earnings Available to Common Shareholders before Provision for 6,944 6,137 4,879 Income Tax Adjustments to GAAP Earnings Available to Common Shareholders Acquisition-Related Costs - - 119 Accelerated Accretion of Remaining Preferred Stock Discount - - 1,046 -------------------------------------------------------------------- ----- ------ ----- Operating Earnings Before Provision for Income Tax 6,944 6,137 6,044 Provision for Income Tax 2,171 1,898 1,929 -------------------------------------------------- ----- ------ ----- Net Operating Earnings $ 4,773 $ 4,239 $ 4,115 ================================================== ==== ===== ====== ====== ==== ===== Diluted GAAP Earnings per Common Share $ 0.31 $ 0.28 $ 0.19 Diluted Operating Earnings per Common Share $ 0.31 $ 0.28 $ 0.27
Non-GAAP Financial Measures
Tangible common equity, tangible assets and tangible book value per
common share are not measures that are calculated in accordance with
GAAP. However, management uses these non-GAAP measures in their analysis
of the Company?s performance. Management believes that these non-GAAP
measures are an important indication of the Company?s ability to grow
both organically and through business combinations, and, with respect to
tangible common equity, the Company?s ability to pay dividends and to
engage in various capital management strategies.
Neither tangible common equity, tangible assets and tangible book value
per common share should be considered in isolation or as a substitute
for common shareholders? equity or book value per common share or any
other measure calculated in accordance with GAAP. Moreover, the manner
in which the Company calculates tangible common equity, tangible assets
and tangible book value per share may differ from that of other
companies reporting measures with similar names.
The following table provides the reconciliation of the Company?s
shareholders? equity (GAAP) to tangible common equity (non-GAAP) and
total assets (GAAP) to tangible assets (non-GAAP) for the periods
presented:
March 31, December 31, March 31, ($ in thousands, except per share data) 2012 2011 2011 --------------------------------------------- ---------- ---------- ---------- Total Shareholders' Equity $ 173,757 $ 170,751 $ 157,125 Adjustments to Shareholders' Equity Goodwill and Other Intangible Assets, net (1) (5,088) (5,214) (5,679) --------------------------------------------- ---------- --- ---------- ---- ---------- --- Tangible Common Equity 168,669 165,537 151,446 Total Assets $ 1,696,596 $ 1,670,613 $ 1,683,387 Adjustments to Total Assets Goodwill and Other Intangible Assets, net (1) (5,088) (5,214) (5,679) --------------------------------------------- ---------- --- ---------- ---- ---------- --- Tangible Assets 1,691,508 1,665,399 1,677,708 Common Shares Outstanding at Period End 15,419,472 15,398,197 15,333,073 Tangible Common Equity 9.97 % 9.94 % 9.03 % Tangible Book Value per Common Share $ 10.94 $ 10.75 $ 9.88 (1) Goodwill and Other intangible assets, net excludes mortgage servicing rights
SOURCE: Washington Banking Company
Washington Banking Company Jack Wagner -- WBCO President CEO Bryan McDonald -- WIB President CEO Rick Shields -- EVP CFO 360-679-3121
Copyright Business Wire 2012
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