Published:
North Central Bancshares, Inc. Announces Results for Third Quarter 2008
FORT DODGE, Iowa, Oct. 31 /PRNewswire-FirstCall/ -- North Central
Bancshares, Inc. (the "Company") (Nasdaq: FFFD), the holding company for First
Federal Savings Bank ofIowa (the "Bank"), announced its financial results for
the third quarter and nine months ended September 30, 2008.
As previously announced in an 8-K filing on September 9, 2008, the Company
held Freddie Mac and Fannie Mae perpetual preferred stock at June 30, 2008
with a cost basis of approximately $4.2 million. On September 7, 2008, the
Federal Housing Finance Agency placed both Freddie Mac and Fannie Mae under
conservatorship. This action did not eliminate the equity in Freddie Mac and
Fannie Mae represented by the perpetual preferred stock but did negatively
impact its value. As a result, a non-cash other-than-temporary impairment
("OTTI") charge of $3.85 million pre tax was recorded by the Company in the
quarter ended September 30, 2008. The estimated fair value of these
securities at September 30, 2008 was $300,000.
Including the OTTI charge, for the quarter ended September 30, 2008, the
Company had a net loss of $2.7 million, or $2.04 per diluted share, compared
to net income of $1.01 million, or $0.75 per diluted share, for the quarter
ended September 30, 2007.
On October 3, 2008 the Emergency Economic Stabilization Act of 2008 (the
"Act") was adopted. This Act provides tax relief to banking organizations
that have suffered losses on preferred holdings of Freddie Mac and Fannie Mae
by changing the characterization of these losses from capital to ordinary for
Federal income tax purposes. As a result, the Company will recognize a tax
benefit of approximately $2.1 million or $1.56 per diluted share, on the
Freddie Mac and Fannie Mae impairment charge during the fourth quarter of
2008. This tax benefit was realized in the third quarter of 2008 for purposes
of the Company's regulatory capital ratios. See the Selected Financial Ratios
included in the Financial Highlights below.
Excluding the OTTI charge, net operating earnings for the quarter ended
September 30, 2008, were $1.1 million, or $0.82 per diluted share, compared to
net income of $1.01 million, or $0.75 per diluted share, for the quarter ended
September 30, 2007. Excluding the OTTI charges during 2008, earnings for the
nine months ended September 30, 2008 were $2.87 million, or $2.13 per diluted
share, compared to net income of $3.1 million, or $2.24 per diluted share, for
the nine months ended September 30, 2007.
The Company is providing net operating earnings in addition to net income
(loss) results in order to provide users of the financial information a
clearer indication of the results of the Company's core business. The
following table reconciles our determination of net operating earnings to net
loss as prepared in accordance with generally accepted accounting principles:
Three Months Ended Nine Months Ended
September 30, 2008 September 30, 2008
(dollars in thousands, Diluted per Diluted per
except per share data) Amount share Amount share
Reported net loss $(2,750) (2.04) $(2,903) (2.17)
Other-than-temporary
impairment (net) 3,851 2.86 5,777 4.30
Net operating earnings $1,101 0.82 $2,874 2.13
For the nine month period ending September 30, 2008, the Company reported
a net loss of $2.9 million, or $2.17 per diluted share, compared to net income
of $3.1 million, or $2.24 per diluted share, for the nine months ended
September 30, 2007.
Net interest income for the quarter ended September 30, 2008 was $3.29
million compared to net interest income of $3.27 million for the quarter ended
September 30, 2007. The increase in net interest income was primarily due to
an increase in net interest spread. The net interest spread increased to
2.70% for the quarter ended September 30, 2008 from 2.37% for the quarter
ended September 30, 2007.
The Company's provision for loan losses was $60,000 and $245,000 for the
quarters ended September 30, 2008 and 2007, respectively. The Company
establishes provisions for loan losses, which are charged to operations, in
order to maintain the allowance for loan losses at a level which is deemed to
be appropriate based upon an assessment of prior loss experience, industry
standards, past due loans, economic conditions, the volume and type of loans
in the Bank's portfolio, and other factors related to the collectibility of
the Bank's loan portfolio.
The Company's noninterest income (loss) was $(1.93) million and $1.95
million for the quarters ended September 30, 2008 and 2007, respectively. The
decrease in noninterest income was primarily due to other-than-temporary
impairment on securities available-for-sale in the quarter ended September 30,
2008. Excluding these impairment charges, noninterest income was $1.92 million
for the quarter ended September 30, 2008.
The Company's noninterest expense was $3.56 million and $3.51 million for
the quarters ended September 30, 2008 and 2007, respectively. The increase in
noninterest expense was primarily due to information technology enhancements
and the write down of, and expenses related to, other real estate owned,
offset in part by a decrease in salaries and employee benefits.
The Company's provision for income taxes was $495,000 and $455,000 for the
quarters ended September 30, 2008 and 2007, respectively. The increase in the
provision for income taxes was primarily due to the increase in income before
income taxes without regard to the other-than-temporary impairment on
securities, which had limited deductibility prior to enactment of the Act.
Total assets at September 30, 2008 were $475.1 million compared to $510.2
million at December 31, 2007. Net loans decreased by $34.6 million, or 7.74%,
to $412.3 million at September 30, 2008, from $446.9 million at December 31,
2007. The decrease in net loans was primarily due to payments, prepayments,
and sales of loans, offset in part by the origination of one-to-four family
residential, consumer loans, and the purchase of multi-family real estate
loans. At September 30, 2008, net loans consisted of (i) $175.7 million of
one-to-four family real estate representing a decrease of $22.2 million from
December 31, 2007, (ii) $100.0 million of commercial real estate loans
representing a decrease of $20.0 million from December 31, 2007, (iii) $58.7
million of multi-family real estate loans representing an increase of $2.6
million from December 31, 2007, and (iv) $77.9 million of consumer loans
representing a increase of $5.0 million from December 31, 2007. Cash and cash
equivalents decreased $2.0 million, or 16.0%, to $10.5 million at September
30, 2008, compared to $12.5 million at December 31, 2007. The decrease in
cash and cash equivalents was primarily due to a decrease in deposits, the
purchase of mortgage backed securities and a decrease in borrowed funds offset
by a reduction of net loans outstanding. The increase in securities
available-for-sale was primarily due to the purchase of mortgage backed
securities.
Deposits decreased $20.7 million, or 5.7%, to $345.2 million at September
30, 2008, from $365.9 million at December 31, 2007, which included a decrease
in brokered deposits of $8.8 million. Borrowed funds decreased $10.0 million,
or 10.3%, to $87.4 million at September 30, 2008, from $97.4 million at
December 31, 2007.
Nonperforming loans to total net loans were 1.05% as of September 30, 2008
compared to 0.53% as of December 31, 2007. Nonperforming assets were 1.15% of
total assets as of September 30, 2008, compared to 0.97% of total assets as of
December 31, 2007. The allowance for loan losses was $3.47 million, or 0.83%
of total loans, at September 30, 2008, compared to $3.49 million, or 0.77% of
total loans, at December 31, 2007.
The Bank remains "well capitalized" for regulatory capital purposes. See
the Selected Financial Ratios included in the Financial Highlights below.
Stockholders' equity was $38.3 million at September 30, 2008, compared to
$41.0 million at December 31, 2007. Book value or stockholders' equity per
share, at September 30, 2008 was $28.50, compared to $30.56 at December 31,
2007. The ratio of stockholders' equity to total assets was 8.06% at
September 30, 2008, compared to 8.03% at December 31, 2007. Notwithstanding
the Bank's strong capital position, management is analyzing the benefits of
participating in the Troubled Asset Relief Program (TARP) Capital Purchase
Program (CPP).
All stockholders of record on September 15, 2008, received a quarterly
cash dividend of $0.01 per share on October 6, 2008. As of September 30, 2008,
the Company had 1,343,448 shares of common stock outstanding.
About the Company and the Bank
North Central Bancshares, Inc. serves north central and southeasternIowa
at eleven full service locations inFort Dodge,Nevada,Ames,Perry,Ankeny,
Clive,West Des Moines,Burlington, andMount Pleasant, Iowa through its
wholly-owned subsidiary, First Federal Savings Bank ofIowa, headquartered in
Fort Dodge, Iowa.
The Bank's deposits are insured by the Federal Deposit Insurance
Corporation up to the full extent permitted by law.
Statements included in this press release and in future filings by North
Central Bancshares, Inc. with the Securities and Exchange Commission, in North
Central Bancshares, Inc. press releases, and in oral statements made with the
approval of an authorized executive officer, which are not historical or
current facts, are "forward-looking statements" made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995, and
are subject to certain risks and uncertainties that could cause actual results
to differ materially from historical earnings and those presently anticipated
or projected. North Central Bancshares, Inc. wishes to caution readers not to
place undue reliance on such forward-looking statements, which speak only as
of the date made. The following important factors, among others, in some
cases have affected and in the future could affect North Central Bancshares,
Inc.'s actual results, and could cause North Central Bancshares, Inc.'s actual
financial performance to differ materially from that expressed in any forward-
looking statement: (1) competitive pressures among depository and other
financial institutions may increase significantly; (2) revenues may be lower
than expected; (3) changes in the interest rate environment may reduce
interest margins; (4) general economic conditions, either nationally or
regionally, may be less favorable than expected, resulting in, among other
things, a deterioration in credit quality and/or a reduced demand for credit;
(5) legislative or regulatory changes, including changes in accounting
standards, may adversely affect the business in which the Company is engaged;
(6) competitors may have greater financial resources and developed products
that enable such competitors to compete more successfully than the Company;
and (7) adverse changes may occur in the securities markets or with respect to
inflation. The foregoing list should not be construed as exhaustive, and
North Central Bancshares, Inc. disclaims any obligation to subsequently revise
any forward-looking statements to reflect events or circumstances after the
date of such statements, or to reflect the occurrence of anticipated or
unanticipated events.
For more information contact: David M. Bradley, Chairman, President and
Chief Executive Officer, 515-576-7531
FINANCIAL HIGHLIGHTS OF NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Financial Condition
(Unaudited)
(Dollars in Thousands, except per share and share data)
September 30, December 31,
2008 2007
Assets
Cash and cash equivalents $10,486 $12,527
Securities available-for-sale 20,886 16,599
Loans (net of allowance of loan loss of
$3,473 and $3,487, respectively) 412,323 446,857
Goodwill 4,947 4,947
Other assets 26,452 29,263
Total assets $475,094 $510,193
Liabilities
Deposits $345,201 $365,948
Borrowed funds 87,356 97,379
Other liabilities 4,243 5,889
Total liabilities 436,800 469,216
Stockholders' equity 38,294 40,977
Total liabilities and stockholders' equity $475,094 $510,193
Stockholders' equity to total assets 8.06% 8.03%
Book value per share $28.50 $30.56
Total shares outstanding 1,343,448 1,340,948
Condensed Consolidated Statements of Income
(Unaudited)
(Dollars in Thousands, except per share data)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
Interest income $6,966 $7,990 $21,609 $23,425
Interest expense 3,676 4,716 11,864 13,550
Net interest income 3,290 3,274 9,745 9,875
Provision for loan loss 60 245 280 335
Net interest income
after provision for
loan loss 3,230 3,029 9,465 9,540
Noninterest income/
(loss) (1,929) 1,946 (281) 5,344
Noninterest expense 3,556 3,507 10,935 10,481
Income/(loss) before
income taxes (2,255) 1,468 (1,751) 4,403
Income taxes 495 455 1,152 1,320
Net income/(loss) $(2,750) $1,013 $(2,903) $3,083
Basic earnings/(loss)
per share $(2.04) $0.75 $(2.17) $2.27
Diluted earnings/(loss)
per share $(2.04) $0.75 $(2.17) $2.24
Selected Financial Ratios
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
2008 2007 2008 2007
Performance ratios
Net interest spread 2.70% 2.37% 2.58% 2.41%
Net interest margin 2.90% 2.64% 2.79% 2.67%
Return on average
assets (2.25)% 0.77% (0.77)% 0.79%
Return on average
equity (27.22)% 9.68% (9.43)% 9.80%
Capital ratios (First For the Nine Months
Federal Savings Bank Ended September 30,
of Iowa) 2008 2007
Tangible 7.34%* 7.01%*
Core 7.34%* 7.01%*
Risk-based 11.14%* 10.67%*
* Exceeds Regulatory definition of "well capitalized"
SOURCE North Central Bancshares, Inc.
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Copyright © 2009, NewsBlaze,
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