United Western Bancorp, Inc. Reports 2009 Third Quarter Results |
United Western Bancorp, Inc. (NASDAQ: UWBK) (the "Company"), a Denver-based holding company whose principal subsidiary, United Western Bank® (the "Bank"), is a community bank focused on expansion across Colorado's Front Range market and selected mountain communities, announced results for its 2009 third quarter.
For the third quarter of 2009, the Company incurred a loss from continuing operations of $8.7 million. On September 22, 2009, the Company issued 20 million shares of its common stock in a public offering. Had these shares been outstanding for the entire third quarter, the loss per share for the quarter would have been $(.30). Based on the weighted average number of shares that were outstanding during the period the loss was $(.95) per share. The loss was attributable to three principal factors: (i) $10.1 million of provision for credit losses, or $6.3 million net of tax, (ii) a net other-than-temporary impairment charge on non-agency mortgage backed securities of $2.8 million, or $1.7 million net of tax, and (iii) during the third quarter, the Company held approximately $370 million of short term liquidity on its balance sheet, which resulted in an approximate 47 basis point reduction in net interest margin for the period. The Company reported a loss from continuing operations for the second quarter of 2009 of $33.7 million, or ($4.71) per share, and income from continuing operations for the third quarter of 2008 of $1.5 million, or $.21 per diluted share. See Appendix I to this earnings release for a reconciliation of our adjusted core earnings and weighted average shares outstanding.
Scot T. Wetzel, President and Chief Executive Officer said: "During the third quarter, we successfully raised $74.4 million, net of expenses, in a common stock offering, and together with an over-allotment option exercised in October, we raised a total of $81.8 million net of expenses. Our community bank deposits increased $193 million, or 100%, during the first nine months of the year, as consumers and businesses seek a solid community banking franchise for their funds. We were cautious in the utilization of this liquidity, which resulted in high cash balances on our balance sheet that negatively impacted our net interest margin. We continue to focus on working diligently and strategically for our customers and shareholders."
William D. Snider, Chief Financial Officer, said: "We continued with our efforts to strengthen the balance sheet and plan for the future. The balance sheet strengthening actions in the third quarter included increasing capital, increasing liquidity, and risk reduction through increased reserves, a decline in exposure to construction and development loans and increasing core community bank deposits. We increased the Company's leverage ratio by almost 300 basis points to 7.43% with our equity raise, reduced exposure to land loans, and added to the allowance which grew to 2.21% in total and 2.47% for community bank loans. At September 30, 2009, nonperforming community bank loans held for investment were $24.6 million. Net charge-offs for the third quarter of 2009 were $8.4 million. Net interest margin declined 48 basis points to 2.84% for the third quarter of 2009 compared to 3.32% for the second quarter of 2009. This was principally due to a decline in the yield on interest earning assets caused by higher levels of liquidity that we maintained on our balance sheet."
Net Interest Income, Yield on Assets, Cost of Liabilities
Quarter Ended September 30, 2009 June 30, 2009 September 30, 2008 (Dollars in thousands) Interest and dividend income $ 25,236 $ 25,975 $ 29,151 Interest expense 8,202 7,595 8,109 Net interest income beforeprovision for credit losses $ 17,034 $ 18,380 $ 21,042 Yield on assets 4.20 % 4.69 % 5.51 % Cost of liabilities 1.48 % 1.50 % 1.73 % Net interest spread 2.72 % 3.19 % 3.78 % Net interest margin 2.84 % 3.32 % 3.99 % ------------------------------------------------------------------------------- Average community bank loans increased $35.2 million in the third quarter of 2009 to $1.167 billion as compared to $1.132 billion for the second quarter of 2009. The yield on community bank loans declined eight basis points to 5.34% for the third quarter as compared to 5.42% for the second quarter as a result of an increase in the average balance of nonperforming construction and development loans, which reduced interest income approximately $259,000. The yield on community bank loans in the year ago quarter was 6.19%, when the average prime rate of interest was 175 basis points higher than for the quarter ended September 30, 2008. Average wholesale assets declined $76.8 million in the third quarter of 2009 to $838.5 million as compared to $915.2 million in the second quarter of 2009. The yield on wholesale assets declined eighteen basis points to 4.42% in the third quarter of 2009 as compared to 4.60% in the second quarter of 2009. The principal cause of the decline in the yield was due to adjustable rate residential loans that have repriced to current rates. In the year ago period, average wholesale assets were $1.1 billion and yielded 4.99%. Average other interest earning assets increased $209.4 million based on our decision to maintain additional liquidity on our balance sheet in the current environment together with strong deposit growth. The average balance of other interest earning assets was $382 million for the third quarter, compared to $172.7 million for the second quarter. The yield was 26 basis points for the third quarter compared to 36 basis points in the second quarter. The Company's cost of interest-bearing liabilities declined two basis points to 1.48% for the third quarter, compared with 1.50% for the second quarter. This decrease can be primarily attributed to the decline in rates paid on certificates of deposit. The average balance of interest bearing liabilities increased $172.7 million, which caused interest expense to increase over the second quarter level. In the year ago period the cost of interest-bearing liabilities was 1.73%. We expect net interest margin to improve prospectively from the following actions: (i) future reductions in our institutional deposit base in order to reduce excess liquidity, (ii) continued disciplined loan pricing and (iii) fourth quarter 2009 maturities of certain higher-cost wholesale funding. Provision for Credit Losses
Quarter Ended September 30, 2009 June 30, 2009 September 30, 2008 (Dollars in thousands) Net interest income before provisionfor credit losses $ 17,034 $ 18,380 $ 21,042 Provision for credit losses 10,106 6,278 2,203 Net interest income after provisionfor credit losses $ 6,928 $ 12,102 $ 18,839 ------------------------------------------------------------------------------- In the third quarter of 2009, provision for credit losses was $10.1 million, compared with $6.3 million for the second quarter of 2009 and $2.2 million for the third quarter of 2008. Net charge-offs of community bank loans held for investment for the quarter ended September 30, 2009, were $8.3 million, compared to $842,000 for the second quarter of 2009, and $13,000 for the third quarter of 2008. There were four relationships in our C&D portfolio that accounted for $6.9 million of the net charge-offs in the third quarter of 2009, including the complete charge-off of one out-of-market loan, and another loan that the Bank successfully moved to real estate owned as part of its classified asset management strategy. Overall at September 30, 2009, our allowance for credit losses as a percent of loans held for investment increased to 2.21%, as compared to 2.02% at June 30, 2009, and 1.16% at September 30, 2008. The allowance for loan losses attributed to community bank loans as a percent of community bank loans for the periods shown above was 2.47%, 2.26%, and 1.33%, respectively. Based on constant review of our loan portfolio, the current level of delinquencies and our outlook for the economic environment in the short run, we considered it prudent to continue to build our reserves in the quarter. Noninterest Income
Quarter Ended September 30, 2009 June 30, 2009 September 30, 2008 (Dollars in thousands) Custodial, administative and escrowservices $ 101 $ 171 $ 174 Loan administration 1,070 1,038 1,175 Gain on sale of loans held for sale 1,244 331 418 Loss on sale of available for salesecurities - (46,980 ) - Total other-than-temporaryimpairment ("OTTI") losses (3,244 ) (892 ) (4,110 ) Portion of OTTI losses recognized inother comprehensive income beforetaxes 443 289 - Net OTTI losses recognized inearnings (2,801 ) (603 ) (4,110 ) Other 427 642 1,115 Total noninterest income (loss) $ 41 $ (45,401 ) $ (1,228 ) ------------------------------------------------------------------------------- The Company incurred OTTI charges on three of its non-agency mortgage-backed securities in the third quarter of 2009. Two securities subject to OTTI were the same securities for which OTTI was incurred in the second quarter of 2009 and third quarter of 2008. The other security subject to an OTTI charge in the third quarter of 2009 was a security that demonstrated weaknesses in performance similar to the other OTTI securities; the charge was $2 million for this other security. Gain on sale of SBA originated loans improved in the third quarter and there is evidence of a recovery of this market activity. We believe it is possible that this business sector will allow for increased levels of sales in future quarters. Noninterest Expense
Quarter Ended September 30, 2009 June 30, 2009 September 30, 2008 (Dollars in thousands) Compensation and employee benefits $ 6,995 $ 6,554 $ 6,764 Subaccounting fees 6,377 3,983 4,365 Lower of cost or fair value adjustment onloans held for sale 300 252 610 Occupancy and equipment 895 823 716 Other 6,459 8,187 4,473 Total noninterest expense $ 21,026 $ 19,799 $ 16,928 ------------------------------------------------------------------------------- Compensation and employee benefits increased $441,000 to $7.0 million in the third quarter compared with $6.6 million in the second quarter. The increase in the third quarter of 2009 compared to the second quarter of 2009 was the result of an increase in incentive compensation related to loan originations, deposit growth and loan sales for the period and modestly higher medical insurance costs. After the completion of the sale of certain assets of UW Trust at the end of June 2009, the Company incurred subaccounting fees on the custodial deposits transferred to the buyer. During the third quarter of 2009, the increase of $2.4 million in subaccounting fees was the result of this sale. Between the third quarter of 2009 and the third quarter of 2008, the fee increased as a result of the sale of certain assets of UW Trust, adjusted for decline in the underlying index upon which the subaccounting fees are tied. The fair value adjustment on loans held for sale increased $48,000 between the third quarter of 2009 and the second quarter of 2009. During the third quarter, an increase in the level of delinquencies required an addition to the valuation account. Other expense decreased $1.7 million between the third quarter of 2009 and the second quarter of 2009. During the second quarter of 2009, the Company incurred a $1.8 million loss on the disposition of legacy assets owned by a non-core subsidiary, and a $672,000 loss at the UWBK Colorado Fund LLC, incurred on a loan that paid off in full at United Western Bank. In addition, between the second quarter of 2009 and the third quarter of 2009, there was an $888,000 decline in FDIC assessments, principally the result of the $1.2 million special assessment incurred during the second quarter. Partially offsetting these declines was an increase in real estate owned expense and loan collection expenses of approximately $1.3 million. Income Taxes. For the quarter ended September 30, 2009, the Company's effective tax rate was (38.2%). The Company's tax rate was 25.5% for the second quarter of 2009 and (118.2%) for the third quarter of 2008.
Balance Sheet. The Company's assets were $2.63 billion at September 30, 2009, compared with $2.26 billion at December 31, 2008, and $2.24 billion at September 30, 2008. Assets grew $368 million in the first nine months of 2009 due to $289 million of deposit growth, including escrow balances, our equity capital raise, and our decision to maintain increased liquidity on our balance sheet.
Loan Portfolio
The table below includes loans held for investment:
September 30, 2009 June 30, 2009 December 31, 2008 September 30, 2008 (Dollars in thousands) Community bank loans: Commercial real estate $ 476,319 $ 453,283 $ 434,399 $ 417,780 Construction 277,143 306,732 277,614 243,401 Land 98,527 101,676 123,395 122,332 Commercial 155,787 161,308 134,435 131,128 Multifamily 18,663 25,223 20,381 20,128 Consumer and mortgage 44,140 43,150 49,440 44,481 Premium, net 186 192 216 223 Unearned fees (4,896) (5,333) (3,565) (3,407) Total community bank loans 1,065,869 1,086,231 1,036,315 976,066 Wholesale loans: Residential 94,400 101,824 125,630 132,632 SBA purchased loans - guaranteed 68,193 71,149 80,110 84,677 Premium on SBA purchased,guaranteed portions 6,162 6,348 7,084 7,548 Premium, net 154 324 345 106 Total wholesale loans 168,909 179,645 213,169 224,963 Total loans $ 1,234,778 $ 1,265,876 $ 1,249,484 $ 1,201,029 ------------------------------------------------------------------------------- At September 30, 2009, community bank loans held for investment increased $30 million from December 31, 2008, inclusive of the $43.1 million note received in connection with the UW Trust asset sale. Absent the UW Trust asset sale note, community bank loans decreased a modest $14 million in the first nine months of 2009, which is consistent with our balance sheet management plan implemented in 2008. We are reducing our exposure to construction and development ("C&D") loans. As a percentage of the total held for investment loan portfolio, C&D loans decreased to 30.4% at September 30, 2009, compared to 32.1% at December 31, 2008. In addition, our land loan exposure declined $24.9 million in that same period. We have established a goal to reduce C&D loans to 25% of our total held for investment loan portfolio. Commitments to fund C&D loans declined to $42.8 million at September 30, 2009 compared to $151.2 million at December 31, 2008. In the first nine months of 2009, wholesale loans declined $44.3 million as a result of repayments. Asset Quality
The following table sets forth our nonperforming assets from our held for investment portfolio as of the dates indicated:
September 30, 2009 June 30, 2009 December 31, 2008 September 30, 2008 (Dollars in thousands) Residential $ 3,729 $ 3,867 $ 3,238 $ 2,425 SBA purchased loans - guaranteed - - 791 728 Total wholesale 3,729 3,867 4,029 3,153 Commercial real estate 7,583 9,164 1,311 885 Construction and development 16,239 14,258 2,900 4,713 Commercial and industrial 756 1,036 283 146 SBA originated, guaranteed portions 50 101 124 88 Total community bank 24,628 24,559 4,618 5,832 Total nonperforming loans held for investment 28,357 28,426 8,647 8,985 REO 13,325 3,920 4,417 2,693 Total nonperforming assets $ 41,682 $ 32,346 $ 13,064 $ 11,678 Nonperforming residential to residential loans 3.95 % 3.80 % 2.58 % 1.83 % Nonperforming community bank to community bankloans 2.31 % 2.26 % 0.45 % 0.60 % Total nonperforming HFI loans to total HFI loans 2.30 % 2.25 % 0.69 % 0.75 % Total nonperforming assets to total assets 1.59 % 1.34 % 0.58 % 0.52 % ------------------------------------------------------------------------------- Total nonperforming assets have increased as shown in the table above. During the third quarter, there was a modest decline in nonperforming wholesale loans partially offset by a modest increase in community bank nonperforming, and in total nonperforming loans declined slightly in the third quarter of 2009 as compared to the second quarter of 2009. We continue to manage these problem loans with anticipatory actions including conducting regular reviews of loans, obtaining current independent appraisals, and taking other appropriate actions to work with our customers to a satisfactory resolution. During the third quarter of 2009, we moved the largest nonperforming asset as of June 30, 2009, into real estate owned, which resulted in a $6.9 million increase in REO. In addition, we moved two other former community bank loans totaling $2.2 million at September 30, 2009, into real estate owned. The balance of the increase was due to wholesale residential foreclosures during the period. The table below shows the nonperforming loans that are held for sale which are subject to the fair value adjustment for loans held for sale:
September 30, 2009 June 30, 2009 December 31, 2008 September 30, 2008 (Dollars in thousands) Residential $ 9,663 $ 8,849 $ 6,493 $ 5,786 Total wholesale 9,663 8,849 6,493 5,786 Multifamily 1,511 1,511 6,759 337 Total community bank 1,511 1,511 6,759 337 Total nonperforming loansheld for sale $ 11,174 $ 10,360 $ 13,252 $ 6,123 ------------------------------------------------------------------------------- Nonperforming residential loans increased $814,000 in the third quarter. This increase is generally consistent with delinquency trends in the national marketplace. There were no residential charge-offs from the held for sale portfolio during the period. Multifamily nonperforming loans held for sale did not change for the third quarter and represents one loan in the process of foreclosure. Investment Securities
At September 30, 2009, the Company's held to maturity mortgage-backed investment security portfolio had an amortized cost of $363 million. The Company's available for sale mortgage-backed investment security portfolio had a fair value of $35 million, or approximately $3 million below cost. As shown above in noninterest income, the Company incurred $2.8 million net other-than-temporary impairment charges ("OTTI") on three private label mortgage-backed securities during the third quarter of 2009. To date these securities have been written down to 39% of the remaining unpaid principal balance, which represents our best estimate of anticipated recovery. Our exposure to non-agency mortgage-backed securities decreased $33 million from repayments in the third quarter and decreased $134 million since December 31, 2008, as a result of the previously disclosed sale of $47 million of mortgage-backed securities secured by option-adjustable-rate mortgage loans during the second quarter and year-to date repayments. At September 30, 2009, risk based capital regulations required the Bank to allocate $86.9 million of capital to support the $333.2 million book value of non-agency mortgage-backed securities portfolio, of which $77.1 million of capital was allocated to $138.0 million of nonagency mortgage-backed securities subject to the direct credit substitute methodology. The level of repayments has positively impacted the values of non-agency mortgage-backed securities in the third quarter of 2009 as well as resulting in a corresponding reduction in risk of loss related to those repayments. However, a continued increase in the levels of delinquencies, foreclosures and incurred losses by the underlying loans that collateralize mortgage-backed securities owned by the Company may result in additional OTTI charges prospectively. Deposits. At September 30, 2009, deposits, including custodial escrow balances, increased $289 million to $2.04 billion, as compared with $1.75 billion at December 31, 2008. Community bank deposits increased $92 million, or 32%, in the third quarter of 2009 to $385 million at September 30, 2009, versus $293 million at June 30, 2009. During the third quarter of 2009, community bank deposits increased as a result of successful marketing efforts which resulted in higher money market account balances and certificates of deposit.
Capital. At September 30, 2009, after completion of the Company's common equity raise, the Company's equity leverage ratio was 7.43% compared with 5.35% at June 30, 2009. At September 30, 2009, the Bank's Tier-1 core capital, total risk-based and Tier-1 risk-based capital ratios were 8.77%, 11.07% and 9.82%, respectively, all of which are in excess of regulatory requirements of 5%, 10% and 6%, respectively.
The Office of Thrift Supervision ("OTS") conducted a regularly scheduled examination of the Company's and Bank's condition as of March 30, 2009. Upon completion of the examination the OTS found certain matters that required the attention of management and the Company's and the Bank's Board of Directors. The Bank has received a proposed memorandum of understanding from the OTS and although the memorandum of understanding has not yet been finalized, once finalized and executed the memorandum of understanding could require the Company and the Bank to take certain actions concerning capital, dividends, debt and stock redemptions, and asset and liability concentrations. The Company expects that the terms of the memorandum of understanding will be finalized in the near future.
Conference Call
Any investor or interested individual can listen to the teleconference, which is scheduled to begin at 9:00 a.m. MST (11:00 a.m. EST) on Thursday, November 5, 2009. To participate in the teleconference, please call toll-free 1-877-941-2333 (or 1-480-629-9692 for international callers) approximately 10 minutes prior to the start time. You may also listen to the teleconference live on the Company's website, www.uwbancorp.com, and accessing the Investor Relations tab, or by accessing http://www.talkpoint.com/viewer/starthere.asp?Pres=128492. The teleconference may include forward-looking statements.
For those unable to attend, an archive of the conference call will be hosted on our website.
About United Western Bancorp, Inc.
Denver-based United Western Bancorp, Inc. is focused on developing its community-based banking network through its subsidiary, United Western Bank, by strategically positioning branches across Colorado's Front Range market and certain mountain communities. This area spans the eastern slope of the Rocky Mountains -- from Pueblo to Fort Collins, and from metropolitan Denver to the Roaring Fork Valley. United Western Bank plans to grow its network to an estimated ten to twelve community bank locations over the next three to five years. In addition to community-based banking, United Western Bancorp, Inc. and its subsidiaries offer deposit services to institutional customers and custodial, administrative, and escrow services through its wholly owned subsidiary, UW Trust Company. For more information, please visit our website at www.uwbancorp.com.
Forward-Looking Statements
This press release contains certain statements that may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to significant risks and uncertainties. Forward-looking statements include information concerning our liquidity, exposure to C&D loans, management of nonperforming loans, and community bank implementation and business strategy. These statements often include terminology such as "may," "will," "expect," "anticipate," "predict," "believe," "plan," "estimate," "continue," "could," "should," "would," "intend," "projects," or the negative thereof or other variations thereon or comparable terminology and similar expressions. As you consider forward-looking statements, you should understand that these statements are not guarantees of performance or results. They involve risks, uncertainties and assumptions that could cause actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to: the successful implementation of our community banking strategies; the ability to secure, timing of, and any conditions imposed thereon of any, regulatory approvals or consents for new branches or other contemplated actions; the availability of suitable and desirable locations for additional branches; the continuing strength of our existing business, which may be affected by various factors, including but not limited to interest rate fluctuations, level of delinquencies, defaults and prepayments, increased competitive challenges, and expanding product and pricing pressures among financial institutions; changes in financial market conditions, either internationally, nationally or locally in areas in which we conduct our operations, including without limitation, reduced rates of business formation and growth, commercial and residential real estate development, real estate prices and other recent problems in the commercial and residential real estate markets; demand for loan products and financial services; unprecedented fluctuations in markets for equity, fixed-income, commercial paper and other securities, including availability, market liquidity levels, and pricing; increases in the levels of losses, customer bankruptcies, claims and assessments; the extreme levels of volatility and limited credit currently being experiencedin the financial markets; changes in political and economic conditions, including the economic effects of terrorist attacks against the United States and related events; legal and regulatory developments, such as changes in fiscal, monetary, regulatory, trade and tax policies and laws, including policies of the U.S. Department of Treasury and the Federal Reserve Board; our participation, or lack thereof, in governmental programs implemented under the Emergency Economic Stabilization Act (the "EESA"), including without limitation the Troubled Asset Relief Program ("TARP"), and the Capital Purchase Program (the "CPP"), and the impact of such programs and related regulations on our business and on international, national, and local economic and financial markets and conditions.
Additional information concerning these and other factors that may cause actual results to differ materially from those anticipated in forward-looking statements is contained in the "Risk Factors" section included in the Prospectus filed with the Securities and Exchange Commission pursuant to Rule 424 (b) (4) on September 17, 2009, and in the Company's other periodic reports and filings with the Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this press release.
Any forward-looking statements made by the Company speak only as of the date on which the statements are made and are based on information known to us at that time. We do not intend to update or revise the forward-looking statements made in this press release after the date on which they are made to reflect subsequent events or circumstances, except as required by law.
UNITED WESTERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETS(Unaudited)(Dollars in thousands) September 30, December 31, 2009 2008 Assets Cash and due from banks $ 568,581 $ 22,332 Interest-earning deposits 351 548 Total cash and cash equivalents 568,932 22,880 Investment securities - available for sale, at estimated fair value 34,920 59,573 Investment securities - held to maturity, at amortized cost 410,530 498,464 Loans held for sale - at lower of cost or fair value 272,142 291,620 Loans held for investment 1,234,778 1,249,484 Allowance for credit losses (27,254 ) (16,183 ) Loans held for investment, net 1,207,524 1,233,301 FHLBank stock, at cost 12,311 29,046 Mortgage servicing rights, net 7,791 9,496 Accrued interest receivable 7,318 8,973 Other receivables 20,384 15,123 Premises and equipment, net 24,406 23,364 Bank-owned life insurance 25,942 25,233 Other assets, net 7,453 13,839 Deferred income taxes 14,599 24,100 Foreclosed real estate 13,325 4,417 Total assets $ 2,627,577 $ 2,259,429 Liabilities and shareholders' equity Liabilities: Deposits $ 2,005,442 $ 1,724,672 Custodial escrow balances 37,603 29,697 FHLBank borrowings 216,636 226,721 Borrowed money 118,513 119,265 Junior subordinated debentures owed to unconsolidated subsidiary trusts 30,442 30,442 Income tax payable - 1,140 Other liabilities 23,763 25,543 Total liabilities 2,432,399 2,157,480 Shareholders' equity: Common stock 3 1 Additional paid-in capital 99,376 23,856 Retained earnings 98,372 100,348 Accumulated other comprehensive loss (2,573 ) (22,256 ) Total shareholders' equity 195,178 101,949 Total liabilities and shareholders' equity $ 2,627,577 $ 2,259,429 ------------------------------------------------------------------------------- UNITED WESTERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONS(Unaudited)(Dollars in thousands, except share information) Quarter Ended Nine Months Ended September 30, September 30, June 30, September 30, September 30, 2009 2008 2009 2009 2008 Interest and dividend income: Community bank loans $ 15,717 $ 15,439 $ 15,301 $ 45,983 $ 42,451 Wholesale residential loans 3,185 5,004 3,793 11,054 15,619 Other loans 360 576 389 818 2,241 Investment securities 5,721 7,779 6,339 18,961 24,487 Deposits and dividends 253 353 153 519 1,327 Total interest and dividend income 25,236 29,151 25,975 77,335 86,125 Interest expense: Deposits 3,919 2,921 3,470 10,671 9,086 FHLBank borrowing 2,391 3,645 2,366 7,138 11,101 Other borrowed money 1,892 1,543 1,759 5,437 4,800 Total interest expense 8,202 8,109 7,595 23,246 24,987 Net interest income before provision for credit losses 17,034 21,042 18,380 54,089 61,138 Provision for credit losses 10,106 2,203 6,278 20,565 6,226 Net interest income after provision for credit losses 6,928 18,839 12,102 33,524 54,912 Noninterest income: Custodial, administrative and escrow services 101 174 171 388 697 Loan administration 1,070 1,175 1,038 3,265 3,833 Gain on sale of loans held for sale 1,244 418 331 1,622 742 Loss on sale of available for sale investment securities - - (46,980 ) (46,980 ) - Total other-than-temporary impairment losses (3,244 ) (4,110 ) (892 ) (4,136 ) (4,110 ) Portion of loss recognized in OCI (before taxes) 443 - 289 732 - Net OTTI losses recognized in earnings (2,801 ) (4,110 ) (603 ) (3,404 ) (4,110 ) Gain on sale of investment in Matrix Financial Solutions, Inc. - - - 3,567 - Other 427 1,115 642 1,880 2,369 Total noninterest income 41 (1,228 ) (45,401 ) (39,662 ) 3,531 Noninterest expense: Compensation and employee benefits 6,995 6,764 6,554 19,804 19,153 Subaccounting fees 6,377 4,365 3,983 13,800 14,066 Amortization of mortgage servicing rights 570 491 587 1,951 1,872 Lower of cost or fair value adjustment on loans held for sale 300 610 252 (25 ) 1,175 Occupancy and equipment 895 716 823 2,510 1,923 Postage and communication 222 237 247 692 676 Professional fees 1,017 880 944 3,056 2,032 Mortgage servicing rights subservicing fees 330 389 344 1,042 1,288 Other general and administrative 4,320 2,476 6,065 13,146 6,631 Total noninterest expense 21,026 16,928 19,799 55,976 48,816 (Loss) income from continuing operations before income taxes (14,057 ) 683 (53,098 ) (62,114 ) 9,627 Income tax (benefit) provision (5,363 ) (807 ) (19,360 ) (23,169 ) 1,869 (Loss) income from continuing operations (8,694 ) 1,490 (33,738 ) (38,945 ) 7,758 Discontinued operations: Income from operations, net of income tax provision of $0, $2, $20,727,$20,620, and $91, respectively - 2 37,736 37,525 162 Net (Loss) Income $ (8,694 ) $ 1,492 $ 3,998 $ (1,420 ) $ 7,920 (Loss) Income from continuing operations per share - basic and diluted $ (0.95 ) $ 0.21 $ (4.71 ) $ (4.97 ) $ 1.07 Income from discontinued operations per share - basic and diluted - - 5.26 4.79 0.02 Net (Loss) Income per share - basic and diluted $ (0.95 ) $ 0.21 $ 0.55 $ (0.18 ) $ 1.09 ------------------------------------------------------------------------------- UNITED WESTERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED AVERAGE BALANCE SHEET(Unaudited) Nine Months Ended September 30, 2009 2008 Average Average Average Average Balance Interest Rate Balance Interest Rate (Dollars in thousands) Assets Interest-earning assets Community bank loans: Commercial real estate $ 393,037 $ 17,231 5.86 % $ 288,637 $ 14,289 6.61 % Construction and development 378,932 13,629 4.81 305,303 14,049 6.15 Originated SBA loans 148,572 6,289 5.66 107,118 6,081 7.58 Multifamily 47,257 1,786 5.04 50,148 2,403 6.39 Commercial 120,217 5,005 5.57 108,077 5,250 6.49 Consumer and other loans 54,436 2,043 5.02 10,231 379 4.95 Total community bank loans 1,142,451 45,983 5.38 % 869,514 42,451 6.52 % Wholesale assets: Residential mortgage loans 313,684 11,054 4.70 392,684 15,619 5.30 Purchased SBA loans and securities 129,717 1,633 1.68 162,596 3,977 3.27 Mortgage-backed securities 463,079 18,146 5.22 575,180 22,751 5.27 Total wholesale assets 906,480 30,833 4.54 % 1,130,460 42,347 4.99 % Interest-earning deposits 186,574 254 0.18 16,551 307 2.44 FHLBank stock 22,977 265 1.54 36,099 1,020 3.77 Total interest-earning assets 2,258,482 $ 77,335 4.57 % 2,052,624 $ 86,125 5.60 % Non-interest earning assets Cash 54,700 18,896 Allowance for credit losses (24,761 ) (12,276 ) Premises and equipment 26,088 20,588 Other assets 90,238 84,682 Total non-interest bearing assets 146,265 111,890 Total assets $ 2,404,747 $ 2,164,514 Liabilities and Shareholders' Equity Interest-bearing liabilities: Passbook accounts $ 342 $ 1 0.25 % $ 253 $ 2 0.81 % Money market and NOW accounts 1,441,578 5,653 0.52 1,191,489 8,076 0.91 Certificates of deposit 236,028 5,017 2.84 33,934 1,008 3.97 FHLBank borrowings 219,273 7,138 4.29 419,934 11,101 3.47 Repurchase agreements 79,489 2,743 4.55 78,361 2,124 3.56 Borrowed money and junior subordinated debentures 69,775 2,694 5.09 51,906 2,676 6.77 Total interest-bearing liabilities 2,046,485 23,246 1.50 % 1,775,877 24,987 1.86 % Noninterest-bearing liabilities: Demand deposits (including custodial escrow balances) 218,701 254,867 Other liabilities 19,098 21,759 Total non-interest bearing liabilities 237,799 276,626 Shareholders' equity 120,463 112,011 Total liabilities and shareholders' equity $ 2,404,747 $ 2,164,514 Net interest income before provision for credit losses $ 54,089 $ 61,138 Interest rate spread 3.07 % 3.74 % Net interest margin 3.21 % 3.99 % Ratio of average interest-earning assets to average interest-bearing liabilities 110.36 % 115.58 % ------------------------------------------------------------------------------- UNITED WESTERN BANCORP, INC. AND SUBSIDIARIESCONSOLIDATED AVERAGE BALANCE SHEET(Unaudited) Three Months Ended September 30, 2009 2008 Average Average Average Average Balance Interest Rate Balance Interest Rate (Dollars in thousands) Assets Interest-earning assets Community bank loans: Commercial real estate $ 415,695 $ 6,092 5.81 % $ 349,329 $ 5,561 6.33 % Construction and development 363,819 4,239 4.62 335,165 4,912 5.83 Originated SBA loans 157,490 2,316 5.83 119,417 2,082 6.94 Multifamily 43,412 583 5.37 49,457 802 6.49 Co |
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