-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DHxwgdU3qloOMbxj/J+eZKsTzPCaRXEGvdxkQPED+ALa1reWu8aAOgOtuHSt+AEQ 3E4yKBQc0ZbKfgLs/scqBg== 0001053352-10-000003.txt : 20100202 0001053352-10-000003.hdr.sgml : 20100202 20100201184106 ACCESSION NUMBER: 0001053352-10-000003 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20091231 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100202 DATE AS OF CHANGE: 20100201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: HERITAGE COMMERCE CORP CENTRAL INDEX KEY: 0001053352 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 770469558 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-23877 FILM NUMBER: 10564610 BUSINESS ADDRESS: STREET 1: 150 ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 BUSINESS PHONE: 4089476900 MAIL ADDRESS: STREET 1: 150 ALMADEN BOULEVARD CITY: SAN JOSE STATE: CA ZIP: 95113 8-K 1 pr4q09.htm PR4Q09 Unassociated Document
UNITED STATES
 
SECURITIES AND EXCHANGE COMMISSION
 
Washington, D.C. 20549
 

 
FORM 8-K
 

 
CURRENT REPORT
 
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
 
Date of Report (Date of earliest event reported): January 28, 2010
 
HERITAGE COMMERCE CORP
 
(Exact name of registrant as specified in its charter)
 

 
California
000-23877
77-0469558
(State or other jurisdiction of incorporation)
(Commission File Number)
(IRS Employer Identification No.)
 
150 Almaden Boulevard, San Jose, California
 
95113
(Address of principal executive offices)
(Zip Code)
 
Registrant’s telephone number, including area code: (408) 947-6900
 
Not Applicable
(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (See General Instruction A.2. below):
 
□ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
□ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
□ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
□ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 
 

 
ITEM 2.02   RESULTS OF OPERATION AND FINANCIAL CONDITION

On January 28, 2010, Heritage Commerce Corp issued a press release announcing preliminary results for the year ended December 31, 2009.  A copy of the press release is attached as Exhibit 99.1 to this Current Report and is incorporated herein by reference.
 
The information in this report  set forth under this Item 2.02 shall not  be treated as "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference into any registration statement or other document pursuant to the Securities Act of 1933 or the Securities Exchange Act of 1934, except as expressly stated by specific reference in such filing.
 
 
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(D) Exhibits.

99.1  
Press Release, dated January 28, 2010, entitled Heritage Commerce Corp Reports Financial Results for 2009
 
 
 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: January 28, 2010      
 
Heritage Commerce Corp

By: /s/ Lawrence D. McGovern
Name: Lawrence D. McGovern
Executive Vice President and Chief Financial Officer
 
By: /s/ Walter T. Kaczmarek
Name: Walter T. Kaczmarek
President and Chief Executive Officer
 
 
 
 
INDEX TO EXHIBITS


EXHIBIT NO.         DESCRIPTION
 
99.1  
                   Press Release, dated January 28, 2010 entitled Heritage Commerce Corp Reports 
                         Financial Results for 2009       

 
 


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Exhibit 99.1

Heritage Commerce Corp Reports Financial Results for 2009

 
San Jose, CA – January 28, 2010 – Heritage Commerce Corp (Nasdaq: HTBK)parent company of Heritage Bank of Commerce, reported today a fourth quarter 2009 net loss of $574,000 and a net loss allocable to common shareholders of $1.2 million, or $(0.10) per diluted common share, which includes a $5.7 million provision for loan losses and a $600,000 accrual for dividends and discount accretion on preferred stock.  For the full year ended December 31, 2009, the Company reported a net loss of $12.0 million and a net loss allocable to common shareholders of $14.4 million, or $(1.21) per diluted common share, which includes a $33.9 million provision for loan losses and $2.4 million in dividends and discount accretion on preferred stock.   In the fourth quarter of 2008, net income was $700,000 and net income allocable to common shareholders was $445,000, or $0.04 per diluted common share, including a $4.5 million provision for loan losses and $255,000 in dividends and discount accretion on preferred stock. For the full year ended December 31, 2008, net income was $1.8 million, and net income allocable to common shareholders was $1.5 million, or $0.13 per diluted common share, including $15.5 million in provision for loan losses and $255,000 for dividends and discount accretion on preferred stock.
 
Fourth Quarter Developments
 
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On a consolidated basis, the Company had a leverage ratio of 10.05% at December 31, 2009.
 
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Tangible common equity to tangible assets was 6.63% at December 31, 2009.
 
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Nonperforming assets were $64.6 million, or 4.74% of total assets at December 31, 2009, compared to $58.2 million, or 4.26% of total assets at September 30, 2009. Of the $64.6 million in nonperforming assets at December 31, 2009, $2.4 million of loans over 90 days past due and still accruing were brought current on January 5, 2010.
 
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The allowance for loan losses was $28.8 million, or 2.69% of total loans at December 31, 2009, compared to $29.0 million, or 2.68% of total loans, at September 30, 2009.
 
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Net charge-offs were $5.9 million in the fourth quarter of 2009, compared to $9.6 million in the third quarter of 2009.
 
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Total assets remained flat at $1.36 billion at December 31, 2009, compared to September 30, 2009.
 
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Loans, excluding loans held-for-sale, decreased 1% to $1.07 billion at December 31, 2009, compared to $1.08 billion at September 30, 2009.
 
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Land and construction loans decreased $14.5 million to $182.9 million, or 17% of the total loan portfolio at December 31, 2009, compared to $197.4 million or 18% of total loans at September 30, 2009.
 
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The net interest margin was 3.61% for the fourth quarter of 2009, compared to 3.62% for the third quarter of 2009. 
 
In 2009, we had significant success in reducing our land and construction loan portfolio, reducing it by $78.7 million, or 29%.  This coupled with other loan portfolio reductions has resulted in our capital ratios remaining above the well-capitalized regulatory guidelines during these difficult economic times,” said Mr. Kaczmarek, President and Chief Executive Officer.
 
Balance Sheet, Capital Management and Credit Quality
 
At December 31, 2009, the Company’s assets totaled $1.36 billion, compared to $1.50 billion a year ago and $1.37 billion at September 30, 2009.  The securities portfolio of $­­110.0 million at December 31, 2009, consisted primarily of debt securities, mortgage-backed securities, and collateralized mortgage obligations, all of which were issued by U. S. Government sponsored entities.
 
Loans, excluding loans held-for-sale, totaled $1.07 billion at December 31, 2009, compared to $1.25 billion at December 31, 2008 and $1.08 billion at September 30, 2009. SBA loan originations totaled $25.2 million in 2009. SBA loans not held-for-sale, which are included in commercial loans and owner occupied commercial real estate loans, totaled $89.4 million at December 31, 2009, compared to $113.2 million a year ago.  “We are seeing continuing demand for Small Business Administration loans in our market and our team of SBA lenders is doing a very good job of serving the needs of our customers.  Sales of SBA loans also are contributing to revenues, ” said Mr. Kaczmarek.
 
Commercial and industrial loans account for 40% of the total loan portfolio.  Commercial real estate loans account for another 37% of the portfolio, of which 53% were owner occupied by businesses.  Land and construction loans continued to decrease and were 17% of the portfolio.  Consumer and home equity loans account for the remaining 6% of total loans.
 
Nonperforming assets increased to $64.6 million at December 31, 2009, compared to $58.2 million at September 30, 2009, and $41.1 million at December 31, 2008.  Nonperforming assets were 4.74% of total assets at December 31, 2009, 4.26% at September 30, 2009 and 2.74% at December 31, 2008.  At December 31, 2009, land and construction loans were 52% of nonperforming assets, commercial and industrial loans were 21%, commercial real estate loans were 15%, SBA loans were 8% and other real estate owned (“OREO”) was 4%.
 
Total OREO was $2.2 million at December 31, 2009 and $3.0 million at September 30, 2009.  In the fourth quarter of 2009, no properties moved from nonaccrual status into OREO and three OREO properties were sold.  The sales resulted in a net loss of $137,000 in the fourth quarter of 2009.
 
The allowance for loan losses at December 31, 2009 was $28.8 million, or 2.69% of total loans, and represented 46.12% of nonperforming loans, while the allowance for loan losses a year ago was $25.0 million, or 2.00% of total loans and 61.84% of nonperforming loans.  The allowance for loan losses at September 30, 2009, was $29.0 million, or 2.68% of total loans and 52.43% of nonperforming loans.
 
Deposits totaled $1.09 billion at December 31, 2009, compared to $1.15 billion at December 31, 2008 and $1.12 billion at September 30, 2009.  Savings and money market deposits decreased $49.4 million, or 14%, from December 31, 2008, and $29.2 million, or 9% from September 30, 2009.  At December 31, 2009, title insurance company, escrow, and real estate exchange facilitators’ accounts decreased to $23.0 million, compared to $56.6 million at December 31, 2008, and $32.9 million at September 30, 2009, primarily as a result of the current economic environment.  Time deposits $100,000 and over decreased $41.4 million, or 24% from December 31, 2008, primarily due to a reduction of public deposits. At December 31, 2009, brokered deposits were $178.0 million, compared to $184.6 million at December 31, 2008, and $181.8 million at September 30, 2009.
 
Heritage Bank of Commerce is a member of the Certificate of Deposit Account Registry Service (“CDARS”) program.  The CDARS program allows customers with deposits in excess of FDIC insured limits to obtain coverage on time deposits through a network of banks within the CDARS program.  Deposits gathered through this program have been considered brokered deposits under regulatory guidelines.  Deposits in the CDARS program totaled $38.2 million at December 31, 2009, and $41.4 million at September 30, 2009.  There was $11.7 million in the CDARS program at December 31, 2008.
 
Shareholders’ equity was $172.3 million, or $11.34 book value per common share, at December 31, 2009, compared to $184.3 million, or $12.38 book value per common share, a year ago.  Shareholders’ equity was $173.4 million, or $11.44 book value per common share, at September 30, 2009.   The Company’s consolidated leverage ratio at December 31, 2009, was 10.05%, compared to 11.27% at December 31, 2008, and 10.08% at September 30, 2009.
 
Operating Results
 
Operating results in 2009 compared to 2008 have been adversely impacted by net interest margin compression, loss of interest income on nonaccrual loans, a higher provision for loan losses, and increased FDIC deposit insurance premiums.
 
Net interest income decreased to $11.5 million in the fourth quarter of 2009 from $12.4 million for the fourth quarter of 2008 and $11.6 million in the third quarter of 2009. Net interest income for the year ended December 31, 2009 was $46.0 million, compared to $51.5 million a year ago.  The net interest margin was 3.61% for the fourth quarter of 2009, compared to 3.64% for the fourth quarter a year ago and 3.62% for the third quarter of 2009.  The net interest margin for the year ended December 31, 2009 was 3.53%, compared to 3.94% for the year ended December 31, 2008.  The decrease in the net interest margin in 2009 compared to 2008 was primarily due to the 325 basis points decline in short-term interest rates from January 22, 2008 through December 16, 2008, with the prime rate remaining at a historically low level of 3.25% for all of 2009.  
 
Noninterest income was $2.5 million for the fourth quarter of 2009, compared to $1.8 million for the fourth quarter of 2008, and $2.4 million for the prior quarter.  Noninterest income for the year ended December 31, 2009 was $8.0 million, compared to $6.8 million a year ago.  The increase in noninterest income in 2009 compared to 2008 was primarily due to $1.3 million in gains on the sale of SBA loans in 2009.
 
The provision for loan losses was $5.7 million for the fourth quarter of 2009, compared to $4.5 million for the fourth quarter of 2008, and $7.1 million for the third quarter of 2009. The provision for loan losses was $33.9 million for the year ended December 31, 2009 and $15.5 million for year ended December 31, 2008.  The significant increase in provision for loan losses in 2009 reflects a higher volume of classified and nonperforming loans and an increase in loan charge-offs caused by challenging conditions in commercial lending and the residential housing market, turmoil in the financial markets, and the prolonged downturn in the overall economy.
 
Noninterest expense was $10.6 million for the fourth quarter of 2009, compared to $10.4 million in the fourth quarter of 2008 and $10.7 million in the third quarter of 2009.  Professional fees were $1.0 million in the fourth quarter of 2009, compared to $842,000 in the fourth quarter of 2008, and $691,000 in the third quarter of 2009.  Deposit insurance premiums and regulatory assessments were $864,000 in the fourth quarter of 2009, compared to $259,000 in the fourth quarter of 2008, and $631,000 in the third quarter of 2009.  Noninterest expense increased to $44.8 million in 2009, compared to $42.4 million a year ago, primarily due to higher FDIC deposit insurance costs.
 
The income tax benefit for the quarter ended December 31, 2009 was $1.7 million, as compared to $1.4 million in the fourth quarter a year ago, and $1.8 million in the third quarter of 2009.  The negative effective income tax rates are due to the loss before income taxes. The difference in the effective tax rate compared to the combined federal and state statutory tax rate of 42% is primarily the result of the Company’s investment in life insurance policies whose earnings are not subject to taxes, and tax credits related to investments in low income housing limited partnerships.
 
The efficiency ratio was 75.77% in the fourth quarter of 2009, compared to 73.40% in the fourth quarter of 2008 and 76.89% in the third quarter of 2009.  The efficiency ratio in 2009 increased to 82.90% from 72.71% a year ago.  The efficiency ratio increased in 2009 primarily due to lower net interest income, higher professional fees and increased FDIC deposit insurance premiums.
 
 
Heritage Commerce Corp, a bank holding company established in February 1998, is the parent company of Heritage Bank of Commerce, established in 1994 and headquartered in San Jose with full-service branches in Los Gatos, Fremont, Danville, Pleasanton, Walnut Creek, Morgan Hill, Gilroy, Mountain View, and Los Altos.  Heritage Bank of Commerce is an SBA Preferred Lender with Loan Production Offices in Sacramento, Oakland and Santa Rosa, California.  For more information, please visit www.heritagecommercecorp.com.



Forward Looking Statement Disclaimer

Forward-looking statements are based on management’s knowledge and belief as of today and include information concerning the Company’s possible or assumed future financial condition, and its results of operations, business and earnings outlook. These forward-looking statements are subject to risks and uncertainties. A number of factors, some of which are beyond the Company’s ability to control or predict, could cause future results to differ materially from those contemplated by such forward-looking statements.  The forward-looking statements could be affected by many factors, including but not limited to: (1) our ability to attract new deposits and loans; (2) local, regional, and national economic conditions and events and the impact they may have on us and our customers; (3) risks associated with concentrations in real estate related loans; (4) increasing levels of classified assets, including nonperforming assets, which could adversely affect our earnings and liquidity; (5) market interest rate volatility; (6) stability of funding sources and continued availability of borrowings; (7) changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth and constrain our activities, including the terms of an anticipated written agreement to be entered into by the Company and the Board of Governors of the Federal Reserve System; (8) changes in accounting standards and interpretations; (9) significant decline in the market value of the Company that could result in an impairment of goodwill; (10) our ability to raise capital or incur debt on reasonable terms; (11) regulatory limits on the Heritage Bank of Commerce’s ability to pay dividends to the Company; (12) effectiveness of the Emergency Economic Stabilization Act of 2008, the American Recovery and Reinvestment Act of 2009 and other legislative and regulatory efforts to help stabilize the U.S. financial markets; (13) future legislative or administrative changes to the U.S. Treasury Capital Purchase Program enacted under the Emergency Economic Stabilization Act of 2008; (14) the impact of the Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009 and related rules and regulations on our business operations and competitiveness, including the impact of executive compensation restrictions, which may affect our ability to retain and recruit executives in competition with other firms who do not operate under those restrictions; and (15) our success in managing the risks involved in the foregoing items.  For a discussion of factors which could cause results to differ, please see the Company’s reports on Forms 10-K and 10-Q as filed with the Securities and Exchange Commission and the Company’s press releases. Readers should not place undue reliance on the forward-looking statements, which reflect management’s view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
 
 
 
Member FDIC
 


    For the Three Months Ended:    Percent Change From:    For the Year Ended:
CONSOLIDATED INCOME STATEMENTS
 
Dec 31,
 
Sep 30,
 
Dec 31,
 
Sep 30,
 
Dec 31,
 
Dec 31,
 
Dec 31,
 
Percent
(in $000's, unaudited)
 
2009
 
2009
 
2008
 
2009
 
2008
 
2009
 
2008
 
Change
Interest Income
  $ 14,942   $ 15,495   $ 18,166     -4%     -18%   $ 62,293   $ 75,957     -18%
Interest Expense
    3,438     3,872     5,771     -11%     -40%     16,326     24,444     -33%
    Net Interest Income
    11,504     11,623     12,395     -1%     -7%     45,967     51,513     -11%
Provision for Loan Losses
    5,676     7,129     4,500     -20%     26%     33,928     15,537     118%
    Net Interest Income after Provision for Loan Losses
    5,828     4,494     7,895     30%     -26%     12,039     35,976     -67%
Noninterest Income:
                                               
   Gain on Sale of Loans
    663     643     -     3%     N/A     1,306     -     N/A
   Servicing Income
    377     382     443     -1%     -15%     1,587     1,790     -11%
   Increase in Cash Surrender Value of Life Insurance
    416     420     413     -1%     1%     1,664     1,645     1%
   Service Charges and Other Fees on Deposit Accounts
    557     557     550     0%     1%     2,221     2,007     11%
   Gain (Loss) on Sale of Securities
    238     (7)     -     3500%     N/A     231     -     N/A
   Other
    202     355     391     -43%     -48%     1,018     1,349     -25%
Total Noninterest Income
    2,453     2,350     1,797     4%     37%     8,027     6,791     18%
                                                 
Noninterest Expense:
                                               
   Salaries and Employee Benefits
    5,096     5,730     4,930     -11%     3%     22,927     22,624     1%
   Occupancy and Equipment
    1,044     1,005     1,112     4%     -6%     3,937     4,623     -15%
   Professional Fees
    1,017     691     842     47%     21%     3,851     2,954     30%
   Deposit Insurance Premiums and Regulatory Assessments
    864     631     259     37%     234%     3,454     885     290%
   Other
    2,554     2,687     3,274     -5%     -22%     10,591     11,306     -6%
Total Noninterest Expense
    10,575     10,744     10,417     -2%     2%     44,760     42,392     6%
Income (Loss) Before Income Taxes
    (2,294)     (3,900)     (725)     41%     -216%     (24,694)     375     -6685%
Income Tax Benefit
    (1,720)     (1,824)     (1,425)     -6%     21%     (12,709)     (1,387)     816%
Net Income (Loss)
  $ (574)   $ (2,076)   $ 700     72%     -182%   $ (11,985)   $ 1,762     -780%
Dividends and Discount Accretion on Preferred Stock
    (600)     (599)     (255)     0%     135%     (2,376)     (255)     832%
Net Income (Loss) Allocable to Common Shareholders
  $ (1,174)   $ (2,675)   $ 445     56%     -364%   $ (14,361)   $ 1,507     -1053%
                                                 
PER COMMON SHARE DATA
                                               
(unaudited)
                                               
Basic Earnings (Loss) Per Share
  $ (0.10)   $ (0.23)   $ 0.04     57%     -350%   $ (1.21)   $ 0.13     -1031%
Diluted Earnings (Loss) Per Share
  $ (0.10)   $ (0.23)   $ 0.04     57%     -350%   $ (1.21)   $ 0.13     -1031%
Common Shares Outstanding at Period-End
    11,820,509     11,820,509     11,820,509     0%     0%     11,820,509     11,820,509     0%
Book Value Per Share
  $ 11.34   $ 11.44   $ 12.38     -1%     -8%   $ 11.34   $ 12.38     -8%
Tangible Book Value Per Share
  $ 7.38   $ 7.47   $ 8.37     -1%     -12%   $ 7.38   $ 8.37     -12%
                                                 
KEY FINANCIAL RATIOS
                                               
(unaudited)
                                               
Annualized Return on Average Equity
    -1.30%     -4.67%     1.71%     72%     -176%     -6.68%     1.15%     -681%
Annualized Return on Average Tangible Equity
    -1.78%     -6.38%     2.42%     72%     -174%     -9.06%     1.67%     -643%
Annualized Return on Average Assets
    -0.16%     -0.58%     0.19%     72%     -184%     -0.83%     0.12%     -792%
Annualized Return on Average Tangible Assets
    -0.17%     -0.60%     0.19%     72%     -189%     -0.86%     0.13%     -762%
Net Interest Margin
    3.61%     3.62%     3.64%     0%     -1%     3.53%     3.94%     -10%
Efficiency Ratio
    75.77%     76.89%     73.40%     -1%     3%     82.90%     72.71%     14%
                                                 
AVERAGE BALANCES
                                               
(in $000's, unaudited)
                                               
Average Assets
  $ 1,407,251   $ 1,411,954   $ 1,494,245     0%     -6%   $ 1,439,944   $ 1,456,361     -1%
Average Tangible Assets
  $ 1,360,389   $ 1,364,926   $ 1,446,732     0%     -6%   $ 1,392,839   $ 1,408,573     -1%
Average Earning Assets
  $ 1,263,418   $ 1,272,341   $ 1,354,829     -1%     -7%   $ 1,301,603   $ 1,308,358     -1%
Average Loans Held-for-Sale
  $ 15,892   $ 17,596     -     -10%     N/A   $ 8,580     -     N/A
Average Total Loans
  $ 1,079,973   $ 1,131,654   $ 1,233,763     -5%     -12%   $ 1,162,957   $ 1,178,194     -1%
Average Deposits
  $ 1,126,166   $ 1,153,103   $ 1,179,456     -2%     -5%   $ 1,148,166   $ 1,160,926     -1%
Average Demand Deposits - Noninterest Bearing
  $ 269,903   $ 267,528   $ 263,301     1%     3%   $ 261,539   $ 258,624     1%
Average Interest Bearing Deposits
  $ 856,263   $ 885,575   $ 916,155     -3%     -7%   $ 886,627   $ 902,302     -2%
Average Interest Bearing Liabilities
  $ 922,139   $ 937,212   $ 1,039,814     -2%     -11%   $ 966,598   $ 1,016,515     -5%
Average Equity
  $ 174,685   $ 176,198   $ 162,465     -1%     8%   $ 179,390   $ 153,216     17%
AverageTangible Equity
  $ 127,823   $ 129,170   $ 114,952     -1%     11%   $ 132,285   $ 105,428     25%
 

    End of Period:   Percent Change From:
CONSOLIDATED BALANCE SHEETS
 
Dec 31,
 
Sep 30,
 
Dec 31,
 
Sep 30,
 
Dec 31,
(in $000's, unaudited)
 
2009
 
2009
 
2008
 
2009
 
2008
ASSETS
                   
Cash and Due from Banks
  $ 45,372   $ 42,105   $ 29,996   8%   51%
Interest-Bearing Deposits in Other Financial Institutions
    90     -     -   N/A   N/A
Federal Funds Sold
    100     150     100   -33%   0%
Securities Available-for-Sale, at Fair Value
    109,966     96,618     104,475   14%   5%
Loans Held-for-Sale, including Deferred Costs
    10,742     21,976     -   -51%   N/A
Loans:
                         
   Commercial Loans
    427,177     414,441     525,080   3%   -19%
   Real Estate-Mortgage
    400,731     405,486     405,530   -1%   -1%
   Real Estate-Land and Construction
    182,871     197,374     256,567   -7%   -29%
   Home Equity
    51,368     51,768     55,490   -1%   -7%
   Consumer Loans
    7,181     11,476     4,310   -37%   67%
        Loans
    1,069,328     1,080,545     1,246,977   -1%   -14%
Deferred Loan Costs, net
    785     1,023     1,654   -23%   -53%
    Total Loans, Including Deferred Costs
    1,070,113     1,081,568     1,248,631   -1%   -14%
Allowance for Loan Losses
    (28,768)     (28,976)     (25,007)   -1%   15%
    Net Loans
    1,041,345     1,052,592     1,223,624   -1%   -15%
Company Owned Life Insurance
    42,313     41,897     40,649   1%   4%
Premises & Equipment, net
    9,006     9,182     9,517   -2%   -5%
Goodwill
    43,181     43,181     43,181   0%   0%
Intangible Assets
    3,589     3,750     4,231   -4%   -15%
Accrued Interest Receivable and Other Assets
    58,166     56,159     43,454   4%   34%
     Total Assets
  $ 1,363,870   $ 1,367,610   $ 1,499,227   0%   -9%
                           
LIABILITIES AND SHAREHOLDERS' EQUITY
                   
Liabilities:
                         
  Deposits
                         
    Demand Deposits-Noninterest Bearing
  $ 260,840   $ 250,515   $ 261,337   4%   0%
    Demand Deposits-Interest Bearing
    146,828     139,919     134,814   5%   9%
    Savings and Money Market
    295,404     324,611     344,767   -9%   -14%
    Time Deposits, Under $100
    40,197     43,559     45,615   -8%   -12%
    Time Deposits, $100 and Over
    129,831     134,533     171,269   -3%   -24%
    Time Deposits-CDARS
    38,154     41,418     11,666   -8%   227%
    Time Deposits - Brokered
    178,031     181,819     184,582   -2%   -4%
Total Deposits
    1,089,285     1,116,374     1,154,050   -2%   -6%
Securities Sold under Agreement to Repurchase
    25,000     25,000     35,000   0%   -29%
Note payable
    -     -     15,000   N/A   -100%
Other Short-term Borrowings
    20,000     -     55,000   N/A   -64%
Notes Payable to Subsidiary Grantor Trusts
    23,702     23,702     23,702   0%   0%
Accrued Interest Payable and Other Liabilities
    33,578     29,111     32,208   15%   4%
Total Liabilities
    1,191,565     1,194,187     1,314,960   0%   -9%
                           
Shareholders' Equity:
                         
   Preferred Stock, net
    38,248     38,159     37,900   0%   1%
   Common Stock
    80,222     79,884     78,854   0%   2%
   Accumulated Other Comprehensive Loss
    (2,554)     (2,183)     (291)   -17%   -778%
   Retained Earnings
    56,389     57,563     67,804   -2%   -17%
Total Shareholders' Equity
    172,305     173,423     184,267   -1%   -6%
    Total Liabilities and Shareholders' Equity
  $ 1,363,870   $ 1,367,610   $ 1,499,227   0%   -9%
                           
                           
CREDIT QUALITY DATA
                         
(in $000's, unaudited)
                         
Nonaccrual Loans
  $ 59,480   $ 55,120   $ 39,981   8%   49%
Loans Over 90 Days Past Due and Still Accruing
    2,895     144     460   1910%   529%
    Total Nonperforming Loans
    62,375     55,264     40,441   13%   54%
Other Real Estate Owned
    2,241     2,973     660   -25%   240%
    Total Nonperforming Assets
  $ 64,616   $ 58,237   $ 41,101   11%   57%
Net Charge-offs
  $ 5,883   $ 9,551   $ 1,816   -38%   224%
Allowance for Loan Losses to Total Loans
    2.69%     2.68%     2.00%   0%   35%
Allowance for Loan Losses to Nonperforming Loans
    46.12%     52.43%     61.84%   -12%   -25%
Nonperforming Assets to Total Assets
    4.74%     4.26%     2.74%   11%   73%
Nonperforming Loans to Total Loans
    5.83%     5.11%     3.24%   14%   80%
                           
OTHER PERIOD-END STATISTICS
                         
(unaudited)
                         
Shareholders' Equity / Total Assets
    12.63%     12.68%     12.29%   0%   3%
Tangible Common Equity / Tangible Assets
    6.63%     6.69%     6.82%   -1%   -3%
Loan to Deposit Ratio
    98.24%     96.88%     108.20%   1%   -9%
Noninterest Bearing Deposits / Total Deposits
    23.95%     22.44%     22.65%   7%   6%
Leverage Ratio
    10.05%     10.08%     11.27%   0%   -11%
 
    For The Three Months Ended    For the Three Months Ended
   
December 31, 2009
 
December 31, 2008
       
Interest
 
Average
     
Interest
 
Average
   
Average
 
Income/
 
Yield/
 
Average
 
Income/
 
Yield/
NET INTEREST INCOME AND NET INTEREST MARGIN
 
Balance
 
Expense
 
Rate
 
Balance
 
Expense
 
Rate
Assets:
 
(Dollars in thousands, unaudited)
Loans, gross
  $ 1,095,865   $ 13,984     5.06%   $ 1,233,763   $ 16,964     5.47%
Securities
    109,534     916     3.32%     116,256     1,193     4.08%
Interest bearing deposits in other financial institutions
    57,917     42     0.29%     1,814     7     1.54%
Federal funds sold
    102     -     0.06%     2,996     2     0.27%
  Total interest earning assets
    1,263,418     14,942     4.69%     1,354,829     18,166     5.33%
Cash and due from banks
    27,110                 29,137            
Premises and equipment, net
    9,127                 9,486            
Goodwill and other intangible assets
    46,862                 47,513            
Other assets
    60,734                 53,280            
  Total assets
  $ 1,407,251               $ 1,494,245            
                                     
Liabilities and shareholders' equity:
                                   
Deposits:
                                   
     Demand, interest bearing
  $ 143,142     84     0.23%   $ 134,861     237     0.70%
     Savings and money market
    312,407     471     0.60%     376,344     1,304     1.38%
     Time deposits, under $100
    41,589     190     1.81%     42,142     285     2.69%
     Time deposits, $100 and over
    134,328     575     1.70%     157,846     963     2.43%
     Time deposits-CDARS
    40,835     111     1.08%     13,878     81     2.32%
     Time Deposits - Brokered
    183,962     1,381     2.98%     191,084     1,881     3.92%
Notes payable to subsidiary grantor trusts
    23,702     469     7.85%     23,702     537     9.01%
Securities sold under agreement to repurchase
    25,000     150     2.38%     35,000     263     2.99%
Note payable
    -     -     N/A     15,000     108     2.86%
Other short-term borrowings
    17,174     7     0.16%     49,957     112     0.89%
  Total interest bearing liabilities
    922,139     3,438     1.48%     1,039,814     5,771     2.21%
Demand deposits, noninterest bearing
    269,903                 263,301            
Other liabilities
    40,524                 28,665            
  Total liabilities
    1,232,566                 1,331,780            
Shareholders' equity
    174,685                 162,465            
  Total liabilities and shareholders' equity
  $ 1,407,251               $ 1,494,245            
 
                                   
Net interest income / margin
        $ 11,504     3.61%         $ 12,395     3.64%

     For the Year Ended    For the Year Ended
   
December 31, 2009
 
December 31, 2008
       
Interest
 
Average
     
Interest
   
Average
   
Average
 
Income/
 
Yield/
 
Average
 
Income/
   
Yield/
NET INTEREST INCOME AND NET INTEREST MARGIN
 
Balance
 
Expense
 
Rate
 
Balance
 
Expense
   
Rate
Assets:
 
(Dollars in thousands, unaudited)
Loans, gross
  $ 1,171,537   $ 58,602     5.00%   $ 1,178,194   $ 70,488     5.98%
Securities
    106,806     3,628     3.40%     126,223     5,395     4.27%
Interest bearing deposits in other financial institutions
    22,827     63     0.28%     881     16     1.82%
Federal funds sold
    433     -     0.10%     3,060     58     1.90%
  Total interest earning assets
    1,301,603     62,293     4.79%     1,308,358     75,957     5.81%
Cash and due from banks
    24,985                 34,339            
Premises and equipment, net
    9,311                 9,273            
Goodwill and other intangible assets
    47,105                 47,788            
Other assets
    56,940                 56,603            
  Total assets
  $ 1,439,944               $ 1,456,361            
                                     
Liabilities and shareholders' equity:
                                   
Deposits:
                                   
     Demand, interest bearing
  $ 136,734     336     0.25%   $ 145,785     1,513     1.04%
     Savings and money market
    334,657     2,514     0.75%     433,839     7,679     1.77%
     Time deposits, under $100
    43,946     983     2.24%     36,301     1,101     3.03%
     Time deposits, $100 and over
    155,475     2,813     1.81%     162,298     4,853     2.99%
     Time deposits-CDARS
    19,702     303     1.54%     3,488     81     2.32%
     Time Deposits - Brokered
    196,113     6,513     3.32%     120,591     4,808     3.99%
Notes payable to subsidiary grantor trusts
    23,702     1,933     8.15%     23,702     2,148     9.06%
Securities sold under agreement to repurchase
    28,822     787     2.73%     32,030     937     2.93%
Note payable
    2,507     82     3.27%     10,243     292     2.85%
Other short-term borrowings
    24,940     62     0.25%     48,238     1,032     2.14%
  Total interest bearing liabilities
    966,598     16,326     1.69%     1,016,515     24,444     2.40%
Demand deposits, noninterest bearing
    261,539                 258,624            
Other liabilities
    32,417                 28,006            
  Total liabilities
    1,260,554                 1,303,145            
Shareholders' equity
    179,390                 153,216            
  Total liabilities and shareholders' equity
  $ 1,439,944               $ 1,456,361            
 
                                   
Net interest income / margin
        $ 45,967     3.53%         $ 51,513     3.94%
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