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Nonperforming assets were $64.4 million at June 30, 2009 compared to $43.9 million at March 31, 2009. This represents an increase of $20.5 million or 46.7% in the linked quarter comparison. Other real estate owned, which represents properties acquired through foreclosure, totaled $20.0 million, an increase of $5.1 million or 33.9%. Loans past due 90 days or more and still accruing interest increased $3.5 million or 56.8% to $9.7 million. Nonaccrual loans increased $11.8 million or 51.9% to $34.7 million. The increase in nonperforming assets is the result of continued economic stress that has negatively impacted the Company's lending portfolio, particularly loans to real estate developers and related businesses.
Net loan charge-offs were $2.4 million in the current three months ended June 30, 2009 versus $727 thousand for the linked quarter. Net charge-offs as a percentage of outstanding loans (net of unearned income) were 0.18% and .055% in the current and linked quarters, respectively. The allowance for loan losses as a percentage of net loans outstanding increased to 1.62% at June 30, 2009 compared to 1.35% at March 31, 2009 and 1.28% at year-end 2008.
Second Quarter 2009 Compared to First Quarter 2009
-- The $.56 decrease in per common share earnings in the second quarter of
2009 compared to the first quarter of 2009 is driven mainly by a $4.3
million increase in the provision for loan losses and higher deposit
insurance expense of $1.3 million.
-- The higher provision for loan losses reflects an increase in
nonperforming assets, primarily nonaccrual loans secured by real estate
developments.
-- The increase in deposit insurance expense was driven by a special
assessment imposed by the Federal Deposit Insurance Corporation
("FDIC") during the current quarter as part of its plan to
replenish the Deposit Insurance Fund.
-- Margin compression, primarily due to a 22 basis point decline in the
average rate earned on earning assets, lowered net interest income $836
thousand or 5.9%. Net interest margin declined to 2.85% compared to
3.03% in the linked quarter.
-- Noninterest income increased $1.1 million or 16.4%, boosted by
securities gains and moderate increases in other fee income line items.
-- Noninterest expenses increased $1.1 million or 7.0% due mainly to the
increase in deposit insurance.
-- Income tax expense decreased $945 thousand due the decline in income
before tax.
Second Quarter 2009 Compared to Second Quarter 2008
-- The $.84 decrease in per common share earnings in the second quarter of
2009 compared to the second quarter of 2008 is driven mainly by a $5.5
million increase in the provision for loan losses, a decrease in net
interest income of $1.9 million, and higher deposit insurance expense of
$1.6 million. In addition, preferred stock dividends and related
accretion, which did not exist in the prior year, account for $.06 of
the decrease in per common share earnings.
-- The higher provision for loan losses is attributed to the increase in
nonperforming assets, primarily nonaccrual loans secured by real estate
developments.
-- The increase in deposit insurance expense was driven by the FDIC special
assessment mentioned above.
-- Margin compression, primarily due to a 107 basis point decline in the
average rate earned on earning assets, lowered net interest income $1.9
million or 12.7%. Net interest margin declined to 2.85% compared to
3.43% in the same period a year earlier.
-- Noninterest income increased $1.6 million or 26.4%, mainly attributed to
higher securities gains and moderate increases in other fee income
categories.
-- Noninterest expenses increased $1.8 million or 12.3% due mainly to the
increase in deposit insurance premiums.
-- Income tax expense decreased $1.8 million due to the net loss in the
current quarter.
Six-month Comparison
-- The $1.04 decrease in per common share earnings for the six-month period
ended June 30, 2009 compared to the same period for 2008 is mainly
attributed to a $6.0 million increase in the provision for loan losses,
lower net interest income of $2.5 million, and higher deposit insurance
expense of $2.0 million. In addition, preferred stock dividends and
related accretion, which did not exist in the prior year, account for
$.12 of the decrease in per common share earnings.
-- The higher provision for loan losses is attributed to a sharp increase
in nonperforming assets, primarily nonaccrual loans secured by real
estate developments.
-- The increase in deposit insurance expense was driven by the FDIC special
assessment mentioned above.
-- Margin compression, primarily due to a 106 basis point decline in the
average rate earned on earning assets, lowered net interest income $2.5
million or 8.2%. Net interest margin declined to 2.94% compared to 3.36%
a year ago.
-- Noninterest income increased $2.0 million or 15.7%, driven by higher
securities gains, allotment processing fees, and net gains on the sale
of loans.
-- Noninterest expenses increased $2.5 million or 8.7% due mainly to the
increase in deposit insurance.
-- Income tax expense decreased $2.3 million due to an overall lower
taxable position. The Company's effective income tax rate was
relatively unchanged at 24.1%.
Balance Sheet
-- Total assets were $2.3 billion at June 30, 2009, an increase of $55.1
million or 2.5% compared to March 31, 2009. The net increase in assets
is primarily related to $46.1 million or 20.3% higher cash and
equivalents and higher net investment securities of $11.8 million or
2.2% partially offset by lower net loans of $7.2 million or 0.6%.
-- The decrease in net loans compared to March 31, 2009 is mainly
attributed to a $5.1 million increase in repossessed properties and a
higher allowance for loan losses of $3.5 million.
-- Total deposits were up $35.7 million or 2.2% in the linked quarter
comparison. Commonwealth of Kentucky deposits account for $9.4 million
or 26.3% of the increase in total deposits and 58.5% of the $16.0
million increase in noninterest bearing deposit balances.
-- Noninterest bearing deposits, short-term borrowing arrangements, and
cash balances were all boosted by a large volume of activity with the
Commonwealth on June 30, 2009.
-- Nonperforming loans were $44.3 million at June 30, 2009, an increase of
$15.3 million or 52.9% from the linked quarter-end and an increase of
$18.8 million compared to year-end 2008.
-- The allowance for loan losses was 1.62% of net loans outstanding at June
30, 2009 compared to 1.35% and 1.28% at March 31, 2009 and December 31,
2008, respectively. Net charge-offs for the three months ended June 30,
2009 were $2.4 million, an increase of $1.7 million compared to the
first quarter of 2009.
-- The Company's regulatory capital level remains in excess of
"well-capitalized" as defined by its regulators.
Farmers Capital Bank Corporation is a financial holding company headquartered in Frankfort, Kentucky. The Company operates 37 banking locations in 23 communities throughout Central and Northern Kentucky, a leasing company, a data processing company, and an insurance company. Its stock is publicly traded on the NASDAQ Stock Market LLC exchange in the Global Select Market tier under the symbol: FFKT.
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based upon current expectations, but are subject to certain risks and uncertainties that may cause actual results to differ materially. Among the risks and uncertainties that could cause actual results to differ materially are economic conditions generally and in the subject market areas, overall loan demand, increased competition in the financial services industry which could negatively impact the ability of the subject entities to increase total earning assets, and retention of key personnel. Actions by the Federal Reserve Board and changes in interest rates, loan prepayments by, and the financial health of, borrowers, and other factors described in the reports filed by the Company with the Securities and Exchange Commission could also impact current expectations. For more information about these factors please see the Company's Annual Report on Form 10-K on file with the SEC. All of these factors should be carefully reviewed, and readers should not place undue reliance on these forward-looking statements.
These forward-looking statements were based on information, plans and estimates at the date of this press release, and the Company does not promise to update any forward-looking statements to reflect changes in underlying assumptions or factors, new information, future events or other changes.
Consolidated Financial Highlights (1)
(In thousands except
per share data)
--------------------
Three Months Ended Six Months Ended
June 30, March 31, June 30, June 30, June 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
Interest income $25,479 $26,329 $29,037 $51,808 $59,072
Interest expense 12,076 12,090 13,686 24,166 28,966
---------------- ------ ------ ------ ------ ------
Net interest income 13,403 14,239 15,351 27,642 30,106
------------------- ------ ------ ------ ------ ------
Provision for loan
losses 5,940 1,676 483 7,616 1,585
------------------ ----- ----- --- ----- -----
Net interest income
after provision for
loan losses 7,463 12,563 14,868 20,026 28,521
-------------------- ----- ------ ------ ------ ------
Noninterest income 7,825 6,725 6,191 14,550 12,578
Noninterest expenses 16,163 15,112 14,392 31,275 28,772
-------------------- ------ ------ ------ ------ ------
(Loss) income before
income tax expense (875) 4,176 6,667 3,301 12,327
Income tax (benefit)
expense (74) 871 1,767 797 3,051
-------------------- ---- --- ----- --- -----
Net (loss) income $(801) $3,305 $4,900 $2,504 $9,276
----------------- ----- ----- ----- ----- -----
Net (loss) income $(801) $3,305 $4,900 $2,504 $9,276
Preferred stock dividends
and discount accretion (462) (414) (876)
------------------------- ---- ---- ----
Net (loss) income
available to common
shareholders $(1,263) $2,891 $4,900 $1,628 $9,276
-------------------- ------- ----- ----- ----- -----
Per common share
Basic and diluted net
(loss) income $(.17) $.39 $.67 $.22 $1.26
Cash dividend declared .25 .25 .33 .50 .66
Averages
Loans, net of
Unearned interest $1,319,377 $1,315,584 $1,297,789 $1,317,491 $1,296,851
Total assets 2,268,229 2,225,577 2,135,643 2,247,021 2,136,148
Deposits 1,634,587 1,591,758 1,531,628 1,613,291 1,526,085
Shareholders' equity 197,990 195,154 173,584 196,580 172,409
Weighted average
shares outstanding -
basic 7,363 7,357 7,350 7,360 7,362
Weighted average
shares outstanding -
diluted 7,376 7,357 7,350 7,360 7,362
Return on average
assets (0.14)% .60% .92% .22% .87%
Return on average
equity (1.62)% 6.87% 11.35% 2.57% 10.82%
June 30, March 31, December 31,
2009 2009 2008
---- ---- ----
Cash and cash equivalents $272,731 $226,638 $190,775
Investment securities 552,476 540,638 536,109
Loans, net of allowance of $21,318,
$17,777, and $16,828 1,293,988 1,301,216 1,295,752
Other assets 176,997 172,641 179,531
------------ ------- ------- -------
Total assets $2,296,192 2,241,133 $2,202,167 ------------ --------- ---------- ----------
Deposits $1,638,265 $1,602,590 $1,594,115
Federal funds purchased and other
short-term borrowings 105,843 71,709 77,474
Other borrowings 329,762 335,480 335,661
Other liabilities 27,645 33,342 26,621
----------------- ------ ------ ------
Total liabilities 2,101,515 2,043,121 2,033,871
----------------- --------- --------- ---------
Shareholders' equity 194,677 198,012 168,296
-------------------- ------- ------- -------
Total liabilities and
shareholders' equity $2,296,192 $2,241,133 $2,202,167
--------------------- --------- --------- ----------
End of period book value per
common share(1) $22.60 $23.08 $22.87
End of period common share value 25.17 15.67 24.42
End of period dividend yield(2) 3.97% 6.38% 5.41%
(1) Represents total common equity divided by the number of common
shares outstanding at the end of the period.
(2) Represents annualized dividend declared divided by the end of
period common share value.
SOURCE Farmers Capital Bank Corporation
http://www.farmerscapital.com
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