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"BancTrust's second quarter write-down of goodwill is a non-cash accounting entry that has no effect on the operation of our business, our ability to serve our customers or our insurance coverage for deposits," stated W. Bibb Lamar, Jr., President and Chief Executive Officer of BancTrust Financial Group, Inc. "With the further decline in our stock price and continuation of unprecedented conditions in the markets in general, our goodwill testing showed impairment, and we determined that it was appropriate to recognize a charge to more conservatively state the company's asset values and remove uncertainty regarding the possibility of a future write-down. This adjustment more closely aligns the company's book value with its tangible book value, and, we believe, results in a more accurate reflection of current market conditions in our statement of condition. BancTrust continues to be classified as "well-capitalized," the highest regulatory rating, and our deposits continue to be insured to the maximum amount provided by the Federal Deposit Insurance Corporation.
"Our second quarter loss was due primarily to the non-cash write-down of goodwill and an increase in our loan loss provision compared with the second quarter of last year," continued Mr. Lamar. "The increase in our provision reflects the continued weakness in real estate markets and its effect on certain loans, particularly in Florida. We added $22.1 million to our allowance for loan losses in the second quarter to strengthen our reserves. We remain focused on managing credit quality, disposing of other real estate and maintaining our strong capital position. We believe these will be key steps in restoring BancTrust's earnings power in future quarters, and we are hopeful that the Company will return to profitability by the end of 2009."
Second Quarter Results
Net interest revenue was $12.4 million in the second quarter of 2009 compared with $16.2 million in the second quarter of 2008. The decline in net interest revenue was due primarily to a 95 basis point decrease in net interest margin which more than offset a 3.85% increase in average earning assets to $1.889 billion. BancTrust's net interest margin was 2.65% in the second quarter of 2009 compared with 3.60% in the second quarter of 2008. The reduced margin resulted in part from numerous interest rate cuts by the Federal Reserve in 2008 which caused our average yield on loans to decline at a faster rate than our cost of deposits. Approximately 54% of BancTrust's loan portfolio is tied to variable interest rates. In addition, the net interest margin was negatively impacted by the high level of non-performing assets that reduced interest income.
Total loans were down 3.9% to $1.5 billion since the second quarter of 2008 as a result of the slowdown in economic activity in our coastal markets, non-performing loans moved into other real estate owned, and the sale of three Tuscaloosa area branches that included approximately $24.6 million in loans. The Tuscaloosa area branches were acquired in the Peoples BancTrust acquisition and sold in August 2008 as part of the Company's strategy to focus on markets where it has a greater presence.
Non-performing loans rose to $125.7 million in the second quarter of 2009 compared with $108.0 million in the first quarter of 2009 and $34.3 million in the second quarter of 2008. Of the $17.7 million increase from the first quarter of 2009, $12.2 million are loans that are renegotiated but accruing interest. "The majority of our non-performing loans are attributable to real estate loans in our coastal markets, with Florida-based loans accounting for about 65% of nonperforming assets," stated Mr. Lamar. "During the second quarter we hired two seasoned veteran executives in Florida, one of whom serves as area president, to manage this market, with a charge to focus on problem assets. We also engaged a commercial real estate consultant and a local realtor to assist with the disposition of our other real estate in northwest Florida. The new team reported a modest increase in Florida real estate transactions during the second quarter and was able to sell several parcels that had been foreclosed. We believe the slowdown in the rate of growth in our non-performing assets this quarter reflects a positive change in Florida; however, we continued to build our allowance for loan losses to offset our higher level of non-performing loans. We believe our aggressive actions in providing for problem loans will accelerate our return to profitability as the economy improves."
BancTrust recorded a provision for loan losses of $22.1 million in the second quarter of 2009 compared with $2.4 million in the second quarter of 2008, and $11.1 million in the linked first quarter of 2009. Net charge-offs for the second quarter of 2009 were $10.9 million and were primarily related to land development loans. This compares with net charge-offs of $1.6 million in the second quarter of 2008. The allowance for loan losses was 3.27% of total loans at June 30, 2009, compared with 2.47% in the first quarter of 2009 and 1.58% in the second quarter of 2008.
Total non-interest revenue declined 8.2% to $5.0 million in the second quarter of 2009 compared with $5.4 million in the second quarter of 2008. Trust revenue declined 7.4% to $926,000 primarily because of a decline in the stock market; service charges on deposit accounts decreased 16% to $2.3 million; and other income, charges and fees were up 6.8% to $1.7 million, all compared with the second quarter of 2008.
Total non-interest expense, excluding the $97.4 million write-off of goodwill, increased to $28.0 million in the second quarter of 2009 compared with $16.6 million in the second quarter of 2008. This increase in non-interest expense was due primarily to a $9.3 million loss on the sale of other real estate (OREO), $2.3 million in FDIC insurance fees which included a special assessment and higher insurance rates by the FDIC, and $1.5 million in other real estate carrying costs.
BancTrust was classified as well-capitalized at the end of the second quarter of 2009. Total risk-based capital was 12.83% for the holding company and 13.84% for the bank, compared with a regulatory requirement of 10.0% for a well-capitalized institution and a minimum regulatory requirement of 8.0%. Tier 1 risk-based capital was 11.56% for the holding company and 12.57% for the bank, both measures significantly above the requirement of 6.0% for a wellcapitalized institution and minimum regulatory requirement of 4.0%.
Six Months Results
Net loss available to common shareholders was $124.7 million for the first six months of 2009 compared with net income of $4.5 million for the first six months of 2008. Net loss per diluted share was $7.08 for the first six months of 2009 compared with net income of $0.26 per diluted share for the same period in 2008. The 2009 results include a $97.4 million non-cash charge related to the writedown of goodwill as required by FASB Statement 142, which is responsible for $5.53 of the $7.08 loss per diluted share, as well as $1.5 million in expense related to the preferred stock dividend. BancTrust sold $50 million in senior preferred shares to the U.S. Treasury in December 2008. The preferred shares pay a cumulative annual dividend rate of 5% for the first five years.
Net interest income decreased to $25.2 million in the first six months of 2009 compared with $33.0 million in the first six months of 2008. The decline in interest income was due primarily to an 87 basis point decrease in net interest margin compared with the first six months of 2008. Our high level of non-performing assets also contributed to this decline.
The provision for loan losses was $33.2 million in the 2009 period compared with $5.3 million in the 2008 period. The increase in the provision since last year was primarily due to higher charge-offs and adding reserves to the allowance for loan losses. At June 30, 2009, non-performing assets totaled $177.5 million compared with $84.4 million at June 30, 2008.
Non-interest expense increased to $142.6 million in the first six months of 2009 compared with $33.3 million in the first six months of 2008. The increase was due to the $97.4 million write-off of goodwill, an increase of $10.8 million in losses and write downs of other real estate owned, an increase of $2.4 million in FDIC insurance expense due to a special assessment and increased insurance rates by the FDIC, and a $1.4 million increase in other real estate carrying costs compared with the corresponding period of the prior year.
BancTrust's Board of Directors did not declare a dividend for the third quarter of 2009. "We believe it is important for BancTrust to preserve its capital during this turbulent economic period, and our recent results of operations do not justify the payment of a dividend this quarter," stated Mr. Lamar. "Our Board of Directors will continue to evaluate the advisability of future cash dividends to balance our goals of maintaining a strong capital base and building long-term shareholder value."
About BancTrust Financial Group, Inc.
BancTrust Financial Group, Inc. is a registered bank holding company headquartered in Mobile, Alabama. The Company provides an array of traditional financial services through 41 bank offices in the southern two-thirds of Alabama and 10 bank offices in northwest Florida. BancTrust's common stock is listed on the NASDAQ Global Select Market under the symbol BTFG.
Additional information concerning BancTrust Financial Group can be accessed at www.banktrustonline.com by following the link to investor relations.
Forward-Looking Statements
This press release includes forward-looking statements within the meaning and subject to the protection of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements can be identified by the use of words such as "expect," "may," "could," "intend," "project,", "hope," "schedule," "estimate," "anticipate," "should," "will," "plan," "believe," "continue," "predict," "contemplate" and similar expressions. Our ability to accurately project results or predict the future effects of our plans and strategies is inherently limited. Although we believe that the expectations reflected in our forward-looking statements are based on reasonable assumptions, actual results and performance could differ materially from those set forth in the forward-looking statements. Our forward-looking statements are based on information presently available to management and are subject to various risks and uncertainties, in addition to the inherent uncertainty of predictions, including, without limitation, risks that competitive pressures among depository and other financial institutions may increase significantly; changes in the interest rate environment may reduce margins; general economic conditions may be less favorable than expected, resulting in, among other things, a further deterioration in credit quality and/or a reduction in demand for credit; legislative or regulatory changes, including changes in accounting standards and changes resulting from the recently enacted Emergency Economic Stabilization Act of 2008, American Recovery and Reinvestment Act of 2009 and programs enacted by the U. S. Treasury and BancTrust's regulators to address capital and liquidity concerns in the financial system, may adversely affect the business in which BancTrust is engaged; BancTrust may be unable to obtain required shareholder or regulatory approval or financing for any proposed acquisition or other strategic or capital raising transactions; costs or difficulties related to the integration of BancTrust's businesses may be greater than expected; deposit attrition, customer loss or revenue loss following acquisitions may be greater than expected; competitors may have greater financial resources and develop products that enable these competitors to compete more successfully than BancTrust can compete; and the other risks described in BancTrust's SEC reports and filings under "Cautionary Note Concerning Forward-Looking Statements" and "Risk Factors." You should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. BancTrust has no obligation and does not undertake to publicly update, revise or correct any of its forward-looking statements after the date of this press release, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise.
Contact: F. Michael Johnson
Chief Financial Officer
(251) 431-781
BANCTRUST FINANCIAL GROUP, INC.
(BTFG)
Financial Highlights (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
-------------
June 30, March 31, December 31, September 30, June 30,
2009 2009 2008 2008 2008
---- ---- ---- ---- ----
EARNINGS:
Interest
revenue $21,066 $21,911 $24,210 $25,266 $27,622
Interest
expense 8,669 9,149 10,697 10,898 11,458
----- ----- ------ ------ ------
Net interest
revenue 12,397 12,762 13,513 14,368 16,164
Provision for
loan losses 22,050 11,100 8,086 1,863 2,382
Trust revenue 926 926 1,138 1,018 1,000
Service charges
on deposit
accounts 2,312 2,271 2,697 2,802 2,753
Securities gains 4 2,299 135 3 41
Gain on sale of
interest rate
floor 0 0 0 0 0
Other income,
charges and
fees 1,716 1,456 1,503 1,764 1,607
----- ----- ----- ----- -----
Total
non-interest
revenue 4,958 6,952 5,473 5,587 5,401
----- ----- ----- ----- -----
Salaries,
pensions and
other employee
benefits 7,449 7,356 7,598 7,626 7,603
Net occupancy,
furniture and
equipment
expense 2,599 2,676 2,954 2,998 3,148
Intangible
amortization 688 687 780 949 948
Goodwill
Impairment 97,367 0 0 0 0
Loss (gain)
on other real
estate, net 9,340 1,643 301 1,709 159
FDIC insurance
assessment 2,290 389 404 198 118
Other real
estate
carrying cost 1,505 528 405 260 437
Other
non-interest
expense 4,200 3,874 4,199 4,166 4,157
----- ----- ----- ----- -----
Total
non-interest
expense 125,438 17,153 16,641 17,906 16,570
------- ------ ------ ------ ------
(Loss) income
before income
taxes (130,133) (8,539) (5,741) 186 2,613
Income tax
(benefit)
expense (12,217) (3,261) (2,249) (37) 836
------- ------ ------ --- ---
Net (loss)
income (117,916) (5,278) (3,492) 223 1,777
-------- ------ ------ --- -----
Effective
preferred
stock
dividend 761 745 111 0 0
--- --- --- - -
Net (loss)
income to
common
share-
holders ($118,677) ($6,023) ($3,603) $223 $1,777
========= ======= ======= ==== ======
(Loss) earnings
per common
share:
Total
Basic (6.74) (0.34) (0.21) $0.01 $0.10
Diluted (6.74) (0.34) (0.21) 0.01 0.10
Cash dividends
declared per
common share $0.010 $0.025 $0.13 $0.13 $0.13
Book value per
common share $6.55 $13.32 $13.80 $14.00 $14.08
Common shares
outstanding 17,629 17,594 17,555 17,548 17,535
Basic average
common shares
outstanding 17,613 17,588 17,555 17,548 17,535
Diluted
average
common
shares
outstanding 17,613 17,715 17,712 17,721 17,697
STATEMENT OF
CONDITION: 06/30/09 03/31/09 12/31/08 09/30/08 06/30/08
-------- -------- -------- -------- --------
Cash and cash
equivalents $159,619 $201,967 $85,069 $99,638 $77,124
Securities
available
for sale 270,771 208,655 221,879 215,126 222,082
Loans and
loans held
for sale 1,498,336 1,532,003 1,533,806 1,521,704 1,558,967
Allowance for
loan losses (49,008) (37,872) (30,683) (25,116) (24,642)
Goodwill 0 97,367 97,367 97,506 98,463
Other
intangible
assets 8,102 8,790 9,477 10,256 11,205
Other assets 186,834 174,750 171,262 169,774 179,630
------- ------- ------- ------- -------
Total
assets $2,074,654 $2,185,660 $2,088,177 $2,088,888 $2,122,829
========== ========== ========== ========== ==========
Deposits $1,777,471 $1,770,933 $1,662,477 $1,687,116 $1,703,332
Short term
borrowings 20,000 20,000 20,000 959 8,042
FHLB
borrowings
and long
term debt 93,125 93,209 93,398 134,473 142,807
Other
liabilities 21,264 19,954 22,914 20,677 21,823
Preferred
stock 47,323 47,194 47,085 0 0
Common
shareholders'
equity 115,471 234,370 242,303 245,663 246,825
------- ------- ------- ------- -------
Total
liabilities
and
shareholders'
equity $2,074,654 $2,185,660 $2,088,177 $2,088,888 $2,122,829
========== ========== ========== ========== ==========
Quarter Ended
-------- -------- -------- -------- --------
06/30/09 03/31/09 12/31/08 09/30/08 06/30/08
-------- -------- -------- -------- --------
AVERAGE
BALANCES:
Total assets $2,163,702 $2,139,138 $2,072,075 $2,088,019 $2,127,484
Earning
assets 1,889,139 1,848,420 1,766,228 1,774,193 1,819,174
Loans 1,525,170 1,533,361 1,521,737 1,542,183 1,570,840
Deposits 1,753,792 1,710,054 1,670,043 1,677,430 1,710,582
Common
shareholders'
equity 231,964 242,563 246,079 247,008 249,270
PERFORMANCE
RATIOS:
Return on
average
assets -21.86% -1.00% -0.67% 0.04% 0.34%
Return on
average
common
shareholders'
equity -205.21% -10.07% -5.82% 0.36% 2.87%
Net interest
margin (tax
equivalent) 2.65% 2.83% 3.08% 3.25% 3.60%
ASSET QUALITY:
Ratio of
non-performing
assets to
total assets 8.56% 7.23% 5.91% 5.58% 3.97%
Ratio of
allowance for
loan losses
to total loans,
net of unearned
income 3.27% 2.47% 2.00% 1.65% 1.58%
Net loans
charged-off to
average loans
(annualized) 2.87% 1.03% 0.66% 0.27% 0.42%
Ratio of ending
allowance
to total
non-performing
loans 39.00% 35.07% 42.32% 35.94% 71.86%
CAPITAL RATIOS:
Average common
shareholders'
equity to
average total
assets 10.72% 11.34% 11.88% 11.83% 11.72%
Dividend payout
ratio N/A N/A N/A 1300.00% 130.00%
Six Months Ended
----------------
June 30,
2009 2008
---- ----
EARNINGS:
Interest revenue $42,977 $58,616
Interest expense 17,818 25,593
------ ------
Net interest revenue 25,159 33,023
Provision for
loan losses 33,150 5,311
Trust revenue 1,852 2,000
Service charges
on deposit
accounts 4,583 5,570
Securities gains 2,303 48
Gain on sale of
interest rate floor 0 1,115
Other income,
charges and fees 3,172 3,381
----- -----
Total non-interest revenue 11,910 12,114
------ ------
Salaries, pensions and
other employee benefits 14,805 16,049
Net occupancy, furniture
and equipment expense 5,275 6,139
Intangible amortization 1,375 1,772
Goodwill Impairment 97,367 0
Loss (gain) on other real
estate, net 10,983 188
FDIC insurance assessment 2,679 279
Other real estate
carrying cost 2,033 642
Other non-interest expense 8,074 8,241
----- -----
Total non-interest expense 142,591 33,310
------- ------
(Loss) income before
income taxes (138,672) 6,516
Income tax (benefit)
expense (15,478) 1,991
------- -----
Net (loss) income (123,194) 4,525
-------- -----
Effective preferred
stock dividend 1,506 0
----- -----
Net (loss) income
to common shareholders ($124,700) $4,525
========= ======
(Loss) earnings per
common share:
Total
Basic -$7.08 $0.26
Diluted -7.08 0.26
Cash dividends declared
per common share $0.035 $0.26
Book value per
common share $6.55 $14.08
Common shares outstanding 17,629 17,535
Basic average common
shares outstanding 17,601 17,529
Diluted average common
shares outstanding 17,601 17,673
STATEMENT OF CONDITION: 06/30/09 06/30/08
-------- --------
Cash and cash equivalents $159,619 $77,124
Securities available
for sale 270,771 222,082
Loans and loans held
for sale 1,498,336 1,558,967
Allowance for loan
losses (49,008) (24,642)
Goodwill 0 98,463
Other intangible assets 8,102 11,205
Other assets 186,834 179,630
------- -------
Total assets $2,074,654 $2,122,829
========== ==========
Deposits $1,777,471 $1,703,332
Short term borrowings 20,000 8,042
FHLB borrowings
and long term debt 93,125 142,807
Other liabilities 21,264 21,823
Preferred stock 47,323 0
Common shareholders'
equity 115,471 246,825
------- -------
Total liabilities and
shareholders' equity $2,074,654 $2,122,829
========== ==========
Six Months Ended
----------------
06/30/09 06/30/08
-------- --------
AVERAGE BALANCES:
Total assets $2,151,488 $2,153,201
Earning assets 1,868,892 1,854,478
Loans 1,529,243 1,588,382
Deposits 1,732,044 1,737,868
Common shareholders'
equity 237,234 249,575
PERFORMANCE RATIOS:
Return on average assets -11.55% 0.42%
Return on average common
shareholders' equity -106.00% 3.65%
Net interest margin
(tax equivalent) 2.74% 3.61%
ASSET QUALITY:
Ratio of non-performing
assets to total assets 8.56% 3.97%
Ratio of allowance for
loan losses to total
loans, net of unearned
income 3.27% 1.58%
Net loans charged-off
to average loans
(annualized) 1.95% 0.56%
Ratio of ending allowance
to total non-performing
loans 39.00% 71.86%
CAPITAL RATIOS:
Average common shareholders'
equity to average total
assets 11.03% 11.59%
Dividend payout ratio N/A 100.00%
SOURCE BancTrust Financial Group, Inc.
http://www.banktrustonline.com
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