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Using the Forecaster Model In 2006, geography was destiny - and the metrics were misleading. It was a winning strategy to 'avoid' California and Oregon and 'buy' Texas and Oklahoma. The stocks that the analyst liked did not out-'total return' the stocks the analysts did not like. The low yielders failed to out-return the high yielders. Nor was buying the high P/E stocks or high Price/Book stocks a winning strategy. In a sector where the dividend payout ratio varies from 21% to 80%, it is not a surprise that the dividend discount model fails to be predictive. This sector sells at a fairly consistent P/E ratios despite wide variations in CAGRs. That is not logical. And the CAGRs also fail to be predictive of the stocks with high price to book ratios. That is not logical. I am not giving up hope that this sector can be forecasted. But my readers should be pessimestic about the predictions in the forecaster spreadsheet until it shows more signs of some success. This is the link to the 2006 stats for this sector, showing the projections based on 2006 begining of the year stats - along with the 2006 returns in the 'forecasting' spreadsheet which is the last of five spreadsheet posted - or roughly in the middle of the long page. This is the link to the 2007 stats page. BOKF sees 4-fold rise in loan loss provision Reuters 7-02 BOK Financial Corp forecast a more than four-fold increase in provision for loan losses for the second quarter, sending its shares down as much as 10 percent. The Oklahoma-based financial holding company also expects to take a quarterly charge of $2.5 million to $3.0 million related to the sale of certain residential mortgage loans, it said in a filing with the U.S. Securities and Exchange Commission. BOK will record a provision for bad loans of $30 million to $35 million for the second quarter, up from the $7.8 million it recorded in the year-ago quarter. For the first quarter of 2008, the company had recorded a loan loss provision of $17.6 million. BOKF Reports $0.65/share vs. $0.80/share in Q2-07 Business Wire 7-15 BOK Financial reported Q2-08 earnings of $43.683 million [$0.65/share] compared to 53.863 million [$0.80/share] for Q2-07. ROA was 0.81% while ROE was 8.85%. Book value per share was $29.45. The Tier 1 ratio was 9.09%. The Total capital ratio was 12.09%. The Leverage ratio was 8.17%. Net interest revenue totaled $159.1 million. Net interest margin increased to 3.45% from 3.31% for both Q1-08 and Q2-07. Widening of the spread between LIBOR and the federal funds rate increased our net interest margin. LIBOR is the basis for the interest earned on many of our loans and the federal funds rate is the basis for the interest paid on many of our interest-bearing liabilities. Yields on average earning assets decreased 56 bps from the previous quarter to 5.61%. Loan yields were down 79 bps and securities yields were down 3 bps. The cost of interest-bearing liabilities decreased 82 bps from the previous quarter to 2.29%. The cost of interest-bearing deposits decreased 77 bps and the cost of other borrowed funds decreased 101 bp. Fees and commissions revenue totaled $113.6 million, down $263 thousand from Q1-08 and up $16.6 million or 17% over Q2-07. Net losses on securities, derivatives and mortgage servicing rights totaled $9.0 million compared with net gains of $5.0 million for Q1-08 and net losses of $1.4 million in Q2-07. Non-performing assets totaled $158 million [1.26% of outstanding loans and OREO] at June 30, 2008, up from $126 million [1.02%] at March 31, 2008 and $70 million [0.60%] at June 30, 2007. But $8.6 million of NPA residential mortgage loans are guaranteed by agencies of the U.S. government and $14 million of NPAs were acquired with First United Bank and BOKF will be reimbursed by the sellers up to $8 million for any losses. NPAs excluding assets guaranteed or escrowed totaled $135 million [1.08% of outstanding loans and repossessed assets]. With total assets of $22.499 billion, NPAs were 0.70%. There were four potential problem areas: [1] Non-accruing commercial real estate loans totaled $60 million or 2.14% of those loans; [2] NPAs in the Arizona market totaled $35 million or 5.67% of those loans and OREO; [3] Indirect automobile loans (a portfolio of $476 million) that were past due 30 days or more was 1.95% while the comparable national average past due rate is 3.09% based on survey data as of March 31, 2008; and [4] BOKF has $400 million of off-balance sheet obligations related to community development residential mortgage loans that were sold with recourse - and at June 30, 2008 approximately 2.12% of these loans are non-performing. A separate reserve for credit risk of $7.5 million is maintained for these loans. Net loans charged off were $13.0 million [0.42% of average loans] compared to $8.9 million [0.29%] for Q1-08 and $5.8 million [0.21%] for Q2-07. BOH Reports $1.00/share vs. $0.95/share in Q2-07 Business Wire 7-28 Bank of Hawaii Corporation reported Q2-08 net income of $48.3 million [$1.00/share] compared to $47.7 million [$0.95/share] in Q2-07. ROA was 1.85% while ROE was 24.82%. Book Value was $16.01/share. The tier 1 leverage ratio was 7.04%. FTE Net interest income was $107.4 million compared to $99.1 million in Q2-07. Q2-07 Net interest income included a $1.1 million credit for the settlement of the LILO leveraged lease. Q2-08 included a provision for credit losses of $7.2 million compared with $3.4 million in Q2-07. The net interest margin was 4.41% compared to 4.12% in Q2-07. Total Earning Assets were $9.752 billion earnings $138.9 million at an average yield of 5.71%. Total Interest-Bearing Liabilities were $7.415 billion costing $31.5 million at an average yield of 1.70%. Noninterest income was $60.5 million compared to $58.0 million in Q2-07. Non-accrual loans and leases were $6.5 million [0.10% of total loans and leases], up from $6.3 million [also 0.10%] at June 30, 2007. Total non-performing assets were $6.680 million [0.10% of total loans and foreclosed real estate], up from $6.3 million [0.09%] at the end of Q2-07. With average assets of $10.504 billion, NPAs to assets was 0.063%. Accruing loans and leases past due 90 days or more were $4.2 million at June 30, 2008, up from $1.4 million at June 30, 2007 and down from $5.8 million at March 31, 2008. The ratio of total non-performing assets and loans 90 days or more past due to total loans at June 30, 2008 was 0.17%. Net charge-offs were $4.7 million [0.29% annualized of total average loans and leases] compared to $3.4 million [0.21%] in Q2-07. The decrease compared to the previous quarter was largely due to lower charge-offs in the indirect automobile and unsecured consumer installment portfolios. BXS Reports $0.49/share vs. $0.43/share in Q2-07 PRNewswire 7-17 BancorpSouth's reported Q2-08 net income of $40.1 million [$0.49/share] compared with $35.9 million [$.43/share] in Q2-07. ROA was 1.23% and ROE was 13.16%. Book value per share was $14.98. Interest revenue decreased to $175.8 million from $202.6 million for Q2-07 while Interest expense decreased to $65.9 million from $95.9 million for Q2-07. Net interest revenue increased to $109.8 million from $106.7 million for Q2-07. Net interest margin was 3.79% [the highest NIM since 2003] from 3.69% for Q2-07. FTE Total interest earning assets were $11.957 billion earning $178.548 million at an average yield of 6.01% [compared to 6.94% in Q2-07]. Total interest bearing liabilities were $10.040 billion costing $65.919 million at an average yield of 2.64% [compared to 3.86% in Q2-07]. Noninterest revenue was $73.3 million compared with $60.2 million in Q2-07. This growth reflected a 21.5% increase in insurance commission revenue since Q2-07 and a 19.7% increase in credit and debit card fee revenue over the same period. BXS had a $2.6 million gain during Q2-08 from the sale of shares of MasterCard stock. Non-performing loans and leases increased to $46.0 million [0.49% of loans and leases] at June 30, 2008 from $23.9 million [0.27%] at June 30, 2007 and from $38.7 million [0.42%] at March 31, 2008. The allowance for credit losses was 1.30% of loans and leases at June 30, 2008 compared with 1.22% of loans and leases at June 30, 2007 and 1.29% of loans and leases at March 31, 2008. [The allowance for credit losses was 2.65x NPLs and 4.33x net charge-offs.] With Non-accrual loans and leases of $17.710 million plus Loans and leases 90+ days past due $25.719 million plus Restructured loans and leases of $2.620 million plus OREO of $28.942 million sum to NPAs of $74.997 million. With net loans and leases of $9.358 billion plus loans held for sale of $0.171 million plus OREO of $0.029 billion, [9.558]NPAs were 0.78% of loans & OREO. With total assets of $13.399 billion, NPAs were 0.56% of assets. Annualized net charge offs was 0.30% of average loans and leases vs. 0.29% in Q1-08. From the Conference Call: [with above text in italics being from the call] Detail of NPLs: [1] The construction, acquisitions and development portfolio was $1.78 billion had Gross charge offs were .27% and non-performing loans were 0.88% of loans [or total of $13.9 million]; [2] Non-owner occupied and Multi Family $1.480 billion non-performing loans $.800 million or .05% of loans; [3] HELOCs of $470 million non-perfroming loans of $.600 million or 0.12% of portfolio with 30 days past due of 0.4% - only 60 accounts out of 19,000; [4] Owner occupied Commerical portfolio of $1.444 billion with non-performing loans of $2.8 million or 0.9% of loans. Have your re-appraisals caused a decline of the collateral? BXS: We have not seen the level of depreciation that the hot market have seen - most reappraisal 12% to 15% of values. Is there any contagion in the CNI book? BXS: We have not seen that. We are likely to see that going forward. Some banks are seeing opportunity to price risk [loans] higher and to also price deposits lower. BXS: Our record 3.79% NIM was casued by a shift, with good loan growth - and with lower yielding investments shifting to higher yielding loans and from higher costing public CDs to lower costing deposit balances. We have seen banks be aggresive with CD pricing, but the trend is as you described it. We hope to see more rational pricing going forward but it is not substantial or broad based. Do you projected CD rate flexibility - your average is 3.95% - is there room to cut that? BXS: Probably not due to competition. We will do well to hold it there. What is the trend for auto jobs in your southern footprint? BXS: NE Missippi - Toyota going from building the Highlander to the Primus - the first Toyato hybrid built in the US - and that should help parts of our market. Nissan plans revamp Missippi plant to make smaller cars - which will cut employmnet for a while. Volkswagon to build plant in Chattanoga - which is not in our footprint, but is close. CATY Reports $0.39/share vs. $0.60/share in Q2-07 PRNewswire 7-24 Los Aangeles' Cathay General Bancorp reported Q2-08 Net income of $19.2 million [$0.39/share] compared to $30.6 million [$0.60/share] in Q2-07. Included in Q2-08 was a non-cash after-tax charge of $3.4 million [$0.07/share] for "other-than-temporary impairment" on agency preferred securities. ROA was 0.73% while ROE was 7.66%. Book value was $20.13/share. Total risk-based capital ratio was 11.02%. Tier 1 risk-based capital ratio was 9.38%. Tier 1 leverage capital ratio was 7.83%. Net interest income before provision for credit losses decreased to $72.1 million compared to the $76.5 million during Q2-07. [The provision for credit losses was $20.5 million compared to $2.1 million for Q2-07.] The decrease was due primarily to the decline in NIM which was partially offset by strong growth in loans and investment securities. The FTE net interest margin was 2.94%, a decrease of 84 bps from 3.78% in Q2-07. The decrease primarily resulted from the lag in the downward repricing of certificates of deposit to follow the decreases in the prime rate, a change in the mix of investment securities, and the increase in the borrowing rate on our long term repurchase agreements. The FTE yield on average interest-earning assets was 5.86% and the cost of funds on average interest-bearing liabilities equaled 3.34%. In Q2-07, the yield on average interest-earning assets was 7.39% and cost of funds on average interest-bearing liabilities equaled 4.22%. Non-interest income was $9.2 million, an increase of $3.0 million compared to $6.2 million for Q2-07. Net gains of $2.3 million from sale of securities were comprised of $8.16 million of gains from sales of agency mortgage backed securities which were partially offset by the $5.83 million "other-than-temporary impairment" charge on agency preferred stock, which had a carrying value of $30.3 million after the impairment write-down. Depository service fees increased $138,000, or 13.3%, to $1.2 million. Total non-performing loans of $73.966 million plus OREO of $29.077 million sums to Total non-performing assets of $103.043 million. Non-performing assets to gross loans and OREO was 1.40% at June 30, 2008, compared to 1.25% at December 31, 2007. With total assets of $10.811 billion, NPAs were 0.95% of assets. Net chargeoffs were $2.5 million [0.14% of average loans]. CFR Reports $0.89/share vs. $0.89/share in Q2-07 PRNewswire 7-22 San Antonio's Cullen/Frost Bankers reported Q2-08 net income of $52.5 million [$0.89/share] compared to the $53.6 million [$0.89/share] for Q2-07. CFR had a $700 thousand in after tax expense [$1.1 million total] related to a patent litigation settlement on check imaging patents - envolved 50 other banks - with some small future payments for the rights. ROA was 1.56% compared to 1.66% in Q2-07. ROE was 13.44% compared to 15.40% for Q2-07. Book value at end of the quarter was $26.11. Tier 1 ratio was 10.15%. Total Risk-Based Capital Ratio was 12.68%. Net interest income was $131.328 million [FTE was $136 million] compared to $129.520 million in Q2-07. Provision for possible loan losses was $6.328 million compared to $2.650 million in Q2-07. The net interest margin was 4.68% compared to 4.67% for Q1-08 and 4.72% for Q2-07. Total non-interest income $70.581 million compared with $64.020 million in Q2-07. Service charges on deposit accounts were $21.634 million; Trust fees were $19.040 million [with growth due to gains in oil and gas managment fees and trust fees and investment fees]; and Insurance commissions and fees were $7.015 million [while proprety and casulty fees were down]. Non-accrual loans of $40.485 million plus OREO of $9.146 million sums to Non-performing assets were $49.6 million [0.59% of Total loans & OREO and 0.36% of assets], compared to $36.6 million [0.46% and 0.27%] in Q1-08 and $49.7 million [0.67% and 0.38%] in Q2-07. The allowance for possible loan losses as a percentage of loans at June 30, 2008 was 1.13% compared to 1.30% at the end of Q2-07. As a percentage of non-accrual loans, the allowance for possible loan losses was 233.5% at June 30, 2008, compared to 211.1% at the same date last year. Net charge-offs were $4.306 million [0.21% of average loans annualized] compared to $2.723 million [0.15%] in Q2-07. Gross charge offs were $6.5 million. Loans 30 days past due were $68.6 million vs. $71.5 million in Q1-08. From the Conference Call: [italics in text above was from the call] CFR exited the residential mortgage business 7 year ago - and CFR is reducing loans to home builders. We loan to home builders only in Texas - with no national builders in the portfolio. The average experience of those builders is 20 plus years. Consumer banking remains strong using relationship banking and strong customer service. There has been solid organic growth. CFR has an industry leading customer retention. CFR percieves the opportunity to increase business fees and rates - even in this competitive environment. CFR is expanding - opening 5 more offices in 2008. CFR is selling a new family of mutual funds. CFR did not have exposure to SemGroup. CFR believes that inflation is a serious issue. Transportation companies - we are asking more question due to rising fuel costs. With restruants - rising food costs is a concern. Do you see a current ability to pick up share with the big players hurting a bit? CFR: Big players think Texas is a perfect place, and they have not pulled back, but we a starting to see it now. CNB Reports - $0.05/share vs. $0.xx/share in Q2-07 Business Wire 7-16 Montgomery, Alabama's Colonial BancGroup reported in Q2-08 a net loss of $9 million [$0.05/share]. With Total assets of $26.031 billion and Shareholders' equity of $2.422 billion, ROA was -0.13% and ROE was - 1.49%. Book value was $12.00/share. Colonial raised $333 million in Q2-08 to raise the Tier 1 Capital to 10.10%, Total Capital to 14.13% and Leverage Ratio to 7.38%. Net interest income of $174.424 million declined by $7.2 million from Q1-08 as the net interest margin contracted 6 bps in the quarter to 2.88%. The full impact of the reductions in the prime and LIBOR rates that occurred in the first quarter, deposit migration to higher cost time deposits and the increase in nonearning assets negatively impacted the margin in Q2-08. The decline in rates on earning assets was partially offset by a 42 bps decline in deposit and funding costs. Total interest earning assets were $24.576 billion earning $349.841 million at an average yield of 5.72%. Total interest bearing liabilities were $20.979 billion costing $173.316 million at an average yield of 3.32%. Core noninterest income of $159.506 million increased 8% annualized over Q1-08. Most of the increase was in mortgage banking fee income which increased $1.2 million [71%] over Q1-08 as a result of increased sales of FHA and VA loans. Colonial opportunistically increased its mortgage origination staffing in 2007 to diversify its production to agency products which yielded higher volumes and margins in Q2-08. Colonial's financial planning services fee income increased $249,000 [21%] over Q1-08 primarily from increased annuity sales. Loans past due 30-89 days at June 30, 2008 were down 40% from Q1-08 while loans past due more than 90 days but still accruing interest decreased 56% to $31.3 million [0.20% of total loans]. Net charge-offs were $73 million [1.85% of average loans, annualized] compared to 0.84% for Q1-08. Nonaccrual loans of $294.816 million plus OREO of $113.604 million sum to Total nonperforming assets of $408.420 million compared to $266.313 million INQ1-08 and $45.552 million in Q2-07. With Total assets of $26.031 billion, NPAs to assets ratio was 1.57%. With total loans plus OREO of $18.953 billion, NPAs to loans plus OREO was 2.15%. CRBC Reports $0.77/share vs. $0.75/share in Q2-07 Business Wire 7-15 Kansas City's Commerce Bancshares reported Q2-08 Net income of $56.0 million [$0.77/share] compared with $55.6 million [$0.75/share] in Q2-07. ROA was 1.37%. ROE was 14.10%. Book value was $22.32/share. Tier I leverage ratio was 9.03%. Net interest income was $144.8 million, an increase of $10.9 million [8.2%] compared to Q2-07. The FTE net yield on earning assets was 3.87% compared with 3.82% in Q2-07. Total non-interest income was $102.7 million, an increase of 9.2% compared to $94.1 million in Q2-07. The increase resulted mainly from double-digit growth in bank card, corporate cash management and bond trading income. Non-Accrual Loans of $25.190 million plus OREO of $10.639 sum to Total Non-Performing Assets of $35.829 million [0.33% NPAs to Loans and 0.21% NPAs to Total Assets] compared with $34.243 million [0.33% and 0.22%] in Q2-07. Net loan charge-offs were $14.5 million [0.53% of average loans], compared with $11.9 million [0.44%] in Q1-08 and $9.1 million in Q2-07. CYN Reports $0.73/share vs. $1.19/share in Q2-07 Prime Newswire 7-24 City National Corporation reported Q2-08 net income of $35.5 million [$0.73/share] compared with $59.2 million [$1.19/share] in Q2-07. Q2-08 net income reflects a $35 million provision for credit losses and loan growth. ROA was 1.19% while ROE was 11.28%. Book Value was $34.90. Tier I capital of $1.224 billion was 9.28% of risk adjusted assets. Tier I leverage ratio was 7.89%. FTE net interest income was $153.3 million, down $2.9 million from Q2-07 due to the decline in short-term interest rates, but up from $151.3 million in Q1-08. The net interest margin averaged 4.23% compared with 4.26% in Q1-08. Total interest-earning assets were $14.695 billion with an average yield of 5.42%. Total interest-bearing liabilities were $8.544 billion with an average yield of 2.05%. Noninterest income reached $81.5 million, an 11% increase from the same period one year ago, due to fee income generated by wealth management, international banking and cash management. Total nonperforming assets were $115.3 million, down from $117.4 million at March 31 of this year. With Total Loans of $12.178 billion, NPAs were 0.94% of loans. With Total assets of $16.339 billion, NPAs were 0.70% of assets. Nonaccrual loans of $106.2 million and OREO of $9.1 million at June 30, 2008 declined slightly to $115.3 million, or 0.95% of total loans and other nonperforming assets, from $117.4 million [1.00%] in Q1-08 and increased from $22.3 million [0.20%] at June 30, 2007. Net loan charge-offs were $18.9 million compared with $12.1 million in Q1 and $2.3 million in Q2-07. The increase in net charge-offs occurred overwhelmingly in the residential homebuilder portfolio. About 75% of Q2 charge-offs and loans on nonaccrual are related to residential construction and development projects. EWBC Reports - $0.41/share vs. $0.66/share in Q2-07 Business Wire 7-25 East West Bancorp reported a Q2-08 net loss of $25.9 million [- $0.41/share] compared with a gain of $40.490 million [$0.66/share] in Q2-07. The loss was primarily due to a provision for loan losses of $85.0 million. ROA was -0.88%. ROE was -8.48%. Book value was $16.64. The Leverage Capital Ratio was 10.01%. The Tier 1 Capital Ratio was 11.04%. The Total Risk-Based Capital Ratio was 13.01%. Net interest income was $92.2 million, 7% or $6.8 million less than Q2-07. The net interest margin was 3.33% compared to 3.63% in Q1-08. The 30 bps decrease in the margin was primarily comprised of a 10 bps decrease due to the recent steep 225 bps decrease in the federal funds target rate, an 8 bps decrease due to the reversal of interest from nonaccrual loans and an 8 bps decrease due to the reinvestment of loan payoffs into lower yielding Treasury securities and fed funds assets. Yield on earning assets 6.07% while the Cost of deposits was 2.33% and the total Cost of funds was 2.92%. Total noninterest income was $13.383 million compared with $10.802 million in Q2-07 - an increase of 24%. Branch fees were $4.339 million vs. $3.404 million in Q2-07. Net gain on investment securities were $3.433 vs. $0.918 million in Q2-07. Letters of credit fees and commissions were $2.476 million vs. $2.633 million in Q2-07. The $85.0 million provision for loan losses, net of $34.8 million in net charge-offs, increased the allowance for loan losses to $168.4 million, a 44% or $51.3 million increase from March 31, 2008. Total nonperforming assets as of June 30, 2008 totaled $193.1 million [1.64% of total assets] compared to $74.5 million [0.63%] at March 31, 2008. [With Net loans receivable of $8.483 billion and OREO of $17.5 million, NPAs to loans and OREO was 2.27%.] Nonperforming assets as of June 30, 2008 included nonaccrual loans totaling $170.9 million, OREO totaling $17.5 million and loans modified or restructured totaling $4.7 million. During Q2-08 EWBC sold five OREO properties with a carrying value of $10.0 million and foreclosed on five properties with a carrying value of $12.5 million. Total nonaccrual loans as of June 30, 2008 were $170.9 million [1.97% of total loans]. EWBC identified 20 loans totaling $40.4 million which were not 90 days past due as of June 30, 2008, but we proactively classified as nonaccrual due to concerns surrounding collateral and future collectibility. Net chargeoffs of $34.8 million, comprised of $35.2 million in gross charge-offs and $366 thousand in recoveries. This compares to net charge-offs of $25.4 million for Q1-08. Of the total gross charge-offs of $35.2 million for the quarter, 46% or $16.3 million were land loans and 45% or $15.7 million were residential construction loans. From the Conference Call: For additional color on delinquencies EWBC stated that they do expect delinquent loans to go up in Q3 and Q4. Marjority of the delinquencies are in land and construction - and is already accounted for in GBCI's reserves. Some loans are still accruing, but have collateral defficiencies. The person having the loan may add new equity to solve the problem. The person could declare bankrupcy and freeze our ability to foreclose. Charge-offs were mainly in the Inland Empire - what does that portfolio look like now? EWBC: We charged off 35 million and 32 million was land and construction - and almost all was in the Inland Empire. We had both pay downs and charge-offs to reduce this portfolio in Q2-08. We do not see the land and construction portfolio improving or even stabilizing. But the rate of decline will slow. FHN Reports - $0.11/share vs. $0.17/share in Q2-07 Prime Newswire 7-14 First Horizon National Corporation for Q1-08 reported a net loss of $19.1 million [- $0.11/share] compared to net income of $7.9 million [$0.06/share] in Q1-08 and $22.123 million [$0.17/share] in Q2-07. ROA was .21)% while ROE was (3.02)%. Book Value Per Share was $13.74 compared to $19.43 in Q2-07. The Net interest income was $238.895 million. The Net interest margin was 3.01%. Noninterest income was $400.018 million. The net charge-off ratio was 235 bps compared to 181 bps in Q1-08 as net charge-offs increased to $127.7 million from $99.1 million in Q1-08. Management's expectations for full year 2008 charge-off outlook remain within the previously communicated range of $385 to $485 million. Total nonperforming assets increased to 388 bps [3.88% of total loans plus foreclosed real estate] from 278 bps in Q1-08. With Total nonperforming assets $876.138 million and total assets of $35.550 billion, NPAs were 2.47% of assets. FNB Reports $0.17/share vs. $0.29/share in Q2-07 PRNewswire 7-21 Hermitage, Pennsylvania's F.N.B. Corporation reported Q2-08 net income of $14.5 million [$0.17/share] compared to $16.5 million [$0.27/share] in Q1-08 and $17.6 million [$0.29/share] for Q2-07. Results for Q2-08 include $11.9 million pre-tax [$0.09/share, after-tax] for an additional provision for loan losses, merger-related costs [from the Omega acquisition], and other charges. ROA was 0.73% while ROE was 6.30%. Book value was $10.69/share. The Equity/assets ratio was 11.36%. The Leverage ratio was 8.17%. FTE Net interest income after provision was $56.189 million compared with $47.681 million in Q2-07. The FTE Net interest margin was 3.92% compared with 3.73% in Q2-07. FTE Yield on earning assets was 6.24% compared with 6.98% in Q2-07. The Cost of funds was 2.61% compared with 3.63% in Q2-07. Total non-interest income was $27.456 million compared with $22.168 million in Q2-07. Asset quality in Pennsylvania and Ohio continue to be stable, while Florida continues to be weak. Non-performing assets increased $29 million compared to March 31, 2008, solely due to two Florida non-performing assets totaling $15.5 million and the addition of $13.2 million in non-performing assets from the Omega acquisition. Non-accrual loans of $58.215 million plus Restructured loans of $3.631 million plus OREO of $9.291 million sum to Non-performing assets of $71.137 million. With Assets of $7.989 billion, NPAs were 0.72% of assets. The ratio of non-performing assets to total loans and OREO was 127 bps at June 30, 2008, compared to 95 bps at March 31, 2008 and 68 bps at June 30, 2007. Net charge-offs of $4.132 million were 30 bps of average loans, representing a 3 bps increase from 27 bps in Q1-08 and a 6 basis point increase over a historically low ratio for Q2-07. GBCI Reports $0.34/share vs. $0.31/share in Q2-07 PRNewswire 7-24 Glacier Bancorp reported Q2-08 net earnings of $18.459 million [$0.34/share] compared with $16.725 million [$.31/share] for Q2-07. ROA was 1.51% while ROE was 13.51%. Book value was $10.18. Net interest income was $52.300 million compared with $48.629 million in Q2-07. While total interest income has decreased by $1 million, or 1 percent, from the same period last year, total interest expense has decreased by $8 million, or 26 percent, from the same period last year. The decrease in total interest expense is primarily attributable to rate decreases in interest bearing deposits and lower cost borrowings. FTE net interest margin was 4.75% compared with 4.54% in Q2-07. Total non-interest income was $17.381 million compared with $16.262 million in Q2-07. OREO of $6.523 million plus Accruing Loans 90 days overdue of $3.700 million plus Non-accrual loans of $19.674 million sum to Total non-performing assets of $29.897 million. The earnings release stated that NPAs were 0.58% of total bank assets, but with Total assets of $5,027.868 million, I calculate them at 0.59%. With total loans of $3,820.952 million and OREO of $6.523 million, NPAs were 0.78%. Charged-off loans exceeded recoveries of previously charged-off loans by $915 thousand and charge-offs represented 0.03% of average loans. HBHC Reports $0.66/share vs. $0.62/share in Q2-07 Prime Newswire 7-22 Hancock Holding Company announced Q2-08 net income of $21.0 million [$0.66/share] compared with $20.3 million [$0.62/share] in Q2-07. ROA was 1.36% and ROE was 14.51%. Book value was $18.27. The Leverage (Tier I) ratio was 8.57%. FTE Net interest income was $54.613 million comared to $53.810 million in Q2-08 while the Provision for loan losses was $2.787 million compared to $1.238 million in Q2-07. FTE net interest margin was 3.90% - 27 bps narrower than Q2-07. With short-term interest rates down significantly from a year ago, HBHC's loan yield fell 106 bps, pushing the yield on average earning assets down 74 bp. However, total funding costs over the past year were down only 47 bp. Noninterest income [excluding securities transactions - which were flat] was $31.390 million compared to $30.710 million in Q2-07. Non-interest income was mostly comprised of Service charges on deposit accounts of $10.879 million; Trust fees of $4.575 million; Debit card & merchant fees of $2.884 million; and Insurance fees of $4.259 million. Net charge-offs were $2.5 million [0.27% of average loans] down from the $2.9 million [0.32%] in Q1-08. The majority of the decrease was reflected in commercial real estate loans. Non-performing assets were $19.779 million or 0.52% of total loans and foreclosed assets, compared to $16.602 million [0.46%] at March 31, 2008. With total assets of $6,270.116 million - NPAs were 0.31% of assets. HBHC did report an increase in non-accrual loans of $5.1 million and a reduction of ORE of $1.9 million as compared to Q1-08. Loans 90 days past due or greater (accruing) as a percent of period end loans increased 8 bps from March 31, 2008, to 0.17% at June 30, 2008. PACW Reports - $17.47/share vs. $0.xx/share in Q2-07 PRNewswire 7-17 San Diego's PacWest Bancorp announced Q2-08 net operating earnings of $12.8 million [$0.47/share] compared $2.3 million [$0.08/share] for Q1-08. GAAP income was a loss of $474.514 million [$17.47/share]. GAAP ROA was -39.18% while GAAP ROE was -223.19%. With shareholders equity of $4.343 billion and shares of 28.184 billion, I calculate a book value of $0.15/share while PACW reports a Tangible book value of $11.92/share. Net interest income totaled $55.8 million compared to $57.9 million Q1-08 with the decrease due mainly to lower loan yields from reductions in our base lending rate, lower average construction loan balances and increased nonaccrual loans. The net interest margin was 5.44%, a decrease of 14 bps when compared to Q1-08, with the decrease due mostly to lower loan yields. Noninterest income was $5.4 million compared to $6.6 million in Q1-08 with the decrease due mostly to lower SBA loan sale activity. Nonperforming assets include nonaccrual loans and OREO and totaled $74.0 million compared to $38.0 million at the end of March. OREO totaled $9.9 million compared to $6.1 million at the end of March with the increase due mostly to foreclosure on a condominium project in San Diego. The ratio of NPAs to loans & OREO was 1.89% at June 30, 2008 compared to 0.96% at March 31, 2008. With total assets of $4.343 billion, NPAs were 1.70%. Net charge-offs were $4.922 million - and with total loans of $3.914 billion, chargeoffs were 0.13% of loans. PCBC Reports - $0.13/share vs. $0.70/share in Q2-07 Business Wire 7-23 Pacific Capital Bancorp reported in Q2-08 a net loss of $5.9 million [- $0.13/share] compared to net income of $33.2 million [$0.70/share] in Q2-07. Q2-08 included a provision for loan losses of $37.2 million [$43.5 million in the Core Bank a negative provision related RAL while Q2-07 was positively impacted by a $23.5 million pre-tax gain on the sale of PCBC's Indirect Auto and Equipment Leasing loan portfolios. [The Q2-08 pretax loss was $15.3 million compared with $53.5 million pre-tax gain in Q2-07.] ROE was -3.26% while ROA was -0.32%. Book value was $15.36. Tier 1 tangible asset ratio was 8.4%. Total risk weighted capital ratio was 13.1%. Net interest income was $64.4 million compared with $66.8 million in Q2-07. Net interest income for the Core Bank was $61.4 million compared with $64.2 million in Q2-07 with the decrease primarily attributable to the sale and transfer of loans during the past year, and a decline in loan interest rates that could not be fully offset by reductions in interest expense on deposits and borrowings. The net interest margin was 3.91% which compares with 4.13% in Q2-07. For the Core Bank, NIM was 3.74% compared with 4.01% in Q2-07. Total interest-earning assets were $6.789 billion earning $104.962 million at an average yield of 6.22%. Total interest-bearing liabilities were $5.535 billion costing $39.007 million at an average yiled of 2.83%. Non-interest income was $22.2 million compared with $48.9 million in Q2-07 with the decrease mostly impacted by the sale of the indirect auto and equipment leasing loan portfolios, which generated net gains on sale of $23.5 million. Also mortgage-backed securities held for sale had an impairment of $2.6 million and there was a loss of $2.2 million related to an investment in low-income housing partnerships. Total non-performing assets were $161.8 million [2.16% of total assets] compared with $163.7 million [2.16%] at the end of Q1-08. With Total loans held for investment of $5.620 billion, NPAs to loans was 2.88%. Net charge-offs were $28.5 million or 2.05% of total average loans. Gross charge-offs were $29.3 million which included approximately $13.7 million in home building and land loans, $5.4 million for commercial and industrial loans, $4.9 million in residential real estate loans, $2.3 million in small business loans, $2.2 million in home owner equity lines, and $0.8 million in other. PRSP Reports $0.52/share vs. $0.52/share in Q2-07 PRNewswire 7-23 Prosperity Bancshares reported Q2-08 earnings of $23.437 million [$0.52/share] compared with $22.993 million [$0.52/share] in Q2-07. Prosperity owns Fannie Mae and Freddie Mac preferred stock booked at $14.025 million at the end of 2007, but booked at $11.769 million as of June 30, 2008, resulting in an 'unrealized loss' [without a other than temporary markdown? - it sounded like it hit the balance sheet but not the income statement] of $2.256 million. ROA was 1.43% while ROE was 7.96%. Book value was $26.44. Tier 1 risk-based capital was 12.70%. Tier 1 leverage capital was 7.87%. Net interest income before provision for credit losses increased to $53.971 million compared with $51.344 million during Q2-07. The increase was attributable primarily to a 5.1% increase in average earning assets. The FTE net interest margin increased to 4.10% compared with 4.09% for Q2-07. Margin expantion projected over the next few quarters due to PRSP's ability to reprice liabilites down. Total interest earning assets were $5.108 billion earning $87.300 million with an average yield of 6.85%. Total interest bearing liabilities were $3.952 billion earnings $35.956 million with an average yield of 3.65%. Non-interest income decreased to $13.066 million compared with $13.845 million for Q2-07. The decrease was attributable primarily to a $200,000 decrease in gains on the sale of held for sale loans and a $416,000 decrease in trust and investment income. Prosperity discontinued the origination of mortgage loans for sale, which was part of the mortgage banking activities of Texas United Bancshares. The decrease in trust and investment income was due to the dissolution in the second quarter of 2007 of the trust department acquired in the TXUI acquisition. Linked quarter non-interest income increased 3.1% primarily due to an increase in service charges on deposit accounts related to the 1st Choice acquisition. Non-performing assets totaled $11.651 million [0.22% of average earning assets or 0.35 of loans and OREO] at June 30, 2008 compared with $11.193 million [0.22%] at June 30, 2007 and $17.554 million [0.33%] at March 31, 2008. At June 30, 2008, the allowance for credit losses was 1.03% of total loans, compared with 1.14% at June 30, 2007 and 1.01% of total loans at March 31, 2008. Net charge-offs were $1.163 million [0.04% of average loans] compared to $1.166 million [0.02%] in Q2-07. From the Conference Call: [italics in text above was from the call] There has been a residential construction slow down - but to a normalized build rate. The Texas economy is still growing. For the state of Texas there was job growth of 47,700 thousand in June and 245,000 jobs in past 12 months - meaning there was 2.4% anualized job growth. And those new employyes are still looking for houses. The prices for homes went up except for Ft Bend County and Dallas Metro-plex - with a state average of a 1.0% increase. Those with a good product still are seeing demand. On CDs re-pricing: Rates at 3.00% with 3.97% average in Q2. Most of our CDs are short term - with most re-priced every one to six months. We are no longer in an inverted yield curve which squeezed our margins last year. PRSP will not be aggressvie in growing CDs - which will lower growth but add more profit. On M&A: We are seeing more opportunities and looking at all of them. Wachovia [and really everyone] may be looking at asset sales. We are looking for the right opportunity. RF Reports $0.30 vs. $0.xx in Q2-07 Business Wire 7-22 Regions’ reported Q2-08 net income of $206.4 million [$0.30/share] which included the final $100.1 million (pre-tax) in merger-related expenses. ROA was 0.58% while ROE was 10.98%. With Total Stockholders'Equity $19,708,494,000 and average shares oputstanding during Q2-08 of 695,947,000, I calculate a book value of $28.32 [compared to $28.37 at Yahoo!] Tier one capital ratio 7.47% - with a projected build in this ratio given the dividend cut. Given the conditions in the market, RF would not offer new common equity, but would do a convertable preferred to build equity. FTE Net interest income was $989.5 million compared with $1,112.0 million in Q2-07. Net interest margin was 3.36% compared with 3.82% in Q2-07 - falling due to a shift in deposit mix and higher NPAs. Non-interest income was $743.2 million compared with $696.8 million in Q2-07. Total non-performing assets at June 30, 2008, were $1.6 billion. NPAs (including 90+ past due) as % of loans and other real estate was 2.08%. NPAs were 1.65% of loans and OREO. With total assets of $142.560 billion, NPAs were 1.12% of assets. Net charge-offs were $209.0 million or 0.86% of average net loans - with the growth mainly due to HELOCs [1.94% up from 0.57% in Q1-08] and residential homebuilder credit deterioration. HELOC problem is geographically concentrated in Florida - one third of RF's portfolio. There are more second homes in this region - which adds to the problem. And this area has had a greater fall in property values. HELOC 30 days past due were 2.36% vs 2.67% in Q1. The HELOC book outside of Florida was doing OK. On foreclosed first lien loans, RF is getting $0.60 to $0.70 on the dollar. From the Conference Call QnAs: First mortgage residential book delinquencies held with charge-offs up marginally. Residential builder at the end of the quarter had a 30% level of loans are problem loans. Lots and land - not a lot of loss severity 60 cents on the dollar. Most of RF's losses were based on appraisals causing markdowns on those loans. Size of residential builder book is going down. Florida commercial real estate book is holding up and we do not see pressure building on it. Ditto for Florida CNI loans. Total CNI charge-offs are down. Home builder portfolio at 9%-10% in NPAs with projected increases going forward. Land exposure and condo exposure is going down - and those are the main issues. TRMK Reports $1.02/share vs. $1.19/share in Q2-07 Business Wire 7-22 Trustmark Corporation announced Q2-08 net income of $17.6 million [$0.31/share]. Q2-08 earnings included a gain on sale of MasterCard stock that increased net income by $3.3 million [$0.058/share]. ROA was 0.77%. ROE was 7.48%. Book value was $16.33. Tier 1 leverage ratio was 7.87%. Tier 1 risk-based capital ratio was 9.58%. Total risk-based capital was 11.46%. FTE Net interest income was $79.865 million compared to $77.070 million in Q1-08. The Provision for loan losses was $31.012 million compared to $14.243 million in Q1-08 resulting in FTE Net interest income after provision of $48.853 million compared with $62.827 million in Q1-08. Net interest margin was 3.91%. Total noninterest income was $48.466 million compared with $48.516 million in Q1-08. Nonperforming assets totaled $118.2 million at June 30, 2008, up $30.6 million relative to Q1-08, to represent 1.67% of total loans and other real estate. With Total assets of $9.175 billion, NPAs were 1.28% of assets. With Total earning assets of $8.221 billion, NPAs were 1.43%. Net charge-offs were $26.3 million in the second quarter of 2008 compared to $12.3 million in the prior quarter. The provision for loan losses in the second quarter totaled $31.0 million compared to $14.2 million in the prior quarter. Allocation of Trustmark’s $86.6 million allowance for loan losses represented 1.67% of commercial loans and 0.60% of consumer and home mortgage loans, resulting in an allowance to total loans of 1.26%. UB Reports $1.02/share vs. $1.19/share in Q2-07 Business Wire 7-21 UnionBanCal reported Q2-08 net income of $141.3 million [$1.02/share] compared with $165.4 million [$1.19/share] in Q2-07. Net income for Q2-08 included an $11.5 million [$0.08/share] net gain on the sale of the insurance brokerage business, and a $4.4 million [$0.03/share] gain on the partial redemption of MasterCard stock. Earnings from continuing operations were $0.97/share compared with $1.19/share for Q2-07. The Provision for loan losses rose from $5 million in Q2-07 to $95 million. ROA was 0.96% while ROE was 12.31%. Book value was $34.11. Tier 1 risk-based capital ratio 7.96% compared to 8.59% in Q2-07. Total risk-based capital ratio was 10.84% compared to 11.54% in Q2-07. The Leverage ratio was 7.95% compared to 8.30% in Q2-07. Net interest income rose from $431.039 million in Q2-07 to $512.887 million. Average noninterest bearing deposits represented 29.8% of average total deposits. The annualized average all-in cost of funds improved to 1.56% compared with 2.62% in Q2-07. The average rate on interest bearing liabilities of $40.2 billion was 2.06%, down 178 bps compared with Q2-07. The average yield on earning assets of $54.9 billion was 5.24%, down 87 bps from Q2-07. The net interest margin was 3.74%. |