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BancTrust Financial Group, Inc. Reports Improved Third Quarter Results
PR Newswire
Oct 29, 2009
MOBILE, Ala., Oct. 29, /PRNewswire-FirstCall/ -- BancTrust Financial Group, Inc. (Nasdaq: BTFG) today reported its financial results for the third quarter and nine months ended September 30, 2009. The Company reported net income available to common shareholders of $30,000, or $0.00 per fully diluted share, for the third quarter of 2009 compared with net income of $223,000, or $0.01 per fully diluted share, for the third quarter of 2008. Net income before the preferred stock dividend was $786,000 in the third quarter of 2009 compared to $223,000 for the same period in 2008. For the first nine months of 2009, BancTrust reported a net loss of $124.7 million, or $7.08 per diluted share, compared with net income of $4.7 million, or $0.27 per diluted share, in the first nine months of 2008. The 2009 nine month results include a $97.4 million ($5.53 per diluted share) non-cash write-off of goodwill. The 2009 earnings per share were also diminished by preferred stock dividends of $756,000, or $0.04 per diluted share, for the third quarter and $2.3 million, or $0.13 per share, for the first nine months. No comparable preferred dividends were paid in 2008.
"BancTrust's results in the third quarter compared to the prior two quarters benefitted from growth in our net interest margin," stated W. Bibb Lamar, Jr., President and Chief Executive Officer of BancTrust. "We've made further progress in stabilizing our loan portfolio since mid-year, and our improved credit metrics highlight our success. Our non-performing loans were down almost 5% since June 30, 2009.
"Our outlook for the fourth quarter is positive based on our current credit trends and the recovery we are experiencing in certain key markets, including Mobile," continued Mr. Lamar. "We remain focused on reducing our non-performing assets through workouts on non-performing loans and sales of other real estate. We believe these steps are key to building our profitability in future quarters."
Third Quarter Results
Net interest revenue increased to $13.6 million in the third quarter of 2009 compared with $12.4 million in the linked second quarter of 2009. The increase was enhanced by a 27 basis point improvement in the net interest margin to 2.92% compared with 2.65% in the second quarter of 2009.
For the third quarter of 2008, net interest revenue was $14.4 million and our net interest margin was 3.25%. The net interest margin has declined 33 basis points since the third quarter of last year as a result of numerous interest rate cuts by the Federal Reserve and the negative impact of reduced interest income associated with the increase in nonperforming assets over the past year. Approximately 50.7% of BancTrust's loan portfolio is tied to variable interest rates.
Total loans have declined 1.7% since September 30, 2008, because of a slowdown in economic activity in our coastal markets and an increase in other real estate owned (OREO). Total loans were down $25.4 million to $1.5 billion at September 30, 2009, compared with the same time in 2008.
"Our focus has been on credit quality throughout our franchise and particularly in our Florida market, and we are pleased with the results that occurred during the quarter," stated Mr. Lamar. Non-performing loans declined 4.8% to $119.7 million in the third quarter of 2009 compared with the linked second quarter total of $125.7 million. Renegotiated loans, all of which are accruing interest, account for 10.5% of non-performing loans at September 30, 2009. Other real estate owned also declined in the latest quarter to $49.9 million at September 30, 2009 compared with $51.8 million at June 30, 2009. BancTrust had $69.9 million in non-performing loans and $46.7 million of OREO at September 30, 2008. For the second consecutive quarter, loans that were 30 days past due and accruing interest were approximately 1.35% of total loans.
BancTrust recorded a provision for loan losses of $1.7 million in the third quarter of 2009, a substantial reduction from the second quarter 2009 provision of $22.1 million and a slight reduction from the $1.9 million provision in the third quarter of 2008. Net charge-offs also declined in the third quarter of 2009 to $2.8 million compared with $10.9 million in the second quarter of 2009 and compared to $1.0 million in the third quarter of 2008. The allowance for loan losses was 3.20% of total loans at September 30, 2009, compared with 3.27% in the second quarter of 2009 and 1.65% in the third quarter of 2008.
"We strengthened our allowance for loan losses over the past year to account for the deterioration in the economy, particularly the soft real estate conditions in our Florida market," continued Mr. Lamar. "We utilized some of our reserves in the third quarter to account for write-offs previously reserved for. We expect to further utilize our reserves in coming quarters as problem loans are moved through our system. We remain diligent in protecting our strong capital base to buffer BancTrust from any prolonged weakness in the economy."
Total non-interest revenue increased 2.4% to $5.7 million in the third quarter of 2009 compared with $5.6 million in the third quarter of 2008. Some of the increase was due to securities gains and higher other income, offset partially by lower trust department income and service charges.
We are pleased to report total non-interest expense was down 6.7% to $16.7 million in the third quarter of 2009 compared with $17.9 million in the third quarter of 2008. BancTrust's cost-cutting initiatives are continuing. These initiatives contributed to lower expenses for salaries and employee benefits, lower furniture and equipment expenses and lower net occupancy expenses in the third quarter of 2009 compared with the same quarter last year. Other expenses rose because of increased FDIC insurance costs ($580,000) and higher carrying costs for other real estate ($425,000), partially offset by a $1,046,000 decrease in loss on OREO compared with the third quarter of 2008.
BancTrust was classified as well-capitalized at the end of the third quarter of 2009. Total risk-based capital was 12.9% for the holding company and 14.0% 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 11.6% for the holding company and 12.7% for the bank, both measures significantly above the requirement of 6.0% for a wellcapitalized institution and minimum regulatory requirement of 4.0%.
Nine Months Results
Net loss available to common shareholders for the first nine months of 2009 was $124.7 million compared with net income of $4.7 million for the first nine months of 2008. Net loss available to common shareholders per diluted share was $7.08 for the first nine months of 2009 compared with net income of $0.27 for the same period in 2008. The 2009 results included a $97.4 million ($5.53 per diluted share) non-cash write-off of goodwill and $2.3 million, or $0.13 per diluted share, in preferred stock dividends.
Net interest income was $38.7 million in the first nine months of 2009 compared with $47.4 million in the first nine months of 2008. The decline in interest income was due primarily to a 69 basis point decrease in the net interest margin compared with the first nine months of 2008. We are pleased that trend was reversed in the third quarter. BancTrust's increase in non-performing assets over the past year also contributed to the decline in net interest income and net interest margin, a trend that was also reversed in the third quarter.
The provision for loan losses rose to $34.9 million in the 2009 period compared with $7.2 million in the 2008 period. The increase in the provision since last year was due primarily to increased charge-offs and a higher level of non-performing loans. At September 30, 2009, non-performing assets totaled $169.6 million compared with $116.6 million at September 30, 2008.
Non-interest income increased 0.7% to $17.6 million in the first nine months of 2009 compared with $17.5 million in the first nine months of 2008. The 2009 results included a $2.9 million increase in security gains offset partially by decreased trust department revenue and service charges. The 2008 results included a $1.1 million gain on the sale of an interest rate floor contract.
Non-interest expense, excluding the $97.4 million charge for goodwill impairment, increased to $61.9 million in the first nine months of 2009 compared with $51.0 million in the first nine months of 2008. The increase was due primarily to a $9.9 million loss/write down on OREO, increased FDIC insurance costs and higher carrying costs related to OREO compared with 2008.
BancTrust's Board of Directors did not declare a dividend for the fourth quarter of 2009. "Our Board of Directors will continue to evaluate the advisability of future cash dividends, keeping in mind our goals of maintaining a strong capital base and building long-term shareholder value," stated Mr. Lamar.
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 42 bank offices in the southern two-thirds of Alabama and 9 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," "outlook," "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.
BANCTRUST FINANCIAL GROUP, INC.
(BTFG)
Financial Highlights (Unaudited)
(In thousands, except per share amounts)
Quarter Ended
-------------
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
-------- -------- -------- -------- --------
EARNINGS:
Interest
revenue $21,399 $21,066 $21,911 $24,210 $25,266
Interest
expense 7,817 8,669 9,149 10,697 10,898
----- ----- ----- ------ ------
Net interest
revenue 13,582 12,397 12,762 13,513 14,368
Provision for
loan losses 1,725 22,050 11,100 8,086 1,863
Trust revenue 866 926 926 1,138 1,018
Service charges
on deposit
accounts 2,379 2,312 2,271 2,697 2,802
Securities gains 667 4 2,299 135 3
Gain on sale of
interest rate
floor 0 0 0 0 0
Other income,
charges and
fees 1,807 1,716 1,456 1,503 1,764
----- ----- ----- ----- -----
Total
non-interest
revenue 5,719 4,958 6,952 5,473 5,587
----- ----- ----- ----- -----
Salaries,
pensions
and other
employee
benefits 6,915 7,449 7,356 7,598 7,626
Net occupancy,
furniture and
equipment
expense 2,757 2,599 2,676 2,954 2,998
Intangible
amortization 687 688 687 780 949
Goodwill
Impairment 0 97,367 0 0 0
Loss (gain)
on other real
estate, net 663 9,340 1,643 301 1,709
FDIC insurance
assessment 778 2,290 389 404 198
Other real estate
carrying cost 685 1,505 528 405 260
Other non-interest
expense 4,226 4,200 3,874 4,199 4,166
----- ----- ----- ----- -----
Total non-interest
expense 16,711 125,438 17,153 16,641 17,906
------ ------- ------ ------ ------
(Loss) income
before income
taxes 865 (130,133) (8,539) (5,741) 186
Income tax
expense (benefit) 79 (12,217) (3,261) (2,249) (37)
-- ------- ------ ------ ---
Net income (loss) 786 (117,916) (5,278) (3,492) 223
--- -------- ------ ------ ---
Effective preferred
stock dividend 756 761 745 111 0
--- --- --- --- ---
Net (loss) income
to common
shareholders $30 ($118,677) ($6,023) ($3,603) $223
=== ========= ======= ======= ====
(Loss) earnings per
common share:
Total
Basic 0.00 (6.74) (0.34) (0.21) $0.01
Diluted 0.00 (6.74) (0.34) (0.21) 0.01
Cash dividends
declared per
common share $0.00 $0.01 $0.025 $0.13 $0.13
Book value per
common share $6.61 $6.55 $13.32 $13.80 $14.00
Common shares
outstanding 17,634 17,629 17,594 17,555 17,548
Basic average
common shares
outstanding 17,634 17,613 17,588 17,555 17,548
Diluted average
common shares
outstanding 17,634 17,613 17,715 17,712 17,721
STATEMENT OF
CONDITION: 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08
-------- -------- -------- -------- --------
Cash and cash
equivalents $94,724 $159,619 $201,967 $85,069 $99,638
Securities
available
for sale 304,461 270,771 208,655 221,879 215,126
Loans and loans
held for
sale 1,496,258 1,498,336 1,532,003 1,533,806 1,521,704
Allowance for
loan losses (47,903) (49,008) (37,872) (30,683) (25,116)
Goodwill 0 0 97,367 97,367 97,506
Other intangible
assets 7,415 8,102 8,790 9,477 10,256
Other assets 181,114 186,834 174,750 171,262 169,774
------- ------- ------- ------- -------
Total assets $2,036,069 $2,074,654 $2,185,660 $2,088,177 $2,088,888
========== ========== ========== ========== ==========
Deposits $1,738,430 $1,777,471 $1,770,933 $1,662,477 $1,687,116
Short term
borrowings 20,000 20,000 20,000 20,000 959
FHLB borrowings
and long
term debt 93,087 93,125 93,209 93,398 134,473
Other
liabilities 20,510 21,264 19,954 22,914 20,677
Preferred stock 47,454 47,323 47,194 47,085 0
Common
shareholders'
equity 116,588 115,471 234,370 242,303 245,663
------- ------- ------- ------- -------
Total liabilities
and shareholders'
equity $2,036,069 $2,074,654 $2,185,660 $2,088,177 $2,088,888
========== ========== ========== ========== ==========
Quarter Ended
--------- -------- -------- -------- --------
09/30/09 06/30/09 03/31/09 12/31/08 09/30/08
-------- -------- -------- -------- --------
AVERAGE BALANCES:
Total
assets $2,049,546 $2,163,702 $2,139,138 $2,072,075 $2,088,019
Earning
assets 1,865,263 1,889,139 1,848,420 1,766,228 1,774,193
Loans 1,491,762 1,525,170 1,533,361 1,521,737 1,542,183
Deposits 1,752,623 1,753,792 1,710,054 1,670,043 1,677,430
Common shareholders'
equity 116,001 231,964 242,563 246,079 247,008
PERFORMANCE RATIOS:
Return on
average
assets 0.15% -21.86% -1.00% -0.67% 0.04%
Return on
average common
shareholders'
equity 0.10% -205.21% -10.07% -5.82% 0.36%
Net interest
margin (tax
equivalent) 2.92% 2.65% 2.83% 3.08% 3.25%
ASSET QUALITY:
Ratio of
non-performing
assets to total
assets 8.33% 8.56% 7.23% 5.91% 5.58%
Ratio of
allowance for
loan losses
to total loans,
net of
unearned
income 3.20% 3.27% 2.47% 2.00% 1.65%
Net loans
charged-off to
average loans
(annualized) 0.75% 2.87% 1.03% 0.66% 0.27%
Ratio of ending
allowance to
total non-performing
loans 40.02% 39.00% 35.07% 42.32% 35.94%
CAPITAL RATIOS:
Average common
shareholders'
equity to
average total
assets 5.66% 10.72% 11.34% 11.88% 11.83%
Dividend payout
ratio N/A N/A N/A N/A 1300.00%
Nine Months Ended
-----------------
September 30,
2009 2008
---- ----
EARNINGS:
Interest revenue $64,376 $83,882
Interest expense 25,635 36,491
------ ------
Net interest
revenue 38,741 47,391
Provision for loan
losses 34,875 7,174
Trust revenue 2,718 3,018
Service charges on
deposit accounts 6,962 8,372
Securities gains 2,970 51
Gain on sale of
interest rate
floor 0 1,115
Other income,
charges and fees 4,979 4,957
----- -----
Total non-interest
revenue 17,629 17,513
------ ------
Salaries, pensions
and other employee
benefits 21,720 23,675
Net occupancy,
furniture and
equipment expense 8,032 9,137
Intangible
amortization 2,062 2,721
Goodwill Impairment 97,367 0
Loss (gain) on
other real estate,
net 11,646 1,709
FDIC insurance
assessment 3,457 477
Other real estate
carrying cost 2,718 902
Other non-interest
expense 12,300 12,407
------ ------
Total non-interest
expense 159,302 51,028
------- ------
(Loss) income
before income
taxes (137,807) 6,702
Income tax expense
(benefit) (15,399) 1,954
------- -----
Net income (loss) (122,408) 4,748
-------- -----
Effective
preferred stock
dividend 2,262 0
----- -
Net (loss) income
to common
shareholders ($124,670) $4,748
========= ======
(Loss) earnings per common share:
Total
Basic -$7.08 $0.27
Diluted -7.08 0.27
Cash dividends declared
per common share $0.035 $0.39
Book value per
common share $6.61 $14.00
Common shares
outstanding 17,634 17,548
Basic average
common shares
outstanding 17,612 17,535
Diluted average
common shares
outstanding 17,612 17,689
STATEMENT OF
CONDITION: 09/30/09 09/30/08
-------- --------
Cash and cash
equivalents $94,724 $99,638
Securities
available for sale 304,461 215,126
Loans and loans
held for sale 1,496,258 1,521,704
Allowance for loan
losses (47,903) (25,116)
Goodwill 0 97,506
Other intangible
assets 7,415 10,256
Other assets 181,114 169,774
------- -------
Total
assets $2,036,069 $2,088,888
========== ==========
Deposits $1,738,430 $1,687,116
Short term
borrowings 20,000 959
FHLB borrowings
and long term debt 93,087 134,473
Other liabilities 20,510 20,677
Preferred stock 47,454 0
Common
shareholders'
equity 116,588 245,663
------- -------
Total liabilities
and shareholders'
equity $2,036,069 $2,088,888
========== ==========
Nine Months Ended
----------------- --------
09/30/09 09/30/08
-------- --------
AVERAGE BALANCES:
Total
assets $2,117,134 $2,131,315
Earning assets 1,867,669 1,827,521
Loans 1,516,612 1,572,870
Deposits 1,738,979 1,717,575
Common
shareholders'
equity 196,379 248,713
PERFORMANCE RATIOS:
Return on average
assets -7.73% 0.30%
Return on average
common
shareholders'
equity -84.88% 2.55%
Net interest
margin (tax
equivalent) 2.80% 3.49%
ASSET QUALITY:
Ratio of non-
performing assets
to total assets 8.33% 5.58%
Ratio of allowance
for loan losses to
total loans, net
of unearned income 3.20% 1.65%
Net loans charged-
off to average
loans (annualized) 1.56% 0.47%
Ratio of ending
allowance to total
non-performing
loans 40.02% 35.94%
CAPITAL RATIOS:
Average common shareholders' equity to
average total
assets 9.28% 11.67%
Dividend payout
ratio N/A 144.44%
SOURCE BancTrust Financial Group, Inc.
Copyright (2009) PR Newswire. All Rights Reserved.
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