FCCO » Topics » Comparison of Results of Operations for Three Months Ended September 30, 2008 to the Three Months Ended September 30, 2007:

This excerpt taken from the FCCO 10-Q filed Nov 12, 2008.

Comparison of Results of Operations for Three Months Ended September 30, 2008 to the Three Months Ended September 30, 2007:

 

Net Income (loss)
 

Our net loss for the third quarter of 2008 was $3.9 million, or $1.23 diluted loss per share, as a result of the OTTI charge on Freddie Mac preferred stock, as compared to net income of $1.1 million, or $0.35 diluted earnings per share during the comparable period in 2007.  As noted above under “Reconciliations,” our operating earnings were $1.1 million, or $0.35 per diluted share, for the three months ended September 30, 2008 as compared to $1.1 million, or $0.35 diluted earnings per share, for the same period in 2007.  Net interest income increased by $527,000 for the three months ended September 30, 2008 from $3.9 million in 2007 to $4.4 million in 2008.  The increase in net interest income is primarily due to the increase in the level of average earning assets resulting from the implementation of the leverage strategy discussed previously as well as core internal growth. Average earning assets equaled $560.2 million during the third quarter of 2008 as compared to $483.7 million during the third quarter of 2007.  As a result of stopping dividends on our Freddie Mac preferred stock holdings in the third quarter of 2008, net interest income was reduced by approximately $146,000 as compared to prior quarters.

 

Please refer to the table at the end of this Item 2 for the yield and rate data for interest-bearing balance sheet components during the three-month periods ended September 30, 2008 and 2007, along with average balances and the related interest income and interest expense amounts.

 

The yield on average earning assets decreased to 5.98% in the third quarter of 2008 from 6.56% in the third quarter of 2007. The cost of interest bearing liabilities also decreased to 3.18% in third quarter of 2008 as compared to 3.88% in the third quarter of 2007.  The net interest margin was 3.15% for the three months ended September 30, 2008 as compared to 3.21% in the same period of 2007.  On a fully taxable equivalent basis, we had a net interest margin of 3.17% and 3.29% for the three months ended September 30, 2008 and 2007, respectively.

 

Non-interest Income and Non-interest Expense
 

As a result of the OTTI charge on Freddie Mac preferred stock, we had a non-interest income loss of $6.8 million for the three months ended September 30, 2008.  As reflected in the chart above under “Reconciliations,” we

 

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earned $1.3 million in non-interest income (excluding the OTTI charge) for the three months ended September 30, 2008 as compared to $1.4 million in the same period of 2007.  Deposit service charges increased by $36,000 in the three months ended September 30, 2008 as compared to the same period in 2007.  Mortgage origination fees increased by $53,000 or 68.4% during the three months ended September 30, 2008 as compared to the same period in 2007.  As previously discussed, this increase results from a continued emphasis on this source of revenue as well as the continued favorable mortgage interest rate environment.  During the three months ended September 30, 2008 we had a loss on fair value adjustments of $8,000 as compared to a gain of $138,000 in the same period of 2007.

 

Total non-interest expense increased by $398,000 in the third quarter of 2008 as compared to the same quarter of 2007.  Salaries and benefits increased by $148,000 in the third quarter of 2008 as compared to the same period in 2007.  This was primarily due to the staff additions and incentive plan modifications made for our commercial lenders.  Other non-interest expense increased by $342,000 in the third quarter of 2008 as compared to the same period in 2007.  As discussed in the nine month results, FDIC insurance premium cost account for approximately $56,000 of the increase.  Losses on the limited partnership investment discussed in the nine month results account for approximately $127,000 of the increase in other non-interest expense between the two periods.    An increase in professional fees in the third quarter of 2008 compared to the same period in 2007 accounted for approximately $107,000 of the increase in other non-interest expense.  During the third quarter of 2008 we incurred higher legal fees related to amending plans to comply with IRS section 409A as well as various other legal fees including those associated with the increase in the level of non-performing assets.  All other variances in non-interest expenses during the three months ended September 30, 2008 as compared to the same period of 2007 reflect normal fluctuations in each of the categories.

 

This excerpt taken from the FCCO 10-Q filed Aug 13, 2008.

Comparison of Results of Operations for Three Months Ended June 30, 2008 to the Three Months Ended June 30, 2007:

 

Net Income
 

Our net loss for the second quarter of 2008 was $3.5 million, or $1.08 diluted loss per share, as a result of the OTTI charge, as compared to net income of $893,000, or $0.27 diluted earnings per share during the comparable period in 2007.  As noted above under “Reconciliations,” our operating earnings were $1.2 million, or $0.38 per diluted share, for the three months ended June 30, 2008 as compared to $845,000, or $0.26 diluted earnings per share, for the same period in 2007.  Net interest income increased by $719,000 for the three months ended June 30, 2008 from $3.8 million in 2007 to $4.5 million in 2008.  The increase in net interest income is primarily due to the increase in the level of average earning assets resulting from the implementation of the leverage strategy discussed previously as well as core internal growth. Average earning assets equaled $552.8 million during the second quarter of 2007 as compared to $464.2 million during the second quarter of 2007.

 

Please refer to the table at the end of this Item 2 for the yield and rate data for interest-bearing balance sheet components during the three-month periods ended June 30, 2008 and 2007, along with average balances and the related interest income and interest expense amounts.

 

The yield on average earning assets decreased to 6.17% in the second quarter of 2008 from 6.52% in the second quarter of 2007. The cost of interest bearing liabilities also decreased to 3.32% in second quarter of 2008 as compared to 3.78% in the second quarter of 2007.  The net interest margin remained flat at 3.26% for the three months ended June 30, 2008 and 2007  On a fully taxable equivalent basis, we had a net interest margin of 3.33% and 3.34% for the three months ended June 30, 2008 and 2007, respectively.

 

Non-interest Income and Non-interest Expense
 

As a result of the OTTI charge, we had a non-interest income loss of $4.9 million for the three months ended June 30, 2008.  As reflected in the chart above under “Reconciliations,” we earned $1.3 million in non-interest income (excluding the OTTI charge) for the three months ended June 30, 2008 as compared to $1.1 million in the same period of 2007.  Deposit service charges increased by $13,000 in the three months ended June 30, 2008 as compared to the same period in 2007.  Mortgage origination fees increased by $68,000 or 87.7% during the three months ended June 30, 2008 as compared to the same period in 2007.  As previously discussed this increase results from a continued emphasis on this source of revenue as well as the continued favorable mortgage interest rate environment

 

Total non-interest expense increased by $266,000 in the second quarter of 2008 as compared to the same quarter of 2007.  This was primarily due to the staff additions and incentive plan modifications noted in the six month results.  Non-interest expense “Other” increased by $100,000 in the second quarter of 2008 as compared to the same period in 2007.  As discussed in the six month results, this increase primarily relates to an increase in FDIC insurance premium cost.  Throughout 2007 we had a credit applied to the premiums related to our acquisition of Newberry Federal Savings Bank in 2004.  In the second quarter of 2008 this premium increased expenses by approximately $56,000 as compared to the same period in 2007.  All other variances in non-interest expenses during the three months ended June 30, 2008 as compared to the same period of 2007 reflect normal fluctuations in each of the categories.

 

EXCERPTS ON THIS PAGE:

10-Q
Nov 12, 2008
10-Q
Aug 13, 2008

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