Attached files
| file | filename |
|---|---|
| 8-K - 8-K - INTERMOUNTAIN COMMUNITY BANCORP | a8-kq42013cover.htm |
FOR IMMEDIATE RELEASE
CONTACT: | Curt Hecker, CEO | |
Intermountain Community Bancorp | ||
(208) 263-0505 | curt.hecker@panhandlebank.com | |
Doug Wright, Executive Vice President & CFO | ||
Intermountain Community Bancorp | ||
(509) 363-2635 | doug.wright@intermountainbank.com | |
Intermountain Community Bancorp Reports Fourth Quarter and Full Year 2013 Earnings
Sandpoint, Idaho, February 12, 2014 - Intermountain Community Bancorp (NASDAQ - IMCB), the holding company for Panhandle State Bank, is pleased to report $6.1 million, or $0.93 per diluted share, in net income applicable to common shareholders for the quarter ended December 31, 2013, as compared to net income of $1.5 million, or $0.23 per share, and $909,000, or $0.14 per share, in the third quarter of 2013 and the fourth quarter of 2012, respectively. Fourth quarter 2013 results included the $6.1 million reversal of the Company's deferred tax asset valuation allowance, which offset higher expenses related to equity compensation granted to raise key employee compensation levels to market, and a valuation reserve established on the installment sale of the Company's one remaining other real estate owned (OREO) property.
For the year ended December 31, 2013, net income applicable to common shareholders was $10.1 million, or $1.56 per diluted share, compared to $1.9 million, or $0.32 per diluted share for 2012, as the tax valuation allowance reversal and a much lower loan loss provision offset a decrease in net interest income.
"Activities in the fourth quarter represented the culmination of several years of effort to restructure and reposition the Company for the future," said Chief Executive Officer Curt Hecker. "The repayment of our Capital Purchase Program funds, reversal of our deferred tax asset valuation allowance, sale of our last large OREO, and continued reduction in classified assets all represent important activities that signal the end of many past challenges," he added. "We believe the Company is now positioned for success in a different banking environment, where changing customer patterns, rapid technological advances, and stiff competition are creating industry consolidation and customer disruption. With our strong, local deposit franchise and flexible capital base, we're creating a Company that is opportunistic and adaptable to rapidly changing conditions, but is prudent in its management of key risks, particularly credit and interest rate risk."
Fourth Quarter 2013 Highlights (at or for the period ended December 31, 2013, compared to September 30, 2013, and December 31, 2012)
▪ | The Company repaid its $27 million in Capital Purchase Program ("CPP") funds in November 2013, using $20 million in cash and a $7 million loan. The repayment is expected to result in net improvement |
to income available to common shareholders of approximately $1.4 million in 2014 after interest expenses on the loan.
• | The Company reversed its remaining tax valuation allowance in the fourth quarter, resulting in a $6.1 million benefit to net income available to common shareholders. The move signals increasing confidence in the future prospects and profitability of the Company, based on improving regional economic conditions, stronger levels of pre-tax profitability, and strong asset quality. |
▪ | Interest income from the Company's investment portfolio improved in the fourth quarter to $1.7 million from $1.5 million the quarter before as higher market rates and slower prepayment speeds on the Company's mortgage-backed securities had positive impacts. |
▪ | Interest expense continued to decline, totaling $761,000 for the fourth quarter of 2013, compared to $901,000 for the third quarter of 2013 and $1.0 million in the fourth quarter of 2012. Interest expense in 2013 was down $1.5 million or 29.2% from 2012. |
▪ | The Company recorded $214,000 in provision for losses on loans in the fourth quarter of 2013, up from the $82,000 it recorded during the third quarter, but down from the $619,000 in provision for the fourth quarter of 2012. For the year, provision for loan losses totaled $559,000, an 87% reduction from the $4.3 million recorded in 2012. |
▪ | Fees from trust and investment services totaled $2.3 million in 2013, a 49.5% increase from 2012 as the Company continued to emphasize the development of this business. |
▪ | Nonperforming assets ("NPAs") dropped to 0.68% of total assets at December 31, 2013 from 0.77% at September 30, 2013 and 1.18% at December 31, 2012, as the Company continued to reduce problem assets. The Company's "Texas Ratio" (non-performing assets divided by tangible equity plus the allowance for loan loss) now stands at 6.3%. |
▪ | In FY 2013, Company employees donated a total of 5,860 volunteer hours to community projects and causes. In addition, the Company supported local charities and community business development activities with gifts totaling $167,000. |
Assets and Loan Portfolio Summary
Assets totaled $939.6 million at December 31, 2013, compared to $923.8 million at September 30, 2013 and $972.1 million at December 31, 2012, respectively. The increase from September reflects increases in cash balances resulting from seasonal increases in municipal repurchase balances. The decrease from last year represents the use of cash and marketable securities to redeem the CPP preferred stock and to pay down higher cost liabilities, including brokered and higher rate retail CDs. Net loans receivable decreased by $5.4 and $5.9 million from September 30, 2013 and December 31, 2012, respectively, as the Company continued to remain cautious about adding risk to its loan portfolio in the current economic environment. "We have maintained a conservative approach to credit portfolio management, as we see both credit and interest-rate risks increasing in the current environment," noted Hecker. "The intense competition for loans has led us to scrutinize opportunities carefully for appropriate risk and return ratios.”
The following tables summarize the Company's loan portfolio by type and geographic region, and provide trending information over the prior year.
LOANS BY CATEGORIES | |||||||||||||||||
(Dollars in thousands) | 12/31/2013 | % of total | 9/30/2013 | % of total | 12/31/2012 | % of total | |||||||||||
Commercial loans | $ | 113,736 | 21.7 | % | $ | 111,238 | 21.1 | % | $ | 121,307 | 23.0 | % | |||||
Commercial real estate | 181,207 | 34.7 | % | 185,116 | 35.1 | % | 186,844 | 35.4 | % | ||||||||
Commercial construction | 7,383 | 1.4 | % | 6,305 | 1.2 | % | 3,832 | 0.7 | % | ||||||||
Land and land development | 28,946 | 5.5 | % | 34,172 | 6.5 | % | 31,278 | 5.9 | % | ||||||||
Agriculture | 96,584 | 18.5 | % | 97,453 | 18.4 | % | 85,967 | 16.3 | % | ||||||||
Multifamily | 18,205 | 3.5 | % | 15,802 | 3.0 | % | 16,544 | 3.1 | % | ||||||||
Residential real estate | 59,172 | 11.3 | % | 61,185 | 11.6 | % | 60,020 | 11.3 | % | ||||||||
Residential construction | 2,531 | 0.5 | % | 1,721 | 0.3 | % | 940 | 0.2 | % | ||||||||
Consumer | 9,033 | 1.7 | % | 9,084 | 1.7 | % | 9,626 | 1.8 | % | ||||||||
Municipal | 5,964 | 1.2 | % | 6,107 | 1.1 | % | 12,267 | 2.3 | % | ||||||||
Total loans receivable | $ | 522,761 | 100.0 | % | $ | 528,183 | 100.0 | % | $ | 528,625 | 100.0 | % | |||||
Allowance for loan losses | (7,687 | ) | (8,030 | ) | (7,943 | ) | |||||||||||
Net deferred origination (fees) costs | (240 | ) | 86 | 86 | |||||||||||||
Loans receivable, net | $ | 514,834 | $ | 520,239 | $ | 520,768 | |||||||||||
LOAN PORTFOLIO BY LOCATION December 31, 2013 | ||||||||||||||||||||
(Dollars in thousands) | North Idaho - Eastern Washington | Magic Valley Idaho | Greater Boise Area | E. Oregon, SW Idaho, excluding Boise | Other | Total | % of Loan type to total loans | |||||||||||||
Commercial loans | $ | 80,582 | $ | 4,602 | $ | 9,745 | $ | 18,013 | $ | 794 | $ | 113,736 | 21.8 | % | ||||||
Commercial real estate | 128,248 | 9,862 | 9,299 | 15,465 | 18,333 | 181,207 | 34.7 | % | ||||||||||||
Commercial construction | 7,028 | — | 317 | — | 38 | 7,383 | 1.4 | % | ||||||||||||
Land and land development | 20,397 | 1,378 | 5,344 | 1,203 | 624 | 28,946 | 5.5 | % | ||||||||||||
Agriculture | 2,003 | 3,440 | 26,143 | 61,034 | 3,964 | 96,584 | 18.5 | % | ||||||||||||
Multifamily | 12,431 | 149 | 4,420 | 30 | 1,175 | 18,205 | 3.5 | % | ||||||||||||
Residential real estate | 42,141 | 3,365 | 4,244 | 7,046 | 2,376 | 59,172 | 11.3 | % | ||||||||||||
Residential construction | 2,337 | — | 77 | 117 | — | 2,531 | 0.5 | % | ||||||||||||
Consumer | 5,400 | 1,149 | 730 | 1,506 | 248 | 9,033 | 1.7 | % | ||||||||||||
Municipal | 4,627 | 1,337 | — | — | — | 5,964 | 1.1 | % | ||||||||||||
Total | $ | 305,194 | $ | 25,282 | $ | 60,319 | $ | 104,414 | $ | 27,552 | $ | 522,761 | 100.0 | % | ||||||
Percent of total loans in geographic area | 58.4 | % | 4.8 | % | 11.5 | % | 20.0 | % | 5.3 | % | 100.0 | % | ||||||||
Asset Quality
Nonperforming loans totaled $2.7 million at December 31, 2013, down from $2.8 million at September 30, 2013 and $6.5 million at the end of last year. The allowance for loan loss coverage of non-performing loans increased to 288.1% in the fourth quarter, up from 281.8% at September 30, 2013 and 121.7% at December 31, 2012, respectively.
NPAs were $6.4 million at quarter end, compared to $7.1 million at September 30, 2013, and $11.5 million at December 31, 2012. Outstanding troubled debt restructured loans totaled $10.0 million, up from $9.2 million at September 30, 2013 and $6.7 million at December 31, 2012.
The following table summarizes nonperforming assets by type and provides trending information over the prior year.
NPA BY CATEGORY | ||||||||||||||||||||
(Dollars in thousands) | 12/31/2013 | % of total | 9/30/2013 | % of total | 12/31/2012 | % of total | ||||||||||||||
Commercial loans | $ | 1,431 | 22.5 | % | $ | 1,066 | 15.0 | % | $ | 4,042 | 35.2 | % | ||||||||
Commercial real estate | 167 | 2.6 | % | 261 | 3.7 | % | 1,716 | 14.9 | % | |||||||||||
Land and land development | 3,845 | 60.5 | % | 4,415 | 62.3 | % | 5,118 | 44.6 | % | |||||||||||
Agriculture | 213 | 3.4 | % | 527 | 7.4 | % | 98 | 0.9 | % | |||||||||||
Residential real estate | 693 | 10.9 | % | 814 | 11.5 | % | 502 | 4.4 | % | |||||||||||
Consumer | 3 | 0.1 | % | 3 | 0.1 | % | 4 | — | % | |||||||||||
Total NPA by Categories | $ | 6,352 | 100.0 | % | $ | 7,086 | 100.0 | % | $ | 11,480 | 100.0 | % | ||||||||
Commercial real estate, land development, agricultural and residential real estate NPAs all experienced decreases from the prior quarter, reflecting sales and collection activity, while commercial loans registered a slight increase. Land and land development loans still comprise the greatest proportion of NPA totals, primarily as a result of one large relationship. The majority of NPAs are in the North Idaho/Eastern Washington region, reflecting the Company's higher loan totals in these areas.
Classified loans totaled $23.1 million at quarter end, compared to $23.1 million at September 30, 2013 and $24.9 million at December 31, 2012. Classified loans are loans in which the Company recognizes potential problems in obtaining repayment of principal and interest per the contractual terms, but does not necessarily believe that losses will occur. The Company took advantage of more favorable market conditions to sell its largest remaining troubled marketable security, reducing classified investments by $4.9 million from September 30, 2013 to a total of $1.2 million.
OREO balances totaled $3.7 million at December 31, 2013, compared to $4.2 million at September 30, 2013 and $5.0 million at December 31, 2012. The Company has entered into an installment sales agreement to sell its final remaining OREO property over a five-year period. While the contract requires full payment of the balance recorded by the Company, because of the installment sales contract, accounting guidance requires the maintenance of the OREO balance on the Company's books and the establishment of a $539,000 valuation reserve against the balance. The Company anticipates recovery of this reserve over the five-year period.
Investment Portfolio, Deposit, Borrowings and Equity Summary
Investments available for sale decreased by $13.4 million during the quarter, as the Company sold some of its portfolio to redeem the CPP preferred stock. The portfolio is down $28.5 million from the same period a year ago, as the Company sold longer-term securities earlier in the year to reduce interest rate risk and moved several municipal bonds, totaling $8.2 million, into the held-to-maturity portfolio. The value of the Company's bond holdings dropped moderately during the fourth quarter, in response to a moderate increase in market interest rates. Prepayments on the Company's mortgage-backed securities have slowed considerably as refinance activity has fallen dramatically. "While we see some opportunity to boost yield and income from the recent rise in market rates, the potential for additional rate increases presents both opportunity in terms of higher interest income and risk in the form of decreased market value," said Chief Financial Officer Doug Wright. "We continue to approach investing cautiously, with a measured approach to moderately boosting income, while maintaining relatively short durations," he added.
Deposits totaled $706.0 million at December 31, 2013, compared to $711.1 million at September 30, 2013 and $748.9 million at the end of the fourth quarter last year. The table below provides information on both current composition and trends in the deposit portfolio.
DEPOSITS | |||||||||||||||
(Dollars in thousands) | 12/31/2013 | % of total | 9/30/2013 | % of total | 12/31/2012 | % of total | |||||||||
Non-interest bearing demand accounts | $ | 235,793 | 33.4 | % | $ | 240,116 | 33.8 | % | $ | 254,979 | 34.0 | % | |||
Interest bearing demand accounts | 102,629 | 14.6 | % | 100,572 | 14.1 | % | 99,623 | 13.3 | % | ||||||
Money market accounts | 215,458 | 30.5 | % | 217,110 | 30.5 | % | 213,155 | 28.5 | % | ||||||
Savings & IRA accounts | 68,555 | 9.7 | % | 66,683 | 9.4 | % | 75,788 | 10.1 | % | ||||||
Certificates of deposit (CDs) | 34,178 | 4.8 | % | 35,827 | 5.0 | % | 43,535 | 5.8 | % | ||||||
Jumbo CDs | 49,437 | 7 | % | 50,613 | 7.1 | % | 56,228 | 7.5 | % | ||||||
Brokered CDs | — | — | % | — | — | % | 5,200 | 0.7 | % | ||||||
CDARS CDs to local customers | — | — | % | 151 | 0.1 | % | 426 | 0.1 | % | ||||||
Total Deposits | $ | 706,050 | 100.0 | % | $ | 711,072 | 100.0 | % | $ | 748,934 | 100.0 | % | |||
Demand deposit, money market and savings balances were relatively stable from the quarter ended September 30, 2013, but down from the quarter ended December 31, 2013. The decrease in non-interest bearing demand deposits from prior year end reflects some unusual municipal and business deposit activity related to uncertainty over federal government tax and spending policies at the end of 2012 that was not repeated in 2013, and the movement of some municipal funds into repurchase agreements in 2013 as the FDIC ended its unlimited guarantee on non-interest bearing balances. Money market accounts have been relatively stable, while the decrease in savings account balances from last year reflects the termination of a third party contract under which the Company held savings balances to secure credit cards. The Company continues to redeem higher cost CD funding and has no brokered or other wholesale CDs outstanding. Non-interest bearing demand deposits comprised 33.3% of the deposit portfolio and overall, low-cost transaction deposits represented 78.4% of the deposit portfolio at December 31, 2013.
Stockholders' equity totaled $94.0 million at December 31, 2013, compared to $115.0 million at September 30, 2013 and $114.4 million at December 31, 2012. The decrease over last quarter and the prior year reflects the repayment of the Company's CPP preferred stock and the reversal of the Company's unrealized gain on its securities portfolio, which offset additions from improved earnings. Tangible book value per common share totaled $14.48 at December 31, 2013, compared to $13.66 at September 30, 2013 and $13.63 at December 31, 2012. The improvement reflects the earnings improvement of the Company and because only common equity is included in this ratio, was not impacted by the reduction in preferred stock.
Tangible stockholders' equity to tangible assets was 10.0%, compared to 12.4% at September 30, 2013 and 11.8% at the end of December last year. Tangible common equity to tangible assets, which excludes preferred stock, was 10.0%, compared to 9.5% at September 30, 2013 and 9.0% at December 31, 2012.
Income Statement Summary
Net income applicable to common shareholders for the fourth quarter totaled $6.1 million, or $0.93 per common diluted share, compared to a net income applicable to common shareholders of $1.5 million, or $0.23 per common diluted share in the third quarter of 2013, and $909,000, or $0.14 per common diluted share in the fourth quarter of 2012. For the year ended December 31, 2013, net income applicable to common shareholders totaled $10.1 million, or $1.55 per common diluted share, compared to $1.9 million, or $0.32 per common diluted share for the same time period in 2012. Fourth quarter and 2013 full-year results include the $6.1 million reversal of the Company's remaining tax valuation allowance.
Fourth quarter 2013 net interest income before provision totaled $7.4 million, compared to $7.4 million in the third quarter of 2013 and $7.6 million in the fourth quarter of 2012. The decrease from prior quarters reflects lower loan interest income as downward pressure continued on loan yields. Investment interest income rebounded to $1.7 million from $1.5 million in the prior quarter as the impact of higher yields and slowing prepayment speeds on the Company's investment portfolio more than offset lower volumes.
Decreasing interest expense partially offset the decrease in interest income, as rates paid on both deposits and other borrowings continued to decline. The net interest margin was 3.49% for the fourth quarter, up slightly from 3.46% in the third quarter of 2013, but down slightly from 3.53% in the fourth quarter of 2012. Average earning assets for the fourth quarter totaled $842.2 million, compared to $850.8 million for the third quarter of 2013 and $854.5 million for the fourth quarter of 2012. The yield on interest earning assets was 3.85% for the fourth quarter of 2013 versus 3.88% in the third quarter and 4.00% in the fourth quarter of 2012. Average interest-bearing liabilities totaled $809.7 million, $805.5 million and $809.2 million for the fourth quarter of 2013, the third quarter of 2013 and the final quarter of 2012, respectively. The cost on interest-bearing liabilities was 0.37% for the quarter ended December 31, 2013, down from 0.44% and 0.49% for the quarters ended September 30, 2013 and December 31, 2012, respectively.
Net interest margin for the full year 2013 was 3.50% versus 3.56% for 2012, as the decline in the yield on interest-earning assets from 4.15% to 3.92% was largely offset by a decrease in the cost of interest-bearing liabilities from 0.61% to 0.45%. Average interest earning assets totaled $849.3 million in 2013 versus $863.2 million in 2012, while average interest-costing liabilities totaled $806.7 million in 2013, down from $825.9 million in 2012.
The provision for loan loss remained at a relatively low level in the fourth quarter, totaling $214,000. This compared to a net recovery of provision expense of $82,000 in the third quarter of 2013 and a provision expense of $619,000 in the fourth quarter of last year. The Company experienced net chargeoffs of $557,000 during the fourth quarter compared to net recoveries of $70,000 during the third quarter and net chargeoffs of $1.8 million in the quarter ending December 31, 2012. For the year ended December 31, 2013, the provision for loan losses totaled $559,000, an 87.0% decrease from the $4.3 million provision recorded in 2012. Net charge-offs for 2013 were $815,000 versus $9.1 million for 2012.
The tables below provide information on other income for the current three- and twelve-month periods in comparison to prior periods.
Three Months Ended | 12/31/2013 | % of Total | 9/30/2013 | % of Total | 12/31/2012 | % of Total | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Fees and service charges | $ | 1,169 | 45 | % | $ | 1,299 | 51 | % | $ | 1,204 | 40 | % | ||||||||
Commissions & fees from trust & investment advisory services | 612 | 23 | % | 559 | 22 | % | 438 | 14 | % | |||||||||||
Loan related fee income | 616 | 23 | % | 499 | 20 | % | 858 | 28 | % | |||||||||||
Net gain (loss) on sale of securities | (82 | ) | (3 | )% | 180 | 7 | % | 208 | 7 | % | ||||||||||
Net gain (loss) on sale of other assets | 4 | — | % | (8 | ) | — | % | 4 | — | % | ||||||||||
BOLI income | 72 | 3 | % | 83 | 3 | % | 86 | 3 | % | |||||||||||
Hedge fair value adjustment | 91 | 3 | % | 89 | 4 | % | (26 | ) | (1 | )% | ||||||||||
Unexercised warrant liability fair value adjustment | 63 | 2 | % | (179 | ) | (7 | )% | 71 | 2 | % | ||||||||||
Other income | 115 | 4 | % | (4 | ) | — | % | 204 | 7 | % | ||||||||||
Total | $ | 2,660 | 100 | % | $ | 2,518 | 100 | % | $ | 3,047 | 100 | % | ||||||||
Twelve Months Ended | 12/31/2013 | % of Total | 12/31/2012 | % of Total | |||||||||
(Dollars in thousands) | |||||||||||||
Fees and service charges | $ | 4,866 | 46 | % | $ | 4,732 | 44 | % | |||||
Commissions & fees from trust & investment advisory services | 2,344 | 22 | % | 1,568 | 15 | % | |||||||
Loan related fee income | 2,312 | 22 | % | 2,987 | 28 | % | |||||||
Net gain on sale of securities | 301 | 3 | % | 794 | 7 | % | |||||||
Net gain on sale of other assets | 1 | — | % | 19 | — | % | |||||||
Other-than-temporary credit impairment on investment securities | (63 | ) | (1 | )% | (357 | ) | (3 | )% | |||||
BOLI income | 324 | 3 | % | 345 | 3 | % | |||||||
Hedge fair value adjustment | 326 | 3 | % | (326 | ) | (3 | )% | ||||||
Unexercised warrant liability fair value adjustment | (114 | ) | (1 | )% | 180 | 2 | % | ||||||
Other income | 265 | 3 | % | 775 | 7 | % | |||||||
Total | $ | 10,562 | 100 | % | $ | 10,717 | 100 | % | |||||
Other income in the fourth quarter of 2013 was $2.7 million, up from $2.5 million in the third quarter, but down from $3.0 million in the final quarter of 2012. Trust and investment fees have consistently risen during the past year as the Company continues to emphasize and grow this business line, while deposit fees and service charges have fallen slightly. Although mortgage related income was up from the third quarter, lower refinance activity has led to a decline in this area from 2012 results. Positive fair value adjustments in hedge activity and the Company's warrant liability during the fourth quarter offset a slight loss taken in the sale of securities.
For the comparative twelve-month periods, other income decreased modestly as increases in investment services income and hedge fair value adjustments were offset by lower mortgage origination fees, secured savings contract income, and gains on the sale of securities.
The tables below provide information on operating expenses for the current three- and twelve-month periods in comparison to prior periods.
Three Months Ended | 12/31/13 | % of Total | 9/30/13 | % of Total | 12/31/12 | % of Total | ||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Salaries and employee benefits | $ | 5,028 | 51 | % | $ | 4,133 | 51 | % | $ | 4,181 | 49 | % | ||||||||
Occupancy expense | 1,161 | 12 | % | 1,120 | 14 | % | 1,223 | 14 | % | |||||||||||
Technology | 935 | 10 | % | 982 | 12 | % | 895 | 10 | % | |||||||||||
Advertising | 162 | 2 | % | 194 | 2 | % | 174 | 2 | % | |||||||||||
Fees and service charges | 93 | 1 | % | 88 | 1 | % | 131 | 2 | % | |||||||||||
Printing, postage and supplies | 160 | 2 | % | 176 | 2 | % | 208 | 2 | % | |||||||||||
Legal and accounting | 528 | 6 | % | 350 | 5 | % | 504 | 6 | % | |||||||||||
FDIC assessment | 132 | 1 | % | 145 | 2 | % | 97 | 1 | % | |||||||||||
OREO operations | 543 | 6 | % | 139 | 2 | % | 390 | 4 | % | |||||||||||
Other expense | 851 | 9 | % | 766 | 9 | % | 868 | 10 | % | |||||||||||
Total | $ | 9,593 | 100 | % | $ | 8,093 | 100 | % | $ | 8,671 | 100 | % | ||||||||
Twelve Months Ended | 12/31/2013 | % of Total | 12/31/2012 | % of Total | |||||||||
(Dollars in thousands) | |||||||||||||
Salaries and employee benefits | $ | 17,619 | 52 | % | $ | 16,291 | 48 | % | |||||
Occupancy expense | 4,640 | 14 | % | 4,911 | 15 | % | |||||||
Technology | 3,718 | 11 | % | 3,583 | 11 | % | |||||||
Advertising | 650 | 2 | % | 633 | 2 | % | |||||||
Fees and service charges | 359 | 1 | % | 597 | 2 | % | |||||||
Printing, postage and supplies | 727 | 2 | % | 987 | 3 | % | |||||||
Legal and accounting | 1,709 | 5 | % | 1,796 | 5 | % | |||||||
FDIC assessment | 627 | 2 | % | 1,024 | 3 | % | |||||||
OREO operations | 825 | 2 | % | 653 | 2 | % | |||||||
Other expense | 3,209 | 9 | % | 2,958 | 9 | % | |||||||
Total | $ | 34,083 | 100 | % | $ | 33,433 | 100 | % | |||||
Operating expenses increased during the fourth quarter to $9.6 million, compared to $8.1 million in the third quarter of 2013 and $8.7 million in the fourth quarter of 2012. Fourth quarter results were impacted by the issuance of restricted stock for key employees to bring compensation levels to market, and by the establishment of the $539,000 OREO valuation adjustment noted above. Most other expenses were relatively stable when compared to prior quarters.
The Company recorded $34.1 million in operating expense for the year ended December 31, 2013 up from $33.4 million for the same period in 2012. The impacts of the restricted stock vesting and OREO valuation reserve offset decreases in occupancy, collection, armored car, FDIC insurance, printing, supplies, and legal and accounting expenses. One-time expenses related to the Company's conversion of its core processing systems during 2013 also had an impact, but should result in savings long term. "After several years of consistent and significant cost reduction, 2013 was a repositioning year for us," Hecker noted, "as we incurred some additional expense to better position the Company for new initiatives in the future."
As noted above, the Company reversed its tax valuation allowance in the fourth quarter, resulting in a net $6.1 million income tax benefit for both the quarter and year. In doing so, Company management evaluated its future potential earnings and possible tax strategies, and concluded that there is a high probability that the tax benefits resulting from prior losses will be realized during the allowed carry forward period. After
the reversal of the allowance, the Company's net deferred tax asset totaled $21.7 million, compared to $14.9 million at September 30, 2013 and $12.3 million at December 31, 2012.
About Intermountain Community Bancorp:
Intermountain is headquartered in Sandpoint, Idaho, and operates as four separate divisions with nineteen banking locations in three states. Its banking subsidiary, Panhandle State Bank, offers financial services through northern Idaho offices in Sandpoint, Ponderay, Bonners Ferry, Priest River, Coeur d'Alene, Post Falls, Rathdrum and Kellogg. Intermountain Community Bank, a division of Panhandle State Bank, operates branches in southwest Idaho in Weiser, Payette, Nampa, Caldwell and Fruitland, as well as in Ontario, Oregon. Intermountain Community Bank Washington, a division of Panhandle State Bank, operates branches in downtown Spokane and Spokane Valley, Washington. Magic Valley Bank, a division of Panhandle State Bank, operates branches in Twin Falls and Gooding, Idaho.
All data contained in this report have been prepared on a consolidated basis for Intermountain Community Bancorp. IMCB's shares are quoted on the NASDAQ Capital Market Exchange, ticker symbol IMCB. Additional information on Intermountain Community Bancorp, and its internet banking services, can be found at www.intermountainbank.com.
Forward Looking Statements
This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements may include but are not limited to statements about the Company's plans, objectives, expectations and intentions and other statements contained in this report that are not historical facts. These forward-looking statements are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company's control. Actual results may differ materially from the results discussed in these forward-looking statements because of numerous possible risks and uncertainties. These include but are not limited to the following and the other risks described in the “Risk Factors,” “Business,” and “Management's Discussion and Analysis of Financial Condition and Results of Operations” sections, as applicable, of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012: the possibility of adverse economic developments that may, among other things, increase default and delinquency risks in the Company's loan portfolio; shifts in interest rates that may result in lower interest rate margins; shifts in the demand for the Company's loan and other products; declines in the housing and real estate market; increases in unemployment or sustained high levels of unemployment; changes in accounting policies; changes in the monetary and fiscal policies of the federal government; and changes in laws, regulations and the competitive environment. Readers are cautioned that forward-looking statements in this release speak only as of the date of this release. The Company does not undertake any obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
INTERMOUNTAIN COMMUNITY BANCORP CONSOLIDATED BALANCE SHEETS (Unaudited) | |||||||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | |||||||||
(Dollars in thousands, except per share amounts) | |||||||||||
ASSETS | |||||||||||
Cash and cash equivalents: | |||||||||||
Interest-bearing | $ | 44,946 | $ | 17,795 | $ | 53,403 | |||||
Non-interest bearing and vault | 7,851 | 7,972 | 13,536 | ||||||||
Restricted cash | 12,333 | 12,236 | 13,146 | ||||||||
Available-for-sale securities, at fair value | 251,638 | 265,000 | 280,169 | ||||||||
Held-to-maturity securities, at amortized cost | 28,286 | 26,241 | 14,826 | ||||||||
Federal Home Loan Bank of Seattle stock, at cost | 2,187 | 2,228 | 2,269 | ||||||||
Loans held for sale | 614 | 721 | 1,684 | ||||||||
Loans receivable, net of allowance for losses on loans $7,687, $8,030 and $7,943 as of December 31, 2013, September 30, 2013 and December 31, 2012, respectively | 514,834 | 520,239 | 520,768 | ||||||||
Accrued interest receivable | 4,170 | 4,310 | 4,320 | ||||||||
Office properties and equipment, net | 35,036 | 35,420 | 35,453 | ||||||||
Bank-owned life insurance | 9,797 | 9,725 | 9,472 | ||||||||
Other real estate owned (“OREO”) | 3,684 | 4,236 | 4,951 | ||||||||
Prepaid expenses and other assets | 24,272 | 17,641 | 18,142 | ||||||||
Total assets | $ | 939,648 | $ | 923,764 | $ | 972,139 | |||||
LIABILITIES | |||||||||||
Deposits: | |||||||||||
Interest bearing deposits | $ | 470,257 | $ | 470,956 | $ | 493,955 | |||||
Noninterest bearing deposits | 235,793 | 240,116 | 254,979 | ||||||||
Securities sold subject to repurchase agreements | 99,888 | 64,409 | 76,738 | ||||||||
Advances from Federal Home Loan Bank | 4,000 | 4,000 | 4,000 | ||||||||
Unexercised stock warrant liability | 942 | 1,004 | 828 | ||||||||
Cashier checks issued and payable | 3,620 | 3,174 | 2,024 | ||||||||
Accrued interest payable | 219 | 307 | 1,185 | ||||||||
Other borrowings | 23,410 | 16,527 | 16,527 | ||||||||
Accrued expenses and other liabilities | 7,507 | 8,321 | 7,469 | ||||||||
Total liabilities | 845,636 | 808,814 | 857,705 | ||||||||
STOCKHOLDERS' EQUITY | |||||||||||
Common stock - voting shares | 97,087 | 96,358 | 96,368 | ||||||||
Common stock - non-voting shares | 31,941 | 31,941 | 31,941 | ||||||||
Preferred stock, Series A | — | 26,894 | 26,527 | ||||||||
Accumulated other comprehensive income (loss) (1) | (1,182 | ) | (331 | ) | 3,529 | ||||||
Accumulated deficit | (33,834 | ) | (39,912 | ) | (43,931 | ) | |||||
Total stockholders' equity | 94,012 | 114,950 | 114,434 | ||||||||
Total liabilities and stockholders' equity | $ | 939,648 | $ | 923,764 | $ | 972,139 | |||||
Book value per common share, excluding preferred stock | $ | 14.48 | $ | 13.67 | $ | 13.64 | |||||
Tangible book value per common share, excluding preferred stock (2) | $ | 14.48 | $ | 13.66 | $ | 13.63 | |||||
Shares outstanding at end of period | 6,490,902 | 6,443,294 | 6,442,820 | ||||||||
Stockholders' Equity to Total Assets | 10.01 | % | 12.44 | % | 11.77 | % | |||||
Tangible Common Equity to Tangible Assets | 10.00 | % | 9.53 | % | 9.04 | % | |||||
(1) Net of deferred income taxes (2) Amount represents common stockholders' equity less net goodwill and other intangible assets divided by total common shares outstanding. | |||||||||||
INTERMOUNTAIN COMMUNITY BANCORP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | ||||||||||
(Dollars in thousands, except per share amounts) | ||||||||||||
Interest income: | ||||||||||||
Loans | $ | 6,495 | $ | 6,809 | $ | 6,929 | ||||||
Investments | 1,668 | 1,517 | 1,689 | |||||||||
Total interest income | 8,163 | 8,326 | 8,618 | |||||||||
Interest expense: | ||||||||||||
Deposits | 442 | 471 | 700 | |||||||||
Borrowings | 319 | 430 | 312 | |||||||||
Total interest expense | 761 | 901 | 1,012 | |||||||||
Net interest income | 7,402 | 7,425 | 7,606 | |||||||||
(Provision for) recovery of losses on loans | (214 | ) | 82 | (619 | ) | |||||||
Net interest income after provision for losses on loans | 7,188 | 7,507 | 6,987 | |||||||||
Other income (expense): | ||||||||||||
Fees and service charges | 1,169 | 1,299 | 1,204 | |||||||||
Commissions & fees from trust & investment advisory services | 612 | 559 | 438 | |||||||||
Loan related fee income | 616 | 499 | 858 | |||||||||
Net gain (loss) on sale of securities | (82 | ) | 180 | 208 | ||||||||
Net gain (loss) on sale of other assets | 4 | (8 | ) | 4 | ||||||||
Bank-owned life insurance | 72 | 83 | 86 | |||||||||
Fair value adjustment on cash flow hedge | 91 | 89 | (26 | ) | ||||||||
Unexercised warrant liability fair value adjustment | 63 | (179 | ) | 71 | ||||||||
Other income | 115 | (4 | ) | 204 | ||||||||
Total other income, net | 2,660 | 2,518 | 3,047 | |||||||||
Operating expenses: | ||||||||||||
Salaries and employee benefits | 5,028 | 4,133 | 4,181 | |||||||||
Occupancy expense | 1,161 | 1,120 | 1,223 | |||||||||
Technology | 935 | 982 | 895 | |||||||||
Advertising | 162 | 194 | 174 | |||||||||
Fees and service charges | 93 | 88 | 131 | |||||||||
Printing, postage and supplies | 160 | 176 | 208 | |||||||||
Legal and accounting | 528 | 350 | 504 | |||||||||
FDIC assessment | 132 | 145 | 97 | |||||||||
OREO operations | 543 | 139 | 390 | |||||||||
Other expenses | 851 | 766 | 868 | |||||||||
Total operating expenses | 9,593 | 8,093 | 8,671 | |||||||||
Income before income tax benefit | 255 | 1,932 | 1,363 | |||||||||
Income tax benefit | 6,118 | — | 8 | |||||||||
Net income | 6,373 | 1,932 | 1,371 | |||||||||
Preferred stock dividend | 294 | 461 | 461 | |||||||||
Net Income applicable to common stockholders | $ | 6,079 | $ | 1,471 | $ | 910 | ||||||
Income per share - basic | $ | 0.94 | $ | 0.23 | $ | 0.14 | ||||||
Income per share - diluted | $ | 0.93 | $ | 0.23 | $ | 0.14 | ||||||
Weighted-average common shares outstanding - basic | 6,448,599 | 6,443,294 | 6,442,729 | |||||||||
Weighted-average common shares outstanding - diluted | 6,509,675 | 6,497,886 | 6,470,944 | |||||||||
INTERMOUNTAIN COMMUNITY BANCORP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||
Twelve Months Ended | ||||||||
12/31/2013 | 12/31/2012 | |||||||
(Dollars in thousands, except per share amounts) | ||||||||
Interest income: | ||||||||
Loans | $ | 26,973 | $ | 28,172 | ||||
Investments | 6,358 | 7,704 | ||||||
Total interest income | 33,331 | 35,876 | ||||||
Interest expense: | ||||||||
Deposits | 1,984 | 3,002 | ||||||
Borrowings | 1,614 | 2,081 | ||||||
Total interest expense | 3,598 | 5,083 | ||||||
Net interest income | 29,733 | 30,793 | ||||||
Provision for losses on loans | (559 | ) | (4,306 | ) | ||||
Net interest income after provision for losses on loans | 29,174 | 26,487 | ||||||
Other income (expense): | ||||||||
Fees and service charges | 4,866 | 4,732 | ||||||
Commissions & fees from trust & investment advisory services | 2,344 | 1,568 | ||||||
Loan related fee income | 2,312 | 2,987 | ||||||
Net gain on sale of securities | 301 | 794 | ||||||
Net gain on sale of other assets | 1 | 19 | ||||||
Other-than-temporary impairment on investments | (63 | ) | (357 | ) | ||||
Bank-owned life insurance | 324 | 345 | ||||||
Fair value adjustment on cash flow hedge | 326 | (326 | ) | |||||
Unexercised warrant liability fair value adjustment | (114 | ) | 180 | |||||
Other income | 265 | 775 | ||||||
Total other income, net | 10,562 | 10,717 | ||||||
Operating expenses: | ||||||||
Salaries and employee benefits | 17,619 | 16,291 | ||||||
Occupancy expense | 4,640 | 4,911 | ||||||
Technology | 3,718 | 3,583 | ||||||
Advertising | 650 | 633 | ||||||
Fees and service charges | 359 | 597 | ||||||
Printing, postage and supplies | 727 | 987 | ||||||
Legal and accounting | 1,709 | 1,796 | ||||||
FDIC assessment | 627 | 1,024 | ||||||
OREO operations | 825 | 653 | ||||||
Other expenses | 3,209 | 2,958 | ||||||
Total operating expenses | 34,083 | 33,433 | ||||||
Income (loss) before income tax benefit | 5,653 | 3,771 | ||||||
Income tax benefit | 6,118 | 8 | ||||||
Net income | 11,771 | 3,779 | ||||||
Preferred stock dividend | 1,673 | 1,891 | ||||||
Net Income applicable to common stockholders | $ | 10,098 | $ | 1,888 | ||||
Income per share - basic | $ | 1.57 | $ | 0.33 | ||||
Income per share - diluted | $ | 1.55 | $ | 0.32 | ||||
Weighted-average common shares outstanding - basic (1) | 6,444,556 | 5,806,958 | ||||||
Weighted-average common shares outstanding - diluted (2) | 6,494,089 | 5,825,283 | ||||||
INTERMOUNTAIN COMMUNITY BANCORP KEY PERFORMANCE RATIOS | |||||||||||
Three Months Ended | Twelve Months Ended | ||||||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | 12/31/2013 | 12/30/2012 | |||||||
Net Interest Spread: | |||||||||||
Yield on Loan Portfolio | 4.89 | % | 5.02 | % | 5.28 | % | 5.12 | % | 5.43 | % | |
Yield on Investments & Cash | 2.10 | % | 1.92 | % | 2.01 | % | 1.97 | % | 2.23 | % | |
Yield on Interest-Earning Assets | 3.85 | % | 3.88 | % | 4.00 | % | 3.92 | % | 4.15 | % | |
Cost of Deposits | 0.25 | % | 0.26 | % | 0.38 | % | 0.28 | % | 0.42 | % | |
Cost of Advances | 1.46 | % | 3.07 | % | 3.08 | % | 2.12 | % | 2.25 | % | |
Cost of Borrowings | 1.21 | % | 1.72 | % | 1.50 | % | 1.63 | % | 1.96 | % | |
Cost of Interest-Bearing Liabilities | 0.37 | % | 0.44 | % | 0.49 | % | 0.45 | % | 0.61 | % | |
Net Interest Spread | 3.47 | % | 3.44 | % | 3.50 | % | 3.48 | % | 3.53 | % | |
Net Interest Margin | 3.49 | % | 3.46 | % | 3.53 | % | 3.50 | % | 3.56 | % | |
Performance Ratios: | |||||||||||
Return on Average Assets | 2.71 | % | 0.83 | % | 0.56 | % | 1.25 | % | 0.39 | % | |
Return on Average Common Stockholders' Equity | 26.49 | % | 6.70 | % | 4.14 | % | 11.33 | % | 2.75 | % | |
Return on Average Common Tangible Equity (1) | 26.50 | % | 6.70 | % | 4.14 | % | 11.34 | % | 2.75 | % | |
Operating Efficiency | 95.34 | % | 81.39 | % | 81.39 | % | 84.58 | % | 80.54 | % | |
Noninterest Expense to Average Assets | 4.05 | % | 3.46 | % | 3.60 | % | 3.66 | % | 3.46 | % | |
(1) Average common tangible equity is average common stockholders' equity less average other intangible assets. | |||||||||||
INTERMOUNTAIN COMMUNITY BANCORP LOAN AND REGULATORY CAPITAL DATA | ||||||||||
12/31/2013 | 9/30/2013 | 12/31/2012 | ||||||||
(Dollars in thousands) | ||||||||||
Loan Data | ||||||||||
Net Charge-Offs to Average Net Loans (QTD Annualized) | 0.42 | % | (0.05 | )% | 1.37 | % | ||||
Loan Loss Allowance to Total Loans | 1.47 | % | 1.52 | % | 1.50 | % | ||||
Nonperforming Assets: | ||||||||||
Accruing Loans-90 Days Past Due | $ | — | $ | 42 | $ | — | ||||
Nonaccrual Loans | 2,668 | 2,808 | 6,529 | |||||||
Total Nonperforming Loans | 2,668 | 2,850 | 6,529 | |||||||
OREO | 3,684 | 4,236 | 4,951 | |||||||
Total Nonperforming Assets (“NPA”) | $ | 6,352 | $ | 7,086 | $ | 11,480 | ||||
Troubled Debt Restructured Loans | 10,047 | 9,212 | 6,719 | |||||||
NPA to Total Assets | 0.68 | % | 0.77 | % | 1.18 | % | ||||
NPA to Net Loans Receivable | 1.23 | % | 1.36 | % | 2.20 | % | ||||
NPA to Estimated Risk Based Capital | 6.45 | % | 5.60 | % | 9.25 | % | ||||
NPA to Tangible Equity + Allowance for Loan Loss | 6.25 | % | 5.76 | % | 9.39 | % | ||||
Loan Delinquency Ratio (30 days and over) | 0.24 | % | 0.31 | % | 0.13 | % | ||||
12/31/2013 | 9/30/2013 | 12/31/2012 | ||||||||
Allowance for Loan Loss by Loan Type | (Dollars in thousands) | |||||||||
Commercial loans | $ | 1,819 | $ | 1,764 | $ | 2,156 | ||||
Commercial real estate loans | 2,455 | 2,514 | 2,762 | |||||||
Commercial construction loans | 177 | 154 | 101 | |||||||
Land and land development loans | 1,067 | 1,206 | 1,197 | |||||||
Agriculture loans | 726 | 928 | 228 | |||||||
Multifamily loans | 33 | 35 | 51 | |||||||
Residential real estate loans | 1,192 | 1,255 | 1,144 | |||||||
Residential construction loans | 56 | 38 | 24 | |||||||
Consumer loans | 136 | 107 | 202 | |||||||
Municipal loans | 26 | 29 | 78 | |||||||
Totals | $ | 7,687 | $ | 8,030 | $ | 7,943 | ||||
Regulatory Capital | ||||||||||
Total capital (to risk-weighted assets): | ||||||||||
The Company | 16.92 | % | 21.13 | % | 20.51 | % | ||||
Panhandle State Bank | 16.95 | % | 20.08 | % | 19.07 | % | ||||
Tier 1 capital (to risk-weighted assets): | ||||||||||
The Company | 15.67 | % | 19.88 | % | 19.26 | % | ||||
Panhandle State Bank | 15.70 | % | 18.83 | % | 17.82 | % | ||||
Tier 1 capital (to average assets): | ||||||||||
The Company | 10.06 | % | 12.94 | % | 12.54 | % | ||||
Panhandle State Bank | 10.06 | % | 12.26 | % | 11.60 | % | ||||