Add
FFKT to Portfolio
Set Alert
Email to a
Friend
| |||
|
|
Quotes & Info
|
| FFKT > SEC Filings for FFKT > Form 10-Q on 7-May-2009 | All Recent SEC Filings |
7-May-2009
Quarterly Report
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. In general, forward-looking statements relate to a discussion of future financial results or projections, future economic performance, future operational plans and objectives, and statements regarding the underlying assumptions of such statements. Although the Company believes that the assumptions underlying the forward-looking statements contained herein are reasonable, any of the assumptions could be inaccurate, and therefore, there can be no assurance that the forward-looking statements included herein will prove to be accurate. Factors that could cause actual results to differ from the results discussed in the forward-looking statements include, but are not limited to: economic conditions (both generally and more specifically in the markets in which the Company and its subsidiaries operate) and lower interest margins; competition for the Company's customers from other providers of financial services; deposit outflows or reduced demand for financial services and loan products; government legislation, regulation, and changes in monetary and fiscal policies (which changes from time to time and over which the Company has no control); changes in interest rates; changes in prepayment speeds of loans or investment securities; inflation; material unforeseen changes in the liquidity, results of operations, or financial condition of the Company's customers; changes in the level of non-performing assets and charge-offs; changes in the number of common shares outstanding; the capability of the Company to successfully enter into a definitive agreement for and close anticipated transactions; the possibility that acquired entities may not perform as well as expected; unexpected claims or litigation against the Company; technological or operational difficulties; the impact of new accounting pronouncements and changes in policies and practices that may be adopted by regulatory agencies; acts of war or terrorism; and other risks or uncertainties detailed in the Company's filings with the Securities and Exchange Commission, all of which are difficult to predict and many of which are beyond the control of the Company. The Company expressly disclaims any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in the Company's opinions or expectations.
RESULTS OF OPERATIONS
The Company reported net income of $3.3 million for the quarter ended March 31, 2009. This represents a decrease of $1.1 million or 24.5% compared to $4.4 million for the quarter ended March 31, 2008. Net income per common share was $.39 in the current quarter, a decrease of $.20 or 33.9% compared to $.59 a year ago. A summary of the quarterly comparison follows.
† The percentage decrease in per share earnings is greater than the percentage decrease in net income due to dividends on the preferred stock issued during the current quarter.
† Net interest income decreased $516 thousand or 3.5%. Interest income on loans declined $2.8 million or 12.4% partially offset by lower interest expense on deposits of $2.4 million or 21.7%.
† The provision for loan losses increased $574 thousand or 52.1%.
† Noninterest income increased $338 thousand or 5.3% mainly due to a $388 thousand increase in net gains on the sale of investment securities and a $221 thousand increase in net gains on the sale of loans. Service charges and fees on deposits decreased $192 thousand or 8.1% in the comparison.
† Noninterest expenses increased $732 thousand or 5.1%. Salary and benefit expenses were relatively unchanged at $7.5 million. Higher expenses occurred across a broad range of line items.
† Income tax expense decreased $413 thousand or 32.2%. The effective income tax rate was 20.9% in the current period compared to 22.7% a year earlier.
† Return on average assets ("ROA") and equity ("ROE") was .60% and 6.87%, respectively compared to .82% and 10.28% for the previous-year first quarter.
† Net interest spread and margin for the current quarter was 2.75% and 3.03%, respectively compared to 2.99% and 3.29% a year earlier. The balance sheet leverage transaction that occurred during 2007 negatively impacted net interest margin by 13 basis points in the current three months.
Net Interest Income
The overall interest rate environment during the first quarter of 2009 has been more stable compared to the dramatic volatility that occurred during 2008. However, the overall rate environment remains near historic lows and has made managing the Company's net interest margin very challenging. At March 31, 2009 the short-term federal funds target interest rate was between zero and 0.25%, unchanged from December 31, 2008. The yield curve has inched upward since year-end 2008, with the 10 and 30-year treasury yields climbing 45 and 86 basis points, respectively. Shorter-term treasury yields moved upward at a much lower amount, up 13, 16, and 3 basis points for the 3-month, 6-month, and 2-year treasury's, respectively. The 3-year and 5-year treasury yields were up 15 and 11 basis points, respectively.
Net interest income was $14.2 million for the first three months of 2009, a decrease of $516 thousand or 3.5% from $14.8 million a year earlier. The decrease in net interest income is attributed mainly to a $2.8 million or 12.4% decline in interest income on loans that was partially offset by a $2.4 million or 21.7% decrease in interest expense on deposit accounts. The decrease in both of these line items was driven by rate declines, which countered the effect on net interest income of volume increases in both loans and deposits.
Interest income and interest expense related to nearly all of the Company's earning assets and interest paying liabilities have declined in the quarterly comparison. These declines are due almost entirely to the lower interest rate environment in the current period compared to a year earlier. The Company is generally earning and paying less interest from its earning assets and funding sources as rates have dropped. This includes repricing of variable and floating rate assets and liabilities that have reset since the prior reporting period as well as activity related to new earning assets and funding sources that reflect the overall lower interest rate environment.
Total interest income was $26.3 million in the first quarter of 2009, a decrease of $3.7 million or 12.3% and was driven by lower interest income on loans of $2.8 million or 12.4%. The average rate earned on loans was 6.2% in the current period, down 95 basis points from 7.2% a year earlier. Similar declines were experienced in other earning asset categories. Interest income from deposits held in other banks and federal funds sold and securities purchased under agreements to resell was down $489 thousand or 86.1% as a 289 basis point decrease in the average rate earned offset a volume increase of $71.9 million or 98%. Interest on taxable securities decreased $384 thousand or 6.5% which is also attributed to a 37 basis point lower average rate earned.
Total interest expense was $12.1 million in the current quarter. This represents a decrease of $3.2 million or 20.9% compared to $15.3 million a year ago. The decrease in interest expense was driven by lower interest expense on deposits of $2.4 million or 21.7%. The average rate paid on deposit accounts was 2.54% in the current period, a decrease of 83 basis points compared to 3.36% a year earlier. Interest expense on time deposits, the largest component of interest expense on deposits, declined $1.3 million or 14.6% in the quarterly comparison. Interest expense on short and long-term borrowings decreased $590 thousand or 83.6% and $228 thousand or 6.3%, respectively. These decreases were mainly driven by the overall lower interest rate environment.
The net interest margin on a taxable equivalent basis decreased 26 basis points to 3.03% during the first quarter of 2009 compared to 3.29% in the same quarter of 2008. The lower net interest margin is attributed to a 24 basis point decrease in the spread between rates earned on earning assets and the rates paid on interest bearing liabilities to 2.75% in the current quarter from 2.99% in the first quarter of 2008. The decrease in net interest margin was impacted mainly by an overall lower interest rate environment. The Company expects its net interest margin to remain flat or decrease slightly in the near term due to the maturity structure of its earning assets, particularly loans, and to a lesser degree, funding sources that continue to reprice downward to reflect the overall lower market interest rate environment.
The following tables present an analysis of net interest income for the quarterly periods ended March 31.
Distribution of Assets, Liabilities and Shareholders' Equity: Interest Rates and
|
|