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| WABC > SEC Filings for WABC > Form 10-Q on 8-May-2009 | All Recent SEC Filings |
8-May-2009
Quarterly Report
Three months ended
March 31, March 31, December 31,
2009 2008 2008
(In thousands, except per share data)
Net interest income (FTE) $ 59,359 $ 47,982 $ 49,850
Provision for loan losses (1,800 ) (600 ) (900 )
Noninterest income 63,968 19,378 9,908
Noninterest expense (34,123 ) (23,056 ) (26,166 )
Provision for income taxes (FTE) (34,579 ) (16,926 ) (11,882 )
Net income $ 52,825 $ 26,778 $ 20,810
Net income applicable to common equity $ 52,247 $ 26,778 $ 20,810
Average diluted common shares 29,105 29,210 29,218
Diluted earnings per common share $ 1.80 $ 0.92 $ 0.71
Average total assets $ 4,998,964 $ 4,433,934 $ 4,053,295
Net income (annualized) to average total
assets 4.24 % 2.43 % 2.04 %
Net income (annualized) to average common
stockholders' equity 48.01 % 27.32 % 20.56 %
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Net income applicable to common equity for the first quarter of 2009 was $25.5 million more than the same quarter of 2008, largely attributable to a FAS 141R gain of $48.8 million and higher net interest income (FTE), partially offset by higher provision for loan losses, higher noninterest expense and an increase in income tax provision (FTE). An $11.4 million or 23.7% increase in net interest income (FTE) was mostly attributed to growth in average balances of loans and lower rates paid on interest-bearing liabilities, partially offset by lower yields on loans and higher average balances of interest-bearing liabilities and lower average balances of investments. The provision for loan losses increased $1.2 million, reflecting Management's assessment of credit risk and the appropriate level of the allowance for loan losses. Noninterest income rose $44.6 million mainly due to the FAS 141R gain and higher service charges on deposit accounts, partially offset by the $5.7 million securities gain in the first quarter of 2008. Noninterest expense increased $11.1 million mostly due to acquisition-related increases in salaries and related benefits, occupancy and equipment expenses, legal fees, loan expenses, higher amortization of intangibles and the reversal of a $2.3 million accrual for Visa related litigation in the first quarter of 2008. The provision for income taxes (FTE) increased $17.7 million primarily due to the FAS 141R gain and higher profitability.
Comparing the first quarter of 2009 to the prior quarter, net income applicable
to common equity increased $31.4 million, due to the FAS 141R gain and higher
net interest income (FTE), partially offset by increases in the provision for
loan losses, noninterest expense and income tax provision (FTE). The higher net
interest income (FTE) was mainly caused by higher average loans and lower rates
paid on interest-bearing deposits, partially offset by lower yields on loans and
higher average balances of interest-bearing liabilities. The provision for loan
losses increased $900 thousand to reflect Management's assessment of credit risk
and the appropriate level of the allowance for loan losses. Noninterest income
increased $54.1 million largely due to the FAS 141R gain, higher service charges
on deposit accounts due to acquired deposits and the securities losses in the
fourth quarter of 2008. The income tax provision (FTE) increased $22.7 million
primarily due to the FAS 141R gain and higher profitability and the securities
losses in the fourth quarter of 2008.
Net Interest Income
Following is a summary of the components of net interest income for the periods
indicated:
Three months ended
March 31, December 31,
2009 2008 2008
(In thousands)
Interest and fee income $ 59,185 $ 55,394 $ 49,445
Interest expense (4,833 ) (12,828 ) (4,592 )
FTE adjustment 5,007 5,416 4,997
Net interest income (FTE) $ 59,359 $ 47,982 $ 49,850
Average earning assets $ 4,475,371 $ 4,028,221 $ 3,654,966
Net interest margin (FTE) 5.35 % 4.79 % 5.44 %
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Net interest income (FTE) increased during the first quarter of 2009 by
$11.4 million or 23.7% from the same period in 2008 to $59.4 million, mainly due
to higher average balances of loans (up $658 million) and lower rates paid on
interest-bearing liabilities (down 123 basis points ("bp")), partially offset by
lower yields on loans (down 51 bp) and higher average balances of
interest-bearing liabilities (up $384 million) and lower average balances of
investments (down $211 million).
Comparing the first three months of 2009 with the fourth quarter of 2008, net
interest income (FTE) increased $9.5 million or 19.1%, primarily due to a higher
volume of average loans (up $736 million) and lower rates paid on
interest-bearing deposits (down 13 bp), partially offset by lower yields on
loans (down 17 bp) and higher average balances of interest-bearing liabilities
(up $730 million).
Interest and Fee Income
Interest and fee income (FTE) for the first quarter of 2009 increased
$3.4 million or 5.6% from the same period in 2008. The increase was caused
primarily by higher average balances of loans (up $658 million), partially
offset by lower yields on loans (down 51 bp) and lower average balances of
investments (down $211 million).
The growth in the average earning assets in the first quarter of 2009 compared
with the same period in 2008 was substantially attributable to the acquisition
of County loans from the FDIC. The average balance of such loans for the first
quarter of 2009 was $762 million. The growth in average balances of loans were
mainly due to increases in the average balance of commercial real estate loans
(up $341 million), taxable commercial loans (up $303 million), and other
consumer loans (up $70 million), partially offset by a $23 million decline in
average tax-exempt commercial loans, a $21 million decline in average
residential real estate loans and a $12 million decline in average construction
loans. The average investment portfolio decreased $211 million largely due to
declines in average balances of U.S. government sponsored entity obligations
(down $135 million), a $24 million decline in municipal securities and a
$62 million decline in average balances of FHLMC and FNMA stock resulting from
the impairment charge in the second, third and fourth quarters of 2008,
partially offset by increases in mortgage backed securities and collateralized
mortgage obligations which were purchased from the FDIC as a part of the County
acquisition. The average yield on the Company's earning assets decreased from
6.06% in the first quarter 2008 to 5.79% in the corresponding period of 2009.
The composite yield on loans fell 51 bp to 5.97% due to decreases in yields on
taxable commercial loans (down 176 bp), commercial real estate loans (down 58
bp) and real estate construction loans (down 466 bp), partially offset by a 21
bp increase in yields on tax-exempt commercial loans. The investment portfolio
yield decreased 2 bp to 5.38%, mainly due to a 489 bp decrease in the average
yield on corporate and other securities which was affected primarily by
suspended dividends on FLHMC and FNMA preferred stock. Offsetting the decline
were increases in yields on U.S. government sponsored entity obligations (up 36
bp), mortgage backed securities and collateralized mortgage obligations (up 31
bp) and municipal securities (up 11 bp).
Comparing the first quarter of 2009 with the prior quarter of 2008, interest and
fee income (FTE) was up $9.8 million or 17.9%. The increase largely resulted
from a higher volume of average loans due to the County acquisition, partially
offset by lower yields on loans. Average earning assets increased $820 million
or 22.4% for the first quarter of 2009 compared with the previous quarter due to
the County acquisition. A $736 million increase in the average balance of the
loan portfolio was attributable to increases in average balances of commercial
real estate loans (up $372 million), taxable commercial loans (up $288 million),
consumer installment loans (up $70 million) and real estate construction loans
(up $18 million), partially offset by a $7 million decrease in the average
balance of tax-exempt commercial loans and a $5 million decrease in the average
balance of residential real estate loans. Average investments rose by
$84 million primarily due to County acquisition related growth in the average
balances of mortgage backed securities and collateralized mortgage obligations
(up $77 million), municipal securities (up $10 million), and corporate and other
securities (up $4 million), partially offset by an $8 million decrease in the
average balance of U.S. government sponsored entity obligations. The average
yield on earning assets for the first three months of 2009 was 5.79% compared
with 5.94% in the fourth quarter of 2008. The loan portfolio yield for the first
three months of 2009 compared with the previous quarter was lower by 17 bp, due
to decreases in yields on commercial real estate loans (down 53 bp), taxable
commercial loans (down 46 bp), and real estate construction loans (down 68 bp),
partially offset by consumer installment and other consumer loans (up 9 bp). The
investment portfolio yield decreased by 16 bp. The decrease resulted mostly from
lower yields on corporate and other securities (down 136 bp) and U.S. government
sponsored entity obligations (down 13 bp), partially offset by higher yields on
mortgage backed securities and collateralized mortgage obligations (up 27 bp)
and municipal securities (up 4 bp).
Interest Expense
Interest expense in the first quarter of 2009 decreased $8.0 million compared
with the same period in 2008. The decrease was attributable to lower rates paid
on the interest-bearing liabilities and higher levels of shareholders' equity,
partially offset by higher average interest-bearing liabilities. The average
rate paid on interest-bearing liabilities decreased from 1.85% in the first
quarter of 2008 to 0.62% in the same quarter of 2009. Rates paid on most
interest-bearing liabilities moved with general market conditions. Rates on
interest-bearing deposits decreased 86 bp to 0.60% primarily due to decreases in
rates paid on CDs over $100 thousand (down 243 bp) , CDs less than $100 thousand
(down 164 bp) and preferred money market savings (down 145 bp). Rates on
short-term borrowings also decreased 224 bp mostly due to lower rates on federal
funds purchased (down 303 bp) and line of credit and repurchase facilities (down
198 bp). Average interest-bearing liabilities rose by $384 million or 13.9% for
the first quarter of 2009 over the same period of 2008 primarily through
acquisition. Interest-bearing deposits grew $564 million primarily due to
increases in CDs less than $100 thousand (up $170 million), CDs over $100
thousand (up $164 million), money market checking accounts (up $121 million),
regular savings (up $58 million) and money market savings (up $53 million).
Offsetting the increase were decreases in average balances of short-term
borrowings (down $169 million) and long-term debt (down $10 million). Average
short-term borrowings decreased $169 million due to declines in average balances
of federal funds purchased (down $251 million) and sweep accounts (down
$22 million), partially offset by FHLB advances assumed through the County
acquisition averaging $59 million and a $45 million increase in average balances
of repurchase facilities.
Comparing the first quarter of 2009 with the fourth quarter of 2008, interest
expense increased $241 thousand or 5.2%, due to higher average balances of
interest-bearing liabilities, offset by lower rates paid and higher levels of
shareholders' equity. Average interest-bearing liabilities during the first
quarter of 2009 rose by $730 million or 30.1% over the last quarter of 2008
mainly through the County acquisition. A $628 million growth in interest-bearing
deposits was mostly attributable to increases in average balances of CDs over
$100 thousand (up $185 million), CDs less than $100 thousand (up $174 million),
money market checking accounts (up $134 million), money market savings (up
$78 million) and regular savings (up $54 million). Short-term borrowings also
increased, mainly the net result of higher average balances of repurchase
agreements (up $63 million) and FHLB advances (up $59 million), partially offset
by lower average balances of federal funds purchased (down $10 million) and
sweep accounts (down $10 million). Rates paid on liabilities averaged 0.62%
during the first three months of 2009 compared with 0.75% for the last three
months of 2008. The average rate paid on interest-bearing deposits declined 13
bp to 0.60% in the first quarter 2009 mainly due to lower rates on CDs less than
$100 thousand (down 59 bp), CDs over $100 thousand (down 49 bp) and preferred
money market savings (down 32 bp). Rates on short-term borrowings were also
lower by 6 bp largely due to federal funds (down 31 bp) and sweep accounts (down
10 bp).
Net Interest Margin (FTE)
The following summarizes the components of the Company's net interest margin for
the periods indicated:
Three months ended
March 31, March 31, December 31,
2009 2008 2008
Yield on earning assets (FTE) 5.79 % 6.06 % 5.94 %
Rate paid on interest-bearing liabilities 0.62 % 1.85 % 0.75 %
Net interest spread (FTE) 5.17 % 4.21 % 5.19 %
Impact of all other net noninterest bearing funds 0.18 % 0.58 % 0.25 %
Net interest margin (FTE) 5.35 % 4.79 % 5.44 %
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During the first quarter of 2009, the net interest margin (FTE) increased 56 bp
compared with the same period in 2008. Rates paid on interest-bearing
liabilities declined faster than yields on earning assets (FTE), resulting in a
96 bp increase in net interest spread. The increase in the net interest spread
was partially reduced by the lower net interest margin contribution of
noninterest bearing funding sources. The margin contribution of noninterest
bearing funds decreased 40 bp because of the lower market rates of interest at
which they could be invested. The net interest margin (FTE) in the first three
months of 2009 declined by 9 bp compared with the fourth quarter of 2008.
Earning asset yields decreased 15 bp while the cost of interest-bearing
liabilities declined by 13 bp, resulting in a 2 bp decrease in the net interest
spread. The 7 bp decrease in margin contribution from noninterest bearing
funding sources lowered the net interest margin to 5.35%.
[Remainder of this page left intentionally left blank]
Summary of Average Balances, Yields/Rates and Interest Differential The following tables present, for the periods indicated, information regarding the Company's consolidated average assets, liabilities and shareholders' equity, the amount of interest income from average earning assets and the resulting yields, and the amount of interest expense paid on interest-bearing liabilities. Average loan balances include nonperforming loans. Interest income includes proceeds from loans on nonaccrual status only to the extent cash payments have been received and applied as interest income. Yields on securities and certain loans have been adjusted upward to reflect the effect of income which is exempt from federal income taxation at the current statutory tax rate (FTE).
For the three months ended
March 31, 2009
(In thousands)
Interest Rates
Average Income/ Earned/
Balance Expense Paid
Assets:
Money market assets and funds sold $ 878 $ 1 0.46 %
Investment securities:
Available for sale
Taxable 229,304 1,867 3.26 %
Tax-exempt (1) 170,520 2,808 6.59 %
Held to maturity
Taxable 400,229 4,790 4.79 %
Tax-exempt (1) 538,496 8,539 6.34 %
Loans:
Commercial:
Taxable 612,454 8,848 5.86 %
Tax-exempt (1) 191,948 3,165 6.69 %
Commercial real estate 1,191,260 19,072 6.49 %
Real estate construction 80,830 772 3.87 %
Real estate residential 458,180 5,527 4.83 %
Consumer 601,272 8,803 5.94 %
Total loans (1) 3,135,944 46,187 5.97 %
Total earning assets (1) 4,475,371 $ 64,192 5.79 %
Other assets 523,593
Total assets $ 4,998,964
Liabilities and shareholders' equity
Deposits:
Noninterest bearing demand $ 1,286,013 $ - -
Savings and interest-bearing transaction 1,545,154 1,105 0.29 %
Time less than $100,000 366,794 1,452 1.61 %
Time $100,000 or more 664,474 1,227 0.75 %
Total interest-bearing deposits 2,576,422 3,784 0.60 %
Short-term borrowed funds 552,645 626 0.46 %
Debt financing and notes payable 26,618 423 6.35 %
Total interest-bearing liabilities 3,155,685 $ 4,833 0.62 %
Other liabilities 72,212
Shareholders' equity 485,054
Total liabilities and shareholders' equity $ 4,998,964
Net interest spread (1) (2) 5.17 %
Net interest income and interest margin (1) (3) $ 59,359 5.35 %
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(1) Interest and rates calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
(2) Net interest spread represents the average yield earned on earning assets minus the average rate paid on interest-bearing liabilities.
(3) Net interest margin is computed by calculating the difference between interest income and expense (annualized), divided by the average balance of earning assets.
For the three months ended
March 31, 2008
(In thousands)
Interest Rates
Average Income/ Earned/
Balance Expense Paid
Assets:
Money market assets and funds sold $ 892 $ 1 0.45 %
Investment securities:
Available for sale
Taxable 299,484 3,112 4.16 %
Tax-exempt (1) 218,733 3,962 7.25 %
Held to maturity
Taxable 471,183 5,183 4.40 %
Tax-exempt (1) 560,263 8,655 6.18 %
Loans:
Commercial:
Taxable 309,177 5,858 7.62 %
Tax-exempt (1) 215,145 3,465 6.48 %
Commercial real estate 850,504 14,953 7.07 %
Real estate construction 92,672 1,965 8.53 %
Real estate residential 478,929 5,757 4.81 %
Consumer 531,239 7,899 5.98 %
Total loans (1) 2,477,666 39,897 6.48 %
Total earning assets (1) 4,028,221 $ 60,810 6.06 %
Other assets 405,713
Total assets $ 4,433,934
Liabilities and shareholders' equity
Deposits:
Noninterest bearing demand $ 1,199,604 $ - -
Savings and interest-bearing transaction 1,314,860 1,782 0.55 %
Time less than $100,000 196,947 1,589 3.25 %
Time $100,000 or more 500,936 3,957 3.18 %
Total interest-bearing deposits 2,012,743 7,328 1.46 %
Short-term borrowed funds 722,025 4,922 2.70 %
Debt financing and notes payable 36,758 578 6.29 %
Total interest-bearing liabilities 2,771,526 $ 12,828 1.85 %
Other liabilities 68,531
Shareholders' equity 394,273
Total liabilities and shareholders' equity $ 4,433,934
Net interest spread (1) (2) 4.21 %
Net interest income and interest margin (1) (3) $ 47,982 4.79 %
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(1) Interest and rates calculated on a fully taxable equivalent basis using the current statutory federal tax rate.
(2) Net interest spread represents the average yield earned on earning assets minus the average rate paid on interest-bearing liabilities.
(3) Net interest margin is computed by calculating the difference between interest income and expense (annualized), divided by the average balance of earning assets.
For the three months ended
December 31, 2008
(dollars in thousands)
Interest Rates
Average Income/ Earned/
Balance Expense Paid
Assets:
Money market assets and funds sold $ 431 $ 1 0.92 %
Investment securities:
. . .
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