(Source: Business Wire)
City Bank (NASDAQ:CTBK) today announced a net loss of $35.56 million for
the quarter ended September 30, 2009, or $2.26 per diluted share,
compared to a reported net loss of $10.96 million, or $.69 per diluted
share, for the same quarter in the prior year. The Bank also announced a
net loss of $66.34 million, or $4.21 per share, for the nine months
ended September 30, 2009, compared to a net income of $4.04 million, or
$.26 per share, for the same period in 2008. The primary causes for the
net loss were a reduction in interest income of $16.73 million, a
non-cash provision for loan losses of $25.42 million and non-cash
valuation adjustment for foreclosed real estate of $669 thousand for the
three months ended September 30, 2009. The non-cash charges, totaling
$26.09 million, represent the Bank's estimate of changes in the
appraised value of loan collateral and foreclosed real estate due to the
ongoing disruptions in residential construction sales. The current
nine-month period net loss was also impacted by a deferred tax valuation
allowance of $21.74 million, which limited the effective tax benefit
rate to 7.83% instead of the statutory rate of 35%. The prior year
reported amount included income tax benefits at the statutory rate of
35%.
Martin Heimbigner, Lead Independent Director, commented, "The Bank's
loss for the quarter and the nine months was impacted by ongoing
uncertainty in the market for residential building lots. We are selling
very few building lots because of the incredibly low market prices right
now. Instead, the Bank is strategically financing certain builders to
complete houses in partially finished developments and sell them in what
has been a slightly improved market for homes in recent months. In
accordance with accounting requirements, we are required to carry
residential building lots at distressed market prices until we sell the
completed houses. A percentage of the non-cash loss provisions
attributable to the write down of lot prices may be recovered in future
quarters when we sell completed houses on those lots."
Balance Sheet Summary (Amount in Thousands)
September 30 2009 June 30 2009 December 31 2008 September 30 2008
Total Assets $ 1,219,356 $ 1,289,818 $ 1,325,541 $ 1,324,334
Total Loans, excluding mortgage loans held for sale $ 820,526 $ 927,982 $ 1,064,080 $ 1,193,242
Total Cash and Federal Funds $ 274,706 $ 206,515 $ 111,632 $ 46,406
Non-Performing Assets $ 586,559 $ 611,112 $ 601,192 $ 199,186
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Three Months Summary (In thousands, except ratios)
Sept. 30, 2009 Sept. 30, 2008
Net Income (Loss) $ (35,563) $ (10,963)
Net Interest Margin -.03% 4.88%
Non-cash loan loss provisions $ 25,423 $ 28,000
Non-cash valuation adjustments to foreclosed real estate $ 669 $ -0-
Average Equity to Average Assets 8.17% 17.17%
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Net loss for the quarter ended September 30, 2009, was $35.56 million,
or $2.26 per diluted share. The primary cause for the net loss was a
non-cash provision for loan losses of $25.42 million for the three
months ended September 30, 2009, compared to $28.00 million for the same
quarter of 2008. Also contributing to the net loss is the $16.73 million
reduction in interest income due to the level of nonperforming loans.
The nonperforming assets expense for the quarter ended September 30,
2009, was $4.08 million, of which $669 thousand was attributable to
non-cash valuation adjustment for foreclosed real estate, compared to
$1.15 million for the same quarter in the prior year of 2008. On a
diluted per share basis, net loss was $2.26 per share, compared to net
loss of $.69 in the comparable period in 2008. Net interest loss after
provision for credit losses was a loss of $25.51 million for the three
months ended September 30, 2009, compared to net interest loss of $12.83
million for the same period in 2008.
Nine Months Summary (In thousands, except ratios)
Sept. 30, 2009 Sept. 30, 2008
Net Income (Loss) $ (66,343) $ 4,041
Net Interest Margin .45% 5.41%
Non-cash loan loss provisions $ 42,299 $ 33,100
Non-cash valuation adjustments to other real estate owned $ 7,985 $ 392
Average Equity to Average Assets 9.53% 17.16%
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Net loss for the nine months ended September 30, 2009, was $66.34
million, or $4.21 per diluted share. The primary cause for the net loss
was a non-cash provision for loan losses of $42.30 million for the nine
months ended September 30, 2009, compared to $33.10 million for the same
period of 2008. Also contributing to the net loss is the $50.09 million
reduction in interest income due to the level of nonperforming loans.
The nonperforming assets expense for the nine months ended September 30,
2009, was $18.21 million, of which $7.99 million was attributable to
non-cash valuation adjustment for foreclosed real estate, compared to
$2.02 million for the same period in the prior year of 2008. On a
diluted per share basis, net loss was $4.21 per share, compared to net
income of $.26 in the comparable period in 2008. Net interest loss after
provision for credit losses was a loss of $38.18 million for the nine
months ended September 30, 2009, compared to net interest income of
$17.59 million for the same period in 2008.
During the period from July 1, 2008, to date, the Bank experienced an
increase in nonperforming assets primarily as a result of the reduced
ability of home builders to sell inventory in this recessionary period
of declining demand. City Bank defines nonperforming assets to include
accruing loans past due ninety days or more, non-accrual loans,
including loans where the borrower is making cash payments of interest
that we apply to principal in accordance with GAAP, loans which have
been restructured to provide a reduction in or deferral of interest or
floor rates or principal for reasons related to the debtors financial
difficulties, potential problem loans and loans to related borrowers,
and foreclosed real estate.
During the second half of 2008 and continuing through the
first nine months of 2009 there was a significant downturn in local
economic conditions due to the national recession and the banking
crisis. These forces coupled with the Bank's focus on residential real
estate construction lending have led to an increase in nonperforming
loans and a higher provision for loan losses of $42.30 million for the
nine months ended September 30, 2009, compared to $33.10 million for the
same period in the prior year. As of September 30, 2009, nonperforming
assets totaled $586.56 million, which represents 48.10% of total assets.
The total nonperforming assets balance reflects partial charge-offs to
adjust loan balances to collateral value. As of September 30, 2009, the
allowance for loan losses was $61.74 million, which represents 7.53% of
total loans, compared to 3.21% in the third quarter of 2008.
Home Sales Including Pending Sales in Excess of $320 Million
Year-to-Date
Mr. Heimbigner said, "City Bank and our borrowers have sold houses and
some lots in excess of $320 million in construction loan balances during
2009. We are expecting that by the end of the year this will be
approximately $370 million including pending sales."
As the table below indicates the Bank has been conducting an orderly and
aggressive effort to sell residential properties securing the Bank's
loans, which is already showing positive results. Since the beginning of
January through October 16, 2009, 960 homes representing $287.44 million
have been sold and paid-off and 118 properties have pending sales
(signed agreements with earnest money deposits) totaling $33.41 million
for closing dates primarily in October and November. The combination of
paid and pending sales totaled 1,078 homes/lots representing $320.85
million in original construction loan balances. The average realized
loss on these 1,078 transactions is 9.85% of the original loan
principal. The average realized losses on the transactions that were
short sales are 15.68% of the original loan principal. These loss
percentages are consistent with the level of loan loss reserves
established by the Bank in 2008 and 2009. These realized losses are not
incremental to the loan loss provisions made in 2008 and 2009, but
represent the ultimate resolution of these loans to net cash proceeds.
Mr. Heimbigner commented, "These lower losses and some recoveries
results are illustrative of the benefits that can be obtained from the
sale of completed houses rather than residential building lots."
Q1 Actual Q2 Actual Q3 Actual Oct.