CHICAGO, Jan. 24, 2012 /PRNewswire/ -- Taylor Capital Group, Inc. (the "Company") (NASDAQ: TAYC), the parent company of Cole Taylor Bank (the "Bank"), today reported earnings for the fourth quarter of 2011 and for the full year 2011.
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FULL YEAR 2011 AND FOURTH QUARTER 2011 HIGHLIGHTS
-- The Bank reported net income during each quarter of 2011, and the Company returned to profitability in 2011. The Company's income before income taxes was $9.0 million for the fourth quarter of 2011, compared to $9.8 million for the third quarter of 2011. For the full year 2011, income before income taxes was $18.0 million compared to a loss before income taxes of $52.6 million in 2010. -- Strong business line growth during 2011: -- Second consecutive quarter exceeding $20 million pre-tax, pre-provision operating earnings(1) -- Commercial lending remains strategic backbone: expanded customer base and contributed strong fee revenue -- Cole Taylor Business Capital, the Company's asset based lending unit, increased loans outstanding by $125.7 million to $476.5 million at December 31, 2011 -- Mortgage banking revenue grew 42.9% during 2011 to $20.4 million as Cole Taylor Mortgage expanded its national platform and diversified revenue streams -- Credit quality significantly improved during 2011: -- Credit costs (provision for loan losses and nonperforming asset expense) down 66.5% in 2011 to $54.5 million -- Nonperforming loans dropped 35.5% in 2011 to $103.1 million -- Commercial criticized and classified loans(2) fell 39.9% in 2011 to $182.6 million -- The ratio of the allowance for loan losses to nonperforming loans topped 100% at December 31, 2011 -- Strengthened common equity capital, including raising $60 million in common equity and converting the Company's Series C Preferred and Series E Preferred to common or a common stock equivalent in 2011. -- These results - combined with management's belief that the Company has achieved sustainable profitability - supported the Company's fourth quarter reversal of the previously established $73.2 million valuation allowance on its net deferred tax asset. -- As a result, stockholders' equity nearly doubled during 2011 to $409.5 million at December 31, 2011 -- Tangible book value per share rose from $3.97 at December 31, 2010 to $10.84 at December 31, 2011 -- The Company's total capital to risk weighted assets ratio increased from 12.98% at December 31, 2010 to 14.72% at December 31, 2011
In commenting on the results, Mark A. Hoppe, President and Chief Executive Officer of Taylor Capital Group said, "The fourth quarter of 2011 was a landmark quarter for Taylor Capital. Our fix and grow strategy, initiated in 2008, has driven significant improvements in the profile of Cole Taylor Bank. Today, the Company's commercial lending backbone is strong and growing, and our earnings have been diversified and reinforced by the addition of two national business lines: Cole Taylor Business Capital and Cole Taylor Mortgage. Further, our progress on improving credit quality has resulted in a drop in nonperforming loans to approximately $100 million, with an allowance coverage ratio over 100%."
Mr. Hoppe continued, "We achieved a substantial increase in profitability for 2011 as a result of the progress we have made in fixing asset quality and growing the business. Income before income taxes was $18.0 million for 2011, compared to a loss before income taxes of $52.6 million in 2010. As a result of the Company's significantly improved profitability, which we believe to be sustainable, we reversed the valuation allowance on our net deferred tax asset. This action represented $2.58 per share of the total $6.87 per share increase in tangible book value from year end 2010 to year end 2011. We are excited to begin 2012 with a strengthened balance sheet and considerable momentum."
NET INCOME AND NET INCOME AVAILABLE TO COMMON STOCKHOLDERS
Net income for the fourth quarter of 2011 was $82.3 million, compared to net income of $9.8 million for the third quarter of 2011. Net income applicable to common stockholders was $70.1 million, or $3.20 per diluted share, for the fourth quarter of 2011(3), compared to net income applicable to common stockholders of $7.3 million, or $0.35 per diluted share, for the third quarter of 2011.
Net income for the full year 2011 was $91.1 million, compared to a net loss of $53.8 million for 2010. Net income applicable to common stockholders was $71.5 million, or $3.45 per diluted share, for 2011(3), compared to a net loss applicable to common stockholders of $79.3 million, or $5.27 per diluted share, for 2010(4).
FOURTH QUARTER 2011 AND FULL YEAR 2011 PERFORMANCE OVERVIEW
Results of Operations - Fourth Quarter 2011
Income before income taxes was $9.0 million for the fourth quarter of 2011, compared to income before income taxes of $9.8 million in the third quarter of 2011. This decline was largely due to a $3.3 million increase in nonperforming asset expense and a $2.0 million decrease in pre-tax, pre-provision operating earnings, partially offset by a $5.3 million reduction in the provision for loan losses as asset quality continues to improve.
Pre-tax, Pre-provision Operating Earnings
Pre-tax, pre-provision operating earnings totaled $21.8 million for the fourth quarter of 2011, compared to $23.8 million for the third quarter of 2011. This decrease was partially due to an increase of $3.9 million in noninterest expense, which was primarily the result of higher compensation expense. Offsetting the higher expenses were an increase in noninterest income of $1.3 million, largely from higher mortgage banking revenue, and an increase in net interest income of $548,000, due to the impact of lower funding costs.
Revenue
Revenue(1) was $52.0 million for the fourth quarter of 2011, compared to $50.1 million for the third quarter of 2011, or an increase of 3.8%.
Net interest income was $35.3 million for the fourth quarter of 2011, up from $34.7 million for the third quarter of 2011, as loan volume increased quarter-over-quarter, partially offset by lower volumes of investment securities. As expected, the net interest margin, however, remained flat at 3.25% for the fourth quarter of 2011. This was largely due to lower funding rates, the result of deposit repricing and changes made to the funding mix over the last few quarters, offset by lower yields on earning assets.
Noninterest income was $16.7 million for the fourth quarter of 2011, excluding gains or losses on investment securities and derivative termination expense, up from $15.4 million for the third quarter of 2011. This increase was primarily due to higher mortgage banking revenue.
Mortgage banking revenue increased to $9.1 million in the fourth quarter of 2011 from $7.6 million in the third quarter of 2011. The growth was due to a rise in loan fundings at Cole Taylor Mortgage, which increased to $782.1 million in the fourth quarter of 2011, up from $521.5 million in the third quarter of 2011. The increased volume was the result of sustained low mortgage interest rates in the fourth quarter and the continued expansion of the unit's national platform. Also contributing to the increase in mortgage banking revenue was significant growth in mortgage servicing activities, including retained servicing and purchased mortgage servicing rights.
Other derivative fee income was up at $3.3 million in the fourth quarter of 2011, compared to $2.7 million in the third quarter of 2011, including a loss on the termination of certain derivative contracts of $896,000. The fourth quarter represented the second consecutive quarter of higher volumes on interest rate swap agreements entered into by commercial clients of Cole Taylor Commercial Banking and Cole Taylor Commercial Real Estate Banking, two of the Bank's commercial lending units.
Noninterest Expense
Noninterest expense was $30.2 million for the fourth quarter of 2011, compared to $26.4 million in the third quarter of 2011, excluding nonperforming asset expense and early extinguishment of debt expense. The increase was primarily the result of increased mortgage and other corporate incentive compensation.
Nonperforming asset expense was $1.6 million for the fourth quarter of 2011, compared to a nonperforming asset expense credit of $1.6 million in the third quarter of 2011. The credit in the third quarter was principally the result of reversals of reserves for unfunded commitments associated with nonperforming loans that were resolved during the third quarter of 2011. Nonperforming asset expense in the fourth quarter of 2011 was driven by other real estate and repossessed assets ("OREO") write downs, partially offset by a reversal of real estate tax expense accruals.
Income Tax Expense
Income tax benefit was $73.3 million for the fourth quarter of 2011, up from $42,000 in the third quarter of 2011, largely due to the one-time income tax benefit that resulted from the reversal of the $73.2 million valuation allowance on the Company's net deferred tax asset. The valuation allowance was first established in 2008 based on management's analysis of the continued losses incurred by the Company and the likelihood of recovery of those assets. As the Company returned to profitability in 2011, improved asset quality significantly and bolstered its capital ratios, management has concluded that those assets are more likely than not to be recovered and thus maintaining a valuation allowance for deferred tax assets was no longer necessary.
Results of Operations - Full Year 2011
Income before income taxes was $18.0 million for 2011, compared to a loss before income taxes of $52.6 million in 2010. The improvement between 2010 and 2011 was largely the result of a $108.4 million, or 66.5%, reduction in credit costs. Total credit costs declined from $162.9 million in 2010 to $54.5 million in 2011, as commercial criticized and classified loans continued to decline and asset quality improved. Further improving income before income taxes was an increase of $3.2 million in pre-tax, pre-provision operating earnings from 2010 to 2011. Partially offsetting these improvements were a $36.4 million decline in gains and losses on investment securities, a $3.1 million increase in early extinguishment of debt expense and $896,000 in derivative termination fees that did not occur in 2010.
Pre-tax, Pre-provision Operating Earnings
Pre-tax, pre-provision operating earnings were $72.5 million for 2011, up from $69.3 million for 2010. The year-over-year increase was primarily due to higher noninterest income from mortgage banking revenue and other derivative income, partially offset by higher noninterest expense.
Revenue
For 2011, revenue was $180.2 million, up from $167.4 million for 2010.
Net interest income was $134.4 million for 2011, compared to $136.1 million for 2010. Net interest margin was 3.16% for 2011, compared to 3.17% for 2010. The reduction in both net interest income and net interest margin was the result of lower yields on all earning assets, as well as lower loan volumes during 2011, which were mostly offset by lower funding costs driven by deposit repricing and deliberate changes made to the funding mix.
Noninterest income was $45.8 million for 2011, compared to $31.7 million for 2010, excluding gains and losses on investment securities and derivative termination expense. The increase from 2010 to 2011 was due primarily to higher mortgage banking revenue generated by Cole Taylor Mortgage, and higher other derivative income from customer swap agreements generated by Cole Taylor's Commercial Banking and Commercial Real Estate Banking.
Noninterest Expense
Noninterest expense was $107.7 million in 2011, up from $98.1 million for 2010, excluding nonperforming asset expense and early extinguishment of debt expense. This was primarily the result of higher compensation expense, including salaries and incentives, largely due to the growth of Cole Taylor Mortgage and Cole Taylor Business Capital.
Income Tax Expense
Income tax benefit was $73.1 million for 2011, up from income tax expense of $1.2 million in 2010, largely due to the one-time income tax benefit that resulted from the reversal of the $73.2 million valuation allowance on the Company's net deferred tax asset.
Credit Quality - Fourth Quarter 2011
Asset quality improved markedly during the fourth quarter of 2011. Nonperforming loans decreased by 15.2% to $103.1 million at December 31, 2011, from $121.5 million at September 30, 2011. Commercial criticized and classified loans decreased for the sixth consecutive quarter to $182.6 million at December 31, 2011, from $221.1 million at September 30, 2011, a 17.4% decline. The coverage ratio of the allowance for loan losses to nonperforming loans topped one hundred percent at 100.66% at December 31, 2011, compared to 87.06% at September 30, 2011.
Loan Portfolio Performance and Credit Quality
Nonperforming assets were $138.7 million at December 31, 2011, compared to $150.8 million at September 30, 2011. Nonperforming assets to total assets declined to 2.96% at December 31, 2011, compared to 3.35% at September 30, 2011.
Nonaccrual loans decreased to $103.1 million at December 31, 2011, compared to $121.5 million at September 30, 2011, due to pay downs and charge-offs. The total decline of $18.4 million largely consisted of reductions of $12.1 million in commercial and industrial nonaccrual loans and $4.1 million in commercial real estate secured nonaccrual loans.
OREO increased to $35.6 million at December 31, 2011 from $29.2 million at September 30, 2011. This was due to several new properties being transferred to OREO, as foreclosures were completed in the fourth quarter of 2011. The increase was partially offset by OREO sales during the quarter.
Commercial criticized and classified loans were $182.6 million at December 31, 2011, compared to $221.1 million at September 30, 2011. This decrease was largely the result of pay downs and charge-offs during the fourth quarter of 2011, partially offset by new loans being placed on criticized and classified status.
Allowance and Provision for Loan Losses
The allowance for loan losses was $103.7 million at December 31, 2011, down from $105.8 million at September 30, 2011, as credit quality trends continued to improve, nonperforming loans dropped and commercial criticized and classified loans declined. This decline resulted from net charge-offs exceeding the provision for loan losses during the fourth quarter of 2011 by $2.1 million. The coverage ratio of the allowance for loan losses to nonperforming loans was 100.66% at December 31, 2011, up from 87.06% at September 30, 2011.
For the fourth quarter of 2011, the provision for loan losses was $11.0 million, down from $16.2 million for the third quarter of 2011.
Credit Quality - Full Year 2011
Significant asset quality improvement was achieved during 2011. Nonperforming loans declined by $56.6 million, or 35.4%, from $159.7 million at year end 2010 to $103.1 million at year end 2011. Moreover, commercial criticized and classified loans decreased $121.3 million, or 39.9%, from $303.9 million at December 31, 2010 to $182.6 million at December 31, 2011. These improvements are the result of significant nonperforming asset resolutions, combined with a slowdown in both migrations to nonperforming status and inflows to criticized and classified status. As a result, credit costs have declined by 66.5%, from $162.9 million for the full year 2010 to $54.5 million for the full year 2011.
Loan Portfolio Performance and Credit Quality
Nonperforming assets were $138.7 million at December 31, 2011, compared to $191.2 million at December 31, 2010. Nonperforming assets to total assets were 2.96% at December 31, 2011, compared to 4.26% at December 31, 2010.
Nonaccrual loans totaled $103.1 million at December 31, 2011, compared to $159.7 million at December 31, 2010, a decrease of $56.6 million. The two largest reductions were a $28.5 million decrease in commercial and industrial nonaccrual loans and a $12.9 million decline in residential construction and land nonaccrual loans. The reduction in commercial and industrial nonaccrual loans was principally due to lower nonaccrual loans in the portfolio of loans to banks and bank holding companies, partially offset by migrations of other commercial and industrial loan types. The portfolio of loans to banks and bank holding companies has declined to $57.8 million at December 31, 2011, from $92.9 million at December 31, 2010. The reduction in residential construction and land nonaccrual loans is the results of the Company's focus on reducing the overall exposure to these types of loans.
OREO was $35.6 million at December 31, 2011, compared to $31.5 million at December 31, 2010. Despite active resolution of nonperforming assets, the balance of OREO increased as of year end 2011.
Commercial criticized and classified loans were $182.6 million at December 31, 2011, down 39.9% from $303.9 million at December 31, 2010, and down 55.1% from $406.3 million a year earlier at December 31, 2009.
Allowance and Provision for Loan Losses
The allowance for loan losses declined to $103.7 million at December 31, 2011, from $124.6 million at December 31, 2010, as charge offs during 2011 exceeded the provision for loan losses. Despite this decline, the allowance for loan losses as a percent of nonperforming loans was 100.66% at December 31, 2011, up from 77.98% at December 31, 2010. For 2011, the provision for loan losses was $49.3 million, compared to $143.1 million for 2010.
Credit Quality Performance Summary 12/31/2011 9/30/2011 Change 12/31/2010 Change (in thousands) ---------- --------- 9/30/2011 ---------- 12/31/2010 to to 12/31/2011 12/31/2011 ---------- ---------- Nonperforming loans $103,061 $121,534 ($18,473) $159,740 ($56,679) Nonperforming assets $138,683 $150,771 ($12,088) $191,230 ($52,547) Nonperforming loans to total loans 3.31% 4.02% -0.71% 5.16% -1.85% Allowance to nonperforming loans 100.66% 87.06% 13.60% 77.98% 22.68% Commercial criticized and classified loans $182,570 $221,122 ($38,552) $303,923 ($121,353)
Balance Sheet - Fourth Quarter 2011
Assets
Total assets at December 31, 2011 were $4.69 billion, compared to $4.50 billion at September 30, 2011.
Investment securities were $1.28 billion at December 31, 2011, compared to $1.31 billion at September 30, 2011.
Loans held for sale were $186.0 million at December 31, 2011, compared to $148.7 million at September 30, 2011, a result of continued growth in mortgage origination volumes at Cole Taylor Mortgage in the fourth quarter of 2011.
Loans, net of allowance for loan losses, were $2.82 billion at December 31, 2011, compared to $2.77 billion at September 30, 2011, an increase of $57.0 million. Commercial and industrial loans, including commercial owner-occupied real estate loans, were $1.87 billion at December 31, 2011, up from $1.82 billion at September 30, 2011. Consumer-oriented loans were $300.3 million at December 31, 2011, up from $266.8 million at September 30, 2011, primarily the result of certain mortgages originated by Cole Taylor Mortgage being held in the loan portfolio rather than sold in the secondary market. Offsetting these increases was a decrease in real estate related loans, excluding commercial owner-occupied real estate loans, to $755.6 million at December 31, 2011, from $789.5 million at September 30, 2011. This decline was due to pay downs and nonperforming loan resolutions during the fourth quarter of 2011.
Other assets increased to $167.1 million at December 31, 2011, from $92.1 million at September 30, 2011. The increase of $75.0 million was largely the result of the Company reversing the valuation allowance on its net deferred tax asset.
Liabilities and Stockholders' Equity
Total liabilities at December 31, 2011, were $4.28 billion, compared to $4.21 billion at September 30, 2011.
Total deposits were $3.12 billion at December 31, 2011, compared to $2.93 billion at September 30, 2011, an increase of $196.9 million. The rise in deposits during the fourth quarter of 2011 was largely due to growth in core deposits, including increases in noninterest-bearing deposits of $144.4 million, NOW accounts of $51.0 million, and money market accounts of $52.2 million.
The increase in deposits was partially offset by a reduction in notes payable and other advances to $747.5 million at December 31, 2011, from $872.5 million at September 30, 2011, as a result of lower Federal Home Loan Bank advances. Other borrowings also declined to $168.1 million at December 31, 2011 from $180.8 million at September 30, 2011, largely due to a decline in Federal Funds borrowing.
Total stockholders' equity increased to $409.5 million at December 31, 2011, from $288.9 million at September 30, 2011. The increase was largely due to net income available to common stockholders in the fourth quarter of 2011, which was the result of strong earnings from the business, which enabled the reversal of the valuation allowance on the Company's net deferred tax asset. In addition, the $35 million rights offering completed during the fourth quarter of 2011 further bolstered stockholders' equity.
During the fourth quarter of 2011, the Company completed the previously disclosed conversion of its 8% Non-Cumulative Convertible Perpetual Preferred Stock, Series C ("Series C Preferred") and 8% Non-Cumulative Convertible Perpetual Preferred Stock, Series E ("Series E Preferred"), totaling $37.5 million in preferred stock, into shares of common stock, or in the case of some shareholders Nonvoting Non-Cumulative Convertible Perpetual Preferred Stock, Series G ("Series G Preferred"). This transaction strengthened the common equity component of stockholders' equity by replacing an outstanding preferred stock with common equity.
Balance Sheet - Full Year 2011
Assets
Total assets at December 31, 2011, were $4.69 billion, compared to $4.48 billion at December 31, 2010.
Investment securities were $1.28 billion at December 31, 2011, compared to $1.25 billion at December 31, 2010.
Loans held for sale were $186.0 million at December 31, 2011, compared to $259.0 million at December 31, 2010. This decline was due to improved efficiencies in the secondary marketing processes in 2011, and therefore faster turnover of mortgage loans held for sale.
Loans, net of allowance for loan losses, at December 31, 2011, were $2.82 billion, compared to $2.71 billion at December 31, 2010. Commercial and industrial loans, including commercial owner-occupied real estate loans, were $1.87 billion at December 31, 2011, up from $1.76 billion at December 31, 2010. Consumer-oriented loans were $300.3 million at December 31, 2011, up from $152.7 million at December 31, 2010, primarily the result of certain mortgages originated by Cole Taylor Mortgage being held in the loan portfolio, rather than being sold in the secondary market. Offsetting these increases was a decrease in real estate related loans, excluding commercial owner-occupied real estate loans, to $755.6 million at December 31, 2011, from $919.3 million at December 31, 2010. This decline was due to pay downs and nonperforming loan resolutions during 2011.
Liabilities and Stockholders' Equity
Total liabilities at December 31, 2011, were unchanged from December 31, 2010 at $4.28 billion.
Total deposits were $3.12 billion at December 31, 2011, compared to $3.03 billion at December 31, 2010. The largest movements in deposits during 2011 were in core funding categories, including increases in noninterest bearing deposits of $169.2 million, NOW accounts of $76.2 million and money market accounts of $74.1 million. Out-of-local-market certificates of deposit also increased $36.5 million. Partially offsetting these increases were declines during 2011 in customer certificates of deposit of $156.2 million, in-market CDARS time deposits of $60.7 million and brokered certificates of deposit of $42.8 million. The declines were due to planned runoff in higher priced sources of funding.
Other borrowings were down to $168.1 million at December 31, 2011, from $511.0 million at December 31, 2010, primarily due to a reduction in repurchase agreements. The decrease in other borrowings was in part offset by an increase in notes payable and other advances to $747.5 million at December 31, 2011, from $505.0 million at December 31, 2010, due to an increase in Federal Home Loan Bank advances. These actions were taken together to shift the funding mix to lower the overall cost of funds.
Total stockholders' equity almost doubled to $409.5 million at December 31, 2011, from $208.8 million at December 31, 2010. The increase was due to net income available to common stockholders during 2011, which was principally due to the reversal of the valuation allowance on the net deferred tax asset, as well as significantly increased income before income taxes in 2011 compared to a loss in 2010. In addition, during 2011, the Company completed two previously disclosed capital raises totaling $60 million, further bolstering stockholders' equity. A shift in the capital mix also took place as a result of the Company's conversion of its Series C Preferred and Series E Preferred to common stock or Series G Preferred, a common stock equivalent, in the fourth quarter of 2011.
Capital
At December 31, 2011, the Company's Tier I Risk Based Capital ratio was 11.22%, while its Total Risk Based Capital ratio was 14.72% and its Tier I Capital to Average Assets leverage ratio was 8.84%.
All the Company's regulatory capital ratios exceeded the regulatory requirements for well-capitalized bank holding companies of 6.00% for Tier I Risk Based Capital, 10.00% for Total Risk Based Capital and 5.00% for Tier I Capital to Average Assets.
Conference Call and Slide Presentation
The Company will host a webcast and conference call on Wednesday, January 25, 2012, at 9:00 am Central Time (10:00 am Eastern Time) to discuss fourth quarter 2011 and full year 2011 earnings and other matters. To access the call, please dial (866) 450-8367 (toll-free) or (412) 317-5427, and enter the code 4306742. Participants are encouraged to dial into the call approximately 10 minutes prior to the start time. To access streaming audio, please go to www.taylorcapitalgroup.com.
The Company will also provide a slide presentation, which management will speak to during the discussion. A copy of the presentation will be available for download prior to the start of the call at www.taylorcapitalgroup.com. The presentation will not be webcast live. If you have any trouble obtaining a copy of the presentation, please call Investor Relations at (847) 653-7166.
A replay of the conference call will be made available after approximately 12:00 p.m. Central Time (1:00 p.m. Eastern Time), and the instructions for accessing the replay will be available on the Company's website at that time.
Accompanying Financial Statements and Tables
This press release is accompanied by the following unaudited financial information:
-- Condensed Consolidated Balance Sheets -- Consolidated Statements of Operations -- Summary of Key Quarterly Financial Data -- Summary of Key Year-To-Date Financial Data -- Summary of Key Period-End Financial Data -- Composition of Loan Portfolio -- Credit Quality -- Loan Portfolio and Held for Sale Aging -- Funding Liabilities -- Reconciliation of U.S. GAAP Financial Measures
About Taylor Capital Group, Inc. (NASDAQ: TAYC)
Taylor Capital Group, Inc. is a $4.7 billion bank holding company for Cole Taylor Bank, a commercial bank headquartered in Chicago. Cole Taylor specializes in serving the banking needs of closely held businesses and the people who own and manage them. Through its divisions Cole Taylor Business Capital and Cole Taylor Mortgage, the Bank also provides asset based lending and residential mortgage loan products through a growing network of offices throughout the United States. Cole Taylor is a member of the FDIC and is an Equal Housing Lender.
Endnotes:
(1) Schedules reconciling earnings in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") to the non-GAAP measurement of pre-tax, pre-provision operating earnings and revenue are provided in the attached tables.
(2) Commercial criticized and classified loans (special mention, substandard, and nonaccrual loans) in commercial & industrial, commercial real estate, residential construction and land, and commercial construction and land loans. Excludes consumer loans.
(3) Net income applicable to common stockholders for the fourth quarter of 2011 and for the full year 2011 includes a non-cash, non-capital impacting implied dividend of $10.5 million in the fourth quarter of 2011, representing an inducement to the holders of the Company's Series C Preferred and Series E Preferred to participate in the conversion of such stock into common stock, or in the case of some stockholders, Series G Preferred, a common stock equivalent, in the fourth quarter of 2011.
(4) Net loss applicable to common stockholders for 2010 includes a non-cash, non-capital impacting implied dividend of $15.8 million in the second quarter of 2010, representing an inducement to the holders of the Company's Series A Preferred to participate in the conversion of such stock into common stock in the second quarter of 2010.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release includes forward-looking statements that reflect our current expectations and projections about our future results, performance, prospects and opportunities. We have tried to identify these forward-looking statements by using words including "may," "might," "contemplate," "plan," "prudent," "potential," "should," "will," "expect," "anticipate," "believe," "intend," "could" and "estimate" and similar expressions. These forward-looking statements are based on information currently available to us and are subject to a number of risks, uncertainties and other factors that could cause our actual results, performance, prospects or opportunities in 2012 and beyond to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation: the risk that our regulators could require us to maintain regulatory capital in excess of the levels needed to be considered well-capitalized; the risk that our allowance for loan losses may prove insufficient to absorb probable losses in our loan portfolio; possible volatility in loan charge-offs and recoveries between periods; negative developments and further disruption in the credit and lending markets impacting our business and the businesses of our customers, as well as other banks and lending institutions with which we have commercial relationships; the continued decline in residential real estate sales volume and the likely potential for continuing illiquidity in the real estate market, including within the Chicago metropolitan area; the risks associated with the high volume of loans secured by commercial real estate in our portfolio; the uncertainties in estimating the fair value of developed real estate and undeveloped land in light of declining demand for such assets and continuing illiquidity in the real estate market; the risks associated with the current and planned growth of our new mortgage unit, including the expansion into new geographic markets and regulatory changes; lending concentration risks; the risks associated with attracting and retaining experienced and qualified personnel, including our senior management and other key personnel in our core business lines; uncertainty in estimating the fair value of loans held for sale and the possibility that we will not be able to dispose of these assets on terms acceptable to us; security risks relating to our internet banking activities that could damage our reputation and our business; the potential impact of certain operational risks, including, but not limited to, data processing system failures and errors and customer or employee fraud; the risks associated with implementing our business strategy and managing our growth effectively, including our ability to preserve and access sufficient capital to execute on our strategy; the effect on our profitability if interest rates fluctuate, as well as the effect of our customers' changing use of our deposit products; the ability to use net operating loss carryforwards to reduce future tax payments if an ownership change of the Company is deemed to have occurred for tax purposes; the possibility that our wholesale funding sources may prove insufficient to replace deposits at maturity and support our growth; continuation of volatility in the capital markets; the effectiveness of our hedging transactions and their impact on our future results of operations; the conditions of the local economy in which we operate and continued weakness in the local economy; changes in general economic and capital market conditions, interest rates, our debt credit ratings, deposit flows, loan demand, loan syndication opportunities and competition; regulatory restrictions and liquidity constraints at the holding company level that could impair our ability to pay dividends or interest on our outstanding securities; significant restrictions on our operations as a result of our participation in the TARP Capital Purchase Program; the impact of changes in legislation, including the Dodd-Frank Act and the regulations promulgated thereunder, or regulatory and accounting principles, policies or guidelines affecting our business, including those relating to capital requirements; and other economic, competitive, governmental, regulatory and technological factors impacting our operations.
For further information about these and other risks, uncertainties and factors, please review the disclosure included in the section captioned "Risk Factors" in our December 31, 2010 Annual Report on Form 10-K filed with the SEC on March 22, 2011. You should not place undue reliance on any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements or risk factors, whether as a result of new information, future events, changed circumstances or any other reason after the date of this press release.
CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (Unaudited) (Unaudited) Dec. 31, ----------- ----------- -------- Sept. Dec. 31, 30, 2010 -------- ------ ---- 2011 2011 ---- --- ASSETS Cash and cash equivalents $121,164 $83,902 $81,329 Investment securities 1,279,676 1,309,579 1,254,477 Loans held for sale 185,984 148,718 259,020 Loans, net of allowance for loan losses of $103,744 at December 31, 2011, $105,805 at September 30, 2011 and $124,568 at December 31, 2010 2,824,555 2,767,605 2,710,770 Premises, leasehold improvements and equipment, net 14,882 15,356 15,890 Investment in Federal Home Loan Bank and Federal Reserve Bank stock 56,781 56,767 40,032 Other real estate and repossessed assets, net 35,622 29,237 31,490 Other assets 167,146 92,070 90,846 ------- ------ ------ Total assets $4,685,810 $4,503,234 $4,483,854 ========== ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing $802,480 $658,092 $633,300 Interest-bearing 2,320,731 2,268,189 2,393,606 --------- --------- --------- Total deposits 3,123,211 2,926,281 3,026,906 Other borrowings 168,133 180,755 511,008 Accrued interest, taxes and other liabilities 61,183 58,725 56,697 Notes payable and other advances 747,500 872,500 505,000 Junior subordinated debentures 86,607 86,607 86,607 Subordinated notes, net 89,648 89,436 88,835 ------ ------ ------ Total liabilities 4,276,282 4,214,304 4,275,053 --------- --------- --------- Stockholders' equity: Preferred stock, Series B 102,042 101,619 100,389 Preferred stock, Series C -- 31,912 31,912 Preferred stock, Series D 4 4 4 Preferred stock, Series E -- 5,588 5,588 Preferred stock, Series G 9 2 -- Common stock 297 217 192 Surplus 423,674 340,641 312,693 Accumulated deficit (118,426) (188,511) (189,895) Accumulated other comprehensive income (loss) 31,513 27,043 (22,497) Treasury stock (29,585) (29,585) (29,585) ------- ------- Total stockholders' equity 409,528 288,930 208,801 ------- ------- ------- Total liabilities and stockholders' equity $4,685,810 $4,503,234 $4,483,854 ========== ========== ==========
CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) (in thousands, except per share data) For the Three Months For the Twelve Ended Months Ended --------------------- --------------- Sept. Dec. Dec. 31, 30, 31, Dec. 31, Dec. 31, -------- ------ ----- -------- -------- 2011 2011 2010 2011 2010 ---- ---- --- ---- ---- Interest income: Interest and fees on loans $35,395 $35,204 $38,607 $140,307 $153,899 Interest and dividends on investment securities: Taxable 10,268 11,391 10,500 44,864 50,162 Tax-exempt 677 700 855 2,874 4,444 Interest on cash equivalents 5 4 5 15 11 --- --- --- --- --- Total interest income 46,345 47,299 49,967 188,060 208,516 ------ ------ ------ ------- ------- Interest expense: Deposits 5,990 6,505 9,402 29,147 44,286 Other borrowings 419 1,131 1,797 4,865 8,648 Notes payable and other advances 700 995 1,291 3,838 5,289 Junior subordinated debentures 1,458 1,445 1,449 5,792 5,804 Subordinated notes 2,512 2,505 2,466 10,004 8,415 ----- ----- ----- ------ ----- Total interest expense 11,079 12,581 16,405 53,646 72,442 ------ ------ ------ ------ ------ Net interest income 35,266 34,718 33,562 134,414 136,074 Provision for loan losses 10,955 16,240 59,923 49,258 143,127 ------ ------ ------ ------ ------- Net interest income (loss) after provision for loan losses 24,311 18,478 (26,361) 85,156 (7,053) ------ ------ ------- ------ ------ Noninterest income: Service charges 2,998 2,897 2,861 11,481 11,282 Mortgage banking revenue 9,053 7,571 5,758 20,384 14,261 Gain (loss) on disposition of bulk purchased mortgage loans 6 30 19 105 (2,418) Gain on sales of investment securities 6 4,938 6,997 4,944 41,376 Other derivative income 3,344 2,735 669 7,026 1,963 Other noninterest income 1,131 1,261 1,705 5,302 6,219 ----- ----- ----- ----- ----- Total noninterest income 16,538 19,432 18,009 49,242 72,683 ------ ------ ------ ------ ------ Noninterest expense: Salaries and employee benefits 19,402 15,462 16,408 64,736 54,073 Occupancy of premises, furniture and equipment 2,565 2,707 2,637 10,765 10,612 Nonperforming asset expense 1,622 (1,648) 9,259 5,264 19,790 FDIC assessment 1,632 1,626 1,877 6,705 8,238 Early extinguishment of debt -- 3,444 -- 3,444 378 Legal fees, net 920 1,081 1,195 3,821 4,922 Other noninterest expense 5,705 5,480 5,595 21,658 20,223 ----- ----- ----- ------ ------ Total noninterest expense 31,846 28,152 36,971 116,393 118,236 ------ ------ ------ ------- ------- Income (loss) before income taxes 9,003 9,758 (45,323) 18,005 (52,606) Income tax expense (benefit) (73,317) (42) 284 (73,110) 1,217 ------- --- --- ------- ----- Net income (loss) 82,320 9,800 (45,607) 91,115 (53,823) Preferred dividends and discounts (1,734) (2,477) (2,448) (9,145) (9,699) Implied non-cash preferred dividend (10,501) -- -- (10,501) (15,756) ------- --- Net income (loss) applicable to common stockholders $70,085 $7,323 $(48,055) $71,469 $(79,278) ======= ====== ======== ======= ======== Basic income (loss) per common share $3.20 $0.35 $(2.76) $3.45 $(5.27) Diluted income (loss) per common share 3.20 0.35 (2.76) 3.45 (5.27) Wtd-avg common shares outstanding - basic 20,684,652 19,920,269 17,427,676 19,474,273 15,049,868 Wtd-avg common shares outstanding - diluted 20,709,071 19,924,987 17,427,676 19,499,275 15,049,868
SUMMARY OF KEY QUARTERLY FINANCIAL DATA (dollars in thousands) Unaudited --------- 2011 2010 ---- ---- Fourth Third Second First Fourth Quarter Quarter Quarter Quarter Quarter ------- ------- ------- ------- ------- Condensed Income Data: --------- Net interest income $35,266 $34,718 $32,243 $32,187 $33,562 Provision for loan losses 10,955 16,240 11,822 10,241 59,923 Total noninterest income 16,538 19,432 6,387 6,885 18,009 Total noninterest expense 31,846 28,152 27,846 28,549 36,971 Income (loss) before income taxes 9,003 9,758 (1,038) 282 (45,323) Income tax expense (benefit) (73,317) (42) 355 (106) 284 Net income (loss) 82,320 9,800 (1,393) 388 (45,607) Preferred dividends and discounts (1,734) (2,477) (2,470) (2,464) (2,448) Implied non- cash preferred dividends (10,501) - - - - Net income (loss) applicable to common stockholders $70,085 $7,323 $(3,863) $(2,076) $(48,055) ======= ====== ======= ======= ======== Non- GAAP Measures of Performance (1) ------------ Revenue $51,988 $50,108 $39,011 $39,072 $44,574 Pre- tax, pre- provision operating earnings 21,764 23,752 13,178 13,800 16,862 Per Share Data: ------ Basic earnings (loss) per common share $3.20 $0.35 $(0.19) $(0.12) $(2.76) Diluted earnings (loss) per common share 3.20 0.35 (0.19) (0.12) (2.76) Tangible book value per common share 10.84 7.37 5.13 4.50 3.97 Weighted average common shares- basic 20,684,652 19,920,269 19,811,006 17,440,617 17,427,676 Weighted average common shares- diluted 20,709,071 19,924,987 19,811,006 17,440,617 17,427,676 Common shares outstanding- end of period 28,360,076 20,312,842 20,240,408 20,184,809 17,877,708 Performance Ratios (annualized): ------------- Return (loss) on average assets 7.26% 0.89% (0.13)% 0.04% (4.08)% Return (loss) on average equity 112.63% 15.30% (2.36)% 0.75% (64.86)% Efficiency ratio (2) 61.26% 56.18% 71.38% 73.07% 82.94% Average Balance Sheet Data (3): -------- Total assets $4,533,916 $4,411,811 $4,331,166 $4,389,583 $4,474,270 Investments 1,299,059 1,361,630 1,374,892 1,355,827 1,273,452 Cash equivalents 1,651 2,049 1,457 1,109 1,598 Loans 3,066,629 2,936,781 2,869,169 2,933,939 3,063,780 Total interest- earning assets 4,367,339 4,300,460 4,245,518 4,290,875 4,338,830 Interest- bearing deposits 2,365,451 2,276,657 2,393,647 2,460,937 2,374,297 Borrowings 1,080,583 1,177,136 1,043,623 1,057,337 1,151,370 Total interest- bearing liabilities 3,446,034 3,453,793 3,437,270 3,518,274 3,525,667 Noninterest- bearing deposits 738,371 646,946 604,018 612,032 617,158 Total stockholders' equity 292,356 256,264 236,180 206,476 281,251 Tax Equivalent Net Interest Margin: ----------- Net interest income as stated $35,266 $34,718 $32,243 $32,187 $33,562 Tax equivalent adjust. - Add: investment (4) 365 377 389 417 460 Tax equivalent adjust. - loans (4) 32 33 48 24 25 --- --- --- --- --- Tax equivalent net interest income $35,663 $35,128 $32,680 $32,628 $34,047 ======= ======= ======= ======= ======= Net interest margin without tax adjust. 3.21% 3.21% 3.04% 3.03% 3.08% Net interest margin -tax equivalent (4) 3.25% 3.25% 3.09% 3.07% 3.12% Yield on earning assets without tax adjust. 4.22% 4.37% 4.42% 4.48% 4.58% Yield on earning assets -tax equivalent (4) 4.26% 4.41% 4.46% 4.52% 4.62% Yield on interest- bearing liabilities 1.28% 1.45% 1.70% 1.77% 1.85% Net interest spread - without tax adjust. 2.94% 2.93% 2.72% 2.71% 2.73% Net interest spread -tax equivalent (4) 2.98% 2.97% 2.76% 2.75% 2.77%
Footnotes: ---------- (1) Refer to Reconciliation of U.S. GAAP Financial Measures for a reconciliation to GAAP. Efficiency ratio is determined by dividing noninterest expense by an amount equal to net interest (2) income plus noninterest income, adjusted for gains or losses from investment securities. (3) Average balances are daily averages. Adjustment reflects tax-exempt interest income on an equivalent before-tax basis assuming a tax (4) rate of 35.0%.
SUMMARY OF KEY YEAR-TO-DATE FINANCIAL DATA (dollars in thousands) Unaudited --------- Year To Date December 31, ------------ 2011 2010 ---- ---- Condensed Income Data: ---------------------- Net interest income $134,414 $136,074 Provision for loan losses 49,258 143,127 Total noninterest income 49,242 72,683 Total noninterest expense 116,393 118,236 Income (loss) before income taxes 18,005 (52,606) Income tax expense (benefit) (73,110) 1,217 Net income (loss) 91,115 (53,823) Preferred dividends and discounts (9,145) (9,699) Implied non-cash preferred dividends (10,501) (15,756) Net income (loss) applicable to common stockholders $71,469 $(79,278) ======= ======== Non-GAAP Measures of Performance (1) ------------------------------------ Revenue $180,179 $167,381 Pre-tax, pre-provision operating earnings 72,494 69,313 Per Share Data: --------------- Basic income (loss) per common share $3.45 $(5.27) Diluted income (loss) per common share 3.45 (5.27) Tangible book value per common share 10.84 3.97 Weighted average common shares-basic 19,474,273 15,049,868 Weighted average common shares- diluted 19,499,275 15,049,868 Shares outstanding-end of period 28,360,076 17,877,708 Performance Ratios (annualized): -------------------------------- Return (loss) on average assets 2.06% (1.20)% Return (loss) on average equity 36.73% (19.54)% Efficiency ratio (2) 64.60% 70.64% Average Balance Sheet Data (3): ------------------------------- Total assets $4,417,002 $4,493,413 Investments 1,347,734 1,331,138 Cash equivalents 1,570 939 Loans 2,951,952 3,034,898 Total interest-earning assets 4,301,256 4,366,975 Interest-bearing deposits 2,373,644 2,386,808 Borrowings 1,089,973 1,175,450 Total interest-bearing liabilities 3,463,617 3,562,258 Noninterest-bearing deposits 650,679 602,757 Total stockholders' equity 248,077 275,494 Tax Equivalent Net Interest Margin: ----------------------------------- Net interest income as stated $134,414 $136,074 Add: Tax equivalent adjust. -investment (4) 1,547 2,393 Tax equivalent adjust. -loans (4) 137 100 --- --- Tax equivalent net interest income $136,098 $138,567 ======== ======== Net interest margin without tax adjust. 3.12% 3.12% Net interest margin -tax equivalent (4) 3.16% 3.17% Yield on earning assets without tax adjust. 4.37% 4.77% Yield on earning assets -tax equivalent (4) 4.41% 4.83% Yield on interest-bearing liabilities 1.30% 2.03% Net interest spread -without tax adjust. 2.82% 2.74% Net interest spread -tax equivalent (4) 2.86% 2.80%
Footnotes: ---------- Refer to Reconciliation of U.S. GAAP Financial Measures for a (1) reconciliation to GAAP. Efficiency ratio is determined by dividing noninterest expense by (2) an amount equal to net interest income plus noninterest income, adjusted for gains or losses from investment securities. (3) Average balances are daily averages. Adjustment reflects tax-exempt interest income on an equivalent (4) before-tax basis assuming a tax rate of 35.0%.
SUMMARY OF KEY PERIOD-END FINANCIAL DATA (dollars in thousands) Unaudited --------- Dec. 31, Sept. 30, June 30, Mar. 31, Dec. 31, 2011 2011 2011 2011 2010 ---- ---- ---- ---- ---- Condensed Balance Sheet Data: ----------------- Investment securities $1,279,676 $1,309,579 $1,328,857 $1,305,486 $1,254,477 Loans 3,114,283 3,022,128 2,916,075 2,836,759 3,094,358 Allowance for loan losses 103,744 105,805 109,044 114,966 124,568 Total assets 4,685,810 4,503,234 4,395,116 4,286,690 4,483,854 Total deposits 3,123,211 2,926,281 2,906,777 3,076,857 3,026,906 Total borrowings 1,091,888 1,229,298 1,186,213 926,611 1,191,450 Total stockholders' equity 409,528 288,930 242,554 229,039 208,801 Asset Quality Ratios: ------------- Nonperforming loans $103,061 $121,534 $143,058 $168,210 $159,740 Nonperforming assets 138,683 150,771 170,915 206,375 191,230 Allowance for loan losses to total loans (excluding loans held for sale) 3.54% 3.68% 3.85% 4.13% 4.39% Allowance for loan losses to nonperforming loans 100.66% 87.06% 76.22% 68.35% 77.98% Nonperforming assets to total loans plus repossessed property 4.68% 4.94% 5.98% 7.18% 6.12% Capital Ratios (Taylor Capital Group, Inc.): ---------------- Total Capital (to Risk Weighted Assets) 14.72% 13.63% 13.80% 14.24% 12.98% Tier I Capital (to Risk Weighted Assets) 11.22% 10.08% 9.90% 10.26% 8.93% Leverage (to average assets) 8.84% 7.83% 7.78% 7.72% 6.89%
COMPOSITION OF LOAN PORTFOLIO (unaudited) (dollars in thousands) The following table presents the composition of the Company's loan portfolio as of the dates indicated: December 31, 2011 September 30, 2011 December 31, 2010 ----------------- ------------------ ----------------- Percent Percent Percent of of of Gross Gross Gross Loans: Loans Loans Balance Loans ------ Balance -------- -------- ------- -------- Balance ------- Commercial and industrial $1,426,221 48.8% $1,398,337 48.7% $1,351,862 47.7% Commercial real estate secured 1,037,976 35.4 1,017,899 35.4 1,120,361 39.5 Residential construction & land 64,824 2.2 71,227 1 2.5 104,036 3.7 Commercial construction & land 99,021 3.4 119,157 4.1 106,423 3.8 ------ --- ------- --- ------- --- Total commercial loans 2,628,042 89.8 2,606,620 90.7 2,682,682 94.7 Consumer 300,257 10.2 266,790 9.3 152,657 5.3 ------- ---- ------- --- ------- --- Gross loans 2,928,299 100.0% 2,873,410 100.0% 2,835,339 100.0% ===== ===== ===== Less: Unearned discount -- -- (1) --- --- --- Total loans 2,928,299 2,873,410 2,835,338 Less: Loan loss allowance (103,744) (105,805) (124,568) -------- -------- -------- Net loans $2,824,555 $2,767,605 $2,710,770 ========== ========== ========== Loans Held for Sale $185,984 $148,718 $259,020 ======== ======== ========
The following tables provide details of the Company's commercial real estate and residential construction and land portfolios: December 31, 2011 September 30, 2011 December 31, 2010 ----------------- ------------------ ----------------- Commercial real Percent Percent Percent estate of of of secured*: Total Total Total ----------- -------- -------- -------- Balance Balance Balance ------- ------- ------- Commercial non- owner occupied: Retail strip centers or malls $143,052 13.8% $154,302 15.2% $198,527 17.7% Office/ mixed use property 113,429 10.9 105,381 10.4 116,726 10.4 Commercial properties 129,921 12.5 130,440 12.8 147,920 13.2 Specialized - other 80,971 7.8 77,029 7.6 82,332 7.4 Other commercial properties 40,270 3.9 40,052 3.9 43,595 3.9 ------ --- ------ --- ------ --- Subtotal commercial non- owner occupied 507,643 48.9 507,204 49.9 589,100 52.6 Commercial owner- occupied 446,259 43.0 418,739 41.1 411,519 36.7 Multi- family properties 84,074 8.1 91,956 9.0 119,742 10.7 ------ --- ------ --- ------- ---- Total commercial real estate $1,037,976 100.0% $1,017,899 100.0% $1,120,361 100.0% secured ========== ===== ========== ===== ========== ===== Residential construction & land: ------------ Residential construction $47,163 72.8% $51,342 72.1% $80,685 77.6% Land 17,661 27.2 19,885 27.9 23,351 22.4 ------ ---- ------ ---- ------ ---- Total residential construction $64,824 100.0% $71,227 100.0% $104,036 100.0% and land ======= ===== ======= ===== ======== =====
*As a result of our core system conversion, we identified certain sub-codings within our loan system that changed the characterization of certain commercial real estate non-owner occupied loans to owner occupied real estate. Although there was no impact to the calculation of the total commercial real estate loans, we have adjusted the table above to reflect the revised classifications for all periods presented.
CREDIT QUALITY (unaudited) (dollars in thousands) At or for the Three Months Ended -------------------------------- Sept. Dec. 31, 30, Dec. 31, 2011 ------ -------- 2011 2010 ---- ---- Nonperforming Assets: Loans contractually past due 90 days or more but still accruing interest $-- $-- $55 Nonaccrual loans: Commercial and industrial 42,909 55,052 71,438 Commercial real estate secured 35,159 39,305 42,221 Residential construction and land 7,810 7,529 20,660 Commercial construction and land 5,279 6,172 12,734 Consumer 11,904 13,476 12,632 ------ Total nonaccrual loans 103,061 121,534 159,685 ------- Total nonperforming loans 103,061 121,534 159,740 Other real estate owned and repossessed assets 35,622 29,237 31,490 ------ ------ ------ Total nonperforming assets $138,683 $150,771 $191,230 ======== ======== ======== Other Credit Quality Information: Loans contractually past due 30 through 89 days and still accruing $7,409 $5,609 $11,948 Commercial criticized and classified loans (1) 182,570 221,122 303,923 Performing restructured loans 14,176 11,365 29,786 Recorded balance of impaired loans 108,535 119,472 181,081 Allowance for loan losses related to impaired loans 32,044 32,051 59,857 ====== ====== ====== Allowance for Loan Losses Summary: Allowance at beginning of period $105,805 $109,044 $94,138 Charge-offs, net of recoveries: Commercial and commercial real estate (10,898) (17,559) (27,944) Real estate - construction and land (1,498) (1,116) (639) Consumer (620) (804) (910) ---- ---- ---- Total net charge-offs (13,016) (19,479) (29,493) Provision for loan losses 10,955 16,240 59,923 ------ ------ ------ Allowance at end of period $103,744 $105,805 $124,568 ======== ======== ======== Key Credit Ratios: Nonperforming loans to total loans 3.31% 4.02% 5.16% Nonperforming assets to total loans plus repossessed property (excluding loans held for sale) 4.68% 4.94% 6.12% Nonperforming assets to total assets 2.96% 3.35% 4.26% Annualized net charge-offs to average total loans 2.37% 2.61% 3.85% Allowance to total loans at end of period (excluding loans held for sale) 3.54% 3.68% 4.39% Allowance to nonperforming loans 100.66% 87.06% 77.98% 30 - 89 days past due to total loans 0.24% 0.19% 0.39% ==== ==== ====
(1) Commercial criticized and classified loans (special mention, substandard and nonaccrual loans) in commercial & industrial, commercial real estate, residential construction and land and commercial construction and land loans. Excludes consumer loans.
LOAN PORTFOLIO AND HELD FOR SALE AGING (unaudited) (dollars in thousands) As of December 31, 2011 ----------------------- % of 30-89 Days Total Total Past Due >90 Days Nonaccrual Current Loans Loans Allowance ----------- -------- ---------- ------- ------ ----- --------- Past Due for Loan -------- -------- and Loss Still Allocation ------ ----------- Accruing -------- Commercial and industrial $129 $-- $42,909 $1,383,183 $1,426,221 46% $51,388 Commercial real estate secured: Commercial non- owner occupied: Retail strip centers or malls -- -- 6,693 136,359 143,052 4% 6,539 Office/ mixed use property -- -- 3,291 110,138 113,429 4% 3,455 Commercial properties -- -- 1,641 128,280 129,921 4% 2,694 Specialized - other -- -- 6,391 74,580 80,971 3% 2,646 Other commercial properties -- -- -- 40,270 40,270 1% 798 --- --- --- ------ ------ --- --- Subtotal commercial non- owner occupied -- -- 18,016 489,627 507,643 16% 16,132 Commercial owner- occupied -- -- 6,472 439,787 446,259 14% 10,048 Multi- family properties -- -- 10,671 73,403 84,074 3% 4,139 --- --- ------ ------ ------ --- ----- Total commercial real -- -- 35,159 1,002,817 1,037,976 33% 30,319 estate secured Residential construction & land: Residential construction -- -- 6,324 40,839 47,163 2% 5,768 Land -- -- 1,486 16,175 17,661 * 2,315 --- --- ----- ------ ------ --- ----- Total residential -- -- 7,810 57,014 64,824 2% 8,083 construction and land Commercial construction and land -- -- 5,279 93,742 99,021 3% 6,978 --- --- ----- ------ ------ --- ----- Total commercial loans 129 -- 91,157 2,536,756 2,628,042 84% 96,768 Consumer loans 7,280 -- 11,904 467,057 486,241 16% 6,976 ----- --- ------ ------- ------- --- ----- Total loans $7,409 $-- $103,061 $3,003,813 $3,114,283 100% $103,744 ====== === ======== ========== ========== === ======== * = less than 1%
FUNDING LIABILITIES (unaudited) (dollars in thousands) The following table presents the distribution of the Company's average deposit account balances for the periods indicated: For the Quarter Ended --------------------- September 30, December 31, 2011 2011 December 31, 2010 ----------------- -------------- ----------------- Percent Percent Percent Average of Average of Average of Balance Deposits Balance Deposits Balance Deposits -------- -------- -------- -------- -------- -------- In-market deposits: Noninterest- bearing deposits $738,371 23.8% $646,946 22.1% $617,158 20.6% NOW accounts 302,516 9.8 252,123 8.6 268,446 9.0 Savings deposits 38,337 1.2 38,818 1.3 40,120 1.3 Money market accounts 632,451 20.4 609,256 20.9 579,990 19.4 Customer certificates of deposit 573,903 18.5 611,360 20.9 725,383 24.3 CDARS in- market time deposits 157,424 5.1 142,552 4.9 145,808 4.9 Public time deposits 57,630 1.8 58,333 2.0 63,324 2.1 ------ --- ------ --- ------ --- Total in- market deposits 2,500,632 80.6 2,359,388 80.7 2,440,229 81.6 Out-of- market deposits: Brokered money market deposits -- -- -- -- 6,028 0.2 Out-of- local- market certificates of deposit 138,997 4.5 122,942 4.2 94,856 3.2 Out-of- local- market CDARS 32,122 1.0 -- -- -- -- Brokered certificates of deposit 432,071 13.9 441,273 15.1 450,342 15.0 ---- Total out- of- market deposits 603,190 19.4 564,215 19.3 551,226 18.4 ------- ---- ------- Total deposits $3,103,822 100.0% $2,923,603 100.0% $2,991,455 100.0% ========== ===== ========== ===== ========== =====
The following table sets forth the period end balances of total deposits as of each of the dates indicated below, as well as categorizes the Company's deposits as "in-market" and "out-of- market" deposits: Dec. 31, Sept. 30, Dec. 31, -------- --------- -------- 2011 2011 2010 ---- --- ---- In-market deposits: Noninterest- bearing deposits $802,480 $658,092 $633,300 NOW accounts 324,877 273,863 248,662 Savings accounts 38,370 38,480 37,992 Money market accounts 657,500 605,312 583,365 Customer certificates of deposit 558,874 579,020 715,030 CDARS time deposits 122,219 148,500 182,879 Public time deposits 54,086 59,030 70,697 ------ Total in-market deposits 2,558,406 2,362,297 2,471,925 Out-of-market deposits: Brokered money market deposits -- -- 5,832 Out-of-local- market certificates of deposit 135,838 126,910 99,313 Out-of-local- market CDARS 21,899 -- -- Brokered certificates of deposit 407,068 437,074 449,836 ------- ------- ------- Total out-of- market deposits 564,805 563,984 554,981 ------- ------- ------- Total deposits $3,123,211 $2,926,281 $3,026,906 ========== ========== ==========
RECONCILIATION OF U.S. GAAP FINANCIAL MEASURES (unaudited) (dollars in thousands) The following, as of the dates indicated, reconciles the income (loss) before income taxes to pre-tax, pre-provision operating earnings. For the Three Months Ended -------------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, ----- ------ ----- ----- ----- 2011 2011 2011 2011 2010 --- --- --- --- --- Income (loss) before income taxes $9,003 $9,758 $(1,038) $282 $(45,323) Add back (subtract): Credit costs: Provision for loan losses 10,955 16,240 11,822 10,241 59,923 Nonperforming asset expense 1,622 (1,648) 2,013 3,277 9,259 ----- ------ ----- ----- ----- Credit costs subtotal 12,577 14,592 13,835 13,518 69,182 Other: Gain on sales of investment securities (6) (4,938) -- -- (6,997) Derivative termination fees -- 896 -- -- -- Early extinguishment of debt -- 3,444 -- -- -- Impairment of investment securities 190 -- 381 -- -- --- --- --- --- --- Other subtotal 184 (598) 381 -- (6,997) --- --- Pre-tax, pre- provision operating earnings $21,764 $23,752 $13,178 $13,800 $16,862 ======= ======= ======= ======= =======
The following, as of the dates indicated, details the components of revenue. For the Three Months Ended --------------------- Dec. Sept. June Mar. Dec. 31, 30, 30, 31, 31, ----- ------ ----- ----- ----- 2011 2011 2011 2011 2010 ---- ---- ---- ---- ---- Net interest income $35,266 $34,718 $32,243 $32,187 $33,562 Noninterest income 16,538 19,432 6,387 6,885 18,009 Add back (subtract): Gain on sales of investment securities (6) (4,938) -- -- (6,997) Derivative termination fees -- 896 -- -- -- Impairment of investment securities 190 -- 381 -- -- --- --- Revenue $51,988 $50,108 $39,011 $39,072 $44,574 ======= ======= ======= ======= =======
The Company's accounting and reporting policies conform to U.S. generally accepted accounting principles ("GAAP") and general practice within the banking industry. Management uses certain non- GAAP financial measures to evaluate the Company's financial performance and has provided the non-GAAP measures of pre-tax, pre-provision operating earnings and of revenue. In the pre-tax, pre-provision operating earnings non-GAAP financial measure, the provision of loan losses, nonperforming asset expense and certain non-recurring items, such as gains and losses on investment securities, derivative termination fees, early extinguishment of debt and impairment of investment securities are excluded from the determination of operating results. The non-GAAP measure of revenue is calculated as the sum of net interest income and noninterest income adjusted by investment securities gains and losses, derivative termination fees and impairment of investment securities. Management believes that these measures are useful because they provide a more comparable basis for evaluating financial performance from core operations period to period.
SOURCE Taylor Capital Group, Inc.