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EvergreenBancorp Grows Deposits 12 Percent and Loans 19 Percent; Earns
$3.5 Million or $1.45 Per Diluted Share in YTD 2008 Wednesday November
5, 6:30 am ET
SEATTLE, Nov. 5, 2008 - EvergreenBancorp, Inc. , the holding company
for EvergreenBank, recently reported a 19% increase in loans and a 12%
increase in deposits which helped counter margin compression and a
$377,000 after-tax charge for the Visa litigation settlement, which
produced a small loss in the third quarter. In the third quarter of
2008, Evergreen reported a loss of $47,000, or $0.02 per share,
compared to earnings of $802,000, or $0.33 per diluted share in the
third quarter a year ago. In the first nine months of 2008, net income
totaled $3.5 million, or $1.45 per diluted share, compared to $2.2
million, or $0.92 per diluted share, in the first nine months of 2007.
Operating profits were reduced by $572,000 pretax, or $0.16 per share
after-tax, in the third quarter and boosted by $5.6 million pretax, or
$1.42 per diluted share after tax, from the ownership of Visa, Inc.,
its litigation settlement and IPO.
''The investment in our branch network is showing positive results
generating solid growth in deposits and loans in the past year,'' said
Gerald O. Hatler, president and chief executive officer. ''We have
added a number of experienced banking professionals to our retail team,
which has raised the caliber of service and professionalism throughout
the franchise. In addition, we opened the Kent Branch this summer and
it has already brought in $8.8 million in deposits in less than two
quarters of operations.''
Third Quarter 2008 Financial Highlights (9/30/2008 compared with
9/30/2007)
* Total assets rose 14% to $466 million.
* Capital ratios for the Bank remained strong with Tier 1 Capital to
average assets of 8.84%, well above the regulatory requirements of 5%
for well-capitalized institutions.
* On August 22, a cash dividend of $0.07 per share was paid to
shareholders of record August 6, 2008.
* Total loans increased 19% to $423 million from $354 million.
* Commercial real estate loans grew 49% and account for 52% of the
portfolio;
* Construction loans declined 7% and now represent only 13% of the
portfolio.
Balance Sheet and Asset Quality
Total assets grew 14% to $466 million at September 30, 2008, from $410
million at September 30, 2007. Investment securities, which are
classified as available for sale, totaled $14.6 million and are
primarily U.S. government or agency backed securities with an average
life of less than five years. Of the total investments, Federal Home
Loan Bank stock accounted for $3.6 million and mortgage backed
securities totaled $3.0 million. There were no Fannie Mae or Freddie
Mac securities in the investment portfolio.
Net loans increased 19% to $416 million from $351 million a year ago.
The loan portfolio continues to be well secured and well diversified.
At September 30, 2008, commercial loans accounted for 22% of the
portfolio, commercial real estate loans accounted for 52%, construction
and land development loans were equal to 13% of the portfolio, single
family residential loans accounted for 8% and consumer loans
contributed 5% of gross loans.
''Our asset quality is not at the pristine levels we have seen in past
years, although the problem credits are limited to just a few
relationships which are all secured by real estate,'' said Gordon
Browning, chief financial officer. Total nonperforming loans rose to
$8.7 million, or 1.86% of assets at September 30, 2008, from $7.5
million or 1.64% of assets at June 30, 2008 and $1.1 million, or 0.26%
of total assets at September 30, 2007.
Components of nonperforming loans were as follows:
* A $4 million loan secured by a residential land parcel in Redmond,
Washington, currently valued at $7 million, and was originally valued
at $11 million. This loan is currently the subject of a dispute between
its two business partners who are working to dissolve their business
and the property is scheduled to go into foreclosure in the near future.
* Two construction loans to a single party totaling $3.1 million for
two high-end homes in Seattle and North Pierce County, for which
additional reserves were booked in the first quarter.
* A residential development loan in East Snohomish County, with
EvergreenBank participating with other institutions for $1.1 million.
The Bank's exposure to the development includes 8 lots and 3 single
family homes, which are near completion. The loans, net of recorded
impairment amounts included in the allowance for loan losses, have an
aggregate principal balance of approximately 95% of the current
appraised value.
''In addition, we have a few large relationships which are showing 30
to 89 days delinquent. The largest such relationship is for $6 million
secured by multi-family properties in King County, and we are working
with the estate attorney to bring the loans current,'' Browning noted.
The allowance for loan losses stood at $6.1 million or 1.44% of total
loans at September 30, 2008, compared with $3.7 million or 1.05% of
total loans at September 30, 2007. In the third quarter of 2008, net
charge-offs totaled $9,000 compared to net charge-offs of $66,000 for
the same quarter a year ago. Year-to-date, net charge-offs were
$923,000, or 0.23% of average loans, compared to net charge-offs of
$95,000 in the first nine months of 2007.
At September 30, 2008, deposits grew 12% to $360 million, a $40 million
increase from one year ago. Core deposits accounted for 50% of total
deposits. Noninterest bearing deposits accounted for 14% of total
deposits, and other transaction accounts contributed 23% of the total.
Time deposits were $89 million and brokered and bulletin board CD's
were $137 million at quarter end. ''The increases in FDIC insurance
limits is a welcome change and should reassure depositors in the safety
and soundness of their savings,'' said Hatler.
Shareholders' equity increased 12% year over year to $28.7 million.
Book value per share was up 11% to $11.85 at September 30, 2008, from
$10.80 at September 30, 2007. The estimated 92,000 equivalent
restricted shares of Visa, Inc. that Evergreen owns are carried on its
books at zero value, but may eventually add value to the franchise.
''While we have strong capital ratios, we are investigating the
possibility of participating in the new TARP Capital Purchase Program
proposed by the Treasury Department,'' added Hatler. ''We are in the
process of preparing our application, but whether we choose to accept
some or all of the funding we expect to qualify for is still under
consideration. The Board has been very clear that they will make the
determination on taking TARP funds based on their estimation of the
long-term impact on capital levels, shareholder dilution and the
operating restrictions associated with these funds. So we are not
making plans for any additional capital until the dust settles.''
Operating Results
Third quarter operating revenue (net interest income, before provision
for loan loss, plus noninterest income excluding Visa gain or expenses)
totaled $4.5 million compared to $4.8 million in the third quarter a
year ago. For the first nine months of 2008, operating revenues were
flat at $13.3 million compared to the year ago period.
Third quarter net interest income, before the provision for loan
losses, declined 4% to $4.1 million and grew 2% in the first nine
months of 2008 to $12.0 million compared to the year ago periods. In
the third quarter of 2008, Evergreen's net interest margin was 3.80%
compared to 4.51% for the third quarter of last year. In the first nine
months of 2008, net interest margin fell to 3.79% from 4.44% in the
first nine months of 2007, reflecting the sharp decline in short term
interest rates in the past year. ''We are beginning to see some pricing
power on the lending side in the current market environment, although
competition for deposits remains high,'' said Hatler.
''Due to the increase in our non-performing loans and because our loan
portfolio is growing, we continue to build reserves,'' said Michael
Tibbits, chief credit officer. Evergreen provisioned $501,000 for loan
losses in the third quarter compared to $525,000 in the third quarter
of 2007. Year-to-date, the provision for loan losses totaled $2.8
million compared to $1.0 million in the first nine months of 2007.
After the provision for loan losses, net interest income totaled $3.6
million in the third quarter of 2008, compared to $3.8 million in the
third quarter a year ago. In the first nine months of 2008, net
interest income after the provision was $9.2 million compared to $10.8
million for the like period in 2007.
Third quarter noninterest income was $404,000 compared to $515,000 in
the third quarter a year ago, reflecting lower fee income from service
charges and credit card processing. In the first nine months of 2008,
noninterest income was $6.8 million compared to $1.5 million in the
first nine months of 2007. Excluding the first quarter 2008 Visa gain,
noninterest income in the first nine months of 2008 totaled $1.3
million.
The significant impact from Visa's initial public offering contributed
to a large gain on the income statement in the first nine months of the
year. The value of the shares of Visa will not be reflected on the
balance sheet until they are sold, and they are restricted from sale
for at least three years to offset Visa's possible litigation exposure.
Noninterest expense rose 34% in the third quarter of 2008 to $4.1
million compared with $3.1 million in the same quarter a year ago,
reflecting a Visa indemnification charge (expected to be offset by a
comparable fourth quarter gain), overall franchise growth and increased
FDIC insurance premiums. Noninterest expense in the first nine months
of 2008 also increased 22% to $11.0 million from $9.0 million in the
first nine months of 2007. The ratio of annualized noninterest expense
to average assets was 3.62% for the third quarter and 3.34% for the
first nine months of 2008 in line with year ago levels.
About EvergreenBancorp and EvergreenBank
Founded in 1971, EvergreenBank is a subsidiary of EvergreenBancorp,
Inc., a bank holding company headquartered in Seattle, Washington.
EvergreenBank is a community bank with seven offices located in
Seattle, Bellevue, Lynnwood, Federal Way and Kent. The Bank offers a
full suite of personal and business banking services. Services include
commercial, real estate, and consumer lending; savings, checking, and
certificate of deposit accounts; health savings accounts; Internet
banking and merchant credit card processing services. Visit
http://www.EvergreenBancorp.com
to learn more.
This press release contains ''forward-looking statements'' within the
meaning of federal securities law, including statements concerning
business strategies and their intended results, and similar statements
concerning expectations that are not historical facts. The
forward-looking statements in this press release are subject to
numerous risks and uncertainties, including the effects of economic
conditions, demand for financial services, competitive conditions,
regulatory changes, and the availability of capital to finance growth,
which could cause actual results to differ materially from those
expressed in or implied by the statements herein.
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