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* Net income grew to $0.8 million for the quarter ended 9/30/09.
* Net income per share grew to $0.11 for the quarter ended 9/30/09.
* Net interest margin increased 22 basis points to 3.19% for the quarter ending 9/30/09, compared to 2.97% for the quarter ended 6/30/09.
* Nonperforming loans decreased $11.1 million or 21.5% from the prior quarter.
* Allowance for loan losses increased to 2.07% of total loans at 9/30/09, up 24 basis points from the prior quarter.
* Total Stockholders' Equity increased $4.5 million to $74.9 million at 9/30/09, up 6.4% from the prior quarter.
* Convertible Promissory Notes in the amount of $4.2 million were issued.
Baylake Corp. (OTC Bulletin Board: BYLK), a bank holding company with $1.0 billion in assets, today reported net income of $0.8 million, or $0.11 basic and diluted earnings per share, for the third quarter of 2009, an improvement of $2.0 million compared to a net loss of $1.2 million ($0.15 basic and diluted loss per share) for the third quarter of 2008. Return on assets (ROA) and return on equity (ROE) for the quarter ended September 30, 2009 increased to 0.31% and 4.61%, respectively, compared to (0.43%) and (6.37%), respectively, for the same period in 2008.
The improved operating results for the third quarter of 2009 were impacted by a $2.0 million (62.5%) reduction in the provision for loan losses from $3.2 million for the quarter ended September 30, 2008 to $1.2 million for the quarter ended September 30, 2009.
During the third quarter, non performing loans decreased $11.1 million (21.5%) from $51.6 million at June 30, 2009 to $40.5 million at September 30, 2009.
"We are encouraged by our third quarter results. Although our non performing loans remain at an unacceptably high level, we are hopeful that reductions in problem loan levels will continue in the next few quarters. Despite the fact that the effects of the recession have continued to hamper the repayment abilities of many of our borrowers, we are beginning to see slight improvements in business activity from some of our larger manufacturing customers," said Robert J. Cera, Baylake Corp. President and Chief Executive Officer.
Net charge-offs for the quarter ended September 30, 2009 were $0.3 million, or 0.14% on an annualized basis of average total loans compared to $2.9 million, or 0.60% on an annualized basis of average total loans for the quarter ended September 30, 2008. Net charge-offs for the quarter ended June 30, 2009 were $2.9 million. At September 30, 2009 and September 30, 2008, the allowance for loan losses as a percent of total loans was 2.07% and 1.69%, respectively. This compares to 1.83% for the quarter ended June 30, 2009. The ratio of allowance for loan losses to non-performing loans at September 30, 2009 was 34.5%, compared to 33.0% at September 30, 2008 and 25.23% at June 30, 2009.
Total loans decreased by $71.0 million, or 9.5%, from $746.6 million at September 30, 2008 to $675.6 million at September 30, 2009. Total deposits decreased $10.3 million, or 1.2%, from $842.4 million at September 30, 2008 to $832.1 million as of September 30, 2009. The decline in deposits was a result of our strategic decision to allow brokered certificates of deposit in the amount of $19.3 million to mature in an effort to reduce our reliance on such deposits. In addition, the decline in deposit balances was impacted by aggressive pricing decisions made by local bank and non-bank competitors, which we chose not to match during the third quarter of 2009.
Our investment portfolio decreased $14.3 million, or 6.4%, from $223.9 million at September 30, 2008 to $209.6 million as of September 30, 2009. Partially offsetting this decrease, during the third quarter of 2009, was the market value of certain corporate debt obligations currently held in our investment portfolio showed improvement. Baylake does not currently hold any Fannie Mae or Freddie Mac preferred securities.
Baylake's total assets and shareholders' equity were $1.0 billion and $74.9 million, respectively, at September 30, 2009, compared to $1.1 billion and $75.5 million, respectively, at September 30, 2008. The decrease in shareholders' equity when compared to September 30, 2008 was primarily a result of operating losses of $8.6 million experienced in the fourth quarter of 2008 partially offset by net operating income of $3.7 million for the nine months ended September 30, 2009 and a $4.3 million increase in accumulated other comprehensive income related to an increase in the market value of Baylake's investment portfolio. Baylake's total risk-based capital was 11.34% at September 30, 2009 compared to 11.73% at September 30, 2008. At September 30, 2009, both Baylake Corp. and Baylake Bank were considered "well capitalized" under applicable bank regulatory guidelines.
During the quarter ending September 30, 2009, $4.2 million of Convertible Promissory Notes were issued through a Private Placement offering. The proceeds from the offering will be used to provided capital to Baylake Bank and for other general corporate purposes.
Net interest margin increased 9 basis points from 3.10% for the quarter ended September 30, 2008 to 3.19% for the quarter ended September 30, 2009.
We believe that we have more than adequate resources available to meet our short-term liquidity needs. As of September 30, 2009, Baylake Bank had $32.6 million in established lines of credit with nonaffiliated banks, none of which had been drawn as of that date. Additionally, Baylake Bank is approved to access, subject to pledging appropriate collateral, the Federal Reserve Discount Window for short term borrowing as necessary.
Baylake Corp., headquartered in Sturgeon Bay, Wisconsin, is the bank holding company for Baylake Bank. Through Baylake Bank, Baylake Corp. provides a variety of banking and financial services from 28 financial centers located throughout Northeast and Central Wisconsin, in Brown, Door, Green Lake, Kewaunee, Manitowoc, Outagamie, Waupaca, and Waushara Counties.
The following appears in accordance with the Private Securities Litigation Reform Act of 1995:
This news release contains forward-looking statements about the financial condition, results of operations and business of Baylake Corp. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "anticipate," "intend," "plan," "estimate" or words of similar meaning, or future or conditional verbs such as "would," "should," "could" or "may."
Forward-looking statements, by their nature, are subject to risks and uncertainties. A number of factors, many of which are beyond the control of Baylake Corp., could cause actual conditions, events or results to differ significantly from those indicated by the forward-looking statements. These factors, which are described in this press release and in the annual and quarterly reports filed by Baylake Corp. with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2008 under "Item 1A. Risk Factors," include certain credit, market, operational, liquidity and interest rate risks associated with the company's business and operations. Other factors include changes in general business and economic conditions, developments (including collection efforts) relating to the identified non-performing loans and other problem loans and assets, world events (especially those which could affect our customers' tourism-related businesses), competition, fiscal and monetary policies and legislation.
Forward-looking statements speak only as of the date they are made, and Baylake Corp. does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.
Baylake Corp. and Subsidiaries
Summary Financial Data
The following tables set forth selected consolidated financial and other data for Baylake Corp. at the dates and for the period indicated. The selected financial and other data at September 30, 2009 and 2008 has not been audited, but in the opinion of management of Baylake Corp. reflects all necessary adjustments for a fair presentation of results as of the dates and for the periods covered.
September December September
30, 2009 31, 2008 30, 2008
Selected Financial -------- -------- --------
Condition Data (unaudited) (unaudited) (unaudited)
(at end of period) --------- --------- ---------
(dollars in thousands,
except per share data)
Total assets $1,045,561 $1,062,913 $1,074,619
Investment
securities (1) 209,612 225,417 223,946
Total loans 675,634 729,090 746,595
Total deposits 832,124 849,758 842,442
Borrowings (2) 106,221 115,269 129,372
Subordinated
debentures 16,100 16,100 16,100
Convertible
promissory notes 4,200 --- ---
Stockholders'
equity 74,915 68,954 75,463
Non-performing
loans (3) 40,485 44,054 38,234
Non-performing
assets (3) 50,663 51,197 46,384
Shares outstanding 7,911,539 7,911,539 7,911,539
Book value per
share $9.47 $8.72 $9.54
As of and for the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
Selected Operations Data - 2009 2008 2009 2008
UNAUDITED ---- ---- ---- ----
---------
Total interest income $11,828 $13,947 $35,922 $43,855
Total interest expense 4,410 6,628 14,300 22,147
----- ----- ------ ------
Net interest income
before provision for
loan losses 7,418 7,319 21,622 21,708
Provision for loan losses 1,200 3,200 3,600 4,361
Net Interest income after ----- ----- ----- -----
provision for loan
losses 6,218 4,119 18,022 17,347
Total non-interest income 2,090 2,102 9,219 6,615
Total non-interest
expense 7,429 8,712 22,671 25,567
----- ----- ------ ------
Income (loss) before
income taxes 879 (2,491) 4,570 (1,605)
Income tax expense
(benefit) 44 (1,317) 919 (1,690)
Net income (loss) $835 $(1,174) $3,651 $85
==== ======= ====== ===
As of and for the As of and for the
Three Months Ended Nine Months Ended
September 30, September 30,
(unaudited) (unaudited)
2009 2008 2009 2008
---- ---- ---- ----
Per Share Data: (4)
-------------------
Net income (loss) per
share (basic) $0.11 $(0.15) $0.46 $0.01
Net income (loss) per
share (diluted) $0.11 $(0.15) $0.46 $0.01
Cash dividends per
common share $-- $-- $-- $--
Book value per share $9.47 $9.54 $9.47 $9.54
Performance Ratios: (5)
-----------------------
Return on average total
assets 0.31% -0.43% 0.46% 0.01%
Return on average total
shareholders' equity 4.61% -6.37% 6.87% 0.14%
Net interest margin (6) 3.19% 3.10% 3.13% 3.09%
Net interest spread (6) 3.06% 2.90% 3.00% 2.87%
Efficiency ratio (9) 75.53% 89.06% 70.85% 87.84%
Non-interest income to
average assets 0.79% 0.77% 1.17% 0.82%
Non-interest expense to
average assets 2.80% 3.20% 2.88% 3.16%
Net overhead ratio (7) 2.01% 2.43% 1.71% 2.35%
Average loan to average
deposit ratio 82.03% 87.20% 84.15% 86.94%
Average interest earning
assets to average
interest bearing
liabilities 107.61% 107.66% 106.66% 107.48%
Asset Quality Ratios:
(3) (5)
---------------------
Non-performing loans to
total loans 5.99% 5.12% 5.99% 5.12%
Allowance for loan
losses to:
Total loans 2.07% 1.69% 2.07% 1.69%
Non-performing loans 34.51% 32.97% 34.51% 32.97%
Net charge-offs to
average loans 0.14% 1.55% 0.60% 0.64%
Non-performing assets to
total assets 4.85% 4.32% 4.85% 4.32%
Capital Ratios: (5)(8)
----------------------
Shareholders' equity to
assets 7.17% 7.02% 7.17% 7.02%
Tier 1 risk-based
capital 9.54% 10.48% 9.54% 10.48%
Total risk-based capital 11.34% 11.73% 11.34% 11.73%
Leverage ratio 7.16% 8.36% 7.16% 8.36%
Other:
------
Number of bank
subsidiaries 1 1 1 1
Number of banking
facilities 28 28 28 28
Number of full-time
equivalent employees 306 314 306 314
(1) Includes securities classified as available for sale.
(2) Consists of Federal Home Loan Bank advances, federal funds purchased,
and collateralized borrowings.
(3) Non-performing loans consist of non-accrual loans and guaranteed
loans 90 days or more past due but still accruing interest.
Non-performing assets consist of non-performing loans and other real
estate owned.
(4) Earnings per share are based on the weighted average number of shares
outstanding for the period.
(5) With the exception of end of the period ratios, all ratios are based
on average daily balances and are annualized where appropriate.
(6) Net interest margin represents net interest income as a percentage of
average interest-earning assets. Net interest rate spread represents
the difference between the weighted average yield on interest-earning
assets and the weighted average cost of interest-bearing liabilities.
(7) Net overhead ratio represents the difference between non-interest
expense and non-interest income, divided by average assets.
(8) The capital ratios are presented on a consolidated basis.
(9) Efficiency ratio is calculated as follows: non-interest expense
divided by the sum of taxable equivalent net interest income plus
non-interest income, excluding net investment security gains and
excluding net gains on sale of fixed assets.
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