HENDERSON, Nev.--(BUSINESS WIRE)--April 30, 2008--Silver State Bancorp (NASDAQ:
SSBX - News) today reported a net loss for the quarter ended March 31, 2008
of $14.4 million, or $0.95 per diluted share, compared with net income of $5.6
million or $0.39 per diluted share reported for the first quarter of 2007, directly
reflecting a significant increase in the company's loan loss reserve resulting
from the impact of the deteriorating economy in the Nevada and Arizona markets
on the Company's loan portfolio, most specifically its residential construction
and land loans.
Despite the reported loss, Silver State Bancorp's capital levels remain above
the "well-capitalized" levels dictated by Federal bank regulatory capital requirements
as confirmed by the Company's Total Risk-Based Capital Ratio of 11.4%.
The net loss for the quarter reflects an increased provision for loan losses
of $31.0 million, attributed to first quarter charge-offs of $9.7 million and
an increase in nonperforming loans to $78.0 million from $13.1 million. The
increased provision offset an otherwise positive quarter of operations.
Compared with the first quarter of 2007, net interest income increased $1.9
million despite a falling interest rate environment. Operating expenses increased
$2.9 million reflecting the addition of four branch offices, a new administrative
facility and corresponding staff increases consistent with the Company's planned
growth strategy.
Corey L. Johnson, President and Chief Executive Officer, stated, "The impact
of the deterioration of the Nevada and Arizona economies and real estate markets
on certain segments of our loan portfolio, namely our residential construction
and land loans, began to be realized toward the end of the first quarter of
2008 as project delays mounted and updated appraisals showing significant lower
valuations were received. With many real estate projects requiring an extended
time to market, some of our borrowers have exhausted their liquidity which requires
us to place the loan into nonaccrual status."
Mr. Johnson stated that, "While our results for the first quarter are not
acceptable, they are, in senior management's view, the consequence of the deteriorating
economic environment. We will continue thorough detailed reviews of our portfolio,
which includes updated appraisals, take steps to aggressively address and mitigate
any further deterioration. We have a strong, experienced team in place to work
with our borrowers to plot a course through this complicated and difficult economic
period providing all involved with the best possible opportunity for a satisfactory
outcome."
Mr. Johnson also noted that, "We have taken actions to work through this economic
environment of which the most obvious was the significant increase in our loan
loss provision. We have also:
-- modified our lending guidelines to reflect the current
economic conditions;
-- created a new internal loan review department to work in
conjunction with our external loan review protocols;
-- increased the number of professionals in our Special Asset
Department; and
-- effected a range of expense reduction measures.
Mr. Johnson stated that, "In addition to these operational adjustments, we
are actively evaluating a variety of more global, strategic alternatives to
improve our overall balance sheet.
"The range of alternatives includes the alteration of the mix of our loan
portfolio, sales of certain of the weaker portions of the portfolio, adjusting
our funding mix and other strategic alternatives to enhance our capital position
and strengthen our balance sheet. To assist us in evaluating these alternatives
the Board has enlisted the services of Keefe, Bruyette & Woods, Inc., a nationally
recognized investment banking firm."
Mr. Johnson continued, "Despite the challenges of this current market environment,
we remain optimistic regarding the ability of our markets to recover and grow
over the long term. The fundamental strength of Arizona and Nevada as desirable
places to live and work continue to point to our markets as long term growth
areas. Testament to this outlook is Silver State Bank's continued SBA lending,
an area in which we continue to lead the industry in our markets.
"While at this time, it would be reasonable to expect the second quarter to
result in another loss which, combined with the first quarter results, could
result in a loss for the year, we will work aggressively through this severe
economic environment and continually evaluate and, where appropriate, modify
our operational approach to position the Company to return to the earnings trend
our shareholders have come to expect from us."
Income Statement
Total interest income was $35.8 million for the quarter ended March 31, 2008
compared with $29.4 million for the corresponding period of 2007. This increase
of $6.4 million or 21.6% was primarily the result of an increase in the balance
of our average earning assets. Our average earning assets, driven by an increase
in our average loans, increased $544.4 million or 44.9% for the first quarter
of 2008 compared with the corresponding period of 2007. The average yield on
earning assets decreased to 8.19% for the quarter ended March 31, 2008 compared
with 9.84% for the corresponding period of 2007, primarily as a result of market
interest rate reductions.
Total interest expense was $16.8 million for the quarter ended March 31, 2008
compared with $12.3 million for the corresponding period of 2007. This increase
of $4.5 million or 36.5% was primarily the result of an increase in the balance
of our average interest-bearing liabilities. Our average interest-bearing liabilities,
driven primarily by an increase in interest-bearing deposits, increased $508.8
million or 50.7% for the first quarter of 2008 compared with the corresponding
period of 2007. The average cost of interest-bearing liabilities decreased to
4.47% for the quarter ended March 31, 2008 compared with 4.98% for the corresponding
period of 2007.
Net interest income was $18.9 million for the quarter ended March 31, 2008,
an increase of $1.9 million or 10.9% compared with net interest income of $17.1
million for the corresponding period of 2007. The net interest margin decreased
to 4.34% for the first quarter of 2008 compared with 5.22% for the fourth quarter
of 2007 and compared with 5.72% for the first quarter of 2007. This decrease
is primarily attributable to a decrease in the average yield of our loan portfolio
reflecting recent interest rate cuts as well as continued competitive pressures
on the pricing of our deposit products. In addition, our net interest margin
decreased by 0.22% due to the reversal of interest income on loans being placed
on nonaccrual status during the first quarter of 2008.
The provision for loan losses was $31.0 million for the quarter ended March
31, 2008 compared with $3.6 million for the quarter ended December 31, 2007
and compared with $1.3 million for the quarter ended March 31, 2007. The increase
in the provision for loan losses is primarily attributable to the Company's
residential construction and land portfolio which continues to experience deterioration
in estimated collateral values and repayment abilities of some of the Company's
customers.
Total non-interest income was $2.0 million for the quarter ended March 31,
2008, a decrease of $705,000 or 26.4% compared with non-interest income of $2.7
million for the corresponding period of 2007. Total non-interest income represented
5.2% of total revenue for the first quarter of 2008 compared with 8.3% for the
corresponding period of 2007. The decrease in non-interest income was primarily
the result of a decrease in the gain on sale of loans which decreased $586,000
or 32.0% for the quarter ended March 31, 2008 compared with the corresponding
period of 2007.
Total non-interest expense was $12.3 million for the quarter ended March 31,
2008, an increase of $2.9 million or 30.6% compared with total non-interest
expense of $9.4 million for the corresponding period of 2007. The increase was
primarily attributable to expenses associated with salaries and employee benefits
which increased $1.5 million or 26.4% to $7.4 million for the quarter ended
March 31, 2008 compared with $5.8 million for the corresponding period of 2007
due to the addition of new employees which is consistent with our overall growth.
Occupancy expenses increased $441,000 or 61.6% to $1.2 million for the quarter
ended March 31, 2008 compared with $716,000 for the corresponding period of
2007 primarily as a result of the Company's number of full service branch offices
increasing to 16 at March 31, 2008 from 12 at March 31, 2007 as well as opening
of our new corporate and administration office building during the second quarter
of 2007. Depreciation and amortization expense increased $180,000 or 30.4% to
$772,000 for the quarter ended March 31, 2008 compared with $592,000 for the
corresponding period of 2007 due to increases in premises, equipment and other
depreciable assets. Insurance expense increased $245,000 or 355.1% to $314,000
for the quarter ended March 31, 2008 compared with $69,000 for the corresponding
period of 2007 due primarily to an increase in FDIC deposit insurance assessments.
Total income tax benefit was $8.0 million for the quarter ended March 31,
2008, a difference of $11.4 million or 335.3% compared with total income tax
expense of $3.4 million for the corresponding period of 2007.
Balance Sheet
Total assets were $1.9 billion at March 31, 2008, an increase of $151.0 million
or 8.6% from December 31, 2007. This increase is due primarily to internally
generated loan growth.
Net loans, excluding loans held for sale, totaled $1.6 billion at March 31,
2008, an increase of $47.0 million or 3.1% from December 31, 2007. Loans held
for sale totaled $91.2 million at March 31, 2008, an increase of $22.3 million
or 32.4% from December 31, 2007. The majority of the loan growth was in construction
and land loans which grew $54.9 million or 5.2% from December 31, 2007. Net
loans represented 82.9% of total assets at March 31, 2008 compared with 87.3%
at December 31, 2007. The allowance for loan and lease losses represented 2.50%
of gross loans at March 31, 2008 and 1.24% at December 31, 2007.
Our total cash and cash equivalents were $84.7 million at March 31, 2008,
an increase of $70.9 million or 512.2% from December 31, 2007. This increase
is due to our concerted efforts to increase our liquidity, which is continuing
into the second quarter. We expect cash and cash equivalents to exceed $200
million at the end of April.
Deposits totaled $1.6 billion at March 31, 2008, an increase of $145.6 million
or 10.2% from December 31, 2007. The majority of our deposit growth occurred
in time deposits which grew $184.1 million or 26.7% from December 31, 2007.
At March 31, 2008, $674.1 million of our total deposits are considered for regulatory
purposes to be brokered deposits, an increase of $173.9 million or 34.8% from
December 31, 2007. We expect to gradually reduce the level of brokered deposits
throughout the remainder of 2008. Federal Home Loan Bank advances were $117.6
million at March 31, 2008, an increase of $27.0 million or 29.8% from December
31, 2007. Deposits and Federal Home Loan Bank advances are used as our primary
funding sources to support our loan growth.
Junior subordinated debt totaled $69.6 million at March 31, 2008 and remained
unchanged from December 31, 2007. Our junior subordinated debt, which is issued
to our statutory trust subsidiaries that, in turn, issue trust preferred securities,
is considered long-term borrowing for financial reporting purposes but is included
as a component of regulatory capital, subject to limitations.
Stockholders' equity decreased $15.5 million or 9.9% from December 31, 2007.
This decrease was primarily a result of the Company's $14.4 million loss for
the first quarter. The Company also repurchased 146,600 shares of its common
stock under an authorized stock repurchase program at a weighted average price
per share of $10.29 during the quarter ended March 31, 2008. Total stockholders'
equity represented 7.4% of total assets at March 31, 2008, compared with 8.9%
at December 31, 2007. Tangible book value per share decreased to $8.09 at March
31, 2008 from $9.03 at December 31, 2007.
Asset Quality and Capital Ratios
At March 31, 2008 nonperforming loans were $78.0 million and represented 4.79%
of gross loans and nonperforming assets were $79.2 million and represented 4.14%
of total assets. Net charge-offs were $9.7 million for the quarter ending March
31, 2008 and as a percentage of average loans were 0.57% for the quarter ending
March 31, 2008. These increases are due primarily to residential construction
and land loans where the borrower has experienced project delays affecting the
timing or completion of projects or financial difficulty due to the current
challenging economic environment coupled with declining real estate values.
The Company is considered "well-capitalized" pursuant to regulatory capital
definitions at March 31, 2008 with Tier 1 Risk-Based, Total Risked-Based and
Leverage Capital Ratios of 9.1%, 11.4% and 9.3%, respectively.
Conference Call
Silver State Bancorp will host a conference call at 11:00 AM Eastern Time/8:00
AM Pacific Time on Thursday, May 1, 2008 to discuss the Company's performance
and first quarter results. Participants may access the call by dialing 866.510.0707
(International dial 617.597.5376) using the pass code 45143649. The call will
be recorded and made available for replay after 1:00 PM Eastern Time on May
1, 2008 until 11:59 PM Eastern Time on May 8, 2008 by dialing 888.286.8010 (International
dial 617.801.6888) using the pass code 17106208. A replay will also be available
via web broadcast at www.silverstatebancorp.com.
About Silver State Bancorp
Silver State Bancorp, through its wholly owned subsidiary Silver State Bank,
currently operates thirteen full service branches in southern Nevada and four
full service branches in the Phoenix/Scottsdale market area. Silver State Bank
also operates loan production offices located in Nevada, California, Washington,
Oregon, Utah, Colorado and Florida. Please visit www.silverstatebancorp.com
for more information.
Forward-Looking Statements
This press release contains forward-looking statements. Terms such as "will,"
"should," "plan," "intend," "expect," "continue," "believe," "anticipate," "seek,"
and similar expressions are forward-looking in nature and reflect management's
view only as the date hereof. Actual results and events could differ materially
from those expressed or anticipated and are subject to a number of risks and
uncertainties including but not limited to fluctuations in interest rates, asset
quality, government regulations, economic conditions and competition in the
geographic and business areas in which Silver State Bancorp conducts its operations.
We undertake no obligation to review or update any forward-looking statements,
whether as a result of new information, future events, or otherwise.
Silver State Bancorp and Subsidiaries
Consolidated Balance Sheets
March 31, 2008 and December 31, 2007
(Dollars in thousands)
(UNAUDITED)
March 31, December 31,
2008 2007
----------------------------------------------------------------------
Assets
Cash and cash equivalents $ 19,572 $ 13,838
Federal funds sold 65,138 -
-----------------------
Total cash and cash equivalents 84,710 13,838
Securities available-for-sale 52,704 51,966
Federal Home Loan Bank stock, at cost 5,875 5,469
Loans held for sale 91,185 68,868
Loans, net of allowance for losses of $40,651
and $19,304, respectively 1,586,687 1,539,667
Premises and equipment, net 44,462 43,081
Accrued interest receivable 9,064 9,874
Deferred taxes, net 13,534 5,902
Other real estate owned 1,249 110
Goodwill 18,835 18,835
Intangible asset, net of amortization of $314
and $247, respectively 850 917
Prepaids and other assets 6,056 5,656
-----------------------
Total assets $1,915,211 $1,764,183
=======================
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand $ 142,145 $ 177,084
Interest bearing:
Checking 531,848 535,902
Savings 23,427 22,943
Time, $100 and over 282,809 256,392
Other time 591,853 434,183
-----------------------
Total deposits 1,572,082 1,426,504
Accrued interest payable and other liabilities 11,506 9,890
Federal funds purchased and securities sold
under repurchase agreements 2,339 9,983
Federal Home Loan Bank advances and other
borrowings:
Short-term borrowings 64,000 34,000
Long-term borrowings 53,600 56,600
Junior subordinated debt 69,589 69,589
-----------------------
Total liabilities 1,773,116 1,606,566
-----------------------
Stockholders' Equity
Preferred stock, par value of .001 cents;
10,000,000 shares authorized; none issued or
outstanding - -
Common stock, par value of .001 cents;
60,000,000 shares authorized; shares issued
2008: 15,955,098; 2007: 15,944,154; shares
outstanding 2008: 15,135,765; 2007:
15,271,421 16 16
Additional paid-in capital 80,001 79,721
Retained earnings 67,500 81,974
Accumulated other comprehensive income 244 64
-----------------------
147,761 161,775
Less cost of treasury stock, 2008: 819,333
shares, 2007: 672,733 shares (5,666) (4,158)
-----------------------
Total stockholders' equity 142,095 157,617
-----------------------
Total liabilities and stockholders'
equity $1,915,211 $1,764,183
=======================
Silver State Bancorp and Subsidiaries
Consolidated Statements of Operations
For the three months ended March 31, 2008 and 2007
(Dollars in thousands, except per share information)
(UNAUDITED)
Three Months
Ended March 31,
2008 2007
----------------------------------------------------------------------
Interest and dividend income on:
Loans, including fees $ 34,913 $28,433
Securities, taxable 645 693
Dividends on FHLB stock 71 59
Federal funds sold and other 124 212
----------------
Total interest income 35,753 29,397
----------------
Interest expense on:
Deposits 14,360 10,767
Federal funds purchased and securities sold under
repurchase agreements 92 154
Short-term borrowings 639 165
Long-term borrowings 663 571
Junior subordinated debt 1,068 666
----------------
Total interest expense 16,822 12,323
----------------
Net interest income 18,931 17,074
Provision for loan losses 31,000 1,330
----------------
Net interest income (loss) after provision for
loan losses (12,069) 15,744
----------------
Other income:
Gain on sale of loans 1,245 1,831
Net realized gain on sale of available-for-sale
securities 52 31
Service charges on deposit accounts 265 199
Loan servicing fees, net of amortization 67 189
Other income 337 424
Gain on disposal of other assets 3 -
----------------
Total non-interest income 1,969 2,674
----------------
Non-interest expense:
Salaries, wages and employee benefits 7,367 5,830
Occupancy 1,157 716
Depreciation and amortization 772 592
Insurance 314 69
Professional fees 930 851
Advertising, public relations and business
development 313 225
Customer service expense 92 87
Loss on other real estate owned 16 182
Other 1,359 879
----------------
Total non-interest expense 12,320 9,431
----------------
Income (loss) before income taxes (22,420) 8,987
Income taxes (benefit) (7,999) 3,399
----------------
Net income (loss) (14,421) 5,588
================
Basic income (loss) per common share $ (0.95)$ 0.41
================
Diluted income (loss) per common share $ (0.95)$ 0.39
================
Silver State Bancorp and Subsidiaries
Summary Consolidated Financial and Other Data
(Dollars in thousands, except per share data
and ratios)
(UNAUDITED)
At or for the Three
Months Ended March 31,
-----------------------
2008 2007
-----------------------
Selected Financial Data:
Interest income $ 35,753 $ 29,397
Interest expense 16,822 12,323
----------- -----------
Net interest income 18,931 17,074
Provision for loans losses 31,000 1,330
----------- -----------
Net interest income (loss) after provision for
loan losses (12,069) 15,744
Non-interest income 1,969 2,674
Non-interest expense 12,320 9,431
----------- -----------
Income (loss) before income taxes (22,420) 8,987
Provision for income taxes (benefit) (7,999) 3,399
----------- -----------
Net Income (loss) $ (14,421)$ 5,588
=========== ===========
Share data:
Earnings (loss) per share--basic $ (0.95)$ 0.41
Earnings (loss) per share--diluted (0.95) 0.39
Book value per share 9.39 8.19
Tangible book value per share 8.09 6.74
Shares outstanding at period end 15,135,765 13,724,114
Weighted average shares outstanding--basic 15,210,741 13,696,855
Weighted average shares outstanding--diluted 15,210,741 14,170,469
Selected Balance Sheet Data:
Cash and cash equivalents $ 84,710 $ 36,261
Investments and other securities 52,704 57,565
Loans held for sale 91,185 62,392
Gross loans, including net deferred loan fees 1,627,338 1,168,478
Allowance for loan losses 40,651 12,530
Assets 1,915,211 1,384,783
Deposits 1,572,082 1,151,226
Junior subordinated debt 69,589 38,661
Stockholders' equity 142,095 112,399
Selected Other Balance Sheet Data:
Average assets $ 1,833,659 $ 1,284,435
Average earning assets 1,755,980 1,211,543
Average stockholders' equity 160,401 109,905
Selected Capital Ratios:
Leverage Ratio 9.3% 10.3%
Tier 1 Risk-Based Capital ratio 9.1% 9.5%
Total Risk-Based Capital ratio 11.4% 10.4%
Silver State Bancorp and Subsidiaries
Summary Consolidated Financial and Other Data
(continued)
(Dollars in thousands, except per share data
and ratios)
(UNAUDITED)
At or for the Three
Months Ended March 31,
-----------------------
2008 2007
-----------------------
Selected Financial & Performance Ratios:
Return on average assets (1) -3.16% 1.76%
Return on average stockholders' equity (1) -36.16% 20.62%
Net interest rate spread (1)(2) 3.72% 4.86%
Net interest margin (1)(3) 4.34% 5.72%
Efficiency ratio (4) 58.95% 47.76%
Loan to deposit ratio 103.51% 101.50%
Average earning assets to average interest-
bearing liabilities 116.10% 120.71%
Average stockholders' equity to average assets 8.75% 8.56%
Selected Asset Quality Ratios:
Nonperforming loans to gross loans (5) 4.79% 0.01%
Nonperforming assets to total assets (6) 4.14% 0.02%
Loans past due 90 days or more and still
accruing to total loans - -
Allowance for loan losses to gross loans 2.50% 1.07%
Allowance for loan losses to nonperforming
loans 52.15% 9789.06%
Net charge-offs to average loans outstanding 0.57% 0.00%
Selected Other Data:
Number of full service branch offices 16 12
===============================================
(1) Annualized for the three months ended March 31, 2008
and 2007.
(2) Net interest spread represents average yield earned on interest-
earning assets less the average rate paid on interest-bearing
liabilities.
(3) Net interest margin represents net interest income as a percentage
of average interest-earning assets.
(4) Efficiency ratio represents non-interest expenses as a percentage
of the total of net interest income plus non-interest income.
(5) Nonperforming loans are defined as loans that are past due 90 days
or more plus loans placed in nonaccrual status.
(6) Nonperforming assets include nonperforming loans plus
other real estate owned.
Three Months Ended March 31,
2008 2007
-----------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
(5) (5)
-----------------------------------------------------
(Dollars in thousands)
Interest-earning
assets
Investment
Securities-
taxable $ 52,495 $ 6454.94% $ 61,027 $ 693 4.61%
Federal funds
sold and other 17,228 1242.89% 16,480 212 5.22%
Loans (1)(2) 1,680,474 34,9138.36% 1,129,930 28,43310.21%
FHLB stock 5,783 714.94% 4,106 59 5.83%
------------------- -------------------
Total
earning
assets 1,755,980 35,7538.19% 1,211,543 29,397 9.84%
Non-interest
earning assets
Cash and due
from banks 15,144 18,564
Allowance for
loan losses (20,207) (11,539)
Other assets 82,742 65,867
----------- -----------
Total assets $1,833,659 $1,284,435
=========== ===========
Interest-bearing
liabilities
Interest
checking $ 10,493 $ 271.03% $ 20,896 $ 57 1.11%
Savings and
money market 543,906 4,8193.56% 466,931 5,376 4.67%
Time deposits 762,968 9,5145.02% 402,386 5,334 5.38%
------------------- -------------------
Total interest-
bearing
deposits 1,317,367 14,3604.38% 890,213 10,767 4.91%
Short-term
borrowings 70,076 7314.20% 24,710 319 5.24%
Long-term debt 55,446 6634.81% 50,111 571 4.62%
Junior
subordinated
debt 69,589 1,0686.17% 38,661 666 6.99%
------------------- -------------------
Total
interest-
bearing
liabilities 1,512,478 16,8224.47% 1,003,695 12,323 4.98%
Non-interest
bearing
liabilities
Non-interest
bearing demand
deposits 149,472 163,634
Other
liabilities 11,308 7,201
Stockholders'
equity 160,401 109,905
----------- -----------
Total
liabilities
and
stockholders'
equity $1,833,659 $1,284,435
=========== ===========
Net interest
rate spread
(3) 3.72% 4.86%
Net interest
income/net
interest
margin (4) $ 18,9314.34% $ 17,074 5.72%
======== ========
Total interest-
earning assets
to interest-
bearing
liabilities 116.10% 120.71%
(1) Net loan fees of $3.7 million and $2.3 million are included in the
yield computation for the three months ended 2008 and 2007,
respectively.
(2) Nonaccrual loans have
been included in average
loan balances.
(3) Net interest spread represents average yield earned on interest-
earning assets less the average rate paid on interest-bearing
liabilities.
(4) Net interest margin is computed by
dividing net interest income by total
average earning assets.
(5) Annualized.
CONTACT: Silver State Bancorp
Investors:
Corey L. Johnson, 702-433-8300
Michael J. Threet, 702-433-8300
or
Stern And Company
Media:
Steve Stern, 702-240-9533
steve@sdsternpr.com
SOURCE: Silver State Bancorp
