HENDERSON, Nev.--(BUSINESS WIRE)--Aug. 1, 2008--Silver State
Bancorp (NASDAQ: SSBX) today reported a net loss for the quarter ended
June 30, 2008 of $62.7 million, or ($4.15) per diluted share, compared
with net income of $6.2 million, or $0.44 per diluted share, reported
for the second quarter of 2007.
The loss for the quarter is the direct result of a $58.6 million
provision to the Company's loan loss reserve, an impairment charge of
$18.8 million representing a full write-down of the Company's goodwill
asset, and the establishment of a valuation allowance of $7.1 million
to the Company's net deferred tax assets.
Michael J. Threet, Chief Operating Officer and Chief Financial
Officer, said, "Our second quarter and six month results are due to
the severe economic downturn in our nation, in our region and in the
real estate values in the markets we serve.
"There is no question that these are unprecedented times for our
nation, our region and our company. The economic downturn is the most
severe downturn ever manifest in our largest market, Nevada, and has
had a severe impact on the banking industry as a whole, as reflected
in the results of operations that so many other financial institutions
are posting. Despite these difficult economic times, our capital
position remains adequate to support our balance sheet, our allowance
for loan losses is adequate to protect against probable losses in our
loan portfolio and we enhanced our liquidity position to support our
customers' needs.
"However, the Company's senior management is aggressively
executing its directive to manage risk, cut expenses, strengthen our
balance sheet and generate capital. However, safety and soundness is
our number one priority at this time. The increase in our loan loss
provision, while certainly impacting our financial results,
categorically does not have an impact on our depositors' funds. In
addition, our depositors' funds are insured by the Federal Deposit
Insurance Corporation, up to the applicable limits."
Mr. Threet continued, "We believe that our Special Assets
Department has identified and isolated most, if not all, of our
problem loans. Although we had anticipated a loss in the second
quarter, which we reported in our first quarter results, the work done
by our Special Assets Department has provided us with a much clearer
understanding regarding our loss estimates than we had just after the
first quarter. As a result, we believe the provision for loan losses
should decline in the second half of 2008. In addition, senior
management is reviewing asset disposition opportunities for our
problem loans to the extent that they make economic sense.
"To help navigate through this challenging economic time, we have
taken a number of other proactive actions to keep Silver State Bank
safe and sound, including:
-- Reorganizing the management team.
-- Exercising our contractual right to defer the interest on our
trust preferred securities at the Company level.
-- Slowing our branch expansion plan for the next several
quarters.
-- Continuing to work with our financial advisor, Keefe, Bruyette
& Woods, to seek additional capital.
-- Halting our stock repurchase program.
-- Completed an independent third-party loan review to assess the
quality of the Company's construction and land loan
portfolios.
"While no financial institution is immune to the effects of the
greater economic downturn, Silver State remains committed to
weathering the storm, and when the cycle turns, emerging leaner and
stronger."
For the six months ended June 30, 2008, the Company reported a net
loss of $77.1 million compared with a net income of $11.8 million for
the first six months ended 2007. The diluted loss per share was
($5.08) for the six months ended June 30, 2008 compared with diluted
income of $0.83 for the same period of 2007.
As a result of the loss, the Company, as of June 30, 2008, is
deemed to be "adequately-capitalized" pursuant to regulatory capital
definitions with a Total Risk-Based Capital Ratio of 9.5%. Silver
State Bank, the Company's bank subsidiary, is also deemed to be
"adequately-capitalized" with a Total Risk-Based Capital Ratio of 9.4%
The net loss for the quarter reflects an increased provision for
loan losses of $58.6 million, attributed to second quarter net
charge-offs of $30.9 million and an increase in nonperforming loans at
June 30, 2008 to $252.0 million from $78.0 million at March 31, 2008.
The increase in nonperforming loans is primarily related to the
Company's residential construction and residential land portfolio
which continues to experience deterioration in estimated collateral
values and repayment abilities of some of the Company's customers. The
Company does not, nor has it ever, engaged in subprime lending.
The net loss for the quarter also reflects an impairment charge of
$18.8 million, representing a full write-down of the Company's
goodwill asset, which was recorded with the acquisition of Choice
Bank. The impairment charge was the result of the Company completing
an impairment valuation test of its goodwill asset during the quarter
due to the continued deterioration of market conditions as well as
continued credit concerns for financial institutions. The goodwill
impairment charge had no impact on the Company's tangible capital
levels, tangible book value per share, regulatory capital ratios or
liquidity.
The net loss for the second quarter of 2008 also includes the
establishment of a valuation allowance of a $7.1 million to the
Company's net deferred tax assets. This valuation allowance is related
to certain tax aspects involving the allowance for loan losses.
Return on average stockholders' equity, annualized, was (181.6%)
for the quarter ended June 30, 2008 compared to 21.2% for the
corresponding period of 2007. Return on average assets, annualized,
was (12.3%) for the quarter ended June 30, 2008 compared with 1.7% for
the corresponding period of 2007.
Net interest income for the quarter ended June 30, 2008 was $11.6
million, a decrease of $8.3 million or 41.7% compared with the
corresponding period 2007. The decrease in net interest income was due
primarily to the falling interest rate environment which began at the
end of 2007 and continued into 2008, as well as the increase in
nonaccrual loans.
Net loans, excluding loans held for sale, decreased $102.5 million
or 6.5% during the quarter to $1.48 billion at June 30, 2008. The 2008
year-to-date decrease in net loans, excluding loans held for sale, was
$55.5 million or 3.6%. Loans held for sale decreased $4.6 million
during the second quarter 2008.
Total deposits increased $160.4 million or 10.2% during the
quarter to $1.73 billion at June 30, 2008. The 2008 year-to-date
increase in total deposits was $306.0 million or 21.5%.
Despite the loss, the Company continues to maintain strong levels
of liquidity. The Company's cash and cash equivalents at June 30, 2008
increased $155.4 million from March 31, 2008.
Excluding unusual and non-operating items, pre-tax pre-provision
operating earnings were $1.9 million in the second quarter of 2008,
down 77.7% from $8.6 million in the first quarter of 2008.
At or At or for At or
for the the for the For the For the
Three Three Three Six Six
Months Months Months Months Months
Ended Ended Ended Ended Ended
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
------------------- -------- ------------------
(Dollars in thousands)
Pre-tax pre-
provision
operating
earnings(a) $ 1,914 $ 8,580 $ 11,671 $ 10,494 $ 21,988
Consolidated net
income (loss) (62,694) (14,421) 6,170 (77,115) 11,758
Diluted earnings
per share (4.15) (0.95) 0.44 (5.08) 0.83
Tier 1 risk-based
capital ratio 5.9% 9.1% 9.0%
Total risk-based
capital ratio 9.5% 11.4% 9.9%
---------------------
(a) See reconciliation to net income (loss) reported in accordance
with GAAP in the following table.
The following table reconciles pre-tax pre-provision operating
earnings to consolidated net income (loss) presented in accordance
with U.S. generally accepted accounting principles (GAAP).
At or At or for At or
for the the for the For the For the
Three Three Three Six Six
Months Months Months Months Months
Ended Ended Ended Ended Ended
June 30, March 31, June 30, June 30, June 30,
2008 2008 2007 2008 2007
------------------- -------- ------------------
(Dollars in thousands)
Consolidated net
income (loss) $(62,694) $ (14,421) $ 6,170 $(77,115) $ 11,758
Provision for
income taxes
(benefit) (12,827) (7,999) 3,641 (20,826) 7,040
Provision for loan
losses 58,600 31,000 1,860 89,600 3,190
Goodwill impairment 18,835 - - 18,835 -
-------- --------- -------- -------- --------
Pre-tax pre-
provision
operating earnings $ 1,914 $ 8,580 $ 11,671 $ 10,494 $ 21,988
======== ========= ======== ======== ========
Management has presented pre-tax pre-provision operating earnings
in this release for purposes of additional analysis of operating
results. Pre-tax pre-provision operating earnings, as defined by
management, represents net income (loss) excluding income tax
(benefit) expense, the provision for loan losses, as well as other
unusual, nonrecurring or nonoperating items. Pre-tax pre-provision
operating earnings is a non-GAAP measure. Consolidated net income
(loss), measured in accordance with GAAP, is the principal and most
useful measure of earnings and provides comparability of earnings with
other companies. However, management believes presenting pre-tax
pre-provision operating earnings provides investors with the ability
to understand the Company's underlying operating trends.
Income Statement
Total interest income was $29.1 million for the quarter ended June
30, 2008 compared with $34.3 million for the corresponding period of
2007. This decrease of $5.3 million or 15.4% was primarily the result
of the lower interest rate environment and increase in nonperforming
loans offset by an increase in the balance of our total average
earning assets. Our average earning assets, driven by an increase in
our average loans, increased $604.6 million or 44.2% for the second
quarter of 2008 compared with the corresponding period of 2007. The
average yield on earning assets decreased to 5.93% for the quarter
ended June 30, 2008 compared with 10.07% for the corresponding period
of 2007.
Total interest expense was $17.4 million for the quarter ended
June 30, 2008 compared with $14.4 million for the corresponding period
of 2007. This increase of $3.0 million or 21.0% was primarily the
result of an increase in the balance of our average interest-bearing
liabilities offset by the falling interest rate environment. Our
average interest-bearing liabilities, driven primarily by an increase
in interest-bearing deposits, increased $609.1 million or 53.2% for
the second quarter of 2008 compared with the corresponding period of
2007. The average cost of interest-bearing liabilities decreased to
3.99% for the quarter ended June 30, 2008 compared with 5.03% for the
corresponding period of 2007.
Net interest income was $11.6 million for the quarter ended June
30, 2008, a decrease of $8.3 million or 41.7% compared with net
interest income of $20.0 million for the corresponding period of 2007.
Net interest margin is calculated by dividing net interest income by
total average earning assets. The net interest margin decreased to
2.38% for the second quarter of 2008 compared with a net interest
margin of 4.34% for the first quarter of 2008 and compared with a net
interest margin of 5.85% for the second quarter of 2007. This decrease
is primarily attributable to a decrease in the average yield of our
loan portfolio reflecting the lower interest rate environment, as well
as continued competitive pressures on the pricing of our deposit
products. Additionally, the net interest margin was negatively
impacted due to a shift in our deposits mix as the Company has become
increasingly reliant on higher cost funding sources such as time
deposits. Furthermore, the decrease in the Company's net interest
margin was 0.49% due to the loss of interest income from additional
loans being placed on nonaccrual status during the second quarter of
2008.
The provision for loan losses was $58.6 million for the quarter
ended June 30, 2008 compared with $31.0 million for the quarter ended
March 31, 2008 and compared with $1.9 million for the quarter ended
June 30, 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. As stated before, the Company does not, nor has
it ever, engaged in subprime lending. To assist us in identifying
weaknesses in our construction and land loan portfolios, we engaged an
independent third-party to review these portions of our loan
portfolio. The results of the third-party loan review which was
completed during the second quarter were taken into account in
establishing our provision for loan losses.
Total non-interest income was $1.4 million for the quarter ended
June 30, 2008, a decrease of $429,000 or 22.9% compared with
non-interest income of $1.9 million for the corresponding period of
2007. Total non-interest income represented 4.7% of total revenue for
the second quarter of 2008 compared with 5.2% 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
$625,000 or 52.0% for the quarter ended June 30, 2008 compared with
the corresponding period of 2007.
Total non-interest expense was $30.0 million for the quarter ended
June 30, 2008, an increase of $19.9 million or 195.3% compared with
total non-interest expense of $10.2 million for the corresponding
period of 2007. The increase includes an impairment charge of $18.8
million incurred during the second quarter 2008 representing a full
write-down of the Company's goodwill asset. Salaries and employee
benefits expense decreased $1.3 million or 19.6% to $5.2 million for
the quarter ended June 30, 2008 compared with $6.4 million for the
corresponding period of 2007 due primarily to a decrease in loan
commissions and bonus accruals. Occupancy expenses increased $356,000
or 41.8% to $1.2 million for the quarter ended June 30, 2008 compared
with $852,000 for the corresponding period of 2007 primarily as a
result of the Company's increase in the number of full service branch
offices increasing to 17 at June 30, 2008 from 12 at June 30, 2007, as
well as the opening of our new corporate and administration office
building in June 2007. Depreciation and amortization expense increased
$187,000 or 30.5% to $800,000 for the quarter ended June 30, 2008
compared with $613,000 for the corresponding period of 2007 due to
increases in premises, equipment and other depreciable assets.
Professional fees expense increased $1.1 million or 233.5% to $1.5
million for the quarter ended June 30, 2008 compared with $463,000 for
the corresponding period of 2007 due to the increase in size and
complexity of our company and increased legal, audit, accounting,
compliance, and loan review fees associated with being a public
company and the challenging economic environment. Losses on other real
estate owned increased 100.0% to $152,000 for the quarter ended June
30, 2008 compared with $0 for the corresponding period of 2007 as a
result of the significant increase in other real estate owned and
related transactions to dispose of properties acquired in
foreclosures.
Total income tax benefit was $12.8 million for the quarter ended
June 30, 2008, a difference of $16.5 million or 452.3% compared with
total income tax expense of $3.6 million for the corresponding period
of 2007. The income tax benefit is due to the loss before income taxes
partially offset by a valuation charge of $7.1 million to the
Company's net deferred tax assets incurred during the quarter ended
June 30, 2008. Our largest deferred tax asset component relates to our
allowance for loan losses. The allowance for loan losses represents
future tax benefits which would be realized when actual charge-offs
are made against the allowance. To the extent available, sources of
taxable income, including those available from prior years' under tax
regulations, are deemed per GAAP to be insufficient to absorb tax
losses, and a valuation allowance is therefore necessary. The
valuation loss increased by $7.1 million during the quarter ended June
30, 2008.
Balance Sheet
Total assets were $1.97 billion at June 30, 2008, an increase of
$207.7 million or 11.8% from December 31, 2007. Total assets increased
$56.7 million or 3.0% from March 31, 2008. These increases are due
primarily to an increase in total cash and cash equivalents.
Total cash and cash equivalents were $240.1 million at June 30,
2008, an increase of $226.2 million or 1635.1% from December 31, 2007
and an increase of $155.4 million or 183.4% from March 31, 2008. This
increase is due to our concerted efforts to increase our liquidity,
which are continuing into the third quarter.
Net loans, excluding loans held for sale, totaled $1.48 billion at
June 30, 2008, a decrease of $55.5 million or 3.6% from December 31,
2007 and a decrease of $102.5 million or 6.5% from March 31, 2008.
Loans held for sale totaled $86.5 million at June 30, 2008, an
increase of $17.7 million or 25.7% from December 31, 2007 and a
decrease of $4.6 million or 5.1% from March 31, 2008. The majority of
the overall loan decrease was in construction and land loans which
decreased $13.3 million or 1.3% from December 31, 2007 and decreased
$68.2 million or 6.1% from March 31, 2008 and in commercial real
estate loans which decreased $16.7 million or 6.4% from December 31,
2007 and decreased $11.7 million or 4.6% from March 31, 2008. In
addition, a portion of the decrease in net loans is attributable to
the $58.6 million provision to the allowance for loan losses offset by
the $30.9 million in net charge-offs for the quarter ended June 30,
2008. The Company continues to be a leading lender of Small Business
Administration (SBA) loans in the markets it serves and originated
approximately $17.6 million in SBA loans during the quarter ended June
30, 2008. Net loans represented 75.3% of total assets at June 30, 2008
compared with 87.3% at December 31, 2007 and 82.9% at March 31, 2008.
The allowance for loan and lease losses represented 4.40% of gross
loans at June 30, 2008 compared with 1.24% at December 31, 2007 and
2.50% at March 31, 2008.
Due to the continued deterioration of market conditions as well as
continued credit concerns for financial institutions, the Company
completed an impairment valuation test of its $18.8 million goodwill
asset during the second quarter. As a result of this impairment test,
the Company recorded a full impairment charge to the goodwill asset of
$18.8 million. The goodwill impairment charge had no impact on the
Company's tangible capital levels, tangible book value per share,
regulatory capital ratios or liquidity.
Other real estate owned totaled $16.3 million at June 30, 2008, an
increase of $16.2 million or 14720.9% from December 31, 2007 and an
increase of $15.1 million or 1205.3% from March 31, 2008. The increase
is due to the increased amount of real estate collateral obtained by
the Company due to the increased amount of loan defaults by the
Company's customers.
Total deposits totaled $1.73 billion at June 30, 2008, an increase
of $306.0 million or 21.5% from December 31, 2007 and an increase of
$160.4 million or 10.2% from March 31, 2008. The majority of our
deposit growth occurred in time deposits which increased $479.8
million or 69.5% from December 31, 2007 to $1.17 billion at June 30,
2008 and increased $295.7 million or 33.8% from March 31, 2008.
Interest bearing checking deposits decreased $121.6 million or 22.7%
from December 31, 2007 to $414.3 million at June 30, 2008 and
decreased $117.5 million or 22.1% from March 31, 2008. At June 30,
2008, $594.2 million of our total deposits or 34.3% are considered for
regulatory purposes to be brokered deposits, an increase of $94.0
million or 18.8% from December 31, 2007 and a decrease of $79.9
million or 11.9% from March 31, 2008.
Federal Home Loan Bank advances were $77.0 million at June 30,
2008, a decrease of $13.6 million or 15.0% from December 31, 2007 and
a decrease of $40.6 million or 34.5% from March 31, 2008. Deposits and
Federal Home Loan Bank advances are used as our primary funding
sources to support our asset growth.
Junior subordinated debt totaled $69.6 million at June 30, 2008
and remained unchanged from December 31, 2007 and March 31, 2008. 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 totaled $79.3 million at June 30, 2008, a
decrease of $78.3 million or 49.7% from December 31, 2007 and a
decrease of $62.8 million or 44.2% from March 31, 2008. This decrease
was primarily the result of the Company's $62.7 million net loss for
the second quarter and the Company's $77.1 million net loss for the
six months ended June 30, 2008, respectively. The Company 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. The Company did not
repurchase any shares of its common stock under this repurchase
program during the quarter ended June 30, 2008. Total stockholders'
equity represented 4.0% of total assets at June 30, 2008, compared
with 8.9% at December 31, 2007 and 7.4% at March 31, 2008. Tangible
book value per share decreased to $5.19 at June 30, 2008 from $9.03 at
December 31, 2007 and $8.09 at March 31, 2008.
Asset Quality and Capital Ratios
At June 30, 2008 nonperforming loans were $252.0 million and
represented 16.23% of gross loans, nonperforming assets were $268.3
million and represented 13.61% of total assets, and loans past due 90
days and still accruing were $10.2 million and represented 0.66% of
gross loans. At December 31, 2007 nonperforming loans were $13.1
million and represented 0.84% of gross loans, nonperforming assets
were $13.2 million and represented 0.75% of total assets, and there
were no loans past due 90 days and still accruing. Net charge-offs
were $30.9 million for the quarter ended June 30, 2008 and as a
percentage of average loans were 1.82% for the quarter ended June 30,
2008. Net charge-offs were $56,000 for the quarter ended June 30, 2007
and as a percentage of average loans was less than 0.01%. 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 "adequately capitalized" pursuant to
regulatory capital definitions at June 30, 2008 with Tier 1
Risk-Based, Total Risk-Based and Leverage Capital Ratios of 5.9%, 9.5%
and 5.1%, respectively. The Company's bank subsidiary is also
considered "adequately capitalized" pursuant to regulatory capital
definitions at June 30, 2008 with Tier 1 Risk-Based, Total Risk-Based
and Leverage Capital Ratios of 8.1%, 9.4%, and 7.1%, respectively.
Liquidity
Total cash and cash equivalents (consisting of cash and due from
banks and federal funds sold) were $240.1 million at June 30, 2008, an
increase of $226.2 million or 1635.1% from December 31, 2007 and an
increase of $155.4 million or 183.4% from March 31, 2008. This
increase is due to our concerted efforts to increase our liquidity.
Our primary sources of funds continue to be cash received from
scheduled amortization and prepayments of loans, new deposits,
borrowed funds, maturities and calls of investment securities and
funds provided by our operations.
Payment Deferral on Trust Preferred Securities
In an effort to preserve the Company's capital and improve its
capital ratios, on July 30, 2008, the Company's board of directors
elected to defer further interest payments on each of the Company's
series of junior subordinated debt securities relating to the trust
preferred securities of Silver State Capital Trust II, Silver State
Capital Trust III, Silver State Capital Trust IV, Silver State Capital
Trust V and Silver State Capital Trust VI (each an unconsolidated
subsidiary of the Company). The Company has the ability under each
indenture for the junior subordinated debt securities to defer
interest payments for up to 20 consecutive calendar quarters without
experiencing a default under the indentures. The deferral provisions
for these securities were intended to be exercised during
extraordinary times such as the Company is now experiencing.
Conference Call
Silver State Bancorp will host a conference call at 12:00 PM
Eastern Time/9:00 AM Pacific Time on Monday, August 4, 2008 to discuss
the Company's performance and second quarter results. Participants may
access the call by dialing 866-825-3209 (International dial
617-213-8061) using the pass code 28072676. The call will be recorded
and made available for replay after 8:00 PM Eastern Time on August 4,
2008 until 11:59 PM Eastern Time August 11, 2008 by dialing
888-286-8010 (International dial 617-801-6888) using the pass code
74374027. 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. The deposit accounts of Silver State Bank are
insured up to the applicable limits by the Federal Deposit Insurance
Corporation.
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 Subsidiary
Consolidated Balance Sheets
June 30, 2008 and December 31, 2007
(Dollars in thousands)
(UNAUDITED)
June 30, December 31,
2008 2007
----------------------------------------------------------------------
Assets
Cash and cash equivalents $ 15,918 $ 13,838
Federal funds sold 224,183 -
------------------------
Total cash and cash equivalents 240,101 13,838
Securities available-for-sale 51,821 51,966
Federal Home Loan Bank stock, at cost 5,957 5,469
Loans held for sale 86,543 68,868
Loans, net of allowance for losses of $68,369
and $19,304, respectively 1,484,198 1,539,667
Premises and equipment, net 40,666 43,081
Land held for sale 5,508 -
Accrued interest receivable 7,035 9,874
Deferred taxes, net 16,586 5,902
Other real estate owned 16,303 110
Goodwill - 18,835
Intangible asset, net of amortization of $378
and $247, respectively 786 917
Prepaids and other assets 16,413 5,656
------------------------
Total assets $1,971,917 $1,764,183
========================
Liabilities and Stockholders' Equity
Deposits:
Non-interest bearing demand $ 122,052 $ 177,084
Interest bearing:
Checking 414,308 535,902
Savings 25,774 22,943
Time, $100 and over 415,440 256,392
Other time 754,906 434,183
------------------------
Total deposits 1,732,480 1,426,504
Accrued interest payable and other
liabilities 11,969 9,890
Federal funds purchased and securities sold
under repurchase agreements 1,595 9,983
Federal Home Loan Bank advances and other
borrowings:
Short-term borrowings 30,000 34,000
Long-term borrowings 47,000 56,600
Junior subordinated debt 69,589 69,589
------------------------
Total liabilities 1,892,633 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: 15,954,098; 2007:
15,944,154; shares outstanding 2008:
15,134,765; 2007: 15,271,421 16 16
Additional paid-in capital 80,224 79,721
Retained earnings 4,805 81,974
Accumulated other comprehensive income
(loss) (95) 64
------------------------
84,950 161,775
Less cost of treasury stock, 2008: 819,333
shares, 2007: 672,733 shares (5,666) (4,158)
------------------------
Total stockholders' equity 79,284 157,617
------------------------
Total liabilities and stockholders'
equity $1,971,917 $1,764,183
========================
Silver State Bancorp and Subsidiary
Consolidated Statements of Operations
For the three months and six months ended June 30, 2008 and 2007
(Dollars in thousands, except per share information)
(UNAUDITED)
Three Months Ended Six Months Ended
June 30, June 30,
2008 2007 2008 2007
----------------------------------------------------------------------
Interest and dividend income on:
Loans, including fees $ 27,219 $33,411 $ 62,132 $61,844
Securities, taxable 1,022 634 1,667 1,327
Dividends on FHLB stock 83 40 154 99
Federal funds sold and other 729 258 853 470
------------------ ------------------
Total interest income 29,053 34,343 64,806 63,740
------------------ ------------------
Interest expense on:
Deposits 15,626 12,713 29,986 23,480
Federal funds purchased and
securities sold under
repurchase agreements 31 88 123 242
Short-term borrowings 357 250 996 415
Long-term borrowings 620 643 1,283 1,214
Junior subordinated debt 772 689 1,840 1,355
------------------ ------------------
Total interest expense 17,406 14,383 34,228 26,706
------------------ ------------------
Net interest income 11,647 19,960 30,578 37,034
Provision for loan losses 58,600 1,860 89,600 3,190
------------------ ------------------
Net interest income (loss)
after provision for loan
losses (46,953) 18,100 (59,022) 33,844
------------------ ------------------
Other income:
Gain on sale of loans 577 1,202 1,822 3,033
Net realized gain on sale of
available-for-sale
securities - - 52 31
Service charges on deposit
accounts 258 221 523 420
Loan servicing fees, net of
amortization 74 61 141 250
Other income 538 406 875 830
Gain (loss) on disposal of
other assets (2) (16) 1 (16)
------------------ ------------------
Total non-interest income 1,445 1,874 3,414 4,548
------------------ ------------------
Non-interest expense:
Salaries, wages and employee
benefits 5,160 6,414 12,527 12,244
Occupancy 1,208 852 2,365 1,568
Depreciation and amortization 800 613 1,572 1,205
Insurance 613 552 927 621
Professional fees 1,544 463 2,474 1,314
Advertising, public relations
and business development 286 226 599 451
Customer service expense 57 100 149 187
Goodwill impairment 18,835 - 18,835 -
Loss on other real estate
owned 152 - 168 182
Other 1,358 943 2,717 1,822
------------------ ------------------
Total non-interest expense 30,013 10,163 42,333 19,594
------------------ ------------------
Income (loss) before income
taxes (75,521) 9,811 (97,941) 18,798
Income taxes (benefit) (12,827) 3,641 (20,826) 7,040
------------------ ------------------
Net income (loss) (62,694) 6,170 (77,115) 11,758
================== ==================
Basic income (loss) per common
share $ (4.15) $ 0.45 $ (5.08) $ 0.86
================== ==================
Diluted income (loss) per common
share $ (4.15) $ 0.44 $ (5.08) $ 0.83
================== ==================
Silver State Bancorp and Subsidiary
Summary Consolidated Financial and Other Data
(Dollars in thousands, except per share data and ratios)
(UNAUDITED)
At or for the Three For the Six Months
Months Ended Ended
June 30, June 30,
------------------------ -----------------------
2008 2007 2008 2007
----------- ----------- ----------- ----------
Selected Financial
Data:
Interest income $ 29,053 $ 34,343 $ 64,806 $ 63,740
Interest expense 17,406 14,383 34,228 26,706
----------- ----------- ----------- ----------
Net interest income 11,647 19,960 30,578 37,034
Provision for loans
losses 58,600 1,860 89,600 3,190
----------- ----------- ----------- ----------
Net interest income
(loss) after
provision for loan
losses (46,953) 18,100 (59,022) 33,844
Non-interest income 1,445 1,874 3,414 4,548
Non-interest
expense 30,013 10,163 42,333 19,594
----------- ----------- ----------- ----------
Income (loss)
before income
taxes (75,521) 9,811 (97,941) 18,798
Provision for
income taxes
(benefit) (12,827) 3,641 (20,826) 7,040
----------- ----------- ----------- ----------
Net Income (loss) $ (62,694) $ 6,170 $ (77,115) $ 11,758
=========== =========== =========== ==========
Share data:
Earnings (loss) per
share--basic $ (4.15) $ 0.45 $ (5.08) $ 0.86
Earnings (loss) per
share--diluted (4.15) 0.44 (5.08) 0.83
Book value per
share 5.24 8.64
Tangible book value
per share 5.19 7.20
Shares outstanding
at period end 15,134,765 13,746,162
Weighted average
shares
outstanding--basic 15,121,715 13,723,765 15,166,228 13,710,441
Weighted average
shares
outstanding--
diluted 15,121,715 14,141,082 15,166,228 14,155,906
Selected Balance
Sheet Data:
Cash and cash
equivalents $ 240,101 $ 28,035
Investments and
other securities 51,821 52,466
Loans held for sale 86,543 52,121
Gross loans,
including net
deferred loan fees 1,552,567 1,311,525
Allowance for loan
losses 68,369 14,334
Assets 1,971,917 1,510,619
Deposits 1,732,480 1,245,305
Junior subordinated
debt 69,589 38,661
Stockholders'
equity 79,284 118,767
Selected Other
Balance Sheet
Data:
Average assets $ 2,044,681 $ 1,443,194 $ 1,939,020 $ 1,362,938
Average earning
assets 1,972,159 1,367,547 1,864,017 1,288,871
Average
stockholders'
equity 138,817 116,569 150,109 113,255
Selected Capital
Ratios:
Leverage Ratio 5.1% 9.6%
Tier 1 Risk-Based
Capital ratio 5.9% 9.0%
Total Risk-Based
Capital ratio 9.5% 9.9%
Silver State Bancorp and Subsidiary
Summary Consolidated Financial and Other Data (continued)
(Dollars in thousands, except per share data and ratios)
(UNAUDITED)
At or for the For the Six
Three Months Months Ended
Ended
June 30, June 30,
------------------ ----------------
2008 2007 2008 2007
-------- --------- -------- -------
Selected Financial & Performance
Ratios:
Return on average assets (1) -12.33% 1.71% -8.00% 1.74%
Return on average stockholders'
equity (1) -181.64% 21.23% -103.31% 20.94%
Net interest rate spread (1)(2) 1.94% 5.04% 2.78% 4.96%
Net interest margin (1)(3) 2.38% 5.85% 3.30% 5.79%
Efficiency ratio (4) 229.25% 46.55% 124.54% 47.12%
Loan to deposit ratio 89.62% 105.32%
Average earning assets to average
interest-bearing liabilities 112.37% 119.34% 114.09% 119.99%
Average stockholders' equity to
average assets 6.79% 8.08% 7.74% 8.31%
Selected Asset Quality Ratios:
Nonperforming loans to gross
loans (5) 16.23% 0.01%
Nonperforming assets to total
assets (6) 13.61% 0.02%
Loans past due 90 days or more
and still accruing to total
loans 0.66% -
Allowance for loan losses to
gross loans 4.40% 1.09%
Allowance for loan losses to
nonperforming loans 27.13% 12045.38%
Net charge-offs to average loans
outstanding 1.82% 0.00% 2.40% 0.00%
Selected Other Data:
Number of full service branch
offices 17 12
(1) Annualized for the three month and six month periods ended June
30, 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 June 30,
2008
------------------------------
Average
Average Yield/
Balance Interest Cost
(5)
------------------------------
(Dollars in thousands)
Interest-earning assets
Investment Securities-taxable $ 127,796 $ 1,022 3.22%
Federal funds sold and other 141,050 729 2.08%
Loans (1)(2) 1,697,417 27,219 6.45%
FHLB stock 5,896 83 5.66%
--------------------
Total earning assets 1,972,159 29,053 5.93%
Non-interest earning assets
Cash and due from banks 20,011
Allowance for loan losses (42,009)
Other assets 94,520
-----------
Total assets $2,044,681
===========
Interest-bearing liabilities
Interest checking $ 17,448 $ 85 1.96%
Savings and money market 499,456 3,852 3.10%
Time deposits 1,071,521 11,689 4.39%
--------------------
Total interest-bearing deposits 1,588,425 15,626 3.96%
Short-term borrowings 45,410 388 3.44%
Long-term debt 51,642 620 4.83%
Junior subordinated debt 69,589 772 4.46%
--------------------
Total interest-bearing
liabilities 1,755,066 17,406 3.99%
Non-interest bearing liabilities
Non-interest bearing demand deposits 137,570
Other liabilities 12,228
Stockholders' equity 139,817
-----------
Total liabilities and
stockholders' equity $2,044,681
===========
Net interest rate spread (3) 1.94%
Net interest income/net interest
margin (4) $11,647 2.38%
========
Total interest-earning assets to
interest-bearing liabilities 112.37%
Three Months Ended June 30,
2007
-----------------------------
Average
Average Yield/
Balance Interest Cost
(5)
-----------------------------
(Dollars in thousands)
Interest-earning assets
Investment Securities-taxable $ 53,214 $ 634 4.78%
Federal funds sold and other 22,968 258 4.51%
Loans (1)(2) 1,287,071 33,411 10.41%
FHLB stock 4,294 40 3.74%
---------------------
Total earning assets 1,367,547 34,343 10.07%
Non-interest earning assets
Cash and due from banks 17,377
Allowance for loan losses (13,230)
Other assets 71,500
------------
Total assets $1,443,194
============
Interest-bearing liabilities
Interest checking $ 16,481 $ 44 1.07%
Savings and money market 522,192 6,161 4.73%
Time deposits 487,380 6,508 5.36%
---------------------
Total interest-bearing deposits 1,026,053 12,713 4.97%
Short-term borrowings 27,024 338 5.02%
Long-term debt 54,207 643 4.76%
Junior subordinated debt 38,661 689 7.15%
---------------------
Total interest-bearing liabilities 1,145,945 14,383 5.03%
Non-interest bearing liabilities
Non-interest bearing demand deposits 169,333
Other liabilities 11,347
Stockholders' equity 116,569
------------
Total liabilities and
stockholders' equity $1,443,194
============
Net interest rate spread (3) 5.04%
Net interest income/net interest
margin (4) $19,960 5.85%
========
Total interest-earning assets to
interest-bearing liabilities 119.34%
(1) Net loan fees of $2.8 million and $3.5 million are included in the
yield computation for the three months ended June 30, 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.
Six Months Ended June 30,
2008
------------------------------
Average
Average Yield/
Balance Interest Cost
(5)
------------------------------
(Dollars in thousands)
Interest-earning assets
Investment Securities-taxable $ 90,145 $ 1,667 3.72%
Federal funds sold and other 79,103 853 2.17%
Loans (1)(2) 1,688,929 62,132 7.40%
FHLB stock 5,840 154 5.30%
--------------------
Total earning assets 1,864,017 64,806 6.99%
Non-interest earning assets
Cash and due from banks 17,547
Allowance for loan losses (31,091)
Other assets 88,547
-----------
Total assets $1,939,020
===========
Interest-bearing liabilities
Interest checking $ 13,970 $ 112 1.61%
Savings and money market 521,681 8,671 3.34%
Time deposits 917,245 21,203 4.65%
--------------------
Total interest-bearing deposits 1,452,896 29,986 4.15%
Short-term borrowings 57,743 1,119 3.90%
Long-term debt 53,544 1,283 4.82%
Junior subordinated debt 69,589 1,840 5.32%
--------------------
Total interest-bearing
liabilities 1,633,772 34,228 4.21%
Non-interest bearing liabilities
Non-interest bearing demand deposits 143,521
Other liabilities 11,617
Stockholders' equity 150,109
-----------
Total liabilities and
stockholders' equity $1,939,019
===========
Net interest rate spread (3) 2.78%
Net interest income/net interest
margin (4) $30,578 3.30%
========
Total interest-earning assets to
interest-bearing liabilities 114.09%
Six Months Ended June 30,
2007
-----------------------------
Average
Average Yield/
Balance Interest Cost
(5)
-----------------------------
(Dollars in thousands)
Interest-earning assets
Investment Securities-taxable $ 57,099 $ 1,327 4.69%
Federal funds sold and other 18,637 470 5.09%
Loans (1)(2) 1,208,934 61,844 10.32%
FHLB stock 4,201 99 4.75%
---------------------
Total earning assets 1,288,871 63,740 9.97%
Non-interest earning assets
Cash and due from banks 17,968
Allowance for loan losses (12,389)
Other assets 68,488
------------
Total assets $1,362,938
============
Interest-bearing liabilities
Interest checking $ 18,676 $ 101 1.09%
Savings and money market 494,714 11,537 4.70%
Time deposits 445,118 11,842 5.36%
---------------------
Total interest-bearing deposits 958,508 23,480 4.94%
Short-term borrowings 23,968 657 5.53%
Long-term debt 52,971 1,214 4.62%
Junior subordinated debt 38,661 1,355 7.07%
---------------------
Total interest-bearing liabilities 1,074,108 26,706 5.01%
Non-interest bearing liabilities
Non-interest bearing demand deposits 166,499
Other liabilities 9,076
Stockholders' equity 113,255
------------
Total liabilities and
stockholders' equity $1,362,938
============
Net interest rate spread (3) 4.96%
Net interest income/net interest
margin (4) $37,034 5.79%
========
Total interest-earning assets to
interest-bearing liabilities 119.99%
(1) Net loan fees of $6.5 million and $5.8 million are included in the
yield computation for the six months ended June 30, 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
Michael J. Threet, 702-433-8300 (Investors)
or
Stern And Company
Steve Stern, 702-240-9533 (Media)
steve@sdsternpr.com
SOURCE: Silver State Bancorp
