STURGEON BAY, Wis., Oct. 20 /PRNewswire-FirstCall/ -- Baylake Corp. (BULLETIN BOARD: BYLK) , a bank holding company with $1.1 billion in assets, reported third quarter net income of $1.9 million or $0.24 basic earnings per share, as compared to $0.7 million or $0.09 basic earnings per share in the third quarter of 2005. The Company reported net income of $5.6 million or $0.72 basic earnings per share for the nine months ended September 30, 2006, as compared to $5.9 million or $0.76 per share for the nine months ended September 30, 2005.
Diluted earnings per shared increased to $0.24 for the three months ended September 30, 2006, compared to $0.09 for the three months ended September 30, 2005. Return on assets (ROA) and return on equity (ROE) increased for the three months ended September 30, 2006 to 0.69% and 9.54%, respectively, from 0.26% and 3.60%, respectively, for the same period a year ago. Diluted earnings per share equaled $0.71 for the first nine months of 2006 compared to $0.75 a year earlier. ROA and ROE decreased for the nine months ended September 30, 2006, to 0.68% and 9.49%, respectively, from 0.73% and 10.14%, respectively, for the same period a year earlier.
Baylake's net interest margin for the third quarter of 2006 was 3.61% compared to 3.53% for the second quarter of 2006 and 3.58% for the third quarter of 2005.
Baylake Corp. recorded provisions for loan losses totaling $371,000 during the three months ended September 30, 2006 compared to $1.5 million for the same period in 2005. For the nine months, Baylake Corp. recorded provisions for loan losses totaling $632,000, compared to $1.7 million for the same period in 2005. The provision for loan losses is determined based on a quarterly process of evaluating the allowance for loan loss which takes into account various factors including specific credit allocations for individual loans, historical loss experience for category of loans, consideration of concentrations and changes in portfolio volume, and other qualitative factors.
Total assets for Baylake Corp. increased 0.4% for the nine months ended September 30, 2006. Assets were $1.1 billion at both September 30, 2006 and December 31, 2005. Total loans decreased 0.7% during the first nine months of 2006 to $806.8 million at September 30, 2006, while deposits increased 1.3% to $867.7 million during the period. Growth in shareholders' equity increased 2.8% during the nine months ended September 30, 2006 with balances totaling $80.7 million and $78.5 million, respectively, at September 30, 2006 and December 31, 2005, respectively. The increase in shareholders' equity was the result of a reduction in accumulated other comprehensive loss (related to unrealized losses on securities) and increased by net income less the payment of cash dividends for the period. This was offset by an increase in the treasury stock balance. $1.1 million of treasury stock was repurchased during the quarter as a result of the Common Stock Repurchase Plan implemented in the third quarter of 2006.
Non-performing loans totaled $22.3 million and $6.9 million at September 30, 2006 and December 31, 2005, respectively. The increase in non- performing loans during the nine-month period ended September 30, 2006 was due to an increase in non-accrual loans during the period, primarily during the first quarter. For the three months ended September 30, 2006, non-accrual loans decreased $6.4 million, as $6.2 million of loans previously disclosed became current during the period and $629,000 of the decrease in the period resulted from loan charge-offs. The ratio of allowance for loan loss to non- performing loans was 36.9% and 137.6% at September 30, 2006 and December 31, 2005, respectively.
Due to aggressive collection efforts and continued emphasis on asset quality improvement, Baylake Corp. believes the balance of the allowance for loan loss is presently sufficient to absorb probable incurred credit losses at September 30, 2006. However, future adjustments to the allowance for loan losses may be necessary based on changes in the performance of the loan portfolio or in economic conditions and the impact that these changes, if any, may have on the ability of borrowers to continue to service or repay outstanding credits and on the value of the underlying collateral securing these credits.
Capital resources for the nine months ended September 30, 2006 increased by $2.2 million, as a result of factors previously stated. Baylake Corp. anticipates that it has resources available to meet its commitments. At September 30, 2006, Baylake Corp. had $75.6 million of established lines of credit with nonaffiliated banks, of which $75.6 million was available.
As announced earlier, Robert J. Cera has joined the Company as President and Chief Operating Officer effective August 21, 2006. "Rob's energy level and enthusiasm has been a welcome addition to Baylake Bank's management team," said Thomas L. Herlache, the Company's Chief Executive Officer. "We look forward to his expanded influence on the bank's current operating plan and long term strategic plan."
Baylake Corp., headquartered in Sturgeon Bay, Wisconsin, is the bank holding company for Baylake Bank. Through Baylake Bank, the Company 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 "will," "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. This press release, and the most recent annual and quarterly reports filed by Baylake Corp. with the Securities and Exchange Commission, including its Form 10-Q for the quarter ended June 30, 2006 and Form 10-K for the year ended December 31, 2005, describe some of these factors, including certain credit, market, operational, liquidity and interest rate risks associated with the company's business and operations, and recent actions taken by the Wisconsin Department of Revenue relating to state tax obligations. 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 periods indicated. The
selected consolidated financial and other data at September 30, 2006 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.
At September 30, At December 31, At September 30,
2006 2005 2005
(dollars in thousands)
Selected Financial Condition
Data (at end of period):
Total assets $ 1,093,768 $ 1,089,408 $ 1,099,638
Securities available for sale 188,097 171,638 211,227
Federal funds sold 401 199 3,132
Total loans 806,819 812,670 789,748
Allowance for loan loss 8,220 9,551 10,492
Total deposits 867,721 856,711 866,624
Borrowings(1) 116,775 126,500 127,093
Subordinated debentures 16,100 16,100 16,100
Total shareholders' equity 80,711 78,544 78,062
Non-performing loans, net of
discount(2)(3) 22,268 6,942 7,299
Non-performing assets, net
of discount(2)(3) 25,425 10,275 9,928
As of and for the As of and for the
Three Months Nine Months
Ended September 30, Ended September 30,
2006 2005 2006 2005
(dollars in thousands, except per share data)
Selected Income Data:
Total interest income $18,094 $15,885 $52,262 $44,875
Total interest expense 9,288 7,093 26,891 18,579
Net interest income 8,806 8,792 25,371 26,296
Provision for loan
losses 371 1,547 632 1,668
Net interest income
after provision for
loan losses 8,435 7,245 24,739 24,628
Total non-interest
income 2,477 2,343 7,196 6,632
Total non-interest
expense 8,326 8,943 24,143 23,079
Income before income
tax 2,586 645 7,792 8,181
Income tax provision 703 (62) 2,215 2,330
Net income $1,883 $707 $5,577 $5,851
Per Share data:(4)
Net income per share
(basic) $0.24 $0.09 $0.72 $0.76
Net income per share
(diluted) 0.24 0.09 0.71 0.75
Cash dividends per
common share 0.16 0.15 0.48 0.45
Book value per share 10.34 10.05 10.34 10.05
Performance Ratios:(5)
Return on average total
assets 0.69% 0.26% 0.68% 0.73%
Return on average total
shareholders' equity 9.54 3.60 9.49 10.14
Net interest margin(6) 3.61 3.58 3.46 3.65
Net interest spread(6) 3.19 3.21 3.06 3.31
Non-interest income to
average assets 0.90 0.85 0.87 0.83
Non-interest expense to
average assets 3.04 3.25 2.93 2.88
Net overhead ratio(7) 2.13 2.39 2.06 2.05
Efficiency ratio(9) 71.76 77.97 72.21 68.09
Average loan-to-average
deposit ratio 93.67 93.62 95.32 95.09
Average interest-earning
assets to average
interest-bearing
liabilities 111.59 113.38 111.11 113.37
Asset Quality
Ratios:(2)(3)(5)
Non-performing loans
to total loans 2.76% 0.92% 2.76% 0.92%
Allowance for loan
losses to:
Total loans 1.02 1.33 1.02 1.33
Non-performing loans 36.91 143.75 36.91 143.75
Net charge-offs to
average loans 0.78 0.31 0.32 0.27
Non-performing assets
to total assets 2.32 0.90 2.32 0.90
Capital Ratios:(5)(8)
Shareholders' equity
to assets 7.38% 7.10% 7.38% 7.10%
Tier 1 risk-based
capital 9.99 9.55 9.99 9.55
Total risk-based
capital 10.88 10.69 10.88 10.69
Leverage ratio 8.47 8.06 8.47 8.06
Other Data at End
of Period:
Number of bank
subsidiaries 1 1 1 1
Number of banking
facilities 28 27 28 27
Number of full-time
equivalent employees 334 311 334 311
(1) Consists of Federal Home Loan Bank advances, federal funds purchased
and collateralized borrowings.
(2) 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.
(3) The increase in non-performing assets during the nine months ended
September 30, 2006 was due, in part, to a $15.0 million increase in
non-accrual loans in the first nine months of 2006, particularly
relating to four unrelated commercial credits which became
non-accrual in the first quarter offset, partially by a decrease in
other real estate owned in the first nine months of 2006. Refer to
the Form 10-Q disclosures for the quarter ended June 30, 2006.
(4) Earnings per share are based on the weighted average number of shares
outstanding for the period.
(5) With the exception of end of 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, and 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 investment securities gains, net and
excluding net gains on sale of fixed assets.
