PAOLA, Kan., Nov. 3 /PRNewswire-FirstCall/ -- Team Financial, Inc. (the "Company") today announced net income of $784,000, or $.22 basic and $.21 diluted income per share, for the three months ended September 30, 2006, compared to $881,000 or $.22 basic and $.21 diluted income per share, for the three months ended September 30, 2005, a decrease of 11.0%. Net income for the nine months ended September 30, 2006 was $2,661,000, or $.70 basic and $.68 diluted income per share, compared to $2,736,000, or $.68 basic and $.67 diluted income per share for the nine months ended September 30, 2005, a decrease of 2.7%.
As previously disclosed, the Company recorded a loss on the sale of its insurance agency subsidiary during the second quarter of 2005 of approximately $164,000. The subsidiary was sold effective December 31, 2004. The loss on the sale of the subsidiary is reported net of the tax effect in discontinued operations.
Excluding the effects of discontinued operations, net income from continuing operations was $784,000, or $.22 basic and $.21 diluted income per share, for the three months ended September 30, 2006, a decrease of 11.0%, compared to $881,000, or $.22 basic and $.21 diluted income per share, for the three months ended September 30, 2005. Net income from continuing operations for the nine months ended September 30, 2006 was $2,661,000, or $.70 basic and $.68 diluted income per share, compared to $2,844,000, or $.70 basic and $.69 diluted income per share for the nine months ended September 30, 2005.
In September 2006, the Company restructured its trust preferred securities by redeeming $15.5 million fixed-rate trust preferred securities and reissuing $22 million of trust preferred securities at a variable interest rate in order to lower the effective interest rate. In doing so, the Company incurred a pre-tax charge of $824,000, which was the unamortized portion of the offering cost of the trust preferred securities that were issued in 2001. The Company expects to save approximately $338,000 annually based on the current reduction in interest rate on the new trust preferred securities.
The Company also restructured $6.5 million of its investment portfolio during the third quarter, extending the average life of those investments to 8.1 years and increasing the yield on the restructured securities 1.6%, or approximately $104,000 annually. A charge of approximately $74,000 was incurred as a loss on investment securities as a result of the restructuring; however, the Company expects to recoup this loss in approximately six months.
The charges incurred for the restructuring of the trust preferred securities and the investment portfolio had approximately $0.16 basic and diluted earnings per share effect after taxes for the quarter. Excluding these two restructurings, earnings per share would have been $0.38 basic and $0.37 diluted income per share for the three months ended September 30, 2006 and $0.85 basic and $0.83 diluted earnings per share for the nine months ended September 30, 2006.
Net interest income for the three months ended September 30, 2006 increased approximately $669,000, or 12.4%, from the same period last year, due to a 15 basis point increase in net interest margin. Non-interest income decreased approximately $226,000, or 11.3%, from the same period last year, primarily due to a decrease in service charge income, a loss taken on investment securities sales in an effort to reposition the portfolio, and a continued decrease in gain on sales of mortgage loans. Non-interest expense increased $681,000, or 11.3%, during the three months ended September 30, 2006 from the same period last year, primarily due to the $824,000 charge relating to the restructuring of the trust preferred securities. Offsetting this charge was a summary judgment entered against the Company during the third quarter of 2005, which resulted in a charge for $214,000 during that quarter. This judgment is currently on appeal. Salaries and employee benefits increased approximately $166,000 during the three months ended September 30, 2006 compared to the same period last year, offset by a $96,000 decrease in professional fees.
Loans receivable increased approximately $48.4 million, or 11.5%, to $468.6 million at September 30, 2006 compared to December 31, 2005. This increase was primarily a result of an increase in construction and land development loans. The increase in loans was funded with a $23.6 million, or 4.6%, increase in total deposits, and a decrease in cash and cash equivalents.
"We had a very productive third quarter. We strengthened our senior management team by welcoming Rick Tremblay as our new Chief Financial Officer. We restructured our trust preferred securities which will save the Company approximately $338,000 per year, and we also restructured our investment portfolio, extending the average life and increasing the average yield. The losses incurred by both of these restructurings will be recouped in a relatively short time. All of these events will help position the Company for a more profitable future.
"In July we received a claim against the representations and warranties provisions of the sales contract of the insurance agency subsidiary that we sold effective December 31, 2004. We do not believe that any of the claims presented are legitimate and we intend to dispute all of them. The Company has continued discussions with the buyer regarding its claims, including a professionally conducted mediation session, yet, no litigation has been filed and the Company has not changed its assessment," said Robert J. Weatherbie, Chairman and Chief Executive Officer of Team Financial, Inc.
The provision for loan losses was $131,000 for the three months ended September 30, 2006 compared to $263,000 for the three months ended September 30, 2005. The allowance for loan losses as a percent of loans was 1.23% at September 30, 2006 and 1.29% at December 31, 2005, and non-performing loans were 1.83% of total loans at September 30, 2006 and 1.09% of total loans at December 31, 2005. Additional allowances were not necessary in the opinion of the Company, despite the increase in non-performing loans, as the additions to the non-performing credits are well-secured.
Team Financial, Inc. is a financial services company with $720 million in total assets. It operates in the Kansas City metropolitan area, southeastern Kansas, western Missouri, the Omaha, Nebraska metropolitan area, and in the Colorado Springs, Colorado metropolitan area. The Company offers a full range of consumer and corporate banking services, including small business loans, mortgage loans, trust services, and investment and brokerage services. For additional information on Team Financial, Inc., visit its web site at http://www.teamfinancialinc.com/ or call 913-294-9667.
This press release contains forward-looking statements under the Private Securities Litigation Reform Act of 1995 that are subject to certain risks and uncertainties that could cause actual results to differ materially from historical income and those presently anticipated or projected. The Company cautions readers not to place undue reliance on any such forward looking statements, which speak only as of the date of this release. Such risks and uncertainties include those detailed in the Company's filings with the Securities and Exchange Commission, risks of adversely changing results of operations, risks related to the Company's acquisition strategy, risks relating to loans and investments, including the effect of the change of the local economic conditions, risks associated with the adverse effects of the changes in interest rates, and competition for the Company's customers by other providers of financial services, all of which are difficult to predict and many of which are beyond the control of the Company.
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Financial Condition
(In Thousands)
September 30, December 31,
Assets 2006 2005
Cash and due from banks $12,956 $14,592
Federal funds sold and interest
bearing bank deposits 2,519 19,768
Cash and cash equivalents 15,475 34,360
Investment securities:
Available for sale, at fair value
(amortized cost of $177,476 and
$183,719 at September 30, 2006 and
December 31, 2005, respectively) 175,093 181,758
Other non-marketable securities
(amortized cost of $8,955 and
$8,669 at September 30, 2006 and
December 31, 2005, respectively) 8,955 8,651
Total investment securities 184,048 190,409
Loans receivable, net of unearned fees 468,562 420,181
Allowance for loan losses (5,769) (5,424)
Net loans receivable 462,793 414,757
Accrued interest receivable 5,583 4,607
Premises and equipment, net 16,489 16,359
Assets acquired through foreclosure 902 455
Goodwill 10,700 10,700
Intangible assets, net of
accumulated amortization 2,792 3,223
Bank-owned life insurance policies 19,725 19,173
Other assets 1,774 2,486
Total assets $720,281 $696,529
Liabilities and Stockholder's Equity
Deposits:
Checking deposits $168,269 $186,791
Savings deposits 30,382 31,944
Money market deposits 60,207 46,465
Certificates of deposit 272,649 242,678
Total deposits 531,507 507,878
Federal funds purchased and
securities sold under agreements to
repurchase 4,172 4,036
Federal Home Loan Bank advances 108,090 111,131
Notes payable 192 202
Subordinated debentures 22,681 16,005
Accrued expenses and other liabilities 5,657 3,928
Total liabilities 672,299 643,180
Stockholders' Equity:
Preferred stock, no par value,
10,000,000 shares authorized; no
shares issued - -
Common stock, no par value,
50,000,000 shares authorized;
4,501,516 and 4,499,470 shares issued;
3,598,784 and 4,034,995 shares
outstanding at September 30, 2006
and December 31, 2005, respectively 27,901 27,880
Capital surplus 588 417
Retained earnings 32,710 30,941
Treasury stock, 902,732 and 464,475
shares of common stock at cost
at September 30, 2006, and December 31,
2005, respectively (11,645) (4,583)
Accumulated other comprehensive loss (1,572) (1,306)
Total stockholders' equity 47,982 53,349
Total liabilities and
stockholders' equity $720,281 $696,529
TEAM FINANCIAL, INC. AND SUBSIDIARIES
Unaudited Consolidated Statements of Operations
(Dollars In Thousands, Except Per Share Data)
Three Months Ended Nine Months Ended
September 30, September 30,
2006 2005 2006 2005
Interest Income:
Interest and fees on loans $9,290 $7,136 $25,951 $20,141
Taxable investment securities 2,015 1,815 5,829 5,483
Nontaxable investment
securities 256 310 796 889
Other 115 55 422 217
Total interest income 11,676 9,316 32,998 26,730
Interest Expense:
Deposits:
Checking deposits 460 301 1,399 788
Savings deposits 57 58 163 166
Money market deposits 417 157 994 444
Certificates of deposit 3,010 1,792 7,815 4,776
Federal funds purchased and
securities sold under
agreements to repurchase 36 51 124 107
FHLB advances payable 1,139 1,175 3,402 3,515
Notes payable and other
borrowings 94 11 137 58
Subordinated debentures 411 388 1,188 1,165
Total interest expense 5,624 3,933 15,222 11,019
Net interest income before
provision for loan losses 6,052 5,383 17,776 15,711
Provision for loan losses 131 263 563 675
Net interest income after
provision for loan losses 5,921 5,120 17,213 15,036
Non-Interest Income:
Service charges 951 1,029 2,702 2,931
Trust fees 173 159 555 529
Gain on sales of mortgage loans 125 240 455 667
Loss on sales of investment
securities (74) - (164) -
Bank-owned life insurance income 220 209 650 625
Other 372 356 1,090 1,008
Total non-interest income 1,767 1,993 5,288 5,760
Non-Interest Expenses:
Salaries and employee benefits 2,977 2,811 9,213 8,261
Occupancy and equipment 735 705 2,231 2,072
Data processing 737 726 2,135 2,137
Professional fees 250 346 1,100 1,001
Marketing 109 106 284 253
Supplies 63 98 249 259
Intangible asset amortization 141 151 436 464
Other 1,681 1,069 3,342 2,696
Total non-interest expenses 6,693 6,012 18,990 17,143
Income from continuing
operations before income
taxes 995 1,101 3,511 3,653
Income tax expense 211 220 850 809
Net income from continuing
operations $784 $881 $2,661 $2,844
Net loss from discontinued
operations - - - (108)
Net income $784 $881 $2,661 $2,736
Basic income per share from
continuing operations $0.22 $0.22 $0.70 $0.70
Diluted income per share from
continuing operations $0.21 $0.21 $0.68 $0.69
Basic loss per share from
discontinued operations $- $- $- $(0.03)
Diluted loss per share from
discontinued operations $- $- $- $(0.03)
Basic income per share $0.22 $0.22 $0.70 $0.68
Diluted income per share $0.21 $0.21 $0.68 $0.67
Shares applicable to basic
income per share 3,594,401 4,040,595 3,821,758 4,039,068
Shares applicable to diluted
income per share 3,692,392 4,101,431 3,912,655 4,095,474
Team Financial, Inc. And Subsidiaries
Selected Ratios and Other Data
(Unaudited)
As of and For As of and For
Three Months Ended Nine Months Ended
September 30 September 30
Selected Data 2006 2005 2006 2005
Balance Sheet Highlights
Average Assets $719,968 $673,524 $711,928 $669,008
Average Loans $459,816 $409,147 $450,260 $398,431
Non Performing Loans $8,563 $3,533
Performance Ratios
Return On Average Assets 0.43% 0.52% 0.50% 0.55%
Return On Average Equity 6.61% 6.52% 7.10% 6.88%
Average Equity To Average Assets 6.53% 7.96% 7.04% 7.95%
Net Interest Margin On Average
Earning Assets During The
Period (Tax Equivalent) 3.78% 3.63% 3.78% 3.61%
Efficiency Ratio(a)(c) 85.60% 81.51% 82.34% 79.84%
Book Value Per Share $13.33 $13.26
Tangible Book Value Per Share(b)(c) $9.68 $9.88
Asset Quality Ratios
Non Performing Loans As A Percent
Of Total Loans 1.83% 0.85%
Non Performing Assets As A Percent
Of Total Assets 1.31% 0.57%
Allowance For Loan Losses As A
Percent Of Total Loans 1.23% 1.29%
Allowance For Loan Losses As A
Percent Of Non Performing Loans 67.37% 152.56%
(a) Calculated as non-interest expense/(net interest income plus non-
interest income)
(b) Calculated as (stockholders equity less goodwill, less intangible
assets, net of accumulated amortization plus mortgage servicing
rights) divided by shares outstanding.
(c) Computation includes the corresponding components of discontinued
operations.
