SHELBYVILLE, Ind., May 20, 2011 /PRNewswire/ -- Blue River Bancshares, Inc. (OTC BB: BRBI.OB) today announced financial results for the year ended December 31, 2010 and the first quarter of 2011, management changes and recent regulatory actions.
On January 18, 2011, Randy Collier resigned as Executive Vice President of the Company and Chief Executive Officer, President and Director of the Company's wholly-owned financial institution subsidiary, SCB Bank (the "Bank"). Following Mr. Collier's resignation, the Board of Directors directed that his loan portfolio be reviewed. Based upon the preliminary results of that review and other factors, management conducted a further review of Mr. Collier's loan portfolio and other loans at the Bank. The Bank also engaged Professional Bank Services to conduct an independent loan review. Upon completion of the reviews, the Bank reclassified certain loans, increased the allowance for loan losses, took specific reserves and charged off certain loans. These actions impacted the financial results for the period ending December 31, 2010. As a result, the Bank amended its Thrift Financial Report for that period.
Year Ending December 31, 2010 - Unaudited Financial Results
The Company reported a consolidated net loss of $13,416,000 for the year ended December 31, 2010 and a net loss to common shareholders of $13,745,000. This net loss compares to a consolidated net loss to common shareholders of $2,700,000 for the same period of 2009. Fully diluted loss per share was $4.58 for the year ended December 31, 2010, compared to a $0.90 fully diluted loss per share for the year ended December 31, 2009. Weighted average outstanding shares (fully diluted) for 2010 were 2,999,149 as compared to 2,991,313 for 2009.
The net loss to common shareholders of $13,745,000 for the year ended December 31, 2010 was primarily the result of $11,434,000 of provision to the allowance for loan losses. In addition, the Company recorded a valuation allowance of $2,367,000 of deferred taxes because management believes it is more likely than not that the benefit associated with this deferred tax asset will not be realized. The Company also recognized $27,000 of other than temporary impairment, ("OTTI") charges on investments and $369,000 of write downs on other real estate ("ORE") and other repossessed assets. These losses were partially offset by a $101,000 gain on sale of securities.
Consolidated net loss for the three month period ended December 31, 2010 was $13,325,000 or $4.44 loss per share, as compared to a net loss for the same three month period ended December 31, 2009, of $2,197,000 or $0.73 loss per share. The weighted average outstanding shares were 2,999,149 for the three month period ended December 31, 2010 and December 31, 2009. During the fourth quarter of 2010, there was a $269,000 loss on the disposition of other assets and OTTI. For the fourth quarter period of 2010, there was a $10,141,000 provision to the allowance for loan loss. This is compared to a $2,872,000 provision to the allowance for loan loss for the same period of 2009. As indicated in the table following the Consolidated Financial Highlights, our non-performing assets, which include other real estate owned properties increased by approximately $3.7 million from the third quarter 2010 levels.
Quarter ending March 31, 2011 - Unaudited Financial Results
In addition, Blue River reported consolidated net loss of $1,287,000 for the quarter ended March 31, 2011 and a net loss to common shareholders of $1,370,000. This net loss compares to a consolidated net loss to common shareholders of $140,000 for the same period of 2010. Fully diluted loss per share was $.46 for the quarter ended March 31, 2011 and a fully diluted loss per share of $.05 for the same period in 2010. Weighted average outstanding shares (fully diluted) were 2,999,149, for both quarters ended March 31, 2011 and March 31, 2010.
The net loss to common shareholders for the quarter ended March 31, 2011 was primarily the result of continued high provision for loan losses. As discussed above, the Bank has completed an internal and external loan review resulting in increases to the reserve and adjustments that impacted the financial results for the first quarter of 2011 in addition to the impact to the fourth quarter of 2010.
Management Restructuring
The Bank has taken the following actions which were intended to address the issues facing the Bank. In January of this year, following the resignation of Mr. Collier, the Bank restructured its management team. The Board of Directors of the Bank took the following actions:
- Appointed Russell Breeden, III, as Chief Executive Officer of the Bank. Mr. Breeden, who is currently the Chairman, Chief Executive Officer, and President of the Company has over 37 years of experience in the financial services industry. He has been a Director of the Bank since 2002 and has served in several capacities at the Bank and Company, including Chairman, Chief Executive Officer, and President.
- Appointed Steven R. Abel as President and Chief Credit Officer of the Bank. Mr. Abel has over 30 years of banking experience. Mr. Abel has been a Director of the Bank since 1998 and has served in several capacities at the Bank and Company, including Chairman, Chief Executive Officer, President, and Chief Credit Officer. Mr. Abel has agreed to continue to serve as the President of the Bank until such time as the Bank receives the necessary regulatory approvals from the OTS for the appointment of Larry Lux as the President of the Bank. Upon Mr. Lux' approval as President of the Bank, Mr. Abel will resign as the President, but will continue as a Director and the Chief Credit Officer of the Bank.
- Appointed Larry Lux as President of the Bank, subject to the approval of the Office of Thrift Supervision. Mr. Lux, who has been with the Bank for 7 years, is currently serving as the Executive Vice President of the Bank. Mr. Lux has 22 years of banking experience. Prior to joining the Bank, Mr. Lux was the Area President - Vice President Commercial Lending for National City Bank.
- Hired Sarita Grace as Chief Operating Officer. Ms. Grace has 15 years of banking experience and has been a Certified Public Accountant for 19 years. She has an MBA with a focus in Banking, and is a 2007 graduate of the Stonier Graduate School of Banking. Ms. Grace, who was previously employed by the Bank and its affiliate, Paramount Bank, has served the Bank and Paramount Bank in several capacities, including Chief Financial Officer, Chief Credit Officer, and Compliance Officer.
- Appointed Wendell Bernard, who is currently a Director and the Audit Committee Chairman of the Company, to the Board of Directors of the Bank. Mr. Bernard has over 12 years of experience as a Director of the Company or the Bank. He has served as Director of both the Bank and the Company. He owned and operated Bernard Realty, Inc. from 1982 until 2010.
With respect to the management restructuring, Mr. Abel commented, "Larry Lux has been a valuable member of the management team at the Bank since 2003 and has my full support as President of the Bank." Mr. Breeden added, "Larry is a well respected businessman and community leader. His community presence and leadership will allow SCB Bank to take advantage of its opportunities."
In addition, to the management restructuring, the Bank has taken the following additional remedial actions. The Bank engaged Pyramid Business Consultants to assist it in assessing its current financial and regulatory condition, identify issues and to develop strategic alternatives to respond to the conditions and issues identified. The Principal of Pyramid Business Consultants, Larry Toombs, has previously served as both a consultant to the Bank and its President. Mr. Breeden commented, "Larry Toombs has been instrumental in advising other troubled institutions. We are confident that Mr. Toombs' advice will be equally beneficial to us in responding to our current circumstances."
The Boards of Directors of the Company and the Bank are continuing to examine a number of strategic alternatives for restoring the Company's and the Bank's prior capital levels and strength. The Company is currently pursuing a two pronged strategy of shrinking the size of the Bank's balance sheet and raising additional capital from outside sources.
Regulatory Actions
As indicated by the capital levels reported in its amended Thrift Financial Report, the Bank is currently considered "undercapitalized" under the prompt corrective action provisions of the Federal Deposit Insurance Act. The Bank's primary federal regulator, the Office of Thrift Supervision (the "OTS"), has issued a formal enforcement action against the Bank in the form of a cease and desist order ("C&D"). Based upon its capital levels, the Bank also anticipates receiving a prompt corrective action ("PCA") directive from the OTS. The OTS has also issued a C&D against the Company. As a result, the Bank and the Company will each be subject to heightened regulatory restrictions, increased reporting requirements and greater regulatory scrutiny.
The C&D issued to the Bank includes a number of restrictions on the operations and management of the Bank, including required capital ratios and growth limitations. Under the C&D, the Bank must obtain and maintain a Tier 1 (Core) Capital Ratio equal to or greater than 8.25% after funding an adequate allowance for loan and lease losses and a Total Risk-Based Capital Ratio equal to or greater than 12.25%. The Bank may not increase its total assets during any quarter in excess of an amount equal to net interest credited on deposit liabilities during the prior quarter without the prior approval of the OTS.
Similar to the C&D applicable to the Bank, the Company's C&D contains restrictions on the operations and management of the Company. Among other restrictions, the Company is prohibited from declaring, making or paying any cash dividends or other capital distributions or purchasing or committing to purchase or redeem any of its equity securities without the prior non-objection of the OTS. As a result, the Company has deferred the dividend payments on the preferred securities that it issued to the United States Department of the Treasury under the TARP Capital Purchase Program. Such deferral is permitted under the terms of the preferred securities and does not constitute a default. Further, the Company is prohibited from incurring, issuing, renewing, or paying interest or principal on any debt, or committing to do any of the foregoing, without the prior approval of the OTS. The Company has deferred the payments due on its trust preferred securities. The deferral is permitted under the terms of the trust preferred securities and does not constitute a default. The Company is also required to submit to the OTS a written Capital Plan for enhancing the Company's Capital.
Bank deposit accounts are (and continue to be) insured by the FDIC at the maximum level allowed by law. The exact amount of coverage is impacted by the type of accounts and legal ownership of each account you have. Visit any SBC Bank branch to discuss your personal FDIC insurance coverage and to confirm that you are taking full advantage of the coverage available on your accounts.
Blue River Bancshares, Inc. is the holding company for SCB Bank which does business in the Shelbyville, Indiana market under the name of Shelby County Bank, a division of SCB Bank and originates mortgages under the name W.R. Clouse and Associates.
Cautionary Statement Regarding Forward-Looking Statements
Certain matters in this news release constitute forward-looking statements. Forward-looking statements can be identified by the fact that they include words like "believe," "expect," "anticipate," "estimate," and "intend," or future or conditional verbs such as "will," "would," "should," "could," or "may". These forward-looking statements relate to, among other things, expectations of the business environment in which Blue River operates, projections of future performance, perceived opportunities in the market and potential future credit experience.
These forward-looking statements are based upon the current beliefs and expectations of Blue River's management and are inherently subject to significant business, economic, regulatory and competitive uncertainties and contingencies, many of which are outside of Blue River's control. Blue River's actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements due to a wide range of factors, including, but not limited to, the general business environment, interest rates, the economy, competitive conditions between banks and non-bank financial services providers, regulatory changes, other factors that may be subject to circumstances beyond Blue River's control.
Blue River undertakes no obligation to revise these statements following the date of this press release.
CONSOLIDATED FINANCIAL HIGHLIGHTS | |||
Unaudited for December 31, 2010 | |||
YEARS ENDED DECEMBER 31 | |||
2010 | 2009 | ||
GROSS LOANS | $173,565,000 | $176,655,000 | |
TOTAL ASSETS | $246,649,000 | $266,864,000 | |
DEPOSITS | $216,740,000 | $215,079,000 | |
COMMON SHAREHOLDERS' EQUITY | ($ 1,808,000) | $ 10,525,000 | |
BOOK VALUE PER COMMON SHARE | $(.60) | $3.51 | |
NET INTEREST INCOME | $ 6,602,000 | $ 6,643,000 | |
PROVISION FOR LOAN LOSSES | $ 11,434,000 | $ 4,151,000 | |
NON INTEREST INCOME | $ 1,630,000 | $ (460,000) | |
NON INTEREST EXPENSE | $ 8,303,000 | $ 6,124,000 | |
INCOME TAX EXPENSE (BENEFIT) | $ 1,911,000 | $ (1,663,000) | |
NET (LOSS) | $ (13,416,000) | $(2,429,000) | |
NET (LOSS) TO COMMON SHAREHOLDERS | $ (13,745,000) | $(2,700,000) | |
BASIC & DILUTIVE (LOSS) PER SHARE | $ (4.58) | $ (.90) | |
BRBI CONSOLIDATED DELINQUENCIES | ||||
Quarter Ended | Quarter Ended | Quarter Ended | ||
12/31/2010 | 9/30/2010 | 12/31/2009 | ||
Non-Performing Assets | ||||
Non-performing loans 90+ days (excludes TDR's) | $ 571,622 | $ 5,887,728 | $ 1,003,926 | |
Non-accrual loans less SBA guarantees (excludes TDR's) | 11,625,033 | 8,861,525 | 7,284,341 | |
less specific reserves and general allocated reserves for non-accrual loans | (4,602,257) | (458,439) | (681,978) | |
Troubled Debt Restructured less SBA guarantees (includes TDR non-accruals) | 16,305,449 | 2,619,260 | 3,051,560 | |
less specific and general allocated reserves for TDR's | (3,426,849) | (142,516) | (102,543) | |
Other real estate | 1,910,262 | 1,902,461 | 1,436,857 | |
Other repossessed assets | - | 9,700 | 11,400 | |
Total Non-Performing Assets | $ 22,383,260 | $ 18,679,719 | $ 12,003,563 | |
SOURCE Blue River Bancshares, Inc.
