United Western Bancorp, Inc. (NASDAQ: UWBK) (the “Company”),
a Denver-based holding company whose principal subsidiary, United
Western Bank, is a community bank focused on expansion across Colorado’s
Front Range market and selected mountain communities, reported first
quarter 2008 income of $3.4 million, or $.46 per diluted share, compared
with $3.0 million, or $.41 per diluted share, for the fourth quarter of
2007. Income for the quarter ended March 31, 2007 was $2.3 million, or
$.31 per diluted share.
For the first quarter of 2008, net interest margin grew 32 basis points
to 4.05%, versus net interest margin of 3.73% for the quarter ended
December 31, 2007. Net interest margin for the quarter ended March 31,
2008 was 94 basis points greater than that of the quarter ended March
31, 2007, when net interest margin was 3.11%.
Scot T. Wetzel, President and Chief Executive Officer, commented: “We
are very pleased with our results for the first quarter of 2008. Our
earnings of $.46 per diluted share reflect the continued successful
execution of our business plan and effective management of our legacy
wholesale assets. We accomplished these goals in a macro-economic
environment that is very challenging for the financial services
industry. I am particularly satisfied with the continued expansion of
our net interest margin and our loan growth, which is an ongoing
testament to the quality of the banking teams we have put in place. We
remain focused on our goal of becoming Colorado's leading community bank
and continue to make steady progress toward that end.”
William D. Snider, Chief Financial Officer, said: “The
Colorado economy continues to grow and has not exhibited the extent of
weakness that is occurring in other parts of the country. Approximately
90% of our construction and development loans are in Colorado, which we
believe has contributed to the relative stability in our asset quality.
Nonperforming community bank loans were 52 basis points of the community
bank portfolio at March 31, 2008, reflecting an increase of $2.6 million
in the first quarter primarily due to one loan. The asset quality of the
residential loan portfolio continued to improve in the first quarter
with nonperforming residential loans declining $910,000 to $6.9 million.
“The negative economic and financial factors
impacting the banking industry have had moderate effects on the Company.
The principal effects are: (1) the lower interest rate environment has
had a positive effect upon net interest income, (2) the run-off of
wholesale assets has slowed due to lower prepayments on mortgages and
mortgage-backed securities, and (3) the disruptions in the securities
markets have caused a lower of cost or fair value adjustment to our
mortgages and caused a temporary decline in our available for sale
securities.”
Michael J. McCloskey, Chief Operating Officer, explained: “Sterling
Trust Company, our custodial, administrative, and escrow services
subsidiary, contributed positively to the overall results of the Company
for the first quarter. Total assets under custody grew in the first
quarter of 2008 to approximately $4.62 billion, an increase of
approximately $110 million since December 31, 2007. At March 31, 2008,
total accounts grew to 60,885 from 58,622 at December 31, 2007, and
deposits at United Western Bank acquired through Sterling Trust were
$392 million compared to $405 million at December 31, 2007. Included in
the balances at Sterling Trust is a series of accounts for one life
settlement agent for special asset acquisitions and administration with
a balance of $73 million and $104 million at March 31, 2008 and December
31, 2007, respectively. In January 2008, we elected to restructure this
relationship and terminate certain elements of business with respect to
this large life settlement agent account. During the first quarter of
2008, approximately $31 million was withdrawn from this account. Through
Sterling Trust’s successful marketing
efforts, growth in new accounts and the increase in uninvested cash in
existing accounts offset $19 million of this decrease.”
Net Interest Income, Yield on Assets, Cost of Liabilities
Quarter Ended
March 31,
2008
December 31,
2007
March 31,
2007
(Dollars in thousands)
Interest and dividend income
$29,480
$30,366
$30,217
Interest expense
9,270
11,998
14,320
Net interest income before provision for credit losses
$20,210
$18,368
$15,897
Yield on assets
5.89
%
6.12
%
5.92
%
Cost of liabilities
2.17
%
2.76
%
3.28
%
Net interest spread
3.72
%
3.36
%
2.64
%
Net interest margin
4.05
%
3.73
%
3.11
%
Net interest income before provision for credit losses totaled $20.2
million for the quarter ended March 31, 2008, compared with $18.4
million for the quarter ended December 31, 2007, and $15.9 million for
the quarter ended March 31, 2007. The increase in net interest income
before provision for credit losses between the first quarter of 2008 and
the fourth quarter of 2007 of $1.8 million was principally the result of
the decline in interest expense and a $938,000 reduction in premium
amortization of purchased SBA loans and securities. These two positive
items were partly offset by a decline in net interest income from
interest-earning assets of $1.8 million. In the first quarter of 2008,
the yield on total interest-earning assets declined 23 basis points
versus the fourth quarter of 2007 as a result of the decreases in the
prime rate to which the majority of our community bank loans are tied.
The yield on assets was 5.89% for the first quarter compared with 6.12%
for the fourth quarter of last year. The yield on community bank loans
declined 95 basis points to 7.15% for the first quarter compared with
8.10% for the 2007 fourth quarter. For the same periods, the yield on
wholesale assets increased to 5.19% versus 5.14% due to the lower
purchased SBA amortization. Net interest income and net interest margin
increased notwithstanding the lower yield on assets because the Company’s
cost of interest-bearing liabilities decreased by 59 basis points to
2.17% for the first quarter compared with 2.76% for the fourth quarter.
These decreases were consistent with the decline in market rates of
interest and in particular, to the decline in the LIBOR rate to which
many of our interest-bearing liabilities are tied. Our larger proportion
of funding from wholesale sources also contributed to the decline in
interest expense.
Comparing the first quarter of 2008 to the first quarter of 2007, net
interest income before provision for credit losses increased $4.3
million as the cost of liabilities declined by $5.1 million, and for the
same periods, interest and dividend income declined by $737,000 as
average interest-earning assets declined by $45 million between the
periods. The yield on assets was 5.89% for the first quarter of 2008
compared with 5.92% for the first quarter of 2007. This three basis
point decline in the yield on interest-earning assets was the result of
the decrease in the prime rate and partially offset by the change in mix
of assets. The decline in the prime rate caused the yield on our
community bank loans to decline by 115 basis points. However, between
the first quarters of 2007 and 2008 the average balance of community
bank loans increased by $317 million and the average balance of lower
yielding wholesale assets declined by $367 million. Also, there was
lower premium amortization of $499,000 on purchased SBA loans and
securities.
The cost of interest-bearing liabilities declined by 111 basis points
between the periods to 2.17% for the first quarter of 2008 versus 3.28%
for the same period last year. In addition to the factors discussed
above, we had a 182 basis point reduction in borrowed money and junior
subordinated debt, due to both general market declines in rates and as a
result of our retirement of $20 million of trust preferred securities
during the third quarter of 2007.
Provision for Credit Losses
Quarter Ended
March 31,
2008
December 31,
2007
March 31,
2007
Net interest income before provision for credit losses
$20,210
$18,368
$15,897
Provision for credit losses
1,536
1,174
358
Net interest income after provision for credit losses
$18,674
$17,194
$15,539
In the first quarter of 2008, provision for credit losses was $1.5
million compared with $1.2 million for the fourth quarter of 2007 and
$358,000 for the first quarter of 2007. The provision for credit losses
in the first quarter was principally the result of the $114.3 million of
growth net of repayments in our community bank loan portfolio during the
period, one $2.9 million construction loan was added to the
nonperforming loan listing and its loan grade was reduced, which
resulted in $261,000 of additional provision expense. Lastly management
elected to increase the unallocated portion of the allowance for credit
losses by $100,000. The increase in the unallocated portion was due to
general economic conditions and is consistent with the Company’s
identified risk factors.
The provision for credit losses for the fourth quarter of 2007 of $1.2
million reflected growth of the community bank loan portfolio of $98.2
million net of repayments and a $150,000 increase in the unallocated
portion of the allowance for credit losses due to general economic
conditions.
The provision for credit losses for the first quarter of 2007 of
$358,000 reflected growth of the community bank loan portfolio of $61
million net of repayments and was partially offset by repayments of
residential wholesale loans and certain improvements in individual loan
grades.
Noninterest Income
Quarter Ended
March 31,
2008
December 31,
2007
March 31,
2007
(Dollars in thousands)
Custodial, administrative and escrow services
$2,560
$2,254
$1,993
Loan administration
1,456
1,408
1,697
Gain on sale of loans and securities
182
92
833
Litigation settlements
-
155
-
Other
625
747
820
Total noninterest income
$4,823
$4,656
$5,343
Noninterest income was $4.8 million for the quarter ended March 31,
2008, compared to $4.7 million for the quarter ended December 31, 2007,
and $5.3 million for the quarter ended March 31, 2007. The increase
between the first quarter of 2008 and fourth quarter of 2007 was caused
by higher custodial, administrative, and escrow services revenues from
Sterling Trust, as revenues increased to $2.56 million, or $306,000,
from $2.25 million between the periods based on continued account
growth. Noninterest income for the fourth quarter of 2007 was also
positively affected by nonrecurring litigation settlements of $155,000.
Gain on sale of loans was $182,000 for the first quarter of 2008 on
sales of $6.2 million of principal balance of SBA loans versus gain of
$92,000 on sales of $2.7 million of principal balance of SBA loans for
the fourth quarter of 2007.
Noninterest income for the quarter ended March 31, 2007 included gains
from the sale of $12.5 million of principal balance of SBA originated
loans from which we realized a gain of $735,000 and a gain of $98,000
from the sale of available for sale investment securities.
Noninterest Expense
Quarter Ended
March 31,
2008
December 31,
2007
March 31,
2007
(Dollars in thousands)
Compensation and employee benefits
$7,707
$7,161
$6,340
Subaccounting fees
5,215
5,192
5,985
Lower of cost or fair value adjustments
767
(104
)
397
Occupancy and equipment
810
776
649
Other
4,189
4,598
4,463
Total noninterest expense
$18,688
$17,623
$17,834
Noninterest expense was $18.7 million for the quarter ended March 31,
2008, versus $17.6 million for the quarter ended December 31, 2007, and
$17.8 million for the quarter ended March 31, 2007. Noninterest expense
for the first quarter of 2008 increased 6.0% from the fourth quarter due
to a $767,000 charge to reduce the carrying value of residential loans
held for sale to the lower of cost or fair value. Due to lack of
liquidity and the general malaise in the secondary mortgage market,
rates of return demanded by investors increased, causing a decline in
the value of the Company’s portfolio.
Compensation and employee benefits increased $546,000 to $7.7 million in
the first quarter compared with $7.2 million for the fourth quarter.
This increase was the result of the addition of 17 personnel, including
retail bankers, the head of energy lending, SBA division lending
professionals, as well as additional custodial, administrative and
escrow personnel all to support our business growth. Subaccounting fees
increased $23,000 in the first quarter to $5.2 million as the increase
in deposits subject to subaccounting fees was offset by the decline in
general market interest rates upon which such fees are based.
Noninterest expense for the first quarter of 2008 increased $854,000, or
4.8%, as compared with the first quarter of 2007. Compensation and
employee benefits increased $1.4 million due to an increase in personnel
at United Western Bank to staff the new Loveland branch that opened in
the fourth quarter of 2007, and to hire operation and credit
administration personnel to support the growth of our community banking
business. Between the first quarter of 2008 and first quarter of 2007
subaccounting fees declined $770,000 principally due to the decline in
market interest rates upon which such fees are based.
Income Taxes. For the quarter ended March 31, 2008, the Company’s
effective tax rate was 30.1%, compared with an effective tax rate of
29.4% for the quarter ended December 31, 2007, and 26.1% for the quarter
ended March 31, 2007. The Company’s tax rate
for all periods differs from the enacted tax rates principally due to
the Company’s utilization of $33 million of
New Markets Tax Credits.
Balance Sheet. The Company’s assets
were $2.15 billion at March 31, 2008, compared with $2.10 billion at
December 31, 2007 and March 31, 2007. Assets grew $50 million in the
first quarter, as community bank loans before the community bank
allowance for credit losses increased $114.3 million in the first
quarter of 2008 to $820.5 million at March 31, 2008, as shown below.
Loan Portfolio
March 31,
December 31,
March 31,
2008
2007
2007
(Dollars in thousands)
Community bank loans:
Commercial real estate
$321,177
$287,294
$235,108
Construction and development
311,274
272,736
123,235
Commercial
120,954
88,175
37,654
Multifamily
58,334
48,613
57,896
SBA originated, guaranteed portions
3,749
5,602
5,785
Consumer
5,054
3,825
2,754
Total community bank loans
820,542
706,245
462,432
Wholesale loans:
Residential
386,371
442,890
568,916
SBA purchased loans - guaranteed
107,698
116,084
150,209
Total loans
$1,314,611
$1,265,219
$1,181,557
At March 31, 2008, community bank loans net of the community bank
allowance for credit losses were $811 million, a $113 million increase
from $698 million at December 31, 2007. For those same periods,
wholesale loans net of the wholesale allowance for credit losses
declined $65 million to $492 million as the result of repayments and $18
million of residential loans that were securitized with FNMA.
The Company’s loan portfolio is predominately
collateralized by real estate. In addition to the wholesale residential
portfolio, the Company’s community bank loan
portfolio consists of a large concentration of commercial real estate
and construction and development (C&D) loans. Risks associated with C&D
lending are managed by: (1) rigorous credit underwriting, (2)
centralized internal controls and construction loan administration
systems, (3) policies relating to C&D loan type and geographic
concentrations, and (4) professional lenders with seasoned experience in
Colorado and C&D lending. Within the C&D portfolio, construction loans
totaled $186 million and land development loans were $125 million at
March 31, 2008. Of the land development loans, $121.2 million, or 97%,
are for land that is under development and is generally intended to
either be sold to contractors as lot loans for commencement of
construction, or for which the current borrower will commence vertical
construction within six to 12 months. The construction loan portfolio
consists of 34% single family, 43% commercial projects, and 23%
multifamily.
Asset Quality
The following table sets forth our nonperforming assets as of the
dates indicated:
March 31,
December 31,
March 31,
2008
2007
2007
(Dollars in thousands)
Residential
$6,963
$7,873
$6,606
SBA purchased loans - guaranteed
767
893
1,077
Commercial real estate
1,035
1,152
268
Construction and development
2,900
–
209
Commercial
2
–
153
SBA originated, guaranteed portions
327
557
1,282
Total nonperforming loans
11,994
10,475
9,595
REO
3,808
3,109
3,524
Total
$15,802
$13,584
$13,119
Nonaccrual residential loans totaled $7.0 million, $7.9 million, and
$6.6 million, at March 31, 2008, December 31, 2007, and March 31, 2007,
respectively. The improvement between the fourth quarter of 2007 and
first quarter of 2008 was the result of a combination of payoffs, loans
brought current and balances transferred to real estate owned. At March
31, 2008, the overall level of nonaccrual single-family residential
loans is 1.80% of the outstanding residential loan balance, and based on
data from the Mortgage Bankers Association is better than the average in
the national marketplace of 3.24%.
At March 31, 2008, the Company placed our first non-SBA originated
community bank loan on nonaccrual. This addition caused a net $1.5
million increase in total nonperforming loans from December 31, 2007.
Nonaccrual community bank loans were $4.3 million at March 31, 2008, or
52 basis points of the community bank portfolio, $1.7 million at
December 31, 2007, or 24 basis points, and $1.9 million at March 31,
2007, or 41 basis points. Net of SBA guarantees, at March 31, 2008,
community bank nonaccrual loans were $3.9 million or 48 basis points of
community bank loans, compared with $1.2 million or 16 basis points at
December 31, 2007 and $630,000 or 14 basis points at March 31, 2007.
Net charge-offs for the first quarter of 2008, fourth quarter of 2007
and first quarter of 2007 were $253,000, $257,000 and $225,000,
respectively. Residential charge offs for those same periods were
$201,000, or 19.1 basis points annualized, $227,000, or 20 basis points
annualized, and $27,000, or 2 basis points annualized. Community bank
loan charge-offs were $52,000, or 3 basis points annualized in the first
quarter of 2008, compared to $30,000, or 2 basis points annualized in
the fourth quarter of 2007, and $198,000, or 18 basis points in the
first quarter of 2007.
The allowance for credit losses as a percentage of community bank loans
was 1.22%, 1.21%, and 1.40%, at March 31, 2008, December 31, 2007, and
March 31, 2007, respectively. The allowance for credit losses as a
percentage of residential loans was .42%, .42%, and .41%, at March 31,
2008, December 31, 2007, and March 31, 2007, respectively. The total
allowance for credit losses to total nonaccrual loans is 97.7% at March
31, 2008, compared with 99.7% at December 31, 2007, and 92.7% at March
31, 2007.
At March 31, 2008, the Company owned approximately $277,000 of mortgages
that met the regulatory definition of “subprime”
at the date of purchase or origination. In prior years, the Company
originated subprime mortgages through its mortgage banking subsidiary,
Matrix Financial Services Corporation, and United Western Bank
occasionally purchased subprime mortgages. These activities ceased in
February 2003, and the balance represents the remainder of such
activities. The Company is not now active, and has no intention of
becoming active, in the subprime market.
At March 31, 2008 the Company’s
mortgage-backed investment securities portfolio was approximately $602
million. The portfolio consists of approximately 99% AAA- or AA-rated
securities with the remainder in A-rated CRA securities. The portfolio
is comprised of approximately 12% underlying Alt-A collateral, the
remaining 88% is A collateral. All securities are current as to
principal and interest payments. On April 29, 2008 one mortgage-backed
security was downgraded from AA to B by one of the credit rating
agencies. The Company is continuing to monitor the security and based on
the collateral performance and credit support, management continues to
believe the Company will realize full value for this security.
Deposits. At March 31, 2008, deposits, including custodial escrow
balances, increased $60 million to $1.48 billion as compared with $1.42
billion at December 31, 2007. Community bank deposits increased $14.9
million in the first quarter to $104.2 million at March 31, 2008, versus
$89.3 million at December 31, 2007. Institutional deposits increased $45
million during the first quarter as compared to year end 2007.
Capital. At March 31, 2008, the Company’s
equity leverage ratio was 5.25% compared with 5.41% at December 31,
2007. The decline in the leverage ratio was principally caused by the
unrealized loss on available for sale investment securities, which was
included in other comprehensive income and growth in total assets.
United Western Bank’s tier-1 core capital,
total risk-based and tier-1 risk-based capital ratios are approximately
7.26%, 12.67% and 11.85 %, respectively, as of March 31, 2008, all of
which are well in excess of regulatory requirements of 5%, 10% and 6%,
respectively.
The Company paid its fifth consecutive quarterly cash dividend in the
amount of $.06 per share on March 17, 2008. On May 1, 2008, Board of
Directors declared a quarterly cash dividend of $0.06 per common share
to shareholders of record on June 5, 2008. The dividend is payable June
16, 2008.
During the first quarter of 2008, the Company repurchased 13,900 of its
common shares. After these repurchases, the Company has remaining
authorization to repurchase a total of 365,018 outstanding common
shares. Stock repurchases are part of the Company’s
capital management plan and strategy. Such repurchases will be made from
time to time in accordance with the Company’s
Fair Disclosure and Insider Trading policies, as well as based on
capital, liquidity and other factors.
Conference Call
Management will host a conference call on Tuesday, May 6, 2008 at 9:00
a.m. Mountain Time to review the results of operations for the first
quarter ended March 31, 2008, and other topics that may be raised during
the discussion. To participate in the teleconference, please call
toll-free 800-218-9073 (or 303-275-2170 for local and international
callers) approximately 10 minutes prior to the start time. To hear a
live web simulcast or to listen to the archived webcast following the
completion of the call, please visit the Company’s
website at www.uwbancorp.com,
click on the “Investor Relations”
link and then under “News & Events”
select “Calendar of Events”
to access the link to the call.
About United Western Bancorp, Inc.
Denver-based United Western Bancorp, Inc. is focused on developing its
community-based banking network through its subsidiary, United Western
Bank, by strategically positioning branches across Colorado’s
Front Range market and certain mountain communities. This area spans the
eastern slope of the Rocky Mountains – from
Pueblo to Fort Collins, and from metropolitan Denver to the Roaring Fork
Valley. United Western Bank plans to grow its network to estimated 10 to
12 community bank locations over the next three to five years. In
addition to community-based banking, United Western Bancorp, Inc. and
its subsidiaries offer deposit services to institutional customers and
custodial, administrative, and escrow services through Sterling Trust
Company. For more information, please visit our web site at www.uwbancorp.com.
Forward-Looking Statements
This press release contains “forward-looking
statements” that are made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform Act
of 1995. These forward-looking statements are subject to
significant risks and uncertainties. Forward-looking statements
include information concerning our future results, interest rates, loan
and deposit growth, operations, development and growth of our community
bank network and our business strategy. Forward-looking statements
sometimes include terminology such as “may,”
“will,” “expects,”
“anticipates,” “predicts,”
“believes,” “plans,”
“estimates,” “potential,”
“projects,” “intends,”
“should” or “continue”
or the negative thereof or other variations thereon or comparable
terminology. However, a statement may still be forward looking
even if it does not contain one of these terms. As you consider
forward-looking statements, you should understand that these statements
are not guarantees of performance or results. They involve risks,
uncertainties and assumptions that could cause actual performance or
results to differ materially from those in the forward-looking
statements. These factors include, but are not limited to: the
successful implementation of our community banking strategies and growth
plans; the timing of regulatory approvals or consents for new branches
or other contemplated actions; the availability of suitable and
desirable locations for additional branches; the continuing strength of
our existing business, which may be affected by various factors,
including but not limited to interest rate fluctuations, level of
delinquencies, defaults and prepayments, general economic conditions,
competition, legal and regulatory developments, and future additional
risks and uncertainties currently unknown to us. Additional
information concerning these and other factors that may cause actual
results to differ materially from those anticipated in forward-looking
statements is contained in the “Risk Factors”
section of the Company’s Annual Report on
Form 10-K for the year ended December 31, 2007 and in the Company’s
other periodic reports and filings with the Securities and Exchange
Commission. The Company cautions investors not to place undue
reliance on the forward-looking statements contained in this press
release.
Any forward-looking statements made by the Company speak only as of
the date on which the statements are made and are based on information
known to us at that time. We do not intend to update or revise
the forward-looking statements made in this press release after the date
on which they are made to reflect subsequent events or circumstances,
except as required by law.
UNITED WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
March 31,
December 31,
2008
2007
Assets
Cash and due from banks
$32,707
$21,650
Interest-earning deposits
3,308
3,156
Federal funds sold
10,000
16,000
Total cash and cash equivalents
46,015
40,806
Investment securities – available for
sale, at estimated fair value
96,184
87,676
Investment securities – held to maturity,
at amortized cost
556,087
574,105
Community bank loans, net
810,509
697,732
Wholesale loans, net
492,381
557,049
FHLBank stock, at cost
40,326
39,913
Mortgage servicing rights, net
11,299
11,971
Accrued interest receivable
9,511
10,551
Other receivables
15,700
14,120
Premises and equipment, net
18,890
16,949
Bank owned life insurance
24,517
24,279
Other assets, net
11,653
11,737
Deferred income taxes
9,009
6,113
Foreclosed real estate
3,808
3,109
Total assets
$2,145,889
$2,096,110
Liabilities and shareholders’ equity
Liabilities:
Deposits
$1,427,871
$1,385,481
Custodial escrow balances
51,481
34,172
FHLBank borrowings
398,803
406,129
Borrowed money
98,201
97,428
Junior subordinated debentures owed to unconsolidated subsidiary
trusts
30,442
30,442
Income tax payable
2,069
222
Other liabilities
24,459
28,815
Total liabilities
2,033,326
1,982,689
Shareholders’ equity:
Common stock
1
1
Additional paid-in capital
23,777
23,724
Retained earnings
95,066
92,364
Accumulated other comprehensive loss
(6,281
)
(2,668
)
Total shareholders’ equity
112,563
113,421
Total liabilities and shareholders’
equity
$2,145,889
$2,096,110
UNITED WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except share information)
Quarter Ended
Mar 31,
Dec 31,
Mar 31,
2008
2007
2007
Interest and dividend income:
Community bank loans
$13,425
$13,418
$8,969
Wholesale residential loans
5,645
6,431
7,761
Other loans
1,188
764
1,974
Investment securities
8,652
9,013
10,742
Deposits and dividends
570
740
771
Total interest and dividend income
29,480
30,366
30,217
Interest expense:
Deposits
3,712
4,985
6,628
FHLBank borrowings
3,793
5,119
5,484
Other borrowed money
1,765
1,894
2,208
Total interest expense
9,270
11,998
14,320
Net interest income before provision for credit losses
20,210
18,368
15,897
Provision for credit losses
1,536
1,174
358
Net interest income after provision for credit losses
18,674
17,194
15,539
Noninterest income:
Custodial, administrative and escrow services
2,560
2,254
1,993
Loan administration
1,456
1,408
1,697
Gain on sale of loans and securities
182
92
833
Litigation settlements
–
155
–
Other
625
747
820
Total noninterest income
4,823
4,656
5,343
Noninterest expense:
Compensation and employee benefits
7,707
7,161
6,340
Subaccounting fees
5,215
5,192
5,985
Amortization of mortgage servicing rights
709
687
978
Occupancy and equipment
810
776
649
Postage and communication
342
326
303
Professional fees
601
712
506
Mortgage servicing rights subservicing fees
441
445
520
Other general and administrative
2,863
2,324
2,553
Total noninterest expense
18,688
17,623
17,834
Income before income taxes
4,809
4,227
3,048
Income tax provision
1,445
1,244
795
Net income
$3,364
$2,983
$2,253
Net income per share – basic
$0.47
0.41
0.31
Net income per share – assuming dilution
0.46
0.41
0.31
UNITED WESTERN BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED AVERAGE BALANCE SHEET
(Unaudited)
(Dollars in thousands)
Three Months Ended March 31,
2008
2007
Average
Balance
Interest
Average
Rate
Average
Balance
Interest
Average
Rate
(Dollars in thousands)
Assets
Interest-earning assets:
Community bank loans:
Commercial real estate loans
$229,310
$4,010
7.03%
$151,603
$2,790
7.46%
Construction and development loans
280,984
4,786
6.85
100,220
2,284
9.24
Originated SBA loans
99,213
2,096
8.50
102,425
2,416
9.57
Multifamily loans
49,153
817
6.65
57,891
928
6.41
Commercial loans
91,257
1,644
7.25
23,121
483
8.47
Consumer and other loans
5,042
72
5.74
2,934
68
9.40
Total community bank loans
754,959
13,425
7.15
438,194
8,969
8.30
Wholesale assets:
Residential loans
419,904
5,645
5.38
588,239
7,761
5.28
Purchased SBA loans and securities
174,181
1,970
4.55
235,568
3,003
5.17
Mortgage-backed securities
598,677
7,870
5.26
735,706
9,713
5.28
Total wholesale assets
1,192,762
15,485
5.19
1,559,513
20,477
5.25
Interest-earning deposits
19,298
156
3.20
14,129
179
5.07
FHLBank stock
39,917
414
4.17
40,548
592
5.92
Total interest-earning assets
2,006,936
29,480
5.89%
2,052,384
30,217
5.92%
Noninterest-earning assets:
Cash
18,029
22,127
Allowance for credit losses
(10,618)
(8,991)
Premises and equipment
18,324
9,482
Other assets
81,079
85,427
Total noninterest-earning assets
106,814
108,045
Total assets
$2,113,750
$2,160,429
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
Passbook accounts
$235
$–
0.85%
$134
$–
0.00%
Money market and NOW accounts
1,154,089
3,383
1.18
1,153,438
6,259
2.20
Certificates of deposit
31,439
329
4.21
36,286
369
4.12
FHLBank borrowings
392,179
3,793
3.83
441,670
5,484
4.97
Repurchase agreements
76,673
848
4.38
60,868
739
4.92
Borrowed money and junior subordinated Debentures
51,442
917
7.05
66,216
1,469
8.87
Total interest-bearing liabilities
1,706,057
9,270
2.17%
1,758,612
14,320
3.28%
Noninterest-bearing liabilities:
Demand deposits (including custodial escrow balances)
271,210
269,724
Other liabilities
20,519
20,875
Total noninterest-bearing liabilities
291,729
290,599
Shareholders’ equity
115,964
111,218
Total liabilities and shareholders’ equity
$2,113,750
$2,160,429
Net interest income before provision for credit losses
$20,210
$15,897
Interest rate spread
3.72%
2.64%
Net interest margin
4.05%
3.11%
Ratio of average interest-earning assets to average
interest-bearing liabilities
117.64%
116.70%
UNITED WESTERN BANCORP, INC. AND SUBSIDIARIES
OPERATING RATIOS AND OTHER SELECTED DATA
(Unaudited)
(Dollars in thousands, except share information)
Quarter Ended
Mar 31,
Dec 31,
Mar 31,
2008
2007
2007
Weighted average shares – basic
7,217,399
7,232,375
7,256,573
Weighted average shares – assuming
dilution
7,238,411
7,241,071
7,256,791
Number of shares outstanding at end of period
7,318,818
7,264,224
7,256,573
Operating Ratios & Other Selected
Data (1)
Return of average equity
11.60
%
10.29
%
8.10
%
Operating efficiency ratios (3)
71.82
%
73.56
%
79.36
%
Book value per share (end of period)
$15.38
$15.61
$15.13
Yield on assets
5.89
%
6.12
%
5.92
%
Cost of liabilities
2.17
%
2.76
%
3.28
%
Net interest margin (2)
4.05
%
3.73
%
3.11
%
Asset Quality Information
(1)
Community bank allowance for credit losses
$10,033
$8,513
$6,483
Allowance to community bank loans
1.22
%
1.21
%
1.40
%
Residential allowance for credit losses
$1,635
$1,869
$2,340
Allowance to residential loans
0.42
%
0.42
%
0.41
%
Allowance for credit losses
$11,721
$10,438
$8,895
Allowance for credit losses to total loans
0.89
%
0.82
%
0.75
%
Community bank net charge offs
$52
$30
$198
Residential net charge offs
201
227
27
Residential nonaccrual loans
6,963
7,873
6,606
Commercial nonaccrual loans
5,031
2,602
2,989
Commercial guaranteed nonaccrual loans
1,094
1,450
2,359
Total nonaccrual assets and REO
15,802
13,584
13,119
Total residential loans allowance to nonaccrual residential loans
23.50
%
23.70
%
35.42
%
Ratio of allowance for credit losses to total nonaccrual loans
(less guaranteed portion)
107.53
%
115.66
%
122.93
%
Ratio of allowance for credit losses to total nonaccrual loans
97.72
%
99.65
%
92.70
%
Total nonaccrual residential loans to total residential loans
1.80
%
1.78
%
1.16
%
Total nonaccrual commercial loans to total commercial loans
0.54
%
0.32
%
0.49
%
Total nonaccrual assets and REO to total assets
0.74
%
0.65
%
0.62
%
(1) Calculations are based on average
daily balances where available and monthly averages otherwise, as
applicable.
(2) Net interest margin has been
calculated by dividing net interest income before credit losses by
average interest earning assets.
(3) The operating efficiency ratios have
been calculated by dividing noninterest expense, excluding
amortization of mortgage servicing rights, by operating income.
Operating income is equal to net interest income before provision
for credit losses plus noninterest income.
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