Alliance Financial Announces Third Quarter Earnings
SYRACUSE, N.Y., Oct. 14 /PRNewswire-FirstCall/ -- Alliance Financial Corporation ("Alliance", or the "Company") (Nasdaq: ALNC), the holding company for Alliance Bank, N.A., announced today its net income for the quarter ended September 30, 2010 was $3.1 million or $0.66 per diluted share, compared to $3.0 million or $0.64 per diluted share in the year-ago quarter.
Net income for the nine months ended September 30, 2010 was $8.8 million, compared to $8.0 million in the year-ago period.
Net income available to common shareholders for the nine months ended September 30, 2010 was $8.8 million or $1.89 per diluted share, compared with $6.9 million or $1.49 per diluted share in the year-ago period. Preferred dividends and the accretion of the discount on preferred stock issued under the Treasury Department's Capital Purchase Program was $1.1 million or $0.24 per diluted share for the nine months ended September 30, 2009. The Company redeemed the preferred stock in May 2009.
Jack H. Webb, President and CEO of Alliance said, "We continue to demonstrate the ability to produce solid financial performance in spite of the weak economy within a highly competitive marketplace. Our local community banking model is recognized as a preferred alternative to individuals, businesses and municipalities, which have become increasingly disenchanted by the lack of personal attention from larger financial institutions."
Webb added, "In the first quarter of this year, we enhanced our commercial banking team. Through their efforts we have attracted several new significant relationships and have a strong pipeline of additional opportunities going into the fourth quarter. Our core deposit levels continue to increase providing the funding necessary for us to continue lending to credit worthy borrowers throughout Central New York."
Balance Sheet Highlights
Total assets were $1.4 billion at September 30, 2010, which was a decrease of $9.9 million from the end of the second quarter. Total loans and leases (net of unearned income) decreased $13.3 million during the quarter, and were $901.9 million at September 30, 2010. The decrease in loan balances resulted from the continued amortization of our lease portfolio combined with lower commercial line-of-credit utilization and the sale of most residential mortgage originations in the third quarter. Loan origination volumes increased $11.3 million or 16.9% in the third quarter compared with the second quarter, with residential mortgage and commercial loan originations increasing 28% and 47%, respectively, compared to the second quarter.
Commercial loans and mortgages decreased $1.1 million in the third quarter and totaled $226.8 million at September 30, 2010. Originations of commercial loans and mortgages in the third quarter (excluding lines of credit) totaled $19.6 million, compared with $13.3 million in the second quarter of 2010 and $10.5 million in the year-ago quarter.
Residential mortgages outstanding decreased $6.1 million in the third quarter primarily as a result of our plan to sell most of our residential originations on the secondary market because of low interest rates. Originations of residential mortgages totaled $34.7 million in the third quarter of 2010, compared with $27.1 million in the second quarter of 2010 and $37.1 million in the year-ago quarter.
Indirect auto loan balances were $183.6 million at the end of the third quarter, which was essentially unchanged from the end of the second quarter. The Company originated $22.5 million of indirect auto loans in the third quarter, compared with $25.3 million in the second quarter of 2010 and $25.0 million in the year-ago quarter. Alliance originates auto loans through a network of reputable, well established automobile dealers located in Central and Western New York. Applications received through the Company's indirect lending program are subject to the same comprehensive underwriting criteria and procedures as employed in its direct lending programs.
Leases (net of unearned income) decreased $7.0 million in the third quarter as a result of the Company's previously announced decision to cease new lease originations. The remaining balance of the lease portfolio of $47.5 million is expected to continue to run off at the rate of approximately $6.0 million per quarter over the next twelve months.
The Company's investment securities portfolio decreased $11.0 million in the third quarter and totaled $395.8 million at September 30, 2010. The Company's portfolio is comprised entirely of investment grade securities, of which 84% are rated "AAA" by one or more of the nationally recognized rating agencies. The breakdown of the securities portfolio at September 30, 2010 was 78% guaranteed mortgage-backed securities, 19% municipal securities and 1% obligations of U.S. Government-sponsored corporations. Mortgage-backed securities, which totaled $307.2 million at September 30, 2010, are primarily comprised of pass-through securities backed by conventional residential mortgages and guaranteed by Fannie Mae, Freddie Mac or Ginnie Mae, which in turn are backed by the full faith and credit of the federal government. The Company's municipal securities portfolio, which totaled $77.1 million at the end of the third quarter, is primarily comprised of highly rated general obligation bonds issued by local municipalities in New York State.
The Company recorded net unrealized gains of approximately $11.6 million in its securities portfolio at September 30, 2010.
Deposits increased $7.0 million in the third quarter, and were $1.1 billion at September 30, 2010. Transaction account balances (checking, savings, and money market) increased $32.1 million in the third quarter as the result of growth in commercial and municipal deposits. Since the end of 2009 transaction accounts are up $83.4 million with growth in each of our retail, commercial and municipal lines of business. Time accounts decreased $25.1 million in the third quarter as growth in transaction accounts was used to reduce wholesale brokered deposits. Low cost transaction accounts comprised 69.7% of total deposits at the end of the third quarter, compared with 65.2% at December 31, 2009 and 64.0% at September 30, 2009.
Shareholders' equity was $134.5 million at September 30, 2010, compared with $132.7 million at the end of the second quarter. Net income for the quarter increased shareholders' equity by $3.1 million and was partially offset by common stock dividends declared of $1.4 million or $0.30 per common share.
The Company's Tier 1 leverage ratio was 8.07% and its total risk-based capital ratio was 14.27% at the end of the third quarter, both of which exceeded the regulatory thresholds required to be classified as a well-capitalized institution, which are 5.0% and 10.0%, respectively. The Company's tangible common equity capital ratio was 6.63% at September 30, 2010.
Asset Quality and the Provision for Credit Losses
The Company's level of nonperforming assets declined in the third quarter through a combination of collection activities, charge-offs and fewer loans and leases moving into nonperforming status. Nonperforming assets were $8.5 million or 0.59% of total assets at September 30, 2010, compared with $10.3 million or 0.71% of total assets at June 30, 2010, and $9.0 million or 0.64% of total assets at December 31, 2009. Nonperforming assets at the end of the third quarter included nonperforming loans and leases totaling $7.8 million and foreclosed and repossessed collateral totaling $694,000. Conventional residential mortgages comprised $3.1 million (37 loans) or 40.0% of nonperforming loans and leases at September 30, 2010. Commercial loans and mortgages on nonperforming status totaled $3.1 million (29 loans) or 39.9% of nonperforming loans and leases at the end of the third quarter. Leases on nonperforming status totaled $802,000 (23 leases) or 10.3% of nonperforming loans and leases at the end of the third quarter.
Loans and leases past due 30 days or more (including nonperforming) totaled $17.6 million or 1.96% of total loans and leases at September 30, 2010, compared with $16.8 million or 1.84% of total loans and leases at June 30, 2010, and $18.7 million or 2.06% of total loans and leases at December 31, 2009.
The provision for credit losses was $1.1 million and $3.3 million in the quarter and nine months ended September 30, 2010, respectively, compared with $1.1 million and $4.7 million in the year-ago periods, respectively.
Net charge-offs were $922,000 and $2.2 million in the three months and nine months ended September 30, 2010, respectively, compared with $978,000 and $3.8 million in the year-ago periods, respectively. Annualized net charge-offs equaled 0.41% and 0.33%, respectively, of average loans and leases during the three months and nine months ended September 30, 2010, compared with 0.42% and 0.55%, respectively, in the year-ago periods. The provision for credit losses as a percentage of net charge-offs was 119% and 147%, respectively, in the quarter and nine months ended September 30, 2010, compared with 115% and 122%, respectively, in the year-ago periods.
The allowance for credit losses was $10.5 million at September 30, 2010, compared with $10.3 million at June 30, 2010 and $9.4 million at December 31, 2009. The ratio of the allowance for credit losses to total loans and leases was 1.16% at September 30, 2010, compared with 1.12% at June 30, 2010 and 1.03% at December 31, 2009. The ratio of the allowance for credit losses to nonperforming loans and leases was 134.3% at September 30, 2010, compared with 106.3% at June 30, 2010 and 109.7% at December 31, 2009.
Net Interest Income
Net interest income totaled $11.2 million in the three months ended September 30, 2010, which was approximately equal to the third quarter of 2009 and the second quarter of 2010 as the Company's average earning assets and the tax-equivalent net interest margin remained relatively stable in each of the three quarterly periods. Average interest earning assets were approximately $1.3 billion in the third quarter, and the tax-equivalent net interest margin was 3.57%. The net interest margin was 3.56% in the second quarter of 2010 and 3.62% in the third quarter of 2009.
The Company's yield on earning-assets was 4.78% in the third quarter, compared with 5.12% in the year-ago quarter and 4.83% in the second quarter of 2010. The Company's earning assets yield has gradually declined over the past year as the result of reinvestment of cash flows at lower rates, particularly in the securities portfolio, which comprised a larger share of total earning assets in 2010.
The cost of funds was 1.40% in the third quarter, compared to 1.72% in the year-ago quarter and 1.46% in the second quarter of 2010. The cost of funds declined over the past year due to lower interest-bearing deposit rates and wholesale funding costs and a favorable change in the Company's deposit mix as the result of growth in lower cost transaction accounts. Average transaction account balances increased $83.8 million or 12.3% in the third quarter compared with the third quarter of 2009. Total average transaction accounts were $766.9 million or 68.1% of total average deposits in the third quarter compared with $683.1 million or 62.8% in the year-ago quarter.
Net interest income for the nine months ended September 30, 2010 totaled $33.5 million, an increase of $1.6 million or 4.9% compared with $31.9 million in the year-ago period. Average earning assets increased $23.5 million in the first nine months of 2010 compared with the year-ago period, while the tax-equivalent net interest margin increased 7 basis points to 3.58% in the first nine months of 2010. A decrease of 32 basis points in the Company's tax-equivalent earning-assets yield in the first nine months of 2010 compared with the same period in 2009 was offset by a decrease of 46 basis points in the cost of funds.
Non-Interest Income and Non-Interest Expenses
Non-interest income was $5.1 million in the third quarter of 2010, compared with $4.8 million in the third quarter of 2009 and $4.9 million in the second quarter of 2010. Non-interest income, excluding gains on security sales, comprised 30.2% of total revenue in the third quarter of 2010 compared with 29.8% in the year-ago quarter and 30.3% in the second quarter of 2010.
Non-interest income totaled $14.6 million in the first nine months of 2010 compared with $14.9 million in the year-ago period. The Company recognized $308,000 in pre-tax securities gains in the third quarter of 2010, down from $1.0 million in 2009. Adjusted for the effect of these gains, non-interest income increased $378,000 primarily due to increases in investment management income, electronic customer transaction fees and gains on sales of loans. Excluding the effect of securities gains, non-interest income comprised 29.9% of total revenue in the first nine months of 2010 compared with 30.3% in the year-ago period.
Non-interest expenses were $11.2 million in the quarter ended September 30, 2010, compared with $10.9 million in the third quarter of 2009 and $11.0 million the second quarter of 2010.
Non-interest expenses were $33.1 million in the nine months ended September 30, 2010 compared with $31.9 million in the first nine months of 2009. Salaries and benefits expense increased $1.8 million or 12.1% compared with the first nine months of 2009. Approximately $975,000 or 55% of this increase represents incremental recurring expense from a combination of new customer service and business development positions, normal salary increases and lower incentive compensation expense in 2009. As required under generally accepted accounting principles, the deferral of salaries and benefits expense in connection with successfully originated loans comprised approximately $386,000 or 22% of the increase in salaries and benefits in 2010 compared with the same period in 2009, due to the substantially higher residential mortgage origination volume in 2009.
FDIC insurance expense decreased $625,000 or 34.3% compared with the first nine-months of 2009 due to a special assessment required of all FDIC-insured banks in 2009. The assessment for Alliance was $676,000 in the second quarter of 2009.
The Company's efficiency ratio was 70.1% in the third quarter of 2010 compared with 68.2% in the year-ago quarter and 68.3% in the second quarter of 2010. The Company's efficiency ratio was 69.4% in the nine months ended September 30, 2010 compared with 69.6% in the year-ago period.
The Company's effective tax rate was 22.6% and 23.9% for the three months and nine months ended September 30, 2010, respectively, compared with 25.4% and 22.4% in the year-ago periods, respectively.
About Alliance Financial Corporation
Alliance Financial Corporation is an independent financial holding company with Alliance Bank, N.A. as its principal subsidiary that provides retail, commercial and municipal banking, and trust and investment services through 29 offices in Cortland, Madison, Oneida, Onondaga and Oswego counties. Alliance also operates an investment management administration center in Buffalo, N.Y., an equipment lease financing company, Alliance Leasing, Inc., and a multi-line insurance agency, Ladd's Agency, Inc.
Forward-Looking Statements
This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of Alliance Financial Corporation. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: an increase in competitive pressure in the banking industry; changes in the interest rate environment which may affect the net interest margin; changes in the regulatory environment; general economic conditions, either nationally or regionally, resulting, among other things, in a deterioration in credit quality; changes in business conditions and inflation; changes in the securities markets; changes in technology used in the banking business; our ability to maintain and increase market share and control expenses; increases in FDIC insurance premiums may cause earnings to decrease; and other risks set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009 and in subsequent filings with the Securities and Exchange Commission.
Contact: |
Alliance Financial Corporation |
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J. Daniel Mohr, Executive Vice President and CFO |
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(315) 475-4478 |
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Alliance Financial Corporation Consolidated Statements of Income (Unaudited) |
|||||||||
Three months ended September 30, |
Nine months ended September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
(Dollars in thousands, except share and per share data) |
|||||||||
Interest income: |
|||||||||
Loans, including fees |
$11,549 |
$12,417 |
$35,002 |
$37,605 |
|||||
Federal funds sold and interest bearing deposits |
1 |
1 |
4 |
15 |
|||||
Securities |
3,552 |
3,711 |
10,930 |
10,273 |
|||||
Total interest income |
15,102 |
16,129 |
45,936 |
47,893 |
|||||
Interest expense: |
|||||||||
Deposits: |
|||||||||
Savings accounts |
95 |
105 |
298 |
339 |
|||||
Money market accounts |
645 |
766 |
2,147 |
2,573 |
|||||
Time accounts |
1,739 |
2,347 |
5,633 |
7,523 |
|||||
NOW accounts |
127 |
120 |
399 |
404 |
|||||
Total |
2,606 |
3,338 |
8,477 |
10,839 |
|||||
Borrowings: |
|||||||||
Repurchase agreements |
206 |
233 |
607 |
691 |
|||||
FHLB advances |
959 |
1,149 |
2,897 |
3,819 |
|||||
Junior subordinated obligations |
171 |
179 |
484 |
647 |
|||||
Total interest expense |
3,942 |
4,899 |
12,465 |
15,996 |
|||||
Net interest income |
11,160 |
11,230 |
33,471 |
31,897 |
|||||
Provision for credit losses |
1,095 |
1,125 |
3,285 |
4,675 |
|||||
Net interest income after provision for credit losses |
10,065 |
10,105 |
30,186 |
27,222 |
|||||
Non-interest income: |
|||||||||
Investment management income |
1,804 |
1,743 |
5,439 |
5,289 |
|||||
Service charges on deposit accounts |
1,178 |
1,297 |
3,374 |
3,758 |
|||||
Card-related fees |
649 |
566 |
1,892 |
1,654 |
|||||
Insurance agency income |
328 |
338 |
1,093 |
1,027 |
|||||
Income from bank-owned life insurance |
260 |
255 |
795 |
753 |
|||||
Gain on the sale of loans |
323 |
230 |
738 |
505 |
|||||
Gain on sale of securities available-for-sale |
308 |
— |
308 |
1,015 |
|||||
Other non-interest income |
289 |
333 |
920 |
887 |
|||||
Total non-interest income |
5,139 |
4,762 |
14,559 |
14,888 |
|||||
Non-interest expense: |
|||||||||
Salaries and employee benefits |
5,576 |
5,307 |
16,515 |
14,728 |
|||||
Occupancy and equipment expense |
1,771 |
1,728 |
5,451 |
5,279 |
|||||
Communication expense |
158 |
207 |
491 |
594 |
|||||
Office supplies and postage expense |
305 |
359 |
874 |
971 |
|||||
Marketing expense |
207 |
228 |
892 |
727 |
|||||
Amortization of intangible asset |
289 |
388 |
869 |
1,163 |
|||||
Professional fees |
762 |
734 |
2,330 |
2,165 |
|||||
FDIC insurance premium |
389 |
434 |
1,195 |
1,820 |
|||||
Other operating expense |
1,753 |
1,515 |
4,517 |
4,419 |
|||||
Total non-interest expense |
11,210 |
10,900 |
33,134 |
31,866 |
|||||
Income before income tax expense |
3,994 |
3,967 |
11,611 |
10,244 |
|||||
Income tax expense |
904 |
1,009 |
2,780 |
2,293 |
|||||
Net income |
$3,090 |
$2,958 |
$8,831 |
$7,951 |
|||||
Dividend and accretion of discount on preferred stock |
— |
— |
— |
(1,084) |
|||||
Net income available to common shareholders |
$3,090 |
$2,958 |
$8,831 |
$6,867 |
|||||
Share and Per Share Data |
|||||||||
Basic average common shares outstanding |
4,624,819 |
4,521,331 |
4,610,546 |
4,503,298 |
|||||
Diluted average common shares outstanding |
4,646,889 |
4,563,168 |
4,635,454 |
4,524,057 |
|||||
Basic earnings per common share |
$0.66 |
$0.64 |
$1.90 |
$1.50 |
|||||
Diluted earnings per common share |
$0.66 |
$0.64 |
$1.89 |
$1.49 |
|||||
Cash dividends declared |
$0.30 |
$0.28 |
$0.86 |
$0.80 |
|||||
Alliance Financial Corporation Consolidated Balance Sheets (Unaudited) |
|||||
September 30, 2010 |
December 31, 2009 |
||||
Assets |
(Dollars in thousands, except share and per share data) |
||||
Cash and due from banks |
$ 26,521 |
$ 26,696 |
|||
Federal Funds sold |
11,400 |
— |
|||
Securities available-for-sale |
395,756 |
362,158 |
|||
Federal Home Loan Bank of NY ("FHLB") Stock and Federal Reserve Bank ("FRB") Stock |
8,787 |
10,074 |
|||
Loans and leases held for sale |
1,351 |
1,023 |
|||
Total loans and leases, net of unearned income |
901,891 |
914,162 |
|||
Less allowance for credit losses |
10,466 |
9,414 |
|||
Net loans and leases |
891,425 |
904,748 |
|||
Premises and equipment, net |
19,138 |
20,086 |
|||
Accrued interest receivable |
4,788 |
4,167 |
|||
Bank-owned life insurance |
28,149 |
27,354 |
|||
Goodwill |
32,073 |
32,073 |
|||
Intangible assets, net |
9,206 |
10,075 |
|||
Other assets |
18,245 |
18,790 |
|||
Total assets |
$1,446,839 |
$1,417,244 |
|||
Liabilities and shareholders' equity |
|||||
Liabilities: |
|||||
Deposits: |
|||||
Non-interest bearing |
175,272 |
159,149 |
|||
Interest bearing |
949,851 |
916,522 |
|||
Total deposits |
1,125,123 |
1,075,671 |
|||
Borrowings |
142,934 |
172,707 |
|||
Accrued interest payable |
1,066 |
1,745 |
|||
Other liabilities |
17,439 |
17,412 |
|||
Junior subordinated obligations issued to unconsolidated subsidiary trusts |
25,774 |
25,774 |
|||
Total liabilities |
1,312,336 |
1,293,309 |
|||
Shareholders' equity: |
|||||
Common stock |
5,021 |
4,937 |
|||
Surplus |
44,673 |
43,013 |
|||
Undivided profits |
91,006 |
86,194 |
|||
Accumulated other comprehensive income |
5,354 |
946 |
|||
Directors' stock-based deferred compensation plan |
(2,895) |
(2,499) |
|||
Treasury stock |
(8,656) |
(8,656) |
|||
Total shareholders' equity |
134,503 |
123,935 |
|||
Total liabilities and shareholders' equity |
$1,446,839 |
$1,417,244 |
|||
Common shares outstanding |
4,698,737 |
4,614,921 |
|||
Book value per common share |
$ 28.63 |
$ 26.86 |
|||
Tangible book value per common share |
$ 19.84 |
$ 17.72 |
|||
Alliance Financial Corporation Consolidated Average Balances (Unaudited) |
|||||||||
Three months ended September 30, |
Nine months ended September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
||||||
(Dollars in thousands) |
|||||||||
Earning assets: |
|||||||||
Federal funds sold and interest bearing deposits |
$2,587 |
$ — |
$5,360 |
$ 17,176 |
|||||
Securities(1) |
404,654 |
374,718 |
396,546 |
339,467 |
|||||
Loans and leases receivable: |
|||||||||
Residential real estate loans(2) |
353,289 |
350,798 |
354,823 |
340,632 |
|||||
Commercial loans |
218,217 |
210,629 |
213,854 |
213,077 |
|||||
Leases, net of unearned income(2) |
50,127 |
79,529 |
57,100 |
89,313 |
|||||
Indirect loans |
183,242 |
195,244 |
182,741 |
187,415 |
|||||
Other consumer loans |
91,210 |
92,109 |
91,047 |
90,939 |
|||||
Loans and leases receivable, net of unearned income |
896,085 |
928,309 |
899,565 |
921,376 |
|||||
Total earning assets |
1,303,326 |
1,303,027 |
1,301,471 |
1,278,019 |
|||||
Non-earning assets |
137,574 |
131,669 |
136,180 |
132,904 |
|||||
Total assets |
$1,440,900 |
$1,434,696 |
$1,437,651 |
$1,410,923 |
|||||
Interest bearing liabilities: |
|||||||||
Interest bearing checking accounts |
$145,045 |
$ 116,665 |
$137,536 |
$ 116,097 |
|||||
Savings accounts |
102,523 |
95,048 |
99,248 |
91,671 |
|||||
Money market accounts |
347,016 |
311,788 |
354,059 |
295,551 |
|||||
Time deposits |
359,165 |
404,397 |
367,647 |
381,566 |
|||||
Borrowings |
143,729 |
182,905 |
146,927 |
194,950 |
|||||
Junior subordinated obligations issued to unconsolidated trusts |
25,774 |
25,774 |
25,774 |
25,774 |
|||||
Total interest bearing liabilities |
1,123,252 |
1,136,577 |
1,131,191 |
1,105,609 |
|||||
Non-interest bearing deposits |
172,341 |
159,617 |
164,397 |
154,561 |
|||||
Other non-interest bearing liabilities |
16,192 |
16,214 |
16,492 |
16,833 |
|||||
Total liabilities |
1,311,785 |
1,312,408 |
1,312,080 |
1,277,003 |
|||||
Shareholders' equity |
129,115 |
122,288 |
125,571 |
133,920 |
|||||
Total liabilities and shareholders' equity |
$1,440,900 |
$1,434,696 |
$1,437,651 |
$1,410,923 |
|||||
(1) The amounts shown are amortized cost and include FHLB and FRB stock (2) Includes loans and leases held for sale |
|||||||||
Alliance Financial Corporation Investments, Loans and Leases, and Deposits (Unaudited) The following table sets forth the amortized cost and fair value of the Company's available-for-sale securities portfolio: |
||||||||||||||
September 30, 2010 |
June 30, 2010 |
December 31, 2009 |
||||||||||||
Amortized |
Fair |
Amortized |
Fair |
Amortized |
Fair |
|||||||||
Securities available-for-sale |
(Dollars in thousands) |
|||||||||||||
Debt securities: |
||||||||||||||
U.S. Treasury obligations |
$ 3,350 |
$ 3,350 |
$ 100 |
$ 100 |
$ 100 |
$ 101 |
||||||||
Obligations of U.S. government- sponsored corporations |
4,765 |
5,008 |
5,139 |
5,400 |
5,864 |
6,129 |
||||||||
Obligations of states and political subdivisions |
73,612 |
77,106 |
69,238 |
71,586 |
75,104 |
77,147 |
||||||||
Mortgage-backed securities(1) |
299,458 |
307,216 |
317,569 |
326,405 |
273,499 |
275,680 |
||||||||
Total debt securities |
381,185 |
392,680 |
392,046 |
403,491 |
354,567 |
359,057 |
||||||||
Stock investments: |
||||||||||||||
Equity securities |
1,932 |
2,046 |
1,958 |
2,255 |
1,958 |
2,104 |
||||||||
Mutual funds |
1,000 |
1,030 |
1,000 |
1,023 |
1,000 |
997 |
||||||||
Total stock investments |
2,932 |
3,076 |
2,958 |
3,278 |
2,958 |
3,101 |
||||||||
Total available-for-sale |
$384,117 |
$395,756 |
$395,004 |
$406,769 |
$357,525 |
$362,158 |
||||||||
(1) Comprised of pass-through debt securities collateralized by conventional residential mortgages and guaranteed by either Fannie Mae, Freddie Mac or Ginnie Mae, which are, in turn, backed by the full faith and credit of the federal government. |
||||||||||||||
The following table sets forth the composition of the Company's loan and lease portfolio at the dates indicated: |
||||||||||||||
September 30, 2010 |
June 30, 2010 |
December 31, 2009 |
||||||||||||
Amount |
Percent |
Amount |
Percent |
Amount |
Percent |
|||||||||
Loan portfolio composition |
(Dollars in thousands) |
|||||||||||||
Residential real estate loans |
$348,443 |
38.8% |
$354,544 |
38.9% |
$356,906 |
39.2% |
||||||||
Commercial loans |
116,887 |
13.0% |
122,714 |
13.5% |
111,243 |
12.2% |
||||||||
Commercial real estate |
109,876 |
12.2% |
105,157 |
11.5% |
96,753 |
10.7% |
||||||||
Leases, net of unearned income |
47,451 |
5.3% |
54,402 |
6.0% |
68,224 |
7.5% |
||||||||
Indirect loans |
183,594 |
20.4% |
183,410 |
20.1% |
184,947 |
20.3% |
||||||||
Other consumer loans |
91,885 |
10.3% |
91,073 |
10.0% |
92,022 |
10.1% |
||||||||
Total loans and leases |
898,136 |
100.0% |
911,300 |
100.0% |
910,095 |
100.0% |
||||||||
Net deferred loan costs |
3,755 |
3,851 |
4,067 |
|||||||||||
Allowance for credit losses |
(10,466) |
(10,293) |
(9,414) |
|||||||||||
Net loans and leases |
$891,425 |
$904,858 |
$904,748 |
|||||||||||
The following table sets forth the composition of the Company's deposits at the dates indicated: |
||||||||||||||
September 30, 2010 |
June 30, 2010 |
December 31, 2009 |
||||||||||||
Deposit composition |
Amount |
Percent |
Amount |
Percent |
Amount |
Percent |
||||||||
Non-interest bearing checking |
$175,272 |
15.6% |
$162,147 |
14.5% |
$ 159,149 |
14.8% |
||||||||
Interest bearing checking |
143,976 |
12.8% |
141,339 |
12.6% |
130,368 |
12.1% |
||||||||
Total checking |
319,248 |
28.4% |
303,486 |
27.1% |
289,517 |
26.9% |
||||||||
Savings |
101,356 |
9.0% |
103,528 |
9.3% |
94,524 |
8.8% |
||||||||
Money market |
363,847 |
32.3% |
345,385 |
30.9% |
317,051 |
29.5% |
||||||||
Time deposits |
340,672 |
30.3% |
365,771 |
32.7% |
374,579 |
34.8% |
||||||||
Total deposits |
$1,125,123 |
100.0% |
$1,118,170 |
100.0% |
$1,075,671 |
100.0% |
||||||||
Alliance Financial Corporation Asset Quality (Unaudited) The following table represents a summary of delinquent loans and leases grouped by the number of days delinquent at the dates indicated: |
||||||||||
Delinquent loans and leases |
September 30, 2010 |
June 30, 2010 |
December 31, 2009 |
|||||||
$ |
%(1) |
$ |
%(1) |
$ |
%(1) |
|||||
(Dollars in thousands) |
||||||||||
30 days past due |
$ 6,922 |
0.78% |
$ 5,864 |
0.64% |
$ 7,883 |
0.87% |
||||
60 days past due |
2,894 |
0.32% |
1,263 |
0.14% |
2,271 |
0.25% |
||||
90 days past due and still accruing |
43 |
—% |
— |
—% |
— |
—% |
||||
Non-accrual |
7,749 |
0.86% |
9,679 |
1.06% |
8,582 |
0.94% |
||||
Total |
$17,608 |
1.96% |
$16,806 |
1.84% |
$ 18,736 |
2.06% |
||||
(1) As a percentage of total loans and leases, excluding deferred costs |
||||||||||
The following table represents information concerning the aggregate amount of non-performing assets: |
|||||||
Non-performing assets |
September 30, 2010 |
June 30, 2010 |
December 31, 2009 |
||||
(Dollars in thousands) |
|||||||
Non-accruing loans and leases |
|||||||
Residential real estate loans |
$3,116 |
$ 3,444 |
$2,843 |
||||
Commercial loans |
1,225 |
1,769 |
2,167 |
||||
Commercial real estate |
1,888 |
2,218 |
1,846 |
||||
Leases |
802 |
1,496 |
1,418 |
||||
Indirect loans |
157 |
193 |
109 |
||||
Other consumer loans |
561 |
559 |
199 |
||||
Total non-accruing loans and leases |
7,749 |
9,679 |
8,582 |
||||
Accruing loans and leases delinquent 90 days or more |
43 |
— |
— |
||||
Total non-performing loans and leases |
7,792 |
9,679 |
8,582 |
||||
Other real estate and repossessed assets |
694 |
603 |
445 |
||||
Total non-performing assets |
$8,486 |
$10,282 |
$9,027 |
||||
The following table summarizes changes in the allowance for credit losses arising from loans and leases charged off, recoveries on loans and leases previously charged off and additions to the allowance which have been charged to expense: |
|||||||||
Allowance for credit losses |
Three months ended September 30, |
Nine months ended September 30, |
|||||||
2010 |
2009 |
2010 |
2009 |
||||||
(Dollars in thousands) |
|||||||||
Allowance for credit losses, beginning of period |
$10,293 |
$ 9,859 |
$ 9,414 |
$ 9,161 |
|||||
Loans and leases charged-off |
(1,119) |
(1,292) |
(2,834) |
(4,991) |
|||||
Recoveries of loans and leases previously charged-off |
197 |
314 |
601 |
1,161 |
|||||
Net loans and leases charged-off |
(922) |
(978) |
(2,233) |
(3,830) |
|||||
Provision for credit losses |
1,095 |
1,125 |
3,285 |
4,675 |
|||||
Allowance for credit losses, end of period |
$10,466 |
$10,006 |
$10,466 |
$10,006 |
|||||
Alliance Financial Corporation Consolidated Financial Information (Unaudited) |
||||||||||
Key Ratios |
At or for the three months ended September 30, |
At or for the nine months ended September 30, |
||||||||
2010 |
2009 |
2010 |
2009 |
|||||||
Return on average assets |
0.86% |
0.82% |
0.82% |
0.65% |
||||||
Return on average equity |
9.57% |
9.68% |
9.38% |
6.84% |
||||||
Return on average common equity |
9.57% |
9.68% |
9.38% |
7.55% |
||||||
Return on average tangible common equity |
14.09% |
14.85% |
14.04% |
11.69% |
||||||
Yield on earning assets |
4.78% |
5.12% |
4.86% |
5.18% |
||||||
Cost of funds |
1.40% |
1.72% |
1.47% |
1.93% |
||||||
Net interest margin (tax equivalent) (1) |
3.57% |
3.62% |
3.58% |
3.51% |
||||||
Non-interest income to total income (2) |
30.21% |
29.78% |
29.86% |
30.31% |
||||||
Efficiency ratio (3) |
70.10% |
68.17% |
69.43% |
69.62% |
||||||
Common dividend payout ratio (4) |
45.45% |
43.75% |
45.50% |
53.69% |
||||||
Net loans and leases charged-off to average loans and leases, annualized |
0.41% |
0.42% |
0.33% |
0.55% |
||||||
Provision for credit losses to average loans and leases, annualized |
0.49% |
0.49% |
0.49% |
0.68% |
||||||
Allowance for credit losses to total loans and leases |
1.17% |
1.08% |
n/a |
n/a |
||||||
Allowance for credit losses to non-performing loans and leases |
134.3% |
98.0% |
n/a |
n/a |
||||||
Non-performing loans and leases to total loans and leases |
0.87% |
1.10% |
n/a |
n/a |
||||||
Non-performing assets to total assets |
0.59% |
0.72% |
n/a |
n/a |
||||||
(1) Tax equivalent net interest income divided by average earning assets (2) Non-interest income (excluding net realized gains and losses on securities and other non-recurring gains and losses) divided by the sum of net interest income and non-interest income (as adjusted) (3) Non-interest expense divided by the sum of net interest income and non-interest income (as adjusted) (4) Cash dividends declared per share divided by diluted earnings per share |
||||||||||
Alliance Financial Corporation Selected Quarterly Financial Data (Unaudited) |
|||||||||||
2010 |
2009 |
||||||||||
Third |
Second |
First |
Fourth |
Third |
|||||||
(Dollars in thousands, except share and per share data) |
|||||||||||
Interest income |
$ 15,102 |
$ 15,378 |
$ 15,456 |
$ 16,069 |
$ 16,129 |
||||||
Interest expense |
3,942 |
4,188 |
4,335 |
4,585 |
4,899 |
||||||
Net interest income |
11,160 |
11,190 |
11,121 |
11,484 |
11,230 |
||||||
Provision for credit losses |
1,095 |
1,095 |
1,095 |
1,425 |
1,125 |
||||||
Net interest income after provision for credit losses |
10,065 |
10,095 |
10,026 |
10,059 |
10,105 |
||||||
Other non-interest income |
5,139 |
4,859 |
4,561 |
5,923 |
4,762 |
||||||
Other non-interest expense |
11,210 |
10,963 |
10,961 |
11,342 |
10,900 |
||||||
Income before income tax expense |
3,994 |
3,991 |
3,626 |
4,640 |
3,967 |
||||||
Income tax expense |
904 |
999 |
877 |
1,143 |
1,009 |
||||||
Net income |
$ 3,090 |
$ 2,992 |
$ 2,749 |
$ 3,497 |
$ 2,958 |
||||||
Stock and related per share data |
|||||||||||
Basic earnings per common share |
$ 0.66 |
$ 0.64 |
$ 0.59 |
$ 0.76 |
$ 0.64 |
||||||
Diluted earnings per common share |
$ 0.66 |
$ 0.64 |
$ 0.59 |
$ 0.75 |
$ 0.64 |
||||||
Basic weighted average common shares outstanding |
4,624,819 |
4,622,660 |
4,583,617 |
4,546,819 |
4,521,331 |
||||||
Diluted weighted average common shares outstanding |
4,646,889 |
4,643,679 |
4,614,060 |
4,585,800 |
4,563,168 |
||||||
Cash dividends paid per common share |
$ 0.30 |
$ 0.28 |
$ 0.28 |
$ 0.28 |
$ 0.28 |
||||||
Common dividend payout ratio (1) |
45.45% |
43.75% |
47.46% |
37.33% |
43.75% |
||||||
Common book value |
$ 28.63 |
$ 28.46 |
$ 27.38 |
$ 26.86 |
$ 27.04 |
||||||
Tangible common book value (2) |
$ 19.84 |
$ 19.55 |
$ 18.39 |
$ 17.72 |
$ 17.84 |
||||||
Capital Ratios |
|||||||||||
Holding Company |
|||||||||||
Tier 1 leverage ratio |
8.07% |
7.87% |
7.86% |
7.55% |
7.42% |
||||||
Tier 1 risk based capital |
13.06% |
12.69% |
12.56% |
12.06% |
11.53% |
||||||
Tier 1 risk based common capital (3) |
10.17% |
9.84% |
9.68% |
9.22% |
8.74% |
||||||
Total risk based capital |
14.27% |
13.88% |
13.69% |
13.13% |
12.64% |
||||||
Tangible common equity to tangible assets(4) |
6.63% |
6.44% |
6.10% |
5.95% |
5.82% |
||||||
Bank |
|||||||||||
Tier 1 leverage ratio |
7.67% |
7.48% |
7.38% |
7.14% |
6.95% |
||||||
Tier 1 risk based capital |
12.47% |
12.12% |
11.85% |
11.47% |
10.84% |
||||||
Total risk based capital |
13.70% |
13.32% |
12.99% |
12.55% |
11.97% |
||||||
Selected ratios |
|||||||||||
Return on average assets |
0.86% |
0.83% |
0.77% |
0.97% |
0.82% |
||||||
Return on average equity |
9.57% |
9.62% |
8.93% |
11.13% |
9.68% |
||||||
Return on average tangible common equity |
14.09% |
14.48% |
13.55% |
16.76% |
14.85% |
||||||
Yield on earning assets |
4.78% |
4.83% |
4.96% |
5.08% |
5.12% |
||||||
Cost of funds |
1.40% |
1.46% |
1.54% |
1.61% |
1.72% |
||||||
Net interest margin (tax equivalent) (5) |
3.57% |
3.56% |
3.61% |
3.68% |
3.62% |
||||||
Non-interest income to total income (6) |
30.21% |
30.28% |
29.08% |
29.35% |
29.78% |
||||||
Efficiency ratio (7) |
70.10% |
68.31% |
69.90% |
69.77% |
68.17% |
||||||
Asset quality ratios |
|||||||||||
Net loans and leases charged off to average loans and leases, annualized |
0.41% |
0.23% |
0.35% |
0.88% |
0.42% |
||||||
Provision for credit losses to average loans and leases, annualized |
0.49% |
0.49% |
0.49% |
0.62% |
0.49% |
||||||
Allowance for credit losses to total loans and leases |
1.17% |
1.12% |
1.07% |
1.03% |
1.08% |
||||||
Allowance for credit losses to non-performing loans and leases |
134.3% |
106.3% |
101.3% |
109.7% |
98.0% |
||||||
Non-performing loans and leases to total loans and leases |
0.87% |
1.06% |
1.06% |
0.94% |
1.10% |
||||||
Non-performing assets to total assets |
0.59% |
0.71% |
0.69% |
0.64% |
0.72% |
||||||
(1) Cash dividends declared per common share divided by diluted earnings per common share (2) Common shareholders' equity less goodwill and intangible assets divided by common shares outstanding (3) Tier 1 capital excluding junior subordinated obligations issued to unconsolidated trusts divided by total risk-adjusted assets (4) The Company uses certain non-GAAP financial measures, such as the Tangible Common Equity to Tangible Assets ratio (TCE), to provide information for investors to effectively analyze financial trends of ongoing business activities, and to enhance comparability with peers across the financial sector. The Company believes TCE is useful because it is a measure utilized by regulators, market analysts and investors in evaluating a company's financial condition and capital strength. TCE, as defined by the Company, represents common equity less goodwill and intangible assets. A reconciliation from the Company's GAAP Total Equity to Total Assets ratio to the Non-GAAP Tangible Common Equity to Tangible Assets ratio is presented below: |
|||||||||||
(in thousands) |
September 30, 2010 |
June 30, 2010 |
March 31, 2010 |
December 31, 2009 |
September 30, 2009 |
||||||
Total assets |
$1,446,839 |
$1,456,731 |
$1,445,326 |
$ 1,417,244 |
$ 1,456,276 |
||||||
Less: Goodwill and intangible assets, net |
41,279 |
41,568 |
41,858 |
42,148 |
42,438 |
||||||
Tangible assets (non-GAAP) |
$1,405,560 |
$1,415,163 |
$1,403,468 |
$ 1,375,096 |
$ 1,413,838 |
||||||
Total Common Equity |
134,503 |
132,712 |
127,487 |
123,935 |
124,770 |
||||||
Less: Goodwill and intangible assets, net |
41,279 |
41,568 |
41,858 |
42,148 |
42,438 |
||||||
Tangible Common Equity (non-GAAP) |
93,224 |
91,144 |
85,629 |
81,787 |
82,332 |
||||||
Total Equity/Total Assets |
9.30% |
9.11% |
8.82% |
8.74% |
8.57% |
||||||
Tangible Common Equity/Tangible Assets (non-GAAP) |
6.63% |
6.44% |
6.10% |
5.95% |
5.82% |
||||||
(5) Tax equivalent net interest income divided by average earning assets (6) Non-interest income (net of realized gains and losses on securities and other non-recurring items) divided by the sum of net interest income and non-interest income (as adjusted) (7) Non-interest expense divided by the sum of net interest income and non-interest income (as adjusted) |
|||||||||||
SOURCE Alliance Financial Corporation
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