Anchor BanCorp Wisconsin Inc. (OTC Market:ABCW.PK) today announced a net loss available to common equity of $7.4 million, or $0.35 per common share, for the three months ended March 31, 2012. This compares to a net loss available to common equity of $21.7 million, or $1.02 per common share, and $15.3 million, or $0.72 per common share, for the three months ended March 31, 2011 and December 31, 2011, respectively. For the fiscal year ended March 31, 2012, net loss available to common equity was $50.4 million, compared to $54.5 million in the prior year.
Financial Highlights
•AnchorBank fsb (the "Bank) remains adequately capitalized for the seventh consecutive quarter.
•Net loss available to common equity decreased $7.9 million or 51.7 percent in the fourth quarter of fiscal 2012 compared to the preceding quarter ending December 31, 2011 and $14.3 million or 66.0 percent compared to the year ago quarter ending March 31, 2011.
•Non-performing loans decreased to $224.9 million at March 31, 2012 from $261.2 million in the preceding quarter. Net charge-offs, however increased by $8.5 million in the current quarter to $24.3 million, from $15.8 million in the preceding quarter ending December 31, 2011.
•Gross mortgage banking revenue totaled $7.8 million in the current quarter, an increase of $2.4 million, or 43.4 percent over $5.4 million in the preceding quarter.
•Total assets decreased by $272.1 million, or 8.9 percent to $2.8 billion at March 31, 2012, compared to $3.1 billion at December 31, 2011 as the Bank allowed high rate CD's to roll off or re-price at today's lower interest rates.
•Cost of funds declined to 1.72% in the quarter ending March 31, 2012 compared to 1.85% in the year ago quarter as the Bank aggressively managed deposit pricing.
•Service charges on deposits improved to $2.7 million in the current quarter compared to $2.5 million in the same quarter a year ago, contrasting a national trend of declining fee revenue in the banking industry as the Bank carefully managed fee based services.
Bank Capital Ratios
March 31, 2012
March 31, December 31, March 31, Increase (decrease) vs.
(Dollars in thousands) 2012 2011 2011 12/31/11 3/31/11
Tier 1 capital $125,894 $125,881 $145,807 $13 ($19,913)
Adjusted total assets 2,792,122 3,064,805 3,422,303 (272,683) (630,181)
Tier 1 leverage ratio 4.51% 4.11% 4.26% 0.40% 0.25%
Total risk-based capital $149,141 $150,518 $174,453 ($1,377) ($25,312)
Risk weighted assets 1,771,260 1,864,639 2,170,197 (93,379) (398,937)
Total risk-based capital ratio 8.42% 8.07% 8.04% 0.35% 0.38%
The Bank's Tier 1 leverage and total risk-based capital ratios of 4.51 percent and 8.42 percent at March 31, 2012, increased by 40 and 35 basis points, respectively compared to December 31, 2011. The ratios benefitted from a planned decrease in assets (adjusted total assets and risk weighted assets), and the muted impact on Tier 1 capital and risk-based capital of the lower net loss reported in the current quarter as compared to the past several quarters.
Under regulatory requirements, a bank must have a Tier 1 leverage ratio of 4.0 percent or greater and a total risk-based capital ratio of 8.0 percent or greater to be considered adequately capitalized. "We are encouraged by our seventh consecutive quarter of capital ratios above the threshold to be considered adequately capitalized," stated Chris Bauer, President and Chief Executive Officer of the Corporation and the Bank. "These are our highest reported capital ratios since June 2009," Bauer added.
The Corporation, as the holding company of the Bank, however continues to be burdened with significant senior debt and preferred stock obligations:
•The Corporation currently owes $116.3 million to various lenders led by U.S. Bank under its credit agreement that matures November 30, 2012. In addition, accrued but unpaid interest and fees totaling $41.0 million associated with this obligation are also due and payable at maturity.
•The Corporation issued $110 million in preferred stock in January 2009 to the United States Treasury pursuant to the Treasury's Capital Purchase Program ("CPP"). As permitted under the CPP program, the Corporation has deferred twelve quarterly preferred stock dividend payments to the Treasury totaling $18.8 million, including interest.
•While the Bank has substantial liquidity, it is currently precluded by its regulators from paying dividends to the Corporation for purposes of repayment of the foregoing obligations.
The Corporation continues to work with Sandler O'Neill & Partners, L.P. as its financial advisor to assist in capital raising efforts to address its capital needs.
Financial Results
Financial results for the fourth quarter ended March 31, 2012, include:
•Net interest margin fell to 2.35 percent for the three months ended March 31, 2012, from 2.63 percent for the same period in the previous year. The decrease was primarily due to a 300 basis point rate increase on the $116.3 million Credit Agreement to 15 percent per annum effective in May 2011, and sales of higher yielding investment securities in September 2011.
•Provision for credit losses of $4.6 million decreased $5.6 million, or 54.8 percent from $10.2 million in the same period a year ago largely due to a lower required general allowance for losses on non-impaired loans attributable to improved credit metrics which are used in part to establish this reserve.
•Non-interest income totaled $13.0 million, up $5.9 million or 82.7 percent, compared to the same period in the previous year. The increase was primarily due to higher gains on sale of mortgage loans reflecting better execution in the sale of these instruments into the secondary market. Gains on sale of REO also contributed to this favorable variance as total net gains of $1.9 million in the current quarter ended March 31, 2012 were $1.6 million higher than reported in the year ago quarter.
•Total non-interest expense decreased by $8.4 million or 22.9 percent, compared to the comparable period a year ago largely due to lower loss provisions on repossessed property reflecting stabilizing real estate values; and recovery of previously recorded mortgage servicing rights impairment as market interest rates drifted higher at the end of March 2012.
Credit Quality
March 31, 2012
(Dollars in thousands) March 31, December 31, March 31, Increase (decrease) vs.
2012 2011 2011 12/31/11 3/31/11
Quarterly Financial Results
Provision for credit losses $4,601 $8,380 $10,178 ($3,779) ($5,577)
Net charge-offs 24,336 15,848 17,428 8,488 6,908
Key Metrics (at period end)
Loans 30 to 89 days past due 30,562 46,655 76,723 (16,093) (46,161)
Non-performing loans (NPL) 224,924 261,152 282,645 (36,228) (57,721)
Other real estate owned 88,841 86,925 90,707 1,916 (1,866)
Non-performing assets 313,765 348,077 373,352 (34,312) (59,587)
Allowance for loan loss to NPL 49.45% 50.13% 53.11% -0.68% -3.66%
Certain key credit related metrics continue to trend favorably as both loans 30 to 89 days past due and non-performing loans as of March 31, 2012 were lower compared to the preceding quarter and the year ago quarter. The impact of these trends contributed significantly to the lower provision for credit losses in the current quarter. Despite the decrease in provision for credit losses, the allowance for loan loss remains strong at just shy of 50 percent of non-performing loans at March 31, 2012. The level of non-performing assets (non-performing loans plus other real estate owned) has also improved as the March 31, 2012 balance of $313.8 million is $34.3 million and $59.6 million lower than the preceding quarter and year ago quarter reported amounts, respectively. Net charge-offs however, spiked $8.5 million over the preceding quarter to $24.3 million reflecting the uneven nature of this activity as several larger exposures moved to charge-off status in the current quarter.
Bauer added, "Although we are pleased to see some favorable credit trends, much work remains to be done regarding troubled loans and the disposition of foreclosed properties. We continue to work aggressively to resolve the issues that remain in the credit portfolios. The positive trends emerging on the credit front are partially offset as we continue to be negatively impacted by ongoing costs associated with carrying an elevated level of foreclosed properties on the Bank's balance sheet." Other real estate owned totaled $88.8 million at March 31, 2012, up from $86.9 million at December 31, 2011, but a decrease of $1.9 million compared to $90.7 million at March 31, 2011.
Mortgage Banking
For the Quarter Ending: March 31, 2012
(In thousands) March 31, December 31, March 31, Increase (decrease) vs.
2012 2011 2011 12/31/11 3/31/11
Gross revenue
Loan servicing income (loss), net ($507) ($1,571) $516 $1,064 ($1,023)
Credit enhancement income 4 5 43 (1) (39)
Gain on sale of mortgages 6,406 6,018 1,600 388 4,806
OMSR (impairment) / recovery 1,895 985 (52) 910 1,947
Residential mortgage banking revenue $7,798 $5,437 $2,107 $2,361 $5,691
Key Metrics
Origination volume (closed loans) $294,200 $405,000 $105,000 ($110,800) $189,200
Serviced loan portfolio 3,126,000 3,173,000 3,366,000 (47,000) (240,000)
Residential mortgage banking revenue totaled $7.8 million for the quarter ending March 31, 2012 compared to $5.4 million in the preceding quarter and $2.1 million in the year ago quarter. Residential mortgage origination volume slipped to $294.2 million in the current quarter from the recent high water mark of $405.0 million set in the preceding quarter, yet is well above the $219.7 million average origination volume over the past two years. Gain on sale of mortgages was strong again this quarter at $6.4 million compared to $6.0 million in the preceding quarter and $1.6 million in the year ago quarter reflecting healthy margins on sale of this product into the secondary market and effective hedging strategies.
Commenting on residential mortgage activity, Bauer added, "Residential mortgages have been a focus over the past several months as customer demand, sparked by lower mortgage rates, resulted in significantly higher revenues. It has also afforded us an opportunity to increase product penetration rates for existing customers as well as to offer other products and services to customers new to the Bank."
Retirement of Certain Directors
Donald Kropidlowski, Greg Larson, and Donald Parker, who have served as directors since 1995, 1992, and 1999, respectively, have announced their retirement effective June 30, 2012.
Bauer said, "Messrs. Kropidlowski, Larson and Parker have been very dedicated and supportive of our efforts to address our financial issues." Bauer also indicated that with two Board members now being elected by the U.S. Treasury ("Treasury") as a result of shares issued to it in connection with the Troubled Asset Relief Program in 2009, the Board of Directors is expected to reduce the size of the Board following the Annual Meeting from eleven to eight members with six members elected by the holders of common stock and two members by the Treasury.
About Anchor BanCorp Wisconsin Inc.
Anchor BanCorp Wisconsin Inc.'s stock is traded in the over-the-counter market under the symbol ABCW.PK. AnchorBank fsb (the "Bank"), the wholly owned subsidiary, has 57 offices. All are located in Wisconsin.
Forward-Looking Statements
This news release contains certain forward-looking statements, as that term is defined in the U.S. federal securities laws. In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements. Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions or dispositions made by or to be made by us, projections involving anticipated revenues, earnings, liquidity, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update them in light of new information or future events, except to the extent required by federal securities laws. Please refer to our Annual Report for the fiscal year ending March 31, 2012 on Form 10-K, as filed with the Securities and Exchange Commission, for a more comprehensive discussion of forward-looking statements and the risks and uncertainties associated with our business.
ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(Unaudited)
March 31,
2012 2011
(In thousands, except share data)
Assets
Cash and cash equivalents $ 242,980 $ 107,015
Investment securities available for sale, at fair value 242,299 523,289
Investment securities held to maturity, at amortized cost 20 27
Loans
Held for sale 39,332 7,538
Held for investment 2,058,008 2,520,367
Other real estate owned, net 88,841 90,707
Real estate held for development and sale 457 717
Premises and equipment, net 25,453 29,127
Federal Home Loan Bank stock--at cost 35,792 54,829
Mortgage servicing rights, net 22,156 24,961
Accrued interest receivable 12,075 16,353
Other assets 22,039 19,895
Total assets $ 2,789,452 $ 3,394,825
Liabilities and Stockholders' Deficit
Deposits
Non-interest bearing $ 264,751 $ 240,671
Interest bearing 2,000,164 2,458,762
Total deposits 2,264,915 2,699,433
Other borrowed funds 476,103 659,005
Accrued interest and fees payable 43,320 28,319
Accrued taxes, insurance and employee related expenses 6,385 6,609
Other liabilities 28,279 14,630
Total liabilities 2,819,002 3,407,996
Preferred stock, $0.10 par value, 5,000,000 shares authorized, 110,000 shares issued and outstanding; dividends in arrears of $18,785 at March 31, 2012 and $12,507 at March 31, 2011 96,421 89,008
Common stock, $0.10 par value, 100,000,000 shares authorized, 25,363,339 shares issued, 21,247,725 shares outstanding 2,536 2,536
Additional paid-in capital 110,402 111,513
Retained deficit (147,513) (103,362)
Accumulated other comprehensive income (loss) 132 (19,952)
Treasury stock (4,115,614 shares), at cost (90,259) (90,534)
Deferred compensation obligation (1,269) (2,380)
Total stockholders' deficit (29,550) (13,171)
Total liabilities and stockholders' deficit $ 2,789,452 $ 3,394,825
ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Loss
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2012 2011 2012 2011
Interest income: (In thousands, except per share data)
Loans $ 26,559 $ 33,231 $ 116,929 $ 150,692
Investment securities and Federal Home Loan Bank stock 1,427 3,943 9,738 15,251
Interest-bearing deposits 177 66 584 520
Total interest income 28,163 37,240 127,251 166,463
Interest expense:
Deposits 4,870 8,607 24,963 48,626
Other borrowed funds 7,405 7,173 30,366 32,757
Total interest expense 12,275 15,780 55,329 81,383
Net interest income 15,888 21,460 71,922 85,080
Provision for credit losses 4,601 10,178 33,578 51,198
Net interest income after provision for credit losses 11,287 11,282 38,344 33,882
Non-interest income:
Net impairment losses on securities recognized in earnings (231) (78) (568) (440)
Loan servicing income (loss), net of amortization (507) 516 (832) 1,592
Credit enhancement income on mortgage loans sold 4 43 71 648
Service charges on deposits 2,672 2,544 11,339 12,317
Investment and insurance commissions 944 752 3,808 3,448
Net gain on sale of loans 6,406 1,600 17,591 17,764
Net gain on sale of investment securities 217 709 6,579 8,661
Net gain on sale of OREO 1,942 315 6,118 3,640
Net gain on sale of branches -- 2 -- 7,350
Other revenue from real estate partnership operations 64 (295) 222 92
Other 1,469 997 5,028 4,431
Total non-interest income 12,980 7,105 49,356 59,503
Non-interest expense:
Compensation and benefits 10,878 10,203 41,741 42,002
Occupancy 1,971 2,236 7,946 8,541
Furniture and equipment 1,358 1,536 5,989 6,559
Federal deposit insurance premiums 1,654 2,283 7,189 11,402
Data processing 1,603 1,559 6,259 6,540
Marketing 582 514 1,461 1,479
Expenses from real estate partnership operations 121 115 881 662
OREO operations - net expense 6,633 12,093 28,777 31,165
Mortgage servicing rights impairment (recovery) (1,895) 52 2,410 (97)
Legal services 1,315 1,333 4,892 7,978
Other professional fees 844 1,387 3,669 5,294
Other 3,156 3,309 13,214 12,874
Total non-interest expense 28,220 36,620 124,428 134,399
Loss before income taxes (3,953) (18,233) (36,728) (41,014)
Income tax expense -- 150 10 164
Net loss (3,953) (18,383) (36,738) (41,178)
Preferred stock dividends in arrears (1,591) (1,503) (6,278) (5,934)
Preferred stock discount accretion (1,844) (1,843) (7,413) (7,412)
Net loss available to common equity $ (7,388) $ (21,729) $ (50,429) $ (54,524)
Net loss $ (3,953) $ (18,383) $ (36,738) $ (41,178)
Reclassification adjustment for realized net gains recognized in income (217) (709) (6,579) (8,661)
Reclassification adjustment for unrealized credit related other-than-
temporary impairment losses recognized in income 98 70 194 432
Reclassification adjustment for realized credit losses recognized in income 123 -- 364 --
Change in net unrealized gains (losses) on available-for-sale securities (274) 921 26,105 (6,324)
Comprehensive loss $ (4,223) $ (18,101) $ (16,654) $ (55,731)
Loss per common share:
Basic $ (0.35) $ (1.02) $ (2.37) $ (2.57)
Diluted (0.35) (1.02) (2.37) (2.57)
ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Financial Highlights (1)
(Unaudited)
Three Months Ended Year Ended
March 31, March 31,
2012 2011 2012 2011
Yield on earning assets 4.17% 4.57% 4.34% 4.59%
Cost of funds 1.72 1.85 1.79 2.16
Interest rate spread 2.45 2.72 2.55 2.43
Net interest margin 2.35 2.63 2.45 2.35
Non-interest expense to average assets 3.89 4.22 3.96 3.50
Book value per common share (6.57) (5.80) (6.57) (5.80)
(1) Annualized when appropriate.
CONTACT: For more information, contact
Emily Campbell, VP - Marketing & Communications
(608) 252-1436
