Anchor BanCorp Wisconsin Inc. (OTC Market: ABCW.PK) today announced a net loss available to common equity of $3.4 million, or $0.16 per common share, for the three months ended June 30, 2012. This compares to a net loss available to common equity of $7.4 million, or $0.35 per common share and $8.2 million, or $0.38 per common share, for the three months ended March 31, 2012 and June 30, 2011, respectively.
Financial Highlights
•AnchorBank fsb (the "Bank) remains adequately capitalized for the eighth consecutive quarter.
•Net loss available to common equity decreased $4.0 million or 53.7 percent in the first quarter of fiscal 2013 compared to the preceding quarter ending March 31, 2012 and $4.7 million or 58.1 percent compared to the year ago quarter ending June 30, 2011.
•Non-performing loans decreased to $189.0 million at June 30, 2012 from $224.9 million in the preceding quarter.
•Net charge-offs also decreased, by $16.4 million or 67.4 percent, in the current quarter to $7.9 million from $24.3 million in the quarter ending March 31, 2012. Quarterly net charge-offs were below $10.0 million for the first time since the quarter ending March 31, 2010.
•Gross return on mortgage banking totaled $4.2 million in the current quarter, a decrease of $3.6 million, or 46.5 percent from $7.8 million in the preceding quarter; but an increase of $2.4 million over the same period a year ago.
•Total assets were essentially flat, decreasing by $5.4 million or 0.2 percent during the quarter to $2.8 billion at June 30, 2012.
•Cost of funds declined to 1.56 percent in the quarter ending June 30, 2012 compared to 1.78 percent in the year ago quarter as the Bank aggressively managed deposit pricing.
•Service charges on deposits improved to $2.9 million in the current quarter, up 7.3 percent and 2.6 percent over the preceding and prior year quarters, respectively.
•Investment and insurance commissions increased 9.3 percent in the current quarter to $1.0 million compared to the quarter ending March 31, 2012. This is the third time in the past three years that commission income has exceeded the million dollar threshold.
Bank Capital Ratios
June 30, 2012
June 30, March 31, June 30, Increase (decrease) vs.
(Dollars in thousands) 2012 2012 2011 3/31/12 6/30/11
Tier 1 capital $127,026 $125,894 $144,384 $1,132 ($17,358)
Adjusted total assets 2,783,319 2,792,122 3,255,388 (8,803) (472,069)
Tier 1 leverage ratio 4.56% 4.51% 4.44% 0.05% 0.12%
Total risk-based capital $148,738 $149,141 $171,563 ($403) ($22,825)
Risk weighted assets 1,656,451 1,771,260 2,062,719 (114,809) (406,268)
Total risk-based capital ratio 8.98% 8.42% 8.32% 0.56% 0.66%
Memo: Bank quarterly net income $913 ($144) ($1,067) $1,057 $1,980
The Bank's tier 1 leverage and total risk-based capital ratios of 4.56 percent and 8.98 percent at June 30, 2012, increased by 5 and 56 basis points, respectively, compared to March 31, 2012. The ratios benefitted from a planned decrease in assets (adjusted total assets and risk weighted assets), and the favorable impact on tier 1 capital and risk-based capital of the net income reported in the current quarter compared to net losses in the past several quarters. Risk weighted assets of $1.7 billion at June 30, 2012 decreased $115.5 million during the quarter due in part to a $115.6 million increase in zero percent risk weighted assets as the Bank has accumulated additional liquidity in the form of cash and cash equivalents on its balance sheet.
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 eighth 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. "Net income at the Bank of nearly one million in the quarter is also a promising development. We have not reported positive quarterly net earnings at the Bank level since September 2010," Bauer added.
While the Bank reported positive net quarterly earnings, the Corporation, as the holding company of the Bank, 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 $45.8 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 thirteen quarterly preferred stock dividend payments to the Treasury totaling $20.4 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 efforts to address its capital needs.
Financial Results
Financial results for the first quarter ended June 30, 2012, include:
•Net interest margin fell to 2.57 percent for the three months ended June 30, 2012, from 2.77 percent for the same period in the previous year. Interest income decreased $9.1 million or 25.3 percent for the three months ended June 30, 2012, as compared to the same period in the prior year primarily due to a decline in average balances in the loan and investment security portfolios. Interest expense decreased $4.0 million or 27.4 percent for the three months ended June 30, 2012, as compared to the same period in the prior year due to a reduction in certificate of deposit average balances and the rate paid on these accounts.
•The provision for credit losses improved $5.2 million to a recapture of $(1.7) million for the three months ended June 30, 2012 compared to $3.5 million of provision expense in the same period in the previous year. The change was largely due to a lower required general allowance for losses on non-impaired loans resulting from an improvement in the credit metrics which are used in part to establish this reserve.
•Non-interest income totaled $13.5 million, up $4.3 million or 47.2 percent, compared to the same period in the previous year. The increase was primarily due to $5.8 million of gains on sale of mortgage loans in the three months ending June 30, 2012, up $4.7 million over the prior year quarter, 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 $3.2 million in the current quarter were $1.9 million higher than reported in the year ago quarter.
•Total non-interest expense decreased by $0.4 million or 1.2 percent, compared to the same period a year ago largely due to a decrease of $1.9 million in OREO expense arising from lower loss provisions on repossessed property reflecting stabilizing real estate values. This favorable variance was partially offset by a $1.0 million increase in mortgage servicing rights impairment as market interest rates declined considerably during the current year quarter.
Credit Quality
June 30, 2012
(Dollars in thousands) June 30, March 31, June 30, Increase (decrease) vs.
2012 2012 2011 3/31/12 6/30/11
Quarterly Financial Results
Provision for credit losses ($1,716) $4,601 $3,482 ($6,317) ($5,198)
Net charge-offs 7,935 24,336 15,002 (16,401) (7,067)
Key Metrics (at period end)
Loans 30 to 89 days past due 39,843 30,562 68,665 9,281 (28,822)
Non-performing loans (NPL) 188,987 224,924 260,927 (35,937) (71,940)
Other real estate owned 83,955 88,841 89,491 (4,886) (5,536)
Non-performing assets 272,942 313,765 350,418 (40,823) (77,476)
Allowance for loan loss to NPL 53.17% 49.45% 53.17% 3.72% 0.00%
Certain key credit related metrics continue to trend favorably with loans 30 to 89 days past due at $39.8 million as of June 30, 2012 compared to $68.7 million at June 30, 2011, although up $9.3 million over the preceding quarter. Non-performing loans of $189.0 million at June 30, 2012 were significantly lower than in the preceding quarter and the year ago quarter, decreasing $35.9 million and $71.9 million, respectively. The impact of these trends contributed 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 53.17 percent of non-performing loans at June 30, 2012. The level of non-performing assets (non-performing loans plus other real estate owned) has improved as the June 30, 2012 balance of $272.9 million is $40.8 million and $77.5 million lower than in the preceding quarter and year ago quarter reported amounts, respectively. Net charge-offs also declined notably, to $7.9 million in the current quarter compared to $24.3 million and $15.0 million in the quarters ending March 31, 2012 and June 30, 2011, respectively.
Bauer added, "Although we are pleased to see these favorable credit trends, considerable effort remains to be expended resolving troubled loans and the disposition of foreclosed properties. We continue to work aggressively to resolve the issues within the credit portfolios. The positive trends emerging on the credit front are partially offset by the negative impact of costs associated with carrying an elevated level of foreclosed properties on the Bank's balance sheet." Other real estate owned totaled $84.0 million at June 30, 2012, down from $88.8 million at March 31, 2012 and $89.5 million at June 30, 2011.
Mortgage Banking
For the Quarter Ending: June 30, 2012
(In thousands) June 30, March 31, June 30, Increase (decrease) vs.
2012 2012 2011 3/31/12 6/30/11
Loan servicing income (loss), net ($395) ($503) $814 $108 ($1,209)
Gain on sale of mortgages 5,823 6,406 1,156 (583) 4,667
OMSR (impairment) / recovery (1,257) 1,895 (221) (3,152) (1,036)
Residential mortgage banking gross returns $4,171 $7,798 $1,749 ($3,627) $2,422
Key Metrics
Origination volume (closed loans) $258,500 $294,200 $90,300 ($35,700) $168,200
Serviced loan portfolio 3,095,000 3,126,000 3,301,000 (31,000) (206,000)
Gross returns on residential mortgage banking totaled $4.2 million for the quarter ending June 30, 2012 compared to $7.8 million in the preceding quarter and $1.7 million in the year ago quarter. Lower returns in the quarter ending June 30, 2012 compared to the preceding quarter was primarily due to an unfavorable variance in OMSR of $3.2 million as lower market interest rates at quarter end resulted in an impairment charge vs. a recovery in the quarter ending March 31, 2012. Residential mortgage origination volume slipped to $258.5 million in the current quarter compared to $294.2 million in the preceding quarter but remained above the $235.6 million average origination volume over the past eight quarters. Gain on sale of mortgages was strong at $5.8 million compared to $6.4 million in the preceding quarter and $1.2 million in the year ago quarter, reflecting healthy margins on sale of this product into the secondary market and the execution of effective hedging strategies.
Commenting on residential mortgage activity, Bauer added, "The residential mortgage business continues to be a focus as customer demand, sparked by lower mortgage rates, has resulted in significantly higher revenues. It has also afforded us opportunities to increase product penetration rates for existing customers and to offer other products and services to customers new to the Bank."
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.
For More Information
For more information, contact Emily Campbell, VP – Marketing & Communications, at (608) 252-1436.
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)
June 30, March 31,
2012 2012
(In thousands, except share data)
Assets
Cash and cash equivalents $ 368,369 $ 242,980
Investment securities available for sale, at fair value 231,644 242,299
Investment securities held to maturity, at amortized cost -- 20
Loans
Held for sale 27,938 39,332
Held for investment 1,959,551 2,058,008
Other real estate owned, net 83,955 88,841
Premises and equipment, net 27,422 25,453
Federal Home Loan Bank stock---at cost 30,522 35,792
Mortgage servicing rights, net 20,590 22,156
Accrued interest receivable 11,391 12,075
Other assets 22,694 22,496
Total assets $ 2,784,076 $ 2,789,452
Liabilities and Stockholders' Deficit
Deposits
Non-interest bearing $ 275,526 $ 264,751
Interest bearing 1,977,647 2,000,164
Total deposits 2,253,173 2,264,915
Other borrowed funds 476,378 476,103
Accrued interest and fees payable 47,937 43,320
Accrued taxes, insurance and employee related expenses 6,502 6,385
Other liabilities 28,594 28,279
Total liabilities 2,812,584 2,819,002
Preferred stock, $0.10 par value, 5,000,000 shares authorized, 110,000 shares issued and outstanding; dividends in arrears of $20,395 at June 30, 2012 and $18,785 at March 31, 2012 98,284 96,421
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 110,402 110,402
Retained deficit (149,321) (147,513)
Accumulated other comprehensive income (loss) 1,119 132
Treasury stock (4,115,614 shares), at cost (90,259) (90,259)
Deferred compensation obligation (1,269) (1,269)
Total stockholders' deficit (28,508) (29,550)
Total liabilities and stockholders' deficit $ 2,784,076 $ 2,789,452
ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income
(Unaudited)
Three Months Ended June 30,
2012 2011
Interest income: (In thousands, except per share data)
Loans $ 25,288 $ 32,109
Investment securities and Federal Home Loan Bank stock 1,549 3,956
Interest-bearing deposits 154 52
Total interest income 26,991 36,117
Interest expense:
Deposits 3,591 7,319
Other borrowed funds 7,001 7,278
Total interest expense 10,592 14,597
Net interest income 16,399 21,520
Provision for credit losses (1,716) 3,482
Net interest income after provision for credit losses 18,115 18,038
Non-interest income:
Net impairment losses on securities recognized in earnings (64) (59)
Loan servicing income (loss), net of amortization (395) 814
Service charges on deposits 2,866 2,794
Investment and insurance commissions 1,032 1,037
Net gain on sale of loans 5,823 1,173
Net gain on sale of investment securities 62 1,136
Net gain on sale of OREO 3,172 1,245
Other revenue from real estate partnership operations 5 38
Other 997 994
Total non-interest income 13,498 9,172
Non-interest expense:
Compensation and benefits 10,560 10,194
Occupancy 1,833 1,980
Furniture and equipment 1,586 1,544
Federal deposit insurance premiums 1,564 1,933
Data processing 1,385 1,383
Marketing 239 305
Expenses from real estate partnership operations 571 42
OREO operations - net expense 7,012 8,870
Mortgage servicing rights impairment (recovery) 1,257 221
Legal services 1,574 934
Other professional fees 643 1,018
Other 3,334 3,531
Total non-interest expense 31,558 31,955
Loss before income taxes 55 (4,745)
Income tax expense -- 10
Net loss 55 (4,755)
Preferred stock dividends in arrears (1,610) (1,536)
Preferred stock discount accretion (1,863) (1,863)
Net loss available to common equity $ (3,418) $ (8,154)
Net loss $ 55 $ (4,755)
Reclassification adjustment for realized net gains recognized in income (62) (1,136)
Reclassification adjustment for unrealized credit related other-than-temporary impairment losses recognized in income 68 59
Reclassification adjustment for credit related other-than-temporary impairment previously recognized on securities paid-off during the period (4) --
Change in net unrealized gains (losses) on available-for-sale securities 985 14,013
Comprehensive loss $ 1,042 $ 8,181
Loss per common share:
Basic $ (0.16) $ (0.38)
Diluted (0.16) (0.38)
ANCHOR BANCORP WISCONSIN INC. AND SUBSIDIARIES
Financial Highlights (1)
(Unaudited)
Three Months Ended
June 30,
2012 2011
Yield on earning assets 4.22% 4.66%
Cost of funds 1.56 1.78
Interest rate spread 2.66 2.88
Net interest margin 2.57 2.77
Book value per common share (6.52) (5.41)
(1) Annualized when appropriate.
CONTACT: Emily Campbell
VP -- Marketing & Communications
(608) 252-1436
