Frontier Financial Corporation (NASDAQ: FTBK) today announced
results for the quarter ended March 31, 2009. For the three months
ended March 31, 2009, the Corporation reported a net loss of $33.8
million, or ($0.72) per diluted share, compared to a net loss of
$89.5 million, or ($1.90) per diluted share for the three months
ended December 31, 2008, and net income of $15.5 million, or $0.33
per diluted share, for the three months ended March 31, 2008.
Contributing to the first quarter 2009 net loss was a $58.0 million
provision for loan losses. During the fourth quarter of 2008, the
Corporation recognized a $77.1 million non-cash goodwill impairment
charge and a $44.4 million provision for loan losses.
The first quarter 2009 results reflect continued pressure from
an uncertain economy and the negative impact on the local housing
market. The ratio of nonperforming assets has increased to 16.25%
of total assets at March 31, 2009, up from 10.87% at December 31,
2008, and 0.97% a year ago. Because of this continued pressure, the
provision for loan losses was $58.0 million for the three months
ended March 31, 2009, compared to $44.4 million for the three
months ended December 31, 2008, and $9.0 million for the three
months ended March 31, 2008. Net charge-offs for the three months
ended March 31, 2009, totaled $59.5 million, compared to $39.2
million and $3.0 million for the three months ended December 31,
2008 and March 31, 2008, respectively.
Despite these challenging times, the Board of Directors and
management continue to take important steps to strengthen the
Corporation. Management has been diligently working to reduce the
concentration in real estate construction and land development
loans, and on a linked quarter basis, successfully reduced these
portfolios by $147.4 million, or 9.6%. In addition, undisbursed
loan commitments related to these portfolios decreased $75.0
million, or 41.9%, for the same period resulting in a reduction of
total commitments for real estate construction and land development
of $222.4 million in the quarter. At March 31, 2009, deposits
totaled $3.35 billion, an increase of $78.5 million, or 2.4%,
compared to December 31, 2008.
As part of our ongoing strategy to reduce noninterest expense,
the Board of Directors voted to suspend the Corporation's matching
of employee 401(k) plan contributions, effective May 1, 2009. This
cost saving measure is expected to reduce noninterest expense by
approximately $1.7 million annually.
Patrick M. Fahey, Chairman and CEO of Frontier Financial
Corporation, said, "While the economy in general and the housing
market in particular remain our primary issue, we are seeing
increasing signs of improvement. There was virtually no activity in
sales of finished homes in other real estate or the portfolio at
the beginning of the quarter. Purchase and sale agreements and
closed sales have been slowly gaining momentum with some new
activity daily. While it will still take time and continued
improvement, we are pleased to see encouraging signs.
"We have continued an aggressive approach to recognition of
problem loans, and have been even more conservative this quarter by
charging off the specific reserves in the allowance, with the added
benefit of an income tax deduction and an enhancement of total risk
weighted capital."
As previously announced, on March 20, 2009, Frontier Bank
("Bank"), a wholly-owned subsidiary of Frontier Financial
Corporation, entered into a Stipulation and Consent to the Issuance
of an Order to Cease and Desist ("Consent Agreement") with the
Federal Deposit Insurance Corporation ("FDIC") and the Washington
Department of Financial Institutions ("DFI") resulting from a June
30, 2008 examination. The Corporation and the Bank are actively
engaged in responding to the concerns raised in the FDIC order, and
we believe we have already addressed many of the regulators'
requirements.
Liquidity
We continue to closely monitor and manage our liquidity
position, understanding that this is of critical importance in the
current economic environment. Attracting and retaining customer
deposits remains our primary source of liquidity. Total deposits
increased $78.5 million on a linked quarter basis and $190.5
million year-over-year.
In an effort to increase on-balance sheet liquidity, we have
focused on reducing our balance sheet, in particular, the real
estate loan portfolio. For the first quarter of 2009, total loans
decreased $119.2 million, compared to the fourth quarter of 2008,
and $57.4 million compared to the first quarter of 2008.
Additionally, we have increased our federal funds sold balances on
a linked quarter and year-over-year basis.
Capital
Management constantly monitors the level of capital,
considering, among other things, our present and anticipated needs,
current market conditions and other relevant factors, which may
necessitate changes in the level of capital. We are currently
taking steps to strengthen our capital position. We continue to
look at adding capital through a private equity investment and have
engaged an investment banking firm to help facilitate this process.
At March 31, 2009, our total risk-based capital and Tier 1 leverage
capital ratios were 10.4% and 7.6%, respectively, and continue to
be above the established minimum regulatory capital levels. Our
tangible common equity ratio was 7.7% at March 31, 2009.
Review of Financial Condition
Loans
At March 31, 2009, total loans, including loans held for resale,
were $3.66 billion, compared to $3.78 billion at December 31, 2008,
and $3.72 billion at March 31, 2008.
The quarter-over-quarter and year-over-year decreases in total
loans is attributable to decreases in new loan originations, loan
pay downs and increased loan charge-offs. With few exceptions, we
have suspended the origination of new real estate construction,
land development and completed lot loans. New loan originations for
the first quarter of 2009 totaled $23.3 million, compared to $74.2
million for the fourth quarter 2008, and $287.1 million for the
first quarter of 2008.
Management continues to recognize loan quality deterioration on
a timely basis and aggressively address work out strategies. Net
charge-offs totaled $59.5 million for the three months ended March
31, 2009, compared to $39.2 million for the three months ended
December 31, 2008, and $3.0 million for the three months ended
March 31, 2008. Due to the increased net charge-offs, the
Corporation has adjusted its income tax provision to claim these
losses as current tax deductions.
Allowance for Loan Losses
The total allowance for loan losses was $111.5 million, or
3.05%, of total loans outstanding at March 31, 2009, compared to
$112.6 million, or 2.98%, at December 31, 2008, and $60.3 million,
or 1.62%, at March 31, 2008. The allowance for loan losses,
including the reclassified allocation for undisbursed loans of $1.6
million, would amount to a total allowance of $113.1 million, or
3.09%, of total loans outstanding at March 31, 2009.
Asset Quality
Nonperforming assets are summarized as follows (in
thousands):
March 31, December 31, September 30, June 30, March 31,
2009 2008 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Commercial and
industrial $ 12,745 $ 12,908 $ 1,256 $ 394 $ 18
Real estate:
Commercial 14,527 10,937 2,986 - -
Construction 286,342 181,905 135,419 96,526 24,950
Land
development 217,082 177,139 40,602 13,450 10,594
Completed
lots 94,438 34,005 17,949 7,872 2,525
Residential
1-4 family 30,521 17,686 6,985 1,010 666
Installment and
other 718 645 - 684 14
---------- ---------- ---------- ---------- ----------
Total
nonaccruing
loans 656,373 435,225 205,197 119,936 38,767
Other real
estate owned 18,874 10,803 3,693 3,681 633
---------- ---------- ---------- ---------- ----------
Total
non-
performing
assets $ 675,247 $ 446,028 $ 208,890 $ 123,617 $ 39,400
========== ========== ========== ========== ==========
Restructured
loans - - - - -
Total loans at
end of period
(1) $3,659,510 $3,778,733 $3,832,052 $3,807,278 $3,716,950
Total assets at
end of period $4,154,267 $4,104,445 $4,244,963 $4,156,721 $4,062,825
Total
nonaccruing
loans to total
loans 17.94% 11.52% 5.35% 3.15% 1.04%
Total
nonperforming
assets to
total assets 16.25% 10.87% 4.92% 2.97% 0.97%
(1) Includes loans held for resale.
The ratio of loans past due over 90 days was 14.1% of total
loans at March 31, 2009, compared to 8.9% at December 31, 2008, and
0.8% at March 31, 2008. There were no loans 90 days or more past
due and still accruing interest at March 31, 2009.
Results of Operations
Net interest income
Net interest income for the three months ended March 31, 2009,
was $23.8 million, compared to $33.9 million for the three months
ended December 31, 2008, and $47.4 million for the three months
ended March 31, 2008.
On a linked quarter basis, net interest income decreased $10.1
million, or 29.8%. The decrease in net interest income is primarily
attributable to the reversal of $6.3 million of accrued interest
income on loans placed on nonaccrual status during the quarter and
the $94.2 million, or 2.5%, decrease in average loans outstanding.
For the quarter ended March 31, 2009, the average yield on loans
was 5.38%, down 80 basis points from 6.18% for the quarter ended
December 31, 2008.
For the three months ended March 31, 2009, net interest income
decreased $23.6 million, or 49.9%, compared to the same period a
year ago. Average outstanding balances decreased net interest
income by $2.7 million and changes in interest rates decreased net
interest income by $20.9 million. For the first quarter of 2009,
average earning assets increased $355.9 million, or 9.3%, and
average interest bearing liabilities increased $363.6 million, or
11.6%, compared to the first quarter of 2008. The average quarterly
yield on earning assets decreased 327 basis points to 4.95% for the
first quarter 2009, compared to 8.22% for the first quarter 2008.
The average cost on total interest bearing liabilities decreased 77
basis points to 3.10% for the first quarter 2009, compared to 3.87%
for the first quarter 2008.
Also contributing to the decrease in net interest income for the
quarter and year, was the change in mix of earning assets. For the
first quarter of 2009, federal funds sold accounted for 7.5% of
total earning assets, compared to 1.1% for the linked quarter and
0.3% for the prior year. Typically, federal funds sold are a lower
earning asset and currently yield a rate of 0.25%. As previously
mentioned, federal funds sold balances increased on a linked
quarter and year-over-year basis to improve liquidity and were
funded by growth in time deposits.
The annualized tax equivalent net interest margin was 2.31% for
the quarter ended March 31, 2009, compared to 3.42% for the quarter
ended December 31, 2008, and 5.01% for the quarter ended March 31,
2008. For the quarter ended March 31, 2009, the reversal of $6.3
million of interest accruals lowered the tax equivalent net
interest margin by approximately 61 basis points. The remainder of
the decrease in net interest margin, on a linked quarter basis, can
be attributed to lower loan fees as a result of reduced loan
originations, a reduction of average outstanding loan balances and
a change in the mix of the balance sheet.
The year-over-year 270 basis point decrease in the tax
equivalent net interest margin can be attributed to the decreases
in interest rates by the Federal Reserve, and the resulting
repricing of variable rate loans at lower rates. At March 31, 2009,
the Federal Funds rate was 0.25%, down 200 basis points from 2.25%
at March 31, 2008. In addition, loan originations decreased 91.9%
from the first quarter of 2008 to the first quarter of 2009,
resulting in lower loan fees.
Noninterest income
For the three months ended March 31, 2009, noninterest income
totaled $4.3 million, compared to $7.5 million for the three months
ended December 31, 2008, and $6.3 million for the three months
ended March 31, 2008.
On a linked quarter basis, noninterest income decreased $3.2
million, or 42.4%. Excluding nonrecurring items for both periods,
such as the gain on sale of securities and the gain on sale of
consumer credit cards, which is included in other noninterest
income, total noninterest income actually increased $301 thousand,
or 7.8%. For the quarter, gain on sale of secondary mortgage loans
increased $337 thousand, or 136.4%, and service charges increased
$155 thousand, or 12.0%.
During the fourth quarter 2008, we sold our interest in
Washington Banking Company for a pre-tax gain of $2.5 million and
certain agency securities for a pre-tax gain of $532 thousand.
During the first quarter of 2009, we sold two securities for a
nominal pre-tax gain of $47 thousand. Additionally, in the fourth
quarter of 2008, we recognized a $506 thousand gain related to the
sale of our consumer credit card portfolio to TCM Bank. Related to
this initial sale, an additional premium of $107 thousand was paid
and recognized during the first quarter of 2009. No additional
consumer credit cards, however, were sold during the first quarter
of 2009.
Noninterest income decreased $2.0 million, or 31.4%, for the
three months ended March 31, 2009, compared to the same period a
year ago. During the first quarter of 2009, we recognized a nominal
pre-tax gain of $47 thousand on the sale of two securities. In
comparison, we recognized a pre-tax gain of $2.0 million on the
sale of our interest in Skagit State Bank and a one-time pre-tax
gain of $274 thousand related to the required liquidation of our
stake in Visa, Inc., during the first quarter of 2008. Excluding
the gain on sale of securities for both periods, noninterest income
increased $296 thousand, or 7.4%, as a result of an increase in the
gain on sale of secondary mortgage loans and an increase in service
charges.
Noninterest expense
Noninterest expense totaled $23.3 million for the three months
ended March 31, 2009, compared to $94.9 million for the three
months ended December 31, 2008, and $21.5 million for the three
months ended March 31, 2008.
During the fourth quarter 2008, we recognized a $77.1 million
non-cash charge related to the full impairment of goodwill. In
addition, during the same quarter, we had a reversal of bonus and
profit sharing accruals of $2.9 million. Excluding this non-cash
impairment charge for goodwill and the reversal of bonus and profit
sharing accrual, noninterest expense increased $2.5 million, or
14.2%, for the first quarter of 2009 compared to the linked
quarter.
On a linked quarter basis, salaries and employee benefits
increased $3.0 million, or 32.2%. Excluding the fourth quarter
reversal of the bonus and profit sharing contribution, salaries and
employee benefits remained relatively flat. For the most part, we
have placed a moratorium on the hiring of new employees, and
therefore, do not expect any significant increases in salaries and
employee benefits for 2009. At March 31, 2009, full-time
equivalents totaled 781, compared to 799 at December 31, 2008, and
824 at March 31, 2008. Additionally, the decrease in loan
originations and deferred loan costs, increased salaries and
employee benefits by $1.0 million for the period.
Other noninterest expense totaled $7.7 million for the three
months ended March 31, 2009, compared to $5.7 million for the three
months ended December 31, 2008, an increase of $2.0 million, or
35.5%. The most significant increase related to increases in FDIC
insurance assessments which totaled $2.5 million. For the period,
we were also assessed an additional $363 thousand from the Public
Deposit Protection Commission for Frontier Bank's share of
uninsured public funds as a result of the fourth quarter 2008
failure of the Bank of Clark County located in Vancouver,
Washington. Additionally, foreclosure expense increased $178
thousand and collection expense increased $86 thousand, which
directly corresponds to the increase in nonperforming assets over
the period. Other noninterest expense, excluding the additional
FDIC assessments of $2.9 million, actually decreased $899 thousand,
or 15.8%, for the period as a result of our continued efforts to
decrease costs.
Total noninterest expense increased $1.8 million, or 8.1%, for
the three months ended March 31, 2009, compared to the three months
ended March 31, 2008. For the same period, salaries and employee
benefits decreased $1.6 million, or 11.2%, while other noninterest
expense increased $3.3 million, or 74.7%. The decrease in salary
and employee benefits is primarily attributable to the elimination
of bonus and incentive pay, a reduction in executive compensation,
salary freezes and a moratorium on hiring. The increases in other
noninterest expense is attributable to the increases in FDIC
insurance premiums of $2.9 million, collection expense of $280
thousand and foreclosure expense of $395 thousand for the period.
Excluding the $2.9 million in additional FDIC insurance premiums,
total noninterest expense decreased $1.2 million year-over-year, as
a result of our cost reduction measures that commenced in the third
quarter of 2008.
Certain amounts in prior years' financial statements have been
reclassified to conform to the 2008 presentation. These
classifications have not had an effect on previously reported
income or total equity.
Frontier Financial Corporation is a Washington-based financial
holding company providing financial services through its commercial
bank subsidiary, Frontier Bank. Frontier Bank offers a wide range
of financial services to businesses and individuals in its market
area, including investment and insurance products.
CERTAIN FORWARD-LOOKING INFORMATION -- This press release
contains certain "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 ("PSLRA").
This statement is included for the express purpose of availing
Frontier of the protections of the safe harbor provisions of the
PSLRA. The forward-looking statements contained herein are subject
to factors, risks and uncertainties that may cause actual results
to differ materially from those projected. The following items are
among the factors that could cause actual results to differ
materially from the forward-looking statements: general economic
conditions, including their impact on capital expenditures;
business conditions in the banking industry; recent world events
and their impact on interest rates, businesses and customers; the
regulatory environment; new legislation; vendor quality and
efficiency; employee retention factors; rapidly changing technology
and evolving banking industry standards; competitive standards;
including increased competition with community, regional and
national financial institutions; fluctuating interest rate
environments; higher than expected loan delinquencies; and similar
matters. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis
only at the date of this release.
Frontier undertakes no obligation to publicly revise or update
these forward-looking statements to reflect events or circumstances
that arise after the date of this release. Readers should carefully
review the risk factors described in this and other documents
Frontier files from time to time with the Securities and Exchange
Commission, including Frontier's 2008 Form 10-K.
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except for shares and per share amounts)
(Unaudited)
Three Months Ended
----------------------------------------
March 31, December 31, March 31,
2009 2008 2008
------------ ------------ ------------
INTEREST INCOME
Interest and fees on loans $ 49,400 $ 59,343 $ 75,918
Interest on investments 1,091 1,049 1,582
------------ ------------ ------------
Total interest income 50,491 60,392 77,500
------------ ------------ ------------
INTEREST EXPENSE
Interest on deposits 22,635 22,715 25,725
Interest on borrowed funds 4,102 3,822 4,377
------------ ------------ ------------
Total interest expense 26,737 26,537 30,102
------------ ------------ ------------
Net interest income 23,754 33,855 47,398
PROVISION FOR LOAN LOSSES 58,000 44,400 9,000
------------ ------------ ------------
Net interest income after
provision for loan losses (34,246) (10,545) 38,398
------------ ------------ ------------
NONINTEREST INCOME
Gain on sale of securities 47 3,129 2,324
Gain on sale of secondary
mortgage loans 584 247 389
Gain on sale of other real
estate owned - 4 12
Service charges on deposit
accounts 1,446 1,291 1,325
Other noninterest income 2,245 2,831 2,253
------------ ------------ ------------
Total noninterest income 4,322 7,502 6,303
------------ ------------ ------------
NONINTEREST EXPENSE
Salaries and employee benefits 12,420 9,398 13,993
Occupancy expense 2,838 2,406 2,590
State business taxes 326 370 551
Other noninterest expense 7,708 5,690 4,411
------------ ------------ ------------
23,292 17,864 21,545
------------ ------------ ------------
Goodwill impairment - 77,073 -
------------ ------------ ------------
Total noninterest expense 23,292 94,937 21,545
------------ ------------ ------------
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME TAXES (53,216) (97,980) 23,156
PROVISION (BENEFIT) FOR INCOME
TAXES (19,405) (8,464) 7,655
------------ ------------ ------------
NET INCOME (LOSS) $ (33,811) $ (89,516) $ 15,501
============ ============ ============
Weighted average number of shares
outstanding for the period 47,126,801 47,038,400 46,985,320
Basic earnings (losses) per share $ (0.72) $ (1.90) $ 0.33
============ ============ ============
Weighted average number of
diluted shares outstanding for
period 47,126,801 47,038,400 47,098,645
Diluted earnings (losses) per
share $ (0.72) $ (1.90) $ 0.33
============ ============ ============
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except for shares and per share amounts)
(Unaudited)
March 31, December 31, March 31,
2009 2008 2008
------------ ------------ ------------
ASSETS
Cash and due from banks $ 38,160 $ 52,022 $ 70,010
Federal funds sold 290,349 117,740 5
Securities
Available for sale, at fair
value 80,111 90,606 124,862
Held to maturity, at amortized
cost 3,084 3,085 3,742
------------ ------------ ------------
Total securities 83,195 93,691 128,604
Loans held for resale 6,191 6,678 6,592
Loans 3,653,319 3,772,055 3,710,358
Allowance for loan losses (111,484) (112,556) (60,277)
------------ ------------ ------------
Net loans 3,548,026 3,666,177 3,656,673
Premises and equipment, net 50,717 51,502 50,831
Intangible assets 740 794 78,080
Federal Home Loan Bank (FHLB)
stock 19,885 19,885 18,738
Bank owned life insurance 24,578 24,321 24,002
Other real estate owned 18,874 10,803 633
Other assets 79,743 67,510 35,249
------------ ------------ ------------
Total assets $ 4,154,267 $ 4,104,445 $ 4,062,825
============ ============ ============
LIABILITIES
Deposits
Noninterest bearing $ 410,411 $ 395,451 $ 373,268
Interest bearing 2,943,245 2,879,714 2,789,879
------------ ------------ ------------
Total deposits 3,353,656 3,275,165 3,163,147
Federal funds purchased and
securities sold under repurchase
agreements 22,067 21,616 67,984
Federal Home Loan Bank advances 428,996 429,417 318,165
Junior subordinated debentures 5,156 5,156 5,156
Other liabilities 24,991 21,048 40,451
------------ ------------ ------------
Total liabilities 3,834,866 3,752,402 3,594,903
------------ ------------ ------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
10,000,000 shares authorized - - -
Common stock, no par value;
100,000,000 shares authorized 256,970 256,137 253,824
Retained earnings 64,209 98,020 208,793
Accumulated other comprehensive
income (loss), net of tax (1,778) (2,114) 5,305
------------ ------------ ------------
Total shareholders' equity 319,401 352,043 467,922
------------ ------------ ------------
Total liabilities and
shareholders' equity $ 4,154,267 $ 4,104,445 $ 4,062,825
============ ============ ============
Shares outstanding at end of
period 47,131,853 47,095,103 46,998,802
Book value $ 6.78 $ 7.48 $ 9.96
Tangible book value $ 6.76 $ 7.46 $ 8.29
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS
(In thousands)
(Unaudited)
For the Period Ended (Year-to-Date)
----------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2009 2008 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Loans by Type
(including
loans
held for
resale)
Commercial and
industrial $ 444,681 $ 457,215 $ 452,286 $ 448,360 $ 416,154
Real Estate:
Commercial 1,020,530 1,044,833 1,049,939 1,048,321 1,025,047
Construction 870,201 949,909 1,030,591 1,048,552 1,084,264
Land
development 512,804 580,453 607,501 598,931 565,690
Completed lots 297,702 249,685 242,234 236,004 245,500
Residential
1-4 family 443,361 431,170 379,485 357,650 312,545
Installment and
other loans 70,231 65,468 70,016 69,460 67,750
---------- ---------- ---------- ---------- ----------
Total loans $3,659,510 $3,778,733 $3,832,052 $3,807,278 $3,716,950
========== ========== ========== ========== ==========
Allowance for
Loan Losses
Balance at
beginning of
period $ 114,638 $ 57,658 $ 57,658 $ 57,658 $ 57,658
---------- ---------- ---------- ---------- ----------
Provision for
loan losses 58,000 120,000 75,600 33,500 9,000
---------- ---------- ---------- ---------- ----------
Loans
charged-off
Commercial and
industrial (5,355) (3,101) (1,167) (381) (138)
Real Estate:
Commercial (149) (1,264) - - -
Construction (29,448) (31,968) (17,316) (9,275) (2,652)
Land
development (19,057) (12,165) (1,050) - (250)
Completed
lots (3,504) (13,839) (4,031) - (26)
Residential
1-4 family (2,127) (846) (250) - -
Installment
and other
loans (205) (343) (246) (106) (24)
---------- ---------- ---------- ---------- ----------
Total
charged-off
loans (59,845) (63,526) (24,060) (9,762) (3,090)
---------- ---------- ---------- ---------- ----------
Recoveries
Commercial and
industrial 211 308 237 226 94
Real Estate:
Commercial - - - - -
Construction 51 161 9 10 7
Land
development 57 - - - -
Completed
lots 16 9 5 - -
Residential
1-4 family - - - - -
Installment
and other
loans 2 28 23 11 7
---------- ---------- ---------- ---------- ----------
Total
recoveries 337 506 274 247 108
---------- ---------- ---------- ---------- ----------
Net
(charge-offs)
recoveries (59,508) (63,020) (23,786) (9,515) (2,982)
---------- ---------- ---------- ---------- ----------
Balance before
portion
identified
for
undisbursed
loans 113,130 114,638 109,472 81,643 63,676
Reserve
acquired in
merger - - - - -
Portion of
reserve
identified for
undisbursed
loans (1,646) (2,082) (2,837) (2,921) (3,399)
---------- ---------- ---------- ---------- ----------
Balance at end
of period $ 111,484 $ 112,556 $ 106,635 $ 78,722 $ 60,277
========== ========== ========== ========== ==========
Allowance for
loan losses as
a percentage
of total loans,
including
loans held
for resale 3.05% 2.98% 2.78% 2.07% 1.62%
========== ========== ========== ========== ==========
For the Period Ended (Year-to-Date)
----------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2009 2008 2008 2008 2008
---------- ---------- ---------- ---------- ----------
Nonperforming
Assets (NPA)
Nonaccruing
loans $ 656,373 $ 435,225 $ 205,197 $ 119,936 $ 38,767
Other real
estate owned 18,874 10,803 3,693 3,681 633
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets 675,247 446,028 208,890 123,617 39,400
---------- ---------- ---------- ---------- ----------
Restructured
loans - - - - -
---------- ---------- ---------- ---------- ----------
Total impaired
assets $ 675,247 $ 446,028 $ 208,890 $ 123,617 $ 39,400
========== ========== ========== ========== ==========
Total
nonaccruing
loans to total
loans 17.94% 11.52% 5.35% 3.15% 1.04%
Total NPA to
total assets 16.25% 10.87% 4.92% 2.97% 0.97%
Interest
Bearing
Deposits
Money market,
sweep and NOW $ 365,807 $ 325,554 $ 557,323 $ 600,023 $ 733,551
Savings 334,076 365,114 418,535 367,731 305,982
Time deposits 2,243,362 2,189,046 2,050,857 1,939,297 1,750,346
---------- ---------- ---------- ---------- ----------
Total interest
bearing
deposits $2,943,245 $2,879,714 $3,026,715 $2,907,051 $2,789,879
========== ========== ========== ========== ==========
Capital Ratios
Tier 1 leverage
ratio 7.60% 8.62% 8.88% 9.69% 9.94%
Tier 1
risk-based
capital ratio 9.13% 9.64% 9.48% 9.96% 10.13%
Total
risk-based
capital ratio 10.40% 10.91% 10.75% 11.22% 11.38%
For the Three Months Ended
----------------------------------------------------------
Performance March 31, December 31, September 30, June 30, March 31,
Ratios 2009 2008 2008 2008 2008
---------- ---------- ---------- ---------- ----------
ROA
(annualized) -3.18% -8.68% -1.69% 0.20% 1.55%
ROE
(annualized) -38.70% -81.58% -15.32% 1.75% 13.36%
Efficiency
ratio 83% 50% 49% 43% 42%
Average assets $4,248,979 $4,125,319 $4,221,730 $4,087,538 $3,989,829
Average
shareholders'
equity $ 349,465 $ 438,908 $ 464,500 $ 473,750 $ 464,248
For the Period Ended (Year-to-Date)
----------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2009 2008 2008 2008 2008
---------- ---------- ---------- ---------- ----------
ROA
(annualized) -3.18% -2.18% -0.01% 0.87% 1.55%
ROE
(annualized) -38.70% -19.42% -0.06% 7.44% 13.36%
Efficiency
ratio 83% 45% 44% 42% 42%
Average assets $4,248,979 $4,107,571 $4,102,034 $4,041,808 $3,989,829
Average
shareholders'
equity $ 349,465 $ 461,981 $ 469,727 $ 472,369 $ 464,248
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS (Continued)
(In thousands)
(Unaudited)
Quarterly Average
Balances
March 31, December 31,
2009 2008 $ Change % Change
----------- ----------- ----------- -----------
Assets
Cash and due from banks $ 48,534 $ 48,279 $ 255 0.5%
Federal funds sold 312,701 44,246 268,455 606.7%
Securities available
for sale 80,756 97,124 (16,368) -16.9%
Securities held to
maturity 3,085 3,517 (432) -12.3%
----------- ----------- ----------- -----------
Total securities 83,841 100,641 (16,800) -16.7%
Loans held for sale 6,356 2,414 3,942 163.3%
Loans
Commercial and
industrial 446,402 456,594 (10,192) -2.2%
RE commercial 1,028,500 1,051,625 (23,125) -2.2%
RE construction 936,854 1,022,043 (85,189) -8.3%
RE land development 558,172 602,838 (44,666) -7.4%
RE completed lots 272,422 249,849 22,573 9.0%
RE residential 1-4
family 430,531 385,218 45,313 11.8%
Installment and
other 66,798 69,656 (2,858) -4.1%
----------- ----------- ----------- -----------
Total 3,746,035 3,840,237 (94,202) -2.5%
Allowance for loan
losses (120,981) (121,288) 307 -0.3%
----------- ----------- ----------- -----------
Net loans 3,625,054 3,718,949 (93,895) -2.5%
Premises and equipment,
net 51,271 51,819 (548) -1.1%
Intangible assets 768 77,905 (77,137) -99.0%
FHLB Stock 19,885 18,084 1,801 10.0%
Bank owned life
insurance 24,434 24,185 249 1.0%
Other real estate owned 14,758 3,468 11,290 325.5%
Other assets 67,733 37,743 29,990 79.5%
----------- ----------- ----------- -----------
Total assets $ 4,248,979 $ 4,125,319 $ 123,660 3.0%
=========== =========== =========== ===========
Liabilities
Deposits:
Noninterest bearing $ 383,699 $ 389,127 $ (5,428) -1.4%
Interest bearing
MMA, Sweep and
NOW 330,878 407,758 (76,880) -18.9%
Savings 358,560 392,845 (34,285) -8.7%
Time deposits 2,349,563 2,065,873 283,690 13.7%
----------- ----------- ----------- -----------
Total interest
bearing 3,039,001 2,866,476 172,525 6.0%
Total deposits 3,422,700 3,255,603 167,097 5.1%
Fed funds purchased and
repurchase agreements 18,917 61,487 (42,570) -69.2%
FHLB Advances 429,324 359,296 70,028 19.5%
Junior subordinated
debt 5,156 5,156 - 0.0%
Other liabilities 23,417 4,869 18,548 380.9%
----------- ----------- ----------- -----------
Total liabilities 3,899,514 3,686,411 213,103 5.8%
Total shareholders?
equity 349,465 438,908 (89,443) -20.4%
----------- ----------- ----------- -----------
Total liabilities and
shareholders? equity $ 4,248,979 $ 4,125,319 $ 123,660 3.0%
=========== =========== =========== ===========
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS (Continued)
(In thousands)
(Unaudited)
Quarterly Average
Balances
March 31, March 31,
2009 2008 $ Change % Change
----------- ----------- ----------- -----------
Assets
Cash and due from banks $ 48,534 $ 50,383 $ (1,849) -3.7%
Federal funds sold 312,701 11,897 300,804 2528.4%
Securities available
for sale 80,756 124,053 (43,297) -34.9%
Securities held to
maturity 3,085 3,743 (658) -17.6%
----------- ----------- ----------- -----------
Total securities 83,841 127,796 (43,955) -34.4%
Loans held for resale 6,356 4,806 1,550 32.3%
Loans
Commercial and
industrial 446,402 397,144 49,258 12.4%
RE commercial 1,028,500 1,016,160 12,340 1.2%
RE construction 936,854 1,068,228 (131,374) -12.3%
RE land development 558,172 555,373 2,799 0.5%
RE completed lots 272,422 245,456 26,966 11.0%
RE residential 1-4
family 430,531 293,516 137,015 46.7%
Installment and
other 66,798 67,475 (677) -1.0%
----------- ----------- ----------- -----------
Total 3,746,035 3,648,158 97,877 2.7%
Allowance for loan
losses (120,981) (55,210) (65,771) 119.1%
----------- ----------- ----------- -----------
Net loans 3,625,054 3,592,948 32,106 0.9%
Premises and equipment,
net 51,271 48,696 2,575 5.3%
Intangible assets 768 78,119 (77,351) -99.0%
FHLB Stock 19,885 18,738 1,147 6.1%
Bank owned life
insurance 24,434 23,853 581 2.4%
Other real estate owned 14,758 665 14,093 2119.2%
Other assets 67,733 36,734 30,999 84.4%
----------- ----------- ----------- -----------
Total assets $ 4,248,979 $ 3,989,829 $ 259,150 6.5%
=========== =========== =========== ===========
Liabilities
Deposits:
Noninterest bearing $ 383,699 $ 366,077 $ 17,622 4.8%
Interest bearing
MMA, Sweep and
NOW 330,878 710,264 (379,386) -53.4%
Savings 358,560 265,728 92,832 34.9%
Time deposits 2,349,563 1,734,853 614,710 35.4%
----------- ----------- ----------- -----------
Total interest
bearing 3,039,001 2,710,845 328,156 12.1%
Total deposits 3,422,700 3,076,922 345,778 11.2%
Fed funds purchased and
repurchase agreements 18,917 81,455 (62,538) -76.8%
FHLB Advances 429,324 331,352 97,972 29.6%
Junior subordinated
debt 5,156 5,156 - 0.0%
Other liabilities 23,417 30,696 (7,279) -23.7%
----------- ----------- ----------- -----------
Total liabilities 3,899,514 3,525,581 373,933 10.6%
Total shareholders?
equity 349,465 464,248 (114,783) -24.7%
----------- ----------- ----------- -----------
Total liabilities and
shareholders? equity $ 4,248,979 $ 3,989,829 $ 259,150 6.5%
=========== =========== =========== ===========
Contact: Patrick M. Fahey Frontier Financial Corporation
Chairman and CEO 425-423-7250 Michael Clementz Frontier Financial
Corporation President 425-514-0717 John J. Dickson Frontier Bank
President 425-514-0700
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