ACCOUNTING CLASSIFICATION OF CERTAIN SECURITIES FINANCING (REPOS)
AS SALES RESULTS IN FOURTH QUARTER LOSS OF $4.3 MILLION; ACCOUNTING
TREATMENT DOES NOT DECREASE CAPITAL, NOR IMPACT CASH FLOW,
LIQUIDITY, OR ASSET QUALITY. PANAMA CITY, Feb. 13
/PRNewswire-FirstCall/ -- Banco Latinoamericano de Exportaciones
(NYSE: BLX, "Bladex" or "the Bank") today reported net income of
$55.1 million and diluted earnings per share of $1.51 for the year
ended December 31, 2008. These results include the impact of
classifying certain securities financings (repos) as outright
sales. The Bank reported diluted earnings per share of $1.98 for
the year ended December 31, 2007. Excluding the impact of the
sales-accounting treatment, required by the application of
Financial Accounting Standards Board ("FASB") Statement No. 140, as
well as the positive impact of ("FASB") Statement No. 157 during a
particularly volatile fourth quarter, the Bank's net income for
2008 would have been $67.8 million, or $1.86 per share, and its
fourth quarter income would have amounted to $8.4 million, or $0.23
per share. See "Non-GAAP Disclosures and Reconciliation" in Exhibit
XIII for the reconciliation between the Bank's non-GAAP and GAAP
reported income. The Bank has regularly entered into repo
arrangements as part of its financing activities. Accounting for
the repo transactions as sales did not decrease net stockholders'
equity, and had no impact on the Bank's cash flow, liquidity, or
asset quality. Based on the structure of its new repos, the Bank
does not expect the need for any further sales-accounting
treatments in the future. Annual Business Highlights -- Commercial
Division's net operating income(1) for 2008 was $58.3 million, the
highest in the last five years, representing an increase of 37%
compared to 2007, mainly due to increased average loan balances
during the first three quarters of the year, as well as increased
lending margins. -- Asset Management Division's net operating
income for 2008 was $12.3 million compared to $18.5 million in
2007, representing a return of 12.2% on assets under management. --
Liquidity (2) as of December 31, 2008 was $826 million, compared to
$396 million as of December 31, 2007. -- The Bank's Tier 1 capital
ratio as of December 31, 2008 was 20.4%, compared to 20.9% as of
December 31, 2007. The Bank's leverage on these dates was 7.6x and
7.7x, respectively. The Bank's equity consists entirely of common
shares. -- As of December 31, 2008, the Bank reported zero past due
credits in its portfolio, as has been the case since 2006. The
ratio of the allowance for credit losses to the commercial
portfolio was 2.8%, compared to 2.0% in September 30, 2008, and to
1.9% as of December 31, 2007. -- After three quarters of growth,
the Bank reduced its credit portfolio by $1.3 billion in the fourth
quarter, as it built liquidity, collected vulnerable exposures,
and/or concentrations, and preserved its strong capitalization in
response to deteriorating macroeconomic conditions. -- Treasury
Division reported a net operating loss of $16.3 million in 2008,
compared to net income of $10.0 million in 2007. The 2008 results
were driven by the accounting treatment related to certain
securities-based financing transactions (repos), which were
recorded as sales. The Bank has routinely entered into repo
transactions as part of its normal business operations, accounting
for the repos as financing transactions. However, a particularly
tight interbank market caused the Bank to contract some repos under
new terms that resulted in the Bank receiving less cash for the
value of the underlying securities ("repo haircuts" or "haircuts")
than it had under normal market conditions. Based on the
application of FASB Statement No. 140 and related guidance, the
Bank determined that the repo transactions contracted under the new
terms should be treated as sales of the underlying securities,
rather than as financings (borrowings). While the Bank fully
expects to unwind the repo transactions at maturity and repurchase
the underlying securities in March, 2009, the sales-accounting
treatment of the repo transactions involved, resulted in a $25.0
million non-cash charge to earnings. Given that the Bank accounted
for changes in the fair value of both the securities portfolio and
the corresponding Interest Rate Swap hedges through unrealized
gains and losses in the Other Comprehensive Income account ("OCI"),
the charge to earnings had no detrimental impact on the Bank's
USGAAP capital. Furthermore, the non-cash nature of the accounting
treatment signifies that liquidity was unaffected. Finally, with
the underlying securities current as to interest and principal, the
Bank's asset quality also remained unaffected. The Bank may reverse
part or all of the accounting-related charge in future reporting
periods if it sells the securities at a gain, or through the
maturity of the instruments. The Bank has changed the structure of
its securities financing (repos) to avoid the need for sale
treatment in the future. CEO's Comments Mr. Jaime Rivera, Bladex's
Chief Executive Officer, stated the following regarding the Bank's
results, "Working within a challenging financial environment,
Bladex achieved solid results for the year, and maintained the
Bank's strong fundamentals. While Bladex's performance during the
first nine months of the year was strong, a deteriorating economic
environment during the fourth quarter compelled us to respond
decisively. We took action by collecting on loans to vulnerable
sectors and building record levels of liquidity in anticipation of
a year-end crunch that thankfully did not materialize. As part of
Bladex's efforts to strengthen liquidity, the Bank extended the
tenor of its repo financings. Given the extraordinarily tight
market liquidity conditions that prevailed during the period, the
extended tenors implied discounts from fair market value ("repo
haircuts") that required some of these transactions to be accounted
as outright sales. The resulting charge did not decrease the Bank's
capital and had no impact on the Bank's liquidity, cash flow, asset
quality, or any of the fundamentals underpinning the strength of
our Company. Going forward in 2009, despite a global economy
undergoing significant stress, Bladex continues to generate solid
business opportunities. The Bank is leveraging its position as the
premier provider of trade finance services within a less
competitive environment, continuing to widen intermediation
margins. In addition, Bladex's Asset Management Division is
boosting the Bank's profitability through its consistent ability to
generate positive results under a variety of market conditions. The
Bank is aware of the limitations imposed on growth by the tight
liquidity conditions in the interbank markets and of the strains
imposed on the portfolio by a global economic crisis that does not
appear to have reached bottom yet, and that is likely to persist
for some time. Until this challenging environment begins to
improve, we will continue to manage the Bank being especially
mindful of the need to carefully balance risks and opportunities to
best protect the interests of our shareholders and the value of
Bladex's franchise. " CONSOLIDATED RESULTS OF OPERATIONS KEY
FINANCIAL FIGURES AND RATIOS (US$ million, except percentages and
per share amounts) 2007 2008 4Q07 3Q08 4Q08
-------------------------- Net Interest Income $70.6 $77.8 $19.1
$21.8 $14.7 Net Operating Income (Loss) by Business Segment:
Commercial Division $42.7 $58.3 $11.3 $16.6 $13.8 Treasury Division
$10.0 ($16.3) $2.7 ($0.7) ($19.6) Asset Management Division $18.5
$12.3 $1.8 ($2.1) $1.2 Net Operating Income (Loss) $71.2 $54.3
$15.8 $13.8 ($4.6) Net Income (Loss) $72.2 $55.1 $15.5 $14.0 ($4.3)
Net Income (loss) per Share(3) $1.99 $1.51 $0.43 $0.38 ($0.12) Book
Value per common share (period end) $16.83 $15.77 $16.83 $16.87
$15.77 Return on Average Equity ("ROE") 11.9% 9.0% 9.9% 8.6% -3.0%
Operating Return on Average Equity ("Operating ROE")(4) 11.7% 8.9%
10.1% 8.5% -3.2% Return on Average Assets ("ROA") 1.8% 1.1% 1.4%
1.0% -0.4% Net Interest Margin 1.73% 1.55% 1.70% 1.61% 1.24%
Efficiency Ratio(5) 34% 42% 40% 39% 188% Tier 1 Capital(6) $620
$640 $620 $654 $640 Total Capital(7) $656 $680 $656 $699 $680
Risk-Weighted Assets 2,927 3,144 $2,927 3,573 $3,144 Tier 1 Capital
Ratio(6) 21.2% 20.4% 21.2% 18.3% 20.4% Total Capital Ratio(7) 22.4%
21.6% 22.4% 19.5% 21.6% Stockholders' Equity $612 $574 $612 $614
$574 Stockholders' Equity to Total Assets 13.0% 13.2% 13.0% 11.5%
13.2% Other Comprehensive Income Account ("OCI") ($10) ($72) ($10)
($44) ($72) Leverage (times)(8) 7.7 7.6 7.7 8.7 7.6 Liquid Assets /
Total Assets(2) 8.4% 18.9% 8.4% 8.2% 18.9% Liquid Assets / Total
Deposits 27.1% 70.6% 27.1% 28.4% 70.6% Non-Accruing Loans to Total
Loans, net 0.0% 0.0% 0.0% 0.0% 0.0% Allowance for Credit Losses to
Commercial Portfolio 1.9% 2.8% 1.9% 2.0% 2.8% Total Assets $4,699
$4,363 $4,699 $5,351 $4,363 ------------ ------ ------ ------
------ ------ Footnotes: (1) Net Operating Income (Loss) refers to
net interest income plus non-interest operating income, minus
operating expenses. (2) Liquidity ratio refers to liquid assets as
a percentage of total assets. Liquid assets consist of
investment-grade 'A' securities, and cash and due from banks,
excluding pledged deposits. (3) Net Income per Share calculations
are based on the average number of shares outstanding during each
period. (4) Operating ROE: Annualized net operating income divided
by average stockholders' equity. (5) Efficiency ratio refers to
consolidated operating expenses as a percentage of net operating
revenues. (6) Tier 1 Capital is calculated according to the US
Federal Reserve Board, and Basel I capital adequacy guidelines, and
is equivalent to stockholders' equity excluding the OCI effect of
the available for sale portfolio. Tier 1 Capital ratio is
calculated as a percentage of risk weighted assets. Risk-weighted
assets are, in turn, also calculated based on US Federal Reserve
Board, and Basel I capital adequacy guidelines. (7) Total Capital
refers to Tier 1 Capital plus Tier 2 Capital, based on US Federal
Reserve Board, and Basel I capital adequacy guidelines. Total
Capital ratio refers to Total Capital as a percentage of risk
weighted assets. (8) Leverage corresponds to assets divided by
stockholders' equity. SAFE HARBOR STATEMENT This press release
contains forward-looking statements of expected future
developments. The Bank wishes to ensure that such statements are
accompanied by meaningful cautionary statements pursuant to the
safe harbor established by the Private Securities Litigation Reform
Act of 1995. The forward-looking statements in this press release
refer to the growth of the credit portfolio, including the trade
portfolio, the increase in the number of the Bank's corporate
clients, the positive trend of lending spreads, the increase in
activities engaged in by the Bank that are derived from the Bank's
client base, anticipated operating income and return on equity in
future periods, including income derived from the Treasury Division
and Asset Management Division, the improvement in the financial and
performance strength of the Bank and the progress the Bank is
making. These forward-looking statements reflect the expectations
of the Bank's management and are based on currently available data;
however, actual experience with respect to these factors is subject
to future events and uncertainties, which could materially impact
the Bank's expectations. Among the factors that can cause actual
performance and results to differ materially are as follows: the
anticipated growth of the Bank's credit portfolio; the continuation
of the Bank's preferred creditor status; the impact of
increasing/decreasing interest rates and of improving macroeconomic
environment in the Region on the Bank's financial condition; the
execution of the Bank's strategies and initiatives, including its
revenue diversification strategy; the adequacy of the Bank's
allowance for credit losses; the need for additional provisions for
credit losses; the Bank's ability to achieve future growth, to
reduce its liquidity levels and increase its leverage; the Bank's
ability to maintain its investment-grade credit ratings; the
availability and mix of future sources of funding for the Bank's
lending operations; potential trading losses; the possibility of
fraud; and the adequacy of the Bank's sources of liquidity to
replace large deposit withdrawals. Non-GAAP Disclosures and
Reconciliation This press release contains non-GAAP financial
information relating to the Bank's income. The Bank believes that
the presentation of non-GAAP financial information provides
important supplementary information to investors regarding
financial and business trends relating to the Bank's financial
condition and results of operations. The non-GAAP financial
measures disclosed by the Bank should not be considered a
substitute for, or superior to, financial measures calculated
differently from, and therefore may not be comparable to, similarly
titles measures used by other companies. The non-GAAP financial
information excludes the accounting classification of certain
securities financings (repos) as outright sales required by
accounting rule FASB Statement No. 140, as well as the positive
impact of FASB Statement No. 157. The Bank believes that the
presentation of the non-GAAP net income excluding these accounting
impacts may enhance the comparability of the Bank's net income for
the year ended December 31, 2008 with that of other periods because
(1) the FASB Statement No. 140 accounting treatment does not
decrease the Bank's capital, nor impact the Bank's cash flow,
liquidity, or asset quality, (2) the non-GAAP information reflects
the manner in which the Bank accounted for repos under historically
prevalent market conditions, and (3) the non-GAAP information
excludes the positive impact of FASB Statement No. 157 during an
extraordinarily volatile fourth quarter 2008. We have provided for
your reference in Exhibit XIV supplemental financial disclosure for
the non-GAAP financial measure of net income described above,
including the most directly comparable GAAP financial measure and
an associated reconciliation. (Please refer to the long version of
the fourth quarter and year 2008 results Press Release in our
company's website). About Bladex Bladex is a supranational bank
originally established by the Central Banks of Latin American and
Caribbean countries to support trade finance in the Region. Based
in Panama, its shareholders include central banks and state-owned
entities in 23 countries in the Region, as well as Latin American
and international commercial banks, along with institutional and
retail investors. Through December 31, 2008, Bladex had disbursed
accumulated credits of over $158 billion. Conference Call
Information There will be a conference call to discuss the Bank's
quarterly results on Friday, February 13, 2009 at 11:00 a.m. New
York City time (Eastern Time). For those interested in
participating, please dial (800) 311-9401 in the United States or,
if outside the United States, (334) 323-7224. Participants should
use conference ID# 8034, and dial in five minutes before the call
is set to begin. There will also be a live audio web cast of the
conference at http://www.bladex.com/. The conference call will
become available for review on Conference Replay one hour after its
conclusion, and will remain available through April 13, 2009.
Please dial (877) 919-4059 or (334) 323-7226, and follow the
instructions. The Conference ID# for the replayed call is 71407734.
DATASOURCE: Banco Latinoamericano de Exportaciones CONTACT: Mr.
Jaime Celorio, Chief Financial Officer, of Bladex, +1-507-210-8630,
fax, +1-507-269-6333, ; or IR, Mrs. Melanie Carpenter, or Mr. Peter
Majeski, both of i-advize Corporate Communications, Inc.,
+1-212-406-3690, Web Site: http://www.bladex.com/
Copyright