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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Frontier Finl Corp Wash (MM) | NASDAQ:FTBK | NASDAQ | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 3.57 | 0 | 01:00:00 |
From May 2019 to May 2024
As noted in our September 23, 2009, Form 8-K filing, we determined that, based on management's internal review, we expected to record an additional provision for loan losses of $140.0 million and loan charge-offs of $100.0 million in the third quarter of 2009. These adjustments were included in the pro forma financial information included in the Joint Proxy Statement/Prospectus for our proposed merger with SP Acquisition Holdings, Inc. ("SPAH"). Subsequent to this filing, however, we jointly announced with SPAH that we mutually agreed to terminate the Agreement and Plan of Merger, effective immediately, due to the fact that certain closing conditions contained in the merger agreement could not be met. The actual provision for loan losses and charge-offs totaled $140.0 million and $98.0 million, respectively, for the three months ended September 30, 2009.
Patrick M. Fahey, Chairman and CEO of Frontier Financial Corporation said, "While we were disappointed our merger with SPAH was terminated, the number of banks able to raise capital since we entered into the agreement with SPAH has increased dramatically. Based on the numerous discussions with investors we have had since the termination of the merger, we are optimistic we will be successful in raising additional capital."
The provision for loan losses increased $63.0 million for the three months ended September 30, 2009, compared to the linked quarter, and $97.9 million, compared to the same period a year ago. For the nine months ended September 30, 2009 and 2008, the provision for loan losses totaled $275.0 million and $75.6 million, respectively. The allowance for loan losses, as a percentage of total loans, was 4.51%, 2.89% and 2.78%, at September 30, 2009, June 30, 2009 and September 30, 2008, respectively.
The rate of growth in the amount of nonperforming assets decreased for the third consecutive quarter. On a linked quarter basis, nonperforming assets increased $93.5 million to $912.3 million. That increase compares to $143.5 million in the second quarter 2009 and $229.2 million in the first quarter 2009. Rob Robinson, Chief Credit Officer said, "We continue to be aggressive at classifying problem loans into nonaccrual status and believe, based on current market conditions, we are at or near the bottom of this challenging housing market."
Despite these challenging times, the Board of Directors and management continue to take important steps to strengthen the Corporation. We continue to reduce our concentrations in real estate construction and land development loans and have successfully reduced these portfolios by $1.0 billion, or 43.4%, from September 30, 2008 to September 30, 2009, including undisbursed loan commitments, as defined by the FDIC.
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. Noninterest bearing deposits increased $8.1 million, or 2.0%, from December 31, 2008 to September 30, 2009, and $26.3 million, or 7.0%, from a year ago.
During the third quarter 2009, we announced our continued participation in the Federal Deposit Insurance Corporation's ("FDIC") voluntary Transaction Account Guarantee ("TAG") portion of the Temporary Liquidity Guarantee Program through June 30, 2010. Under this program, noninterest bearing transaction accounts and qualified NOW checking accounts are fully guaranteed by the FDIC for an unlimited amount of coverage. The coverage under the TAG program is in addition to, and separate from, the coverage of $250,000 available under the FDIC's general deposit insurance protection.
In an effort to increase on-balance sheet liquidity, we have been focused on restructuring our balance sheet, and in particular, reducing the loan portfolio. For the nine months ended September 30, 2009, total loans decreased $627.7 million, or 16.6%, compared to December 31, 2008. Year-over-year, total loans decreased $681.0 million, or 17.8%. Additionally, we have increased our federal funds sold balances to $363.1 million at September 30, 2009, an increase of $245.3 million from December 31, 2008, and $232.7 million from a year ago, to maintain a strong liquidity position.
Capital
As previously announced, on October 5, 2009, the Corporation and SP Acquisition Holdings, Inc. ("SPAH") mutually agreed to terminate the Agreement and Plan of Merger, dated as of July 30, 2009, by and between SPAH and Frontier, as amended by Amendment No. 1 to Agreement and Plan of Merger, dated as of August 10, 2009, effective immediately, due to the fact that certain closing conditions contained in the merger agreement could not be met. Since the termination of the transaction, we have continued to seek private equity investors and have made numerous contacts with potential investors.
Review of Financial Condition
Loans
At September 30, 2009, total loans, including loans held for resale, were $3.15 billion, compared to $3.78 billion at December 31, 2008, and $3.83 billion at September 30, 2008.
The decreases in total loans at September 30, 2009, compared to the year ended 2008 and a year ago, 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 nine months of 2009 totaled $100.1 million, compared to $759.3 million for the same period in 2008, a decrease of $659.2 million, or 86.8%. For the third quarter 2009, new loan originations totaled $22.4 million, compared to $54.4 million for the second quarter 2009 and $175.6 million for the third quarter 2008.
Management continues to proactively manage credit quality and loan collections and address work out strategies. Net charge-offs for the three and nine months ended September 30, 2009, totaled $96.6 million and $246.3 million, respectively, compared to $14.3 million and $23.8 million, respectively, for the same periods a year ago.
Allowance for Loan Losses
The total allowance for loan losses was $142.2 million, or 4.51%, of total loans outstanding at September 30, 2009, compared to $112.6 million, or 2.98%, at December 31, 2008, and $106.6 million, or 2.78%, at September 30, 2008. The allowance for loan losses, including the reclassified allocation for undisbursed loans of $1.1 million, would amount to a total allowance of $143.3 million, or 4.55%, of total loans outstanding at September 30, 2009.
Asset Quality
Nonperforming assets are summarized as follows (in thousands):
Hot Features
Premium
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------- ---------- ---------- ---------- ----------
Commercial and
industrial $ 29,147 $ 27,092 $ 12,745 $ 12,908 $ 1,256
Real estate:
Commercial 81,870 73,130 14,527 10,937 2,986
Construction 277,146 267,102 286,342 181,905 135,419
Land
development 274,959 267,907 217,082 177,139 40,602
Completed
lots 85,341 88,072 94,438 34,005 17,949
Residential
1-4 family 60,669 40,433 30,521 17,686 6,985
Installment and
other 1,388 822 718 645 -
---------- ---------- ---------- ---------- ----------
Total
nonaccruing
loans 810,520 764,558 656,373 435,225 205,197
Other real
estate owned 101,805 54,222 18,874 10,803 3,693
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets $ 912,325 $ 818,780 $ 675,247 $ 446,028 $ 208,890
========== ========== ========== ========== ==========
Restructured
loans - - - - -
Total loans at
end of period
(1) $3,151,004 $3,416,219 $3,659,510 $3,778,733 $3,832,052
Total assets at
end of period $3,772,109 $3,987,403 $4,154,267 $4,104,445 $4,244,963
Total
nonaccruing
loans to total
loans 25.72% 22.38% 17.94% 11.52% 5.35%
Total
nonperforming
assets to
total assets 24.19% 20.53% 16.25% 10.87% 4.92%
(1) Includes loans held for resale.
The ratio of loans past due over 90 days was 22.1% of total loans at September 30, 2009, compared to 9.0% at December 31, 2008, and 4.8% at September 30, 2008. There were no loans 90 days or more past due and still accruing interest at September 30, 2009.
Results of Operations
Net interest income
Net interest income for the three months ended September 30, 2009, was $18.9 million, compared to $21.4 million for the three months ended June 30, 2009, and $40.7 million for the three months ended September 30, 2008. Net interest income for the nine months ended September 30, 2009, totaled $64.1 million, compared to $133.0 million for the same period a year ago. For all periods, the decrease in net interest income was primarily attributable to increases in net loan charge-offs and nonperforming loans placed on nonaccrual status.
Net interest income decreased $2.6 million, or 12.0%, for the three months ended September 30, 2009, compared to the linked quarter. For the period, decreases in average earning assets and interest bearing liabilities decreased net interest income by $2.0 million and changes in interest rates decreased net interest income by $569 thousand. For the third quarter 2009, average earning assets decreased $221.4 million, or 5.6%, and average interest bearing liabilities decreased $62.2 million, or 1.9%, compared to the second quarter 2009. The average quarterly yield on earning assets decreased 21 basis points to 4.45% for the third quarter 2009, compared to 4.66% for the second quarter 2009. The average cost of funds decreased 16 basis points for the same period.
For the three months ended September 30, 2009, net interest income decreased $21.8 million, or 53.6%, compared to the same period a year ago. For the period, changes in average earning assets and average interest bearing liabilities decreased net interest income by $8.6 million and changes in interest rates decreased net interest income by $13.3 million. For the quarter ended September 30, 2009, average net earning assets (average earning assets less average interest bearing liabilities) totaled $472.3 million, compared to $704.0 million a year ago, a decrease of $231.7 million, or 32.9%. The average yield on earning assets was 4.45% for the third quarter 2009, down 233 basis points from 6.78% for the third quarter 2008. The average cost on interest bearing liabilities was down 57 basis points for the period.
For the nine months ended September 30, 2009, net interest income decreased $68.9 million, or 51.8%, compared to the nine months ended September 30, 2008. For the period, changes in average earning assets and average interest bearing liabilities decreased net interest income by $18.9 million and changes in interest rates decreased net interest income by $50.0 million. For the period, average net earning assets decreased $107.0 million, or 15.3%. Year-over-year, the average yield on earning assets and average cost of funds decreased 277 basis points and 61 basis points, respectively.
The annualized tax equivalent net interest margin was 2.04% for the three months ended September 30, 2009, compared to 4.05% for the three months ended September 30, 2008, a decrease of 201 basis points. For the three months ended September 30, 2009, the reversal of $3.5 million of interest accruals lowered the tax equivalent net interest margin by approximately 38 basis points. The remainder of the decrease in net interest margin can be attributed to the increase in total nonaccruing loans, lower loan fees as a result of reduced loan originations and a reduction of average outstanding loan balances.
The annualized tax equivalent net interest margin was 2.21% for the nine months ended September 30, 2009, compared to 4.55% for the nine months ended September 30, 2008, a decrease of 234 basis points. For the nine months ended September 30, 2009, the reversal of $15.3 million of interest income on nonaccrual loans lowered the tax equivalent net interest margin by approximately 52 basis points. The year-over-year decrease in the tax equivalent net interest margin can also be attributed to the increase in total nonaccruing loans, as well as, decreases in interest rates by the Federal Reserve, and the resulting repricing of variable rate loans at lower rates. At September 30, 2009, the Federal Funds rate was 0.25%, down 175 basis points from 2.00% at September 30, 2008. In addition, loan originations for the nine months ended September 30, 2009, decreased 86.8%, compared to the same period a year ago, resulting in lower loan fees.
Also contributing to the decrease in the annualized tax equivalent net interest margin for the three and nine months ended September 30, 2009, compared to the same periods in 2008, was the change in mix of earning assets. As previously mentioned, in an effort to increase on-balance sheet liquidity, we have increased federal funds sold balances. For the third quarter of 2009, average federal funds sold accounted for approximately 8.2% of total average earning assets, compared to 1.4% for the third quarter of 2008. For the nine months ended September 30, 2009 and 2008, average federal funds sold accounted for approximately 7.3% and 0.6% of total average earning assets, respectively. Typically, federal funds sold are a lower earning asset and currently yield a rate of 0.25%.
Noninterest income
For the three months ended September 30, 2009, total noninterest income was $2.9 million, compared to $3.6 million for the three months ended June 30, 2009, and a loss of $3.2 million for the three months ended September 30, 2008. For the nine months ended September 30, 2009, total noninterest income was $10.8 million, compared to $7.3 million for the same period a year ago.
Total noninterest income decreased $712 thousand, or 19.8%, for the three months ended September 30, 2009, compared to the linked quarter, and was primarily attributable to the increase in net loss on sale of other real estate owned. During the third quarter 2009, we recognized a net loss of $1.1 million, as the result of an $820 thousand valuation adjustment and a loss on sale of $248 thousand. Comparatively, for the second quarter 2009, we recognized a net loss of $451 thousand related to other real estate owned, resulting from a $3.8 million valuation adjustment, partially offset by a $3.3 million gain on sale. The valuation adjustments on other real estate owned, for the second and third quarters of 2009, were the result of declines in the market value of these properties subsequent to foreclosure.
Total noninterest income increased $6.1 million for the three months ended September 30, 2009, compared to the same period in 2008. During the third quarter 2008, we recognized a $6.4 million pre-tax loss related to other than temporarily impaired investments in Fannie Mae, Freddie Mac and Lehman Brothers. For the same period, we also recognized a $1.0 million loss on the sale of a security. There were no other than temporarily impaired securities or sales of securities in the third quarter 2009.
For the nine months ended September 30, 2009, total noninterest income increased $3.5 million, or 47.2%, compared to the nine months ended September 30, 2008. As previously noted, we recognized a $6.4 million pre-tax loss related to other than temporarily impaired investments in Fannie Mae, Freddie Mac and Lehman Brothers during the third quarter 2008. There was no such impairment charge during the nine months ended September 30, 2009. Partially offsetting this increase in total noninterest income, however, were losses on the sale of securities and net losses on the sale of other real estate owned. For the nine months ended September 30, 2009, we recognized a loss on sale of securities of $102 thousand, compared to a $1.4 million gain a year ago when we sold our stock in Skagit State Bank for a gain of $2.0 million. Additionally, for the nine months ended September 30, 2009, we recognized a net loss on sale of other real estate owned of $1.5 million, primarily due to valuation adjustments resulting from declines in the market value of these properties subsequent to foreclosure. For the nine months ended September 30, 2008, we recognized a $93 thousand net gain on sale of other real estate owned.
Noninterest expense
For the three months ended September 30, 2009, total noninterest expense was $24.8 million, compared to $25.4 million for the three months ended June 30, 2009, and $22.1 million for the three months ended September 30, 2008. For the nine months ended September 30, 2009, total noninterest expense was $73.5 million, compared to $65.1 million for the same period a year ago.
For the three months ended September 30, 2009, total noninterest expense decreased $573 thousand, or 2.3%, compared to the linked quarter. The decrease in total noninterest expense was primarily attributable to the $2.5 million decrease in FDIC insurance and the $927 thousand decrease in salaries and employee benefits, partially offset by the $2.8 million increase in other noninterest expense. For the three months ended June 30, 2009, we recognized a FDIC special assessment of $1.9 million that was paid in the third quarter 2009. The decrease in salaries and employee benefits, on a linked quarter basis, was primarily attributable to a reduction in force. At September 30, 2009, full time equivalents ("FTE") were down 2.2% from June 30, 2009. The increase in other noninterest expense for the period was primarily attributable to the $1.4 million increase in consulting fees, which related to the proposed merger with SPAH, the $762 thousand increase in collection and foreclosure expenses and the $646 thousand increase in legal expenses. The rising collection, foreclosure and legal expenses are primarily due to the increase in nonperforming assets for the period.
Total noninterest expense increased $2.8 million, or 12.5%, for the three months ended September 30, 2009, compared to the same period a year ago. The increase in total noninterest expense was attributable to increases in other noninterest expense and FDIC insurance, partially offset by reductions in salaries and employee benefits. For the three months ended September 30, 2009, other noninterest expense totaled $7.9 million, compared to $4.7 million for the three months ended September 30, 2008, an increase of $3.2 million, or 66.8%. The increase in other noninterest expense was primarily attributable to the $2.0 million increase in collection and foreclosure expenses, the $1.0 million increase in consulting fees, which related to the proposed merger with SPAH, and the $948 thousand increase in legal expenses. The increase to collection and foreclosure expense for the period was primarily attributable to the increase in nonperforming assets. The increase in legal expense was attributable to both an increase in nonperforming assets and the proposed merger. The increases in other noninterest expense, however, were partially offset by decreases in other miscellaneous other noninterest expense accounts as part of our continuing efforts to cut costs.
FDIC insurance premiums increased $1.4 million for the three months ended September 30, 2009, compared to the three months ended September 30, 2008. For the same period, salaries and employee benefits decreased $1.1 million, or 9.1%, and was primarily attributable to the elimination of bonus and incentive pay, a reduction in executive compensation, a moratorium on hiring and a reduction in force.
For the nine months ended September 30, 2009, total noninterest expense increased $8.4 million, or 12.8%, and was primarily attributable to increases in FDIC insurance and other noninterest expense, partially offset by the decrease in salaries and employee benefits. For the period, FDIC insurance increased $9.2 million and was attributable to an increase in premiums and the recognition of a special assessment of $1.9 million, paid in the third quarter of 2009. Year-over-year, other noninterest expense increased $3.6 million, or 25.8%. This increase was primarily attributable to the $4.1 million increase in collection and foreclosure expenses, resulting from an increase in nonperforming assets.
For the nine months ended September 30, 2009, salaries and employee benefits decreased $3.1 million, or 7.9%, compared to the same period in 2008, and was primarily the result of the elimination of bonus and incentive pay, a reduction in executive compensation, a moratorium on hiring and a reduction in force. At September 30, 2009, full time equivalent employees totaled 698, down from 827 at September 30, 2008, a decrease of 15.6%. In addition, the Board of Directors voted to suspend the Corporation's matching of employee 401(K) Plan contributions, effective May 1, 2009.
Certain amounts in prior years' financial statements have been reclassified to conform to the 2009 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
-------------------------------------------
September 30, June 30, September 30,
2009 2009 2008
------------- ------------- -------------
INTEREST INCOME
Interest and fees on loans $ 40,595 $ 44,732 $ 67,161
Interest on investments 895 849 1,660
------------- ------------- -------------
Total interest income 41,490 45,581 68,821
------------- ------------- -------------
INTEREST EXPENSE
Interest on deposits 18,703 20,148 24,390
Interest on borrowed funds 3,909 3,984 3,705
------------- ------------- -------------
Total interest expense 22,612 24,132 28,095
------------- ------------- -------------
Net interest income 18,878 21,449 40,726
PROVISION FOR LOAN LOSSES 140,000 77,000 42,100
------------- ------------- -------------
Net interest loss after
provision for loan losses (121,122) (55,551) (1,374)
------------- ------------- -------------
NONINTEREST INCOME
Provision for loss on
securities - - (6,431)
Loss on sale of securities - (149) (1,026)
Gain on sale of secondary
mortgage loans 232 630 308
Net gain (loss) on sale of
other real estate owned (1,068) (451) 81
Service charges on deposit
accounts 1,611 1,539 1,384
Other noninterest income 2,103 2,021 2,511
------------- ------------- -------------
Total noninterest income
(loss) 2,878 3,590 (3,173)
------------- ------------- -------------
NONINTEREST EXPENSE
Salaries and employee
benefits 11,290 12,217 12,420
Occupancy expense 2,694 2,732 3,161
State business taxes 239 179 498
FDIC insurance 2,682 5,196 1,236
Other noninterest expense 7,909 5,063 4,742
------------- ------------- -------------
Total noninterest expense 24,814 25,387 22,057
------------- ------------- -------------
LOSS BEFORE BENEFIT FOR
INCOME TAXES (143,058) (77,348) (26,604)
BENEFIT FOR INCOME TAXES (1,970) (27,354) (8,808)
------------- ------------- -------------
NET LOSS $ (141,088) $ (49,994) $ (17,796)
============= ============= =============
Weighted average number of
shares outstanding for the
period 47,131,853 47,131,853 47,010,944
Basic loss per share $ (2.99) $ (1.06) $ (0.38)
============= ============= =============
Weighted average number of
diluted shares outstanding
for period 47,131,853 47,131,853 47,010,944
Diluted loss per share $ (2.99) $ (1.06) $ (0.38)
============= ============= =============
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
(In thousands, except for shares and per share amounts)
(Unaudited)
Nine Months Ended
----------------------------
September 30, September 30,
2009 2008
------------- -------------
INTEREST INCOME
Interest and fees on loans $ 134,727 $ 214,049
Interest on investments 2,835 4,614
------------- -------------
Total interest income 137,562 218,663
------------- -------------
INTEREST EXPENSE
Interest on deposits 61,486 73,376
Interest on borrowed funds 11,995 12,272
------------- -------------
Total interest expense 73,481 85,648
------------- -------------
Net interest income 64,081 133,015
PROVISION FOR LOAN LOSSES 275,000 75,600
------------- -------------
Net interest income (loss)
after provision for loan
losses (210,919) 57,415
------------- -------------
NONINTEREST INCOME
Provision for loss on
securities - (6,431)
Gain (loss) on sale of
securities (102) 1,442
Gain on sale of secondary
mortgage loans 1,446 1,074
Net gain (loss) on sale of
other real estate owned (1,519) 93
Service charges on deposit
accounts 4,596 4,130
Other noninterest income 6,369 7,020
------------- -------------
Total noninterest income 10,790 7,328
------------- -------------
NONINTEREST EXPENSE
Salaries and employee
benefits 35,927 39,005
Occupancy expense 8,264 8,742
State business taxes 744 1,643
FDIC insurance 11,162 1,920
Other noninterest expense 17,396 13,825
------------- -------------
Total noninterest expense 73,493 65,135
------------- -------------
LOSS BEFORE BENEFIT FOR
INCOME TAXES (273,622) (392)
BENEFIT FOR INCOME TAXES (48,729) (171)
------------- -------------
NET LOSS $ (224,893) $ (221)
============= =============
Weighted average number of
shares outstanding for the
period 47,126,801 46,987,948
Basic loss per share $ (4.77) $ (0.00)
============= =============
Weighted average number of
diluted shares outstanding
for period 47,126,801 46,987,948
Diluted loss per share $ (4.77) $ (0.00)
============= =============
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except for shares and per share amounts)
(Unaudited)
September 30, December 31, September 30,
2009 2008 2008
------------- ------------- -------------
ASSETS
Cash and due from banks $ 36,921 $ 52,022 $ 56,707
Federal funds sold 363,081 117,740 130,334
Securities
Available for sale, at fair
value 73,834 90,606 98,095
Held to maturity, at
amortized cost 3,079 3,085 3,737
------------- ------------- -------------
Total securities 76,913 93,691 101,832
Loans held for resale 3,464 6,678 3,104
Loans 3,147,540 3,772,055 3,828,948
Allowance for loan losses (142,229) (112,556) (106,635)
------------- ------------- -------------
Net loans 3,008,775 3,666,177 3,725,417
Premises and equipment, net 48,826 51,502 51,823
Intangible assets 634 794 77,938
Federal Home Loan Bank (FHLB)
stock 19,885 19,885 15,622
Bank owned life insurance 25,116 24,321 24,056
Other real estate owned 101,805 10,803 3,693
Other assets 90,153 67,510 57,541
------------- ------------- -------------
Total assets $ 3,772,109 $ 4,104,445 $ 4,244,963
============= ============= =============
LIABILITIES
Deposits
Noninterest bearing $ 403,534 $ 395,451 $ 377,279
Interest bearing 2,822,087 2,879,714 3,026,715
------------- ------------- -------------
Total deposits 3,225,621 3,275,165 3,403,994
Federal funds purchased and
securities sold under
repurchase agreements 15,584 21,616 34,701
Federal Home Loan Bank advances 375,752 429,417 329,833
Junior subordinated debentures 5,156 5,156 5,156
Other liabilities 20,329 21,048 27,548
------------- ------------- -------------
Total liabilities 3,642,442 3,752,402 3,801,232
------------- ------------- -------------
SHAREHOLDERS' EQUITY
Preferred stock, no par value;
10,000,000 shares authorized - - -
Common stock, no par value;
100,000,000 shares authorized 258,425 256,137 255,575
Retained earnings (deficit) (126,873) 98,020 187,591
Accumulated other
comprehensive income (loss),
net of tax (1,885) (2,114) 565
------------- ------------- -------------
Total shareholders' equity 129,667 352,043 443,731
------------- ------------- -------------
Total liabilities and
shareholders' equity $ 3,772,109 $ 4,104,445 $ 4,244,963
============= ============= =============
Shares outstanding at end of
period 47,131,853 47,095,103 47,023,716
Book value $ 2.75 $ 7.48 $ 9.44
Tangible book value $ 2.74 $ 7.46 $ 7.78
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS
(In thousands)
(Unaudited)
For the Period Ended (Year-to-Date)
----------------------------------------------------------
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------- ---------- ---------- ---------- ----------
Loans by Type
(including loans
held for resale)
Commercial and
industrial $ 405,405 $ 425,221 $ 444,681 $ 457,215 $ 452,286
Real Estate:
Commercial 988,004 1,017,204 1,020,530 1,044,833 1,049,939
Construction 587,594 713,571 870,201 949,909 1,030,591
Land
development 405,400 476,562 512,804 580,453 607,501
Completed lots 257,057 272,824 297,702 249,685 242,234
Residential
1-4 family 436,744 433,884 443,361 431,170 379,485
Installment and
other loans 70,800 76,953 70,231 65,468 70,016
---------- ---------- ---------- ---------- ----------
Total loans $3,151,004 $3,416,219 $3,659,510 $3,778,733 $3,832,052
========== ========== ========== ========== ==========
Allowance for
Loan Losses
Balance at
beginning of
period $ 114,638 $ 114,638 $ 114,638 $ 57,658 $ 57,658
---------- ---------- ---------- ---------- ----------
Provision for
loan losses 275,000 135,000 58,000 120,000 75,600
---------- ---------- ---------- ---------- ----------
Loans charged-off
Commercial and
industrial (26,494) (18,891) (5,355) (3,101) (1,167)
Real Estate:
Commercial (9,212) (1,176) (149) (1,264) -
Construction (90,431) (62,036) (29,448) (31,968) (17,316)
Land
development (74,231) (38,015) (19,057) (12,165) (1,050)
Completed
lots (35,525) (19,286) (3,504) (13,839) (4,031)
Residential
1-4 family (11,596) (10,771) (2,127) (846) (250)
Installment
and other
loans (1,795) (1,089) (205) (343) (246)
---------- ---------- ---------- ---------- ----------
Total
charged-off
loans (249,284) (151,264) (59,845) (63,526) (24,060)
---------- ---------- ---------- ---------- ----------
Recoveries
Commercial and
industrial 616 496 211 308 237
Real Estate:
Commercial - - - - -
Construction 2,048 863 51 161 9
Land
development 57 57 57 - -
Completed
lots 148 66 16 9 5
Residential
1-4 family 59 27 - - -
Installment
and other
loans 47 4 2 28 23
---------- ---------- ---------- ---------- ----------
Total
recoveries 2,975 1,513 337 506 274
---------- ---------- ---------- ---------- ----------
Net (charge-offs)
recoveries (246,309) (149,751) (59,508) (63,020) (23,786)
---------- ---------- ---------- ---------- ----------
Balance before
portion
identified
for undisbursed
loans 143,329 99,887 113,130 114,638 109,472
Portion of
reserve
identified for
undisbursed
loans (1,100) (1,304) (1,646) (2,082) (2,837)
---------- ---------- ---------- ---------- ----------
Balance at end
of period $ 142,229 $ 98,583 $ 111,484 $ 112,556 $ 106,635
========== ========== ========== ========== ==========
Allowance for
loan losses as
a percentage of
total loans,
including
loans held
for resale 4.51% 2.89% 3.05% 2.98% 2.78%
========== ========== ========== ========== ==========
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS (Continued)
(In thousands)
(Unaudited)
For the Period Ended (Year-to-Date)
----------------------------------------------------------
September June March December September
30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------- ---------- ---------- ---------- ----------
Nonperforming
Assets (NPA)
Nonaccruing
loans $ 810,520 $ 764,558 $ 656,373 $ 435,225 $ 205,197
Other real
estate owned 101,805 54,222 18,874 10,803 3,693
---------- ---------- ---------- ---------- ----------
Total
nonperforming
assets 912,325 818,780 675,247 446,028 208,890
---------- ---------- ---------- ---------- ----------
Restructured
loans - - - - -
---------- ---------- ---------- ---------- ----------
Total impaired
assets $ 912,325 $ 818,780 $ 675,247 $ 446,028 $ 208,890
========== ========== ========== ========== ==========
Total
nonaccruing
loans to
total loans 25.72% 22.38% 17.94% 11.52% 5.35%
Total NPA to
total assets 24.19% 20.53% 16.25% 10.87% 4.92%
Interest
Bearing
Deposits
Money market,
sweep and NOW $ 428,704 $ 409,606 $ 365,807 $ 325,554 $ 557,323
Savings 276,989 285,725 334,076 365,114 418,535
Time deposits 2,116,394 2,148,970 2,243,362 2,189,046 2,050,857
---------- ---------- ---------- ---------- ----------
Total interest
bearing
deposits $2,822,087 $2,844,301 $2,943,245 $2,879,714 $3,026,715
========== ========== ========== ========== ==========
Capital Ratios
Tier 1 leverage
ratio 3.40% 6.74% 7.60% 8.62% 8.88%
Tier 1
risk-based
capital ratio 4.33% 8.15% 9.13% 9.64% 9.48%
Total
risk-based
capital ratio 5.62% 9.42% 10.40% 10.91% 10.75%
For the Three Months Ended
----------------------------------------------------------
Performance September June March December September
Ratios 30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------- ---------- ---------- ---------- ----------
ROA (annualized) -14.39% -4.92% -3.18% -8.68% -1.69%
ROE (annualized) -234.71% -63.92% -38.70% -81.58% -15.32%
Average assets $3,922,015 $4,061,874 $4,248,979 $4,125,319 $4,221,730
Average
shareholders'
equity $ 240,448 $ 312,851 $ 349,465 $ 438,908 $ 464,500
For the Period Ended (Year-to-Date)
----------------------------------------------------------
Performance September June March December September
Ratios 30, 2009 30, 2009 31, 2009 31, 2008 30, 2008
---------- ---------- ---------- ---------- ----------
ROA (annualized) -7.38% -4.03% -3.18% -2.18% -0.01%
ROE (annualized) -100.06% -50.63% -38.70% -19.42% -0.06%
Average assets $4,076,476 $4,154,923 $4,248,979 $4,107,571 $4,102,034
Average
shareholders'
equity $ 300,498 $ 331,056 $ 349,465 $ 461,981 $ 469,727
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS (Continued)
(In thousands)
(Unaudited)
Quarterly Average Balances
September 30, September 30,
2009 2008 $ Change % Change
----------- ----------- ----------- -----------
ASSETS
Cash and due from banks $ 43,317 $ 53,789 $ (10,472) -19.5%
Federal funds sold 306,772 58,168 248,604 427.4%
Securities
Available for sale,
at fair value 79,425 137,945 (58,520) -42.4%
Held to maturity, at
amortized cost 3,076 3,739 (663) -17.7%
----------- ----------- ----------- -----------
Total securities 82,501 141,684 (59,183) -41.8%
Loans held for resale 4,118 2,822 1,296 45.9%
Loans
Commercial and
industrial 423,953 458,330 (34,377) -7.5%
RE commercial 1,003,786 1,055,207 (51,421) -4.9%
RE construction 661,786 1,051,884 (390,098) -37.1%
RE land development 455,623 602,436 (146,813) -24.4%
RE completed lots 271,602 241,036 30,566 12.7%
RE residential 1-4
family 426,531 362,543 63,988 17.6%
Installment and other 70,868 69,163 1,705 2.5%
----------- ----------- ----------- -----------
Total 3,318,267 3,843,421 (525,154) -13.7%
Allowance for loan
losses (108,254) (87,365) (20,889) 23.9%
----------- ----------- ----------- -----------
Net loans 3,210,013 3,756,056 (546,043) -14.5%
Premises and equipment,
net 49,344 52,581 (3,237) -6.2%
Intangible assets 662 77,977 (77,315) -99.2%
FHLB Stock 19,885 17,207 2,678 15.6%
Bank owned life
insurance 24,968 24,321 647 2.7%
Other real estate owned 66,843 3,179 63,664 2002.6%
Other assets 117,710 36,768 80,942 220.1%
----------- ----------- ----------- -----------
Total assets $ 3,922,015 $ 4,221,730 $ (299,715) -7.1%
=========== =========== =========== ===========
LIABILITIES
Deposits
Noninterest bearing $ 404,988 $ 386,896 $ 18,092 4.7%
Interest bearing
MMA, Sweep and NOW 416,738 586,319 (169,581) -28.9%
Savings 282,065 392,552 (110,487) -28.1%
Time deposits 2,137,770 2,008,838 128,932 6.4%
----------- ----------- ----------- -----------
Total interest
bearing 2,836,573 2,987,709 (151,136) -5.1%
Total deposits 3,241,561 3,374,605 (133,044) -3.9%
Fed funds purchased and
repurchase agreements 15,806 33,631 (17,825) -53.0%
FHLB advances 397,578 329,985 67,593 20.5%
Junior subordinated
debentures 5,156 5,156 - 0.0%
Other liabilities 21,466 13,853 7,613 55.0%
----------- ----------- ----------- -----------
Total liabilities 3,681,567 3,757,230 (75,663) -2.0%
Total shareholders'
equity 240,448 464,500 (224,052) -48.2%
----------- ----------- ----------- -----------
Total liabilities and
shareholders' equity $ 3,922,015 $ 4,221,730 $ (299,715) -7.1%
=========== =========== =========== ===========
FRONTIER FINANCIAL CORPORATION AND SUBSIDIARIES
SELECTED OTHER FINANCIAL INFORMATION AND RATIOS (Continued)
(In thousands)
(Unaudited)
Year-to-Date Average Balances
September 30, September 30,
2009 2008 $ Change % Change
----------- ----------- ----------- -----------
ASSETS
Cash and due from banks $ 45,047 $ 51,125 $ (6,078) -11.9%
Federal funds sold 286,241 24,145 262,096 1085.5%
Securities
Available for sale,
at fair value 81,448 131,019 (49,571) -37.8%
Held to maturity, at
amortized cost 3,081 3,741 (660) -17.6%
----------- ----------- ----------- -----------
Total securities 84,529 134,760 (50,231) -37.3%
Loans held for resale 6,200 3,720 2,480 66.7%
Loans
Commercial and
industrial 438,227 431,062 7,165 1.7%
RE commercial 1,017,262 1,031,928 (14,666) -1.4%
RE construction 808,002 1,066,762 (258,760) -24.3%
RE land development 505,012 579,007 (73,995) -12.8%
RE completed lots 278,892 242,741 36,151 14.9%
RE residential 1-4
family 430,755 329,014 101,741 30.9%
Installment and
other 69,632 68,195 1,437 2.1%
----------- ----------- ----------- -----------
Total 3,553,982 3,752,429 (198,447) -5.3%
Allowance for loan
losses (115,060) (69,091) (45,969) 66.5%
----------- ----------- ----------- -----------
Net loans 3,438,922 3,683,338 (244,416) -6.6%
Premises and equipment,
net 50,348 51,010 (662) -1.3%
Intangible assets 714 78,050 (77,336) -99.1%
FHLB Stock 19,885 18,756 1,129 6.0%
Bank owned life
insurance 24,700 24,096 604 2.5%
Other real estate owned 36,873 1,909 34,964 1831.5%
Other assets 89,217 34,845 54,372 156.0%
----------- ----------- ----------- -----------
Total assets $ 4,076,476 $ 4,102,034 $ (25,558) -0.6%
=========== =========== =========== ===========
LIABILITIES
Deposits
Noninterest bearing $ 398,604 $ 376,623 $ 21,981 5.8%
Interest bearing
MMA, Sweep and NOW 378,870 647,108 (268,238) -41.5%
Savings 313,436 334,703 (21,267) -6.4%
Time deposits 2,221,187 1,836,898 384,289 20.9%
----------- ----------- ----------- -----------
Total interest
bearing 2,913,493 2,818,709 94,784 3.4%
Total deposits 3,312,097 3,195,332 116,765 3.7%
Fed funds purchased and
repurchase agreements 17,824 77,480 (59,656) -77.0%
FHLB advances 417,614 331,207 86,407 26.1%
Junior subordinated
debentures 5,156 5,156 - 0.0%
Other liabilities 23,287 23,132 155 0.7%
----------- ----------- ----------- -----------
Total liabilities 3,775,978 3,632,307 143,671 4.0%
Total shareholders'
equity 300,498 469,727 (169,229) -36.0%
----------- ----------- ----------- -----------
Total liabilities
and shareholders'
equity $ 4,076,476 $ 4,102,034 $ (25,558) -0.6%
=========== =========== =========== ===========
FRONTIER FINANCIAL CORPORATION 332 SW Everett Mall Way Everett, Washington 98204 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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