Anchor BanCorp Wisconsin Inc. Reports Third Quarter Earnings of $15.5 Million or $1.62 Per Diluted Share

MADISON, Wis., Oct. 29, 2015 (GLOBE NEWSWIRE) — Anchor BanCorp Wisconsin Inc. (the “Company”) (NASDAQ:ABCW), and its wholly-owned subsidiary, AnchorBank, fsb (the “Bank”), today announced financial results for the quarter ended September 30, 2015. The Company recorded a profitable quarter with net income of $15.5 million, or $1.62 per diluted common share. Pre-tax net income for the quarter ended September 30, 2015 of $25.9 million, or $2.71 per diluted share, included a negative provision for loan losses of $22.4 million, or $2.34 per diluted share, which was partially offset by $1.5 million in expense related to early lease termination expenses associated with several previously announced operational efficiency initiatives. Management anticipates these operational efficiency initiatives will result in annual net cost savings of approximately $5.4 million related to reduced compensation, occupancy and other operating costs.

“Following last quarter’s excellent results, we are posting another quarter of strong financial performance. Our continued focus on loan quality improvement has warranted the reduction of our allowance for loan loss this quarter. While the reduction is significant, our loan loss reserve levels remain solid. This quarter’s performance builds on over two years of profitable results and last quarter’s reversal of substantially all of the deferred tax asset valuation allowance,” said Chris Bauer, President and CEO.

Highlights include:

Negative Provision for Loan Losses

The allowance for loan losses is maintained at a level believed appropriate by management to absorb probable and estimable losses inherent in the loan portfolio and is based on: the size and current risk characteristics of the loan portfolio; an assessment of individual impaired loans; actual and anticipated loss experience; and current economic events in specific industries and geographical areas. These economic events include unemployment levels, regulatory guidance and general economic conditions. Determination of the allowance is inherently subjective as it requires significant estimates, including the amounts and timing of expected future cash flows on impaired loans, estimated losses on pools of homogeneous loans based on historical loss experience and consideration of current economic trends, all of which may be susceptible to significant change. Therefore, the allowance for loan losses accounts for elements of imprecision and estimation risk inherent in the calculation.

During the quarter ended September 30, 2015, after a review of the factors listed above, the Company determined such levels of allowance were no longer warranted. While loan quality has improved over a multi-year period, the quarter ended September 30, 2015 was the fourth consecutive quarter of recoveries exceeding charge-offs. Performance trends related to loan losses observed in 2015 include:

  • Total non-performing loans decreased $20.4 million to $14.7 million at September 30, 2015, from $35.1 million at December 31, 2014.
  • The Company has experienced recoveries in excess of charge-offs of $10.2 million over the past four quarters, including $4.9 million for the quarter ended September 30, 2015.
  • Total delinquencies (loans past due 30 days or more) at September 30, 2015 and December 31, 2014, were $18.0 million, or 1.15% of total gross loans, and $29.2 million, or 1.85% of total gross loans, respectively. The Company has experienced a reduction in delinquencies since December 31, 2014, as a result of increased monitoring, loss mitigation and improved economic conditions.
  • Total impaired loans decreased $23.7 million to $71.6 million at September 30, 2015, which included $56.9 million of performing TDRs, from $95.3 million at December 31, 2014, which included $60.2 million of performing TDRs.

The impact to the allowance for loan losses at September 30, 2015 was a $22.4 million negative provision for loan losses. As a result, the allowance for loan losses as a percentage of total loans held for investment was 1.91% at September 30, 2015, compared to 2.99% at December 31, 2014. The allowance for loan losses as a percentage of non-performing loans increased to 200.70% at September 30, 2015, from 133.95% at December 31, 2014.

Net Income

  • Net income was $15.5 million for the quarter ended September 30, 2015, compared to $107.5 million and $5.0 million for the quarters ended June 30, 2015 and September 30, 2014, respectively. During the quarter ended June 30, 2015, the Company recognized $103.0 million of income tax benefit, net of tax provision, due to the reversal of substantially all of the deferred tax asset valuation allowance.
  • Diluted earnings per share was $1.62 for the quarter ended September 30, 2015, compared to $11.37 for the quarter ended June 30, 2015 and $0.55 per diluted share for the quarter ended September 30, 2014.
  • Net interest income was $17.3 million for the quarter ended September 30, 2015, compared to $17.4 million and $17.6 million for the quarters ended June 30, 2015 and September 30, 2014, respectively.
  • Yield on interest-earning assets of 3.60% for the quarter ended September 30, 2015 decreased 5 basis points from 3.65% for the quarter ended June 30, 2015 and decreased 8 basis points compared to 3.68% for the quarter ended September 30, 2014.
  • Negative loan loss provision for the quarter ended September 30, 2015 was $22.4 million, compared to negative loan loss provision of $646,000 and $1.3 million for the quarters ended June 30, 2015 and September 30, 2014, respectively.
  • Non-interest income was $8.7 million for the quarter ended September 30, 2015, compared to $9.7 million and $8.0 million for the quarters ended June 30, 2015 and September 30, 2014, respectively. Non-interest income included a gain of $538,000 from the sale of the Winneconne branch operations and a gain of $294,000 on the sale of the Winneconne branch building and equipment during the quarter ended September 30, 2015. Non-interest income included a $1.4 million gain on the sale of the Appleton Fox River Drive branch building and a gain of $448,000 resulting from the sale of the Viroqua branch operations during the quarter ended June 30, 2015.
  • Non-interest expense was $22.6 million for the quarter ended September 30, 2015, compared to $23.3 million and $21.9 million for the quarters ended June 30, 2015 and September 30, 2014, respectively. The Bank incurred one-time costs of $1.5 million during the quarter ended September 30, 2015, consisting of early lease termination expense, and $2.3 million during the quarter ended June 30, 2015, primarily consisting of employment severance and asset disposition costs related to operational efficiency initiatives that have been completed.

Loans

  • The Bank originated $107.3 million and $104.0 million of commercial, consumer and residential loans in the quarters ended September 30, 2015 and June 30, 2015, respectively. In the last twelve months, the Bank originated $447.7 million in loans, demonstrating the continued confidence that current and new customers have in the Company.
  • Loans held for investment were $1.55 billion at September 30, 2015, a decrease of $22.3 million from December 31, 2014.
  • Loans held for sale were $8.4 million at September 30, 2015, an increase of $1.8 million from December 31, 2014.

Asset Quality

  • Total non-performing loans decreased $20.4 million to $14.7 million at September 30, 2015, from $35.1 million at December 31, 2014.
  • Total non-performing assets (total non-performing loans and other real estate owned) decreased $31.3 million to $39.3 million, or 1.76% of total assets, at September 30, 2015, from $70.6 million, or 3.39% of total assets, at December 31, 2014.
  • Other real estate owned (OREO) was $24.6 million at September 30, 2015, compared to $35.5 million at December 31, 2014.

Deposits and Borrowings

  • Deposits of $1.83 billion at September 30, 2015, increased $15.7 million from December 31, 2014.
  • Cost of funds remained constant at 0.24% for the quarters ended September 30, 2015, and June 30, 2015, an increase of 2 basis points from 0.22% for the quarter ended September 30, 2014.

Capital

  • Book value per common share was $37.49 at September 30, 2015, compared to $35.68 and $23.22 at June 30, 2015 and September 30, 2014, respectively.
  • The Bank’s Tier 1 leverage capital ratio of 12.74% at September 30, 2015 is considered “well capitalized” under the regulatory capital framework.

“Our earnings and ability to execute on our business plan demonstrates support for the confidence our stockholders have in us. We are reviewing capital strategies and believe we are well situated to be opportunistic, yet remain prudent in using our strong capital position for continued profitable growth,” Bauer noted.

About Anchor BanCorp Wisconsin Inc.

Anchor Bancorp Wisconsin Inc, is the parent company for AnchorBank, fsb a community-based financial services company providing commercial, retail, mortgage, consumer finance and investment services to businesses and individuals from 46 banking locations throughout Wisconsin. Anchor Bancorp stock (ABCW) is listed on the NASDAQ Global Market and Russell Global Indexes. Visit AnchorBank online at www.anchorbank.com.

Forward-Looking Statements

This news release contains certain forward-looking statements, as that term is defined in the U.S. federal securities laws. In the normal course of business, we, in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements. Generally, these statements relate to business plans or strategies, projections involving anticipated revenues, earnings, liquidity, capital levels, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business. Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained. You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update them in light of new information or future events, except to the extent required by federal securities laws.

Anchor BanCorp Wisconsin Inc.            
CONSOLIDATED FINANCIAL SUMMARY            
(Unaudited)            
      Qtr Ended
  Quarter Ended Year to Date 9/15-9/14
($ in 000’s, except share data) 9/30/2015 6/30/2015 9/30/2014 9/30/2015 9/30/2014 Incr(Decr)
INCOME STATEMENT            
Interest income 18,418   18,541   18,612   55,043   57,030   (1 )%
Interest expense   1,132     1,117     1,054     3,277     3,295   7  %
Net interest income   17,286     17,424     17,558     51,766     53,735   (2 )%
Provision for loan losses   (22,410 )   (646 )   (1,304 )   (24,410 )   (1,304 ) N/M  
Non-interest income:            
Service charges on deposits   2,633     2,596     2,626     7,597     7,415    %
Investment and insurance commissions   976     1,060     1,015     3,123     3,002   (4 )%
Loan fees   596     179     262     1,506     713   127  %
Loan servicing income, net   500     467     705     1,560     2,219   (29 )%
Loan processing fee income   352     360     266     978     605   32  %
Net gain on sale of loans   1,470     1,912     837     4,983     2,127   76  %
Net gain on sale of investments           482     63     783   (100 )%
Net gain on sale of OREO   719     743     987     2,929     2,188   (27 )%
Net gain (loss) on disposal of premises and equipment   359     1,332     (7 )   1,691     (83 ) N/M  
Net gain on sale of branch   538     448         986        %
Other   578     641     842     1,783     2,588   (31 )%
Total non-interest income   8,721     9,738     8,015     27,199     21,557   9 %
Non-interest expense:            
Personnel costs   10,843     13,371     10,872     36,001     32,773   %
Net occupancy and equipment expense   2,338     2,730     2,443     7,522     7,852   (4 )%
Data processing expense   1,423     1,546     1,340     4,420     4,026   6  %
OREO expense   962     737     2,999     1,935     6,451   (68 )%
Mortgage servicing rights impairment (recovery)   93     (391 )   (53 )   (328 )   42   275  %
Provision for unfunded commitments   258     170     (2,401 )   549     (1,621 ) 111  %
Professional fees   549     606     404     1,589     1,162   36  %
Lease termination expense   1,454             1,454       N/M  
Other   4,632     4,494     6,311     13,646     16,402   (27 )%
Total non-interest expense   22,552     23,263     21,915     66,788     67,087   3  %
Net income before taxes   25,865     4,545     4,962     36,587     9,509   421  %
Income tax expense (benefit)   10,394     (102,976 )       (92,550 )   10   N/M  
Net income $ 15,471   $ 107,521   $ 4,962   $ 129,137   $ 9,499   212  %
SHARE DATA            
Diluted earnings per share $ 1.62   $ 11.37   $ 0.55   $ 13.74   $ 1.05   195  %
Cash dividends $    $    $    $    $    
Book value  $ 37.49    $ 35.68    $ 23.22    $ 37.49    $ 23.22   61  %
Average diluted shares outstanding   9,559,000     9,459,000     9,058,000     9,540,000     9,058,000   6  %
KEY RATIOS AND DATA            
Yield on interest-earning assets   3.60 %   3.65 %   3.68 %   3.62 %   3.78 % (0.08 )
Cost of funds   0.24 %   0.24 %   0.22 %   0.24 %   0.23 % 0.02  
Net interest margin   3.38 %   3.43 %   3.47 %   3.41 %   3.56 % (0.09 )
Return on average assets   2.79 %   20.40 %   0.94 %   8.06 %   0.60 % 1.85  
Average equity to average assets   15.49 %   11.40 %   9.99 %   12.76 %   9.89 % 5.50  
Common Equity Tier 1 ratio (1)   18.63 %   18.26 %   N/A     18.63 %   N/A   N/A  
Tier 1 leverage (1)   12.74 %   12.03 %   10.70 %   12.74 %   10.70 % 2.04  
Tier 1 risk-based capital (1)   18.63 %   18.26 %   16.68 %   18.63 %   16.68 % 1.95  
Total capital ratio (1)   19.93 %   19.58 %   17.96 %   19.93 %   17.96 % 1.97  
                                   
N/A = not applicable  N/M = not meaningful                                  
(1) Capital ratios calculated utilizing Basel III regulatory requirements effective January 1, 2015 for AnchorBank, fsb.
             
Anchor BanCorp Wisconsin Inc.            
CONSOLIDATED FINANCIAL SUMMARY            
(Unaudited)     Ending
      Balances
  Quarter Ended Averages Ending Balances 9/15-12/14
(in 000’s) 9/30/2015 12/31/2014 9/30/2014 9/30/2015 12/31/2014 Incr(Decr)
BALANCE SHEET            
Assets:            
Cash and cash equivalents $ 144,166   $ 195,093   $ 192,041   $ 155,888   $ 147,273   6  %
Investment securities   350,711     293,577     294,105     357,007     294,599   21  %
Loans held for sale   13,607     5,608     5,145     8,408     6,594   28  %
Loans held for investment   1,554,780     1,559,421     1,547,865     1,549,183     1,571,476   (1 )%
Allowance for loan losses   (48,689 )   (48,260 )   (49,377 )   (29,525 )   (47,037 ) 37  %
Loans held for investment, net   1,506,091     1,511,161     1,498,488     1,519,658     1,524,439   %
Other real estate owned (OREO), net   26,584     44,511     52,017     24,612     35,491   (31 )%
Other assets   180,206     77,081     79,148     171,272     73,983   132  %
Total assets $ 2,221,365   $ 2,127,031   $ 2,120,944   $ 2,236,845   $ 2,082,379   7  %
Liabilities and Stockholders’ Equity:          
Non interest bearing deposits $ 291,519   $ 285,960   $ 276,888   $ 295,367   $ 291,248   1  %
Interest bearing deposits   1,543,212     1,582,144     1,595,474     1,534,549     1,522,923   1  %
Total deposits   1,834,731     1,868,104     1,872,362     1,829,916     1,814,171   %
Other borrowed funds   13,860     14,982     14,520     12,581     13,752   (9 )%
Other liabilities   28,744     21,500     22,186     34,477     26,793   29  %
Total liabilities   1,877,335     1,904,586     1,909,068     1,876,974     1,854,716   1  %
Total stockholders’ equity   344,030     222,445     211,876     359,871     227,663   58  %
Total liabilities & stockholders’ equity $ 2,221,365   $ 2,127,031   $ 2,120,944   $ 2,236,845   $ 2,082,379   7  %
       
      Qtr Ended
  Quarter Ended Year-to-Date 9/15-9/14
  9/30/2015 12/31/2014 9/30/2014 9/30/2015 12/31/2014 Incr(Decr)
CREDIT QUALITY            
Provision for loan losses $ (22,410 ) $ (3,281 ) $ (1,304 ) $ (24,410 ) $ (4,585 ) N/M
Net charge-offs (recoveries)   (4,898 )   (3,281 )   834     (6,897 )   13,560   N/M
             
Key Metrics            
Ending allowance for loan losses   29,525     47,037     47,037     29,525     47,037   (37 )%
Loans 30 to 89 days past due   7,735     8,892     9,979     7,735     8,892   (22 )%
Non-performing loans (NPL)   14,711     35,115     38,352     14,711     35,115   (62 )%
Other real estate owned   24,612     35,491     46,725     24,612     35,491   (47 )%
Non-performing assets   39,323     70,606     85,077     39,323     70,606   (54 )%
Non-performing assets to total assets   1.76  %   3.39  %   4.04 %   1.76  %   3.39 % (2.28 )
Allowance for loan losses to NPL   200.70  %   133.95  %   122.65 %   200.70  %   133.95 % 78.05  
Allowance for loan losses to loans held for investment   1.91  %   2.99  %   3.02 %   1.91  %   2.99 % (1.12 )
Net charge-offs (recoveries) to average assets   (0.22 )%   (0.15 )%   0.04 %   (0.32 )%   0.64 % (0.26 )
             
N/M = not meaningful            
CONTACT: Jennifer Ranville, 608-252-8862