Newbridge Bancorp (NBBC) Announces Problem Asset Disposition Plan Success

NewBridge Bancorp (NASDAQ: NBBC), parent of NewBridge Bank, today announced that it has accelerated its previously announced problem asset disposition plan (the “Plan”) and has entered into securities purchase agreements with select investors and insiders of the Company pursuant to which it expects to raise $56 million of convertible preferred equity. The Company also reported results for the three month and nine month periods ended September 30, 2012. For the three months then ended, the Company reported a net loss $32.5 million compared to net income of $1.1 million for the quarter ended September 30, 2011. After dividends and accretion on preferred stock, the Company reported net loss to common shareholders of $2.12 per diluted share. The results for the quarter included one-time items of an $11 million valuation allowance against the Company’s deferred tax asset and $1.9 million of expense to write down facilities and other assets. For the nine months ended September 30, 2012, the Company reported a net loss of $30.0 million compared to net income of $3.2 million for the same period a year ago. The prior year nine month period benefitted from a one-time gain of $2.0 million on the sale of investment securities.

The Company’s financial results were affected by its previously disclosed Plan to accelerate the disposition of problem assets. The Plan objective was to reduce classified assets by $71 million from $149.0 million as measured at March 31, 2012. As of September 30, 2012, the Company had substantially completed this objective. Classified assets declined $46 million during the quarter, totaling $85.0 million at September 30, 2012. Management estimates the Company will exceed the Plan objective by year end. This increase in credit costs is partially reflected through the reduction in problem assets under the Plan, as well as in the higher allowance for credit loss levels. The allowance for credit losses increased $9.8 million in the third quarter to $35.0 million and as a percentage of nonperforming loans from 73% to 126%. The increase in reserves was also attributed to higher general reserve levels principally for homogenous residential and home equity loans resulting from management’s review of these portfolios and the subsequent identification of pools of high risk performing loans.

On November 1, 2012, the Company entered into securities purchase agreements with select investors and insiders pursuant to which it expects to raise $56 million of equity, subject to receipt of customary regulatory approvals and determinations. The capital raise will be executed through a private placement of two series of mandatorily convertible preferred stock at a price of $4.40 per share. The two series of preferred stock will automatically convert into shares of NBBC voting and nonvoting, respectively, common stock in the first quarter of 2013 after the Company has received shareholder approval at a Special Meeting of Shareholders expected to be held in the first quarter of 2013.

Pressley A. Ridgill, President and Chief Executive Officer of NewBridge Bancorp, commented: “I am pleased to share the news of our capital raise and to report the positive results from the problem asset disposition plan. Although the implementation of the Plan resulted in what we anticipate will be a temporary impairment of our deferred tax asset, we believe the resolution of our problem assets fortifies our balance sheet and will immediately result in stronger earnings and positions the Company for improved profitability in the coming years. In addition, the new capital enhances the Company’s ability to address the $52 million preferred equity held by the U.S. Treasury through the Troubled Asset Relief Program (TARP).”

Mr. Ridgill continued, “Our third quarter operating results remain strong but also reflect some of the challenges we face in this operating environment. The Company’s net interest margin declined for the second consecutive quarter on the purging of high risk and high yield loans as well as the ordinary repricing of loans and investments in the low rate environment; liability cost declined but is increasingly limited in its future benefit; personnel expense climbed as the Company expanded its investment in loan production professionals in Charlotte and Raleigh, and certain assets were written down as the Company plans for efficiency improvement over the coming year. The low rate environment and flattening yield curve present unique challenges to our industry. As always, we will meet these challenges thoughtfully by investing in people, reducing costs and planning for disciplined growth.”

Net interest income

Net interest income declined $944,000, or 5.7%, to $15.7 million for the quarter compared to $16.6 million a year ago. Year to date net interest income declined 4.7%, or $2.4 million, to $48.2 million. The Company’s net interest margin declined to 4.02% for the quarter compared to 4.20% for the same period last year. The net interest margin for the nine month period ending September 30, 2012 was 4.11%, down from 4.21% for the first nine months of last year. For the nine month period, the average balance of loans declined $111.9 million from the prior year’s nine month average, and the average yield on loans declined 24 basis points to 4.95%, resulting in a $6.5 million year to date reduction in interest income from loans. This decline was partially offset by lower interest expense on interest bearing liabilities, which fell by $3.7 million primarily due to a decline in deposit rates, and a higher balance of investment securities, which increased $81 million over the prior year. Interest income on investments increased 3.9% for the year, or $398,000. Yield on the investment portfolio for the three months ending September 30, 2012 declined 92 basis points to 3.44% from 4.36% for the same period a year ago.

The sustained low interest rate environment continues to impact loan yields. The annualized average yield on loans decreased to 4.81% for the three months ended September 30, 2012 compared to 5.18% for the three months ended September 30, 2011. The continuing implementation of the Plan adversely impacted loan yields in two ways: the impairment of performing loans reversed previously accrued interest in prior periods, and the $35.6 million of accruing loans disposed of in the September quarter had a 6.2% average yield, whereas new loans added during the quarter had an average yield of 4.2%.

Balance Sheet

Total assets decreased $34.5 million during the third quarter and $20.7 million for the year to $1.71 billion at September 30, 2012. Loans held for investment increased $6.1 million for the quarter, but declined $31.3 million for the year. Under the Plan, approximately $35.6 million of loans were sold or paid out, and $4.5 million were moved to other real estate owned (“OREO”). During the quarter, $19.1 million of net chargeoffs were recorded. Separately, $25.9 million of loans were purchased, and internal loan growth was $12.5 million during the quarter. During the past nine months, the Company has been actively building its commercial and private banking sales teams in the largest metropolitan areas of North Carolina, including the Piedmont Triad, Wilmington, Raleigh and Charlotte markets. Commercial loan production totaled $178 million for the year to date, an increase of 59% from the prior year period. Cash and cash equivalents decreased $19.2 million for the quarter and $11.3 million for the nine months. Investment securities decreased $1.6 million for the quarter to $387.4 million but have increased $49.6 million since the beginning of the year.

Total deposits declined $59.5 million to $1.39 billion at quarter end. Core deposits, excluding time deposits, declined $33.1 million to $1.01 billion. This decline in core deposits resulted from changes in fee structures targeted at simplifying product offerings and growing fee income and from lower rates being offered to certain deposit customers. The weighted average rate on core deposits declined from 0.26% at June 30, 2012 to 0.17% at September 30, 2012. Time deposit balances decreased $26.3 million during the quarter. For the quarter, the weighted average cost of time deposits declined from 0.62% to 0.55%.

Shareholders’ equity decreased $30.2 million during the quarter due primarily to credit related costs of approximately $40 million and the $11 million partial impairment of the Company’s deferred tax asset. Comprehensive income increased $2.9 million. Tangible book value declined $1.92 to $5.35.

Noninterest Income

Operating noninterest income, which excludes gains and losses on sales of securities and OREO, totaled $4.2 million for the third quarter of 2012 compared to $4.1 million for the third quarter of 2011. Mortgage revenues increased $337,000, or 85%, to $732,000 for the quarter. The growth in mortgage revenue was partially offset by lower retail banking revenue and a $57,000 decline in wealth management services revenue. While top line wealth management fee income declined, overall year to date profitability increased by $379,000 over 2011. For the respective nine month periods, operating noninterest income totaled $12.2 million and $14.1 million.

Losses on sales and writedowns of OREO totaled $10.6 million for the quarter and $14.6 million for the year to date compared to $799,000 and $3.9 million for the same periods in 2011.

Securities gains totaled $3,000 during the nine months ended September 30, 2012, compared to $2.0 million in gains during the nine months ended September 30, 2011.

Noninterest Expense

Noninterest expense increased $1.7 million from the prior year quarter to $16.5 million, and included $1.9 million of one-time occupancy and other noninterest expense that related to future planned efficiency initiatives. Personnel expense was $344,000 below the prior year level despite the addition of 11 commercial and private bankers during the current year to staff expansion of Raleigh and Charlotte operations.

Asset Quality

Total classified loans decreased 30%, or $32 million, during the quarter. Total classified loans crested later than many of the Company’s other credit metrics, rising until the third quarter of 2010. Since then, classified loans have declined 56%, or $93 million. As a percentage of the Bank’s tier one capital plus reserves, classified assets declined to 48% from 78% at December 31, 2011 and 93% at September 30, 2010. Nonperforming loans declined 20.1%, or $7.0 million, during the quarter. Nonperforming loans peaked at June 30, 2009 at $64.1 million. Since then, they have declined 56.8%, or $36.4 million. Nonperforming loans represent 2.37% of total loans held for investment. OREO decreased $14.0 million during the quarter to $10.5 million at September 30, 2012, primarily resulting from additional writedowns to estimated liquidation values, which is 43% of the previous carrying value of the properties.

Including OREO, total nonperforming assets decreased $21.0 million to $38.2 million, or 2.23% of total assets, at September 30, 2012. For the third quarter, troubled debt restructured loans totaled $10.9 million of the $27.7 million of nonperforming loans. Accruing restructured loans totaled $4.8 million, and nonaccruing restructured loans totaled $6.1 million.

The allowance for credit losses totaled $35.0 million at September 30, 2012, or 3.00% of loans held for investment. The Company’s allowance for credit losses as a percentage of nonperforming loans totaled 126% at September 30, 2012, compared to 73% at June 30, 2012 and 71% at December 31, 2011. The allowance consists of general reserves (93.4%) and specific reserves (6.6%). The confirmed losses from the Company’s nonperforming loans have been previously recognized through chargeoffs. Consequently, the Company’s allowance for credit losses is generally applicable to inherent losses within the Company’s watch list and other performing loans portfolio. Since the current adverse credit cycle began in 2007, the Company has charged off $183.8 million of loans and OREO, or 11.3% of our highest/peak level of loan balances of $1.627 billion at September 30, 2008. The annualized average quarterly net loss percentages over this 23 quarter period for commercial loans, mortgage loans, credit reserves and home equity lines, retail loans and credit cards were 2.16%, 0.77%, 1.67%, 1.91% and 1.44%, respectively.

The Bank is well within the regulatory commercial real estate high concentration guidelines in land acquisition, development and construction (the “AD&C portfolio”) loans, as well as total commercial real estate loans. At September 30, 2012, the Bank’s concentration levels were 39.61% and 178.96%, respectively, of total regulatory capital, which compares favorably to the interagency regulatory guidance maximum concentrations of 100% and 300%, respectively. The AD&C portfolio totaled $63 million at September 30, 2012, including $23 million of speculative residential construction and residential acquisition and development. This portfolio is largely graded as classified loans.

Outlook

Mr. Ridgill stated that “as previously discussed, we believe that our decision to accelerate the resolution of our remaining problem assets will result in earnings largely unencumbered by credit costs beginning in the fourth quarter of 2012. We believe there will be continued pressure on the margin in coming quarters, although we believe this will be largely offset by a recently implemented deposit account revenue enhancement strategy, further cost reductions and modest growth in earning assets.”

About NewBridge Bancorp

NewBridge Bancorp is the parent company of NewBridge Bank, a full service state chartered community bank headquartered in Greensboro, North Carolina. The stock of NewBridge Bancorp trades on the Nasdaq Global Select Market under the symbol of “NBBC”.

As one of the largest community banks in the state, NewBridge Bank serves small to midsize businesses, professionals and consumers with a comprehensive array of financial services including retail and commercial banking, private banking, wealth management and mortgage banking. NewBridge Bank has assets of approximately $1.7 billion with 30 banking offices in North Carolina.

Disclosures About Forward Looking Statements

The discussions included in this document and its exhibits may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including Section 21E of the Securities Exchange Act of 1934 and Section 27A of the Securities Act of 1933. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results to differ materially. For the purposes of these discussions, any statements that are not statements of historical fact may be deemed to be forward looking statements. Such statements are often characterized by the use of qualifying words such as “expects,” “anticipates,” “believes,” “estimates,” “plans,” “projects,” or other statements concerning opinions or judgments of NewBridge and its management about future events. The accuracy of such forward looking statements could be affected by factors including, but not limited to, successful completion of the capital raise described above, receipt of customary regulatory approvals and determinations referenced above, receipt of the shareholder approval referenced above, the financial success or changing conditions or strategies of NewBridge Bancorp’s clients or vendors, fluctuations in interest rates, actions of government regulators, the availability of capital and personnel or general economic conditions. Additional factors that could cause actual results to differ materially from those anticipated by forward looking statements are discussed in NewBridge’s filings with the Securities and Exchange Commission, including without limitation its annual report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. NewBridge undertakes no obligation to revise or update these statements following the date of this press release.

FINANCIAL SUMMARY
		Three Months Ended September 30, 2012								Three Months Ended September 30, 2011
		Average		Interest Income/		Average Yield/				Average		Interest Income/		Average Yield/
		Balance		Expense		Rate				Balance		Expense		Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
	Loans receivable	$ 1,165,080		$ 14,084		4.81%				$ 1,234,861		$ 16,121		5.18%
	Investment securities	385,750		3,340		3.44%				312,356		3,430		4.36%
	Other earning assets	10,430		10		0.38%				32,709		20		0.24%
	Total Earning Assets	1,561,260		17,434		4.44%				1,579,926		19,571		4.91%
Non-Earning Assets		153,353								138,492
	Total Assets	$ 1,714,613		17,434						$ 1,718,418		19,571
Interest-Bearing Liabilities
	Deposits	$ 1,226,510		1,088		0.35%				$ 1,254,513		2,252		0.71%
	Borrowings	109,185		575		2.10%				117,535		604		2.04%
	Total Interest-Bearing Liabilities	1,335,695		1,663		0.50%				1,372,048		2,856		0.83%
	Noninterest-bearing deposits	189,979								163,440
	Other liabilities	18,442								17,849
	Shareholders’ equity	170,497								165,081
	Total Liabilities and
	Shareholders’ Equity	$ 1,714,613		1,663						$ 1,718,418		2,856
Net Interest Income				$ 15,771								$ 16,715
Net Interest Margin						4.02%								4.20%
Interest Rate Spread						3.94%								4.08%
		Nine Months Ended September 30, 2012								Nine Months Ended September 30, 2011
		Average		Interest Income/		Average Yield/				Average		Interest Income/		Average Yield/
		Balance		Expense		Rate				Balance		Expense		Rate
(Fully taxable equivalent basis, dollars in thousands)
Earning Assets
	Loans receivable	$ 1,177,334		$ 43,587		4.95%				$ 1,289,198		$ 50,052		5.19%
	Investment securities	382,365		10,846		3.79%				301,537		10,443		4.63%
	Other earning assets	15,462		30		0.26%				24,359		44		0.24%
	Total Earning Assets	1,575,161		54,463		4.62%				1,615,094		60,539		5.01%
Non-Earning Assets		156,290								144,431
	Total Assets	$ 1,731,451		54,463						$ 1,759,525		60,539
Interest-Bearing Liabilities
	Deposits	$ 1,229,965		4,217		0.46%				$ 1,264,579		7,513		0.79%
	Borrowings	121,548		1,792		1.97%				150,413		2,220		1.97%
	Total Interest-Bearing Liabilities	1,351,513		6,009		0.59%				1,414,992		9,733		0.92%
	Noninterest-bearing deposits	192,100								164,047
	Other liabilities	19,372								16,657
	Shareholders’ equity	168,466								163,829
	Total Liabilities and
	Shareholders’ Equity	$ 1,731,451		6,009						$ 1,759,525		9,733
Net Interest Income				$ 48,454								$ 50,806
Net Interest Margin						4.11%								4.21%
Interest Rate Spread						4.03%								4.09%

FINANCIAL SUMMARY
		2012						2011
		Third		Second		First		Fourth		Third
		Quarter		Quarter		Quarter		Quarter		Quarter
Period-End Balances (Dollars in thousands)
Assets		$ 1,713,909		$ 1,748,436		$ 1,745,968		$ 1,734,564		$ 1,702,660
Loans held for investment		1,168,747		1,162,630		1,173,671		1,200,070		1,217,058
Loans held for sale		7,074		5,741		7,676		7,851		6,894
Investment securities		387,376		388,968		394,904		337,811		295,461
Earning assets		1,573,843		1,593,275		1,581,981		1,572,095		1,549,932
Noninterest-bearing deposits		184,942		192,066		211,246		172,351		167,689
Savings deposits		44,990		45,371		44,118		40,876		40,097
NOW accounts		429,792		431,390		444,439		441,292		423,258
Money market accounts		350,189		374,217		383,256		370,773		363,340
Time deposits		379,823		406,153		366,135		393,384		401,287
Interest-bearing liabilities		1,368,768		1,367,905		1,348,722		1,379,799		1,347,756
Shareholders’ equity		139,365		169,551		167,046		163,387		167,278
Asset Quality Data (Dollars in thousands)
Nonperforming loans:
	Commercial nonaccrual loans, not restructured	$ 12,411		$ 10,331		$ 17,905		$ 15,773		$ 17,477
	Commercial nonaccrual loans which
	have been restructured	5,092		8,243		8,116		7,489		9,870
	Non-commercial nonaccrual loans, not restructured	4,418		8,195		10,038		9,569		8,789
	Non-commercial nonaccrual loans which
	have been restructured	1,007		2,616		990		283		133
	Total nonaccrual loans	22,928		29,385		37,049		33,114		36,269
	Loans past due 90 days or more and
	still accruing	6		65		29		14		26
	Accruing restructured loans	4,760		5,230		6,633		7,406		7,167
	Total nonperforming loans	27,694		34,680		43,711		40,534		43,462
Other real estate owned		10,465		24,491		30,032		30,587		26,469
Total nonperforming assets		$ 38,159		$ 59,171		$ 73,743		$ 71,121		$ 69,931
Restructured loans, performing		1,296		2,443		3,101		4,888		4,577
Net chargeoffs		19,096		5,047		4,369		3,153		3,736
Allowance for credit losses		35,016		25,231		27,918		28,844		27,750
Allowance for credit losses to loans held for investment		3.00	%	2.17	%	2.38	%	2.40	%	2.28	%
Nonperforming loans to loans held for investment		2.37		2.98		3.72		3.38		3.57
Nonperforming assets to total assets		2.23		3.38		4.22		4.10		4.11
Nonperforming loans to total assets		1.62		1.98		2.50		2.34		2.55
Net chargeoff percentage (annualized)		6.52		1.73		1.48		1.03		1.20
Allowance for credit losses to nonperforming loans		126.44		72.75		63.87		71.16		63.85
Loans identified as impaired		$ 22,644		$ 32,955		$ 35,043		$ 32,591		$ 33,827
Other nonperforming loans		5,050		1,725		8,668		7,943		9,635
	Total nonperforming loans	27,694		34,680		43,711		40,534		43,462
Performing classified loans		46,842		71,673		75,282		87,959		92,327
	Total classified loans	$ 74,536		$ 106,353		$ 118,993		$ 128,493		$ 135,789
Other real estate owned		10,465		24,491		30,032		30,587		26,469
	Total classified assets	$ 85,001		$ 130,844		$ 149,025		$ 159,080		$ 162,258
Classified ratio		48.10	%	63.24	%	72.09	%	77.59	%	79.89	%
Total capital (bank)		$ 176,729		$ 206,901		$ 206,723		$ 205,019		$ 203,109
Gross loan chargeoffs, and writedowns and losses
	on other real estate owned to peak loans
	during the credit cycle beginning January 1, 2007:	2007		2008		2009		2010		2011		2012		TOTAL
Gross loan chargeoffs
	Commercial	$ 5,052		$ 5,046		$ 11,232		$ 9,052		$ 5,045		$ 11,698		$ 47,125
	Real estate – construction	825		7,339		12,227		5,379		3,985		7,014		36,769
	Real estate – mortgage	1,300		5,012		10,110		7,260		6,822		10,411		40,915
	Consumer	2,235		5,071		4,925		2,829		1,358		848		17,266
	Other	–		–		–		6,200		1,387		3		7,590
	Total gross loan chargeoffs	$ 9,412		$ 22,468		$ 38,494		$ 30,720		$ 18,597		$ 29,974		$ 149,665
Other real estate owned writedowns and losses		4,001		3,571		1,294		5,508		5,238		14,571		34,183
	Total chargeoffs, writedowns and losses	$ 13,413		$ 26,039		$ 39,788		$ 36,228		$ 23,835		$ 44,545		$ 183,848
	Peak loans at September 30, 2008													$ 1,626,504
	Chargeoffs, writedowns and losses to peak loans													11.30	%

FINANCIAL SUMMARY
		Three Months Ended September 30										Nine Months Ended September 30
		2012					2011						2012				2011
Income Statement Data
(Dollars in thousands, except share data)
Interest income:
	Loans	$	14,084			$	16,121					$	43,587			$	50,052
	Investment securities		3,247				3,337						10,565				10,167
	Other		10				20						30				44
Total interest income			17,341				19,478						54,182				60,263
Interest expense:
	Deposits		1,088				2,252						4,217				7,513
	Borrowings from the FHLB		232				275						760				907
	Other		343				329						1,032				1,313
Total interest expense			1,663				2,856						6,009				9,733
Net interest income			15,678				16,622						48,173				50,530
Provision for credit losses			28,881				3,445						34,684				12,539
Net interest income after provision for credit losses			(13,203	)			13,177						13,489				37,991
Noninterest income:
	Retail banking		2,308				2,457						6,888				7,511
	Mortgage banking services		732				395						1,848				1,088
	Wealth management services		645				702						1,800				1,873
	Gain on sale of investment securities		3				65						3				2,026
	Writedowns and loss on sale of real estate
	acquired in settlement of loans		(10,587	)			(799	)					(14,571	)			(3,871	)
	Bank-owned life insurance		326				303						1,171				1,015
	Other		171				177						468				592
Total noninterest income			(6,402	)			3,300						(2,393	)			10,234
Noninterest expense
	Personnel		7,513				7,857						21,800				22,498
	Occupancy		2,155				983						4,183				3,043
	Furniture and equipment		832				896						2,495				2,784
	Technology and data processing		1,039				960						3,074				2,970
	Legal and professional		858				664						2,219				2,032
	FDIC insurance		444				600						1,326				2,027
	Real estate acquired in settlement of loans		479				451						1,002				1,233
	Other		3,225				2,482						7,786				7,278
Total noninterest expense			16,545				14,893						43,885				43,865
Income (loss) before income taxes			(36,150	)			1,584						(32,789	)			4,360
Income tax expense (benefit)			(3,700	)			501						(2,771	)			1,125
Net income (loss)			(32,450	)			1,083						(30,018	)			3,235
Dividends and accretion on preferred stock			(729	)			(730	)					(2,188	)			(2,189	)
Net income (loss) available to common shareholders		$	(33,179	)		$	353					$	(32,206	)		$	1,046
Net income (loss) per share – basic			($2.12	)		$	0.02						($2.06	)		$	0.07
Net income (loss) per share – diluted			($2.12	)		$	0.02						($2.06	)		$	0.06
Other Data
Return on average assets			(7.53	)	%		0.25		%				(2.32	)	%		0.25		%
Return on average equity			(75.72	)			2.60						(23.80	)			2.64
Net yield on earning assets			4.02				4.20						4.11				4.21
Efficiency (excluding OREO items and securities gains)			71.08				69.92						67.83				68.09
Average loans to assets			67.95				71.86						68.00				73.27
Average loans to deposits			82.25				87.09						82.79				90.24
Average noninterest-bearing deposits
to total deposits			13.41				11.53						13.51				11.48
Average equity to assets			9.94				9.61						9.73				9.31
Total capital as a percentage of total risk weighted assets			12.07				14.66						12.07				14.66
Tangible common equity as a percentage
	of total risk weighted assets		6.28				8.07						6.28				8.07

INVESTMENT PORTFOLIO
(Dollars in thousands)		As of September 30, 2012
		Amortized		Gross		Gross		Estimated		Average		Average
		Cost		Unrealized gain		Unrealized loss		Fair value		Yield (%)		Duration (years)
US Treasury		$ 19,999		$ –		$ –		$ 19,999		0.05	%	0.06
US Agency		36,996		135		–		37,131		1.74		0.41
Mortgage backed securities		23,963		2,569		–		26,532		5.28		2.40
Collateralized mortgage obligations		11,579		252		(1)		11,830		5.66		1.70
Commercial mortgage backed securities		53,960		2,196		(126)		56,030		3.34		3.54
Covered bonds		44,915		3,853		–		48,768		3.68		3.71
Corporate bonds		150,578		4,978		(1,807)		153,749		3.26		3.51
Municipal obligations		18,048		779		–		18,827		6.21	*	4.27
Federal Home Loan Bank stock		7,874		–		–		7,874
Other		5,775		861		–		6,636
Total		$ 373,687		$ 15,623		$ (1,934)		$ 387,376		3.35	*	2.93
*	Fully taxable equivalent basis

COMMON STOCK DATA
		2012						2011
		Third		Second		First		Fourth		Third
		Quarter		Quarter		Quarter		Quarter		Quarter
Market value:
End of period		$ 4.84		$ 4.38		$ 4.79		$ 3.87		$ 3.90
High		5.00		4.94		4.91		4.20		4.99
Low		3.74		3.88		3.71		3.30		3.53
Book value		5.56		7.48		7.32		7.09		7.34
Tangible book value		5.35		7.27		7.09		6.85		7.09
Average shares outstanding		15,655,868		15,655,868		15,655,868		15,655,868		15,655,868
Average diluted shares outstanding		15,655,868		16,465,346		16,299,152		16,163,509		16,467,550

NON-GAAP MEASURES
Pre-tax, pre-securities gains and
pre-credit related operating income
(also excludes one-time adjustments)
		Three Months Ended September 30										Nine Months Ended September 30
			2012				2011						2012				2011
Net income		$	(32,450	)		$	1,083					$	(30,018	)		$	3,235
Income taxes			(3,700	)			501						(2,771	)			1,125
Less gain on sale of investment securities			(3	)			(65	)					(3	)			(2,026	)
Less one-time expense adjustments			1,949				–						1,949				–
Real estate acquired in settlement of loans expense			479				451						1,002				1,233
Writedowns and loss on sale of real estate
acquired in settlement of loans			10,587				799						14,571				3,871
Provision for credit losses			28,881				3,445						34,684				12,539
Pre-tax, pre-securities gains and
pre-credit related operating income		$	5,743			$	6,214					$	19,414			$	19,977
Operating efficiency percentage
		Three Months Ended September 30										Nine Months Ended September 30
			2012				2011						2012				2011
Total noninterest expense		$	16,545			$	14,893					$	43,885			$	43,865
Less one-time expense adjustments			(1,949	)			–						(1,949	)			–
Less real estate acquired in settlement of loans expense			(479	)			(451	)					(1,002	)			(1,233	)
Numerator for calculation of operating efficiency (A)		$	14,117			$	14,442					$	40,934			$	42,632
Net interest income		$	15,678			$	16,622					$	48,173			$	50,530
Total noninterest income			(6,402	)			3,300						(2,393	)			10,234
Less gain on sale of investment securities			(3	)			(65	)					(3	)			(2,026	)
Writedowns and loss on sale of real estate
acquired in settlement of loans			10,587				799						14,571				3,871
Denominator for calculation of operating efficiency (B)		$	19,860			$	20,656					$	60,348			$	62,609
Operating efficiency percentage (A/B)			71.08	%			69.92	%					67.83	%			68.09	%