Washington Banking Company Reports Operating Results (10-Q)

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Nov 09, 2010
Washington Banking Company (WBCO, Financial) filed Quarterly Report for the period ended 2010-09-30.

Washington Banking Company has a market cap of $197.8 million; its shares were traded at around $12.92 with a P/E ratio of 21.9 and P/S ratio of 3.2. The dividend yield of Washington Banking Company stocks is 1.5%.

Highlight of Business Operations:

For the three months ended September 30, 2010, the Company recorded a $4.0 million provision for loan losses, compared to $2.5 million for the same period a year ago. Net charge-offs of non-covered loans for third quarter of 2010 were $3.0 million, a $1.6 million increase over the third quarter of 2009. The increase in net charge-offs of non-covered loans for the period were due to an increase in real estate loan charge-offs. At September 30, 2010 and 2009, the allowance for loan losses, as a percent of total non-covered loans, was 2.14% and 1.99%, respectively.

Noninterest Income: For the three months ended September 30, 2010, noninterest income totaled $20.8 million, compared to $1.8 million for the same period a year ago, an increase of $19.0 million. For the nine months ended September 30, 2010, noninterest income totaled $27.7 million, an increase of $21.7 million from the same period a year ago. The following table presents the key components of noninterest income for the three and nine months ended September 30, 2010 and 2009

Total assets at September 30, 2010, were $1.8 billion, compared to $1.0 billion at December 31, 2009, an increase of $784.3 million, or 75.0%. The increase in total assets was primarily due to the acquisitions of City Bank and North County in the second and third quarters of 2010, respectively. The City Bank and North County Bank acquisitions added an additional $715.1 million and $279.2 million in assets, respectively, to the Companys balance sheet at the time of each closing. Excluding the acquisitions, non-covered loans, net of allowance for loan losses, increased to $819.1 million, compared to $797.6 million at December 31, 2009, an increase of $21.4 million, or 2.7%. Deposits, excluding the City Bank and North County Bank acquisitions, increased to $870.2 million at September 30, 2010, compared to $846.7 million at December 31, 2009, an increase of $23.5 million, or 2.8%.

Total investment securities increased $119.6 million to $200.4 million at September 30 2010, compared to $80.8 million December 31, 2009. The increase was a result of the Company actively adding investment securities to the portfolio due to decreased loan demand and additional cash proceeds from the City Bank and North County Bank acquisitions. As part of the City Bank and North County Bank acquisitions, the Company acquired $9.1 million and $21.2 million in investments, respectively, at the time of each closing.

Non-Covered Loans: Total non-covered loans, net of allowance for loans losses, totaled $819.1 million at September 30, 2010, compared to $797.6 million at December 31, 2009, an increase of $21.4 million, or 2.7%. Loan portfolio growth during 2010 was primarily in commercial loans, which were offset by decreases in real estate mortgage, construction loans and consumer loans. The Company attempts to balance the diversity of its portfolio, believing that this provides a good means of minimizing risk due to loss and interest rate sensitivity. Active portfolio management has resulted in a diversified portfolio that is not heavily concentrated in any one industry or community.

At September 30, 2010 and December 31, 2009, non-covered impaired loans totaling $12.1 million and $3.4 million had related specific reserves in the allowance for loan losses of $2.1 million and $1.2 million, respectively. Non-covered impaired loans without related specific reserves in the allowance for loan losses at September 30, 2010, totaled $9.4 million. At December 31, 2009, all non-covered impaired loans had related specific reserves in the allowance for loan losses. The average recorded investment in non-covered impaired loans was approximately $6.9 million during the nine months ended September 30, 2010, and $5.7 million for the year ended December 31, 2009.

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