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Taylor Capital Group Inc. Reports Operating Results (10-Q)

November 06, 2012 | About:
10qk

10qk

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Taylor Capital Group Inc. (TAYC) filed Quarterly Report for the period ended 2012-09-30.

Taylor Capital Group Inc has a market cap of $547.7 million; its shares were traded at around $18.7 with a P/E ratio of 20.3 and P/S ratio of 2.3.

Highlight of Business Operations:

Net income applicable to common stockholders was $15.0 million, or $0.49 per diluted common share for the third quarter of 2012, compared to net income applicable to common stockholders of $7.3 million, or $0.35 per diluted common share, in the third quarter of 2011. For the nine months ended September 30, 2012, net income applicable to common stockholders was $35.2 million, or $1.15 per diluted common share outstanding, compared to net income applicable to common stockholders of $1.4 million, or $0.07 per diluted common share outstanding, for the nine months ended September 30, 2011. This increase in income applicable to common stockholders for the three and nine months ended September 30, 2012, was primarily the result of strong mortgage banking revenue and a decrease in credit costs, which includes the provision for loan losses and nonperforming asset expense, and decreased funding costs. Partially offsetting these items was an increase in salaries and employee benefits expense due to an increase in headcount and incentive compensation expense.

Average interest-earning assets during the third quarter of 2012 were $4.67 billion as compared to $4.30 billion during the third quarter of 2011, an increase of $371.6 million, or 8.6%. Average investment balances decreased $130.7 million, or 9.6%, between those two periods while average loan balances increased $504.1 million, or 17.2%. The increase in average loan balances is due primarily to growth in residential mortgage loans held for sale and held in portfolio.

Average interest-earning assets during the first nine months of 2012 were $4.55 billion as compared to $4.28 billion during the first nine months of 2011, an increase of $272.7 million, or 6.4%. Average investment balances decreased $96.1 million, or 7.0%, between those two periods while average loan balances increased $369.7 million, or 12.7%. The increase in average loan balances is due primarily to growth in residential mortgage loans held for sale and held in portfolio.

Net income for the Mortgage Banking segment for the nine months ended September 30, 2012, was $25.1 million, an increase of $26.0 million from net loss of $871,000 for the nine months ended September 30, 2011. Net interest income increased $7.9 million, from $3.3 million for the nine month period ended September 30, 2011 to $11.2 million for the nine month period ended September 30, 2012 due to an increase in both the held for sale and mortgage portfolio loans. Noninterest income also increased, from $11.3 million for the first nine months of 2011 to $81.2 million for the first nine months of 2012, an increase of $69.9 million. This increase reflects this segment s expansion of its national platform, diversification of its revenue streams and sustained low mortgage interest rates which resulted in a greater volume of mortgage originations. These increases resulted in greater gains on mortgage loan sales in the first nine months of 2012. In addition, mortgage servicing revenue increased due to an increase in the amount of loans serviced for others. Noninterest expense increased from $15.8 million for the nine months ended September 30, 2011 to $52.9 million for the nine months ended September 30, 2012, an increase of $37.1 million, primarily due to increased salaries and employee benefits expense and incentive compensation expense due to additional headcount and an increase in commission based incentive compensation. Volume related loan expense also increased.

At September 30, 2012, we had a net unrealized gain of $51.7 million in our available-for-sale investment portfolio, which was comprised of $52.2 million of gross unrealized gains and $0.5 million of gross unrealized losses. At December 31, 2011, the net unrealized gain was $42.9 million, which was comprised of $44.6 million of gross unrealized gains and $1.7 million of gross unrealized losses. The gross unrealized losses at September 30, 2012 related to four investment securities with a carrying value of $22.5 million. Each quarter we analyze each of these securities to determine if other-than-temporary impairment has occurred. The factors we consider include the magnitude of the unrealized loss in comparison to the security s carrying value, the length of time the security has been in an unrealized loss position and the current independent bond rating for the security. Those securities with unrealized losses for more than 12 months and for more than 10% of their carrying value are subject to further analyses to determine if it is probable that not all the contractual cash flows will be received. We obtain fair value estimates from additional independent sources and perform cash flow analysis to determine if other-than-temporary impairment has occurred. Of the four securities with gross unrealized losses at September 30, 2012, three have been in a loss position for 12 months or more and one had other-than-temporary impairment of $125,000 which was recorded against earnings in the nine months ended September 30, 2012.

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