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

August 13, 2009 | About:

Taylor Capital Group Inc. (TAYC) filed Quarterly Report for the period ended 2009-06-30.

Taylor Capital Group is a bank holding company which derives virtually all of its revenue from its subsidiary Cole Taylor Bank. Taylor Capital provides a range of products and services concentrating in four primary banking areas: middle-market business banking small business banking commercial real estate lending and wealth management. Taylor Capital Group Inc. has a market cap of $75.1 million; its shares were traded at around $6.765 with and P/S ratio of 0.4.

Highlight of Business Operations:

We reported a net loss applicable to common shareholders of $26.1 million, or a loss of $2.49 per diluted share outstanding, for the second quarter of 2009, compared to a net loss applicable to common shareholders of $25.3 million, or a loss of $2.42 per diluted share, in the second quarter of 2008. For the first six months of 2009, we reported a net loss applicable to common shareholders of $31.8 million, or a loss of $3.03 per diluted share, compared to a net loss applicable to common shareholders of $29.2 million, or a loss of $2.79 per diluted share, during the first six months of 2008. The net loss in all periods was primarily caused by the increased level of the provision for loan losses as the prolonged recession negatively impacted the business community and our clients.

We continue to take additional steps in an effort to improve operating results. In both the quarterly and year-to-date periods, net interest income and noninterest income increased and the level of noninterest expense was held relatively flat. Net interest income totaled $30.4 million during the second quarter of 2009 compared to $21.6 million during the second quarter of 2008. During the first six months of 2009, net interest income increased to $57.7 million from $46.0 million during the first six months of 2009. These increases were due to higher interest-earning asset volumes. We have also focused on improving our loan pricing, including the use of interest rate floors in new loan originations taken, and increased the size and duration of our investment portfolio to take advantage of higher yields. On the liability side, we continue to strengthen our liquidity position by obtaining more funding from core customers and reducing our reliance on more costly brokered deposits. Noninterest income, excluding gains on the sale of investment securities, increased in both the second quarter and year-to-date 2009 periods as an increase in service charge revenue was partly offset by lower trust and investment management fees. Noninterest expense has remained relatively flat in both the quarterly and year-to-date comparisons, despite the significant increase in deposit insurance premiums, as we have instituted a number of cost control measures to reduce our noninterest expense, such as salaries and benefit costs and other overhead expenses.

Net interest income was $30.4 million for the second quarter of 2009, an increase of $8.8 million, or 40.9%, from $21.6 million of net interest income in the second quarter of 2008. With an adjustment for tax-exempt income, our consolidated net interest income for the second quarter of 2009 was $31.2 million, compared to $22.4 million for the same quarter a year ago. This non-GAAP presentation is discussed in the section captioned Tax-Equivalent Adjustments to Yields and Margins following. Net interest income for the second quarter of 2009 was higher due to higher interest-earning asset levels and an increase in net interest margin.

Our average interest-earning assets during the second quarter of 2009 were $4.53 billion, an increase of $1.08 billion, or 31.3%, as compared to the same quarter in 2008. A $629.3 million, or 24.6%, increase in average loan balances, and a $497.7 million, or 59.0%, increase in average investment securities combined to produce the higher interest-earning assets. Average loans outstanding increased to $3.19 billion during the second quarter of 2009, compared to $2.56 billion during the second quarter of 2008. The increase in loans is a result of a growth strategy implemented in 2008 in which we increased our lending staff. The higher average investment securities mainly resulted from the purchase of mortgage-related investment securities during the past twelve months as we increased the size of the investment portfolio to take advantage of higher yields on longer duration securities.

Net interest income was $57.7 million for the first six months of 2009, compared to $46.0 million during the same six month period a year ago, an increase of $11.7 million, or 25.4%. With an adjustment for tax-exempt income, our consolidated net interest income for the first six months of 2009 was $59.3 million, compared to $47.7 million for the first six months of 2008. This non-GAAP presentation is discussed in the section captioned Tax-Equivalent Adjustments to Yields and Margins following. Net interest income for the first six months of 2009 was higher due to a $1.02 billion increase in average interest-earning assets, offset by a decline in net interest margin.

Our average interest-earning assets during the first half of 2009 were $4.46 billion, an increase of $1.02 billion, or 29.6%, as compared to the $3.44 billion of average interest-earning assets during the first half of 2008. The growth strategy implemented in 2008 caused the $691.3 million, or 27.4%, increase in average loan balances between the two year-to-date periods. In addition, the increase in the size of the investment portfolio that occurred during the last twelve months caused average investment securities to increase by $384.4 million, or 44.6%, in the first half of 2009 as compared to the same six month period a year ago.

Read the The complete Report

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