WGNB Corp. (WGNB, Financial) filed Quarterly Report for the period ended 2009-09-30.
WGNB CORP. stock is traded on the NASDAQ Capital Market under the symbol WGNB. First National Bank of Georgia has 17 locations in Carroll Coweta Douglas and Haralson counties. Wgnb Corp. has a market cap of $1.94 million; its shares were traded at around $0.65 with and P/S ratio of 0.03.
Non-performing assets totaled $141.2 million, or 22.4 percent of total loans including foreclosed property and the fair value of trust preferred securities as of September 30, 2009, compared to $100.4 million, or 14.7 percent of total loans including foreclosed property, as of September 30, 2008 and $122.0 million, or 18.0 percent of total loans including foreclosed property, as of December 31, 2008. The $141.2 million in non-performing assets was comprised primarily of 35 loan relationships ranging in outstanding balances of approximately $1 million to $8 million. The residential real estate construction and development portfolio, not including impaired and non-accrual loans (the performing portfolio), was $72.6 million as of September 30, 2009, compared to $145.6 million as of September 30, 2008. This performing residential real estate construction and development portfolio is comprised of nine loan relationships ranging in balance from $1 million to $4 million. The remainder of the balance in performing residential real estate construction and development loans are comprised of loans less than $1 million. The trust preferred securities consist of 6 investments which have positive book values ranging in original balances of $250 thousand to $1.5 million which have amortized costs ranging from $140 thousand to $320 thousand due to “other-than-temporary” impairment.
Total non-interest expense increased $2.6 million, or 12.8 percent, comparing the nine months ended September 30, 2009 with that of 2008. Likewise, total non-interest expense for the third quarter of 2009 increased by $1.4 million, or 20.4 percent, compared to the third quarter of 2008. We have separately stated expense on loans and foreclosed property in order to emphasize further the impact that non-performing loans and foreclosed property had on the loss of the Company. Expense on loans and foreclosed property includes fees for updated appraisals on impaired loans and foreclosed properties, legal expenses incurred during loan workouts and eventual foreclosure, closing costs on the sale of loans, past due real estate taxes on foreclosed property, insurance on foreclosed property and maintenance, environmental and other holding costs on properties owned. For the nine months ended September 30, 2009, expense on loans and foreclosed property was $1.7 million compared to $1.1 million in the same period ended September 30, 2008. Expense on loans and foreclosed property for the third quarter of 2009 was $299 thousand compared to $297 thousand for the third quarter of 2008.
Net interest income decreased by $6.0 million, or 33.2 percent, from the nine months ended September 30, 2008 to the same period in 2009. Total interest income for the nine months ended September 30, 2009 decreased by $8.9 million, or 23.6 percent, while total interest expense decreased by $2.9 million, or 14.8 percent. Net interest income for the quarterly period ended September 30, 2009 decreased by $1.6 million, or 29.1 percent, when compared to the third quarter of 2008. Generally, the same trends and issues relating to our net interest income results hold true for both the nine and three month periods. The decrease in net interest income from the nine month period ended September 30, 2008 to the same period in 2009 was most impacted by the level of non-performing assets and liquidity (defined as cash and cash equivalents). The year-to-date average balance of non-performing loans and foreclosed property increased from $45.1 million and $23.5 million, respectively, for the nine month period ended September 30, 2008 to $80.8 million and $46.0 million, respectively, for the nine month period ended September 30, 2009. The average balance of interest-bearing liquidity was $14.9 million for the nine months ended September 30, 2008 compared to $62.9 million for the nine months ended September 30, 2009. The total increase in the year-to-date average balance of non-performing assets and liquidity was $106.2 million, which means the Bank needed to carry $106.2 million more deposits at a weighted average cost of 2.68 percent to fund non-performing assets and low yielding liquidity. Stated differently, the Bank incurred an estimated $2.1 million ($106.2 million x 2.68 percent x 3/4) of interest expense on deposits to carry non-performing assets and increased liquidity. Non-performing assets have no yield and our liquid balances had an average yield of approximately 25 basis points in 2009 compared to 222 basis points in the same period of 2008. Our goal continues to be to reduce non-performing assets for the remainder of 2009. Management intends to use the proceeds from the sale of non-performing assets to reduce higher cost deposits such as certificates of deposit as they mature.
Total non-interest income for the nine months ended September 30, 2009 decreased $15.1 million, when compared to the nine months ended September 30, 2008. Comparing the third quarter of 2009 to the third quarter of 2008, total non-interest income decreased by $3.3 million. Most of the decrease in non-interest income between the two nine month periods was attributable to a loss on sale or write-down of foreclosed property in the amount of $9.3 million ($2.5 million each for the second and third quarters and $4.3 million in the first quarter of 2009), and a net impairment loss on held-to-maturity securities attributable to “other-than-temporary” impairment of trust preferred securities in the amount of $6.1 million ($2.3 million in the third quarter and $3.8 million in the second quarter of 2009). In order to preserve cash, the Company chose to settle its interest rate swap position on its junior subordinated debentures which resulted in a loss on the settlement of $691 thousand which occurred in the second quarter of 2009. Therefore, this loss appears in the year-to-date comparison results, but not in the quarterly comparison results for the third quarter 2009.
As described elsewhere in this Report, management must evaluate the fair value of our assets on an ongoing basis. As valuation relates to loans and foreclosed property, management performs evaluations on appraisals. In addition, management takes into consideration observable market data as we market our properties. The valuation of property becomes more difficult to evaluate when there have been few sales or distressed sales and there is uncertainty regarding estimating the amount of time that it will take to sell the property. During the third quarter and into October of both 2008 and 2009, management ordered and received an increased number of updated appraisals on foreclosed property. During 2009, the appraisals came in at values less than anticipated, which resulted in a write-down of property in the amount of $2.6 million in the third quarter, $4.4 million in the second quarter and $1.4 million in the first quarter. Total write-downs for the nine months ended September 30, 2009 were $8.4 million compared to $1.0 million for the same period in 2008. The Bank experienced a gain on the sale of foreclosed property of $79 thousand in the third quarter of 2009. This compares to a loss in the second quarter of $897 thousand and a loss in the first quarter of $66 thousand for total net losses of $884 thousand for the nine months ended September 30, 2009.
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WGNB CORP. stock is traded on the NASDAQ Capital Market under the symbol WGNB. First National Bank of Georgia has 17 locations in Carroll Coweta Douglas and Haralson counties. Wgnb Corp. has a market cap of $1.94 million; its shares were traded at around $0.65 with and P/S ratio of 0.03.
Highlight of Business Operations:
The net loss for the nine months ended September 30, 2009 was $54.9 million, or $9.11 per diluted share, an increase in loss of $51.6 million when compared to a net loss for the nine months ended September 30, 2008 of $3.3 million, or $0.55 per diluted share. The net loss for the three months ended September 30, 2009 was $11.3 million, or $1.87 per diluted share, compared to a net loss of $855 thousand, or $0.14 per diluted share, for the three months ended September 30, 2008. The net loss, both year-to-date and quarter-to-date 2009, is primarily attributable to continued asset quality deterioration in the construction, acquisition and development loan portfolio, particularly with regard to the valuation of the Bank s nonperforming assets which include nonaccrual loans, foreclosed property and, its trust preferred securities portfolio. As previously reported, the mounting losses and diminished capital position caused management to determine that a 100 percent valuation allowance was required on the Company s deferred tax asset in the second quarter of 2009. The only portion of the deferred tax asset that now remains is attributable to FASB ASC Topic 320 Investments – Debt and Equity Securities for the securities valuation recorded in other comprehensive income. In addition, further loss will not have an associated tax benefit until the Company can show that it is more likely than not that the Company will realize those tax benefits.Non-performing assets totaled $141.2 million, or 22.4 percent of total loans including foreclosed property and the fair value of trust preferred securities as of September 30, 2009, compared to $100.4 million, or 14.7 percent of total loans including foreclosed property, as of September 30, 2008 and $122.0 million, or 18.0 percent of total loans including foreclosed property, as of December 31, 2008. The $141.2 million in non-performing assets was comprised primarily of 35 loan relationships ranging in outstanding balances of approximately $1 million to $8 million. The residential real estate construction and development portfolio, not including impaired and non-accrual loans (the performing portfolio), was $72.6 million as of September 30, 2009, compared to $145.6 million as of September 30, 2008. This performing residential real estate construction and development portfolio is comprised of nine loan relationships ranging in balance from $1 million to $4 million. The remainder of the balance in performing residential real estate construction and development loans are comprised of loans less than $1 million. The trust preferred securities consist of 6 investments which have positive book values ranging in original balances of $250 thousand to $1.5 million which have amortized costs ranging from $140 thousand to $320 thousand due to “other-than-temporary” impairment.
Total non-interest expense increased $2.6 million, or 12.8 percent, comparing the nine months ended September 30, 2009 with that of 2008. Likewise, total non-interest expense for the third quarter of 2009 increased by $1.4 million, or 20.4 percent, compared to the third quarter of 2008. We have separately stated expense on loans and foreclosed property in order to emphasize further the impact that non-performing loans and foreclosed property had on the loss of the Company. Expense on loans and foreclosed property includes fees for updated appraisals on impaired loans and foreclosed properties, legal expenses incurred during loan workouts and eventual foreclosure, closing costs on the sale of loans, past due real estate taxes on foreclosed property, insurance on foreclosed property and maintenance, environmental and other holding costs on properties owned. For the nine months ended September 30, 2009, expense on loans and foreclosed property was $1.7 million compared to $1.1 million in the same period ended September 30, 2008. Expense on loans and foreclosed property for the third quarter of 2009 was $299 thousand compared to $297 thousand for the third quarter of 2008.
Net interest income decreased by $6.0 million, or 33.2 percent, from the nine months ended September 30, 2008 to the same period in 2009. Total interest income for the nine months ended September 30, 2009 decreased by $8.9 million, or 23.6 percent, while total interest expense decreased by $2.9 million, or 14.8 percent. Net interest income for the quarterly period ended September 30, 2009 decreased by $1.6 million, or 29.1 percent, when compared to the third quarter of 2008. Generally, the same trends and issues relating to our net interest income results hold true for both the nine and three month periods. The decrease in net interest income from the nine month period ended September 30, 2008 to the same period in 2009 was most impacted by the level of non-performing assets and liquidity (defined as cash and cash equivalents). The year-to-date average balance of non-performing loans and foreclosed property increased from $45.1 million and $23.5 million, respectively, for the nine month period ended September 30, 2008 to $80.8 million and $46.0 million, respectively, for the nine month period ended September 30, 2009. The average balance of interest-bearing liquidity was $14.9 million for the nine months ended September 30, 2008 compared to $62.9 million for the nine months ended September 30, 2009. The total increase in the year-to-date average balance of non-performing assets and liquidity was $106.2 million, which means the Bank needed to carry $106.2 million more deposits at a weighted average cost of 2.68 percent to fund non-performing assets and low yielding liquidity. Stated differently, the Bank incurred an estimated $2.1 million ($106.2 million x 2.68 percent x 3/4) of interest expense on deposits to carry non-performing assets and increased liquidity. Non-performing assets have no yield and our liquid balances had an average yield of approximately 25 basis points in 2009 compared to 222 basis points in the same period of 2008. Our goal continues to be to reduce non-performing assets for the remainder of 2009. Management intends to use the proceeds from the sale of non-performing assets to reduce higher cost deposits such as certificates of deposit as they mature.
Total non-interest income for the nine months ended September 30, 2009 decreased $15.1 million, when compared to the nine months ended September 30, 2008. Comparing the third quarter of 2009 to the third quarter of 2008, total non-interest income decreased by $3.3 million. Most of the decrease in non-interest income between the two nine month periods was attributable to a loss on sale or write-down of foreclosed property in the amount of $9.3 million ($2.5 million each for the second and third quarters and $4.3 million in the first quarter of 2009), and a net impairment loss on held-to-maturity securities attributable to “other-than-temporary” impairment of trust preferred securities in the amount of $6.1 million ($2.3 million in the third quarter and $3.8 million in the second quarter of 2009). In order to preserve cash, the Company chose to settle its interest rate swap position on its junior subordinated debentures which resulted in a loss on the settlement of $691 thousand which occurred in the second quarter of 2009. Therefore, this loss appears in the year-to-date comparison results, but not in the quarterly comparison results for the third quarter 2009.
As described elsewhere in this Report, management must evaluate the fair value of our assets on an ongoing basis. As valuation relates to loans and foreclosed property, management performs evaluations on appraisals. In addition, management takes into consideration observable market data as we market our properties. The valuation of property becomes more difficult to evaluate when there have been few sales or distressed sales and there is uncertainty regarding estimating the amount of time that it will take to sell the property. During the third quarter and into October of both 2008 and 2009, management ordered and received an increased number of updated appraisals on foreclosed property. During 2009, the appraisals came in at values less than anticipated, which resulted in a write-down of property in the amount of $2.6 million in the third quarter, $4.4 million in the second quarter and $1.4 million in the first quarter. Total write-downs for the nine months ended September 30, 2009 were $8.4 million compared to $1.0 million for the same period in 2008. The Bank experienced a gain on the sale of foreclosed property of $79 thousand in the third quarter of 2009. This compares to a loss in the second quarter of $897 thousand and a loss in the first quarter of $66 thousand for total net losses of $884 thousand for the nine months ended September 30, 2009.
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