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2005 News Releases Unizan Financial Corp. Reports Fourth Quarter and Year End 2004 Financial Results
CANTON, Ohio -- February 18, 2005 -- Unizan Financial Corp. (Nasdaq: UNIZ), today reported net income of $3.3 million for the quarter ended December 31, 2004, or $0.15 per diluted share, compared with net income of $2.9 million or $0.13 per diluted share reported for the quarter ended September 30, 2004 and $2.6 million, or $0.12 per diluted share, for the quarter ended December 31, 2003. As previously announced, the fourth quarter 2004 results include a $2.2 million, or $0.10 per diluted share, after-tax charge to recognize an other-than-temporary impairment in value of certain investment securities. The fourth quarter 2004 results also include $160 thousand after-tax, or $0.01 per diluted share, of merger-related severance and other charges compared to an after-tax severance charge of $2.0 million, or $0.09 per diluted share, in the 2003 period. The third quarter 2004 results included an after-tax gain of $317 thousand, or $0.01 per diluted share, on the sale of the Company's Wooster Financial Center and $309 thousand after- tax, or $0.01 per diluted share, of merger-related severance costs and professional fees. Net income for the year-ended December 31, 2004 was $11.7 million or $0.53 per diluted share compared to $23.2 million or $1.05 per diluted share for 2003. In addition to the fourth quarter 2004 charge discussed above, during 2004 Unizan recognized salary expense of $5.1 million pre-tax, or $3.3 million after-tax, in relation to the exercise of certain stock options and additional expenses of $2.7 million pre-tax, or $1.8 million after-tax, for merger- related professional fees and severance costs. Net interest income - Net interest income was $17.2 million for the three months ended December 31, 2004, up 6.9% from the previous quarter and down 7.4% from the same quarter last year. Net interest income has declined from a year ago due to a 4.7% lower level of average earning assets as well as a decline in the net interest margin. Additionally, the yield on earning assets and the cost of funds have been impacted by a change in the mix and duration of outstanding assets and liabilities. The net interest margin was 2.97% for the fourth quarter of 2004 compared to 2.75% for the third quarter of 2004 and 3.04% for the fourth quarter of 2003. Net interest income was negatively impacted during the third quarter of 2004 by faster than projected amortization of the purchase accounting adjustments associated with the mark- to-market of UNB Corp.'s loan portfolio at the time of the merger between UNB Corp. and BancFirst Ohio Corp. in March of 2002. During the third quarter of 2004, $1.4 million of amortization was recognized compared with $436 thousand in the fourth quarter of 2004 and $548 thousand in the fourth quarter of 2003. This amortization reduced the Company's net interest margin by 0.23% in the third quarter of 2004 as compared to .07% in the fourth quarter of 2004 and .09% in the fourth quarter of 2003. Provision for loan losses - The provision for loan losses was $1.4 million for the three months ended December 31, 2004, compared to $3.8 million in the previous quarter and $1.5 million in the fourth quarter of 2003. Net charge- offs for the three months ended December 31, 2004, were $1.5 million compared to $2.3 million for the third quarter of 2004 and $1.5 million for the fourth quarter of 2003. The decrease in net charge-offs from the third quarter of 2004 was mainly attributed to decreases in commercial, commercial real estate and government guaranteed loan charge-offs. Other income - Other income, excluding net gains and losses on securities, was $6.8 million for the fourth quarter of 2004 compared with $7.3 million for the third quarter of 2004 and $6.6 million for fourth quarter of 2003. Results for the third quarter of 2004 included a $488 thousand pre-tax gain on the sale of the Wooster Financial Center. Gains on sales of loans totaled $1.1 million, compared with $1.0 million in both the third quarter of 2004 and fourth quarter of 2003. During the fourth quarter of 2004, gains from the sale of the guaranteed portion of Small Business Administration (SBA) and other government guaranteed loans were $1.0 million, compared with $898 thousand of gains in the third quarter of 2004 and $810 thousand of gains in the fourth quarter of 2003. Gains from the sale of residential mortgage loans in the fourth quarter of 2004 were $113 thousand compared with $110 thousand of gains recognized in the third quarter of 2004 and $196 thousand of gains in the fourth quarter of 2003. With the rise in interest rates and fewer customers who can benefit from refinancing, fees associated with the mortgage related business have declined as refinancing activity has slowed. Net securities losses of $3.3 million were recognized in the fourth quarter of 2004 compared to net losses of $60 thousand in the prior quarter and $502 thousand in the fourth quarter of 2003. As noted earlier, the fourth quarter 2004 results include a $3.4 million pre-tax other-than-temporary impairment charge associated with adjustable rate perpetual preferred stock issued by Fannie Mae (FNMA) and Freddie Mac (FHLMC). Losses in the fourth quarter of 2003 related to sales of equity securities and a write-down of a corporate obligation. Other expense - Other expense was $15.0 million for the three months ended December 31, 2004, down $635 thousand, or 4.0%, from the previous quarter and down $3.9 million, or 20.8%, from the same quarter last year. The decrease from the prior quarter was primarily attributed to a $1.7 million decrease in salaries and benefits due to declines in staffing levels and lower benefits and severance costs. Total full time equivalent employees have decreased from 735 at December 31, 2003 to 650 at September 30, 2004 and 627 at December 31, 2004. This decrease in salaries and benefits was partially offset by a $1.4 million increase in other expenses which related to higher professional fees incurred in connection with activities associated with Section 404 of the Sarbanes-Oxley Act as well as filling staffing vacancies. The decrease from the year ago quarter primarily related to a $4.2 million decrease in salaries and benefits which was mainly attributed to the prior year period including a $2.2 million pre-tax severance charge. Salaries and benefits expense in general also declined as a result of lower staffing levels. Provision for income taxes - The effective tax rate for the three months ended December 31, 2004 was 22.9% compared to 26.3% in the previous quarter and 39.7% in the same quarter last year. The Company's effective tax rates for the third and fourth quarter of 2004 were primarily impacted by tax-exempt income being a larger portion of pre-tax income which had the effect of reducing the effective tax rate as compared to the fourth quarter of 2003. Also, the higher effective tax rate in the 2003 period resulted from the non tax deductible nature of a large portion of the severance charge recognized in such period. Balance sheet - Total assets at December 31, 2004 were $2.57 billion compared to $2.59 billion at the end of the third quarter 2004 and $2.73 billion a year ago. Assets remained relatively unchanged from the prior quarter and declined 5.7% compared to year end 2003. Compared to the prior year, securities declined by 9.9% while loans decreased by 4.8%. During 2004, growth in commercial loans was more than offset by declines in all other loan categories. These declines were attributed to the closing of the aircraft lending centers, competitive factors involving rate and structure and fewer lending officers originating new loans due to turnover of relationship managers in areas where there is significant market overlap with Huntington Bancshares Incorporated ("Huntington" - see Pending Merger below). Total deposits decreased by $135.1 million, or 6.8%, compared to the prior year. A total of $15.4 million of this decline was due to the sale of the Wooster Financial Center during the third quarter of 2004. Of the deposits sold, $10.3 million were certificates of deposit with the remaining distributed between demand and savings accounts. During 2004, interest bearing demand deposits declined by 20.6%, savings deposits, including money market accounts, declined by 0.8% and certificate of deposits declined by 10.3% while non-interest bearing deposits increased 11.9%. During the first half of 2003, Unizan Bank executed a deposit gathering strategy utilizing introductory rates within the interest bearing demand and money market deposit products. A portion of the funds gathered were rate sensitive and have shifted to other higher yielding alternatives. The decline in certificate of deposits was partially due to the maturity of $60.2 million of brokered deposits and is consistent with the Company's overall strategy to change the deposit mix. Asset quality - At December 3, 2004, non-performing loans to total loans increased to 1.61% from 1.53% at September 30, 2004 and 1.32% at December 31, 2003. Non-performing loans at December 31, 2004 were $30.2 million compared to $29.2 million at September 30, 2004 and $25.9 million at December 31, 2003. Non-performing loans, excluding the portion of the loans guaranteed by the government, at December 31, 2004 were $22.9 million compared to $22.2 million at September 30, 2004 and $19.4 million at December 31, 2003. The $705 thousand or 3.2% increase in non-performing loans since September 30, 2004, is primarily attributed to a $376 thousand increase in non-performing aircraft loans and an $833 thousand increase in non-performing commercial real estate loans, offset in part by a $443 thousand decline in net non-performing government guaranteed loans. The $3.5 million increase in non-performing loans from December 31, 2003 was mainly due to a $2.6 million increase in non- performing aircraft loans and a $2.3 million increase in non-performing commercial real estate loans, offset in part by a $1.5 million decline in non- performing residential real estate loans.
Pending Merger As previously announced, the Company has extended its agreement to merge with Huntington to January 27, 2006. As reported, Huntington continues to have ongoing discussions with the staff of the Securities and Exchange Commission ("SEC") regarding resolution of its previously announced formal investigation into certain financial accounting matters relating to fiscal years 2002 and earlier and certain related disclosure matters. Also, Huntington expects to enter into formal supervisory agreements with its banking regulators, the Federal Reserve Board and Office of the Comptroller of the Currency, providing for a comprehensive action plan designed to address its financial reporting and accounting policies, procedures and controls, and its corporate governance practices. Huntington remains in active dialogue with banking regulators concerning these and related matters and is working diligently to resolve them in a full and comprehensive manner. Pending the successful resolution of these matters, Huntington would resubmit its applications for regulatory approval of the merger with Unizan Financial Corp.
Internal Control Over Financial Reporting The Company's management identified and reported to the Audit Committee the following control deficiencies, which, individually or in the aggregate, may constitute a material weakness in the Company's internal control over financial reporting as of December 31, 2004.
Management, with the oversight of the Audit Committee, has been aggressively addressing all of these issues and is committed to effectively remediating known weaknesses as expeditiously as possible. Although the Company's remediation efforts are well underway and expected to be completed in the first quarter of 2005, the Company's weaknesses will not be considered remediated until new internal controls are operational for a period of time and are tested, and management and its independent registered public accounting firm conclude that these controls are operating effectively. Due to the nature of and the time necessary to effectively remediate and test each of the weaknesses identified to date, the Company expects to conclude that some of the weaknesses identified to date had not been effectively remediated as of December 31, 2004. As a result, Management may not be able to issue a positive opinion on the Company's internal controls in the Company's 2004 Annual Report on Form 10-K. Management believes its assertions regarding the Company's internal controls over financial reporting will not preclude an unqualified opinion on the financial statements contained in the Company's 2004 Annual Report on Form 10-K and prepared in conformity with accounting principals generally accepted in the United States of America.
About Unizan Unizan Financial Corp., a $2.6 billion holding company, is a financial services organization headquartered in Canton, Ohio. The company operates 42 full-service retail financial centers in five metropolitan markets in Ohio - Canton, Columbus, Dayton, Newark and Zanesville. Through Unizan Financial Corp.'s subsidiaries, Unizan Bank, National Association; Unizan Financial Services Group, National Association; Unizan Banc Financial Services, Inc.; and Unizan Financial Advisors, Inc., the company offers its client base corporate and retail banking, Internet banking and wealth management products and services. Additionally, the company operates government guaranteed loan programs through its business lending centers in Cincinnati, Cleveland, Columbus and Dayton, Ohio; Detroit, Michigan; Mt. Arlington, New Jersey and Indianapolis, Indiana. For more information on Unizan Financial Corp. and its subsidiaries, visit the company on the Web at www.unizan.com .
About Huntington Huntington Bancshares Incorporated is a $33 billion regional bank holding company headquartered in Columbus, Ohio. Through its affiliated companies, Huntington has more than 139 years of serving the financial needs of its customers. Huntington provides innovative retail and commercial financial products and services through more than 300 regional banking offices in Indiana, Kentucky, Michigan, Ohio and West Virginia. Huntington also offers retail and commercial financial services online at huntington.com; through its technologically advanced, 24-hour telephone bank; and through its network of approximately 700 ATMs. Selected financial service activities are also conducted in other states including: Dealer Sales offices in Florida, Georgia, Tennessee, Pennsylvania, and Arizona; Private Financial Group offices in Florida; and Mortgage Banking offices in Florida, Maryland, and New Jersey. International banking services are made available through the headquarters office in Columbus and an office located in the Cayman Islands and an office located in Hong Kong.
Forward-looking Statements This press release includes forward-looking statements that are subject to certain risks and uncertainties. Unizan Financial Corp.'s actual results, performance, or achievements may differ materially from those expressed or implied in the forward-looking statements. Risk or uncertainties that could cause or contribute to such material differences include, but are not limited to, general economic conditions, interest rate environment, competitive conditions in the financial services industry, changes in law, governmental policies and regulation, and rapidly changing technology affecting financial services. Reference is made to Unizan Financial Corp.'s filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2003, and other periodic filings, for a description of the foregoing and other factors that could cause actual results to differ materially from those in the forward-looking statements. Unizan Financial Corp.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
12/31/04 09/30/04 06/30/04
ASSETS
Federal funds sold and interest
bearing deposits with banks $7,139 $8,408 $5,446
Securities, net 422,566 404,104 408,021
Federal Home Loan Bank stock, at cost 36,170 35,788 35,410
Loans originated and held for sale 1,256 2,353 2,118
Loans:
Commercial, financial and
agricultural 268,339 266,262 269,219
Aircraft 106,845 117,497 126,824
Commercial real estate 607,470 610,061 646,900
Residential real estate 439,866 441,338 446,738
Consumer 450,617 465,591 469,236
Total Loans less unearned income 1,873,137 1,900,749 1,958,917
Less allowance for loan losses 26,356 26,387 24,922
Net loans 1,846,781 1,874,362 1,933,995
Total earning assets 2,340,268 2,351,402 2,409,912
Cash and cash equivalents 52,057 61,072 81,111
Premises and equipment, net 22,226 22,787 23,891
Goodwill 91,971 91,971 91,971
Other intangible assets 15,473 16,157 17,025
Accrued interest receivable and other
assets 77,195 76,500 77,546
Total Assets $2,572,834 $2,593,502 $2,676,534
LIABILITIES
Deposits:
Non-interest bearing deposits $231,004 $213,621 $221,027
Demand - interest bearing 219,249 229,938 242,709
Savings 526,972 517,295 494,598
Certificates and other time deposits 863,501 856,914 908,903
Total deposits 1,840,726 1,817,768 1,867,237
Total borrowings 394,373 439,400 483,485
Accrued taxes, expenses and other
liabilities 25,810 26,148 23,786
Total Liabilities 2,260,909 2,283,316 2,374,508
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
100,000,000 shares authorized;
22,123,069 shares issued) 22,123 22,123 22,123
Paid-in capital 220,741 221,141 223,200
Retained earnings 74,854 74,560 74,654
Stock held by deferred compensation
plan, 124,824; 122,209; 119,274;
118,616 and 118,616 shares at cost,
respectively (2,279) (2,112) (2,039)
Treasury stock, 43,956; 64,059;
327,256; 368,389 and 440,276
shares at cost, respectively (1,137) (1,647) (9,282)
Accumulated other comprehensive loss (2,377) (3,879) (6,630)
Total Shareholders' Equity 311,925 310,186 302,026
Total Liabilities and
Shareholders' Equity $2,572,834 $2,593,502 $2,676,534
Unizan Financial Corp.
CONSOLIDATED BALANCE SHEETS
(In thousands except per share data)
03/31/04 12/31/03
ASSETS
Federal funds sold and interest
bearing deposits with banks $5,080 $1,942
Securities, net 487,316 474,636
Federal Home Loan Bank stock, at cost 35,061 34,716
Loans originated and held for sale 4,744 2,679
Loans:
Commercial, financial and agricultural 258,677 261,167
Aircraft 134,889 133,277
Commercial real estate 662,289 658,699
Residential real estate 449,057 450,398
Consumer 464,323 464,943
Total Loans less unearned income 1,969,235 1,968,484
Less allowance for loan losses 24,611 24,611
Net loans 1,944,624 1,943,873
Total earning assets 2,501,436 2,482,457
Cash and cash equivalents 71,924 59,622
Premises and equipment, net 24,641 25,353
Goodwill 91,971 91,971
Other intangible assets 17,836 18,661
Accrued interest receivable and
other assets 77,987 76,860
Total Assets $2,761,184 $2,730,313
LIABILITIES
Deposits:
Non-interest bearing deposits $214,844 $206,501
Demand - interest bearing 257,012 276,037
Savings 531,437 531,134
Certificates and other time deposits 942,850 962,120
Total deposits 1,946,143 1,975,792
Total borrowings 483,093 421,885
Accrued taxes, expenses and other
liabilities 25,262 29,813
Total Liabilities 2,454,498 2,427,490
SHAREHOLDERS' EQUITY
Common stock ($1.00 stated value,
100,000,000 shares authorized;
22,123,069 shares issued) 22,123 22,123
Paid-in capital 224,722 223,613
Retained earnings 74,461 74,993
Stock held by deferred compensation plan,
124,824; 122,209; 119,274; 118,616
and 118,616 shares at cost, respectively (2,016) (2,016)
Treasury stock, 43,956; 64,059;
327,256; 368,389 and 440,276
shares at cost, respectively (10,308) (11,515)
Accumulated other comprehensive loss (2,296) (4,375)
Total Shareholders'
Equity 306,686 302,823
Total Liabilities and
Shareholders' Equity $2,761,184 $2,730,313
Unizan Financial Corp.
COMPARATIVE STATEMENTS OF INCOME
(In thousands except per share data)
Three months ended
12/31/04 09/30/04 06/30/04
Interest income:
Interest on federal funds sold and
interest bearing deposits with banks $25 $21 $13
Interest and dividends on securities 3,742 3,040 4,269
Interest and fees on loans and loans
held for sale 27,452 26,693 27,573
Total interest income $31,219 $29,754 $31,855
Interest expense:
Interest on deposits 9,392 9,058 8,816
Interest on borrowings 4,596 4,576 4,366
Total interest expense 13,988 13,634 13,182
Net interest income $17,231 $16,120 $18,673
Provision for loan losses 1,425 3,750 2,950
Net interest income after
provision for loan losses $15,806 $12,370 $15,723
Other income:
Trust, financial planning, brokerage
and insurance sales 2,065 1,793 2,050
Customer service fees 1,784 1,854 1,848
Gains on sale of loans 1,117 1,008 686
Security gains/(losses), net (3,348) (60) 181
Other operating income 1,870 2,626 2,419
Total other income 3,488 7,221 7,184
Other expense:
Salaries, wages, pension and benefits 6,489 8,211 10,494
Occupancy expense 802 875 795
Furniture and equipment expense 533 520 572
Taxes other than income taxes 510 557 610
Intangible amortization expense 684 868 811
Other operating expense 6,030 4,652 5,252
Total other expense 15,048 15,683 18,534
Income before income taxes $4,246 $3,908 $4,373
Provision for income taxes 972 1,029 1,242
Net Income $3,274 $2,879 $3,131
Earnings per share:
Basic $0.15 $0.13 $0.14
Diluted $0.15 $0.13 $0.14
Dividends per share $0.135 $0.135 $0.135
Weighted average number of shares:
Basic 22,066,952 21,910,942 21,771,251
Diluted 22,211,146 22,052,059 21,989,444
NOTE: Per share data is based on the weighted average number of shares
outstanding adjusted for stock dividends or splits calculated under
the treasury method using the average and end of period stock market
price for basic and diluted shares, respectively.
Unizan Financial Corp.
COMPARATIVE STATEMENTS OF INCOME
(In thousands except per share data)
Three months ended
03/31/04 12/31/03
Interest income:
Interest on federal funds sold and
interest bearing deposits with banks $8 $8
Interest and dividends on securities 4,597 4,127
Interest and fees on loans and
loans held for sale 27,674 28,401
Total interest income $32,279 $32,536
Interest expense:
Interest on deposits 9,150 9,764
Interest on borrowings 4,337 4,164
Total interest expense 13,487 13,928
Net interest income $18,792 $18,608
Provision for loan losses 1,000 1,492
Net interest income after
provision for loan losses $17,792 $17,116
Other income:
Trust, financial planning,
brokerage and insurance sales 1,953 1,691
Customer service fees 1,844 2,107
Gains on sale of loans 1,245 993
Security gains/(losses), net 71 (502)
Other operating income 1,901 1,834
Total other income 7,014 6,123
Other expense:
Salaries, wages, pension and benefits 12,774 10,659
Occupancy expense 867 828
Furniture and equipment expense 534 562
Taxes other than income taxes 630 504
Intangible amortization expense 825 839
Other operating expense 5,784 5,598
Total other expense 21,414 18,990
Income before income taxes $3,392 $4,249
Provision for income taxes 980 1,685
Net Income $2,412 $2,564
Earnings per share:
Basic $0.11 $0.12
Diluted $0.11 $0.12
Dividends per share $0.135 $0.135
Weighted average number of shares:
Basic 21,733,289 21,656,687
Diluted 21,972,349 21,940,831
NOTE: Per share data is based on the weighted average number of shares
outstanding adjusted for stock dividends or splits calculated under
the treasury method using the average and end of period stock market
price for basic and diluted shares, respectively.
Unizan Financial Corp.
COMPARATIVE STATEMENTS OF INCOME
(In thousands except per share data)
For the full year ending
12/31/2004 12/31/2003
Interest income:
Interest on federal funds sold and interest
bearing deposits with banks $67 $173
Interest and dividends on securities 15,648 20,745
Interest and fees on loans
and loans held for sale 109,392 117,942
Total interest income 125,107 138,860
Interest expense:
Interest on deposits 36,416 43,012
Interest on borrowings 17,875 19,117
Total interest expense 54,291 62,129
Net interest income 70,816 76,731
Provision for loan losses 9,125 4,833
Net interest income after
provision for loan losses 61,691 71,898
Other income:
Trust, financial planning, brokerage
and insurance sales 7,861 7,199
Customer service fees 7,330 7,364
Gains on sale of loans 4,056 7,125
Security gains, net (3,156) 1,773
Other operating income 8,816 7,141
Total other income 24,907 30,602
Other expense:
Salaries, wages, pension and benefits 37,968 37,219
Occupancy expense 3,339 3,432
Furniture and equipment expense 2,159 2,315
Taxes other than income taxes 2,307 2,051
Intangible amortization expense 3,188 3,387
Other operating expense 21,718 19,765
Total other expense 70,679 68,169
Income before income taxes 15,919 34,331
Provision for income taxes 4,223 11,108
Net Income $11,696 $23,223
Earnings per share:
Basic $0.53 $1.07
Diluted $0.53 $1.05
Dividends per share $0.540 $0.540
Weighted average number of shares:
Basic 21,871,255 21,683,336
Diluted 22,056,961 22,205,750
NOTE: Per share data is based on the weighted average number of
shares outstanding adjusted for stock dividends or splits calculated
under the treasury method using the average and end of period stock
market price for basic and diluted shares, respectively.
Unizan Financial Corp.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
2004 2004 2004
EARNINGS 4th Qtr 3rd Qtr 2nd Qtr
Net Interest Income FTE (1) $17,510 16,400 18,959
Provision for loan losses 1,425 3,750 2,950
Other income 6,836 7,281 7,003
Security gains/(losses), net (3,348) (60) 181
Other expenses 15,048 15,683 18,534
FTE adjustment (1) 279 280 286
Net income $3,274 2,879 3,131
Net income per share - diluted $0.15 0.13 0.14
PERFORMANCE RATIOS
Return on average assets (ROA) 0.50% 0.44% 0.46%
Return on average common equity (ROE) 4.16% 3.71% 4.12%
Tangible return on average tangible assets 0.60% 0.55% 0.57%
Tangible return on avg. tangible
common equity 7.20% 6.85% 7.49%
Net interest margin FTE 2.97% 2.75% 3.09%
Efficiency ratio (2) 58.86% 62.03% 59.60%
MARKET DATA
Book value/common share $14.17 14.06 13.86
Tangible book value/common share 9.29 9.16 8.86
Period-end common share mkt value 26.35 27.61 26.10
Market as a % of book 186.0% 196.4% 188.3%
Cash dividends/common share $0.135 0.135 0.135
Common stock dividend payout ratio 91.02% 103.27% 93.80%
Average basic common shares 22,066,952 21,910,942 21,771,251
Average diluted common shares 22,211,146 22,052,059 21,989,444
Period end common shares 22,017,113 22,059,010 21,795,813
Common stock market capitalization $580,151 609,049 568,871
ASSET QUALITY
Gross charge-offs $2,139 2,952 3,372
Net charge-offs 1,456 2,285 2,639
Delinquency Ratio 1.59% 1.60% 1.45%
Allowance for loan losses $26,356 26,387 24,922
Non-accrual loans 28,294 26,628 22,173
Past due 90 days or more & accruing 1,856 2,546 5,612
Other assets owned 2,612 2,254 3,850
Nonperforming assets (NPAs) 32,762 31,428 31,635
Restructured loans 2,430 2,461 2,496
Net charge-off ratio 0.31% 0.47% 0.54%
Allowance/loans 1.41% 1.39% 1.27%
NPL to loans 1.61% 1.53% 1.42%
NPA to loans + other assets 1.75% 1.65% 1.61%
Allowance to NPLs 87.42% 90.45% 89.70%
AVERAGE BALANCES
Assets $2,579,517 2,615,839 2,713,206
Deposits 1,820,310 1,845,818 1,895,935
Loans 1,883,193 1,935,094 1,964,587
Earning assets 2,349,292 2,376,178 2,469,808
Shareholders' equity 313,231 308,618 305,902
ENDING BALANCES
Assets $2,572,834 2,593,502 2,676,534
Deposits 1,840,726 1,817,768 1,867,237
Loans 1,873,137 1,900,749 1,958,917
Goodwill and other intangible assets 107,444 108,128 108,996
Earning assets 2,340,268 2,351,402 2,409,912
Total shareholders' equity 311,925 310,186 302,026
(1) - FTE defined as fully tax-equivalent
(2) - Excludes amortization of intangibles and impairment of goodwill
expenses. Fourth quarter 2004 excludes $246 pre-tax merger related
professional fees and severance accrual. Third quarter 2004 excludes
$488 pre-tax gain on sale of Wooster Financial Center and $476
pre-tax merger related professional fees and severance accrual.
Second quarter 2004 excludes $1,427 pre-tax stock option expense and
$823 pre-tax merger related professional fees and severance accrual.
First quarter 2004 excludes $3,638 pre-tax stock option expense and
$1,203 pre-tax merger related professional fees. Fourth quarter 2003
excludes $2,159 pre-tax expense related to a severance agreement.
Certain previously reported amounts may have been reclassified to
conform to current reporting presentation.
Unizan Financial Corp.
CONSOLIDATED FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
2004 2003
EARNINGS 1st Qtr 4th Qtr
Net Interest Income FTE (1) $19,061 18,909
Provision for loan losses 1,000 1,492
Other income 6,943 6,625
Security gains/(losses), net 71 (502)
Other expenses 21,414 18,990
FTE adjustment (1) 269 301
Net income $2,412 2,564
Net income per share - diluted $0.11 0.12
PERFORMANCE RATIOS
Return on average assets (ROA) 0.36% 0.38%
Return on average common equity (ROE) 3.17% 3.35%
Tangible return on average tangible assets 0.45% 0.48%
Tangible return on avg. tangible
common equity 6.05% 6.40%
Net interest margin FTE 3.08% 3.04%
Efficiency ratio (2) 60.52% 62.59%
MARKET DATA
Book value/common share $14.10 13.97
Tangible book value/common share 9.05 8.86
Period-end common share mkt value 24.91 20.25
Market as a % of book 176.7% 145.0%
Cash dividends/common share $0.135 0.135
Common stock dividend payout ratio 121.68% 114.12%
Average basic common shares 21,733,289 21,656,687
Average diluted common shares 21,972,349 21,940,831
Period end common shares 21,754,680 21,682,793
Common stock market capitalization $541,909 439,077
ASSET QUALITY
Gross charge-offs $1,683 2,265
Net charge-offs 1,000 1,494
Delinquency Ratio 1.67% 1.61%
Allowance for loan losses $24,611 24,611
Non-accrual loans 23,152 20,566
Past due 90 days or more & accruing 5,488 5,333
Other assets owned 1,793 2,143
Nonperforming assets (NPAs) 30,433 28,042
Restructured loans 2,530 2,565
Net charge-off ratio 0.20% 0.31%
Allowance/loans 1.25% 1.25%
NPL to loans 1.45% 1.32%
NPA to loans + other assets 1.54% 1.42%
Allowance to NPLs 85.93% 95.03%
AVERAGE BALANCES
Assets $2,728,886 2,706,490
Deposits 1,954,707 1,994,244
Loans 1,971,090 1,947,729
Earning assets 2,486,312 2,466,001
Shareholders' equity 306,128 303,902
ENDING BALANCES
Assets $2,761,184 2,730,313
Deposits 1,946,143 1,975,792
Loans 1,969,235 1,968,484
Goodwill and other intangible assets 109,807 110,632
Earning assets 2,501,436 2,482,457
Total shareholders' equity 306,686 302,823
(1) - FTE defined as fully tax-equivalent
(2) - Excludes amortization of intangibles and impairment of goodwill
expenses. Fourth quarter 2004 excludes $246 pre-tax merger related
professional fees and severance accrual. Third quarter 2004 excludes
$488 pre-tax gain on sale of Wooster Financial Center and $476
pre-tax merger related professional fees and severance accrual.
Second quarter 2004 excludes $1,427 pre-tax stock option expense and
$823 pre-tax merger related professional fees and severance accrual.
First quarter 2004 excludes $3,638 pre-tax stock option expense and
$1,203 pre-tax merger related professional fees. Fourth quarter 2003
excludes $2,159 pre-tax expense related to a severance agreement.
Certain previously reported amounts may have been reclassified to
conform to current reporting presentation.
Unizan Financial Corp.
Average Balance Sheet and Related Yields
Three Months Ended December 31,
2004 2003
Average Income/ Average Income/
(dollars in thousands) Balance Expense Rate (1) Balance Expense Rate (1)
Interest-earning assets
Interest bearing
deposits and federal
funds sold $7,148 $25 1.39% $4,181 $8 0.76%
Securities 458,951 4,008 3.47% 514,091 4,429 3.42%
Total loans (2) 1,883,193 27,466 5.80% 1,947,729 28,400 5.78%
Total interest-
earning
assets (3) 2,349,292 31,499 5.33% 2,466,001 32,837 5.28%
Nonearning assets:
Cash and due
from banks 51,368 54,263
Other nonearning
assets 205,181 210,799
Allowance for
loan losses (26,324) (24,573)
Total assets $2,579,517 $2,706,490
Interest bearing liabilities:
Demand deposits $222,749 $303 0.54% $276,328 $493 0.71%
Savings deposits 519,130 2,114 1.62% 531,950 1,364 1.02%
Time deposits 849,500 6,977 3.27% 978,859 7,907 3.20%
Subordinated
note (4) 20,619 505 9.74% 20,000 505 10.02%
Company obligated
mandatorily
redeemable trust
preferred (4) - -
Other borrowings 399,759 4,090 4.07% 361,556 3,659 4.02%
Total interest
bearing
liabilities 2,011,757 13,989 2.77% 2,168,693 13,928 2.55%
Noninterest bearing liabilities:
Demand deposits 228,931 207,107
Other liabilities 25,598 26,788
Shareholders' equity 313,231 303,902
Total liabilities
and equity $2,579,517 $2,706,490
Net interest income
and interest rate
spread (3) $17,510 2.56% $18,909 2.73%
Net interest margin (5) 2.97% 3.04%
(1) Calculated on an annualized basis.
(2) Loan fees are included in interest income on loans.
(3) Interest income is computed on a fully tax equivalent (FTE) basis,
using a tax rate of 35%.
(4) As of December 31, 2003, based on new accounting guidance issued under
FASB Interpretation No. 46, the amounts previously reported as
"company obligated mandatorily redeemable trust preferred" have been
recaptioned "subordinated note." The deconsolidation of the Trust
increased the Company's balance sheet by $619, the difference
representing the Company's common ownership in the Trust.
(5) The net interest margin represents net interest income as a percentage
of average interest-earning assets.
Unizan Financial Corp.
Average Balance Sheet and Related Yields
Twelve Months Ended December 31,
2004 2003
Average Income/ Average Income/
(dollars in thousands) Balance Expense Rate (1) Balance Expense Rate (1)
Interest-earning assets
Interest bearing
deposits and
federal funds sold $6,689 $67 1.00% $15,848 $173 1.09%
Securities 475,063 16,711 3.52% 526,357 21,800 4.14%
Total loans (2) 1,938,331 109,461 5.65% 1,951,840 118,006 6.05%
Total interest-
earning
assets (3) 2,420,083 126,239 5.22% 2,494,045 139,979 5.61%
Nonearning assets:
Cash and due
from banks 56,461 57,932
Other nonearning
assets 207,520 213,013
Allowance for
loan losses (25,039) (24,911)
Total assets $2,659,025 $2,740,079
Interest bearing liabilities:
Demand deposits $240,247 $1,299 0.54% $282,540 $2,424 0.86%
Savings deposits 515,145 6,172 1.20% 500,362 5,407 1.08%
Time deposits 902,803 28,945 3.21% 1,028,820 35,181 3.42%
Subordinated note (4) 20,619 2,019 9.79% 20,000 2,019 10.10%
Company obligated
mandatorily
redeemable trust
preferred (4) - -
Other borrowings 426,914 15,855 3.71% 376,685 17,098 4.54%
Total interest
bearing
liabilities 2,105,728 54,290 2.58% 2,208,407 62,129 2.81%
Noninterest bearing liabilities:
Demand deposits 220,746 196,729
Other liabilities 24,068 33,029
Shareholders' equity 308,483 301,914
Total liabilities
and equity $2,659,025 $2,740,079
Net interest income
and interest
rate spread (3) $71,949 2.64% $77,850 2.80%
Net interest margin (5) 2.97% 3.12%
(1) Calculated on an annualized basis.
(2) Loan fees are included in interest income on loans.
(3) Interest income is computed on a fully tax equivalent (FTE) basis,
using a tax rate of 35%.
(4) As of December 31, 2003, based on new accounting guidance issued under
FASB Interpretation No. 46, the amounts previously reported as
"company obligated mandatorily redeemable trust preferred" have been
recaptioned "subordinated note." The deconsolidation of the Trust
increased the Company's balance sheet by $619, the difference
representing the Company's common ownership in the Trust.
(5) The net interest margin represents net interest income as a percentage
of average interest-earning assets.
Unizan Financial Corp.
NONPERFORMING AND UNDERPERFORMING ASSETS
(dollars in thousands)
12/31/04 09/30/04 06/30/04 03/31/04 12/31/03
Non-performing loans:
Commercial $1,689 $1,683 $3,180 $1,294 $1,292
Commercial real estate 6,453 5,620 5,433 5,713 4,112
Government guaranteed 9,266 9,438 7,926 9,334 8,939
Aircraft 2,826 2,450 291 2,003 247
Residential real estate 8,375 8,577 9,563 8,713 9,838
Direct installment loans 111 63 45 161 37
Indirect installment loans 204 160 155 212 212
Home equity 1,226 1,183 1,192 1,210 1,222
Total non-performing loans 30,150 29,174 27,785 28,640 25,899
Less: Government
guaranteed amount 7,294 7,023 6,080 6,965 6,537
Total non-performing loans
excluding government
guaranteed amount $22,856 $22,151 $21,705 $21,675 $19,362
Total non-performing loans $30,150 $29,174 $27,785 $28,640 $25,899
Other assets owned 2,612 2,254 3,850 1,793 2,143
Total non-performing assets 32,762 31,428 31,635 30,433 28,042
Less: Government guaranteed
amount 7,976 7,759 6,816 7,541 6,969
Total non-performing assets
excluding government
guaranteed amount $24,786 $23,669 $24,819 $22,892 $21,073
Restructured loans $2,430 $2,461 $2,496 $2,530 $2,565
Ratio of:
Non-performing loans to total
loans 1.61% 1.53% 1.42% 1.45% 1.32%
Non-performing assets to
total assets 1.27% 1.21% 1.18% 1.10% 1.03%
Non-performing assets to
total loans + other assets 1.75% 1.65% 1.61% 1.54% 1.42%
Allowance to total loans 1.41% 1.39% 1.27% 1.25% 1.25%
Allowance to non-performing
loans 87.42% 90.45% 89.70% 85.93% 95.03%
Ratio of (excluding government
guaranteed amount):
Non-performing loans to total
loans 1.22% 1.17% 1.11% 1.10% 0.98%
Non-performing assets to
total assets 0.96% 0.91% 0.93% 0.83% 0.77%
Non-performing assets to
total loans + other assets 1.32% 1.24% 1.26% 1.16% 1.07%
Allowance to non-performing
loans 115.31% 119.12% 114.82% 113.55% 127.11%
NET CHARGE-OFFS TO AVERAGE LOANS AND LEASES
12/31/04 09/30/04 06/30/04 03/31/04 12/31/03
Average loans
and leases:
Commercial $187,149 $195,561 $198,914 $188,992 $193,154
Commercial real
estate 607,848 636,693 653,138 664,241 648,784
Government
guaranteed 72,949 64,643 61,280 61,676 62,591
Aircraft 111,681 121,690 132,578 133,725 133,267
Residential real
estate 441,000 444,772 448,009 453,362 439,369
Indirect
installment loans 101,154 108,903 116,422 123,426 130,478
Home equity 326,656 326,582 317,320 307,116 298,712
Other consumer 34,756 36,250 36,926 38,552 41,374
Total average loans
and leases $1,883,193 $1,935,094 $1,964,587 $1,971,090 $1,947,729
Net charge-offs
(recoveries):
Commercial $65 $175 $425 $(17) $57
Commercial real estate 87 772 712 261 101
Government guaranteed 26 353 141 255 102
Aircraft 64 (47) 548 - (124)
Residential real
estate 261 236 (21) (50) 38
Indirect installment
loans 436 416 384 371 716
Home equity 217 164 196 11 286
Other consumer 300 216 254 169 318
Total $1,456 $2,285 $2,639 $1,000 $1,494
12/31/04 09/30/04 06/30/04 03/31/04 12/31/03
Net charge-offs
(recoveries) to
average loans and
leases (annualized):
Commercial 0.14% 0.36% 0.85% -0.04% 0.12%
Commercial real
estate 0.06% 0.49% 0.44% 0.16% 0.06%
Government
guaranteed 0.14% 2.18% 0.92% 1.65% 0.65%
Aircraft 0.23% -0.15% 1.65% 0.00% -0.37%
Residential real
estate 0.24% 0.21% -0.02% -0.04% 0.03%
Indirect
installment loans 1.72% 1.53% 1.32% 1.20% 2.20%
Home equity 0.27% 0.20% 0.25% 0.01% 0.38%
Other consumer 3.45% 2.38% 2.75% 1.75% 3.07%
Total 0.31% 0.47% 0.54% 0.20% 0.31%
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