TNCC Tennessee Commerce Bancorp (TN) (MM)

Tennessee Commerce Bancorp, Inc. (NASDAQ: TNCC) today reported record net income, loans and deposits for the fourth quarter and year ended December�31,�2007. �Tennessee Commerce delivered record results in 2007 based on the strong growth in our loan portfolio and our focus on the business market,� stated Mike Sapp, President of Tennessee Commerce Bancorp. �Our business bank operating model is very efficient and contributed to net income rising 45% to $6.9�million in 2007 compared with 2006. In addition, our asset-to-employee ratio rose to $14.1 million at year end, over four times higher than the average for other Tennessee banks, even as we added new staff to accommodate growth.� Fourth Quarter Highlights Net income rose 33.2% to a record $2.1 million Net income per diluted share increased 27.3% to a record $0.42 Net loans increased 45.6% to a record $784 million Asset quality remained strong with a 1.3% loan loss reserve to loans Total deposits increased 45.4% to a record $815 million Operating efficiency ratio was 46.2%, one of the best in the industry �We added over $54 million in net loans during the last quarter of 2007 while selling another $37 million in loans,� continued Mr. Sapp. �Loan demand remains solid across our markets from both local and national accounts. We have not experienced a softening in demand as reported by some banks and believe our diversified customer base and exclusive focus on business accounts will be an important part of our continued growth in 2008.� Fourth Quarter Results Net interest income increased 43.2% to $8.0 million Net interest margin � 3.72% Non interest income rose 36.8% to $874,000 Gain on sale of loans rose to $860,000 Non interest expenses increased to $4.1 million Interest income rose 44.2% to $18.0 million, up from $12.5 million in the fourth quarter of 2006. The growth in interest income was primarily due to a 53.5% increase in average loans to $764 million for the fourth quarter of 2007. Net interest income rose 43.2% to $8.0 million for the fourth quarter of 2007 compared with $5.6�million for the fourth quarter of 2006. The growth in net interest income was due to an increase in loans offset somewhat by a decline in net interest margin. Net interest margin was 3.72% in the fourth quarter of 2007 compared with 3.80% in the fourth quarter of 2006. Provision for loan losses rose to $2.1 million for the fourth quarter of 2007 compared with $1.2�million for the fourth quarter of 2006. Net interest income after the provision for loan losses increased 35.6% to $5.9 million, up from $4.4 million in the prior year�s fourth quarter. �We increased our provision for loan losses in the fourth quarter, in part, to reflect the softer economy,� stated George Fort, Chief Financial Officer. �Overall, our asset quality remained very good at year end. We have no exposure to sub-prime loans and only limited exposure to construction loans. At year-end, we increased our reserves to 1.3% of loans and our charge-offs to average loans was a low 0.45% for 2007.� Non-interest income grew 36.8% to $874,000 compared with $639,000 in the fourth quarter of 2006. Non-interest income benefited from an increase in gain on loan sales. Tennessee Commerce sold approximately $37 million in loans during the fourth quarter of 2007 for a gain of $860,000 compared with loan sales and participations sold of $11 million and a $846,000 gain on sale of loans in the fourth quarter of 2006. �Our packaged loan sales are an important part of building our non-interest income sources,� continued Mr. Sapp. �Demand for loan sales was solid throughout 2007. We are well positioned to take advantage of business opportunities in 2008 by providing packaged loan sales to institutions experiencing deterioration in loan demand in their local areas.� Annualized return on average assets was 0.96% and return on average equity was 13.66% for the fourth quarter of 2007. Tennessee Commerce�s efficiency ratio was 46.23% in the fourth quarter of 2007 compared with 39.08% in the fourth quarter of 2006. Record 2007 Results Net income rose 45.2% to $6.9 million, or $1.41 per diluted share Net interest income increased 40.7% to $27.3 million Non interest income rose 63.4% to $2.9 million Gain on sale of loans increased 32.7% to $2.7 million Non interest expenses were up 46.5% to $13.3 million �Our assets exceeded $900 million at year-end, which is a new record for us,� stated Mr. Sapp. �We are on track to exceed $1 billion in assets during 2008, a new milestone to celebrate during only our seventh year in operation. We are proud of the fact that all of our growth has been generated by our strong markets and our strategic focus on business customers, without any assistance from mergers or acquisitions. We applaud the recent action by the Federal Reserve to stimulate small business and equipment purchases. We believe these actions will provide additional stimulus for our business customers and will have a positive effect on continued loan demand in 2008.� Net income for 2007 rose 45.2% to a record $6.9 million, or $1.41 per diluted share, compared with $4.7�million, or $1.14 per diluted share, in 2006. Total assets rose 44.3% to $900 million and net loans increased 45.6% to $784 million in 2007 compared with 2006. Return on average assets was 0.91% and return on average equity increased to 12.13% in 2007. Net interest income rose 40.7% to $27.3 million in 2007 compared with $19.4 million in 2006. Net interest margin was 3.72% for the 2007 period compared with 3.98% for 2006. Provision for loan losses was $6.4 million in 2007 compared with $4.4�million for the same period in 2006. The increase was primarily related to the overall growth in the loan portfolio. About Tennessee Commerce Bancorp, Inc. Tennessee Commerce Bancorp, Inc. is the parent company of Tennessee Commerce Bank. The Bank provides a wide range of banking services and is primarily focused on business accounts. Its corporate and banking offices are located in Franklin, Tennessee, and it has a loan production office in Birmingham, Alabama. Tennessee Commerce Bancorp's stock is traded on the NASDAQ Global Market under the symbol TNCC. Certain statements contained in this news release may not be based on historical facts and are �forward-looking statements� within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may be identified by reference to a future period or by the use of forward-looking terminology, such as �expect,� �anticipate,� �believe,� �estimate,� �foresee,� �may,� �might,� �will,� �intend,� �could,� �would,� �plan,� �forecast� or future or conditional verb tenses and variations or negatives of such terms. These forward-looking statements include, without limitation, those relating to the impact of our diversified customer base and focus on business accounts on our growth in 2008, our achieving $1 billion in assets during 2008 and the impact of a decreased federal funds rate on our loan demand and our customers� business. We caution you not to place undue reliance on the forward-looking statements contained in this news release because actual results could differ materially from those indicated in such forward-looking statements as a result of a variety of factors. These factors include, but are not limited to, changes in economic conditions, competition for loans, mortgages and other financial services and products, changes in interest rates, concentrations within our loan portfolio, our ability to maintain credit quality, the effectiveness of our risk monitoring systems, changes in consumer preferences, the ability of our borrowers to repay loans, changes in our operating strategy, our ability to meet regulatory capital adequacy requirements, our ability to attract, train and retain qualified personnel, any geographic concentration of our assets, our ability to operate and integrate new technology, our ability to provide market competitive products and services, our ability to diversify revenue, our ability to fund growth with lower cost liabilities, laws and regulations affecting financial institutions in general and other factors detailed from time to time in our press releases and filings with the Securities and Exchange Commission.�We undertake no obligation to update these forward-looking statements to reflect the occurrence of changes or unanticipated events, circumstances or results that occur after the date of this news release. Additional information concerning Tennessee Commerce Bancorp can be accessed at www.tncommercebank.com. TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2007 (UNAUDITED) AND DECEMBER�31, 2006 � � (dollars in thousands except share data) � December 31, December 31, 2007 2006 ASSETS Cash and due from financial institutions $ 5,236 $ 177 Federal funds sold 9,573 13,820 Cash and cash equivalents 14,809 13,997 Securities available for sale 73,753 56,943 Loans 794,322 545,518 Allowance for loan losses (10,321 ) (6,968 ) Net loans 784,001 538,550 Premises and equipment, net 1,413 1,633 Accrued interest receivable 5,901 4,116 Restricted equity securities 938 633 Deferred tax asset 1,747 635 Other assets 17,452 7,011 Total assets $ 900,014 $ 623,518 LIABILITIES AND SHAREHOLDERS� EQUITY Liabilities Deposits Noninterest-bearing $ 27,427 $ 17,001 Interest-bearing 787,626 543,566 Total deposits 815,053 560,567 Accrued interest payable 2,292 1,728 Accrued bonuses 1,700 623 Long-term subordinated debt 8,248 8,248 Other liabilities 9,600 1,128 Total liabilities 836,893 572,294 Shareholders� equity Preferred stock, no par value. Authorized 1,000,000 shares; none issued or outstanding at December 31, 2007 and December 31, 2006 � � Common stock, $0.50 par value. Authorized 10,000,000 shares; issued and outstanding 4,724,196 at December 31, 2007, and 4,451,674 at December 31, 2006 2,362 2,226 Additional paid-in capital 45,024 40,755 Retained earnings 15,426 8,530 Accumulated other comprehensive income (loss) 309 (287 ) Total shareholders� equity 63,121 51,224 Total liabilities and shareholders� equity $ 900,014 $ 623,518 � Note: The balance sheet presented above at December�31, 2006, has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME TWELVE MONTHS ENDED DECEMBER 31, 2007 AND 2006 THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006 (UNAUDITED) � � (dollars in thousands except share data) Twelve Months Ended Three Months Ended December 31, December 31, 2007 � 2006 2007 2006 Interest income Loans, including fees $ 58,114 $ 38,382 $ 16,862 $ 11,439 Securities 3,492 2,216 985 687 Federal funds sold 600 647 165 361 Total interest income 62,206 41,245 18,012 12,487 Interest expense Deposits 34,245 21,216 9,834 6,795 Other 689 652 227 139 Total interest expense 34,934 21,868 10,061 6,934 Net interest income 27,272 19,377 7,951 5,553 Provision for loan losses 6,350 4,350 2,050 1,200 Net interest income after provision for loan losses 20,922 15,027 5,901 4,353 Non interest income Service charges on deposit accounts 132 112 34 61 Gain on sale of loans 2,687 2,025 860 846 Other 61 (374 ) (20 ) (268 ) Total non interest income 2,880 1,763 874 639 Non interest expense Salaries and employee benefits 7,977 5,047 2,614 1,194 Occupancy and equipment 1,109 844 310 216 Data processing fees 983 701 254 194 Professional fees 779 786 236 272 Other 2,415 1,678 666 544 Total non interest expense 13,263 9,056 4,080 2,420 � Income before income taxes 10,539 7,734 2,695 2,572 Income tax expense 3,643 2,985 593 994 Net income 6,896 4,749 2,102 1,578 � Earnings per share (EPS): Basic EPS $ 1.49 $ 1.24 $ 0.44 $ 0.36 Diluted EPS 1.41 1.14 0.42 0.33 Weighted average shares outstanding: Basic 4,613,342 3,822,655 4,715,457 4,450,489 Diluted 4,893,401 4,157,338 4,995,515 4,850,413 TENNESSEE COMMERCE BANCORP, INC. FINANCIAL HIGHLIGHTS � � (Dollars in thousands except ratios and share data) � 2007 2006 % Change For the Quarter ending 12/31 Earnings: Net Interest Income $ 7,951 $ 5,553 43.18% Non-Interest Income 874 639 36.78% Provision for Loan Losses 2,050 1,200 70.83% Operating Expense 4,080 2,420 68.60% Operating Income 2,695 2,572 4.78% Applicable Tax 593 994 -40.34% Net Income $ 2,102 $ 1,578 33.21% At December 31 Total Assets $ 900,014 $ 623,518 44.34% Net Loans 784,001 538,550 45.58% Earning Assets 867,327 610,322 42.11% Allowance for Loan Losses 10,321 6,968 48.12% Deposits 815,053 560,567 45.40% Shareholders' Equity $ 63,121 $ 51,224 23.23% � Total Shares Outstanding 4,724,196 4,451,674 6.12% � Significant Ratios � 4th quarter Net Interest Margin 3.72% 3.80% Return on Average Assets (a) 0.96% 1.05% Return on Average Equity (a) 13.66% 12.58% Efficiency Ratio 46.23% 39.08% Net Charge Offs/ Loans .45% .41% Non-Performing Assets/ Loans 1.08% .87% Loan Loss Reserve/ Loans 1.30% 1.28% Basic Earnings per Share $ 0.44 $ 0.36 22.22% Diluted Earnings per Share $ 0.42 $ 0.33 27.27% � (a) annualized TENNESSEE COMMERCE BANCORP, INC. ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS (UNAUDITED) � � Three Months Ended December 31, 2007 Three Months Ended December 31, 2006 (dollars in thousands) Average Balances � Interest Rates/ Yields Average Balances � Interest Rates/ Yields Interest-earning assets: Loans $ 763,883 $ 16,862 8.76% $ 497,645 $ 11,439 9.12% Securities: Taxable 71,376 985 5.49% 53,088 687 5.09% Federal funds sold and other 13,785 165 4.75% 28,454 361 5.03% Total interest-earning assets 849,044 $ 18,012 8.42% 579,187 $ 12,487 8.55% Nonearning assets 26,677 19,777 Total assets $ 875,721 $ 598,964 Interest-bearing liabilities: Interest-bearing deposits $ 774,274 $ 9,834 5.04% $ 517,694 $ 6,795 5.21% Federal funds purchased 523 13 9.86% 2 - 5.50% Subordinated debt 12,552 214 6.76% 8,248 139 6.69% Total interest-bearing liabilities 787,349 10,061 5.07% 525,994 6,934 5.23% Noninterest bearing deposits and other liabilities 26,831 22,830 Stockholders� equity 61,541 50,190 Total liabilities and equity $ 875,721 $ 598,964 Net interest income $ 7,951 $ 5,553 Net interest spread (1) 3.35% 3.32% Net interest margin (2) 3.72% 3.80% � (1) Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. � � (2) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period. TENNESSEE COMMERCE BANCORP, INC. ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS (UNAUDITED) � � Twelve Months Ended December 31, 2007 Twelve Months Ended December 31, 2006 (dollars in thousands) Average Balances � Interest Rates/ Yields Average Balances � Interest Rates/ Yields Interest-earning assets: Loans $ 656,210 $ 58,114 8.86% $ 428,186 $ 38,382 8.96% Securities: Taxable 63,838 3,492 5.43% 44,317 2,216 4.91% Federal funds sold and other 11,701 600 5.13% 14,165 647 4.57% Total interest-earning assets 731,749 $ 62,206 8.50% 486,668 $ 41,245 8.46% Nonearning assets 23,505 15,310 Total assets $ 755,254 $ 501,978 Interest-bearing liabilities: Interest-bearing deposits $ 663,816 $ 34,245 5.16% $ 432,910 $ 21,216 4.90% Federal funds purchased 889 57 6.41% 990 55 5.56% Subordinated debt 9,355 632 6.76% 8,804 597 6.78% Total interest-bearing liabilities 674,060 34,934 5.18% 442,704 21,868 4.94% Noninterest bearing deposits and other liabilities 24,337 21,833 Stockholders� equity 56,857 37,441 Total liabilities and equity $ 755,254 $ 501,978 Net interest income $ 27,272 $ 19,377 Net interest spread (1) 3.32% 3.52% Net interest margin (2) 3.72% 3.98% � (1)�Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. � � (2) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.