TNCC Tennessee Commerce Bancorp (TN) (MM)

Tennessee Commerce Bancorp, Inc. (NASDAQ: TNCC) today reported financial results for the fourth quarter ended December 31, 2009. The Company reported net income available to common shareholders of $1.3 million, or $0.27 per diluted share, for the fourth quarter of 2009.

“Tennessee Commerce’s fourth quarter results highlight the progress we made in growing our net interest income, expanding net interest margin and improving credit quality this year,” stated Mike Sapp, President and Chief Executive Officer of Tennessee Commerce Bancorp. “Our earnings gained momentum in the fourth quarter and marked our highest level of net interest income, operating income and net income this year despite the continued weakness in the economy.

“We made substantial progress in improving our credit quality during the second half of 2009,” continued Mr. Sapp. “Total nonperforming loans dropped 32.2% to $20.5 million compared with $30.2 million in the third quarter of this year and were at their lowest level in the past five quarters. The continued improvement in credit quality was reflected in our reporting the lowest level of net charge-offs this year. We believe our excellent results highlight our focus on the business banking market as well as the strength of our core market in Middle Tennessee.”

Fourth Quarter Highlights

• Nonperforming loans dropped 32.2% to $20.5 million, the lowest amount in five quarters
• Ranked top 1% in nation for total revenues per employee at $476,000
• Net interest income increased 34.4% to a record $13.2 million
• Net interest margin improved to 4.18%, the highest level in fifteen quarters
• Total deposits increased 16.2% to a record $1.2 billion
• Operating efficiency ratio was 42.01%, one of the best in the industry
• Raised $3.2 million in new capital in a registered direct stock offering
• Ranked #1 in deposit share in home market of Williamson County and Franklin, Tennessee

“Our net interest income set a new quarterly record at $13.2 million due to record earning assets and significant growth in our net interest margin to 4.18%,” stated Frank Perez, Chief Financial Officer of Tennessee Commerce Bancorp. “This was our fourth consecutive quarterly increase in our margin and reflects our focus on improving loan yields and reducing our funding costs.

“We made solid progress in growing our net interest margin over the past year,” continued Mr. Perez. “Our funding costs for deposits were down 139 basis points since the fourth quarter of last year while our yield on loans was down only 54 basis points. These changes contributed to the 57 basis point increase in our net margin from the linked third quarter of 2009 and 70 basis point improvement from the fourth quarter of last year.”

Provision for loan losses was $4.2 million for the fourth quarter of 2009 which exceeded our net charge offs by $225,000. At the end of the fourth quarter 2009, the allowance for loan losses was $19.9 million, or 1.7% of loans. The coverage ratio of allowance to nonperforming loans improved significantly to 97.2%, up from 65.2% in the third quarter of 2009 and 44.3% in the fourth quarter of 2008.

“We made significant progress in reducing our non-performing loans in the latest quarter,” continued Mr. Perez. “We reported a decrease in nonaccrual loans, loans 90+ days past due and other real estate owned. We remain focused on improving our credit metrics and expect this will translate into improved earnings in future quarters.”

Non-interest loss was $1.4 million for the fourth quarter of 2009 compared with non interest income of $1.4 million in the third quarter of 2009 and $2.9 million in the fourth quarter of 2008. The loss was primarily due to loss on repossessions and loan buybacks exceeding gains on loan sales. Demand for loan sales has been down due to the soft economy. Sales of loan pools and loan participations in the fourth quarter of 2009 generated $396,000 in gains and were offset by $1.4 million in losses on loan sales due to loss on sale of one loan combined with fee reversals on buy-backs of small ticket loan pools.

Non-interest expenses declined to $5.0 million or 3.9% in the fourth quarter of 2009 when compared to $5.2 million in the fourth quarter of 2008.

Total risk-based capital was 10.81% for the holding company and 10.63% for the bank compared with regulatory requirements of 10.0% for a well-capitalized bank and minimum regulatory requirements of 8.0%. Tier 1 capital was 9.55% for the holding company and 9.37% for the bank, both well above the requirement of 6.0% for a well-capitalized bank and minimum regulatory requirements of 4.0%.

Tennessee Commerce completed a registered direct stock offering effective December 18, 2009, and sold 903,394 shares and raised net proceeds of $3.2 million. The common stock was offered without a placement agent, underwriter, or broker/dealer.

Tennessee Commerce’s efficiency ratio was 42.01% in the fourth quarter of 2009 and was one of the best in the industry. At year-end 2009, our asset-to-employee ratio exceeded $15 million and was over three times higher than the average bank in the US while the ratio of revenues per employee totaled $476,000 and was ranked in the top 1% of the nation.

2009 Results

Net loss available to common shareholders was $7.1 million, or $1.50 per diluted share, for 2009 compared with net income of $7.8 million, or $1.60 per diluted share, in 2008. The 2009 loss was primarily due to higher charge offs in the first half of 2009 combined with significant additions to the allowance for loan losses. In addition, the 2009 results include $1.5 million in preferred dividends. No comparable dividend payments were paid in 2008.

Net interest income rose 28.5% to $44.9 million in 2009 compared with $35.0 million in 2008. Net interest margin increased 23 basis points to 3.66% in 2009 period compared with 3.43% in 2008.

Provision for loan losses was $31.0 million in 2009 compared with $9.1 million in 2008.

Non interest loss for 2009 was $1.6 million compared with non interest income of $4.3 million in 2008. The 2009 non interest loss was due primarily to $1.9 million in losses on loan sales and repossessed assets.

Non-interest expenses rose to $21.3 million in 2009 compared with $17.6 million in 2008. The increase was due primarily to higher costs associated with other real estate owned, repossessed assets, increased collection efforts and increased costs of FDIC insurance and special assessments.

Art Helf Retires as Chairman of Tennessee Commerce

Tennessee Commerce announced the retirement of Arthur Helf, co-founder of Tennessee Commerce, effective December 31, 2009. Mr. Helf had served as Chairman of the Board and Chief Executive Officer from 2000 until his retirement. He will continue as a Board member of Tennessee Commerce. The Board of Directors elected Michael Sapp, a co-founder of Tennessee Commerce with Mr. Helf, as Chairman and Chief Executive Officer in addition to his title of President.

Fourth Quarter Conference Call

Tennessee Commerce will provide an online, real-time webcast and rebroadcast of its fourth quarter results conference call to be held January 20, 2010. The live broadcast will be available online at www.tncommercebank.com under investor relations tab as well as www.streetevents.com beginning at 11:00 a.m. (Eastern Time). The on-line replay will follow immediately and continue for 30 days.

About Tennessee Commerce Bancorp, Inc.

Tennessee Commerce Bancorp, Inc. is the parent company of Tennessee Commerce Bank. The Company celebrated its tenth anniversary on January 14, 2010. 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 loan production offices in Atlanta, Birmingham and Minneapolis. Tennessee Commerce Bancorp's stock is traded on the NASDAQ Global Market under the symbol TNCC.

Additional information concerning Tennessee Commerce can be accessed at www.tncommercebank.com.

Forward Looking Statements

This press release contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, descriptions of Tennessee Commerce Bancorp’s financial condition, results of operations, asset and credit quality trends and profitability. Forward-looking statements can be identified by the use of the words “anticipate,” “believe,” “expect,” “outlook,” “estimate,” “continue,” “predict,” “project”, “intend,” “could” and “should,” and other words of similar meaning. These forward-looking statements express management’s current expectations or forecasts of future events and, by their nature, are subject to risks and uncertainties and there are a number of factors that could cause actual results to differ materially from those in such statements. Factors that might cause such a difference include, but are not limited to, market, economic, operational, liquidity, credit and interest rate risks associated with Tennessee Commerce’s business, competition, government legislation and policies, ability of Tennessee Commerce to execute its business plan, including, changes in the economy which could materially impact credit quality trends and the ability to generate loans and gather deposits, failure or circumvention of our internal controls, failure or disruption of our information systems, significant changes in accounting, tax or regulatory practices or requirements, new legal obligations or liabilities or unfavorable resolutions of litigations, other matters discussed in this press release and other factors identified in the Company’s Annual Report on Form 10-K and other periodic filings with the Securities and Exchange Commission.

These forward-looking statements are made only as of the date of this press release, and Tennessee Commerce undertakes no obligation to release revisions to these forward-looking statements to reflect events or conditions after the date of this release. Tennessee Commerce is not responsible for updating the information contained in this press release beyond the published date, or for changes made to this document by wire services or Internet services.

  TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED BALANCE SHEETS DECEMBER 31, 2009 (UNAUDITED) AND DECEMBER 31, 2008   (Dollars in thousands except share data)     2009     2008 ASSETS Cash and due from financial institutions $ 22,864 $ 5,260 Federal funds sold   15,010     35,538   Cash and cash equivalents 37,874 40,798   Securities available for sale 93,668 101,290   Loans 1,171,301 1,036,725 Allowance for loan losses   (19,913 )   (13,454 ) Net loans 1,151,388 1,023,271   Premises and equipment, net 1,967 2,330 Accrued interest receivable 9,711 8,115 Restricted equity securities 2,169 1,685 Income tax receivable 0 4,430 Other assets   86,655     36,165     Total assets $ 1,383,432   $ 1,218,084     LIABILITIES AND SHAREHOLDERS’ EQUITY Liabilities Deposits Noninterest-bearing $ 30,111 $ 24,217 Interest-bearing   1,212,431     1,044,926   Total deposits 1,242,542 1,069,143   FHLB advances — — Federal funds purchased — — Accrued interest payable 1,430 3,315 Accrued dividend payable 187 — Short-term borrowings 10,000 10,000 Accrued bonuses — 917 Deferred tax liability 5,146 8,695 Other liabilities 4,637 1,069 Long-term subordinated debt   23,198     23,198   Total liabilities 1,287,140 1,116,337 Shareholders’ equity Preferred stock, 1,000,000 shares authorized; 30,000 shares of $0.50 par value Fixed Rate Cumulative Perpetual, Series A issued and outstanding at December 31, 2009 and December 31, 2008, respectively 15,000 15,000 Common stock, $0.50 par value; 20,000,000 shares authorized at December 31, 2009 and 10,000,000 shares authorized at December 31, 2008; 5,646,338 and 4,731,696 shares issued and outstanding at December 31, 2009 and December 31, 2008, respectively 2,845 2,366 Common stock warrants 453 453 Additional paid-in capital 63,225 59,946 Retained earnings 16,056 23,180 Accumulated other comprehensive income   (1,287 )   802   Total shareholders’ equity 96,292 101,747   Total liabilities and shareholders’ equity $ 1,383,432   $ 1,218,084  

 

(1) The balance sheet at December 31, 2008 has been derived from the audited consolidated financial statements at that date but does not include all of the information and notes required by generally accepted accounting principles for complete financial statements.

  See accompanying notes to consolidated financial statements.   TENNESSEE COMMERCE BANCORP, INC. CONSOLIDATED STATEMENTS OF INCOME TWELVE MONTHS ENDED DECEMBER 31, 2009 AND 2008 THREE MONTHS ENDED DECEMBER 31, 2009 AND 2008 (UNAUDITED)       Twelve Months Ended     Three Months Ended December 31, December 31, (Dollars in thousands, except share data) 2009     2008 2009     2008 Interest income Loans, including fees $ 75,770 $ 71,101 $ 19,866 $ 18,976 Securities 5,325 4,717 1,236 1,319 Federal funds sold   13     160     1     12   Total interest income 81,108 75,978 21,103 20,307   Interest expense Deposits 34,213 39,271 7,406 9,931 Other   1,979     1,756     496     557   Total interest expense   36,192     41,027     7,902     10,488     Net interest income 44,916 34,951 13,201 9,819   Provision for loan losses   31,039     9,111     4,300     3,321     Net interest income after provision for loan losses 13,877 25,840 8,901 6,498   Non-interest income Service charges on deposit accounts 157 122 25 33 Securities gains (losses) 1,118 3,750 248 514 Gain on sale of loans (1,928 ) 447 (1,279 ) 2,331 Other   (904 )   (25 )   (370 )   (12 ) Total non-interest income $ (1,557 ) 4,294 (1,376 ) 2,866   Non-interest expense Salaries and employee benefits 9,849 9,100 2,421 2,949 Occupancy and equipment 1,625 1,422 439 385 Data processing fees 1,549 1,210 401 300 Professional fees 1,851 2,012 458 481 Other   6,431     3,864     1,099     1,053   Total non-interest expense   21,305     17,608     4,818     5,168     Income before income taxes (8,985 ) 12,526 2,707 4,196   Income tax expense   (3,407 ) $ 4,772     1,056   $ 1,549   Net income (5,578 ) 7,754 1,651 2,647 CPP Preferred dividends   (1,546 )   —     (375 )   —     Net income available to common shareholders $ (7,124 ) $ 7,754   $ 1,276   $ 2,647     Earnings per share (EPS): Basic EPS $ (1.50 ) $ 1.64 $ 0.27 $ 0.56 Diluted EPS (1.50 ) 1.60 0.27 0.55   Weighted average shares outstanding: Basic 4,738,638 4,731,204 4,752,753 4,731,696 Diluted 4,738,638 4,852,065 4,752,753 4,852,557   See accompanying notes to consolidated financial statements.   TENNESSEE COMMERCE BANCORP, INC. FINANCIAL HIGHLIGHTS (Dollars in thousands except ratios and per share amounts)       2009     2008     % Change For the Quarter Ending 12/31 Earnings: Net Interest Income $ 13,201 $ 9,819 34.44 % Non-Interest Income (1,376 ) 2,866 -148.01 % Provision for Loan Losses 4,150 3,321 24.96 % Operating Expense   4,968     5,168   -3.87 % Operating Income 2,707 4,196 -35.49 % Applicable Tax   1,056     1,549   -31.83 % Net Income 1,651 2,647 -37.63 % Preferred Dividends   375     -   100.00 % Net Income Available to Common Shareholders $ 1,276   $ 2,647   -51.79 %   At December 31 Total Assets $ 1,383,432 $ 1,218,084 13.57 % Net Loans 1,151,388 1,023,271 12.52 % Earning Assets 1,260,066 1,160,099 8.62 % Allowance for Loan Losses 19,913 13,454 48.01 % Deposits 1,242,542 1,069,143 16.22 % Shareholders' Equity $ 96,292 $ 101,747 -5.36 %   Total Shares Outstanding 5,646,338 4,731,696 19.33 %   Significant Ratios - 4th Quarter Net Interest Margin 4.18 % 3.48 % 20.11 % Return on Average Assets 0.38 % 0.91 % -58.24 % Return on Average Common Equity 7.94 % 13.86 % -42.71 % Efficiency Ratio 42.01 % 40.74 % 3.12 % Loan Loss Reserve/Loans 1.70 % 1.30 % 30.77 % Capital/Assets 6.96 % 8.35 % -16.65 % Basic Earnings per Share - YTD $ 0.27 $ 0.56 -51.79 % Diluted Earnings per Share - YTD $ 0.27 $ 0.55 -50.91 %   TENNESSEE COMMERCE BANCORP, INC. ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS (UNAUDITED)       Three Months Ended December 31,     Three Months Ended December 31, 2009 2008 Average         Average Average         Average (Dollars in thousands) Balance Interest Rate Balance Interest Rate ASSETS   Interest earning assets Securities (taxable) (1) $ 98,979 $ 1,236 4.92 % $ 90,019 $ 1,319 5.75 % Loans (2) (3) 1,153,175 19,866 6.83 % 1,024,607 18,976 7.37 % Federal funds sold   1,565     1 0.25 %   5,944     12 0.80 % Total interest earning assets 1,253,719 21,103 6.67 % 1,120,570 20,307 7.20 %   Non-interest earning assets Cash and due from banks 7,108 4,091 Net fixed assets and equipment 2,026 2,389 Accrued interest and other assets   81,400     34,781     Total assets $ 1,344,253   $ 1,161,831     LIABILITIES AND SHAREHOLDERS’ EQUITY   Interest bearing liabilities Deposits (other than demand) $ 1,176,135 $ 7,406 2.5 % $ 1,014,656 $ 9,931 3.89 % Federal funds purchased 2,016 14 2.76 % 13,881 63 1.81 % Subordinated debt   33,198     482 5.76 %   33,198     494 5.92 % Total interest bearing liabilities 1,211,349   7,902 2.59 % 1,061,735   10,488 3.93 %   Non-interest bearing liabilities Non-interest bearing demand deposits 25,903 21,781 Other liabilities 13,662 1,914 Shareholders’ equity   93,339     76,401     Total liabilities and shareholders’ equity $ 1,344,253   $ 1,161,831     Net Interest Spread 4.08 % 3.27 %   Net Interest Margin 4.18 % 3.48 %   (1) Unrealized gain (loss) of $(695) and $(1,172) is excluded from yield calculation for the twelve months ended December 31, 2009 and 2008, respectively.

(2) Non-accrual loans are included in average loan balances and loan fees of $1,396 and $2,032 are included in interest income for the three months ended December 31, 2009 and 2008, respectively.

(3) Loans are presented net of allowance for loan loss   TENNESSEE COMMERCE BANCORP, INC. ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS (UNAUDITED)       Twelve Months Ended December 31,     Twelve Months Ended December 31, 2009 2008 Average         Average Average         Average (Dollars in thousands) Balance Interest Rate Balance Interest Rate ASSETS   Interest earning assets Securities (taxable) (1) $ 102,827 $ 5,235 5.14 % $ 84,005 $ 4,717 5.59 % Loans (2) (3) 1,115,993 75,770 6.79 % 928,508 71,101 7.66 % Federal funds sold   5,955     13 0.22 %   7,374     160 2.17 % Total interest earning assets 1,224,775 81,018 6.62 % 1,019,887 75,978 7.45 %   Non-interest earning assets Cash and due from banks 8,452 3,732 Net fixed assets and equipment 2,160 1,918 Accrued interest and other assets   71,818     30,322     Total assets $ 1,307,205   $ 1,055,859     LIABILITIES AND SHAREHOLDERS’ EQUITY   Interest bearing liabilities Deposits (other than demand) $ 1,133,387 $ 34,213 3.02 % $ 925,661 $ 39,271 4.24 % Federal funds purchased 14,467 89 0.62 % 10,380 269 2.59 % Subordinated debt   33,198     1,890 5.69 %   25,268    

1,487

5.88 % Total interest bearing liabilities 1,181,052   36,192 3.06 % 961,309   41,027 4.27 %   Non-interest bearing liabilities Non-interest bearing demand deposits 24,372 23,870 Other liabilities 6,626 3,749 Shareholders’ equity   95,155     65,070     Total liabilities and shareholders’ equity $ 1,307,205   $ 1,053,998     Net Interest Spread 3.56 % 3.18 %   Net Interest Margin 3.66 % 3.43 %   (1) Unrealized gain (loss) of $(806) and $(318) is excluded from yield calculation for the twelve months ended December 31, 2009 and 2008, respectively.

(2) Non-accrual loans are included in average loan balances and loan fees of $5,347 and $5,730 are included in interest income for the twelve months ended December 31, 2009 and 2008, respectively.

(3) Loans are presented net of allowance for loan loss   TENNESSEE COMMERCE BANCORP, INC. LOAN DATA   (amounts in thousands)                     12/31/2009 9/30/2009 6/30/2009 3/31/2009 12/31/2008 LOAN BALANCES BY TYPE: Commercial and Industrial $ 649,475 $ 637,016 $ 639,287 $ 635,943 $ 589,518 Consumer 3,476 3,421 3,827 3,628 3,572 Real Estate: Construction 142,109 206,512 216,208 202,034 181,638 1-4 Family 42,425 40,033 37,988 38,257 37,822 Other   259,220     198,653     175,510     172,771     171,150   Total Real Estate 443,754 445,198 429,706 413,062 390,610 Other   74,596     74,070     74,299     51,309     53,025   Total $ 1,171,301   $ 1,159,705   $ 1,147,119   $ 1,103,942   $ 1,036,725     ASSET QUALITY DATA: Nonaccrual Loans $ 19,151 $ 28,854 $ 23,332 $ 24,342 $ 11,603 Loans 90+ Days Past Due   1,328     1,332     2,240     9,605     18,788   Total Non-Performing Loans 20,479 30,186 25,572 33,947 30,391 Other Real Estate Owned   814     1,254     5,635     5,045     5,764   Total Non-Performing Assets $ 21,293 $ 31,440 $ 31,207 $ 38,992 $ 36,155   Non-Performing Loans to Total Loans 1.7 % 2.6 % 2.2 % 3.1 % 2.9 % Non-Performing Assets to Total Loans and OREO 1.8 % 2.7 % 2.7 % 3.5 % 3.5 % Allowance for Loan Losses to Non-Performing Loans 97.2 % 65.2 % 74.1 % 45.4 % 44.3 % Allowance for Loan Losses to Total Loans 1.7 % 1.7 % 1.7 % 1.4 % 1.3 % Loans 30+ Days Past Due to Total Loans 4.5 % 3.0 % 3.3 % 4.9 % 4.5 % (loans not included in non-performing loans) Net Chargeoffs to Average Gross Loans 0.3 % 0.4 % 0.9 % 0.6 % 0.2 %     NET CHARGEOFFS FOR QUARTER $ 3,927 $ 4,498 $ 9,611 $ 6,544 $ 2,058  

Transportation & Other Equipment:

Nonaccrual Loans (included above) $ 11,596 $ 10,486 $ 2,850 $ 7,838 $ 6,952 Loans 90+ Days Past Due (included above) 1,328 1,311 2,240 1,196 2,119 Reposessions $ 24,980 $ 21,262 $ 16,363 $ 11,657 $ 10,363   TENNESSEE COMMERCE BANCORP, INC. FINANCIAL HIGHLIGHTS (Dollars in thousands, except per share amounts)       2009 Q4     2009 Q3     2009 Q2     2009 Q1     2008 Q4 Total Assets $ 1,383,432 $ 1,335,751 $ 1,339,539 $ 1,275,134 $ 1,218,084 Total Net Loans 1,151,388 1,140,015 1,128,181 1,088,518 1,023,271 Total Deposits 1,242,541 1,202,285 1,203,681 1,095,307 1,069,143 Reserves/ Loans (%) 1.70 % 1.70 % 1.65 % 1.40 % 1.30 % Common Equity 66,523 63,163 61,141 68,472 72,200 Tangible Common Equity 66,523 63,163 61,141 68,472 72,200 Net Interest Income 13,201 11,424 10,451 9,840 9,819 Operating Revenue 11,825 12,777 8,890 9,867 12,685

Net Income (Loss) Available to Common Shareholders

1,276 1,161 (6,901 ) (2,660 ) 2,647 Diluted Earnings (Loss) Per Share $ 0.27 $ 0.25 $ (1.46 ) $ (0.56 ) $ 0.55 ROAA 0.38 % 0.34 % -2.13 % -0.86 % 0.91 % ROACE 7.94 % 7.46 % -42.50 % -15.22 % 13.86 % Net Interest Margin 4.18 % 3.61 % 3.45 % 3.39 % 3.48 % Tangible Common Equity/ Total Assets 4.81 % 4.73 % 4.56 % 5.37 % 5.93 % Total Capital Ratio - Bank 10.63 % 10.68 % 10.53 % 10.61 % 11.01 % Total Capital Ratio - Corporation 10.81 % 10.59 % 10.49 % 11.40 % 12.42 %