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Great Lakes Bancorp, Inc. Reports 2006 Fourth Quarter ResultsAggressive Branch Development and Significant Loan Growth ContinuesBUFFALO, N.Y., Feb. 13 /PRNewswire-FirstCall/ -- Great Lakes Bancorp, Inc. (NYSE: GLK) today announced a net loss of $753 thousand or $0.07 per share for the fourth quarter and a net loss of $896 thousand or $0.10 per share for the year ended December 31, 2006. The Bank recognized a net loss of $1.6 million or $0.38 per share for the fourth quarter of 2005 and a net loss of $468 thousand or $0.11 per share for 2005. Per share amounts reflect a significant increase in shares outstanding resulting from the merger with Bay View Capital Corporation on May 1, 2006. The 2006 results reflect increases in net interest income and noninterest income, offset by higher operating costs associated with the Bank's branch development and personnel additions to its lending, support functions and senior management team. The 2005 results included a loss of $3.0 million on the sale of investment securities to improve the Bank's interest rate risk profile. Andrew W. Dorn, Jr., President and Chief Executive Officer, was pleased with the progress made in 2006 to position the Bank for future success. "We opened five new branches during the year bringing our network to 14 full-service locations in Western New York and grew our business checking accounts significantly. On the lending side we focused on growing our commercial portfolios for better yield and diversification. The average balances in our commercial real estate and commercial and industrial portfolios grew by 88 percent and 107 percent, respectively, in 2006. We think the interest rate environment will improve sooner or later and we will be well-positioned when it occurs." Net interest income for the quarter increased $575 thousand, or 17.9 percent, to $3.8 million compared to the fourth quarter of 2005. This increase resulted from significant growth of the Bank's loan portfolios as average loan balances increased by $92.5 million, or 22.4 percent, to $505.9 million compared to the fourth quarter of 2005, offset in part, by higher interest costs. Average interest-bearing liabilities decreased $14.4 million to $692.5 million and average rates paid on those liabilities increased to 4.04 percent from 3.32 percent in the 2006 and 2005 quarters, reflecting the highly competitive retail market. Net interest margins were 1.99 percent for the current quarter compared to 1.78 percent for the fourth quarter of 2005. Provisions for loan losses were $443 thousand in the current quarter compared to $212 thousand in the fourth quarter of 2005. This increase reflects reserves established in the current quarter on two commercial real estate loans that were placed on nonaccrual status. The increase in non-performing loans and the change in the allowance for loan losses as a percentage of total loans outstanding was primarily a result of two commercial real estate loans being placed on nonaccrual status and reserved for during the fourth quarter of 2006. Noninterest income for the current quarter was $600 thousand, representing an increase of $209 thousand or 53.5 percent from the fourth quarter of 2005 after excluding the losses on sales of securities and loans in the 2005 quarter. Noninterest income was up in all categories for the current quarter. Noninterest expenses increased $1.9 million, or 58.0 percent, to $5.2 million for the current quarter compared to the fourth quarter of 2005. While expenses increased across all categories, the most significant were salaries and employee benefits -- up $1.0 million, advertising and professional services -- up $283 thousand, and occupancy, equipment and furnishing expenses -- up $203 thousand. Results for the year ended December 31, 2006 reflected similar developments. Net interest income increased $1.1 million, or 7.7 percent, to $15.1 million in 2006. This increase resulted from significant growth in the loan portfolios with average loan balances up $112.0 million, or 31.2 percent, year to year, offset in part, by higher interest costs. Average interest- bearing liabilities increased $27.6 million to $715.2 million and average rates paid on those liabilities increased to 3.86 percent in the 2006 period from 2.94 percent in the 2005 period. Net interest margins were 1.98 percent in 2006 compared to 2.01 percent in 2005. Provisions for loan losses were $1.0 million in 2006 and $934 thousand in 2005 with loan loss allowance coverage of total loans remaining fairly consistent at 0.73 percent in 2006 and 0.71 percent in 2005. Noninterest income for 2006 was $2.2 million representing an increase of $815 thousand or 59.4 percent from 2005 when excluding the losses on sales of securities and loans in 2005. Noninterest income was up in all categories from 2005 to 2006. Noninterest expenses increased $5.1 million, or 39.1 percent, to $18.1 million for the year. While expenses increased across all categories, the most significant increases were salaries and employee benefits -- up $3.3 million; advertising and professional services -- up $576 thousand; and occupancy, equipment and furnishing expenses -- up $442 thousand. These cost increases reflected the Bank's continued commitment to aggressive completion of its branch network and significant additions to the workforce. As of December 31, 2006, the Bank had 239 FTE employees compared to 185 FTE employees one year ago. At December 31, 2006, the Bank had total assets of $884.4 million, representing an increase of $109.3 million, or 14.1 percent for the year. On May 1, 2006, assets of the Bank increased by $138.3 million with the Bay View merger. Mr. Dorn was upbeat about the Bank's strategic accomplishments in 2006. "We've greatly enhanced our support infrastructure and lending teams, added three Bay View directors with significant bank experience to our Board, and built an accomplished senior management team. We are confident these actions will provide long-term shareholder value." Annual Meeting of Shareholders The Company announced that it will hold its 2007 annual meeting of shareholders on May 15, 2007, at 10:00 a.m. local time at its Main Office at 2421 Main Street, Buffalo, New York. Profile -- Great Lakes Bancorp, Inc. is the bank holding company for Greater Buffalo Savings Bank, a Buffalo-based, full-service community savings bank that serves residents and businesses located throughout Western New York. Forward-Looking Statements -- This press release contains forward-looking statements with respect to the financial condition and results of operations of Great Lakes Bancorp, Inc. including, without limitations, statements relating to the earnings outlook of the Company. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward- looking statements, include among others, the following possibilities:(1) changes in the interest rate environment; (2) competitive pressure among financial services companies; (3) general economic conditions including an increase in nonperforming loans that could result from an economic downturn;(4) changes in legislation or regulatory requirements; (5) difficulties in continuing to improve operating efficiencies; (6) difficulties in the integration of acquired businesses; and (7) increased risk associated with an increase in commercial real-estate and business loans and non- performing loans. GREAT LAKES BANCORP, INC.
Summary of Quarterly Financial Data
Years ended
December 31,
2006 2005
SELECTED INCOME STATEMENT DATA
(Amounts in thousands)
Interest income $42,729 34,286
Interest expense 27,594 20,230
Net interest income 15,135 14,056
Provision for loan losses 1,030 934
Net interest income after provision for loan losses 14,105 13,122
Noninterest income:
Service charges on deposit accounts 654 433
Other fees and service charges 535 317
Earnings on bank-owned life insurance 469 471
Loan fee income 338 85
Gain (loss) on sale of securities, net - (3,027)
Loss on sale of loans 16 (226)
Other operating income 174 65
Total noninterest income 2,186 (1,882)
Noninterest expense:
Salaries and employee benefits 10,687 7,419
Occupancy, equipment and furnishings 2,472 2,030
Data processing and operations 962 789
Advertising 705 492
Professional services 726 363
Printing, postage and supplies 441 376
Other operating expenses 2,122 1,551
Total noninterest expense 18,115 13,020
Income (loss) before income taxes (1,824) (1,780)
Income tax provision (benefit) (928) (1,312)
Net income (loss) $ (896) (468)
Quarterly Trends
2006 2005
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
SELECTED INCOME STATEMENT DATA
(Amounts in thousands)
Interest income $10,840 11,137 10,957 9,795 9,128
Interest expense 7,049 7,141 7,060 6,344 5,912
Net interest income 3,791 3,996 3,897 3,451 3,216
Provision for loan losses 443 29 318 240 212
Net interest income after
provision for loan losses 3,348 3,967 3,579 3,211 3,004
Noninterest income:
Service charges on
deposit accounts 174 184 161 135 129
Other fees and service
charges 156 137 131 111 94
Earnings on bank-owned
life insurance 121 117 116 115 116
Loan fee income 91 88 135 24 27
Gain (loss) on sale of
securities, net - - - - (3,147)
Loss on sale of loans 16 - - - (226)
Other operating income 42 58 44 30 25
Total noninterest income 600 584 587 415 (2,982)
Noninterest expense:
Salaries and
employee benefits 3,067 2,716 2,596 2,308 2,060
Occupancy, equipment
and furnishings 690 630 595 557 487
Data processing and
operations 272 240 229 221 200
Advertising 113 202 198 192 3
Professional services 269 167 154 136 96
Printing, postage and supplies 109 123 99 110 37
Other operating expenses 637 544 539 402 380
Total noninterest expense 5,157 4,622 4,410 3,926 3,263
Income (loss) before
income taxes (1,209) (71) (244) (300) (3,241)
Income tax provision (benefit) (456) (62) (191) (219) (1,606)
Net income (loss) $(753) (9) (53) (81) (1,635)
Years ended
December 31,
2006 2005
SELECTED OPERATING DATA
(Amounts in thousands)
Net income (loss) per share -
Basic and diluted $ (0.10) (0.11)
Net income (loss) (annualized):
Return on average assets (0.10)% (0.06)
Return on average equity (0.88)% (1.26)
Efficiency ratio 103.0% 84.3
FTE personnel - end of period 239 185
Number of branches - end of period 14 10
Stock price (NYSE: GLK) (1):
High $20.98 18.00
Low $13.82 15.27
Close $14.04 17.80
Quarterly Trends
2006 2005
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
SELECTED OPERATING DATA
(Amounts in thousands)
Net income (loss) per share -
Basic and diluted $(0.07) 0.00 (0.01) (0.02) (0.38)
Net income (loss) (annualized):
Return on average assets (0.34)% 0.00 (0.02) (0.04) (0.84)
Return on average equity (2.19)% (0.03) (0.21) (0.94) (17.26)
Efficiency ratio 115.7% 99.5 96.9 99.9 94.6
FTE personnel - end of period 239 234 233 204 185
Number of branches -
end of period 14 14 12 10 10
Stock price (NYSE: GLK) (1):
High $16.63 17.45 20.98 17.86 18.00
Low $13.82 14.05 16.89 16.74 15.30
Close $14.04 16.07 17.48 17.45 17.80
(1) Stock price data prior to the May 1, 2006 merger is that of Bay View
Capital Corporation.
2006 2005
December September June March December
31, 30, 30, 31, 31,
SELECTED BALANCE SHEET DATA
(Dollar amounts in thousands)
Cash:
Cash and cash
equivalents $14,026 13,305 83,246 37,655 95,500
Restricted
cash 3,923 3,900 17,970 - -
Total cash 17,949 17,205 101,216 37,655 95,500
Investment
securities:
Available
for sale 233,853 242,360 247,783 257,312 212,025
Held-to-
maturity 15,997 16,004 16,011 16,018 16,024
Total
investment
securities 249,850 258,364 263,794 273,330 228,049
Loans:
Real estate
loans:
Residential 253,709 247,135 241,530 231,838 223,917
Home equity 53,676 53,235 50,671 50,550 49,874
Commercial 78,666 69,878 70,773 65,628 51,758
Construction 25,481 23,543 11,077 8,649 5,319
Commercial and
industrial 55,055 53,791 52,671 41,358 36,940
Automobile
loans 43,719 43,284 43,249 40,270 37,626
Other consumer
loans 659 769 554 521 491
Total loans 510,965 491,635 470,525 438,814 405,925
Allowance for
loan losses (3,781) (3,375) (3,370) (3,074) (2,910)
Deferred loan
costs, net 6,744 6,761 6,688 6,542 6,321
Total loans,
net 513,928 495,021 473,843 442,282 409,336
Net deferred
tax asset 43,106 42,109 43,424 3,087 1,731
Goodwill 12,832 12,271 11,721 - -
Total assets 884,412 869,290 942,124 798,416 775,101
Total interest-
earning assets 778,617 766,067 841,861 755,549 730,672
Deposits:
Noninterest-
bearing
checking 37,145 29,022 29,194 25,535 23,846
Interest-
bearing
checking 45,139 43,443 40,908 42,288 43,579
Savings and
money market 214,454 230,037 259,480 272,351 260,561
Total core
deposits 296,738 302,502 329,582 340,174 327,986
Certificates
of deposit 337,918 354,018 323,448 306,345 293,098
Total
deposits 634,656 656,520 653,030 646,519 621,084
Short-term
borrowings 17,900 9,539 12 20,501 20,900
Repurchase
agreements 74,000 44,000 112,500 82,000 82,000
Subordinated
debentures 12,372 12,372 12,372 12,372 12,372
Total interest-
bearing
liabilities 701,783 693,409 748,720 735,857 712,510
Net interest-
earning assets 76,834 72,658 93,141 19,692 18,162
Stockholders'
equity 135,510 136,288 133,907 33,735 35,593
Tangible
stockholders'
equity (1) 122,678 124,017 122,186 33,735 35,593
Securities
available for sale
- fair value
adjustment
included in
stockholders'
equity $(2,437) (2,432) (4,863) (4,524) (2,743)
Common shares
outstanding 10,921,796 10,915,274 10,913,535 4,300,436 4,300,436
(1) Excludes goodwill recognized in connection with the Bay View merger.
2006 2005
December September June March December
31, 30, 30, 31, 31,
CAPITAL RATIOS
Tier 1 risk-based
capital 20.23% 21.55 18.87 11.80 11.64
Total risk based
capital 21.03% 22.30 19.52 12.52 12.32
Tier 1 (core)
capital 11.65% 11.60 11.86 6.39 6.52
Equity to assets 15.32% 15.68 14.21 4.23 4.59
Tangible stockholders'
equity to tangible
assets (1) 14.08% 14.47 13.13 4.23 4.59
Stockholders' equity
per share $12.41 12.49 12.27 7.84 8.28
Tangible
stockholders'
equity per
share (1) $11.23 11.36 11.20 7.84 8.28
ASSET QUALITY DATA
(Dollar amounts in thousands)
Nonaccrual loans $3,548 1,186 1,113 753 625
Accruing loans past
due 90 days or more - - 560 201 662
Total non-
performing loans 3,548 1,186 1,673 954 1,287
Foreclosed assets 91 82 583 121 126
Total non-
performing
assets $3,639 1,268 2,256 1,075 1,413
Provision for
loan losses $443 29 318 240 212
Net loan charge-offs $(37) (24) (22) (76) (19)
Net charge-offs to
average loans 0.03% 0.02 0.02 0.07 0.02
Total non-performing
loans to total loans 0.69% 0.24 0.35 0.21 0.31
Total non-performing
assets to total
assets 0.41% 0.15 0.24 0.13 0.18
Allowance for loan
losses to total loans 0.73% 0.68 0.71 0.69 0.71
Allowance for loan
losses to non-
performing loans 106.58% 284.62 201.42 322.38 226.04
(1) Excludes goodwill recognized in connection with the Bay View merger.
Years ended
December 31,
2006 2005
SELECTED AVERAGE BALANCES
(Dollar amounts in thousands)
Taxable securities $250,579 327,458
Tax-exempt securities 15,161 13,448
Commercial loans:
Commercial real estate 79,213 42,195
Commercial and industrial 47,591 23,006
Consumer loans:
Residential mortgages 242,611 215,937
Home equity 51,994 40,794
Automobile 41,870 30,869
Other 627 527
Loans 470,597 358,592
Total interest-earning assets 778,578 712,540
Allowance for loan losses (3,215) (2,537)
Noninterest-earning assets 82,095 38,192
Total assets 857,458 748,195
Interest-bearing liabilities:
Interest-bearing checking 42,207 48,425
Savings 110,356 248,062
Money market 134,001 31,637
Certificates of deposit 329,184 229,364
Borrowings 99,444 130,100
Total interest-bearing liabilities 715,192 687,588
Noninterest-bearing checking 28,708 20,213
Total liabilities 755,246 711,566
Stockholders' equity 102,212 36,629
Net earning assets $63,386 24,952
Weighted average common shares
outstanding - basic and diluted 8,741,737 4,300,436
Average loans to average deposits 76.4% 64.3
Average loans to average assets 54.9% 47.9
Quarterly Trends
2006 2005
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Taxable
securities $243,864 252,513 261,667 244,255 291,911
Tax-exempt
securities 15,148 15,157 15,165 15,174 15,182
Commercial loans:
Commercial
real estate 91,778 85,811 76,566 62,300 52,351
Commercial and
industrial 54,367 53,361 43,384 39,020 35,754
Consumer loans:
Residential
mortgages 254,557 246,749 238,862 229,961 233,334
Home equity 54,263 53,131 50,850 49,668 49,751
Automobile 43,223 43,285 41,820 39,093 35,698
Other 852 604 555 492 385
Loans 505,882 489,694 458,721 427,017 413,394
Total
interest-
earning
assets 770,806 793,263 807,686 742,082 731,615
Allowance for
loan losses (3,418) (3,319) (3,151) (2,965) (2,835)
Noninterest-
earning
assets 105,386 102,581 75,144 44,194 38,891
Total assets 872,774 892,525 879,679 783,311 767,671
Interest-
bearing
liabilities:
Interest-
bearing
checking 42,105 40,916 42,924 42,905 45,075
Savings 91,926 98,476 113,834 137,822 180,627
Money market 137,413 141,166 140,278 116,844 79,362
Certificates
of deposit 344,353 349,826 319,300 302,571 272,238
Borrowings 76,722 80,222 122,468 119,041 129,623
Total
interest-
bearing
liabilities 692,519 710,606 738,804 719,183 706,925
Noninterest-
bearing
checking 33,478 30,606 25,411 25,226 21,896
Total
liabilities 736,434 757,459 778,762 748,019 732,093
Stockholders'
equity 136,340 135,066 100,917 35,292 35,578
Net earning
assets $78,287 82,657 68,882 22,899 24,690
Weighted average
common shares
outstanding -
basic and
diluted 10,921,583 10,914,896 8,733,392 4,300,436 4,300,436
Average loans
to average
deposits 82.2% 77.7 74.4 71.2 71.6
Average loans
to average assets 58.0% 54.9 52.1 54.5 53.9
Quarterly Trends
Years ended 2006 2005
December 31, Fourth Third Second First Fourth
2006 2005 Qtr. Qtr. Qtr. Qtr. Qtr.
SELECTED AVERAGE
YIELDS/RATES
Total investment
securities 4.97% 4.30 5.01 4.98 4.98 4.90 4.43
Loans 5.90% 5.42 5.96 5.99 5.86 5.75 5.49
Total interest-earning
assets 5.52% 4.84 5.61 5.60 5.47 5.39 4.99
Interest-bearing
checking 1.38% 1.88 1.19 1.28 1.48 1.57 1.68
Savings 2.27% 2.42 2.22 2.24 2.28 2.31 2.38
Money market 3.89% 2.78 3.91 3.92 3.92 3.76 3.43
Certificates of deposit 4.34% 3.42 4.60 4.46 4.25 4.01 3.77
Borrowings 5.04% 3.53 5.48 5.58 4.92 4.50 4.18
Total interest-bearing
liabilities 3.86% 2.94 4.04 3.99 3.83 3.58 3.32
Net interest
rate spread 1.66% 1.90 1.57 1.61 1.64 1.81 1.67
Contribution of
interest-free funds 0.32% 0.11 0.42 0.42 0.33 0.11 0.11
Net interest rate
margin 1.98% 2.01 1.99 2.03 1.97 1.92 1.78
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