FNB Corp Reports $29.6 Million Quarterly Loss
FNB United Corp., the holding company for CommunityOne Bank, has reported a net operating loss of $29.6 million for the fourth quarter of 2010.
That was mainly attributed to provisions for loan losses of $22.4 million in the quarter, the company said in a news release.
Adjusting for dividends payable to the U.S. Treasury on the preferred stock issued in the Capital Purchase Program, the fourth quarter 2010 loss attributable to common shareholders was $30.4 million, or $2.67 per diluted share.
During the fourth quarter of 2009, FNB United recognized a provision for loan losses of $24.7 million and incurred a net loss of $28.9 million, or $2.53 per diluted share.
"We continue to expend considerable effort toward the management of nonperforming assets," said R. Larry Campbell, interim president and CEO. "Since the end of 2009, we have seen nonperforming assets increase to $393.7 million as of Dec. 31, 2010. Because of these levels, we have been aggressively making provisions for loan loss reserves as well as charging off loans deemed to be uncollectible.
"Our allowance for loan losses as a percentage of loans held for investment is now 5.84 percent compared with 3.16 percent a year ago. We expect these levels to begin declining over the coming months as the economy improves and we aggressively work out of these credits. During this time, we have also maintained high levels of liquidity. This has allowed us to manage our other borrowed money to lower levels."
During 2010, FNB United recognized provisions for loan losses totaling $115.2 million, the news release said. The company also recognized net gains of $10.6 million from the sale of investment securities. As a result, FNB United reported a net operating loss of $112.9 million for the year ended Dec. 31, 2010.
Adjusting for dividends payable to the U.S. Treasury on the preferred stock issued in the Capital Purchase Program, the resulting 2010 loss attributable to common shareholders was $116.2 million, or $10.17 per diluted share.
In 2009, FNB United reported a net operating loss of $101.7 million, while losses attributable to common shareholders, taking into account preferred dividends, were $104.6 million, or $9.16 per diluted share.
CommunityOne Bank consented to the issuance of a consent order by the Office of the Comptroller of the Currency (OCC) on July 22, 2010, which mandates specific actions by the bank to address certain findings from the OCC's examination and the bank's current financial condition.
The order contains various requirements, including a capital directive, more controls on future extensions of credit and the bank's development of various programs and procedures to improve its asset quality.
In connection with the consent order, the bank has developed a three-year strategic plan that establishes specific objectives, as outlined in the order, and is awaiting OCC approval of the plan.
"We have submitted a strategic capital plan that is designed to restore the capital levels at both the holding company and the bank," Campbell said. "Further, FNB United is actively working with financial advisers, third party advisers and a team of management consultants to achieve this objective. We are regularly communicating with the OCC and Federal Reserve Bank on the plans and actions being taken to comply with capital ratios in the agreements."
Nonperforming loans increased during the fourth quarter to $329.9 million, or 25.30 percent of total loans, as of Dec. 31, compared with $174.4 million, or 11.16 percent of total loans, as of Dec. 31, 2009.
Provisions for loan losses were $22.4 million for the quarter ended Dec. 31, compared with $24.7 million in the same period in 2009, For the year ended Dec. 31, provision for loan losses totaled $115.2 million, compared with $61.7 million for the prior-year period,
During the past year, the bank has increased staff and engaged third-party contractors in its special assets division to manage impaired loans and real estate owned, all of whom are experienced in loan restorations and resolutions and well equipped to resolve credit problems through forbearance, restructuring and modification agreements as well as note sales.
FNB United said in the release that it believes adding resources in this way will help stabilize the increase in nonperforming assets and provide additional options for resolution.
Fourth quarter 2010 net interest income before the provision for loan losses was $10.9 million, compared with $11.6 million in the preceding quarter and $16.4 million in the fourth quarter 2009. FNB United reported that its net interest margin was 2.39 percent for the fourth quarter of 2010, compared with 2.55 percent in the immediate prior quarter and 3.31 percent in the fourth quarter a year ago.
For the year, net interest income before the provision for loan losses was $52.2 million, compared with $62.2 million for 2009.
Total noninterest income was $12.9 million for the fourth quarter 2010, compared with $6.5 million in the previous quarter and $5.4 million in the fourth quarter a year ago.
Total noninterest expense was $27.4 million in the fourth quarter of 2010, compared with $17.1 million in the preceding quarter and $16.2 million in the fourth quarter a year ago. For 2010, total noninterest expense decreased to $79.6 million, compared with $119.9 million in 2009.
Assets decreased 8.6 percent to $1.92 billion as of Dec. 31, compared with $2.10 billion a year earlier. Total deposits decreased 1.5 percent to $1.70 billion as of Dec. 31, compared with $1.72 billion a year ago.
FNB United Corp. is the Asheboro-based bank holding company for CommunityOne Bank, and the bank's subsidiary, Dover Mortgage Co. Opened in 1907, CommunityOne Bank operates 45 offices in 38 communities throughout central, southern and western North Carolina.
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