updated 11/5/2010 5:20:11 PM ET 2010-11-05T21:20:11

MADISON, Wis., Nov. 5, 2010 (GLOBE NEWSWIRE) -- Anchor BanCorp Wisconsin Inc. (Nasdaq:ABCW) (or the Corporation) today announced a net loss of $1.2 million, or $0.05 per common share, for the three months ended September 30, 2010. This compares to a net loss of $15.5 million for the previous quarter ended June 30, 2010. The results include $2.4 million in dividends accrued and discount accreted on the Corporation's Senior Preferred Stock owned by the U.S. Treasury under the Capital Purchase Program. Consolidated results primarily reflect the accounts and results of operations of AnchorBank fsb (the Bank), the Corporation's primary operating subsidiary.

Key Second Quarter Results

  • Total Risk-Based Capital Ratio for the Bank improved to 8.14 percent, up from 7.63 percent at the end of the previous quarter. Under OTS (Office of Thrift Supervision) requirements, a bank is considered to be "adequately capitalized" if it has a risk-based capital level of 8.0 percent or greater.
  • Net of charges related to the Corporation's participation in the Capital Purchase Program, AnchorBanCorp Wisconsin, Inc. generated net income of $1.2 million.
  • Credit quality improved with declines in provisions for credit losses, early stage delinquencies and non-performing assets.
  • Total interest expense declined 41.2 percent to $21.4 million compared to $36.4 million for the quarter ended September 30, 2009.
  • Non-interest expense for the three months ended September 30, 2010, declined 22.7 percent to $34.1 million compared to the three months ended September 30, 2009.
  • Total assets declined to $3.8 billion as of September 30, 2010, compared to $4.6 billion on September 30, 2009 primarily as a result of the sale of 15 branches of the Bank and a portion of the Bank's student loan portfolio during the first two quarters of the fiscal year.

Company Generates $1.2 Million in Net Income On An Operating Basis

Prior to the $2.4 million dividends accrual and discount accretion related to the Corporation's participation in the U.S. Treasury's Capital Purchase Program, on a consolidated basis the Corporation generated net income of $1.2 million, versus a $75.1 million loss on the same basis for the same period last year.

"AnchorBanCorp's ability to generate a positive net income on an operating basis this quarter, for the first time in the last eight quarters, provides clear evidence that we are headed in the right direction," said Chris Bauer, President and Chief Executive Officer of Anchor BanCorp Wisconsin, Inc. "Our efforts across the organization to reduce costs and address credit quality issues are reflected in our improving results."

Capital Ratios Improve

Total Risk-Based Capital Ratio for the Bank improved to 8.14 percent, up from 7.63 percent versus the end of the previous quarter. Under OTS requirements a bank is considered "adequately capitalized" if it has a risk-based capital level of 8.0 percent or greater.

This capital level was achieved through a number of initiatives, including:

  • Sale of Branches - In July 2010, the Bank completed the sale of its four Green Bay branches to Nicolet National Bank. In connection with those sales, Nicolet acquired approximately $105 million in deposits. These sales, along with an earlier sale of eleven branches in Northwestern Wisconsin to Royal Credit Union, completed on June 25, 2010, are a key part of the Bank's plan to improve its capital ratios by reducing the size of its balance sheet and thereby reducing its capital needs.
  • Loan Sales - During the quarter, the Bank sold a portion of its student loan portfolio in order to improve its net interest margin. Earnings were also generated through the sale of mortgage loans in the secondary market, where current interest rates favorably impacted the gain on sale.
  • Expense Reduction - Second quarter expense levels reflect a full quarter of savings resulting from comprehensive business reviews conducted earlier in the year, which resulted in reduced staffing, overhead and other operating expenses.
  • Investment Securities - In July, the Bank repositioned its investment securities portfolio and realized approximately $6.8 million of non-recurring gains.
  • Increased Margin from Repricing of Deposits - The Bank repriced certain deposit products to better align with current market conditions, which resulted in improved interest margins.

The financial impacts of these initiatives are reflected in improved operating results for the three and six month periods ended September 30, 2010.

"The significance of AnchorBank's return to an adequately capitalized status cannot be overstated. Reaching a total risk-based capital ratio of over 8.0% for the Bank was not only indicative of our overall progress, but was also a key factor in our receiving approval of our Capital Restoration Plan from the Office of Thrift Supervision this past September," added Bauer.

Credit Quality Improves

Provisions for credit losses during the quarter declined to $10.7 million, from $60.9 million for the three months ended September 30, 2009. "As a result of aggressively dealing with problem loan situations early, we continue to see reductions in what we need to provide for additional credit losses. These steps have had a substantial, positive, impact on our financial results and capital levels," stated Bauer.

Additionally, the Corporation has seen a stabilization in early-stage delinquencies during the second quarter of fiscal 2011. At September 30, 2010, non-performing loans had decreased $43.9 million to $325.2 compared to March 31, 2010.

Total non-performing assets (consisting of loans past due more than ninety days, loans past due less than ninety days but placed on non-accrual status due to anticipated probable loss, non-accrual troubled debt restructurings and foreclosed properties and repossessed assets) decreased $39.0 million, or 9.2%, to $385.5 million at September 30, 2010 from $424.5 million at March 31, 2010. Total non-performing loans (consisting of loans past due more than 90 days, loans less than 90 days delinquent but placed on non-accrual status due to anticipated probable loss and non-accrual troubled debt restructurings) decreased $43.9 million, or 11.9%, to $325.2 million at September 30, 2010 from $369.1 million at March 31, 2010.

Expenses Continue on Favorable Trend

Total interest expense declined to $21.4 million, a 41.2 percent decrease from the previous year, driven by a nearly $10.0 million decline in interest on deposits compared to the same quarter in 2009. In turn, the Bank's cost of funds declined 76 basis points to 2.24 percent, down from 3.00 percent for the quarter ended September 30, 2009. At the same time, yield on earning assets increased to 4.80 percent for the quarter, up from 4.62 percent for the quarter ended September 30, 2009.

"Our aggressive management of our cost of funds, supported by the continued low interest rate environment, has allowed us to realize significant improvements in both our interest rate spread and net interest margins, which improved to 2.56 percent and 2.45 percent, respectively," commented Chris Bauer. For the same quarter last year, interest rate spread stood at 1.62 percent and net interest margin stood at 1.58 percent.

Non-interest expense also showed substantial improvement to $34.1 million for the quarter, down 22.7 percent, or nearly $10 million, compared to the prior year. The improvement in non-interest expenses was largely driven by a $4.5 million decline in compensation expenses for the quarter and a $1.2 million decline in other professional fees as compared to the same quarter last year. "The results of our comprehensive strategic business review last Spring and the branch sales we executed this Summer are clearly showing in reductions in our core operating expenses and we are still in the process of fully implementing other aspects of our strategic business review," said Bauer.

Total Assets and Deposits Decline

Total assets declined to $3.8 billion as of September 30, 2010, as compared to $4.6 billion for the quarter ended September 30, 2009; deposits declined to $3.0 billion from $3.7 billion. "Our capital ratios and operating expenses have benefited from the continued execution of our strategy to reduce the size of our balance sheet," commented Bauer.

About AnchorBanCorp Wisconsin, Inc.

Anchor BanCorp's stock is traded on the NASDAQ exchange under the symbol ABCW. AnchorBank fsb, the wholly owned subsidiary, has 57 offices. All are located in Wisconsin.

For More Information

For more information, contact Emily Campbell, VP – Marketing & Communications, at (608) 252-1436.

Forward-Looking Statements

This news release contains certain forward-looking statements, as that term is defined in the U.S. federal securities laws.  In the normal course of business, we, in an effort to help keep our shareholders and the public informed about our operations, may from time to time issue or make certain statements, either in writing or orally, that are or contain forward-looking statements.  Generally, these statements relate to business plans or strategies, projected or anticipated benefits from acquisitions or dispositions made by or to be made by us, projections involving anticipated revenues, earnings, liquidity, profitability or other aspects of operating results or other future developments in our affairs or the industry in which we conduct business.  Although we believe that the anticipated results or other expectations reflected in our forward-looking statements are based on reasonable assumptions, we can give no assurance that those results or expectations will be attained.  You should not put undue reliance on any forward-looking statements. Forward-looking statements speak only as of the date they are made and we undertake no obligation to update them in light of new information or future events, except to the extent required by federal securities laws. Please refer to our Annual Report for the fiscal year ending March 31, 2010 on Form 10-K, as filed with the Securities and Exchange Commission, for a more comprehensive discussion of forward-looking statements and the risks and uncertainties associated with our business.

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