TierOne reports $61 million loss in 1st quarter
Continuing a fall from profitability that started last year, TierOne Corp. reported a nearly $61 million first-quarter loss, the biggest in its history as a publicly traded company.
Despite the bad news, though, investors were upbeat.
TierOne’s stock, which had hit record lows for six consecutive days since May 1, closed up almost 13 percent at $7.42 Friday on almost 486,000 shares traded, three times normal volume.
Tom Smith, CEO of Smith Hayes Financial Services Corp. in Lincoln and a former TierOne shareholder, said the big stock bump Friday is likely due to investors deciding the majority of company’s bad news is out of the way.
“Between the fourth and first quarters, I think they’ve taken the majority of the hit they’re going to take,” Smith said.”
He said he thinks TierOne still has very good earnings prospects going forward.
A large portion of TierOne’s loss was due to a non-cash $42.1 million impairment charge — essentially a loss on paper only — related to its 2004 purchase of United Nebraska Financial Co. of Grand Island.
Because its stock price over the past year has dropped from more than $30 a share to $6.59 this week, its lowest price ever, TierOne was required to review the goodwill value it gave to United Nebraska on its balance sheet, and it decided the entire $42.1 million amount was impaired.
The company’s earnings also demonstrated a continuing problem with a portfolio of construction and land development loans in Florida, Nevada and other states. The company said it had to set aside $39.9 as a provision to cover loan losses in the first quarter related to those loans.
Calling the current financial environment “one of the most challenging our country has experienced in decades,” Gilbert G. Lundstrom, TierOne’s chairman and chief executive officer said the company has taken steps to address the challenges facing it.
“We remain focused on our fundamental core operations, combined with our financially solid capital position, to lead us through this unprecedented period of market disruption,” Lundstrom said.
One of those steps is selling off a portfolio of loans in the Cape Coral area of Florida that has dogged TierOne since the beginning of last year.
TierOne previously said it had a dedicated team of people working with the delinquent borrowers of those loans to pursue all possible legal remedies. But now the company said it is working with an investment banking firm that specializes in the sale of mortgage and consumer loan and bank-owned portfolios to try to sell them to another lender.
Ed Swotek, TierOne’s senior vice president and investor relations strategic planning officer, said there is no timetable for selling the loans.
Those loans accounted for $14.5 million of the overall $39.9 million in loan loss provisions TierOne reported in the first quarter.
The bulk of the remaining provision was due to non-performing land development and construction loans in Las Vegas.
TierOne also revealed previously unstated non-performing land development loans in Nebraska, $2.8 million worth related to six residential projects. The company did not say where in the state the projects are, nor did it indicate whether any of the first-quarter loan loss provision was for those loans.
Reach Matt Olberding at 473-2647 or molberding@journalstar.com.
Despite the bad news, though, investors were upbeat.
TierOne’s stock, which had hit record lows for six consecutive days since May 1, closed up almost 13 percent at $7.42 Friday on almost 486,000 shares traded, three times normal volume.
Tom Smith, CEO of Smith Hayes Financial Services Corp. in Lincoln and a former TierOne shareholder, said the big stock bump Friday is likely due to investors deciding the majority of company’s bad news is out of the way.
“Between the fourth and first quarters, I think they’ve taken the majority of the hit they’re going to take,” Smith said.”
He said he thinks TierOne still has very good earnings prospects going forward.
A large portion of TierOne’s loss was due to a non-cash $42.1 million impairment charge — essentially a loss on paper only — related to its 2004 purchase of United Nebraska Financial Co. of Grand Island.
Because its stock price over the past year has dropped from more than $30 a share to $6.59 this week, its lowest price ever, TierOne was required to review the goodwill value it gave to United Nebraska on its balance sheet, and it decided the entire $42.1 million amount was impaired.
The company’s earnings also demonstrated a continuing problem with a portfolio of construction and land development loans in Florida, Nevada and other states. The company said it had to set aside $39.9 as a provision to cover loan losses in the first quarter related to those loans.
Calling the current financial environment “one of the most challenging our country has experienced in decades,” Gilbert G. Lundstrom, TierOne’s chairman and chief executive officer said the company has taken steps to address the challenges facing it.
“We remain focused on our fundamental core operations, combined with our financially solid capital position, to lead us through this unprecedented period of market disruption,” Lundstrom said.
One of those steps is selling off a portfolio of loans in the Cape Coral area of Florida that has dogged TierOne since the beginning of last year.
TierOne previously said it had a dedicated team of people working with the delinquent borrowers of those loans to pursue all possible legal remedies. But now the company said it is working with an investment banking firm that specializes in the sale of mortgage and consumer loan and bank-owned portfolios to try to sell them to another lender.
Ed Swotek, TierOne’s senior vice president and investor relations strategic planning officer, said there is no timetable for selling the loans.
Those loans accounted for $14.5 million of the overall $39.9 million in loan loss provisions TierOne reported in the first quarter.
The bulk of the remaining provision was due to non-performing land development and construction loans in Las Vegas.
TierOne also revealed previously unstated non-performing land development loans in Nebraska, $2.8 million worth related to six residential projects. The company did not say where in the state the projects are, nor did it indicate whether any of the first-quarter loan loss provision was for those loans.
Reach Matt Olberding at 473-2647 or molberding@journalstar.com.
Copyright © 2002-2008 Lincoln Journal Star. All rights reserved.