pab bankshares, inc. - SNL Financial

earned and corresponding expenses in 2009 are not expected in 2010.
Noninterest Expense
The following table summarizes noninterest expense during the last three years.
For the Year Ended December 31, 2009 2008 2007
Percentage
Percentage
Change
Change
Amount 2009 vs. 2008 Amount 2008 vs. 2007 Amount
(Dollars In Thousands)
Salaries and wages $ 13,461 -15.6% $ 15,940 -3.0% $ 16,431
Deferred loan cost (1,423) -13.0% (1,635) -17.0% (1,969)
Employee benefits 3,976 4.5% 3,806 -7.6% 4,119
Net occupancy expense of premises 2,305 -29.9% 3,290 38.6% 2,374
Furniture and equipment expense 2,025 0.1% 2,023 -11.2% 2,279
Advertising and business development 396 -32.0% 582 -7.0% 626
Supplies and printing 360 -7.7% 390 -15.8% 463
Telephone and internet charges 651 -16.2% 777 22.4% 635
Postage and courier 545 -4.9% 573 -11.2% 645
Legal and accounting fees 1,000 116.0% 463 -17.2% 559
Consulting fees 212 271.9% 57 -72.7% 209
Director fees and expenses 547 -12.5% 625 57.0% 398
Service charges and fees 436 -26.7% 595 -4.3% 622
Deposit insurance expense 4,138 1165.4% 327 202.8% 108
Foreclosure and reposession expenses 3,291 244.2% 956 380.4% 199
Goodwill impairment 5,985 100.0% - 0.0% -
Other noninterest expense 2,668 47.0% 1,815 -4.1% 1,892
Total Noninterest Expense $ 40,573 32.7% $ 30,584 3.4% $ 29,590
Noninterest expense increased 32.7% in 2009, from $30.6 million in 2008 to $40.6 million in 2009. As a percentage of
average assets, noninterest expense was 3.10%, 2.47% and 2.54% in 2009, 2008 and 2007, respectively. Our overhead
efficiency ratio, a measure of noninterest expense as a percentage of net interest income plus other noninterest income,
increased from 70.01% in 2008 to 95.74% in 2009.
Salaries and wages expense decreased 15.6% during 2009 due to the 9.7% reduction of our staff from 299 full time
equivalent employees at December 31, 2008 to 270 at December 31, 2009. The decreases in salary due to these reductions
were offset by a one-time severance accrual of $730,000 in the first quarter of 2009 related to the retirement of our
President and Chief Executive Officer and severance expenses of $185,000 for workforce reductions in the second quarter
of 2009. Deferred loan costs, which are credits against salaries and wages, decreased due to a decrease in loan volume.
The increase in occupancy expense in 2008 was due to a $751,000 one-time lease charge we incurred in the fourth quarter
of 2008 related to the branch closures in Jacksonville, Florida and Snellville, Georgia. Furniture and equipment expense
decreased and stabilized from 2007 due to a reduction in depreciation expense on several large pieces of operations
equipment that became fully depreciated during the third quarter of 2007.
Advertising and business development expenses, office supplies and printing charges and telephone and internet fees
decreased during 2009 due to cost-saving awareness and efforts among our locations to reduce noninterest expenses. The
decrease in postage and courier fees is due to a reduction in our courier’s schedule as part of our cost-saving awareness
efforts.
Our deposit insurance premiums increased from $327,000 during 2008 to $4.14 million in 2009 due to rate increases, a
$600,000 special assessment from the FDIC during the second quarter, and an additional $1.8 million of FDIC insurance
expense during the fourth quarter related to a change in the timing and expensing of FDIC insurance premiums.
Foreclosure and repossession expenses increased significantly from $956,000 during 2008 to $3.3 million in 2009 due to
the increased level of foreclosed assets owned by the Company. These increased expenses include property taxes, repairs
and maintenance, insurance and legal and collection expenses.
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