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With the II PUC exams scheduled from next month, most students are rushing through their eleventh-hour preparations and not going to college anymore.
This increase in capital has allowed the Company to reinforce itscommitment to serve the credit needs of our clients and the communities in whichwe operate.The Company has $20 million in outstanding trust preferred securities thatqualify as Tier I capital. The increase is primarily a result of the issuance of$37 million in preferred stock and a warrant under the Treasury's CPP inDecember 2008. As a percentageof average total loans and leases outstanding, these net amounts represented, onan annualized basis, 0.5% for the second quarter of 2009, 0.8% for the secondquarter of 2008 and 1.0% for the first quarter of 2009.CapitalTotal stockholders' equity was $149 million at June 30, 2009 compared to $112million at June 30, 2008. The allowance as a percentage of loans and leasesoutstanding (excluding loans held for sale) was 1.6% at June 30, 2008 and 2.3%at March 31, 2009.The Company recorded net loan and lease charge-offs of $1.4 million in thesecond quarter of 2009 versus net charge-offs of $2.1 million in the secondquarter of 2008 and $2.8 million in the first quarter of 2009. The Company held no Other RealEstate Owned at June 30, 2009, June 30, 2008 or March 31, 2009.As of June 30, 2009, the Company's allowance for loan and lease losses amountedto $28 million or 2.5% of period-end loans and leases outstanding (excludingloans held for sale). The allowance for loan and lease losses as a percentage oftotal non-accrual loans and leases amounted to 81% at June 30, 2009 versus 158%at June 30, 2008 and 91% at March 31, 2009. The allowance for loan and leaselosses as a percentage of non-accrual loans and leases, excluding non-accrualloans categorized as held for sale, amounted to 122% at June 30, 2009 versus158% at June 30, 2008 and 134% at March 31, 2009.
The increase in non-accrual loans at June 30, 2009 compared with March31, 2009 was primarily due to a residential construction loan totaling $4million and a commercial real estate relationship, categorized as held for sale,totaling $3 million. These relationships consisted of residential constructionand commercial real estate credits totaling $27 million, and commercial andindustrial loans totaling $5 million. These additions were reduced bycharge-offs of non-accrual loans of $5 million and cash payments received of $4million. The increase in non-accrual loans and leases at June 30, 2009 compared toJune 30, 2008 resulted primarily from the addition of seven relationships tonon-accrual status. Non-accrual loans categorized as heldfor sale (which have been previously written down to estimated realizable value)amounted to $12 million and $13 million at June 30, 2009 and March 31, 2009,respectively.
The Company had no non-accrual loans held for sale at June 30,2008. The Company recorded a $2.0million income tax benefit in the first half of 2009 versus a $1.7 millionincome tax expense in the comparable period a year ago.Asset QualityNon-accrual loans and leases totaled $35 million or 3.1% of total loans andleases outstanding at June 30, 2009 versus $11 million or 1.0% of total loansand leases outstanding at June 30, 2008 and $28 million or 2.5% of total loansand leases outstanding at March 31, 2009. Theseimprovements were offset by a $2.1 million increase in FDIC and NYS assessmentexpenses in 2009 resulting from higher FDIC insurance premiums, growth indeposits, additional deposit insurance programs and the previously noted FDICspecial assessment of $730 thousand recorded in the second quarter of 2009.Marketing and advertising expenses increased by $463 thousand in 2009 for thesame reasons noted in the second quarter discussion. Otheroperating expenses decreased by $512 thousand, almost entirely related to thesale of the Company's former equipment leasing subsidiary in June 2008.
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