ProAmerica Bank Reports Second Quarter Results of Operations

LOS ANGELES, CA--(Marketwired - Aug 1, 2015) - ProAmérica Bank (OTCQB: PMRA) today reported Net Income of $207,000 for the second quarter of 2015, or $0.07 per common share. Net Income was $183,000, or $0.06 per diluted common share for the quarter ended June 30, 2014. "Our second quarter results reflect the Bank's continued growth due to the new programs we have instituted since the beginning of the year," stated Sal Varela, Interim President and CEO. "This quarter we put in place strategic initiatives to expand our client base and financial services, and we are beginning to see some very positive results. Our attention to the banking needs of entrepreneurs is focused and strategic. Despite the sustained soft economy in which we continue to operate, we successfully expanded and deepened our customer relationships within the communities we serve, and ProAmérica Bank continues to deliver as a prominent and respected institution in our home Los Angeles County markets. "These results are very encouraging and reflect that these initiatives are gaining traction and moving the Bank forward with additional growth and net income," said Chairwoman Maria S. Salinas.

2015 Second Quarter Highlights

• Three-month Operating Income (income before taxes and provision for loan losses) of $349,000, compared to Operating Income of $310,000 in the prior year second quarter, an increase of $39,000.
  
  
• Total Assets at June 30, 2015 were $189.1 million, an increase of $36.2 million or 24% from June 30, 2014.
  
  
• Total Loans at June 30, 2015 increased to $137.0 million, an increase of $22.9 million or 20% from June 30, 2014. The increase included temporary draws on lines of credit totaling $8.0 million.
  
  
• Total Deposits at June 30, 2015 increased to $159.7 million, an increase of $35.7 million or 29% from June 30, 2014. Deposits at June 30, 2015 included $15.0 million in temporary deposits from clients, contributing to the increase.
  
  
• Shareholders' Equity increased $0.5 million, or 2%, to $28.2 million at June 30, 2015, up from $27.7 million at June 30, 2014.
  
  
• Nonperforming assets remained low at $639,000 at June 30, 2015, up from $184,000 at June 30, 2014, representing 0.34% of assets.
  
  
• Capital ratios were in excess of all minimums required to be "Well Capitalized" by regulatory agencies, with a Tier 1 Leverage Ratio of 16.6% and a Total Risk-Based Capital Ratio of 19.2% at June 30, 2015. Regulatory "Well Capitalized" definitions are 5% for the Tier 1 Leverage Ratio and 10% for the Total Risk-Based Capital Ratio.
  

Financial Results

The Net Income for the three months ended June 30, 2015 was $207,000, compared to Net Income of $183,000 for the same period in 2014. Net Income for the six months ended June 30, 2015 was $128,000, compared to Net Income of $259,000 for the same period in 2014. The Operating Income was $349,000 for the second quarter of 2015, as compared to Operating Income of $310,000 for the same period in 2014. Operating Income was $216,000 for the six-month period ended June 30, 2015, as compared to Operating Income of $442,000 for the same period in 2014. Management believes income from operations is a better measure of core earnings performance. The decrease in Operating Income for the first six months of 2015 compared to the same period in 2014 is due to a nonrecurring expense for Salaries and Employee Benefits and no gains on the sale of SBA loans in 2015.

Net Interest Income before the Provision for Loan Losses increased by $118,000 for the second quarter of 2015 compared to the 2014 second quarter. The Net Interest Margin increased to 4.50% for the quarter ended June 30, 2015, compared to 4.48% for the same period of 2014. For the six-month period ended June 30, 2015, Net Interest Income before the Provision for Loan Losses increased by $138,000 compared to the same period in 2014. The Net Interest Margin decreased to 4.26% for the six-month period ended June 30, 2015 as compared to 4.37% in the same period in 2014. The second quarter of 2015 included the receipt of $116,000 in interest income recovered on loans previously on nonaccrual status compared to $35,000 in recovered interest income in the second quarter of 2014. Net interest income for the first six months of 2015 included $171,000 of interest income recovered on loans previously on nonaccrual status. The decrease in the net interest margin in 2015 was due to an increase in average Federal funds sold, a lower-yielding earning asset, and a lower yield on commercial real estate loans.

No Provisions for Loan Losses were required in the three and six-month periods ended June 30 in 2015 and 2014 which reflects the quality of the Bank's loan portfolio.

Noninterest Income decreased $82,000, or 49% in the second quarter of 2015 versus the second quarter of 2014 due to decreased gains on the sales of SBA loans. Noninterest Income decreased $196,000, or 60% for the six months ended June 30, 2015 versus the same period in 2014 due to decreased gains on sales of SBA loans.

Noninterest Expense for the second quarter 2015 was $1,517,000, compared with $1,520,000 for the 2014 second quarter, a decrease of $3,000. The efficiency ratio was 81% for the 2015 second quarter, compared with 83% for the same period in 2014. Noninterest Expense for the six months ended June 30, 2015 was $3.2 million, compared with $3.1 million for the same period in 2014. The efficiency ratio was 94% for the 2015 six-month period, compared with 87% for the same period last year. The increase for the six-month period of 2015 was primarily the result of a nonrecurring expense for Salaries and Employee Benefits.

Cash and Cash Equivalents increased by $13.6 million from the second quarter of 2014 to 2015. Loans, before the allowance for loan losses, increased 20% to $137.0 million at June 30, 2015, compared to $114.1 million at June 30, 2014.

Total Deposits increased 29%, to $159.7 million at June 30, 2015, up from $124.0 million at June 30, 2014. Deposits at June 30, 2015 included $15.0 million in temporary deposits from a client, contributing to the increase.

Asset Quality
Nonperforming Assets were $639,000, or 0.3% of Total Assets at June 30, 2015, compared with $184,000, or 0.1% of Total Assets at June 30, 2014. The Allowance for Loan Losses was $2.1 million, or 1.6% of loans, at June 30, 2015, compared with $2.5 million, or 2.2% of loans, at June 30, 2014. Net recoveries to average loans outstanding were 0.00% and 0.01% in the second quarters of 2015 and 2014, respectively.

Capital Resources
Total Shareholders' Equity increased to $28.2 million at June 30, 2015, up from $27.7 million at June 30, 2014. The Bank's book value available to common shareholders per common share increased to $8.84 at June 30, 2015, up from $8.64 at June 30, 2014.

The Bank's Tier 1 Leverage Capital Ratio was 16.6% at June 30, 2015, versus 16.7% at June 30, 2014. The Total Risk-based Capital Ratio was 19.2% as of June 30, 2015, as compared to 21.4% at June 30, 2014. The Common Equity Tier One Capital Ratio, a new regulatory ratio under Basel III (Basel Committee on Bank Supervision guidelines for determining regulatory capital), was 16.0% at June 30, 2015. The Common Equity Tier One Capital Ratio was not in effect, and therefore, not calculated at June 30, 2014. All capital ratios are well above regulatory requirements for a well-capitalized institution under the new requirements effective January 1, 2015.

Chief Financial Officer Transition
ProAmérica Bank announced the appointment of Lloyd Moromisato as Interim Chief Financial Officer, following the departure of Chief Financial Officer Frank Smith to pursue another career opportunity. "We thank Frank for his stewardship and guidance of the Bank's finance and treasury functions since the Bank's inception," said Ms. Salinas. "We are grateful for all his leadership," said Mr. Varela. "We wish him much success in his future endeavors."

Mr. Moromisato has been with the bank since December 2007, most recently serving as Senior Vice President and Controller. Mr. Moromisato has a 24-year career in banking with extensive experience in all relevant financial disciplines including accounting and control, treasury, asset/liability management, and risk management. He was previously Vice President and Controller at a Los Angeles area community bank and has also served as a Commissioned Safety and Soundness Bank Examiner for the FDIC.

"We are fortunate and excited that Mr. Moromisato has the depth, experience, and skill to assist in this transition," said Mr. Varela. "He has demonstrated exemplary financial leadership, and we are confident that his strong banking experience will assure a seamless transition."

ProAmérica Bank provides a full range of financial services, including credit and deposit products, SBA loan products, cash management, and internet banking for businesses, professionals, nonprofits and high net worth individuals from its headquarters office at 888 West Sixth Street, Second Floor, Los Angeles, CA 90017-2728. Information on products and services may be obtained by calling (213) 613-5000 or visiting the Bank's website at www.PROAMERICABANK.com.

NOTE:

This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about ProAmérica Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: ProAmérica Bank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in ProAmérica Bank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and ProAmérica Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

PROAMÉRICA BANK BALANCE SHEETS
(Dollars in thousands)
					June 30,				June 30,				%
					2015				2014				Change
					Unaudited				Unaudited
Assets:
	Cash and Due From Banks				$	2,687			$	1,693			58.7	%
	Federal Funds Sold					36,565				18,330			99.5	%
	Interest-bearing Balances at Other Financial Institutions					9,807				15,486			-36.7	%
			Total Cash and Cash Equivalents			49,059				35,509			38.2	%
	Loans Net of Deferred Loan Fees/Costs					136,972				114,099			20.0	%
	Allowance for Loan Losses					2,148				2,501			-14.1	%
			Loans Net of Allowance for Loan Losses			134,824				111,598			20.8	%
	Premises and Equipment, net					701				845			-17.0	%
	Federal Home Loan Bank Stock					599				568			5.5	%
	Other Real Estate Owned					0				0			NA
	Accrued Interest Receivable and Other Assets					3,925				4,377			-10.3	%
			Total Assets		$	189,108			$	152,897			23.7	%
Liabilities:
	Noninterest-bearing Demand Deposits				$	30,850			$	27,281			13.1	%
	Interest-bearing Demand Deposits (NOW Deposits)					2,917				2,810			3.8	%
	Savings and Money Market					40,415				28,027			44.2	%
	Certificates of Deposit					85,500				65,901			29.7	%
			Total Interest-bearing Deposits			128,832				96,738			33.2	%
			Total Deposits			159,682				124,019			28.8	%
	Other Borrowings					0				0			NA
	Accrued Interest Payable and Other Liabilities					1,184				1,174			0.9	%
Total Liabilities						160,866				125,193			28.5	%
Shareholders' Equity:
	Common Stock					27,308				27,308			0.0	%
	Additional Paid in Capital					1,995				1,952			2.2	%
	Accumulated Deficit					(4,811	)			(5,306	)		-9.3	%
	SBLF Preferred Stock					3,750				3,750			0.0	%
		Total Shareholders' Equity				28,242				27,704			1.9	%
		Total Liabilities and Shareholders' Equity			$	189,108			$	152,897			23.7	%
		Tier 1 leverage				16.64	%			16.72	%
		Common equity tier 1 capital				15.95	%			N/A
		Tier 1 risk-based capital				17.94	%			20.15	%
		Total risk-based capital				19.20	%			21.41	%

PROAMÉRICA BANK STATEMENT OF OPERATIONS
For the Periods Indicated
(Dollars in thousands except per share data)
				Three Months									Six Months
For The Period Ended June 30,				2015			2014			% Change			2015			2014			% Change
					Unaudited			Unaudited						Unaudited			Unaudited
Interest Income:
	Interest and Fees on Loans			$	1,848		$	1,736		6.5	%		$	3,476		$	3,342		4.0	%
	Interest on Federal Funds Sold				10			10		0.0	%			24			24		0.0	%
	Interest on Balances at Other Financial Institutions				17			15		13.3	%			35			24		45.8	%
	Dividends on FHLB and PCBB Stock				36			14		157.1	%			46			22		109.09	%
		Total Interest Income			1,911			1,775		7.7	%			3,581			3,412		5.0	%
Interest Expense:
	Interest on Deposit Accounts				130			112		16.1	%			254			223		13.9	%
	Net Interest Income				1,781			1,663		7.1	%			3,327			3,189		4.3	%
Provision for Loan Losses					0			0		NA				0			0		NA
	Net Interest Income After Provision for Loan Losses				1,781			1,663		7.1	%			3,327			3,189		4.3	%
Noninterest Income:
	Gain on Sale of SBA Loans				0			94		-100.0	%			0			187		-100.0	%
	Noninterest Income				85			73		16.4	%			133			142		-6.3	%
		Total Non-Interest Income			85			167		-49.1	%			133			329		-59.6	%
Noninterest Expense:
	Salaries and Employee Benefits				896			949		-5.6	%			2,039			1,988		2.6	%
	Stock Based Compensation Expense				3			48		-93.8	%			56			60		-6.7	%
	Occupancy Expense				156			149		4.7	%			307			298		3.0	%
	Operating Expense				462			374		23.5	%			842			730		15.3	%
		Total Non-Interest Expense			1,517			1,520		-0.2	%			3,244			3,076		5.5	%
	Pre-tax Income				349			310		12.6	%			216			442		-51.1	%
Provision for Income Taxes					142			127		NA				88			183		NA
	Net Income			$	207		$	183		13.1	%		$	128		$	259		-50.6	%
	Earnings Per Share - Basic			$	0.07		$	0.07		7.8	%		$	0.04		$	0.09		-58.0	%
	Earnings Per Share - Diluted			$	0.07		$	0.06		7.3	%		$	0.04		$	0.09		-58.2	%

PROAMÉRICA BANK FINANCIAL HIGHLIGHTS
For the Periods Indicated
(Dollars in thousands except per share data)
				Three Months											Six Months
For The Period Ended June 30,				2015				2014				% Change			2015				2014				% Change
				Unaudited				Unaudited							Unaudited				Unaudited
Per Share:
	Net income - basic			$	0.07			$	0.07			7.8	%		$	0.04			$	0.09			-58.0	%
	Net income - diluted			$	0.07			$	0.06			7.3	%		$	0.04			$	0.09			-58.2	%
	Book value - Common			$	8.84			$	8.64			2.3	%
Common Shares Outstanding
	End of period				2,771,000				2,771,000			0.0	%			2,771,000				2,771,000			0.0	%
	Average for period				2,771,000				2,771,000			0.0	%			2,771,000				2,771,000			0.0	%
Financial Ratios:
	Performance Ratios:
		Return on average assets			0.51	%			0.48	%		6.3	%			0.16	%			0.34	%		-52.9	%
		Return on average common equity			3.38	%			3.06	%		10.5	%			1.05	%			2.17	%		-51.6	%
		Net interest margin			4.50	%			4.48	%		0.4	%			4.26	%			4.37	%		-2.5	%
		Efficiency ratio			81.30	%			83.06	%		-2.1	%			93.76	%			87.44	%		7.2	%
	Capital Adequacy Ratios (Period-end):
		Tier 1 leverage			16.64	%			16.72	%		-0.5	%
		Common equity tier 1 capital			15.95	%			N/A			N/A
		Tier 1 risk-based capital			17.94	%			20.15	%		-11.0	%
		Total risk-based capital			19.20	%			21.41	%		-10.3	%
Asset Quality Ratios:
	Allowance for loan and lease losses to total loans				1.57	%			2.19	%		-28.3	%
	Allowance for loan and lease losses to nonperforming loans				336.33	%			1356.44	%		-75.2	%
	Nonperforming loans to total loans				0.47	%			0.16	%		193.8	%
	Nonperforming assets to total assets				0.34	%			0.12	%		183.3	%
	Net charge-offs (recoveries) to average loans (annualized)				0.00	%			-0.01	%		-100.0	%			-0.05	%			-0.02	%		150.0	%
Asset Quality Measures:
	Nonaccrual loans (1)				639				184			247.3	%
	Other real estate owned				0				0			NA
		Total nonperforming assets			639				184			247.3	%
(1) Nonaccrual loans less than 30 days past due					339				184			84.2	%