SOURCE: AMB Financial Corp.

January 25, 2007 07:00 ET

AMB Financial Announces Quarter Results and Payment of Cash Dividend

MUNSTER, IN -- (MARKET WIRE) -- January 25, 2007 --AMB Financial Corp. (OTCBB: AMFC) (the "Company"), the parent holding company for American Savings, FSB (the "Bank"), announced today that net income for the fourth quarter ended December 31, 2006 totaled $63,000, or $.06 per diluted share, compared to $104,000, or $.10 per diluted share reported for the quarter ended December 31, 2005. The decline in income is attributed in part to a pre-tax loss of $111,000 ($67,000 net of tax or $.06 per diluted share) on the disposition and write-down of other real estate owned properties. Return on average equity and return on average assets were 1.72% and .14%, respectively in the current quarter compared to 2.93% and .25% in last year's comparable period. Net income for the year ended December 31, 2006 was $648,000, or $.64 per diluted share compared to $860,000, or $.85 per diluted share for the year ended December 31, 2005.

AMB Financial Corp. also announced that it will pay a regular cash dividend of $.08 per share for the quarter ended December 31, 2006. The dividend will be payable on February 16, 2007 to the shareholders of record on February 2, 2007.

Results for the quarter Ended December 31, 2006 Compared to the Quarter Ended December 31, 2005

Like most thrifts, we experienced margin compression in the last quarter. The Company's net interest margin was 2.46% for the fourth quarter of 2006 compared to 2.78% for the third quarter of 2006 and 2.91% for the fourth quarter of 2005. Net interest income totaled $978,000 in the current quarter compared to $1.087 million for the third quarter of 2006 and $1.096 million for the fourth quarter of 2005. The decrease in both net interest margin and net interest income reflected the impact of higher funding costs, an inverted yield curve, and competitive pricing pressures for loans and deposits in the Company's markets. The average cost of the Company's deposits increased to 3.46% for the fourth quarter of 2006 from 3.31% for the third quarter of 2006 and 2.70% for the fourth quarter of 2005.

Higher interest rates also resulted in increased asset yields between the December quarters, but these advances were not as significant as the increased cost of interest-bearing liabilities. The yield on loans receivable increased by 33 basis to 6.55% for the fourth quarter of 2006 compared to 6.22% for the same period a year ago, however, the yield declined from 6.74% for the third quarter of 2006. The reduced yield between the third and fourth quarter of 2006 is directly attributable to an increase in the reserve for uncollected interest on non-performing loans, which reduced income during the current quarter by $67,000.

Average interest-earning assets increased by $8.1 million, or 5.4% to $158.5 million during the current three month period compared to the prior year quarter. This growth was generated entirely from an increase in the average 1 to 4 family loans receivable balance. The average balance of interest-bearing liabilities also rose by a like amount with the increase due to an increase in borrowed money.

Non-interest income decreased to $212,000 in the current quarter, compared to $346,000 reported in last year's fourth quarter. The decrease in non-interest income for the fourth quarter of 2006 was primarily the result of a $111,000 loss on the sale and write-down of other real estate owned properties, as previously mentioned, as the Company attempts to aggressively market and dispose of these assets. In addition, fee income from the Company's NOW account overdraft protection program declined by $38,000 due to lower volumes of overdraft activity. Offsetting these decreases to non-interest income was a $22,000 increase in income from trading account securities as the market prices of the Company's portfolio of small thrift and community banks increased in response to the general upward bias in financial institution stock prices during the quarter. The Company also reported a smaller loss of $5,000 in the current quarter compared to a loss of $14,000 in the prior year's quarter, related to an investment in a low-income housing joint venture. As a result of this investment, the Company recorded an offsetting $35,000 in federal income tax credits during both periods, which resulted in the reduction of the Company's effective tax rate.

Non-interest expense totaled $1.126 million in the current quarter compared to $1.286 million reported for the quarter ended December 31, 2005. The decrease resulted primarily from decreased data processing costs of $60,000 due in part to increased efficiencies which were undertaken during 2005 as well as a $20,000 expense incurred in the prior year to convert to a new ATM/debit card processing platform. In addition, staffing costs declined by $46,000, primarily related to ESOP expenses, and professional fees declined by $29,000 due, in part, to start-up expenses incurred in the prior year's period to initiate the NOW account overdraft protection program.

The Company recorded a provision for loan losses of $35,000 during the quarter as compared to $40,000 during the prior year's quarter. During the current quarter, the Bank recorded $10,000 of net loan charge-offs, all related to credit card loans. Net loan charge-offs in the prior year's period also amounted to $10,000. The Bank's general allowance for loan losses was $686,000 at December 31, 2006, which was equal to 25.65% of non-performing loans and .45% of net loans receivable.

The Company recorded an income tax benefit of $34,000 in the current quarter compared to a $12,000 income tax expense for the quarter ended December 31, 2005. As a result of amending prior years' state income tax returns, the Company received $25,000 in refunds during the current quarter. In addition, both periods were positively impacted by the recognition of approximately $35,000 in low-income housing tax credits which have a greater impact on the effective rate in a lower earnings period compared to a higher earnings period.

Results for the Year Ended December 31, 2006 Compared to the Year Ended December 31, 2005

Diluted earnings per share totaled $.64 in the current year compared to $.85 last year. For the twelve months ended December 31, 2006, net income totaled $648,000 compared to $860,000 in calendar 2005. Net interest income was slightly lower at $4.220 million compared to $4.436 million last year, as increases in net interest-earning assets were largely offset by contracting interest rate spreads. The net interest margin contracted to 2.69% for 2006, compared to 3.05% for 2005. Return on average equity for the year ended December 31, 2006 was 4.48% compared to 6.20% for the year ended December 31, 2005.

Non-interest income decreased by $279,000, primarily due a reduced gain on the sale of stock in the Bank's data processing provider to $39,000 in the current year compared to $345,000 recorded in the prior year. In addition, the Company recorded an increased loss of $75,000 from the sale and write-down of other real estate owned properties in the current year compared to the prior year. Offsetting these declines was $51,000 in income from real estate operations which began in 2006. Non-interest expense decreased by $31,000 between the years due primarily to decreases in data processing costs of $184,000, offset by increases in advertising costs of $70,000, professional fees of $63,000 and telecommunication charges of $31,000.

Balance Sheet and Capital

Total assets of the Company increased by $11.8 million to $182.3 million at December 31, 2006 from $170.5 million reported at December 31, 2005. The increase in assets during the current year resulted primarily from growth in 1 to 4 family loan balances, which totaled $150.7 million at December 31, 2006 compared to $140.0 million at December 31, 2005, an increase of $10.7 million. In addition, the Company increased its liquidity position by $700,000 to $9.7 million and its investment in real estate held for development by $500,000 to $1.9 million at December 31, 2006. Deposits decreased by $2.6 million during the year due to increased pricing competition in the current interest rate environment and amounted to $124.9 million at December 31, 2006. The decrease in deposits is the result of a $1.2 million decrease in certificates of deposit as well as a $1.4 million decrease in core deposits, primarily passbook and money market accounts. Borrowed money increased during the year by $13.3 million to $34.3 million, primarily from the FHLB of Indianapolis. As of December 31, 2006, the weighted average term to maturity of the borrowings was 2.2 years compared to 3.5 years at December 31, 2005.

As of December 31, 2006, stockholders' equity in AMB Financial Corp. totaled $14.7 million. During the current quarter, the Company repurchased 11,140 shares of common stock at an average price of $15.56 per share. The number of common shares outstanding at December 31, 2006 was 1,046,350 and the book value per common share outstanding was $14.01. The Bank's tangible, core and risk-based capital percentages of 8.74%, 8.74% and 14.93% respectively, at December 31, 2006 exceeded all regulatory requirements by a significant margin.

Non-performing assets increased during the past three months, totaling $3.76 million or 2.06% of total assets at December 31, 2006 compared to $2.88 million or 1.64% of total assets at September 30, 2006. At December 31, 2005, non-performing assets totaled $2.11 million, or 1.24% of total assets. Included in non-performing assets at December 31, 2006, was a 12 unit condominium construction loan totaling $1.1 million which is in the process of being renegotiated by the borrowers as well as a commercial office building located in the local market area totaling $340,000, in the process of foreclosure. In addition, the Company has title to four residential real estate owned properties totaling $700,000 and one commercial real estate owned property totaling $400,000, all located in the local market area, which are currently valued at the lower of cost or net realizable value.

This news release contains various forward-looking statements consisting of estimates with respect to the financial condition, results of operations and business of the company and the Bank. These estimates are subject to various factors that could cause actual results to differ materially from those estimates. These factors include, but are not limited to, (i) the effect that movements in interest rates could have on net interest income and loan repayments, (ii) changes in customer preference for our products and services, (iii) changes in national and local economic and market conditions, including prevailing real estate values, (iv) higher than anticipated operating expenses, (v) a lower level of or higher cost for deposits or a higher cost for borrowings than anticipated, (vi) changes in accounting principles, policies or guidelines, (vii) legislation or regulations adversely affecting the Bank or the company, and (viii) the success of the Company's workout programs for troubled assets and (ix) competition.

American Savings, FSB is a federally chartered stock savings bank. The Bank is a community oriented institution offering a variety of traditional deposit and loan products. It operates three full services offices located in Dyer, Hammond and Munster, Indiana.

(Two pages of selected financial information are included with this release.)

                            AMB Financial Corp.
                    Selected Financial Condition Data
                              (In Thousands)


                                                      Dec. 31     Dec. 31
                                                        2006        2005
                                                    ----------- -----------
                                                    (Unaudited) (Unaudited)


Total assets                                            182,282     170,466
Loans receivable, net                                   150,701     140,035
Mortgage-backed securities                                1,252       1,664
Investment securities and interest bearing deposits      10,772       9,696
Deposits                                                124,858     127,435
Borrowed money                                           34,318      21,012
Guaranteed preferred beneficial interest
 in the Company's subordinated debentures                 5,000       5,000
Stockholders' equity                                     14,661      14,145


                         Selected Operations Data
                              (In Thousands)
                                (Unaudited)


                                    Three Months Ended  Twelve Months Ended
                                       December 31,         December 31,
                                    --------  --------  --------  --------
                                       2006      2005      2006      2005
                                    --------  --------  --------  --------


Total interest income               $  2,566     2,276  $ 10,027     8,585
Total interest expense                 1,588     1,180     5,807     4,149
                                    --------  --------  --------  --------
 Net interest income                     978     1,096     4,220     4,436
Provision for loan losses                 35        40       248       275
                                    --------  --------  --------  --------
 Net interest income after
  provision for loan losses              943     1,056     3,972     4,161
                                    --------  --------  --------  --------
Non-interest income:
 Fees and service charges                249       296     1,139     1,122
 Rental Income                            35        34       139       138
 Gain (loss) on trading securities         7       (15)       10        (8)
 Loss on sale of investment
  securities available for sale            -       (11)        -       (11)
 Loss from investment in joint
  venture                                 (5)      (14)      (41)      (72)
 Income from real estate held for
  development                              -         -        51         -
 Gain on sale of other assets              -         -        39       345
 Loss on sale of real estate owned      (111)       (4)      (79)       (4)
 Increase in cash surrrender value
  of life insurance                       31        28       123       119
 Other operating income                    6        32        23        54
                                    --------  --------  --------  --------
  Total non-interest income:             212       346     1,404     1,683
                                    --------  --------  --------  --------
Non-interest expense:
 Staffing cost                           583       629     2,327     2,348
 Advertising                              51        47       250       180
 Occupancy and equipment costs           101       120       428       428
 Data processing                         115       175       476       660
 Professional fees                        55        84       306       243
 Federal deposit insurance premiums        4         4        16        16
 Other                                   217       227       806       765
                                    --------  --------  --------  --------
  Total non-interest expense           1,126     1,286     4,609     4,640
                                    --------  --------  --------  --------
Net income before income taxes            29       116       767     1,204
                                    --------  --------  --------  --------
Provision for federal & state
 income taxes                            (34)       12       119       344
                                    --------  --------  --------  --------
Net income                          $     63       104  $    648       860
                                    ========  ========  ========  ========

Earnings per share
  Basic                             $   0.06  $   0.11  $   0.64  $   0.90
  Diluted                           $   0.06  $   0.10  $   0.64  $   0.85



                            AMB Financial Corp.
                 Selected Financial Ratios and Other Data
                                (Unaudited)


                           Three Months Ended       Twelve Months Ended
                              December 31,              December 31,
                        ------------------------  ------------------------
                           2006         2005         2006         2005
                        -----------  -----------  -----------  -----------
Performance Ratios
 (annualized):
Return on average
 assets                        0.14%        0.25%        0.37%        0.53%
Return on average
 equity                        1.72         2.93         4.48         6.20
Average yield on
 interest-earning
 assets                        6.48         6.05         6.40         5.90
Average cost of
 interest-bearing
 liabilities                   4.01         3.16         3.71         2.88
Interest rate spread           2.47         2.89         2.69         3.02
Net interest margin            2.46         2.91         2.69         3.05
Efficiency ratio              94.60        88.51        82.52        80.22
Non-interest expense to
 average total assets          2.54         3.07         2.63         2.86
Average interest
 earning assets to
 average interest-
 bearing liabilities           1.00x        1.01x        1.00x        1.01x

Weighted average common
 shares outstanding:
  Basic                   1,052,903      972,415    1,011,735      959,836
  Diluted                 1,057,658    1,024,982    1,015,129    1,013,003

                             At           At
                          Dec. 31      Dec. 31
                            2006         2005
                        -----------  -----------
                        (Unaudited)
Quality Ratios:
Non-performing assets
 to total assets               2.06%        1.24%
Allowance for loan
 losses to non-
 performing loans             25.65        50.80
Allowance for loan
 losses to loans
 receivable, net               0.45         0.53

Capital Ratios:
Stockholders' equity to
 total assets                  8.04         8.30
Tangible capital ratio
 (Bank only)                   8.74         9.26
Core captial ratio
 (Bank only)                   8.74         9.26
Risk-based capital
 ratio (Bank only)            14.93        15.85
Average equity to
 average assets                8.28         8.54


Other Data:
Number of full service
 offices                          3            3

Contact Information

  • Contact:
    Clement B. Knapp, Jr.
    President
    (219) 836-5870