NEW YORK, NY--(Marketwired - Apr 3, 2014) - First American International Corp. (the "Company"), the holding company for First American International Bank (the "Bank") today reported net income for the year ended December 31, 2013 of $2,910,000. Earnings per share available to common shareholders were $1.00 basic and $.99 per diluted share.
Net Income and Results of Operations
The Company today reported net income of $59,000, or ($0.06) per diluted share, after deduction of $186,000 in Troubled Asset Relief Program ("TARP") dividends and discount accretion, for the three months ended December 31, 2013, and $2.9 million, or $.99 per diluted share, after deduction of $751,000 in TARP dividends and discount accretion, for the twelve months ended at that date. This compares to net income of $3.7 million, or $1.63 per diluted share, for the three months ended December 31, 2012 and $9.1 million, or $3.90 per diluted share, for the twelve months ended at that date, also after deduction of TARP dividends and discount accretion.
Earnings per share, without deducting quarterly dividends and discount accretion on the Company's $17 million Troubled Asset Relief Program ("TARP") preferred stock obligation, equates to $0.03 per diluted share for the quarter-ended December 31, 2013 and $1.33 per diluted share for the twelve months ended at that date, compared to $1.71 and $4.23 for the quarter and year ending December 31, 2012.
"We are pleased with the progress we have made in 2013, especially the reduction in non-performing assets, the development of our capacity to originate commercial real estate loans and our conversion to a new core service provider. However, we recognize there is still much more work to do to enhance shareholder value, including further developing our customer base and managing operating expenses," said Mark Ricca, President and Chief Executive Officer.
Net Interest Income
Net interest income for the quarter, before provision for loan losses, was $6.2 million, an increase of $33,000, or 0.5% from the prior year quarter. Net interest income for the year, before provision for loan losses, was $23.4 million. This was a decrease of $2.3 million, or 9.0% from the prior year. The decline is principally due to a decline in the interest rate spread and to a lesser extent a decline in loan balances. For the year ended December 31, 2013 interest rate spread of 4.40% was down 50 basis points from 4.90% for the year ended December 31, 2012; the net interest margin of 4.63% was down 49 basis points from 5.12% for the year ended December 31, 2012. The Bank's loan portfolio of $354.6 million at December 31, 2013 was $605,000, or 0.2% lower than December 31, 2012. This is partially offset by a 26.5% increase from the prior year in the Bank's other interest earning assets to $151.3 million.
Provision for Loan Losses
The Bank took a $488,000 provision during the third quarter of 2013, principally caused by the charge offs of two commercial lines of credit. In 2012, the Bank had a negative provision of $4.5 million due to an improvement in asset quality and fewer loan losses.
Non-interest Income
Non-interest income was $2.8 million for the quarter ended December 31, 2013, compared to $2.3 million for the same quarter last year. Non-interest income for the year was $8.4 million compared to $9.3 million last year. The main reason for the year over year reduction in non-interest income was a decrease in gains on sales of loans and real estate owned of $2.0 million, offset by an improvement of $900,000 in service and transaction fees and a decrease in loss on sale of securities of $213,000 in 2013.
Return on average assets decreased to .54% compared to 1.58% the prior year. Return on average equity decreased to 4.49% compared to 20.99% last year. Excluding the $4.5 million negative provision for the allowance for loan and lease losses return on average assets and return on average equity would have been 1.15% and 15.3%, respectively in 2012.
Non-interest Expense
Non-interest expenses were $26.2 million in 2013 compared to $22.9 million in 2012, an increase of $3.3 million, or 14.4%. The total increase is mainly due to increases in salaries and benefits of $1.1 million, general and administrative expenses of $1.1 million and occupancy expenses of $1.1 million. Salaries and benefits increased due to increased staffing levels, general raises and increased health insurance costs. General and administrative expenses increased due to an increase in data processing expenses of $432,000 attributable to changing our core processor, an increase in loan processing fees of $916,000, and an increase in other expenses of $289,000, which were offset by a decrease in FDIC assessment expense of $400,000 and a decrease in professional fees of $141,000.
Balance Sheet Highlights
Assets
Total assets at December 31, 2013 were $552.6 million, an increase of $25.7 million, or 4.9%, versus December 31, 2012. Loans receivable, net were $354.6 million, a decrease of $605,000 compared to last year. The decrease is due principally to an $88.0 million decrease in construction, commercial real estate, multifamily and commercial and industrial loans (collectively "Commercial Loans"), which was partially offset by an $80.5 million increase in 10/1 and 7/1 adjustable rate 1-4 family loans. Commercial mortgage loans receivable decreased as the Company continued to focus on resolving asset quality issues. Other interest earning assets increased by $31.7 million, or 26.5%, as the proceeds from borrower payments and sales of commercial mortgage loans provided funds that were invested in investment quality securities and bank deposits.
Asset Quality
Non-accrual loans at December 31, 2013 were $10.4 million compared to $22.4 million last year. Total delinquent loans were $9.9 million compared to $24.7 million at December 31, 2012. The Company monitors delinquent loans closely and continues to work on improving asset quality on an overall basis as shown by the decrease in non-performing assets. The allowance for loan losses was $7.2 million, or 2.04% of total loans compared to $10.6 million, or 2.90%, at December 31, 2012. The reduction in the allowance was principally due to net charge offs of $3.9 million associated in large part with the sale of $13.2 million in non-performing loans during the fourth quarter, offset by a provision of $488,000.
Deposits
Deposits at December 31, 2013 were $411.3 million, a decrease of $30.3 million, or 6.9% since December 31, 2012. Certificates of deposit were $186.2 million, a decrease of $36.5 million, or 16.4%, from December 31, 2012. Savings and money market accounts decreased $5.3 million, or 3.8%. Demand deposits increased $12.0 million, or 16.0%. NOW accounts decreased $563,000, or 20.9%. Despite the Company maintaining competitive pricing for deposit products throughout 2013, interest rates remained at a relatively low level, causing customers to seek higher returns in other investment vehicles.
Borrowings
Federal Home Loan Bank Borrowings increased by $51.0 million to $61.0 million in 2013. These advances were taken to partially match fund the Bank's 10/1 and 7/1 1-4 family residential loan originations. The remaining portion of borrowings consists of the Company's trust preferred borrowings originated in 2004.
Stockholders' Equity
Stockholders' equity was $65.3 million, or 11.8% of total assets, a $2.7 million, or 4.4% increase from December 31, 2012.
About First American International Corp
First American International Corp. is the holding company for First American International Bank, a community development financial institution ("CDFI") and a minority depository institution ("MDI") with nine branches serving principally the Chinese-American communities in Manhattan, Queens and Brooklyn in New York City.
See accompanying unaudited financial data tables for additional information.
The information contained herein is intended to provide the reader with historical information about the financial results of First American International Corp. It is not intended to provide guidance as to forward looking statements or projections of future results. A variety of factors could cause our actual results and experiences to differ materially from historical results and anticipated results based on historical results.
| First American International Corp. | ||||
| Financial Highlights (unaudited) | ||||
| Balance Sheet Items | $ thousands | |||
| 12/31/2013 | 12/31/2012 | |||
| Total assets | 552,623 | 526,952 | ||
| Loans | ||||
| Real estate - commercial | 136,891 | 214,509 | ||
| Real estate - residential | 222,366 | 142,866 | ||
| Commercial and industrial | 2,703 | 8,699 | ||
| Consumer and installment | 586 | 539 | ||
| Loans receivable, gross | 362,546 | 366,613 | ||
| Allowance for possible loan losses | 7,226 | 10,618 | ||
| Other interest earning assets | 151,335 | 119,608 | ||
| Deposits | ||||
| Demand deposits | 87,013 | 75,009 | ||
| NOW accounts | 2,136 | 2,700 | ||
| Money market and savings | 135,962 | 141,291 | ||
| Certificate of deposit | 186,200 | 222,661 | ||
| Total deposits | 411,311 | 441,661 | ||
| Borrowings | 68,217 | 17,217 | ||
| Stockholders' equity | 65,333 | 62,761 | ||
| Summary Income Statement | Year-to-date | For the quarter ended | ||||||||||
| 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | |||||||||
| Interest income | 26,827 | 30,103 | 7,132 | 7,121 | ||||||||
| Interest expense | 3,402 | 4,372 | 907 | 929 | ||||||||
| Net interest income | 23,425 | 25,731 | 6,225 | 6,192 | ||||||||
| Provision for loan losses | 488 | (4,509 | ) | - | (4,509 | ) | ||||||
| Net interest income after | ||||||||||||
| provision for loan losses | 22,937 | 30,240 | 6,225 | 10,701 | ||||||||
| Non-interest income | 8,024 | 8,874 | 2,485 | 1,932 | ||||||||
| Non-interest expenses | 26,198 | 22,896 | 9,067 | 6,323 | ||||||||
| BEA grant | 393 | 415 | 323 | 415 | ||||||||
| Income before income taxes | 5,156 | 16,633 | (34 | ) | 6,725 | |||||||
| Income taxes | 2,245 | 7,507 | (93 | ) | 3,037 | |||||||
| Net income | 2,911 | 9,126 | 59 | 3,688 | ||||||||
| Performance ratios (Unaudited) | |||||||||||||||
| Year-to-date | Quarter ended | ||||||||||||||
| 12/31/13 | 12/31/12 | 12/31/13 | 12/31/12 | ||||||||||||
| Return on average assets | 0.54 | % | 1.58 | % | 0.01 | % | 2.84 | % | |||||||
| Return on average net worth | 4.49 | % | 20.99 | % | 0.09 | % | 34.67 | % | |||||||
| Average interest earning assets/bearing liabilities | 135.00 | % | 126.00 | % | 134.00 | % | 128.66 | % | |||||||
| Net interest rate spread | 4.40 | % | 4.90 | % | 4.63 | % | 4.70 | % | |||||||
| Net interest margin | 4.63 | % | 5.12 | % | 4.87 | % | 4.91 | % | |||||||
| Net interest income after provision/total expense | 89.41 | % | 132.00 | % | 68.66 | % | 168.90 | % | |||||||
| Non-interest income to total revenue | 23.88 | % | 26.50 | % | 28.24 | % | 30.25 | % | |||||||
| Non-interest expense to total revenue | 74.33 | % | 65.40 | % | 91.22 | % | 71.37 | % | |||||||
| Non-interest expense to average assets | 4.90 | % | 4.31 | % | 6.68 | % | 4.76 | % | |||||||
| Net Worth and Asset Quality Ratios | |||||||||||||||
| Average net worth to average total assets | 12.14 | % | 10.75 | % | 12.03 | % | 10.75 | % | |||||||
| Total net worth to assets end of period | 11.82 | % | 11.88 | % | 11.82 | % | 11.88 | % | |||||||
| Non-performing assets to total assets | 1.88 | % | 5.25 | % | 1.88 | % | 5.25 | % | |||||||
| Non-performing loans to total loans | 2.93 | % | 7.51 | % | 2.93 | % | 7.51 | % | |||||||
| Allowance for loan losses to total loans | 2.04 | % | 2.90 | % | 2.04 | % | 2.90 | % | |||||||
| Allowance for loan losses to NPLs | 69.45 | % | 38.60 | % | 69.45 | % | 38.60 | % | |||||||
| Risk based total capital ratio (bank) | 22.56 | % | 18.80 | % | 22.56 | % | 18.80 | % | |||||||
| Capital, Book Value and Earnings Per Share | |||||||||||||||
| Tier 1 risk based capital (bank) | 21.30 | % | 17.53 | % | 21.30 | % | 17.53 | % | |||||||
| Leverage ratio (bank) | 13.05 | % | 12.91 | % | 13.05 | % | 12.91 | % | |||||||
| Book value per share basic | $ | 22.28 | $ | 21.49 | $ | 22.28 | $ | 21.49 | |||||||
| Diluted EPS available to Common Shareholders | $ | 0.99 | $ | 3.90 | $ | (0.06 | ) | $ | 1.63 | ||||||
Contact Information:
David A. Chin
Chief Financial Officer
(718) 567-8788 ext. 1388