First American International Corp. Announces Second Quarter 2013 Results

NEW YORK, NY--(Marketwired - Aug 16, 2013) - First American International Corp., the holding company for First American International Bank, with nine branches in Manhattan, Queens and Brooklyn in New York City, provided the following selected financial data for the quarter ended June 30, 2013.

Balance Sheet Highlights

Total assets were $518.4 million at June 30, 2013, down $11.5 million, or 2.2%, from June 30, 2012. Loans receivable, net were $342.6 million at June 30, 2013 or 66.1% of total assets, a decline of $35.6 million from $378.2 million at June 30, 2012. Loans receivable decreased as the company temporarily ceased originating commercial mortgage loans. Origination of 1-4 family residential mortgage loans continues. Construction and development loans, which comprise about 3.6% of total loans, have declined significantly as existing loans have matured and/or paid down. Other interest earning assets increased by $32.1 million, or 30.8%, from the quarter ended June 30, 2012, as the proceeds from borrower payments and sales of commercial mortgage loans provided funds that were invested in non-loan earning assets.

At June 30, 2013, there were approximately $17.9 million of nonperforming assets, compared to $33.7 million at June 30, 2012. Loans from 30-89 days past due were approximately $0.6 million at June 30, 2013, compared to approximately $5.3 million at June 30, 2012. The allowance for loan losses ended the quarter at $8.5 million or 2.43% of total loans.

Deposits at June 30, 2013 were $423.9 million, off $20.6 million, or 4.6%, from June 30, 2012. Certificates of Deposit, which were $198.0 million at June 30, 2013, decreased $30.4 million, or 13.3%, from June 30, 2012. Savings and money market accounts decreased $2.2 million or 1.5% while demand deposits accounts increased $11.6 million, or 16.5%, from June 30, 2012.

Stockholders equity at June 30, 2013 was $64.8 million, or 12.5% of total assets. This compares to $56.4 million at June 30, 2012.

Second Quarter 2013 Results of Operations

FAIC had net income of $1,160,000 for the quarter ended June 30, 2013, or $977,000 net of preferred dividends and discount accretion, compared to net income of $1,957,000 for the quarter-ended June 30, 2012, or $1,779,000 net of preferred dividends and discount accretion. Net interest income before provision was $5,820,000 for the quarter, or 1.2% of average earning assets. This was $395,000, or 6.4%, less than the second quarter of 2012. The second quarter 2013 interest rate spread of 4.47% was down 30 basis points from 4.77% in the second quarter of 2012; the net interest margin of 4.68% was down 31 basis points from 4.99% in the prior year. A decrease in loans as a percentage of total assets contributed to the decline in net interest spread and margin. The ratio of average interest earning assets to average interest bearing liabilities was 132% for the second quarter of 2013 compared to 125% for the second quarter of 2012.

The allowance for loan losses at June 30, 2013 was $8,544,000, or 2.43% of total loans, versus 3.90% at June 30, 2012. The lack of a provision for loan losses during the 2013 quarter and the lower level of the allowance reflected a reduction in loan losses and the improvement in the level of nonaccrual and delinquent loans during 2012 and 2013.

Bank fees and other non-interest revenue contributed $1,668,000 for the quarter-ended June 2013 compared to $2,613,000 for the quarter-ended June 2012. Operating expenses were $5,375,000 for 2013 compared to $5,261,000 for 2012. Operating expenses were 72.41% of total revenues in the 2013 quarter, compared to 59.59% in the same period in 2012.

The following were the principal contributors to the decline in net income. Net interest income declined by $395,000, principally because of the decline in the volume of loans, the highest yielding asset category. In June of 2012, FAIC recognized a valuation gain on mortgage servicing rights of approximately $1.2 million. Although an independent valuation of our servicing portfolio has been completed this year and it reflects an increase in its value, the effect of that increase, which we estimate to be approximately $465,000 of additional non-interest income, will not be recorded until the third quarter of 2013. Furthermore, in the second quarter of 2012, there was a $310,000 gain on the sale of a problem loan that was sold for more than the written-down value. These factors were partially offset by a $325,000 write down in the value of impaired investment securities in the second quarter of 2012. There were no loan sale gains or securities write downs during the second quarter of 2013.

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)
$ thousands
Balance Sheet Items												6/30/13				6/30/13
				6/30/2013				6/30/2012				vs 6/30/12				vs 6/30/12
Total Assets				$	518,371			$	529,916			$	(11,545	)		-2.2	%
Loans Receivable, Net					342,582				378,161				(35,579	)		-9.4	%
Allowance for possible loan losses					8,544				15,343				(6,799	)		-44.3	%
Other Interest earning assets					136,357				104,252				32,105			30.8	%
Deposits					423,881				444,509				(20,628	)		-4.6	%
Borrowings					22,217				22,567				(350	)		-1.6	%
Stockholders' Equity					64,828				56,449				8,379			14.8	%
Summary Income Statement				For the quarter ended								Second Quarter Variances
				6/30/13				6/30/12				2013 vs 2012				2013 vs 2012
Interest Income				$	6,649			$	7,327			$	(678	)		-9.3	%
Interest Expense					829				1,112				(283	)		-25.4	%
	Net interest income				5,820				6,215				(395	)		-6.4	%
Provision for loan losses					-				-				-			N/M
	Net interest income after
		provision for loan losses			5,820				6,215				(395	)		-6.4	%
Non-interest Income					1,668				2,613				(945	)		-36.2	%
Non-interest expenses					5,375				5,261				114			2.2	%
BEA Grant					-				-				-			N/M
	Income before income taxes				2,113				3,567				(1,454	)		-40.8	%
Income taxes					953				1,610				(657	)		-40.8	%
	Net Income			$	1,160			$	1,957			$	(797	)		-40.7	%
Net Income net of Preferred Dividends and discount accretion				$	977			$	1,779			$	(802	)		-45.1	%
Earnings per share-Basic					0.45				0.84				(0.39	)
Earnings per share-Diluted					0.45				0.83				(0.38	)
shares o/s (excludes 2,500 of treasury shares)					2,169,211				2,121,211
diluted o/s* (presented for current Qtr only)					2,184,535				2,147,165
	* diluted o/s not applicable if anti dilutive
First American International Corp.
Performance Ratios (Unaudited)
As of and for the period ending				Quarter-ended
				6/30/2013				6/30/2012
Return on average assets (net income available to common to average total assets)					0.74	%			1.35	%
Return on average common stockholders' equity					8.21	%			18.67	%
Average int earning assets/bearing liab					132	%			125	%
Net interest rate spread					4.47	%			4.77	%
Net Interest Margin					4.68	%			4.99	%
Net Interest Income after provision/tot exp					107.42	%			118.16	%
Non -int income to total revenue					22.22	%			29.60	%
Non int expense to total revenue					72.41	%			59.59	%
Non int expense to average assets					4.15	%			3.99	%
Net Worth and Asset Quality Ratios
Average net worth to Average total assets					12.06	%			10.42	%
Total Net Worth to assets end of period					12.51	%			10.65	%
Non Performing Assets to total assets					3.45	%			6.36	%
Non performing loans to total loans					5.04	%			7.86	%
Allowance for Loan Loss to total loans					2.43	%			3.90	%
Allowance for loan losses to NPLs					48.29	%			49.59	%
Risk Based Total Capital ratio (bank)					20.82	%			15.85	%
Tier 1 RB Capital (bank)					19.56	%			14.57	%
Leverage Ratio (bank)					13.39	%			11.48	%
Book Value per Common Share				$	22.05			$	18.60