ProAmerica Bank Reports 36% Increase in 2012 Second Quarter Earnings

LOS ANGELES, CA--(Marketwire - Sep 10, 2012) - ProAmérica Bank (OTCQB: PMRA) today reported results of operations for its second quarter ended June 30, 2012. The Bank reported net income of $199,000 for the second quarter of 2012, or 7 cents per share, as compared to net income of $146,000, or 5 cents per share, in the second quarter of 2011. For the first six months of 2012, the Bank reported net income of $437,000, or 16 cents per share, compared to net income of $170,000, or 6 cents per share, for the first six months of 2011. "We are pleased with the year over year 36% increase in net income as we continue developing our core earnings," stated L. Bruce Mills, Jr., President and CEO.

"ProAmérica Bank's strong performance in the second quarter stands in contrast to the economic performance experienced across the nation. The economy remained plagued by tepid hiring and sluggish growth in consumer spending during the second quarter," said Executive Chairwoman Maria Contreras-Sweet. She added, "ProAmérica achieved continued growth with a 13% increase in Total Assets, attesting to the strength of the ProAmérica value proposition and our team. We have expanded Total Loans and Deposits by 11% and 12%, respectively. With the addition of our new President and CEO, L. Bruce Mills, we anticipate continued momentum as we deliver success to our clients, community, and shareholders. The Board is pleased to see that Bruce has quickly embraced the vision and mission of the Bank."

2012 Second Quarter Highlights

• Three-month Net Income of $199,000 -- an increase of $53,000, or 36% from the quarter ended June 30, 2011.
  
  
• Total Assets at June 30, 2012 increased to $138.3 million, an increase of $16.0 million or 13% from June 30, 2011.
  
  
• Total Loans at June 30, 2012 increased to $105.6 million, an increase of $10.7 million or 11% from June 30, 2011.
  
  
• Total Deposits at June 30, 2012 increased to $115.1 million, an increase of $12.0 million or 12% from June 30, 2011.
  
  
• Capital ratios are in excess of all minimums required to be "Well Capitalized" by regulatory agencies, with a Tier 1 Leverage Ratio of 17.0% and a Total Risk-Based Capital Ratio of 20.3% at June 30, 2012. Regulatory "Well Capitalized" definitions are 5% for the Tier 1 Leverage Ratio and 10% for the Total Risk-Based Capital Ratio.
  

Financial Results
For the 2012 second quarter, net interest income before the provision for loan losses was flat compared to the 2011 second quarter. Net interest margin increased to 4.5% for the quarter ended June 30, 2012, down from 4.8% for the 2011 second quarter.

There was no provision for loan losses required in the second quarter of 2012 as compared to $87,000 in the second quarter 2011.

Noninterest income decreased $68,000, or 27% in 2012 versus 2011 as a result of a lower volume of SBA loans sold. Second quarter 2012 non-interest income included a $122,000 gain on the sale of SBA loans as compared to $188,000 in the same period of 2011.

Operating expenses for the 2012 second quarter were $1,392,000, compared with $1,430,000 for the 2011 second quarter. The decrease reflects lower stock option and occupancy expense, partially offset by higher salaries and benefit expense and other expense. The efficiency ratio was 85.4% for the 2012 second quarter, compared with 86.9% for the same period last year.

Loans, before the allowance for loan losses, grew 11 percent to $105.6 million at June 30, 2012 from $94.9 million at June 30, 2011. Other real estate owned increased to $3.9 million in the second quarter as a result of the foreclosure of a single loan in April 2012. The property is currently in escrow and is expected to close in the fourth quarter 2012. There was no other real estate owned in 2011.

Total deposits increased 12% to $115.1 million at June 30, 2012 from $103.0 million at June 30, 2011.

Asset Quality
Nonperforming assets (the sum of loans past due 90 days and accruing, nonaccrual loans and foreclosed properties) increased to 7.9% of total assets at June 30, 2012, compared with 1.0% at June 30, 2011. A majority of the nonaccrual loans are current and many are expected to return to accrual status by the end of 2012.

The allowance for loan losses was $2.9 million, or 2.7% of loans, at June 30, 2012, compared with $2.2 million, or 2.3% of loans, at June 30, 2011. Net loan charge-offs for the 2012 second quarter were 0.4% of loans, compared to 0.2% for the 2011 second quarter.

"Management believes the higher Allowance for Loan and Lease Losses is appropriate in light of the higher level of problem loans compared to the previous year; however, there is no assurance that additional adjustments to the allowance will not be required because of changes in economic conditions, regulatory requirements or other factors," said Mills. "We are working on reducing the level of nonperforming assets and expect to see a significant reduction by the end of the year."

Capital resources
Shareholders' equity rose to $22.1 million at June 30, 2012 from $18.8 million at June 30, 2011. The increase included $3,750,000 of preferred stock issued under the U.S. Treasury's Small Business Lending Fund in late 2011. The Bank's book value available to common shareholders per common share decreased to $6.67 at June 30, 2012 from $6.84 at June 30, 2011.

At June 30, 2012, the Bank's Tier 1 leverage capital ratio was 17.0% versus 16.0% at June 30, 2011. The total risk-based capital ratio was 20.3% as of June 30, 2012 as compared to 19.8% at June 30, 2011.

Mills concluded, "As we proceed into the second half of the year, our objectives are to continue to grow our low-cost deposit base, safely generate earning assets, reduce non-performing assets and maintain focus on our expense base. We remain steadfast in enhancing the value of the ProAmérica Bank franchise for our customers, employees and shareholders."

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,				%
				2012				2011				Change
				Unaudited				Unaudited
Assets:
	Cash and Due From Banks			$	3,254			$	1,531			112.5	%
	Federal Funds Sold				22,230				17,395			27.8	%
	Interest-bearing Balances at Other Financial Institutions				2,930				8,661			-66.2	%
		Total Cash and Cash Equivalents			28,414				27,587			3.0	%
	Loans Net of Deferred Loan Fees/Costs				105,609				94,945			11.2	%
	Allowance for Loan Losses				2,859				2,221			28.7	%
		Loans Net of Allowance for Loan Losses			102,750				92,724			10.8	%
Premises and Equipment, net					1,075				213			404.7	%
Federal Home Loan Bank Stock					515				418			23.2	%
Other Real Estate Owned					3,936				0			NA
Accrued Interest Receivable and Other Assets					1,619				1,398			15.8	%
		Total Assets		$	138,309			$	122,340			13.1	%
Liabilities:
	Non-Interest-Bearing Demand Deposits			$	39,836			$	38,013			4.8	%
	Interest-Bearing Demand Deposits (NOW Deposits)				3,799				5,004			-24.1	%
	Savings and Money Market				24,312				18,597			30.7	%
	Certificates of Deposit				47,103				41,409			13.8	%
		Total Interest-Bearing Deposits			75,214				65,010			15.7	%
		Total Deposits			115,050				103,023			11.7	%
	Other Borrowings				0				0			0.0	%
	Accrued Interest Payable and Other Liabilities				1,149				514			123.5	%
Total Liabilities					116,199				103,537			12.2	%
Shareholders' Equity:
	Common Stock				27,248				27,245			0.0	%
	Additional Paid in Capital				1,713				1,595			7.4	%
	Accumulated Deficit				(10,601	)			(10,037	)		5.6	%
	SBLF Preferred Stock				3,750				0			NA
		Total Shareholders' Equity			22,110				18,803			17.6	%
		Total Liabilities and Shareholders' Equity		$	138,309			$	122,340			13.1	%
		Tier 1 leverage			17.0	%			16.0	%
		Tier 1 risk-based capital			19.0	%			18.5	%
		Total risk-based capital			20.3	%			19.8	%

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,					2012			2011			% Change			2012			2011			% Change
					Unaudited			Unaudited						Unaudited			Unaudited
Interest Income:
	Interest and Fees on Loans				$	1,484		$	1,482		0.1	%		$	3,038		$	2,832		7.3	%
	Interest on Federal Funds Sold					10			9		11.1	%			17			22		-22.7	%
	Interest on Balances at Other Financial Institutions					9			22		-59.1	%			25			44		-43.2	%
	Dividends on FHLB and PCBB Stock					4			0		NA				5			0		NA
		Total Interest Income				1,507			1,513		-0.4	%			3,085			2,898		6.5	%
Interest Expense:
	Interest on Deposit Accounts					99			100		-1.0	%			200			187		7.0	%
	Net Interest Income					1,408			1,413		-0.4	%			2,885			2,711		6.4	%
Provision for Loan Losses						0			87		-100.0	%			0			266		-100.0	%
	Net Interest Income After Provision for Loan Losses					1,408			1,326		6.2	%			2,885			2,445		18.0	%
Non-Interest Income:
		Non-Interest Income				183			251		-27.1	%			331			504		-34.3	%
Non-Interest Expense:
	Salaries and Employee Benefits					842			813		3.6	%			1,694			1,589		6.6	%
	Stock Based Compensation Expense					7			80		-91.3	%			18			147		-87.8	%
	Occupancy Expense					147			224		-34.4	%			271			445		-39.1	%
	Operating Expense					396			313		26.5	%			796			597		33.3	%
			Total Non-Interest Expense			1,392			1,430		-2.7	%			2,779			2,778		0.0	%
	Pre-tax Income					199			147		35.4	%			437			171		155.6	%
Provision for Income Taxes						0			1		-100.0	%			0			1		-100.0	%
	Net Income				$	199		$	146		36.3	%		$	437		$	170		157.1	%
	Earnings per share - basic and diluted earnings per share				$	0.07		$	0.05		36.3	%		$	0.16		$	0.06		157.0	%

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,				2012			2011			% Change			2012			2011			% Change
				Unaudited			Unaudited						Unaudited			Unaudited
Per Share:
	Net income, basic and diluted			$	0.07		$	0.05		36.3	%		$	0.16		$	0.06		157.0	%
	Book value - Common			$	6.67		$	6.84		-2.5	%
Common Shares Outstanding
	End of period				2,751,000			2,750,000		0.0	%			2,751,000			2,750,000		0.0	%
	Average for period				2,750,418			2,750,000		0.0	%			2,750,209			2,750,000		0.0	%
Financial Ratios:
	Performance Ratios:
		Return on average assets			0.6	%		0.5	%	20.0	%			0.7	%		0.3	%	133.3	%
		Return on average common equity			5.3	%		3.1	%	71.0	%			4.8	%		1.8	%	166.7	%
		Net interest margin			4.5	%		4.8	%	-6.3	%			4.5	%		4.7	%	-4.3	%
		Efficiency ratio			85.4	%		86.9	%	-1.7	%			86.4	%		86.4	%	0.0	%
	Capital Adequacy Ratios (Period-end):
		Tier 1 leverage			17.0	%		16.0	%	6.3	%
		Tier 1 risk-based capital			19.0	%		18.5	%	2.7	%
		Total risk-based capital			20.3	%		19.8	%	2.5	%
Asset Quality Ratios:
	Allowance for loan and lease losses to:
		Total loans			2.7	%		2.3	%	17.4	%
		Nonaccrual loans			41.1	%		187.0	%	-78.0	%
	Nonperforming assets to:
		Total loans and other real estate owned			9.9	%		1.3	%	661.5	%
		Total assets			7.9	%		1.0	%	690.0	%
	Net charge-offs (recoveries) to average loans (annualized)				0.8	%		0.0	%	NA				0.4	%		0.2	%	100.0	%
Asset Quality Measures:
	Classified assets:
		Loans		$	10,375		$	9,928		4.5	%
		Other real estate owned			3,936			0		NA
	Nonaccrual loans				6,961			1,187		486.4	%
	Nonaccrual loans less than 30 days past due				6,910			1,136		508.3	%