ProAmerica Bank Reports Second Quarter Net Income of $386,000, Total Assets of $158 Million and a Significant Reduction in Nonperforming Assets

LOS ANGELES, CA--(Marketwired - Aug 14, 2013) - ProAmérica Bank (OTCQB: PMRA) today reported Net Income of $386,000 or 14 cents per share diluted for the three months ended June 30, 2013. For the six months, the Bank reported Net Income of $483,000, or 17 cents per share diluted. Total assets increased 14% to $157.9 million as of June 30, 2013, as compared to the prior year. "Our reduction in nonperforming assets was a big factor in achieving strong earnings growth in the second quarter of 2013. ProAmérica Bank has achieved profitability for 10 of the past 11 quarters and we look forward to continuing that trend," stated L. Bruce Mills, Jr., President and CEO. "We continue to focus on a balance between growth and profitability in what has been a challenging market," continued Mills.

"Given the highly competitive marketplace and the downturn in the economy, we are pleased that ProAmérica Bank has experienced a consistent earnings trend, double-digit asset growth year on year, and is in good regulatory standing. The Board is also enthusiastic about the return of one of its founding directors, Edward P. Roski, Jr., President and Chairman of Majestic Realty Co., and the addition of Carlton J. Jenkins, an experienced banker now a Partner with The Yucaipa Companies. All this affords us the opportunity to focus on the key elements of a maturing financial institution and the customer experience. Our goal is to create highly personalized experiences for our clients with solutions that help build their businesses, and, in turn, create value for our shareholders," stated Maria Contreras-Sweet, Executive Chairwoman.

2013 Second Quarter Highlights

• Three-month Net Income of $386,000, compared to $199,000 in the prior year second quarter.
  
  
• Total Assets at June 30, 2013 totaled $157.9 million, an increase of $19.7 million or 14% from June 30, 2012.
  
  
• Total Loans at June 30, 2013 declined to $99.5 million, a decrease of $3.2 million or 3% from June 30, 2012.
  
  
• Nonperforming Assets at June 30, 2013 declined to $0.4 million, a decrease of $10.5 million or 96% from June 30, 2012.
  
  
• Total Deposits at June 30, 2013 increased to $133.4 million, an increase of $18.4 million or 16% from June 30, 2012.
  
  
• Capital ratios are in excess of all minimums required to be "Well Capitalized" by regulatory agencies, with a Tier 1 Leverage Ratio of 15.3% and a Total Risk-based Capital Ratio of 21.0% at June 30, 2013. Regulatory "Well Capitalized" definitions are 5% for the Tier 1 Leverage Ratio and 10% for the Total Risk-based Capital Ratio.
  
  

Financial Results
Adjusted income from operations (income before provisions for loan losses and income taxes) was $386,000 for the second quarter of 2013, as compared to $199,000 for the same period in 2012. Adjusted income from operations (income before provisions for loan losses and income taxes) was $183,000 for the six months ended June 30, 2013, as compared to $437,000 for the same period in 2012. Management believes adjusted income from operations is a better measure of core earnings performance.

For the 2013 second quarter, Net Interest Income before the Provision for Loan Losses increased $262,000 compared to the 2012 second quarter. The Net Interest Margin was flat at 4.5% for the quarters ended June 30, 2013 and 2012. For the six months ended June 30 2013, Net Interest Income before the Provision for Loan Losses increased $109,000 compared to the same period in 2012. The Net Interest Margin declined to 4.0% for the six-month period ended June 30, 2013 as compared to 4.6% in the same period in 2012. The decline was due to the reduction in loans as a percentage of earning assets compared to the previous year.

There was no Provision for Loan Losses required in the second quarters of 2013 or 2012. The Bank recorded a reversal of $300,000 against the allowance for loan losses in the first quarter of 2013. There was no reversal in 2012. Net recoveries of previous loan charge-offs were 0.03% and 0.02% of average loans for the quarter and six-months ended June 30, 2013, respectively. Charge-offs to average loans outstanding were 0.84% and 0.41% of average loans for the quarter and six-months ended June 30, 2012, respectively. Nonaccrual loans declined 94% to $0.4 million as of June 30, 2013, compared to June 30, 2012.

Noninterest Income increased $219,000, or 120% in the second quarter 2013 versus 2012 as a result of receiving prior years' interest income of $260,000 on nonaccrual loans that were paid off. Noninterest Income increased $174,000, or 53% for the six months ended June 30, 2013 versus 2012 as a result of a the above mentioned item, partially offset by a $32,000 loss on the sale of other real estate owned.

Noninterest Expense for the second quarter 2013 was $1,686,000, compared with $1,392,000 for the 2012 second quarter. An increase in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary reasons for the increase. Salaries and Employee Benefits expense increased due to a greater number of employees than the previous year and the addition of a 401(k) plan. Stock Based Compensation expense increased due primarily to the shareholder approved stock option program. The efficiency ratio was 81.4% for the 2013 second quarter, compared with 87.5% for the same period last year. Noninterest Expense for the six months ended June 30, 2013 was $3,316,000, compared with $2,779,000 for the same period in 2012. An increase in Salaries and Employee Benefits expense and Stock Based Compensation expense were the reasons for the increase. Salaries and Employee Benefits expense and Stock Based Compensation increased primarily due to the reasons stated above. The efficiency ratio was 94.8% for the 2013 six month period, compared with 86.4% for the same period last year.

Loans, before the allowance for loan losses, declined 3% to $102.0 million at June 30, 2013 compared to $105.5 million at June 30, 2012. "While new loan production has increased dramatically year over year, prepayments have also increased due to competition from major financial institutions," commented Mills. Other Real Estate Owned decreased from $3.9 million in 2012 due to the sale of the Bank's only property in the first quarter of 2013.

Total Deposits increased 16% to $133.4 million at June 30, 2013, up from $115.1 million at June 30, 2012.

Asset Quality
Nonperforming Assets (the sum of loans past due 90 days and accruing, nonaccrual loans and other real estate owned) decreased to 0.3% of total assets at June 30, 2013, compared with 7.9% at June 30, 2012.

The Allowance for Loan Losses was $2.6 million, or 2.5% of loans, at June 30, 2013, compared with $2.9 million, or 2.7% of loans, at June 30, 2012. There were no net loan charge-offs for the 2013 second quarter as compared to 0.8% of loans for the 2012 second quarter.

Capital Resources
Total Shareholders' Equity increased to $23.2 million at June 30, 2013 from $22.0 million at June 30, 2012. The Bank's book value available to common shareholders per common share increased to $7.09 at June 30, 2013 from $6.64 at June 30, 2012.

At June 30, 2013, the Bank's Tier 1 Leverage Capital Ratio was 15.3% versus 16.9% at June 30, 2012. The Total Risk-based Capital Ratio was 21.0% as of June 30, 2013, as compared to 20.2% at June 30, 2012.

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,				%
				2013				2012				Change
				Unaudited				Unaudited
Assets:
	Cash and Due From Banks			$	1,096			$	3,254			-66.32	%
	Federal Funds Sold				46,415				22,230			108.79	%
	Interest-bearing Balances at Other Financial Institutions				7,959				2,930			171.64	%
		Total Cash and Cash Equivalents			55,470				28,414			95.22	%
	Loans Net of Deferred Loan Fees/Costs				102,043				105,526			-3.30	%
	Allowance for Loan Losses				2,582				2,859			-9.69	%
		Loans Net of Allowance for Loan Losses			99,461				102,667			-3.12	%
Premises and Equipment, net					996				1,075			-7.35	%
Federal Home Loan Bank Stock					482				515			-6.41	%
Other Real Estate Owned					0				3,936			-100.00	%
Accrued Interest Receivable and Other Assets					1,475				1,619			-8.89	%
		Total Assets		$	157,884			$	138,226			14.22	%
Liabilities:
	Noninterest-bearing Demand Deposits			$	28,191			$	39,836			-29.23	%
Interest-bearing Demand Deposits (NOW Deposits)					3,469				3,799			-8.69	%
Savings and Money Market					43,089				24,312			77.23	%
Certificates of Deposit					58,684				47,103			24.59	%
		Total Interest-bearing Deposits			105,242				75,214			39.92	%
		Total Deposits			133,433				115,050			15.98	%
	Other Borrowings				0				0			NA
	Accrued Interest Payable and Other Liabilities				1,209				1,149			5.22	%
Total Liabilities					134,642				116,199			15.87	%
Shareholders' Equity:
	Common Stock				27,248				27,248			0.00	%
	Additional Paid in Capital				1,846				1,713			7.76	%
	Accumulated Deficit				(9,602	)			(10,684	)		-10.13	%
	SBLF Preferred Stock				3,750				3,750			0.00	%
		Total Shareholders' Equity			23,242				22,027			5.52	%
		Total Liabilities and Shareholders' Equity		$	157,884			$	138,226			14.22	%
		Tier 1 leverage			15.25	%			16.90	%
		Tier 1 risk-based capital			19.74	%			18.94	%
		Total risk-based capital			21.01	%			20.21	%

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,					2013			2012			% Change			2013				2012			% Change
					Unaudited			Unaudited						Unaudited				Unaudited
Interest Income:
	Interest and Fees on Loans				$	1,754		$	1,484		18.19	%		$	3,162			$	3,038		4.1	%
	Interest on Federal Funds Sold					23			10		130.00	%			46				17		170.6	%
	Interest on Balances at Other Financial Institutions					11			9		22.22	%			22				25		-12.0	%
	Dividends on FHLB and PCBB Stock					4			4		0.00	%			7				5		40.00	%
		Total Interest Income				1,792			1,507		18.91	%			3,237				3,085		4.9	%
Interest Expense:
	Interest on Deposit Accounts					122			99		23.23	%			243				200		21.5	%
	Net Interest Income					1,670			1,408		18.61	%			2,994				2,885		3.8	%
Provision / (Reversal) for Loan Losses						0			0		NA				(300	)			0		NA
		Net Interest Income After Provision for Loan Losses				1,670			1,408		18.61	%			3,294				2,885		14.2	%
Noninterest Income:
			Noninterest Income			402			183		119.67	%			505				331		52.6	%
Noninterest Expense:
	Salaries and Employee Benefits					1,028			842		22.09	%			2,004				1,694		18.3	%
	Stock Based Compensation Expense					124			7		1671.43	%			157				18		772.2	%
	Occupancy Expense					155			147		5.44	%			306				271		12.9	%
	Operating Expense					379			396		-4.29	%			849				796		6.7	%
			Total Non-Interest Expense			1,686			1,392		21.12	%			3,316				2,779		19.3	%
	Pre-tax Income					386			199		93.97	%			483				437		10.5	%
Provision for Income Taxes						0			0		NA				0				0		NA
	Net Income				$	386		$	199		93.97	%		$	483			$	437		10.5	%
	Earnings Per Share - Basic				$	0.14		$	0.07		93.97	%		$	0.18			$	0.16		10.5	%
	Earnings Per Share - Diluted				$	0.14		$	0.07		92.02	%		$	0.17			$	0.16		9.4	%

PROAMÉRICA BANK FINANCIAL HIGHLIGHTS

For the Periods Indicated

(Dollars in thousands except share and per share data)

				Three Months											Six Months
For The Period Ended June 30,				2013				2012				% Change			2013				2012				% Change
				Unaudited				Unaudited							Unaudited				Unaudited
Per Share:
	Net income - basic			$	0.14			$	0.07			93.97	%		$	0.18			$	0.16			10.53	%
	Net income - diluted			$	0.14			$	0.07			92.02	%		$	0.17			$	0.16			9.41	%
	Book value - Common			$	7.09			$	6.64			6.78	%
Common Shares Outstanding
	End of period				2,751,000				2,751,000			0.00	%			2,751,000				2,751,000			0.00	%
	Average for period				2,751,000				2,750,418			0.02	%			2,751,000				2,750,209			0.03	%
Financial Ratios:
	Performance Ratios:
		Return on average assets			1.01	%			0.61	%		65.57	%			0.64	%			0.67	%		-4.48	%
		Return on average common equity			8.10	%			4.35	%		86.21	%			5.08	%			4.80	%		5.83	%
		Net interest margin			4.48	%			4.52	%		-0.88	%			4.04	%			4.56	%		-11.40	%
		Efficiency ratio			81.37	%			87.49	%		-7.00	%			94.77	%			86.41	%		9.67	%
	Capital Adequacy Ratios (Period-end):
		Tier 1 leverage			15.25	%			16.90	%		-9.76	%
		Tier 1 risk-based capital			19.74	%			18.94	%		4.24	%
		Total risk-based capital			21.01	%			20.21	%		3.96	%
Asset Quality Ratios:
	Allowance for loan and lease losses to total loans				2.53	%			2.71	%		-6.64	%
	Allowance for loan and lease losses to nonaccrual loans				636.90	%			41.07	%		1450.77	%
	Nonperforming loans to total loans				0.40	%			6.60	%		-93.94	%
	Nonperforming assets to total assets				0.26	%			7.88	%		-96.70	%
	Net charge-offs (recoveries) to average loans (annualized)				-0.03	%			0.84	%		-103.57	%			-0.02	%			0.41	%		-104.88	%
Asset Quality Measures:
	Nonaccrual loans (1)				405				6,961			-94.18	%
	Other real estate owned				0				3,936			-100.00	%
		Total nonperforming assets			405				10,897			-96.28	%

(1) Nonaccrual loans less than 30 days past due			405				6,910			-94.14	%