SOURCE: ProAmerica Bank

ProAmerica Bank

July 30, 2014 17:32 ET

ProAmerica Bank Reports Second Quarter Net Income of $183,000

LOS ANGELES, CA--(Marketwired - Jul 30, 2014) - ProAmérica Bank (OTCQB: PMRA) today reported Net Income of $183,000 or 6 cents per diluted common share for the three months ended June 30, 2014. For the six months, the Bank reported Net Income of $259,000, or 9 cents per diluted common share. "ProAmérica Bank continued to build its core earnings in the second quarter," stated L. Bruce Mills, Jr., President and CEO. "The Bank has built a strong balance sheet, with excellent capital ratios and asset quality, which provides a solid platform for continued growth. Both year over year and linked quarter results reflect the continuing improvement in core earnings," continued Mills.

"I am pleased with the positive response to my appointment as Chairwoman," stated Maria S. Salinas, Chairwoman. "We achieved a successful transition and are excited about the Bank's opportunity for growth. Our earnings reflect continued focus on small businesses in our target market and our commitment to provide quality banking."

2014 Second Quarter Highlights

  • Adjusted income from operations was $310,000 for the three months ended June 30, 2014, compared to a loss of $23,000 in the second quarter of 2013 after excluding the recapture of interest on restructured loans and prepayment penalties in 2013. These items are explained below. The adjusted income from operations was $132,000 in the first quarter of 2014. The $178,000 improvement over the first quarter of 2014 was due to higher net interest income resulting from an increase in average earning assets, higher gains on the sale of SBA loans and reduced expenses.

  • Three-month Net Income of $183,000, compared to $386,000 in the 2013 second quarter. The Bank had a Provision for Income Taxes of $127,000 in the second quarter of 2014 compared to none in the same period of 2013. The Bank also had significant non-recurring income in the second quarter of 2013. Unusual items in 2013 are explained below.

  • Total Assets at June 30, 2014 were $152.9 million, a decrease of $5.0 million or 3% from June 30, 2013.

  • Total Loans at June 30, 2014 were $114.1 million, an increase of $12.1 million or 12% from June 30, 2013.

  • Nonperforming Assets at June 30, 2014 totaled $184,000, a decrease of $221,000 or 55% from June 30, 2013.

  • Total Deposits at June 30, 2014 were $124.0 million, a decrease of $9.4 million or 7% from June 30, 2013.

  • Capital ratios were in excess of all minimums required to be "Well Capitalized" by regulatory agencies, with a Tier 1 Leverage Ratio of 16.7% and a Total Risk-based Capital Ratio of 21.4% at June 30, 2014. 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 $310,000 for the second quarter of 2014, as compared to $386,000 for the same period in 2013. For the six months ended June 30, 2014, adjusted income from operations was $442,000, as compared to $183,000 for the same period in 2013. Management believes adjusted income from operations is a better measure of core earnings performance. Income from operations for the three and six-month periods of 2013 included $260,000 from the recovery of previously nonaccrued interest on nonperforming loans $149,000 in loan prepayment penalties. Without these items the 2014 adjusted income from operations would have shown significant increases over the same periods in 2013.

For the 2014 second quarter, Net Interest Income before the Provision for Loan Losses decreased $42,000 compared to the 2013 second quarter. The Net Interest Margin declined to 4.38% for the quarter ended June 30, 2014 compared to 4.44% for the same period of 2013. For the six months ended June 30, 2014, Net Interest Income before the Provision for Loan Losses increased $160,000 compared to the same period in 2013. The Net Interest Margin increased to 4.32% for the six-month period ended June 30, 2014 as compared to 4.04% in the same period in 2013. The increase was due to the increase in loans as a percentage of earning assets compared to the previous year. Loans are the highest earning asset of the Bank. The second quarter of 2013 included receipt of $149,000 in loan prepayment penalties and $62,000 of interest income recovered on loans on nonaccrual status during the first quarter of 2013.

The Bank recorded reversals against the allowance for loan losses of $0 and $300,000 in the three and six-month periods ended June 30, 2013, respectively. There were no provisions for loan losses or reversals thereof in 2014. The reversals in 2013 were made as a result of significantly improved asset quality.

Noninterest Income declined $200,000, or 50% in the second quarter 2014 versus the second quarter of 2013 primarily due to the recovery of $260,000 representing previous years' nonaccrued interest on nonperforming loans included in the results of 2013. Noninterest Income decreased $141,000, or 28% for the six months ended June 30, 2014 versus the same period in 2013 due to the recovery commented on above. The impact of the recoveries in 2013 were partially offset by increases in gains on the sale of SBA loans of $42,000 and $58,000, in the three and six-month periods of 2014, respectively.

Noninterest Expense for the second quarter 2014 was $1.5 million, compared with $1.7 million for the 2013 second quarter. Decreases in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary reasons for the decrease. These decreases were primarily the result of certain changes in personnel. The efficiency ratio was 83.1% for the 2014 second quarter, compared with 81.4% for the same period in 2013. Noninterest Expense for the six months ended June 30, 2014 was $3.1 million, compared with $3.3 million for the same period in 2013. Decreases in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary reasons for the decrease. The efficiency ratio was 87.4% for the 2014 six-month period, compared with 94.8% for the same period last year.

Loans, before the allowance for loan losses, increased 12% to $114.1 million at June 30, 2014 compared to $102.0 million at June 30, 2013. "While we are pleased with the 12% annual growth rate, the Bank had an unusual amount of loan prepayments during the second quarter of 2014," stated Mills. "With a strong loan pipeline going into the third quarter we expect to have a very positive year for loan production and growth."

Total Deposits decreased 7% to $124.0 million at June 30, 2014, down from $133.4 million at June 30, 2013. The decline was the result of the Bank reducing its reliance on larger deposit clients. "Our marketing efforts are focused on expanding our base of core deposits and we are expecting to see good results from these efforts," commented Mills.

Asset Quality
Nonperforming Assets decreased to 0.1% of total assets at June 30, 2014, compared with 0.3% at June 30, 2013. The Allowance for Loan Losses was $2.5 million, or 2.2% of loans, at June 30, 2014, compared with $2.6 million, or 2.5% of loans, at June 30, 2013. Net recoveries of loans previously charged off as a percentage of loans were 0.01% for the 2014 second quarter as compared to 0.03% for the 2013 second quarter.

Capital Resources
Total Shareholders' Equity increased to $27.7 million at June 30, 2014 from $23.2 million at June 30, 2013 as a result of earnings retention. The Bank's book value available to common shareholders per common share increased to $8.64 at June 30, 2014 from $7.09 at June 30, 2013.

At June 30, 2014, the Bank's Tier 1 Leverage Capital Ratio was 16.7% versus 15.3% at June 30, 2013. The Total Risk-based Capital Ratio was 21.4% as of June 30, 2014, as compared to 21.0% at June 30, 2013.

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,     %  
    2014     2013     Change  
    Unaudited     Unaudited        
                       
Assets:                      
  Cash and Due From Banks   $ 1,693     $ 1,096     54.5 %
  Federal Funds Sold     18,330       46,415     -60.5 %
  Interest-bearing Balances at Other Financial Institutions     15,486       7,959     94.6 %
    Total Cash and Cash Equivalents     35,509       55,470     -36.0 %
                         
  Loans Net of Deferred Loan Fees/Costs     114,099       102,043     11.8 %
  Allowance for Loan Losses     2,501       2,582     -3.1 %
    Loans Net of Allowance for Loan Losses     111,598       99,461     12.2 %
  Premises and Equipment, net     845       996     -15.2 %
  Federal Home Loan Bank Stock     568       482     17.8 %
  Other Real Estate Owned     0       0     NA  
  Accrued Interest Receivable and Other Assets     4,377       1,475     196.7 %
                         
    Total Assets   $ 152,897     $ 157,884     -3.2 %
                       
Liabilities:                      
  Noninterest-bearing Demand Deposits   $ 27,281     $ 28,192     -3.2 %
                       
  Interest-bearing Demand Deposits (NOW Deposits)     2,810       3,469     -19.0 %
  Savings and Money Market     28,027       43,089     -35.0 %
  Certificates of Deposit     65,901       58,683     12.3 %
    Total Interest-bearing Deposits     96,738       105,241     -8.1 %
    Total Deposits     124,019       133,433     -7.1 %
                       
  Other Borrowings     0       0     NA  
  Accrued Interest Payable and Other Liabilities     1,174       1,209     -2.9 %
                         
 Total Liabilities     125,193       134,642     -7.0 %
                       
Shareholders' Equity:                      
  Common Stock     27,308       27,248     0.2 %
  Additional Paid in Capital     1,952       1,846     5.7 %
  Accumulated Deficit     (5,306 )     (9,602 )   -44.7 %
  SBLF Preferred Stock     3,750       3,750     0.0 %
    Total Shareholders' Equity     27,704       23,242     19.2 %
                           
    Total Liabilities and Shareholders' Equity   $ 152,897     $ 157,884     -3.2 %
                           
    Tier 1 leverage     16.72 %     15.25 %      
    Tier 1 risk-based capital     20.15 %     19.74 %      
    Total risk-based capital     21.41 %     21.01 %      
                       
                       
 
 
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,   2014   2013   % Change     2014   2013     % Change  
    Unaudited   Unaudited         Unaudited   Unaudited        
                                       
Interest Income:                                      
  Interest and Fees on Loans   $ 1,701   $ 1,754   -3.0 %   $ 3,307   $ 3,162     4.6 %
  Interest on Federal Funds Sold     10     23   -56.5 %     24     46     -47.8 %
  Interest on Balances at Other Financial Institutions     15     11   36.4 %     24     22     9.1 %
  Dividends on FHLB and PCBB Stock     14     4   250.0 %     22     7     214.29 %
    Total Interest Income     1,740     1,792   -2.9 %     3,377     3,237     4.3 %
                                       
Interest Expense:                                      
  Interest on Deposit Accounts     112     122   -8.2 %     223     243     -8.2 %
                                       
  Net Interest Income     1,628     1,670   -2.5 %     3,154     2,994     5.3 %
                                       
Provision / (Reversal) for Loan Losses     0     0   NA       0     (300 )   NA  
                                       
    Net Interest Income After Provision for Loan Losses     1,628     1,670   -2.5 %     3,154     3,294     -4.3 %
                                       
Noninterest Income:                                      
  Noninterest Income     202     402   -49.8 %     364     505     -27.9 %
                                       
Noninterest Expense:                                      
  Salaries and Employee Benefits     949     1,028   -7.7 %     1,988     2,004     -0.8 %
  Stock Based Compensation Expense     48     124   -61.3 %     60     157     -61.8 %
  Occupancy Expense     149     155   -3.9 %     298     306     -2.6 %
  Operating Expense     374     379   -1.3 %     730     849     -14.0 %
    Total Non-Interest Expense     1,520     1,686   -9.8 %     3,076     3,316     -7.2 %
                                       
  Pre-tax Income     310     386   -19.7 %     442     483     -8.5 %
                                       
Provision for Income Taxes     127     0   NA       183     0     NA  
                                       
  Net Income   $ 183   $ 386   -52.6 %   $ 259   $ 483     -46.4 %
                                         
  Earnings Per Share - Basic   $ 0.07   $ 0.14   -52.9 %   $ 0.09   $ 0.18     -46.8 %
                                         
  Earnings Per Share - Diluted   $ 0.06   $ 0.14   -53.4 %   $ 0.09   $ 0.17     -47.3 %
                                         
                                         
 
 
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,   2014     2013     % Change     2014     2013     % Change  
    Unaudited     Unaudited           Unaudited     Unaudited        
Per Share:                                            
  Net income - basic   $ 0.07     $ 0.14     -52.9 %   $ 0.09     $ 0.18     -46.8 %
  Net income - diluted   $ 0.06     $ 0.14     -53.4 %   $ 0.09     $ 0.17     -47.3 %
  Book value - Common   $ 8.64     $ 7.09     21.9 %                      
                                             
Common Shares Outstanding                                            
  End of period     2,771,000       2,751,000     0.7 %     2,771,000       2,751,000     0.7 %
  Average for period     2,771,000       2,751,000     0.7 %     2,771,000       2,751,000     0.7 %
                                             
Financial Ratios:                                            
  Performance Ratios:                                            
    Return on average assets     0.48 %     1.01 %   -52.5 %     0.34 %     0.64 %   -46.9 %
    Return on average common equity     3.06 %     8.10 %   -62.2 %     2.17 %     5.08 %   -57.3 %
    Net interest margin     4.38 %     4.44 %   -1.4 %     4.32 %     4.04 %   6.9 %
    Efficiency ratio     83.06 %     81.37 %   2.1 %     87.44 %     94.77 %   -7.7 %
                                               
  Capital Adequacy Ratios (Period-end):                                            
    Tier 1 leverage     16.72 %     15.25 %   9.6 %                      
    Tier 1 risk-based capital     20.15 %     19.74 %   2.1 %                      
    Total risk-based capital     21.41 %     21.01 %   1.9 %                      
                                             
Asset Quality Ratios:                                            
  Allowance for loan and lease losses to total loans     2.19 %     2.53 %   -13.4 %                      
  Allowance for loan and lease losses to nonaccrual loans     1356.44 %     636.86 %   113.0 %                      
  Nonperforming loans to total loans     0.16 %     0.40 %   -60.0 %                      
  Nonperforming assets to total assets     0.12 %     0.26 %   -53.8 %                      
  Net charge-offs (recoveries) to average loans (annualized)     -0.01 %     -0.03 %   -66.7 %     -0.02 %     -0.02 %   0.0 %
                                             
Asset Quality Measures:                                            
  Nonaccrual loans (1)     184       405     -54.6 %                      
  Other real estate owned     0       0     NA                        
    Total nonperforming assets     184       405     -54.6 %                      
                                               
  (1) Nonaccrual loans less than 30 days past due     184       405     -54.6 %                      

Contact Information

  • Contact:
    ProAmerica Bank
    L. Bruce Mills, Jr.
    CEO / President
    213.787.2803

    Frank E. Smith
    CFO
    213.787.2804