November 17, 2008 17:00 ET

USA Bank Reports Improving Operating Results for the Quarter Ended September 30, 2008

PORT CHESTER, NY--(Marketwire - November 17, 2008) - USA Bank (OTCBB: USBK) reported a net loss of $118 thousand ($0.02 per share) for the quarter ended September 30, 2008, which is a marked improvement compared to the net loss of $843 thousand ($0.15 per share) for the quarter ended September 30, 2007. This marks the fourth successive quarter of reduced losses by the Bank. For the nine months ended September 30, 2008, the Bank's net loss was $1,247,000 ($0.22 per share) as compared to a net loss of $2,838,000 ($0.49 per share) for the nine months ended September 30, 2007.

Noteworthy, the Bank's quarterly operating losses for each of the three quarters of 2008 show a very good improving trend, with the 1st quarter's operating loss being $746 thousand, the 2nd quarter's operating loss being $383 thousand, and the 3rd quarter's loss being the aforementioned $118 thousand.

The Bank continues to leverage upon its capital base with quality loan growth, which is reflected in the $536 thousand increase in interest income in the third quarter of 2008 as compared to the third quarter of 2007, which has contributed to the $342 thousand increase in net interest income for the same period. Also benefiting the third quarter 2008 was the recognition of a gain on the sale of securities of $86 thousand and a $205 thousand reduction in salaries and employee benefits, primarily reflecting staff reductions since September 30, 2007. The third quarter of 2008 also reflects a $167,000 combined reduction in gains on loan sales and fee income from the brokering of loans, which partially reflects the volatile mortgage market and partially reflects the Bank's focus on traditional commercial banking. There was also an unfavorable variance in FDIC insurance expense, which was $89 thousand for the third quarter of 2008 (as compared to $21 thousand for the quarter ended September 30, 2007), reflecting increases in both deposit volume and insurance rates.

Total assets increased $26.2 million (15%) to $195.7 million at September 30, 2008 from $169.5 million at December 31, 2007. As of September 30, 2008, total deposits have increased to $151.9 million, an increase of $29.0 million, or 24%, since year end 2007. As of September 30, 2008, total gross loans have increased to $149.6 million, which represents an increase of $42.6 million, or 40%, since year end 2007. Capital ratios continue to be strong, with Tier One Capital to average assets of 10.77%, Tier One Capital to risk-weighted assets of 12.78%, and Total Capital to risk-weighted assets of 13.92%.

President and CEO Gentile stated that "results continue to show improvement and we are performing essentially in line with our revised business plan/budget. Legal and professional fees continue to have a negative impact on operating results, with such costs aggregating $319 thousand during the recent quarter." He further noted, "I am pleased that our total average cost of funds is continuing to decline to 4.05% for the 3rd quarter 2008; it is down from 4.80% during the 3rd quarter 2007. We continually attempt to reduce these costs by attracting core deposit accounts through our enhanced calling programs, remote deposit capture program, and compensating balances from commercial loan customers."

Mr. Gentile also indicated that "asset quality remains manageable, with non-performing loans aggregating $4.2 million at September 30, 2008, which represents an approximate $600 thousand increase from the $3.6 million in non-performing loans at year end 2007. The underlying collateral real estate of one loan previously included in the non-performing category has been transferred to Other Real Estate Owned, as a result of foreclosure in June 2008, in the amount of $2.4 million. A recent appraisal on this property shows a $2.9 million value."

Mr. Gentile further stated that "the recessionary global economic climate and current declining local real estate market, will make the achievement of profitability in the near term, a major challenge." He also stated that "we remain optimistic, that the closer scrutiny being applied to our large existing commercial real estate and construction loan portfolios, should help ameliorate any potential loan quality concerns. However, any collateral deterioration which may occur if real estate values continue to erode, which cannot be predicted with any certainty, will obviously impact future operations, as it will result in the need to allocate additional provisions for loan loss expenses and possible charge-offs. Prudent underwriting has mostly shielded our Bank to date, and current additional safeguards in our underwriting processes should serve to bolster future credit quality. Additionally, the Bank's Board of Directors successfully negotiated a buy out agreement with the landlord for the approximate 12 thousand square feet of space at our administrative offices at 800 Westchester Avenue in Rye Brook, NY, which will serve to save the Bank considerable future rental expenses from February 2009 through the lease's termination date of May 2011. Nearly all of the staff will be relocated to the Bank's Main Office facility in Port Chester, NY, with the balance of the staff being relocated to a prepaid office site in Greenwich, Connecticut."

"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995

Some of the statements contained in this press release may include forward-looking statements which reflect our current views with respect to future events and financial performance. Statements which include the words "expect," "intend," "plan," "believe," "project," "anticipate" and similar statements of future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements or that could adversely affect the holders of our common stock.

These factors include, but are not limited to, those outlined in the Bank's Annual Report on Form 10-KSB for the year ended December 31, 2007, which was filed with the Federal Deposit Insurance Corporation and is publicly available from the FDIC's Accounting & Securities Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and on the Bank's website at

Contact Information

  • Contact:
    Ronald J. Gentile
    President & CEO USA Bank
    Telephone: 914-417-3205
    800 Westchester Avenue
    Rye Brook, NY 10573