ProAmerica Bank Reports Record 2013 Fourth Quarter and Full-Year Net Income

LOS ANGELES, CA--(Marketwired - Feb 25, 2014) - ProAmérica Bank ( OTCQB : PMRA ) today reported Net Income for the fourth quarter of 2013 of $3.7 million, or $1.32 per diluted common share. Net Income was $4.5 million, or $1.62 per diluted common share for the year ended December 31, 2013. Net Income for both periods includes $2.9 million from the full recognition of its deferred tax asset. "We are pleased to report strong earnings, loan growth and significantly improved asset quality in 2013," stated L. Bruce Mills, Jr., President and CEO. "We have a dedicated team at ProAmérica Bank, solid market alignment, and have accomplished much in a slowly recovering economy," continued Mills.

"ProAmérica Bank has continued to build on its solid reputation in emerging and local markets with strong financial results," stated Executive Chairwoman Maria Contreras-Sweet. "This is a reflection of our team's ability to perform in an environment with intense competitive and economic pressures. We have grown our client base while improving credit quality and maintaining profitability. This growth is thanks in part to our dedicated employees who remain committed to a customer-centric approach to the business of banking, always ready with the personal touch that sets us apart."

"As I look forward to the prospect of serving in the public sector and expanding my commitment to small businesses on a national scale as the nominee to be Administrator of the SBA, I know that the Bank is in excellent hands. ProAmérica Bank has a strong infrastructure in place to continue the mission that the Board and shareholders envisioned when the Bank was first formed," Contreras-Sweet concluded.

2013 Fourth Quarter/Annual Highlights

  • Three-month Net Income of $3,721,000, compared to Net Income of $314,000 in the prior year fourth quarter. Net Income for the year ended December 31, 2013 was $4,520,000, compared to $1,037,000 in 2012.

  • Total Assets at December 31, 2013 were $152.9 million, a decrease of $1.2 million or 1% from December 31, 2012.

  • Total Loans at December 31, 2013 increased to $112.0 million, an increase of $15.5 million or 16% from December 31, 2012.

  • Total Deposits at December 31, 2013 decreased to $124.4 million, a decline of $5.9 million or 5% from December 31, 2012.

  • Nonperforming assets were reduced to $213,000 at December 31, 2013, a 98% decrease from December 31, 2012.

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 21.0% at December 31, 2013. Regulatory "Well Capitalized" definitions are 5% for the Tier 1 Leverage Ratio and 10% for the Total Risk-Based Capital Ratio.

Financial Results
Net Income for the three months ended December 31, 2013 was $3,721,000, compared to $314,000 in 2012. Net Income for the year ended December 31, 2013 was $4,520,000, compared to $1,037,000 in 2012. Net Income for both periods in 2013 includes the impact of reversing the Bank's $2,949,000 valuation allowance against its deferred tax asset that arose from prior years' net operating losses. The reversal was made as a result of Management's belief that it is more likely than not that the Bank will be able to use the net operating losses to offset Federal and State income taxes due in future periods. The Bank has achieved profitability in 12 of the past 13 quarters.

Adjusted income from operations (income before provisions for loan losses and income taxes) was $772,000 for the fourth quarter of 2013, as compared to a $315,000 for the same period in 2012. Adjusted income from operations was $1,172,000 for the year ended December 31, 2013, as compared to $1,038,000 in the previous year. Management believes adjusted income from operations is a better measure of core earnings performance.

For the 2013 fourth quarter, Net Interest Income before the Provision for Loan Losses increased $145,000 compared to the 2012 fourth quarter. The Net Interest Margin increased to 4.24% for the quarter ended December 31, 2013, up from 3.89% for the 2012 fourth quarter. The increase was due to a higher level of average loans as a percentage of average assets in the fourth quarter of 2013. For the year ended December 31, 2013, Net Interest Income before the Provision for Loan Losses increased $260,000 compared to 2012. The Net Interest Margin declined to 4.04% for the year ended December 31, 2013, down from 4.27% for 2012. The decrease was due to a lower level of average loans as a percentage of average assets in 2013 as compared to 2012.

There was no Provision for Loan Losses required in the fourth quarters of 2013 or 2012. For the year ended December 31, 2013, a negative Provision for Loan Losses of $400,000 was recorded due to improved asset quality. There was no Provision for Loan Losses required in 2012.

Non-interest Income increased $292,000, or 97% in the fourth quarter 2013 versus 2012 due to the receipt of a $323,000 Bank Enterprise Award. The award resulted from the Bank's lending performance in lower income census tracts in 2013. Non-interest Income increased $443,000, or 58% for the year ended December 31, 2013 versus 2012 as a result of the receipt of a $323,000 Bank Enterprise Award and recoveries of $448,000 of interest income from prior periods upon the payoff of loans previously on nonaccrual. These amounts were partly offset by a reduction in gains on the sales of SBA loans compared to 2012. Gains on sales of SBA loans were $183,000 in 2013 and $510,000 in 2012.

Non-interest Expense for the 2013 fourth quarter was $1,386,000, compared with $1,406,000 for the 2012 fourth quarter. Increases in Salaries and Employee Benefits expense and Occupancy Expense were offset by lower Operating Expense. Non-interest Expense for the year ended December 31, 2013 was $6,053,000, compared with $5,484,000 for the 2012 fourth quarter. Salaries and Employee Benefits increased as a result of hiring additional staff and the addition of a 401(k) plan in 2013. Company contributions to the plan totaled $66,000 for the year. Stock Based Compensation Expense increased $199,000 for 2013 primarily as a result of a shareholder approved stock option program.

The efficiency ratio was 64% for the 2013 fourth quarter, compared with 82% for the same period in 2012. The efficiency ratio was 84% for the years ended December 31, 2013 and 2012.

Loans, before the allowance for loan losses, increased 16% to $112.0 million at December 31, 2013, compared to $96.5 million at December 31, 2012.

Total Deposits decreased 5% to $124.5 million at December 31 2013, down from $130.3 million at December 31, 2012. The decline was a result of the Bank reducing certain concentrations and focusing on core deposits.

Asset Quality
Nonperforming Assets (the sum of loans past due 90 days and accruing, nonaccrual loans and other real estate owned) decreased to $213,000, or 0.1% of total assets at December 31, 2013, compared with $9,531,000, or 6.2% of total assets at December 31, 2012. All of the nonaccrual loans are current in their payments. The Bank sold its only other real estate owned in February 2013 at a small loss.

The Allowance for Loan Losses was $2.5 million, or 2.2% of loans, at December 31, 2013, compared with $2.9 million, or 3.0% of loans, at December 31, 2012.

The Bank had net recoveries to average loans outstanding of .02% in 2013 and net charge-offs to average loans outstanding of .20% for the year ended December 31, 2012. Nonaccrual loans declined 96% to $213,000 as of December 31, 2013, compared to the prior year end.

Capital Resources
Total Shareholders' Equity increased to $27.4 million at December 31, 2013 from $22.6 million at December 31, 2012. The Bank's book value available to common shareholders per common share increased to $8.54 at December 31, 2013 from $6.86 at December 31, 2012.

At December 31, 2013, the Bank's Tier 1 Leverage Capital Ratio was 16.7% versus 14.9% at December 31, 2012. The Total Risk-based Capital Ratio was 21.0% as of December 31, 2013 and 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)    
 
    December 31,     December 31,     %  
    2013     2012     Change  
    Unaudited     Unaudited        
                   
Assets:                      
  Cash and Due From Banks   $ 1,678     $ 2,440     -31.2 %
  Federal Funds Sold     28,440       43,390     -34.5 %
  Interest-bearing Balances at Other Financial Institutions     7,008       7,701     -9.0 %
    Total Cash and Cash Equivalents     37,126       53,531     -30.6 %
                       
  Loans Net of Deferred Loan Fees/Costs     111,955       96,467     16.1 %
  Allowance for Loan Losses     2,491       2,869     -13.2 %
    Loans Net of Allowance for Loan Losses     109,464       93,598     17.0 %
  Premises and Equipment, net     939       1,034     -9.2 %
  Federal Home Loan Bank Stock     482       515     -6.4 %
  Other Real Estate Owned     0       3,920     -100.0 %
  Accrued Interest Receivable and Other Assets     4,915       1,497     228.3 %
                       
    Total Assets   $ 152,926     $ 154,095     -0.8 %
                       
Liabilities:                      
  Non-Interest-Bearing Demand Deposits   $ 24,352     $ 26,443     -7.9 %
                       
  Interest-Bearing Demand Deposits (NOW Deposits)     3,113       2,262     37.6 %
  Savings and Money Market     31,460       46,686     -32.6 %
  Certificates of Deposit     65,533       54,953     19.3 %
    Total Interest-bearing Deposits     100,106       103,901     -3.7 %
    Total Deposits     124,458       130,344     -4.5 %
                       
  Other Borrowings     0       0     0.0 %
  Accrued Interest Payable and Other Liabilities     1,065       1,121     -5.0 %
                       
Total Liabilities     125,523       131,465     -4.5 %
                       
Shareholders' Equity:                      
  Common Stock     27,308       27,248     0.2 %
  Additional Paid in Capital     1,910       1,717     11.2 %
  Accumulated Deficit     (5,565 )     (10,085 )   -44.8 %
  SBLF Preferred Stock     3,750       3,750     0.0 %
    Total Shareholders' Equity     27,403       22,630     21.1 %
                       
    Total Liabilities and Shareholders' Equity   $ 152,926     $ 154,095     -0.8 %
                       
    Tier 1 leverage     16.68 %     14.88 %      
    Tier 1 risk-based capital     19.76 %     19.71 %      
    Total risk-based capital     21.02 %     20.97 %      
                           
                           
 
PROAMÉRICA BANK STATEMENT OF OPERATIONS 
For the Periods Indicated 
(Dollars in thousands except per share data)   
 
    Three Months     Twelve Months  
For The Periods Ended December 31,   2013   2012   % Change     2013     2012   % Change  
     Unaudited    Unaudited          Unaudited      Unaudited      
                                       
Interest Income:                                      
  Interest and Fees on Loans   $ 1,637   $ 1,492   9.7 %   $ 6,343     $ 6,072   4.5 %
  Interest on Federal Funds Sold     18     23   -21.7 %     85       57   49.1 %
  Interest on Balances at Other Financial Institutions     10     12   -16.7 %     44       45   -2.2 %
  Dividends on FHLB and PCBB Stock     20     8   150.0 %     34       14   142.9 %
    Total Interest Income     1,685     1,535   9.8 %     6,506       6,188   5.1 %
                                       
Interest Expense:                                      
  Interest on Deposit Accounts     120     115   4.3 %     482       424   13.7 %
                                       
  Net Interest Income     1,565     1,420   10.2 %     6,024       5,764   4.5 %
                                       
Provision / (Reversal) for Loan Losses     0     0   NA       (400 )     0   NA  
                                       
  Net Interest Income After Provision     1,565     1,420   10.2 %     6,424       5,764   11.5 %
    (Reversal) for Loan Losses                                      
                                       
Non-Interest Income:                                      
  Non-Interest Income     593     301   97.0 %     1,201       758   58.4 %
                                       
Non-Interest Expense:                                      
  Salaries and Employee Benefits     872     855   2.0 %     3,712       3,364   10.3 %
  Stock Based Compensation Expense     26     12   116.7 %     240       41   485.4 %
  Occupancy Expense     161     150   7.3 %     618       566   9.2 %
  Operating Expense     327     389   -15.9 %     1,483       1,513   -2.0 %
    Total Non-Interest Expense     1,386     1,406   -1.4 %     6,053       5,484   10.4 %
                                       
  Pre-tax Income     772     315   145.1 %     1,572       1,038   51.4 %
                                       
Provision for Income Taxes     (2,949 )   1   NA       (2,948 )     1   NA  
                                       
  Net Income   $ 3,721   $ 314   1085.0 %   $ 4,520     $ 1,037   335.9 %
                                         
  Earnings per share - basic   $ 1.34   $ 0.11   1076.5 %   $ 1.64     $ 0.38   334.6 %
                                         
  Earnings per share - diluted   $ 1.32   $ 0.11   1066.1 %   $ 1.62     $ 0.37   332.0 %
                                         
                                         
 
PROAMÉRICA BANK FINANCIAL HIGHLIGHTS 
For the Periods Indicated 
(Dollars in thousands except share and per share data)    
 
    Three Months     Twelve Months  
For The Period Ended December 31,   2013   2012     % Change     2013     2012     % Change  
    Unaudited   Unaudited           Unaudited     Unaudited        
Per Share:                                          
  Net income, basic and diluted   $ 1.34   $ 0.11     1076.5 %   $ 1.64     $ 0.38     334.6 %
  Net income, diluted   $ 1.32   $ 0.11     1066.1 %   $ 1.62     $ 0.37     332.0 %
  Book value - Common   $ 8.54   $ 6.86     24.5 %                      
                                           
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 %   2,758,880     2,750,604     0.3 %
                                           
Financial Ratios:                                          
  Performance Ratios:                                          
    Return on average assets     9.90 %   0.83 %   1092.8 %     2.99 %     0.74 %   304.1 %
    Return on average common equity     70.00 %   6.65 %   952.6 %     22.91 %     5.61 %   308.4 %
    Net interest margin     4.24 %   3.89 %   9.0 %     4.04 %     4.27 %   -5.4 %
    Efficiency ratio     64.23 %   81.70 %   -21.4 %     83.78 %     84.08 %   -0.4 %
                                           
  Capital Adequacy Ratios (Period-end):                                          
      Tier 1 leverage     16.68 %   14.88 %   12.1 %                      
      Tier 1 risk-based capital     19.76 %   19.71 %   0.3 %                      
      Total risk-based capital     21.02 %   20.97 %   0.2 %                      
                                           
Asset Quality Ratios:                                          
  Allowance for loan and lease losses to:                                          
    Total loans     2.22 %   2.97 %   -25.3 %                      
    Nonaccrual loans     1171.73 %   51.14 %   2191.2 %                      
  Nonperforming assets to:                                          
    Total loans and other real estate owned     0.19 %   9.49 %   -98.0 %                      
    Total assets     0.14 %   6.19 %   -97.7 %                      
  Net charge-offs (recoveries) to average loans (annualized)     -0.01 %   -0.02 %   -50.0 %     -0.02 %     0.20 %   -110.0 %
                                           
Asset Quality Measures:                                          
  Nonaccrual loans (1)   $ 213   $ 5,611     -96.2 %                      
  Other real estate owned     0     3,920     -100.0 %                      
    Total nonperforming assets     213     9,531     -97.8 %                      
                                           
(1) Nonaccrual loans less than 30 days past due   $ 213   $ 5,611     -96.2 %