ProAmerica Bank Reports Third Quarter Net Income of $316,000

Marketwired

LOS ANGELES, CA--(Marketwired - Oct 31, 2013) - ProAmérica Bank (OTCQB: PMRA) today reported Net Income of $316,000 or 11 cents per diluted common share for the three months ended September 30, 2013. For the nine months, the Bank reported Net Income of $800,000, or 29 cents per diluted common share. Total assets increased 1% to $147.6 million at September 30, 2013, as compared to the prior year. "ProAmérica Bank continued to demonstrate good financial performance in the third quarter," stated L. Bruce Mills, Jr., President and CEO. "Asset quality is strong and the Bank is well-positioned in the event of higher interest rates," continued Mills.

"The improvement in the Los Angeles market has been beneficial to our clients and significantly contributed to our broad-based credit improvement this year. ProAmérica approaches banking as a collaborative market building effort and offers solutions-based financial products and services to help businesses grow. As a result, we continue to strengthen existing client relationships as well as add new client relationships. The Directors have worked diligently to ensure ProAmérica remains well positioned to meet the growing needs of an expanding client portfolio and to perform for our shareholders," stated Maria Contreras-Sweet, Executive Chairwoman. "As the Bank approaches its 7th Anniversary, the Directors are pleased that we have shed our de novo status, triumphed over an historic period of numerous bank failures and validated our small to medium enterprise centric business banking model."

2013 Third Quarter Highlights

  • Three-month Net Income of $316,000, compared to $285,000 in the prior year third quarter.

  • Total Assets at September 30, 2013 totaled $147.6 million, an increase of $1.5 million or 1% from September 30, 2012.

  • Total Loans at September 30, 2013 totaled $108.0 million, an increase of $2.4 million or 2% from September 30, 2012.

  • Nonperforming Assets at September 30, 2013 totaled $0.4 million, a decrease of $10.0 million or 96% from September 30, 2012.

  • Total Deposits at September 30, 2013 totaled $122.7 million, an increase of $0.1 million or less than 1% from September 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 15.6% and a Total Risk-based Capital Ratio of 20.8% at September 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 $216,000 for the third quarter of 2013, as compared to $285,000 for the same period in 2012. Adjusted income from operations was $400,000 for the nine months ended September 30, 2013, as compared to $722,000 for the same period in 2012. Management believes adjusted income from operations is a better measure of core earnings performance. Net income included reversals of the Allowance for Loans Losses of $100,000 and $400,000 in the three and nine-month periods of 2013, respectively due to strong improvement in asset quality.

For the 2013 third quarter, Net Interest Income before the Provision for Loan Losses increased $6,000 compared to the 2012 third quarter. The Net Interest Margin declined to 3.9% for the quarter ended September 30, 2013 compared to 4.2% for the same period of 2012. For the nine months ended September 30, 2013, Net Interest Income before the Provision for Loan Losses increased $115,000 compared to the same period in 2012. The Net Interest Margin declined to 4.0% for the nine-month period ended September 30, 2013 as compared to 4.4% 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. Loans are the highest earning asset of the Bank.

The Bank recorded reversals against the allowance for loan losses of $100,000 and $400,000 in the three and nine-month periods ending September 30, 2013, respectively. There were no reversals in 2012. The reversals were made as a result of significantly improved asset quality. Nonperforming assets (the sum of loans past due 90 days and accruing, nonaccrual loans and other real estate owned) declined 96% to $0.4 million as of September 30, 2013, compared to $10.4 million September 30, 2012.

Noninterest Income declined $24,000, or 19% in the third quarter 2013 versus the third quarter of 2012 primarily due to lower sales of SBA loans. Noninterest Income increased $152,000, or 33% for the nine months ended September 30, 2013 versus the same period in 2012 primarily as a result of receiving prior years' interest income of $260,000 on nonaccrual loans that were paid off in the second quarter of 2013, partially offset by a $32,000 loss on the sale of other real estate owned and lower SBA loan sales.

Noninterest Expense for the third quarter 2013 was $1,351,000, compared with $1,300,000 for the 2012 third quarter. Increases 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 a shareholder approved stock option program. The efficiency ratio was 86.2% for the 2013 third quarter, compared with 82.0% for the same period in 2012. Noninterest Expense for the nine months ended September 30, 2013 was $4,667,000, compared with $4,078,000 for the same period in 2012. Increases in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary 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 92.1% for the 2013 nine month period, compared with 85.0% for the same period last year.

Loans, before the allowance for loan losses, increased 2% to $108.0 million at September 30, 2013 compared to $105.7 million at September 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 less than 1% to $122.7 million at September 30, 2013, up from $122.6 million at September 30, 2012. A number of the Bank's larger depositors are required by law to have their deposits fully insured. The demise of the U.S. Treasury's Transaction Account Guarantee Program on December 31, 2012 resulted in the loss of unlimited FDIC insurance on demand deposit accounts. In December 2012, clients requiring insured deposits transferred approximately $30 million from demand deposit accounts to reciprocal money market and certificate of deposit products at the Bank, which allow for full FDIC insurance. This is the reason for the decline in Noninterest-bearing Demand Deposits and corresponding increases in Savings and Money Market and Certificates of Deposit balances for September 30, 2013 as compared to September 30, 2012.

Asset Quality
Nonperforming Assets decreased to 0.3% of total assets at September 30, 2013, compared with 7.1% at September 30, 2012. The Allowance for Loan Losses was $2.5 million, or 2.3% of loans, at September 30, 2013, compared with $2.9 million, or 2.7% of loans, at September 30, 2012. Net recoveries of loans previously charged off as a percentage of loans were .02% for the 2013 third quarter as compared to 0.3% for the 2012 third quarter.

Capital Resources
Total Shareholders' Equity increased to $23.7 million at September 30, 2013 from $22.3 million at September 30, 2012. The Bank's book value available to common shareholders per common share increased to $7.19 at September 30, 2013 from $6.75 at September 30, 2012.

At September 30, 2013, the Bank's Tier 1 Leverage Capital Ratio was 15.6% versus 15.4% at September 30, 2012. The Total Risk-based Capital Ratio was 20.8% as of September 30, 2013, as compared to 20.1% at September 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)  
                   
                   
                   
    September 30,     September 30,     %  
    2013     2012     Change  
    Unaudited     Unaudited        
                       
Assets:                      
  Cash and Due From Banks   $ 3,565     $ 2,198     62.2 %
  Federal Funds Sold     26,875       26,165     2.7 %
  Interest-bearing Balances at Other Financial Institutions     8,468       7,693     10.1 %
    Total Cash and Cash Equivalents     38,908       36,056     7.9 %
                         
  Loans Net of Deferred Loan Fees/Costs     108,041       105,664     2.2 %
  Allowance for Loan Losses     2,487       2,866     -13.2 %
    Loans Net of Allowance for Loan Losses     105,554       102,798     2.7 %
  Premises and Equipment, net     957       1,053     -9.1 %
  Federal Home Loan Bank Stock     482       515     -6.4 %
  Other Real Estate Owned     0       3,911     -100.0 %
  Accrued Interest Receivable and Other Assets     1,661       1,713     -3.0 %
                         
    Total Assets   $ 147,562     $ 146,046     1.0 %
                       
Liabilities:                      
  Non-Interest-Bearing Demand Deposits   $ 28,569     $ 49,336     -42.1 %
                         
  Interest-Bearing Demand Deposits (NOW Deposits)     3,134       2,425     29.2 %
  Savings and Money Market     28,832       23,301     23.7 %
  Certificates of Deposit     62,183       47,544     30.8 %
    Total Interest-bearing Deposits     94,149       73,270     28.5 %
    Total Deposits     122,718       122,606     0.1 %
                         
  Other Borrowings     0       0     0.0 %
  Accrued Interest Payable and Other Liabilities     1,177       1,127     4.4 %
                       
Total Liabilities     123,895       123,733     0.1 %
                       
Shareholders' Equity:                      
  Common Stock     27,308       27,248     0.2 %
  Additional Paid in Capital     1,894       1,752     8.1 %
  Accumulated Deficit     (9,285 )     (10,437 )   -11.0 %
  SBLF Preferred Stock     3,750       3,750     0.0 %
    Total Shareholders' Equity     23,667       22,313     6.1 %
                       
    Total Liabilities and Shareholders' Equity   $ 147,562     $ 146,046     1.0 %
                       
    Tier 1 leverage     15.62 %     15.39 %      
    Tier 1 risk-based capital     19.54 %     18.84 %      
    Total risk-based capital     20.80 %     20.11 %      
                           
                           
       
PROAMÉRICA BANK STATEMENT OF OPERATIONS  
For the Periods Indicated  
(Dollars in thousands except per share data)  
                             
                             
    Three Months     Nine Months  
For The Periods Ended September 30,   2013   2012   % Change     2013   2012   % Change  
    Unaudited   Unaudited         Unaudited   Unaudited      
                                     
Interest Income:                                    
  Interest and Fees on Loans   $ 1,544   $ 1,542   0.1 %   $ 4,705   $ 4,580   2.7 %
  Interest on Federal Funds Sold     21     17   23.5 %     67     34   97.1 %
  Interest on Balances at Other Financial Institutions     12     9   33.3 %     34     34   0.0 %
  Dividends on FHLB and PCBB Stock     6     1   500.0 %     14     5   180.0 %
    Total Interest Income     1,583     1,569   0.9 %     4,820     4,653   3.6 %
                                     
Interest Expense:                                    
  Interest on Deposit Accounts     118     110   7.3 %     361     309   16.8 %
                                     
  Net Interest Income     1,465     1,459   0.4 %     4,459     4,344   2.6 %
                                     
Provision / (Reversal) for Loan Losses     (100 )   0   NA       (400 )   0   NA  
                                     
    Net Interest Income After Provision (Reversal) for Loan Losses     1,565     1,459   7.3 %     4,859     4,344   11.9 %
                                     
Non-Interest Income:                                    
    Non-Interest Income     102     126   -19.0 %     608     456   33.3 %
                                     
Non-Interest Expense:                                    
  Salaries and Employee Benefits     835     815   2.5 %     2,840     2,509   13.2 %
  Stock Based Compensation Expense     58     11   427.3 %     214     29   637.9 %
  Occupancy Expense     151     145   4.1 %     457     416   9.9 %
  Operating Expense     307     329   -6.7 %     1,156     1,124   2.8 %
    Total Non-Interest Expense     1,351     1,300   3.9 %     4,667     4,078   14.4 %
                                     
  Pre-tax Income     316     285   10.9 %     800     722   10.8 %
                                     
Provision for Income Taxes     0     0   NA       0     0   NA  
                                     
  Net Income   $ 316   $ 285   10.9 %   $ 800   $ 722   10.8 %
                                     
  Earnings per share - basic and diluted earnings per share   $ 0.11   $ 0.10   10.4 %   $ 0.29   $ 0.26   10.6 %
                                     
                                     
         
PROAMÉRICA BANK FINANCIAL HIGHLIGHTS  
For the Periods Indicated  
(Dollars in thousands except share and per share data)  
                                 
    Three Months     Nine Months  
For The Period Ended September 30,   2013   2012     % Change     2013   2012     % Change  
    Unaudited   Unaudited           Unaudited   Unaudited        
Per Share:                                        
  Net income, basic and diluted   $ 0.11   $ 0.10     10.4 %   $ 0.29   $ 0.26     10.6 %
  Book value - Common   $ 7.19   $ 6.75     6.5 %                    
                                         
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   2,762,522   2,751,000     0.4 %   2,754,841   2,750,473     0.2 %
                                         
Financial Ratios:                                        
  Performance Ratios:                                        
    Return on average assets     0.84 %   0.79 %   6.3 %     0.70 %   0.71 %   -1.4 %
    Return on average common equity     6.44 %   6.13 %   5.1 %     5.55 %   5.25 %   5.7 %
    Net interest margin     3.91 %   4.18 %   -6.5 %     3.97 %   4.41 %   -10.0 %
    Efficiency ratio     86.22 %   82.02 %   5.1 %     92.11 %   84.96 %   8.4 %
                                           
  Capital Adequacy Ratios (Period-end):                                        
    Tier 1 leverage     15.62 %   15.39 %   1.5 %                    
    Tier 1 risk-based capital     19.54 %   18.84 %   3.7 %                    
    Total risk-based capital     20.80 %   20.11 %   3.4 %                    
                                         
Asset Quality Ratios:                                        
  Allowance for loan and lease losses to:                                        
    Total loans     2.30 %   2.71 %   -15.1 %                    
    Nonaccrual loans     643.89 %   44.36 %   1351.5 %                    
  Nonperforming assets to:                                        
    Total loans and other real estate owned     0.36 %   9.46 %   -96.2 %                    
    Total assets     0.26 %   7.10 %   -96.3 %                    
  Net charge-offs (recoveries) to average loans (annualized)     -0.02 %   -0.03 %   -33.3 %     -0.02 %   -0.27 %   -92.6 %
                                         
Asset Quality Measures:                                        
  Nonaccrual loans (1)   $ 386   $ 6,460     -94.0 %                    
  Other real estate owned     0     3,911     -100.0 %                    
    Total nonperforming assets     386     10,371     -96.3 %                    
                                         
  (1) Nonaccrual loans less than 30 days past due   $ 386   $ 6,460     -94.0 %                    
                                           
Contact:

ProAmerica Bank
Maria Contreras-Sweet
Executive Chairwoman
213.787.2802

L. Bruce Mills, Jr.
CEO / President
213.787.2803

Frank E. Smith
CFO
213.787.2804

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