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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 %