SAN LUIS OBISPO, Calif., April 17 /PRNewswire-FirstCall/ -- American Principle Bank (BULLETIN BOARD: APBA) (the "Bank") today announced financial results for the first quarter of 2009. The Bank achieved profitability during the first quarter of 2009 (its fifth full quarter of operation), earning $204 thousand. The $204 thousand in net income was equivalent to $0.05 diluted earnings per share. The first quarter earnings compared favorably to both the $151 thousand loss during the fourth quarter of 2008 (the immediately preceding quarter) and a loss of $499 thousand during the quarter ended March 31, 2008. The Bank also reported record levels of total assets ($176.3 million), net loans ($118.9 million), and deposits ($129.1 million) as of March 31, 2009. The Bank, a de novo financial institution, opened for business on October 15, 2007.
The earnings during the first quarter of 2009 were generated in part by the Bank's continued growth in loans and other interest earning assets, which led to $1.5 million in net interest income for the quarter. This level of net interest income compared favorably to $1.4 million during the fourth quarter of 2008 and $660 thousand during the first quarter of 2008. The $204 thousand in earnings during the first quarter of 2009 was achieved despite:
-- a reduction in the ratio of net interest income to average total assets from 3.85% during the fourth quarter of 2008 to 3.69% during the first quarter of 2009, which in turn resulted from a change in balance sheet mix and the placement of one loan on non-accrual status, as discussed below; -- higher charges for FDIC insurance, which stemmed from both higher insurance rates implemented for all financial institutions by the FDIC and from the increase in the Bank's deposits; and -- the Bank's increasing its ratio of allowance for loan losses to loans outstanding from 1.41% at December 31, 2008 to 1.54% at March 31, 2009.
Net loans increased from $114.9 million at December 31, 2008 to $118.9 million at March 31, 2009. The pace of loan portfolio expansion during the first quarter of 2009 slowed from recent prior quarters due to:
-- the Bank's tightening its underwriting standards in light of the continued economic recession and softness in local real estate markets; -- the Bank's decision not to originate any new construction or land loans during the first quarter of 2009 due to various factors, including inventory levels of and pricing for completed real estate available for sale (although disbursements were made for existing construction loans); and -- a number of the Bank's clients paying down debt and deleveraging as a defensive positioning during the recession.
A $2.96 million commercial loan was on non-accrual status at March 31, 2009. This loan is secured by real estate collateral in the Bank's primary market area, and is subject to personal guarantees by the principals. Other than this loan, no other loans were on non-accrual status or 30 or more days delinquent as of March 31, 2009. The Bank owned no foreclosed real estate and no repossessed assets as of March 31, 2009.
At March 31, 2009, the Bank did not have any residential one to four unit mortgages in its loan portfolio. The Bank has never conducted sub-prime lending, and does not issue credit cards. All of the Bank's securities as of March 31, 2009 were AAA rated mortgage backed securities or collateralized mortgage obligations issued and guaranteed by government Agencies.
Total assets increased from $158.8 million at December 31, 2008 to $176.3 million at March 31, 2009. Interest bearing deposits in other financial institutions rose from $104 thousand at December 31, 2008 to $6.9 million at March 31, 2009 due to:
-- the Bank's maintaining excess reserves at the Federal Reserve Bank as a higher yielding alternative to overnight federal funds sold; and -- the Bank's building additional liquidity at the end of March 2009 in anticipation of deposit withdrawals associated with client income and property tax payments during April.
Total securities available for sale increased from $35.0 million at December 31, 2008 to $45.3 million at March 31, 2009. Deposit inflows during the first quarter of 2009 that were not used to fund loans or build short term liquidity were primarily invested into LIBOR based Agency mortgage backed securities.
Net loans decreased from 72.4% of total assets at December 31, 2008 to 67.4% of total assets at March 31, 2009. Because loans are the Bank's highest yielding asset class, this change in asset mix, plus the aforementioned non-accrual loan, negatively impacted the ratio of net interest income to average total assets during the first quarter of 2009.
Deposits increased from $112.1 million at December 31, 2008 to $129.1 million at March 31, 2009. Deposit growth during the first quarter of 2009 was concentrated in noninterest-bearing demand deposit accounts ("DDA") and certificates of deposit. The rise in DDA was supported by the Bank's ongoing marketing to local businesses and professionals, certain clients' buildup of deposit balances for upcoming property and income tax payments, and increased balances by certain business clients experiencing growth. The rise in certificate of deposit balances during the first quarter of 2009 was supported by the Bank's initial product focused print advertising campaign and by customer interest in certificates of deposit as a conservative investment during a period of volatility in the stock market and real estate values.
Stockholders' equity increased from $40.1 million at December 31, 2008 to $40.6 million at March 31, 2009. This rise was generated by:
-- the net income earned for the quarter; -- capital generated through the Bank's Restricted Share Plan; and -- an increase in the accumulated other comprehensive income associated with the unrealized gain on securities available for sale. Nominal and tangible book values per share were $9.54 at March 31, 2009.
Total shares of common stock outstanding increased by 800 during the first quarter of 2009 in conjunction with the vesting of awards under the Restricted Share Plan. The Bank grants restricted share awards to employees as a means of encouraging an ownership orientation and aligning employee interests with the generation of stockholder value. In addition, during March 2009, the Board of Directors issued the initial restricted share awards to outside directors. These awards vest after one year, and are the first remuneration of any type paid to outside directors since the organization of the Bank.
Provision for loan losses was $215 thousand during the first quarter of 2009. This was a reduction from $493 thousand during the fourth quarter of 2008 and $305 thousand during the first quarter of 2008. This decreased provision was due to a slower pace of loan portfolio growth. The lower provision for loan losses during the first quarter of 2009 accounted for a majority of the increased profitability versus the fourth quarter of 2008. However, the Bank increased its ratio of allowance for loan losses to loans outstanding to 1.54% during the first quarter of 2009 due to:
-- providing reserves for the aforementioned $2.96 million non-accrual loan, which was graded "substandard" at March 31, 2009; -- the ongoing softening of values for many types of real estate in the Bank's primary market area; and -- the impacts of the continuing recession and increased unemployment on the Bank's business customers, resulting in flat to lower revenues for certain commercial entities.
Non-interest expense increased to $1.11 million during the first quarter of 2009 from $1.07 million during the fourth quarter of 2008 and $861 thousand during the first quarter of 2008. Various categories of non-interest expense continue to increase as the Bank expands its balance sheet, opens additional client accounts, and processes a higher volume of transactions. The Bank had 25 full-time equivalent employees at March 31, 2009, compared to 24 full-time equivalent employees at December 31, 2008, and 23 full-time equivalent employees at March 31, 2008. Accounting, legal, and consulting expenses increased from $99 thousand during the fourth quarter of 2008 to $115 thousand during the first quarter of 2009 primarily due to increased consultant expenses associated with new technology and product implementations and higher legal fees related to the Bank's responding to a complaint regarding alleged trademark infringement associated with the name of the Bank. The Bank continues to defend itself in this regard, with the Bank's general liability insurance carrier paying certain defense costs. The case is currently in the discovery phase, whereby the plaintiff and the Bank are exchanging information. At this time, the Bank cannot predict the outcome of this matter.
The Bank is currently evaluating sites for the planned branch office in Santa Maria. The Bank has already attracted clients from the Santa Maria area, and also has a number of shareholders from that market. The Bank is currently aiming to open the Santa Maria branch in the fourth quarter of 2009 or the first quarter of 2010, with the timing dependent upon the negotiation of an acceptable lease, the receipt of regulatory approval, and the amount of time necessary to complete tenant improvements. The Bank recently hired Michael J. Sell as a Senior Vice President and Senior Relationship Manager. Mr. Sell has many years of banking experience in the Santa Maria area.
The Bank's 2009 Annual Meeting of Shareholders will be held on Tuesday, May 26, 2009 at the Madonna Inn in San Luis Obispo. A welcome reception will commence at 5:30 PM, with the formal component of the Annual Meeting starting at 6:30 PM. All Bank shareholders are cordially invited to attend.
Commenting on the results for the first quarter of 2009, David R. Booker, the Bank's President and Chief Executive Officer, stated: "We are very pleased to have attained profitability in just our fifth full quarter of operation. Achieving this performance during an economic recession and in a challenging interest rate environment is a testament to the caliber and dedication of the Bank's employees, augmented by the strong support of our shareholders."
Mark R. Andino, the Bank's Chief Financial Officer and Chief Operating Officer, then added: "The Bank's financial progress is all the more impressive when one considers the ongoing investment in technology, products, services, and delivery channels made by the Bank. We have recently commenced installing the latest generation of online deposit (check scanning) software for our commercial clients, plan to introduce extended online transaction history access for all our clients in May 2009, and have several new products scheduled for implementation later this year. Our clients continue to comment favorably on the Bank's level of technology, often highlighting the flexibility provided by the Bank's operating platform."
Eric J. Schwefler, the Bank's Chairman of the Board, commented: "The Board of Directors continues to maintain its strong orientation toward high quality corporate governance and the generation of shareholder value. The outside directors worked for about two and one-half years without remuneration of any type through the organization, opening, and operation of the Bank. Now that the Bank has achieved profitability, the Board has decided to compensate the outside directors during 2009 exclusively with shares of the Bank's common stock. The Bank's two inside directors, who are members of the executive management team, have never been paid for their service on the Board." Mr. Schwefler then added: "We have planned an informative 2009 Annual Meeting. In addition to the formal presentations, the Bank's officers and directors will be available to meet with shareholders both during the welcome reception and following the adjournment of the Meeting. Our shareholders have been a strong source of support for the Bank, and we look forward to thanking them and sharing our vision for the forthcoming year."
The Bank's target markets are commercial enterprises, professionals, real estate investors, family business entities, and residents in San Luis Obispo County and northern Santa Barbara County. The Bank serves these markets through a customizable delivery platform that includes online deposit via scanners located at customers' facilities, remote branch deposit, and sophisticated cash management services. Clients are also served through the Bank's custom facility, which was designed to emphasize client convenience, confidentiality, and a concierge approach to conducting financial transactions. The Bank's officers are easily reached via public cell phone numbers, and the Bank maintains a 24/7 "banker on call" service for its clients.
The Bank is located at 4051 Broad Street, Suite 140, San Luis Obispo, California, near the intersection of Broad Street (Highway 227) and Tank Farm Road. The Bank's deposits are insured by the Federal Deposit Insurance Corporation ("FDIC") up to applicable legal limits. The Bank participates in the FDIC's Transaction Account Guarantee Program. Under that Program, through December 31, 2009, all non-interest bearing checking accounts, as defined under the Program, are fully guaranteed by the FDIC for the entire amount of the account. Coverage under the Program is in addition to and separate from the coverage available under the FDIC's general deposit insurance rules.
Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act. Forward-looking statements are typically identified by words or phrases such as "believe", "expect", "anticipate", "intend", "estimate", "target", "plans", "may increase", "may fluctuate", "may result in", "are projected", and similar expressions. The Bank's actual results may differ materially from those included in the forward-looking statements. These forward-looking statements involve risks and uncertainties including, but not limited to, the economic, business, and real estate market conditions in the Bank's market areas, the interest rate environment, competition, regulatory and legislative actions, the possibility that the Bank will not be successful in achieving its strategic objectives, the performance and contributions of employees and directors, and other factors. The Bank does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
This news release is available at the http://www.americanprinciplebank.com/ Internet site for no charge.
For further information contact: David R. Booker President Chief Executive Officer (805) 547 - 2811 David.Booker@americanprinciplebank.com or Mark R. Andino Chief Financial Officer Chief Operating Officer (805) 547 - 2832 Mark.Andino@americanprinciplebank.com General communication: SERVICE@AMERICANPRINCIPLEBANK.COM http://www.americanprinciplebank.com/ Phone: (805) 547 - 2800 Facsimile: (805) 547 - 2801 --- financial data follows --- AMERICAN PRINCIPLE BANK Financial Highlights Unaudited (Dollars In Thousands) March 31, December 31, 2009 2008 Financial Condition Data Assets ------ Cash and due from banks $2,253 $3,319 Federal funds sold 160 2,730 Interest bearing deposits in other financial institutions 6,903 104 Securities available for sale, at fair value: Mortgage backed securities 27,148 16,557 Collateralized mortgage obligations 18,171 18,452 Loans receivable held for investment: Residential one to four unit real estate loans -- -- Home equity lines of credit 10,336 9,415 Multifamily real estate loans 7,438 4,919 Commercial and industrial real estate loans 39,337 39,457 Construction loans 12,688 10,435 Land / lot loans 7,563 7,520 Farm real estate loans 3,601 3,600 Commercial business loans 37,246 37,235 Other loans 2,571 3,998 ----- ----- Gross loans held for investment, net of deferred fees and costs 120,780 116,579 Less: Allowance for loan losses (1,861) (1,646) ------- ------- Loans receivable held for investment, net 118,919 114,933 Investment in capital stock of the Federal Home Loan Bank, at cost 179 179 Premises and equipment, net 1,679 1,778 Accrued interest receivable 574 547 Other assets 322 245 ---- ---- Total assets $176,308 $158,844 ======== ======== Liabilities and Stockholders' Equity ------------------------------------ Deposits: Non-interest bearing demand deposits $17,148 $10,079 Interest bearing checking accounts 2,149 3,803 Savings accounts 64 116 Money market accounts 63,766 61,489 Certificates of deposit 45,963 36,652 ------ ------ Total deposits 129,090 112,139 Borrowings 5,542 5,571 Other liabilities 1,119 1,006 ----- ----- Total liabilities 135,751 118,716 ------- ------- Stockholders' equity 40,557 40,128 ------ ------ Total liabilities and stockholders' equity $176,308 $158,844 ======== ======== AMERICAN PRINCIPLE BANK Financial Highlights, Continued Unaudited (Dollars In Thousands Except Per Share Amounts) Three Three Three Months Months Months Ended Ended Ended 3/31/2009 12/31/2008 3/31/2008 Operating Data Interest and dividend income $2,123 $1,954 $872 Interest expense 614 556 212 ---- ---- ---- Net interest income before provision for loan losses 1,509 1,398 660 Provision for loan losses 215 493 305 ---- ---- ---- Net interest income after provision for loan losses 1,294 905 355 ----- --- --- Non-interest income 16 14 7 ---- ---- ---- Non-interest expense: Compensation and employee benefits 588 565 499 Accounting, legal, and consulting 115 99 72 Occupancy 125 126 132 Equipment 63 76 43 Data and item processing 49 51 36 Supplies, printing, courier, and postage 16 18 17 Regulatory assessments 53 26 6 Advertising and promotion 20 18 5 Provision for off balance sheet commitments -- 2 -- Other expenses 77 89 51 ---- ---- ---- Total non-interest expense 1,106 1,070 861 ----- ----- ---- Income (loss) before provision for income taxes 204 (151) (499) Provision for income taxes -- -- -- ---- ---- ---- Net income (loss) $204 $(151) $(499) ==== ====== ====== Weighted average shares used in basic income (loss) per share calculation 4,251,194 4,246,502 4,224,285 Basic income (loss) per share $0.05 $(0.04) $(0.12) ===== ======= ======= Weighted average shares used in diluted income (loss) per share calculation 4,251,983 4,246,502 4,224,285 Diluted income (loss) per share $0.05 $(0.04) $(0.12) ===== ======= ======= Average total assets $163,642 $145,215 $72,188 Annualized net interest income / average total assets 3.69% 3.85% 3.66% March 31, 2009 December 31, 2008 Other Information Net loans / deposits 92.12% 102.49% Allowance for loan losses / loans outstanding 1.54% 1.41% Nominal and tangible book value per share $9.54 $9.44 Shares of common stock outstanding 4,251,630 4,250,830
American Principle Bank
CONTACT: David R. Booker, President, Chief Executive Officer,
+1-805-547-2811, David.Booker@americanprinciplebank.com, or Mark R. Andino,
Chief Financial Officer, Chief Operating Officer, +1-805-547-2832,
Mark.Andino@americanprinciplebank.com, both of American Principle Bank
Web Site: http://www.americanprinciplebank.com/
