CINCINNATI, May 10 /PRNewswire-FirstCall/ -- First Franklin Corporation , the parent of Franklin Savings and Loan Company, today reported a net loss of $82,000, or 5 cents per share, for the first quarter of 2010, compared with net income of $260,000, or 15 cents per share, in last year's first quarter.
John J. Kuntz, Chairman, President and Chief Executive Officer, said, "Our efforts to create a more robust community bank continue to be partially masked by the lingering effects of this recession. In particular, this quarter we recorded a $177,000 increase in the provision for loan losses, which is the way banks fund their potential loan write downs. Two expense items largely driven by the foundering economy-- a $153,000 rise in FDIC premiums and a $48,000 increase in costs associated with maintaining the larger portfolio of real estate now owned by the bank - also contributed to the loss for the quarter. We expect loan loss provisions and REO expense to continue for the foreseeable future as the economy struggles to recover."
Kuntz noted, "Looking beyond the recession-related factors, we remain generally pleased with our progress on two successful programs. First, we saw a continued contribution from the team brought on board during the first quarter of 2009 to enhance production of residential and commercial mortgages. Selling the residential mortgages, including servicing rights, in the secondary market generated $445,000 in noninterest income in this year's first quarter.
"That program continues to be profitable even though the fee income contribution was down $169,000 from last year's first quarter and expenses reflected a full quarter of staffing. Origination volume fluctuates with market interest rates, and lower rates in last year's first quarter drove a higher volume of refinancing compared to the first quarter of 2010. The rise in commission and other expenses to fund this valuable operation accounted for almost 30% of the overall increase in non-interest expense in the period, largely because the new loan originators were on board for a full quarter. The initial group of originators joined our organization in the middle of last year's first quarter, and we have also added to that staff over the course of the past 12 months."
Kuntz added, "Second, we continue to invest in our long-standing campaign to increase lower-cost checking deposits. The increase in transaction accounts and the decrease in more expensive certificates of deposit were the primary drivers of the $145,000 increase in net interest income before the provision for loan losses over last year's first quarter."
Kuntz said, "My first month at the helm of First Franklin has been busy and productive. My charge from our board is very clear. We must improve the bank's asset quality, restore profitability and pay dividends to our shareholders."
First-Quarter Results
For the first quarter, net interest income, before the provision for loan losses, was $1.72 million, up from $1.58 million for the first quarter of 2009. The improvement was primarily the result of lower interest expense on deposits reflecting both lower interest rates and lower average balances. Management's continued effort to build core checking deposits is helping to reduce interest expense. In addition, the emphasis on loan originations and subsequent sales is reducing reliance on higher-priced certificates of deposit as a funding source.
The provision for loan losses rose to $353,000 in the first quarter of 2010, from $176,000 in the first quarter of 2009. Non-performing loans (non-accruing loans and accruing loans delinquent 90 days or more) were $9.48 million, or 4.02% of total loans at March 31, 2010, compared to $9.24 million, or 3.79% of total loans at December 31, 2009. Net charge-offs for the current period were $437,000, or 0.18% of average loans, primarily due to a $424,000 charge-off for one commercial property, compared with $452,000, or 0.17% of average loans, in last year's first quarter.
Noninterest income for the quarter ended March 31, 2010, was $962,000 compared to $1.00 million for the same quarter in 2009, largely because of lower gains on the sale of loans. Noninterest expenses were $2.48 million for the current quarter compared to $2.02 million for the quarter ended March 31, 2009, for reasons discussed previously.
Capital Position
At March 31, 2010, total stockholders' equity was $22.28 million, or 7.73% of assets, up slightly from $22.21 million, or 7.36% percent of assets, at year-end 2009. At March 31, 2010, book value per share was $13.25 compared to $13.21 per share at December 31, 2009. At March 31, 2010, the company's risk-based capital ratio was 11.67%, up modestly from year-end.
Kuntz noted, "Franklin is considered 'well capitalized' under federal regulatory standards and the regulators have provided us with no specific instructions to raise equity capital. As we are reminded in our regular interactions with the regulators, the focus on capital adequacy is a familiar theme to all financial institutions in the current economic environment. Like many financial institutions, we are pursuing strategies to enhance our regulatory capital ratios relative to our risk profile."
Conclusion
Kuntz concluded, "First Franklin has always been about providing long-term value to shareholders. We have served our community well for 126 years. Since going public in 1987, we have grown to $288 million in assets, expanded our products and services to meet our customers' needs."
About First Franklin Corporation: First Franklin Corporation is a savings and loan holding company that was incorporated under the laws of the State of Delaware in September 1987. It owns all of the outstanding common stock of The Franklin Savings and Loan Company. Additional information about First Franklin and Franklin Savings can be found on the company's Web site: http://www.franklinsavings.com/.
Forward-Looking Statements: Statements included in this document which are not historical or current facts are "forward-looking statements" made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, and are subject to certain risks and uncertainties that could cause actual results to differ materially from historical results. Such statements may be identified by the use of the words "may", "anticipates", "expects", "hopes", "believes", "plans", "intends" and similar expressions. Factors that could cause financial performance to differ materially from that expressed in any forward-looking statement include, but are not limited to, credit risk, interest rate risk, competition, changes in the regulatory environment and changes in general and local business and economic trends.
FIRST FRANKLIN CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in thousands) ASSETS March. 31, Dec. 31, 2010 2009 ----------- --------- (Unaudited) Cash, including certificates of deposit and other interest-earning deposits of $100 at 03/31/10 and $100 at 12/31/09 $3,364 $6,875 Investment securities: Securities available-for-sale, at market value (amortized cost of $17,082 at 03/31/10 and $20,185 at 12/31/09) 17,070 19,949 Mortgage-backed securities: Securities available-for-sale, at market value (amortized cost of $2,347 at 03/31/10 and $2,731 at 12/31/09) 2,418 2,809 Securities held-to-maturity, at amortized cost (market value of $3,894 at 03/31/10 and $4,155 at 12/31/09) 3,709 3,989 Loans held for sale 7,369 7,552 Loans receivable, net 228,661 236,085 Investment in Federal Home Loan Bank of Cincinnati stock, at cost 4,991 4,991 Real estate owned, net 3,045 2,792 Accrued interest receivable 1,183 1,135 Property and equipment, net 3,398 3,448 Bank owned life insurance 6,037 5,983 Other assets 6,748 6,112 ----- ----- Total assets $287,993 $301,720 LIABILITIES Deposits $230,021 $244,010 Borrowings 33,083 32,419 Advances by borrowers for taxes and insurance 1,502 2,160 Other liabilities 971 786 --- --- Total liabilities 265,577 279,375 ------- ------- Minority interest in consolidated subsidiary 140 140 --- --- STOCKHOLDERS' EQUITY Preferred stock -$.01 par value, 500,000 shares authorized, none issued and outstanding - - Common stock -$.01 par value, 2,500,000 shares authorized, 2,010,867 shares issued at 03/31/10 and 12/31/09 13 13 Additional paid-in capital 6,189 6,189 Treasury stock, at cost -330,183 shares at 03/31/10 and 12/31/09 (3,270) (3,270) Retained earnings, substantially restricted 19,296 19,378 Accumulated other comprehensive income: Unrealized gain (loss) on available-for- sale securities, net of taxes of 17 at 03/31/10 and $(48) at 12/31/09 48 (105) --- ---- Total stockholders' equity 22,276 22,205 ------ ------ $287,993 $301,720 FIRST FRANKLIN CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share data) For the three months ended March March 31, 31,2010 2009 -------- ---------- (Unaudited) (Unaudited) Interest income: Loans receivable $3,212 $3,716 Mortgage-backed securities 77 102 Investments 232 234 --- --- 3,521 4,052 ----- ----- Interest expense: Deposits 1,433 1,863 Borrowings 367 613 --- --- 1,800 2,476 ----- ----- Net interest income 1,721 1,576 Provision for loan losses 353 176 --- --- Net interest income after provision for loan losses 1,368 1,400 Noninterest income: Gain on loans sold 445 614 Gain on sale of investments 21 1 Service fees on NOW accounts 205 195 Other income 291 193 --- --- 962 1,003 --- ----- Noninterest expense: Salaries and employee benefits 1,031 943 Occupancy 286 273 Federal deposit insurance premiums 163 10 Advertising 45 22 Service bureau 131 161 Other 828 608 2,484 2,017 ----- ----- Income (loss) before federal income taxes (154) 386 Provision (benefit) for federal income taxes (72) 126 --- --- Net income (loss) $(82) $260 ==== ==== Retained Earnings-Beginning of period $19,378 $20,919 Net Income (loss) (82) 260 Retained Earnings-end of period $19,296 $21,179 ======= ======= Net income (loss) per common share: Basic $(0.05) $0.15 Diluted $(0.05) $0.15
First Franklin Corporation
CONTACT: John J. Kuntz, +1-513-469-5352, jkuntz@franklinsavings.com
Web Site: http://www.franklinsavings.com/
