SAN LUIS OBISPO, Calif., July 19, 2012 /PRNewswire/ --Founders Community Bank, a wholly-owned subsidiary of Founders Bancorp (OTCBB:FBCP) today reported net income of $163 thousand for the three months ended June 30, 2012, up 220 percent from $51 thousand in net income for the quarter ended June 30, 2011. Net income for the six months ended June 30, 2012 was $352 thousand versus $137 thousand for the six months ended June 30, 2011, an increase of 157 percent.
"In July 2011 Founders Bancorp secured $4.2 million in funding from the U. S. Treasury Department's Small Business Lending Fund. Of that amount, $3.76 million was subsequently down-streamed from the Bancorp to the Bank to support organic growth. That action was followed by the opening of our Small Business Lending Center in Atascadero, CA in December 2011 to better serve the credit needs of northern San Luis Obispo County. The opening of the Small Business Lending Center has proven to be a positive strategic move for the Bank as loan originations have increased. At June 30, 2012 the Bank reported total loans of $98.4 million versus $84.1 million at June 30, 2011, an increase of $14.3 million or 17 percent," said Chief Executive Officer Thomas J. Sherman.
"This loan growth, when combined with continuing growth in non-interest bearing deposits has resulted in a higher net interest margin and increased net interest income. Non-interest bearing deposits grew $9.1 million, going from $39.4 million at June 30, 2011 to $48.5 million at June 30, 2012, an increase of 23 percent. Non-interest bearing deposits now represent 43.4 percent of the Bank's total deposits. As a result, net interest income for the six months ended June 30, 2012 was $2.8 million versus $2.4 million for the same period in 2011, an increase of $405 thousand."
"Credit quality also continued to remain strong in the second quarter of 2012 with no loans past due more than 30 days, and only one loan on non-accrual in an amount of $48 thousand which was fully covered by the guarantee of the U.S. Small Business Administration. Additionally, Other Real Estate Owned totaled $754 thousand at June 30, 2012, down from $1.7 million at June 30, 2011," said Sherman.
The Board of Directors was also pleased to announce that on July 5, 2012, the Bank opened a new full service branch at 310 Morro Bay Boulevard, Morro Bay, CA. The branch is managed by long-time Morro Bay native son Alan Tognazzini. Tognazzini has worked in the local community banking arena for over 45 years and has been on the Founders team since our opening in 2005. The new Morro Bay branch offers a full range of services including loan generation, deposit acceptance, internet banking, ATM, safe deposit boxes and an array of other financial services. In addition this office will be the first Founders branch to offer drive-up service to deposit customers.
Second Quarter 2012 Highlights
(at or for the quarter ended June 30, 2012, compared to June 30, 2011 unless otherwise noted)
- Net income grew by $112 thousand in the second quarter 2012 to $163 thousand or 220 percent over the same period in 2011.
- Net income before Provision for Income Tax Expense grew by $212 thousand in the second quarter 2012 to $283 thousand or 299 percent over the first quarter 2011.
- Total interest income for the quarter increased to $1.5 million, up $178 thousand or 13 percent from the second quarter 2011 primarily due to organic loan growth.
- Net interest margin was 4.77 percent in the second quarter 2012 up from 4.52 percent in the second quarter 2011, due largely to the impact of loan growth and decreased cost of deposits.
- Total asset growth of $13 million or 11.5 percent from June 30, 2011.
- Total loans grew to $98 million, a $14 million or 17 percent increase from June 30, 2011.
- Continued strong loan quality with net recoveries of $1 thousand for the six months ending June 30, 2012, versus net charge-offs of $31 thousand for the six months ending June 30, 2011.
- Total deposits grew to $112 million, a $8.7 million or 8.4 percent increase from June 30, 2011.
- Noninterest bearing deposits increased to $48.5 million or 43.4 percent of total deposits at June 30, 2012. Noninterest bearing deposits grew $9.2 million or 23.3 percent from June 30, 2011.
- Cost of deposits declined to 0.25 percent versus 0.45 percent at June 30, 2011. Interest expense fell to $68 thousand for the second quarter 2012 versus $116 thousand in the second quarter of June 30, 2011, a decline of 41.4 percent.
- Capital Ratios continued to exceed all regulatory requirements to be "well-capitalized", the highest regulatory category:
June 30, 2012 | Minimum Capital to be | Founders |
Considered | Community | |
"Well Capitalized" | Bank | |
Total Risk-Based Capital Ratio | 10.0 % | 16.22 % |
Tier 1 Risk-Based Capital Ratio | 6.0 % | 14.96 % |
Tier 1 Leverage Capital Ratio | 5.0 % | 12.18 % |
Second Quarter 2012 Results
Net Interest Income
Net interest income after provision for loan losses for the quarter ended June 30, 2012 was $1.3 million which represents an increase of $200 thousand or 18.6 percent when compared to the second quarter 2011. Interest expense fell to $68 thousand for the second quarter 2012 versus $116 thousand in the second quarter of June 2011, representing a 41.4 percent decrease in interest expense. The Bank recorded a $163 thousand provision for loan losses in the second quarter 2012 compared to $137 thousand in the second quarter 2011.
Significant loan growth during the quarter ending June 30, 2012 was a direct result of new relationships that were developed at the Bank's new Small Business Lending Center, located at 6100 El Camino Real in Atascadero, CA. The Small Business Lending Center opened in December 2011 and has been focused on providing lending opportunities for local professionals, entrepreneurs, and family-owned businesses in northern San Luis Obispo County.
Non-Interest Income
Non-interest income for the quarter ended June 30, 2012 was $63 thousand as compared to only $9 thousand for the three months ending June 30, 2011.
Non-Interest Expense
Staffing costs increased in the second quarter due to annual cost of living increases for non-officer staff as well as increased payroll expense as the Bank prepared for the anticipated opening of its new full-service branch in Morro Bay in July 2012. During the quarter ending June 30, 2012, salary and related benefit costs were $653 thousand versus $604 thousand for the period ending June 30, 2011. Legal and professional expenses were $33 thousand in the quarter ending June 30, 2012 as compared to $56 thousand in the quarter ending June 30, 2011.
Assets
Total assets at June 30, 2012 were $127.2 million, up $13.1 million or 11.5 percent from the second quarter of 2011. The majority of this deposit growth was realized from an increase in core deposits including non-interest bearing demand ($9.2 million, or 23.3%), savings & NOW deposits (3.1 million or 21.9%), and money market deposits ($1.1 million or 6.3%). Non-core certificates of deposit fell $4.7 million or approximately 14.4 percent during the same 12-month period.
The Bank had no outstanding borrowings at either June 30, 2012 or June 30, 2011.
Loans
Loans at June 30, 2012 were $98.4 million, an increase of $14.3 million or 17 percent from the second quarter of 2011. This growth was spurred by organic loan origination and not from purchased loan participations.
Overall credit quality remained strong at June 30, 2012 with only one loan for $48 thousand on non-accrual. This non-accrual loan is fully guaranteed by the US Small Business Administration and will be removed from the Bank's books with no additional loss anticipated. During the period of June 30, 2011 through June 30, 2012, the Bank reduced Other Real Estate Owned (OREO) by $905 thousand to $754 thousand. This represents a 55 percent decrease in OREO from June 30, 2011 to June 30, 2012. In addition, as of June 30, 2012 the Bank had no impaired loans as defined by the Financial Accounting Standards Board.
The Bank's loan to deposit ratio improved for the quarter ended June 30, 2012 to 88 percent compared to 81 percent in the quarter ended June 30, 2011.
Asset Quality and Allowance for Loan and Lease Loss
The Allowance for Loan and Lease Loss (ALLL) as of June 30, 2012 was $1.6 million, or 1.7% of total loans, as compared to $1.5 million, or 1.8% of total loans, at June 30, 2011. While the ALLL has increased, its percentage of the total loan portfolio has decreased. This is due to improved credit quality within the portfolio. As of June 30, 2012 the Bank had $48 thousand in classified credits as compared to $658 thousand as of June 30, 2011.
Other Real Estate Owned
The balance of Other Real Estate Owned (OREO) at June 30, 2012 was $754 thousand as compared to $1.7 million at June 30, 2011. The Bank's current OREO property consists of three vacant land parcels. These parcels include four contiguous commercial lots in Morro Bay, a twelve-acre parcel in Templeton and a 0.75 acre parcel in Buellton. While the Bank has seen a slight increase in local real estate sales activity, movement in vacant land has not materially increased.
Deposits
Second quarter 2012 deposits grew to $112 million, an increase of $8.7 million or 8.4 percent from the same period of 2011.
The deposit portfolio continues to undergo a strategic shift as noninterest bearing demand deposits have grown and more costly time certificates of deposit have been reinvested elsewhere. This shift in the make-up of the deposit portfolio is a result of management's concerted efforts to reduce the Bank's cost of funds.
The following chart represents the shift in the deposit portfolio mix at the end of the second quarter 2012 versus the second quarter ended June 30, 2011:
June 30, 2012 ($000's) | June 30, 2011 ($000's) | |
Non-interest-bearing demand deposits | $ 48,540 | $ 39,377 |
Savings/NOW deposits | 17,094 | 14,025 |
Money market deposits | 18,689 | 17,586 |
Certificates of deposit | 27,646 | 32,306 |
Total Interest Bearing Deposits | 63,429 | 63,917 |
Total Deposits | $ 111,969 | $ 103,294 |
Provision for Income Tax Expense
The Bank became fully taxable in 2012. A provision for income tax expense of $120 thousand was recognized in the second quarter 2012 versus a provision of only $20 thousand in the second quarter 2011 as a result of increased profitability.
About the Bank
Founders Community Bank opened for business on May 5, 2005 and on July 5, 2007 the Bank became a wholly-owned subsidiary of Founders Bancorp. The Bank has two San Luis Obispo locations: the Main Office is located at 237 Higuera Street while the Downtown Office is located at 863 Marsh Street. There is also a Small Business Lending Center at 6100 El Camino Real, Atascadero, and a new full service branch at 310 Morro Bay Boulevard, Morro Bay, CA.
For additional information please review the Bank's website at www.fcbslo.com.
Founders Community Bank - Built on a foundation of success
Forward-Looking Statement Disclaimer -
This release may contain forward-looking statements that are subject to risks and uncertainties. Such risks and uncertainties may include but are not necessarily limited to the Company's ability to sustain dividend payments, fluctuations in interest rates, monetary policy established by the Federal Reserve, inflation, government regulations, general economic conditions, and competition within the business areas in which the Company is conducting its operations, including the real estate market in California, the ability to recognize identified cost savings, and other factors beyond the Company's control. Such risks and uncertainties could cause results for subsequent interim periods or for the entire year to differ materially from those indicated. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. The Company undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.
FOUNDERS COMMUNITY BANK | ||||||||
BALANCE SHEET | ||||||||
(Dollar in thousands) | ||||||||
June 30, | March 31, | December 31, | June 30, | |||||
2012 | 2012 | 2011 | 2011 | |||||
Unaudited | Unaudited | Unaudited | Unaudited | |||||
Assets: | ||||||||
Cash and due from banks | $ | 2,415 | $ | 2,552 | $ | 2,765 | $ | 2,424 |
Interest earning deposits in other financial | 8,590 | 13,196 | 15,066 | 14,327 | ||||
institutions | ||||||||
Total Cash and Cash Equivalents | 11,005 | 15,748 | 17,831 | 16,751 | ||||
Certificates of deposit in financial institutions | 14,130 | 13,977 | 14,221 | 6,622 | ||||
Investment securities | 214 | 214 | 1,000 | 2,634 | ||||
Fed Funds Sold | 595 | 700 | 710 | 916 | ||||
Loans net of unearned income | 98,397 | 87,112 | 86,322 | 84,130 | ||||
Allowance for loan losses | 1,636 | 1,481 | 1,439 | 1,528 | ||||
Net loans | 96,761 | 85,631 | 84,883 | 82,602 | ||||
Premises and equipment, net | 1,792 | 1,786 | 1,836 | 1,206 | ||||
Deferred tax assets | 765 | 685 | 692 | 533 | ||||
Other real estate owned | 754 | 764 | 764 | 1,659 | ||||
Accrued interest receivable and other assets | 1,164 | 1,191 | 1,446 | 1,147 | ||||
Total Assets | $ 127,180 | $ 120,696 | $ 123,383 | $ 114,070 | ||||
Liabilities: | ||||||||
Non-interest-bearing demand deposits | $ 48,540 | $ 44,200 | $ 45,179 | $ 39,377 | ||||
Savings and NOW deposits | 17,094 | 17,275 | 15,464 | 14,025 | ||||
Money market deposits | 18,689 | 17,678 | 19,134 | 17,586 | ||||
Certificates of deposit | 27,646 | 26,491 | 28,760 | 32,306 | ||||
Total Interest Bearing Deposits | 63,429 | 61,444 | 63,358 | 63,917 | ||||
Total Deposits | 111,969 | 105,644 | 108,537 | 103,294 | ||||
Accrued interest payable and other liabilities | 128 | 119 | 89 | 125 | ||||
Total Liabilities | 112,097 | 105,763 | 108,626 | 103,419 | ||||
Shareholders' Equity | ||||||||
Preferred stock and related surplus | 3,760 | 3,760 | 3,760 | - | ||||
Common Stock | 11,159 | 11,159 | 11,159 | 11,159 | ||||
Additional paid in capital | 611 | 601 | 588 | 541 | ||||
Dividends paid - SBLF | (89) | (66) | (40) | |||||
Prior year accumulated deficit | (710) | (710) | (1,191) | (1,191) | ||||
Current year-to-date income (loss) | 352 | 189 | 481 | 136 | ||||
Accumulated other comprehensive income (loss) | - | - | - | 6 | ||||
Total Shareholders' Equity | 15,083 | 14,933 | 14,757 | 10,651 | ||||
Total Liabilities & Shareholders' Equity | $ 127,180 | $ 120,696 | $ 123,383 | $ 114,070 | ||||
FOUNDERS COMMUNITY BANK | ||||||||||||
STATEMENTS OF INCOME | ||||||||||||
For the Three Months Ended June 30, 2012 and June 30, 2011 | ||||||||||||
(Dollar in thousands except per share data) | ||||||||||||
June 30, | June 30, | |||||||||||
2012 | 2011 | |||||||||||
Unaudited | Unaudited | |||||||||||
Interest Income: | ||||||||||||
Interest and fees on loans | $ 1,470 | $ 1,289 | ||||||||||
Interest on investment securities | 1 | 17 | ||||||||||
Interest on interest bearing deposits in other financial institutions | 37 | 24 | ||||||||||
Total Interest Income | 1,508 | 1,330 | ||||||||||
Interest Expense: | ||||||||||||
Interest on savings and NOW deposits | 3 | 3 | ||||||||||
Interest on money market deposits | 19 | 22 | ||||||||||
Interest on certificates of deposit | 46 | 91 | ||||||||||
Total Interest Expense | 68 | 116 | ||||||||||
Net Interest Income | 1,440 | 1,214 | ||||||||||
Provision for loan losses | 163 | 137 | ||||||||||
Net Interest Income After Provision for Loan Losses | 1,277 | 1,077 | ||||||||||
Non-Interest Income: | ||||||||||||
Gain on sale of securities, net | - | - | ||||||||||
Gain(loss) on sale of OREO, net | - | (44) | ||||||||||
Gain(loss) on sale of other assets, net | - | - | ||||||||||
Deposit account service charge income | 22 | 24 | ||||||||||
Other non-interest income | 41 | 29 | ||||||||||
Total Non-Interest Income | 63 | 9 | ||||||||||
Non-Interest Expense: | ||||||||||||
Salaries and employee benefits | 653 | 604 | ||||||||||
Occupancy | 142 | 142 | ||||||||||
Data processing and software | 99 | 92 | ||||||||||
Insurance | 9 | 7 | ||||||||||
Legal and professional | 33 | 56 | ||||||||||
Advertising and marketing | 21 | 6 | ||||||||||
FDIC deposit assessment | 18 | 30 | ||||||||||
Office supplies | 8 | 7 | ||||||||||
Other operating expenses | 74 | 71 | ||||||||||
Total Non-Interest Expense | 1,057 | 1,015 | ||||||||||
Net Income before Provision for Income Tax Expense | 283 | 71 | ||||||||||
Provision for income tax expense | 120 | 20 | ||||||||||
Net Income | $ 163 | $ 51 | ||||||||||
Basic earnings per share | $ 0.14 | $ 0.05 | ||||||||||
Average shares outstanding | 1,129,300 | 1,124,500 | ||||||||||
FOUNDERS COMMUNITY BANK | |||||||
STATEMENTS OF INCOME | |||||||
For the Six Months Ended June 30, 2012 and June 30, 2011 | |||||||
(Dollar in thousands except per share data) | |||||||
June 30, | June 30, | ||||||
2012 | 2011 | ||||||
Unaudited | Unaudited | ||||||
Interest Income: | |||||||
Interest and fees on loans | $ | 2,863 | $ | 2,553 | |||
Interest on investment securities | $ | 3 | $ | 36 | |||
Interest on interest bearing deposits in other financial institutions | $ | 78 | $ | 43 | |||
Total Interest Income | 2,944 | 2,632 | |||||
Interest Expense: | |||||||
Interest on savings and NOW deposits | 6 | 7 | |||||
Interest on money market deposits | 38 | 43 | |||||
Interest on certificates of deposit | 98 | 185 | |||||
Total Interest Expense | 142 | 235 | |||||
Net Interest Income | 2,802 | 2,397 | |||||
Provision for loan losses | 196 | 152 | |||||
Net Interest Income After Provision for Loan Losses | 2,606 | 2,245 | |||||
Non-Interest Income: | |||||||
Gain on sale of securities, net | - | - | |||||
Gain(loss) on sale of OREO, net | - | (87) | |||||
Gain(loss) on sale of other assets, net | (9) | - | |||||
Deposit account service charge income | 47 | 46 | |||||
Other non-interest income | 105 | 61 | |||||
Total Non-Interest Income | 143 | 20 | |||||
Non-Interest Expense: | |||||||
Salaries and employee benefits | 1,326 | 1,220 | |||||
Occupancy | 285 | 283 | |||||
Data processing and software | 204 | 189 | |||||
Insurance | 19 | 14 | |||||
Legal and professional | 68 | 111 | |||||
Advertising and marketing | 37 | 19 | |||||
FDIC deposit assessment | 39 | 94 | |||||
Office supplies | 14 | 17 | |||||
Other operating expenses | 148 | 161 | |||||
Total Non-Interest Expense | 2,140 | 2,108 | |||||
Net Income before Provision for Income Tax Expense | 609 | 157 | |||||
Provision for income tax expense | 257 | 20 | |||||
Net Income | $ | 352 | $ | 137 | |||
Basic earnings per share | $ | 0.31 | $ | 0.12 | |||
Average shares outstanding | 1,129,300 | 1,124,500 | |||||
FOUNDERS COMMUNITY BANK | ||||
SUPPLEMENTAL DATA | ||||
(Dollar in thousands) | ||||
June 30, | March 31, | December 31, | June 30, | |
2012 | 2012 | 2011 | 2011 | |
Unaudited | Unaudited | Audited | Unaudited | |
Capital Ratios Table: | ||||
Tier 1 leverage ratio | 12.18% | 12.27% | 11.75% | 9.21% |
Tier 1 risk-based capital ratio | 14.96% | 16.75% | 16.38% | 12.00% |
Total risk-based capital ratio | 16.22% | 18.01% | 17.64% | 13.25% |
Asset Quality Table: | ||||
Total loans on non-accrual | 48 | 48 | - | 394 |
Other Real Estate Owned | 754 | 764 | 764 | 1,659 |
Total non-accrual loans and Other Real Estate Owned | 802 | 812 | 764 | 2,053 |
Net Charge-offs (Recoveries) year to date | (1) | (11) | 282 | 31 |
Loans on non-accrual as of a % of total loans | 0.05% | 0.05% | 0.00% | 0.47% |
Total non-accrual loans and Other Real Estate Owned | 0.63% | 0.67% | 0.62% | 1.80% |
as a % of total assets | ||||
Allowance for loan losses as a % of total loans | 1.66% | 1.70% | 1.66% | 1.81% |
Net charge-offs as a % of average loans | ||||
Allowance for loan losses as a % of non-accrual | 3408% | 3085% | 0% | 388% |
loans | ||||
Investor Relations Contacts: |
Founders Community Bank |
Thomas J Sherman, CEO, 805-547-2525 |
Mandy Leastman, EVP/CFO, 805-547-2527 |
SOURCE Founders Community Bank
