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Alaska Pacific Bancshares, Inc. Reports Fourth Quarter and Annual Earnings for 2011

JUNEAU, Alaska--()--Alaska Pacific Bancshares, Inc. (OTCBB:AKPB) (“Company”), the parent company of Alaska Pacific Bank (“Bank”), today reported net income available to common shareholders of $157,000, or $0.22 per diluted common share, for the fourth quarter ended December 31, 2011, as compared to net income available to common shareholders of $624,000, or $0.89 per diluted common share for the fourth quarter of 2010.

“The Bank made steady progress during 2011”

Net income available to common shareholders for the year ended December 31, 2011, was $631,000, or $0.87 per diluted common share, compared to net income available to common shareholders of $539,000, or $0.76 per diluted common share for 2010.

“The Bank made steady progress during 2011,” stated Craig Dahl, President & CEO. “Our mortgage loan volume was still lower than planned, and a year end write-down of mortgage servicing rights slowed our fourth quarter performance. On the other hand we had improved loan demand for our commercial loans throughout 2011. The stable and improving economy of Southeast Alaska, along with growth in tourism and mining, provide a sound framework for the Bank’s core business. Although we still have higher than desired classified loans, the Bank’s reserves are adequate to offset any losses. While there are still challenges to overcome, we’re confident that we are moving in the right direction and look forward to the Bank’s continued improvement.”

The provision for loan losses was $60,000 and the net benefit for loan losses was $113,000 for the quarter ended December 31, 2011 and 2010, respectively. The allowance for loan losses at December 31, 2011 was $1.9 million, representing 1.26% of total loans outstanding. Total non-accrual loans were $2.6 million at December 31, 2011 compared with $1.8 million at September 30, 2011 and $448,000 at December 31, 2010. In addition, the Bank’s real estate owned and repossessed assets were $880,000 at December 31, 2011 compared with $1.4 million at September 30, 2011 and $1.8 million at December 31, 2010. There was $234,000 in net loan charge offs for the quarter ended December 31, 2011 compared with no net loan charge offs for the quarter ended September 30, 2011 and $447,000 in net loan charge offs for the quarter ended December 31, 2010.

Net interest income decreased $173,000, or (8.0%) to $2.0 million in the fourth quarter of 2011 compared to $2.2 million for the comparable quarter of 2010 reflecting primarily the decline in the Bank’s average loan portfolio and the continued low interest rate environment. Net interest margin on average interest-earning assets for the fourth quarter of 2011 was 5.13% compared with 5.66% in the fourth quarter of 2010.

Loans (excluding loans held for sale and before the allowance for loan losses) were $147.8 million at December 31, 2011, an increase of $2.3 million, or 1.6% from $145.5 million at September 30, 2011, and an increase of $5.8 million, or 4.1% from $141.9 million at December 31, 2010. Deposits at December 31, 2011, were $147.2 million, a $4.7 million, or 3.1% decrease from $151.9 million at September 30, 2011, and a $347,000, or 0.2% decrease from $147.5 million at December 31, 2010.

Noninterest income for the fourth quarter of 2011, including gain on sale of loans, decreased $222,000, or 47.7% to $243,000 from $465,000 for the fourth quarter of 2010. Gain on sale of loans decreased $238,000 to $286,000 for the year ended December 31, 2011 from $524,000 for fiscal 2010 as a result of a decline in gain on sale of loans and origination fees/costs associated with the decline in the production of one-to-four family mortgage loans. Excluding mortgage banking income, noninterest income decreased $148,000, or 11.7%, to $1.1 million for the year ended December 31, 2011 compared with $1.3 million for fiscal 2010. The decrease is primarily in mortgage servicing income due to the fair value adjustment to mortgage servicing rights of $(144,000). Additionally, other income of $46,000 was recognized in 2010 from the gain on sale of commercial loans.

Noninterest expense for the fourth quarter of 2011 decreased $40,000, or 2.0%, to $1.9 million from $2.0 million for the quarter ended September 30, 2011 and decreased $357,000, or 15.6%, from the quarter ended December 31, 2010. Noninterest expense for the year ended December 31, 2011 decreased $804,000, or 9.1%, from $8.9 million for the year ended December 31, 2010. The net decrease in expense in 2011 is attributable to lower real estate owned and repossessed asset expense, lower professional and consulting expense and lower FDIC premiums.

Forward-Looking Statements

Certain matters in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and non-performing assets in our loan portfolio, result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; deposit flows; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; adverse changes in the securities markets; results of examinations by our banking regulators including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; the possibility that we will be unable to comply with the conditions imposed upon us in the Cease and Desist Orders entered into with the Office of Thrift Supervision that are now enforced by its successors the Office of the Comptroller of the Currency for the Bank and the Federal Reserve for the Company; computer systems on which we depend could fail or experience a security breach, or the implementation of new technologies may not be successful; our ability to retain key members of our senior management team; legislative or regulatory changes such as the Dodd-Frank Wall Street Reform and Consumer Protection Act that adversely affect our business including changes in regulatory policies and principles, and the interpretation of regulatory capital or other rules; the time it may take to lease excess space in Company-owned buildings; future legislative changes in the United States Department of Treasury Troubled Asset Relief Program Capital Purchase Program; and other risks detailed in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Accordingly, these factors should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. We undertake no responsibility to update or revise any forward-looking statements.

 

Alaska Pacific Bancshares, Inc.

Financial Highlights (Unaudited)

Year and Fourth Quarter 2011

(dollars in thousands, except per-share amounts)

 
    Year Ended December 31,
    2011   2010
Condensed Statement of Income:        
Interest income   $ 8,581     $ 9,589  
Interest expense     690       1,107  
Net interest income     7,891       8,482  
Provision for loan losses     373       899  
Gain on sale of loans     286       524  
Other noninterest income     1,114       1,262  
Other noninterest expense     7,977       8,781  
Net income before income tax benefit     941       588  
Income tax benefit     -       (255 )
Net income     941       843  
Preferred stock dividend and discount accretion        
Preferred stock dividend     241       239  
Preferred stock discount accretion     69       65  
Net income available to common shareholders   $ 631     $ 539  
         
Earnings per share:        
Basic   $ 0.96     $ 0.82  
Diluted   $ 0.87     $ 0.76  
         
Performance Ratios:        
Return on average equity     4.68 %     4.43 %
Return on average assets     0.55       0.49  
Yield on average earning assets     5.52       6.03  
Cost of average interest-bearing liabilities     0.58       0.88  
Interest rate spread     4.94       5.15  
Net interest margin on:        
Average earning assets     5.08       5.34  
Average total assets     4.57       4.92  
Efficiency ratio (a)     88.58       90.12  
         
Average balances:        
Loans   $ 145,562     $ 153,736  
Earning assets     155,313       158,919  
Assets     172,628       172,284  
Interest-bearing deposits     115,146       116,298  
Total deposits     146,270       145,371  
Interest-bearing liabilities     118,612       125,319  
Shareholders' equity     20,108       19,029  
         
Average shares outstanding:        
Basic     654,486       654,486  
Diluted     727,165       707,897  
 
 

Alaska Pacific Bancshares, Inc.

Financial Highlights (Unaudited)

Fourth Quarter 2011

(dollars in thousands, except per-share amounts)

 
    Three Months Ended
    December 31,
2011
  September 30,
2011
  December 31,
2010
Condensed Statement of Income:            
Interest income   $ 2,142     $ 2,141     $ 2,387  
Interest expense     157       166       229  
Net interest income     1,985       1,975       2,158  
Provision (benefit) for loan losses     60       60       (113 )
Gain on sale of loans     69       88       120  
Other noninterest income     174       334       345  
Noninterest expense     1,933       1,973       2,290  
Net income before income tax benefit     235       364       446  
Provision for income tax     -       -       (255 )
Net income     235       364       701  
Preferred stock dividend and discount accretion            
Preferred stock dividend     60       60       60  
Preferred stock discount accretion     18       17       17  
Net income available to common shareholders   $ 157     $ 287     $ 624  
             
Income per common share:            
Basic   $ 0.24     $ 0.44     $ 0.95  
Diluted   $ 0.22     $ 0.39     $ 0.89  
             
Performance Ratios:            
Return on average equity     4.60 %     7.21 %     14.39 %
Return on average assets     0.58       0.90       1.72  
Yield on average interest-earning assets     5.53       5.48       6.26  
Cost of average interest-bearing liabilities     0.53       0.56       0.74  
Interest rate spread     5.00       4.92       5.52  
Net interest margin on:            
Average interest-earning assets     5.13       5.05       5.66  
Average total assets     4.89       4.90       5.30  
Efficiency ratio (a)     89.53       85.45       91.49  
             
Average balances:            
Loans   $ 144,743     $ 147,083     $ 146,175  
Interest-earning assets     154,806       156,390       152,538  
Assets     162,238       161,365       162,953  
Interest-bearing deposits     116,369       116,281       118,920  
Total deposits     148,977       151,005       149,551  
Interest-bearing liabilities     119,369       119,281       123,922  
Shareholders' equity     20,452       20,190       19,483  
             
Weighted average common shares outstanding:            
Basic     654,486       654,486       654,486  
Diluted     714,862       729,392       698,574  
 
 
   

December 31,
2011

 

September 30,
2011

 

December 31,
2010

Balance sheet data:            
Total assets   $ 172,057     $ 176,416     $ 174,369  
Loans, before allowance     147,766       145,477       141,938  
Loans held for sale     976       614       450  
Investment securities available for sale     5,714       5,900       2,155  
Total deposits     147,201       151,921       147,548  
Federal Home Loan Bank advances     3,000       3,000       5,000  
Shareholders' equity     20,542       20,362       19,779  
             
Shares outstanding (b)     654,486       654,486       654,486  
             
Book value per share   $ 24.08     $ 23.81     $ 22.92  
             
Asset quality:            
Allowance for loan losses   $ 1,865     $ 2,039     $ 1,583  
Allowance as a percent of loans     1.26 %     1.40 %     1.12 %
Nonaccrual loans   $ 2,645     $ 1,823     $ 448  
Total nonperforming assets     3,525       3,197       2,239  
Impaired loans     11,980       12,346       9,601  
Estimated specific reserves for impairment     473       668       310  
Net charge offs for quarter     234       -       447  
Net charge offs (recoveries) YTD     91       (143 )     1,101  
Real estate owned and repossessed assets     880       1,374       1,791  
 

(a) Noninterest expense, divided by the sum of net interest income and noninterest income, excluding gains on sale of loans or securities.

(b) Excludes treasury stock.


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