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Alaska Pacific Bancshares, Inc. Reports Third Quarter Results of Operations for 2012

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 for the third quarter ended September 30, 2012 of $45,000 or $0.06 per diluted common share, respectively as compared to $287,000 or $0.39 per diluted common share, respectively for the same period in 2011.

“We are seeing our loan demand, in commercial, construction and mortgage loans hitting our target levels that we had albeit later in the year than originally projected. While the quarter’s performance was less than expected, overall I am confident in the Bank’s progress and direction.”

Net (loss) available to common shareholders for the nine months ended September 30, 2012, was $(78,000), or $(0.12) per diluted common share, compared to a net income of $474,000, or $0.65 per diluted common share for the comparable period in 2011.

“Performance for the third quarter was marginally positive, with a significant portion reflecting the adjustments to the Bank’s valuation of mortgage servicing rights as the primary contributor in reducing the quarter’s performance” stated Craig Dahl, President and CEO. “We are seeing our loan demand, in commercial, construction and mortgage loans hitting our target levels that we had albeit later in the year than originally projected. While the quarter’s performance was less than expected, overall I am confident in the Bank’s progress and direction.”

The provision for loan losses was $60,000 for both the quarter ended September 30, 2012 and September 30, 2011. The allowance for loan losses at September 30, 2012 was $1.9 million, representing 1.23% of total loans outstanding. Total non-accrual loans were $5.6 million at September 30, 2012 compared with $5.8 million at June 30, 2012 and $1.8 million at September 30, 2011. The increase at September 30, 2012 compared to the prior year is due primarily to two commercial nonresidential loans totaling $2.5 million to the same borrower that were troubled debt restructurings deemed to be impaired and were placed on nonaccrual status due to a decline in the borrowers’ net worth and global cash flow. In addition, the Bank’s real estate owned and repossessed assets were $390,000 at September 30, 2012 compared with $258,000 at June 30, 2012 and $1.4 million at September 30, 2011. There was $49,000 in net loan charge offs for the quarter ended September 30, 2012 compared with $165,000 of net loan charge offs for the quarter ended June 30, 2012. There were no loan charge offs for the quarter ended September 30, 2011.

Net interest income was $2.0 million for both the quarter ended September 30, 2012 and September 30, 2011. Net interest margin on average interest-earning assets for the third quarter of 2012 was 5.03% compared with 5.05% for the third quarter of 2011.

Loans (excluding loans held for sale and before the allowance for loan losses) were $150.5 million at September 30, 2012, a decrease of $1.2 million, or 0.8% from $151.7 million at June 30, 2012, and an increase of $5.0 million, or 3.4% from $145.5 million at September 30, 2011. Deposits at September 30, 2012 were $155.4 million, a $3.7 million, or 2.5% increase from $151.7 million at June 30, 2012, and a $3.5 million, or 2.3% increase from $151.9 million at September 30, 2011.

Gain on sale of loans increased $46,000 to $134,000 for the third quarter of 2012 from $88,000 for the third quarter of 2011 as a result of an increase in mortgage loans originated and sold. Excluding mortgage banking income, noninterest income decreased $92,000, or 27.5%, to $242,000 for the third quarter of 2012 compared with $334,000 for the third quarter 2011. The decrease is primarily in mortgage servicing income due to the fair value adjustment to mortgage servicing rights of $(85,000).

Noninterest expense for the third quarter of 2012 decreased $325,000, or 13.2%, to $2.1 million from $2.5 million for the quarter ended June 30, 2012 and increased $166,000, or 8.4%, from the quarter ended September 30, 2011. The net decrease in expense in the third quarter of 2012 compared to the second quarter of 2012 is attributable to lower real estate owned and repossessed asset expense resulting from additional impairment and loss on sale of real estate owned of $171,000 recorded during the quarter ended June 30, 2012.

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 the holding company in the Cease and Desist Order entered into with the Office of Thrift Supervision that is now enforced by its successors the Federal Reserve; 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 as a result of Basel III; 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)
Third Quarter 2012
(dollars in thousands, except per-share amounts)
 
    Three Months Ended
    September 30,   June 30,   September 30,
    2012   2012   2011
Condensed Statement of Income (Loss):            
Interest income   $ 2,164     $   2,076     $   2,141  
Interest expense     138         146         166  
Net interest income     2,026         1,930         1,975  
Provision for loan losses     60         90         60  
Gain on sale of loans     134         87         88  
Other noninterest income     242         307         334  
Noninterest expense     2,139         2,464         1,973  
Net income (loss) before income tax benefit     203         (230 )       364  
Provision (benefit) for income tax     80         (89 )       -  
Net income (loss)     123         (141 )       364  
Preferred stock dividend and discount accretion            
Preferred stock dividend     60         60         60  
Preferred stock discount accretion     18         19         17  
Net income (loss) available to common shareholders   $ 45     $   (220 )   $   287  
             
Income (loss) per common share:            
Basic   $ 0.07     $   (0.34 )   $   0.44  
Diluted   $ 0.06     $   (0.34 )   $   0.39  
             
Performance Ratios:            
Return on average equity     2.40 %       (2.74 )%       7.21 %
Return on average assets     0.28         (0.33 )       0.90  
Yield on average interest-earning assets     5.37         5.18         5.48  
Cost of average interest-bearing liabilities     0.46         0.50         0.56  
Interest rate spread     4.91         4.68         4.92  
Net interest margin on:            
Average interest-earning assets     5.03         4.82         5.05  
Average total assets     4.56         4.56         4.90  
Efficiency ratio (a)     94.31         110.15         85.45  
             
Average balances:            
Loans   $ 152,692     $   151,946     $   147,083  
Interest-earning assets     161,206         160,326         156,390  
Assets     177,793         169,390         161,365  
Interest-bearing deposits     116,240         114,485         116,281  
Total deposits     152,571         143,694         151,005  
Interest-bearing liabilities     119,240         117,770         119,281  
Shareholders' equity     20,516         20,574         20,190  
             
Weighted average common shares outstanding:            
Basic     654,486         654,486         654,486  
Diluted     745,085         738,471         729,392  
             
    September 30,   June 30,   September 30,
    2012   2012   2011
Balance sheet data:            
Total assets   $ 180,114     $ 177,417     $ 176,416  
Loans, before allowance     150,454       151,743       145,477  
Loans held for sale     473       985       614  
Investment securities available for sale     4,968       5,709       5,900  
Total deposits     155,381       151,651       151,921  
Federal Home Loan Bank advances     3,000       3,000       3,000  
Shareholders' equity     20,550       20,483       20,362  
             
Shares outstanding (b)     654,486       654,486       654,486  
             
Book value per share   $ 24.09     $ 23.99     $ 23.81  
             
Asset quality:            
Allowance for loan losses   $ 1,855     $ 1,844     $ 2,039  
Allowance as a percent of loans     1.23 %     1.22 %     1.40 %
Nonaccrual loans   $ 5,634     $ 5,753     $ 1,823  
Total nonperforming assets     6,024       6,011       3,197  
Impaired loans     10,921       11,216       12,346  
Estimated specific reserves for impairment     473       473       668  
Net charge offs for quarter     49       165       -  
Net charge offs (recoveries) YTD     250       399       (143 )
Real estate owned and repossessed assets     390       258       1,374  
                         

(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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