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Alaska Pacific Bancshares, Inc. Reports Third Quarter Results of Operations for 2013

JUNEAU, Alaska--()--Alaska Pacific Bancshares, Inc. (OTCBB: AKPB) (“Company”), the parent company of Alaska Pacific Bank (“Bank”), today reported net loss available to common shareholders for the third quarter ended September 30, 2013 of $(38,000) or $(0.06) per diluted common share, as compared to net income of $45,000 or $0.06 per diluted common share, respectively for the same period in 2012.

“The results for the third quarter of the year would have exceeded the second quarter performance, however as you can see by the comments above, the provision for income tax of $367,000 in third quarter, compared to a more normal provision of $65,000 in second quarter eliminated the quarter’s profits”

Net income available to common shareholders for the nine months ended 2013 was $44,000 or $0.06 per diluted common share, compared to a net loss of $(78,000), or $(0.12) per diluted common share for the comparable period of 2012.

The provision for loan losses was $60,000 for the quarters ended September 30, 2013 and September 30, 2012. The allowance for loan losses at September 30, 2013 was $1.9 million, representing 1.29% of total loans outstanding. Total non-accrual loans were $5.9 million at September 30, 2013 compared with $6.1 million at June 30, 2013 and $5.6 million at September 30, 2012. The net increase over prior year was due primarily to the addition of two commercial non-residential real estate loans to one borrower totaling $976,000 that were more than 90 days past due at September 30, 2013 and one commercial non-residential real estate loan for $776,000 that is a troubled debt restructuring deemed to be impaired and placed on nonaccrual status due to payment history and insufficiency of cash flow. This amount was offset by one commercial business loan for $1.4 million that was transferred to real estate owned and repossessed assets. In addition, the Bank’s real estate owned and repossessed assets were $1.4 million at September 30, 2013 compared with $1.5 million at June 30, 2013 and $390,000 at September 30, 2012. There were $117,000 of net loan charge offs for the quarter ended September 30, 2013 compared with $49,000 in net loan charge offs for the quarter ended September 30, 2012.

Net interest income was $2.0 million for the quarters ended September 30, 2013, June 30, 2013 and September 30, 2013. Net interest margin on average interest-earning assets for the third quarter of 2013 was 4.63% compared with 4.76% for the quarter ended June 30, 2013, and 5.03% for the third quarter of 2012.

Loans (excluding loans held for sale and before the allowance for loan losses) were $150.3 million at September 30, 2013, a $600,000, or 0.4% increase from $149.7 million as of June 30, 2013 and a $200,000, or 0.1% decrease from $150.5 million as of September 30, 2012. Deposits at September 30, 2013 were $161.3 million, a $7.3 million, or 4.7% increase from $154.0 million at June 30, 2013, and a $5.9 million, or 3.8% increase from $155.4 million at September 30, 2012.

Gain on sale of loans increased $42,000, to $176,000 for the third quarter of 2013 compared to the same period in the prior year and increased $41,000 from $135,000 for the second quarter of 2013 as a result of an increase in volume of mortgage loans originated and sold.

Noninterest expense was $2.2 million for both the quarter ended September 30, 2013 and June 30, 2013 compared to $2.1 million for the quarter ended September 30, 2012. The net increase compared to the third quarter of 2012 was primarily related to an increase of $101,000 in professional and consulting fees and $75,000 in real estate owned and repossessed assets expense offset with a decrease of $50,000 in compensation and benefits expense and $71,000 in other expenses.

Provision for income taxes increased $287,000 to $367,000 for the third quarter of 2013 compared to $80,000 for the third quarter of 2012. The increase was primarily related to a $208,000 reduction to the deferred income tax asset for amounts determined not to be realizable in future periods.

“The results for the third quarter of the year would have exceeded the second quarter performance, however as you can see by the comments above, the provision for income tax of $367,000 in third quarter, compared to a more normal provision of $65,000 in second quarter eliminated the quarter’s profits,” stated Craig Dahl, President & CEO. “I would expect our fourth quarter performance to be in line with previous quarters, subject to any decrease in our mortgage banking income as Alaska Pacific Bank begins an exit strategy from direct mortgage origination in response to rising interest rates, regulatory burden and an anticipated decline in volume. Even with the recent announcement of the merger between Alaska Pacific Bancshares and Northrim Bancorp, we are focused on business as usual with the commercial and consumer segments of our business and will continue to serve the consumers and businesses of Southeast Alaska as we have since 1935.”

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; 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; the Agreement and Plan of Merger (the "Merger Agreement") with Northrim BanCorp, Inc. (“Northrim BanCorp”) may be terminated in accordance with its terms, and the merger may not be completed; termination of the Merger Agreement could negatively impact us; we will be subject to business uncertainties and contractual restrictions while the merger is pending; the Merger Agreement limits our ability to pursue an alternative acquisition proposal and requires us to pay a termination fee of $600,000 under limited circumstances relating to alternative acquisition proposals; 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, 2012. 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)

Second Quarter 2013

(dollars in thousands, except per-share amounts)

     
    Three Months Ended
    September 30, June 30, September 30,
      2013     2013     2012  
Condensed Statement of Income (Loss):        
Interest income   $ 2,095   $ 2,067   $ 2,164  
Interest expense     95     101     138  
Net interest income     2,000     1,966     2,026  
Provision for loan losses     60     60     60  
Gain on sale of loans     176     135     134  
Other noninterest income     447     306     242  
Noninterest expense     2,156     2,181     2,139  
Net income before provision for income tax     407     166     203  
Provision for income tax     367     65     80  
Net income     40     101     123  
Preferred stock dividend and discount accretion        
Preferred stock dividend     59     60     60  
Preferred stock discount accretion     19     20     18  
Net (loss) income available to common shareholders   $ (38 ) $ 21   $ 45  
         
Income (Loss) per common share:        
Basic   $ (0.06 ) $ 0.03   $ 0.07  
Diluted   $ (0.06 ) $ 0.03   $ 0.06  
         
Performance Ratios:        
Return on average equity     0.77 %   1.94 %   2.40 %
Return on average assets     0.09     0.23     0.28  
Yield on average interest-earning assets     4.85     5.01     5.37  
Cost of average interest-bearing liabilities     0.32     0.34     0.46  
Interest rate spread     4.53     4.67     4.91  
Net interest margin on:        
Average interest-earning assets     4.63     4.76     5.03  
Average total assets     4.44     4.55     4.56  
Efficiency ratio (a)     88.11     95.99     94.31  
         
Average balances:        
Loans   $ 149,783   $ 150,261   $ 152,692  
Interest-earning assets     172,924     165,092     161,206  
Assets     180,190     172,758     177,793  
Interest-bearing deposits     119,894     118,431     116,240  
Total deposits     156,856     149,157     152,571  
Interest-bearing liabilities     119,894     118,431     119,240  
Shareholders' equity     20,825     20,854     20,516  
         
Weighted average common shares outstanding:        
Basic     654,486     654,486     654,486  
Diluted     770,226     768,697     745,085  
         
    September 30, June 30, September 30,
      2013     2013     2012  
Condensed Balance Sheet data:        
Total assets   $ 183,054   $ 176,908   $ 180,114  
Loans, before allowance     150,292     149,726     150,454  
Loans held for sale     105     1,585     473  
Investment securities available for sale     5,689     5,821     4,968  
Total deposits     161,281     153,982     155,381  
Federal Home Loan Bank advances     -     -     3,000  
Shareholders' equity     20,811     20,839     20,550  
         
Shares outstanding (b)     654,486     654,486     654,486  
         
Book value per share   $ 24.49   $ 24.54   $ 24.09  
         
Asset quality:        
Allowance for loan losses   $ 1,942   $ 1,999   $ 1,855  
Allowance as a percent of loans     1.29 %   1.34 %   1.23 %
Nonaccrual loans   $ 5,887   $ 6,054   $ 5,634  
Total nonperforming assets     7,261     7,597     6,024  
Impaired loans     10,282     11,067     10,921  
Estimated specific reserves for impairment     473     473     473  
Net (recoveries) charge offs for quarter     117     (3 )   49  
Net (recoveries) charge offs YTD     114     (3 )   250  
Real estate owned and repossessed assets     1,374     1,543     390  

(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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