Albina Community Bancorp Reports 2012 Results
Albina Community Bank Enters Into Stock Purchase Agreement With One PacificCoast Bancorp

PORTLAND, Ore., Feb. 8, 2013 (GLOBE NEWSWIRE) -- Albina Community Bancorp (OTCBB:ACBC), the holding company of Albina Community Bank, the only certified community development bank headquartered in Portland, today reported that higher than anticipated expenses related to year-end strategic charge offs impacted net income in both the fourth quarter and full year in 2012. Albina lost $379,000, or $(0.29) per share in 2012, compared to earning $292,000, or $0.22 per share in 2011. For the fourth quarter of 2012, the net loss was $741,000, or $(0.56) per share, compared to net income of $252,000, or $0.19 per share in the preceding quarter and $157,000, or $0.12 per share in the fourth quarter of 2011.

"The losses we incurred during the quarter and for the year were related to a number of decisions we made prior to the Bank entering into a stock purchase agreement with One PacificCoast Bancorp, and will not adversely impact the Bank's capital levels once the investment has been finalized. Credit quality remains strong and none of the expenses we incurred in the fourth quarter were linked to credit quality issues," said Cheryl Cebula, President and Chief Executive Officer of Albina Community Bank. "Specifically during the quarter, we wrote off $220,000 remaining in a community real estate investment project, and we established a $300,000 reserve for costs associated with a previously owned foreclosed commercial property."

The recently announced Investment Agreement between Albina Community Bank and One PacificCoast Bancorp is expected to close in the second quarter of 2013. "The capital infusion will bolster capital levels as required by the regulators and provide a platform for long term, sustainable success for the Bank," Cebula added.

2012 Highlights (at or for the period ended December 31, 2012):

  • Albina Community Bank entered into an investment agreement with One PacificCoast Bancorp, which is expected to close in the second quarter of 2013. The recapitalization of the Bank will bring capital levels in line with regulatory requirements.
  • Albina Community Bancorp lost $(0.56) per share in the fourth quarter of 2012 and $(0.29) per share for the year.
  • Credit quality further improved as non-performing assets decreased to $3.9 million or 3.06% of total assets.
  • Total assets were $128.4 million, compared to $130.3 million at the end of the preceding quarter and $132.1 million a year ago. 
  • Total deposits were down 1% year-over-year to $118.7 million from $119.7 million at December 31, 2011, reflecting a reduction in matured high-cost internet "bulletin board" and brokered certificates of deposit of $14.8 million. Non-interest-bearing deposits grew 17% year-over-year and accounted for 32% of total deposits at December 31, 2012.
  • Interest expense for the quarter declined 34% to $214,000 from $326,000 during the like quarter a year ago, primarily due to a shift in deposit mix out of higher cost certificates of deposit into less expensive checking and money market products.   Interest expense for the year dropped 36%, to $964,000, compared to $1.5 million in 2011.
  • Loans totaled $77.1 million at quarter end, compared to $76.2 million at September 30, 2012, and $93.2 million at December 30, 2011.

Credit Quality

"Overall asset quality continues to improve and we have not had to provision for any loan losses for the last three quarters of 2012," commented Cebula. "We have a strong cushion against potential loan losses with an allowance for loan and lease losses (ALLL) at $2.7 million, or 3.53% of total loans at December 31, 2012."

Nonperforming assets (NPAs), consisting of nonaccrual loans, other real estate owned (OREO) and loans delinquent 90 days or more, decreased by $1.5 million, to $3.9 million, or 3.06% of total assets, at December 31, 2012, from $5.4 million, or 4.09% of total assets a year ago. At September 30, 2012, NPAs were $4.1 million, or 3.13% of total assets. $967,000, or 37.0% of loans classified as NPAs, were current on their payments at quarter end. These NPAs are classified as nonaccrual loans due to cash flow deficiencies for properties, which the borrowers are supplementing from other sources.

Nonperforming loans (NPLs) remained relatively unchanged at $2.6 million for the third and fourth quarter of 2012, and declined substantially from $4.6 million at the end of 2011. NPLs represented 3.39% of total loans at December 30, 2012, compared to 3.46% of total loans three months earlier and 4.94% a year ago. 

"Three of the four foreclosed properties that we took possession of in the third quarter are no longer on our books, with the sale of one of the properties closing in January. We also have solid interest in the fourth property and anticipate it will be sold soon," said Cebula.  OREO accounted for $1.3 million of NPAs at December 30, 2012, $1.4 million at September 30, 2012, and $795,000 at the end of the fourth quarter a year ago.

Net charge offs for the fourth quarter of 2012 totaled $49,000, or 0.26% of average loans during the quarter, significantly down from $382,000, or 1.61% of average loans during the fourth quarter of last year. Net charge offs for 2012 totaled $245,000, or 0.29% of average loans compared to $1.0 million or 1.02% a year ago. Recoveries from previously charged off loans reduced net charge offs by $163,000 for the year compared to $327,000 during 2011.

The allowance for loan and lease losses (ALLL) was $2.7 million, or 3.53% of total loans at December 30, 2012, compared to $2.9 million, or 3.12% of total loans a year ago. At September 30, 2012, the ALLL was $2.8 million, or 3.64% of total loans. No provision for loan and lease losses was recorded in the fourth quarter 2012, compared to a provision of $150,000 taken in the fourth quarter of 2011.

Balance Sheet

Albina Community Bancorp's assets totaled $128.4 million at December 31, 2012, compared to $130.3 million at September 30, 2012 and $132.1 million at December 31, 2011.

The investment securities portfolio increased 45% to $27.7 million at December 31, 2012, compared to $19.1 million at December 31, 2011. At September 30, 2012, investment securities totaled $30.8 million. The investment securities portfolio is primarily comprised of government-sponsored mortgage-backed securities that have an estimated average life of 2.07 years, as at December 31, 2012.

"Loan demand has slowly continued to improve, but we are also experiencing some loan pay offs, which is suppressing our overall loan growth and impacting our yield," Cebula added. "After the capital infusion, which is scheduled to close in the second quarter, we expect to be in a much stronger position to grow our loan portfolio and consider deals we could not previously because of capital restraints. In the meantime, we continue to maintain strong liquidity to meet the demands of credit-worthy customers by holding short-term liquid securities. We also have access to lines of credit at the Federal Home Loan Bank and the Federal Reserve Bank." Loans, net of reserves, grew by almost $1 million to $74.4 million at quarter end, compared to $73.4 million at September 30, 2012. At December 31, 2011, net loans totaled $90.3 million.

Albina's loan portfolio remains well-diversified with a wide variety of borrowers and collateral. Approximately 75% of the loan portfolio is secured by either residential or commercial real estate, with approximately 43% of Albina's commercial real estate (CRE) being owner-occupied. The following table shows the changes in the loan portfolio in each category:

Albina Community Bancorp
Selected Highlights
(Dollars in thousands)As of the Date Ended
(Certain loan balances have been reclassifiedDecember 31,September 30,December 31,
between categories in the periods presented.)2012 2012 2011 
(unaudited) (unaudited) (unaudited)
Loans
Commercial business  $ 18,364 23.8%  $ 16,449 21.6%  $ 20,370 21.9%
R/E construction  --  0.0%  --  0.0%  --  0.0%
Commercial R/E  42,818 55.5%  42,785 56.1%  47,327 50.8%
Multifamily residential  2,415 3.1%  2,441 3.2%  2,759 3.0%
One to four family residential  12,563 16.3%  13,539 17.8%  15,948 17.1%
Consumer  1,107 1.4%  1,104 1.4%  6,933 7.4%
Unearned Loan Fees  (139) -0.2%  (109) -0.1%  (124) -0.1%
Total Loans  $ 77,128 100.0%  $ 76,209 100.0%  $ 93,212 100.0%

Total deposits, reflecting the run-off of $14.8 million of brokered and internet CDs, were $118.7 million at December 31, 2012, compared to $119.7 million a year ago. Noninterest-bearing deposits at December 31, 2012, were up 17% from a year ago and interest-bearing deposits grew 10%. Savings account balances were up 24% from year ago levels, while certificates of deposit dropped 32%. 

"We continue to see the support of our local community with the increase in our home-grown deposits allowing us to be less reliant on internet and brokered CDs," said Cebula. At the end of 2012, noninterest-bearing deposits accounted for 32% of total deposits, interest-bearing accounts represented 38% and savings accounts were 8%. Certificates of deposits (CDs) continue to decline and accounted for 22% of total deposits at December 31, 2012. Brokered and internet certificate of deposits accounted for less than 2% of Albina's total deposits at year end compared to over 14% at the end of last year. The ratio of loans to deposits was 65% at December 31, 2012.

Review of Operations

Net interest income was $930,000 for the fourth quarter of 2012, compared to $1.1 million in the preceding quarter. Because of adequate reserves in the ALLL, no loan loss provision was recorded in the last nine month of 2012. Following a $150,000 provision for loan losses in the fourth quarter of 2011, net interest income was $1.1 million. For 2012, after provisioning $60,000 against loan losses, net interest income was $4.3 million, compared to $4.8 million in 2011, following a provision of $650,000. The decline in net interest income during the year was largely due to declining loan balances and the lower yields earned on those balances as they shifted into cash or short-term investments.

"As expected, our net interest margin was lower for the quarter and for the year primarily due to the overall low interest rate environment, higher than expected loan repayments, and to the lower returns we have yielded from our mortgage-backed securities," said Cebula. The net interest margin (NIM) was 3.63% for the year, compared to 4.42% for 2011. The NIM for the fourth quarter was 3.09%, compared to 3.61% for the immediate prior quarter and 4.03% in the fourth quarter a year ago.

Total non-interest income for the year was up 8% to $2.1 million, compared to $1.9 million for 2011. Non-interest income in the fourth quarter was $454,000, compared to $864,000 in the third quarter of 2012, and $618,000 in the fourth quarter a year ago. Merchant and card interchange income was up 10% from a year ago and up 11% year-over year. The increase in non-interest income in the third quarter 2012 was primarily due to the $456,000 of New Markets Tax Credit fee income.

Non-interest expense increased 5% in 2012, to $6.7 million, compared to $6.4 million recorded in 2011. Non-interest expense was $2.1 million for the fourth quarter of 2012, compared to $1.5 million for the fourth quarter a year ago. "As previously mentioned, the increased expenses incurred in the quarter were predominantly related to a one-time cost associated with a prior foreclosed commercial property, and to a community investment project that had sustained losses over the last several years," said Cebula. Other expenses impacting the quarter were related legal expenses. 

About Albina Community Bancorp

Albina Community Bank is a local, full-service, independent commercial bank committed to investing in individuals, families, businesses and local neighborhoods. The Bank promotes community development by providing products and services and banking solutions that are directed towards improving the social or economic conditions of underserved peoples or residents of distressed communities. Albina offers a wide range of competitive banking solutions, while also maintaining its mission to promote jobs, growth of small businesses, and wealth in our local Portland neighborhoods. Track Albina's community involvement by viewing its scorecard at: www.albinabank.com/company/scorecard.cfm.

Albina Community Bank opened in December 1995 as the sole subsidiary of Albina Community Bancorp. Albina is one of approximately 60 commercial banks across the United States certified by the U.S. Treasury Department's Community Development Financial Institutions Fund as a community development financial institution. Albina is the only CDFI-certified commercial bank headquartered in Oregon. Albina operates from five local Portland locations including offices at: 2002 Northeast Martin Luther King Jr. Boulevard; 8040 North Lombard in the St. Johns neighborhood of North Portland; 4020 Northeast Fremont Street in the Beaumont neighborhood; 5636 Northeast Sandy Boulevard in the Rose City Park neighborhood of the International District; and 430 Northwest 10th Avenue in Portland's Pearl District; and a remote ATM at New Columbia in North Portland. For more information about Albina Community Bank, please call 503-287-7537 or visit www.albinabank.com.

Forward-Looking Statement Disclaimer

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, including statements about the anticipated consummation of the proposed stock purchase transaction and concerning the continued financial performance of the company and its plans and opportunities for future growth. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected, including the parties not entering into the proposed stock purchase agreement and regulatory approval for the proposed transaction. Specific risks include, but are not limited to, general business and economic conditions, competitive factors, pricing pressures, further interest rate changes, and other factors listed from time to time in Albina Community Bancorp's regulatory reports. Readers should not place undue reliance on the forward-looking statements, which reflect management's view only as of the date hereof. Albina undertakes no obligation to publicly revise these forward-looking statements to reflect subsequent events or circumstances.

Albina Community Bancorp
Balance Sheet
(Dollars in thousands)As of the Date Ended
December 31,
2012
September 30,
2012
December 31,
2011
(unaudited)(unaudited)(unaudited)
ASSETS
Cash and due from banks  $ 572  $ 386  $ 326
Interest-bearing deposits  14,953  14,030  10,926
Federal funds sold  --   6  21
Total cash and cash equivalents  15,525  14,422  11,274
Investment securities   27,687  30,798  19,069
Federal Home Loan Bank Stock  1,302  1,313  1,325
Loans  77,128  76,209  93,212
Allowance for loan and lease losses  (2,725)  (2,774)  (2,910)
Net loans  74,403  73,434  90,302
Property and equipment, net  4,550  4,596  4,778
Other real estate owned  1,317  1,439  795
Other assets  3,665  4,291  4,562
Total assets  $ 128,449  $ 130,295  $ 132,105
LIABILITIES AND EQUITY
Deposits
Non-interest bearing deposits  $ 38,365  $ 38,169  $ 32,749
Interest-bearing accounts  45,040  44,109  40,948
Savings accounts  8,640  7,832  6,971
Time certificates  26,700  29,598  39,070
Total deposits  118,745  119,708  119,738
Liabilities
Other borrowings  2,975  3,004  5,089
Subordinated debentures  6,186  6,186  6,186
Other liabilities  2,383  2,451  2,356
Total liabilities  130,289  131,349  133,369
Shareholders' equity:
Preferred stock  2,482  2,482  2,482
Common stock  8,611  8,611  8,611
Retained earnings  (12,925)  (12,184)  (12,546)
Accum. other comp. income  (8)  37  190
Total shareholders' equity  (1,840)  (1,054)  (1,263)
Total liabilities and equity  $ 128,449  $ 130,295  $ 132,105
FINANCIAL RATIOS
Loans / deposits 63% 64% 75%
Non-performing loans / total loans 3.39% 3.46% 4.94%
Reserve / loans 3.53% 3.64% 3.12%
Albina Community Bancorp
Income Statement
(Dollars in thousands, except per-share data) Three Months Ended  Twelve Months Ended 
 December 31,  September 30,  December 31,  December 31, 
20122012201120122011
(unaudited)(unaudited)(unaudited)(unaudited)(unaudited)
INTEREST INCOME
Interest and fees on loans  $ 1,094  $ 1,231  $ 1,483  $ 5,067  $ 6,632
Interest on investment securities  40  75  53  219  343
Other interest income  10  14  7  44  27
Total interest income  1,144  1,320  1,543  5,330  7,002
INTEREST EXPENSE
Interest on deposits  100  113  199  504  992
Interest on borrowings  114  116  127  460  513
Total interest expense  214  229  326  964  1,504
NET INTEREST INCOME  930  1,091  1,218  4,366  5,497
Loan loss provision  --   --   150  60  650
Net interest income after provision  930  1,091  1,068  4,306  4,847
NON-INTEREST INCOME
Service charges and fees  139  144  155  584  588
Government payments and contracts  --   --   247  --   247
Loan fees on brokered loans  --   --   --   --   5
Merchant & card interchange income  118  119  108  469  422
Realized gain/(loss) on sale of investment securities  --   --   --   --   4
Realized gain/(loss) on sale of Loans & OREO  92  --   --   58  205
Other income  105  601  109  944  429
Total non-interest income  454  864  618  2,055  1,900
NON-INTEREST EXPENSE
Salaries and employee benefits  619  617  666  2,471  2,809
Occupancy and equipment  170  168  164  678  685
Legal and professional  229  304  189  847  745
Marketing  43  33  51  147  160
Data processing  186  187  184  750  752
Loan and OREO  422  139  24  656  255
FDIC assessment  37  109  107  368  478
Other   419  146  151  823  564
Total non-interest expense  2,125  1,703  1,536  6,740  6,448
PRETAX INCOME (LOSS)  (741)  252  150  (379)  300
Provision for income taxes  --   --   (7)  --   8
NET INCOME (LOSS)  $ (741)  $ 252  $ 157  $ (379)  $ 292
Earnings (loss) per share:
Basic  $ (0.56)  $ 0.19  $ 0.12  $ (0.29)  $ 0.22
Diluted  $ (0.56)  $ 0.19  $ 0.12  $ (0.29)  $ 0.22
Weighted average shares outstanding:
Basic  1,073,310  1,073,310  1,073,310  1,073,310  1,073,310
Diluted  1,073,310  1,073,310  1,073,310  1,073,310  1,073,310
FINANCIAL RATIOS
Return on average assets -2.26% 0.76% 0.45% -0.29% 0.21%
Efficiency ratio 154% 87% 84% 105% 87%
Net interest margin 3.09% 3.61% 4.03% 3.63% 4.42%
Albina Community Bancorp
Selected Highlights
(Dollars in thousands)As of the Date Ended
(Certain loan balances have been reclassifiedDecember 31,September 30,December 31,
between categories in the periods presented.)2012 2012 2011 
(unaudited) (unaudited) (unaudited)
Loans
Commercial business  $ 18,364 23.8%  $ 16,449 21.6%  $ 20,370 21.9%
R/E construction  --  0.0%  --  0.0%  --  0.0%
Commercial R/E  42,818 55.5%  42,785 56.1%  47,327 50.8%
Multifamily residential  2,415 3.1%  2,441 3.2%  2,759 3.0%
One to four family residential  12,563 16.3%  13,539 17.8%  15,948 17.1%
Consumer  1,107 1.4%  1,104 1.4%  6,933 7.4%
Unearned Loan Fees  (139) -0.2%  (109) -0.1%  (124) -0.1%
Total Loans  $ 77,128 100.0%  $ 76,209 100.0%  $ 93,212 100.0%
ASSET QUALITY
Non-Performing loans:
Loans past due 90 days or more  $ --  $ --  $ 45
Non-accrual loans  2,612  2,639  4,561
Total non-performing loans  2,612  2,639  4,606
OREO  1,317  1,439  795
Total non performing assets  $ 3,929  $ 4,078  $ 5,401
Non performing assets / total assets 3.06% 3.13% 4.09%
Beginning ALLL - from previous FYE  $ 2,910  $ 2,910  $ 3,298
Provision for loan loss expense  60  60  650
Loan charge offs  (408)  (307)  (1,365)
Loan recoveries  163  111  327
(Charge offs), net of recoveries  (245)  (196)  (1,038)
Ending ALLL - YTD  $ 2,725  $ 2,774  $ 2,910
Average Loans
Quarter  $ 76,813  $ 80,203  $ 94,864
YTD  83,154  85,283  101,315
Net charge-off
Quarter  49  13  382
YTD  245  196  1,038
Net charge-offs (a)
Quarter 0.26% 0.06% 1.61%
YTD 0.29% 0.31% 1.02%
(a) Annualized and calculated on average loan balances
Non-accrual loans
Residential Real Estate  $ 967  $ 1,264  $ 1,000
Commercial Real Estate  1,645  1,375  3,314
Commercial/ Industrial  --   --   247
Total Non-accrual loans  $ 2,612  $ 2,639  $ 4,561
CONTACT: Cheryl Cebula, President & CEO of
         Albina Community Bank
         (503) 288-7296
         
         Joey C. Ingman, Chief Financial Officer
         Albina Community Bancorp / Bank
         (503) 288-8495
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