Market Overview

Albina Community Bancorp Earns $0.27 Per Share for the First Nine Months of 2012

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PORTLAND, Ore.--(BUSINESS WIRE)--

Albina Community Bancorp (OTCBB:ACBC), the holding company of Albina Community Bank, the only certified community development bank headquartered in Portland, today reported earnings of $252,000, or $0.19 per share in the third quarter ended September 30, 2012. By comparison, net income was $12,000, or $0.01 per share in the second quarter this year, and Albina lost $126,000, or $0.10 per share in the third quarter a year ago. Year-to-date, net income was $362,000, or $0.27 per share, compared to $135,000, or $0.10 per share in the first nine months of 2011. Increased revenue, continued improvements in asset quality and lower cost of funds contributed to profits in the quarter and year-to-date results.

Net income at Albina Community Bank was $70,000 in the third quarter of 2012, compared to $143,000 in the preceding quarter and a loss of $14,000 in the third quarter a year ago. For the first nine months of 2012, the bank earned $461,000, compared to $514,000 in the first nine months of 2011.

“The third quarter is our sixth profitable quarter out of the last seven consecutive quarters, for both the bank and the holding company, and is one of our most profitable quarters in the last few years,” said Cheryl Cebula, President and Chief Executive Officer of Albina Community Bank. “Contributing to increased profits for the quarter and year-to-date was $456,000 of fee income associated with the deployment of $8.4 million in New Markets Tax Credit allocations (NMTC) in August.” Expenses directly related to this fee income totaled $154,000. Albina will continue to collect fee income of $36,000 annually during the next six years for managing financial, audit, and compliance activities related to the NMTC program.

“Our steady return to profitability reflects the hard work of our team and we continue to work towards improving operating performance. As a consequence, we are seeing strong interest from investors in our efforts to raise new capital,” added Cebula.

Financial Highlights (at or for the period ended September 30, 2012):

  • Albina earned $0.19 per share in the third quarter of 2012 and $0.27 per share for the first nine months of 2012.
  • Net income increased 168% to $362,000 for the first nine months of 2012 compared to $135,000 for the like period a year ago.
  • In August 2012, Albina deployed $8.4 million of New Markets Tax Credit (NMTC) allocations generating $456,000 of fee income, contributing to third quarter revenues of $1.96 million.
  • Deposits totaled $119.7 million, compared to $123.8 million at the end of the preceding quarter and $122.2 million at September 30, 2011. Non-interest-bearing deposits grew 15% year-over-year and accounted for 32% of total deposits at September 30, 2012.
  • Total assets were $130.3 million, compared to $134.2 million at the end of the preceding quarter and $134.4 million a year ago.
  • Loans totaled $76.2 million at quarter end, compared to $84.1 million at June 30, 2012, and $96.7 million at September 30, 2011.
  • Interest expense for the quarter declined 35% to $229,000 from $355,000 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.
  • Net interest margin (NIM) expanded 4 basis points to 3.65% in the third quarter of 2012, from 3.61% in the preceding quarter and was down from 4.18% in the third quarter a year ago. Year-to-date, NIM was 3.80% compared to 4.54% in the first nine months of 2011.

Credit Quality

“We have been focusing significantly on improving credit quality over the years and as a consequence, it was not necessary to record a loan loss provision in the second or third quarter of 2012,” Cebula commented. Reserves remained ample with allowance for loan and lease losses at $2.8 million, or 3.64% of gross loans at September 30, 2012.

Key credit metrics further improved during the quarter with nonperforming assets (NPAs), consisting of nonaccrual loans, other real estate owned (OREO) and loans delinquent 90 days or more, declining significantly to $4.1 million, or 3.13% of total assets at September 30, 2012, compared to $6.9 million, or 5.13% of total assets a year ago. At June 30, 2012, NPAs were $4.4 million, or 3.29% of total assets. $1.0 million, or 38% 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) decreased 40% during the quarter to $2.6 million, compared to $4.4 million at the end of the preceding quarter, and dropped 57% from $6.1 million at the end of the third quarter a year ago. NPLs represented 3.46% of total loans at September 30, 2012, compared to 5.25% of total loans three months earlier and 6.30% a year ago. “The decline in NPLs during the quarter was attributable to foreclosing on nonperforming loans and converting them to OREO,” said Cebula. “We foreclosed on four properties during the quarter, and have an offer on one fully operating business. We anticipate the sale to close during the fourth quarter. We will soon be actively marketing the remaining three properties and, as the economy improves, we believe we can sell these properties within our communities.” OREO accounted for $1.4 million of NPAs at September 30, 2012. Albina had no OREO at June 30, 2012 and $795,000 at the end of the third quarter a year ago.

Net charge offs for the third quarter of 2012 totaled $13,000, or 0.06% of average loans during the quarter, down sharply from $243,000, or 0.99% of average loans during the third quarter of last year. Recoveries from previously charged off loans reduced net charge-offs by $111,000 in the first nine months of 2012.

The allowance for loan and lease losses (ALLL) was $2.8 million, or 3.64% of total loans at September 30, 2012, compared to $3.1 million, or 3.25% of total loans a year ago. At June 30, 2012, the ALLL was $2.8 million, or 3.31% of total loans. No provision for loan and lease losses was recorded during the second or third quarter of 2012, compared to a provision of $400,000 taken in the third quarter of 2011.

Balance Sheet

Albina Community Bancorp's assets totaled $130.3 million at September 30, 2012, compared to $134.2 million at June 30, 2012 and $134.4 million at September 30 2011.

The investment securities portfolio increased 59% to $30.8 million at September 30, 2012, compared to $19.4 million at June 30, 2012 and grew 63% from $18.8 million a year ago. At the end of September 2012, the investment portfolio was comprised primarily of government-sponsored mortgage-backed securities that have an estimated average life of 2.2 years.

“We have been dedicated to growing our loans over the last several quarters. We see loan demand starting to improve although, as a result of two large loans paying off, gross loans are down this quarter,” commented Cebula. “We maintain strong liquidity to meet the demands of credit-worthy customers by holding short-term liquid securities, and we also have access to lines of credit at the Federal Home Loan Bank and the Federal Reserve Bank.” Loans, net of reserves, were $73.5 million at quarter end, compared to $81.3 million at June 30, 2012, and $93.6 million at September 30, 2011.

Albina's loan portfolio remains well-diversified with a wide variety of borrowers and collateral. Approximately 77% of the loan portfolio is secured by either residential or commercial real estate, with approximately 41% of Albina's commercial real estate (CRE) being owner-occupied. The following table shows the changes in the loan portfolio in each category:

(Dollars in thousands)

(Certain loan balances have been reclassified between categories in the periods presented.)

 

  As of the Date Ended

 

September 30,   June 30,   September 30,

 

2012   2012   2011
(unaudited) (unaudited) (unaudited)
Loans      
 
Commercial business $ 16,449 21.6 % $ 17,004 20.2 % $ 21,307 22.0 %
R/E construction - 0.0 % - 0.0 % - 0.0 %
Commercial R/E 42,785 56.1 % 47,151 56.1 % 49,020 50.7 %
Multifamily residential 2,441 3.2 % 2,464 2.9 % 2,783 2.9 %
One to four family residential 13,539 17.8 % 16,488 19.6 % 16,363 16.9 %
Consumer 1,104 1.4 % 1,087 1.3 % 7,364 7.6 %
Unearned Loan Fees   (109 ) -0.1 %   (120 ) -0.1 %   (121 ) -0.1 %
Total Loans 76,209 100.0 % 84,073 100.0 % 96,715 100.0 %

Total deposits were $119.7 million at the end of September 2012, compared to $123.8 million at June 30, 2012 and $122.2 million a year ago. Noninterest-bearing deposits at September 30, 2012, were up 15% from a year ago and interest-bearing deposits grew 9%. Savings account balances were up 32% from year ago levels, while certificates of deposit dropped 30%.

At the end of the third quarter of 2012, noninterest-bearing deposits accounted for 32% of total deposits, interest-bearing accounts represented 37% and savings accounts were 7%. Certificates of deposits (CDs) accounted for 25% of total deposits at September 30, 2012; a significant decline from year ago levels when CDs represented 35% of total deposits. “We continue to see strong support from our neighboring communities who want to support their local community bank,” said Cebula. “This local support has contributed to our ability to allow higher rate, out-of-area, CDs leave the bank as they mature. We had nearly $7.0 million in such maturities during July but our total deposits only dropped by approximately $4.1 million during the quarter. As Portland's only certified community development bank, we are proud to support the financial needs of the small businesses in the communities we serve.”

Review of Operations

Total revenue (net interest income plus non-interest income) increased 32% to $1.96 million in the third quarter, compared to $1.48 million in the preceding quarter, and grew 13% from $1.74 million in the quarter ended September 30, 2011.

Net interest income was $1.1 million both in the second and third quarter of 2012; because of improvements in loan quality and the adequacy of the ALLL, no loan loss provision was recorded in either quarter. After a $400,000 provision for loan losses in the third quarter of 2011, net interest income was $884,000. For the first nine months of 2012, after a $60,000 loan loss provision, net interest income was $3.4 million, compared to $4.3 million for the first nine months of 2011, which was after a provision of $500,000. The decline in net interest income year-to-date was primarily due to declining loan balances and the lower yields earned on those balances as they shifted into cash or short-term investments.

“While our net interest margin remains under pressure because of the historically low interest rate environment, the margin was up 4 basis points from the preceding quarter but down from a year ago,” said Cebula. Albina's net interest margin (NIM) was 3.65% for the third quarter, compared to 3.61% in the preceding quarter and 4.18% in the third quarter a quarter a year ago. For the first nine months of 2012, the NIM was 3.80% compared to 4.54% for the first nine months of 2011.

Primarily due to the $456,000 of NMTC fee income, non-interest income was $864,000 in the third quarter of 2012. Non-interest income in the second quarter was $391,000, compared to $454,000 in third quarter of 2011. In the first nine months of 2012, non-interest income was $1.6 million, compared to $1.3 million in the first nine months of 2011. Although the NMTC fee income was a main factor in the increased non-interest income year-to-date, merchant and card interchange income was up 10% from the preceding quarter and 11% year-over year.

Non-interest expense increased 16% to $1.7 million for the third quarter of 2012, compared to $1.5 million for the third quarter a year ago. Year-to-date, non-interest expense declined 6% to $4.6 million from $4.9 million for the first nine months of 2011. “Total non-interest expense increased for the third quarter primarily due to increased legal and professional expenses related to the NMTC fee income we received in the quarter,” added Cebula. “Other expenses impacting the quarter were legal expenses and unpaid property taxes related to the OREO properties.”

About Albina Community Bancorp

Albina Community Bank is a locally owned, 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.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, including statements 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 than those expected. 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.

 
Albina Community Bancorp
Balance Sheet

(Dollars in thousands)

 

  As of the Date Ended
September 30,   June 30,   September 30,
2012   2012   2011
(unaudited)   (unaudited)   (unaudited)
ASSETS
 
Cash and due from banks $ 386 $ 312 $ 368
Interest-bearing deposits 14,030 22,956 10,324
Federal funds sold   6       28       21  
Total cash and cash equivalents 14,422 23,297 10,713
 
Investment securities 30,798 19,418 18,844
Federal Home Loan Bank Stock 1,313 1,325 1,325
 
Loans 76,209 84,073 96,715
Allowance for loan and lease losses   (2,774 )     (2,787 )     (3,142 )
Net loans 73,434 81,286 93,573
 
Property and equipment, net 4,596 4,656 4,829
Other real estate owned 1,439 - 795
Other assets   4,291       4,253       4,270  
         
Total assets $ 130,295     $ 134,235     $ 134,350  
 
LIABILITIES AND EQUITY
 
Deposits
Non-interest bearing deposits $ 38,169 $ 35,457 $ 33,291
Interest-bearing accounts 44,109 44,961 40,378
Savings accounts 7,832 7,460 5,948
Time certificates   29,598       35,908       42,574  
Total deposits 119,708 123,786 122,191
 
Liabilities
Other borrowings 3,004 3,032 5,117
Subordinated debentures 6,186 6,186 6,186
Other liabilities   2,451       2,436       2,235  
Total liabilities 131,349 135,441 135,729
 
Shareholders' equity:
Preferred stock 2,482 2,482 2,482
Common stock 8,611 8,611 8,611
Retained earnings (12,184 ) (12,436 ) (12,703 )
Accum. other comp. income   37       137       231  
Total shareholders' equity   (1,054 )     (1,206 )     (1,380 )
         
Total liabilities and equity $ 130,295     $ 134,235     $ 134,350  
 
FINANCIAL RATIOS
Loans / deposits 64 % 68 % 79 %
Non-performing loans / total loans 3.46 % 5.25 % 6.30 %
Reserve / loans 3.64 % 3.31 % 3.25 %
 
Albina Community Bancorp
Statement of Operations

(Dollars in thousands, except per-share data)

 

  Three Months Ended   Nine Months Ended
September 30,   June 30,   September 30, September 30,   September 30,
2012   2012   2011 2012   2011
(unaudited)   (unaudited)   (unaudited) (unaudited)   (unaudited)
INTEREST INCOME
Interest and fees on loans $ 1,231 $ 1,277 $ 1,554 $ 3,973 $ 5,149
Interest on investment securities 75 43 76 179 289
Other interest income   14       12       7     34       20  
Total interest income 1,320 1,332 1,638 4,186 5,458
 
INTEREST EXPENSE
Interest on deposits 113 130 229 403 793
Interest on borrowings   116       116       126     346       386  
Total interest expense   229       247       355     749       1,179  
 
NET INTEREST INCOME 1,091 1,086 1,284 3,437 4,280
Loan loss provision   -       -       400     60       500  
Net interest income after provision 1,091 1,086 884 3,377 3,780
 
NON-INTEREST INCOME
Service charges and fees 144 150 145 445 433
Government payments and contracts - - - - -
Loan fees on brokered loans - - 5 - 5
Merchant & card interchange income 119 121 108 350 314
Realized gain/(loss) on sale of investment securities - - 1 - 4
Realized gain/(loss) on sale of Loans & OREO - - 87 (34 ) 205
Other income   601       120       108     839       320  
Total non-interest income 864 391 454 1,600 1,282
 
NON-INTEREST EXPENSE
Salaries and employee benefits 617 682 663 1,852 2,142
Occupancy and equipment 168 172 162 508 521
Legal and professional 304 116 139 618 556
Marketing 33 40 33 104 109
Data processing 187 195 184 564 568
Loan and OREO 139 24 117 234 231
FDIC assessment 109 111 92 331 371
Other   146       125       74     404       412  
Total non-interest expense 1,703 1,465 1,464 4,615 4,912
 
PRETAX INCOME 252 12 (126 ) 362 150
Provision for income taxes   -       -       -     -     15  
 
NET INCOME $ 252     $ 12     $ (126 ) $ 362     $ 135  
 
Earnings per share:
Basic $ 0.19 $ 0.01 $ (0.10 ) $ 0.27 $ 0.10
Diluted $ 0.19 $ 0.01 $ (0.10 ) $ 0.27 $ 0.10
 
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 0.77 % 0.04 % -0.36 % 0.37 % 0.13 %
Efficiency ratio 87 % 99 % 84 % 92 % 88 %
Net interest margin 3.65 % 3.61 % 4.18 % 3.80 % 4.54 %
 
Albina Community Bancorp
Selected Highlights

(Dollars in thousands)

(Certain loan balances have been reclassified between categories in the periods presented.)

 

  As of the Date Ended

 

September 30,   June 30,   September 30,

 

2012   2012   2011
(unaudited) (unaudited) (unaudited)
Loans      
 
Commercial business $ 16,449 21.6 % $ 17,004 20.2 % $ 21,307 22.0 %
R/E construction - 0.0 % - 0.0 % - 0.0 %
Commercial R/E 42,785 56.1 % 47,151 56.1 % 49,020 50.7 %
Multifamily residential 2,441 3.2 % 2,464 2.9 % 2,783 2.9 %
One to four family residential 13,539 17.8 % 16,488 19.6 % 16,363 16.9 %
Consumer 1,104 1.4 % 1,087 1.3 % 7,364 7.6 %
Unearned Loan Fees   (109 ) -0.1 %   (120 ) -0.1 %   (121 ) -0.1 %
Total Loans 76,209 100.0 % 84,073 100.0 % 96,715 100.0 %
 
 
ASSET QUALITY
Non-Performing loans:
Loans past due 90 days or more $ - $ - $ 81
Non-accrual loans   2,639     4,411     6,013  
Total non-performing loans 2,639 4,411 6,095
OREO   1,439     -     795  
Total non performing assets $ 4,078   $ 4,411   $ 6,890  
 
Non performing assets / total assets 3.13 % 3.29 % 5.13 %
 
 
Beginning ALLL - from previous FYE $ 2,910 $ 2,910 $ 3,298
Provision for loan loss expense 60 60 500
Loan charge offs (307 ) (265 ) (921 )
Loan recoveries   111     82     265  
(Charge offs), net of recoveries   (196 )   (183 )   (656 )
Ending ALLL - YTD   2,774     2,787     3,142  
 
 
Average Loans
Quarter 80,203 84,806 97,836
YTD 85,283 87,851 103,489
Net charge-off
Quarter 13 6 243
YTD 196 183 656
Net charge-offs (a)
Quarter 0.06 % 0.03 % 0.99 %
YTD 0.31 % 0.42 % 0.85 %
(a) Annualized and calculated on average loan balances
 
Non-accrual loans
Residential Real Estate 1,264 2,516 1,000
Commercial Real Estate 1,375 1,814 4,553
Commercial/ Industrial   -     81     460  
Total Non-accrual loans 2,639 4,411 6,013

Albina Community Bank
President & CEO
Cheryl Cebula, 503-288-7296
or
Albina Community Bancorp / Bank
Chief Financial Officer
Joey C. Ingman, 503-288-8495

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