- Second Quarter 2008 Financial ResultsAmerican Principle Bank (the "Bank") announced year to date financial
results through June 30, 2008. The Bank is a de novo financial institution
that opened for business on October 15, 2007.The Bank lost $309 thousand during the second quarter of 2008, a 38.1%
reduction from a loss of $499 thousand during the first quarter of the
year. The second quarter loss was primarily due to $349 thousand in
provision for loan losses recorded to increase the allowance for loan
losses in conjunction with the growth in the Bank's loan portfolio. Net
loans increased from $15.0 million at December 31, 2007 to $38.5 million at
March 31, 2008 and to $66.6 million at June 30, 2008. The second quarter
2008 loss was equivalent to $0.07 per share, down from a $0.12 loss per
share for the first quarter of 2008. The 2008 year to date loss of $808
thousand was equivalent to $0.19 per share.The Bank reported no non-accrual or delinquent loans as of June 30,
2008, and has not experienced any loan charge-offs. The Bank did not have
any foreclosed real estate or repossessed assets as of June 30, 2008. The
loan portfolio at June 30, 2008 was diversified across multiple types of
lending, with the largest portfolio segments being commercial real estate
loans and commercial business loans. The Bank does not originate sub-prime
mortgage loans.Total assets increased from $100.1 million at March 31, 2008 to $109.5
million at June 30, 2008. The Bank's asset mix experienced a positive shift
during the second quarter, with a greater percentage of assets comprised of
loans and securities and a smaller percentage of assets composed of
comparatively lower yielding federal funds sold. This change in asset mix
contributed to a 38.6% increase in net interest income from $660 thousand
during the first quarter of 2008 to $915 thousand during the second quarter
of 2008.Deposits increased from $13.2 million at December 31, 2007 to $57.9
million at March 31, 2008 and to $67.6 million at June 30, 2008.
Certificates of deposit increased from $814 thousand at March 31, 2008 to
$15.8 million at June 30, 2008 due to customers desiring certificates of
deposit in light of the steepening yield curve and in conjunction with the
Bank's initial participation in the State of California Time Deposit
Program.Stockholders' equity declined from $40.9 million at December 31, 2007 to
$40.4 million at June 30, 2008, as the effect of the year to date loss was
partially offset by capital generated through the Bank's restricted share
plan and an increase in the accumulated other comprehensive income
associated with the unrealized gain on securities available for sale.Provision for loan losses increased from $305 thousand during the first
quarter of 2008 to $349 thousand during the second quarter of 2008. The
ratio of allowance for loan losses to loans outstanding was 1.25% at June
30, 2008.Non-interest expense increased slightly from $861 thousand during the
first quarter of 2008 to $881 thousand during the second quarter of 2008.
This was in part caused by the Bank's recording a $28 thousand provision
for off balance sheet commitments during the second quarter of 2008 in
conjunction with originations of commercial lines of credit and other
sources of undisbursed credit commitments. At June 30, 2008, the Bank
maintained an accrued liability for credit exposure associated with off
balance sheet commitments of $48 thousand.Commenting on the second quarter results, David R. Booker, the Bank's
President and Chief Executive Officer, stated: "We are pleased to report
the Bank's achieving notable success in building its balance sheet and
progressing toward profitability during the second quarter of 2008." Mr.
Booker then added: "The Bank's shareholders have been a strong and
recurring source of business, allowing us to enter the third quarter with a
favorable pipeline of prospective business, with the potential for total
assets to approach $150 million by the end of 2008." Eric J. Schwefler, the
Bank's Chairman of the Board, stated: "The Bank has been well received by
local businesses and professionals seeking customized financial solutions,
flexible delivery options, advanced technology, and concierge service. We
continue to introduce new products and features as part of our commitment
to developing longstanding and beneficial relationships with our clients."The Bank's target markets are commercial enterprises, professionals,
real estate investors, family business entities, and residents in San Luis
Obispo County and northern Santa Barbara County. The Bank serves these
markets through a customizable delivery platform that includes online
deposit via scanners located at customers' facilities, remote branch
deposit throughout the western United States, and sophisticated cash
management services. Clients are also served through the Bank's custom
facility, which was designed to emphasize client convenience,
confidentiality, and a concierge approach to conducting financial
transactions.The Bank is located at 4051 Broad Street, Suite 140, San Luis Obispo,
California, near the intersection of Broad Street (Highway 227) and Tank
Farm Road. The Bank's deposits are insured by the Federal Deposit Insurance
Corporation to the maximum extent allowed by law.Certain of the statements contained herein that are not historical facts
are forward-looking statements within the meaning of the Private Securities
Litigation Reform Act. Forward-looking statements are typically identified
by words or phrases such as "believe", "expect", "anticipate", "intend",
"estimate", "target", "plans", "may increase", "may fluctuate", "may result
in", "are projected", and similar expressions. The Bank's actual results
may differ materially from those included in the forward-looking
statements. These forward-looking statements involve risks and
uncertainties including, but not limited to, the economic, business, and
real estate market conditions in the Bank's market areas, the interest rate
environment, competition, regulatory and legislative actions, the
possibility that the Bank will not be successful in achieving its strategic
objectives, the performance and contributions of employees and directors,
and other factors. The Bank does not undertake, and specifically disclaims
any obligation, to update any forward-looking statements to reflect
occurrences or unanticipated events or circumstances after the date of such
statements.This news release is available at the Internet site for no charge.General communication:
     Phone: (805) 547 - 2800
     Facsimile: (805) 547 - 2801AMERICAN PRINCIPLE BANK
Financial Highlights
(Dollars In Thousands)
June 30, March 31, December 31,
2008 2008 2007
Financial Condition Data
Cash and due from banks $1,598 $3,499 $486
Federal funds sold 15,955 35,845 22,420
Interest bearing deposits in other
financial institutions 5 17 5,088
Securities available for sale,
at estimated fair value:
Mortgage backed securities 9,191 4,849 --
Collateralized mortgage obligations 13,476 14,826 10,680
Loans receivable held for investment:
Residential one to four unit
real estate loans 3,918 4,546 5,185
Home equity lines of credit 2,157 708 --
Multifamily real estate loans 4,947 -- --
Commercial and industrial
real estate loans 24,166 13,819 2,607
Construction loans 6,309 1,865 914
Land / lot loans 7,016 1,606 612
Farm real estate loans 3,591 3,587 --
Commercial business loans 14,098 11,704 4,672
Other loans 1,263 1,185 1,158
Gross loans held for investment,
net of deferred fees and costs 67,465 39,020 15,148
Allowance for loan losses (844) (495) (190)
Loans receivable held for
investment, net 66,621 38,525 14,958
Investment in capital stock of the
Federal Home Loan Bank, at cost 175 77 --
Premises and equipment, net 1,935 2,014 2,088
Accrued interest receivable 322 248 111
Other assets 176 151 122
Total assets $109,454 $100,051 $55,953
Liabilities and Stockholders' Equity
Non-interest bearing demand deposits $6,419 $6,484 $1,695
Interest bearing checking accounts 2,685 1,287 511
Savings accounts 70 21 8
Money market accounts 42,555 49,303 10,814
Certificates of deposit 15,840 814 190
Total deposits 67,569 57,909 13,218
Borrowings 626 653 679
Other liabilities 878 850 1,115
Total liabilities 69,073 59,412 15,012
Stockholders' equity 40,381 40,639 40,941
Total liabilities and
stockholders' equity $109,454 $100,051 $55,953
Financial Highlights, Continued
(Dollars In Thousands Except Share And Per Share Amounts)
Six Months Three Months Three Months
Ended Ended Ended
6/30/2008 6/30/2008 3/31/2008
Operating Data
Interest and dividend income $2,068 $1,196 $ 872
Interest expense 493 281 212
Net interest income before
provision for loan losses 1,575 915 660
Provision for loan losses 654 349 305
Net interest income after
provision for loan losses 921 566 355
Non-interest income 14 7 7
Non-interest expense:
Compensation and employee
benefits 968 469 499
Accounting, legal, and
consulting 147 75 72
Occupancy 256 124 132
Equipment 86 43 43
Data and item processing 75 39 36
Supplies, printing, courier,
and postage 39 22 17
Regulatory assessments 16 10 6
Advertising and promotion 13 8 5
Provision for off balance sheet
commitments 28 28 --
Other expenses 114 63 51
Total non-interest expense 1,742 881 861
Loss before provision for
income taxes (807) (308) (499)
Provision for income taxes 1 1 --
Net loss $(808) $(309) $(499)
Weighted average shares used
in basic loss per share
calculation 4,224,285 4,224,285 4,224,285
Basic loss per share $(0.19) $(0.07) $(0.12)
June 30, March 31, December 31,
2008 2008 2007
Other Information
Net loans to deposits ratio 98.60% 66.53% 113.16%
Allowance for loan losses /
loans outstanding 1.25% 1.27% 1.25%
Nominal and tangible book
value per share $9.56 $9.62 $9.69
Shares of common stock
outstanding 4,224,285 4,224,285 4,224,285_________________________________________________________________________________________________
(c)2008 Market News Publishing Inc. All rights reserved.
Toronto:(416)366-8881 Vancouver:(604)689-1101 Fax:(604)689-1106

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