PORTLAND, Ore., May 18, 2011 (GLOBE NEWSWIRE) -- Albina Community Bancorp (OTCBB:ACBC), the holding company of Portland's only certified community development bank announced today it earned $161,000, or $0.12 per diluted share, as problem credits were cut in half and net interest margin expanded 117 basis points in the quarter and 132 basis points year-over-year. The profitable first quarter compares to net losses of $1.3 million, or $0.92 per share, in the fourth quarter of 2010 and a net loss of $867,000, or $0.66 per share, in the first quarter of 2010.
"Our financial results for the first quarter showed strong improvement over prior periods with better asset quality and lower cost of funds contributing to an improved margin," said Jim Schlotfeldt, Executive Vice President and Chief Financial Officer. "The restatement of fourth quarter results, while significant, is the result of a single loan that was returned to nonperforming status pursuant to regulatory accounting standards. Despite the restatement, we remain confident that the asset valuation remains the same as previously reported and the credit will be collected in full. We are pleased with our first quarter results, as we continue to focus on improving asset quality."
Following a regulatory review, the company reversed a recovery of a single loan and restated its fourth quarter and 2010 financial results. "With the lump-sum payment of $703,000, we booked the payment as a recovery and returned the $2.4 million loan to accrual status at the end of 2010. Because the borrower had added equity, made monthly interest payments and was continuing to sell condos in the project, we deemed the loan to be a performing loan," added Schlotfeldt. "After further review and consultation with our regulators, we determined that the loan did not qualify to be returned to accrual status. Consequently, the fourth quarter 2010 results were reduced by the reversal of the $703,000 recovery and the reversal of $210,000 of interest income that had been recognized when the loan was returned to accrual status. Additionally, the provision for loan losses increased $1.1 million with the reverse provision of $900,000 moving to a provision of $200,000, generating a net loss for the fourth quarter of 2010 of $1.3 million, or $0.92 per common share. For the full year, the net loss totaled $4.9 million, or $3.91 per common share.
"We are making significant progress in reducing our nonperforming loans, and aside from a handful of small balance consumer loans, we have no new delinquency issues," continued Schlotfeldt. "Net interest margin expanded again in the first quarter, as we lowered our cost of funds and repaid brokered and borrowed funds, which contributed to the profitable first quarter in 2011. We are pleased with the progress of the bank, albeit not as expeditiously as we would like, and believe we will return our company to a healthy financial condition. Potential investors continue to express an interest in our efforts to raise new capital."
First Quarter 2011 Financial Highlights: (for the period ended March 31, 2011)
- Net income of $161,000, or $0.12 per share for the quarter ended March 31, 2011.
- Net interest margin improved to 4.98% in the first quarter, compared to 3.81% in the preceding quarter, and 3.67% in the first quarter ended March 31, 2010.
- Asset quality improved substantially with nonperforming assets decreasing 11% to $7.4 million from $8.3 million in the preceding quarter and down 58% from $17.6 million a year ago.
- Allowance for loan losses stands at $3.0 million, or 2.91% of total loans.
- Deposits totaled $125.6 million, compared to $154.1 million a year ago, as the level of wholesale funding was reduced substantially.
- Total assets declined 26% to $137.8 million from $185.6 million a year ago.
- Gross loans were $104.0 million, down 25% from $139.3 million a year ago.
"We have a diverse mix of loans and a deposit base that reflects our solid local customer base," said Cheryl Cebula, President and Chief Executive Officer of Albina Community Bank. "We continue to reach out to the greater Portland neighborhoods and are fulfilling our mission to serve the needs of a broad range of customers, especially low-to-moderate income individuals and small business owners and to those that care most about our community."
Nonperforming assets (NPAs), consisting of nonperforming loans, other real estate owned (OREO), and loans delinquent 90 days or more, declined during the quarter to $7.4 million, or 5.35% of total assets, at March 31, 2011, from $8.3 million, or 5.67% of total assets in the preceding quarter, and down from $17.6 million, or 9.47% of assets a year ago. "In addition to the significant improvement in our credit quality from a year ago, real estate construction loans continue to decline and now account for 0.4% of the loan portfolio, said Schlotfeldt. "Again, we are also seeing a considerable slowdown in new problematic loans."
Nonperforming loans (NPLs) decreased 7.0% during the quarter to $4.7 million, compared to $6.8 million in the preceding quarter, and declined 31.9% from $14.8 million in the first quarter a year ago. NPLs represented 4.5% of total loans at March 31, 2011, compared to 5.8% of total loans three months earlier and 10.6% a year ago. "The decline in NPLs during the quarter continues to reflect efforts to work with borrowers to meet loan requirements or to convert nonperforming loans to other real estate owned (OREO)," said Schlotfeldt.
Net charge-offs for the quarter totaled $371,000, or 0.33% of average loans, down from $1.0 million, or 0.74% of average loans a year ago. Recoveries of previously charged off loans totaled $102,000 during the quarter. Other real estate owned (OREO) increased to $2.7 million from $1.5 million in the preceding quarter and fell slightly from $2.8 million a year ago.
The allowance for loan and lease losses (ALLL) totaled $3.0 million, or 2.91% of total loans at March 31, 2011, compared to $3.3 million or 2.85% of total loans at December 31, 2010, and $3.8 million, or 2.72% of total loans a year ago.
Balance Sheet Results
Total assets were $137.8 million at March 31, 2011, compared with $185.6 million at March 31, 2010. Loans, net of reserves, declined during the quarter to $101.0 million at quarter-end compared to $112.5 million at December 31, 2010, and $134.5 million a year ago. The decline in loans during the quarter reflects Albina's exit from the real estate construction market and other loan concentrations that presented elevated risk.
The loan portfolio is well-diversified with a wide variety of borrowers and collateral. Over 70% of the portfolio is secured by real estate, both residential and commercial. Consumer loan participations declined 27% year-over-year standing at $7.2 million. Commercial loan participations dropped 56% year-over-year to $8.6 million. Consumer and commercial loan participations provide additional earnings and diversification for the portfolio and account for approximately 15% of the total loan portfolio. More than 48% of Albina's commercial real estate loans are owner-occupied and another 24% are partially occupied by owners with the remainder of the building leased to other businesses.
The following table shows the changes in the loan portfolio in each category (3/31/2011 compared to 12/31/2010 and 3/31/2010):
At March 31, 2011, total deposits were $125.6 million compared to $154.1 million a year ago. Noninterest bearing deposits accounted for 24% of total deposits, interest bearing and savings accounts accounted for 37% of deposits and time certificates were 39% of total deposits at quarter end. "Albina is well-known in our community, and customers are looking to develop and build solid relationships with us. Local support is much appreciated and evidenced with the increase in our home-grown deposits allowing us to be less reliant on brokered CDs," said Cebula. "With the support of the members of our community, we are making a positive impact in our neighborhoods." The ratio of loans to deposits was 80% at March 31, 2011, compared with 88% a year earlier.
The investment securities portfolio totaled $13.9 million at March 31, 2011. "Our investment portfolio consists entirely of investment grade agency securities that have an average life span of less than 1.4 years; excess liquidity is invested in securities until the underlying time deposits mature or loan originations increase," said Schlotfeldt. "We maintain strong liquidity by holding liquid securities and through our available lines of credit at the Federal Home Loan Bank and the Federal Reserve Bank."
Net interest income before the provision for loan losses was $1.6 million for the first quarter of 2011, compared to $1.5 million for the first quarter a year ago. After the $100,000 provision for loan losses, first quarter 2011 net interest income was $1.5 million compared to a net interest income of $585,000 in the first quarter a year ago, which included a provision for loan losses of $900,000. Non-interest income was $342,000 for the first quarter of 2011, down 16% from $405,000 for the first quarter of 2010.
Albina's net interest margin was 4.98% for the first quarter, an improvement of 117 basis points compared to the preceding quarter and up 131 basis points from the first quarter a year ago. Net interest margin was enhanced approximately .74% by collections of fees on commercial real estate loans during the quarter. "Maturing certificates of deposits and the run-off of high cost certificates of deposits reduced funding costs substantially in the first quarter and are expected to further benefit results this year," said Schlotfeldt.
Non-interest expense declined 8% to $1.7 million for the first quarter 2011 compared to $1.9 million for the first quarter a year ago. "The decline in total non-interest expense for the first quarter reflects a decrease in legal and professional fees and expenses related to managing the loan portfolio and OREOs," added Schlotfeldt. "Salaries and employee benefits have also declined since a year ago."
Due to the capital structure of the company, preferred shareholders participated in the per share loss during the quarter and year-to-date periods. "Our original shareholders, owners of the Preferred A and B series, had reached their maximum participation in our earnings stream in prior years," said Schlotfeldt. "With the recent losses, however, our retained earnings have fallen below their earnings participation threshold. Consequently, the earnings per share allocated to common shareholders was lower by $.03 in the first quarter of 2011. Loss per share allocated to common shareholders was lower by $.63 for the year ended December 31, 2010. On a pro rata basis, future earnings or losses will continue to be allocated between preferred and common shareholders until preferred shareholders reach the $100 per preferred share liquidation preference."
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.
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 .
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.
CONTACT: Cheryl Cebula, President & CEO of Albina Community Bank (503) 288-7296 Jim Schlotfeldt, Chief Financial Officer (503) 288-8495