BOCA RATON, Fla., Jan. 29, 2008 (PRIME NEWSWIRE) -- Sun American Bancorp (Nasdaq:SAMB) ("Sun American"), the bank holding company for Sun American Bank, today reported a net loss of $2.1 million or $0.20 per share for the fourth quarter ended December 31, 2007, compared to net income of $1.8 million or $0.20 per diluted share for the fourth quarter of 2006.
For the full year, the net loss was $2.4 million, or $0.22 per diluted share, compared to net income of $3.2 million, or $0.35 per diluted share, in 2006.
The reduced results for the full year ended December 31, 2007 are attributed mostly to a higher loan loss provision and write offs in the fourth quarter.
"This quarter our earnings were impacted by the declining Florida real estate markets through higher non performing assets and increased provision for loan losses. Our revenue performance remained solid and overhead was essentially unchanged from the prior quarter. We continue to work diligently on cost cutting and have reduced certain costs since the third quarter of 2007. Our capital ratios remain strong and position us to continue to grow our bank," said Michael Golden, President, CEO and Chairman of Sun American Bank. Sun American ended the year with assets of $579 million up 15 percent over the prior year. Net loans were $439 million, an increase of 25%.
The following one time write offs of $1.1 million were included in the 2007 financial results:
* Fixed asset write-off of the demolition of an older branch for $292,000; * Conversion costs related to two bank acquisitions of $199,000 * Restructuring charges in connection with staff reductions of $50,000; * Litigation settlement costs of $77,000; * Lease cancellation costs for a closed branch of $122,000. Full Year 2007 Financial Highlights (compared to 2006) included: * Revenues advanced 36% to $21.9 million. * Net interest income before provision for loan losses grew 31% to $19.9 million. * Nonperforming assets represented 0.96% of total assets. (This compared to a 1.61% in the third quarter of 2007.) * Net interest margin for the year was 4.06% * Loans increased 25% to $439 million. * Assets increased 15% to $579 million. * Book value per share increased to $9.55 from $9.12. * Completed the integration of two banks. * New common stock repurchase program to buy back up to one million shares of the Company's common stock, after the Company had previously purchased 302,510 shares of its common stock under the previous stock repurchase program.
Operating Results
Sun American's quarterly net interest income increased to $4.7 million compared to $3.7 million in the fourth quarter a year ago. For all of 2007, net interest income increased 31% to $19.9 million compared to $15.2 million in 2006 due to increases in the loan portfolio balances. Interest and fees on loans increased 39% to $8.6 million in the fourth quarter of 2007, and increased 49% to $34.1 million for all of 2007, compared to their respective periods a year ago. Non-interest income was $522,000 in the fourth quarter of 2007 compared to $238,000 in the fourth quarter a year ago, and for the full year, non-interest income increased by 132% to $2.0 million, compared to $859,000 in 2006. The fee revenue increase primarily resulted from an increase in service charges on deposit accounts and an increase in the number of accounts as a result of two acquisitions.
Total revenues, consisting of net interest income before the provision for loan losses and non-interest income, grew 33% to $5.2 million in the fourth quarter, compared to $3.9 million in the fourth quarter of 2006. Revenues increased 36% to $21.9 million for all of 2007, compared to $16.1 million in 2006.
The net interest margin for 2007 was 4.06%, compared to 5.01% in 2006.
Non-interest expenses were $5.4 million in the fourth quarter of 2007, an increase from $3.8 million in the fourth quarter a year ago. For all of 2007, non-interest expenses were $22.1 million compared to $13.8 million in 2006. Salaries and employee benefits and occupancy costs associated with the two acquisitions and the expansion of our branch network constituted the majority of the increase in expenses. Also included in 2007 are non-recurring expenses already noted above.
Sun American incurred stock-based compensation expense of $985,000 for 2007, compared to $610,000 in 2006. This is a non cash GAAP expense item and is not deducted from equity capital.
Results for the fourth quarter of 2007 reflect a provision for loan loss in the amount of $3.2 million due to loan charge-offs and by assigning higher provisions in certain areas to reflect current market exposures. For all of 2007, the provision for loan loss is $3.3 million compared to $338,000 for all 2006.
The income tax benefit for 2007 amounts to $1.1 million mostly driven by the credit losses mentioned above. This compares to a $1.2 million tax benefit recognized in 2006 for deferred tax assets.
Balance Sheet Activity
Net loans increased 25%, to $439 million at December 31, 2007, compared to $351 million a year earlier.
Assets increased 15% to $579 million at December 31, 2007, compared to $504 million a year earlier.
Stockholders' equity increased 20% to $102 million compared to $85 million at the end of 2006. Equity growth was due to the issuance of common shares associated with the acquisition of Independent Community Bank less the impact of the share and warrants buyback programs and the net loss for 2007.
Book value per share improved to $9.55 at December 31, 2007, compared to $9.12 a year earlier.
Robert Nichols, Chairman of the Executive Committee and CFO noted that "our franchise remains strong and we are proud to have been able to grow our balance sheet, branch network and core businesses in a challenging year."
Credit Quality
"During the fourth quarter of 2007, we focused on a detailed review of our loan portfolio to provide early identification of potential problem loans. The results of this review determined that additional loan loss provisions and charge offs were required in the fourth quarter of 2007, to reflect current loan asset values and to provide for a general decline in collateral values in our market place. As a result of our review, additional provision for loan losses of $3.2 million were recorded in the fourth quarter of 2007," stated Robert Garrett, EVP & Chief Lending Officer.
Also during the fourth quarter of 2007, we diligently worked to reduce the level of non performing loans. At December 31, 2007, nonperforming loans totaled $ 5.5 million, representing 0.96 % of total assets. This compares to $ 9.5 million at the end of the third quarter which represented 1.66 % of total assets.
The allowance for loan losses at December 31, 2007 was $ 5.3 million and represented 1.20 % of total loans. This compares to an allowance for loan losses of $3.1 million at the end of 2006 which represented 0.86% of total assets.
Mr. Golden noted that, "We have had a decrease in nonperforming assets during the fourth quarter 2007 due to an aggressive policy with our borrowers and hard intensive work by our work out specialist. We will continue working aggressively to resolve issues related to clients who are experiencing loan performance issues. Initiatives include work outs, loan sales and foreclosures. Our policy is to monitor borrower activity closely and to identify potential issues before they amplify. We work with our borrowers to provide solutions that work in the best interests of both the borrower and the bank. However we recognize that during this period of real estate challenges these types of problems do not go away over night and we will continue to deal with them well into 2008. I am confident that we have the expertise and experience to deal with these issues as we have demonstrated in the fourth quarter by our successful efforts to remove unwanted loans from the balance sheet and the reduction of non performing assets."
2007 Accomplishments
On December 29, 2006, Sun American completed its acquisition of Beach Bank, resulting in the acquisition of $114 million in total assets, $68 million of loans and $106 million of deposits.
On March 30, 2007 Independent Community Bank was successfully acquired, which added $123 million in assets and $99 million in deposits.
"In the past year we have focused on solidifying the acquisition of both Beach Bank and Independent Community Bank, which were successfully converted in the first half of 2007," said Michael Golden, President and CEO. We opened one new branch in West Boca Raton, Florida in April 2007 and we opened a second new branch in Stuart, Florida in December 2007. We will continue to evaluate growth opportunities that can be cost effective and add to shareholder value."
In April 2007 we began trading on the NASDAQ Global market under the common stock symbol of "SAMB".
In May 2007 we completed a one for two and a half reverse common stock split.
In November 2007 we completed a series of tender offers to repurchase outstanding warrants issued for our common stock. Approximately 2.8 million warrants were tendered and this resulted in a reduction of overall warrants outstanding of approximately 18 percent.
"Though, I believe, the New Year will be a challenging one I also believe that our management team is up for the challenge. The Bank will focus on adding new quality loans and continue to grow the bank without increasing the expense side of the ledger. We will continue to focus on our target of long term growth which we believe will result in good shareholder value in the future. We believe our strong capital base will get us through any potential problems that are unforeseen at this time. Our core franchise remains very strong with strong risk management procedures in place. Though the bank up until this time has been on a fast track for growth, a shift to obtain more current earnings will be highlighted due to the current environment and the maturing of our core business. Our objective of becoming a $1 billion bank is still on track and we believe still obtainable during the next few years," Mr. Golden stated.
About Sun American Bancorp
Based in Boca Raton, Florida, Sun American Bancorp is the single-bank holding company of Sun American Bank, a state-chartered, federal member bank engaged in a general commercial and consumer banking business. Sun American Bank operates 15 offices in Miami, Broward and Palm Beach Counties in Southeast Florida. For additional information, please visit our website at www.sunamericanbank.com.
The Sun American Bancorp logo is available at http://www.primenewswire.com/newsroom/prs/?pkgid=3685
Except for historical information containing herein, the matters set forth in this news release are "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995. Although Sun American Bancorp believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions; there can be no assurance that its expectations will be realized. Forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially from Sun American Bancorp's expectations. Factors that could contribute to such differences include those identified in Sun American Bancorp's Form 10-K for the year-ended December 31, 2006, and those described from time to time in Sun American's other filings with the Securities and Exchange Commission, news releases and other communications.
SUN AMERICAN BANCORP CONSOLIDATED BALANCE SHEETS December 31, -------------------------- 2007 2006 ------------ ------------ ASSETS Cash and due from financial institutions $ 8,109,917 $ 7,878,379 Federal funds sold -- 48,537,000 ------------ ------------ Total cash and cash equivalents 8,109,917 56,415,379 Securities available for sale 5,778,655 5,173,796 Securities held to maturity (fair value 2007 - $50,904,402, 2006 - $ 51,980,571) 50,306,758 52,244,379 Loans, net (of allowance for loan losses of $5,309,508 and $3,052,638) 439,423,063 350,742,657 Federal Reserve Bank stock 3,180,900 1,749,300 Federal Home Loan Bank stock 4,658,500 1,289,600 Accrued interest receivable 2,698,469 2,409,283 Premises and equipment, net 11,211,441 9,880,563 Goodwill 44,553,427 17,440,156 Intangibles 2,719,538 1,758,082 Other assets 6,521,165 4,780,002 ------------ ------------ $579,161,835 $503,883,197 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Non-interest bearing $ 50,098,536 $ 53,334,086 Interest bearing 330,608,180 349,644,106 ------------ ------------ Total deposits 380,706,716 402,978,192 Federal Funds Purchased 11,871,000 -- Repurchase agreements 3,112,655 1,547,273 Federal Home Loan Bank advances 78,000,000 11,000,000 Other borrowed money 2,703,155 -- Accrued expenses and other liabilities 1,211,303 3,816,042 ------------ ------------ Total liabilities 477,604,829 419,341,507 Minority interest 27,552 27,753 Shareholders' equity Common stock, $.025 par value; 20,000,000 shares authorized; 2007 - 10,632,434 shares outstanding, 2006 - 9,270,657 shares outstanding 273,374 231,766 Capital surplus 108,722,717 87,407,548 Accumulated deficit (5,281,249) (2,915,439) Treasury Stock, at cost; 302,510 shares (1,990,641) -- Accumulated other comprehensive loss (194,747) (209,938) ------------ ------------ Total shareholders' equity 101,529,454 84,513,937 ------------ ------------ $579,161,835 $503,883,197 ============ ============ SUN AMERICAN BANCORP CONSOLIDATED STATEMENTS OF INCOME Twelve Months Ended Three Months Ended ------------------------- ------------------------- December 31, December 31, December 31, December 31, 2007 2006 2007 2006 ----------- ----------- ----------- ----------- (unaudited) (unaudited) (unaudited) Interest and dividend income Loans, including fees $34,069,909 $22,821,484 $ 8,571,029 $ 6,164,077 Securities 3,588,166 1,362,235 945,950 407,266 Federal funds sold and other 718,338 915,893 6,708 532,677 ----------- ----------- ----------- ----------- 38,376,413 25,099,612 9,523,687 7,104,020 Interest expense Deposits 16,544,432 9,148,681 3,897,183 3,189,176 Other 1,901,078 748,530 928,003 232,581 ----------- ----------- ----------- ----------- 18,445,510 9,897,211 4,825,186 3,421,757 ----------- ----------- ----------- ----------- Net interest income 19,930,903 15,202,401 4,698,501 3,682,263 Provision for loan losses 3,325,966 338,321 3,170,272 (456,983) ----------- ----------- ----------- ----------- Net interest income after provision for loan losses 16,604,937 14,864,080 1,528,229 4,139,246 Noninterest income Service charges on deposit accounts 1,991,058 859,411 521,943 238,351 Net losses on sales of securities (11,924) -- (384) -- ----------- ----------- ----------- ----------- 1,979,134 859,411 521,559 238,351 Noninterest expense Salaries and employee benefits 10,134,466 7,154,241 2,293,952 1,925,353 Occupancy and equipment 5,831,182 3,001,340 1,530,436 917,685 Data processing 1,187,340 721,607 268,062 209,936 Professional services 1,424,568 699,968 445,350 124,789 Insurance 603,868 253,433 177,214 70,669 Advertising 132,328 293,430 57,167 81,324 Amortization of intangibles 794,444 148,620 229,853 36,388 Other 1,971,523 1,506,324 386,459 412,404 ----------- ----------- ----------- ----------- 22,079,719 13,778,963 5,388,493 3,778,548 ----------- ----------- ----------- ----------- Income (loss) before income taxes and minority interest (3,495,648) 1,944,528 (3,338,705) 599,049 Minority interest in net income of subsidiary (15,486) (1,524) (489) (811) ----------- ----------- ----------- ----------- Income (loss) before provision for income taxes (3,511,134) 1,943,004 (3,338,216) 598,238 ----------- ----------- ----------- ----------- Income tax benefit (1,145,324) (1,236,000) (1,223,727) (1,236,000) ----------- ----------- ----------- ----------- Net income (loss) $(2,365,810) $ 3,179,004 $(2,114,489) $ 1,834,238 =========== =========== =========== =========== Basic earnings (loss) per share: $ (0.22) $ 0.42 $ (0.20) $ 0.24 Diluted earnings (loss) per share: $ (0.22) $ 0.35 $ (0.20) $ 0.20 Weighted average number of common shares, basic 10,733,017 7,590,345 10,649,360 7,793,150 Weighted average number of common shares, diluted 10,733,017 9,031,388 10,649,360 9,220,617 SUN AMERICAN BANCORP AVERAGE BALANCE SHEET For the years ended December 31, ----------------------------------------------------- 2007 2006 ------------------------- ------------------------- Average Average Average Interest Yield/ Average Interest Yield/ Balance (c) Rate Balance (c) Rate -------- -------- ------ -------- -------- ------ (Dollars in Thousands) Assets: Interest- earning assets: Investments (a) $ 69,177 $ 3,659 5.29% $ 30,297 $ 1,362 4.50% Federal funds sold 13,528 647 4.79 18,303 916 5.00 Net loans : Commercial loans (b) 33,409 3,035 9.08 25,622 2428 9.47 Commercial real estate loans (b) 268,480 22,515 8.39 162,026 14,386 8.88 Consumer loans (b) 4,747 395 8.33 2,090 172 8.26 Residential real estate loans (b) 77,087 6,437 8.35 62,396 5,622 9.01 Home equity and other loans (b) 24,316 1,688 6.94 2,886 213 7.38 -------- -------- -------- -------- Net loans (b) 408,039 34,070 8.35 255,020 22,821 8.95 -------- -------- -------- -------- Total interest earning assets 490,744 38,376 7.82 303,620 25,099 8.27 -------- -------- Noninterest- earning assets 68,540 24,861 -------- -------- Total assets $559,284 $328,481 ======== ======== Liabilities and Stockholders' Equity: Interest- bearing liabilities: Deposits NOW $ 88,520 $ 3,529 3.99% $ 91,383 $ 4,040 4.42% Money market accounts 64,894 2,908 4.48 14,299 506 3.54 Savings accounts 18,252 686 3.76 4,716 102 2.16 Certificates of deposit 181,268 9,421 5.20 102,135 4,501 4.41 -------- -------- -------- -------- Total interest- bearing deposits 352,934 16,544 4.69 212,533 9,149 4.30 Federal funds purchased, securities sold under repurchase agreements and other 4,957 203 4.10 1,185 51 4.33 Federal Home Loan Bank advances 34,026 1,664 4.89 16,255 697 4.29 Other borrowed money 483 34 7.07 -- -- -- -------- -------- ------ -------- -------- ------ Total interest- bearing liabilities 392,400 18,445 4.70 229,973 9,897 4.30 -------- -------- ------ -------- -------- ------ Noninterest bearing liabilities 66,384 36,370 Stockholders' equity 100,500 62,138 -------- -------- Total liabilities and stockholders' equity $559,284 $328,481 ======== ======== Net interest income and net yield on interest- earning assets $ 19,931 4.06% $ 15,202 5.01% ======== ===== ======== ===== (a) Includes investment securities, Federal Reserve Bank stock and Federal Home Loan Bank stock. (b) Includes loans for which the accrual of interest has been suspended. (c) Includes fee income on loans.