CLARKSVILLE, Tenn., Aug. 8, 2008 (PRIME NEWSWIRE) -- First Advantage Bancorp (the "Company") (Nasdaq:FABK), the holding company for First Federal Savings Bank (the "Bank"), today announced its results of operations for the three and six months ended June 30, 2008. The Company's net income for the three months ended June 30, 2008 was $549,000 compared to $40,000 for the same period in 2007. For the six months ended June 30, 2008, net income was $1.1 million compared to a net loss of $26,000 for the six months ended June 30, 2007. Basic and diluted earnings per share for the three months ended June 30, 2008 amounted to $0.11. Basic earnings per share for the six months ended June 30, 2008 amounted to $0.24, while diluted earnings per share amounted to $0.23. The results reported for the second quarter and year-to-date of 2007 are the results of the Bank only, which completed its conversion from the mutual to the stock form of organization on November 29, 2007. Due to the completion of the Bank's conversion and the Company's related initial public stock offering on November 29, 2007, per share data is not available for the three- and six-month periods ended June 30, 2007.
Earl O. Bradley, III, Chief Executive Officer of the Company and the Bank, stated, "While the economic environment remains turbulent and challenging, I am proud of the progress the Bank has made in terms of operating results this year. Our improvement in net income can be largely traced to our improvement in net interest margin as we have taken steps to effectively deploy the capital raised in our November 2007 stock offering. Our employees' continuing focus on remarkable customer service is evident, as our loan growth remains strong and we have begun to experience success in stabilizing our core deposit base."
Balance Sheet Review - Annualized
Total assets increased $77.3 million to $330.7 million reflecting annualized growth of 61.3% during the six months ended June 30, 2008 compared to December 31, 2007. Total loans increased $37.7 million to $155.1 million as of June 30, 2008 reflecting annualized growth of 32.1% during the first six months of 2008. Total deposits decreased $4.1 million to $165.7 million as of June 30, 2008, resulting in an annualized declining rate of 4.9% during the period ended June 30, 2008 compared to December 31, 2007. Total equity decreased $696,000 to $78.8 million, reflecting an annualized reduction of 1.8% during the six months ended June 30, 2008.
The Bank does not have, nor has it had, any sub-prime loans or other high-interest rate loans to consumers with impaired or non-existent credit histories in its loan portfolios.
Asset Quality
The allowance for loan losses at June 30, 2008 was $1.9 million, or 1.20% of total loans, compared to $1.5 million, or 1.30% of total loans at December 31, 2007. Nonperforming loans at June 30, 2008 were $792,000, or 0.51% of total loans, compared to $836,000, or 0.71% of total loans at December 31, 2007.
The provision for loan losses increased to $80,000 for the three months ended June 30, 2008 compared to $21,000 for the same period in 2007. For the six months ended June 30, 2008, the provision for loan losses increased to $357,000 compared to $32,000 for the six months ended June 30, 2007.
Leverage Transaction
The Company entered into a balance sheet leverage transaction which was completed in the second quarter 2008. In the transaction, the Bank borrowed approximately $35.0 million in multiple rate repurchase agreements with an initial weighted average cost of 3.67%. The borrowings mature in time periods ranging from four to ten years with a weighted average maturity of 6.9 years, and certain borrowings have a call option beginning with periods ranging from two to three years after origination and are continuously callable after the initial call date. The Bank used the proceeds from the borrowing to purchase a similar amount of US Agency pass through Mortgage Backed Securities (the "Securities"). The Securities had an initial weighted average yield of 5.25% and a stated weighted average remaining maturity of 27 years. The estimated weighted average life of the Securities is 6.21 years. The leverage transaction added approximately $92,000 to net interest income during the second quarter of 2008.
Investments
In addition to the leverage transaction mentioned above, our investment securities portfolio consists primarily of U.S. government and callable federal agency bonds and U.S. government agency mortgage-backed securities, with a relatively smaller investment in obligations of state and political subdivisions and other securities including agency preferred stock and pooled trust preferred debt issues. Total securities increased by $40.3 million, or 35.7%, to $153.1 million at June 30, 2008 compared to $112.8 million as of December 31, 2007. At June 30, 2008, the Company owned investment grade perpetual callable preferred securities issued by the Federal Home Loan Mortgage Corporation ("Freddie Mac") and Federal National Mortgage Association ("Fannie Mae") with a total book value of $13.5 million and unrealized losses totaling $500,000. The continued turbulence in the residential and sub-prime markets and the recent controversy concerning the government sponsored entities (GSE's, i.e., Freddie Mac and Fannie Mae) has caused these investments to further decline in value and this stock continues to experience high price volatility. The government's recent action to shore up the finances of the GSE's has not yet resulted in a recovery in the preferred stock values. As of the end of July 2008, the difference between book and estimated market value for these investments was approximately $4.9 million, pre-tax. Management is closely monitoring these investments and, while they believe the recent declines in market value are temporary, they cannot guarantee that there will not be a need to record an impairment charge if there are negative changes in the market place or deterioration in the credit quality of the GSE's and the market values of the securities do not recover in the future.
At June 30, 2008, the Company's investment portfolio included trust preferred securities (PRETSL's) with a total book value of $4.9 million and unrealized losses totaling $1.5 million. Credit performance of the Company's bank trust preferred securities portfolio remained satisfactory at June 30, 2008. However, as of the end of July 2008, the estimated market value of these securities had declined approximately an additional $300,000, pre-tax. Given the uncertainties of the market, management will continue to analyze these securities and, while they believe the recent declines in market value are temporary, they cannot guarantee that there will not be a need to record an impairment charge if there are negative changes in the market place or deterioration in the credit quality resulting in default of the underlying entities that are represented in the pooled securities and the market values of the securities do not recover in the future.
"Although I am disappointed with the market values of our investments in Freddie Mac and Fannie Mae securities as well as the reduced market values on our investments in PRETSL's, I am extremely pleased with our core loan growth and our strong capital position, which is reflected in the Bank's total risk-based capital ratio of 27.81%," Mr. Bradley stated. "The fundamentals of our Company continue to be sound."
Results of Operations
Net interest income for the three months ended June 30, 2008 was $2.8 million, up 54.0% from the second quarter of 2007. The net interest margin for the three months ended June 30, 2008 was 3.69%, up 15 basis points from the second quarter of 2007. Net interest income for the first six months of 2008 was $5.2 million, up 49.5% from the first six months of 2007. The net interest margin for the six months ended June 30, 2008 was 3.72%, up 28 basis points from the six months of 2007.
Non-interest income for the quarter ended June 30, 2008 was $553,000 compared to $477,000 for the quarter ended June 30, 2007. Non-interest income for the six months ended June 30, 2008 was $1.4 million compared to $1.1 million for the same period of 2007.
Non-interest expense increased $276,000 to $2.5 million for the three months ended June 30, 2008 from $2.2 million for the comparable period in 2007. Non-interest expense increased $434,000 to $5.1 million for the six months ended June 30, 2008 from $4.6 million for the comparable period in 2007.
It is likely that non-interest expenses will increase over the next several months, primarily due to two factors. First, management plans to increase marketing expenses in the second half of the year in support of key strategic initiatives. Second, expenses will increase if the Compensation Committee of the Board of Directors takes action to allocate stock awards and stock options under the Company's 2008 Equity Incentive Plan, approved by the Company's stockholders at the annual meeting of stockholders on June 11, 2008. The amount of each of these expenditures is unknown at this time due to the number of variables that could influence the final costs. It is likely that our net income will decrease as a result of these higher non-interest expenses.
For further discussion of these results, please refer to the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2008, filed with the Securities and Exchange Commission on August 8, 2008.
About First Advantage Bancorp
Founded in 1953, First Federal Savings Bank, a wholly-owned subsidiary of First Advantage Bancorp, is a federally chartered savings bank headquartered in Clarksville, Tennessee. The Bank operates as a community-oriented financial institution, with four full-service offices and one limited service office in Montgomery County, Tennessee, which is approximately 40 miles northwest of Nashville near the Kentucky border. First Federal Savings Bank offers a full range of retail and commercial financial services. The Bank's website address is www.firstfederalsb.com. First Advantage Bancorp stock trades on the Nasdaq Global Market under the symbol "FABK."
Forward-Looking Statements
Certain statements contained herein are forward-looking statements that are based on assumptions and may describe future plans, strategies, and expectations of First Advantage Bancorp. These forward-looking statements are generally identified by use of the words "believe," "expect," "intend," "anticipate," "estimate," "project," or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and its subsidiary include, but are not limited to, changes in interest rates, national and regional economic conditions, legislative and regulatory changes, monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality and composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in First Federal Savings Bank's market area, changes in real estate market values in First Federal Savings Bank's market area, changes in relevant accounting principles and guidelines and the inability of third party service providers to perform. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Except as required by applicable law or regulation, the Company does not undertake, and specifically disclaims any obligation, to release publicly the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of the statements or to reflect the occurrence of anticipated or unanticipated events.
FIRST ADVANTAGE BANCORP
SELECTED FINANCIAL DATA
(Unaudited-Dollars in thousands)
Three Months Ended Six Months Ended Year-End
June 30 June 30 Dec.31,
------------------- ------------------- ---------
SELECTED FINANCIAL 2008 2007 2008 2007 2007
CONDITION DATA:
END OF PERIOD
BALANCES
Assets $ 330,673 $ 219,728 $ 253,403
Available-for-sale
Securities, at
fair value 153,149 93,550 112,817
Loans 155,134 102,497 117,469
Allowance for
Loan Losses 1,860 2,008 1,510
Deposits 165,715 184,074 169,854
FHLB Advances and
Other Borrowings 83,387 -- 891
Common
Shareholders'
Equity 78,809 32,236 79,505
AVERAGE BALANCES
Assets $ 314,898 $ 215,836 $ 292,988 $ 214,392 $ 220,501
Earning Assets 302,875 204,609 280,431 203,220 209,895
Investment
securities 148,704 93,361 135,526 91,556 94,586
Other investments 7,757 10,302 8,853 10,870 10,474
Loans, net of
allowance 146,414 100,946 136,052 100,794 104,835
Deposits 163,029 179,403 164,395 178,226 180,680
FHLB Advances and
Other Borrowings 69,323 218 45,738 201 736
Common Shareholders'
Equity 80,187 32,872 80,026 32,449 36,753
SELECTED OPERATING
RESULTS:
Interest and
Dividend Income $ 4,381 $ 3,302 $ 8,221 $ 6,403 $ 13,253
Interest Expense 1,599 1,495 3,036 2,934 6,016
--------- --------- --------- --------- ---------
Net Interest
Income 2,782 1,807 5,185 3,469 7,237
Provision for Loan
Losses 80 21 357 32 (364)
--------- --------- --------- --------- ---------
Net Interest
Income After
Provision for
Loan Losses 2,702 1,786 4,828 3,437 7,601
Noninterest Income 553 477 1,390 1,085 1,987
Noninterest
Expense 2,513 2,237 5,065 4,631 10,060
--------- --------- --------- --------- ---------
Income (Loss)
Before Income Tax
Expense (Benefit) 742 26 1,153 (109) (472)
Income Tax Expense
(Benefit) 193 (14) 15 (83) (217)
--------- --------- --------- --------- ---------
Net Income
(Loss) $ 549 $ 40 $ 1,138 $ (26)$ (255)
========= ========= ========= ========= =========
Basic earnings per
share $ 0.11 N/A 0.24 N/A N/A
Diluted earnings
per share 0.11 N/A 0.23 N/A N/A
Book Value Per
Common Share -
Basic 16.51 N/A 16.53 N/A N/A
Book Value Per
Common Share -
Diluted 16.18 N/A 16.19 N/A N/A
Average shares
outstanding 4,774,267 N/A 4,768,323 N/A N/A
Average diluted
shares
outstanding 4,871,511 N/A 4,868,908 N/A N/A
SELECTED ASSET
QUALITY
Net Charge-offs $ 7 $ 10 $ 7 $ 49 $ 151
Classified Assets 2,099 4,225 1,962
Nonperforming
Assets 795 1,767 836
Total
nonperforming
loans to total
loans 0.52% 1.72 0.71%
Total
nonperforming
loans to total
assets 0.24% 0.80 0.33
Total
nonperforming
assets to total
assets 0.24% 0.80 0.33
SELECTED RATIOS
(quarterly and
year-to-date rates
annualized)
Return on Average
Assets 0.70% 0.07% 0.78% (0.02)% (0.12)%
Return on Average
Common
Shareholders'
Equity 2.75 0.49 2.86 (0.16) (0.69)
Average Common
Shareholders'
Equity to Average
Assets 25.46 15.23 27.31 15.14 16.67
Net Interest
Margin 3.69 3.54 3.72 3.44 3.45
Efficiency:
Expense to
Revenue 75.35 97.94 77.03 101.69 109.06