ELLIJAY, Ga., July 30, 2009 (GLOBE NEWSWIRE) -- Appalachian Bancshares, Inc. (Nasdaq:APAB), holding company for Appalachian Community Bank, Appalachian Community Bank, F.S.B., and Appalachian Real Estate Holdings, Inc. reported consolidated total assets of $1.2 billion, at June 30, 2009, compared to $1.1 billion at June 30, 2008, an increase of 12.31%. Total loans net of unearned income were $856.9 million at June 30, 2009, a decrease of $12.7 million, or (1.46%), when compared with $869.6 million at June 30, 2008. Deposits grew to $1.0 billion at June 30, 2009, an increase of $142.1 million, or 15.74%, when compared to $903.1 million at June 30, 2008.
Tracy Newton, President and Chief Executive Officer, stated that, "The challenges of the previous two quarters intensified during the recent quarter. Customers that we had traditionally considered insulated from volatile financial markets exhibited financial weaknesses for the first time. However, our team remains determined to be proactive in our collection practices and maintain strong liquidity, while continuing to lower wholesale funding. We continue to focus on the implementation of our capital plan to mitigate the damage caused by this extended recession. We are beginning to re-price many of our interest bearing deposits in the second half of 2009 which should assist us in this effort. We believe that this will provide us with much needed relief to our net interest margin. We are also encouraged by the increase in real estate sales in our markets during June 2009."
Net loss for the second quarter of 2009 was $25.8 million, or $(4.71) per diluted share, which is a $26.5 million decrease in net income when compared to $701 thousand, or $0.13 per diluted share, for the same quarter in 2008 which is reflective of the continued decline in real estate values and continued decline in credit quality. Our decrease in net income for the second quarter 2009 was primarily due to our provision for loan losses of $21.5 million, which represent an increase of $20.0 million when compared to the same period in 2008. A decreasing net interest margin in the second quarter of 2009 compared to 2008 also contributed to our net losses. Contributing factors to this decreasing net interest margin were interest reversals due to increasing non-accrual loans, the lost future interest accruals from placing these loans on non-accrual status and the increase in other non-performing assets. Interest reversals during the second quarter of 2009 decreased our margin 83 basis points compared to 11 basis points for the same period in 2008. Our net interest margin was 1.32% for the quarter ended June 30, 2009, compared to 4.07% the same quarter in 2008. Finally, net losses on the sale of ORE plus costs to carry ORE combined increased from $364 thousand to $665 thousand for the second quarter of 2009 compared to the same period of 2008. This helped contribute to our decrease in net income.
For the first six months of 2009, our net loss was $27.5 million, or $(5.04) per diluted share, a $29.4 million decrease in net income compared to $1.8 million, or $0.34 per diluted share, for the same period in 2008. Again, we reversed interest, due to placing loans on non-accrual, during the first six months of 2009, which represents a 47 basis point decrease of our margin compared to only an 8 basis point reduction during the same period in 2008. Net losses on the sale of ORE plus increased costs to carry ORE increased from $978 thousand to $1.5 million for the first six months of 2009 compared to the same period of 2008. Our net interest margin for the first six months of 2009 was 2.01% compared to 4.18% for the same period in 2008. Net losses were offset as we sold investment securities and took a $1.0 million net gain in the first six months of 2009 compared to only a $9 thousand net gain for the same period in 2008.
Return on average shareholders' equity was (152.36%) annualized for the second quarter of 2009, compared to 3.70% for the same period in 2008. Return on average assets was (8.40%) annualized for the second quarter of 2009, compared to 0.28% for the same period in 2008. During the first six months of 2009, return on average shareholders' equity was (78.53%) annualized for the first six months of 2009 compared to 4.89% for the same period of 2008. Return on average assets was (4.55%) for the first six months of 2009 compared to 0.37% during the same period of 2008.
Mr. Newton said, "Our non-performing assets to total assets ratio increased to 13.07% at June 30, 2009, from 3.50% at December 31, 2008 and from 0.87% at June 30, 2008. Our non-performing loans to total loans ratio was 15.11% at June 30, 2009, compared to 3.18% at December 31, 2008 and 0.60% at June 30, 2008. Our net charge-off ratio was 1.55% for second quarter 2009, compared to 0.58% for the fourth quarter 2008 and 0.13% for the quarter ended June 30, 2008. Year to date net charge-offs at June 30, 2009 were 2.01% compared to 0.19% for the same period in 2008. Considering increasing risks in our loan portfolio and our timely approach that allows us to quickly identify troubled loans, we believe that our loan loss reserves of 2.58% of gross loans outstanding at June 30, 2009, compared to 1.22% of gross loans outstanding at June 30, 2008, sufficiently prepares us for identified potential future losses. As always, if conditions continue to worsen, additional loan loss reserve provisions will be provided."
Total revenue, net of interest expense, was $4.6 million for the second quarter of 2009 and $10.9 million for the second quarter 2008, a decrease of 57.3%. For the first six months of 2009 total revenue, net of interest expense was $13.5 million compared to $21.9 million for the same period in 2008, a decrease of 38.2%. The decreases in total revenue, net of interest expense, was primarily due to the decrease in our net interest margin, which were partially offset by the $1 million gain on the sale of securities.
Book value per share stood at $8.10 at June 30, 2009, compared to $14.13 per share at June 30, 2008, a decrease of approximately 42.7%.
Conference Call
The Company will hold a conference call on Thursday, July 30, 2009 at 11:00 a.m. ET, to discuss its financial results and strategic initiatives and to entertain questions. Listeners will be able to participate in the question-and-answer session. The telephone number for the conference call is 1-800-860-2442. The conference call will also be available by webcast through the Company's website, www.apab.com, by clicking on the Investor Relations' section. A replay of the call will be archived on the Company's website for one year.
About Appalachian Bancshares, Inc.
The Company is based in Ellijay, Georgia, and is the holding company of Appalachian Community Bank, a Georgia state-chartered bank, Appalachian Community Bank, F.S.B., a federally-chartered thrift and Appalachian Real Estate Holdings, Inc. The Company, through Appalachian Community Bank (which also operates in Gilmer County, Georgia, under the trade name of Gilmer County Bank) and Appalachian Community Bank, F.S.B., provides a full range of community banking services to individuals and to small and medium-sized businesses, through its thirteen banking offices, located in Ellijay, East Ellijay, Blue Ridge, Blairsville, Chatsworth, Dawsonville, McCaysville, Dahlonega and Dalton, Georgia, and in Ducktown, Tennessee, and Murphy, North Carolina. The Company's common stock trades on the NASDAQ Global Market under the symbol APAB. For more information, please visit the Company's website at www.apab.com.
Certain statements in this news release contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to future plans and expectations, and are thus prospective. These forward-looking statements are subject to risks and uncertainties, including, but not limited to, economic conditions, competition, interest rate sensitivity and exposure to regulatory and legislative changes, and other risks and uncertainties described in our company's filings with the Securities and Exchange Commission. Although we believe that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, we can give no assurance that the results contemplated in the forward-looking statements will be realized. The inclusion of this forward-looking information should not be construed as a representation by our company or any person that the future events, plans, or expectations contemplated by our company will be achieved. We undertake no obligation to update publicly or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(in thousands, except per share data)
Three Months Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Summary Results of
Operations Data:
Interest income $ 12,119 $ 17,400 $ 27,789 $ 36,043
Interest expense 8,942 7,864 17,949 16,793
--------- --------- --------- ---------
Net interest income 3,177 9,536 9,840 19,250
Provision for
loan losses 21,468 1,496 25,194 2,451
--------- --------- --------- ---------
Net interest income
after provision for
loan losses (18,291) 8,040 (15,354) 16,799
Noninterest income 1,465 1,342 3,673 2,607
Noninterest expense 8,940 8,426 17,105 16,788
--------- --------- --------- ---------
Income (loss)
before taxes (25,766) 956 (28,786) 2,618
Income tax
expense (benefit) -- 255 (1,264) 780
--------- --------- --------- ---------
Net income (loss) $ (25,766) $ 701 $ (27,522) $ 1,838
========= ========= ========= =========
Per Share Data:
Net income (loss),
basic $ (4.71) $ 0.13 $ (5.04) $ 0.34
Net income (loss),
diluted (4.71) 0.13 (5.04) 0.34
Book value 8.10 14.13 8.10 14.13
Weighted average number
of shares outstanding:
Basic 5,475,701 5,372,505 5,464,298 5,360,747
Diluted 5,475,701 5,372,505 5,464,298 5,360,747
Performance Ratios:
Return on average
assets(1) -8.40% 0.28% -4.55% 0.37%
Return on average
equity(1) -152.36% 3.70% -78.53% 4.89%
Net interest
margin(1) (2) 1.32% 4.07% 2.01% 4.18%
Efficiency ratio(3) 193.38% 77.46% 137.14% 76.84%
Growth Ratios and
Other Data:
Percentage change in
net income -3775.61% -1597.39%
Percentage change in
diluted net income
per share -3723.08% -1582.35%
At June 30,
----------------------
2009 2008
---------- ----------
Summary Balance Sheet Data:
Assets $1,190,372 $1,059,880
Average earning assets - QTD 993,752 951,717
Average earning assets - YTD 1,002,112 935,092
Securities available-for-sale 56,029 76,454
Restricted equity securities 5,225 4,264
Loans, held for sale 2,868 3,967
Loans 856,866 869,595
Allowance for loan losses 22,099 10,644
Deposits 1,045,178 903,053
Short-term borrowings 10,332 11,803
Accrued interest 1,983 1,871
Federal Home Loan Bank advances 72,000 57,150
Subordinated long-term
capital notes 12,511 6,186
Other liabilities 4,028 3,884
Shareholders' equity 44,340 75,933
Asset Quality :
Asset Quality Ratios
Nonperforming loans to total loans 15.11% 0.60%
Nonperforming assets to total assets 13.07% 0.87%
Allowance for loan losses to
nonperforming loans 17.07% 202.67%
Allowance for loan losses to total loans 2.58% 1.22%
At June 30,
------------------------------------------
2009 2008
-------------------- --------------------
% of % of
Total Total
Loans by Category Amount Loans Amount Loans
--------- --------- --------- ---------
Real estate -
acquisition &
development $ 372,368 43.46% $ 399,520 45.94%
Real estate -
commercial 171,219 19.98% 168,717 19.40%
Real estate -
residential 210,201 24.53% 197,707 22.74%
Commercial business 68,142 7.95% 66,030 7.59%
Other loans 34,936 4.08% 37,621 4.33%
--------- ---------
Total Loans $ 856,866 $ 869,595
========= =========
At June 30,
------------------------------------------
2009 2008
-------------------- --------------------
% of % of
Total Total
Nonperforming assets Non- Non-
by category: Amount performing Amount performing
Loans --------- --------- --------- ---------
Real estate -
acquisition &
development $ 87,098 56.00% $ 2,175 23.61%
Real estate -
commercial 18,700 12.02% 682 7.40%
Real estate -
residential 19,901 12.79% 1,465 15.90%
Commercial business 3,182 2.05% 706 7.66%
Other loans 606 0.39% 224 2.44%
Other Real Estate
Real estate -
acquisition &
development 11,131 7.16% 1,559 16.92%
Real estate -
commercial 6,607 4.25% 206 2.24%
Real estate -
residential 8,004 5.15% 2,144 23.27%
Commercial business 84 0.05% -- 0.00%
Other Repossessed
Property
Other loans 222 0.14% 51 0.56%
--------- ---------
Total Nonperforming
Assets $ 155,535 $ 9,212
========= =========
At June 30,
------------------------------------------
2009 2008
-------------------- --------------------
% of % of
Quarterly Net Total Total
Charge-Offs Average Average
by Category Amount Loans Amount Loans
--------- --------- --------- ---------
Real estate -
acquisition &
development $ 7,551 0.87% $ 762 0.09%
Real estate -
commercial 254 0.03% -- 0.00%
Real estate -
residential 3,306 0.38% 211 0.02%
Commercial business 2,167 0.25% 29 0.00%
Other loans 241 0.02% 104 0.02%
--------- ---------
Total Net Charge-Offs $ 13,519 1.55% $ 1,106 0.13%
========= =========
At June 30,
------------------------------------------
2009 2008
Year-to-Date Net -------------------- --------------------
Charge-Offs % of % of
by Category Total Total
Average Average
Amount Loans Amount Loans
Real estate - --------- --------- --------- ---------
acquisition &
development $ 10,192 1.16% $ 1,073 0.13%
Real estate -
commercial (434) -0.05% 7 0.00%
Real estate -
residential 4,214 0.48% 256 0.03%
Commercial business 3,269 0.37% 57 0.01%
Other loans 364 0.05% 222 0.02%
--------- ---------
Total Net Charge-Offs $ 17,605 2.01% $ 1,615 0.19%
========= =========
Growth Ratios and At June 30,
Other Data: 2009
-----------
Percentage change in assets 12.31%
Percentage change in loans -1.46%
Percentage change in deposits 15.74%
Percentage change in equity -41.61%
Loans to deposits ratio 81.98%
--------------------------------------------------------------------
(1) Annualized.
(2) Taxable equivalent.
(3) Computed by dividing noninterest expense by the sum of the net
interest income and noninterest income excluding any realized
gains/losses on securities.
APPALACHIAN BANCSHARES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands, except shares and per share data)
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
2009 2008 2009 2008
----------- ----------- ----------- -----------
Interest Income
Interest and
fees on loans $ 11,537 $ 16,379 $ 26,321 $ 34,038
Interest on
securities:
Taxable
securities 434 802 1,169 1,581
Nontaxable
securities 131 158 262 318
Interest on
deposits with
other banks 9 6 9 8
Interest on
federal funds
sold 8 55 28 98
----------- ----------- ----------- -----------
Total Interest
Income 12,119 17,400 27,789 36,043
----------- ----------- ----------- -----------
Interest Expense
Interest on
deposits 7,968 7,142 15,996 15,258
Interest on
short-term
borrowings 104 121 225 245
Interest on
Federal Home
Loan Bank
advances 601 504 1,198 1,084
Interest on
subordinated
long-term
capital notes 269 97 530 206
----------- ----------- ----------- -----------
Total Interest
Expense 8,942 7,864 17,949 16,793
----------- ----------- ----------- -----------
Net Interest
Income 3,177 9,536 9,840 19,250
Provision for
loan losses 21,468 1,496 25,194 2,451
----------- ----------- ----------- -----------
Net Interest
Income After
Provision
for Loan Losses (18,291) 8,040 (15,354) 16,799
----------- ----------- ----------- -----------
Noninterest Income
Customer service
fees 588 660 1,106 1,224
Mortgage
origination
commissions 617 418 1,053 864
Net gains on
sales of
securities 19 -- 1,040 9
Other operating
income 241 264 474 510
----------- ----------- ----------- -----------
Total
Noninterest
Income 1,465 1,342 3,673 2,607
----------- ----------- ----------- -----------
Noninterest
Expenses
Salaries and
employee
benefits 4,107 5,044 8,243 10,035
Occupancy,
furniture and
equipment expense 1,121 1,020 2,248 2,102
Other operating
expenses 3,712 2,362 6,614 4,651
----------- ----------- ----------- -----------
Total
Noninterest
expense 8,940 8,426 17,105 16,788
----------- ----------- ----------- -----------
Income (loss)
before income
taxes (25,766) 956 (28,786) 2,618
Income tax
expense
(benefit) -- 255 (1,264) 780
----------- ----------- ----------- -----------
Net Income (Loss) $ (25,766) $ 701 $ (27,522) $ 1,838
=========== =========== =========== ===========
Earnings (Loss)
Per Common Share
Basic $ (4.71) $ 0.13 $ (5.04) $ 0.34
Diluted (4.71) 0.13 (5.04) 0.34
Cash Dividends
Declared Per
Common Share $ -- $ -- $ -- $ --
Weighted Average
Shares
Outstanding
Basic 5,475,701 5,372,505 5,464,298 5,360,747
Diluted 5,475,701 5,372,505 5,464,298 5,360,747
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)
June 30, Dec. 31, June 30,
2009 2008 2008
---------- ---------- ----------
Assets
Cash and due from banks $ 44,871 $ 12,825 $ 22,076
Interest-bearing deposits
with other banks 139,242 731 5,896
Federal funds sold 14,132 133,351 23,787
---------- ---------- ----------
Cash and Cash Equivalents 198,245 146,907 51,759
Securities available-for-sale 56,029 79,308 76,454
Restricted equity securities 5,225 4,932 4,264
Loans, held for sale 2,868 2,783 3,967
Loans, net of unearned income 856,866 885,374 869,595
Allowance for loan losses (22,099) (14,510) (10,644)
---------- ---------- ----------
Net Loans 834,767 870,864 858,951
Premises and equipment, net 40,273 39,638 35,311
Accrued interest 6,978 9,289 9,210
Cash surrender value on life
insurance 9,255 9,140 8,967
Intangibles, net 1,992 1,992 2,013
Foreclosed assets 26,048 13,323 3,960
Other assets 8,692 7,502 5,024
---------- ---------- ----------
Total Assets $1,190,372 $1,185,678 $1,059,880
========== ========== ==========
Liabilities and Shareholders'
Equity
Liabilities
Noninterest-bearing deposits $ 58,879 $ 50,035 $ 53,095
Interest-bearing deposits 986,299 963,241 849,958
---------- ---------- ----------
Total Deposits 1,045,178 1,013,276 903,053
Short-term borrowings 10,332 10,604 11,803
Accrued interest 1,983 1,936 1,871
Federal Home Loan Bank
advances 72,000 72,000 57,150
Subordinated long-term
capital notes 12,511 12,511 6,186
Other liabilities 4,028 2,913 3,884
---------- ---------- ----------
Total Liabilities 1,146,032 1,113,240 983,947
---------- ---------- ----------
Shareholders' Equity
Preferred Stock, 20,000,000
shares authorized, none
issued -- -- --
Common stock, par value $0.01
per share, 20,000,000 shares
authorized, 5,475,701,
5,372,505 and 5,372,505
shares issued at
June 30, 2009, December 31,
2008 and June 30, 2008,
respectively 55 54 54
Paid-in capital 45,351 44,979 44,841
Retained earnings (1,050) 26,472 31,169
Accumulated other
comprehensive income (loss) (16) 933 (131)
---------- ---------- ----------
Total Shareholders'
Equity 44,340 72,438 75,933
---------- ---------- ----------
Total Liabilities and
Shareholders' Equity $1,190,372 $1,185,678 $1,059,880
========== ========== ==========