ELLIJAY, Ga., Jan. 29, 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 December 31, 2008, compared to $971.2 million at December 31, 2007, an increase of 22.2%. Total gross loans were $885.4 million at December 31, 2008, an increase of $77.9 million, or 9.6%, when compared with $807.5 million at December 31, 2007. Deposits grew to $1.0 billion at December 31, 2008, an increase of $205.7 million, or 25.5%, when compared to $807.6 million at December 31, 2007.
Tracy Newton, President and Chief Executive Officer, stated that, "The 4th quarter challenged us to our core. The volatile financial events that arose during the quarter created an environment of fear and uncertainty causing a lack of consumer confidence and conservative spending in our markets. Based on this recent turn of events, we are continuing to make adjustments as necessary with our core business plan of operating in a realistic manner. We are focused on building liquidity, lowering wholesale funding, identifying and providing proper reserves for problem assets, maintaining a well capitalized position, as well as making adjustments where possible to minimize the effects of the relentless downward interest rate cycle. As you will note, these efforts come at a cost."
Net loss for the fourth quarter of 2008 was $831 thousand, or $0.15 per diluted share, which is a 175.3% decrease in net income when compared to $1.1 million, or $0.21 per diluted share, for the same quarter in 2007. Net loss for the year ended December 31, 2008 was $1.6 million, or $0.30 per diluted share, which is a 129.0% decrease per diluted share compared to $5.6 million, or $1.06 per diluted share, for the year ended December 31, 2007. Our decrease in net income for the fourth quarter and the year ended December 31, 2008 was primarily due to our provision for loan losses of $3.8 million and $10.9 million, respectively, which represent increases of $1.3 million and $6.2 million, respectively, when compared to the same periods in 2007. A decreasing net interest margin in the fourth quarter of 2008 also contributed to our net losses. Our net interest margin decreased 36.2% during the fourth quarter of 2008 when compared to the same period in 2007, and decreased 22.9% for the year ended December 31, 2008 when compared to the year ended December 31, 2007. In addition, an other than temporary impairment of $816 thousand, caused by a required write down of Freddie Mac preferred stock in the third quarter, contributed to our 2008 net loss.
Return on average shareholders' equity was (4.48%) annualized for the fourth quarter of 2008, compared to 5.99% for the same period in 2007. For the year ended December 31, 2008, return on average shareholders' equity was (2.14%) annualized compared to 7.93% for the same period in 2007. Return on average assets was (0.30%) annualized for the fourth quarter of 2008, compared to 0.47% for the same period in 2007. For the year ended December 31, 2008, return on average assets was (0.15%) annualized compared to 0.65% for the same period in 2007.
Mr. Newton commented that, "Our non-performing assets to total assets ratio increased to 3.18% at December 31, 2008 from 1.77% at September 30, 2008 and from 0.64% at December 31, 2007. Our non-performing loans to total loans ratio was 2.76% at December 31, 2008 compared to 1.81% at September 30, 2008 and 0.57% at December 31, 2007. Our net charge-off ratio for the year ended December 31, 2008 was 0.95% as compared 0.36% for the same period in 2007. Net charge-offs for the fourth quarter 2008 were 0.58% compared to 0.21% for the same period in 2007. After carefulconsideration of increasing risks in our loan portfolio and electing to charge off many impaired loans, which previously had specific reserves assigned to them or became impaired during the quarter, we believe that our loan loss reserves of 1.41% of gross loans outstanding at December 31, 2008, compared to 1.21% of gross loans outstanding at December 31, 2007,, adequately prepares us for identified potential future losses. As always, if conditions should worsen, additional loan loss reserve provisions will be provided."
Our net interest margin was 2.85% for the quarter ended December 31, 2008, compared to 4.47% the same quarter in 2007. During 2008, our net interest margin was 3.61% compared to 4.68% for 2007. Due to placing loans on non-accrual, we reversed interest during the fourth quarter of 2008, which represents a 30 basis point decrease of our margin. Likewise, we reversed interest during the year ended December 31, 2008, which represented 22 basis points decrease of our margin.
Total revenue, net of interest expense, was $8.5 million for the fourth quarter of 2008 and $11.0 million for the fourth quarter 2007, a decrease of 22.9%. During 2008, total revenue, net of interest expense, was $39.2 million compared to $42.8 million for 2007, a decrease of 8.5%. The decreases in total revenue, net of interest expense, are primarily due to the decrease in our net interest margin and the other than temporary impairment for our Freddie Mac preferred stock.
Book value per share stood at $13.71 at December 31, 2008, compared to $13.94 per share at December 31, 2007, a decrease of approximately 1.6%.
Conference Call
The Company will hold a conference call on Thursday, January 29, 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 Ended Year Ended
December 31, December 31,
-------------------------------------------
2008 2007 2008 2007
-------- ------- -------- -------
Summary Results of
Operations Data:
Interest income $ 16,091 $19,068 $ 69,005 $72,127
Interest expense 8,776 9,420 34,034 34,800
-------- ------- -------- -------
Net interest income 7,315 9,648 34,971 37,327
Provision for loan
losses 3,799 2,466 10,915 4,726
-------- ------- -------- -------
Net interest income
after provision for
loan losses 3,516 7,182 24,056 32,601
Noninterest income 1,189 1,387 4,249 5,518
Noninterest expense 6,270 6,969 31,616 29,786
-------- ------- -------- -------
Income (loss) before
taxes (1,565) 1,600 (3,311) 8,333
Income tax expense
(benefit) (734) 497 (1,698) 2,763
-------- ------- -------- -------
Net income (loss) $ (831) $ 1,103 $ (1,613) $ 5,570
======== ======== ========= ========
Per Share Data:
Net income (loss),
basic $ (0.15) $ 0.21 $ (0.30) $ 1.06
Net income (loss),
diluted (0.15) 0.21 (0.30) 1.06
Book value 13.71 13.94 13.71 13.94
Weighted average number
of shares outstanding:
Basic 5,372,505 5,293,571 5,366,658 5,265,555
Diluted 5,372,505 5,293,571 5,366,658 5,276,200
Performance Ratios:
Return on average
assets(1) -0.30% 0.47% -0.15% 0.65%
Return on average
equity(1) -4.48% 5.99% -2.14% 7.93%
Net interest
margin(1) (2) 2.85% 4.47% 3.61% 4.68%
Efficiency ratio(3) 74.09% 63.19% 79.05% 69.53%
Growth Ratios and Other Data:
Percentage change in
net income -175.34% -128.96%
Percentage change in
diluted net income per
share -171.43% -128.30%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(in thousands, except per share data)
At December 31,
----------------------
2008 2007
-------- ---------
Summary Balance
Sheet Data:
Assets $ 1,186,924 $ 971,200
Average earning
assets
(quarter-to-date) 1,032,083 865,235
Average earning
assets
(year-to-date) 979,380 804,865
Investment
securities 84,240 80,510
Loans, held for sale 2,783 6,503
Loans 885,374 807,522
Allowance for loan
losses 12,510 9,808
Deposits 1,013,276 807,597
Short-term
borrowings 10,604 21,048
Accrued interest 1,936 2,059
Federal Home Loan
Bank advances 72,000 57,350
Subordinated long-term
capital notes 12,511 6,186
Other liabilities 2,913 3,297
Shareholders' equity 73,684 73,663
Asset Quality :
Asset Quality Ratios
Nonperforming loans
to total loans 2.76% 0.57%
Nonperforming
assets to total
assets 3.18% 0.64%
Allowance for loan
losses to
nonperforming
loans 51.11% 212.57%
Allowance for loan
losses to total
loans 1.41% 1.21%
At December 31,
---------------------------------------------
2008 2007
---------------------------------------------
% of Total % of Total
Amount Loans Amount Loans
Loans by Category ---------- ---------- --------- ----------
Real estate -
acquisition &
development (4) $ 389,339 43.98% $ 389,695 48.26%
Real estate -
commercial 173,566 19.60% 154,663 19.15%
Real estate -
residential 212,661 24.02% 178,193 22.07%
Commercial business 72,543 8.19% 48,749 6.04%
Other loans 37,265 4.21% 36,222 4.48%
---------- ---------
Total Loans $ 885,374 $ 807,522
========== =========
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(in thousands, except per share data)
At December 31,
---------------------------------------------
2008 2007
---------------------- ------------------
Nonperforming assets
by category: % of Total % of Total
Non- Non-
Loans Amount performing Amount performing
---------- ----------- ------- ----------
Real estate -
acquisition &
development $ 13,179 34.87% $ 3,302 53.36%
Real estate -
commercial 6,389 16.90% -- 0.00%
Real estate -
residential 3,843 10.17% 839 13.56%
Commercial
business 908 2.40% 412 6.66%
Other loans 159 0.42% 61 0.98%
Other Real Estate
Real estate -
acquisition &
development 4,975 13.16% 363 5.87%
Real estate -
commercial 4,360 11.53% 206 3.33%
Real estate -
residential 3,756 9.94% 935 15.11%
Commercial
business 80 0.21% -- 0.00%
Other Repossessed
Property
Other loans 151 0.40% 70 1.13%
---------- ---------
Total
Nonperforming
Assets $ 37,800 $ 6,188
========== =========
At December 31,
---------------------------------------------
2008 2007
---------------------- --------------------
Quarterly Net % of Total % of Total
Charge-Offs Average Average
by Category Amount Loans Amount Loans
---------- ----------- ------- ----------
Real estate -
acquisition &
development $ 2,409 0.27% $ 940 0.12%
Real estate -
commercial 1,143 0.13% -- 0.00%
Real estate -
residential 892 0.10% 495 0.06%
Commercial
business 452 0.05% 40 0.01%
Other loans 243 0.03% 149 0.02%
---------- ---------
Total Net
Charge-Offs $ 5,139 0.58% $ 1,624 0.21%
========== =========
At December 31,
---------------------------------------------
2008 2007
---------------------- --------------------
Year-to-Date Net Charge-Offs by Category
Real estate -
acquisition &
development $ 3,744 0.43% $ 1,230 0.17%
Real estate -
commercial 1,150 0.13% 145 0.02%
Real estate -
residential 1,968 0.23% 671 0.09%
Commercial
business 626 0.07% 114 0.02%
Other loans 725 0.09% 428 0.06%
---------- ---------
Total Net
Charge-Offs $ 8,213 0.95% $ 2,588 0.36%
========== =========
At
Growth Ratios and December 31,
Other Data: 2008
------------
Percentage change in
assets 22.21%
Percentage change in
loans 9.64%
Percentage change in
deposits 25.47%
Percentage change in
equity 0.03%
Loans to deposits
ratio 87.38%
-----------------------
(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 INCOME
(Unaudited)
(Dollars in thousands, except shares and per share data)
Three Months Ended Year Ended
December 31, December 31,
---------------------- ---------------------
2008 2007 2008 2007
----------- --------- ---------- ---------
Interest Income
Interest and fees on
loans $ 15,000 $ 18,061 $ 64,637 $ 68,213
Interest on
securities:
Taxable securities 813 743 3,227 2,859
Nontaxable
securities 145 164 612 639
Interest on deposits
with other banks 2 5 16 78
Interest on federal
funds sold 131 95 513 338
--------- --------- --------- ---------
Total Interest
Income 16,091 19,068 69,005 72,127
--------- --------- --------- ---------
Interest Expense
Interest on deposits 7,917 8,708 30,993 32,367
Interest on
short-term
borrowings 145 92 417 283
Interest on Federal
Home Loan Bank
advances 457 500 2,066 1,629
Interest on
subordinated
long-term capital
notes 257 120 558 521
--------- --------- --------- ---------
Total Interest
Expense 8,776 9,420 34,034 34,800
--------- --------- --------- ---------
Net Interest Income 7,315 9,648 34,971 37,327
Provision for loan
losses 3,799 2,466 10,915 4,726
--------- --------- --------- ---------
Net Interest Income
After Provision
for Loan Losses 3,516 7,182 24,056 32,601
--------- --------- --------- ---------
Noninterest Income
Customer service
fees 608 588 2,528 2,235
Mortgage origination
commissions 241 512 1,404 1,988
Net gains (losses)
on sales of
securities 41 7 (776) 7
Other operating
income 299 280 1,093 1,288
--------- --------- --------- ---------
Total Noninterest
Income 1,189 1,387 4,249 5,518
--------- --------- --------- ---------
Noninterest Expenses
Salaries and
employee benefits 2,708 3,702 17,743 17,510
Occupancy, furniture
and equipment
expense 1,096 978 4,286 3,678
Other operating
expenses 2,466 2,289 9,587 8,598
--------- --------- --------- ---------
Total Noninterest
expense 6,270 6,969 31,616 29,786
--------- --------- --------- ---------
Income (loss) before
income taxes (1,565) 1,600 (3,311) 8,333
Income tax expense
(benefit) (734) 497 (1,698) 2,763
--------- --------- --------- ---------
Net Income (Loss) $ (831) $ 1,103 $ (1,613) $ 5,570
========= ========= ========= =========
Earnings (Loss) Per
Common Share
Basic $ (0.15) $ 0.21 $ (0.30) $ 1.06
Diluted $ (0.15) $ 0.21 $ (0.30) $ 1.06
Cash Dividends
Declared Per Common
Share -- -- -- --
Weighted Average Shares
Outstanding
Basic 5,372,505 5,293,571 5,366,658 5,265,555
Diluted 5,372,505 5,293,571 5,366,658 5,276,200
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)
December 31, December 31,
2008 2007
----------- -----------
Assets
Cash and due from banks $ 12,825 $ 13,392
Interest-bearing deposits with
other banks 731 310
Federal funds sold 133,351 12,797
----------- ----------
Cash and Cash Equivalents 146,907 26,499
Securities available-for-sale 84,240 80,510
Loans, held for sale 2,783 6,503
Loans, net of unearned income 885,374 807,522
Allowance for loan losses (12,510) (9,808)
----------- ----------
Net Loans 872,864 797,714
Premises and equipment, net 39,638 32,966
Accrued interest 9,289 9,797
Cash surrender value on life
insurance 9,140 8,778
Intangibles, net 1,992 2,179
Other assets 20,071 6,254
----------- ----------
Total Assets $ 1,186,924 $ 971,200
=========== ===========
Liabilities and Shareholders' Equity
Liabilities
Noninterest-bearing deposits $ 50,035 $ 56,559
Interest-bearing deposits 963,241 751,038
----------- ----------
Total Deposits 1,013,276 807,597
Short-term borrowings 10,604 21,048
Accrued interest 1,936 2,059
Federal Home Loan Bank advances 72,000 57,350
Subordinated long-term capital
notes 12,511 6,186
Other liabilities 2,913 3,297
----------- ----------
Total Liabilities 1,113,240 897,537
----------- ----------
Shareholders' Equity
Preferred Stock, 20,000,000 shares
authorized, none issued -- --
Common stock, par value $0.01 per
share, 20,000,000 shares
authorized, 5,372,505 shares
issued at December 31, 2008,
and 5,285,026 shares issued at
December 31, 2007 54 53
Paid-in capital 44,979 43,998
Retained earnings 27,718 29,331
Accumulated other comprehensive
income 933 281
----------- ----------
Total Shareholders' Equity 73,684 73,663
----------- ----------
Total Liabilities and Shareholders'
Equity $ 1,186,924 $ 971,200
=========== ===========