MISSOULA, Mont., Jan. 27, 2015 (GLOBE NEWSWIRE) -- Treasure State Bank ("the Bank") (OTCBB:TRSU), a Montana chartered community bank, today announced:
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The Bank had a net profit of $1.93MM for the quarter ended December 31, 2014, as compared to $133,000 for the quarter ended September 30, 2014 and $7,000 for the same quarter last year. This quarter's earnings include a $1.88MM income tax benefit. Therefore, net operating profit for the quarter, excluding this item, was $50,000.
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On a year-to-date basis for 2014, the Bank had an operating profit of $2.26MM, as compared to $564,000 for the same period last year. The year-to-date earnings include a $1.88MM income tax benefit. Therefore, net operating profit on a year-to-date basis excluding this item, was $380,000. The year-to-date 2013 earnings of $564,000 include a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. Therefore, net operating profit on a year-to-date basis for 2013, excluding these two items, was $214,000 as compared to $380,000 for 2014.
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The annualized return on average assets for the quarter ended December 31, 2014 was 0.29%, excluding the $1.88MM income tax benefit. This compares to 0.78% for the quarter ended September 30, 2014 and 0.04% for the same quarter last year.
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The return on average assets for the twelve month period ended December 31, 2014 was 0.56%, excluding the $1.88MM income tax benefit. This compares to 0.32% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
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The annualized return on average equity for the quarter ended December 31, 2014 was 2.14%, excluding the $1.88MM income tax benefit. This compared to 7.16% for the quarter ended September 30, 2014 and 0.38% for the quarter ended December 31, 2013.
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The return on average equity for the twelve month period ended December 31, 2014 was 4.05%, excluding the $1.88MM income tax benefit. This compared to 3.03% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
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Earnings per share for the quarter were $1.11 ($4.44 annualized) and year-to-date 2014 earnings per share were $1.30 based on 1,738,451 shares outstanding. Excluding the $1.88MM income tax benefit, earnings per share for the quarter were $0.03 ($0.12 annualized) and for the twelve month period ended December 31, 2014, was $0.22.
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Tier 1 leverage capital was 10.42% as of December 31, 2014, as compared to 10.00% as of December 31, 2013. Total Risk-Based Capital was 14.14% as of December 31, 2014, as compared to 14.46% at December 31, 2013.
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Stockholders' Equity to assets at December 31, 2014 was 13.01% as compared to 10.71% at December 31, 2013.
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Book value per share was $5.38 as of December 31, 2014, based on 1,738,451 shares outstanding, a 26.0% increase over the $4.27 book value per share at September 30, 2014.
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Total assets increased $5.8MM to $71.9MM at December 31, 2014, as compared to $66.1MM at December 31, 2013.
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Cost of funds at December 31, 2014 was 0.59%, as compared to 0.61% at September 30, 2014 and 0.71% at December 31, 2013.
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The net interest margin (interest income less interest expense divided by average earning assets) decreased to 3.44% for the quarter ended December 31, 2014, as compared to 3.61% for the quarter ended September 30, 2014, and 3.75% for the quarter ended December 31, 2013.
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Loan loss reserves to total loans were 2.76% ($1.3MM) at December 31, 2014, as compared to 3.41% ($1.6MM) at December 31, 2013.
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Total liquidity as of December 31, 2014 was 21.68%, and available liquidity was 21.68%.
- Non-performing assets decreased $200,000 during the quarter to $4.1MM at December 31, 2014, as compared to $4.3MM at September 30, 2014.
President and Chief Executive Officer Jim Salisbury stated "Since June 30, 2013 the Bank has had $1.88MM of deferred tax asset available to be recognized as a tax benefit once financial conditions warranted the recognition. The Bank has reported profitability for four consecutive years, asset quality has substantially improved, net interest margins remain strong, cost of funds have decreased and the Bank believes that the allowance for loan loss reserve is adequately funded. This, along with a reasonable expectation of continued profitability, has prompted management to determine that the deferred tax assets would more likely than not be recovered through future taxable income and that maintaining the valuation allowance was no longer necessary.
Going forward the Bank will tax affect earnings at approximately 39.0% and this will reduce earnings on a comparable basis. However, because the tax expense is offset by a reduction in unused net operating losses there will not be a cash effect to the Bank until the entire unused net operating losses are utilized. Therefore, this discussion concentrates on pre-tax earnings as a comparison to prior periods. Book value per share increased 26.0% from $4.27 at September 30, 2014 to $5.38 at December 31, 2014, due primarily to the reversal of the valuation allowance against deferred tax assets.
The $50,000 of net operating profit for the quarter December 31, 2014, excluding the tax expense benefit, is less than the $133,000 for the prior two quarters due primarily to increased compensation costs tied to 2014 performance and increased OREO expenses related to foreclosure proceedings on a troubled asset.
The non-performing assets of the Bank are all "legacy assets" that were originated over five years ago. The Bank continues to work diligently to resolve their non-performing status.
Our focus continues to be growing the Bank once again by increasing loan production, which will increase net interest income and loan related fee income. This is evidenced by the $2.7MM, or 5.9% increase, in net increase in gross loans during the year. It continues to be a challenge to have increases in the gross loans of the Bank while troubled loans are brought to a resolution and paid off. Our net interest margin remains strong at 3.44%, complemented by a 2.76% loan loss reserve to total loans and a continued reduction in the Bank's cost of funds of 16.9% year over year. The reduction in cost of funds has slowed in 2014 due to fewer higher rate certificates of deposit maturing.
I am also pleased to note that this month Treasure State Bank was named the "Emerging Lender of the Year" in Montana by the Small Business Administration ("SBA") for 2014. The Emerging Lender award goes to a lender that has significantly increased their SBA loan volume from one year to another. In 2014 Treasure State Bank approved five loans within their programs which accounted for an increase in SBA lending of over $1.85MM for the Bank.
Total assets increased $5.8MM, or 8.8%, to $71.9MM at December 31, 2014, as compared to $66.1MM at December 31, 2013. Cash and cash equivalents increased $1.1MM, gross loans increased $2.7MM to $51.6MM, deferred tax assets increased $1.9MM and other assets increased $100,000. I am pleased with the continued change in our mix of deposits. Total deposits increased $3.5MM to $58.8MM at December 31, 2014, as compared to $55.3MM at December 31, 2013. Our all-important transaction accounts have increased 21.0% since December 31, 2013.
The Bank believes at this time that its reserve for loan losses is sufficient and that no additional provision for loan loss reserves is currently required. There could be additional charges related to foreclosed property if certain appraisals would indicate the need for additional write downs of these assets.
Twenty two cents ($0.22) of every dollar is held in domestic liquid assets to cushion the Bank from a rising interest rate environment and to allow for the funding of new loans. In addition, the investments that the Bank owns have very short term maturities, which will not fluctuate significantly in market value should interest rates increase. The current interest rate environment does not reward the Bank for having this relatively high liquidity position because earnings are minimal on these investments. Given the many uncertainties with the economy, the ending of the Federal Reserve's Quantitative Easing program in 2014, the massive Federal deficits, the current strained political situation in Washington D.C., the weak world economic and worldwide political instability, such liquidity position is analogous to a form of "insurance" that the Bank is willing to maintain at this time to continue to improve its financial condition. In addition, the Bank is resisting the temptation to reach for higher yields on assets with extended maturities until it is comfortable with the true direction of interest rates."
About Treasure State Bank
Treasure State Bank, a Montana chartered community bank, is headquartered in Missoula, Montana. The Bank was founded in January 2007. Treasure State Bank currently trades on the OTCBB under the ticker symbol "TRSU". Treasure State Bank serves businesses, professionals, non-profit organizations and individuals through customized banking services and products. For more information, please visit www.treasurestatebank.com.
Safe Harbor Statement
This communication contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Treasure State Bank and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully, and the ability to complete before-mentioned transactions. The Bank undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.