ELLIJAY, Ga., Oct. 27, 2006 (PRIMEZONE) -- Appalachian Bancshares, Inc. (Nasdaq:APAB) today announced that net income for the first nine months of 2006 was $4.4 million, or $0.83 per diluted share, a 20.6% increase in net income when compared to $3.6 million, or $0.91 per diluted share, for the same period in 2005.
Total assets grew to $742.8 million as of September 30, 2006, compared to $546.3 million on September 30, 2005, an increase of 36.0%. Total loans grew 39.4% to $592.6 million on September 30, 2006, compared to $425.3 million on September 30, 2005. Total deposits grew to $599.3 million at September 30, 2006, compared to $452.7 at September 30, 2005, an increase of 32.4%.
Tracy Newton, Chief Executive Officer, said, "We are pleased with our performance during the first nine months of 2006. Regarding our previously announced expansionary objectives, we have successfully opened four full-service branches in new markets, including a branch in East Ellijay that opened on October 2, 2006. We also have opened loan production offices in North Carolina and Tennessee, which, also as previously announced, will become branches of our new thrift subsidiary that, subject to regulatory approvals, we expect to open during the first quarter of 2007. Non-interest expenses directly related to these expansionary activities were approximately $1.7 million during the first nine months of 2006. We believe, however, that this investment in these new markets will fuel the solid growth in assets, core deposits and revenues that our Company continues to enjoy."
Annualized return on average assets for the first nine months of 2006 was 0.92%, compared to 0.96% for the same period in 2005. Annualized return on average shareholders' equity for the first nine months of 2006 was 9.44%, compared to 12.87% for the same period in 2005. The net interest margin was 5.09% for the period ended September 30, 2006, compared to 4.72% for the same period a year ago.
The decline in return on average shareholders' equity resulted, in large part, from the approximately $18.4 million increase in the Company's equity, attributable to the issuance and sale of 1,265,000 common shares in a follow-on stock offering, completed in November of 2005, the proceeds of which are being used to capitalize the Company's growth and expansionary activities. As mentioned, this decline is also attributable to the approximately $1.7 million increase in non-interest expenses related to the Company's expansionary activities. Correspondingly, net income for the third quarter of 2006 remained substantially unchanged at $1.4 million when compared to the third quarter of 2005, whereas diluted earnings per share were $0.26 versus $0.35 for the same quarter of 2005.
Total revenue, net of interest expense, was $9.0 million and $25.2 million for the quarter and nine-month period ended September 30, 2006, respectively. This represented increases of 30.4% and 34.4% over the same periods in 2005. Revenue growth is a result of strong organic growth originating from the Company's longstanding branches, as well as growth related to the Company's expansionary activities. At September 30, 2006, approximately $31.4 million in loans, $3.7 million in premises and equipment, and $26.7 million in core deposits were attributable to the branches, and loan production offices, opened in 2006.
The Company's book value per share was $12.54 as of September 30, 2006, compared to $10.30 per share on September 30, 2005, an increase of approximately 21.7%. The Company's closing stock price on September 29, 2006 was $24.39.
Conference Call
The Company will hold a conference call on Friday, October 27, 2006, 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 1-877-407-9210. The conference call will also be available by webcast through the Company's website, www.acbanks.net, 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.
Appalachian Bancshares, Inc., based in Ellijay, Georgia, is the holding company of Appalachian Community Bank, a state-chartered bank organized under the laws of the State of Georgia. Appalachian Community Bank, which also operates in Gilmer County, Georgia, under the trade name of Gilmer County Bank, provides a full range of community banking services to individuals and to small and medium-sized businesses, through its eight full-service branches in North Georgia (Ellijay, East Ellijay, Blue Ridge, Blairsville, Chatsworth, Dawsonville and McCaysville), as well as through loan production offices in Murphy, North Carolina and Ducktown, Tennessee. 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.acbanks.net.
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.
Please contact Tracy Newton, Chief Executive Officer, or Joe Moss, President and Chief Operating Officer, at (706) 276-8160, with any questions or requests for additional information.
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
Summary Results of ----------------- -----------------
Operations Data: 2006 2005 2006 2005
------- ------- ------- -------
Interest income $14,124 $ 9,266 $37,699 $24,617
Interest expense 6,188 3,209 15,350 8,227
------- ------- ------- -------
Net interest income 7,936 6,057 22,349 16,390
Provision for loan losses 751 617 2,459 1,546
------- ------- ------- -------
Net interest income after
provision for loan losses 7,185 5,440 19,890 14,844
Noninterest income 1,049 834 2,846 2,363
Noninterest expense 6,355 4,190 16,266 11,895
------- ------- ------- -------
Income before taxes 1,879 2,084 6,470 5,312
Income tax expense 491 694 2,108 1,696
------- ------- ------- -------
Net income $ 1,388 $ 1,390 $ 4,362 $ 3,616
======= ======= ======= =======
Per Share Data:
Net income, basic $ 0.27 $ 0.36 $ 0.85 $ 0.94
Net income, diluted $ 0.26 $ 0.35 $ 0.83 $ 0.91
Book value $ 12.54 $ 10.30 $ 12.54 $ 10.30
Weighted average number of
shares outstanding:
Basic 5,169 3,881 5,160 3,842
Diluted 5,291 3,989 5,282 3,968
Performance Ratios:
Return on average assets (a) 0.80% 1.04% 0.92% 0.96%
Return on average equity (a) 8.70% 14.19% 9.44% 12.87%
Net interest margin (a)(b) 4.96% 4.90% 5.09% 4.72%
Efficiency ratio (c) 70.73% 60.80% 64.56% 63.43%
Growth Ratios and Other Data:
Percentage change in
net income -0.14% 20.63%
Percentage change in diluted
net income per share -25.71% -8.79%
At September 30,
------------------
2006 2005
------- -------
Summary Balance Sheet Data:
Assets 742,786 546,338
Average earning assets 567,834 469,574
Investment securities 71,983 68,383
Loans 592,618 425,284
Allowance for loan losses 7,172 5,437
Deposits 599,348 452,653
Short-term borrowings 42,514 13,861
Accrued interest 1,202 626
Federal Home Loan Bank advances 25,500 30,400
Subordinated long-term capital notes 6,186 6,186
Other liabilities 3,150 2,633
Shareholders' equity 64,886 39,979
Asset Quality Ratios:
Nonperforming loans to total loans 0.44% 0.33%
Nonperforming assets to total assets 0.39% 0.28%
Net charge-offs to average total loans 0.26% 0.11%
Allowance for loan losses to
nonperforming loans 277.98% 390.31%
Allowance for loan losses to total loans 1.21% 1.28%
Growth Ratios and Other Data:
Percentage change in assets 35.96%
Percentage change in loans 39.35%
Percentage change in deposits 32.41%
Percentage change in equity 62.30%
Loans to deposits ratio 98.88%
------------------------------------------------------------------
(a) Annualized.
(b) Taxable equivalent.
(c) Computed by dividing noninterest expense by the sum of the net
interest income and noninterest income.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -----------------
2006 2005 2006 2005
------- ------- ------- -------
Interest Income
Interest and fees on loans $13,305 $ 8,538 $35,235 $22,711
Interest on securities:
Taxable securities 584 533 1,683 1,349
Nontaxable securities 161 161 508 488
Interest on deposits with
other banks 6 6 24 13
Interest on federal funds sold 68 28 249 56
------- ------- ------- -------
Total Interest Income 14,124 9,266 37,699 24,617
------- ------- ------- -------
Interest Expense
Interest on deposits 5,592 2,751 13,793 6,908
Interest on short-term
borrowings 187 70 343 150
Interest on Federal Home Loan
Bank advances 275 284 848 877
Interest on subordinated
long-term capital notes 134 104 366 292
------- ------- ------- -------
Total Interest Expense 6,188 3,209 15,350 8,227
------- ------- ------- -------
Net Interest Income 7,936 6,057 22,349 16,390
Provision for loan losses 751 617 2,459 1,546
------- ------- ------- -------
Net Interest Income After
Provision for Loan Losses 7,185 5,440 19,890 14,844
------- ------- ------- -------
Noninterest Income
Customer service fees 413 380 1,200 1,032
Mortgage origination
commissions 391 242 942 690
Other operating income 245 212 704 641
------- ------- ------- -------
Total Noninterest Income 1,049 834 2,846 2,363
------- ------- ------- -------
Noninterest Expenses
Salaries and employee benefits 3,820 2,356 9,690 6,335
Occupancy, furniture and
equipment expense 733 495 1,900 1,536
Other operating expenses 1,802 1,339 4,676 4,024
------- ------- ------- -------
Total Noninterest expense 6,355 4,190 16,266 11,895
------- ------- ------- -------
Income before income taxes 1,879 2,084 6,470 5,312
Income tax expense 491 694 2,108 1,696
------- ------- ------- -------
Net Income $ 1,388 $ 1,390 $ 4,362 $ 3,616
======= ======= ======= =======
Earnings Per Common Share
Basic $ 0.27 $ 0.36 $ 0.85 $ 0.94
Diluted $ 0.26 $ 0.35 $ 0.83 $ 0.91
Cash Dividends Declared
Per Common Share $ -- $ -- $ -- $ --
Weighted Average Shares
Outstanding
Basic 5,169 3,881 5,160 3,842
Diluted 5,291 3,989 5,282 3,968
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)
Sept. 30, Dec. 31, Sept. 30,
2006 2005 2005
-------- -------- --------
Assets
Cash and due from banks $ 28,403 $ 20,772 $ 13,532
Interest-bearing deposits
with other banks 5,058 13,765 399
Federal funds sold 8,583 799 13,679
-------- -------- --------
Cash and Cash Equivalents 42,044 35,336 27,610
Securities available-for-sale 71,983 71,570 68,383
Loans, net of unearned income 592,618 457,418 425,284
Allowance for loan losses (7,172) (6,059) (5,437)
-------- -------- --------
Net Loans 585,446 451,359 419,847
Premises and equipment, net 22,562 16,797 14,512
Accrued interest 6,587 4,751 4,048
Cash surrender value on life
insurance 8,361 8,143 8,028
Intangibles, net 2,228 1,992 1,992
Other assets 3,575 2,658 1,918
-------- -------- --------
Total Assets $742,786 $592,606 $546,338
======== ======== ========
Liabilities and Shareholders' Equity
Liabilities
Noninterest-bearing deposits $ 57,509 $ 46,561 $ 46,913
Interest-bearing deposits 541,839 426,749 405,740
-------- -------- --------
Total Deposits 599,348 473,310 452,653
Short-term borrowings 42,514 24,892 13,861
Accrued interest 1,202 728 626
Federal Home Loan Bank advances 25,500 24,950 30,400
Subordinated long-term capital notes 6,186 6,186 6,186
Other liabilities 3,150 2,715 2,633
-------- -------- --------
Total Liabilities 677,900 532,781 506,359
-------- -------- --------
Shareholders' Equity
Preferred Stock, 20,000,000 shares
authorized, none issued -- -- --
Common stock, par value $0.01 per
share, 20,000,000 shares
authorized, 5,252,197 shares issued
at September 30, 2006,
5,225,097 shares issued at December
31, 2005 and 3,956,797 shares
issued at September 30, 2005 53 52 40
Paid-in capital 43,722 43,184 24,557
Retained earnings 22,118 17,757 16,250
Accumulated other comprehensive
income (loss) (307) (468) (168)
Treasury stock, at cost (75,973 shares
at September 30, 2006 and 2005,
and at December 31, 2005) (700) (700) (700)
-------- -------- --------
Total Shareholders' Equity 64,886 59,825 39,979
-------- -------- --------
Total Liabilities and
Shareholders' Equity $742,786 $592,606 $546,338
======== ======== ========