ALASKA PACIFIC BANCSHARES, INC. 
By Alaska Pacific Bancshares, Inc. (OTCBB:AKPB) ("Company"), the parent company of Alaska Pacific Bank ("Bank"), today reported net income available to common shareholders of $157,000, or $0.22 per diluted common share, for the fourth quarter ended December 31, 2011, as compared to net income available to common shareholders of $624,000, or $0.89 per diluted common share for the fourth quarter of 2010.
Net income available to common shareholders for the year ended December 31, 2011, was $631,000, or $0.87 per diluted common share, compared to net income available to common shareholders of $539,000, or $0.76 per diluted common share for 2010.
"The Bank made steady progress during 2011," stated Craig Dahl, President & CEO. "Our mortgage loan volume was still lower than planned, and a year end write-down of mortgage servicing rights slowed our fourth quarter performance. On the other hand we had improved loan demand for our commercial loans throughout 2011. The stable and improving economy of Southeast Alaska, along with growth in tourism and mining, provide a sound framework for the Bank's core business. Although we still have higher than desired classified loans, the Bank's reserves are adequate to offset any losses. While there are still challenges to overcome, we're confident that we are moving in the right direction and look forward to the Bank's continued improvement."
The provision for loan losses was $60,000 and the net benefit for loan losses was $113,000 for the quarter ended December 31, 2011 and 2010, respectively. The allowance for loan losses at December 31, 2011 was $1.9 million, representing 1.26% of total loans outstanding. Total non-accrual loans were $2.6 million at December 31, 2011 compared with $1.8 million at September 30, 2011 and $448,000 at December 31, 2010. In addition, the Bank's real estate owned and repossessed assets were $880,000 at December 31, 2011 compared with $1.4 million at September 30, 2011 and $1.8 million at December 31, 2010. There was $234,000 in net loan charge offs for the quarter ended December 31, 2011 compared with no net loan charge offs for the quarter ended September 30, 2011 and $447,000 in net loan charge offs for the quarter ended December 31, 2010.
Net interest income decreased $173,000, or (8.0%) to $2.0 million in the fourth quarter of 2011 compared to $2.2 million for the comparable quarter of 2010 reflecting primarily the decline in the Bank's average loan portfolio and the continued low interest rate environment. Net interest margin on average interest-earning assets for the fourth quarter of 2011 was 5.13% compared with 5.66% in the fourth quarter of 2010.
Loans (excluding loans held for sale and before the allowance for loan losses) were $147.8 million at December 31, 2011, an increase of $2.3 million, or 1.6% from $145.5 million at September 30, 2011, and an increase of $5.8 million, or 4.1% from $141.9 million at December 31, 2010. Deposits at December 31, 2011, were $147.2 million, a $4.7 million, or 3.1% decrease from $151.9 million at September 30, 2011, and a $347,000, or 0.2% decrease from $147.5 million at December 31, 2010.
Noninterest income for the fourth quarter of 2011, including gain on sale of loans, decreased $222,000, or 47.7% to $243,000 from $465,000 for the fourth quarter of 2010. Gain on sale of loans decreased $238,000 to $286,000 for the year ended December 31, 2011 from $524,000 for fiscal 2010 as a result of a decline in gain on sale of loans and origination fees/costs associated with the decline in the production of one-to-four family mortgage loans. Excluding mortgage banking income, noninterest income decreased $148,000, or 11.7%, to $1.1 million for the year ended December 31, 2011 compared with $1.3 million for fiscal 2010. The decrease is primarily in mortgage servicing income due to the fair value adjustment to mortgage servicing rights of $(144,000). Additionally, other income of $46,000 was recognized in 2010 from the gain on sale of commercial loans.
Noninterest expense for the fourth quarter of 2011 decreased $40,000, or 2.0%, to $1.9 million from $2.0 million for the quarter ended September 30, 2011 and decreased $357,000, or 15.6%, from the quarter ended December 31, 2010. Noninterest expense for the year ended December 31, 2011 decreased $804,000, or 9.1%, from $8.9 million for the year ended December 31, 2010. The net decrease in expense in 2011 is attributable to lower real estate owned and repossessed asset expense, lower professional and consulting expense and lower FDIC premiums.
Forward-Looking Statements
Certain matters in this news release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations, and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and non-performing assets in our loan portfolio, result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions, either nationally or in our market areas; changes in the levels of general interest rates, and the relative differences between short and long term interest rates, deposit interest rates, our net interest margin and funding sources; deposit flows; fluctuations in the demand for loans, the number of unsold homes and other properties and fluctuations in real estate values in our market areas; adverse changes in the securities markets; results of examinations by our banking regulators including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings; the possibility that we will be unable to comply with the conditions imposed upon us in the Cease and Desist Orders entered into with the Office of Thrift Supervision that are now enforced by its successors the Office of the Comptroller of the Currency for the Bank and the Federal Reserve for the Company; computer systems on which we depend could fail or experience a security breach, or the implementation of new technologies may not be successful; our ability to retain key members of our senior management team; legislative or regulatory changes such as the Dodd-Frank Wall Street Reform and Consumer Protection Act that adversely affect our business including changes in regulatory policies and principles, and the interpretation of regulatory capital or other rules; the time it may take to lease excess space in Company-owned buildings; future legislative changes in the United States Department of Treasury Troubled Asset Relief Program Capital Purchase Program; and other risks detailed in our reports filed with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. Accordingly, these factors should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. We undertake no responsibility to update or revise any forward-looking statements.
Alaska Pacific Bancshares, Inc. Financial Highlights (Unaudited) Year and Fourth Quarter 2011 (dollars in thousands, except per-share amounts) | ||||||||
| Year Ended December 31, | ||||||||
| 2011 | 2010 | |||||||
| Condensed Statement of Income: | ||||||||
| Interest income | $ | 8,581 | $ | 9,589 | ||||
| Interest expense | 690 | 1,107 | ||||||
| Net interest income | 7,891 | 8,482 | ||||||
| Provision for loan losses | 373 | 899 | ||||||
| Gain on sale of loans | 286 | 524 | ||||||
| Other noninterest income | 1,114 | 1,262 | ||||||
| Other noninterest expense | 7,977 | 8,781 | ||||||
| Net income before income tax benefit | 941 | 588 | ||||||
| Income tax benefit | - | (255 | ) | |||||
| Net income | 941 | 843 | ||||||
| Preferred stock dividend and discount accretion | ||||||||
| Preferred stock dividend | 241 | 239 | ||||||
| Preferred stock discount accretion | 69 | 65 | ||||||
| Net income available to common shareholders | $ | 631 | $ | 539 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.96 | $ | 0.82 | ||||
| Diluted | $ | 0.87 | $ | 0.76 | ||||
| Performance Ratios: | ||||||||
| Return on average equity | 4.68 | % | 4.43 | % | ||||
| Return on average assets | 0.55 | 0.49 | ||||||
| Yield on average earning assets | 5.52 | 6.03 | ||||||
| Cost of average interest-bearing liabilities | 0.58 | 0.88 | ||||||
| Interest rate spread | 4.94 | 5.15 | ||||||
| Net interest margin on: | ||||||||
| Average earning assets | 5.08 | 5.34 | ||||||
| Average total assets | 4.57 | 4.92 | ||||||
| Efficiency ratio (a) | 88.58 | 90.12 | ||||||
| Average balances: | ||||||||
| Loans | $ | 145,562 | $ | 153,736 | ||||
| Earning assets | 155,313 | 158,919 | ||||||
| Assets | 172,628 | 172,284 | ||||||
| Interest-bearing deposits | 115,146 | 116,298 | ||||||
| Total deposits | 146,270 | 145,371 | ||||||
| Interest-bearing liabilities | 118,612 | 125,319 | ||||||
| Shareholders' equity | 20,108 | 19,029 | ||||||
| Average shares outstanding: | ||||||||
| Basic | 654,486 | 654,486 | ||||||
| Diluted | 727,165 | 707,897 | ||||||
Alaska Pacific Bancshares, Inc. Financial Highlights (Unaudited) Fourth Quarter 2011 (dollars in thousands, except per-share amounts) | ||||||||||||
| Three Months Ended | ||||||||||||
|
December 31, 2011 |
September 30, 2011 |
December 31, 2010 | ||||||||||
| Condensed Statement of Income: | ||||||||||||
| Interest income | $ | 2,142 | $ | 2,141 | $ | 2,387 | ||||||
| Interest expense | 157 | 166 | 229 | |||||||||
| Net interest income | 1,985 | 1,975 | 2,158 | |||||||||
| Provision (benefit) for loan losses | 60 | 60 | (113 | ) | ||||||||
| Gain on sale of loans | 69 | 88 | 120 | |||||||||
| Other noninterest income | 174 | 334 | 345 | |||||||||
| Noninterest expense | 1,933 | 1,973 | 2,290 | |||||||||
| Net income before income tax benefit | 235 | 364 | 446 | |||||||||
| Provision for income tax | - | - | (255 | ) | ||||||||
| Net income | 235 | 364 | 701 | |||||||||
| Preferred stock dividend and discount accretion | ||||||||||||
| Preferred stock dividend | 60 | 60 | 60 | |||||||||
| Preferred stock discount accretion | 18 | 17 | 17 | |||||||||
| Net income available to common shareholders | $ | 157 | $ | 287 | $ | 624 | ||||||
| Income per common share: | ||||||||||||
| Basic | $ | 0.24 | $ | 0.44 | $ | 0.95 | ||||||
| Diluted | $ | 0.22 | $ | 0.39 | $ | 0.89 | ||||||
| Performance Ratios: | ||||||||||||
| Return on average equity | 4.60 | % | 7.21 | % | 14.39 | % | ||||||
| Return on average assets | 0.58 | 0.90 | 1.72 | |||||||||
| Yield on average interest-earning assets | 5.53 | 5.48 | 6.26 | |||||||||
| Cost of average interest-bearing liabilities | 0.53 | 0.56 | 0.74 | |||||||||
| Interest rate spread | 5.00 | 4.92 | 5.52 | |||||||||
| Net interest margin on: | ||||||||||||
| Average interest-earning assets | 5.13 | 5.05 | 5.66 | |||||||||
| Average total assets | 4.89 | 4.90 | 5.30 | |||||||||
| Efficiency ratio (a) | 89.53 | 85.45 | 91.49 | |||||||||
| Average balances: | ||||||||||||
| Loans | $ | 144,743 | $ | 147,083 | $ | 146,175 | ||||||
| Interest-earning assets | 154,806 | 156,390 | 152,538 | |||||||||
| Assets | 162,238 | 161,365 | 162,953 | |||||||||
| Interest-bearing deposits | 116,369 | 116,281 | 118,920 | |||||||||
| Total deposits | 148,977 | 151,005 | 149,551 | |||||||||
| Interest-bearing liabilities | 119,369 | 119,281 | 123,922 | |||||||||
| Shareholders' equity | 20,452 | 20,190 | 19,483 | |||||||||
| Weighted average common shares outstanding: | ||||||||||||
| Basic | 654,486 | 654,486 | 654,486 | |||||||||
| Diluted | 714,862 | 729,392 | 698,574 | |||||||||
December 31, |
September 30, |
December 31, | ||||||||||
| Balance sheet data: | ||||||||||||
| Total assets | $ | 172,057 | $ | 176,416 | $ | 174,369 | ||||||
| Loans, before allowance | 147,766 | 145,477 | 141,938 | |||||||||
| Loans held for sale | 976 | 614 | 450 | |||||||||
| Investment securities available for sale | 5,714 | 5,900 | 2,155 | |||||||||
| Total deposits | 147,201 | 151,921 | 147,548 | |||||||||
| Federal Home Loan Bank advances | 3,000 | 3,000 | 5,000 | |||||||||
| Shareholders' equity | 20,542 | 20,362 | 19,779 | |||||||||
| Shares outstanding (b) | 654,486 | 654,486 | 654,486 | |||||||||
| Book value per share | $ | 24.08 | $ | 23.81 | $ | 22.92 | ||||||
| Asset quality: | ||||||||||||
| Allowance for loan losses | $ | 1,865 | $ | 2,039 | $ | 1,583 | ||||||
| Allowance as a percent of loans | 1.26 | % | 1.40 | % | 1.12 | % | ||||||
| Nonaccrual loans | $ | 2,645 | $ | 1,823 | $ | 448 | ||||||
| Total nonperforming assets | 3,525 | 3,197 | 2,239 | |||||||||
| Impaired loans | 11,980 | 12,346 | 9,601 | |||||||||
| Estimated specific reserves for impairment | 473 | 668 | 310 | |||||||||
| Net charge offs for quarter | 234 | - | 447 | |||||||||
| Net charge offs (recoveries) YTD | 91 | (143 | ) | 1,101 | ||||||||
| Real estate owned and repossessed assets | 880 | 1,374 | 1,791 | |||||||||
(a) Noninterest expense, divided by the sum of net interest income and noninterest income, excluding gains on sale of loans or securities.
(b) Excludes treasury stock.
Alaska Pacific Bancshares, Inc.
Senior Vice President and CFO
Julie
M. Pierce, 907-790-5135
or
President and CEO
Craig E.
Dahl, 907-790-5101
