ELLIJAY, Ga., Oct. 31, 2008 (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 $1.1 billion, as of September 30, 2008, compared to $898.0 million on September 30, 2007, an increase of 24.66%. Total gross loans were $894.1 million, an increase of $141.1 million, or 18.74%, when compared with $753.0 million on September 30, 2007. Deposits grew to $961.8 million as of September 30, 2008, an increase of $195.0 million, or 25.44%, when compared to $766.7 million on September 30, 2007.
Tracy Newton, President and Chief Executive Officer, stated that, "The increasing risks pertaining to our overall loan quality, which is primarily due to further deterioration of local economic conditions during the quarter, required us to increase the allowance for loan losses significantly. This increase to the allowance for loan losses, however, will allow us to continue to be very aggressive in dealing with problem assets."
Net loss for the third quarter of 2008 was $2.6 million, or $0.49 per diluted share, which is a 286.21% decrease in net income when compared to $1.4 million, or $0.27 per diluted share, for the same quarter in 2007. Net loss for the first nine months of 2008 was $782 thousand, or $0.15 per diluted share, which is a 117.51% decrease per diluted share compared to $4.5 million, or $0.85 per diluted share, for the same period in 2007. Our decrease in net income for the third quarter and the first nine months of 2008 was primarily due to our provision for loan losses of $4.7 million and $7.1 million, respectively, which represents increases of $4.0 million and $4.9 million over the same periods in 2007. In addition, the other than temporary impairment of $816 thousand caused by a required write down of Freddie Mac preferred stock and a decreasing net interest margin in the third quarter of 2008, contributed to our net losses. Our net interest margin decreased 1.25% during the third quarter of 2008 compared to the same period in 2007 and 0.88% for the first nine months of 2008 compared to the same period in 2007.
"In spite of decreased earnings, we continue to implement our strategic business plan by raising additional core deposits in our expansion markets. We also remain focused on reducing overhead and continuing to deliver quality customer service with the right mix of products in our markets," Newton stated.
Return on average shareholders' equity was (13.70%) annualized for third quarter 2008, compared to 7.84% for the same period in 2007. For the first nine months of 2008, return on average shareholders' equity was (1.38%) annualized compared to 8.62% for the same period in 2007. Return on average assets was (0.95%) annualized for the third quarter 2008, compared to 0.63% for the same period in 2007. For the first nine months of 2008, return on average assets was (0.10%) annualized compared to 0.71% for this period in 2007.
Mr. Newton commented that, "Consistent with our previous efforts, we continue to quickly identify and address our problem assets. Our non-performing assets to total assets ratio increased to 1.77% at September 30, 2008 from 0.87% at June 30, 2008, 0.64% at December 31, 2007 and 0.82% at September 30, 2007, our non-performing loans to total loans ratio was 1.81% at September 30, 2008 compared to 0.77% at September 30, 2007. Our net charge-off ratio for the first nine months of 2008 is 0.36% as compared 0.14% at September 30, 2007, and consistent with our budgeted ratio. After careful consideration of increasing risks in our loan portfolio, we feel confident that increasing our loan loss reserves to 1.55% of gross loans outstanding at September 30, 2008 compared to 1.22% at June 30, 2008 and 1.19% at September 30, 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 3.33% for the quarter ended September 30, 2008, compared to 4.58% the same quarter in 2007 and 4.07% during the second quarter of 2008. During the first nine months of 2008, our net interest margin was 3.88% compared to 4.76% for the same period in 2007. Due to placing loans on non-accrual, we reversed interest during the third quarter which represents a 35 basis point decrease of our margin. Likewise, we reversed interest during the first nine months of 2008, which represents a 16 basis points decrease of our margin.
Total revenue, net of interest expense, was $8.9 million for the third quarter of 2008 and $10.9 million for the third quarter 2007. This represented a decrease of 18.5%. During the first nine months of 2008, total revenue, net of interest expense, was $30.7 million compared to $31.8 million for the same period in 2007, a decrease of 3.4%. Total revenue, net of interest expense, decreased during the third quarter of 2008 and the first nine months of 2008 compared to the same periods in 2007. This decrease is primarily due to the decrease in our net interest margin and the other than temporary impairment for the Freddie Mac preferred stock.
Book value per share stood at $13.70 at September 30, 2008, compared to $13.66 per share at September 30, 2007, an increase of approximately 0.3%. At December 31, 2007 our book value per share was $13.94.
Conference Call
The Company will hold a conference call on Friday, October 31, 2008 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 also will 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. 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)
(Dollars in thousands, except shares and per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
-------------------- --------------------
2008 2007 2008 2007
--------- --------- --------- ---------
Summary Results of
Operations Data:
Interest income $ 16,871 $ 18,529 $ 52,914 $ 53,059
Interest expense 8,465 9,154 25,258 25,380
--------- --------- --------- ---------
Net interest income 8,406 9,375 27,656 27,679
Provision for
loan losses 4,665 677 7,116 2,260
--------- --------- --------- ---------
Net interest income
after provision
for loan losses 3,741 8,698 20,540 25,419
Noninterest income 453 1,499 3,060 4,131
Noninterest expense 8,558 8,085 25,346 22,817
--------- --------- --------- ---------
Income (loss)
before taxes (4,364) 2,112 (1,746) 6,733
Income tax expense
(benefit) (1,744) 705 (964) 2,266
--------- --------- --------- ---------
Net income (loss) $ (2,620) $ 1,407 $ (782) $ 4,467
========= ========= ========= =========
Per Share Data:
Net income (loss),
basic $ (0.49) $ 0.27 $ (0.15) $ 0.85
Net income (loss),
diluted (0.49) 0.27 (0.15) 0.85
Book value 13.70 13.66 13.70 13.66
Weighted average number
of shares outstanding:
Basic 5,372,505 5,298,509 5,364,695 5,256,568
Diluted 5,372,505 5,298,509 5,364,695 5,270,801
Performance Ratios:
Return on average
assets(1) -0.95% 0.63% -0.10% 0.71%
Return on average
equity(1) -13.70% 7.84% -1.38% 8.62%
Net interest
margin(1) (2) 3.33% 4.58% 3.88% 4.76%
Efficiency
ratio(3) 88.36% 74.35% 80.38% 71.73%
Growth Ratios and
Other Data:
Percentage change
in net income -286.21% -117.51%
Percentage change
in diluted net income
per share -281.48% -117.65%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except shares and per share data)
At September 30,
------------------------
2008 2007
---------- ----------
Summary Balance Sheet Data:
Assets $1,119,514 $ 898,027
Average earning assets QTD 1,014,984 820,311
Average earning assets YTD 962,072 784,442
Investment securities 78,789 78,768
Loans held for sale 2,376 4,187
Loans 894,117 752,988
Allowance for loan losses 13,850 8,966
Deposits 961,763 766,726
Short-term borrowings 13,419 9,125
Accrued interest 2,071 1,979
Federal Home Loan Bank advances 52,100 37,450
Subordinated long-term
capital notes 12,311 6,186
Other liabilities 4,279 4,266
Shareholders' equity 73,571 72,295
Asset Quality Ratios:
Nonperforming loans to total loans 1.81% 0.77%
Nonperforming assets to total assets 1.77% 0.82%
Net charge-offs to average total loans 0.36% 0.14%
Allowance for loan losses to
nonperforming loans 85.37% 154.08%
Allowance for loan losses to total loans 1.55% 1.19%
At September 30,
-----------------------------------------
2008 2007
% of % of
Total Total
Loans by Category Amount Loans Amount Loans
-------- -------- -------- --------
Real estate -
acquisition &
development $397,655 44.47% $399,214 53.02%
Real estate -
commercial 175,000 19.57% 141,812 18.83%
Real estate -
residential 216,461 24.21% 129,504 17.20%
Commercial business 67,355 7.53% 47,457 6.30%
Other loans 37,646 4.22% 35,001 4.65%
-------- --------
Total Loans $894,117 $752,988
======== ========
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
SELECTED CONSOLIDATED FINANCIAL DATA
(Unaudited)
(Dollars in thousands, except shares and per share data)
At September 30,
-----------------------------------------
2008 2007
------------------- -------------------
% of % of
Nonperforming Total Total
assets by Non- Non-
category: Amount performing Amount performing
Loans -------- -------- -------- --------
Real estate -
acquisition &
development $ 6,361 32.06% $ 2,712 36.92%
Real estate -
commercial 4,953 24.96% 674 9.18%
Real estate -
residential 3,906 19.68% 1,777 24.19%
Commercial business 743 3.74% 518 7.05%
Other loans 260 1.31% 138 1.88%
Other Real Estate
Real estate -
acquisition &
development 1,938 9.77% 532 7.24%
Real estate -
commercial -- 0.00% 540 7.35%
Real estate -
residential 1,609 8.11% 455 6.19%
Other Repossessed
Property
Other loans 74 0.37% -- 0.00%
-------- --------
Total Nonperforming
Assets $ 19,844 $ 7,346
======== ========
At September 30,
-----------------------------------------
2008 2007
------------------- -------------------
% of Total % of Total
Average Average
Amount Loans Amount Loans
-------- -------- -------- --------
Quarter-to-Date Net
Charge-Offs
by Category
Real estate -
acquisition &
development $ 262 0.03% $ 229 0.03%
Real estate -
commercial -- 0.00% 55 0.01%
Real estate -
residential 820 0.09% 121 0.01%
Commercial business 117 0.01% 51 0.01%
Other loans 260 0.03% 135 0.02%
-------- --------
Total Net
Charge-Offs $ 1,459 0.16% $ 591 0.08%
======== ========
2008 2007
------------------- -------------------
% of Total % of Total
Average Average
Amount Loans Amount Loans
-------- -------- -------- --------
Year-to-Date Net
Charge-Offs by
Category
Real estate -
acquisition &
development $ 1,335 0.16% $ 283 0.04%
Real estate -
commercial 7 0.00% 145 0.02%
Real estate -
residential 1,076 0.13% 176 0.02%
Commercial business 174 0.02% 80 0.01%
Other loans 482 0.05% 280 0.04%
-------- --------
Total Net
Charge-Offs $ 3,074 0.36% $ 964 0.13%
======== ========
Growth Ratios and
Other Data:
Percentage change in
assets 24.66%
Percentage change in
loans 18.74%
Percentage change in
deposits 25.44%
Percentage change in
equity 1.76%
Loans to deposits ratio 92.97%
------------------------------------------------------------------
(1) Annualized.
(2) Taxable equivalent.
(3) Computed by dividing noninterest expense by the sum of the net
interest income and noninterest income.
APPALACHIAN BANCSHARES, INC AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2008 2007 2008 2007
---------- ---------- ---------- ----------
Interest Income
Interest and fees on
loans $ 15,599 $ 17,546 $ 49,637 $ 50,152
Interest on securities:
Taxable securities 833 719 2,414 2,116
Nontaxable securities 149 165 467 475
Interest on deposits
with other banks 6 9 14 73
Interest on federal
funds sold 284 90 382 243
---------- ---------- ---------- ----------
Total Interest
Income 16,871 18,529 52,914 53,059
---------- ---------- ---------- ----------
Interest Expense
Interest on deposits 7,818 8,553 23,076 23,659
Interest on short-term
borrowings 27 79 272 191
Interest on Federal
Home Loan Bank
advances 525 389 1,609 1,129
Interest on
subordinated long-term
capital notes 95 133 301 401
---------- ---------- ---------- ----------
Total Interest
Expense 8,465 9,154 25,258 25,380
---------- ---------- ---------- ----------
Net Interest Income 8,406 9,375 27,656 27,679
Provision for loan
losses 4,665 677 7,116 2,260
---------- ---------- ---------- ----------
Net Interest Income
After Provision for
Loan Losses 3,741 8,698 20,540 25,419
---------- ---------- ---------- ----------
Noninterest Income
Customer service fees 696 586 1,920 1,647
Mortgage origination
commissions 299 483 1,163 1,476
Net losses on
securities (826) -- (817) --
Other operating income 284 430 794 1,008
---------- ---------- ---------- ----------
Total Noninterest
Income 453 1,499 3,060 4,131
---------- ---------- ---------- ----------
Noninterest Expenses
Salaries and employee
benefits 5,000 4,870 15,035 13,808
Occupancy, furniture
and equipment expense 1,088 937 3,190 2,700
Other operating
expenses 2,470 2,278 7,121 6,309
---------- ---------- ---------- ----------
Total Noninterest
expense 8,558 8,085 25,346 22,817
---------- ---------- ---------- ----------
Income (loss) before
income taxes (4,364) 2,112 (1,746) 6,733
Income tax expense
(benefit) (1,744) 705 (964) 2,266
---------- ---------- ---------- ----------
Net Income (Loss) $ (2,620) $ 1,407 $ (782) $ 4,467
========== ========== ========== ==========
Earnings (Loss) Per
Common Share
Basic $ (0.49) $ 0.27 $ (0.15) $ 0.85
Diluted (0.49) 0.27 (0.15) 0.85
Cash Dividends Declared
Per Common Share -- -- -- --
Weighted Average Shares
Outstanding
Basic 5,372,505 5,298,509 5,364,695 5,256,568
Diluted 5,372,505 5,298,509 5,364,695 5,270,801
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(Dollars in thousands)
Sept. 30, Dec. 31, Sept. 30,
2008 2007 2007
---------- ---------- ---------
Assets
Cash and due from banks $ 19,124 $ 13,392 $ 11,280
Interest-bearing deposits with
other banks 701 310 509
Federal funds sold 70,436 12,797 728
---------- ---------- ---------
Cash and Cash Equivalents 90,261 26,499 12,517
Securities available-for-sale 78,789 80,510 78,768
Loans, held for sale 2,376 6,503 4,187
Loans, net of unearned income 894,117 807,522 752,988
Allowance for loan losses (13,850) (9,808) (8,966)
---------- ---------- ---------
Net Loans 880,267 797,714 744,022
Premises and equipment, net 37,742 32,966 31,868
Accrued interest 8,598 9,797 9,666
Cash surrender value on life
insurance 9,060 8,778 8,690
Intangibles, net 1,992 2,179 2,315
Other assets 10,429 6,254 5,994
---------- ---------- ---------
Total Assets $1,119,514 $ 971,200 $ 898,027
========== ========== =========
Liabilities and Shareholders' Equity
Liabilities
Noninterest-bearing deposits $ 51,843 $ 56,559 $ 62,877
Interest-bearing deposits 909,920 751,038 703,849
---------- ---------- ---------
Total Deposits 961,763 807,597 766,726
Short-term borrowings 13,419 21,048 9,125
Accrued interest 2,071 2,059 1,979
Federal Home Loan Bank advances 52,100 57,350 37,450
Subordinated long-term capital
notes 12,311 6,186 6,186
Other liabilities 4,279 3,297 4,266
---------- ---------- ---------
Total Liabilities 1,045,943 897,537 825,732
---------- ---------- ---------
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 September 30, 2008,
5,285,026 shares issued at
December 31, 2007 and 5,294,026
shares issued at September 30,
2007 54 53 53
Paid-in capital 44,923 43,998 44,039
Retained earnings 28,549 29,331 28,228
Accumulated other comprehensive
income (loss) 45 281 (25)
---------- ---------- ---------
Total Shareholders' Equity 73,571 73,663 72,295
---------- ---------- ---------
Total Liabilities and
Shareholders' Equity $1,119,514 $ 971,200 $ 898,027
========== ========== =========