VALDOSTA, Ga., Nov. 3, 2009 (GLOBE NEWSWIRE) -- PAB Bankshares, Inc. (Nasdaq:PABK), the parent company for The Park Avenue Bank, announced its consolidated financial results for the three months ended September 30, 2009. The Company reported a net loss of $20.0 million, or ($1.93) per diluted share, for the third quarter of 2009 after posting a $31.4 million provision for loan losses. "During the third quarter, we successfully completed a private placement of capital in order to further protect our balance sheet from loan losses and to continue to serve our customers' financial needs during these difficult economic times. We concluded that the most effective way to utilize our capital was to transfer it into our allowance for loan losses," stated Company President and CEO Jay Torbert. "Despite the elevated level of nonperforming assets, the Bank has ample liquidity, it remains well-capitalized, and it has a strong allowance for loans losses. In addition, we believe our core operating earnings will cover the increased cost to carry our nonperforming assets and the increased cost of deposit insurance without having a negative impact on our capital," added Torbert.
Earnings from core operations were $4.2 million for the third quarter of 2009, down slightly from $4.4 million in the same period in 2008. The Company defines earnings from core operations as pre-tax, pre-provision and other expenses as shown in the financial tables included with this press release. A reconciliation of earnings from core operations to net income (loss) is set forth in the financial tables included in this press release. The loss for the third quarter of 2009 reflects a $31.4 million provision for loan losses, a $1.4 million decrease in net interest income due to interest lost on nonperforming loans, a $755,000 loss on disposal of nonperforming assets, $686,000 in legal, collections, taxes, insurance and other carrying charges related to its nonperforming assets (a 165% increase compared to the same period in 2008), and $520,000 in deposit insurance premiums (an 1,802% increase compared to the same period in 2008).
At September 30, 2009, the Company reported total assets of $1.25 billion, which represents a $25.8 million, or 2.0%, decrease compared to the $1.28 billion in total assets reported at June 30, 2009. During the quarter, total loans outstanding decreased $27.7 million, or 3.0%, to $892.0 million, and total deposits decreased $6.7 million, or 0.7%, to $1.03 billion. The decrease in deposits was the result of a $14.8 million decrease in brokered deposits and a $6.8 million decrease in demand accounts, offset by a $6.6 million increase in retail time deposits placed in the CDARs program and an $8.3 million increase in other time deposits. The Bank continues to maintain its "Well Capitalized" status based on the regulatory definitions for capital adequacy. At September 30, 2009, the Bank's Total Risk-Based Capital Ratio was 10.0%, a decrease compared to 10.9% at June 30, 2009. "We intend to methodically liquidate our nonperforming assets over a period of time and shrink the Bank's balance sheet in order to reduce pressure on our capital," stated Torbert. Additional information regarding the Company's financial results is provided in the tables accompanying this press release.
Asset Quality
A summary of pertinent asset quality ratios for the Company as of September 30, 2009 is as follows:
* Total nonperforming assets equaled $120.0 million, or 9.59% of total assets, a $12.1 million increase during the quarter. Nonperforming assets consisted of $64.8 million in nonaccrual loans and $55.2 million in foreclosed real estate and other repossessed assets. * The Bank's "Texas Ratio", which is a popular comparison of an institution's nonperforming assets to its tangible equity plus allowance for loan losses, was 94%. * For the third quarter of 2009, the Company charged off $11.3 million in loans and recovered $96,000 in loans previously charged-off for an annualized net charge-off ratio of 4.84% of average loans. * The allowance for loan losses represented approximately 4.48% of total loans and 61.72% of total nonperforming loans. * Loan loss provision expense was $31.4 million in the third quarter of 2009, compared to $2.0 million for the second quarter of 2009 and $7.3 million for the third quarter of 2008. * The nonperforming loans consisted of: --------------------------------------------------------------------- Net Carrying Collateral Average Carrying Category Value * Description Value/ Unit --------------------------------------------------------------------- Construction 12 parcels of $9,200 per and $12.8 million undeveloped land residential acre Development totaling 558 acres $56,200 per commercial acre --------------------------------------------------------------------- Construction and $4.5 million 161 residential $27,800 per lot Development lots --------------------------------------------------------------------- 1-4 Family Residential $5.5 million 74 houses $75,000 per house --------------------------------------------------------------------- Commercial $19.4 million 22 commercial $880,600 per property Real Estate properties --------------------------------------------------------------------- Agriculture $1.9 million 3 parcels of farm $5,000 per acre land totaling 373 acres --------------------------------------------------------------------- Commercial $3.6 million Non-real estate $297,000 per loan and collateral Industrial --------------------------------------------------------------------- Multi-Family $8.0 million 9 condominium $891,900 per unit Residential units --------------------------------------------------------------------- Consumer $21,000 Non-real estate $3,000 per loan collateral --------------------------------------------------------------------- Total $55.7 million --------------------------------------------------------------------- * The term "net carrying value" represents the book value of the loan less any allocated allowance for loan losses. * Foreclosed properties included: --------------------------------------------------------------------- Category Book Value Description Average Value/ Unit --------------------------------------------------------------------- Construction 15 parcels of $9,500 per and $11.2 million undeveloped land residential acre Development totaling 1,039 $53,200 per acres commercial acre --------------------------------------------------------------------- Construction 628 residential and $14.3 million lots $22,700 per lot Development --------------------------------------------------------------------- 1-4 Family Residential $11.3 million 65 houses $174,600 per house --------------------------------------------------------------------- Commercial 26 commercial Real Estate $18.4 million properties $706,300 per property --------------------------------------------------------------------- Total $55.2 million --------------------------------------------------------------------- * Approximately 49% of nonperforming loans were construction and development loans, and these loans represented approximately 12% of the Company's total portfolio of construction and development loans. * The Company reported total loans past due 30-89 days of $28.9 million, or 3.24% of total loans, a $5.0 million increase during the quarter. These loans are not included in nonperforming assets at quarter end. Approximately 67% of the loans past due 30-89 days were construction and development loans.
Non-GAAP Financial Measures
This press release, including the attached selected unaudited financial tables, which are a part of this release, contains financial information determined by methods other than in accordance with U.S. generally accepted accounting principles ("GAAP"). Management uses the non-GAAP measure of earnings from core operations in its analysis of the Company's performance. This measure, as used by the Company, adjusts net income determined in accordance with GAAP to exclude the effects of taxes, the provision for loan losses and other expenses as detailed in the attached financial tables. Because certain of these items and their impact on the Company's performance are difficult to predict, management believes presentation of financial measures excluding the impact of such items provides useful supplemental information in evaluating the operating results of the Company's core business and assessing trends in the Company's core operations reflected in the current quarter and year-to-date results. These disclosures should not be viewed as a substitute for net income determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other companies. Please refer to the "Reconciliation of Non-GAAP Measure" in the attached tables for a more detailed analysis of this non-GAAP measure and the most directly comparable GAAP measure.
Conference Call
Management will host a conference call and webcast to discuss the Company's quarterly financial results at 10:00 AM Eastern on Thursday, November 5, 2009. The conference call will be broadcast via the Internet using Windows Media Player. The webcast URL is http://www.talkpoint.com/viewer/starthere.asp?Pres=128207. A link to the webcast is posted on the "Investor Relations" section of the Company's website at www.pabbankshares.com. Interested shareholders, industry analysts and members of the news media and the investment community wanting to participate in the live question and answer session following management's presentation may access the conference call by dialing (toll free) 800-860-2442 or (international) +1 412-858-4600.
Shortly following the call and at any time for at least 30 days thereafter, interested parties may access an archived version of the webcast on the "Investor Relations" section of the Company's website or by dialing (toll free) 877-344-7529 or (International) +1 412-317-0088. The following replay passcodes will be required for playback access: 434351.
About PAB
The Company is a $1.25 billion bank holding company headquartered in Valdosta, Georgia, and its sole operating subsidiary is The Park Avenue Bank. Founded in 1956, the Bank operates through 18 branch offices and two loan production offices in 13 counties in Georgia and Florida. Additional information on the Bank's locations and the products and services offered by the Bank is available on the Internet at www.parkavebank.com. The Company's common stock is listed on the NASDAQ Global Select Market under the symbol PABK. More information on the Company is available on the Internet at www.pabbankshares.com.
Cautionary Note to Investors Regarding Forward-Looking Statements
Certain matters set forth in this news release are "forward-looking statements" within the meaning of the federal securities laws, including, without limitation, statements regarding our plans regarding our nonperforming assets, our outlook on asset quality, the impact of our nonperforming assets on our capital position, the interest rate environment and economic conditions in general, and are based upon management's beliefs as well as assumptions made based on data currently available to management. When words like "believe", "anticipate", "intend", "plan", "expect", "estimate", "could", "should", "will" and similar expressions are used, you should consider them as identifying forward-looking statements. These forward-looking statements are not guarantees of future performance, and a variety of factors could cause the Company's actual results to differ materially from the anticipated or expected results expressed in these forward-looking statements. The following list, which is not intended to be an all-encompassing list of risks and uncertainties affecting the Company, summarizes several factors that could cause the Company's actual results to differ materially from those anticipated or expected in these forward-looking statements: (1) competitive pressures among depository and other financial institutions may increase significantly; (2) changes in the interest rate environment may reduce margins or the volumes or values of loans made by The Park Avenue Bank; (3) general economic conditions (both generally and in our markets) may continue to be less favorable than expected, resulting in, among other things, a further deterioration in credit quality and/or a reduction in demand for credit; (4) continued weakness in the real estate market has adversely affected us and may continue to adversely affect us; (5) legislative or regulatory changes, including changes in accounting standards and compliance requirements, may adversely affect the businesses in which we are engaged; (6) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than we can; (7) our ability to attract and retain key personnel can be affected by the increased competition for experienced employees in the banking industry; (8) adverse changes may continue to occur in the bond and equity markets; (9) our ability to raise capital to protect against further deterioration in our loan portfolio may be limited due to unfavorable conditions in the equity markets; (10) war or terrorist activities may cause further deterioration in the economy or cause instability in credit markets; (11) restrictions or conditions imposed by our regulators on our operations may make it more difficult for us to achieve our goals; (12) economic, governmental or other factors may prevent the projected population, residential and commercial growth in the markets in which we operate; and (13) the risk factors discussed from time to time in the Company's periodic reports filed with the Securities and Exchange Commission, including the Company's Annual Report on Form 10-K for the year ended December 31, 2008. The Company undertakes no obligation to revise these statements following the date of this press release.
PAB BANKSHARES, INC. SELECTED QUARTERLY FINANCIAL DATA Period Ended -------------------------------------------------------- 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ---------------------------------------------------------------------- (Dollars in thousands except per share and other data) Summary of Operations: Interest income $14,816 $16,090 $16,151 $16,814 $17,680 Interest expense 7,562 8,104 8,959 9,476 8,460 ---------------------------------------------------------------------- Net interest income 7,254 7,986 7,192 7,338 9,220 ---------------------------------------------------------------------- Provision for loan losses 31,438 2,000 1,750 8,500 7,300 Other income 889 2,487 2,106 107 1,081 Other expense 7,284 8,102 8,126 8,053 7,510 ---------------------------------------------------------------------- Income before income tax expense (30,579) 371 (578) (9,108) (4,509) Income tax expense (10,623) 29 (283) (3,297) (1,649) ---------------------------------------------------------------------- Net income $(19,956) $342 $(295) $(5,811) $(2,860) ====================================================================== Net interest income on a tax-equivalent basis $7,324 $8,069 $7,316 $7,470 $9,397 Per Share Ratios: Net income - basic** $(1.93) $0.04 $(0.03) $(0.62) $(0.31) Net income - diluted** (1.93) 0.04 (0.03) (0.60) (0.32) Dividends declared for period -- -- -- -- -- Dividend payout ratio 0.00% 0.00% 0.00% 0.00% 0.00% Book value at end of period** $6.03 $9.48 $9.73 $9.82 $9.97 Common Share Data: Outstanding at period end** 13,795,040 9,324,407 9,324,407 9,324,407 9,324,407 Weighted average outstanding** 10,344,878 9,324,407 9,324,407 9,324,407 9,324,407 Diluted weighted average outstanding** 10,344,878 9,324,407 9,324,407 9,324,407 9,325,783 Selected Average Balances: Total assets $1,283,374 $1,310,819 $1,358,168 $1,311,529 $1,238,010 Earning assets 1,183,823 1,221,385 1,266,311 1,236,651 1,166,498 Loans 914,699 930,131 947,030 974,151 973,017 Deposits 1,042,085 1,069,685 1,122,115 1,083,862 1,010,201 Stockholders' equity 91,670 90,552 91,631 93,086 96,160 Selected Period End Balances: Total assets $1,251,219 $1,277,016 $1,347,068 $1,350,103 $1,257,869 Earning assets 1,152,966 1,186,897 1,256,085 1,259,495 1,186,292 Loans 891,981 919,698 940,279 956,687 982,571 Allowance for loan losses 40,000 19,719 20,403 19,374 20,240 Goodwill 5,985 5,985 5,985 5,985 5,985 Deposits 1,029,638 1,036,382 1,105,298 1,123,703 1,029,844 Stockholders' equity 83,239 88,413 90,694 91,601 92,981 Tier 1 regulatory capital 79,409 92,159 91,751 91,962 97,715 Performance Ratios: Return on average assets -6.17% 0.10% -0.09% -1.76% -0.92% Return on average stockholders' equity -86.37% 1.51% -1.30% -24.84% -11.83% Net interest margin 2.45% 2.65% 2.34% 2.40% 3.20% Efficiency ratio (excluding the following items): 82.08% 79.48% 85.24% 73.47% 68.84% Securities gains (losses) included in other income $93 $756 $17 $23 $2 Other gains (losses) included in other income (755) (394) (127) (820) (434) Selected Asset Quality Factors: Nonaccrual loans $64,808 $70,232 $62,653 $54,903 $43,471 Loans 90 days or more past due and still accruing 4 190 19 206 4 Other impaired loans (troubled-debt restructur- ings) -- 84 311 311 9,808 Other real estate and repossessions 55,195 37,417 31,489 25,269 11,972 Asset Quality Ratios: Net charge-offs to average loans (annualized YTD) 2.09% 0.73% 0.31% 1.21% 0.31% Nonperforming loans to total loans 7.27% 7.67% 6.70% 5.79% 5.42% Nonperforming assets to total assets 9.59% 8.45% 7.01% 5.98% 5.19% Allowance for loan losses to total loans 4.48% 2.14% 2.17% 2.03% 2.06% Allowance for loan losses to nonperforming loans 61.72% 27.97% 32.39% 34.96% 37.99% Other Selected Ratios and Nonfinancial Data: Average loans to average earning assets 77.27% 76.15% 74.79% 78.77% 83.41% Average loans to average deposits 87.78% 86.95% 84.40% 89.88% 96.32% Average stockholders' equity to average assets 7.14% 6.91% 6.75% 7.10% 7.77% Full-time equivalent employees 266 269 287 299 314 Bank branch offices 18 18 18 18 20 Bank loan production offices 2 2 2 2 3 Bank ATMs 26 26 26 26 26 ** Adjusted for 2% Stock Dividend Paid on July 15, 2008 PAB BANKSHARES, INC. SELECTED YEAR-TO-DATE FINANCIAL DATA Period Ended ------------------------------------------------------- 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ---------------------------------------------------------------------- (Dollars in thousands except per share and other data) Summary of Operations: Interest income $47,057 $32,241 $16,151 $70,984 $54,170 Interest expense 24,625 17,062 8,959 36,218 26,742 ---------------------------------------------------------------------- Net interest income 22,432 15,179 7,192 34,766 27,428 ---------------------------------------------------------------------- Provision for loan losses 35,188 3,750 1,750 18,050 9,550 Other income 5,481 4,592 2,106 4,403 4,296 Other expense 23,512 16,227 8,126 30,584 22,531 ---------------------------------------------------------------------- Income before income tax expense (30,787) (206) (578) (9,465) (357) Income tax expense (10,876) (254) (283) (3,554) (257) ---------------------------------------------------------------------- Net income $(19,911) $48 $(295) $(5,911) $(100) ====================================================================== Net interest income on a tax-equivalent basis $22,709 $15,385 $7,316 $35,432 $27,962 Per Share Ratios: Net income - basic** $(2.06) $0.01 $(0.03) $(0.63) $(0.01) Net income - diluted** (2.06) 0.01 (0.03) (0.63) (0.01) Dividends declared for the period -- -- -- 0.240 0.240 Dividend payout ratio 0.00% 0.00% 0.00% -37.16% -2213.13% Common Share Data: Weighted average outstanding** 9,668,302 9,324,407 9,324,407 9,335,376 9,339,059 Diluted weighted average outstanding** 9,668,302 9,324,407 9,324,407 9,352,375 9,372,897 Selected Average Balances: Total assets $1,317,180 $1,334,363 $1,358,168 $1,238,875 $1,214,480 Earning assets 1,223,538 1,243,724 1,266,311 1,165,625 1,141,777 Loans 930,502 938,534 947,030 955,253 948,908 Deposits 1,077,668 1,095,755 1,122,115 1,011,596 987,331 Stockholders' equity 91,285 91,089 91,631 96,877 98,151 Performance Ratios: Return on average assets -2.02% 0.01% -0.09% -0.48% -0.01% Return on average stockholders' equity -29.16% 0.10% -1.30% -6.10% -0.14% Net interest margin 2.48% 2.49% 2.34% 3.04% 3.27% Efficiency ratio (excluding the following items): 82.21% 82.26% 85.24% 70.01% 69.12% Securities gains (losses) included in other income $865 $773 $17 $225 $202 Other gains (losses) included in other income (1,276) (522) (127) (1,362) (542) Other Selected Ratios: Average loans to average earning assets 76.05% 75.46% 74.79% 81.95% 83.11% Average loans to average deposits 86.34% 85.65% 84.40% 94.43% 96.11% Average stockholders' equity to average assets 6.93% 6.83% 6.75% 7.82% 8.08% ** Adjusted for 2% Stock Dividend Paid on July 15, 2008 PAB BANKSHARES, INC. LOAN AND DEPOSIT PORTFOLIO BY MARKET As of September 30, 2009 South North Georgia Georgia Florida Market Market Market Treasury Total --------------------------------------------------- (Dollars in Thousands) Loans Commercial and financial $29,163 $43,064 $4,799 $11,837 $88,863 Agricultural (including loans secured by farmland) 35,010 2,986 6,474 -- 44,470 Real estate - construction 77,130 148,204 39,929 4,541 269,804 Real estate - commercial 96,110 158,759 20,640 7,895 283,404 Real estate - residential 122,864 45,465 9,278 3,441 181,048 Installment loans to individuals and others 11,946 5,600 129 6,886 24,561 --------------------------------------------------- 372,223 404,078 81,249 34,600 892,150 Deferred loan fees and unearned interest, net 194 (168) (131) (64) (169) --------------------------------------------------- Total loans 372,417 403,910 81,118 34,536 891,981 Allowance for loan losses (5,338) (21,937) (3,632) (9,093) (40,000) --------------------------------------------------- Net loans $367,079 $381,973 $77,486 $25,443 $851,981 =================================================== Percentage of total 43.1% 44.8% 9.1% 3.0% 100.0% =================================================== Deposits Noninterest-bearing demand $78,616 $17,184 $6,510 $4,263 $106,573 Interest-bearing demand and savings 184,105 30,175 26,056 737 241,073 Time less than $100,000 174,463 46,932 95,826 1,795 319,016 Time greater than or equal to $100,000 111,184 27,844 45,201 17,711 201,940 Retail placed in CDARs program 39,571 2,085 -- 143 41,799 Brokered -- -- -- 119,237 119,237 --------------------------------------------------- Total deposits $587,939 $124,220 $173,593 $143,886 $1,029,638 =================================================== Percentage of total 57.1% 12.1% 16.8% 14.0% 100.0% =================================================== PAB BANKSHARES, INC. LOAN PORTFOLIO SUMMARY The amount of loans outstanding at the indicated dates is presented in the following table according to type of loan: Period Ended ------------------------------------------------ 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ------------------------------------------------ (Dollars In Thousands) Commercial and financial $88,863 $84,599 $82,534 $87,530 $91,401 Agricultural (including loans secured by farmland) 44,470 45,774 44,671 48,647 49,227 Real estate - construction 269,804 290,949 314,863 315,786 332,901 Real estate - commercial 283,404 285,731 274,338 276,645 281,781 Real estate - residential 181,048 183,074 191,388 196,306 195,439 Installment loans to individuals and other loans 24,561 29,790 32,740 32,084 32,075 -------- -------- -------- -------- -------- 892,150 919,917 940,534 956,998 982,824 Deferred loan fees and unearned interest, net (169) (219) (255) (310) (253) -------- -------- -------- -------- -------- Total loans 891,981 919,698 940,279 956,688 982,571 Allowance for loan losses (40,000) (19,719) (20,403) (19,374) (20,240) -------- -------- -------- -------- -------- Net loans $851,981 $899,979 $919,876 $937,314 $962,331 ======== ======== ======== ======== ======== The percentage of loans outstanding at the indicated dates is presented in the following table according to type of loan: Period Ended ------------------------------------------------ 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ------------------------------------------------ Commercial and financial 9.96% 9.20% 8.78% 9.15% 9.30% Agricultural (including loans secured by farmland) 4.99% 4.98% 4.75% 5.08% 5.01% Real estate - construction 30.25% 31.63% 33.49% 33.01% 33.88% Real estate - commercial 31.77% 31.07% 29.18% 28.92% 28.68% Real estate - residential 20.30% 19.90% 20.35% 20.52% 19.89% Installment loans to individuals and other loans 2.75% 3.24% 3.48% 3.35% 3.27% -------- -------- -------- -------- -------- 100.02% 100.02% 100.03% 100.03% 100.03% Deferred loan fees and unearned interest, net -0.02% -0.02% -0.03% -0.03% -0.03% -------- -------- -------- -------- -------- Total loans 100.00% 100.00% 100.00% 100.00% 100.00% Allowance for loan losses -4.48% -2.14% -2.17% -2.03% -2.06% -------- -------- -------- -------- -------- Net loans 95.52% 97.86% 97.83% 97.97% 97.94% ======== ======== ======== ======== ======== PAB BANKSHARES, INC. DEPOSIT PORTFOLIO SUMMARY The amounts on deposit at the indicated dates are presented in the following table according to type of deposit account: Period Ended ------------------------------------------------------ 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ------------------------------------------------------ (Dollars In Thousands) Noninterest- bearing demand $106,573 $108,973 $111,472 $91,114 $101,417 Interest- bearing demand and savings 241,073 245,459 250,325 252,122 262,723 Time less than $100,000 319,016 320,834 330,854 328,329 323,377 Time greater than or equal to $100,000 201,940 191,852 198,768 198,845 182,491 Retail placed in CDARs program 41,799 35,190 53,712 46,690 18,343 Brokered 119,237 134,074 160,167 206,603 141,493 ---------- ---------- ---------- ---------- ---------- Total deposits $1,029,638 $1,036,382 $1,105,298 $1,123,703 $1,029,844 ========== ========== ========== ========== ========== The percentage of total deposits at the indicated dates is presented in the following table according to type of deposit account: Period Ended ------------------------------------------------ 09/30/09 06/30/09 03/31/09 12/31/08 09/30/08 ------------------------------------------------ Noninterest-bearing demand 10.35% 10.51% 10.09% 8.11% 9.85% Interest-bearing demand and savings 23.42% 23.68% 22.65% 22.44% 25.51% Time less than $100,000 30.98% 30.96% 29.93% 29.22% 31.40% Time greater than or equal to $100,000 19.61% 18.51% 17.98% 17.69% 17.72% Retail placed in CDARs program 4.06% 3.40% 4.86% 4.15% 1.78% Brokered 11.58% 12.94% 14.49% 18.39% 13.74% -------- -------- -------- -------- -------- Total deposits 100.00% 100.00% 100.00% 100.00% 100.00% ======== ======== ======== ======== ======== PAB BANKSHARES, INC. YIELD ANALYSIS The following tables detail the average balances of interest-earning assets and interest-bearing liabilities, the amount of interest earned and paid, and the average yields and rates for the three months and nine months ended September 30, 2009 and 2008. Federally tax-exempt income is presented on a taxable-equivalent basis assuming a 34% Federal tax rate in 2009 and a 35% Federal tax rate in 2008. Loan average balances include loans on nonaccrual status. For the Three Months Ended September 30, 2009 2008 ---------------------------------------------------------------------- Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- (Dollars In Thousands) Interest-earning assets: Loans $914,699 $13,120 5.69% $973,017 $15,391 6.29% Investment securities: Taxable 130,555 1,487 4.52% 145,731 1,891 5.16% Nontaxable 12,539 199 6.30% 33,055 506 6.09% Other short-term investments 126,030 80 0.25% 14,696 69 1.88% ------------------ ------------------ Total interest- earning assets $1,183,823 $14,886 4.99% $1,166,499 $17,857 6.09% ------------------ ------------------ Interest-bearing liabilities: Demand deposits $206,329 $294 0.57% $267,595 $1,149 1.71% Savings deposits 36,576 23 0.25% 36,175 46 0.50% Time deposits 683,548 5,882 3.41% 604,761 6,068 3.99% FHLB advances 101,303 1,052 4.12% 100,042 986 3.92% Notes payable 30,310 262 3.43% 10,310 117 4.50% Other short-term borrowings 12,461 49 1.56% 15,540 94 2.40% ------------------ ------------------ Total interest- bearing liabilities $1,070,527 $7,562 2.80% $1,034,423 $8,460 3.25% ------------------ ------------------ Interest rate spread 2.19% 2.84% ======= ======= Net interest income $7,324 $9,397 ======= ======= Net interest margin 2.45% 3.20% ======= ======= For the Nine Months Ended September 30, 2009 2008 ---------------------------------------------------------------------- Interest Average Interest Average Average Income/ Yield/ Average Income/ Yield/ Balance Expense Rate Balance Expense Rate ---------------------------------------------------------------------- (Dollars In Thousands) Interest-earning assets: Loans $930,502 $41,098 5.91% $948,908 $47,188 6.64% Investment securities: Taxable 145,540 5,213 4.79% 146,957 5,785 5.26% Nontaxable 17,008 790 6.21% 33,359 1,526 6.11% Other short-term investments 130,488 233 0.24% 12,554 205 2.19% ------------------ ------------------ Total interest- earning assets $1,223,538 $47,334 5.17% $1,141,778 $54,704 6.40% ------------------ ------------------ Interest-bearing liabilities: Demand deposits $211,970 $879 0.55% $288,706 $4,414 2.04% Savings deposits 35,756 67 0.25% 35,896 174 0.65% Time deposits 719,647 19,640 3.65% 565,130 18,553 4.39% FHLB advances 105,153 3,204 4.07% 96,681 2,845 3.93% Notes payable 27,306 715 3.50% 10,310 398 5.15% Other short-term borrowings 10,107 120 1.59% 16,052 358 2.98% ------------------ ------------------ Total interest- bearing liabilities $1,109,939 $24,625 2.97% $1,012,775 $26,742 3.53% ------------------ ------------------ Interest rate spread 2.20% 2.87% ======= ======= Net interest income $22,709 $27,962 ======= ======= Net interest margin 2.48% 3.27% ======= ======= PAB BANKSHARES, INC. RECONCILIATION OF NON-GAAP MEASURE The reconciliation of net income to earnings from core operations, as defined as net income adjusted to exclude provision for loan loss expense, charges and losses related to nonperforming assets and income tax benefit follows: Three months ended Nine months ended ------------------ ------------------ 09/30/09 09/30/08 09/30/09 09/30/08 ------------------ ------------------ (Dollars In (Dollars In Thousands) Thousands) Net income $(19,956) $(2,860) $(19,910) $(99) Provision for loan losses 31,438 7,300 35,188 9,550 Loss on sale and writedown of other assets 755 434 1,276 542 Carrying charges related to nonperforming assets 686 259 2,218 581 Lost interest on nonaccrual loans 1,368 874 3,397 2,487 Deposit insurance premiums 520 72 1,639 128 Income tax benefit (10,623) (1,649) (10,876) (257) -------- -------- -------- -------- Earnings from core operations $4,188 $4,430 $12,932 $12,932 ======== ======== ======== ========