Albina Community Bancorp Earns $135,000, or $0.10 per Share, Year-To-Date

PORTLAND, Ore., Oct. 28, 2011 (GLOBE NEWSWIRE) -- Albina Community Bancorp (OTCBB:ACBC), the holding company of Portland's only certified community development bank, today reported that after provisioning $500,000 for potential loan losses, it earned $135,000, or $0.10 per diluted share, for the first nine months of 2011, compared to a net loss of $3.6 million, which included a $2.9 million provision for loan losses in the first nine months of 2010. In the third quarter of 2011, after a $400,000 loan loss provision, Albina lost $126,000, or $0.10 per share, compared to earning $101,000, or $0.08 per share in the preceding quarter with no provisioning for loan losses, and lost $1.7 million, or $1.53 per share, in the third quarter a year ago, following a provision of $1.1 million.

"Our overall year-to-date performance at the holding company is encouraging and operations at the bank level also reflect meaningful improvement," said Cheryl Cebula, President and Chief Executive Officer of Albina Community Bank. "Growth in new core deposit relationships continues to be strong as consumers and businesses are seeking a local community bank relationship. In fact, new account openings have more than doubled at Albina over the last few weeks, and we are very happy to welcome our new client relationships."

"To capitalize on the increased focus on moving money to community financial institutions, Albina's 5 branch offices will be open on Saturday, November 5^th, from 9:00 a.m. to 2:00 p.m. in support of Bank Transfer Day," Cebula continued. "As a local community bank that makes a difference every day in the Portland neighborhoods where we live and work, we welcome those unhappy with their current bank to give us a try."

"Albina is a true community bank focused on the needs of a broad range of customers, including low-to-moderate income individuals and small business owners in the greater Portland neighborhoods," Cebula continued. "And, together with a diverse mix of loans and a deposit base supported by our local communities, we have a sound customer base. We also have a loyal group of employees who continue to reach out in their communities and volunteer their free time. You are invited to track our community involvement by viewing our scorecard at: www.albinabank.com/company/scorecard.cfm." 

Financial Highlights:  (for the period ended September 30, 2011)

• Earned $135,000, or $0.10 per diluted share, for the first nine months of 2011.
• Noninterest-bearing demand deposits increased 10% to $33.3 million from a year earlier, and account for 27% of total deposits. 
• Nonperforming assets declined 51% to $6.9 million, at September 30, 2011, compared to $14.0 million a year ago. 
• Net interest margin remained high at 4.18% in the third quarter, compared to 4.45% in the preceding quarter and 3.85% in the third quarter ended June 30, 2010. For the first nine months of the year, NIM increased 69 basis points to 4.54%.
• Allowance for loan losses stood at $3.1 million, or 3.25% of total loans. Total assets declined 18% to $134.4 million, compared to $163.6 million a year ago.
• Gross loans were $96.7 million, down 21% from $122.6 million a year ago.

"We are on track with our plan to produce stable results this year, despite the loss in the third quarter which resulted from a bolstering of our loan loss reserve. An improved balance sheet mix and year-to-date profitability reflect our team's hard work and priorities, as we continue to focus on strengthening our franchise," said Jim Schlotfeldt, Executive Vice President and Chief Financial Officer. "We are making headway in deleveraging our balance sheet, while maintaining a solid base in local core deposits and relying less and less on brokered CDs. And, as we continue to navigate this financial institution back to sustainable profitability, potential investors are expressing an interest in our efforts to raise new capital."

Credit Quality

Albina's credit quality metrics continue to improve with non-performing assets (NPA) declining 51% from a year ago," said Jim Schlotfeldt, Executive Vice President and Chief Financial Officer. "That being said, we are not immune to the persistent weak economic environment, and we have one matured loan related to a single property, which was moved to nonaccrual status this quarter. We are aggressively working towards a swift resolution to this situation." The ratio of nonperforming assets to total assets was 5.13% at September 30, 2011, compared to 8.54% of total assets a year earlier.

Nonperforming assets (NPAs) totaled $6.9 million, or 5.13% of total assets at September 30, 2011, compared to $14.0 million, or 8.54% of total assets at September 30, 2010. At June 30, 2011, NPAs totaled $5.5 million, or 4.07% of total assets. "It should be noted that $3.0 million of the $6.9 million of NPAs continue to be current on payments but are classified as nonaccrual due to cash flow deficiencies for the properties, which the borrowers are supplementing from other sources," said Schlotfeldt. "In addition to the meaningful improvement in our credit quality from a year ago, we have had no real estate construction loans on our books for the last three quarters, compared to $4.3 million a year ago."    

Nonperforming loans (NPLs) fell by $4.9 million year-over-year to $6.1 million, representing 6.30% of total loans, compared to $11.0 million, or 8.93% of total loans, at the end of the third quarter a year ago "We continue to diligently work with our borrowers to meet the loan requirements or to convert NPLs to other real estate owned (OREO)," said Schlotfeldt. NPLs have declined 44% since September 30, 2010.

OREO was $795,000 at September 30, 2011, unchanged from the preceding quarter and well below $3.0 million from the third quarter a year ago. "During the third quarter we recognized a small gain on the sale of a property that was sold in the preceding quarter," added Schlotfeldt. "We have one remaining OREO property that is under contract for sale, which we expect to close by year end."

Net charge-offs in the third quarter of 2011 declined 93% to $243,000, representing 0.25% of average loans outstanding, compared to $3.4 million, or 2.68% of average loans, in the third quarter of 2010. Net charge-offs in the second quarter of 2011 totaled $42,000, or 0.04% of average loans outstanding. Recoveries of previously charged off loans totaled $265,000 during the first nine months of 2011.

Albina recorded a $400,000 provision for loan losses in the third quarter of 2011, compared to $1.1 million in the third quarter a year ago. There was no provision taken in the second quarter of 2011. The allowance for loan and lease losses remained relatively flat at $3.1 million, or 3.25% of total loans at September 30, 2011, compared to $3.0 million, or 3.03% of total loans at June 30, 2011, and $3.0 million, or 2.45% of total loans a year ago.

Balance Sheet Results

Albina's total assets declined slightly to $134.4 million at September 30, 2011, from $135.7 million in the preceding quarter and fell 18% from $163.6 million in the third quarter a year ago.

The investment securities portfolio increased 5% to $18.8 million at September 30, 2011, from $17.9 million in the preceding quarter and up 9% from $17.2 million at September 30, 2010. "We maintain strong liquidity by holding liquid securities and through our available lines of credit at the Federal Home Loan Bank and the Federal Reserve Bank," said Schlotfeldt. "Excess liquidity is invested in securities until the underlying time deposits mature or loan originations increase." The investment portfolio consists entirely of investment grade agency securities that have an average life of 1.4 years.

Loans, net of reserves, declined to $93.6 million at quarter end, from to $95.4 million at June 30, 2011, and $119.6 million at September 30, 2010. "Despite the present weak loan demand, Albina remains committed to doing our part to assist local businesses," added Schlotfeldt. The decline in loans during the quarter reflects Albina's exit from the real estate construction market and other loan concentrations that presented elevated risk.   

The loan portfolio remains well-diversified with a wide variety of borrowers and collateral. Over 70% of the portfolio is secured by real estate, both residential and commercial. More than 47% of Albina's commercial real estate (CRE) loans are owner-occupied and another 19% are partially occupied by owners with the remainder of the building leased to other businesses. The following table shows the changes in the loan portfolio in each category (9/30/2011 compared to 6/30/2011 and 9/30/2010):

Albina participates in loans with other banks to increase its reach and provide additional earnings and diversification for the portfolio. Consumer and commercial loan participations account for approximately 12% of the total loan portfolio. Consumer loan participations declined 26%, year-over-year, to $6.2 million. Commercial loan participations dropped 59% year-over-year to $6.1 million. 

Noninterest-bearing deposits increased 10% year-over-year and accounted for 27% of total deposits; interest-bearing and savings accounts represented 38% of total deposits, and time certificates dropped 37% year-over-year representing 35% of total deposits at the end of the third quarter 2011. Deposits totaled $122.2 million at September 30, 2011, compared to $123.3 million at the end of June and $144.9 million a year ago. 

"We are delighted with the terrific support we are seeing from the members of our community as they open new accounts with us," said Cebula. "With their patronage, we are able to make a positive impact in our neighborhoods and continue our mission as their local community bank," said Cebula. "As Portland's only certified community development bank, we pride ourselves on understanding the financial needs of the small businesses and the communities we serve." The ratio of loans to deposits was 76.6% at September 30, 2011, compared with 82.6% a year earlier.   

Operating Results

Net interest income, before the provision for loan losses, was $1.3 million in the third quarter of 2011, compared to $1.4 million in the second quarter of 2011 and in the third quarter a year ago. Net interest income for the nine months ended September 30, 2011, was $3.8 million, after a loan loss provision of $500,000, compared to $1.5 million, with a loan loss provision of $2.9 million, for the nine months ended September 30, 2010. Net interest income was adversely impacted by lower yields available in investment securities, in part due to the flat yield curve, and a decrease in loan balances.

The net interest margin (NIM) expanded 33 basis points to 4.18% for the third quarter of 2011, from 3.85% for the third quarter a year ago, but was down from the second quarter of the year. Primarily as a result of lower loan fee income in the third quarter, the NIM declined 27 basis points from the second quarter. The NIM remained high, however, in part due to a lower cost of deposits. For the first nine months of 2011, the NIM increased 69 basis points to 4.54%, compared to 3.85% for the first nine months of 2010, primarily as a result of maturing certificates of deposits and the run-off of high cost wholesale certificates of deposits which reduced funding costs substantially in the third quarter.

"We have taken deliberate and strategic steps to reduce our non-interest expense, and we believe the benefits to our bottom line will be even more apparent in the fourth quarter of 2011," Schlotfeldt said. "The decline in total non-interest expense for the third quarter reflects a decrease in legal and professional fees and expenses related to managing the loan portfolio and OREO. FDIC assessments also dropped by 38% from a year ago, and we continue to cut discretionary spending." Non-interest, or operating, expense declined 34% to $1.5 million in the quarter, from $2.2 million in the third quarter a year ago. 

For the first nine months of 2011, the efficiency ratio improved to 88.31% compared to 113.07% for the first nine months of 2010.

About Albina Community Bancorp

Albina Community Bank is a locally owned, full-service, independent commercial bank committed to investing in individuals, families, businesses and local neighborhoods. The Bank promotes community development by providing products and services and banking solutions that are directed towards improving the social or economic conditions of underserved peoples or residents of distressed communities. Albina offers a wide range of competitive banking solutions, while also maintaining its mission to promote jobs, growth of small businesses, and wealth in our local Portland neighborhoods.

Albina Community Bank opened in December 1995 as the sole subsidiary of Albina Community Bancorp. Albina is one of approximately 60 commercial banks across the United States certified by the U.S. Treasury Department's Community Development Financial Institutions Fund as a community development financial institution. Albina is the only CDFI-certified commercial bank headquartered in Oregon. Albina operates from five local Portland locations including offices at: 2002 Northeast Martin Luther King Jr. Boulevard; 8040 North Lombard in the St. Johns neighborhood of North Portland; 4020 Northeast Fremont Street in the Beaumont neighborhood; 5636 Northeast Sandy Boulevard in the Rose City Park neighborhood of the International District; and 430 Northwest 10th Avenue in Portland's Pearl District; and a remote ATM at New Columbia in North Portland. For more information about Albina Community Bank, please call 503-287-7537 or visit www.albinabank.com.

This release contains forward-looking statements within the meaning of the Private Securities Litigation Act of 1995, including statements concerning the continued financial performance of the company and its plans and opportunities for future growth. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially than those expected. Specific risks include, but are not limited to, general business and economic conditions, competitive factors, pricing pressures, further interest rate changes, and other factors listed from time to time in Albina Community Bancorp's regulatory reports.