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ProAmerica Bank Reports Second Quarter Net Income of $183,000

LOS ANGELES, CA -- (Marketwired) -- 07/30/14 -- ProAmérica Bank (OTCQB: PMRA) today reported Net Income of $183,000 or 6 cents per diluted common share for the three months ended June 30, 2014. For the six months, the Bank reported Net Income of $259,000, or 9 cents per diluted common share. "ProAmérica Bank continued to build its core earnings in the second quarter," stated L. Bruce Mills, Jr., President and CEO. "The Bank has built a strong balance sheet, with excellent capital ratios and asset quality, which provides a solid platform for continued growth. Both year over year and linked quarter results reflect the continuing improvement in core earnings," continued Mills.

"I am pleased with the positive response to my appointment as Chairwoman," stated Maria S. Salinas, Chairwoman. "We achieved a successful transition and are excited about the Bank's opportunity for growth. Our earnings reflect continued focus on small businesses in our target market and our commitment to provide quality banking."

2014 Second Quarter Highlights

  • Adjusted income from operations was $310,000 for the three months ended June 30, 2014, compared to a loss of $23,000 in the second quarter of 2013 after excluding the recapture of interest on restructured loans and prepayment penalties in 2013. These items are explained below. The adjusted income from operations was $132,000 in the first quarter of 2014. The $178,000 improvement over the first quarter of 2014 was due to higher net interest income resulting from an increase in average earning assets, higher gains on the sale of SBA loans and reduced expenses.

  • Three-month Net Income of $183,000, compared to $386,000 in the 2013 second quarter. The Bank had a Provision for Income Taxes of $127,000 in the second quarter of 2014 compared to none in the same period of 2013. The Bank also had significant non-recurring income in the second quarter of 2013. Unusual items in 2013 are explained below.

  • Total Assets at June 30, 2014 were $152.9 million, a decrease of $5.0 million or 3% from June 30, 2013.

  • Total Loans at June 30, 2014 were $114.1 million, an increase of $12.1 million or 12% from June 30, 2013.

  • Nonperforming Assets at June 30, 2014 totaled $184,000, a decrease of $221,000 or 55% from June 30, 2013.

  • Total Deposits at June 30, 2014 were $124.0 million, a decrease of $9.4 million or 7% from June 30, 2013.

  • Capital ratios were in excess of all minimums required to be "Well Capitalized" by regulatory agencies, with a Tier 1 Leverage Ratio of 16.7% and a Total Risk-based Capital Ratio of 21.4% at June 30, 2014. Regulatory "Well Capitalized" definitions are 5% for the Tier 1 Leverage Ratio and 10% for the Total Risk-based Capital Ratio.

Financial Results
Adjusted income from operations (income before provisions for loan losses and income taxes) was $310,000 for the second quarter of 2014, as compared to $386,000 for the same period in 2013. For the six months ended June 30, 2014, adjusted income from operations was $442,000, as compared to $183,000 for the same period in 2013. Management believes adjusted income from operations is a better measure of core earnings performance. Income from operations for the three and six-month periods of 2013 included $260,000 from the recovery of previously nonaccrued interest on nonperforming loans $149,000 in loan prepayment penalties. Without these items the 2014 adjusted income from operations would have shown significant increases over the same periods in 2013.

For the 2014 second quarter, Net Interest Income before the Provision for Loan Losses decreased $42,000 compared to the 2013 second quarter. The Net Interest Margin declined to 4.38% for the quarter ended June 30, 2014 compared to 4.44% for the same period of 2013. For the six months ended June 30, 2014, Net Interest Income before the Provision for Loan Losses increased $160,000 compared to the same period in 2013. The Net Interest Margin increased to 4.32% for the six-month period ended June 30, 2014 as compared to 4.04% in the same period in 2013. The increase was due to the increase in loans as a percentage of earning assets compared to the previous year. Loans are the highest earning asset of the Bank. The second quarter of 2013 included receipt of $149,000 in loan prepayment penalties and $62,000 of interest income recovered on loans on nonaccrual status during the first quarter of 2013.

The Bank recorded reversals against the allowance for loan losses of $0 and $300,000 in the three and six-month periods ended June 30, 2013, respectively. There were no provisions for loan losses or reversals thereof in 2014. The reversals in 2013 were made as a result of significantly improved asset quality.

Noninterest Income declined $200,000, or 50% in the second quarter 2014 versus the second quarter of 2013 primarily due to the recovery of $260,000 representing previous years' nonaccrued interest on nonperforming loans included in the results of 2013. Noninterest Income decreased $141,000, or 28% for the six months ended June 30, 2014 versus the same period in 2013 due to the recovery commented on above. The impact of the recoveries in 2013 were partially offset by increases in gains on the sale of SBA loans of $42,000 and $58,000, in the three and six-month periods of 2014, respectively.

Noninterest Expense for the second quarter 2014 was $1.5 million, compared with $1.7 million for the 2013 second quarter. Decreases in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary reasons for the decrease. These decreases were primarily the result of certain changes in personnel. The efficiency ratio was 83.1% for the 2014 second quarter, compared with 81.4% for the same period in 2013. Noninterest Expense for the six months ended June 30, 2014 was $3.1 million, compared with $3.3 million for the same period in 2013. Decreases in Salaries and Employee Benefits expense and Stock Based Compensation expense were the primary reasons for the decrease. The efficiency ratio was 87.4% for the 2014 six-month period, compared with 94.8% for the same period last year.

Loans, before the allowance for loan losses, increased 12% to $114.1 million at June 30, 2014 compared to $102.0 million at June 30, 2013. "While we are pleased with the 12% annual growth rate, the Bank had an unusual amount of loan prepayments during the second quarter of 2014," stated Mills. "With a strong loan pipeline going into the third quarter we expect to have a very positive year for loan production and growth."

Total Deposits decreased 7% to $124.0 million at June 30, 2014, down from $133.4 million at June 30, 2013. The decline was the result of the Bank reducing its reliance on larger deposit clients. "Our marketing efforts are focused on expanding our base of core deposits and we are expecting to see good results from these efforts," commented Mills.

Asset Quality
Nonperforming Assets decreased to 0.1% of total assets at June 30, 2014, compared with 0.3% at June 30, 2013. The Allowance for Loan Losses was $2.5 million, or 2.2% of loans, at June 30, 2014, compared with $2.6 million, or 2.5% of loans, at June 30, 2013. Net recoveries of loans previously charged off as a percentage of loans were 0.01% for the 2014 second quarter as compared to 0.03% for the 2013 second quarter.

Capital Resources
Total Shareholders' Equity increased to $27.7 million at June 30, 2014 from $23.2 million at June 30, 2013 as a result of earnings retention. The Bank's book value available to common shareholders per common share increased to $8.64 at June 30, 2014 from $7.09 at June 30, 2013.

At June 30, 2014, the Bank's Tier 1 Leverage Capital Ratio was 16.7% versus 15.3% at June 30, 2013. The Total Risk-based Capital Ratio was 21.4% as of June 30, 2014, as compared to 21.0% at June 30, 2013.

ProAmérica Bank provides a full range of financial services, including credit and deposit products, SBA loan products, cash management, and internet banking for businesses, professionals, nonprofits and high net worth individuals from its headquarters office at 888 West Sixth Street, Second Floor, Los Angeles, CA 90017-2728. Information on products and services may be obtained by calling (213) 613-5000 or visiting the Bank's website at


This news release contains statements that are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on current expectations, estimates and projections about ProAmérica Bank's business based, in part, on assumptions made by management. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including those described above and the following: ProAmérica Bank's timely implementation of new products and services, technological changes, changes in consumer spending and savings habits and other risks discussed from time to time in ProAmérica Bank's reports and filings with banking regulatory agencies. In addition, such statements could be affected by general industry and market conditions and growth rates, and general domestic and international economic conditions. Such forward-looking statements speak only as of the date on which they are made, and ProAmérica Bank does not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this release.

                           (Dollars in thousands)

                                              June 30,   June 30,      %
                                                2014       2013     Change
                                             ---------  ---------  --------
                                             Unaudited  Unaudited

  Cash and Due From Banks                    $   1,693  $   1,096      54.5%
  Federal Funds Sold                            18,330     46,415     -60.5%
  Interest-bearing Balances at Other
   Financial Institutions                       15,486      7,959      94.6%
                                             ---------  ---------  --------
    Total Cash and Cash Equivalents             35,509     55,470     -36.0%
                                             ---------  ---------  --------

  Loans Net of Deferred Loan Fees/Costs        114,099    102,043      11.8%
  Allowance for Loan Losses                      2,501      2,582      -3.1%
                                             ---------  ---------  --------
    Loans Net of Allowance for Loan Losses     111,598     99,461      12.2%
  Premises and Equipment, net                      845        996     -15.2%
  Federal Home Loan Bank Stock                     568        482      17.8%
  Other Real Estate Owned                            0          0        NA
  Accrued Interest Receivable and Other
   Assets                                        4,377      1,475     196.7%
                                             ---------  ---------  --------

    Total Assets                             $ 152,897  $ 157,884      -3.2%
                                             ---------  ---------  --------

  Noninterest-bearing Demand Deposits        $  27,281  $  28,192      -3.2%

  Interest-bearing Demand Deposits (NOW
   Deposits)                                     2,810      3,469     -19.0%
  Savings and Money Market                      28,027     43,089     -35.0%
  Certificates of Deposit                       65,901     58,683      12.3%
                                             ---------  ---------  --------
    Total Interest-bearing Deposits             96,738    105,241      -8.1%
                                             ---------  ---------  --------
    Total Deposits                             124,019    133,433      -7.1%

  Other Borrowings                                   0          0        NA
  Accrued Interest Payable and Other
   Liabilities                                   1,174      1,209      -2.9%
                                             ---------  ---------  --------

Total Liabilities                              125,193    134,642      -7.0%

Shareholders' Equity:
  Common Stock                                  27,308     27,248       0.2%
  Additional Paid in Capital                     1,952      1,846       5.7%
  Accumulated Deficit                           (5,306)    (9,602)    -44.7%
  SBLF Preferred Stock                           3,750      3,750       0.0%
                                             ---------  ---------  --------
    Total Shareholders' Equity                  27,704     23,242      19.2%
                                             ---------  ---------  --------

    Total Liabilities and Shareholders'
     Equity                                  $ 152,897  $ 157,884      -3.2%
                                             ---------  ---------  --------

    Tier 1 leverage                              16.72%     15.25%
    Tier 1 risk-based capital                    20.15%     19.74%
    Total risk-based capital                     21.41%     21.01%

                        For the Periods Indicated
               (Dollars in thousands except per share data)

                           Three Months                  Six Months
                    --------------------------  ---------------------------
For The Period                             %                            %
 Ended June 30,        2014      2013   Change     2014      2013    Change
------------------- --------- --------- ------  --------- ---------  ------
                    Unaudited Unaudited         Unaudited Unaudited

Interest Income:
 Interest and Fees
  on Loans          $   1,701 $   1,754   -3.0% $   3,307 $   3,162     4.6%
 Interest on
  Federal Funds
  Sold                     10        23  -56.5%        24        46   -47.8%
 Interest on
  Balances at Other
  Institutions             15        11   36.4%        24        22     9.1%
 Dividends on FHLB
  and PCBB Stock           14         4  250.0%        22         7  214.29%
                    --------- --------- ------  --------- ---------  ------
  Total Interest
   Income               1,740     1,792   -2.9%     3,377     3,237     4.3%

Interest Expense:
 Interest on
  Deposit Accounts        112       122   -8.2%       223       243    -8.2%
                    --------- --------- ------  --------- ---------  ------

 Net Interest
  Income                1,628     1,670   -2.5%     3,154     2,994     5.3%

Provision /
 (Reversal) for
 Loan Losses                0         0     NA          0      (300)     NA
                    --------- --------- ------  --------- ---------  ------

  Net Interest
   Income After
   Provision for
   Loan Losses          1,628     1,670   -2.5%     3,154     3,294    -4.3%

Noninterest Income:
 Noninterest Income       202       402  -49.8%       364       505   -27.9%

 Salaries and
  Employee Benefits       949     1,028   -7.7%     1,988     2,004    -0.8%
 Stock Based
  Expense                  48       124  -61.3%        60       157   -61.8%
 Occupancy Expense        149       155   -3.9%       298       306    -2.6%
 Operating Expense        374       379   -1.3%       730       849   -14.0%
                    --------- --------- ------  --------- ---------  ------
  Total Non-
   Interest Expense     1,520     1,686   -9.8%     3,076     3,316    -7.2%

 Pre-tax Income           310       386  -19.7%       442       483    -8.5%

Provision for
 Income Taxes             127         0     NA        183         0      NA

 Net Income         $     183 $     386  -52.6% $     259 $     483   -46.4%
                    --------- --------- ------  --------- ---------  ------

 Earnings Per Share
  - Basic           $    0.07 $    0.14  -52.9% $    0.09 $    0.18   -46.8%
                    --------- --------- ------  --------- ---------  ------

 Earnings Per Share
  - Diluted         $    0.06 $    0.14  -53.4% $    0.09 $    0.17   -47.3%
                    --------- --------- ------  --------- ---------  ------

                          For the Periods Indicated
                (Dollars in thousands except per share data)

                      Three Months                     Six Months
             ------------------------------  ------------------------------
For The
 Ended June                             %                               %
 30,            2014        2013     Change     2014        2013     Change
------------ ----------  ----------  ------  ----------  ----------  ------
              Unaudited   Unaudited           Unaudited   Unaudited
Per Share:
 Net income
  - basic    $     0.07  $     0.14   -52.9% $     0.09  $     0.18   -46.8%
 Net income
  - diluted  $     0.06  $     0.14   -53.4% $     0.09  $     0.17   -47.3%
 Book value
  - Common   $     8.64  $     7.09    21.9%

 End of
  period      2,771,000   2,751,000     0.7%  2,771,000   2,751,000     0.7%
 Average for
  period      2,771,000   2,751,000     0.7%  2,771,000   2,751,000     0.7%

  Return on
   assets          0.48%       1.01%  -52.5%       0.34%       0.64%  -46.9%
  Return on
   equity          3.06%       8.10%  -62.2%       2.17%       5.08%  -57.3%
   margin          4.38%       4.44%   -1.4%       4.32%       4.04%    6.9%
   ratio          83.06%      81.37%    2.1%      87.44%      94.77%   -7.7%

  Tier 1
   leverage       16.72%      15.25%    9.6%
  Tier 1
   capital        20.15%      19.74%    2.1%
   capital        21.41%      21.01%    1.9%

  for loan
  and lease
  losses to
  loans            2.19%       2.53%  -13.4%
  for loan
  and lease
  losses to
  loans         1356.44%     636.86%  113.0%
  loans to
  total loans      0.16%       0.40%  -60.0%
  assets to
  total assets     0.12%       0.26%  -53.8%
 Net charge-
  to average
  (annualized)    -0.01%      -0.03%  -66.7%      -0.02%      -0.02%    0.0%

  loans (1)         184         405   -54.6%
 Other real
  owned               0           0      NA
             ----------  ----------  ------
   assets           184         405   -54.6%

  loans less
  than 30
  days past
  due               184         405   -54.6%

ProAmerica Bank
L. Bruce Mills, Jr.
CEO / President

Frank E. Smith

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