USA Bank Reports Results for the Year Ended December 31, 200
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The Bank's total assets reached $209.9 million at December 31, 2008, an increase of $40.4 million (23.9%) from $169.5 million at December 31, 2007. As of December 31, 2008, total gross loans have increased to $153.3 million, which represents an increase of $46.3 million (43.2%) from $107.0 million at December 31, 2007. As of December 31, 2008, total deposits have increased to $169.8 million, an increase of $47.0 million (38.2%), from $122.8 million at December 31, 2007. Capital ratios continue to be strong, with Tier One Capital to average assets of 9.65%, Tier One Capital to risk-weighted assets of 11.51%, and Total Capital to risk-weighted assets of 12.71%.
The Bank continues to leverage upon its capital base with quality loan growth, which is reflected in the $1.7 million (41.5%) increase in net interest income which was $5.8 million for the year ended December 31, 2008 compared to $4.1 million for the year ended December 31, 2007. Also benefiting the year 2008 was the recognition of gains on the sales of securities of $401 thousand as compared to no such gains being recognized in 2007 and a $700 thousand (7.9%) reduction in non-interest expenses from $8.3 million in 2007 to $7.6 million in 2008, even including the one-time $554,000 expense related to the buy-out of its lease in 2008. Partially offsetting the favorable variances noted were increases in the provision for loan losses and reductions in gains on sales of loans and fee income from the brokering of loans. The provision for loan losses increased $515 thousand (52.3%) from $985 thousand to $1.5 million in 2008 reflecting increased loan volume and some deterioration in the loan portfolio. Gains on sales of loans and fee income from the brokering of loans decreased $452,000 and $124,000, respectively, reflecting both a lessening in demand for residential mortgages and the Bank's focus on more traditional commercial lending in 2008.
The $652 thousand (7.9%) reduction in non-interest expense primarily reflects planned reductions in salaries and employee benefits and advertising of $836 thousand (23.7%) and $213 thousand (58.6%), respectively. Commissions were $388 thousand (58.2%) less than a year earlier, which reflects a significant reduction in loans originated for sale as the Bank focused on more traditional commercial banking. Reductions in legal, contract services and professional fees of $143 thousand, $107 thousand and $77 thousand, respectively, also contributed to the reduction in non-interest expenses. Increases in occupancy, FDIC insurance and $108 thousand of expenses related on one property taken by foreclosure in June 2008 partially offset the favorable variance noted. Occupancy expense increased $128 thousand (19.0%) from $675 thousand in 2007 to $803,000 in 2008 reflecting increased rent and real estate taxes related to the new banking office at 601 North Main Street, Port Chester, NY, as compared to such expenses incurred at the former facility at 211 Irving Avenue, Port Chester, NY as well as increased maintenance expense primarily incurred at the administrative office facility at 800 Westchester Avenue, Rye Brook, NY.
There was also a $280 thousand unfavorable variance in FDIC insurance expense, which was $187 thousand in 2007 as compared to $467 thousand in 2008, reflecting increases in both deposit volume and insurance rates.
Ronald J. Gentile, President and Chief Executive Officer of the Bank, stated that "results continue to show improvement." He further noted, "I am pleased that our total average cost of funds is continuing to decline to 4.24% for the year 2008 down from 4.80% for the year 2007. We continually attempt to reduce these costs by attracting core deposit accounts through our enhanced calling programs, remote deposit capture program, and compensating balances from commercial loan customers."
Mr. Gentile also indicated that "due to the poor economic climate, asset quality is beginning to show signs of deterioration, with non-performing loans aggregating $9.7 million at December 31, 2008, an approximate $6.1 million increase from the $3.6 million in nonperforming loans at year end 2007. The increase in non-performing loans is a concern; however, the net realizable value of the underlying collateral for these loans at the present time exceeds the outstanding loan balances, except for one loan which required a specific reserve of $141,540 as of December 31, 2008."
Mr. Gentile further commented that "the recessionary global economic climate and current declining local real estate markets will make the achievement of profitability in the near term a major challenge." He also commented that "we remain optimistic that the closer scrutiny being applied to our large existing commercial real estate and construction loan portfolios should help ameliorate any serious loan quality problems. However, any collateral deterioration which may occur if real estate values continue to erode, which cannot be predicted with any certainty, will obviously impact future operations, as it will result in the need to allocate additional provisions for loan loss expenses and possible charge-offs. Prudent underwriting has mostly shielded our Bank to date, and current additional safeguards in our underwriting processes should serve to bolster future credit quality."
"Safe Harbor" Statement under Private Securities Litigation Reform Act of 1995
Some of the statements contained in this press release may include forward-looking statements which reflect our current views with respect to future events and financial performance. Statements which include the words "expect," "intend," "plan," "believe," "project," "anticipate" and similar statements of future or forward-looking nature identify forward-looking statements for purposes of the federal securities laws or otherwise. All forward-looking statements address matters that involve risks and uncertainties. Accordingly, there are or will be important factors that could cause actual results to differ materially from those indicated in these statements or that could adversely affect the holders of our common stock.
These factors include, but are not limited to, those outlined in the Bank's Annual Report on Form 10-K for the year ended December 31, 2008, which was filed with the Federal Deposit Insurance Corporation and is publicly available from the FDIC's Accounting & Securities Disclosure Section, 550 17th Street, N.W., Washington, D.C. 20429 and on the Bank's website at www.usa-bankers.com.
Ronald J. Gentile President & CEO 914-417-3205
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