PAB Bankshares, Inc. Announces Record Second Quarter 2006 Earnings, Improved Asset Quality, and Branch Expansion Plans28 July 2006
PAB Bankshares, Inc. (Nasdaq:PABK) and President and CEO M. Burke Welsh, Jr. today announced the Company's financial results for the second quarter of 2006. The Company's net income for the quarter ended June 30, 2006 was $3.6 million, or $0.37 per diluted share, a 15% increase compared to the $3.1 million, or $0.32 per diluted share, reported for the same period in 2005. The results for the second quarter also represent an 8% increase over the $3.3 million, or $0.34 per diluted share, reported for the first quarter of 2006. "I'm proud to announce another quarter of solid performance for the Company. We posted record earnings, improved our asset quality levels through the liquidation of our largest problem asset, and continued our operational expansion in the Atlanta and Jacksonville markets during the second quarter," stated Welsh.
The net earnings for the quarter produced a return on average equity ("ROE") of 15.93% and a return on average assets ("ROA") of 1.36%, compared to a 14.89% ROE and a 1.37% ROA for the same period in 2005. The Company's net interest margin was 4.61% for the second quarter of 2006, a 12 basis point improvement compared to the 4.49% net interest margin in the second quarter of 2005. The improvement in the net interest margin is the combined result of a 15% increase in the Company's average earning assets and a two basis point widening in the spread between the average yields earned on those earning assets and the average rates paid on the deposits and other borrowings used to fund those earning assets.
For the six months ended June 30, 2006, the Company reported net income of $6.9 million, or $0.71 per diluted share, a 23% increase compared to $5.6 million, or $0.58 per diluted share, reported for the same period in 2005. The net income for the first six months of 2006 resulted in a 15.51% ROE and a 1.33% ROA, both an improvement compared to a 13.55% ROE and a 1.25% ROA for the same period in 2005. The Company's net interest margin for the first six months of 2006 was 4.59%, a 24 basis point improvement compared to the 4.35% net interest margin for the same period in 2005.
At June 30, 2006, the Company reported total assets of $1.06 billion, total loans of $803.0 million, and total deposits of $856.8 million representing increases of 13.5%, 11.6% and 17.9%, respectively, since June 30, 2005. After a 4.9% increase in total deposits during the first quarter of 2006, the Company reported a nominal 0.2% increase in deposit growth for the second quarter of 2006. "The intense competition for deposits in most of our markets has resulted in a very favorable environment for depositors who shop for the highest rates. We have made the decision to not chase after those deposits with pricing that is irrational to us," stated Welsh. "We will choose where we will compete for deposits in our markets when it makes sense for us and our shareholders. We have the ability to utilize wholesale funding alternatives if we need the liquidity." With minimal growth in deposits during the quarter, the Company reported total asset growth of less than 0.1%. Total loans increased $38.9 million, or 5.1%, during the quarter on continued demand for residential and commercial construction and development lending. The Company utilized its excess liquidity that had been invested in overnight Fed Funds to fund the loan growth this quarter.
Branch Expansion
"Although our asset and deposit growth slowed during the quarter, we are excited about our expansion plans and the momentum that we have built in our existing markets," stated Welsh. The Company reported on the current status of the branch expansion goals of its operating subsidiary, The Park Avenue Bank.
In May, the Bank began construction on a new 3,600 square foot bank branch along Epps Bridge Road in Oconee County, outside of Athens, Georgia. The Bank has operated a loan production office in the Athens market since October 2003. Mark Papanicolaou is the Bank's Athens Market President. Mr. Papanicolaou, who previously served as the Northeast Georgia Market President for SouthTrust, has been with the Bank since February 2005. The construction of the Athens branch is expected to be completed by October 2006.
In June, the Bank entered into a five-year agreement to lease approximately 3,000 square feet of office space for a branch, subject to regulatory approval, at Sutton Place along the Butler Boulevard commercial corridor in Jacksonville, Florida. Ross McWilliams, who previously served as the Market President for Bank of America's North Florida Home Builder Division, recently joined the Bank to serve as the Bank's Jacksonville Market President. The build-out of the leased space for the Jacksonville branch is expected to be completed by October 2006. The Bank has signed a nonbinding letter of intent and is in the process of conducting due diligence on a second potential branch site in the Jacksonville market. The Bank is also in the initial stages of discussion on a third potential branch site in the Jacksonville market.
The Bank has identified a location and is currently in negotiations for a lease for a branch office in Snellville, a growing suburb in Gwinnett County east of Atlanta, to compliment the Bank's Snellville loan production office. The Bank expects to have this branch open by November 2006. Greg Russell, who joined the Bank in December 2005 from Synovus subsidiary Bank of North Georgia, is the Bank's Gwinnett Market President.
With the addition of these three branches, the Bank would have a total of twenty branch offices and three loan production offices in operation by the end of 2006. The Bank plans to open three or four additional offices within its geographic footprint by the end of 2008.
Asset Quality
At June 30, 2006, the Company reported total nonperforming assets of $1.4 million, or 0.13% of total assets, a $6.6 million decrease compared to total nonperforming assets of $8.0 million, or 0.75% of total assets, as of March 31, 2006. During the quarter, the Company foreclosed on a commercial real estate loan relationship with an outstanding balance of $7.1 million at March 31, 2006. The Company charged-off $274,000 and sold three of the four properties foreclosed upon during the quarter associated with this relationship. The remaining parcel, which was included in other real estate owned on the Company's balance sheet with a value of $765,000 at quarter end, is being marketed for sale.
The Company reported $283,000 in net charge-offs for the second quarter of 2006. For the six months ended June 30, 2006, the Company reported net charge-offs of $176,000, resulting in an annualized net loss to average total loans ratio of 0.05%. The allowance for loan losses represented 1.36% of total loans at June 30, 2006, an 11 basis point decrease from the 1.47% level reported at December 31, 2005. "The decrease is a reflection of the Company's improved asset quality and loan growth during the period. Given our concentrations in construction and development lending, we realize that our risk profile could be negatively impacted by changes in market conditions. We will continue to maintain an allowance for loan losses that we believe to be adequate to protect the Company," noted Welsh.
Conference Call
The Company will host a conference call and webcast to allow the public the opportunity to listen to management discuss the Company's quarterly results at 11:00 AM EST on Tuesday, August 1, 2006. Members of the news media, investors and the general public are invited to access the live webcast of the conference call via the Company's website at www.pabbankshares.com. A link to the webcast is posted on the "Corporate Profile" page in the "Investor Relations" section of the Company's website. Participants may also access the live conference call by dialing (toll free) 877-407-8033 or (international) 201-689-8033. Shortly following the call and at any time for 60 days thereafter, listeners may access an archived version of the webcast at the "Investor Relations" section of the Company's website.
About PAB
The Company's sole operating subsidiary is The Park Avenue Bank. Both the Company and the Bank are headquartered in Valdosta, Georgia. The Bank is celebrating its 50th anniversary in 2006. In 1956, the Bank was established by Mr. James L. Dewar, Sr. in a small office at the corner of Park Avenue and Ashley Street in Valdosta. Currently, the Bank operates 17 branch offices and five loan production offices in 15 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. On November 1, 2005, the Company's common stock began trading on the NASDAQ National Market under the symbol PABK. The Company's common stock had previously traded on the American Stock Exchange under the symbol PAB since July 9, 1996. More information on the Company is available on the Internet at www.pabbankshares.com.
Note to Investors
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 outlook on earnings, stock performance, asset quality, projected growth, and branch expansion, and are based upon management's beliefs as well as assumptions made based on data currently available to management. When words like "anticipate", "believe", "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 be less favorable than expected, resulting in, among other things, a deterioration in credit quality and/or a reduction in demand for credit; (4) legislative or regulatory changes, including changes in accounting standards and compliance requirements, may adversely affect the businesses in which we are engaged; (5) competitors may have greater financial resources and develop products that enable such competitors to compete more successfully than we can; (6) our ability to attract and retain key personnel can be affected by the increased competition for experienced employees in the banking industry; (7) adverse changes may occur in the bond and equity markets; (8) war or terrorist activities may cause further deterioration in the economy or cause instability in credit markets; (9) restrictions or conditions imposed by our regulators on our operations may make it more difficult for us to achieve our goals; (10) economic, governmental or other factors may prevent the projected population, residential and commercial growth in the markets in which we operate; and (11) the risk factors discussed from time to time in the Company's Periodic Reports filed with the Securities and Exchange Commission (the "SEC"). The Company undertakes no obligation to revise these statements following the date of this press release.
PAB BANKSHARES, INC.
SELECTED QUARTERLY FINANCIAL DATA
(Dollars in thousands except per share and other data)
Period Ended
--------------------------------------------------------
06/30/06 03/31/06 12/31/05 09/30/05 06/30/05
---------------------------------------------------------------------
Summary of
Operations:
Interest
income $ 19,306 $ 17,848 $ 16,940 $ 15,783 $ 14,180
Interest
expense 8,006 6,956 6,367 5,556 4,580
---------------------------------------------------------------------
Net interest
income 11,300 10,892 10,573 10,227 9,600
---------------------------------------------------------------------
Provision for
loan losses -- -- 300 275 153
Other income 1,557 1,040 1,437 1,570 1,458
Other expense 7,182 6,756 6,526 6,259 6,228
---------------------------------------------------------------------
Income before
income tax
expense 5,675 5,176 5,184 5,263 4,677
Income tax
expense 2,083 1,865 1,856 1,744 1,549
---------------------------------------------------------------------
Net income $ 3,592 $ 3,311 $ 3,328 $ 3,519 $ 3,128
=====================================================================
Net interest
income on a
tax-
equivalent
basis $ 11,422 $ 10,975 $ 10,648 $ 10,284 $ 9,648
Per Share
Ratios:
Net income
- basic $ 0.38 $ 0.35 $ 0.35 $ 0.37 $ 0.33
Net income
- diluted 0.37 0.34 0.34 0.36 0.32
Dividends
declared for
period 0.135 0.125 0.125 0.120 0.120
Dividend
payout
ratio 35.70% 35.91% 35.56% 32.52% 36.57%
Book value
at end of
period $ 9.36 $ 9.35 $ 9.19 $ 9.15 $ 8.87
Common Share
Data:
Outstanding
at period
end 9,498,026 9,512,767 9,469,017 9,534,408 9,528,508
Weighted
average out-
standing
during
period 9,511,395 9,484,570 9,502,842 9,530,712 9,526,343
Diluted
weighted
average out-
standing
during
period 9,722,097 9,712,633 9,707,068 9,709,819 9,671,945
Selected
Average
Balances:
Total
assets $1,055,955 $1,035,348 $1,007,109 $ 974,747 $ 918,643
Earning
assets 994,173 975,699 948,882 916,001 861,462
Loans 787,332 761,900 741,600 722,410 693,433
Deposits 851,937 834,062 803,978 764,068 712,193
Stockholders'
equity 90,433 89,030 87,842 86,596 84,245
Selected
Period End
Balances:
Total
assets $1,060,046 $1,059,167 $1,017,326 $ 991,111 $ 933,747
Earning
assets 994,386 998,323 957,918 932,491 872,380
Loans 803,035 764,090 752,938 731,545 719,634
Allowance for
loan losses 10,903 11,186 11,079 10,768 10,460
Deposits 856,778 855,224 815,681 787,664 726,921
Stockholders'
equity 88,917 88,974 87,001 87,208 84,560
Tier 1
regulatory
capital 96,398 94,686 92,267 91,410 88,969
Performance
Ratios:
Return on
average
assets 1.36% 1.30% 1.31% 1.43% 1.37%
Return on
average stock-
holders' equity 15.93% 15.08% 15.03% 16.12% 14.89%
Net interest
margin 4.61% 4.56% 4.45% 4.45% 4.49%
Efficiency ratio
(excluding the
following
items) 55.37% 54.29% 53.70% 52.80% 55.97%
Securities
gains
(losses)
included in
other
income $ (1) $ (430) $ (10) -- (1)
Other gains
(losses) in-
cluded in
other income 8 2 (57) (1) (19)
Selected Asset
Quality Factors:
Nonaccrual
loans $ 412 $ 7,760 $ 7,856 $ 7,446 $ 7,534
Loans 90 days
or more past
due and still
accruing 23 17 2 20 9
Other impaired
loans (troubled-
debt restruc-
turings) -- -- -- -- --
Other real
estate and
repossessions 976 212 42 38 2
Asset Quality
Ratios:
Net charge-offs
to average
loans
(annualized
YTD) 0.05% -0.06% -0.12% -0.16% -0.23%
Nonperforming
loans to total
loans 0.05% 1.02% 1.04% 1.02% 1.05%
Nonperforming
assets to
total assets 0.13% 0.75% 0.78% 0.76% 0.81%
Allowance for
loan losses to
total loans 1.36% 1.46% 1.47% 1.47% 1.45%
Allowance for
loan losses to
nonperforming
loans 2510.11% 143.82% 140.98% 144.22% 138.66%
Other Selected
Ratios and Non-
financial Data:
Average loans
to average
earning assets 79.19% 78.09% 78.16% 78.87% 80.49%
Average loans
to average
deposits 92.42% 91.35% 92.24% 94.55% 97.37%
Average stock-
holders' equity
to average
assets 8.56% 8.60% 8.72% 8.88% 9.17%
Full-time
equivalent
employees 314 305 300 293 291
Bank branch
offices 17 17 17 17 17
Bank loan
production
offices 5 4 4 3 3
Bank ATMs 20 20 20 18 18
PAB BANKSHARES, INC.
SELECTED YEAR-TO-DATE FINANCIAL DATA
(Dollars in thousands except per share and other data)
Period Ended
--------------------------------------------------------
06/30/06 03/31/06 12/31/05 09/30/05 06/30/05
---------------------------------------------------------------------
Summary of
Operations:
Interest
income $ 37,154 $ 17,848 $ 59,371 $ 42,431 $ 26,647
Interest
expense 14,962 6,956 20,398 14,031 8,475
---------------------------------------------------------------------
Net interest
income 22,192 10,892 38,973 28,400 18,172
---------------------------------------------------------------------
Provision for
loan losses -- -- 1,189 889 614
Other income 2,598 1,040 5,813 4,375 2,805
Other expense 13,938 6,756 24,778 18,252 11,993
---------------------------------------------------------------------
Income before
income tax
expense 10,852 5,176 18,819 13,634 8,370
Income tax
expense 3,948 1,865 6,366 4,510 2,766
---------------------------------------------------------------------
Net income $ 6,904 $ 3,311 $ 12,453 $ 9,124 $ 5,604
=====================================================================
Net interest
income on a
tax-
equivalent
basis $ 22,397 $ 10,975 $ 39,195 $ 28,547 $ 18,263
Per Share
Ratios:
Net income
- basic $ 0.73 $ 0.35 $ 1.31 $ 0.96 $ 0.59
Net income
- diluted 0.71 0.34 1.28 0.94 0.58
Dividends
declared for
the period 0.260 0.125 0.475 0.350 0.230
Dividend pay-
out ratio 35.80% 35.91% 36.29% 36.55% 39.09%
Common Share
Data:
Weighted
average out-
standing
during
period 9,498,057 9,484,570 9,514,775 9,518,797 9,512,741
Diluted
weighted
average out-
standing
during
period 9,719,638 9,712,633 9,686,894 9,679,974 9,660,612
Selected
Average
Balances:
Total assets $1,045,708 $1,035,348 $ 948,457 $ 928,587 $ 905,124
Earning
assets 984,994 975,699 890,336 870,607 847,534
Loans 774,686 761,900 706,052 694,072 679,668
Deposits 843,049 834,062 741,409 720,324 698,089
Stockholders'
equity 89,735 89,030 85,431 84,514 83,456
Performance
Ratios:
Return on
average
assets 1.33% 1.30% 1.31% 1.31% 1.25%
Return on
average
stockholders'
equity 15.51% 15.08% 14.58% 14.43% 13.55%
Net interest
margin 4.59% 4.56% 4.40% 4.38% 4.35%
Efficiency
ratio (ex-
cluding the
following
items): 54.84% 54.29% 54.94% 55.40% 56.86%
Securities
gains
(losses)
included
in other
income $ (430) $ (430) $ (11) (1) (1)
Other gains
(losses)
included
in other
income 10 2 (79) (23) (22)
Other Selected
Ratios:
Average loans
to average
earning assets 78.65% 78.09% 79.30% 79.72% 80.19%
Average loans
to average
deposits 91.89% 91.35% 95.23% 96.36% 97.36%
Average stock-
holders'
equity to
average
assets 8.58% 8.60% 9.01% 9.10% 9.22%
PAB BANKSHARES, INC.
LOAN AND DEPOSIT
PORTFOLIO BY MARKET
As of June 30, 2006
South North
Georgia Georgia Florida
Market Market Market Treasury Total
---------------------------------------------------
(Dollars in Thousands)
Loans
Commercial and
financial $ 32,899 $ 19,859 $ 352 $ 75 $ 53,185
Agricultural
(including loans
secured by
farmland) 40,888 5,565 1,301 -- 47,754
Real estate
- Construction 61,908 197,468 44,951 60 304,387
Real estate
- commercial 86,489 133,229 24,701 7,547 251,966
Real estate
- residential 96,225 24,787 4,083 1,925 127,020
Installment loans
to individuals
and others 17,024 1,368 129 1,445 19,966
---------------------------------------------------
335,433 382,276 75,517 11,052 804,278
Deferred loan
fees and
unearned interest,
net (23) (743) (489) 12 (1,243)
---------------------------------------------------
Total loans 335,410 381,533 75,028 11,064 803,035
Allowance for
loan losses (4,422) (4,781) (985) (715) (10,903)
---------------------------------------------------
Net Loans $330,988 $376,752 $ 74,043 $10,349 $792,132
===================================================
Percent of Total 41.78% 47.56% 9.35% 1.31% 100.00%
===================================================
Deposits
Noninterest-
bearing demand $ 73,570 $ 13,273 $ 3,624 $ 4,991 $ 95,458
Interest-bearing
demand and
savings 227,284 57,581 29,787 840 315,492
Time 247,792 60,620 100,585 36,831 445,828
---------------------------------------------------
Total Deposits $548,646 $131,474 $133,996 $42,662 $856,778
===================================================
Percent of Total 64.04% 15.34% 15.64% 4.98% 100.00%
===================================================
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
-------------------------------------------------
06/30/06 03/31/06 12/31/05 09/30/05 06/30/05
-------- -------- -------- -------- --------
(Dollars In Thousands)
Commercial
and financial $ 53,185 $ 47,164 $ 50,860 $ 55,536 $ 60,127
Agricultural
(including
loans secured
by farmland) 47,754 53,368 55,830 45,759 32,475
Real estate
- construction 304,387 290,863 268,629 257,522 228,539
Real estate
- commercial 251,966 229,236 231,601 206,910 227,079
Real estate
- residential 127,020 123,903 127,326 145,395 151,033
Installment
loans to
individuals
and other
loans 19,966 20,836 20,380 22,239 22,663
-------- -------- -------- -------- --------
804,278 765,370 754,626 733,361 721,916
Deferred loan
fees and
unearned
interest, net (1,243) (1,279) (1,688) (1,816) (2,282)
-------- -------- -------- -------- --------
Total loans 803,035 764,091 752,938 731,545 719,634
Allowance for
loan losses (10,903) (11,186) (11,079) (10,768) (10,460)
-------- -------- -------- -------- --------
Net loans $792,132 $752,905 $741,859 $720,777 $709,174
======== ======== ======== ======== ========
The percentage of loans outstanding at the indicated dates is
presented in the following table according to type of loan:
Period Ended
-------------------------------------------------
06/30/06 03/31/06 12/31/05 09/30/05 06/30/05
-------- -------- -------- -------- --------
Commercial
and financial 6.62% 6.17% 6.75% 7.59% 8.36%
Agricultural
(including
loans secured
by farmland) 5.95% 6.98% 7.41% 6.26% 4.51%
Real estate
- construction 37.89% 38.07% 35.68% 35.20% 31.76%
Real estate
- commercial 31.38% 30.00% 30.76% 28.28% 31.55%
Real estate
- residential 15.82% 16.22% 16.91% 19.88% 20.99%
Installment
loans to
individuals
and other loans 2.49% 2.73% 2.71% 3.04% 3.15%
-------- -------- -------- -------- --------
100.15% 100.17% 100.22% 100.25% 100.32%
Deferred loan
fees and
unearned
interest, net -0.15% -0.17% -0.22% -0.25% -0.32%
-------- -------- -------- -------- --------
Total loans 100.00% 100.00% 100.00% 100.00% 100.00%
Allowance for
loan losses -1.36% -1.46% -1.47% -1.47% -1.45%
-------- -------- -------- -------- --------
Net loans 98.64% 98.54% 98.53% 98.53% 98.55%
======== ======== ======== ======== ========
CONTACT: PAB Bankshares, Inc.
Donald J. "Jay" Torbert, Jr., Executive Vice-President
& Chief Financial Officer
(229) 241-2775, ext. 1717
jayt@parkavebank.com
www.pabbankshares.com
Source: primezone
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