Albina Community Bancorp (OTCBB: ACBC), the holding company of Portland's only certified community development bank, today reported profits of $292,000, or $0.22 per diluted share, in 2011, compared to a net loss of $4.9 million, or $3.91 per share, in 2010. Improving credit quality, strong net interest margin, sustained core deposit growth and better operating efficiencies contributed to profitability in three of the last four quarters. In the fourth quarter of 2011, Albina earned $157,000, or $0.12 per share, compared to a net loss of $126,000, or $0.10 per share in the preceding quarter, and lost $1.3 million, or $0.92 per share in the fourth quarter a year ago.

"We saw many encouraging signs in the fourth quarter, including receiving grant funding from the U.S. Treasury," said Cheryl Cebula, President and Chief Executive Officer of Albina Community Bank. "Having received this award in seven of the past nine years, we believe our return to profitability was a contributing factor toward receiving this award.

"Strengthening our franchise is paramount, and we are very pleased to expand our board of directors with three of Portland's leading business and philanthropic leaders," Cebula continued. "Having J. Duncan Campbell, Michael Powell and Kay D. Toran join our board of directors strengthens our leadership team, and these distinguished individuals are expected to help us attract new business and new investors.

"Albina Community Bank was recently the recipient of the prestigious Bank Enterprise Award (BEA), a $247,000 cash award from the U.S. Department of Treasury's Community Development Financial Institution Fund (CDFI), in recognition of the Bank's community and economic development activities in the Portland neighborhoods," said Cebula. CDFI funds are awarded to viable financial institutions that have the financial and managerial capacity to provide affordable and appropriate financial products and services that positively impact their communities.

Financial Highlights: (for the period ended December 31, 2011)

  • Earned $292,000, or $0.22 per diluted share, for 2011. Fourth quarter net income totaled $157,000, or $0.12 per share.
  • Net interest margin (NIM) increased 58 basis points to 4.42% for the year, compared to 3.84% for 2010.
  • Nonperforming assets declined by 35% to $5.4 million, at December 31, 2011, compared to $8.3 million a year ago.
  • Allowance for loan losses stood at $2.9 million, or 3.12% of total loans.
  • Total assets declined 10% to $132.1 million, compared to $146.5 million a year ago.
  • Diverse deposit mix with noninterest-bearing demand deposits increasing 13% to $32.7 million from a year earlier, and accounting for 27% of total deposits.
  • Gross loans were $93.2 million, down 19% from $115.8 million a year ago.

Credit Quality

Credit quality metrics are still improving with non-performing assets (NPA) declining 35% from a year ago to $5.4 million, or 4.09% of total assets, at December 31, 2011, compared to $8.3 million, or 5.67% of total assets a year ago. At September 30, 2011, non-performing assets totaled $6.9 million, or 5.13% of total assets. "At year end, 56% or $2.9 million of loans that we classify as NPA continue to be current on payments. They are classified as nonaccrual due to cash flow deficiencies for the properties, which the borrowers are supplementing from other sources," said Cebula. Albina has had no real estate construction loans on its books since the fourth quarter of 2010.

Nonperforming loans (NPLs) fell by $2.2 million year-over-year to $4.6 million, representing 4.94% of total loans, compared to $6.8 million, or 5.84% of total loans, at the end of the fourth quarter a year ago. "We continue to diligently work with our borrowers to either bring loans into performing status or to convert NPLs to other real estate owned (OREO)," said Cebula. NPLs have declined 32% since December 31, 2010.

OREO, which consisted of one property, totaled $795,000 at December 31, 2011, unchanged from the preceding quarter, but substantially below the $1.5 million at the end of the fourth quarter a year ago. "This one remaining property under contract for sale was scheduled to close in December 2011. However, the owners incurred delays in securing related permits and requested an extension to proceed with due diligence; we are confident that the sale will go through during the first quarter of 2012," added Cebula.

For the full year in 2011, net charge-offs totaled $1.0 million, or 1.02% of average loans, compared to $3.7 million, or 2.83% of average loans in 2010. Net charge-offs in the fourth quarter of 2011 were $382,000, representing 0.40% of average loans outstanding, compared to $92,000 of recoveries in the fourth quarter of 2010. Net charge-offs in the third quarter of 2011 totaled $243,000, or 0.25% of average loans outstanding.

With the significant improvement in credit quality, Albina recorded a $150,000 provision for loan losses in the fourth quarter of 2011, compared to $200,000 in the fourth quarter a year ago. The provision for loan loss in the third quarter of 2011 was $400,000. The allowance for loan and lease losses totaled $2.9 million, or 3.12% of total loans at December 31, 2011, compared to $3.1 million, or 3.25% of total loans at September 31, 2011, and $3.3 million, or 2.85% of total loans a year ago.

Balance Sheet Results

Albina's total assets declined slightly to $132.1 million at December 31, 2011, from $134.4 million in the preceding quarter and fell 10% from $146.5 million in the fourth quarter a year ago.

The investment securities portfolio increased 21% to $19.1 million at December 31, 2011, from $18.8 million in the preceding quarter and up 21% from $15.8 million at December 31, 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 Cebula. "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 one year.

Loans, net of reserves, declined to $90.3 million at quarter end, from $93.6 million at September 30, 2011, and $112.5 million at December 31, 2010. "Although loan originations have been down, we remain committed to assisting local businesses in the community," added Cebula. The decline in loans during the quarter reflects Albina's exit from the real estate construction market and other loan concentrations that present elevated risk.

Albina's loan portfolio remains well-diversified with a wide variety of borrowers and collateral. Approximately 70% of the loan portfolio is secured by either residential or commercial real estate, with more than 35% of Albina's commercial real estate (CRE) being owner-occupied. The following table shows the changes in the loan portfolio in each category:

                                   
December 31,       September 30,       December 31,  
2011         2011         2010    
(unaudited) (unaudited) (unaudited)
Loans
 
Commercial business $ 20,370 21.8 % $ 21,307 22.0 % $ 25,653 22.2 %
R/E construction - 0.0 % - 0.0 % 3,246 2.8 %
Commercial R/E 47,327 50.8 % 49,020 50.7 % 56,478 48.8 %
Multifamily residential 2,759 3.0 % 2,783 2.9 % 4,625 4.0 %
One to four family residential 15,948 17.1 % 16,363 16.9 % 16,767 14.5 %
Consumer 6,933 7.4 % 7,364 7.6 % 9,183 7.9 %
Unearned Loan Fees   (124 ) -0.1 %   (121 ) -0.1 %   (199 ) -0.2 %
Total Loans $ 93,212   100.0 % $ 96,715   100.0 % $ 115,752   100.0 %
 

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 27%, year-over-year, to $5.8 million. Commercial loan participations dropped 53% year-over-year to $5.5 million.

Noninterest-bearing deposits increased 13% year-over-year and accounted for 27% of total deposits; interest-bearing and savings accounts represented 40% of total deposits, and time certificates dropped 29% year-over-year representing 33% of total deposits at the end of the fourth quarter 2011. Deposits totaled $119.7 million at December 31, 2011, compared to $129.2 million a year earlier, and $122.2 million at September 30, 2011. The ratio of loans to deposits was 75.4% at December 31, 2011, compared with 87.0% a year earlier.

"People have responded tremendously to the home-town banking approach and we have benefitted from the increasing movement of money to local community banks," said Cebula. "Albina is well-known in our community, and customers are looking to develop and build a solid relationship with us. And, with their support, we are able to make a positive impact in our neighborhoods and continue our mission as their local community bank. 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."

Operating Results

Net interest income for the full year 2011 was $4.8 million, after a loan loss provision of $650,000, compared to $2.7 million, with a loan loss provision of $3.1 million, for 2010. Net interest income, before the provision for loan losses, was $1.2 million in the fourth quarter of 2011, compared to $1.3 million in both the third quarter of 2011 and in the fourth quarter a year ago. 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.

Net interest margin (NIM) increased 58 basis points to 4.42% for the full year 2011, compared to 3.84% for 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 2011. The NIM for the fourth quarter of 2011 was 4.03%, up 22 basis points from 3.81% for the fourth quarter of 2010, and down 15 basis points from 4.18% in the third quarter of 2011. NIM remained high, however, in part due to a lower cost of deposits.

Non-interest income was $618,000 for the fourth quarter of 2011, compared to $454,000 in the preceding quarter and $62,000 for the fourth quarter of 2010. The increased income in the fourth quarter was predominantly due to the BEA cash award. Service charges and fees actually declined year-over-year, in spite of the increased number of customers that have flocked to Albina during the year. Merchant card interchange income in the fourth quarter was flat from the preceding quarter and up 14% year-over-year also reflecting the increased volume of customers. For the full year 2011, non-interest income was $1.9 million, up 62% from $1.2 million in 2010. The increase in non-interest income for the year also included the gain on sale of loans and OREO taken during 2011.

"The strategic steps we undertook to reduce our overhead expenses are reflected in our bottom line results," Cebula said. "The decline in total non-interest expense for the fourth quarter reflects a decrease in legal and professional fees and expenses related to managing the loan portfolio and OREO. FDIC assessments also dropped by 35% from a year ago. Total non-interest expense declined 38% to $1.5 million in the fourth quarter, from $2.5 million in the fourth quarter a year ago. For the full year, non-interest expense declined 27% to $6.4 million from $8.7 million in 2010."

Other News

Albina Community Bancorp also announced today that Jim Schlotfeldt, Chief Financial Officer, has resigned from Albina Community Bancorp to pursue an opportunity with another bank. "Jim has been a highly valued member of our management team and we appreciate all his contributions to our bank," said Cheryl Cebula. "We will take the time necessary to ensure that we find the best possible candidate to complete our management team."

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. Track Albina's community involvement by viewing its scorecard at: www.albinabank.com/company/scorecard.cfm.

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 431 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.

Albina Community Bancorp                  
Balance Sheet
(Dollars in thousands) As of the Date Ended
    December 31, September 30, December 31, Annual
2011     2011     2010     % Change
(unaudited) (unaudited) (unaudited)
ASSETS
 
Cash and due from banks $ 326 $ 368 $ 464 -30 %
Interest-bearing deposits 10,926 10,324 4,902 123 %
Federal funds sold   21         21         26   -18 %
Total cash and cash equivalents 11,274 10,713 5,391 109 %
 
Time deposits with other banks - - 398 -100 %
Investment securities 19,069 18,844 15,820 21 %
Federal Home Loan Bank Stock 1,325 1,325 1,325 0 %
 
Loans
Albina originated loans 81,906 84,440 96,158 -15 %
Commercial participations purchased 5,526 6,051 11,710 -53 %
Consumer participations purchased   5,780         6,224         7,883   -27 %
Total loans 93,212 96,715 115,752 -19 %
 
Allowance for loan and lease losses   (2,910 )       (3,142 )       (3,298 ) -12 %
Net loans 90,302 93,573 112,454 -20 %
 
Property and equipment, net 4,778 4,829 5,016 -5 %
Other real estate owned 795 795 1,547 -49 %
Other assets   4,562         4,270         4,549   0 %
Total assets $ 132,105       $ 134,350       $ 146,500   -10 %
 
 
LIABILITIES AND EQUITY
 
Deposits
Non-interest bearing deposits $ 32,749 $ 33,291 $ 29,094 13 %
Interest-bearing accounts 40,948 40,378 40,227 2 %
Savings accounts 6,971 5,948 4,880 43 %
Time certificates   39,070         42,574         55,006   -29 %
Total deposits 119,738 122,191 129,207 -7 %
 
Liabilities
Other borrowings 5,089 5,117 10,434 -51 %
Subordinated debentures 6,186 6,186 6,186 0 %
Other liabilities   2,356         2,235         2,048   15 %
Total liabilities 133,369 135,729 147,876 -10 %
 
Shareholders' equity:
Preferred stock 2,482 2,482 2,482 0 %
Common stock 8,611 8,611 8,611 0 %
Retained earnings (12,546 ) (12,703 ) (12,839 ) 2 %
Accum. other comp. income   190         231         370   -49 %
Total shareholders' equity   (1,263 )       (1,380 )       (1,376 ) 8 %
Total liabilities and equity $ 132,105       $ 134,350       $ 146,500   -10 %
 
FINANCIAL RATIOS
Loans / deposits 75.42 % 76.58 % 87.03 %
Non-performing assets / total assets 4.09 % 5.13 % 5.67 %
Reserve / loans 3.12 % 3.25 % 2.85 %
 
Albina Community Bancorp                              
Income Statement
(Dollars in thousands, except per-share data) Three Months Ended Twelve Months Ended
    December 31, September 30, December 31, Q4/Q4 December 31,
2011     2011     2010     % Chg 2011     2010     % Chg
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
INTEREST INCOME
Interest and fees on loans $ 1,483 $ 1,554 $ 1,761 -16 % $ 6,632 $ 8,002 -17 %
Interest on investment securities 53 76 125 -57 % 343 625 -45 %
Other interest income   7         7         20   -64 %   27         89   -70 %
Total interest income 1,543 1,638 1,906 -19 % 7,002 8,716 -20 %
 
INTEREST EXPENSE
Interest on deposits 199 229 427 -54 % 992 2,178 -54 %
Interest on borrowings   127         126         145   -12 %   513         817   -37 %
Total interest expense   326         355         572   -43 %   1,504         2,995   -50 %
 
NET INTEREST INCOME 1,218 1,284 1,334 -9 % 5,497 5,721 -4 %
Loan loss provision   150         400         200   -25 %   650         3,050   -79 %
Net interest income after provision 1,068 884 1,134 -6 % 4,847 2,671 81 %
 
NON-INTEREST INCOME
Service charges and fees 155 145 169 -8 % 588 749 -21 %
Government payments and contracts 247 - - NM 247 - NM
Loan fees on brokered loans - 5 - - 5 48 -90 %
Merchant & card interchange income 108 108 97 11 % 422 371 14 %
Realized gain/(loss) on sale of investment securities - 1 - NM 4 130 -97 %
Realized gain/(loss) on sale of Loans & OREO - 87 (309 ) NM 205 (532 ) NM
Other income   109         108         105   3 %   429         410   5 %
Total non-interest income 618 454 62 896 % 1,900 1,175 62 %
 
NON-INTEREST EXPENSE
Salaries and employee benefits 666 663 706 -6 % 2,809 2,908 -3 %
Occupancy and equipment 164 162 197 -17 % 685 748 -8 %
Legal and professional 189 139 397 -65 % 745 1,228 -43 %
Marketing 51 33 44 15 % 160 184 -13 %
Data processing 184 184 183 1 % 752 794 -5 %
Loan and OREO 24 117 369 -93 % 255 1,239 -79 %
FDIC assessment 107 92 142 -25 % 478 737 -35 %
Other   151         74         447   -66 %   564         867   -35 %
Total non-interest expense   1,536         1,464         2,486   -38 %   6,448         8,705   -27 %
 
PRETAX INCOME (LOSS) 150 (126 ) (1,289 ) NM 300 (4,858 ) NM
Provision for income taxes   (7 )       -         -   NM   8         15   -50 %
-
NET INCOME (LOSS) $ 157       $ (126 )     $ (1,289 ) NM $ 292       $ (4,873 ) NM
 
NM- Not meaningful
 
Earnings (loss) per share- Basic and Diluted $ 0.12 $ (0.10 ) $ (0.92 ) NM $ 0.22 $ (3.91 ) NM
 

Weighted average shares outstanding- Basic and Diluted

1,073,310 1,073,310 1,073,310 0 % 1,073,310 1,073,222 0 %
 
FINANCIAL RATIOS
Return on average assets 0.45 % -0.36 % -0.74 % 0.21 % -2.79 %
Efficiency ratio 83.68 % 84.25 % 178.02 % 87.16 % 126.22 %
Net interest margin 4.03 % 4.18 % 3.81 % 4.42 % 3.84 %
 
Albina Community Bancorp                          
Selected Highlights
(Dollars in thousands) As of the Date Ended
      December 31, September 30, December 31,
2011           2011           2010      
(unaudited) (unaudited) (unaudited)
Loans
 
Commercial business $ 20,370 21.8 % $ 21,307 22.0 % $ 25,653 22.2 %
R/E construction - 0.0 % - 0.0 % 3,246 2.8 %
Commercial R/E 47,327 50.8 % 49,020 50.7 % 56,478 48.8 %
Multifamily residential 2,759 3.0 % 2,783 2.9 % 4,625 4.0 %
One to four family residential 15,948 17.1 % 16,363 16.9 % 16,767 14.5 %
Consumer 6,933 7.4 % 7,364 7.6 % 9,183 7.9 %
Unearned Loan Fees   (124 ) -0.1 %   (121 ) -0.1 %   (199 ) -0.2 %
Total Loans $ 93,212   100.0 % $ 96,715   100.0 % $ 115,752   100.0 %
 
 
ASSET QUALITY
Non-Performing loans:
Loans past due 90 days or more $ 45 $ 81 $ 207
Non-accrual loans   4,561     6,013     6,552  
Total non-performing loans 4,606 6,095 6,759
OREO   795     795     1,547  

Total non-performing assets

$ 5,401   $ 6,890   $ 8,306  
 

Non-performing assets / total assets

4.09 % 5.13 % 5.67 %
 
 
Beginning ALLL - from previous FYE $ 3,298 $ 3,298 $ 3,921
Provision for loan loss expense 650 500 3,050

Loan charge-offs

(1,365 ) (921 ) (4,669 )
Loan recoveries   327     265     995  

(Charge-offs), net of recoveries

  (1,038 )   (656 )   (3,673 )
Ending ALLL - YTD $ 2,910   $ 3,142   $ 3,298  
 
 
Average Loans
Quarter $ 94,864 $ 97,836 $ 118,892
YTD 101,315 103,489 129,719
Net charge-off
Quarter 382 243 (92 )
YTD 1,038 656 3,673
Net charge-offs as % of Average loans
Quarter 0.40 % 0.25 % -0.08 %
YTD 1.02 % 0.63 % 2.83 %
 
 
Non-accrual loans
Residential Development $ 1,000 $ 1,000 $ 3,052
Commercial Real Estate 3,314 4,553 3,388

Commercial / Industrial

  247     460     113  
Total Non-accrual loans $ 4,561   $ 6,013   $ 6,552  

Albina Community Bank
President & CEO
Cheryl Cebula, 503-288-7296