JACKSONVILLE BANCORP ANNOUNCES
2014 THIRD QUARTER EARNINGS
JACKSONVILLE, FLA., November 7, 2014/ -- Jacksonville Bancorp, Inc. (the “Company”) (NASDAQ: JAXB), holding company for The Jacksonville Bank (the “Bank”), announced today net income for the three months ended September 30, 2014 of $808 thousand compared to net income of $147 thousand for the three months ended September 30, 2013. For the nine months ended September 30, 2014, the Company recorded net income of $1.3 million, compared to $375 thousand for the same period in the prior year. Book value and tangible book value per common share as of September 30, 2014 were $6.26 and $6.15, respectively.
Balance Sheet Overview
Total assets were $510.5 million as of September 30, 2014, compared to $514.5 million as of September 30, 2013. The decrease in total assets was largely due to a decrease in net loans of $10.5 million, a decrease in securities available-for-sale of $5.8 million, a decrease in other real estate owned (“OREO”) of $3.8 million and a decrease in bank-owned life insurance of $1.1 million. These amounts were offset by an increase in cash and cash equivalents of $18.3 million.
Total assets increased $3.2 million, or 0.63%, from $507.3 million as of December 31, 2013 to $510.5 million as of September 30, 2014. The increase was driven by an increase in cash and cash equivalents in the amount of $13.9 million and other real estate owned of $1.5 million. These amounts were offset by a decrease in net loans of $9.1 million, a decrease in securities available-for-sale of $2.3 million and a decrease in bank-owned life insurance of $1.1 million.
Total deposits were $438.4 million as of September 30, 2014, a decrease of $2.0 million compared to total deposits of $440.4 million as of September 30, 2013. The decrease was driven primarily by:
The time deposit portfolio decreased by $30.5 million, or 20.3%, driven primarily by a $23.6 million reduction in local CDs, $2.2 million in brokered CDs and national CDs of $4.8 million.
Noninterest-bearing deposits increased $15.4 million, or 15.7%, to $113.4 million.
Money market, NOW and savings deposits increased $13.2 million, or 6.9%, largely due to one large temporary escrow account that the Company anticipates will disperse funds in the last quarter of 2014.
Total deposits increased by $3.4 million, or 0.78%, during the nine months ended September 30, 2014, from $435.0 million as of December 31, 2013 to $438.4 million as of September 30, 2014. The increase was driven primarily by:
Noninterest-bearing deposits increased $12.7 million, or 12.6%, to $113.4 million. This represents 25.9% of total deposits as of September 30, 2014.
Money market, NOW and savings deposits increased $16.9 million, or 9.0%, largely due to one large temporary escrow account that the Company anticipates will disperse funds in the last quarter of 2014.
The time deposit portfolio decreased by $26.2 million, or 17.9%, driven primarily by a $19.5 million reduction in local CDs, $2.2 million in brokered CDs and national CDs of $4.5 million.
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All share and per share amounts reflect the common equity 1-for-20 reverse stock split completed in October 2013.
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Asset Quality
As of September 30, 2014, nonperforming assets decreased to $18.7 million, or 3.67% of total assets, compared to $24.0 million, or 4.66% of total assets, as of September 30, 2013.
CC
23,954
Allowance for loan losses
$
(15,170
)
$
(14,616
)
$
(15,104
)
$
(15,760
)
$
(16,974
)
Allowance for loan losses as a percentage of NPL's
107.36
%
78.03
%
91.10
%
92.66
%
109.40
%
Nonperforming loans as a percentage of gross loans
3.92
%
5.08
%
4.37
%
4.59
%
4.16
%
Total nonperforming assets as a percentage of total assets
3.67
%
4.60
%
4.05
%
3.95
%
4.66
%
Total past due loans
$
8,342
$
13,835
$
14,767
$
19,460
$
19,793
Loans past due 30-89 days,still accruing interest
$
637
$
1,294
$
2,922
$
5,857
$
7,976
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Total nonperforming loans (“NPL’s”) include loans on nonaccrual and loans past due over 90 days still on accrual.
As of September 30, 2014, nonperforming loans decreased $1.4 million when compared to September 30, 2013 and $2.9 million when compared to December 31, 2013. The decrease in nonperforming loans was due to one large loan’s return to accrual, charge-offs (both partial and full) on impaired loans that were largely specifically reserved for as of December 31, 2013, as well as several impaired loans that were paid off during the year. This was offset by a few large commercial real estate relationships that went on nonaccrual in the first nine months of 2014.
Total past due loans were $8.3 million as of September 30, 2014, compared to $19.5 million as of December 31, 2013. The decrease is indicative of improvements in our customers’ ability to repay. Although a loan may no longer be considered past due, it may remain a nonperforming loan until such time as future payments are reasonably assured. Total loans past due 30-89 days, still accruing interest, were $637 thousand as of September 30, 2014 compared to $5.9 million as of December 31, 2013. The decrease was due to a few large commercial real estate relationships noted above moving from performing to nonperforming loan status or to OREO in the first nine months of 2014.
The allowance for loan losses was 4.20% of total loans as of September 30, 2014, compared to 4.55% of total loans as of September 30, 2013 with an allowance for loan losses as a percentage of NPL’s of 107.36% as of September 30, 2014. The allowance for loan losses decreased by $590 thousand during the nine months ended September 30, 2014 to $15.2 million compared to $15.8 million as of December 31, 2013. The decrease in the allowance for loan losses as of September 30, 2014 compared to December 31, 2013 was driven primarily by an overall decrease in the historical loss component used in loans collectively evaluated for impairment and an overall decrease in the total loans collectively evaluated for impairment. In addition, specific reserves decreased slightly as balances on impaired loans have decreased from December 31, 2013 to September 30, 2014.
Operating Results
Total interest income decreased $354 thousand to $5.3 million for the three months ended September 30, 2014, compared to the same period in 2013. This decrease was primarily driven by a decrease in average earning assets, in particular, average loan balances which declined by $14.3 million when compared to the same period in the prior year. The average yield on loans decreased to 5.28% for the three months ended September 30, 2014, compared to 5.39% for the three months ended September 30, 2013.
Total interest income decreased $1.9 million for the nine months ended September 30, 2014 when compared to the same period in 2013. This decrease was primarily driven by the decrease in average loan balances and a decrease in the average yield on loans to 5.26% for the nine months ended September 30, 2014 compared to 5.63% for the nine months ended September 30, 2013. The decrease in the loan yield was driven by a decrease in accretion recognized on acquired loans of approximately $453 thousand as well as a slight decrease in the core average yield earned on loans.
Interest expense decreased by $242 thousand and $780 thousand for the three and nine months ended September 30, 2014, respectively, when compared to the same periods in the prior year. The average cost of interest-bearing liabilities decreased to 0.88% and 0.92% for the three and nine months ended September 30, 2014 compared to 1.06% and 1.10% for the three and nine months ended September 30, 2013, respectively. The overall decrease in the average cost of interest-bearing deposits reflects an ongoing reduction in interest rates paid on deposits as a result of the re-pricing activities in the current low interest rate environment.
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All share and per share amounts reflect the common equity 1-for-20 reverse stock split completed in October 2013.
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The net interest margin increased by 8 basis points to 3.74% from 3.66%, when comparing the third quarter of 2014 to the same period in the prior year. This increase was driven by the decrease in the average cost of interest-bearing liabilities which outpaced the decrease in the average yield on interest-bearing assets. The average yield on interest-bearing assets benefitted by accretion recognized on a large acquired loan that was paid off in the third quarter of 2014.
The net interest margin decreased by 7 basis points to 3.77% from 3.84%, when comparing the first nine months of 2014 to the same period in the prior year. This decrease was mainly due to the decrease in average cost of interest-bearing liabilities, offset by the decrease in accretion recognized on acquired loans as discussed above.
The provision for loan loss expense for the three and nine months ended September 30, 2014 was $0 and $287 thousand, respectively, as compared to a provision for loan loss expense of $367 thousand and $100 thousand for the three and nine months ended September 30, 2013, respectively. The increase in the provision for loan losses is due to an increase in the reserves required on loans individually evaluated for impairment. This was offset by a decrease in the reserves required on loans collectively evaluated for impairment.
Noninterest income was $867 thousand and $1.6 million for the three and nine months ended September 30, 2014, respectively, compared to $761 thousand and $1.6 million for the three and nine months ended September 30, 2013, respectively. Included in the prior year other income was realized gains from the sale of investment securities of $391 thousand and $437 thousand for the three and nine months ended September 30, 2013, respectively. No such sales occurred during the three and nine months ended September 30, 2014. For the three and nine months ended September 30, 2014, the Company recorded a gain of $489 thousand from bank-owned life insurance due to life insurance benefits received in excess of cash surrender value from the death of a former employee.
Noninterest expense decreased to $4.5 million for the three months ended September 30, 2014, compared to $4.8 million for the three months ended September 30, 2013. This decrease was mainly due to a reduction in salaries and employee benefits of $233 thousand and other real estate owned expense of $111 thousand. The remainder of the components of noninterest expense remained relatively flat when compared to the same period in the prior year.
Noninterest expense decreased to $13.4 million for the nine months ended September 30, 2014, compared to $15.6 million for the nine months ended September 30, 2013. This decrease was due to a decrease in professional fees of $0.4 million, mainly related to audit and legal fees that were higher in the nine-month period in 2013 as a result of the special shareholders’ meeting held in the first quarter of 2013. In addition, there was a decrease of $1.1 million for OREO and $438 thousand for loan expenses as a result of the Company’s execution of its strategy to reduce problem assets. The remainder of the components of noninterest expense remained relatively flat period-over-period.
Income tax expense increased to $20 thousand for the nine months ended September 30, 2014, compared to none for the same period in 2013. This was a result of Alternative Minimum Taxes. The Company recorded a full valuation allowance against its deferred taxes as of December 31, 2011. Based on an analysis performed as of September 30, 2014, it was determined that the need for a full valuation allowance still existed.
On a per common share basis, the Company had net income available to common shareholders of $0.14 and $0.23 for the three and nine months ended September 30, 2014, compared to net income (loss) available to common shareholders of $0.03 and $(7.06) for the same periods in the prior year.
“The solid execution of our strategy is reflected in our ability to achieve operational efficiencies, ongoing asset quality improvement and stabilization in our balance sheet,” said Chief Executive Officer Kendall L. Spencer. “We have turned the corner and remain committed to the community banking model that has served us well over the years and supports an operating strategy that meets the needs of our community, employees and investors.”
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All share and per share amounts reflect the common equity 1-for-20 reverse stock split completed in October 2013.
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SUBSEQUENT EVENTS
As previously disclosed in May 2014, the Company began implementing a restructuring plan in order to better align the Company’s and the Bank’s processes and procedures with the best industry practices and standards. As part of that plan, on October 22, 2014, the Company implemented a second reduction in the Bank’s workforce eliminating an additional 14 positions and affecting eight employees, or approximately 10% of the workforce. This action was approved by the Company’s board of directors on August 13, 2014. The Company estimates it will incur approximately $60 thousand in restructuring expenses in connection with this workforce reduction, consisting of severance benefits and other employee-related costs. The $60 thousand in estimated costs is expected to be recognized as a one-time charge in the fourth quarter. As a result of this second reduction, the total restructuring plan has resulted in the elimination of 32.5 positions at the Bank, or approximately 30% of the workforce and total restructuring costs of $111 thousand.
The Company
Jacksonville Bancorp, Inc., a bank holding company, is the parent of The Jacksonville Bank, a Florida state-chartered bank focusing on the Northeast Florida market with approximately $510.5 million in assets and eight full-service branches in Jacksonville and Jacksonville Beach, Duval County, Florida, as well as our virtual branch. The Jacksonville Bank opened for business on May 28, 1999 and provides a variety of community banking services to businesses and individuals in the greater Jacksonville area of Northeast Florida. More information is available at its website at www.jaxbank.com.
The statements contained in this press release, other than historical information, are forward-looking statements, which involve risks, assumptions and uncertainties. The risks, uncertainties and factors affecting actual results include but are not limited to: our ability to dispose of substandard assets and the disposition prices thereof; economic and political conditions, especially in North Florida; real estate prices and sales in the Company’s markets; competitive circumstances; bank regulation, legislation, accounting principles and monetary policies; the interest rate environment; efforts to increase our capital and reduce our nonperforming assets; and technological changes. The Company’s actual results may differ significantly from the results discussed in forward-looking statements. Investors are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof. The Company does not undertake, and specifically disclaims, any obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Additional information regarding risk factors can be found in the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, which is incorporated herein by reference.
Contact Valerie Kendall at 904-421-3051 for additional information.
for details see filed 8k
