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Treasure State Bank Reports Second Quarter 2014 Operating Results

MISSOULA, Mont., July 31, 2014 (GLOBE NEWSWIRE) -- Treasure State Bank ("the Bank") (OTCBB:TRSU), a Montana chartered community bank, today announced:

  • The Bank had a net profit of $133,000 for the quarter ended June 30, 2014, as compared to $63,000 for the quarter ended March 31, 2014, and a pro forma net operating profit of $65,000 for the quarter ended June 30, 2013. Actual net profit for the quarter ended June 30, 2013 were $415,000, but included a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. Therefore, net profit for the quarter ended June 30, 2013 on a pro forma comparability basis was $65,000. There was not a provision for loan losses for the quarter ended June 30, 2014 as compared to $30,000 for the same quarter last year.
  • Earnings, before non-cash expenses of depreciation and amortization, loan loss provisions, real estate owned write-downs, stock option expense and income tax benefit were $245,000 ($980,000 annualized) for the quarter ended June 30, 2014, as compared to $109,000 ($436,000 annualized) for the quarter ended March 31, 2014 and $172,000 ($688,000 annualized) for the same quarter last year.
  • On a year-to-date basis, the Bank had a net profit of $196,000, as compared to $115,000 for the same period last year. Actual net profit for the six month period ended June 30, 2013 was $465,000, but as previously mentioned, included a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. There was not a provision for loan losses for the six month period ended June 30, 2014 as compared to $54,000 for the same period last year.
  • Earnings, before non-cash expenses of depreciation and amortization, loan loss provisions, real estate owned write-downs and stock option expense were $354,000 ($708,000 annualized) for the six month period ended June 30, 2014 as compared to $323,000 ($646,000 annualized) for the same period last year.
  • The annualized return on average assets for the quarter ended June 30, 2014 was 0.81%, as compared to 0.38% for the quarter ended March 31, 2014, and 0.39% for the quarter ended June 30, 2013, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
  • The annualized return on average assets for the six month period ended June 30, 2014 was 0.60%, as compared to 0.35% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
  • The annualized return on average equity for the quarter ended June 30, 2014 was 7.31%, as compared to 3.52% for the quarter ended March 31, 2014 and 3.90% for the quarter ended June 30, 2013, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
  • The annualized return on average equity for the six month period ended June 30, 2014 was 5.38%, as compared to 3.44% for the same period last year, excluding the $700,000 income tax benefit and $350,000 additional provision for OREO write down.
  • Earnings per share for the quarter were $0.08 ($0.32 annualized) and year-to-date was $0.11 ($0.23 annualized) based on 1,736,451 shares outstanding.
  • Tier 1 leverage capital was 10.47% as of June 30, 2014, as compared to 10.00% as of December 31, 2013. Total Risk-Based Capital was 14.61% as of June 30, 2014, as compared to 14.46% at December 31, 2013.
  • Stockholder's Equity to assets at June 30, 2014 was 10.53% as compared to 10.71% at December 31, 2013.
  • Book value per share was $4.20 as of June 30, 2014, based on 1,736,451 shares outstanding.
  • Total assets increased $3.1MM to $69.2MM at June 30, 2014, as compared to $66.1MM at December 31, 2013.
  • Cost of funds at June 30, 2014 was 0.62%, as compared to 0.65% at March 31, 2014 and 0.91% at June 30, 2013.
  • The net interest margin (interest income less interest expense divided by average earning assets) increased to 4.13% for the quarter ended June 30, 2014, as compared to 3.59% for the quarter ended March 31, 2014 and 3.86% for the quarter ended June 30, 2013.
  • Loan loss reserves to total loans were 3.26% ($1.5MM) at June 30, 2014, as compared to 3.41% ($1.6MM) at December 31, 2013.
  • Total liquidity as of June 30, 2014 was 24.12%, and available liquidity was 24.12%.
  • Non-performing assets increased $800,000 to $4.9MM at June 30, 2014, up from $4.1MM at March 31, 2014 and $4.2MM at December 31, 2013.

President and Chief Executive Officer Jim Salisbury stated, "On May 16, 2014, the Bank issued a press release announcing that its formal joint Consent Order dated December 28, 2009 between the FDIC and the Montana Division of Banking and Financial Institutions had been terminated effective May 13, 2014. I stated that I was very pleased to report that after approximately four and one half years this formal agreement with our government regulators has been lifted. The Bank has made substantial progress over these years improving its asset quality, earnings and capital. During this period of time the country and Montana have endured what many refer to as the 'greatest recession since the great depression.'

"I am pleased with the earnings for the quarter of $133,000. In its efforts to improve asset quality, at times the Bank is able to recover lost interest on troubled loans. That was the case in the quarter just ended. Even though non-performing assets increased $800,000 during the quarter, the Bank feels it is adequately reserved for potential loan losses and has therefore not seen the need to add to loan loss provisions in 2014. The non-performing assets of the Bank are all "legacy assets" that were originated over five years ago. The Bank continues to work diligently to resolve their non-performing status. Our focus continues to be growing the Bank once again by increasing loan production, which will increase net interest income and loan related fee income. This is evidenced by our $1.3MM net increase in gross loans during the year. It continues to be a challenge to have increases in the gross loans of the Bank while troubled loans are brought to a resolution and paid off. Our net interest margin remains strong at 4.13%, complemented by a 3.26% loan loss reserve to total loans and a continued reduction in the Bank's cost of funds of 31.9% year over year. The reduction in cost of funds has slowed in 2014 due to fewer higher rate certificates of deposit maturing. The 4.13% net interest margin was enhanced by the recovery of interest income on a troubled loan that was paid off.

"Total assets increased $3.1MM to $69.2MM at June 30, 2014, as compared to $66.1MM at December 31, 2013. Cash and cash equivalents increased $2.2MM and gross loans increased $1.3MM, while other assets decreased $400,000.

"The Bank believes at this time that its reserve for loan losses is sufficient and that no additional provision for loan loss reserves is currently required. There could be additional charges related to foreclosed property if certain appraisals would indicate the need for additional write downs of these assets.

"Twenty four cents of every dollar is held in domestic liquid assets to cushion the Bank from a rising interest rate environment and to allow for the funding of new loans. In addition, the investments that the Bank owns have very short term maturities, which will not fluctuate significantly in market value should interest rates increase. The current interest rate environment does not reward the Bank for having this relatively high liquidity position because earnings are minimal on these investments. Given the many uncertainties with the economy, the continued gradual ending of the Federal Reserve's Quantitative Easing program in 2014, the massive Federal deficits and current strained political situation in Washington D.C., such position is analogous to a form of 'insurance' that the Bank is willing to incur at this time to continue to improve its financial condition. In addition, the Bank is resisting the temptation to reach for higher yields on assets with extended maturities until it is comfortable with the true direction of interest rates."

For more information regarding this release, or the Bank in general, you may contact James A. Salisbury, President and CEO, at 406-543-8700.

About Treasure State Bank

Treasure State Bank, a Montana chartered community bank, is headquartered in Missoula, Montana. The Bank was founded in January 2007. Treasure State Bank currently trades on the OTCBB under the ticker symbol "TRSU". Treasure State Bank serves businesses, professionals, non-profit organizations and individuals through customized banking services and products. For more information, please visit www.treasurestatebank.com.

CONTACT: James Salisbury, President & CEO or Anne Robinson, Chief Financial Officer Treasure State Bank 3660 Mullan Road, Missoula, MT 59808 (406) 543-8700 jsalisbury@treasurestatebank.com arobinson@treasurestatebank.comSource:Treasure State Bank