Treasure State Bank Reports Second Quarter 2013 Operating Results

MISSOULA, Mont., July 30, 2013 (GLOBE NEWSWIRE) -- Treasure State Bank ("the Bank") (OTCBB:TRSU), a Montana chartered community bank, today announced:

  • The Bank had a net profit of $415,000 for the quarter ended June 30, 2013, as compared to $50,000 for the quarter ended March 31, 2013 and $76,000 for the same quarter last year. This quarter's earnings include a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. Therefore, net operating profit for the quarter was $65,000.
  • 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 $172,000 ($688,000 annualized) for the quarter ended June 30, 2013, as compared to $151,000 ($604,000 annualized) for the quarter ended March 31, 2013 and $214,000 ($856,000 annualized) for the same quarter last year.
  • On a year-to-date basis, the Bank had an operating profit of $465,000, as compared to $118,000 for the same period last year. The year-to-date earnings include a $700,000 income tax benefit, which was partially offset by a $350,000 additional provision for OREO write down. Therefore, net operating profit on a year-to-date basis was $115,000.
  • Earnings, before non-cash expenses of depreciation and amortization, loan loss provisions, real estate owned write-downs and stock option expense were $323,000 ($646,000 annualized) for the six month period ended June 30, 2013, as compared to $391,000 ($782,000 annualized) 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 assets for the quarter ended June 30, 2013 was 0.39%, as compared to 0.30% for the quarter ended March 31, 2013 and 0.41% for the same quarter 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, 2013 was 3.90%, as compared to 3.19% for the quarter ended March 31, 2013 and 5.22% for the same quarter last year.
  • 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, 2013 was 0.35%, as compared to 0.32% for the same six month 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 six month period ended June 30, 2013 was 3.44%, as compared to 4.06% for the same six month period last year.
  • Tier 1 leverage capital was 9.67% as of June 30, 2013, as compared to 9.41% as of March 31, 2013 and 7.92% as of June 30, 2012. Total Risk-Based Capital was 13.36% as of June 30, 2013, as compared to 13.37% as of March 31, 2013 and 11.93% as of June 30, 2012.
  • Stockholder's Equity to assets at June 30, 2013 was 10.10% as compared to 9.16% at December 31, 2012.
  • Book value per share was $4.08 as of June 30, 2013, based on 1,635,821 shares outstanding.
  • Total assets decreased $300,000 to $66.4MM at June 30, 2013, as compared to $66.7MM at March 31, 2013.
  • Cost of funds at June 30, 2013 was 0.91%, as compared to 0.97% at March 31, 2013 and 1.19% at June 30, 2012.
  • The net interest margin (interest income less interest expense divided by average earning assets) decreased to 3.86% for the quarter ended June 30, 2013, as compared to 3.93% for the quarter ended March 31, 2013 and 3.30% for the quarter ended June 30, 2012.
  • Loan loss reserves to total loans were 3.12% ($1.5MM) at June 30, 2013, as compared to 3.95% at March 31, 2013 and 4.04% as of June 30, 2012.
  • Total liquidity as of June 30, 2013 was 18.5%, and available liquidity was 17.8%.
  • Non-performing assets decreased 10.5% for the quarter to $5.1MM at June 30, 2013, down from $5.7MM as of March 31, 2013. Year over year non-performing assets decreased 17.7% from $6.2MM at June 30, 2012.

President and Chief Executive Officer Jim Salisbury stated, "While the quarter just ended reflects a net profit of $415,000, the earnings include two unusual items. First, the Bank issued a special press release on May 1, 2013 announcing the release of Deferred Tax Assets in the amount of $700,000. This resulted in an increase in net income for the quarter just ended of an additional $700,000, which represents an income tax benefit resulting from a deferred tax asset valuation allowance reversal. The total amount of deferred tax asset valuation allowance is $2.6MM at December 31, 2012, but the Bank has concluded to release only $700,000 of the $2.6MM in order to be conservative and to be certain that future earnings will continue to justify the release of the remaining $1.9MM. The remaining $1.9MM is available to be recognized as an income tax benefit in future periods as additional taxable earnings are anticipated. The Bank has reported profitability for ten consecutive quarters, asset quality has improved, net interest margins remain strong, cost of funds are decreasing and the Bank believes that the allowance for loan loss reserve is adequately funded. This, along with a reasonable expectation of continued profitability has prompted management to determine that those tax assets would more likely than not be recovered through future taxable income and that maintaining the entire valuation allowance was no longer necessary. Second, the Bank incurred an additional $350,000 provision for OREO write down. The OREO is related to vacant repossessed lots in a prestigious resort. The lots have not sold for some time and the market for them remains weak. Another financial institution that also owns vacant lots in the subdivision recently reduced their sales price substantially, therefore forcing the Bank to adjust the carrying value of the lots due to the lack of reasonable market data for those properties.

The Bank continues to work diligently to address non-performing assets. During the quarter ended June 30, 2013, the Bank sold $141,000 of real estate owned with no new additions to real estate owned. Total non-performing assets, which include $1.8MM of repossessed assets, decreased $600,000, or 10.5%, during the quarter to $5.1MM as of June 30, 2013, as compared to $5.7MM as of March 31, 2013. Non-performing assets decreased $1.1MM, or 17.7%, from $6.2MM at June 30, 2012.

Gross loans were $48.0MM at June 30, 2013, which is unchanged from the prior quarter. The Bank continues to lend to qualified borrowers and is actively seeking qualified borrowers. During the quarter just ended, the Bank originated and refinanced $3.6MM in loans. Year to date the Bank has originated and refinanced $6.6MM in loans. With the improving economy in Missoula, the Bank has seen some existing loans payoff. However, in several cases the payoffs have enhanced the quality of the Bank's loan portfolio.

The Bank continues to work diligently to reduce its cost of funds. At June 30, 2013 the cost of funds was 0.91% as compared to 0.97% at March 31, 2013 and 1.19% at June 30, 2012.

Nearly eighteen 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 investment securities that the Bank owns have very short term maturities, which will not fluctuate significantly in market value should interest rates increase. A significant increase in interest rates would result in reduced loan fees earned on loans originated for sale to the secondary markets. These loan fees have been a significant source of income for the Bank, as well as for the banking industry."

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.

Safe Harbor Statement

This communication contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Treasure State Bank and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully, and the ability to complete before-mentioned transactions. The Bank undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

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