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Treasure State Bank Reports Third Quarter 2010 Operating Results

MISSOULA, Mont., Nov 12, 2010 (BUSINESS WIRE) -- Treasure State Bank ("the Bank") (OTCBB:TRSU), a Montana chartered community bank, today announced: The Bank had earnings before provision for loan loss and real estate owned charge-offs of $217,000 ($868,000 annualized) for the third quarter ended September 30, 2010, as compared to $62,000 ($248,000 annualized) for the same period last year and $152,000 ($608,000 annualized) for the quarter ended June 30, 2010. The Bank set aside $860,000 in additional provision for loan loss and real estate owned charge-offs for the quarter ended September 30, 2010, as compared to $136,000 for the same period last year and $869,000 for the quarter ended June 30, 2010. Therefore, as a result of these provisions and charge-offs, the Bank had a $643,000 net loss for the quarter ended September 30, 2010, as compared to a $74,000 net loss for the same quarter last year and a $717,000 net loss for the quarter ended June 30, 2010. On a year-to-date basis, the Bank had earnings before provision for loan loss and real estate owned charge-offs of $524,000 ($700,000 annualized) for the nine months ended September 30, 2010, as compared to $215,000 ($287,000 annualized) for the same period last year. The Bank set aside $1,929,000 in additional provision for loan loss and real estate owned charge-offs for the nine months ended September 30, 2010, as compared to $1,284,000 for the same period last year. Therefore, as a result of these provisions and charge-offs the Bank had a $1,405,000 net loss for the nine months ended September 30, 2010, as compared to a $1,069,000 net loss for the same period last year. Earnings, before non-cash expenses of depreciation and amortizations, loan loss provisions, real estate owned charge-offs and stock option expense, were $281,000 ($1.1MM annualized) for the quarter ended September 30, 2010, as compared to $142,000 ($568,000 annualized) for the same period last year and $215,000 ($860,000 annualized) for the quarter ended June 30, 2010. Tier 1 leverage capital was 9.55% for the quarter ended September 30, 2010, as compared to 10.10% for the quarter ended June 30, 2010, 10.09% at December 31, 2009 and 8.95% at September 30, 2009. Risk-based capital was 13.56% for the quarter ended September 30, 2010, as compared to 14.27% for the quarter ended June 30, 2010, 14.20% at December 31, 2009 and 11.70% at September 30, 2009. Book value per share was $5.41 as of September 30, 2010. Total assets decreased $2.9MM, or 3.2%, to $88.6MM at September 30, 2010, as compared to $91.5 MM at December 31, 2009, due to continued progress in the planned reduction of the Bank's total assets. Cost of funds declined 40.2% to 2.07% at the quarter ended September 30, 2010 from 3.46% for the quarter ended September 30, 2009. This compares to cost of funds of 2.34% for the quarter ended June 30, 2010 and 2.97% for the quarter ended December 31, 2009. The net interest margin (interest income less interest expense divided by average assets) for the quarter ended September 30, 2010 was 3.46% as compared to 3.07% for the quarter ended June 30, 2010, 3.03% for the quarter ended December 31, 2009 and 2.76% for the quarter ended September 30, 2009. Loan loss reserves to total loans were 3.00% as of September 30, 2010, as compared 3.23% at June 30, 2010 and 2.44% as of December 31, 2009. Total liquidity as of September 30, 2010 was 20.9%, and available liquidity was 17.0%. President and Chief Executive Officer Jim Salisbury stated "Asset quality continues to be a challenge in a weak Montana and national economy. The Bank continues to diligently address its non-performing assets, the amount of loans that are 90 or more days past due, on non-accrual status or in real estate owned. These non-performing assets decreased to $9.7 MM at September 30, 2010 as compared with $10.5 MM at June 30, 2010. These non-performing assets totaled $8.3 MM at March 31, 2010 and $6.3 MM at December 31, 2009. The Bank set aside $647,000 in additional loan loss reserves for the quarter ended September 30, 2010 to reflect the continued weakness in the non-performing assets. This has resulted in loan loss reserves of $1.9 MM, or 3.0% of gross loans. Cash earnings continue to exceed $1.0 MM annualized, and strong mortgage loan origination fees continue to help offset real estate owned expenses. Tier 1 capital decreased to 9.55% at September 30, 2010 from 10.10% at June 30, 2010 as a result of the net loss of $643,000 for the quarter. Liquidity remains strong with total liquidity of 20.9% and available liquidity of 17.0% as of September 30, 2010. The Bank has made very good progress in reducing its cost of funds. Cost of funds declined 40.2% to 2.07% for the quarter ended September 30, 2010 from 3.46% at the quarter ended September 30, 2009. Management is undertaking an intense review of troubled assets during this fourth quarter. The continued deterioration in the Western Montana economy, the receipt of updated appraisals, the continued volume of foreclosures and the inability to sell repossessed property near the asking price indicates that additional provision for loan losses will be necessary in the fourth quarter. This will put additional pressure on capital ratios.

However, once the additional provisions are incurred, the core earnings of the Bank discussed above should result in a return to profitability and increased capital." 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.

SOURCE: Treasure State Bank CONTACT: Treasure State Bank James A Salisbury, President & CEO, 406-543-8700 jsalisbury@treasurestatebank.com Copyright Business Wire 2010 -0- KEYWORD: United States

North America

Montana INDUSTRY KEYWORD: Professional Services

Banking

Finance SUBJECT CODE: Earnings