Jacksonville Bancorp Announces 2012 Results

JACKSONVILLE, Fla., March 26, 2013 /PRNewswire/ -- Jacksonville Bancorp, Inc. (the "Company") (Nasdaq: JAXB), holding company for The Jacksonville Bank (the "Bank"), reported a net loss for the year ended December 31, 2012 of $43.0 million, or $7.31 per basic and diluted common share, compared to the net loss of $24.1 million, or $4.09 per basic and diluted common share, for the year ended December 31, 2011.  

(Logo: http://photos.prnewswire.com/prnh/20020410/JAXBLOGO)

The net loss in 2012 was driven primarily by (i) an increase in the provision for loan losses, noncash goodwill impairment expense and OREO expenses, (ii) an increase in loan related expenses, (iii) a decrease in interest income on loans, and (iv) additional expenses related to 2012 capital raise activities and the asset sale completed late in the fourth quarter of 2012 (the "Asset Sale").  The decrease in net interest income when compared to the prior year was due to a decrease in interest earned on interest-earning assets, driven primarily by a decrease in average earning assets (in particular average loan balances), a decrease in the average yield on loans, and a decrease in interest income as a result of accretion recognized on acquired loans.

Interest income was $26.3 million for the year ended December 31, 2012, a decrease of $4.4 million when compared to $30.7 million in 2011.  Interest earned on loans was $24.2 million in 2012, compared to $28.8 million in 2011.  This decrease resulted from a decrease in the average loan portfolio balance to $447.1 million for the year ended December 31, 2012 from $492.2 million for the year ended December 31, 2011, primarily due to the accelerated disposition of substandard assets and the natural fluctuation of loan balances resulting from timing differences between loan payoffs and the origination of new loans throughout the year.  This decrease was also the result of a decrease in the average yield on loans to 5.41% in 2012 from 5.84% in 2011.  The decrease in yield was driven primarily by the following factors when compared to the prior year:

  • A decrease in accretion recognized on acquired loans of approximately $1.0 million;
  • A decrease in the weighted average loan yield for new loans of 63 basis points; and
  • Modifications to reduce existing loan rates in order to be competitive in the current low-rate market environment.

Interest expense decreased by $1.7 million to $5.3 million for the year ended December 31, 2012 from $7.0 million for the year ended December 31, 2011.  This was primarily due to a decrease in the average cost of interest-bearing liabilities to 1.15% for the year ended December 31, 2012, compared to 1.47% in 2011.  This decrease reflected the ongoing reduction in interest rates paid on interest-bearing liabilities (particularly on deposits) as a result of repricing activities in the current market environment coupled with a shift in the funding mix from interest-bearing to more noninterest-bearing deposits which further reduced overall funding costs.

Noninterest income remained relatively consistent year-over-year, with $1.5 million in service charges and other income for the years ended December 31, 2012 and 2011.

Noninterest expense decreased to $27.7 million for the year ended December 31, 2012, compared to $30.2 million for the year ended December 31, 2011.  The overall decrease was mainly due to noncash goodwill impairment expense of $3.1 million in 2012, compared to $11.2 million in 2011.  This decrease was offset by an increase in other real estate owned expense and other noninterest expenses primarily due to an increase in loan related expenses and nonrecurring expenses that resulted from the extended period of time from the inception of the 2012 capital raise activities and the related Asset Sale to their completion late in the fourth quarter of 2012.  In comparison, noninterest expense items related to general operating expenses remained relatively consistent year-over-year with slight increases in compensation, occupancy and equipment, telephone expense and director fees, offset by reductions in regulatory assessments, data processing, advertising and business development, and professional fees.

Income tax benefit for the year ended December 31, 2012 was $173 thousand, as compared to an income tax expense of $6.8 million in 2011.  The decrease in income tax expense in comparison to the prior year was mostly the result of recording a full valuation allowance on the Company's deferred tax asset as of December 31, 2011.  This was substantially due to the fact that it was more-likely-than-not that the benefit would not be realized in future periods due to Section 382 of the Internal Revenue Code.   The calculation for the income tax provision or benefit generally does not consider the tax effects of changes in other comprehensive income ("OCI"), which is a component of shareholders' equity on the balance sheet.  However, an exception is provided in certain circumstances, such as when there is a full valuation allowance against the net deferred tax assets, there is a loss from continuing operations and income in other components of the financial statements.  In such a case, income from other categories, such as changes in OCI, must be considered in determining a tax benefit to be allocated to the loss from continuing operations.  During the year ended December 31, 2012, this resulted in $173 thousand of income tax benefit allocated to continuing operations.

Total assets were $565.1 million as of December 31, 2012, compared to $561.4 million as of December 31, 2011.  The increase in total assets was influenced by a significant year-over-year increase in cash and cash equivalents and securities available-for-sale offset primarily by a reduction in net loans, other real estate owned, and a full impairment of the remaining balance of goodwill.  The increase in cash and cash equivalents to $72.1 million as of December 31, 2012 from $10.0 million as of December 31, 2011 was primarily due to federal funds sold in the amount of $57.5 million.  The large federal funds sold position was driven by the proceeds received from the 2012 capital raise activities and the Asset Sale completed late in the fourth quarter of 2012.  Net loans decreased by 16.0% to $377.8 million as of December 31, 2012, compared to $449.6 million as of December 31, 2011.  Other real estate owned decreased $1.0 million to $7.0 million as of December 31, 2012, compared to $8.0 million as of December 31, 2011.  The year-over-year reduction in net loans and other real estate owned was the direct result of the accelerated disposition of substandard assets, including the Asset Sale, whereby the Company sold $25.1 million of certain of the Bank's loans and other assets with a history of being past due.  The assets underlying the Asset Sale included OREO of $0.5 million and loans of $24.6 million

Total deposits of $490.0 million as of December 31, 2012 increased $16.1 million compared to total deposits of $473.9 million as of December 31, 2011.  The increase in total deposits during 2012 was driven primarily by an increase in time deposits of $5.1 million and noninterest-bearing demand deposits of $11.7 million, offset by a slight decrease in money market, NOW and savings deposits of $0.7 million.  The increase in noninterest-bearing demand deposits in relation to the decrease in interest-bearing deposits resulted in a reduction of overall funding costs.  During 2012, the Company utilized additional cash balances from increased deposits and run-off in the loan portfolio to fund additional purchasing activities for securities available-for-sale to maximize the yield on interest-earning assets in the current interest rate environment.

As of December 31, 2012, nonperforming assets were $29.7 million, or 5.26% of total assets, compared to $54.9 million, or 9.77% of total assets, as of December 31, 2011.  The year-over-year decrease in nonperforming assets was driven primarily by an increase in loan charge-offs, write-downs on OREO, the disposition of OREO via sale or substandard assets via short sales, and the disposition of substandard assets via the Asset Sale completed late in the fourth quarter of 2012.  This is consistent with the Company's overall strategy, which began in the second quarter of 2012, to accelerate the disposition of substandard assets.  As of December 31, 2012, nonperforming loans acquired in the merger with Atlantic BancGroup, Inc. were $12.2 million, or 41.1% of total nonperforming assets.

The following table presents information concerning nonperforming assets as of the last five quarters:


For the Period Ended

(Dollars in thousands)

December 31,
2012


September 30,
2012


June 30,
2012


March 31,
2012


December 31,
2011





















Nonperforming Assets




















Nonperforming loans

$

22,747



$

35,168



$

46,407



$

49,066



$

46,904






















Foreclosed assets, net


6,971




4,599




7,508




7,667




7,968


Total nonperforming assets


29,718




39,767




53,915




56,733




54,872






















Total nonperforming assets as




















  a percent of total assets


5.26

%



7.21

%



9.25

%



9.68

%



9.77

%

Nonperforming loans as a




















  percent of gross loans


5.71

%



8.05

%



10.24

%



10.69

%



10.13

%

Loans past due 30-89 days,




















  still accruing interest

$

4,622



$

11,372



$

4,628



$

10,917



$

7,724























Total loans past due still accruing interest decreased $6.7 million to $4.7 million as of December 31, 2012 from $11.4 million as of September 30, 2012.  This decrease was driven primarily by management's strategy to accelerate the disposition of substandard assets, including the previously discussed Asset Sale completed late in the fourth quarter of 2012.  Nonperforming loans decreased $12.5 million to $22.7 million as of December 31, 2012 from $35.2 million as of September 30, 2012.

The allowance for loan losses was 5.07% of total loans as of December 31, 2012, compared to 2.82% as of December 31, 2011.  Provision for loan loss expense was $38.0 million for the year ended December 31, 2012, compared to $12.4 million in 2011.  The Company recorded net charge-offs of $30.8 million for the year ended December 31, 2012, compared to $12.4 million in 2011.  The high level of charge-offs for the year ended December 31, 2012 was primarily due to the Company's disposition of distressed assets on an individual customer basis in addition to increased charge-offs resulting from the Asset Sale completed late in the fourth quarter of 2012.  This fit with the Company's strategy to accelerate the disposition of substandard assets in 2012 as discussed further below. 

During the second quarter of 2012, the Company adopted a new overall strategy to accelerate the disposition of substandard assets on an individual customer basis.  Certain current appraised values were discounted to estimated fair value based on current market data such as recent sales of similar properties, discussions with potential buyers and negotiations with existing customers.  This strategy materially impacted the Company's earnings for the year ended December 31, 2012 through the increased provision for loan losses.  Looking forward, the Company intends to continue reducing problem assets in conjunction with the continued fine tuning of the current credit processes.  In addition, the Company is working to reposition its loan and deposit portfolio mix to better align with our targeted market segment of professional services, wholesalers, distributors and other service industries.  Our balance sheet mix will be diversified as a result of the capital received late in 2012.  This excess capital will be deployed into short-term investments to maximize earnings while the desired loan growth is achieved. 

In addition, during the fourth quarter of 2012, the Company completed a $50.0 million capital raise through the private placement of 50,000 shares of the Company's Mandatorily Convertible, Noncumulative, Nonvoting, Perpetual Preferred Stock, Series A ("Series A Preferred Stock"), at a purchase price of $1,000 per share.  Consideration in the private placement included cash, the one-for-one exchange of Series B preferred stock sold in the $5.0 million bridge financing completed during the third quarter of 2012 and $1.8 million in the cancellation of outstanding debt under the Company's revolving loan agreements held by certain purchasers in the private placement and/or their related interests.  Net proceeds from the issuance of preferred stock in the amount of $45.1 million were used for general operating expenses, mainly for the subsidiary bank, to improve capital adequacy ratios and will be used to supplement the Company's business strategy going forward.  On February 19, 2013, after receiving requisite shareholder approvals, all issued and outstanding shares of Series A Preferred Stock automatically converted into an aggregate of 47,640,000 shares of common stock and 52,360,000 shares of the Company's newly authorized nonvoting common stock.  Book value and tangible book value per common share as of December 31, 2012 were $2.55 and $2.34, respectively.  Book value and tangible book value per common share as of December 31, 2012, adjusted for the conversion, were $0.32 and $0.31, respectively.  Please refer to the Company's Non-GAAP Reconciliations for additional information related to these non-GAAP financial measures.

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 $565.1 million in assets and eight full-service branches in Jacksonville, 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 Jacksonville, Florida.  More information is available at its website at www.jaxbank.com.

This press release contains non-GAAP financial disclosures that are not in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP").  The Company uses certain non-GAAP financial measures to provide meaningful, supplemental information regarding its operational results and to enhance investor's overall understanding of the Company's financial performance.  The limitations associated with these non-GAAP financial measures include the risk that persons might disagree as to the appropriateness of items comprising these measures and that different companies might calculate these measures differently.  In addition, these disclosures should not be considered an alternative to the Company's U.S. GAAP results.  Please refer to the table at the end of this release for a reconciliation of the non-GAAP financial measures to the most directly comparable U.S. GAAP financial measures.

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, 2012, which are incorporated herein by reference.


 

JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands, except share and per share data)

















For the Three Months Ended


December 31,


September 30,


June 30,


March 31,


December 31,


2012


2012


2012


2012


2011

Consolidated Earnings Summary















Total interest income

$

6,466


$

6,641


$

6,474


$

6,671


$

7,145

Total interest expense


1,286



1,238



1,376



1,356



1,591

Net interest income


5,180



5,403



5,098



5,315



5,554

Provision for loan losses


20,348



5,990



11,584



72



7,617

Net interest income (loss) after provision for loan losses


(15,168)



(587)



(6,486)



5,243



(2,063)

Total noninterest income


420



356



290



437



355

Total noninterest expense


7,118



10,560



5,656



4,392



16,677

Income (loss) before income tax


(21,866)



(10,791)



(11,852)



1,288



(18,385)

Income tax expense (benefit)


(37)



(106)



(30)



-



8,458

Net income (loss)

$

(21,829)


$

(10,685)


$

(11,822)


$

1,288


$

(26,843)

















For the Three Months Ended


December 31,


September 30,


June 30,


March 31,


December 31,


2012


2012


2012


2012


2011

Summary Average Consolidated Balance Sheet















Loans, gross

$

425,813


$

447,885


$

455,604


$

459,166


$

474,612

Securities


88,931



91,887



82,648



70,427



65,380

Other earning assets


16,353



3,802



25,598



8,741



5,698

Total earning assets


531,097



543,574



563,850



538,334



545,690

Other assets


22,144



20,457



30,144



30,184



47,844

Total assets

$

553,241


$

564,031


$

593,994


$

568,518


$

593,534
















Interest-bearing liabilities

$

442,426


$

453,260


$

471,622


$

454,613


$

451,804

Other liabilities


98,198



92,012



91,733



84,400



85,936

Shareholders' equity


12,617



18,759



30,639



29,505



55,794

Total liabilities and shareholders' equity

$

553,241


$

564,031


$

593,994


$

568,518


$

593,534




































For the Three Months Ended  




December 31,


September 30,


June 30,


March 31,


December 31,




2012


2012


2012


2012


2011

Per Share Data

















Basic earnings (loss) per share



$

(3.71)


$

(1.81)


$

(2.01)


$

0.22


$

(4.56)

Diluted earnings (loss) per share



$

(3.71)


$

(1.81)


$

(2.01)


$

0.22


$

(4.56)

Basic weighted average shares  outstanding




5,890,880



5,890,880



5,890,136



5,889,822



5,889,822

Diluted weighted average shares outstanding




5,890,880



5,890,880



5,890,136



5,890,689



5,889,822

Total shares outstanding at end of period




5,890,880



5,890,880



5,890,880



5,889,822



5,889,822

Closing market price per share



$

0.80


$

0.92


$

1.51


$

3.53


$

3.15

 

JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands, except share and per share data)

















For the Three Months Ended


December 31,


September 30,


June 30,


March 31,


December 31,


2012


2012


2012


2012


2011

Selected ratios















Return on average assets


(15.70)%



(7.54)%



(8.00)%



0.91%



(17.94)%

Return on average equity


(688.29)%



(226.60)%



(155.19)%



17.56%



(190.87)%

Average equity to average assets


2.28%



3.33%



5.16%



5.19%



9.40%

Tangible common equity to tangible  assets


2.44%



2.22%



2.48%



4.48%



4.39%

Interest rate spread


3.68%



3.77%



3.44%



3.78%



3.80%

Net interest margin


3.88%



3.95%



3.64%



3.97%



4.04%

Allowance for loan losses as a percentage of total loans


5.07%



4.14%



4.56%



2.85%



2.82%

Allowance for loan losses as a percentage of NPL's


88.79%



51.47%



44.49%



22.98%



27.77%

Ratio of net charge-offs as a  percentage of average loans


17.05%



7.58%



3.56%



0.01%



6.51%

Efficiency ratio


127.11%



183.37%



104.97%



76.36%



282.23%

















As of


December 31,


September 30,


June 30,


March 31,


December 31,


2012


2012


2012


2012


2011

Summary Consolidated Balance Sheet















Cash and cash equivalents

$

72,079


$

13,661


$

25,703


$

23,136


$

9,955

Securities


83,985



88,838



90,583



78,768



63,140

Loans, gross


398,031



436,754



453,263



459,121



462,607

Allowance for loan losses


(20,198)



(18,100)



(20,647)



(13,082)



(13,024)

Loans, net


377,833



418,654



432,616



446,039



449,583

Goodwill


-



-



3,137



3,137



3,137

Other intangible assets, net


1,260



1,380



1,511



1,642



1,774

All other assets


29,900



29,018



29,407



33,111



33,836

Total assets

$

565,057


$

551,551


$

582,957


$

585,833


$

561,425
















Deposit accounts

$

490,021


$

493,205


$

521,549


$

513,513


$

473,907

All other liabilities


41,460



44,767



42,430



41,518



58,174

Shareholders' equity


33,576



13,579



18,978



30,802



29,344

Total liabilities and shareholders' equity

$

565,057


$

551,551


$

582,957


$

585,833


$

561,425























 


JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands, except share and per share data)








For the Year Ended


December 31,


December 31,


2012


2011

Consolidated Earnings Summary






Total interest income

$

26,252


$

30,744

Total interest expense


5,256



7,016

Net interest income


20,996



23,728

Provision for loan losses


37,994



12,392

Net interest income (loss) after provision for loan losses


(16,998)



11,336

Total noninterest income


1,503



1,531

Total noninterest expense


27,726



30,152

Income (loss) before income tax


(43,221)



(17,285)

Income tax expense (benefit)


(173)



6,774

Net income (loss)

$

(43,048)


$

(24,059)








For the Year Ended


December 31,


December 31,


2012


2011

Summary Average Consolidated Balance Sheet






Loans, gross

$

447,061


$

492,220

Securities


83,511



65,904

Other earning assets


13,604



7,698

Total earning assets


544,176



565,822

Other assets


25,708



46,965

Total assets

$

569,884


$

612,787







Interest-bearing liabilities

$

455,282


$

476,553

Other liabilities


91,761



82,202

Shareholders' equity


22,841



54,032

Total liabilities and shareholders' equity

$

569,884


$

612,787








For the Year Ended


December 31,


December 31,


2012


2011

Per Share Data






Basic earnings (loss) per share

$

(7.31)


$

(4.09)

Diluted earnings (loss) per share

$

(7.31)


$

(4.09)

Basic weighted average shares  outstanding


5,890,432



5,889,439

Diluted weighted average shares outstanding


5,890,432



5,889,439

Total shares outstanding at end of period


5,890,880



5,889,822

Closing market price per share

$

0.80


$

3.15

 

JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands, except share and per share data)








For the Year Ended


December 31,


December 31,


2012


2011

Selected ratios






Return on average assets


(7.55)%



(3.93)%

Return on average equity


(188.47)%



(44.53)%

Average equity to average assets


4.01%



8.82%

Tangible common equity to tangible  assets


2.44%



4.39%

Interest rate spread


3.67%



3.96%

Net interest margin


3.86%



4.19%

Allowance for loan losses as a percentage of total loans


5.07%



2.82%

Allowance for loan losses as a percentage of NPL's


88.79%



27.77%

Ratio of net charge-offs as a  percentage of average loans


6.89%



2.53%

Efficiency ratio


123.23%



119.37%








As of


December 31,


December 31,


2012


2011

Summary Consolidated Balance Sheet






Cash and cash equivalents

$

72,079


$

9,955

Securities


83,985



63,140

Loans, gross


398,031



462,607

Allowance for loan losses


(20,198)



(13,024)

Loans, net


377,833



449,583

Goodwill


-



3,137

Other intangible assets, net


1,260



1,774

All other assets


29,900



33,836

Total assets

$

565,057


$

561,425







Deposit accounts

$

490,021


$

473,907

All other liabilities


41,460



58,174

Shareholders' equity


33,576



29,344

Total liabilities and shareholders' equity

$

565,057


$

561,425

 

JACKSONVILLE BANCORP, INC.

Non-GAAP Reconciliations

(Unaudited)

(Dollars in thousands, except share and per share data)







(Dollars in thousands, except share

and per share amounts)

December 31, 2012

(as reported)


Conversion Adjustments


December 31, 2012

(as adjusted)










Book Value Per Common Share









Shareholders' equity(1)

$

33,576


$

18,536


$

33,576


Less: Preferred stock(2)


18,536



(18,536)



-

Book value

$

15,040



-


$

33,576


Less: Goodwill and other intangible assets


1,260



-



1,260

Tangible book value

$

13,780


$

-


$

32,316










Shares outstanding


5,890,880



100,000,000



105,890,880










Book value per common share(3)


2.55






0.32

Tangible book value per common share(4)


2.34






0.31

                                                                      

(1)    

Assumes the full conversion of the Series A Preferred Stock into 100,000,000 shares of common stock and nonvoting common stock as of December 31, 2012 resulting in an additional $50.0 million in common equity and a non-cash implied dividend recognized as a reduction of retained earnings in conjunction with the discount on the Series A Preferred Stock beneficial conversion feature of $31.5 million.

(2)   

Assumes no shares of preferred stock outstanding following the Conversion.

(3)   

Calculated as book value divided by shares outstanding, where book value is calculated as shareholders' equity less preferred stock equity (excluding proceeds allocated to common equity as a result of the beneficial conversion feature) as of the balance sheet date.

(4)    

Calculated as tangible book value divided by shares outstanding, where tangible book value is calculated as book value less goodwill and other intangible assets as of the balance sheet date.

 

SOURCE Jacksonville Bancorp, Inc.



RELATED LINKS
http://www.jaxbank.com

More by this Source


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

 

PR Newswire Membership

Fill out a PR Newswire membership form or contact us at (888) 776-0942.

Learn about PR Newswire services

Request more information about PR Newswire products and services or call us at (888) 776-0942.