2014

Jacksonville Bancorp Announces Quarterly Results

JACKSONVILLE, Fla., Aug. 3, 2012 /PRNewswire/ -- Jacksonville Bancorp, Inc. (the "Company") (NASDAQ: JAXB), holding company for The Jacksonville Bank (the "Bank"), reported a net loss for the three months ended June 30, 2012 of $11.8 million, or $2.01 per basic and diluted common share, compared to the second quarter 2011 net income of $1.0 million, or $.18 per basic and diluted common share.  The net loss was $10.5 million, or $1.79 per basic and diluted common share, for the six months ended June 30, 2012, compared to net income of $1.5 million, or $.25 per basic and diluted common share, for the same period in 2011.  Book value and tangible book value per common share at June 30, 2012 were $3.22 and $2.43, respectively.

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

Total assets were $583.0 million at June 30, 2012, compared to $615.3 million at June 30, 2011.  Net loans decreased by 8.6% to $432.6 million as of June 30, 2012, compared to $473.4 million as of June 30, 2011.  Total deposits remained relatively flat at $521.5 million as of June 30, 2012, compared to $521.2 million as of June 30, 2011.  Total deposits as of June 30, 2012 increased $47.6 million from December 31, 2011 driven primarily by an increase in time deposits of $28.4 million, noninterest-bearing demand deposits of $10.5 million and money market, NOW and savings deposits of $8.7 million.

As of June 30, 2012, nonperforming assets were $54.0 million, or 9.25% of total assets, compared to $42.7 million, or 6.94% of total assets a year ago.  The increase in nonperforming assets from the second quarter of 2011 to the second quarter of 2012 is primarily a result of the ongoing challenging economic environment and the lagging recovery in the market in which the Company operates.  As of June 30, 2012, nonperforming assets acquired in the merger with Atlantic BancGroup, Inc. ("ABI") were $12.0 million, or 22.2% of total nonperforming assets.

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

(dollars in thousands)

For the period ended



June

30,

2012


March

31,

2012


December

31,

2011


September

30,

2011


June

30,

2011














Nonperforming Assets












Nonperforming loans

$

46,407

$

49,066

$

46,904

$

51,639

$

39,542














Total nonperforming loans


46,407


49,066


46,904


51,639


39,542


Foreclosed assets, net


7,508


7,667


7,968


4,314


3,172


Total nonperforming assets


53,915


56,733


54,872


55,953


42,714














Nonperforming loans and foreclosed












  assets as a percent of total assets


9.25

%

9.68

%

9.77

%

9.20

%

6.94

%

Nonperforming loans as a percent of












  gross loans


10.24

%

10.69

%

10.13

%

10.78

%

8.15

%

Loans past due 30-89 days, still












  accruing interest

$

4,628

$

10,917

$

7,724

$

9,270

$

12,883


 

The decrease in loans past due 30-89 days in the current quarter, still accruing interest, was driven by accelerated collection efforts by the Company as well as a migration of past due loans to nonaccrual.  Nonperforming loans decreased $2.7 million from $49.1 million for the three months ended March 31, 2012 to $46.4 million for the three months ended June 30, 2012.

The allowance for loan losses was 4.56% of total loans at June 30, 2012, compared to 2.47% for the comparable period in 2011 and 2.82% at December 31, 2011.  Provision for loan loss expense was $11.6 million and $11.7 million for the three- and six-month periods ended June 30, 2012, respectively, compared to $1.1 million and $3.0 million for the comparable periods in 2011.  The Company has recorded net charge-offs of $4 million for both the three- and six-month periods ended June 30, 2012, respectively, compared to $447 thousand and $4.1 million for the comparable periods in 2011.  The high level of charge-offs for the six months ended June 30, 2012 is due primarily to the timing of recording charge-offs related to the Company's disposition of distressed assets on an individual customer basis.  This fits with the Company's current overall strategy to accelerate the disposition of substandard assets 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.  These negotiations have materially impacted the Company's earnings for the three- and six-month periods ended June 30, 2012 through the increased provision for loan losses.  The Company expects to continue this new strategy for the foreseeable future.  In addition, the Company has executed a financial advisory agreement with an investment banking firm (the "Firm").  Under the agreement, the Firm has agreed to work with Company management to assist in raising capital as well as advising the Company on reducing classified assets. 

On June 18, 2012, Price W. Schwenck retired as the President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank.  On that same date, we appointed Stephen C. Green as President and Chief Executive Officer of the Company and Chief Executive Officer of the Bank subject to regulatory approval.  On May 14, 2012, Margaret A. Incandela was appointed as Executive Vice President and Chief Credit Officer of the Company and the Bank.  Subsequently, on June 14, 2012, she was also appointed as Chief Operating Officer of the Company and the Bank subject to applicable regulatory approval.  We have offered each employment contracts with equity awards subject to such regulatory approvals, as well as shareholder approvals. 

Net loss for the three- and six-month periods ended June 30, 2012 was $11.8 million and $10.5 million, compared to a net income of $1.0 million and $1.5 million, respectively, during the comparable periods in 2011.  The decrease in net income was driven primarily by the increase in provision for loan losses, OREO expenses and decreased net interest income.  The decreased net interest income from the previous year was due to a decrease in average earning assets, primarily driven by a reduction in loan balances and the yield earned on these assets.

Interest income decreased $1.6 million during the three-month period ended June 30, 2012 when compared to the same period in the prior year. This decrease was driven by a decrease in average earning assets, in particular loan balances which declined by $38.6 million when compared to the same period in the prior year. This was further exacerbated by a decrease in the loan yield to 5.25% for the three-month period ended June 30, 2012 from the 6.16% recognized during the three-month period ended June 30, 2011. The decrease in the loan yield was driven by the following factors when compared to the same period in the prior year:

  • Decrease in accretion recognized on acquired loans of approximately $647 thousand;
  • Increase in loans on nonaccrual of $6.9 million;
  • Decrease in the weighted-average loan yield for new loans of 100 basis points; and
  • Modifications to reduce existing loan rates to be competitive in the current low-rate market environment.

Interest income decreased $2.7 million during the six-month period ended June 30, 2012 when compared to the same period in the prior year. This decrease was driven by a decrease in average earning assets, in particular loan balances which declined by $47.9 million when compared to the same period in the prior year. This was further exacerbated by a decrease in the loan yield to 5.33% for the six-month period ended June 30, 2012 from the 5.92% recognized during the six months ended June 30, 2011. The decrease in the loan yield was driven by the following factors when compared to the same period in the prior year:

  • Decrease in accretion recognized on acquired loans of approximately $800 thousand;
  • Increase in loans on nonaccrual of $6.9 million;
  • Decrease in the weighted-average loan yield for new loans of 85 basis points; and
  • Modifications to reduce existing loan rates to be competitive in the current low-rate market environment.

Interest expense decreased by $444 thousand and $1.0 million during the three- and six-month periods ended June 30, 2012, respectively, when compared to the same periods in the prior year.  This was partially due to a decrease in the average cost of interest-bearing liabilities to 1.17% and 1.19% for the three-month and six-month periods ended June 30, 2012, respectively, compared to 1.52% and 1.51% for the same periods in the prior year.  This decrease reflected the ongoing reduction in interest rates paid on deposits as a result of the re-pricing of deposits in the current market environment as well as a shift in the funding mix from interest-bearing to more non-interest-bearing deposits.

Noninterest income for the three- and six-month periods ended June 30, 2012, respectively, decreased to $290 thousand and $727 thousand when compared to $404 thousand and $800 thousand in the comparable periods in the prior year.  The decrease for the three-month period ended June 30, 2012, compared to the same period in the prior year, was driven by a $23 thousand decrease in service charges on deposit accounts as well as a $57 thousand decrease for realized gain on securities.  The decrease for the six-month period ended June 30, 2012, compared to the same period in the prior year, was driven primarily by a $56 thousand decrease in service charges on deposit accounts as well as a $57 thousand decrease for realized gains on securities, offset partially by a $70 thousand fee received related to a loan pre-payment during the first half of 2012.

Noninterest expense increased to $5.7 million and $10.0 million, respectively, for the three- and six-month periods ended June 30, 2012, compared to $4.7 million and $8.9 million, respectively, during the same periods in 2011.  Increases to compensation, advertising and OREO expenses were offset by reductions in data processing, regulatory assessments and merger-related costs.

The income tax benefit for the six months ended June 30, 2012 was $30 thousand compared to $465 thousand for the same period in 2011.  The Company recorded a full valuation allowance against its deferred taxes at 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 six-month period ended June 30, 2012, this resulted in $30 thousand of income tax benefit allocated to continuing operations.   

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 $583 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.

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 raise capital; 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, 2011 which are incorporated herein by reference.

 

JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands except per share data)















For the three months ended




June

30,

2012


March

31,

2012


December

31,

2011


September

30,

2011


June

30,

2011

Consolidated Earnings Summary











Total interest income

$

6,474

$

6,671

$

7,145

$

7,754

$

8,105

Total interest expense


1,376


1,356


1,591


1,741


1,820

Net interest income


5,098


5,315


5,554


6,013


6,285

Provision for loan losses


11,584


72


7,617


1,737


1,109

Net interest income (loss) after provision for loan losses


(6,486)


5,243


(2,063)


4,276


5,176

Noninterest income


290


437


355


376


404

Noninterest expense


5,656


4,392


16,677


4,574


4,651

Income (loss) before income tax


(11,852)


1,288


(18,385)


78


929

Income tax expense (benefit)


(30)


-


8,458


(1,219)


(119)

Net income (loss)

$

(11,822)

$

1,288

$

(26,843)

$

1,297

$

1,048

Summary Average Consolidated Balance Sheet











Loans, gross

$

455,604

$

459,166

$

474,612

$

484,122

$

494,217

Securities



82,648


70,427


65,380


66,400


66,778

Other earning assets


25,598


8,741


5,698


14,157


5,518

Total earning assets


563,850


538,334


545,690


564,679


566,513

Other assets


30,144


30,184


47,844


45,931


46,731

Total assets


$

593,994

$

568,518

$

593,534

$

610,610

$

613,244

Interest-bearing liabilities

$

471,622

$

454,613

$

451,804

$

473,524

$

479,491

Other liabilities


91,733


84,400


85,936


82,305


80,543

Shareholders' equity


30,639


29,505


55,794


54,781


53,210

Total liabilities and shareholders' equity

$

593,994

$

568,518

$

593,534

$

610,610

$

613,244























Per Share Data











Basic earnings (loss) per share

$

(2.01)

$

0.22

$

(4.56)

$

0.22

$

0.18

Diluted earnings (loss) per share

$

(2.01)

$

0.22

$

(4.56)

$

0.22

$

0.18

Basic weighted average shares  outstanding


5,890,136


5,889,822


5,889,822


5,889,822


5,889,288

Diluted weighted average shares outstanding


5,890,136


5,890,689


5,889,822


5,890,553


5,891,030

Book value per basic share at end of period

$

3.22

$

5.23

$

4.98

$

9.52

$

9.27

Tangible book value per basic share at end of period

$

2.43

$

4.42

$

4.15

$

6.76

$

6.50

Total shares outstanding at end of period


5,890,880


5,889,822


5,889,822


5,889,822


5,889,822

Closing market price per share

$

1.51

$

3.53

$

3.15

$

4.89

$

6.59

























Selected ratios












Return on average assets



-8.00%


0.91%


-17.94%


0.84%


0.69%

Return on average equity



-155.19%


17.56%


-190.87%


9.39%


7.90%

Average equity to average assets



5.16%


5.19%


9.40%


8.97%


8.68%

Tangible common equity to tangible  assets



2.48%


4.48%


4.39%


6.73%


6.39%

Interest rate spread



3.44%


3.78%


3.80%


3.99%


4.22%

Net interest margin



3.64%


3.97%


4.04%


4.22%


4.45%

Allowance for loan losses as a percentage of total loans


4.56%


2.85%


2.82%


2.75%


2.47%

Allowance for loan losses as a percentage of NPL's



44.49%


22.98%


27.77%


25.56%


30.33%

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

3.56%


0.01%


6.51%


0.44%


0.36%

Efficiency ratio



104.97%


76.36%


282.23%


71.59%


69.53%

























Summary Consolidated Balance Sheet


June

30,

2012


March

31,

2012


December

31,

2011


September

30,

2011


June

30,

2011













Cash and cash equivalents


$

25,703

$

23,136

$

9,955

$

22,972

$

24,313

Securities



90,583


78,768


66,025


63,892


63,796

Loans, gross



453,263


459,121


462,607


479,083


485,442

Allowance for loan losses



(20,647)


(13,082)


(13,024)


(13,197)


(11,993)

Loans, net



432,616


446,039


449,583


465,886


473,449

Goodwill



3,137


3,137


3,137


14,326


14,210

Other intangible assets, net



1,511


1,642


1,774


1,916


2,069

All other assets



29,407


33,111


30,951


38,952


37,427

Total assets


$

582,957

$

585,833

$

561,425

$

607,944

$

615,264













Deposit accounts


$

521,549

$

513,513

$

473,907

$

511,754

$

521,233

All other liabilities



42,430


41,518


58,174


40,126


39,456

Shareholders' equity



18,978


30,802


29,344


56,064


54,575

Total liabilities and shareholders'












   equity


$

582,957

$

585,833

$

561,425

$

607,944

$

615,264

 

JACKSONVILLE BANCORP, INC.

(Unaudited)

(Dollars in thousands except per share data)









Six Months Ended



June 30, 2012



June 30, 2011


Consolidated Earnings Summary







Total interest income

$

13,145


$

15,845


Total interest expense


2,732



3,684


Net interest income


10,413



12,161


Provision for loan losses


11,656



3,038


Net interest income (loss) after provision for loan losses


(1,243)



9,123


Noninterest income


727



800


Noninterest expense


10,048



8,901


Income (loss) before income tax


(10,564)



1,022


Income tax benefit


(30)



(465)


Net (loss) income

$

(10,534)


$

1,487









Summary Average Consolidated Balance Sheet







Loans, gross

$

457,385


$

505,286


Securities


76,537



65,918


Other earning assets


17,170



5,430


Total earning assets


551,092



576,634


Other assets


30,164



46,343


Total assets

$

581,256


$

622,977









Interest-bearing liabilities

$

463,118


$

492,255


Other liabilities


88,066



77,967


Shareholders' equity


30,072



52,755


Total liabilities and shareholders' equity

$

581,256


$

622,977









Per Share Data







Basic earnings (loss) per share

$

(1.79)


$

0.25


Diluted earnings (loss) per share

$

(1.79)


$

0.25


Basic weighted average shares outstanding


5,889,979



5,889,050


Diluted weighted average shares outstanding


5,889,979



5,890,584


Book value per basic share at end of period

$

3.22


$

9.27


Tangible book value per basic share at end of period

$

2.43


$

6.50


Total shares outstanding at end of period


5,890,880



5,889,822


Closing market price per share

$

1.51


$

6.59









Selected ratios







Return on average assets


(3.64)

%


0.48

%

Return on average equity


(70.44)

%


5.68

%

Average equity to average assets


5.17

%


8.47

%

Tangible common equity to tangible assets


2.48

%


6.39

%

Interest rate spread


3.61

%


4.03

%

Net interest margin


3.80

%


4.25

%

Allowance for loan losses as a percentage of total loans


4.56

%


2.47

%

Allowance for loan losses as a percentage of NPL's


44.49

%


30.33

%

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


1.77

%


1.64

%

Efficiency ratio


90.20

%


68.68

%










 June 30, 



 June 30, 




2012



2011


Summary Consolidated Balance Sheet                             














Cash and cash equivalents

$

25,703


$

24,313


Securities


90,583



63,796


Loans, gross


453,263



485,442


Allowance for loan losses


(20,647)



(11,993)


Loans, net


432,616



473,449


Goodwill


3,137



14,210


Other intangible assets, net


1,511



2,069


All other assets


29,407



37,427


Total assets

$

582,957


$

615,264









Deposit accounts

$

521,549


$

521,233


All other liabilities


42,430



39,456


Shareholders' equity


18,978



54,575


Total liabilities and shareholders' equity

$

582,957


$

615,264


 

SOURCE Jacksonville Bancorp, Inc.



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