American Perspective Bank Announces Third Quarter 2010 Financial Results

Oct 27, 2010, 16:15 ET from American Perspective Bank

SAN LUIS OBISPO, Calif., Oct. 27 /PRNewswire-FirstCall/ -- American Perspective Bank (OTC Bulletin Board: APBA) (the "Bank") today announced third quarter and year to date financial results through September 30, 2010.  Net income during the third quarter of 2010 was $24 thousand, or $0.01 diluted earnings per share.  The Bank reported a loss of $2.2 million during the third quarter of 2009, equivalent to $(0.52) per share, primarily resulting from a $2.6 million provision for loan losses.  Net income during the second quarter of 2010 (the immediately preceding quarter) was $142 thousand, equivalent to $0.03 diluted earnings per share.  Net income for the first nine months of 2010 was $313 thousand, or $0.07 diluted earnings per share.  This compares to a loss of $1.9 million during the first nine months of 2009, equivalent to $(0.46) per share.

The Bank reported record levels of total assets and deposits as of September 30, 2010.  Total assets rose from $203.0 million at December 31, 2009 to $217.9 million at September 30, 2010, supported by ongoing inflows of deposits.  Total deposits increased from $152.3 million at December 31, 2009 to $171.8 million at September 30, 2010, with the rise concentrated in money market accounts.  The $8.0 million in deposit growth during the third quarter of 2010 was supported by the opening of the Santa Maria branch on July 21, 2010.

At September 30, 2010, the Bank's:  (i) Tier One Leverage regulatory capital ratio was 18.24%; (ii) Tier One Risk-Based regulatory capital ratio was 24.01%; and (iii) Total Risk-Based regulatory capital ratio was 25.27%.  All of these ratios were significantly in excess of the levels required to be categorized in the highest regulatory capital classification of "well capitalized".  The Bank's capital ratio profile continues to be one of the strongest for banks headquartered in San Luis Obispo and Santa Barbara counties.

Cash and cash equivalents increased from $4.9 million at December 31, 2009 to $5.5 million at September 30, 2010.  In recent periods, the Bank has worked to minimize its excess cash and cash equivalents in light of the very low yields available for such assets in the current capital markets environment.

Total securities available for sale decreased from $56.0 million at December 31, 2009 to $54.6 million at September 30, 2010.  During the second and third quarters of 2010, the Bank sold mortgage backed securities and purchased variable rate collateralized mortgage obligations in conjunction with its interest rate risk management program.  In light of the current status of the capital markets, the Bank determined to reallocate asset duration from securities to loans.  The mortgage backed security sales generated aggregate gains on sale of $329 thousand during the third quarter of 2010 and $417 thousand for September 30, 2010 year to date.  The combination of the sales plus monthly principal payments resulted in mortgage backed securities declining from $51.2 million at December 31, 2009 to $22.4 million at September 30, 2010.  In contrast, collateralized mortgage obligations increased from $4.8 million at December 31, 2009 to $32.2 million at September 30, 2010.  The Bank's portfolio of collateralized mortgage obligations at September 30, 2010 was primarily comprised of floating rate tranches that reprice monthly based upon a margin over the 1 month LIBOR index.  All of the Bank's securities at September 30, 2010 were AAA rated government agency issued securities.  The fair value of the Bank's $54.6 million in securities at September 30, 2010 exceeded historical cost by $701 thousand.

Net loans increased from $137.4 million at December 31, 2009 to $147.9 million at September 30, 2010.  Increased balances were achieved across all segments of the loan portfolio other than construction, land, and farm real estate loans.  The Bank has not emphasized land and construction lending in recent periods in light of the amount of existing real estate inventory relative to sales and leasing demand; and in recognition of the current relationship between the sales prices of existing inventory relative to the costs of development of new real estate projects in various markets.  The Bank had a single farm real estate loan outstanding at December 31, 2009 that paid off in full during 2010.  At both December 31, 2009 and September 30, 2010, the Bank had no residential, closed-end mortgages on its balance sheet.

While gross loans held for investment were almost constant from June 30, 2010 to September 30, 2010, the Bank originated $9.8 million in new credit commitments during the third quarter of 2010, with a concentration in commercial and industrial business loans.  These new business relationships, along with seasonal factors, fostered the $4.6 million increase in non-interest bearing demand deposits generated during the third quarter of 2010.  The Bank concluded the third quarter of 2010 with a historically strong pipeline of potential new loans, including an increased number of loans eligible for programs under the U.S. Small Business Administration ("SBA").

Commenting on the third quarter lending activity and the loan pipeline at September 30, 2010, Thomas J. Beene, the Bank's President and Chief Executive Officer, stated:  "In conjunction with the opening of the Santa Maria branch and the increased advertising and marketing performed by the Bank during the third quarter of 2010, a greater portion of the Bank's primary market area has become more familiar with the Bank, its strong capital position, and its capacity to lend to qualified borrowers.  American Perspective Bank's credit profile, liquidity, and highly customizable delivery platform well position us to continue attracting additional professionals (e.g. physicians, accountants, attorneys) and local businesses.  In addition, our increasing volume of SBA lending combined with recent changes to the SBA programs has allowed us to assist a greater number of earlier stage local companies with financing."

The Bank's investment in the capital stock of the Federal Home Loan Bank ("FHLB") increased from $757 thousand at December 31, 2009 to $1.1 million at September 30, 2010 due to the standard asset-based investment requirement applicable to FHLB members.

Premises and equipment, net, increased from $1.4 million at December 31, 2009 to $1.8 million at September 30, 2010 primarily due to the leasehold improvements and furniture, fixtures, and equipment associated with the new Santa Maria branch.

Other real estate owned increased from none at December 31, 2009 to $4.8 million at September 30, 2010.  The $4.8 million was comprised of three properties in the Bank's primary market area, two of which are owned by limited liability company subsidiaries of the Bank.  Two of these properties are currently rented to tenants.  During the third quarter of 2010, the sales of two of the properties were actively pursued, with the third property now being prepared for sale.  This third property is also the subject of a title insurance claim and a lawsuit by the Bank against the title insurance company in response to issues with the processing of the subject escrow and the imposition of intervening liens associated with a prior owner of the property.  A legal action is in process to address the intervening liens that were not removed through the foreclosure and other actions, which have now resulted in the Bank subsidiary's sole ownership of all of the subject real estate (4 parcels comprising approximately 237 acres).  The Bank intends to continue to vigorously pursue the title insurance company to hold the Bank financially harmless from the errors that occurred through the escrow process.

The ratio of allowance for loan losses to loans outstanding decreased from 1.78% at December 31, 2009 to 1.44% at September 30, 2010.  The primary reason for this decrease was an overall improvement in the credit profile of the outstanding loan portfolio, as:  (i) the Bank had no loans on non-accrual status at September 30, 2010, versus $6.6 million of non-accrual loans at December 31, 2009; (ii) certain loans experienced an improvement in credit profile during the first nine months of 2010, leading to a lower associated general reserve requirement; (iii) the Bank had no loans that were 30 days or more delinquent at September 30, 2010; (iv) the Bank had only one troubled debt restructured loan at September 30, 2010, with an associated net investment of $46 thousand; and (v) relatively few loans experienced a significant deterioration in credit profile during the most recent three quarters.

The Bank recorded net charge-offs of $1.3 million during the first nine months of 2010.  The charge-offs were primarily associated with loans for which the collateral was foreclosed upon and transferred to other real estate owned by September 30, 2010.  The Bank records other real estate owned at fair value less cost to sell.  All three of the foreclosed properties at September 30, 2010 experienced a decline in market value since the origination of the subject loans.

Mark A. Crawford, the Bank's Chief Credit Officer, commented upon the Bank's credit profile at September 30, 2010:  "We are pleased to report that the overall credit profile of the Bank continued to improve during the third quarter of 2010.  The foreclosure upon the collateral securing the previously non-accrual loans positions the Bank to be able to sell the subject real estate and bring these problem credits to closure.  The combination of the rental income from two of the foreclosed properties plus the current low interest rate environment serves to constrain the Bank's carrying costs while these properties are being marketed for sale."

Non-interest bearing demand deposit balances increased from $18.5 million at December 31, 2009 and from $14.3 million at June 30, 2010 to $19.0 million at September 30, 2010.  The Bank's demand deposits are seasonally impacted by the timing for tax payments, with a cyclical low after April 15.  During the first half of October 2010, the Bank's demand deposits averaged in excess of $20.0 million each day, also influenced by the October 15 deadline for certain personal and corporate tax payments.  Aside from the seasonal factors, demand deposit balances during the third quarter of 2010 benefited from the Bank's opening a significant number of new accounts for local businesses and professionals.

Interest bearing checking accounts decreased from $3.3 million at December 31, 2009 to $2.4 million at September 30, 2010.  Part of this decrease was associated with one large client's transferring funds from interest bearing checking to money market deposit accounts in light of the yield differential.

Throughout 2010, the Bank has participated in the FDIC Transaction Account Guarantee Program (the "Program"), which grants unlimited deposit insurance coverage to the Bank's checking accounts through December 31, 2010.  Deposit insurance under the Program is in addition to the regular FDIC deposit insurance.  Participants, including the Bank, pay additional FDIC deposit insurance premiums in conjunction with the Program.  In response to the Dodd-Frank regulatory reform legislation, a revision to the Program has been drafted to take effect December 31, 2010, whereby demand deposits would continue to receive unlimited FDIC deposit insurance, but interest bearing checking accounts would no longer be eligible for the Program.

Savings deposits increased from $77 thousand at December 31, 2009 to $472 thousand at September 30, 2010.  This rise was primarily associated with new retirement (e.g. IRA) savings accounts following the Bank's introduction of that product during the first quarter of 2010.

Money market deposits increased from $74.9 million at December 31, 2009 to $92.6 million at September 30, 2010.  Money market deposit balances during the first nine months of 2010 benefited from:

  • Low (often, near zero) interest rates being paid on brokerage accounts and money market mutual funds, thereby encouraging clients to transfer their funds to higher yielding and FDIC insured accounts.
  • The desire by certain clients to keep their funds liquid given the weak economic environment.
  • The conversion of certain deposits from certificates of deposit to money market accounts given the limited yield differential between the products in the current interest rate environment.

Certificates of deposit increased from $55.5 million at December 31, 2009 to $57.3 million at September 30, 2010.  This increase was achieved despite the transfer of funds from certain maturing certificates of deposit to money market accounts and despite the Bank's decision to, at maturity, return the funds associated with certain maturing wholesale certificates of deposit in light of the Bank's favorable liquidity profile and the relative yields available in the capital markets.

Commenting on the Bank's recent deposit performance, Thomas R. Strait, the Bank's Director of Retail Banking, stated:  "Our deposit growth during 2010 has benefited from a range of initiatives, including the introduction of retirement deposit accounts (e.g. IRAs), the opening of the Santa Maria branch, the Bank's continuing to invest in its delivery platform and thereby providing even greater customization and more flexible service for our clients, the implementation of demand deposit account analysis, and improved cross-sales of business deposit accounts with the extension of credit by our Relationship Managers.  The Bank's increase in deposit balances has been achieved at the same time that the weighted average cost of deposits has decreased, as we have adjusted our interest rates in light of the status and profile of the capital markets."

The Bank's liquidity position benefited from the $8.0 million in net deposit inflows during the third quarter of 2010.  In addition, as of September 30, 2010, the Bank had access to over $80.0 million in off balance sheet liquidity, including secured funding available from the FHLB and the Federal Reserve Bank of San Francisco.

Borrowings decreased from $10.5 million at December 31, 2010 to $5.4 million at September 30, 2010.  Borrowings at September 30, 2010 were comprised of a $5.0 million five year fixed rate advance from the FHLB obtained during the second quarter of 2010 in conjunction with the Bank's interest rate risk management program, and a $0.4 million term borrowing associated with the tenant improvements at the San Luis Obispo office.

Shareholders' equity rose from $39.2 million at December 31, 2009 to $39.7 million at September 30, 2010.  The increase was due to the 2010 year to date net income and the capital generated through the Bank's Restricted Share Plan.  Nominal and tangible book values were $9.22 per share at September 30, 2010 versus $9.15 per share at December 31, 2009.  Shares of common stock outstanding rose by 32,900 during the first nine months of 2010 in conjunction with the vesting of awards under the Restricted Share Plan.  The Bank grants restricted share awards to employees as a means of encouraging an ownership orientation and aligning employee interests with the generation of shareholder value.

Net interest income before the provision for loan losses increased from $1.6 million during the third quarter of 2009 to $1.8 million during the third quarter of 2010.  This increase was primarily generated through a larger average balance sheet, as the ratio of annualized net interest income to average total assets was 3.37% during the third quarter of 2010 versus 3.48% during the third quarter of 2009.  Net interest income before the provision for loan losses during the first nine months of 2010 totaled $5.5 million, comparing favorably to $4.8 million during the first nine months of 2009.  The improvement in year to date net interest income in 2010 compared to 2009 was also primarily generated by a larger average balance sheet, as the ratio of annualized net interest income to average total assets declined from 3.73% for the first nine months of 2009 to 3.50% for the first nine months of 2010.

The Bank's ratio of annualized net interest income to average total assets has been constrained in 2010 by several factors, including:

  • the historically low interest rate environment, which has led to spread compression since funding costs cannot be lowered below zero and because the yields for certain assets, particularly for cash equivalents and benchmark securities, have declined to record low levels;
  • the Bank's asset mix, with net loans comprising 67.9% of total assets at September 30, 2010, versus a targeted level of approximately 75.0%;
  • the decisions by the Federal National Mortgage Association ("Fannie Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") to repurchase en mass delinquent loans from their hybrid mortgage backed security pools, leading to accelerated purchase premium amortization (and, hence, lower effective yields) for the Bank's mortgage backed securities portfolio; and
  • the impact of non-performing assets (all of which was composed of other real estate owned at September 30, 2010).

On the other hand, during 2010, the Bank has been successful in continuing to gradually reduce its weighted average cost of deposits, despite already being at a nominally and historically low level (1.36%) at December 31, 2009.  The Bank's weighted average cost of deposits during the third quarter of 2010 was 1.23% despite the Bank's proactive steps to increase the duration of the certificate of deposit portfolio during 2010 in conjunction with its interest rate risk management program.  The FDIC's imposition of deposit rate caps on troubled financial institutions, the industry-wide contraction in lending, and the limited competition from money market mutual funds have all contributed to a less competitive environment for deposit pricing than in certain prior periods.

The provision for loan losses was $386 thousand during the third quarter of 2010, compared to $2.6 million during the third quarter of 2009 when a $2.3 million specific reserve was established for the loans secured by a motel that was subsequently foreclosed upon in January 2010 and sold by the Bank in June 2010.  The provision for loan losses was $333 thousand during the second quarter of 2010 (the immediately preceding quarter).  The third quarter 2010 provision for loan losses primarily arose from:  (i) the Bank's setting aside unallocated general reserves for commercial real estate loans in recognition of the overall trends in valuations, market demand, rents, and vacancies for a range of income property types in California; (ii) the charge-off of a $49 thousand commercial loan that did not have an existing specific reserve; and (iii) the Bank's increasing certain formula general reserve factors to reflect recent industry credit loss experience.

The provision for loan losses during the first nine months of 2010 totaled $981 thousand, compared to $3.2 million during the first nine months of 2009.  A majority of the provision for loan losses during 2010 was associated with:  (i) establishing specific reserves for impaired loans (subsequently charged off by September 30, 2010); (ii) increased reserve requirements stemming from the growth in the loan portfolio and from certain higher formula general reserve factors; and (iii) the aforementioned increased unallocated general reserves for commercial real estate loans.  These factors were partially offset by reduced general reserve requirements associated with an improvement in the overall credit profile of the Bank's loan portfolio.

The Bank realized a gain of $329 thousand on the sale of three hybrid agency mortgage backed securities during the third quarter of 2010.  A gain of $88 thousand was recognized on the sale of a similar security during the second quarter of 2010, resulting in $417 thousand in gains on the sale of securities for the nine months ended September 30, 2010.  No securities were sold during the three or nine months ended September 30, 2009.

Other non-interest income totaled $27 thousand during both the third quarter of 2010 and the third quarter of 2009.  Other non-interest income was $80 thousand during the first nine months of 2010, comparing favorably to $60 thousand during the first nine months of 2009.  The Bank is gradually augmenting its fee income as it builds its client base and more clients select fee based services such as ACH origination, positive payment, and online wire request.

Income and expenses associated with other real estate owned have impacted the Bank's financial results in 2010.  No foreclosed property was sold during the third quarter of 2010.  The sale of the motel in June 2010 produced a loss on sale of $105 thousand, accounting for all of the Bank's September 30, 2010 year to date loss on sale of other real estate owned.  The Bank recorded a $210 thousand post-acquisition valuation allowance during the third quarter of 2010 that was associated with one of the three foreclosed properties owned by the Bank at September 30, 2010.  This valuation allowance was recognized in response to market feedback in conjunction with the Bank's listing the property for sale.  For the first nine months of 2010, post-acquisition valuation adjustments for other real estate owned totaled $288 thousand, versus none during the same period in 2009.  Other real estate owned generated net operating expense of $36 thousand during the third quarter of 2010, but net operating income of $36 thousand for the first nine months of 2010 primarily due to the (now sold) motel's experiencing peak seasonal room demand during the first quarter of 2010.  The Bank did not have any operating income or expense for foreclosed real estate during the first nine months of 2009.

Non-interest expense (excluding other real estate owned expense) increased from $1.3 million during the third quarter of 2009 to $1.5 million during the third quarter of 2010; and from $3.7 million during the first nine months of 2009 to $4.4 million during the first nine months of 2010.  Two factors that contributed significantly to the rise in non-interest expense from the 2009 periods to the 2010 periods were the commencement of expenses (e.g. salaries, rent, insurance) for the new Santa Maria branch starting in the first quarter of 2010 and higher credit collection costs (especially legal fees) in 2010 versus 2009.

Compensation and employee benefits expenses rose from $600 thousand during the third quarter of 2009 to $717 thousand during the third quarter of 2010; and from $1.8 million during the first nine months of 2009 to $2.1 million during the first nine months of 2010.  Factors leading to these increases other than the aforementioned hiring for the Santa Maria branch included:

  • The hiring of additional employees (other than for Santa Maria) in light of the historic and planned growth of the Bank.
  • Increased benefits expenses, primarily due to higher costs for medical insurance sponsored by the Bank.  While the Bank took multiple steps to moderate its medical insurance costs in 2010, such were insufficient in aggregate to fully offset the significant premium increases implemented throughout the marketplace.
  • Base salary increases granted to non-executive employees effective October 1, 2009 (executives received no compensation adjustments in 2009).  The Bank's Board of Directors decided to postpone annual base salary adjustments for employees from October 1, 2010 to January 1, 2011 as a cost savings measure.
  • Increased expense for the Bank's Restricted Share Plan, as the Bank continues to provide a restricted share award to all employees soon following hire as a means of fostering an ownership orientation.
  • Capitalized direct loan origination expenses, which reduce reported compensation and benefits expense, were $31 thousand lower during the first nine months of 2010 versus the similar period in 2009.

The Bank has not established any accrual for incentive compensation through September 30, 2010 in light of the decision by the Board of Directors to not provide bonus payments to employees until the Bank's profitability further improves.

Accounting, legal, and consulting expenses totaled $192 thousand during the third quarter of 2010, up from $165 thousand during the third quarter of 2009.  Accounting, legal, and consulting expenses increased from $441 thousand during the first nine months of 2009 to $519 thousand during the first nine months of 2010.  Legal expenses have been elevated during 2010 primarily due to the costs associated with collecting troubled loans, including the expenses associated with foreclosing on two properties during the third quarter of 2010.  The following table provides a detailed recap of accounting, legal, and consulting expenses during the three and nine month periods ended September 30, 2010 and September 30, 2009, respectively:

(Dollars In Thousands)

Non-Interest Expense Item

Three Months Ended 9/30/2010

Three Months Ended 9/30/2009

Nine Months Ended 9/30/2010

Nine Months Ended 9/30/2009

Accounting - internal audit

$      17

$      27

$      50

$      75

Accounting - other

26

18

71

60

Legal expenses - credit collections

73

23

226

31

Legal expenses - other

11

47

43

143

Consulting / professional services

65

50

129

132

Total

$    192

$    165

$    519

$    441

As highlighted in the above table, most of the increase from 2009 to 2010 was concentrated in legal collection costs.  The Bank anticipates reduced legal collection costs during the fourth quarter of 2010.  Accounting costs moderated in 2010 versus the 2009 periods primarily due to the Bank's negotiating more favorable pricing for internal audit services in 2010, partially offset by higher attestation audit and tax compliance assistance expenses.

Occupancy expense increased from $128 thousand and $379 thousand during the three and nine months ended September 30, 2009, respectively, to $165 thousand and $474 thousand for the three and nine months ended September 30, 2010, respectively.  These increases were primarily due to the occupancy expense associated with the Santa Maria branch location.

Regulatory assessments increased from $64 thousand during the three months ended September 30, 2009 to $83 thousand during the three months ended September 30, 2010.  This was primarily due to the Bank's continuing rise in base FDIC insurance expense associated with the growth of the deposit portfolio.  Regulatory assessments totaled $237 thousand for both the nine month periods ending September 30, 2010 and September 30, 2009, as the impact of the second quarter 2009 FDIC special assessment ($67 thousand) offset the effect of higher base FDIC assessments associated with the larger deposit portfolio in 2010.

Equipment expense increased from $69 thousand and $192 thousand during the three and nine months ended September 30, 2009, respectively, to $80 thousand and $223 thousand for the three and nine months ended September 30, 2010, respectively.  These increases were primarily due to:  (i) the equipment expense associated with the Santa Maria branch location; and (ii) the Bank's continuing investment in new technologies to further enhance its range of products and services.

Director expenses declined from $46 thousand during the third quarter of 2009 to less than $1 thousand during the third quarter of 2010, and from $94 thousand during the first nine months of 2009 to $39 thousand during the first nine months of 2010.  These reductions were due to the March 2010 vesting of the only restricted share award ever provided to outside directors.  Those awards vested one year following grant.  The Bank's directors determined to not grant any new restricted share awards to directors thus far in 2010 in support of the Bank's earnings.  The Bank's Board members have never received cash director fees.

Advertising and promotion expense increased from $19 thousand and $58 thousand during the three and nine months ended September 30, 2009, respectively, to $89 thousand and $191 thousand during the three and nine months ended September 30, 2010, respectively.  The Bank significantly increased its advertising and promotion expense during 2010 in support of:

  • its new retirement deposit account product line (e.g. both liquid and term IRA deposits);
  • introducing new officers to the Bank's primary market;
  • commencing the introduction of the Bank to the north San Luis Obispo County market;
  • facilitating the adoption of the new name and the opening of the Santa Maria branch;
  • implementing an enhanced web site; and
  • supporting a wider range of community events and organizations.

Now that the Santa Maria branch has been open for three months, the new web site has been implemented, and clients and local communities are familiar with the Bank's new name, the Bank anticipates a lower level of advertising and promotion expenses during the fourth quarter of 2010.

Commenting on the Bank's financial and operating results for the first nine months of 2010, Thomas J. Madden, the Bank's Chairman of the Board, stated:  "We are very pleased to announce the many significant milestones attained by the Bank at its third anniversary since opening for business on October 15, 2007.  In 2010, we have opened our first branch office, implemented a new web site, smoothly completed a name change, attained record levels of total assets and deposits, and improved the Bank's aggregate credit profile.  At a time when many competitors are reporting significant issues and the FDIC has closed 139 financial institutions thus far in 2010, we are pleased to report the Bank's being profitable, with a very strong capital position and ample liquidity."  Mr. Madden then added:  "The timing and pricing associated with the sale of the three foreclosed properties owned by the Bank at September 30, 2010 will impact the Bank's financial results and profile for the end of 2010.  We look forward to reallocating the internal effort and the external expense associated with these assets toward continuing to develop the Bank's franchise.  The Board of Directors remains deeply committed to enhancing shareholder value and effectively representing the interests of our shareholders."

Paul S. Viborg, a director of the Bank and owner of Viborg Sand and Gravel, headquartered in north San Luis Obispo County, added:  "The Board of Directors continues to team with management to evaluate alternatives for a Bank presence in Paso Robles.  The limited number of suitable locations currently available for a full service branch office has been disappointing, leading us to consider initially establishing a loan production office to allow the Bank to more timely meet the credit needs of local businesses and professionals."

Michael D. Bouquet, a director of the Bank and the General Manager of Honda of Santa Maria and Toyota of Santa Maria, commented:  "The Santa Maria community has welcomed the opening of the Bank's branch office near the corner of Santa Maria Way and Broadway.  Our facility has received multiple accolades, which have also been echoed for our Santa Maria team, led by Michael J. Sell, Senior Vice President and Senior Relationship Manager.  I encourage any Santa Maria business owners and professionals that have not yet visited the branch to do so."

Mark R. Andino, the Bank's Chief Financial Officer and Chief Operating Officer, then added:  "We are currently working on implementing multiple enhancements to our product line and the scope of services we provide to our clients.  In the coming months, we plan to implement mobile banking (e.g. via cell phones and personal digital assistants), consumer online deposit (check scanning), a more robust electronic bill payment platform, and several other technology initiatives that will facilitate our clients' banking when, how, and where they please."

The Bank's target markets are commercial enterprises, professionals, real estate investors, family business entities, and residents in San Luis Obispo County and northern Santa Barbara County.  The Bank's San Luis Obispo office is located at 4051 Broad Street, Suite 140, San Luis Obispo, California, near the intersection of Broad Street (Highway 227) and Tank Farm Road.  The Bank's Santa Maria office is located at 2646 Santa Maria Way, Suite 101, Santa Maria, California, near the intersection of Santa Maria Way and Broadway.  The Bank is a participant in the FDIC's Transaction Account Guarantee Program and the Bank's deposits are insured by the FDIC up to applicable legal limits.

Certain of the statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act.  Forward-looking statements are typically identified by words or phrases such as "believe," "expect," "anticipate," "intend," "estimate," "target," "plans," "may increase," "may fluctuate," "may result in," "are projected," and similar expressions.  The Bank's actual results may differ materially from those included in the forward-looking statements.  These forward-looking statements involve risks and uncertainties including, but not limited to, the economic, business, and real estate market conditions in the Bank's market areas, the interest rate environment, competition, regulatory and legislative actions, the possibility that the Bank will not be successful in achieving its strategic objectives, the performance and contributions of employees and directors, and other factors.  The Bank does not undertake, and specifically disclaims any obligation, to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.

This news release is available at the www.AmericanPerspectiveBank.com Internet site for no charge.

General communication:

SERVICE@AMERICANPERSPECTIVEBANK.COM

www.AmericanPerspectiveBank.com

Phone:  (805) 547 - 2800 (San Luis Obispo)

Facsimile:  (805) 547 - 2801 (San Luis Obispo)

Phone:  (805) 354 - 7800 (Santa Maria)

Facsimile:  (805) 354 - 7801 (Santa Maria)

---   financial data follows   ---

AMERICAN PERSPECTIVE BANK

Consolidated Financial Highlights Unaudited (Dollars In Thousands)

September 30, 2010

June 30, 2010

December 31, 2009

Financial Condition Data

Assets

Cash and due from banks

$       2,661

$       2,025

$       2,462

Interest bearing deposits in other financial institutions

2,825

1,729

2,421

Securities available for sale, at fair value:

     Mortgage backed securities

22,422

42,723

51,218

     Collateralized mortgage obligations

32,174

9,824

4,819

Loans receivable held for investment:

     Home equity lines of credit

12,935

13,881

12,536

     Multifamily real estate loans

11,119

11,166

7,966

     Commercial and industrial real estate loans

66,133

65,005

55,231

     Construction loans

9,082

9,176

9,440

     Land / lot loans

5,444

5,489

8,681

     Farm real estate loans

--

--

3,600

     Commercial business loans

38,604

39,428

37,067

     Other loans

6,740

6,605

5,402

  Gross loans held for investment, net of deferred fees and costs

150,057

150,750

139,923

  Less:

     Allowance for loan losses

(2,167)

(2,246)

(2,488)

Loans receivable held for investment, net

147,890

148,504

137,435

Investment in capital stock of the Federal Home Loan Bank, at cost

1,076

1,076

757

Premises and equipment, net

1,824

1,690

1,384

Accrued interest receivable

528

581

623

Other real estate owned

4,787

2,300

--

Other assets

1,711

1,834

1,849

Total assets

$   217,898

$   212,286

$   202,968

Liabilities and Stockholders' Equity

Deposits:

     Non-interest bearing demand deposits

$     18,969

$     14,329

$     18,482

     Interest bearing checking accounts

2,426

4,387

3,297

     Savings accounts

472

471

77

     Money market accounts

92,641

82,307

74,936

     Certificates of deposit

57,255

62,260

55,460

Total deposits

171,763

163,754

152,252

Borrowings

5,359

7,491

10,453

Other liabilities

1,038

1,247

1,109

Total liabilities

178,160

172,492

163,814

Stockholders' equity

39,738

39,794

39,154

Total liabilities and stockholders' equity

$   217,898

$   212,286

$   202,968

AMERICAN PERSPECTIVE BANK

Consolidated Financial Highlights, Continued Unaudited (Dollars In Thousands Except Per Share Amounts)

Operating Data

Three Months Ended 9/30/2010

Three Months Ended 9/30/2009

Nine Months Ended 9/30/2010

Nine Months Ended 9/30/2009

Interest and dividend income

$      2,391

$      2,143

$      7,111

$      6,516

Interest expense

564

545

1,633

1,672

Net interest income before provision for loan losses

1,827

1,598

5,478

4,844

Provision for loan losses

386

2,580

981

3,159

Net interest income (loss) after provision for loan losses

1,441

(982)

4,497

1,685

Non-interest income:

    Gain on sale of securities

329

--

417

--

    Name change payments in excess of costs

--

--

40

--

    Other non-interest income

27

27

80

60

Total non-interest income

356

27

537

60

Other real estate owned expense:

    Loss on sale of other real estate owned

--

--

105

--

    Other real estate owned valuation adjustments

210

--

288

--

    Other real estate owned operations expense (income)

36

--

(36)

--

Total other real estate owned expense

246

--

357

--

Non-interest expense:

    Compensation and employee benefits

717

600

2,139

1,822

    Accounting, legal, and consulting

192

165

519

441

    Occupancy

165

128

474

379

    Regulatory assessments

83

64

237

237

    Equipment

80

69

223

192

    Data and item processing

59

52

161

152

    Director expenses

--

46

39

94

    Supplies, printing, courier, and postage

39

30

90

69

    Advertising and promotion

89

19

191

58

    Provision for (reduction of) allowance for off balance

         sheet commitments

2

(6)

(10)

(5)

    Other expenses

100

87

299

255

Total non-interest expense

1,526

1,254

4,362

3,694

Income (loss) before provision for income taxes

25

(2,209)

315

(1,949)

Provision for income taxes

1

--

2

--

Net income (loss)

$            24

$     (2,209)

$          313

$     (1,949)

Weighted average shares used in basic income (loss)

     per share calculation

4,303,981

4,251,733

4,295,890

4,251,519

Basic income (loss) per share

$        0.01

$      (0.52)

$       0.07

$        (0.46)

Weighted average shares used in diluted income (loss)

     per share calculation

4,303,982

4,251,733

4,302,292

4,251,519

Diluted income (loss) per share

$        0.01

$     (0.52)

$       0.07

$        (0.46)

Average total assets

$   216,641

$   183,775

$   208,557

$   173,332

Annualized net interest income / average total assets

3.37%

3.48%

3.50%

3.73%

AMERICAN PERSPECTIVE BANK

Consolidated Financial Highlights, Continued Unaudited (Dollars In Thousands Except Per Share Amounts)

September 30, 2010

June 30, 2010

December 31, 2009

Other Information

Net loans / deposits

86.10%

90.69%

90.27%

Allowance for loan losses / loans outstanding

1.44%

1.49%

1.78%

Nominal and tangible book value per share

$   9.22

$   9.25

$   9.15

Shares of common stock outstanding

4,310,613

4,302,533

4,277,713

SOURCE American Perspective Bank



RELATED LINKS

http://www.AmericanPerspectiveBank.com