Appalachian Bancshares, Inc. Announces Solid Growth in First
Quarter Earnings and Income ELLIJAY, Ga., May 2
/PRNewswire-FirstCall/ -- Appalachian Bancshares, Inc. (the
"Company") (OTC:APAB.PK) today announced earnings highlights for
the quarter ended March 31, 2005, including: - Net income of
$965,325, a 7.7% increase over the first quarter of 2004 - Diluted
earnings per share of $0.25, an 8.7% increase over the same period
last year - Net interest income in the first quarter totaled
$4,901,002, an increase of 14.3% over the first quarter of 2004 -
Continued progress in positioning the bank for a new stage of
growth as mentioned in the 2004 Annual Report "We grew assets and
generated profitable, quality growth during the first quarter of
2005 as a result of our customer-focused approach to banking and
the continued expansion of our high-growth markets in North
Georgia," said President and Chief Executive Officer Tracy R.
Newton. "Increased banking activity, ongoing customer referrals and
reduced customer turnover costs are direct results of the strong
relationships we have developed with our customers." Total assets
at March 31, 2005, were $495,978,134, compared to $472,811,128 at
December 31, 2004. The rise was due primarily to solid growth in
loans and deposits. Loans, net of unearned income, were
$388,424,316 at the end of the first quarter, compared to
$377,351,501 at the end of the previous quarter. Total deposits
were $394,563,787 at March 31, 2005, compared to $381,498,171 at
December 31, 2004. Noninterest-bearing deposits grew 10.5% over the
previous quarter, while interest-bearing deposits grew 2.8%.
"Growth in our markets continues to outpace the national economy,
which enabled us to increase loans and deposits from long-time
customers while adding new clients to our banking family," said
Newton. "We expect the economy in Ellijay and the surrounding area
to continue to expand at a healthy rate." Noninterest income rose
10.5% from $675,389 in the first quarter of 2004 to $746,174 in
2005. Growth in income from insurance commissions and other service
fees contributed to this increase. Noninterest expense increased
from $3,278,503 to $3,833,240, year over year, due to increased
capital expenditures related to the opening of a new branch
location in Blue Ridge, Georgia, and the construction of a new
corporate facility in Ellijay, Georgia. The increase in salaries
and employee benefits was due to the Company's decision to provide
annual raises in the first half of the year as well as an increase
in the bonus accruals for 2005 in anticipation that this year's
earnings performance will be comparable to the year ending 2004.
The net interest margin experienced a slight uptick in the first
quarter of 2005, rising from 4.42% to 4.45%, year over year. Credit
quality remained strong during the first three months of 2005. The
allowance for loan losses was $4,466,779 in the first quarter of
2005, compared to $4,348,618 at December 31, 2004. Nonperforming
assets totaled $1,456,167 compared to $2,074,943 in the previous
quarter. As a percentage of total assets, nonperforming assets were
0.29% at March 31, 2005, compared to 0.44% at December 31, 2004.
"We continued to make good progress in positioning the bank for a
new stage of growth in the coming years," said Newton. "As we
expand our asset size and market footprint, we will continue to
remain focused on the values that have made us successful and
committed to delivering returns for our loyal shareholders." About
Appalachian Bancshares, Inc. Appalachian Bancshares, Inc., based in
Ellijay, Georgia, is a bank holding company that owns all of the
outstanding shares of capital stock of Appalachian Community Bank.
The Company, through Appalachian Community Bank, engages in a full
range of banking services in North Georgia, through banking offices
located in Ellijay, East Ellijay, Blue Ridge and Blairsville,
Georgia. The main banking office of the Company, located in
Ellijay, Georgia, is operated under the trade name "Gilmer County
Bank." Certain statements in the release contain "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements can generally be identified by
the use of forward-looking terminology, such as "may," "will,"
"expect," "estimate," "anticipate," "believe," "target," "plan,"
"project," "continue," or the negatives thereof, or other
variations thereon or similar terminology, and are made on the
basis of management's plans and current analyses of the Company,
its business and the industry as a whole. These forward-looking
statements are subject to risks and uncertainties, including, but
not limited to, economic conditions, competition, interest rate
sensitivity and exposure to regulatory and legislative changes, and
other risks and uncertainties described in the Company's filings
with the Securities and Exchange Commission. The above factors, in
some cases, have affected, and in the future could affect, the
Company's financial performance and could cause actual results for
2005 and beyond to differ materially from those expressed or
implied in such forward- looking statements, even if experience or
future changes make it clear that any projected results expressed
or implied therein will not be realized. APPALACHIAN BANCSHARES,
INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL
CONDITION March 31, 2005 (Unaudited) and December 31, 2004 March
31, 2005 December 31, (Unaudited) 2004 % Change Assets Cash and due
from banks $10,754,382 $4,953,563 117.1% Interest-bearing deposits
with other banks 7,126,579 403,532 1666.1% Federal funds sold
2,407,000 2,156,000 11.6% Cash and Cash Equivalents 20,287,961
7,513,095 170.0% Securities available-for-sale 64,089,558
64,654,722 -0.9% Loans, net of unearned income 388,424,316
377,351,501 2.9% Allowance for loan losses (4,466,779) (4,348,618)
2.7% Net Loans 383,957,537 373,002,883 2.9% Premises and equipment,
net 13,217,612 12,988,640 1.8% Accrued interest 2,834,086 2,901,737
-2.3% Cash surrender value on life insurance 7,900,781 7,833,450
0.9% Intangibles, net 2,108,058 2,116,558 -0.4% Other assets
1,582,541 1,800,043 -12.1% Total Assets $495,978,134 $472,811,128
4.9% Liabilities and Shareholders' Equity Liabilities
Noninterest-bearing deposits $36,358,742 $32,896,346 10.5%
Interest-bearing deposits 358,205,045 348,601,825 2.8% Total
Deposits 394,563,787 381,498,171 3.4% Short-term borrowings
24,528,124 15,469,540 58.6% Accrued interest 594,923 540,217 10.1%
Long-term debt 31,400,000 31,950,000 -1.7% Subordinated long-term
capital notes 6,186,000 6,186,000 0.0% Other liabilities 1,583,662
1,083,878 46.1% Total Liabilities 458,856,496 436,727,806 5.1%
Shareholders' Equity Preferred Stock, 20,000,000 shares authorized,
none issued - - 0.0% Common stock, par value $0.01 per share,
20,000,000 shares authorized, 3,924,172 shares issued at March 31,
2005 and 3,840,572 shares issued at December 31, 2004 39,242 38,406
2.2% Paid-in capital 24,417,969 23,731,549 2.9% Retained earnings
13,600,499 12,635,174 7.6% Accumulated other comprehensive income
(loss): net unrealized holding gains (losses) on securities
available-for-sale, net of deferred income tax (236,276) 377,989
-162.5% Treasury stock, at cost (75,973 shares at March 31, 2005
and at December 31, 2004) (699,796) (699,796) 0.0% Total
Shareholders' Equity 37,121,638 36,083,322 2.9% Total Liabilities
and Shareholders' Equity $495,978,134 $472,811,128 4.9% APPALACHIAN
BANCSHARES, INC AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, 2005 and 2004 (Unaudited)
Three Months Ended March 31, 2005 2004 % Change Interest Income
Interest and fees on loans $6,633,431 $5,505,051 20.5% Interest on
investment securities: Taxable securities 424,387 354,435 19.7%
Nontaxable securities 162,483 162,390 0.1% Interest on deposits
with other banks 1,716 395 334.4% Interest on federal funds sold
11,426 3,390 237.1% Total Interest Income 7,233,443 6,025,661 20.0%
Interest Expense Interest on deposits 1,919,524 1,452,603 32.1%
Interest on short-term borrowings 49,753 16,768 196.7% Interest on
long-term debt 273,164 206,123 32.5% Interest on subordinated
long-term capital notes 90,000 63,900 40.8% Total Interest Expense
2,332,441 1,739,394 34.1% Net Interest Income 4,901,002 4,286,267
14.3% Provision for loan losses 437,000 360,000 21.4% Net Interest
Income After Provision For Loan Losses 4,464,002 3,926,267 13.7%
Noninterest Income Customer service fees 307,273 283,218 8.5%
Insurance commissions 14,075 8,965 57.0% Mortgage origination fees
214,660 220,369 -2.6% Investment securities gains (losses) - - 0.0%
Other operating income 210,166 162,837 29.1% Total Noninterest
Income 746,174 675,389 10.5% Noninterest Expenses Salaries and
employee benefits 1,943,987 1,567,020 24.1% Occupancy, furniture
and equipment expense 522,224 443,518 17.7% Other operating
expenses 1,367,029 1,267,965 7.8% Total Noninterest expense
3,833,240 3,278,503 16.9% Income before income taxes 1,376,936
1,323,153 4.1% Income tax expense 411,611 426,700 -3.5% Net Income
$965,325 $896,453 7.7% Earnings Per Common Share Basic $0.26 $0.24
8.3% Diluted 0.25 0.23 8.7% Cash Dividends Declared Per Common
Share $- $- 0.0% Weighted Average Shares Outstanding Basic
3,778,801 3,689,545 2.4% Diluted 3,929,673 3,862,309 1.7%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
(Unaudited) Three Months Three Months Ended Ended March 31, March
31, 2005 2004 % Change Earnings Summary (amounts in thousands) Net
income for period $965 $896 7.7% Net interest income 4,901 4,286
14.3% Net interest income (tax equivalent) 4,987 4,382 13.8%
Noninterest expense 3,833 3,279 16.9% Select Average Balances
(amounts in thousands) Loans $381,556 $338,064 12.9% Allowance for
loan losses 4,364 3,787 15.2% Investment securities 64,084 56,156
14.1% Earning assets 448,042 396,698 12.9% Total assets 478,091
418,216 14.3% Deposits 389,134 341,543 13.9% Shareholders' equity
36,343 31,846 14.1% Per Common Share Net income - basic $0.26 $0.24
8.3% Net income - diluted 0.25 0.23 8.7% Book value 9.65 8.86 8.9%
End of period shares outstanding 3,848,199 3,697,359 4.1% Weighted
average shares outstanding: Basic 3,778,801 3,689,545 2.4% Diluted
3,929,673 3,862,309 1.7% Ratios Return on average assets 0.81%
0.86% Return on average equity 10.62% 11.25% Average earning assets
to average total assets 93.71% 94.85% Average loans as percentage
of average deposits 98.05% 98.98% Net interest margin (tax
equivalent) 4.45% 4.42% Average equity to average assets 7.60%
7.61% Efficiency ratio 67.88% 66.10% Loan loss reserve to total
loans 1.15% 1.14% DATASOURCE: Appalachian Bancshares, Inc. CONTACT:
Tracy R. Newton, Chief Executive Officer, or Darren M. Cantlay,
Chief Financial Officer, of Appalachian Bancshares, Inc.,
+1-706-276-8000 Web site: http://www.acbanks.net/
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