Appalachian Bancshares, Inc. Reports Increases in Net Income of 34%
and 42% for the Three and Nine Months (Respectively) Ended
September 30, 2004 ELLIJAY, Ga., Oct. 26 /PRNewswire-FirstCall/ --
Appalachian Bancshares, Inc. (the "Company") (Other OTC: APAB.PK),
today announced that net income for the quarter ended September 30,
2004, was $1,068,102, compared to net income of $796,853 for the
quarter ended September 30, 2003, which represents an increase of
$271,249, or 34.0%. Basic earnings per share were $0.29 and $0.22
for the quarters ended September 30, 2004 and 2003, respectively,
an increase of 31.8%. Diluted earnings per share were $0.27 and
$0.21 for the quarters ended September 30, 2004, and 2003,
respectively, an increase of 28.6%. Net income for the nine months
ended September 30, 2004, was $2,944,359, compared to net income of
$2,069,983 for the nine months ended September 30, 2003, which
represents an increase of $874,376, or 42.2%. Basic earnings per
share were $0.79 and $0.58 for the nine months ended September 30,
2004 and 2003, respectively, an increase of 36.2%. Diluted earnings
per share were $0.76 and $0.55 for the nine months ended September
30, 2004, and 2003, respectively, an increase of 38.2%. Net
interest income increased from $3,830,317 to $4,609,087, or 20.3%,
from the quarter ended September 30, 2003, to the quarter ended
September 30, 2004. The provision for loan loss was $274,000 for
the quarter ended September 30, 2004, compared to $385,000 for the
quarter ended September 30, 2003. The ratio of loan loss reserves
to total loans increased from 1.09% to 1.15% for the quarters ended
September 30, 2003, and 2004, respectively. Non- interest expense
increased $502,278, from $3,005,630 to $3,507,908, from the quarter
ended September 30, 2003, to the quarter ended September 30, 2004.
This increase was related primarily to expenses associated with the
increase in the staff of Appalachian Community Bank, the Company's
wholly-owned subsidiary (the "Bank"), which was necessary in order
to accommodate the growth that the Bank has experienced, as well as
the opening, during the second quarter, of a new 9,000-square-foot
branch office in Blue Ridge, Georgia, with a 3,500-square-foot
community building, in order to better service the Bank's Blue
Ridge market. Net interest income increased from $10,672,185 to
$13,362,281, or 25.2%, from the nine months ended September 30,
2003, to the nine months ended September 30, 2004. The provision
for loan loss was $925,107 for the nine months ended September 30,
2004, compared to $1,105,000 for the nine months ended September
30, 2003. The ratio of loan loss reserves to total loans increased
from 1.09% to 1.15%, for the nine months ended September 30, 2003,
and 2004, respectively. Non-interest expenses increased $1,560,798,
from $8,662,540 to $10,223,338, for the nine months ended September
30, 2003, to the nine months ended September 30, 2004. Tracy R.
Newton, President and Chief Executive Officer of the Company,
stated that, "Our primary financial goal is to achieve sustainable
growth in our earnings per share, in the range of 11% to 15% per
year. The hard work and skill of our dedicated staff of directors,
officers, and employees have made these excellent results a
reality. Our long-term commitment to enhancing shareholder value
remains at the forefront of all our strategic planning." Mr. Newton
also stated that, "Site preparation has been started for a new
Gilmer County Bank branch office in the rapidly expanding Highlands
Shopping Center in East Ellijay. Grading is also underway for a new
corporate office facility on Industrial Blvd in Ellijay. When
complete, these new facilities will allow us to more conveniently
serve our customers and consolidate our operations." Appalachian
Bancshares, Inc., 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 northern Georgia, through banking
offices located in Ellijay, East Ellijay, Blue Ridge and
Blairsville, Georgia. The main banking office of the Company, which
is 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, which 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. 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 2004 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
September 30, 2004 (Unaudited) and December 31, 2003 September 30,
2004 December 31, (Unaudited) 2003 % Change Assets Cash and due
from banks $7,154,144 $6,530,984 9.54% Interest-bearing deposits
with other banks 9,720,789 273,841 3449.79% Federal funds sold
1,790,000 586,000 205.46% Cash and Cash Equivalents 18,664,933
7,390,825 152.54% Securities available-for-sale 56,198,872
55,363,327 1.51% Loans, net of unearned income 370,062,492
332,306,446 11.36% Allowance for loan losses (4,256,628)
(3,609,794) 17.92% Net Loans 365,805,864 328,696,652 11.29%
Premises and equipment, net 12,923,619 9,161,652 41.06% Accrued
interest 2,522,125 2,289,994 10.14% Cash surrender value on life
insurance 7,753,072 2,592,416 199.07% Intangibles, net 2,125,058
2,157,433 -1.50% Other assets 1,379,917 1,965,179 -29.78% Total
Assets $467,373,460 $409,617,478 14.10% Liabilities and
Shareholders' Equity Liabilities Deposits: Noninterest-bearing
$31,780,016 $23,795,787 33.55% Interest-bearing 339,285,086
309,123,161 9.76% Total Deposits 371,065,102 332,918,948 11.46%
Short-term borrowings 13,018,035 7,085,992 83.72% Accrued interest
586,151 670,614 -12.59% Long-term debt 40,371,429 30,692,858 31.53%
Guaranteed preferred beneficial interest in the Company's
subordinated debentures 6,186,000 6,186,000 0.00% Other liabilities
1,549,953 980,713 58.04% Total Liabilities 432,776,670 378,535,125
14.33% Shareholders' Equity Preferred Stock, 20,000,000 shares
authorized, none issued - - 0.00% Common stock, par value $0.01 per
share, 20,000,000 shares authorized, 3,812,052 shares issued at
June 30, 2004 and 3,734,686 shares issued at December 31, 2003
38,121 37,347 2.07% Paid-in capital 23,170,052 22,727,208 1.95%
Retained earnings 11,532,519 8,588,160 34.28% Accumulated other
comprehensive income: net unrealized holding gains on securities
available-for-sale, net of deferred income tax 555,894 429,434
29.45% Treasury stock, at cost (75,973 shares at June 30, 2004 and
at December 31, 2003) (699,796) (699,796) 0.00% Total Shareholders'
Equity 34,596,790 31,082,353 11.31% Total Liabilities and
Shareholders' Equity $467,373,460 $409,617,478 14.10% APPALACHIAN
BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME
(Unaudited) Three Months Ended September 30, 2004 2003 % Change
Interest Income Interest and fees on loans $6,028,139 $5,357,283
12.52% Interest on investment securities: Taxable securities
335,412 182,740 83.55% Nontaxable securities 162,881 182,017
-10.51% Interest on deposits in other banks 623 104 499.04%
Interest on federal funds sold 8,589 5,261 63.26% Total Interest
Income 6,535,644 5,727,405 14.11% Interest Expense Interest on
deposits 1,585,469 1,572,091 0.85% Interest on federal funds
purchased and securities sold under agreements to repurchase 35,884
20,443 75.53% Interest on long-term debt 235,204 283,254 -16.96%
Interest on subordinated debentures 70,000 21,300 228.64% Total
Interest Expense 1,926,557 1,897,088 1.55% Net Interest Income
4,609,087 3,830,317 20.33% Provision for loan losses 274,000
385,000 -28.83% Net Interest Income After Provision For Loan Losses
4,335,087 3,445,317 25.83% Noninterest Income Customer services
fees 312,051 207,362 50.49% Insurance commissions 12,736 8,507
49.71% Mortgage origination fees 196,357 358,585 -45.24% Other
operating income 204,779 147,712 38.63% Investment securities gains
(losses) - - 0.00% Total Noninterest Income 725,923 722,166 0.52%
Noninterest Expenses Salaries and employee benefits 1,786,710
1,467,070 21.79% Occupancy expense 229,557 149,708 53.34% Furniture
and equipment expense 301,597 236,636 27.45% Other operating
expenses 1,190,044 1,152,216 3.28% Total Noninterest expense
3,507,908 3,005,630 16.71% Income before income taxes 1,553,102
1,161,853 33.67% Income tax expense 485,000 365,000 32.88% Net
Income $1,068,102 $796,853 34.04% Earnings Per Common Share Basic
$0.29 $0.22 31.82% Diluted 0.27 0.21 28.57% Cash Dividends Declared
Per Common Share $- $- 0.00% Weighted Average Shares Outstanding
Basic 3,736,079 3,660,485 2.07% Diluted 3,894,699 3,822,959 1.88%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (Unaudited) Nine Months Ended September 30,
2004 2003 % Change Interest Income Interest and fees on loans
$17,309,728 $15,909,412 8.80% Interest on investment securities:
Taxable securities 1,006,195 707,463 42.23% Nontaxable securities
487,847 539,051 -9.50% Interest on deposits in other banks 2,073
28,816 -92.81% Interest on federal funds sold 15,789 34,384 -54.08%
Total Interest Income 18,821,632 17,219,126 9.31% Interest Expense
Interest on deposits 4,508,485 5,516,094 -18.27% Interest on
federal funds purchased and securities sold under agreements to
repurchase 76,850 64,338 19.45% Interest on long-term debt 675,616
945,209 -28.52% Interest on subordinated debentures 198,400 21,300
831.46% Total Interest Expense 5,459,351 6,546,941 -16.61% Net
Interest Income 13,362,281 10,672,185 25.21% Provision for loan
losses 925,107 1,105,000 -16.28% Net Interest Income After
Provision For Loan Losses 12,437,174 9,567,185 30.00% Noninterest
Income Customer services fees 887,375 598,120 48.36% Insurance
commissions 39,067 55,219 -29.25% Mortgage origination fees 640,273
1,060,205 -39.61% Other operating income 540,141 380,772 41.85%
Investment securities gains (losses) (22,633) (16,978) -33.31%
Total Noninterest Income 2,084,223 2,077,338 0.33% Noninterest
Expenses Salaries and employee benefits 5,029,721 4,161,198 20.87%
Occupancy expense 604,176 464,317 30.12% Furniture and equipment
expense 844,484 724,569 16.55% Other operating expenses 3,744,957
3,312,456 13.06% Total Noninterest expense 10,223,338 8,662,540
18.02% Income before income taxes 4,298,059 2,981,983 44.13% Income
tax expense 1,353,700 912,000 48.43% Net Income $2,944,359
$2,069,983 42.24% Earnings Per Common Share Basic $0.79 $0.58
36.21% Diluted 0.76 0.55 38.18% Cash Dividends Declared Per Common
Share $- $- 0.00% Weighted Average Shares Outstanding Basic
3,719,312 3,599,384 3.33% Diluted 3,879,415 3,771,632 2.86%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
(Unaudited) Three Months Three Months Ended Ended Sept. 30, Sept.
30, 2004 2003 % Change Earnings Summary (amounts in thousands) Net
income for period $1,068 $797 34.00% Net interest income 4,609
3,830 20.34% Net interest income (tax equivalent) 4,695 3,938
19.22% Noninterest expense 3,508 3,006 16.70% Select Average
Balances (amounts in thousands) Loans $368,005 $320,035 14.99%
Allowance for loan losses 4,228 3,485 21.32% Investment securities
55,890 53,208 5.04% Earning assets 426,915 375,523 13.69% Total
assets 455,254 396,177 14.91% Deposits 368,605 322,201 14.40%
Shareholders' equity 33,318 29,435 13.19% Per Common Share Net
income - basic 0.29 0.22 31.82% Net income - diluted 0.27 0.21
28.57% Book value 9.26 8.16 13.48% End of period shares outstanding
3,736,079 3,658,713 2.11% Weighted average shares outstanding:
Basic 3,736,079 3,660,485 2.07% Diluted 3,894,699 3,822,959 1.88%
Ratios Return on average assets 0.94% 0.80% Return on average
equity 12.82% 10.83% Average earning assets to average total assets
93.78% 94.79% Average loans as percentage of average deposits
99.84% 99.33% Net interest margin (tax equivalent) 4.40% 4.19%
Average equity to average assets 7.32% 7.43% Efficiency ratio
76.11% 78.49% Loan loss reserve to total loans 1.15% 1.09%
APPALACHIAN BANCSHARES, INC. AND SUBSIDIARIES FINANCIAL HIGHLIGHTS
(Unaudited) Nine Months Nine Months Ended Ended Sept. 30, Sept. 30,
2004 2003 % Change Earnings Summary (amounts in thousands) Net
income for period $2,944 $2,070 42.22% Net interest income 13,362
10,672 25.21% Net interest income (tax equivalent) 13,632 10,992
24.02% Noninterest expense 10,223 8,663 18.01% Select Average
Balances (amounts in thousands) Loans $355,250 $311,963 13.88%
Allowance for loan losses 4,037 3,384 19.30% Investment securities
55,993 48,424 15.63% Earning assets 413,421 366,456 12.82% Total
assets 438,972 389,149 12.80% Deposits 357,087 318,198 12.22%
Shareholders' equity 32,472 27,923 16.29% Per Common Share Net
income - basic 0.79 0.58 36.21% Net income - diluted 0.76 0.55
38.18% Book value 9.26 8.16 13.48% End of period shares outstanding
3,736,079 3,658,713 2.11% Weighted average shares outstanding:
Basic 3,719,312 3,599,384 3.33% Diluted 3,879,415 3,771,632 2.86%
Ratios Return on average assets 0.89% 0.71% Return on average
equity 12.09% 9.88% Average earning assets to average total assets
94.18% 94.17% Average loans as percentage of average deposits
99.49% 98.04% Net interest margin (tax equivalent) 4.40% 4.00%
Average equity to average assets 7.40% 7.18% Efficiency ratio
76.51% 81.18% Loan loss reserve to total loans 1.15% 1.09%
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.appalachianbancshares.com/
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