Pamrapo Bancorp, Inc. (NASDAQ: PBCI) (the "Company") today
announced a net loss for the year ended December 31, 2009 and the
fourth quarter ended December 31, 2009.
The net loss for the year ended December 31, 2009 amounted to
$6.6 million or $1.34 per share, as compared to net income of $2.5
million or $0.49 per share for the year ended December 31, 2008.
The net loss for the 2009 fiscal year was primarily due to a $9.1
million increase in total non-interest expenses and a $2.4 million
increase in the provision for loan losses, partly offset by a $2.4
million decrease in income taxes. The $9.1 million increase in
total non-interest expenses was primarily driven by a $5.0 million
litigation loss reserve accrued in 2009, a $2.1 million increase in
professional fees, a $1.4 million increase in FDIC premiums and
$918,000 of merger related expenses.
The increase in professional fees during the 2009 fiscal year,
as compared to the 2008 fiscal year, was predominately due to
expenses incurred for legal, accounting and other professional
services as a result of the federal grand jury investigation
discussed below, fees paid to consultants that Pamrapo Savings
Bank, S.L.A. (the "Bank"), the wholly owned subsidiary of the
Company, engaged as a result of a cease and desist order issued by
the Office of Thrift Supervision (the "OTS"), effective September
26, 2008.
FDIC premiums increased as a result of an increase in premium
rates, the depletion of assessment credits previously in effect and
a special assessment during the quarter ended June 30, 2009 of
$270,000.
The increase in the provision for loan losses during the 2009
fiscal year, as compared to the 2008 fiscal year was primarily due
to an increase in the Bank's non-performing loans, which were $22.6
million at December 31, 2009 compared to $10.8 million at December
31, 2008.
The net loss for the fourth quarter of 2009 amounted to $3.4
million or $0.70 per share, as compared to a net loss of $124,000
or $0.03 per share for the same period in 2008. The net loss for
the fourth quarter of 2009 was primarily due to an $885,000
decrease in total interest income, a $750,000 increase in the
provision for loan losses, a decrease of $320,000 of non-interest
income, an additional $2.0 million litigation loss reserve, a
$761,000 increase in FDIC premiums and $918,000 of merger related
expenses, which were partially offset by a $1.0 million decrease in
interest expense and a $949,000 decrease in income taxes.
The Bank continues to be well-capitalized as of December 31,
2009 with a tier one capital ratio of 8.89% as compared to the
minimum regulatory requirement of 4.0%.
Pamrapo's book value per share at December 31, 2009 was
$9.77.
As previously reported, the Bank received federal grand jury
subpoenas from the U.S. Attorney's Office for the District of New
Jersey ("U.S. Attorney's Office"). The subpoenas were issued to the
Bank in connection with an ongoing investigation being conducted by
the U.S. Attorney's Office, the Internal Revenue Service, and the
Department of Justice (the "DOJ") regarding the Bank's anti-money
laundering and Bank Secrecy Act compliance during the period from
2003 to the end of 2008. Certain individuals, including the Bank's
senior officers and directors, have received grand jury testimony
subpoenas in connection with this investigation. In addition, the
Bank and its wholly-owned subsidiary, Pamrapo Service Corporation,
have also received federal grand jury subpoenas from the U.S.
Attorney's Office relating to certain commissions paid to the
manager of Pamrapo Service Corporation through the first quarter of
2009. The Bank has, and continues to fully cooperate with these
ongoing investigations. It is anticipated that the investigation
will be resolved in the first quarter of 2010.
Also, as previously reported, no penalties, either criminal or
civil, have been imposed on the Bank to date as a result of the
investigation. However, as first disclosed in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2009,
it is probable that the Bank will incur monetary penalties in the
form of fines and forfeitures as a result of these matters.
Pursuant to FASB ASC 450, a company must accrue funds for a
possible litigation loss if a loss is probable and the amount of
the expected loss is reasonably estimable. As previously disclosed,
the Bank accrued a $3.0 million litigation loss reserve in the
second quarter of 2009.
As reported in a Form 8-K filed with the Securities and Exchange
Commission on December 7, 2009, new information, which was not
available as of the filing date of the Company's Form 10-Q for the
quarter ended September 30, 2009, came to light as a result of
which the Bank determined that it was appropriate to accrue an
additional $2.0 million litigation loss reserve to reflect a
potential criminal forfeiture of $5.0 million. The additional
reserve was recorded in the fourth quarter of 2009 and the Bank
remains well capitalized after the charge.
Management of the Bank believes, based on discussions with DOJ,
that the $5.0 million litigation loss reserve represents the
maximum amount of the potential criminal forfeiture. However, any
final resolution entered into between the Bank and all involved
government agencies may result in additional losses. Such
additional losses would relate to potential criminal fines that may
be imposed separately by a court, and civil money penalties that
may be imposed by the OTS, the Bank's primary federal regulator,
and Financial Crimes Enforcement Network, a part of the United
States Treasury Department.
As previously disclosed, the Bank had a commercial loan of $1.9
million to a local hospital. In October 2006, $1.0 million of the
total $3.0 million due on the loan was paid and the remaining
contractual balance of approximately $1.9 million was secured by a
mortgage on real estate. The repayment of the loan was subject to
bankruptcy proceedings. In September 2008, the creditor's committee
for the hospital filed a complaint against the Bank seeking to
recover the $1.0 million previously paid on the loan and to set
aside the mortgage securing the $1.9 million still owed to the
Bank, charging that the payment and the mortgage were "avoidable
preferences."
On June 9, 2009, the Liquidating Trustee for the hospital (who
was substituted for the creditor's committee for the hospital, as
plaintiff) filed a motion providing for an auction sale of the two
mortgaged properties to be sold free and clear of all liens, with
liens to attach to the proceeds of sale. The Bank did not oppose
the motion and the auction sale was held at a hearing on July 20,
2009. The U.S. Bankruptcy Court for the District of New Jersey, by
orders dated July 23, 2009, approved separate bids to acquire the
properties for a total of $1.6 million. The closings took place on
August 5, 2009 and August 6, 2009, respectively. Net proceeds of
the sale, after deducting taxes, real estate commissions and other
closing costs, were approximately $1.5 million. In November 2009,
the parties in the litigation filed motions for summary
judgment.
On December 29, 2009 the Bankruptcy Court ruled in favor of the
Bank and against the creditor's committee motion and also ruled in
favor of the Liquidating Trustee on the mortgage, ruling that the
Bank does not have a security interest in the property. As a
result, the Bank is deemed an unsecured creditor with a lower
priority in the future distribution from the Liquidating Trustee,
who will be entitled to the sum of approximately $1.5 million,
which is currently held in escrow, along with other funds that are
being held by the Liquidating Trustee pending the resolution of the
bankruptcy proceedings. The Liquidating Trustee will distribute
such funds, including the Bank's proportion of its $1.9 million
claim, at a yet to be determined date.
Based on the fact that the Bank is deemed an unsecured creditor
with a lower priority in the future distribution from the
Liquidating Trustee, the Company's board of directors decided on
January 20, 2010 to write off the remaining net loan balance of
$941,000 as of December 31, 2009.
Pamrapo Bancorp, Inc. is a holding company whose principal
subsidiary, Pamrapo Savings Bank, S.L.A., operates ten branch
offices in Bayonne, Jersey City, Hoboken, and Monroe, New
Jersey.
Forward-Looking Statements
This press release may include certain forward-looking
statements based on current management expectations. The actual
results of Pamrapo Bancorp, Inc. (the "Company") could differ
materially from those management expectations. Factors that could
cause future results to vary from current management expectations
include, but are not limited to, general economic conditions,
legislative and regulatory changes, monetary and fiscal policies of
the federal government, changes in tax policies, rates and
regulations of federal, state and local tax authorities, changes in
interest rates, deposit flows, the cost of funds, demand for loan
products, demand for financial services, competition, changes in
the quality or composition of loan and investment portfolios of
Pamrapo Savings Bank, S.L.A., the Company's wholly-owned
subsidiary, changes in accounting principles, policies or
guidelines, and other economic, competitive, governmental and
technological factors affecting the Company's operations, markets,
products, services and prices. The Company wishes to caution
readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The Company
undertakes no obligation to publicly release the result of any
revisions that may be made to any forward-looking statements to
reflect events or circumstances after the date of such statements
or to reflect the occurrence of anticipated or unanticipated
events.
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
COMPARATIVE STATEMENTS OF FINANCIAL CONDITION (Unaudited)
(In Thousands)
December 31, December 31,
ASSETS 2009 2008
------------ ------------
Cash and amounts due from depository
institutions $ 4,037 $ 4,117
Interest-bearing deposits in other banks 17,736 9,470
------------ ------------
Cash and Cash Equivalents 21,773 13,587
Securities available for sale 712 771
Investment securities held to maturity 11,337 11,350
Mortgage-backed securities held to maturity 87,751 117,428
Loans receivable 421,049 437,554
Foreclosed real estate 384 426
Premises and equipment 2,615 2,929
Federal Home Loan Bank of New York stock 3,396 5,160
Interest receivable 2,650 2,884
Other assets 6,133 5,923
------------ ------------
Total Assets $ 557,800 $ 598,012
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 444,492 $ 443,999
Advances from Federal Home Loan Bank of New
York 51,000 89,500
Advance payments by borrowers for taxes and
insurance 3,261 3,282
Other liabilities 10,811 6,553
------------ ------------
Total Liabilities 509,564 543,334
------------ ------------
Stockholders' Equity:
Preferred stock; 3,000,000 shares authorized;
none issued and outstanding - -
Common Stock; $0.01 par value; 25,000,000
shares authorized; 6,900,000 shares issued;
4,935,542 shares outstanding for 2009 and
2008 69 69
Paid-in capital 19,340 19,340
Retained earnings 54,039 61,928
Accumulated other comprehensive loss (1,672) (3,119)
Treasury stock, at cost; 1,964,458 shares
for 2009 and 2008 (23,540) (23,540)
------------ ------------
Total Stockholders' Equity 48,236 54,678
------------ ------------
Total Liabilities and Stockholders' Equity $ 557,800 $ 598,012
============ ============
PAMRAPO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In Thousands, except per share data)
For the Year Ended Three Months Ended
December 31, December 31,
2009 2008 2009 2008
--------- ---------- --------- ---------
Interest income:
Loans $ 25,915 $ 27,746 $ 6,457 $ 7,024
Mortgage-backed securities 4,658 5,647 1,039 1,377
Investments 929 851 226 228
Other interest-earning assets 225 970 62 40
--------- ---------- --------- ---------
Total Interest Income 31,727 35,214 7,784 8,669
--------- ---------- --------- ---------
Interest expense:
Deposits 8,303 11,512 1,737 2,519
Advances and other borrowed
money 3,188 3,893 694 919
--------- ---------- --------- ---------
Total Interest Expense 11,491 15,405 2,431 3,438
--------- ---------- --------- ---------
Net Interest Income 20,236 19,809 5,353 5,231
Provision for Loan Losses 4,025 1,630 1,800 1,050
--------- ---------- --------- ---------
Net Interest Income after
Provision for Loan Losses 16,211 18,179 3,553 4,181
--------- ---------- --------- ---------
Non-Interest Income:
Fees and service charges 1,120 1,240 298 284
Gain on sale of branch 492 --- --- ---
Commissions from sale of
financial products 89 859 2 346
Other 345 325 70 60
--------- ---------- --------- ---------
Total Non-Interest Income 2,046 2,424 370 690
--------- ---------- --------- ---------
Non-Interest Expenses:
Salaries and employee benefits 8,013 7,910 2,109 1,973
--------- ---------- --------- ---------
Net occupancy expense of
premises 1,224 1,292 291 303
Equipment 1,322 1,358 331 370
Advertising 202 243 60 51
Professional fees 4,885 2,798 1,013 1,262
Losses on foreclosed real
estate 68 92 53 ---
Federal Deposit Insurance
premiums 1,449 71 761 21
Litigation loss reserve 5,000 0 2,000 0
Merger expenses 918 0 918 0
Other 2,479 2,656 609 845
--------- ---------- --------- ---------
Total Non-Interest Expenses 25,560 16,420 8,145 4,825
--------- ---------- --------- ---------
Income (loss) before Income
Taxes (7,303) 4,183 (4,222) 46
Income Tax Expense (Benefit) (697) 1,724 (779) 170
--------- ---------- --------- ---------
Net Income (Loss) ($ 6,606) $ 2,459 ($ 3,443) ($ 124)
========= ========== ========= =========
Net Income (Loss) per Common
Share
Basic ($ 1.34) $ 0.49 ($ 0.70) ($ 0.03)
Diluted ($ 1.34) $ 0.49 ($ 0.70) ($ 0.03)
========= ========== ========= =========
Weighted Average Number of
Common Shares outstanding
Basic 4,935,542 4,970,788 4,935,542 4,956,629
--------- ---------- --------- ---------
Diluted 4,935,542 4,970,788 4,935,542 4,956,629
--------- ---------- --------- ---------
========= ========== ========= =========
Dividends per Common Share $ 0.26 $ 0.84 $ 0.00 $ 0.15
========= ========== ========= =========
CONTACT Robert A. Hughes Investor Relations 201-339-4600
Pamrapo Bancorp (MM) (NASDAQ:PBCI)
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