United American Bank (OTCBB:UABK), reported results for the second quarter and six months ended June 30, 2010. While net interest income increased by 57.0 percent or $1.2 million to $3.3 million for the second quarter, from net interest income for the same period of the prior year of $2.1 million, the Bank recognized a special loan loss provision of $2.4 for the second quarter resulting in a year-to-date loss of $1.5 million. These figures compare to a loss of $1.9 million for the six months ended June 30, 2009.

President and CEO John Schrup attributed the improvement in net interest income to a sharply reduced overall cost of funds. He explained that the Bank had conducted a time deposit campaign at promotional interest rates in the first quarter of fiscal 2009 to introduce new customers to the Bank. As the time deposits matured, many of those customers chose to continue banking with United American Bank. Average deposits have increased $7.3 million to $348 million for the second quarter of 2010, as compared to $341 million for the prior year. “Our success in this area is reflective of the quality and high level of service provided by our banking professionals,” commented President Schrup.

“This special provision for loan loss will allow the Bank to discharge several problem real estate credits from the loan portfolio,” explained President Schrup. “The performance of our loan portfolio has been impacted by a material decline in the value of a number of real estate credits. However, we believe our balance sheet to be solid, and that our earnings will improve once a stable economy returns,” said Mr. Schrup. “We will work with our regulators to strengthen the Bank’s performance and anticipate entering into a formal understanding to facilitate this effort,” concluded Mr. Schrup.

About United American Bank

United American Bank is a full-service commercial bank headquartered in San Mateo, California. The bank has offices in San Mateo, Sunnyvale, Half Moon Bay, and Redwood City. The bank is dedicated to providing quality banking and financial services to businesses, professionals and individuals who prefer a high level of personalized client service and management. For more information, visit United American Bank on the web at www.UnitedAmericanBank.com or call 650-579-1500.

Safe Harbor

Certain matters discussed in this press release constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements relate to the bank’s current expectations regarding future operating results and the growth in loans, deposits, and assets. These forward looking statements are subject to certain risks and uncertainties that could cause the actual results, or performance to differ materially from those expressed, suggested or implied by the forward looking statements.

These risks and uncertainties include, but are not limited to: (1) the impact on the bank’s performance from changes in interest rates, local and national economic conditions, and the number of financial services providers, (2) the banks ability to continue the current rate of growth, (3) the banks ability to increase net interest income (4) the quality of the loan portfolio and (5) changes in government regulations.

BALANCE SHEET   Quarter   Quarter       Quarter    
(dollars in thousands) Ending Ending Change     Ending Change    
End of Period   6/30/2010     6/30/2009       $     %     3/31/2010       $     %  
 
Total Assets $ 366,560 $ 412,679 $ (46,119 ) -11.2 % $ 397,167 $ (30,607 ) -7.7 %
Total Loans 283,126 283,394 (268 ) -0.1 % 280,273 2,853 1.0 %
Total Deposits 336,890 357,664 (20,774 ) -5.8 % 362,323 (25,433 ) -7.0 %
Allowance for Loan Losses 5,873 6,885 (1,012 ) -14.7 % 6,726 (853 ) -12.7 %
Shareholders' Equity 29,799 35,072 (5,273 ) -15.0 % 31,652 (1,853 ) -5.9 %
 
Quarter Average
 
Total Assets 382,198 398,677 (16,479 ) -4.1 % 396,281 $ (14,083 ) -3.6 %
Total Loans 285,958 277,783 8,175 2.9 % 285,746 212 0.1 %
Total Deposits 347,993 340,708 7,285 2.1 % 357,121 (9,128 ) -2.6 %
Shareholders' Equity 31,723 36,816 (5,093 ) -13.8 % 34,060 (2,337 ) -6.9 %
 
OPERATIONS QUARTER TO DATE
 
Interest Income $ 4,179,756 $ 4,290,421 $ (110,665 ) -2.6 % $ 4,231,726 $ (51,970 ) -1.2 %
Interest Expense   840,094     2,163,285       (1,323,191 ) -61.2 %   1,207,520   (367,426 ) -30.4 %
Net Interest Income 3,339,662 2,127,136 1,212,526 57.0 % 3,024,206 315,456 10.4 %
 
Provision for loan losses 2,400,000 2,400,000 - 0.0 % 300,000 2,100,000 700.0 %
Noninterest Income 145,280 103,145 42,135 40.9 % 299,318 (154,038 ) -51.5 %
Noninterest Expense 2,994,764 3,182,366 (187,602 ) -5.9 % 2,665,415 329,349 12.4 %
Income Tax Expense (Benefit)   (40,400 )   (1,438,000 ) 1,397,600   37,700   (78,100 )
Net Income $ (1,869,422 ) $ (1,914,085 ) 44,663 -2.3 % $ 320,409   (2,189,831 ) -683.4 %
 
RATIOS:
 
Net Interest Margin 3.63 % 2.22 % 3.24 %
Efficiency Ratio 155.00 % 250.00 % 89.23 %
 
ALLL/Gross Loans 2.07 % 2.42 % 2.40 %
Nonperforming/Total Loans 5.50 % 5.49 % 5.32 %
Average Capital/Average Assets 8.30 % 9.23 % 8.59 %

Copyright Business Wire 2010

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