LACEY, Wash., July 27, 2015 (GLOBE NEWSWIRE) -- Anchor Bancorp (NASDAQ:ANCB) ("Company"), the holding company for Anchor Bank ("Bank"), today reported net income of $624,000 or $0.25 per diluted share, for the fourth quarter of its fiscal year ended June 30, 2015 compared to net income of $298,000 or $0.12 per diluted share for the same period last year.  For the fiscal year ended June 30, 2015 the Company reported net income of $9.8 million or $3.97 per diluted share, which includes an $8.2 million tax benefit related to the reversal of the valuation allowance on deferred tax assets ("DTA") compared to net income of $423,000 or $0.17 per diluted share for the fiscal year ended June 30, 2014.

"This is the first quarter where we believe our expenses related to nonperforming assets have reached a normalized level, as reflected by the $1.2 million decrease in real estate owned related expenses during fiscal 2015 as compared to fiscal 2014.  Our nonperforming assets are at their lowest levels since 2008.  Although our results for fourth quarter include a non-recurring loss of $758,000 from the sale of two loan center facilities, the long term impact of these closings is beneficial as future operating expenses related to these facilities will be eliminated.  Our net interest margin continues to be strong increasing 18 basis points during the year to 4.05%", stated Jerald L. Shaw, the Company's President and Chief Executive Officer.

Fiscal Fourth Quarter Highlights
  • Total classified loans decreased $2.9 million or 44.3% to $3.7 million at June 30, 2015 from $6.6 million at June 30, 2014 and were $5.1 million at March 31, 2015;
  • Total delinquent loans (past due 30 days or more) decreased $3.9 million or 52.0% to $3.6 million at June 30, 2015 from $7.5 million at June 30, 2014;
  • Our allowance for loan losses to nonperforming loans increased to 185.0% at June 30, 2015 from 98.1% at June 30, 2014;
  • Net interest margin ("NIM") increased 21 basis points to 4.14% for the quarter ended June 30, 2015 compared to 3.93% for the quarter ended June 30, 2014; and
  • No provision for loan losses was recorded for the quarter and year ended June 30, 2015 or for the quarter and year ended June 30, 2014.

Credit Quality

Total delinquent loans (past due 30 days or more), decreased $3.9 million, or 52.0% to $3.6 million at June 30, 2015 from $7.5 million at June 30, 2014.  The percentage of nonperforming loans, which includes nonaccrual loans and accruing loans which are 90 days or more past due, to total loans decreased to 0.7% at June 30, 2015 from 1.6% at June 30, 2014.  As a result of our steady improvement in our asset quality we have not recorded a provision for loan losses since March 31, 2013. The allowance for loan losses of $3.7 million at June 30, 2015 represented 1.3% of loans receivable and 185.0% of nonperforming loans. This compares to an allowance for loan losses of $4.6 million at June 30, 2014, representing 1.6% of loans receivable and 98.1% of nonperforming loans.

Nonperforming loans decreased by $603,000 to $2.0 million at June 30, 2015 from $2.6 million at March 31, 2015, $2.8 million at December 31, 2014 and $4.7 million at June 30, 2014.  Nonperforming loans consisted of the following at the dates indicated:

  June 30, 2015   March 31, 2015   December 31, 2014   June 30, 2014
       
  (In thousands)
Real estate:              
One-to-four family $ 1,263     $ 2,104     $ 2,124     $ 2,101  
Multi-family     351     374     158  
Commercial             2,070  
Land         70     150  
Total real estate 1,263     2,455     2,568     4,479  
Consumer:              
Home equity         75      
Automobile              
Credit cards 6     6     5      
Other 31     31     32      
Total consumer 37     37     112      
Business:              
Commercial business 711     122     122     235  
Total $ 2,011     $ 2,614     $ 2,802     $ 4,714  
               

We restructure our delinquent loans, when appropriate, so our borrowers can continue to make payments while minimizing the Company's potential loss.  As of June 30, 2015, March 31, 2015, December 31, 2014 and June 30, 2014 there were 39, 42, 43 and 45 loans, respectively, with aggregate net principal balances of $9.8 million, $10.6 million, $10.8 million and $11.3 million, respectively, classified as "troubled debt restructurings," of which, $902,000, $1.2 million, $1.5 million, and $2.2 million, respectively, were included in the nonperforming loans above.

As of June 30, 2015, the Company had eight real estate owned ("REO") properties with an aggregate book value of $797,000 compared to 10 properties with an aggregate book value of $676,000 at March 31, 2015 and 20 properties with an aggregate book value of $5.1 million at June 30, 2014.  The decrease in number of properties during the year ended June 30, 2015 was primarily attributable to ongoing sales of residential properties and two commercial real estate properties with a net book value of $4.0 million.  During the quarter ended June 30, 2015, the Company sold two residential real estate properties for $154,000 and two land parcels for $85,000 resulting in an aggregate gain on sale of $14,000.  At June 30, 2015, the largest of the REO properties was a residential real estate property with an aggregate book value of $257,000 located in Grays Harbor County, Washington.

Capital

As of June 30, 2015, the Bank exceeded all regulatory capital requirements with, Tier 1 Leverage-Based Capital, Common Equity Tier 1 Capital (CET1), Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios of  14.3%, 16.2%, 16.2% and 17.4%, respectively.  As of June 30, 2014, these ratios were 13.6%, 16.8%, and 18.0%, respectively.  The CET1 ratio is a new regulatory capital ratio required beginning for the quarter ended March 31, 2015.  The Bank paid a $5.0 million cash dividend to Anchor Bancorp.  The dividend will be used to support the Company's operations including the possible repurchase of the Company's common stock. 

Anchor Bancorp exceeded all regulatory capital requirements with Tier 1 Leverage-Based Capital, CET1, Tier 1 Risk-Based Capital and Total Risk-Based Capital ratios of 16.6%, 19.0%, 19.0%, and 20.1% as of June 30, 2015.  As of June 30, 2014, these ratios were 14.0%, 17.1% and 18.3%, respectively.

Balance Sheet Review

Total assets decreased by $9.9 million, or 2.5%, to $379.2 million at June 30, 2015 from $389.1 million at June 30, 2014. Federal Home Loan Bank ("FHLB") stock decreased $5.2 million, or 85.9% to $853,000 and REO decreased $4.3 million, or 84.3% to $797,000 during the year ended June 30, 2015. The FHLB stock decreased due to the merger of the Seattle FHLB with Des Moines FHLB.  Our excess FHLB Seattle stock was redeemed upon the merger in June 2015.  Securities available-for-sale and held-to-maturity decreased $9.4 million, or 24.0% and $1.1 million, or 13.1%, respectively. The decreases in these portfolios were primarily the result of contractual principal repayments and the sale of five securities totaling $2.4 million resulting in a gain of $47,000. These declines were partially offset by an increase in the DTA, net, of $8.3 million as the valuation allowance was reversed on December 31, 2014 due to the Company's return to profitability and its expectations of sustainable profitability for future periods.

Loans receivable, net, increased $1.9 million or 0.7% to $283.4 million at June 30, 2015 from $281.5 million at June 30, 2014 as a result of new loan production exceeding principal reductions and loans transferred to REO.  Commercial real estate loans increased $20.5 million or 19.0% to $128.3 million at June 30, 2015 from $107.8 million at June 30, 2014.  Of that increase $7.7 million is related to retail space and $5.7 million to office space with balances at June 30, 2015 of $17.2 million and $21.2 million, respectively.  Commercial business loans increased $2.3 million or 13.4% to $19.0 million at June 30, 2015 from $16.7 million at June 30, 2014.  Partially offsetting these increases were construction and land loans decreasing $8.0 million, net, or 50.7% to $15.8 million at June 30, 2015 from $23.8 million at June 30, 2014. In addition, one-to-four family loans decreased $5.1 million or 8.0% to $57.9 million from $63.0 million at June 30, 2014.  Multi-family loans decreased $4.3 million or 9.0% to $43.2 million at June 30, 2015 from $47.5 million at June 30, 2014.  In addition, consumer loans decreased $4.4 million or 15.6% to $23.9 million at June 30, 2015 from $28.3 million at June 30, 2014 as consumers continue to reduce their debt. The demand for loans in our market area has been modest during the current economic recovery.

Loans receivable consisted of the following at the dates indicated:

  June 30, 2015   March 31, 2015   June 30, 2014
  (In thousands)
Real estate:          
One-to-four family $ 57,944     $ 59,863     $ 63,009  
Multi-family 43,249     42,015     47,507  
Commercial 128,306     112,358     107,828  
Construction 11,731     22,010     19,690  
Land loans 4,069     4,130     4,126  
Total real estate 245,299     240,376     242,160  
           
Consumer:          
Home equity 17,604     18,512     20,894  
Credit cards 3,289     3,233     3,548  
Automobile 686     776     1,073  
Other consumer 2,347     2,299     2,838  
Total consumer 23,926     24,820     28,353  
           
Business:          
Commercial business 18,987     17,276     16,737  
           
Total Loans 288,212     282,472     287,250  
           
Less:          
Deferred loan fees 1,047     1,062     1,100  
Allowance for loan losses 3,721     3,818     4,624  
Loans receivable, net $ 283,444     $ 277,592     $ 281,526  
           

Total liabilities decreased $19.2 million between June 30, 2015 and June 30, 2014, primarily as the result of a decline in our interest bearing deposits, mostly certificates of deposit, of $14.8 million or 5.5% and a decrease in FHLB advances of $7.5 million or 42.9% to $10.0 million.

Deposits consisted of the following at the dates indicated:

  June 30, 2015   March 31, 2015   June 30, 2014
  Amount   Percent   Amount   Percent   Amount   Percent
  (Dollars in thousands)
Noninterest-bearing demand deposits $ 44,719     15.0 %   $ 42,208     14.1 %   $ 41,149     13.2 %
Interest-bearing demand deposits 22,448     7.5     22,084     7.4     22,771     7.3  
Money market accounts 63,916     21.3     64,876     21.8     69,610     22.4  
Savings deposits 42,399     14.1     41,864     14.0     39,693     12.8  
Certificates of deposit 126,330     42.1     127,193     42.7     137,811     44.3  
Total deposits $ 299,812     100.0 %   $ 298,225     100.0 %   $ 311,034     100.0 %
                       

Total stockholders' equity increased $10.0 million or 18.7% to $63.7 million at June 30, 2015 from $53.7 million at June 30, 2014. The increase was primarily the result of income of $9.8 million of which $8.3 million was from the reversal of our deferred tax asset valuation allowance and $1.5 million from operating income for year the ended June 30, 2015.

Operating Results

Net interest income. Net interest income before the provision for loan losses remained virtually unchanged at $3.5 million for the quarters ended June 30, 2015 and June 30, 2014.  For the year ended June 30, 2015, net interest income before the provision for loan losses decreased $298,000 or 2.1% to $13.8 million from $14.1 million for fiscal 2014. Average loans receivable, net, for the quarter ended June 30, 2015 increased $2.1 million or 0.7% to $284.3 million from $282.2 million for the quarter ended June 30, 2014.  For the year ended June 30, 2015, average loans receivable, net, increased $271,000 or 0.1% to $282.8 million from $282.6 million for the year ended June 30, 2014.

The Company's net interest margin increased 21 basis points to 4.14% for the fourth quarter ended June 30, 2015 from 3.93% for the comparable period in 2014.  The yield on mortgage-backed securities increased to 2.06% from 1.88% for the same period in the prior year. The average yield on interest-earning assets increased seven basis points to 4.98% from 4.91% for the quarters ended June 30, 2015 and 2014.  The average cost of interest-bearing liabilities decreased 13 basis points to 1.06% for the fourth quarter ended June 30, 2015 compared to 1.19% for the same period in the prior year. For the year ended June 30, 2015, the Company's net interest margin increased 18 basis points to 4.05% compared to 3.87% for the year ended June 30, 2014.  The improvement in our net interest margin compared to the same quarter last year and a year ago reflects a significant reduction in the adverse effect of nonperforming assets and reductions in the cost of deposits and FHLB advances. The average yield on interest-earning assets increased eight basis points to 4.96% for the year ended June 30, 2015 compared to 4.88% for the same period in the prior year. The average cost of interest-bearing liabilities decreased seven basis points to 1.13% for the year ended June 30, 2015 compared to 1.20% for the same period of the prior year reflecting the low interest rate environment that has persisted throughout the year.

Provision for loan losses. In connection with its analysis of the loan portfolio at June 30, 2015, management determined that no provision for loan losses was required for the quarter ended June 30, 2015 and there was no provision for the same period of the prior year.  There was no provision for loan losses for both years ended June 30, 2015 and 2014, reflecting management's analysis of the general loan loss reserve adequacy and improvement in the portfolio credit quality.

Noninterest income. Noninterest income increased $658,000, or 66.0%, to $1.7 million for the quarter ended June 30, 2015 compared to $1.0 million for the same quarter a year ago. The increase in noninterest income was primarily attributable to the $480,000 or 363.6% increase in bank owned life insurance in the quarter ended June 30, 2015 to $612,000 compared to $132,000 for the same quarter a year ago primarily due to the receipt of $479,000 related to a former Anchor Bank executive's insurance death benefit.  In addition, other income increased $257,000, or 257.0% to $357,000 in the same period in 2014 primarily due to a large prepayment on a commercial real estate loan.  The increase was offset by a decline of $81,000, or 19.5% to $335,000 for deposit service fees as compared to the same quarter a year ago.  Noninterest income increased 10.5% to $4.5 million during the year ended June 30, 2015 compared to $4.1 million for the same period in 2014 primarily for the same reasons discussed above for the quarter.

Noninterest expense. Noninterest expense increased $483,000, or 11.6%, to $4.6 million for the quarter ended June 30, 2015 from $4.2 million for the quarter ended June 30, 2014 primarily due to a loss on sale of premises, $758,000 for our Aberdeen Loan Center locations.  Gain on sale of REO property decreased $350,000 or 96.2% to $14,000 from $364,000 and REO impairment expense declined $276,000 or 174.7% to a recovery of $(118,000) from a write down of $158,000 for the same period last year.  REO holding costs declined by $97,000 to $20,000 for the quarter ended June 30, 2015 as compared to $117,000 for the same quarter last year.  Noninterest expense decreased $953,000 or 5.4% in the year ended June 30, 2015 to $16.8 million from $17.8 million for the year ended June 30, 2014.  The decrease was primarily due to a decrease in REO impairment expense of $1.1 million and REO holding costs decrease of $180,000 or 40.3% from $447,000 to $267,000 as compared to the same period in 2014, reflecting the stabilization in real estate prices in our market.  In addition our general and administrative expenses decreased $423,000 or 13.7% during the year ended June 30, 2015 to $2.7 million from $3.1 million last year reflecting our focus on cost control.

About the CompanyAnchor Bancorp is headquartered in Lacey, Washington and is the parent company of Anchor Bank, a community-based savings bank primarily serving Western Washington through its 11 full-service banking offices (including one Wal-Mart in-store location) within Grays Harbor, Thurston, Lewis, Pierce and Mason counties, Washington. The Company's common stock is traded on the NASDAQ Global Market under the symbol "ANCB" and is included in the Russell 2000 Index. For more information, visit the Company's web site www.anchornetbank.com.

Forward-Looking Statements: Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities, including changes in the level and trend of loan delinquencies and write-offs that may be impacted by deterioration in the housing and commercial real estate markets and may lead to increased losses and nonperforming assets in our loan portfolio, and may result in our allowance for loan losses not being adequate to cover actual losses, and require us to materially increase our reserves; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; results of examinations of us by the Federal Reserve Bank of San Francisco and our bank subsidiary by the Federal Deposit Insurance Corporation ("FDIC"), the Washington State Department of Financial Institutions, Division of Banks ("Washington DFI") or other regulatory authorities, including the possibility that any such regulatory authority may, among other things, require us to increase our reserve for loan losses, write-down assets, change our regulatory capital position or affect our ability to borrow funds or maintain or increase deposits, which could adversely affect our liquidity and earnings and other factors described in the Company's latest annual Report on Form 10-K and Quarterly Reports on Form 10-Q and other filings with the Securities and Exchange Commission-which are available on our website at www.anchornetbank.com and on the SEC's website at www.sec.gov. Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements.  These risks could cause our actual results for fiscal 2015 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of us, and could negatively affect the Company's operations and stock price performance.

 
ANCHOR BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION  (Dollars in thousands), (unaudited) June 30, 2015   March 31, 2015   June 30, 2014
           
ASSETS          
Cash and cash equivalents $ 14,450     $ 12,885     $ 14,758  
Securities available-for-sale, at fair value 29,565     31,359     38,917  
Securities held-to-maturity, at amortized cost 7,617     7,903     8,765  
Loans held for sale 505          
Loans receivable, net of allowance for loan losses of $3,721, $3,818  and $4,624 283,444     277,592     281,526  
Life insurance investment, net of surrender charges 19,001     19,835     19,428  
Accrued interest receivable 1,069     1,045     1,236  
Real estate owned, net 797     676     5,067  
Federal Home Loan Bank (FHLB) stock, at cost 853     5,859     6,046  
Property, premises and equipment, net 10,370     11,212     11,313  
Deferred tax asset, net 8,867     8,696     555  
Prepaid expenses and other assets 2,691     1,227     1,517  
Total assets $ 379,229     $ 378,289     $ 389,128  
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
LIABILITIES          
Deposits:          
Noninterest-bearing $ 44,719     $ 42,208     $ 41,149  
Interest-bearing 255,093     256,017     269,885  
Total deposits 299,812     298,225     311,034  
           
FHLB advances 10,000     10,000     17,500  
Advance payments by borrowers for taxes and insurance 1,002     1,583     891  
Supplemental Executive Retirement Plan liability 1,814     1,704     1,715  
Accounts payable and other liabilities 2,879     3,610     4,313  
Total liabilities 315,507     315,122     335,453  
           
STOCKHOLDERS' EQUITY          
Preferred stock, $0.01 par value per share authorized 5,000,000 shares; no shares issued or outstanding          
Common stock, $0.01 par value per share, authorized 45,000,000 shares; 2,550,000 shares issued at June 30, 2015, March 31, 2015 and June 30, 2014 and 2,480,865, 2,479,143 and 2,473,981 shares outstanding at June 30, 2015, March 31, 2015 and June 30, 2014, respectively 25     25     25  
Additional paid-in capital 23,404     23,376     23,293  
Retained earnings, substantially restricted 41,740     41,116     31,914  
Unearned Employee Stock Ownership Plan (ESOP) shares (736 )   (745 )   (797 )
Accumulated other comprehensive loss, net of tax (711 )   (605 )   (760 )
Total stockholders' equity 63,722     63,167     53,675  
Total liabilities and stockholders' equity $ 379,229     $ 378,289     $ 389,128  

 

ANCHOR BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in thousands, except per share data) (unaudited) Three Months Ended  June 30,   Year Ended June 30,
  2015   2014   2015   2014
Interest income:              
Loans receivable, including fees $ 3,987     $ 4,076     $ 16,006     $ 16,718  
Securities 15     18     57     115  
Mortgage-backed securities 195     227     823     956  
Total interest income 4,197     4,321     16,886     17,789  
Interest expense:              
Deposits 677     707     2,730     2,936  
FHLB advances 29     158     346     745  
Total interest expense 706     865     3,076     3,681  
Net interest income before provision for loan losses 3,491     3,456     13,810     14,108  
Provision for loan losses              
Net interest income after provision for loan losses 3,491     3,456     13,810     14,108  
Noninterest income              
Deposit service fees 335     416     1,381     1,562  
Other deposit fees 184     198     735     790  
Gain on sale of investments         47      
Loans fees 162     144     588     657  
Gain (loss) on sale of loans 5     7     (15 )   8  
Bank owned life insurance 612     132     1,019     549  
Other income 357     100     748     509  
Total noninterest income 1,655     997     4,503     4,075  
Noninterest expense              
Compensation and benefits 2,025     2,054     8,003     8,100  
General and administrative expenses 632     738     2,663     3,086  
Real estate owned (recoveries) impairment, net (118 )   158     32     1,090  
Real estate owned holding costs 20     117     267     447  
Federal Deposit Insurance Corporation (FDIC) insurance premiums 31     115     342     505  
Information technology 438     410     1,739     1,710  
Occupancy and equipment 513     457     1,944     1,833  
Deposit services 99     262     570     725  
Marketing 254     208     710     679  
Loss (gain) on sale of property, premises and equipment 758         820     (8 )
Gain on sale of real estate owned (14 )   (364 )   (283 )   (407 )
Total noninterest expense 4,638     4,155     16,807     17,760  
Income before provision for income taxes 508     298     1,506     423  
Provision for income taxes (116 )       (8,321 )    
Net income $ 624     $ 298     $ 9,827     $ 423  
Basic earnings per share $ 0.25     $ 0.12     $ 3.97     $ 0.17  
Diluted earnings per share $ 0.25     $ 0.12     $ 3.97     $ 0.17  

  As of or For the Quarter Ended(unaudited)
  June 30, 2015   March 31, 2015   December 31, 2014   June 30, 2014
  (Dollars in thousands)
SELECTED PERFORMANCE RATIOS              
Return on average assets (1) 0.67 %   0.33 %   2.67 %   0.30 %
Return on average equity (2) 4.82     2.32     19.35     2.31  
Average equity-to-average assets (3) 13.96     14.15     13.82     13.17  
Interest rate spread (4) 3.92     3.85     3.84     3.72  
Net interest margin (5) 4.14     4.07     4.06     3.93  
Efficiency ratio (6) 90.1     127.0     123.1     93.3  
Average interest-earning assets to average interest-bearing liabilities 126.3     89.9     89.9     121.0  
Other operating expenses as a percent of average total assets 5.0     4.1     4.2     4.3  
               
CAPITAL RATIOS (Anchor Bank)              
Tier 1 leverage 14.3     16.3     16.2     13.6  
Common equity Tier 1 capital (7) 16.2     19.0     N/A     N/A  
Tier 1 risk-based 16.2     19.0     19.4     16.8  
Total risk-based 17.4     20.2     20.7     18.0  
               
ASSET QUALITY              
Nonaccrual and loans 90 days or more past due and still accruing interest as a percent of total loans 0.7     0.9     1.0     1.6  
Allowance for loan losses as a percent of total loans 1.3     1.4     1.4     1.6  
Allowance as a percent of total nonperforming loans 185.0     146.1     142.8     98.1  
Nonperforming assets as a percent of total assets 0.7     0.9     0.9     2.5  
Net charge-offs (recoveries) to average  outstanding loans 0.03     0.06     0.00     (0.15 )
Classified loans $ 3,682     $ 5,093     $ 5,326     $ 6,608  
_____________________              

(1) Net income divided by average total assets, annualized.(2) Net income divided by average equity, annualized.(3) Average equity divided by average total assets.(4) Difference between weighted average yield on interest-earning assets and weighted average rate on interest-bearing liabilities.(5) Net interest income as a percentage of average interest-earning assets.(6) Noninterest expense divided by the sum of net interest income and noninterest income.(7) The common equity Tier 1 capital ratio was required beginning the quarter ended March 31, 2015. 

 

Contact:Jerald L. Shaw, PresidentTerri L. Degner, EVP and Chief Financial OfficerAnchor Bancorp(360) 491-2250

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