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MISSOULA, Mont., July 23, 2015 (GLOBE NEWSWIRE) -- Treasure State Bank ("the Bank") (OTCBB:TRSU), a Montana chartered community bank, today announced:
President and Chief Executive Officer Jim Salisbury stated, "In the press release reporting the fourth quarter 2014 earnings, I noted that going forward the Bank will make a provision for income taxes on earnings for financial statement purposes at approximately 39.0% and this will reduce earnings on a comparable basis. However, because the tax provision is offset by net operating loss carryforwards, there will not be a cash effect to the Bank until all of the net operating loss carryforwards are fully utilized. Management predicts that it will be some years prior to the Bank being required to actually pay income taxes. Therefore, some discussions will focus on pre-tax earnings as a comparison to prior periods.
In the first quarter of 2015, the Bank reported record pre-tax earnings of $160,000. This quarter's earnings were $35,000 lower due primarily to increased real estate owned expenses and employee compensation costs. Mortgage loan fee income continues to be strong while net interest income declined slightly because of a decrease in earning assets. While the pre-tax earnings of $125,000 for the quarter ended June 30, 2015 were similar to the pre-tax earnings of $133,000 for the same period last year, the return on equity for the current quarter was 5.32% as compared to 7.31% for the same period last year. This is because stockholders' equity at June 30, 2015 was $9.4MM as compared to $7.3MM at June 30, 2014. This is primarily the result of the $1.88MM income tax benefit reported for the quarter ended December 31, 2014.
Our focus continues to be growing the Bank by increasing loan production, which will increase net interest income and loan related fee income. Loan growth during the quarter was flat however. Our net interest margin increased during the quarter and remains strong at 3.56%, complemented by a 2.76% loan loss reserve to total loans and a continued reduction in the Bank's cost of funds of 6.45% year over year to 0.58% at June 30, 2015. Our reduction in cost of funds has slowed and is probably near its bottom.
As noted above, non-performing assets decreased $600,000, year-to-date, or 14.63%, to $3.5MM at June 30, 2015 from $4.1MM at December 31, 2014.
The Bank believes at this time that its reserve for loan losses is sufficient and that no additional provision for loan loss reserves is currently required. There could be additional charges related to foreclosed property if certain appraisals would indicate the need for additional write downs of these assets.
Twenty cents of every dollar is held in domestic liquid assets to cushion the Bank from a rising interest rate environment and to allow for the funding of new loans. In addition, the investments that the Bank owns have very short term maturities, which will not fluctuate significantly in market value should interest rates increase. The current interest rate environment does not reward the Bank for having this relatively high liquidity position because earnings are minimal on these investments. Given the many uncertainties with the global economy and civil unrest, talk of rate increases soon by the Federal Reserve, the massive Federal deficits and current strained political situation in Washington D.C., such position is analogous to a form of 'insurance' that the Bank is willing to incur at this time to continue to improve its financial condition."
For more information regarding this release, or the Bank in general, you may contact James A. Salisbury, President and CEO, at 406-543-8700.
About Treasure State Bank
Treasure State Bank, a Montana chartered community bank, is headquartered in Missoula, Montana. The Bank was founded in January 2007. Treasure State Bank currently trades on the OTCBB under the ticker symbol "TRSU". Treasure State Bank serves businesses, professionals, non-profit organizations and individuals through customized banking services and products. For more information, please visit www.treasurestatebank.com.NEXT ARTICLE