Jacksonville Bancorp Announces Quarterly Results

               Jacksonville Bancorp Announces Quarterly Results

PR Newswire

JACKSONVILLE, Fla., Nov. 14, 2012

JACKSONVILLE, Fla., Nov. 14, 2012 /PRNewswire/ --Jacksonville Bancorp, Inc.
(the "Company") (NASDAQ: JAXB), holding company for The Jacksonville Bank (the
"Bank"), reported a net loss for the three months ended September30, 2012 of
$10.7 million, or $1.81 per basic and diluted common share, compared to the
third quarter 2011 net income of $1.3 million, or $.22 per basic and diluted
common share.The net loss was $21.2 million, or $3.60 per basic and diluted
common share, for the nine months ended September 30, 2012, compared to net
income of $2.8 million, or $.47 per basic and diluted common share, for the
same period in 2011. Book value and tangible book value per common share as
of September 30, 2012 were $2.31 and $2.07, respectively.

(Logo: http://photos.prnewswire.com/prnh/20020410/JAXBLOGO )

The decrease in net income was driven primarily by an increase in provision
for loan losses, noncash goodwill impairment expense and OREO expenses, an
increase in loan related expenses, and a decrease in interest income on
loans. The decreased net interest income when compared to the previous year
was due to a decrease in average earning assets, primarily driven by a
reduction in loan balances, and the average yield earned on these assets.

Interest income decreased $1.1 million during the three-month period ended
September 30, 2012 when compared to the same period in the prior year. This
decrease was driven by a decrease in average earning assets, in particular,
average loan balances which declined by $36.2 million when compared to the
same period in the prior year. This was also attributable to a decrease in
the loan yield to 5.42% for the three-month period ended September 30, 2012
from the 5.93% recognized during the three-month period ended September
30,2011. The decrease in the loan yield was driven by the following factors
when compared to the same period in the prior year:

  oDecrease in accretion recognized on acquired loans of approximately $570
    thousand;
  oDecrease in the weighted-average loan yield for new loans of 60 basis
    points; and
  oModifications to reduce existing loan rates to be competitive in the
    current low-rate market environment.

Interest income decreased $3.8 million during the nine-month period ended
September 30, 2012 when compared to the same period in the prior year. This
decrease was driven by a decrease in average earning assets, in particular,
average loan balances which declined by $44.0 million when compared to the
same period in the prior year. This decrease was also impacted by a decrease
in the average loan yield to 5.36% for the nine-month period ended September
30, 2012 from the 5.93% recognized during the nine months ended September 30,
2011. The decrease in the loan yield was driven by the following factors when
compared to the same period in the prior year:

  oDecrease in accretion recognized on acquired loans of approximately $1.4
    million;
  oDecrease in the weighted-average loan yield for new loans of 74 basis
    points; and
  oModifications to reduce existing loan rates to be competitive in the
    current low-rate market environment.

Interest expense decreased by $503 thousand and $1.5 million during the three-
and nine-month periods ended September30, 2012, respectively, when compared
to the same periods in the prior year. This was partially due to a decrease
in the average cost of interest-bearing liabilities to 1.09% and 1.15% for the
three-month and nine-month periods ended September30, 2012, respectively,
compared to 1.46% and 1.49% for the same periods in the prior year. This
decrease reflected the ongoing reduction in interest rates paid on deposits as
a result of the re-pricing of deposits in the current market environment as
well as a shift in the funding mix from interest-bearing to more
noninterest-bearing deposits which further reduces overall funding costs.

Noninterest income for the three- and nine-month periods ended September 30,
2012, respectively, decreased to $356thousand and $1.1 million when compared
to $376 thousand and $1.2 million in the comparable periods in the prior
year. The decrease for the three-month period ended September 30, 2012,
compared to the same period in the prior year, was driven by a $16 thousand
decrease in service charges on deposit accounts with all other components
remaining relatively flat period over period. The decrease for the nine-month
period ended September 30, 2012, compared to the same period in the prior
year, was driven primarily by a $72 thousand decrease in service charges on
deposit accounts with all other components remaining relatively flat period
over period.

Noninterest expense increased to $10.6 million and $20.6 million,
respectively, for the three- and nine-month periods ended September 30, 2012,
compared to $4.6 million and $13.5 million, respectively, during the same
periods in 2011. This overall increase was mainly due to noncash goodwill
impairment of $3.1 million, an increase in OREO expenses and write-downs of
$1.8 million, loan related expenses of $1.2 million, and capital raise
expenses of $497 thousand as a result of the extended time frame of raising
capital when compared to the same period in the prior year. In comparison,
noninterest expense items related to general operating expenses remained
relatively consistent year over year with increases in compensation,
professional fees, and advertising and business development offset by
reductions in data processing, occupancy and equipment, and regulatory
assessments.

The income tax benefit for the nine months ended September 30, 2012 was $136
thousand compared to $1.7 million for the same period in 2011. The Company
recorded a full valuation allowance against its deferred taxes at December 31,
2011. This was substantially due to the fact that it was "more likely than
not" that the benefit would not be realized in future periods due to Section
382 of the Internal Revenue Code. The calculation for the income tax
provision or benefit generally does not consider the tax effects of changes in
other comprehensive income ("OCI"), which is a component of shareholders'
equity on the balance sheet. However, an exception is provided in certain
circumstances, such as when there is a full valuation allowance against the
net deferred tax assets, there is a loss from continuing operations and income
in other components of the financial statements. In such a case, income from
other categories, such as changes in OCI, must be considered in determining a
tax benefit to be allocated to the loss from continuing operations. During
the nine-month period ended September 30, 2012, this resulted in $136thousand
of income tax benefit allocated to continuing operations. 

Total assets were $551.6 million as of September 30, 2012, compared to $607.9
million as of September 30, 2011.Net loans decreased by 10.1% to $418.7
million as of September 30, 2012, compared to $465.9 million as of September
30, 2011. Total deposits of $493.2 million as of September 30, 2012 increased
$19.3 million compared to total deposits of $473.9million as of December 31,
2011, whereas total deposits decreased $18.6 million compared to total
deposits of $511.8million as of September30, 2011. The increase in total
deposits from December 31, 2011 was driven primarily by an increase in time
deposits of $16.7 million and noninterest-bearing demand deposits of $5.0
million, offset by a decrease in money market, NOW and savings deposits of
$2.4 million. The increase in noninterest bearing demand deposits in relation
to the decrease in interest-bearing deposits resulted in a reduction of
overall funding costs.

As of September 30, 2012, nonperforming assets were $39.8 million, or 7.21% of
total assets, compared to $56.0million, or 9.2% of total assets as of
September 30, 2011. The decrease in nonperforming assets from the third
quarter of 2011 to the third quarter of 2012 is primarily a result of an
increase in loan charge-offs, write-downs on OREO, and the disposition of
substandard assets. This is consistent with the Company's overall strategy,
which began in the second quarter of 2012, to accelerate the disposition of
substandard assets. As of September 30, 2012, nonperforming loans acquired in
the merger with Atlantic BancGroup, Inc. were $9.0million, or 22.5% of total
nonperforming assets.

The following table presents information concerning nonperforming assets as of
the last five quarters:



               For the Period Ended
               September 30,  June 30,    March 31,     December    September
               2012           2012        2012          31,         30,
                                                        2011        2011
Nonperforming
Assets
Nonperforming  $  35,168      $ 46,407      $ 49,066    $ 46,904    $ 51,639
loans
Foreclosed        4,599         7,508         7,667       7,968       4,314
assets, net
Total
nonperforming     39,767        53,915        56,733      54,872      55,953
assets
Nonperforming
loans and
 foreclosed
assets as a
 percent of      7.21    %     9.25   %      9.68   %    9.77   %    9.20   %
total assets
Nonperforming
loans as a
 percent of      8.05    %     10.24  %      10.69  %    10.13  %    10.78  %
gross loans
Loans past due
30-89 days,
 still
accruing       $  11,372      $ 4,628       $ 10,917    $ 7,724     $ 9,270
interest



The increase in loans past due 30-89 days in the current quarter, still
accruing interest, was driven primarily by one large relationship of $2.5
million that is in the process of being renewed, pending regulatory approval,
and one loan of $3.5million that was in process of executing a forbearance
agreement in order to refinance to a lender providing government guaranteed
loans. Both of these situations are anticipated to be resolved in the near
term. Nonperforming loans decreased $11.2million from $46.4 million for the
three months ended June 30, 2012 to $35.2 million for the three months ended
September 30, 2012.

The allowance for loan losses was 4.14% of total loans as of September 30,
2012, compared to 2.75% for the comparable period in 2011 and 2.82% as of
December 31, 2011. Provision for loan loss expense was $6.0 million and
$17.6million for the three- and nine-month periods ended September 30, 2012,
respectively, compared to $1.7 million and $4.8 million for the comparable
periods in 2011. The Company has recorded net charge-offs of $8.5 million and
$12.6 million for the three- and nine-month periods ended September 30, 2012,
respectively, compared to $533 thousand and $4.6million for the comparable
periods in 2011. The high level of charge-offs for the nine months ended
September 30, 2012 is due primarily to the timing of recording charge-offs
related to the Company's disposition of distressed assets on an individual
customer basis. This fits with the Company's current overall strategy to
accelerate the disposition of substandard assets as discussed further below.

During the second quarter of 2012, the Company adopted a new overall strategy
to accelerate the disposition of substandard assets on an individual customer
basis. Certain current appraised values were discounted to estimated fair
value based on current market data such as recent sales of similar properties,
discussions with potential buyers and negotiations with existing customers.
These negotiations have materially impacted the Company's earnings for the
three and nine months ended September 30, 2012 through the increased provision
for loan losses. The Company expects to continue this new strategy for the
foreseeable future.

In addition, the Company has executed a financial advisory agreement with an
investment banking firm (the "Firm") to assist in raising capital. During the
third quarter of 2012, Bancorp executed a Stock Purchase Agreement (the "Stock
Purchase Agreement") with its largest shareholder CapGen Capital Group IV LP
("CapGen"), for the sale of up to 25,000 shares of the Company's preferred
stock, to-be-designated as Mandatorily Convertible, Noncumulative, Nonvoting
Perpetual Preferred Stock, Series A ("Series A Preferred Stock"). Under the
terms of the Stock Purchase Agreement, the Series A Preferred Stock is
mandatorily convertible into shares of the Company's common stock upon
approval by shareholders regarding the issuance of the common stock in
connection with the conversion. The Stock Purchase Agreement was approved
unanimously by Bancorp's Board of Directors in contemplation of the private
placement of 50,000 shares of Series A Preferred Stock at a purchase price of
$1,000 per share for an aggregate of $50.0 million (the "Private Placement").
The closing of the Private Placement is conditioned upon certain factors,
among other customary closing conditions, including: (i) the aggregate sale of
$50.0 million in Series A Preferred Stock to investors, (ii) the determination
of the conversion price and conversion rate of the Series A Preferred Stock
issuance, (iii) the receipt of Federal Reserve approval of CapGen's additional
investment in Bancorp, (iv) the receipt of an opinion from the Company's
independent auditors that the Private Placement should not be an "ownership
change" for purposes of Section 382 of the Internal Revenue Code, and (v) the
receipt of a fairness opinion from a third-party investment banker.

Also during the third quarter of 2012, Bancorp completed a $5.0 million
capital raise through the sale of 5,000 shares of the Company's Noncumulative,
Nonvoting, Perpetual Preferred Stock, Series B, $0.01 par value ("Series B
Preferred Stock"), at a purchase price of $1,000 per share. Proceeds from the
sale of Series B Preferred Stock were $4.9 million, net of offering expenses,
and were used for general operating expenses mainly for the subsidiary bank.
In connection with the $5.0 million capital raise, Bancorp and CapGen entered
into an Exchange Agreement whereby Bancorp agreed to exchange shares of Series
B Preferred Stock for the Series A Preferred Stock simultaneously with the
issuance of shares of Series A Preferred Stock in the Private Placement (the
"Exchange"), unless such shares of Series B Preferred Stock are first redeemed
by the Company. In the Exchange, all issued and outstanding shares of Series
B Preferred Stock would be exchanged for the number of shares of Series A
Preferred Stock having an aggregate liquidation preference equal to the
aggregate Series B liquidation preference, unless otherwise specified under
the closing terms of the Private Placement.

Jacksonville Bancorp, Inc., a bank holding company, is the parent of The
Jacksonville Bank, a Florida state-chartered bank focusing on the Northeast
Florida market with approximately $552 million in assets and eight
full-service branches in Jacksonville, Duval County, Florida, as well as our
virtual branch.The Jacksonville Bank opened for business on May 28, 1999 and
provides a variety of community banking services to businesses and individuals
in Jacksonville, Florida.More information is available at its website at
www.jaxbank.com.

The statements contained in this press release, other than historical
information, are forward-looking statements, which involve risks, assumptions
and uncertainties.The risks, uncertainties and factors affecting actual
results include but are not limited to: our ability to raise capital; our
ability to dispose of substandard assets and the disposition prices thereof;
economic and political conditions, especially in North Florida; real estate
prices and sales in the Company's markets; competitive circumstances; bank
regulation, legislation, accounting principles and monetary policies; the
interest rate environment; efforts to increase our capital and reduce our
nonperforming assets; and technological changes.The Company's actual results
may differ significantly from the results discussed in forward-looking
statements.Investors are cautioned not to place undue reliance on
forward-looking statements, which speak only as of the date hereof.The
Company does not undertake, and specifically disclaims, any obligation to
publicly release any revisions to these forward-looking statements to reflect
events or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.Additional information regarding risk factors can be
found in the Company's filings with the Securities and Exchange Commission
including the Company's Annual Report on Form 10-K for the year ended December
31, 2011 which are incorporated herein by reference.



JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
               For the Three Months Ended
               September 30,   June 30,     March 31,   December     September
                                                        31,          30,
               2012            2012         2012        2011         2011
Consolidated
Earnings
Summary
Total interest $  6,641        $ 6,474      $   6,671   $ 7,145      $ 7,754
income
Total interest    1,238          1,376          1,356     1,591        1,741
expense
Net interest      5,403          5,098          5,315     5,554        6,013
income
Provision for     5,990          11,584         72        7,617        1,737
loan losses
Net interest
income (loss)
after
   provision
   for loan       (587)          (6,486)        5,243     (2,063)      4,276
   losses
Total
noninterest       356            290            437       355          376
income
Total
noninterest       10,560         5,656          4,392     16,677       4,574
expense
Income (loss)
before income     (10,791)       (11,852)       1,288     (18,385)     78
taxes
Income tax
expense           (106)          (30)           -         8,458        (1,219)
(benefit)
Net income     $  (10,685)     $ (11,822)   $   1,288   $ (26,843)   $ 1,297
(loss)



                         For the Three Months Ended
                         September  June 30,   March 31,  December   September
                         30,                              31,        30,
                         2012       2012       2012       2011       2011
Summary Average
Consolidated
    Balance Sheet
Loans, gross             $ 447,885  $ 455,604  $ 459,166  $ 474,612  $ 484,122
Securities                 91,887     82,648     70,427     65,380     66,400
Other earning assets       3,802      25,598     8,741      5,698      14,157
Total earning assets       543,574    563,850    538,334    545,690    564,679
Other assets               20,457     30,144     30,184     47,844     45,931
Total assets             $ 564,031  $ 593,994  $ 568,518  $ 593,534  $ 610,610
Interest-bearing         $ 453,260  $ 471,622  $ 454,613  $ 451,804  $ 473,524
liabilities
Other liabilities          92,012     91,733     84,400     85,936     82,305
Shareholders' equity       18,759     30,639     29,505     55,794     54,781
Total liabilities and
    shareholders' equity $ 564,031  $ 593,994  $ 568,518  $ 593,534  $ 610,610



               For the Three Months Ended
               September    June 30,     March 31,    December     September
               30,                                    31,          30,
               2012         2012         2012         2011         2011
Per Share Data
Basic earnings
(loss) per     $ (1.81)     $ (2.01)     $ 0.22       $ (4.56)     $ 0.22
share
Diluted
earnings       $ (1.81)     $ (2.01)     $ 0.22       $ (4.56)     $ 0.22
(loss) per
share
Basic weighted
average
  shares         5,890,880    5,890,136    5,889,822    5,889,822    5,889,822
  outstanding
Diluted
weighted
average
  shares         5,890,880    5,890,136    5,890,689    5,889,822    5,890,553
  outstanding
Book value per
basic share
  at end of    $ 2.31       $ 3.22       $ 5.23       $ 4.98       $ 9.52
  period
Tangible book
value per
basic
  share at end $ 2.07       $ 2.43       $ 4.42       $ 4.15       $ 6.76
  of period
Total shares
outstanding
  at end of      5,890,880    5,890,880    5,889,822    5,889,822    5,889,822
  period
Closing market
price per      $ 0.92       $ 1.51       $ 3.53       $ 3.15       $ 4.89
share





JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
                 For the Three Months Ended
                 September    June 30,     March 31,   December     September
                 30,                                   31,          30,
                 2012         2012         2012        2011         2011
Selected Ratios
Return on          (7.54)%      (8.00)%      0.91%       (17.94)%     0.84%
average assets
Return on          (226.60)%    (155.19)%    17.56%      (190.87)%    9.39%
average equity
Average equity
to average         3.33%        5.16%        5.19%       9.40%        8.97%
assets
Tangible common
equity to
   tangible        2.22%        2.48%        4.48%       4.39%        6.73%
   assets
Interest rate      3.77%        3.44%        3.78%       3.80%        3.99%
spread
Net interest       3.95%        3.64%        3.97%       4.04%        4.22%
margin
Allowance for
loan losses
   as a
   percentage of   4.14%        4.56%        2.85%       2.82%        2.75%
   total loans
Allowance for
loan losses
   as a
   percentage of   51.47%       44.49%       22.98%      27.77%       25.56%
   NPL's
Ratio of net
charge-offs as
a
   percentage of   7.58%        3.56%        0.01%       6.51%        0.44%
   average loans
Efficiency ratio   183.37%      104.97%      76.36%      282.23%      71.59%
                 As of
                 September    June 30,     March 31,   December     September
                 30,                                   31,          30,
                 2012         2012         2012        2011         2011
Summary
Consolidated
   Balance Sheet
Cash and cash    $ 13,661     $ 25,703     $ 23,136    $ 9,955      $ 22,972
equivalents
Securities         88,838       90,583       78,768      66,025       63,892
Loans, gross       436,754      453,263      459,121     462,607      479,083
Allowance for      (18,100)     (20,647)     (13,082)    (13,024)     (13,197)
loan losses
Loans, net         418,654      432,616      446,039     449,583      465,886
Goodwill           -            3,137        3,137       3,137        14,326
Other intangible   1,380        1,511        1,642       1,774        1,916
assets, net
All other assets   29,018       29,407       33,111      30,951       38,952
Total assets     $ 551,551    $ 582,957    $ 585,833   $ 561,425    $ 607,944
Deposit accounts $ 493,205    $ 521,549    $ 513,513   $ 473,907    $ 511,754
All other          44,767       42,430       41,518      58,174       40,126
liabilities
Shareholders'      13,579       18,978       30,802      29,344       56,064
equity
Total
liabilities and
 shareholders'  $ 551,551    $ 582,957    $ 585,833   $ 561,425    $ 607,944
equity





JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
                                                  For the Nine Months Ended
                                                  September 30,  September 30,
                                                  2012           2011
Consolidated Earnings Summary
Total interest income                             $  19,786      $  23,599
Total interest expense                               3,970          5,425
Net interest income                                  15,816         18,174
Provision for loan losses                            17,646         4,775
Net interest income (loss) after provision for       (1,830)        13,399
loan losses
Total noninterest income                             1,083          1,176
Total noninterest expense                            20,608         13,476
Income (loss) before income tax                      (21,355)       1,099
Income tax benefit                                   (136)          (1,684)
Net income (loss)                                 $  (21,219)    $  2,783
                                                  For the Nine Months Ended
                                                  September 30,  September 30,
                                                  2012           2011
Summary Average Consolidated Balance Sheet
Loans, gross                                      $  454,195     $  498,154
Securities                                           81,691         66,080
Other earning assets                                 12,681         8,371
Total earning assets                                 548,567        572,605
Other assets                                         26,905         46,669
Total assets                                      $  575,472     $  619,274
Interest-bearing liabilities                      $  459,807     $  485,942
Other liabilities                                    89,391         79,894
Shareholders' equity                                 26,274         53,438
Total liabilities and shareholders' equity        $  575,472     $  619,274
                                                  For the Nine Months Ended
                                                  September 30,  September 30,
                                                  2012           2011
Per Share Data
Basic earnings (loss) per share                   $  (3.60)      $  0.47
Diluted earnings (loss) per share                 $  (3.60)      $  0.47
Basic weighted average shares outstanding            5,890,281      5,889,310
Diluted weighted average shares outstanding          5,890,281      5,890,170
Book value per basic share at end of period       $  2.31        $  9.52
Tangible book value per basic share at end of     $  2.07        $  6.76
period
Total shares outstanding at end of period            5,890,880      5,889,822
Closing market price per share                    $  0.92        $  4.89





JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
                                                  For the Nine Months Ended
                                                  September 30,  September 30,
                                                  2012           2011
Selected Ratios
Return on average assets                             (4.93)%         0.60%
Return on average equity                             (107.88)%       6.96%
Average equity to average assets                     4.57%           8.63%
Tangible common equity to tangible assets           2.22%           6.73%
Interest rate spread                                 3.67%           4.02%
Net interest margin                                  3.85%           4.24%
Allowance for loan losses as a percentage of         4.14%           2.75%
total loans
Allowance for loan losses as a percentage of         51.47%          25.56%
NPL's
Ratio of net charge-offs as a percentage of          3.70%           1.25%
average loans
Efficiency ratio                                     121.95%         69.64%
                                                  As of
                                                  September 30,  September 30,
                                                  2012           2011
Summary Consolidated Balance Sheet
Cash and cash equivalents                         $  13,661      $   22,972
Securities                                           88,838          63,892
Loans, gross                                         436,754         479,083
Allowance for loan losses                            (18,100)        (13,197)
Loans, net                                           418,654         465,886
Goodwill                                             -               14,326
Other intangible assets, net                         1,380           1,916
All other assets                                     29,018          38,952
Total assets                                      $  551,551     $   607,944
Deposit accounts                                  $  493,205     $   511,754
All other liabilities                                44,767          40,126
Shareholders' equity                                 13,579          56,064
Total liabilities and shareholders' equity        $  551,551     $   607,944





SOURCE Jacksonville Bancorp, Inc.

Website: http://www.jaxbank.com
Contact: Valerie Kendall, +1-904-421-3051