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Jacksonville Bancorp Announces 2013 First Quarter Earnings

          Jacksonville Bancorp Announces 2013 First Quarter Earnings

PR Newswire

JACKSONVILLE, Fla., May 9, 2013

JACKSONVILLE, Fla., May 9, 2013 /PRNewswire/ -- Jacksonville Bancorp, Inc.
(the "Company") (NASDAQ: JAXB), holding company for The Jacksonville Bank (the
"Bank"), reported net income for the three months ended March 31, 2013 of $199
thousand compared to $1.3 million of net income for the three months ended
March 31, 2012. Book value and tangible book value per common share as of
March 31, 2013 were $0.32 and $0.30, respectively.

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

Net income for the first quarter of 2013 was driven primarily by (i) net
interest income of $5.2 million, (ii) provision for loan losses of $0.2
million, (iii) noninterest income of $0.4 million, and (iv) noninterest
expenses of $5.2 million. The slight decrease in net interest income when
compared to the same period in the prior year was due to a decrease in
interest earned on interest-earning assets, driven primarily by a decrease in
average earning assets (in particular average loan balances) slightly offset
by an increase in the average yield on loans.

Total interest income decreased $0.3 million for the three months ended March
31, 2013 when compared to the same period in 2012. This decrease was
primarily driven by a decrease in average earning assets, in particular,
average loan balances which declined by $63.6 million when compared to the
same period in the prior year. The decrease in average loan balances was
partially offset by an increase in the average yield on loans to 6.03% for the
three months ended March31, 2013 compared to 5.41% for the three months ended
March 31, 2012. The increase in the loan yield was driven by an increase in
accretion recognized on acquired loans of approximately $0.4 million as well
as a decrease in total nonperforming loans of $29.0 million for the three
months ended March 31, 2013 when compared to the same period in 2012.

Interest expense decreased by $0.3 million to $1.1 million for the three
months ended March 31, 2013 from $1.4 million for the three months ended March
31, 2012. This was primarily due to a decrease in the average cost of
interest-bearing liabilities to 1.11% for the three months ended March 31,
2013, compared to 1.20% for the same period in 2012. This decrease reflects
the ongoing reduction in interest rates paid on interest-bearing liabilities
(particularly on deposits) as a result of repricing activities in the current
low interest rate environment coupled with an increase in noninterest-bearing
deposits to $89.9 million as of March 31, 2013 from $80.8 million as of March
31, 2012.

Noninterest income remained relatively consistent period-over-period, with
$0.4 million in service charges and other income for the three months ended
March 31, 2013 and 2012. The Company sold $2.2 million of its municipal
securities at a $37thousand realized gain during the three months ended March
31, 2013.

Noninterest expense increased to $5.2 million for the three months ended March
31, 2013, compared to $4.4 million for the three months ended March 31, 2012.
This increase was mainly due to an increase in professional fees of $0.3
million and other expenses of $0.5 million, primarily loan-related expenses,
while the remainder of components of noninterest expense remained relatively
flat period-over-period.

There was no income tax expense recorded during the three months ended March
31, 2013 and 2012. The Company recorded a full valuation allowance against
its deferred taxes as of 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. Based on
an analysis performed as of March 31, 2013 and December 31, 2012, it was
determined that the need for a full valuation allowance still existed.

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. This strategy is ongoing and supports the continued reduction of
problem assets as needed. In addition, the Company has been and will continue
to fine tune the current credit processes. The Company is working to
reposition its loan and deposit portfolio mix to better align with our
targeted market segment of professional services, wholesalers, distributors
and other service industries resulting in greater diversification in our
balance sheet mix. The capital received late in 2012 is being deployed into
short-term investments to maximize earnings while the desired loan growth is
achieved.

During the fourth quarter of 2012, the Company completed a $50.0 million
capital raise through the private placement of 50,000 shares of the Company's
Mandatorily Convertible, Noncumulative, Nonvoting, Perpetual Preferred Stock,
Series A ("Series A Preferred Stock"), at a purchase price of $1,000 per
share. Consideration in the private placement included cash, the one-for-one
exchange of Series B preferred stock sold in the $5.0 million bridge financing
completed during the third quarter of 2012 and $1.8 million in the
cancellation of outstanding debt under the Company's revolving loan agreements
held by certain purchasers in the private placement and/or their related
interests. Net proceeds from the issuance of preferred stock in the amount of
$45.1 million were used for general operating expenses, mainly for the
subsidiary bank, to improve capital ratios and will be used to support the
Company's business strategy going forward. On February 19, 2013, after
receiving requisite shareholder approvals, all issued and outstanding shares
of Series A Preferred Stock automatically converted into an aggregate of 47.6
million shares of common stock and 52.4 million shares of the Company's newly
authorized nonvoting common stock. Book value and tangible book value per
common share as of December 31, 2012 were $2.55 and $2.34, respectively. Book
value and tangible book value per common share as of December 31, 2012,
adjusted for the conversion, were $0.32 and $0.31, respectively. Please refer
to the Company's Non-GAAP Reconciliations for additional information related
to these non-GAAP financial measures. In addition, on December 31, 2012, the
Bank completed the sale of $25.1 million in assets, including non-accrual
loans and other loans with a history of being past due of $24.6 million and
other real estate owned ("OREO") of $0.5 million, to a real estate investment
firm, for a purchase price of $11.7 million.

Total assets were $520.9 million as of March 31, 2013, compared to $585.3
million as of March 31, 2012.The decrease in total assets was largely due to
the decrease in net loans as a result of the Company's execution of its
overall strategy to accelerate the disposition of substandard assets as
discussed above. To a lesser extent, the write-off of the Company's goodwill
also decreased total assets period-over-period. Total assets decreased $44.2
million as of March 31, 2013 from December 31, 2012. This decrease in total
assets was due to the Company experiencing a significant decrease in cash and
cash equivalents as a result of a reduction in federal funds sold in the
amount of $47.3 million due to the purchase of investment securities
available-for-sale and the timing of the natural maturity of deposit accounts,
particularly time deposits. In addition, there was a decrease in net loans of
$4.7 million, primarily due to foreclosure activities during the three months
ended March 31, 2013. These amounts were offset by an increase in securities
available-for-sale of $7.3 million during the three months ended March 31,
2013.

Total deposits were $446.2 million as of March 31, 2013, a decrease of $67.3
million compared to total deposits of $513.5million as of March 31, 2012.
The decrease in total deposits during the first quarter of 2013 when compared
to the first quarter of 2012 was driven primarily by a decrease in time
deposits of $54.5 million due largely to a reduction in national and brokered
CDs (the Company is currently not offering or renewing national or brokered
CDs). This decrease was offset slightly by a $9.1 million increase in
noninterest-bearing demand deposits. 

As of March 31, 2013, nonperforming assets were $30.0 million, or 5.76% of
total assets, compared to $56.7million, or 9.68% of total assets, as of March
31, 2012. The decrease in nonperforming assets was driven primarily by an
increase in loan charge-offs, specifically during 2012, write-downs on OREO,
the disposition of OREO via sale or substandard assets via short sales, and
the disposition of substandard assets via the asset sale completed late in the
fourth quarter of 2012. This is consistent with the Company's overall
strategy to accelerate the disposition of substandard assets.

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

                  For the Period Ended
(Dollars in       March 31,   December 31,  September   June 30,    March 31,
thousands)        2013        2012          30,         2012        2012
                                            2012
Nonperforming
Assets
Total
nonperforming     $ 20,067    $  22,747     $ 35,168    $ 46,407    $ 49,066
loans
Foreclosed          9,920        6,971        4,599       7,508       7,667
assets, net
Total
nonperforming     $ 29,987    $  29,718     $ 39,767    $ 53,915    $ 56,733
assets
Nonperforming
loans and
foreclosed
 assets as a
percent of total    5.76   %     5.26    %    7.21   %    9.25   %    9.68   %
assets
Nonperforming
loans as a
percent of
 gross loans       5.10   %     5.71    %    8.05   %    10.24  %    10.69  %
Loans past due
30-89 days, still
 accruing        $ 8,246     $  4,622      $ 11,372    $ 4,628     $ 10,917
interest

Total loans past due still accruing interest increased $3.6 million to $8.2
million as of March 31, 2013 from $4.6million as of December 31, 2012. This
increase was driven primarily by several larger loans in process of renewal as
well as one relationship that is being orderly liquidated. Nonperforming
loans decreased $2.6million to $20.1 million as of March 31, 2013 from $22.7
million as of December 31, 2012.

The allowance for loan losses was 5.04% of total loans as of March 31, 2013,
compared to 2.85% as of March 31, 2012 and 5.07% as of December 31, 2012.
Provision for loan loss expense was $217 thousand for the three months ended
March 31, 2013, compared to $72 thousand in 2012. The Company recorded net
charge-offs of $595 thousand for the three months ended March 31, 2013,
compared to $14 thousand in 2012. The higher level of charge-offs for the
three months ended March 31, 2013 was primarily due to the Company's continued
disposition of distressed assets on an individual customer basis. This fits
with the Company's strategy to accelerate the disposition of substandard
assets as discussed above.

On a diluted per common share basis, the Company had a net loss of $0.61 for
the three months ended March 31, 2013, compared to net income of $0.22 for the
same period in the prior year. The Company experienced a net loss per diluted
common share due to the reduction of net income available to common
shareholders in the amount of $31.5 million as a result of the noncash,
implied preferred stock dividend recognized in conjunction with the mandatory
conversion of the Company's Series A Preferred Stock into approximately
47.6million shares of common stock and 52.4million shares of a new class of
nonvoting common stock (the "Conversion"), during the three months ended March
31, 2013. As adjusted to reflect earnings (loss) per common share less the
impact of the noncash, implied preferred stock dividend, basic and diluted
earnings per common share was $0.00 for the three months ended March 31,
2013. Please refer to the Company's Non-GAAP Reconciliations for additional
information related to this non-GAAP financial measure.

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 $520.9 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.

This press release contains non-GAAP financial disclosures that are not in
accordance with generally accepted accounting principles in the United States
of America ("U.S. GAAP"). The Company uses certain non-GAAP financial
measures to provide meaningful, supplemental information regarding its
operational results and to enhance investors' overall understanding of the
Company's financial performance. The limitations associated with these
non-GAAP financial measures include the risk that persons might disagree as to
the appropriateness of items comprising these measures and that different
companies might calculate these measures differently. In addition, these
disclosures should not be considered an alternative to the Company's GAAP
results. Please refer to the table at the end of this release for a
reconciliation of the non-GAAP financial measures to the most directly
comparable GAAP financial measures.

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 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, 2012, which are incorporated herein
by reference.



JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
                 For the Three Months Ended
                 March 31,      December     September    June 30,     March 31,
                                31,          30,
                 2013           2012         2012         2012         2012
Consolidated
Earnings Summary
Total interest   $ 6,362        $ 6,466      $ 6,641      $ 6,474      $ 6,671
income
Total interest     1,133          1,286        1,238        1,376        1,356
expense
Net interest       5,229          5,180        5,403        5,098        5,315
income
Provision for      217            20,348       5,990        11,584       72
loan losses
Net interest
income (loss)      5,012          (15,168)     (587)        (6,486)      5,243
after provision
for loan losses
Total
noninterest        424            420          356          290          437
income
Total
noninterest        5,237          7,118        10,560       5,656        4,392
expense
Income (loss)
before income      199            (21,866)     (10,791)     (11,852)     1,288
tax
Income tax         -              (37)         (106)        (30)         -
benefit
Net income       $ 199          $ (21,829)   $ (10,685)   $ (11,822)   $ 1,288
(loss)
Noncash, implied
preferred stock    (31,464)       -            -            -            -
dividend
Net(loss)
incomeavailable $ (31,265)     $ (21,829)   $ (10,685)   $ (11,822)   $ 1,288
to common
shareholders
                 For the Three Months Ended
                 March 31,      December     September    June 30,     March 31,
                                31,          30,
                 2013           2012         2012         2012         2012
Summary Average
Consolidated
Balance Sheet
Loans, gross     $ 395,589      $ 425,813    $ 447,885    $ 455,604    $ 459,166
Securities         91,186         88,931       91,887       82,648       70,427
Other earning      32,816         16,353       3,802        25,598       8,741
assets
Total earning      519,591        531,097      543,574      563,850      538,334
assets
Other assets       18,464         22,144       20,457       30,144       30,184
Total assets     $ 538,055      $ 553,241    $ 564,031    $ 593,994    $ 568,518
Interest-bearing $ 412,753      $ 442,426    $ 453,260    $ 471,622    $ 454,613
liabilities
Other              91,734         98,198       92,012       91,733       84,400
liabilities
Shareholders'      33,568         12,617       18,759       30,639       29,505
equity
Total
liabilities and  $ 538,055      $ 553,241    $ 564,031    $ 593,994    $ 568,518
shareholders'
equity
                 For the Three Months Ended
                 March 31,      December     September    June 30,     March 31,
                                31,          30,
                 2013           2012         2012         2012         2012
Per Share Data
Basic (loss)
earnings per     $ (0.61)       $ (3.71)     $ (1.81)     $ (2.01)     $ 0.22
common share
Diluted (loss)
earnings per     $ (0.61)       $ (3.71)     $ (1.81)     $ (2.01)     $ 0.22
common share
Basic weighted
average common     51,446,436     5,890,880    5,890,880    5,890,136    5,889,822
shares
outstanding
Diluted weighted
average common     51,447,063     5,890,880    5,890,880    5,890,136    5,890,689
shares
outstanding
Total shares
outstanding at     105,890,880    5,890,880    5,890,880    5,890,880    5,889,822
end of period
Closing market   $ 1.50         $ 0.80       $ 0.92       $ 1.51       $ 3.53
price per share



JACKSONVILLE BANCORP, INC.
(Unaudited)
(Dollars in thousands, except per share data)
              For the Three Months Ended
              March 31,   December      September     June 30,      March 31,
                          31,           30,
              2013        2012          2012          2012          2012
Selected
ratios
Return on
average         0.15%       (15.70)%      (7.54)%       (8.00)%       0.91%
assets
Return on
average         2.40%       (688.29)%     (226.60)%     (155.19)%     17.56%
equity
Average
equity to       6.24%       2.28%         3.33%         5.16%         5.19%
average
assets
Tangible
common equity   6.21%       2.44%         2.22%         2.48%         4.48%
to tangible
assets
Interest rate   3.86%       3.68%         3.77%         3.44%         3.78%
spread
Net interest    4.08%       3.88%         3.95%         3.64%         3.97%
margin
Allowance for
loan losses
as a            5.04%       5.07%         4.14%         4.56%         2.85%
percentage of
total loans
Allowance for
loan losses
as a            98.77%      88.79%        51.47%        44.49%        22.98%
percentage of
NPL's
Ratio of net
charge-offs
as a           0.61%       17.05%        7.58%         3.56%         0.01%
percentage of
average loans
Efficiency      92.64%      127.11%       183.37%       104.97%       76.36%
ratio
              As of
              March 31,   December      September     June 30,      March 31,
                          31,           30,
              2013        2012          2012          2012          2012
Summary
Consolidated
Balance Sheet
Cash and cash $ 23,961    $ 72,079      $ 13,661      $ 25,703      $ 23,136
equivalents
Securities      91,262      83,985        88,838        90,583        78,768
Loans, gross    392,989     398,031       436,754       453,263       459,121
Allowance for   (19,820)    (20,198)      (18,100)      (20,647)      (13,082)
loan losses
Loans, net      373,169     377,833       418,654       432,616       446,039
Goodwill        -           -             -             3,137         3,137
Other
intangible      1,153       1,260         1,380         1,511         1,642
assets, net
All other       31,353      29,900        29,018        29,407        33,111
assets
Total assets  $ 520,898   $ 565,057     $ 551,551     $ 582,957     $ 585,833
Deposit       $ 446,235   $ 490,021     $ 493,205     $ 521,549     $ 513,513
accounts
All other       41,239      41,460        44,767        42,430        41,518
liabilities
Shareholders'   33,424      33,576        13,579        18,978        30,802
equity
Total
liabilities
and           $ 520,898   $ 565,057     $ 551,551     $ 582,957     $ 585,833
shareholders'
equity



JACKSONVILLE BANCORP, INC.
Non-GAAP Reconciliations
(Unaudited)
(Dollars in thousands, except share and per share data)
                                             March 31, 2013  March 31, 2013

                                             (as reported)   (as adjusted)^(1)
(Loss) Earnings Per Common Share:
Net income                                   $  199          $    199
  Less: Noncash implied preferred stock         (31,464)          -
  dividend
Net (loss) income available to common        $  (31,265)     $    199
shareholders
Basic weighted average common shares            51,446,436        51,446,436
outstanding
Diluted weighted average common shares          51,447,063        51,447,063
outstanding
Basic (loss) earnings per common share       $  (0.61)       $    0.00
Diluted (loss) earnings per common share     $  (0.61)       $    0.00

  

^(1)  Adjusted to reflect the calculation of (loss) earnings per common
share less the impact of the noncash, implied preferred stock dividend
recognized in conjunction with the Conversion during the three months ended
March 31, 2013.



                           December 31, 2012  Conversion     December 31, 2012
                                              Adjustments
                           (as reported)                     (as adjusted)
Book Value Per Common
Share
Shareholders' equity^(2)   $    33,576        $ -            $   33,576
  Less: Preferred               18,536          (18,536)         -
  stock^(3)
Book value                 $    15,040          -            $   33,576
  Less: Goodwill and other      1,260           -                1,260
  intangible assets
Tangible book value        $    13,780        $ -            $   32,316
Shares outstanding              5,890,880       100,000,000      105,890,880
Book value per common           2.55                             0.32
share^(4)
Tangible book value per         2.34                             0.31
common share^(5)

  

^(2)  Assumes the full Conversion of the Series A Preferred Stock into
100,000,000 shares of common stock and nonvoting common stock as of December
31, 2012, resulting in an additional $50.0 million in common equity, no
preferred stock outstanding, and a noncash, implied dividend recognized as a
reduction of retained earnings in conjunction with the discount on the Series
A Preferred Stock beneficial conversion feature of $31.5 million. Total
shareholders' equity did not change as a result of this transaction.

^(3)  Assumes no shares of preferred stock outstanding following the
Conversion.

^(4)  Calculated as book value divided by shares outstanding, where book
value is calculated as shareholders' equity less preferred stock equity
(excluding proceeds allocated to common equity as a result of the beneficial
conversion feature) as of the balance sheet date.

^(5)  Calculated as tangible book value divided by shares outstanding,
where tangible book value is calculated as book value less goodwill and other
intangible assets as of the balance sheet date.





SOURCE Jacksonville Bancorp, Inc.

Website: http://www.jaxbank.com
Contact: Valerie Kendall at 904-421-3051 for additional information.
 
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