Anchor Bancorp Reports First Quarter Fiscal 2014 Earnings

Anchor Bancorp Reports First Quarter Fiscal 2014 Earnings

LACEY, Wash., Oct. 25, 2013 (GLOBE NEWSWIRE) -- Anchor Bancorp (Nasdaq:ANCB)
("Company"), the holding company for Anchor Bank ("Bank"), today reported
first quarter earnings for the fiscal year ending June 30, 2014. For the
quarter ended September 30, 2013, the Company reported a net loss of $12,000
or $0.00 per diluted share, compared to a net income of $278,000 or $0.11 per
diluted share for the same period last year.

"We are pleased with the ongoing improvement of our classified loans; a
decrease of 6.6% during the quarter and 48.4% decrease year-over-year. We are
also pleased with the number of sales within real estate owned; we have sold
25 properties within the last 12 months. This quarter we did recognize
additional impairments in real estate owned as we continue to liquidate these
properties. We have several properties under contract that we expect to close
within the next 45 days. Additionally this quarter we repaid $47.4 million in
FHLB borrowings with an average cost of 1.33%," stated Jerald L. Shaw,
President and Chief Executive Officer.

Fiscal First Quarter Highlights (at or for the quarter ended September 30,
2013, compared to June 30, 2013, or September 30, 2012):

  *Total classified loans decreased $1.2 million or 6.6% to $16.1 million at
    September 30, 2013 from $17.3 million at June 30, 2013 and were $31.3
    million at September 30, 2012;
  *No provision for loan losses was recorded for the quarters ended September
    30, 2013 and June 30, 2013 compared to $300,000 for the quarter ended
    September 30, 2012;
  *Net charge-offs to average outstanding loans was 0.07% at September 30,
    2013 compared to 0.06% at June 30, 2013 and 0.20% at September 30, 2012;
    and
  *Loans receivable, net, increased $3.2 million or 1.2% to $280.7 million at
    September 30, 2013 from $277.5 million at June 30, 2013.

Credit Quality

Total delinquent loans (past due 30 days or more), nonaccrual loans and loans
90 days or more past due and still accruing interest increased $1.7 million to
$11.9 million at September 30, 2013 from $10.2 million at June 30, 2013. The
ratio of nonperforming loans, which includes nonaccrual loans and loans which
are 90 days or more past due, to total loans remained unchanged at 2.2% at
both September 30, 2013 and June 30, 2013. The Company recorded no provision
for loan losses for the current quarter compared to $300,000 for the quarter
ended September 30, 2012 reflecting the improvement in our asset quality. The
allowance for loan losses of $4.9 million at September 30, 2013 represented
1.7% of loans receivable and 80.0% of nonperforming loans.

Nonperforming loans increased slightly by $18,000 at September 30, 2013 from
$6.2 million at June 30, 2013 and decreased from $8.5 million at September 30,
2012. Nonperforming loans consisted of the following at the dates indicated:

                   September30, June30, 2013 March 31, 2013 September 30,
                    2013                                       2012
                   (In thousands)
Real estate:                                                
One-to-four family  $5,075      $4,758      $4,743       $1,684
Multi-family        —             —             —              102
Commercial          —             —             —              —
Construction        —             —             —              3,444
Land                774           734           788            71
Total real estate   5,849         5,492         5,531          5,301
Consumer:                                                   
Home equity         299           428           241            260
Automobile          —             2             51             68
Credit cards        29            18            —              19
Other               —             —             —              12
Total consumer      328           448           292            359
Business:                                                   
Commercial business —             219           1,207          2,865
Total               $6,177      $6,159      $7,030       $8,525

We continue to actively restructure our delinquent loans when feasible so our
borrowers can continue to make payments while minimizing the Company's
potential loss.As of September 30, 2013, June 30, 2013, and September 30,
2012, there were 49, 48, and 33 loans, respectively, with aggregate net
principal balances of $17.0 million, $17.5 million, and $15.4 million,
respectively, that we have identified as "troubled debt restructures."At
September 30, 2013, June 30, 2013, and September 30, 2012, there were $3.7
million, $3.6 million, and $695,000, respectively, of "troubled debt
restructures" included in the nonperforming loans above.

As of September 30, 2013, the Company had 17 properties in real estate owned
("REO") with an aggregate book value of $5.8 million compared to 21 properties
with an aggregate book value of$6.2 million at June 30, 2013, and 42
properties with an aggregate book value of $5.5 million at September 30,
2012.The decrease in number of properties during the quarter ended September
30, 2013 was primarily attributable to ongoing sales of residential
properties.During the quarter ended September 30, 2013, the Company sold four
residential real estate properties located in Washington State for $411,000,
two in Oregon State for $381,000, and one commercial real estate property in
Washington State for $180,000, resulting in an aggregate loss of $5,000.The
largest of the REO properties at September 30, 2013 had an aggregate book
value of $3.7 million and consisted of commercial real estate property located
in Pierce County, Washington.At September 30, 2013, the Company owned 10
one-to-four family residential properties with an aggregate book value of $1.6
million, four vacant land parcels with an aggregate book value of $123,000,
and three parcels of commercial real estate with an aggregate book value of
$4.0 million. Our REO properties are located in Pierce County, southwest
Washington and the greater Portland area of northwest Oregon, with 15 of the
parcels in Washington and the remaining two in Oregon.

Capital

As of September 30, 2013, the Bank exceeded all regulatory capital
requirements with Tier 1 Leverage-Based Capital, Tier 1 Risk-Based Capital and
Total Risk-Based Capital ratios of 11.9%, 16.9% and 18.2%, respectively.As of
September 30, 2012, these ratios were 11.3%, 17.1%, and 18.4%, respectively.

Anchor Bancorp exceeded all regulatory capital requirements with Tier 1
Leverage-Based Capital, Tier 1 Risk-Based Capital and Total Risk-Based Capital
ratios of 12.2%, 17.3%, and 18.6% as of September 30, 2013.As of September
30, 2012, these ratios were 11.7%, 17.7% and 18.9%, respectively.

Balance Sheet Review

Total assets decreased by $48.9 million, or 10.8%, to $403.3 million at
September 30, 2013 from $452.2 million at June 30, 2013. Cash and cash
equivalents decreased $43.8 million or 67.0% as we used our excess cash to
repay $47.4 million of FHLB advances, and to increase our loans receivable,
net, by $3.2 million, or 1.2% since June 30, 2013. Securities
available-for-sale and held-to-maturity decreased $3.1 million, or 6.4% and
$586,000, or 5.7%, respectively, during the first quarter.

Mortgage-backed securities available-for-sale decreased $3.1 million, or 6.6%,
to $43.8 million at September 30, 2013 from $46.9 million at June 30, 2013.
Mortgage-backed securities held-to-maturity decreased $584,000, or 5.7%, to
$9.6 million at September 30, 2013 from $10.2 million at June 30, 2013.The
decreases in these portfolios were primarily the result of contractual
principal repayments.

Loans receivable, net, increased $3.2 million or 1.2% to $280.7 million at
September 30, 2013 from $277.5 million at June 30, 2013 as a result of new
loan production exceeding principal reductions, transfers to REO and loan
charge-offs.Multi-family loans increased $6.6 million or 17.1% to $45.0
million at September 30, 2013 from $38.4 million at June 30,2013.
Construction and land loans increased $3.9 million or 35.4% to $14.9 million
at September 30, 2013 from $11.0 million at June 30, 2013. Commercial real
estate loans decreased $1.1 million or 1.1% to $105.7 million at September 30,
2013 from $106.9 million at June 30, 2013 and one-to-four family loans
decreased $2.5 million or 3.4% to $71.4 million from $73.9 million at June 30,
2013. Commercial business loans decreased $2.0 million or 11.0% to $16.2
million at September 30, 2013 from $18.2 million at June 30, 2013. Consumer
loans decreased $1.7 million or 4.8% to $33.5 million at September 30, 2013
from $35.1 million at June 30, 2013 as consumers continue to reduce debt. The
demand for consumer loans has been modest during the current economic
uncertainty.

Loans receivable consisted of the following at the dates indicated:

                         September30, June30, 2013 September 30,
                          2013                        2012
                         (In thousands)
Real Estate:                                        
One-to-four family        $71,440     $73,901     $79,976
Multi-family              45,011        38,425        41,800
Commercial                105,710       106,859       102,228
Construction              9,735         5,641         8,115
Land loans                5,118         5,330         6,063
Total real estate         237,014       230,156       238,182
                                                   
Consumer:                                           
Home equity               24,570        25,835        29,517
Credit cards              4,175         4,741         5,184
Automobile                1,688         1,850         2,769
Other consumer            3,039         2,723         2,960
Total consumer            33,472        35,149        40,430
                                                   
Business:                                           
Commercial business       16,197        18,211        16,370
                                                   
Total Loans               286,683       283,516       294,982
                                                   
Less:                                               
Deferred loan fees        1,075         915           802
Allowance for loan losses 4,941         5,147         6,680
Loans receivable, net     $280,667    $277,454    $287,500

Total liabilities decreased $49.1 million between June 30, 2013 and September
30, 2013, primarily as the result of a $47.4 million or 73.0% decrease in
Federal Home Loan Bank advances.Our core deposits, which consist of all
deposits other than certificates of deposit increased by $1.1 million or 0.6%
to $180.0 million from $178.9 million at June 30, 2013.

Deposits consisted of the following at the dates indicated:

                     September30, 2013 June30, 2013      September 30, 2012

                     Amount     Percent Amount     Percent Amount     Percent
                     (Dollars in thousands)
Noninterest-bearing   $42,507  13.0%   $39,713  12.1%   $38,184  11.3%
demand deposits
Interest-bearing      19,177     5.9%    20,067     6.1%    17,199     5.1%
demand deposits
Money market accounts 80,270     24.6%   82,603     25.1%   81,476     24.1%
Savings deposits      38,023     11.7%   36,518     11.1%   36,364     10.8%
Certificates of       145,999    44.8%   149,683    45.6%   164,346    48.7%
deposit
Total deposits        $325,976 100.0%  $328,584 100.0%  $337,569 100.0%

Total stockholders' equity increased $220,000 or 0.42% to $52.6 million at
September 30, 2013 from $52.4 million at June 30, 2013. The increase was
primarily due to a $203,000 decrease in accumulated other comprehensive loss
related to our unrealized losses on securities available-for-sale.Accumulated
other comprehensive loss was $1.3 million at September 30, 2013 as compared to
$1.5 million at June 30, 2013. 

Operating Results

Anchor Bancorp had a net loss of $12,000 or $0.00 per diluted share, for the
three months ended September 30, 2013 compared to net income of $278,000 or
$0.11 per diluted share for the same period in 2012.

Net interest income. Net interest income before the provision for loan losses
decreased $383,000, or 9.6%, to $3.6 million for the quarter ended September
30, 2013 from $4.0 million for the quarter ended September 30, 2012.

The Company's net interest margin decreased seven basis points to 3.61% for
the quarter ended September 30, 2013 from 3.68% for the comparable period in
2012 as the average yield on interest-earning assets decreased 24 basis points
to 4.65% for the quarter ended September 30, 2013 compared to the 4.89% for
the same period in the prior year. The decrease was primarily due to the
decrease in the yield of loans receivable, net, which decreased 37 basis
points to 6.03% during the quarter ended September 30, 2013 compared to 6.40%
for the same period in the prior year. The average cost of interest-bearing
liabilities decreased 17 basis points to 1.24% for the quarter ended September
30, 2013 compared to 1.41% for the same period in the prior year primarily due
to the renewal of certificates of deposit at currently low interest rates and
the reduction in the balance of these higher costing deposits.

Provision for loan losses. In connection with its analysis of the loan
portfolio at September 30, 2013, management determined that no provision for
loan losses was required for the quarter ended September 30, 2013 compared to
a provision for loan losses of $300,000 for the same period of the prior year,
reflecting the decline in nonperforming loans over the last year.

Noninterest income. Noninterest income decreased $405,000, or 29.5%, to
$967,000 for the quarter ended September 30, 2013 compared to $1.4 million for
the same quarter a year ago. The decrease in noninterest income was
attributable to a $194,000 decline in gain on sale of loans to a loss on sale
of loans of $17,000 for the quarter ended September 30, 2013 compared to a
$177,000 gain on sale of loans for the quarter ended September 30, 2012, and
other income decreasing $152,000 or 56.9% due primarily to the decrease in
secondary market activity.These decreases were partially offset by an
increase of $11,000 to $200,000 in other deposit fees for the quarter ended
September 30, 2013 compared to $189,000 for the same quarter in 2012.

Noninterest expense. Noninterest expense decreased $198,000, or 4.2%, to $4.6
million for the three months ended September 30, 2013 from $4.8 million for
the three months ended September 30, 2012. The decrease was primarily due to
compensation and benefits expense decreasing $129,000 or 6.0% to $2.0 million
from $2.1 million as we realized the savings from the closure of two Wal-Mart
branches during the past year.REO holding costs decreased $108,000 or 58.4%
to $77,000 during the quarter ended September 30, 2013 compared to $185,000
during the quarter ended September 30, 2012, reflecting the decrease in the
number of our REO properties which was offset by an increase in REO impairment
expense of $125,000 or 53.2% to $360,000 from $235,000 during the quarter.The
majority of the increase in impairment expense was attributed to aggregate
impairments of $215,000 for four one-to-four family REO properties in Oregon.

About the Company

Anchor 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 two Wal-Mart
store locations) within Grays Harbor, Thurston, Lewis, Pierce and Mason
counties, Washington.In addition we have two loan production offices located
in Grays Harbor County.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: 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, either nationally or in our market areas; changes in the levels of
general interest rates, and the relative differences between short and long
term interest rates, deposit interest rates, our net interest margin and
funding sources; fluctuations in the demand for loans, the number of unsold
homes and other properties and fluctuations in real estate values in our
market areas; 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,
institute additional enforcement actions against the Company or the Bank, to
take additional corrective action and refrain from unsafe and unsound
practices, which may also 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; our compliance with regulatory
enforcement actions including; the requirements and restrictions that have
been imposedunder the Supervisory Directive the Bank entered into with the
FDIC and the Washington DFI and the possibility that noncompliance by the Bank
could result in the imposition of additional requirements or restrictions; our
ability to attract and retain deposits; increases in premiums for deposit
insurance; our ability to control operating costs and expenses; the use of
estimates in determining fair value of certain of our assets, which estimates
may prove to be incorrect and result in significant declines in valuation;
difficulties in reducing risk associated with the loans on our balance sheet;
staffing fluctuations in response to product demand or the implementation of
corporate strategies that affect our work force and potential associated
charges; computer systems on which we depend could fail or experience a
security breach; our ability to retain key members of our senior management
team; costs and effects of litigation, including settlements and judgments;
our ability to manage loan delinquency rates; increased competitive pressures
among financial services companies; changes in consumer spending, borrowing
and savings habits; legislative or regulatory changes that adversely affect
our business including changes in regulatory policies and principles, or the
interpretations of regulatory capital or the other rules, including changes
related to the Basel III requirements, the impact of the effect of the
Dodd-Frank Wall Street Reform and Consumer Protection Act and the implementing
regulations, including the interpretation of regulatory capital or other
rules; the availability of resources to address changes in laws, rules, or
regulations or to respond to regulatory actions; adverse changes in the
securities markets; inability of key third-party providers to perform their
obligations to us; changes in accounting policies and practices, as may be
adopted by the financial institution regulatory agencies or the Financial
Accounting Standards Board, including additional guidance and interpretation
on accounting issues and details of the implementation of new accounting
methods; the economic impact of war or any terrorist activities; other
economic, competitive, governmental, regulatory, and technological factors
affecting our operations, pricing, products and services; andother risks
detailed in our Form 10-K and other reports filed with the Securities and
Exchange Commission. 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 undertake no responsibility to
update or revise any forward-looking statements.

ANCHOR BANCORP AND SUBSIDIARY                                      
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION        September30, June30,
(Dollars in thousands), (unaudited)                  2013          2013
                                                                  
ASSETS                                                             
Cash and cash equivalents                             $21,591     $65,353
Securities available-for-sale, at fair value          45,231        48,308
Securities held-to-maturity, at amortized cost        9,709         10,295
Loans held for sale                                   —             222
Loans receivable, net of allowance for loan losses of 280,667       277,454
$4,941 and $5,147
Bank owned life insurance investment, net of          19,021        18,879
surrender charges
Accrued interest receivable                           1,589         1,583
Real estate owned, net                                5,766         6,212
Federal Home Loan Bank(FHLB) stock, at cost          6,220         6,278
Property, premises and equipment, net                 11,369        11,394
Deferred tax asset, net                               555           555
Prepaid expenses and other assets                     1,569         5,646
Total assets                                          $403,287    $452,179
LIABILITIES AND STOCKHOLDERS' EQUITY                               
                                                                  
LIABILITIES                                                        
Deposits:                                                          
Noninterest-bearing                                   $42,507     $39,713
Interest-bearing                                      283,469       288,871
Total deposits                                        325,976       328,584
                                                                  
FHLB advances                                         17,500        64,900
Advance payments by borrowers for taxes and insurance 1,390         791
Supplemental Executive Retirement Plan liability      1,688         1,703
Accounts payable and other liabilities                4,145         3,833
Total liabilities                                     350,699       399,811
                                                                  
STOCKHOLDERS' EQUITY                                               
Preferred stock, $.01 par value per share authorized  —             —
5,000,000 shares; no shares issued or outstanding
Common stock, $.01 par value per share, authorized
45,000,000 shares; 2,550,000 issued and 2,466,133
outstanding at September 30, 2013 and 2,550,000       25            25
shares issued and 2,464,433 outstanding at June 30,
2013, respectively
Additional paid-in capital                            23,241        23,229
Retained earnings, substantially restricted           31,479        31,491
Unearned Employee Stock Ownership Plan (ESOP) shares  (839)         (856)
Accumulated other comprehensive loss, net of tax      (1,318)       (1,521)
Total stockholders' equity                            52,588       52,368
Total liabilities and stockholders' equity            $403,287    $452,179

                                                                    
ANCHOR BANCORP AND SUBSIDIARY                                        
CONSOLIDATED STATEMENTS OF OPERATIONS                       Three Months Ended
(Dollars in thousands, except per share data) (unaudited)   September 30,
                                                           2013      2012
Interest income:                                                     
Loans receivable, including fees                            $4,321  $4,745
Securities                                                  57        61
Mortgage-backed securities                                  259       474
Total interest income                                       4,637     5,280
Interest expense:                                                    
Deposits                                                    773       990
FHLB advances                                               270       313
Total interest expense                                      1,043     1,303
Net interest income before provision for loan losses        3,594     3,977
Provision for loan losses                                   —         300
Net interest income after provision for loan losses         3,594     3,677
Noninterest income                                                   
Deposit service fees                                        377       391
Other deposit fees                                          200       189
Loans fees                                                  149       185
(Loss) gain on sale of loans                                (17)      177
Bank owned life insurance investment                        143       163
Other income                                                115       267
Total noninterest income                                    967       1,372
Noninterest expense                                                  
Compensation and benefits                                   2,006     2,135
General and administrative expenses                         798       819
Real estate owned impairment                                360       235
Real estate owned holding costs                             77        185
Federal Deposit Insurance Corporation (FDIC) insurance      142       162
premiums
Information technology                                      428       360
Occupancy and equipment                                     464       539
Deposit services                                            136       189
Marketing                                                   162       127
Gain on sale of property, premises and equipment            (5)       —
Loss on sale of real estate owned                           5         20
Total noninterest expense                                   4,573     4,771
(Loss) income before provision for income taxes             (12)      278
Provision for income taxes                                  —         —
Net (loss) income                                           $ (12)  $278
Basic (loss) earnings per share                             $ 0.00    $0.11
Diluted (loss) earnings per share                           $ 0.00    $0.11

                                  
                                  As of or For the
                                  Quarter Ended
                                  (unaudited)
                                   September   June 30,   March 31,  September
                                  30,         2013       2013       30,
                                   2013                              2012
                                  (Dollars in thousands)
SELECTED PERFORMANCE RATIOS                                       
Return (loss) on average assets    (0.01)%     (0.71)%    0.05%      0.24%
^(1)
Return (loss) on average equity    (0.09)      (6.26)     0.42       2.12
^(2)
Average equity-to-average assets   11.60       11.34      11.21      11.28
^(3)
Interest rate spread ^(4)          3.41        2.80       3.54       3.48
Net interest margin ^(5)           3.61        2.99       3.72       3.68
Efficiency ratio ^(6)              100.3       118.8      94.5       89.2
Average interest-earning assets to
averageinterest-bearing           118.3       118.4      117.2      117.0
liabilities
Other operating expenses as a      4.2         4.5        4.1        4.1
percent of average total assets
                                                                 
CAPITAL RATIOS (Anchor Bank)                                      
                                                                 
Tier 1 leverage                    11.9        11.4       11.4       11.3
Tier 1 risk-based                  16.9        16.7       16.9       17.1
Total risk-based                   18.2        18.0       18.2       18.4
                                                                 
ASSET QUALITY                                                     
Nonaccrual and 90 days or more
past due loans as a percent of     2.2         2.2        2.4        2.9
total loans
Allowance for loan losses as a     1.7         1.8        1.8        2.3
percent of total loans
Allowance as a percent of total    80.0        83.6       75.6       78.4
nonperforming loans
Nonperforming assets as a percent  3.0         2.7        3.0        3.0
of total assets
Net charge-offs to average         0.07        0.06       0.02       0.20
outstanding loans
Classified loans                   $ 16,149    $ 17,290   $ 30,410   $ 31,308
_____________________                                             
^(1)^ Net income (loss) divided by average total assets, annualized.
^(2)^ Net income (loss) 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.

CONTACT: Jerald L. Shaw, President
         Terri L. Degner, EVP and Chief Financial Officer
         Anchor Bancorp
         (360) 491-2250
 
Press spacebar to pause and continue. Press esc to stop.