First American International Corp. Announces Fourth Quarter and Annual Earnings for 2013

First American International Corp. Announces Fourth Quarter and Annual Earnings  for 2013  NEW YORK, NY -- (Marketwired) -- 04/03/14 --  First American International Corp. (the "Company"), the holding company for First American International Bank (the "Bank") today reported net income for the year ended December 31, 2013 of $2,910,000. Earnings per share available to common shareholders were $1.00 basic and $.99 per diluted share.  Net Income and Results of Operations  The Company today reported net income of $59,000, or ($0.06) per diluted share, after deduction of $186,000 in Troubled Asset Relief Program ("TARP") dividends and discount accretion, for the three months ended December 31, 2013, and $2.9 million, or $.99 per diluted share, after deduction of $751,000 in TARP dividends and discount accretion, for the twelve months ended at that date. This compares to net income of $3.7 million, or $1.63 per diluted share, for the three months ended December 31, 2012 and $9.1 million, or $3.90 per diluted share, for the twelve months ended at that date, also after deduction of TARP dividends and discount accretion.   Earnings per share, without deducting quarterly dividends and discount accretion on the Company's $17 million Troubled Asset Relief Program ("TARP") preferred stock obligation, equates to $0.03 per diluted share for the quarter-ended December 31, 2013 and $1.33 per diluted share for the twelve months ended at that date, compared to $1.71 and $4.23 for the quarter and year ending December 31, 2012.  "We are pleased with the progress we have made in 2013, especially the reduction in non-performing assets, the development of our capacity to originate commercial real estate loans and our conversion to a new core service provider. However, we recognize there is still much more work to do to enhance shareholder value, including further developing our customer base and managing operating expenses," said Mark Ricca, President and Chief Executive Officer.   Net Interest Income  Net interest income for the quarter, before provision for loan losses, was $6.2 million, an increase of $33,000, or 0.5% from the prior year quarter. Net interest income for the year, before provision for loan losses, was $23.4 million. This was a decrease of $2.3 million, or 9.0% from the prior year. The decline is principally due to a decline in the interest rate spread and to a lesser extent a decline in loan balances. For the year ended December 31, 2013 interest rate spread of 4.40% was down 50 basis points from 4.90% for the year ended December 31, 2012; the net interest margin of 4.63% was down 49 basis points from 5.12% for the year ended December 31, 2012. The Bank's loan portfolio of $354.6 million at December 31, 2013 was $605,000, or 0.2% lower than December 31, 2012. This is partially offset by a 26.5% increase from the prior year in the Bank's other interest earning assets to $151.3 million.  Provision for Loan Losses  The Bank took a $488,000 provision during the third quarter of 2013, principally caused by the charge offs of two commercial lines of credit. In 2012, the Bank had a negative provision of $4.5 million due to an improvement in asset quality and fewer loan losses.  Non-interest Income  Non-interest income was $2.8 million for the quarter ended December 31, 2013, compared to $2.3 million for the same quarter last year. Non-interest income for the year was $8.4 million compared to $9.3 million last year. The main reason for the year over year reduction in non-interest income was a decrease in gains on sales of loans and real estate owned of $2.0 million, offset by an improvement of $900,000 in service and transaction fees and a decrease in loss on sale of securities of $213,000 in 2013.  Return on average assets decreased to .54% compared to 1.58% the prior year. Return on average equity decreased to 4.49% compared to 20.99% last year. Excluding the $4.5 million negative provision for the allowance for loan and lease losses return on average assets and return on average equity would have been 1.15% and 15.3%, respectively in 2012.  Non-interest Expense  Non-interest expenses were $26.2 million in 2013 compared to $22.9 million in 2012, an increase of $3.3 million, or 14.4%. The total increase is mainly due to increases in salaries and benefits of $1.1 million, general and administrative expenses of $1.1 million and occupancy expenses of $1.1 million. Salaries and benefits increased due to increased staffing levels, general raises and increased health insurance costs. General and administrative expenses increased due to an increase in data processing expenses of $432,000 attributable to changing our core processor, an increase in loan processing fees of $916,000, and an increase in other expenses of $289,000, which were offset by a decrease in FDIC assessment expense of $400,000 and a decrease in professional fees of $141,000.  Balance Sheet Highlights  Assets  Total assets at December 31, 2013 were $552.6 million, an increase of $25.7 million, or 4.9%, versus December 31, 2012. Loans receivable, net were $354.6 million, a decrease of $605,000 compared to last year. The decrease is due principally to an $88.0 million decrease in construction, commercial real estate, multifamily and commercial and industrial loans (collectively "Commercial Loans"), which was partially offset by an $80.5 million increase in 10/1 and 7/1 adjustable rate 1-4 family loans. Commercial mortgage loans receivable decreased as the Company continued to focus on resolving asset quality issues. Other interest earning assets increased by $31.7 million, or 26.5%, as the proceeds from borrower payments and sales of commercial mortgage loans provided funds that were invested in investment quality securities and bank deposits.  Asset Quality  Non-accrual loans at December 31, 2013 were $10.4 million compared to $22.4 million last year. Total delinquent loans were $9.9 million compared to $24.7 million at December 31, 2012. The Company monitors delinquent loans closely and continues to work on improving asset quality on an overall basis as shown by the decrease in non-performing assets. The allowance for loan losses was $7.2 million, or 2.04% of total loans compared to $10.6 million, or 2.90%, at December 31, 2012. The reduction in the allowance was principally due to net charge offs of $3.9 million associated in large part with the sale of $13.2 million in non-performing loans during the fourth quarter, offset by a provision of $488,000.   Deposits  Deposits at December 31, 2013 were $411.3 million, a decrease of $30.3 million, or 6.9% since December 31, 2012. Certificates of deposit were $186.2 million, a decrease of $36.5 million, or 16.4%, from December 31, 2012. Savings and money market accounts decreased $5.3 million, or 3.8%. Demand deposits increased $12.0 million, or 16.0%. NOW accounts decreased $563,000, or 20.9%. Despite the Company maintaining competitive pricing for deposit products throughout 2013, interest rates remained at a relatively low level, causing customers to seek higher returns in other investment vehicles.  Borrowings  Federal Home Loan Bank Borrowings increased by $51.0 million to $61.0 million in 2013. These advances were taken to partially match fund the Bank's 10/1 and 7/1 1-4 family residential loan originations. The remaining portion of borrowings consists of the Company's trust preferred borrowings originated in 2004.   Stockholders' Equity  Stockholders' equity was $65.3 million, or 11.8% of total assets, a $2.7 million, or 4.4% increase from December 31, 2012.  About First American International Corp  First American International Corp. is the holding company for First American International Bank, a community development financial institution ("CDFI") and a minority depository institution ("MDI") with nine branches serving principally the Chinese-American communities in Manhattan, Queens and Brooklyn in New York City.   See accompanying unaudited financial data tables for additional information.  The information contained herein is intended to provide the reader with historical information about the financial results of First American International Corp. It is not intended to provide guidance as to forward looking statements or projections of future results. A variety of factors could cause our actual results and experiences to differ materially from historical results and anticipated results based on historical results.                                                                                                                                                                                     First American International Corp.                                            Financial Highlights (unaudited)                                                                                                    Balance Sheet Items                                       $ thousands                                                             12/31/2013   12/31/2012                                                    ------------ ------------ Total assets                                            552,623      526,952                                                                              Loans                                                                        Real estate - commercial                                136,891      214,509 Real estate - residential                               222,366      142,866 Commercial and industrial                                 2,703        8,699 Consumer and installment                                    586          539                                                    ------------ ------------ Loans receivable, gross                                 362,546      366,613                                                                              Allowance for possible loan losses                        7,226       10,618 Other interest earning assets                           151,335      119,608                                                                              Deposits                                                                     Demand deposits                                          87,013       75,009 NOW accounts                                              2,136        2,700 Money market and savings                                135,962      141,291 Certificate of deposit                                  186,200      222,661                                                    ------------ ------------ Total deposits                                          411,311      441,661                                                                              Borrowings                                               68,217       17,217 Stockholders' equity                                     65,333       62,761                                                                                                                                                                                                                                        Summary Income Statement           Year-to-date       For the quarter ended                                 12/31/13   12/31/12    12/31/13    12/31/12                                 ---------- ----------  ----------  ----------  Interest income                   26,827     30,103       7,132       7,121  Interest expense                   3,402      4,372         907         929                                ---------- ----------  ----------  ----------    Net interest income             23,425     25,731       6,225       6,192  Provision for loan losses            488     (4,509)          -      (4,509)   Net interest income after                                                                                ---------- ----------  ----------  ----------      provision for loan losses     22,937     30,240       6,225      10,701  Non-interest income                8,024      8,874       2,485       1,932  Non-interest expenses             26,198     22,896       9,067       6,323  BEA grant                            393        415         323         415                                ---------- ----------  ----------  ----------    Income before income taxes       5,156     16,633         (34)      6,725  Income taxes                       2,245      7,507         (93)      3,037                                ---------- ----------  ----------  ----------    Net income                       2,911      9,126          59       3,688                                ========== ==========  ==========  ==========                                                                                                                                                                                                                                                                Performance ratios (Unaudited)                                                                                                                                       Year-to-date            Quarter ended                                     12/31/13    12/31/12    12/31/13    12/31/12                               ----------  ----------  ----------  ----------  Return on average assets           0.54%       1.58%       0.01%       2.84% -----------------------------                                                                                                                             Return on average net worth        4.49%      20.99%       0.09%      34.67%                                                                              Average interest earning                                                      assets/bearing liabilities      135.00%     126.00%     134.00%     128.66%                                                                              Net interest rate spread           4.40%       4.90%       4.63%       4.70%                                                                              Net interest margin                4.63%       5.12%       4.87%       4.91%                                                                              Net interest income after                                                     provision/total expense          89.41%     132.00%      68.66%     168.90%                                                                              Non-interest income to total                                                  revenue                          23.88%      26.50%      28.24%      30.25%                                                                              Non-interest expense to total                                                 revenue                          74.33%      65.40%      91.22%      71.37%                                                                              Non-interest expense to                                                       average assets                    4.90%       4.31%       6.68%       4.76%                                                                              Net Worth and Asset Quality                                                   Ratios                                                                      -----------------------------                                                                                                                             Average net worth to average                                                  total assets                     12.14%      10.75%      12.03%      10.75%                                                                              Total net worth to assets end                                                 of period                        11.82%      11.88%      11.82%      11.88%                                                                              Non-performing assets to                                                      total assets                      1.88%       5.25%       1.88%       5.25%                                                                              Non-performing loans to total                                                 loans                             2.93%       7.51%       2.93%       7.51%                                                                              Allowance for loan losses to                                                  total loans                       2.04%       2.90%       2.04%       2.90%                                                                              Allowance for loan losses to                                                  NPLs                             69.45%      38.60%      69.45%      38.60%                                                                              Risk based total capital                                                      ratio (bank)                     22.56%      18.80%      22.56%      18.80%                                                                              Capital, Book Value and                                                       Earnings Per Share                                                          -----------------------------                                                                                                                             Tier 1 risk based capital                                                     (bank)                           21.30%      17.53%      21.30%      17.53%                                                                              Leverage ratio (bank)             13.05%      12.91%      13.05%      12.91%                                                                              Book value per share basic   $    22.28  $    21.49  $    22.28  $    21.49                                                                               Diluted EPS available to                                                      Common Shareholders         $     0.99  $     3.90  $    (0.06) $     1.63      David A. Chin Chief Financial Officer (718) 567-8788 ext. 1388