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Treasure State Bank Reports First Quarter 2013 Operating Results


April 26, 2013 - Missoula, MT

Treasure State Bank ("the Bank") (OTCQB: TRSU), a Montana chartered community bank, today announced:

  • The Bank had a net operating profit of $50,000 for the quarter ended March 31, 2013, as compared to $42, 000 for the same quarter last year.

  • Earnings, before non-cash expenses of depreciation and amortization, loan loss provisions, real estate owned write-downs and stock option expense, were $151,000 ($604,000 annualized) for the quarter ended March 31, 2013, as compared to $178,000 ($712,000 annualized) for the same quarter last year. Non cash stock option expense was $2, 000 for the quarter ended March 31, 2013 as compared to $30,000 for the same period last year.

  • The return on average assets for the quarter ended March 31, 2013 was 0.30%, as compared to 0.22% for the same quarter last year. The return on average equity for the quarter ended March 31, 2013 was 3.19%, as compared to 2.96% for the same quarter last year.

  • Equity to assets at March 31, 2013 was 9.37% as compared to 9.16% at December 31, 2012. Regulatory Tier 1 leverage capital, based on quarterly average assets, was 9.41% as of March 31, 2013, as compared to 8.80% as of December 31, 2012. Regulatory Total Risk-Based Capital based on total risk-weighted assets was 13.37% as of March 31, 2013, as compared to 12.92% as of December 31, 2012.

  • Book value per share was $3.83 as of March 31, 2013, based on 1,633,321 shares outstanding.

  • Total assets decreased $900, 000, or 1.3%, to $66.7MM at March 31, 2013, as compared to $67.6MM at December 31, 2012.

  • Cost of funds decreased 14.9% to 0.97% at March 31, 2013 as compared to 1.14% at December 31, 2012.

  • The net interest margin (interest income less interest expense divided by average earning assets) increased to 3.93% for the quarter ended March 31, 2013, as compared to 3.85% for the quarter ended December 31, 2012.

  • Loan loss reserves to total loans were 3.95% ($1.9MM) at March 31, 2013, as compared to 3.89% ($1.9MM) as of December 31, 2012.

  • Total liquidity as of March 31, 2013 was 19.5%, and available liquidity was 18.8%.

  • Non-performing assets decreased $300, 000 or 5.0%, to $5.7MM at March 31, 2013 from $6.0MM at December 31, 2012. Non-performing assets to total assets at March 31, 2013 were 8.5% as compared to 8.9% at December 31, 2012 and 11.0% at March 31, 2012.

President and Chief Executive Officer Jim Salisbury stated, "I am pleased to report that the Bank began 2013 with continued improvement in many critical areas that continue to enhance the financial condition of the Bank. Our earnings for this quarter ($50,000) represent continued profitability for the Bank. The earnings for the quarter ended March 31, 2013 of $50,000 compares to $42, 000 for the same period last year. The $8,000 increase in year over year earnings is primarily attributable to a reduction of $7,000 in provision for loan losses and provision for valuation loss on OREO and a reduction in stock option expense of $28,000, partially offset by an increase in operating expense of $12,000 and a $15,000 reduction in net interest income."

The Bank continues to work diligently to address non-performing assets. As noted above, non-performing assets decreased $300,000 or 5.0%, to $5.7MM at March 31, 2013 from $6.0MM at December 31, 2012. The Bank sold $235,000 of repossessed property during the quarter ended March 31, 2013, while not adding any new repossessed property.

Total assets decreased $900,000, or 1.3%, to $66.7MM at March 31, 2013, as compared to $67.6MM at December 31, 2012. Cash and cash equivalents decreased $329,000, gross loans decreased $321,000 and repossessed assets decreased $250,000.

The Bank added $54, 000 for the quarter just ended to its reserves for allowance for loan losses and allowance for valuation loss on OREO. The allowance for loan losses totals $1.9MM at March 31, 2013. This is 3.95% of gross loans and is available to act as a cushion to absorb potential losses on existing troubled loans.

The Bank continued to successfully reduce its cost of funds. Cost of funds decreased 14.9% to 0.97% at March 31, 2013, as compared to 1.14% at December 31, 2012 and 1.27% at March 31, 2012. The Bank is in a position to further reduce its cost of funds during 2013, which is critical to maintaining a net interest margin that will allow for the continued profitability of the Bank.

Nearly twenty cents of every dollar is held in domestic liquid assets to cushion the Bank from a possible rising interest rate environment and to allow for the funding of new loans, or the continued diversification away from non-core deposits.

The Western Montana economy has shown a slight improvement in the last twelve months. This has allowed the Bank to reduce its non-performing assets substantially. However, additional write downs of repossessed developed lots may be required to liquidate them in the future if demand for them does not improve. With an improved economic outlook, positive earnings and the $1.9MM in loan loss reserves, the Bank is hopeful that its non-performing assets will continue to decline. The continued easing by the Federal Reserve could result in a continued decrease in net interest income for the Bank and could put added pressure on the Bank's earnings. On the other hand, if the Federal Reserve were to discontinue its policy of easing and adding liquidity to the markets, or the United States deficit is not meaningfully reduced, then interest rates could increase. This could reduce the Bank's loan fee income associated with the origination of mortgage loans and put pressure on the Bank's cost of funds. We will continue to work diligently to improve the asset quality of the Bank, generate profits to enhance stockholders' equity and retain adequate liquidity in these uncertain economic times. The Bank has made great progress in the last two years and is in the position once again to grow its asset base with quality loans funded by core deposits in 2013 and beyond."

For more information regarding this release, or the Bank in general, you may contact James A. Salisbury, President and CEO, at 406-543-8700.

About Treasure State Bank
Treasure State Bank, a Montana chartered community bank, is headquartered in Missoula, Montana. The Bank was founded in January 2007. Treasure State Bank currently trades on the OTCBB under the ticker symbol "TRSU". Treasure State Bank serves businesses, professionals, non-profit organizations and individuals through customized banking services and products. For more information, please visit www.treasurestatebank.com.

Safe Harbor Statement
This communication contains statements that may constitute "forward-looking statements" within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934, as amended by the Private Securities Litigation Reform Act of 1995. Those statements include statements regarding the intent, belief or current expectations of Treasure State Bank and members of its management as well as the assumptions on which such statements are based. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and that actual results may differ materially from those contemplated by such forward-looking statements. Important factors currently known to management that could cause actual results to differ materially from those in forward-statements include fluctuation of operating results, the ability to compete successfully, and the ability to complete before-mentioned transactions. The Bank undertakes no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.

Contact:

James A Salisbury
President & CEO
Treasure State Bank
3660 Mullan Road
Missoula, MT 59808
(406) 543-8700
jsalisbury@treasurestatebank.com

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