HSB Str PD S&P 2001-11

VERNON, N.J., March 8 /PRNewswire-FirstCall/ -- Highlands State Bank (OTC Bulletin Board: HSBK) reported a fourth quarter net loss available to common stockholders of $1,104,000 or $.62 per diluted share compared to a loss of $404,000 or $.37 per diluted share, for the same period in 2008. The net loss available to common stockholders for the full year 2009 was $2,218,000 or $1.24 per diluted share compared to a loss of $993,000 or $.91 per diluted share for the year of 2008. The 2009 results reflect the impact of the dividends and accretion on the preferred stock issued to the United States Treasury in 2009 under the Treasury's Capital Purchase Program ("CPP"). No such preferred stock was outstanding during the 2008 periods. During 2009 Highlands State Bank elected and was approved to participate in the CPP and CPP for Small Banks, and received investments from the Treasury of $3,091,000 in the second quarter of 2009 and $2,359,000 during the fourth quarter of 2009. In addition, the 2009 financial results reflect the integration of the former Noble Community Bank into Highlands State Bank. The acquisition of Noble Community Bank was completed on December 31, 2008, and 2008 results have not been restated to give effect to the merger. Net interest income increased by $761,000 to $1,285,000 for the fourth quarter of 2009 when compared to net interest income of $524,000 for the three month period ended on December 31, 2008. For the year ended December 31, 2009, net interest income increased to $4,349,000 from $1,953,000 for 2008. The provision for loan losses increased by $1,061,000 for the quarter and $1,680,000 for the year ended December 31, 2009 to $1,282,000 and $2,090,000 respectively, reflecting an increase in non-performing loans. Charge-offs for the year ended December 31, 2009 were $1,800,000, as non-performing loans were written down to their net realizable value. Non-interest expenses increased by $498,000 for the quarter and $2,173,000 for the year ended December 31, 2009 compared to the similar periods of 2008, to $1,242,000 and $4,777,000 respectively. The 2009 results include the effects of the acquisition of Noble Community Bank on December 31, 2008 as well as the opening of a new branch office in January 2009, including increased salaries and employee benefits, occupancy and equipment charges, data processing expenses, higher FDIC deposit insurance premiums and a special FDIC assessment charge. Total assets at Highlands State Bank were $166.0 million on December 31, 2009, an increase of $46.4 million or 39% when compared to total assets of $119.6 million at December 31, 2008. The year end 2008 assets include those assets acquired as part of the Noble acquisition. Deposits increased $46.8 million or 48% during 2009 from $96.8 million on December 31, 2008 to $143.6 million on December 31, 2009. Net loans outstanding on December 31, 2009 were $111.9 million compared to $89.4 million on December 31, 2008, an increase of 25%. Highlands State Bank is a full service community bank headquartered in Vernon, New Jersey with branch offices in Sparta and Totowa, New Jersey. Highlands State Bank provides deposit and loan banking services to consumers and businesses in northern New Jersey. On December 31, 2008 Highlands State Bank merged with the former Noble Community Bank, Sparta, NJ. Forward-Looking Statements This news release contains certain forward-looking statements, either expressed or implied, which are provided to assist the reader in understanding anticipated future financial performance. These statements involve certain risks, uncertainties, estimates and assumptions made by management, which are subject to factors beyond the company's control and could impede its ability to achieve these goals. These factors include general economic conditions, trends in interest rates, the ability of our borrowers to repay their loans, and results of regulatory exams, among other factors. Highlands State Bank Financial Highlights (unaudited) (In thousands, except per share data) Three Months Ended Twelve Month Ended December 31, December 31, 2009 2008 2009 2008 -------- --------- -------- -------- INCOME STATEMENT Net interest income $1,285 $524 $4,349 $1,953 Provision for loan losses 1,282 221 2,090 410 Non-interest income 188 37 433 68 Non-interest expense 1,242 744 4,777 2,604 -------- --------- -------- -------- Net loss (1,051) (404) (2,085) (993) Preferred stock dividends and accretion (53) - (133) - -------- --------- -------- -------- Net loss available to common stockholders $(1,104) $(404) $(2,218) $(993) ======== ========= ======== ======== Net loss per common share Basic and diluted $(0.62) $(0.37) $(1.24) $(0.91) Weighted average common shares Basic and diluted 1,788,262 1,095,159 1,788,262 1,095,159 SELECTED BALANCE SHEET DATA AT END OF PERIOD 12/31/2009 12/31/2008 ---------- ---------- Total loans $113,319 $90,603 Allowance for loan loss 1,438 1,147 Investment securities 19,134 19,596 Total Assets 165,955 119,646 Total Deposits 143,566 96,781 Stockholders' Equity 15,746 12,483 ASSET QUALITY Non-accrual loans 4,601 675 Loans past due 90 days and still accruing - 593 OREO property - - Allowance for loan losses to total loans 1.28% 1.27% Non-performing loans to total loans 4.06% 1.40% DATASOURCE: Highlands State Bank CONTACT: Highlands State Bank, George E. Irwin, President,+1-973-764-3200

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