Americasbank 10QSB 2006 Q3 Quarterly report (small business)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-QSB

(Mark One)

x	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2006

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO

Commission file number: 000-22925

AmericasBank Corp.

(Exact name of small business issuer as specified in its charter)


Maryland		52-2090433
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

500 York Road, Towson, Maryland 21204

Address of principal executive offices

(410) 823-0500

Issuer’s telephone number

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date:

At November 6, 2006, the issuer had 2,654,202 shares of Common Stock outstanding.

Transitional Small Business Disclosure Format (Check one): YES ¨ NO x

Part I - FINANCIAL INFORMATION

Item 1.

Financial Statements

AmericasBank Corp. and Subsidiary

Consolidated Balance Sheets


	September 30, 2006			December 31, 2005
	(Unaudited)
Assets
Cash and due from banks	$	1,056,917		$	1,957,870
Federal funds sold and Federal Home Loan Bank deposit		10,824,483			18,440,881

Cash and cash equivalents		11,881,400			20,398,751
Securities available for sale		30,000			30,000
Federal Home Loan Bank and Federal Reserve Bank stock at cost		609,250			238,500
Loans held for sale		3,551,443			1,223,616
Loans and leases, less allowance of$915,660 and $366,910		78,396,299			48,989,605
Premises and equipment		1,049,228			1,005,561
Accrued interest receivable		468,523			263,039
Goodwill		202,235			266,985
Intangible assets		19,259			24,222
Other assets		108,532			305,785

	$	96,316,169		$	72,746,064

Liabilities and Stockholders’ Equity
Deposits
Noninterest-bearing	$	6,826,880		$	7,998,387
Interest-bearing		73,311,245			59,177,095

Total deposits		80,138,125			67,175,482
Other liabilities		342,247			314,531

		80,480,372			67,490,013

Stockholders’ equity
Common stock, par value $.01 per share; 30,000,000 shares authorized, issued and outstanding2,654,202 and 941,702, shares		26,542			9,417
Preferred stock, par value $.01 per share; 5,000,000 shares authorized, issued and outstanding 0 shares		—			—
Additional paid-in capital		22,762,123			11,634,984
Accumulated deficit		(6,952,868	)		(6,388,350	)
Accumulated other comprehensive income		—			—

		15,835,797			5,256,051

	$	96,316,169		$	72,746,064

The accompanying notes are an integral part of these consolidated financial statements.

AmericasBank Corp. and Subsidiary

Consolidated Statements of Operations

(Unaudited)


	Three Months Ended						Nine Months Ended
	September 30, 2006			September 30, 2005			September 30, 2006			September 30, 2005
Interest revenue
Loans and leases, including fees	$	1,470,185		$	776,685		$	3,625,942		$	1,966,212
Federal funds sold and Federal Home Loan Bank deposit		210,336			110,593			598,565			263,330
Loans held for sale		48,682			45,957			108,707			80,874
Preferred trust securities		—			—			—			7,417
Other		9,455			3,768			18,316			9,704

Total interest revenue		1,738,658			937,003			4,351,530			2,327,537

Interest expense
Deposits		813,784			454,157			2,011,248			1,119,079

Net interest income		924,874			482,846			2,340,282			1,208,458
Provision for loan and lease losses		470,000			15,000			559,000			35,000

Net interest income after provision for loan and lease losses		454,874			467,846			1,781,282			1,173,458

Noninterest revenue
Service charges on deposit accounts and other fees		25,331			25,077			72,129			57,346
Mortgage banking gains and fees		98,262			145,634			268,533			392,582

Total noninterest revenue		123,593			170,711			340,662			449,928

Noninterest expenses
Salaries		396,049			272,238			1,197,914			824,057
Employee benefits		120,784			82,740			362,708			247,594
Occupancy		53,725			40,869			150,559			131,139
Furniture and equipment		27,983			28,066			86,131			88,289
Other		339,721			225,745			889,150			647,385

Total noninterest expenses		938,262			649,658			2,686,462			1,938,464

Income (loss) before income taxes		(359,795	)		(11,101	)		(564,518	)		(315,078	)
Income taxes		—			—			—			—

Net income (loss)	$	(359,795	)	$	(11,101	)	$	(564,518	)	$	(315,078	)

Loss per common share - basic and diluted	$	(0.14	)	$	(0.01	)	$	(0.25	)	$	(0.33	)

The accompanying notes are an integral part of these consolidated financial statements.

AmericasBank Corp. and Subsidiary

Consolidated Statements of Changes in Stockholders’ Equity

(Unaudited)


	Common stock					Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income			Comprehensive income
	Shares		Par value			Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive income			Comprehensive income
Balance, December 31, 2004	941,702		$	9,417		$	11,449,191			($6,080,564	)	$	17,760
Net loss	—			—			—			(315,078	)		—		$	(315,078	)
Unrealized loss on investment securities available for sale, net	—			—			—			—			(17,760	)		(17,760	)

Comprehensive income															$	(332,838	)

Stock-based compensation expense	—			—			122,168			—			—

Cash paid for fractional shares resulting from reverse stock split	—			—			(327	)		—			—

Balance, September 30, 2005	941,702		$	9,417		$	11,571,032		$	(6,395,642	)	$	—


Balance, December 31, 2005	941,702		$	9,417		$	11,634,984		$	(6,388,350	)	$	—

Net loss	—			—			—			(564,518	)		—		$	(564,518	)
Unrealized loss on investment securities available for sale, net	—			—			—			—			—			—

Comprehensive income															$	(564,518	)

Stock-based compensation expense	—			—			161,575			—			—

Common stock surrendered	(12,500	)		(125	)		(64,625	)		—			—

Common stock issued, net	1,725,000			17,250			11,030,189			—			—

Balance, September 30, 2006	2,654,202		$	26,542		$	22,762,123		$	(6,952,868	)	$	—

The accompanying notes are an integral part of these consolidated financial statements.

AmericasBank Corp. and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited)


	Nine Months Ended
	September 30, 2006			September 30, 2005
Cash flows from operating activities
Interest received	$	4,205,593		$	2,172,280
Fees and commissions received		72,129			57,346
Interest paid		(1,917,363	)		(1,085,081	)
Proceeds from sales of loans held for sale		29,990,146			28,357,464
Originations of loans held for sale		(32,049,440	)		(31,747,632	)
Cash paid to suppliers and employees		(2,230,270	)		(1,664,555	)

		(1,929,205	)		(3,910,178	)

Cash flows from investing activities
Proceeds from maturity and call of investment securities available for sale		—			300,422
Purchase of Federal Home Loan Bank and Federal Reserve stock		(370,750	)		(105,950	)
Loans and leases made, net of principal collected		(30,025,241	)		(14,631,275	)
Purchase of premises, equipment and software		(137,487	)		(45,937	)

		(30,533,478	)		(14,482,740	)

Cash flows from financing activities
Net increase in time deposits		10,943,192			17,001,867
Net increase in other deposits		2,019,451			14,366,171
Cash payment for fractional shares		—			(327	)
Common stock surrendered		(64,750	)		—
Proceeds from issuance of common stock, net		11,047,439			—

		23,945,332			31,367,711

Net increase (decrease) in cash and cash equivalents		(8,517,351	)		12,974,793
Cash and cash equivalents at beginning of year		20,398,751			5,223,547

Cash and cash equivalents at end of period	$	11,881,400		$	18,198,340

The accompanying notes are an integral part of these consolidated financial statements.

AmericasBank Corp. and Subsidiary

Consolidated Statements of Cash Flows

(Unaudited) (Continued)


	Nine Months Ended
	September 30, 2006			September 30, 2005
Reconciliation of net loss to net cash provided by operating activities
Net loss	$	(564,518	)	$	(315,078	)
Adjustments to reconcile net loss to net cash provided by operating activities
Depreciation and amortization		121,278			129,709
Provision for loan and lease losses		559,000			35,000
Stock-based compensation		161,575			122,168
Amortization of loan premium and other intangible assets		4,241			3,000
Increase (decrease) in
Deferred loan fees and costs, net		59,547			(56,260	)
Accrued interest payable		93,885			33,998
Other liabilities		(66,169	)		(15,423	)
Decrease (increase) in
Loans held for sale		(2,327,827	)		(3,782,750	)
Accrued interest receivable		(205,484	)		(98,997	)
Other assets		235,267			34,455

	$	(1,929,205	)	$	(3,910,178	)

The accompanying notes are an integral part of these consolidated financial statements.

AMERICASBANK CORP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.	BASIS OF PRESENTATION

The accompanying consolidated financial statements include the activity of AmericasBank Corp. (the “Company”) and its wholly owned subsidiary, AmericasBank (the “Bank”). All significant intercompany transactions and balances have been eliminated in consolidation.

The foregoing consolidated financial statements are unaudited; however, in the opinion of management, all adjustments (comprising only normal recurring accruals and adjustments) necessary for a fair presentation of the results of the interim period have been included. These statements should be read in conjunction with the financial statements and accompanying notes included in AmericasBank Corp.’s 2005 Annual Report on Form 10-KSB. There have been no significant changes to the Company’s Accounting Policies as disclosed in the 2005 Annual Report. The results shown in this interim report are not necessarily indicative of results to be expected for the full year 2006.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America.

Reclassifications

Certain reclassifications have been made to amounts previously reported to conform to the current presentation.

2.	STOCK-BASED COMPENSATION

Effective January 1, 2005, AmericasBank Corp. began recognizing expense for stock-based compensation using the fair value based method of accounting described in Statement of Financial Accounting Standards (“SFAS”) No. 123,Accounting for Stock-Based Compensation, as amended. As a result, salaries, employee benefits expense, and other expense (directors fees) included stock-based compensation of $89,696 and $161,575 for the three months and nine months ended September 30, 2006, and $40,723 and $122,168 for the three and nine months ended September 30, 2005, respectively. We have chosen the retroactive restatement method described in SFAS No. 148,Accounting for Stock-Based Compensation — Transition and Disclosure, which amended SFAS No. 123. As a result, financial information for all prior periods presented have been restated to reflect the salaries and employee benefits expense that would have been recognized had the recognition provisions of SFAS No. 123 been applied to all awards granted to employees. The use of the retroactive restatement method resulted in the restatement of previously reported balances of additional paid-in capital and accumulated deficit. As of December 31, 2004, previously reported additional paid-in capital was increased by $286,910 and accumulated deficit was increased by the same amount.

3.	REGULATORY MATTERS

The Bank is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory—and possibly additional discretionary - actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. The Bank must meet specific capital guidelines that involve quantitative measures of the Bank’s assets, liabilities and certain off-balance sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weighting and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Bank to maintain minimum amounts and ratios.

4.	REVERSE STOCK SPLIT

Effective August 23, 2005, AmericasBank Corp. implemented a one-for-four reverse stock split of the Company’s outstanding common stock where every four shares of outstanding common stock were converted into one share. Fractional shares resulting from the split were converted to cash. The reverse stock split has been reflected

retroactively in the consolidated financial statements and notes for all periods presented and all applicable references as to the number of common shares and per share information, stock option data and market prices have been restated.

5.	INCOME/LOSS PER SHARE

Income/loss per common share is determined by dividing net income/loss by the weighted average number of common shares outstanding during the period. The Company’s common stock equivalents were not considered in the computation of diluted income/loss per share because the result would have been anti-dilutive. The weighted average common shares outstanding were 2,654,202 and 2,231,446 for the three and nine months ended September 30, 2006, and 941,702 for the three and nine months ended September 30, 2005, respectively.

6.	SALE OF COMMON STOCK

On March 10, 2006, the Company sold 1,725,000 shares of its common stock for $7.00 per share. Net proceeds from the offering were approximately $11,047,439. The Company invested $10,500,000 of these funds into AmericasBank in March 2006. On March 13, 2006, the common stock of the Company began to be quoted for trading on the NASDAQ Capital Market under the symbol AMAB.

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Because AmericasBank Corp. has no material operations and conducts no business on its own other than owning its subsidiary, AmericasBank, this discussion primarily concerns the business of AmericasBank. However, for ease of reading and because our financial statements are presented on a consolidated basis, unless the context requires otherwise, references to “we” or “our” refers to both AmericasBank Corp. and AmericasBank.

General

AmericasBank Corp. was incorporated as a Maryland corporation on June 4, 1996, to become a one-bank holding company by acquiring all of the capital stock of AmericasBank, a federal stock savings bank, upon its formation. AmericasBank commenced operations on December 1, 1997. On March 20, 1999, AmericasBank converted from a federal stock savings bank to a Maryland chartered trust company exercising the powers of a commercial bank.

Strategy

Our long-term strategy is to become a high-performing community bank that provides above-average investment returns to its stockholders while maintaining a low to moderate risk profile. The essence of our strategy is consistent with the traditional community bank model, under which we focus on promoting business entrepreneurship and home ownership by delivering value-added products and services to selected customers in the communities that we serve. Specifically, we will seek to obtain low cost, core deposits from small businesses in our market areas and then re-invest those funds primarily into in-market residential and commercial real estate loans and commercial loans, as we identify opportunities via our network of mortgage originators. Obtaining low cost, core deposits in lieu of depending upon high rate certificates of deposits will reduce our overall cost of funds, and ultimately improve our net interest margin.

To succeed in our community banking strategy, we must effectively differentiate ourselves from our competitors, including the larger financial service companies operating in our market area. We believe we can do this by selling the concept that we have established and published in our marketing material – we want to be known as: Creative, Responsive and Flexible. We have observed that by consistently providing customer service beyond what is expected, we attract the specific customers we seek and they, in turn, become our best advocates and referral sources. Since 2004, we have realigned and expanded bank and loan operations with experienced staff and also invested in new banking products.

We are using the $11 million in capital that we raised in our recent offering to execute our expansion strategy, thereby allowing us to effectively leverage our investment in bank and loan operations with only incremental additions to staff. Our expansion strategy for new markets consists of replicating the community bank business model that we have developed in the Towson market. We believe this as an efficient way to enter a market and drive the operation to profitability relatively quickly. Our goal is to enter several new markets over the next few years.

We anticipate that over the short term, net income will be reduced as we incur capital expenditures and non-interest expense, including marketing expense, in opening and operating new banking centers — until the new banking centers become profitable. Further, because we will likely enter new markets by first building a mortgage lending presence, we anticipate that in each new market we will solicit higher cost deposits to fund loan growth. We also anticipate that our dependency on high costs deposits will diminish as we ramp up core deposit growth in the new market.

In 2006, we have made the following achievements in the implementation of our strategic plan:

•

Lending efficiency improved as a result of a larger legal lending limit provided by the new capital raised in March 2006.

•

In April 2006, we announced the appointment of William J. Allen as a Senior Vice President to lead the development and growth of the bank’s mortgage division.

•

In July 2006, we opened a mortgage loan origination office in Frederick, Maryland.

•

In August 2006, we engaged the services of a marketing firm to begin the process to develop a new corporate identity for our community bank model, and to define the product offerings for our targeted customers including small business and professional service organizations. Focus group studies are being conduced in the fourth quarter of 2006.

•

In September 2006, we announced the appointment of William Wilcox as a director of the Company and the Bank. Mr. Wilcox is a veteran mortgage banking executive.

•

We continue to search for commercial and mortgage bankers in our current market as well as the markets that we have targeted for expansion.

Summary of Recent Performance

We incurred a net loss of $359,795 or $(0.14) per basic and diluted common share for the three months ended September 30, 2006, an increase of $348,694 compared to our net loss of $11,101 or $(0.01) per basic and diluted common share for the three months ended September 30, 2005. Our net loss for the nine months ended September 30, 2006 was $564,518 or $(0.25) per basic and diluted common share, an increase of $249,440 compared to our net loss of $315,078 or $(0.33) per basic and diluted common share for the nine months ended September 30, 2005.

During the three months ended September 30, 2006, we reported a 62.3% growth in average loans and an 85.6% growth in interest revenues compared to the three months ended September 30, 2005. This resulted in a $422,028 or 91.5% growth in net interest income between the comparative quarters, and an increase in our net interest margin to 4.12% for the three months ended September 30, 2006, from 3.23% for the three months ended September 30, 2005. However, the increase in income was more than offset by a $470,000 provision for loan and lease losses for the three months ended September 30, 2006 compared to a $15,000 provision for the three months ended September 30, 2005. The provision in the third quarter of 2006 was attributable to reserves for loan growth in the quarter, the increasing softness in the real estate market, the downgrade of several loans, and specific reserves for specific borrowers.

The loan loss provision for the three months ended September 30, 2006, included $123,000 provided for the $15,808,057 in gross loan growth during the third quarter of 2006, and $112,000 to increase the allowance percentage on residential investment properties to reflect the softness in the local real estate market.

In addition, the provision included a special provision of $68,000 for the downgrade in the risk rating on several loans in the portfolio. The loans that have had been downgraded include a commercial finance lease of $152,621 and three loans to one borrower aggregating $600,170 secured by residential investment properties. This borrower is actively marketing the properties securing our loans and we believe that the proceeds from these sales should repay the debt in full. The additional allowance on these loans reflects the heightened risk that our loans may not be fully repaid from the sale.

negotiated a settlement agreement to sell the collateral property to the national homebuilder who was going to build on the property. Among other things, the terms of this settlement agreement provided that the national homebuilder would assume the responsibility of negotiating with the municipality where the land is located to secure the approvals necessary to move forward with the development of the collateral property. In August 2006, negotiations between the national homebuilder and the municipality broke down over access and storm water management issues. Bank management believes this event creates a significant adverse condition, exposing the Bank to increased risks, including the risk of the borrower filing for bankruptcy protection and a possible foreclosure action. Increasing the reserves was deemed prudent by management given the additional risks now associated with this credit. Subsequently, on September 12, 2006, a foreclosure action was filed on the property and an auction date was set for November 10, 2006. The guarantor of the loan, an LLC that owns the property, filed bankruptcy on November 8, 2006, which has forestalled the auction.

The provision for loan and lease losses in the third quarter of 2006 increased the amount of the allowance for loan and lease losses and the ratio of the allowance to total loans. The allowance for loan and lease losses was $915,660 or 1.15% of loans at September 30, 2006, compared to $366,910 or 0.74% of loans at December 31, 2005. Notwithstanding the increase in the allowance for loan and lease losses, non-performing assets remained unchanged at $622,761 at September 30, 2006, and December 31, 2005. Non-performing assets as a percent of total loans were 0.78% of loans at September 30, 2006, compared to 1.26% of loans at December 31, 2005.

Mortgage loans originated for sale in the secondary market remained below our levels from a year ago. Mortgage banking gains and fees decreased $47,372 or 32.5%, to $98,262 for the three months ended September 30, 2006, from $145,634 for the three months ended September 30, 2005. We operate under a business model whereby our mortgage loan officers are expected to originate loans for sale in the secondary market and refer loan business to the Bank for our loan portfolio. While behind in loans originated for sale in the secondary mortgage market for the first nine months of 2006 compared to 2005, this sales group has maintained a steady referral of loan business to the Bank and their efforts have contributed to the growth in loans. These loans, while principally secured by real estate, tend to be for commercial purposes such as builder construction, owner occupied businesses, and investors who are rehabbing either one or several 1 to 4 residential properties.

The efforts of this sales group are evident as our loans and leases, net of allowance, increased $29,406,694 or 60.0% in the first nine months of 2006 to $78,396,299 at September 30, 2006, from $48,989,605 reported at December 31, 2005. It has been and will continue to be our strategy to leverage our mortgage loan originators as a source for building our portfolio loans. We believe that our strategy of building a loan portfolio based on real estate based products will allow us to continue to maintain good asset quality and is consistent with our risk management policies.

Noninterest expenses continue to increase over 2005 levels. Noninterest expenses increased $288,604 or 44.4%, to $938,262 for the three months ended September 30, 2006, from $649,658 for the three months ended September 30, 2005, and $747,998 or 38.6%, to $2,686,462 for the nine months ended September 30, 2006, from $1,938,464 for the nine months ended September 30, 2005. The significant increases in 2006 compared to 2005 are mostly attributable to increases in salaries, employee benefits, professional fees and our new director compensation program. In the fourth quarter of 2005, our directors adopted a compensation plan to maintain and attract new directors. All outside directors served without cash compensation and only nominal stock option grants before January 1, 2006.

Total assets increased by $23,570,105 or 32.4%, to $96,316,169 at September 30, 2006, compared to $72,746,064 at December 31, 2005. Average interest earning assets for the nine months ended September 30, 2006, were $78,799,366, an increase of $28,183,019, or 55.7% from the $50,616,347 in average interest earning assets for the first nine months of 2005.

Total deposits at September 30, 2006, were $80,138,125, an increase of 19.3% from $67,175,482 at December 31, 2005. The increase in deposits is primarily the result of growth in premium rate certificates of deposit obtained through an Internet-based service and brokers. Noninterest bearing deposits were $6,826,880 at September 30, 2006, compared to $7,998,387 at December 31, 2005, reflecting a decrease in deposits from title companies

Results of Operations

Net Interest Income

Net interest income is the difference between interest revenue on assets and the cost of funds supporting those assets. Earning assets are comprised primarily of loans, investments and federal funds sold; interest-bearing deposits make up the cost of funds. Noninterest bearing deposits and capital are also funding sources. Changes in the volume and mix of earning assets and funding sources along with changes in associated interest rates determine changes in net interest income.

Net interest income for the three and nine months ended September 30, 2006, increased 91.5% and 93.7%, respectively, to $924,874 from $482,846 for the three months ended September 30, 2005, and to $2,340,282 from $1,208,458 for the nine months ended September 30, 2005.

Total interest revenue increased for the three months ended September 30, 2006, to $1,738,658, from $937,003 for the three months ended September 30, 2005, and to $4,351,530 for the nine months ended September 30, 2006 from $2,327,537 for the nine months ended September 30, 2005. The increases are primarily attributable to an increase in interest revenue from loans and leases and from federal funds sold. Interest revenue from loans and leases increased for the three and nine months ended September 30, 2006, by $693,500 or 89.3% and $1,659,730 or 84.4%, respectively. Interest revenue from federal funds sold and Federal Home Loan Bank deposits increased for the three and nine months ended September 30, 2006, by $99,743 or 90.2% and $335,235 or 127.3%, respectively.

Increases in average balances of our earning assets and market interest rates were the primary factors contributing to the significant increases in interest revenue between the comparable periods. Average loans increased by $26,633,763 or 62.3% for the three months ended September 30, 2006, to $69,396,171 from $42,762,408 for the three months ended September 30, 2005. The yield on loans increased to 8.41% for the three months ended September 30, 2006, from 7.21% for the three months ended September 30, 2005. Average loans increased by $22,714,105 or 61.7% for the nine months ended September 30, 2006, to $59,504,108 from $36,790,003 for the nine months ended September 30, 2005. The yield on loans increased to 8.15% for the nine months ended September 30, 2006, from 7.15% for the nine months ended September 30, 2005.

Average federal funds sold and Federal Home Loan Bank deposit increased by $3,235,058 or 25.6% for the three months ended September 30, 2006, to $15,894,113 from $12,659,055 for the three months ended September 30, 2005. The yield on these funds increased to 5.25% for the three months ended September 30, 2006, from 3.47% for the three months ended September 30, 2005. Average federal funds sold and Federal Home Loan Bank deposit increased by $5,128,096 or 45.2% for the nine months ended September 30, 2006, to $16,476,398 from $11,348,302 for the nine months ended September 30, 2005. The yield on these funds increased to 4.86% for the nine months ended September 30, 2006, from 3.10% for the nine months ended September 30, 2005. The capital from our offering which closed on March 10, 2006, was invested into federal funds sold, accounting for part of the increase between the nine month periods.

The increase in yields on earning assets was also influenced by the increase in market interest rates in response to actions by the Federal Reserve to increase the target for the federal funds rate to 5.25% as of September 30, 2006, from the target rate of 3.75% as of September 30, 2005.

Interest expense increased by $359,627 or 79.2% for the three months ended September 30, 2006, to $813,784 from $454,157 for the three months ended September 30, 2005, and by $892,169 or 79.7% for the nine months ended September 30, 2006, to $2,011,248 from $1,119,079 for the nine months ended September 30, 2005. The increase in interest expense was due to the growth in average balances of our money market accounts and premium rate certificates of deposit, and an increase in the rates paid on deposits as a result of the rise in market interest rates.

Average interest bearing deposits increased by $20,655,506 or 42.9% for the three months ended September 30, 2006, to $68,846,014 from $48,190,508 for the three months ended September 30, 2005. The rate on interest-bearing deposits increased to 4.69% for the three months ended September 30, 2006, from 3.74% for the three months ended September 30, 2005. Average interest bearing deposits increased by $19,249,469 or 45.7% for the nine months ended September 30, 2006, to $61,373,392 from $42,123,923 for the nine months ended September 30, 2005. The rate on interest-bearing deposits increased to 4.38% for the nine months ended September 30, 2006, from 3.55% for the nine months ended September 30, 2005. The majority of the increase in average interest-bearing deposits was attributable to our growth in certificates of deposit and money market accounts resulting from our marketing efforts and the use of a web based service to offer certificates of deposit.

Average noninterest-bearing deposits decreased by $1,806,696 or 22.3% for the three months ended September 30, 2006, to $6,307,442 from $8,114,138 for the three months ended September 30, 2005. Average noninterest-bearing deposits increased by $836,320 or 15.5% for the nine months ended September 30, 2006, to $6,214,747 from $5,378,427 for the nine months ended September 30, 2005. Noninterest-bearing deposits are mainly comprised of deposits from title companies and the balances held in these accounts are subject to the variability of the real estate market.

The net margin on earning assets increased to 4.12% for the three months ended September 30, 2006, from 3.23% for the three months ended September 30, 2005. The net margin on earning assets increased to 3.97% for the nine months ended September 30, 2006, from 3.19% for the nine months ended September 30, 2005. The increase in average interest earning assets, our new capital, and the increases in market interest rates contributed to the increase in the net margin on earning assets.

The following tables illustrates average balances of total interest earning assets and total interest bearing liabilities for the periods indicated, showing the average distribution of assets, liabilities, stockholders’ equity and related revenue, expense and corresponding weighted average yields and rates. The average balances used in these tables and other statistical data were calculated using average daily balances.

Average Balances, Interest, and Yields/Rates


	Nine Months Ended September 30,
	2006							2005
	Average balance			Interest		Yield/ Rate		Average balance			Interest		Yield/ Rate
Assets:
Federal Funds Sold and FHLB deposit	$	16,476,398		$	598,565	4.86	%	$	11,348,302		$	263,330	3.10	%
FHLB and FRB stock		414,214			17,618	5.69	%		221,216			9,142	5.53	%
Investment Securities
Mortgage backed		—			—	—			46			—	0.00	%
Preferred trust		—			—	—			97,802			7,417	10.14	%
Equity security		30,000			698	3.11	%		30,000			562	2.50	%

Total investment securities		30,000			698	3.11	%		127,848			7,979	8.34	%
Loans held for sale		2,374,646			108,707	6.12	%		2,128,978			80,874	5.08	%
Loans:
Residential real estate		28,833,846			1,733,106	8.04	%		16,462,002			893,817	7.26	%
Construction and land development		9,991,517			631,638	8.45	%		4,791,893			220,507	6.15	%
Commercial, including real estate		10,753,348			660,652	8.21	%		8,192,899			479,755	7.83	%
Commercial finance leases		1,693,507			89,453	7.06	%		3,009,410			159,021	7.06	%
Home equity		7,863,155			490,895	8.35	%		3,881,431			188,872	6.51	%
Installment		368,735			20,198	7.32	%		452,368			24,240	7.16	%

Total loans		59,504,108			3,625,942	8.15	%		36,790,003			1,966,212	7.15	%

Total interest earning assets		78,799,366			4,351,530	7.38	%		50,616,347			2,327,537	6.15	%

Allowance for loan and lease losses		(427,774	)						(321,940	)
Noninterest-bearing cash		1,517,505							1,173,779
Premises and equipment		996,179							943,132
Other assets		662,698							469,879

Total assets		81,547,974							52,881,197

Liabilities and Stockholders’ Equity
Interest-bearing Deposits
Savings		4,860,792			116,736	3.21	%		5,448,242			81,792	2.01	%
NOW money market and escrow		14,635,786			521,493	4.76	%		4,385,916			110,222	3.36	%
Certificates of deposit		41,876,814			1,373,019	4.38	%		32,289,765			927,065	3.84	%

Total interest-bearing deposits		61,373,392			2,011,248	4.38	%		42,123,923			1,119,079	3.55	%
Noninterest-bearing deposits		6,214,747			—				5,378,427			—

		67,588,139			2,011,248	3.98	%		47,502,350			1,119,079	3.15	%

Other liabilities		271,791							159,624
Stockholders’ equity		13,688,044							5,219,223

Total Liabilities and Stockholders’ Equity	$	81,547,974						$	52,881,197

Net interest spread						3.40	%						3.00	%
Net interest income				$	2,340,282						$	1,208,458

Net margin on earning assets						3.97	%						3.19	%


	Three Months Ended September 30,
	2006							2005
	Average balance			Interest		Yield/ Rate		Average balance			Interest		Yield/ Rate
Assets:
Federal Funds Sold and FHLB deposit	$	15,894,113		$	210,336	5.25	%	$	12,659,055		$	110,593	3.47	%
FHLB and FRB stock		609,249			9,257	6.03	%		238,500			3,594	5.98	%
Investment Securities
Mortgage backed		—			—	—			—			—	—
Preferred trust		—			—	—			—			—	—
Equity security		30,000			198	2.62	%		30,000			174	2.30	%

Total investment securities		30,000			198	2.62	%		30,000			174	2.30	%
Loans held for sale		3,122,084			48,682	6.19	%		3,590,521			45,957	5.08	%
Loans:
Residential real estate		32,345,968			672,414	8.25	%		18,455,388			334,206	7.18	%
Construction and land development		13,268,744			297,021	8.88	%		5,931,451			98,727	6.60	%
Commercial, including real estate		13,017,648			271,874	8.29	%		10,302,942			201,380	7.75	%
Commercial finance leases		1,449,826			25,956	7.10	%		2,471,486			43,707	7.02	%
Home equity		8,919,741			195,198	8.68	%		4,988,126			87,332	6.95	%
Installment		394,244			7,722	7.77	%		613,015			11,333	7.33	%

Total loans		69,396,171			1,470,185	8.41	%		42,762,408			776,685	7.21	%

Total interest earning assets		89,051,617			1,738,658	7.75	%		59,280,484			937,003	6.27	%

Allowance for loan and lease losses		(479,382	)						(335,206	)
Noninterest-bearing cash		1,502,513							1,338,170
Premises and equipment		1,019,750							924,219
Other assets		725,989							440,712

Total assets		91,820,487							61,648,379

Liabilities and Stockholders’ Equity
Interest-bearing Deposits
Savings		4,982,143			43,006	3.42	%		5,028,666			28,469	2.25	%
NOW money market and escrow		15,746,309			202,501	5.10	%		6,816,323			67,405	3.92	%
Certificates of deposit		48,117,562			568,277	4.69	%		36,345,519			358,283	3.91	%

Total interest-bearing deposits		68,846,014			813,784	4.69	%		48,190,508			454,157	3.74	%
Noninterest-bearing deposits		6,307,442			—				8,114,138			—

		75,153,456			813,784	4.30	%		56,304,646			454,157	3.20	%

Other liabilities		304,623							172,144
Stockholders’ equity		16,362,408							5,171,589

Total Liabilities and Stockholders’ Equity	$	91,820,487						$	61,648,379

Net interest spread						3.45	%						3.07	%
Net interest income				$	924,874						$	482,846

Net margin on earning assets						4.12	%						3.23	%

Provision for Loan and Lease Losses and Analysis of Allowance for Loan and Lease Losses

Lending involves a risk that our loans and leases may not be repaid in full and a credit loss will result. Credit losses occur in varying amounts according to, among other factors, the type of loans being made, the credit-worthiness of the borrowers over the term of the loans, the quality of the collateral for the loan, if any, as well as general economic conditions. We maintain a reserve account for credit losses called the allowance for loan and lease losses, and charge all probable credit losses against this account in accordance with regulatory guidance, industry standards, and generally accepted accounting principles. We charge a provision for loan and lease losses to earnings to maintain our allowance for loan and lease losses at a level that we consider to represent our best estimate of the losses known and inherent in the portfolio that are both probable and reasonable to estimate, based on, among other factors, prior loss experience, volume and type of lending conducted, industry standards, economic conditions (particularly as such conditions relate to AmericasBank’s market area), regulatory guidance, the financial condition of the borrower, historical payment performance and the collateral securing the loans and leases. Recoveries on loans previously charged off are added back to the allowance.

The provision for loan and lease losses was $470,000 and $559,000 for the three and nine months ended September 30, 2006, compared to $15,000 and $35,000 for the three and nine months ended September 30, 2005, respectively. The provision for each period reflects our risk assessment of the portfolio and the growth in loan and leases balances outstanding. During the first nine months of 2006, we had $10,262 in chargeoffs and $12 in recoveries compared to $143 in chargeoffs and no recoveries for the first nine months of 2005.

The loan loss provision for the three months ended September 30, 2006 included $123,000 provided for the $15,808,057 in gross loan growth during the third quarter of 2006, and $112,000 to increase the allowance percentage on residential investment properties to reflect the softness in the local real estate market.

The provision also included $167,000 provided for a $587,761 land development loan that has been on nonaccrual status since March 2005. In February, 2006, the land development firm, who is the bank’s borrower, negotiated a settlement agreement to sell the collateral property to the national homebuilder who was going to build on the property. Among other things, the terms of this settlement agreement provided that the national homebuilder would assume the responsibility of negotiating with the municipality where the land is located to secure the approvals necessary to move forward with the development of the collateral property. In August 2006, negotiations between the national homebuilder and the municipality broke down over access and storm water management issues. Bank management believes this event creates a significant adverse condition, exposing the Bank to increased risks, including the risk of the borrower filing for bankruptcy protection and a possible foreclosure action. Increasing the reserves was deemed prudent by management given the additional risks now associated with this credit. Subsequently, on September 12, 2006, a foreclosure action was filed on the property and an auction date was set for November 10, 2006. The guarantor of the loan, an LLC that owns the property, filed bankruptcy on November 8, 2006, which has forestalled the auction.

We have a methodology for evaluating the adequacy of the allowance for loan and lease losses that distinguishes between credits evaluated as a group by either loan or risk rating category and those evaluated individually. We have predetermined allowance percentages based on credit types and for each risk rating category. All loans and leases are assigned a risk rating when they are made. This risk rating is reassessed by management periodically using the various evaluation factors mentioned above. Loans and leases that exhibit an acceptable level of risk per our internal risk grading system are grouped by category and assigned a standard reserve percentage when assessing the adequacy of the allowance for loan and lease losses. Loans and leases that are adversely risk-rated, or exhibit characteristics that suggest we have a heightened risk of default, are evaluated separately from non-adversely risk rated credits. Each adversely risk rated credit is assigned a standard reserve based on its risk rating or a special reserve based on an assessment of the specific risk factors related to that credit, which may be greater or lesser than the standard reserve for that risk rating.

The predetermined percentages that we use are based on management’s judgment as to appropriate reserve percentages for various categories of loans, and adjusting those values based on the following: historical losses in each category, historical and current delinquency in each category, underwriting standards in each category, comparison of

our losses and delinquencies to peer group performance and an assessment of the likely impact of economic and other external conditions on the performance of each category.

A test of the adequacy of the allowance for loan and lease losses is performed and reported to the Board of Directors on a quarterly basis by our senior lending officer. Our senior lending officer will recommend an increase or decrease in the provision and the board will approve or disapprove the recommendation based on a discussion of the risk factors. We believe that we use the most reliable information available to us to make a determination with respect to the allowance for loan and lease losses, recognizing that the determination is inherently subjective and that future adjustments may be necessary depending upon, among other factors, a change in economic conditions of specific borrowers or generally in the economy, and new information that becomes available to us. However, there are no assurances that the allowance for loan and lease losses will be sufficient to absorb losses on nonperforming assets, or that the allowance will be sufficient to cover losses on nonperforming assets in the future.

The allowance for loan and lease losses was $915,660 or 1.15% of loans at September 30, 2006, compared to $366,910 or 0.74% of loans at December 31, 2005. The increase in the allowance for loan and lease losses as a percent of loans and leases was the result of our risk assessment of the loan and lease portfolios, management’s judgment as to appropriate reserve percentages for various categories of loans, and the growth in loans outstanding. AmericasBank has no exposure to foreign countries or foreign borrowers. Management believes that the current allowance for loan and lease losses is adequate.

The changes in the allowance for loan and lease losses are presented in the following table:


	Nine Months Ended September 30,						Year Ended December 31, 2005
	2006			2005			Year Ended December 31, 2005
Balance, beginning of year	$	366,910		$	315,127		$	315,127
Provision charged to operations		559,000			35,000			52,000
Recoveries		12			—			—

		925,922			350,127			367,127
Loans charged off		10,262			143			217

Balance, end of year	$	915,660		$	349,984		$	366,910

Allowance for loan and lease losses to total loans		1.15	%		0.76	%		0.74	%

Loans past due 90 days or more and still accruing interest	$	—		$	—		$	—

Noninterest Revenue

Noninterest revenue consisted primarily of mortgage banking gains and fees from the sale of mortgage loans, and service charges on deposit accounts, which includes debit card fees and ATM fees. Noninterest revenues decreased $47,118 and $109,266 for the three and nine months ended September 30, 2006, to $123,593 and $340,662, from $170,711 and $449,928 for the three and nine months ended September 30, 2005, respectively. The decrease for both the three and nine month periods was from a decline in mortgage banking gains and fees. These gains and fees decreased $47,372 or 32.5%, and $124,049 or 31.6% to $98,262 and $268,533 for the three and nine months ended September 30, 2006, from $145,634 and $392,582 for the three and nine months ended September 30, 2005, respectively. We expect to continue to expand our mortgage business to originate and sell loans as either a correspondent or broker.

Service charges on deposit accounts and other fees increased to $25,331 and $72,129 for the three and nine months ended September 30, 2006, from $25,077 and $57,346 for the three and nine months ended September 30, 2005. The increase was primarily from fees on business accounts and ATM service charges.

Noninterest Expenses

Noninterest expenses continue to increase over 2005 levels. Noninterest expenses increased $288,604 or 44.4% for the three months ended September 30, 2006, to $938,262 from $649,658 for the three months ended September 30, 2005. Noninterest expenses increased $747,998 or 38.6% for the nine months ended September 30, 2006, to $2,686,462 from $1,938,464 for the nine months ended September 30, 2005

Salaries increased 45.5% and 45.4% for the three and nine months ended September 30, 2006, to $396,049 and $1,197,914 from $272,238 and $824,057 for the three and nine months ended September 30, 2005, respectively. Accordingly, employee benefits increased 46.0% and 46.5% for the three and nine months ended September 30, 2006, to $120,784 and $362,708 from $82,740 and $247,594 for the three and nine months ended September 30, 2005, respectively. The increase in salaries is mostly attributed to turnover and realignment of staff resulting in a higher salary base, annual merit increases, and an increase in the number of employees at the end of the periods. We had thirty-two full-time equivalent employee including seven loan originators at September 30, 2006, compared to twenty-nine full-time equivalent employee including six loan originators at September 30, 2005. We also paid hiring incentives to attract new mortgage loan officers. Beginning in 2006, we engaged the services of Administaff, a professional employer organization, in an effort to improve our benefit package with the underlying strategy to be competitive in the recruiting market for both our existing staff and prospective employees. The increase in costs associated with our change in service providers and the increase in benefits arising from a larger and more highly compensated staff were the primary reasons for the increase in our employee benefits in 2006 compared to 2005.

Occupancy expense increased $12,856 for the three months ended September 30, 2006, to $53,725, from $40,869 for the three months ended September 30, 2005, and increased $19,420 for the nine months ended September 30, 2006,

to $150,559, from $131,139 for the nine months ended September 30, 2005. The increase in the three and nine month periods is primarily from additional depreciation expense arising from the renovations to the bank building at our 500 York Road location, additional rent for the expansion of our mortgage business in Frederick, other building maintenance and an increase in utilities. Furniture and equipment decreased $83 and $2,158 for the three and nine months ended September 30, 2006 to $27,983 and $86,131, from $28,066 and $88,289 for the three and nine months ended September 30, 2005.

Other expenses increased $113,976, or 50.5% and $241,765, or 37.3% for the three and nine months ended September 30, 2006, to $339,721 and $889,150, from $225,745 and $647,385 for the three and nine months ended September 30, 2005, respectively. The increase in other expenses is related to our newly implemented director compensation program, legal fees, and other professional fees and costs associated with being a public company. In the three months ended September 30, 2006, other expense also included stock-based compensation expense for the granting of 20,000 stock options under the director compensation program. These options were fully vested at the time of the grant which resulted in a $48,640 expense in the quarter.

In the fourth quarter of 2005, our directors adopted a compensation plan to maintain and attract new directors. All outside directors served without cash compensation and only nominal stock option grants before January 1, 2006.

Analysis of Financial Condition

Investment Securities

AmericasBank’s portfolio has consisted primarily of U.S. government agency securities, mortgage-backed securities and certain equity securities. The portfolio provides a source of liquidity and a means of diversifying AmericasBank’s earning assets. While we generally intend to hold the investment portfolio assets until maturity, we classify the entire portfolio as available for sale. We account for securities so classified at fair value and report the unrealized appreciation and depreciation as a separate component of stockholders’ equity. AmericasBank invests in securities for the yield they produce and not to profit from trading the securities. There are no trading securities in the portfolio.

The investment portfolio at September 30, 2006 and December 31, 2005 consisted of a $30,000 equity security. The security is classified as available for sale.

Loan Portfolio

Loans and leases, net of allowance, unearned fees and origination costs increased $29,404,694 or 60.0% to $78,396,299 at September 30, 2006, from $48,989,605 at December 31, 2005. Compared to a year earlier, loans and leases, net of allowance, unearned fees and origination costs have increased by $32,498,602 or 70.8 % from $45,897,697 at September 30, 2005.

Residential real estate loans increased by $13,205,634 (55.8%), construction and land development loans increased by $9,166,652 (109.2%), commercial loans including commercial real estate loans increased by $5,078,676 (58.0%), commercial finance leases decreased by $525,043 (28.2%), home equity loans increased by $2,849,467 (44.0%), and installment loans increased by $239,605 (80.0%) from their respective balances at December 31, 2005. Going forward, we expect to continue to see wide changes in the percentage of loans in our various loan categories as we experience scheduled payoffs and as we grow our loan portfolio.

Loans secured by real estate comprise the majority of the loan portfolio. AmericasBank’s loan customers are generally located in the greater Baltimore metropolitan area.

The following table summarizes the composition of the loan portfolio by dollar amount and percentages:


	Loan Portfolio
	September 30, 2006			%		December 31, 2005			%
Residential real estate	$	36,855,311		46.40	%	$	23,649,677		47.83	%
Construction and land development		17,560,510		22.10	%		8,393,858		16.97	%
Commercial, including real estate		13,840,121		17.40	%		8,761,445		17.72	%
Commercial finance leases		1,339,449		1.70	%		1,864,492		3.77	%
Home equity		9,330,191		11.70	%		6,480,724		13.11	%
Installment		539,161		0.70	%		299,556		0.60	%

		79,464,743		100.00	%		49,449,752		100.00	%

Deferred loan origination fees, net of cost		(152,784	)				(93,237	)
Allowance for loan and lease losses		(915,660	)				(366,910	)

	$	78,396,299				$	48,989,605

As of September 30, 2006, of the $36,855,311 in loans classified as residential real estate in the table above, $21,688,738 (or 58.8%) are loans made to investors. As of December 31, 2005, of the $23,649,677 in loans classified as residential real estate, $14,162,743 (or 59.9%) are loans made to investors. These loans are primarily secured by 1 to 4 residential properties and with the majority structured as adjustable rate mortgages.

We perform monthly reviews of all delinquent loans and leases and relationship officers are charged with working with customers to resolve potential credit issues and payment delinquency in a timely manner. We generally classify loans and leases as nonaccrual when collection of full principal and interest under the original terms of the credit is not expected or payment of principal or interest has become 90 days past due. Classifying a credit as nonaccrual results in us no longer accruing interest on such loan or lease and reversing any interest previously accrued but not collected. We will generally restore a nonaccrual loan or lease to accrual status when delinquent principal and interest payments are brought current and we expect to collect future monthly principal and interest payments in a timely manner and in accordance with the original repayment schedule. Generally, we credit all interest payments received on nonaccruing credits to the principal balance of the loan or lease to reduce our credit exposure. If we have collateral that mitigates our credit exposure, we may recognize interest as income when received.

Information about nonaccrual loans is as follows:


	September 30,				December 31,
	2006		2005		2005
Nonaccrual loans	$	622,761	$	622,761	$	622,761
Unrecorded interest on nonaccrual loans		93,091		39,553		51,922
Specific reserve for nonaccrual loans included in the allowance for loan and lease losses		195,924		106,959		29,388

A substantial amount of our nonaccrual loans is related to one loan in which we held an approximately 10% participation. Our loan balance to this borrower was $587,761 at September 30, 2006. This non-performing loan is a participation in a loan to a land developer for the purchase and development of raw land that was under contract for sale as developed lots to a national homebuilder. The project ran into delays during the permitting process related primarily to storm water management issues. As a result of the delays, the interest reserve was exhausted, causing the loan to go into interest payment default.

In early November 2005, the national homebuilder agreed to release the borrower from its original purchase agreement. On November 18, 2005, the participating banks negotiated a 90-day Forbearance Agreement with the borrower for the purpose of allowing the borrower to negotiate the sale of the property. On February 7, 2006, the borrower entered into a new agreement with the same national homebuilder to sell the property “as is.” The new

agreement was contingent upon completion of a feasibility study within 45 days of its execution. The national homebuilder completed its feasibility study and, on March 27, 2006, approved the purchase of the property, subject to the municipality’s approval of road access and drainage plans. In August 2006, negotiations between the national homebuilder and the municipality broke down over access and storm water management issues. Bank management believes this event creates a significant adverse condition, exposing the Bank to increased risks, including the risk of the borrower filing for bankruptcy protection and a possible foreclosure action. Increasing the reserves was deemed prudent by management given the additional risks now associated with this credit. Subsequently, on September 12, 2006, a foreclosure action was filed on the property and an auction date was set for November 10, 2006. The guarantor of the loan, an LLC that owns the property, filed bankruptcy on November 8, 2006, which has forestalled the auction.

We apply the provisions of Statement of Financial Accounting Standards No. 114 (“SFAS No. 114”),Accounting by Creditors for Impairment of a Loan, as amended by Statement of Financial Accounting Standards No. 118 (“SFAS No. 118”),Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosure. SFAS No. 114 and SFAS No. 118 require that impaired loans, which consist of all modified loans and other loans for which collection of all contractual principal and interest is not probable, be measured based on the present value of expected future cash flows discounted at the loan’s effective interest rate, or at the loan’s observable market price or the fair value of the collateral if the loan is collateral dependent. If the measure of the impaired loan is less than the recorded investment in the loan, an impairment is recognized through a valuation allowance and corresponding provision for loan and lease losses. We write off impaired loans when collection of the loan is doubtful. We generally classify nonaccrual loans and leases as impaired. As of September 30, 2006, we had two borrowers with loans totaling $752,791 that had been identified as impaired in addition to the nonaccrual loans and lease described above. As of December 31, 2005, no credit had been identified as impaired other than the nonaccrual loans and leases described above.

We classify any property acquired as a result of foreclosure on a mortgage loan as foreclosed real estate and record it at the lower of the unpaid principal balance or fair value at the date of acquisition and subsequently carry the property at the lower of cost or net realizable value. We charge any required write-down of the loan to its net realizable value against the allowance for loan and lease losses at the time of foreclosure. We charge to expense any subsequent adjustments to net realizable value. Upon foreclosure, we generally require an appraisal of the property and, thereafter, appraisals of the property on at least an annual basis and external inspections on at least a quarterly basis. As of September 30, 2006, and December 31, 2005, we had no foreclosed real estate.

Deposits

We seek deposits within our market area by paying competitive interest rates and offering high quality customer service. In conjunction with our growth strategy, we offer premium rate certificates of deposit to support loan growth.

Total deposits increased by $12,962,643 or 19.3% to $80,138,125 from $67,175,482 at December 31, 2005. Interest-bearing deposits increased $14,134,150 or 23.9% to $73,311,245 at September 30, 2006, from $59,177,095 at December 31, 2005. Noninterest bearing deposits decreased $1,171,507 or 14.6% to $6,826,880 at September 30, 2006, from $7,998,387 at December 31, 2005.

A majority of the increase in our interest bearing deposits at September 30, 2006, was due to growth of premium rate certificates of deposits that were issued with maturities of one year or less. The additional capital raised in March 2006, provided us with sufficient liquidity though the middle part of the third quarter, however as we grew our assets during the third quarter of 2006 we used deposit brokers and a web-based service to offer certificates of deposits. While the interest rates for certificates of deposit offered through brokers and the web-based services are higher than what we would typically pay within our market, we view these sources as efficient processes to raise deposits expeditiously and for specific terms. The decrease in noninterest bearing deposits was primarily from a decrease in activity in our accounts held by title companies which is consistent with the slowdown in the real estate market.

Liquidity

Our overall asset/liability strategy takes into account our need to maintain adequate liquidity to fund asset growth and deposit runoff. We monitor our federal funds sold position on a daily basis in that this is our primary source of liquidity. From time to time we may sell or participate out loans to create additional liquidity as required. Additional liquidity is also available from our loans held for sale, which amounted to $3,551,443 at September 30, 2006. We have no other sources of liquidity, such as lines of credit or correspondent relationships with other financial institutions. When we sustain breakeven profitability, we hope to establish a line of credit with the Federal Home Loan Bank, but there can be no assurance that we will be successful in our efforts.

Our immediate sources of liquidity are cash and due from banks and short term investments. As of September 30, 2006, we had $1,056,917 in cash and due from banks, and $10,824,483 in federal funds sold and Federal Home Loan Bank deposit. Management has made a decision to maintain liquidity instead of investing in investment securities in order to ensure that funds are readily available to fund the growth of the loan portfolio. In addition, deposits from title companies represent a deposit that is subject to more volatility, thereby increasing our need to have funds available. We believe that our risks of volatility associated with these deposits will lessen as we add more of this type of account to our customer base.

We have sufficient liquidity to meet our loan commitments as well as fluctuations in deposits. We are not aware of any demands, trends, commitments, or events that would result in our inability to meet anticipated or unexpected liquidity needs. Although we do not have a line of credit and are limited in our use of brokered certificates of deposit, because of our large relative amount of federal funds sold, we believe that we can adequately satisfy all of our commitments.

Capital

Our stockholders’ equity was $15,835,797 at September 30, 2006, an increase of $10,579,746 from the $5,256,051 reported at December 31, 2005. The significant increase is due to capital raised in our public offering which closed on March 10, 2006. In the offering, we sold 1,725,000 shares of common stock for $7.00 per share. Net proceeds from the offering were approximately $11,047,439. We invested $10,500,000 of these funds into AmericasBank in March 2006.

In June 2006, we agreed to separate our business relationship with the head of our Towson mortgage loan production office. Among the terms of the separation agreement, the employee surrendered 12,500 shares of AmericasBank Corp common stock. These shares were unvested and expired under the terms of the purchase agreement dated October 4, 2004. Goodwill and stockholders’ equity were reduced by $64,750 to record the financial result of this transaction.

Under the regulations of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), regulatory capital guidelines apply on a consolidated basis to bank holding companies with consolidated assets below $500 million or more only where the holding company (i) is engaged in significant nonbanking activities, (ii) conducts significant off-balance sheet activities, or (iii) has a material amount of debt or equity securities outstanding that are registered with the Securities and Exchange Commission. The Federal Reserve also may apply consolidated regulatory capital requirements at its discretion to any bank holding company, regardless of asset size, if it deems such action warranted for supervisory purposes. The Company has less than $500 million of assets and none of the above listed factors exist, and the Company has not otherwise been notified by the Federal Reserve that consolidated regulatory capital requirements apply to the Company.

The Bank, however, is subject to regulatory capital requirements. The following summarizes the Bank’s regulatory capital position at September 30, 2006.


	Actual				Minimum capital adequacy				To be well capitalized
($ in thousands)	Amount		Ratio		Amount		Ratio		Amount		Ratio
Total capital (to risk-weighted assets)	$	15,824	22.33	%	$	5,668	8.00	%	$	7,086	10.00	%
Tier 1 capital (to risk-weighted assets)	$	14,938	21.08	%	$	2,834	4.00	%	$	4,251	6.00	%
Tier 1 capital (to average assets)	$	14,938	16.31	%	$	3,664	4.00	%	$	4,580	5.00	%

Application of Critical Accounting Policies

General

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States of America and follow general practices within the industry in which we operate. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the financial statements and accompanying notes. These estimates, assumptions, and judgments are based on information available as of the date of the financial statements; accordingly, as this information changes, the financial statements could reflect

different estimates, assumptions, and judgments. Certain policies inherently have a greater reliance on the use of estimates, assumptions, and judgments and as such have a greater possibility of producing results that could be materially different than originally reported. Estimates, assumptions, and judgments are necessary when assets and liabilities are required to be recorded at fair value, when a decline in the value of an asset not carried on the financial statements at fair value warrants an impairment write-down or valuation reserve to be established, or when an asset or liability needs to be recorded contingent upon a future event. Carrying assets and liabilities at fair value inherently results in more financial statement volatility. The fair values and the information used to record valuation adjustments for certain assets and liabilities are based either on quoted market prices or are provided by other third-party sources, when available.

The most significant accounting policies followed by AmericasBank are presented in Note 1 to the consolidated financial statements. These policies, along with the disclosures presented in the other financial statement notes and in this financial review, provide information on how significant assets and liabilities are valued in the financial statements and how those values are determined. Based on the valuation techniques used and the sensitivity of financial statement amounts to the methods, assumptions, and estimates underlying those amounts, management has identified the determination of the allowance for loan and lease losses as the accounting area that requires the most subjective or complex judgments, and as such could be most subject to revision as new information becomes available.

Allowance for Loan and Lease Losses

The allowance for loan and lease losses represents management’s best estimate of losses known and inherent in the loan and lease portfolio that are both probable and reasonable to estimate, based on, among other factors, prior loss experience, volume and type of lending conducted, industry standards, economic conditions (particularly as such conditions relate to AmericasBank’s market area), regulatory guidance, the financial condition of the borrower, historical payment performance and the collateral securing the loans and leases. Determining the amount of the allowance for loan and lease losses is considered a critical accounting estimate because it requires significant estimates, assumptions and judgment. The loan and lease portfolio also represents the largest asset type on the balance sheets.

We have developed a methodology for evaluating the adequacy of the allowance for loan and lease losses that distinguishes between credits evaluated as a group by either loan or risk rating category and those evaluated individually. We have predetermined allowance percentages based on credit types and for each risk rating category. All loans and leases are assigned a risk rating when they are made. This risk rating is reassessed by management periodically using the various evaluation factors mentioned above. Loans and leases that exhibit an acceptable level of risk per our internal risk grading system are grouped by category and assigned a standard reserve percentage when assessing the adequacy of the allowance for loan and lease losses. Loans and leases that are adversely risk-rated, or exhibit characteristics that suggest we have a heightened risk of collection, are evaluated separately from non-adversely risk rated credits. Each adversely risk rated credit is assigned a standard reserve based on its risk rating or a special reserve based on an assessment of the specific risk factors related to that credit, which may be greater or lesser than the standard reserve for that risk rating.

Management has significant discretion in making the judgments inherent in the determination of the provision and allowance for loan and lease losses, including in connection with the valuation of collateral and the financial condition of the borrower, and in establishing allowance percentages and risk ratings. The establishment of allowance factors is a continuing exercise and allowance factors may change over time, resulting in an increase or decrease in the amount of the provision or allowance based upon the same volume and classification of loans.

Changes in allowance factors or in management’s interpretation of those factors will have a direct impact on the amount of the provision, and a corresponding effect on income and assets. Also, errors in management’s perception and assessment of the allowance factors could result in the allowance not being adequate to cover losses in the portfolio, and may result in additional provisions or charge-offs, which would adversely affect income and capital. For additional information regarding the allowance for loan and lease losses, see the “Provision for Loan and Lease Losses and Analysis of Allowance for Loan and Lease Losses” section of this financial review.

Fair Value Accounting for Stock Options

The Financial Accounting Standards Board encourages use of a fair value based method of accounting for stock options. In prior periods AmericasBank Corp. had elected to use the intrinsic value method to account for stock-based employee compensation plans in accordance with Accounting Principles Board Opinion No. 25,Accounting for Stock Issued to Employees. Under this method, compensation cost is recognized for awards of shares of common stock to employees only if the quoted market price of the stock at any measurement date is greater than the amount the employee

must pay to acquire the stock. As permitted, AmericasBank Corp. elected to adopt the disclosure-only provisions of SFAS No. 123,Accounting for Stock-Based Compensation.

Effective January 1, 2005, AmericasBank Corp. began recognizing expense for stock-based compensation using the fair value based method of accounting described in Statement of Financial Accounting Standards (“SFAS”) No. 123,Accounting for Stock-Based Compensation, as amended. We have chosen the retroactive restatement method described in SFAS No. 148,Accounting for Stock-Based Compensation — Transition and Disclosure, which amended SFAS No. 123. As a result, financial information for all prior periods presented have been restated to reflect the salaries expense that would have been recognized had the recognition provisions of SFAS No. 123 been applied to all awards granted to employees. The use of the retroactive restatement method resulted in the restatement of previously reported balances of additional paid-in capital and accumulated deficit. As of December 31, 2004, previously reported additional paid-in capital was increased by $286,910 and accumulated deficit was increased by the same amount.

The value of the options was estimated using the Black-Scholes option pricing model with the option life estimated at 5-9 years. There were no modifications made to outstanding share options prior to the adoption of the fair value method. The compensation expense not yet recognized as of September 30, 2006, was approximately $290,000.

Net Deferred Tax Asset

AmericasBank Corp. has recorded a 100% valuation allowance against the net deferred tax asset since it is more likely than not that it will not be realized. At December 31, 2005 and 2004, AmericasBank Corp. has net operating loss carryforwards of approximately $5,631,845 and $5,232,241 available to offset future taxable income. The current carryforwards will expire beginning in 2017.

Goodwill

Goodwill represents the cost in excess of the fair value of net assets acquired (including identifiable intangibles) in transactions accounted for as purchases. SFAS No. 142, Goodwill and Other Intangible Assets, requires that goodwill no longer be amortized over an estimated useful life, but rather be tested at least annually for impairment. Impairment is the condition that exists when the carrying amount of goodwill exceeds its implied fair value. The implied fair value of goodwill is the amount determined by deducting the estimated fair value of all tangible and identifiable intangible net assets of the reporting unit to which goodwill has been allocated from the estimated fair value of the reporting unit. If the recorded value of goodwill exceeds its implied value, an impairment charge is recorded for the excess.

Goodwill of $266,985 was recorded when we acquired certain assets and assumed certain liabilities of uvm Mortgage Marketing in October 2004. In June 2006, we agreed to separate our business relationship with the head of our Towson mortgage loan production office who was the former owner of uvm Mortgage Marketing. Among the terms of the separation agreement, the employee surrendered 12,500 shares of AmericasBank Corp common stock. These shares were unvested and expired under the terms of the purchase agreement dated October 4, 2004. Goodwill and stockholders’ equity were reduced by $64,750 to record the financial result of this transaction.

Goodwill is tested at least annually for impairment.

Estimate of Costs to Originate Loans

Effective January 2005, we reevaluated our estimate of the costs to originate or acquire loans and leases and loans held for sale. This analysis resulted in a higher amount of costs deferred per loan than in prior periods. The deferral of loan origination costs results in a reduction of salaries and other noninterest expense. The reduction to salaries and other noninterest expense was partially offset by a reduction in interest revenues on loans and leases due to the amortization of these costs. Also, mortgage banking gains and fees from the sale of loans held for sale were reduced by the recognition of the costs upon the sale of the loan. Deferred loan origination costs were $657,707 and $408,764 at September 30, 2006 and December 31, 2005 respectively, an increase of $248,943. Deferred loan origination fees were $810,491 and $502,001 at September 30, 2006 and December 31, 2005 respectively, an increase of $308,490.

This increase in both deferred loan costs and fees is the result of greater loan originations and our reevaluation of cost estimates. Deferred origination costs includes the unamortized balance of the origination costs described above, plus other direct costs such as closing costs paid by us in connection with the origination of certain loans, primarily home equity loans. Management evaluates its estimate of loan origination costs quarterly.

Off-Balance Sheet Arrangements

AmericasBank is a party to financial instruments with off-balance sheet risk in the normal course of business. These financial instruments primarily include loan commitments, lines of credit, including home-equity lines and commercial lines, and letters of credit. AmericasBank uses these financial instruments to meet the financing needs of its customers. These financial instruments involve, to varying degrees, elements of credit, interest rate, and liquidity risk. These do not represent unusual risks and management does not anticipate any accounting losses, which would have a material effect on AmericasBank.

Outstanding loan commitments and lines and letters of credit at September 30, 2006 and December 31, 2005 are as follows:


	September 30, 2006		December 31, 2005
Loan commitments	$	5,510,400	$	5,071,512
Unused lines of credit	$	23,703,893	$	7,613,465
Letters of credit	$	12,000	$	60,713

Loan commitments and held for sale loan commitments are agreements to lend to a customer as long as there is no violation of any condition established in the contract. AmericasBank generally requires collateral to support financial instruments with credit risk on the same basis as it does for on-balance sheet instruments. The collateral is based on management’s credit evaluation of the counter party. Loan commitments generally have interest rates at current market amounts, fixed expiration dates or other termination clauses and may require payment of a fee. Loan held for sale are usually sold to the investor within 30 days. Unused lines of credit represent the amount of credit available to the customer so long as there is no violation of any contractual condition. These lines generally have variable interest rates. Since many of the commitments are expected to expire without being drawn upon, and since it is unlikely that customers will draw upon their lines of credit in full at any time, the total commitment amount or line of credit amount does not necessarily represent future cash requirements. The Company is not aware of any loss it would incur by funding its commitments or lines of credit.

Letters of credit are conditional commitments issued to guarantee the performance of a customer to a third party. AmericasBank’s exposure to credit loss in the event of nonperformance by the customer is the contract amount of the commitment. The credit risk involved in issuing letters of credit is essentially the same as that involved in extending loan facilities to customers.

In general, loan commitments, credit lines and letters of credit are made on the same terms, including with respect to collateral, as outstanding loans. Each customer’s credit-worthiness and the collateral required are evaluated on a case-by-case basis.

Information Regarding Forward-Looking Statements

In addition to the historical information contained in Part I of this Quarterly Report on Form 10-QSB, the discussion in Part I of this Quarterly Report on Form 10-QSB contains certain forward-looking statements. The statements presented herein with respect to, among other things, AmericasBank Corp.’s plans, objectives, expectations and intentions, including statements regarding profitability, liquidity, allowance for loan and lease losses, interest rate sensitivity, market risk and financial and other goals are forward looking. These statements are based on AmericasBank Corp.’s beliefs, assumptions and on information available to AmericasBank Corp. as of the date of this filing, and involve risks and uncertainties. These risks and uncertainties include, among others, those discussed in this Quarterly Report on Form 10-QSB; the risk that AmericasBank Corp. may continue to incur losses; possible loss of key personnel; the inability to successfully implement strategic initiatives; risk of changes in interest rates, deposit flows and loan demand; risks associated with AmericasBank’s lending limit; risks associated with the lack of a credit facility; risk of an industry concentration with respect to deposits; risk of credit losses; risks associated with acting as a correspondent lender; risk associated with a slowdown in the housing market or high interest rates; the allowance for loan and lease losses may not be sufficient; operational and credit risks of the leasing companies to which AmericasBank has extended credit in connection with the lease portfolio; dependence on third party vendors; risk of insufficient capital; risk of possible future regulatory action as a result of past violations of the Real Estate Settlement Procedures Act; as well as

changes in economic, competitive, governmental, regulatory, technological and other factors that may affect AmericasBank Corp. or AmericasBank specifically or the banking industry generally.

For a more complete discussion of some of these risks and uncertainties see the discussion under the caption “Factors Affecting Future Results” in AmericasBank Corp.’s Annual Report on Form 10-KSB.

AmericasBank Corp.’s actual results could differ materially from those discussed herein and you should not put undue reliance on any forward-looking statements. All forward-looking statements speak only as of the date of this filing, and AmericasBank Corp. undertakes no obligation to make any revisions to the forward-looking statements to reflect events or circumstances after the date of this filing or to reflect the occurrence of unanticipated events.

Item 3.

Controls and Procedures

As of the end of the period covered by this quarterly report on Form 10-QSB, AmericasBank Corp.’s Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of AmericasBank Corp.’s disclosure controls and procedures. Based upon that evaluation, AmericasBank Corp.’s Chief Executive Officer and Chief Financial Officer concluded that AmericasBank Corp.’s disclosure controls and procedures are effective. Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed by AmericasBank Corp. in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

In addition, there were no changes in AmericasBank Corp.’s internal control over financial reporting (as defined in Rule 13a-15 or Rule 15d-15 under the Securities Act of 1934, as amended) during the quarter ended September 30, 2006, identified in connection with the evaluation required by paragraph (d) of Securities and Exchange Commission Rule 13a-15 that have materially affected, or are reasonably likely to materially affect, AmericasBank Corp.’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

None.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

(a)

Not applicable.

(b)

Not applicable.

(c)

None.

Item 3.

Defaults Upon Senior Securities.

None.

Item 4.

Submission of Matters to a Vote of Securities Holders.

None

Item 5.

Other Information.

None.

Item 6.

Exhibits.


31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	AmericasBank Corp.

Date: November 13, 2006	By:	/s/ Mark H. Anders
		Mark H. Anders, President and Chief Executive Officer
		(Principal Executive Officer)

Date: November 13, 2006	By:	/s/ A. Gary Rever
		A. Gary Rever, Chief Financial Officer
		(Principal Accounting and Financial Officer)

Americasbank (AMAB) Inactive 10QSB2006 Q3 Quarterly report (small business)