BALTIMORE--(BUSINESS WIRE)--Fraternity Community Bancorp, Inc. (OTCBB:FRTR), the holding company for Fraternity Federal Savings and Loan Association, today announced that it realized net income of $109,800 for the quarter ended June 30, 2014, as compared to net income of $102,700 for the same quarter in 2013. This represented earnings per common share of $0.09 for the three months ended June 30, 2014 as compared to $0.08 per common share for the same period ended June 30, 2013. For the six month period ended June 30, 2014, net income of $62,100 was reported, as compared to net income of $168,000 for the same period in 2013.
For the three months ended June 30, 2014, net interest income increased by $35,700, or 3.3%, from $1,082,000 for the three months ended June 30, 2013 to $1,117,700 for the three months ended June 30, 2014. We had a negative provision for loan losses of $91,400 for the three months ended June 30, 2014 as compared to a negative provision for loan losses of $32,800 for the three months ended June 30, 2013. Non-interest income increased $64,600, or 106.9%, for the three months ended June 30, 2014, from $60,500 for the three months ended June 30, 2013 to $125,100 for the three months ended June 30, 2014. The increase was primarily attributable to an increase in other income of $71,900. The increase in other income was primarily due to $26,700 in proceeds received from a private mortgage insurance company for two REO properties previously sold and a $44,800 gain on the sale of an REO property. Non-interest expenses increased by $161,300, or 15.5%, from $1,039,600 for the three months ended June 30, 2013 to $1,200,900 for the three months ended June 30, 2014. The increase primarily was attributable to an increase in salaries and employee benefits of $98,400, or 19.0% and an increase in legal fees of $38,400, or 82.5%.
For the six months ended June 30, 2014, net interest income increased by $85,800, or 4.0%, from $2,158,900 for the six months ended June 30, 2013 to $2,244,700 for the six months ended June 30, 2014. We had a negative provision for loan losses of $94,400 for the six months ended June 30, 2014, as compared to a negative provision of $11,900 for the six months ended June 30, 2013. Non-interest income decreased $21,200 or 11.4% for the six months ended June 30, 2014, from $185,200 for the six months ended June 30, 2013 to $164,000 for the six months ended June 30, 2014. The decrease was primarily attributable to a decrease of $43,300, or 100.0%, in the gain on sale of investment securities, a decrease of $41,600, or 83.0%, in gain on sale of loans, offset by $26,700 in proceeds from a private mortgage insurance company for two REO and partially properties previously sold and a $41,700 gain on the sale of an REO property. Non-interest expense increased by $320,200, or 14.9%, for the six months ended June 30, 2014, from $2,144,200 for the six months ended June 30, 2013 to $2,464,400 for the six months ended June 30, 2014. The increase primarily was attributable to an increase in salaries and employee benefits of $158,400, or 14.5%, an increase in directors fees of $24,800, or 51.9%, an increase in legal fees of $42,300, or 58.6%, and an increase in other general and administrative expenses of $62,400, or 21.0%. The increase in other general and administrative expenses was primarily due to a $100,000 write-down of the luxury residential property sold from REO during the quarter. There was also a decrease of $62,400, or 63.4%, in advertising expense.
At June 30, 2014, total assets decreased by $950,500 to $165.4 million at June 30, 2014 from $166.4 million at December 31, 2013. The decrease in assets for the six months ended June 30, 2014 was due mainly to a $1.9 million decrease in other real estate owned from $1,921,700 at December 31, 2013 to $22,500 at June 30, 2014. In addition, there was a decrease in cash and cash equivalents of $1.2 million, from $15.4 million at December 31, 2013, to $14.2 million as of June 30, 2014. Offsetting this was an increase of $2.5 million in loans receivable, net, from $114.6 million at December 31, 2013 to $117.1 million at June 30, 2014.
Non-accrual loans totaled $758,900 at June 30, 2014 compared to $1.1 million at December 31, 2013. Net loan recoveries amounted to $91,400 during the three months ended June 30, 2014, compared to net loan recoveries of $32,800 during the three months ended June 30, 2013. As of June 30, 2014, non-accrual loans included thirteen owner occupied one- to- four family residential loans totaling $189,900, five non-owner occupied one- to- four family residential loans totaling $249,500 and three home equity lines of credit totaling $319,500. As of December 31, 2013, non-accrual loans included one troubled debt restructured loan totaling $386,400, eighteen one- to- four family residential loans totaling $404,000 and two home equity lines of credit totaling $289,900.
Other real estate owned totaled $22,500 at June 30, 2014 compared to $1.9 million at December 31, 2013. Other real estate owned at June 30, 2014 consisted of one non-owner occupied property totaling $22,500. Other real estate owned at December 31, 2013 consisted of one luxury residential property that was a speculative construction loan totaling $1.7 million, one owner occupied property and one non-owner occupied property.
The Company’s consolidated equity, all of which is tangible, was $27.4 million at June 30, 2014 compared to $26.8 million at December 31, 2013. The increase was primarily due to a reduction of $395,400 in accumulated other comprehensive loss, which was attributable to a decrease in long term rates that affect our available for sale investment portfolio. The Bank remains well capitalized with a Tier 1 leverage ratio, Tier 1 risk-based capital ratio and Total risk-based capital ratio of 14.38%, 25.75% and 27.00%, respectively, as compared to 14.19%, 25.71% and 26.96%, respectively for the same measures as of December 31, 2013.
Fraternity Community Bancorp previously announced a stock repurchase program, and it has 77,130 shares remaining that may be repurchased under this program. Fraternity Community Bancorp presently intends to continue stock repurchases under this program. Repurchases will be conducted through open market purchases, which may include purchases under a trading plan adopted pursuant to Securities and Exchange Commission Rule 10b5-1, or through privately negotiated transactions. Repurchases will be made from time to time depending on market conditions and other factors. There is no guarantee as to the exact number of shares to be repurchased by Fraternity Community Bancorp.
Fraternity Community Bancorp, Inc. is the holding company for Fraternity Federal Savings and Loan Association, founded in 1913. The Bank is a community-oriented financial institution, dedicated to serving the financial service needs of customers and businesses within its market area, which consists of Baltimore City and Baltimore, Carroll and Howard Counties in Maryland.
FORWARD-LOOKING STATEMENTS
This press release contains statements that are forward-looking, as that term is defined by the Private Securities Litigation Reform Act of 1995 or the Securities and Exchange Commission in its rules, regulations and releases. The Company intends that such forward-looking statements be subject to the safe harbors created thereby. All forward-looking statements are based on current expectations regarding important risk factors, including but not limited to real estate values, market conditions, market prices for the Company’s common stock, the impact of interest rates on financing, local and national economic factors and the matters described in “Item 1A. Risk factors” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. Accordingly, actual results may differ from those expressed in the forward-looking statements, and the making of such statements should not be regarded as a representation by the Company or any other person that results expressed herein will be achieved.
| Fraternity Community Bancorp, Inc. | ||||||||
| Consolidated Statements of Financial Condition | ||||||||
| (unaudited) | ||||||||
| June 30, 2014 | December 31, 2013 | |||||||
| (in thousands) | (in thousands) | |||||||
| ASSETS | ||||||||
| Cash and due from banks | $ | 837 | $ | 973 | ||||
| Interest-bearing deposits in other banks | 13,337 | 14,378 | ||||||
| Investment securities | 24,151 | 24,424 | ||||||
| Loans, net | 117,093 | 114,578 | ||||||
| Other real estate owned | 23 | 1,922 | ||||||
| Other assets | 9,979 | 10,095 | ||||||
| Total Assets | $ | 165,420 | $ | 166,370 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Deposits | $ | 115,618 | $ | 118,101 | ||||
| Advances from the Federal Home Loan Bank | 20,000 | 20,000 | ||||||
| Advances by borrowers for taxes and insurance | 1,522 | 658 | ||||||
| Other liabilities | 852 | 807 | ||||||
| Total Liabilities | 137,992 | 139,566 | ||||||
| Stockholders' Equity | 27,428 | 26,804 | ||||||
| Total Liabilities & Stockholders' Equity | $ | 165,420 | $ | 166,370 | ||||
| Fraternity Community Bancorp, Inc. | ||||||||||||||||||||
| Consolidated Statements of Operations | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| For the Three | For the Three | For the Six | For the Six | |||||||||||||||||
| Months Ended | Months Ended | Months Ended | Months Ended | |||||||||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||||||
| (in thousands) | (in thousands) | (in thousands) | (in thousands) | |||||||||||||||||
| Interest Income | ||||||||||||||||||||
| Loans | $ | 1,368 | $ | 1,400 | $ | 2,743 | $ | 2,810 | ||||||||||||
| Investment Securities | 181 | 169 | 364 | 348 | ||||||||||||||||
| Other | 10 | 13 | 20 | 24 | ||||||||||||||||
| Total Interest Income | 1,559 | 1,582 | 3,127 | 3,182 | ||||||||||||||||
| Interest Expense | ||||||||||||||||||||
| Deposits | 287 | 348 | 577 | 722 | ||||||||||||||||
| Borrowings | 154 | 152 | 305 | 301 | ||||||||||||||||
| Total Interest Expense | 441 | 500 | 882 | 1,023 | ||||||||||||||||
| Net Interest Income | 1,118 | 1,082 | 2,245 | 2,159 | ||||||||||||||||
| Recovery of Loan Losses | (91 | ) | (33 | ) | (94 | ) | (12 | ) | ||||||||||||
| Net Interest Income after Recovery of Loan Losses | 1,209 | 1,115 | 2,339 | 2,171 | ||||||||||||||||
|
Non-interest Income |
125 | 60 | 164 | 185 | ||||||||||||||||
|
Non-interest Expense |
1,201 | 1,039 | 2,464 | 2,144 | ||||||||||||||||
| Net Income Before Income Tax Expense (Benefit) | 133 | 136 | 39 | 212 | ||||||||||||||||
| Income Tax Expense (Benefit) | 23 | 33 | (23 | ) | 44 | |||||||||||||||
| Net Income | $ | 110 | $ | 103 | $ | 62 | $ | 168 | ||||||||||||