Frederick County Bancorp, Inc. Reports Results for the Third Quarter 2016

FREDERICK, Md.--()--Frederick County Bancorp, Inc. (the “Company”) (OTCPink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended September 30, 2016, the Company recorded net income of $457 thousand and diluted earnings per share of $0.30, as compared to net income of $378 thousand and diluted earnings per share of $0.24 recorded for the third quarter of 2015. The Company earned $1.1 million with diluted earnings per share of $0.72 for the nine months ended on September 30, 2016, as compared to $1.2 million in earnings and diluted earnings per share of $0.79 for the same period in 2015.

The increase in quarterly earnings was due primarily to an increase in net interest income to $3.16 million in the third quarter of 2016 as compared to $2.87 million in the third quarter of 2015, resulting from a 13 basis point increase in the net interest margin and increased loan volume, which was offset by an increase in total noninterest expense to $2.75 million in the third quarter of 2016 from $2.73 million in the third quarter of 2015, a $50 thousand in provision for loan losses in the third quarter of 2016, as compared to no provision expense in the same period of 2015, and a decrease in total noninterest income to $312 thousand in the third quarter of 2016 from $394 thousand in the third quarter of 2015. The increase in total noninterest expense was due primarily to increases in salaries and employee benefits of $29 thousand and an increase in occupancy and equipment expense of $27 thousand in the third quarter of 2016 as compared to the third quarter of 2015, respectively. The decrease in total noninterest income was due primarily to decreases in securities gains of $29 thousand and gain on sale of loans of $46 thousand in the third quarter of 2016 as compared to the third quarter of 2015.

The slight decrease in year-to-date earnings was due primarily to an increase in total noninterest expense to $8.3 million in the first nine months of 2016 as compared to $8.0 million in the first nine months of 2015, which added to the overall decrease in total noninterest income of $332 thousand in the first nine months of 2016 as compared to the first nine months of 2015. The increase in total noninterest expense was due primarily to increases in salaries and employee benefits of $255 thousand and in occupancy and equipment expenses of $111 thousand, as compared to the first nine months of 2015. The decrease in total noninterest income was due primarily to decreases in securities gains of $47 thousand and in gain on sale of loans of $271 thousand as compared to the first nine months of 2015, reflecting lower SBA loan originations and subsequent sales in the first nine months of 2016. Earnings for the first nine months of 2016 were also impacted by $250 thousand in provisions for loan losses, as compared to no provision expense in the same period of 2015.

The ratio of the allowance for loan losses to total loans stood at 1.05% and 1.15% as of September 30, 2016 and 2015, respectively. Total nonperforming assets stood at $7.4 million and $7.4 million at September 30, 2016 and 2015, respectively, and at $5.9 million at December 31, 2015. The corresponding nonperforming assets to total assets ratios were 1.94% and 2.05% as of September 30, 2016 and 2015, respectively, and 1.68% at December 31, 2015.

The Company also reported that, as of September 30, 2016, assets stood at $383.3 million, with total deposits of $326.7 million and gross loans of $299.2 million, representing increases of 6.7%, 7.2%, and 12.9%, respectively, compared to September 30, 2015. Total shareholders’ equity at September 30, 2016 was $31.0 million, an increase of $1.4 million from December 31, 2015. The increase primarily resulted from an increase in additional paid-in capital of $195 thousand, which was from the exercise of stock options, an increase in retained earnings of $796 thousand and an increase in accumulated other comprehensive income of $417 thousand from December 31, 2015. On a per share basis, book value increased by 75 cents for 2016 to $20.78 per share at September 30, 2016 from $20.03 per share at December 31, 2015. The dividends declared per share remained constant at $0.21 per share for the nine month periods ended September 30, 2016 and 2015.

Frederick County Bank is headquartered in Frederick, Maryland, and conducts full service commercial banking services through five bank centers located in Frederick County, Maryland.

           
September 30, September 30, December 31,

2016

  2015 2015
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $383,309 $359,028 $350,542
Loans 299,236 264,883 278,950
Deposits 326,704 304,880 295,632
Shareholders’ equity 30,964 28,817 29,556
 
Nonperforming assets:
Nonaccrual loans $6,322 $2,507 $2,160
Accruing troubled debt restructurings 402 3,424 3,031
Loans 90 days or more past due and still accruing -- -- --
Foreclosed properties 706   1,435 706
Total nonperforming assets $7,430   $7,366 $5,897
 
For the Three Months Ended

For the Nine Months Ended

 
September 30, September 30, September 30, September 30,
2016   2015 2016   2015
(dollars in thousands, except for per share data) (unaudited) (unaudited) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $457 $378 $1,108 $1,213
Total comprehensive income 525 485 1,525 1,190
 
Charge-offs $ -- $ 79 $236 $362
(Recoveries) (11)   (26) (44)   (53)
Net (recoveries) charge-offs $(11)   $ 53 $192   $309
 
PER COMMON SHARE DATA:
Basic earnings per share $0.31 $0.26 $0.75 $0.82
Diluted earnings per share $0.30 $0.24 $0.72 $0.79
Basic weighted average number of shares outstanding 1,489,731 1,475,824 1,485,242 1,475,448
Diluted weighted average number of shares outstanding 1,543,379 1,545,442 1,541,944 1,539,575
Common shares outstanding 1,489,844 1,475,929 1,489,844 1,475,929 1,475,929
Dividends declared $0.07 $0.07 $0.21 $0.21
Book value per share $20.78 $19.52 $20.78 $19.52 $20.03
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.49% 0.43% 0.41% 0.47%
Return on average equity 5.87% 5.24% 4.84% 5.65%
Allowance for loan losses to total loans 1.05% 1.15% 1.05% 1.15% 1.10%
Nonperforming assets to total assets 1.94% 2.05% 1.94% 2.05% 1.68%
Ratio of net (recoveries) charge-offs to average loans --% 0.02% 0.07% 0.12%
Common Equity Tier 1 to risk-weighted assets 9.05% 9.88% 9.05% 9.88% 9.63%
Tier 1 capital to risk-weighted assets 10.82% 11.93% 10.82% 11.93% 11.58%
Total capital to risk-weighted assets 11.75% 12.98% 11.75% 12.98% 12.57%
Tier 1 capital to average assets 9.86% 9.91% 9.86% 9.91% 9.99%
Average equity to average assets 8.38% 8.20% 8.43% 8.25%
Net interest margin 3.61% 3.48% 3.66% 3.56%
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, September 30, December 31,
      2016   2015   2015
      (unaudited)   (unaudited)   (audited)
(dollars in thousands)              
ASSETS
Cash and due from banks $ 2,818 $ 2,778 $ 2,683
Federal funds sold 1,058 35 1,083
Interest-bearing deposits in other banks       42,623     49,228     26,482
Cash and cash equivalents       46,499     52,041     30,248
Investment securities available-for-sale at fair value 19,503 24,660 24,363
Restricted stock 1,636 1,629 1,629
Loans 299,236 264,883 278,950
Less: Allowance for loan losses       (3,133)     (3,053)     (3,064)
Net loans       296,103     261,830     275,886
Bank premises and equipment 7,580 6,200 6,445
Bank owned life insurance 8,679 8,454 8,511
Foreclosed properties 706 1,435 706
Other assets       2,603     2,779     2,754
Total assets     $ 383,309   $ 359,028   $ 350,542
 
LIABILITIES AND SHAREHOLDERS' EQUITY              
               
Liabilities
Deposits
Noninterest-bearing deposits $ 79,783 $ 67,695 $ 67,816
Interest-bearing deposits       246,921     237,185     227,816
Total deposits 326,704 304,880 295,632
Short-term borrowings 3,300 3,300 3,300
FHLB advances 15,000 15,000 15,000
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities       1,155     845     868
Total liabilities       352,345     330,211     320,986
 

Shareholders' Equity

 

 

 

 

 

 

 

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,489,844; 1,475,929 and 1,475,929 shares issued and outstanding, respectively

 

 

 

15

15

15

Additional paid-in capital 15,379 15,180 15,184
Retained earnings 15,245 13,662 14,449
Accumulated other comprehensive income (loss)       325     (40)     (92)
Total shareholders' equity       30,964     28,817     29,556
Total liabilities and shareholders' equity     $ 383,309   $ 359,028   $ 350,542
 
         
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
     

For the Three Months Ended

 

For the Nine Months Ended

(dollars in thousands, except per share amounts)    

September 30,
2016

 

September 30,
2015

 

September 30,
2016

 

September 30,
2015

Interest income
Interest and fees on loans $3,371 $3,110 $ 9,856 $9,265
Interest and dividends on investment securities:
Interest – taxable 52 74 190 241
Interest – tax exempt 33 45 118 146
Dividends 25 20 74 76
Interest on federal funds sold 1 -- 4 --
Other interest income     41   26   108   67
Total interest income     3,523   3,275   10,350   9,795
Interest expense
Interest on deposits 267 261 809 781
Interest on short-term borrowings 29 27 85 77
Interest on FHLB advances 28 86 84 256
Interest on junior subordinated debentures     37   30   106   89
Total interest expense     361   404   1,084   1,203
Net interest income 3,162 2,871 9,266 8,592
Provision for loan losses     50   --   250   --
Net interest income after provision for loan losses     3,112   2,871   9,016   8,592
Noninterest income
Securities gains -- 29 51 98
Gain on sale of loans 70 116 88 359
Bank owned life insurance income 56 58 168 174
Service fees 97 101 270 270
Other operating income     89   90   261   269
Total noninterest income     312   394   838   1,170
Noninterest expense
Salaries and employee benefits 1,626 1,597 4,884 4,629
Occupancy and equipment expenses 469 442 1,419 1,308
Other operating expenses     652   689   1,950   2,090
Total noninterest expense     2,747   2,728   8,253   8,027
Income before provision for income taxes 677 537 1,601 1,735
Provision for income taxes     220   159   493   522
Net income     $ 457   $ 378   $1,108   $1,213
Basic earnings per share     $0.31   $0.26   $0.75   $0.82
Diluted earnings per share     $0.30   $0.24   $0.72   $0.79
Basic weighted average number of shares outstanding     1,489,731   1,475,824   1,485,242   1,475,448
Diluted weighted average number of shares outstanding     1,543,379   1,545,442   1,541,944   1,539,575
Dividends declared per share     $0.07   $0.07   $0.21   $0.21
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
      For the Three Months Ended
(dollars in thousands)    

September 30,
2016

 

September 30,
2015

Net income $457 $378
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $44 in 2016 and income tax benefits of $81 in 2015 68 125
Reclassification adjustment for (gains) realized, net of income taxes of $0 in 2016 and $11 in 2015     --   (18)
Total comprehensive income     $525   $485
 
      For the Nine Months Ended
(dollars in thousands)    

September 30,
2016

 

September 30,
2015

Net income $1,108 $1,213
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $292 in 2016 and income tax benefits of $24 in 2015 448 36
Reclassification adjustment for (gains) realized, net of income taxes of $20 in 2016 and $39 in 2015     (31)   (59)
Total comprehensive income     $1,525   $1,190
 
 
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
           

Accumulated

Other

Additional

Comprehensive

Total

Shares

Common

Paid-in

Retained

Income

Shareholders'

(dollars in thousands)

   

Outstanding

 

Stock

 

Capital

 

Earnings

 

(Loss)

 

Equity

 
Balance, January 1, 2015 1,475,154 $ 15 $ 15,158 $ 12,758 $ (17) $ 27,914
Comprehensive income 1,213 (23) 1,190
Dividends declared on common stock, $0.21 per share (309) (309)
Shares issued under stock option transactions 775 9 9
Compensation expense from stock option transactions               13             13
Balance, September 30, 2015     1,475,929   $ 15   $ 15,180   $ 13,662   $ (40)   $ 28,817
Balance January 1, 2016 1,475,929 $ 15 $ 15,184 $ 14,449 $ (92) $ 29,556
Comprehensive income 1,108 417 1,525
Dividends declared on common stock, $0.21 per share (312) (312)
Shares issued under stock option transactions 13,915 156 156
Compensation expense from stock option transactions 11 11
Excess tax benefit from equity-base awards               28             28
Balance, September 30, 2016     1,489,844   $ 15   $ 15,379   $ 15,245   $ 325   $ 30,964
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
      For The Nine Months Ended
      September 30,   September 30,
(dollars in thousands)     2016   2015
Cash flows from operating activities:
Net income $ 1,108 $ 1,213

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 335 333
Deferred income taxes 247 22
Provision for loan losses 250 --
Securities gains (51) (98)
Gain on sale of loans (88) (359)
Loans originated for sale (2,543) (3,774)
Proceeds from loans sold 2,631 4,133
Net premium amortization on investment securities 115 125
Loss on disposal of bank premises and equipment 6 --
Bank owned life insurance income (168) (174)
Stock-based compensation expense 11 13
Excess tax benefit from equity-based awards (28) --
(Increase) decrease in accrued interest and other assets (128) 2
Increase in accrued interest and other liabilities     75   114
Net cash provided by operating activities     1,772   1,550
Cash flows from investing activities:
Purchases of investment securities available for sale -- (5,210)
Proceeds from sales of investment securities available for sale 1,790 1,511

Proceeds from maturities, prepayments and calls investment securities available for sale

3,695 3,164
(Purchase) redemption of restricted stock (7) 176
Net increase in loans (20,467) (3,373)
Purchases of bank premises and equipment     (1,476)   (160)
Net cash used in investing activities     (16,465)   (3,892)
Cash flows from financing activities:

Net increase in NOW, money market accounts, savings accounts and noninterest-bearing deposits

24,012 16,653
Net increase in time deposits 7,060 3,242
Repayment of FHLB advances -- (5,000)
Proceeds from issuance of common stock 156 9
Dividends paid on common stock (312) (309)
Excess tax benefit from equity-based awards     28   --
Net cash provided by financing activities     30,944   14,595
Net increase in cash and cash equivalents 16,251 12,253
Cash and cash equivalents – beginning of period     30,248   39,788
Cash and cash equivalents – end of period     $46,499   $52,041
Supplemental cash flow disclosures:
Interest paid     1,084   $1,202
Income taxes paid     $599   $517
Transfer of loans to foreclosed properties     $--   $706
 

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

The following tables show average balances of asset and liability categories, interest income and interest expense, and average yields and rates for the periods indicated.

   
For the Three Months Ended September 30,   2016   2015

Average

 

Interest

 

Average

Average

 

Interest

 

Average

daily

Income/

Yield/

daily

Income/

Yield/

(dollars in thousands)

 

balance

 

Expense

 

Rate(%)

 

balance

 

Expense

 

Rate(%)

Assets
Interest-earning assets:
Federal funds sold $ 1,058 $ 1 0.37 $ 31 $ -- --
Interest bearing deposits in other banks 34,935 41 0.47 42,390 26 0.24
Investment securities (1):
Taxable 17,502 77 1.75 20,354 94 1.83
Tax-exempt (2) 4,323 50 4.59 6,015 68 4.49
Loans (3)     294,585     3,398   4.58     264,635     3,138   4.70
Total interest-earning assets     352,403     3,567   4.02     333,425     3,326   3.96
Noninterest-earning assets     19,087   18,435
Total assets   $ 371,490 $ 351,860
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 34,285 $ 16 0.19 $ 29,615 11 0.15
Savings accounts 11,707 -- -- 9,683 1 0.04
Money market accounts 96,498 70 0.29 101,552 77 0.30
Certificates of deposit 94,524 181 0.76 88,781 172 0.77
Short-term borrowings 3,300 29 3.49 3,300 27 3.25
FHLB advances 15,000 28 0.74 15,000 86 2.27
Junior subordinated debentures     6,186     37   2.37     6,186     30   1.92
Total interest-bearing liabilities     261,500     361   0.55     254,117     404   0.63
Noninterest-bearing deposits 77,899 68,128
Noninterest-bearing liabilities   964   754
Total liabilities     340,363   322,999
Total shareholders’ equity     31,127   28,861
Total liabilities and shareholders’

equity

  $ 371,490     $ 351,860    
Net interest income       $ 3,206     $ 2,922
Net interest spread 3.47% 3.33%
Net interest margin 3.61% 3.48%
(1)   Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which is reflected as a component of shareholders’ equity.
(2) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $17 thousand in 2016 and $23 thousand in 2015 are included in the calculation of the tax-exempt investment interest income.
(3) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $27 thousand in 2016 and $28 thousand in 2015 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $58 thousand in 2016 and $10 in 2015.
 
   
For the Nine Months Ended September 30,   2016   2015

Average

 

Interest

 

Average

Average

 

Interest

 

Average

daily

Income/

Yield/

daily

Income/

Yield/

(dollars in thousands)

 

balance

 

Expense

 

Rate(%)

 

balance

 

Expense

 

Rate(%)

Assets
Interest-earning assets:
Federal funds sold $ 1,066 $ 4 0.50 $ 24 $ -- --
Interest bearing deposits in other banks 31,089 108 0.46 38,136 67 0.23
Investment securities (1):
Taxable 18,781 264 1.88 20,549 317 2.06
Tax-exempt (2) 5,222 179 4.58 6,306 221 4.69
Loans (3)     287,399     9,940   4.62     264,065     9,357   4.74
Total interest-earning assets     343,557     10,495   4.08     329,080     9,962   4.05
Noninterest-earning assets     18,588   17,972
Total assets   $ 362,145 $ 347,052
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 30,667 $ 39 0.17 $ 26,635 30 0.15
Savings accounts 11,005 2 0.02 9,465 2 0.03
Money market accounts 96,487 207 0.29 102,333 230 0.30
Certificates of deposit 93,858 561 0.80 88,170 519 0.79
Short-term borrowings 3,300 85 3.44 3,300 77 3.12
FHLB advances 15,000 84 0.75 16,648 256 2.06
Junior subordinated debentures     6,186     106   2.29     6,186     89   1.92
Total interest-bearing liabilities     256,503     1,084   0.57     252,737     1,203   0.64
Noninterest-bearing deposits 74,279 64,980
Noninterest-bearing liabilities   832   717
Total liabilities     331,614   318,434
Total shareholders’ equity     30,531   28,618

Total liabilities and shareholders’ equity

  $ 362,145     $ 347,052    
Net interest income       $ 9,411     $ 8,759
Net interest spread 3.51% 3.41%
Net interest margin 3.66% 3.56%
(1)   Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which is reflected as a component of shareholders’ equity.
(2) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $61 thousand in 2016 and $75 thousand in 2015 are included in the calculation of the tax-exempt investment interest income.
(3) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $84 thousand in 2016 and $92 thousand in 2015 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $57 thousand in 2016 and $27 in 2015.
 

The statements in this press release that are not historical facts constitute "forward-looking statements" as defined by Federal securities laws. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding the Company's intentions regarding growth and market expansion, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, changes in interest rates, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect the Company specifically, its existing and target market areas or the banking industry generally. Forward-looking statements speak only as of the date they are made. The Company will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.

Contacts

Frederick County Bancorp, Inc.
William R. Talley, Jr.
Executive Vice President, Chief Financial Officer and Chief Operating Officer
240-529-1507

Release Summary

Frederick County Bancorp, Inc. Announces Third Quarter Earnings

Contacts

Frederick County Bancorp, Inc.
William R. Talley, Jr.
Executive Vice President, Chief Financial Officer and Chief Operating Officer
240-529-1507