Frederick County Bancorp, Inc. Reports Results for the First Quarter 2018

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 March 31, 2018, the Company recorded net income of $849 thousand and diluted earnings per share of $0.55, as compared to net income of $367 thousand and diluted earnings per share of $0.24 recorded for the first quarter of 2017.

The increase in quarterly earnings was due primarily to an increase in net interest income of $307 thousand in first quarter of 2018 compared to the first quarter of 2017. In addition, a negative provision for loan losses of $145 thousand was recognized in 2018 compared to a provision of $178 thousand in 2017.

Net loan (recoveries) charge-offs for the quarters ended March 31, 2018 and 2017 totaled $(514) thousand and $100 thousand, respectively. There were $26 thousand in charge-offs in 2018 compared to $267 thousand in 2017, which were offset by recoveries of $540 thousand and $167 thousand for the periods ended March 31, 2018 and 2017, respectively. A recovery of $500 thousand was realized from one commercial client in 2018.

The ratio of the allowance for loan losses to total loans stood at 1.12%, 1.23% and 1.01% as of March 31, 2018 and 2017 and December 31, 2017, respectively. Nonperforming assets stood at $4.7 million, $7.7 million and $5.4 million as of March 31, 2018 and 2017 and December 31, 2017, respectively. The corresponding nonperforming assets to total assets ratios were 1.13%, 1.95% and 1.32% as of March 31, 2018 and 2017 and December 31, 2017, respectively.

The Company also reported that, as of March 31, 2018, assets stood at $421.6 million, with total deposits of $347.2 million and gross loans of $325.8 million, representing increases of 6.4%, 4.4%, and 4.7%, respectively, compared to March 31, 2017. Total shareholders’ equity at March 31, 2018 was $33.1 million, an increase of $451 thousand from December 31, 2017. The increase in total shareholders’ equity resulted primarily from earnings of $849 thousand in the first quarter, offset by dividends of $119 thousand and a decline in the fair value of available-for-sale securities of $280 thousand from December 31, 2017. On a per share basis, book value increased by 30 cents for 2018 to $22.15 per share at March 31, 2018 from $21.85 per share at December 31, 2017. The dividend declared per share was $0.08 for the three month period ended March 31, 2018 as compared to $0.07 per share for the same period in 2017.

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

             

March 31,

March 31, December 31,
2018     2017 2017

(dollars in thousands)

(unaudited) (unaudited) (audited)
Total assets $421,556 $396,073 $405,796
Loans 325,790 311,154 322,156
Deposits 347,221 332,708 332,005
Shareholders’ equity 33,072 31,527 32,621
 
Nonperforming assets:
Nonaccrual loans $3,699 $6,620 $3,756
Accruing troubled debt restructurings 341 398 345
Loans 90 days or more past due and still accruing - - -
Foreclosed properties 706     706 1,264
Total nonperforming assets $4,746     $7,724 $5,365
 
For the Three Months Ended
March 31, March 31,

 

2018     2017
(dollars in thousands, except for per share data) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $849     $367
Total comprehensive income $569     $459
 
Charge-offs $ 26 $267
(Recoveries) (540)     (167)
Net (recoveries) charge-offs $(514)     $100
 
PER COMMON SHARE DATA:
Basic earnings per share $0.57 $0.25
Diluted earnings per share $0.55 $0.24
Basic weighted average number of shares outstanding

1,493,080

1,492,282

Diluted weighted average number of shares outstanding

1,556,723

1,548,504

Common shares outstanding 1,493,104 1,492,764 1,493,044
Dividends declared $0.08 $0.07
Book value per share $22.15 $21.12 $21.85
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.82% 0.38%
Return on average equity 10.27% 4.65%
Allowance for loan losses to total loans 1.12% 1.23% 1.01%
Nonperforming assets to total assets 1.13% 1.95% 1.32%
Ratio of net charge-offs to average loans (0.16)% 0.03%
Common Equity Tier 1 to risk-weighted assets 9.02% 8.65% 8.72%
Tier 1 capital to risk-weighted assets 10.64% 10.33% 10.35%
Total capital to risk-weighted assets 11.62% 11.40% 11.23%
Tier 1 capital to average assets 9.58% 9.63% 9.65%
Average equity to average assets 8.03% 8.23%
Net interest margin 3.66% 3.60%
 
             
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, March 31, December 31,
        2018     2017     2017
        (unaudited)     (unaudited)     (audited)
(dollars in thousands)                    
ASSETS
Cash and due from banks $ 2,998 $ 2,778 $ 2,726
Federal funds sold 5 60 5
Interest-bearing deposits in other banks       48,887     38,052     34,628
Cash and cash equivalents       51,890     40,890     37,359
Investment securities available-for-sale at fair value 23,521 23,963 24,745
Restricted stock 2,395 1,950 2,367
Loans 325,790 311,154 322,156
Less: Allowance for loan losses       (3,633)     (3,822)     (3,265)
Net loans       322,157     307,332     318,891
Bank premises and equipment 9,450 9,739 9,542
Bank owned life insurance 8,994 8,788 8,946
Foreclosed properties 706 706 1,264
Other assets       2,443     2,705     2,682
Total assets       $421,556     $396,073     $405,796
 
LIABILITIES AND SHAREHOLDERS' EQUITY                    
                     
Liabilities
Deposits
Noninterest-bearing deposits $ 90,082 $ 88,850 $ 89,616
Interest-bearing deposits       257,139     243,858     242,389
Total deposits 347,221 332,708 332,005
Short-term borrowings 4,200 4,300 4,200
FHLB advances 29,800 19,800 29,700
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities       1,077     1,552     1,084
Total liabilities       388,484     364,546     373,175
 
Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,493,104; 1,492,764 and 1,493,044 shares issued and outstanding, respectively

15 15 15
Additional paid-in capital 15,398 15,415 15,397
Retained earnings 18,079 15,552 16,829
Accumulated other comprehensive (loss) income       (420)     545     380
Total shareholders' equity       33,072     31,527     32,621
Total liabilities and shareholders' equity       $421,556     $396,073     $405,796
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
     

For the Three Months Ended

(dollars in thousands, except per share amounts)    

March 31,
2018

   

March 31,
2017

Interest income
Interest and fees on loans $3,791 $3,383
Interest and dividends on investment securities:
Interest – taxable 120 100
Interest – tax exempt 23 26
Dividends 40 25
Interest on federal funds sold - 1
Other interest income     139     53
Total interest income     4,113     3,588
Interest expense
Interest on deposits 389 281
Interest on short-term borrowings 45 35
Interest on FHLB advances 122 33
Interest on junior subordinated debentures     51     40
Total interest expense     607     389
Net interest income 3,506 3,199
Provision for loan losses     (145)     178
Net interest income after provision for loan losses     3,651     3,021
Noninterest income
Change in fair value of equity securities 6 -
Gain on sale of loans 81 38
Gain (loss) on foreclosed properties 12 (34)
Bank owned life insurance income 48 53
Service fees 94 87
Other operating income     123     105
Total noninterest income     364     249
Noninterest expense
Salaries and employee benefits 1,687 1,693
Occupancy and equipment expenses 446 458
Other operating expenses     726     576
Total noninterest expense     2,859     2,727
Income before provision for income taxes 1,156 543
Provision for income taxes     307     176
Net income     $ 849     $ 367
Basic earnings per share     $0.57     $0.25
Diluted earnings per share     $0.55     $0.24
Basic weighted average number of shares outstanding     1,493,080     1,492,282
Diluted weighted average number of shares outstanding     1,556,723     1,548,504
Dividends declared per share     $0.08     $0.07
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
      For the Three Months Ended

(dollars in thousands)

   

March 31,
2018

   

March 31,
2017

Net income $849 $367
Changes in net unrealized (losses) gains on securities available for sale, net of income tax benefits of $106 in 2018 and income taxes of $60 in 2017     (280)     92
Total comprehensive income     $569     $459
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)
(dollars in thousands)      

Shares
Outstanding

   

Common
Stock

   

Additional
Paid-in
Capital

   

Retained
Earnings

   

Accumulated
Other
Comprehensive
Income
(Loss)

   

Total
Shareholders'
Equity

                     
January 1, 2017 1,491,844 $15 $15,404 $15,289 $453 $31,161
Comprehensive income 367 92 459
Dividends declared on common stock, $0.07 per share

(104)

(104)

Shares issued under stock option transactions 920 10 10
Compensation expense from stock option transactions                   1                 1
Balance, March 31, 2017       1,492,764     $15     $15,415     $15,552     $545     $31,527
January 1, 2018 1,493,044 $15 $15,397 $16,829 $380 $32,621
Comprehensive income 849 (280) 569
Cumulative change in accounting principle 520 (520) -
Dividends declared on common stock, $0.08 per share (119) (119)
Shares issued under stock option transactions       60           1                 1
Balance, March 31, 2018       1,493,104     $15     $15,398     $18,079     $(420)     $33,072
 
         
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)

 

      For The Three Months Ended
        March 31,     March 31,
(dollars in thousands)       2018     2017
Cash flows from operating activities:
Net income $ 849 $ 367
Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 124 118
Deferred income taxes (benefit) 35 (82)
(Recoveries) provision for loan losses (145) 178
Change in fair value of equity securities (6) -
Gain on sale of loans (81) (38)
Loans originated for sale (1,123) (1,768)
Proceeds from loans sold 1,204 1,806
Net premium amortization on investment securities 33 35
Bank owned life insurance income (48) (53)
(Gain) loss on foreclosed property (12) 34
Stock-based compensation expense - 1
Decrease in accrued interest and other assets 166 179
Increase in accrued interest and other liabilities       137     339
Net cash provided by operating activities       1,133     1,116
Cash flows from investing activities:
Proceeds from maturities, prepayments and calls

of investment securities available for sale

810

797

Purchase of restricted stock (28) (263)
Net increase in loans (3,120) (4,655)
Purchases of bank premises and equipment (32) (2,367)
Proceeds from sale of foreclosed properties       570     126
Net cash used in investing activities       (1,800)     (6,362)
Cash flows from financing activities:
Net increase in NOW, money market accounts, savings

accounts and noninterest-bearing deposits

3,108 8,934
Net increase in time deposits 12,108 1,822
Net increase in short-term borrowings - 1,000
Proceeds from FHLB advances 100 4,800
Proceeds from issuance of common stock 1 10
Dividends paid on common stock       (119)     (104)
Net cash provided by financing activities       15,198     16,462
Net increase in cash and cash equivalents 14,531 11,216
Cash and cash equivalents – beginning of period       37,359     29,674
Cash and cash equivalents – end of period       $51,890     $40,890
Supplemental cash flow disclosures:
Interest paid       $593     $380
 

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 March 31,       2018     2017

 

(dollars in thousands)

     

Average
daily
balance

   

Interest
Income/
Expense

   

Average
Yield/
Rate(%)

   

Average
daily
balance

   

Interest
Income/
Expense

   

Average
Yield/
Rate(%)

Assets                
Interest-earning assets:
Federal funds sold $ 5 $ - - $ 538 $ 1 0.75
Interest bearing deposits in other banks 38,727 139 1.46 29,265 53 0.73
Investment securities (1):
Taxable 23,158 160 2.80 22,237 125 2.28
Tax-exempt (2) 3,340 29 3.52 3,803 39 4.16
Loans (3)       325,141     3,803     4.74     308,377     3,408     4.48
Total interest-earning assets       390,371     4,131     4.29     364,220     3,626     4.04
Noninterest-earning assets       21,719 19,758
Total assets       $412,090 $383,978
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 42,298 $ 25 0.24 $ 34,062 $ 14 0.17
Savings accounts 13,537 1 0.03 11,882 1 0.03
Money market accounts 97,570 67 0.28 100,586 70 0.28
Certificates of deposit 94,501 296 1.27 93,982 196 0.85
Short-term borrowings 4,200 45 4.35 4,044 35 3.51
FHLB advances 29,729 122 1.66 16,412 33 0.82
Junior subordinated debentures       6,186     51     3.34     6,186     40     2.62
Total interest-bearing liabilities       288,021     607     0.85     267,154     389     0.59
Noninterest-bearing deposits 90,144 84,096
Noninterest-bearing liabilities 845 1,143
Total liabilities       379,010 352,393
Total shareholders’ equity       33,080 31,585
Total liabilities and shareholders’

equity

      $412,090       $383,978      
Net interest income             $3,524       $3,237
Net interest spread 3.44% 3.45%
Net interest margin 3.66% 3.60%
 
 
(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 21% for 2018 and 34% for 2017. Taxable-equivalent adjustments of $6 thousand in 2018 and $13 thousand in 2017 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 21% for 2018 and 34% for 2017. Taxable-equivalent adjustments of $12 thousand in 2018 and $25 thousand in 2017 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $(12) thousand in 2018 and $10 thousand in 2017.

 

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

Contacts

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