DCB FINANCIAL CORP LEWIS CENTER, Ohio, April 29, 2015 /PRNewswire/ -- DCB Financial Corp (the "Company"), (OTCQB: DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the "Bank") announced net income of $239,000 or $0.03 per diluted share for the three months ended March 31, 2015, compared to net income of $117,000 or $0.02 per diluted share for the first quarter of 2014 and net income of $168,000 or $0.02 per diluted share for the fourth quarter of 2014.
Ronald J. Seiffert, President and CEO for the Company said, "Net income in the first quarter of 2015 increased 104% and 42% compared to the first and fourth quarters of 2014, respectively, and was the highest quarterly core net income since the first quarter of 2012. The sharp reduction in problem assets that we achieved during 2014 along with the strong loan growth at the end of 2014 set the stage for a strong start to 2015 and our best overall quarter in three years."
Seiffert continued, "Net interest income was up $194,000 in the first quarter of 2015 compared to the first quarter of 2014, as we made substantial progress over the past year in reshaping and growing our loan portfolio. Non-interest expenses were down $112,000 due in large part to lower expenses associated with the improvement in our asset quality."
Balance Sheet Highlights
Total assets were $520.7 million at March 31, 2015, compared with $515.3 million at December 31, 2014.
Total loans were $377.2 million at March 31, 2015, compared with $385.4 million at December 31, 2014 and $369.7 million at September 30, 2014. The Company entered the first quarter of 2015 with a relatively light loan pipeline due primarily to seasonal factors and a large number of commercial loan closings in the fourth quarter of 2014. Growth in the Company's commercial loan portfolios in the fourth quarter of 2014 totaled $9.8 million. In addition, prepayments and payoffs in the Company's commercial loan portfolios were unusually high during the first quarter of 2015, including 5 relationships aggregating $5.7 million that paid off during the quarter.
Deposits totaled $464.8 million at March 31, 2015, compared with $453.2 million at December 31, 2014 and $445.5 million at September 30, 2014. Money market accounts increased $9.1 million in the first quarter of 2015 due primarily to seasonal inflows of municipal deposits.
Shareholders' equity increased $440,000 in the first quarter and was $47.7 million at March 31, 2015. Net income for the first quarter of $239,000 was augmented by an increase in accumulated other comprehensive income of $194,000 due to an increase in unrealized gains on securities available-for-sale.
The Bank's Tier 1 leverage ratio was 8.65% and its total risk-based capital ratio was 13.83% at March 31, 2015, both of which were well above the regulatory thresholds required to be classified as a "well-capitalized" institution, which are 5.0% and 10.0%, respectively.
Asset Quality and the Provision for Loan Losses
Delinquent loans (including non-accrual loans) totaled $2.0 million or 0.53% of total loans at March 31, 2015, compared to $2.2 million or 0.58% of total loans at December 31, 2014 and $3.6 million or 0.98% of total loans at September 30, 2014. Non-accrual loans totaled $1.1 million or 0.30% of total loans at March 31, 2015, compared to $1.4 million or 0.36% of total loans at December 31, 2014 and $3.0 million or 0.81% of total loans at September 30, 2014.
Non-performing assets were $11.8 million or 2.26% of total assets at March 31, 2015, compared with $12.6 million or 2.45% of total assets at December 31, 2014 and $14.6 million or 2.91% of total assets at September 30, 2014. Troubled debt restructurings ("TDR's") which are performing in accordance with the restructured terms and accruing interest, but are included in non-performing assets, were $9.6 million at March 31, 2015, and at December 31, 2014 and $9.8 million at September 30, 2014.
Net charge-offs were $297,000 or 0.31% (annualized) of average loans in the first quarter of 2015, compared to net charge-offs of $1.3 million or 1.43% (annualized) of average loans in the year-ago quarter, and $90,000 or 0.10% (annualized) of average loans in the fourth quarter of 2014. Two relationships comprised nearly all of the charge-offs in the first quarter of 2014, which were charged against allowance allocations established in the fourth quarter of 2013.
The provision for loan losses was $150,000 in the first quarter of 2015 and in the fourth quarter of 2014. No provision for loan losses was recorded in the year-ago quarter. The provision for loan losses as a percentage of net charge-offs was 50.5% for the first quarter of 2015, compared to 166.7% in the fourth quarter of 2014.
The allowance for loan losses was $4.1 million at March 31, 2015, compared to $4.2 million at December 31, 2014 and at September 30, 2014. The ratio of the allowance for loan losses to total loans was 1.08% at March 31, 2015, compared with 1.10% at December 31, 2014 and 1.13% at September 30, 2014. The ratio of the allowance for loan losses to non-performing loans (including TDR's) was 37.8% at March 31, 2015, compared to 38.5% at December 31, 2014 and 31.3% at September 30, 2014. The ratio of the allowance for loan losses to non-accrual loans was 362% at March 31, 2015, compared to 306% at December 31, 2014 and 139% at September 30, 2014.
Net Interest Income
Net interest income totaled $4.2 million in the three months ended March 31, 2015, compared with $4.0 million in the year-ago quarter and $4.2 million in the fourth quarter of 2014. Net interest income in the fourth quarter of 2014 included $171,000 of interest income recognized upon the refinance of a non-accrual commercial mortgage that, upon the refinance, was returned to accrual status.
The net interest margin was unchanged at 3.50% in the first quarter of 2015 compared with the first quarter of 2014 and was 3.62% in the fourth quarter of 2014. The net interest margin was 3.48% in the fourth quarter of 2014 without the $171,000 interest recovery.
The Company's earning assets yield (absent non-recurring items) and cost of funds have been relatively stable over the past five quarters, as growth in the loan portfolio has offset the effect of portfolio amortization at historically higher rates, and as the Company's time deposits have largely repriced to at or near current rates.
Average interest-earning assets were $484.9 million in the first quarter of 2015, compared with $466.4 million in the year-ago quarter and $465.7 million in the fourth quarter of 2014. Total period end loans outstanding increased $15.7 million between September 30, 2014 and December 31, 2014; however, much of the impact of this growth on the average balances of the loan portfolio was reflected in the first quarter of 2015 as much of the fourth quarter growth occurred in the latter part of that quarter. The average balance of loans increased $21.7 million in the first quarter of 2015 compared with the year-ago quarter, and were $7.1 million higher than the fourth quarter of 2014. Total average loans were 78.6% of total average interest-earning assets in the first quarter of 2015, compared with 77.1% in the year-ago quarter and 80.5% in the fourth quarter of 2014. Total average interest-bearing deposit balances increased $14.8 million in the first quarter of 2015 compared to the first quarter of 2014, with a decrease in the average balance of time deposits of $9.8 million being offset by an increase of $24.6 million in the average balances of lower-costing interest-bearing demand, savings and money market accounts.
Non-Interest Income and Non-Interest Expenses
Non-interest income was $1.2 million in the first quarter of 2015 and the first quarter of 2014, and was $1.1 million in the fourth quarter of 2014. Non-interest income (net of nonrecurring income, gains and losses and gains/losses on the sales of securities in the first quarter of 2014) accounted for 21.5% of total revenue in the first quarter of 2015, compared with 22.2% in the year-ago quarter and 20.6% in the fourth quarter of 2014.
Non-interest expenses were $5.0 million for the first quarter of 2015, compared with $5.1 million in the year-ago quarter and in the fourth quarter of 2014. The Company's efficiency ratio was 92.9% in the first quarter of 2015, compared with 98.5% in the year-ago quarter and 94.6% in the fourth quarter of 2014.
About DCB Financial Corp
DCB Financial Corp is a financial holding company formed under the laws of the State of Ohio. The Company is the parent of The Delaware County Bank & Trust Company, a state-chartered commercial bank. The Bank conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 14 branch offices located in Central Ohio. The Bank provides customary retail and commercial banking and cash management services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, commercial leases, real estate mortgage loans, night depository facilities and trust and personalized wealth management services.
Forward-Looking Statements
This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of DCB Financial Corp. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: an increase in competitive pressure in the banking industry; changes in the interest rate environment which may affect the net interest margin; changes in the regulatory environment; general economic conditions, either nationally or regionally, resulting, among other things, in a deterioration in credit quality; changes in business conditions and inflation; changes in the securities markets; changes in technology used in the banking business; our ability to maintain and increase market share and control expenses; increases in FDIC insurance premiums may cause earnings to decrease; and other risks set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and in subsequent filings with the Securities and Exchange Commission.
The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
DCB Financial Corp
Consolidated Balance Sheets (Unaudited)
March 31, 2015 December 31, 2014
-------------- -----------------
(Dollars in thousands, except share and per
share data)
Assets
Cash and due from financial
institutions $5,998 $6,247
Interest-bearing deposits 18,047 15,027
------ ------
Total cash and cash equivalents 24,045 21,274
Securities available-for-sale 85,844 75,909
Loans 377,246 385,444
Less allowance for loan losses (4,089) (4,236)
------ ------
Net loans 373,157 381,208
Real estate owned 940 1,111
Investment in FHLB stock 3,250 3,250
Premises and equipment, net 9,891 10,016
Bank-owned life insurance 20,270 20,027
Accrued interest receivable and
other assets 3,312 2,587
----- -----
Total assets $520,709 $515,382
======== ========
Liabilities and shareholders'
equity
Liabilities:
Deposits:
Non-interest bearing $111,286 $111,022
Interest bearing 353,510 342,170
------- -------
Total deposits 464,796 453,192
Borrowings 4,801 11,808
Accrued interest payable and
other liabilities 3,461 3,171
Total liabilities 473,058 468,171
Shareholders' equity:
Common stock 16,456 16,064
Retained earnings 38,293 38,055
Treasury stock (7,416) (7,416)
Accumulated other comprehensive
income 848 654
Deferred stock-based compensation (530) (146)
Total shareholders' equity 47,651 47,211
------ ------
Total liabilities and
shareholders' equity $520,709 $515,382
======== ========
Common shares outstanding 7,287,437 7,233,795
Book value per common share $6.54 $6.53
DCB Financial Corp
Consolidated Statements of Operations (Unaudited)
Three months ended March 31,
----------------------------
2015 2014
---- ----
(Dollars in thousands, except share and per
share data)
Interest
income:
Loans $3,952 $3,738
Securities 505 553
Federal
funds sold
and
interest
bearing
deposits 10 13
--- ---
Total
interest
income 4,467 4,304
Interest
expense:
Deposits:
Savings and
money
market
accounts 142 131
Time
accounts 92 128
NOW
accounts 16 21
--- ---
Total 250 280
Borrowings: 35 36
FHLB
advances
Total
interest
expense 285 316
Net
interest
income 4,182 3,988
Provision
for loan
losses 150 -
--- ---
Net
interest
income
after
provision
for loan
losses 4,032 3,988
Non-
interest
income:
Service
charges 452 511
Wealth
management
fees 380 293
Treasury
management
fees 58 56
Income from
bank-
owned life
insurance 244 239
Loss on
loans held
for sale - (245)
Gain on
sale of
REO 10 -
Loss on
sale of
securities,
available-
for-sale - (140)
Gain on
sale of
branch - 438
Other non-
interest
income 14 40
--- ---
Total non-
interest
income 1,158 1,192
Non-
interest
expense:
Salaries
and
employee
benefits 2,712 2,779
Occupancy
and
equipment 963 804
Professional
services 353 421
Advertising 108 81
Office
supplies,
postage
and
courier 79 95
FDIC
insurance
premium 110 168
State
franchise
taxes 75 65
Other non-
interest
expense 551 650
--- ---
Total non-
interest
expense 4,951 5,063
Income
before
income
taxes 239 117
Income
taxes - -
--- ---
Net income $239 $117
==== ====
Share and
Per Share
Data
Basic
average
common
shares
outstanding 7,233,836 7,192,350
Diluted
average
common
shares
outstanding 7,250,350 7,244,716
Basic
earnings
per common
share $0.03 $0.02
Diluted
earnings
per common
share $0.03 $0.02
DCB Financial Corp
Consolidated Average Balances (Unaudited)
Three months ended
March 31,
---------
2015 2014
---- ----
(Dollars in thousands)
Earning assets
Interest bearing cash $19,742 $21,750
Securities 80,388 80,379
Tax-exempt securities 3,601 4,812
Loans (1) 381,125 359,427
------- -------
Total earning assets 484,856 466,368
Non-earning assets 42,201 41,997
------ ------
Total assets $527,057 $508,365
======== ========
Interest bearing liabilities
Interest bearing DDA $81,409 $80,776
Money market 155,038 130,336
Savings accounts 42,757 43,521
Time deposits 76,418 86,204
Overnight borrowings 1,567 -
FHLB advances 4,806 4,835
Total interest bearing liabilities 361,995 345,672
Non-interest bearing deposits $113,067 $110,299
Other non-interest bearing
liabilities 5,386 6,574
----- -----
Total liabilities 480,448 462,545
Shareholders' equity 46,609 45,820
------ ------
Total liabilities and
shareholders' equity $527,057 $508,365
======== ========
(1) Includes loans held for sale in 2014
DCB Financial Corp
Loans and Deposits (Unaudited)
The following table sets forth the composition of the Company's loan portfolio at the dates indicated (includes loans held for sale):
March 31, 2015 December 31, 2014 September 30, 2014
-------------- ----------------- ------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Loan portfolio composition (Dollars in thousands)
Commercial and industrial $99,946 26.5% $106,222 27.6% $102,629 27.8%
Commercial real estate 106,334 28.2% 111,851 29.0% 105,621 28.6%
Real estate and home equity 131,658 34.9% 129,650 33.7% 125,484 34.0%
Consumer and credit card 39,074 10.4% 37,507 9.7% 35,725 9.6%
------ ------ ------
Total loans $377,012 100.0% $385,230 100.0% $369,459 100.0%
Net deferred loan costs 234 214 182
Allowance for loan losses (4,089) (4,236) (4,176)
------ ------ ------
Net loans $373,157 $381,208 $365,465
======== ======== ========
The following table sets forth the composition of the Company's deposits at the dates indicated :
March 31, 2015 December 31, 2014 September 30, 2014
-------------- ----------------- ------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Deposit composition (Dollars in thousands)
Non-interest bearing demand $111,286 23.9% $111,022 24.5% $104,991 23.6%
Interest bearing demand 76,390 16.5% 77,534 17.1% 72,622 16.3%
------ ---- ------ ---- ------ ----
Total demand 187,676 40.4% 188,556 41.6% 177,613 39.9%
Savings 43,568 9.4% 42,634 9.4% 42,482 9.5%
Money market 156,806 33.7% 147,667 32.6% 148,628 33.4%
Time deposits 76,746 16.5% 74,335 16.4% 76,811 17.2%
------ ---- ------ ---- ------ ----
Total deposits $464,796 100.0% $453,192 100.0% $445,534 100.0%
======== ===== ======== ===== ======== =====
DCB Financial Corp
Asset Quality (Unaudited)
The following table represents a summary of delinquent loans grouped by the number of days delinquent at the dates indicated:
Delinquent loans and leases March 31, 2015 December 31, 2014 September 30, 2014
--------------------------- -------------- ----------------- ------------------
$%(1) $%(1) $%(1)
---- ---- ----
(Dollars in thousands)
30 days past due $250 0.07% $336 0.09% $68 0.02 %
60 days past due 498 0.13% 37 0.01% 50 0.01 %
90 days past due and still accruing 105 0.03% 480 0.12% 520 0.14%
Non-accrual 1,130 0.30% 1,384 0.36% 3,007 0.81%
----- ---- ----- ---- ----- ----
Total $1,983 0.53% $2,237 0.58% $3,645 0.98%
====== ==== ====== ==== ====== ====
(1) As a percentage of total loans, excluding deferred costs
The following table represents information concerning the aggregate amount of non-performing assets (includes loans held for sale):
Non-performing assets March 31, 2015 December 31, 2014 September 30, 2014
--------------------- -------------- ----------------- ------------------
(Dollars in thousands)
Non-accruing loans:
Residential real estate loans and home equity $340 $334 $343
Commercial real estate 60 298 1,889
Commercial and industrial 612 632 651
Consumer loans and credit cards 118 120 124
--- --- ---
Total non-accruing loans 1,130 1,384 3,007
Accruing loans delinquent 90 days or more 105 480 520
--- --- ---
Total non-performing loans (excluding TDR's) 1,235 1,864 3,527
Other real estate and repossessed assets 940 1,111 1,215
--- ----- -----
Total non-performing assets (excluding TDR's) $2,175 $2,975 $4,742
====== ====== ======
Troubled debt restructurings(1) $9,575 $9,633 $9,834
Total non-performing loans (including TDR's) $10,810 $11,497 $13,361
Total non-performing assets (including TDR's) $11,750 $12,608 $14,576
(1) TDR's that are in compliance with their modified terms and accruing interest.
The following table summarizes changes in the allowance for loan losses arising from loans charged off, recoveries on loans and leases previously charged off and additions to the allowance
which have been charged to expense:
Allowance for loan losses Three months ended
March 31,
--- ---------
2015 2014
---- ----
(Dollars in thousands)
Allowance for loan losses, beginning of period $4,236 $6,725
Loans charged-off (430) (1,412)
Recoveries of loans previously charged-off 133 129
--- ---
Net loans charged-off (297) (1,283)
Allowance related to loans transferred to held-for-sale - (97)
Provision for loan losses 150 -
--- ---
Allowance for loan losses, end of period $4,089 $5,345
====== ======
DCB Financial Corp
Consolidated Financial Information (Unaudited)
Key Ratios At or for the three
months ended
March 31,
--- ---------
2015 2014
---- ----
Return on average assets 0.18% 0.09%
Return on average equity 2.05% 1.02%
Yield on earning assets 3.73% 3.74%
Cost of interest-bearing liabilities 0.32% 0.32%
Net interest margin (1) 3.50% 3.50%
Non-interest income to total income (2) 21.5% 22.2%
Efficiency ratio (3) 92.89% 98.54%
Net loans charged-off to average loans, annualized 0.31% 1.43%
Provision for loan losses to average loans, annualized 0.16% 0.00%
Allowance for loan losses to total loans 1.08% 1.51%
Allowance for loan losses to non-accrual loans 362% 148%
Non-accrual loans to total loans 0.30% 1.02%
Non-performing assets to total assets 2.26% 3.59%
(including performing TDR's)
Non-performing assets to total assets 0.42% 1.05%
(excluding performing TDR's)
(1) Net interest income divided
by average earning assets
(2) Non-interest income
(excluding net realized
gains and losses on
securities and other non-
recurring gains and
losses) divided by the sum
of net interest income and
non-interest income (as
adjusted)
(3) Non-interest expense (less
OREO expense and non-
recurring expenses and
losses) divided by the sum
of net interest income and
non-interest income (as
adjusted)
DCB Financial Corp
Selected Quarterly Financial Data (Unaudited)
2015 2014
---- ----
First Fourth Third Second First
----- ------ ----- ------ -----
(Dollars in thousands, except per share data)
Interest income $4,467 $4,536 $4,278 $4,262 $4,304
Interest expense 285 291 306 299 316
--- --- --- --- ---
Net interest income 4,182 4,245 3,972 3,963 3,988
Provision for loan losses 150 150 - - -
--- --- --- --- ---
Net interest income after provision for loan losses 4,032 4,094 3,972 3,963 3,988
Non-interest income 1,158 1,132 1,140 996 1,192
Non-interest expenses 4,951 5,059 5,062 4,922 5,063
----- ----- ----- ----- -----
Income before income taxes 239 168 50 37 117
Income taxes - - - - -
--- --- --- --- ---
Net income $239 $168 $50 $37 $117
==== ==== === === ====
Stock and related per share data
Basic and diluted earnings per common share $0.03 $0.02 $0.01 $0.01 $0.02
Basic weighted average common shares outstanding 7,233,836 7.196,404 7,192,350 7,192,350 7,192,350
Diluted weighted average common shares outstanding 7,250,350 7,232,961 7,249,194 7,250,702 7,244,716
Common book value per share $6.59 $6.53 $6.49 $6.51 $6.45
Capital Ratios:
Bank
Tier 1 leverage ratio 8.65% 9.00% 8.96% 8.97% 8.83%
Tier 1 risk based capital 12.62% 12.40% 12.42% 12.77% 12.78%
Total risk based capital 13.75% 13.56% 13.57% 14.02% 14.03%
Total equity to assets ratio (consolidated) 9.15% 9.16% 9.33% 9.35% 9.39%
Selected ratios:
Return on average assets 0.18% 0.13% 0.04% 0.05% 0.09%
Return on average equity 2.05% 1.44% 0.43% 0.53% 1.02%
Yield on earning assets 3.73% 3.86% 3.66% 3.75% 3.74%
Cost of interest-bearing liabilities 0.32% 0.33% 0.35% 0.36% 0.32%
Net interest margin 3.50% 3.62% 3.40% 3.51% 3.50%
Non-interest income to total income (1) 21.5% 20.6% 22.6% 21.8% 22.2%
Efficiency ratio (2) 92.89% 94.6% 98.7% 96.2% 98.5%
Asset quality ratios:
Net loans charged off to average loans, annualized 0.31% 0.10% 0.43% 0.87% 1.43%
Provision for loan losses to average loans, annualized 0.16% 0.16% 0.00% 0.00% 0.00%
Allowance for loan losses to total loans 1.08% 1.10% 1.13% 1.28% 1.51%
Allowance for loan losses to non-accrual loans 362% 306% 139% 109% 148%
Non-accrual loans to total loans 0.30% 0.36% 0.81% 1.17% 1.02%
Non-performing assets to total assets (including 2.26% 2.45% 2.91% 3.06% 3.59%
performing TDR's)
Non-performing assets to total assets (excluding 0.42% 0.58% 0.95% 1.12% 1.05%
performing TDR's)
(1) Non-interest income (net of realized gains and losses on securities and other non-recurring items) divided by the sum of net interest income and non-interest income (as adjusted)
(2) Non-interest expense (less OREO expense) divided by the sum of net interest income and non-interest income (as adjusted)
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SOURCE DCB Financial Corp
