Frederick County Bancorp, Inc. (the “Company”) (OTCPink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended December 31, 2016, the Company recorded net income of $149 thousand and diluted earnings per share of $0.10, as compared to net income of $891 thousand and diluted earnings per share of $0.57 recorded for the fourth quarter of 2015. The Company earned $1.3 million with diluted earnings per share of $0.82 for the year ended on December 31, 2016, as compared to $2.1 million in earnings and diluted earnings per share of $1.36 for the same period in 2015.

The decrease in quarterly earnings was due primarily to $600 thousand in provision for loan losses in the fourth quarter of 2016, as compared to a negative provision expense of $(178) thousand in the same period of 2015, a decrease in total noninterest income to $420 thousand in the fourth quarter of 2016 from $756 thousand in the fourth quarter of 2015 and an increase in total noninterest expense to $2.8 million in the fourth quarter of 2016 from $2.6 million in the fourth quarter of 2015. The increase in the provision for loan losses was primarily related to two commercial loan relationships. The decrease in total noninterest income was due primarily to decreases in gain on sale of loans of $206 thousand and in gain on foreclosed properties of $97 thousand in the fourth quarter of 2016 as compared to the fourth quarter of 2015. The increase in total noninterest expense was due primarily to increases in salaries and employee benefits of $160 thousand in the fourth quarter of 2016 as compared to the fourth quarter of 2015, respectively.

For the full year of 2016, the decrease in total earnings was due primarily to an increase in provision for loan losses to $850 thousand in as compared to a negative provision for loan loss expense of $(178) thousand in the same period of 2015, a decrease in total noninterest income to $1.3 million in 2016 as compared to $1.9 million in 2015 and an increase in total noninterest expense of $11.0 million in the full year of 2016 as compared to $10.6 million in the same period in 2015. The increase in the provision for loan losses was primarily related to two commercial loan relationships. The decrease in total noninterest income in 2016 was due primarily to decreases in securities gains of $47 thousand, in gain on sale of loans of $477 thousand, reflecting lower SBA loan originations and subsequent sales in 2016, and in gain on foreclosed properties of $97 thousand. The increase in total noninterest expense in the full year of 2016 was due primarily to increases in salaries and employee benefits of $415 thousand as compared to 2015.

The ratio of the allowance for loan losses to total loans stood at 1.22% and 1.10% as of December 31, 2016 and 2015, respectively. Total nonperforming assets stood at $7.4 million and $5.9 million at December 31, 2016 and 2015, respectively. The corresponding nonperforming assets to total assets ratios were 1.96% and 1.68% as of December 31, 2016 and 2015, respectively.

The Company also reported that, as of December 31, 2016, assets stood at $378.8 million, with total deposits of $322.0 million and gross loans of $306.2 million, representing increases of 8.1%, 8.9%, and 9.8%, respectively, compared to December 31, 2015. Total shareholders’ equity at December 31, 2016 was $31.2 million, an increase of $1.6 million from December 31, 2015. The increase primarily resulted from an increase in additional paid-in capital of $220 thousand, which was from the exercise of stock options, an increase in retained earnings of $840 thousand and an increase in accumulated other comprehensive income of $545 thousand from December 31, 2015. On a per share basis, book value increased by 86 cents for 2016 to $20.89 per share at December 31, 2016 from $20.03 per share at December 31, 2015. The dividends declared per share remained constant at $0.28 per share for the 12 month periods ended December 31, 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.

       

December 31,

December 31,
2016   2015
(dollars in thousands) (unaudited) (audited)
Total assets $378,753 $350,542
Loans 306,242 278,950
Deposits 321,952 295,632
Shareholders’ equity 31,161 29,556
 
Nonperforming assets:
Nonaccrual loans $6,172 $2,160
Accruing troubled debt restructurings 405 3,031
Loans 90 days or more past due and still accruing

--

--
Foreclosed properties 866   706
Total nonperforming assets $7,443   $5,897
 
For the Three Months Ended For the Years Ended
December 31,

December 31,

December 31, December 31,
2016   2015 2016   2015
(dollars in thousands, except for per share data) (unaudited) (audited) (unaudited) (audited)
SUMMARY OF OPERATING RESULTS:
Net income $149   $891 $1,257   $2,104
Total comprehensive income $277   $839 $1,802   $2,029
 
Charge-offs $ - $ - $236 $362
(Recoveries) (22)   (189) (66)   (242)
Net (recoveries) charge-offs $(22)   $(189) $170   $120
 
PER COMMON SHARE DATA:
Basic earnings per share $0.10 $0.60 $0.85 $1.43
Diluted earnings per share $0.10 $0.57 $0.82 $1.36
Basic weighted average number of shares outstanding 1,490,257

1,475,929

1,486,502 1,475,569
Diluted weighted average number of shares outstanding 1,542,745 1,552,907 1,542,119 1,543,502
Common shares outstanding 1,491,844 1,475,929 1,491,844 1,475,929
Dividends declared $0.07 $0.07 $0.28 $0.28
Book value per share $20.89 $20.03 $20.89 $20.03
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.16% 1.00% 0.34% 0.60%
Return on average equity 1.90% 12.17% 4.09% 7.31%
Allowance for loan losses to total loans 1.22% 1.10% 1.22% 1.10%
Nonperforming assets to total assets 1.96% 1.68% 1.96% 1.68%
Ratio of net (recoveries) charge-offs to average loans 0.01% (0.07)% 0.06% 0.05%
Common Equity Tier 1 to risk-weighted assets 8.65% 9.63% 9.63% 9.63%
Tier 1 capital to risk-weighted assets 10.35% 11.58% 10.35% 11.58%
Total capital to risk-weighted assets 11.40% 12.57% 11.40% 12.57%
Tier 1 capital to average assets 9.66% 9.99% 9.66% 9.99%
Average equity to average assets 8.28% 8.21% 8.39% 8.24%
Net interest margin 3.50% 3.64% 3.62% 3.54%
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, December 31,
      2016   2015
      (unaudited)   (audited)
(dollars in thousands)          
ASSETS
Cash and due from banks $ 2,811 $ 2,683
Federal funds sold 1,059 1,083
Interest-bearing deposits in other banks       25,804     26,482
Cash and cash equivalents       29,674     30,248
Investment securities available-for-sale at fair value 24,644 24,363
Restricted stock 1,687 1,629
Loans held for sale 357 -
Loans 306,242 278,950
Less: Allowance for loan losses       (3,744)     (3,064)
Net loans       302,498     275,886
Bank premises and equipment 7,490 6,445
Bank owned life insurance 8,735 8,511
Foreclosed properties 866 706
Other assets       2,802     2,754
Total assets     $ 378,753   $ 350,542
 
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Liabilities
Deposits
Noninterest-bearing deposits $ 83,249 $ 67,816
Interest-bearing deposits       238,703     227,816
Total deposits 321,952 295,632
Short-term borrowings 3,300 3,300
FHLB advances 15,000 15,000
Junior subordinated debentures 6,186 6,186
Accrued interest and other liabilities       1,154     868
Total liabilities       347,592     320,986
 

Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,491,844 and 1,475,929 shares issued and outstanding, respectively

 

 

 

15

15

Additional paid-in capital 15,404 15,184
Retained earnings 15,289 14,449
Accumulated other comprehensive income (loss)       453     (92)
Total shareholders' equity       31,161     29,556
Total liabilities and shareholders' equity     $ 378,753   $ 350,542
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
 
   

For the Three Months Ended

  

For the Years Ended

December 31,

December 31,

December 31,

December 31,

(dollars in thousands, except per share amounts)

  

2016

  

2015

  

2016

  

2015

Interest income
Interest and fees on loans $3,342 $3,206 $13,198 $12,471
Interest and dividends on investment securities:
Interest – taxable 60 79 250 320
Interest – tax exempt 29 46 147 192
Dividends 23 21 97 97
Interest on federal funds sold 2 - 6 -
Other interest income   47   25   155   92
Total interest income   3,503   3,377   13,853   13,172
Interest expense
Interest on deposits 263 285 1,072 1,066
Interest on short-term borrowings 28 26 113 103
Interest on FHLB advances 26 55 110 311
Interest on junior subordinated debentures   40   32   146   121
Total interest expense   357   398   1,441   1,601
Net interest income 3,146 2,979 12,412 11,571
Provision for loan losses   600   (178)   850   (178)
Net interest income after provision for loan losses   2,546   3,157   11,562   11,749
Noninterest income
Securities gains - - 51 98
Gain on sale of loans 164 370 252 729
Gain on foreclosed properties 34 131 34 131
Bank owned life insurance income 55 57 223 231
Service fees 90 96 360 366
Other operating income   77   102   338   371
Total noninterest income   420   756   1,258   1,926
Noninterest expense
Salaries and employee benefits 1,569 1,409 6,453 6,038
Occupancy and equipment expenses 461 483 1,880 1,791
Other operating expenses   752   657   2,702   2,747
Total noninterest expense   2,782   2,549   11,035   10,576
Income before provision for income taxes 184 1,364 1,785 3,099
Provision for income taxes   35   473   528   995
Net income   $ 149   $ 891   $1,257   $2,104
Basic earnings per share   $0.10   $0.60   $0.85   $1.43
Diluted earnings per share   $0.10   $0.57   $0.82   $1.36
Basic weighted average number of shares outstanding   1,490,257   1,475,929   1,486,502   1,475,569
Diluted weighted average number of shares outstanding   1,542,745   1,552,907   1,542,119   1,543,502
Dividends declared per share   $0.07   $0.07   $0.28   $0.28
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended

December 31,

December 31,

(dollars in thousands)

  

2016

  

2015

Net income $149 $891
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $83 in 2016 and income tax benefits of $34 in 2015   128   (52)
Total comprehensive income   $277   $839
 
    For the Years Ended
 

December 31,

  

December 31,

(dollars in thousands)

  

2016

  

2015

Net income $1,257 $2,104
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $375 in 2016 and income tax benefits of $10 in 2015 576 (16)
Reclassification adjustment for (gains) realized, net of income taxes of $20 in 2016 and $39 in 2015   (31)   (59)
Total comprehensive income   $1,802   $2,029
 
 
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

         
Balance, January 1, 2015 1,475,154 $15 $15,158 $12,758 $ (17) $27,914
Comprehensive income 2,104 (75) 2,029
Dividends declared on common stock, $0.28 per share (413) (413)
Shares issued under stock option transactions 775 9 9
Compensation expense from stock option transactions           17           17
Balance, December 31, 2015   1,475,929   $15   $15,184   $14,449   $ (92)   $29,556
Comprehensive income 1,257 545 1,802
Dividends declared on common stock, $0.28 per share (417) (417)
Shares issued under stock option transactions 15,915 180 180
Compensation expense from stock option transactions 12 12
Excess tax benefit from equity-base awards           28           28
Balance, December 31, 2016   1,491,844   $15   $15,404   $15,289   $453   $31,161
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
    For The Years Ended
    December 31,   December 31,
(dollars in thousands)   2016   2015
Cash flows from operating activities:
Net income $ 1,257 $ 2,104

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

Depreciation and amortization 448 477
Deferred income taxes 54 87
Provision for loan losses 850 (178)
Securities gains (51) (98)
Gain on sale of loans (252) (729)
Loans originated for sale (6,324) (7,763)
Proceeds from loans sold 6,219 8,492
Net premium amortization on investment securities 152 163
Loss on disposal of bank premises and equipment 6 -
Bank owned life insurance income (223) (231)
Gain on foreclosed property (34) (131)
Stock-based compensation expense 12 17
Excess tax benefit from equity-based awards (28) -
Increase in accrued interest and other assets (135) (5)
Decrease (increase) in accrued interest and other liabilities   (9)   137
Net cash provided by operating activities   1,942   2,342
Cash flows from investing activities:
Purchases of investment securities available-for-sale (6,381) (5,930)
Proceeds from sales of investment securities available-for-sale 1,790 1,511

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

5,109 4,058
(Purchase) redemption of restricted stock (58) 176
Net increase in loans (27,622) (17,251)
Purchases of bank premises and equipment (1,499) (549)
Proceeds from sale of foreclosed properties   34   860
Net cash used in investing activities   (28,627)   (17,125)
Cash flows from financing activities:

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

19,846 17,063
Net increase (decrease) in time deposits 6,474 (6,416)
Repayment of FHLB advances - (5,000)
Proceeds from issuance of common stock 180 9
Dividends paid on common stock (417) (413)
Excess tax benefit from equity-based awards   28   --
Net cash provided by financing activities   26,111   5,243
Net decrease in cash and cash equivalents (574) (9,540)
Cash and cash equivalents – beginning of period   30,248   39,788
Cash and cash equivalents – end of period   $29,674   $30,248
Supplemental cash flow disclosures:
Interest paid   $1,436   $1,646
Income taxes paid   $659   $697
Transfer of loans to foreclosed properties   $160   $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 December 31,   2016   2015
Average   Interest   Average Average   Interest   Average
(dollars in thousands) daily Income/ Yield/ daily Income/ Yield/
    balance   Expense   Rate(%)   balance   Expense   Rate(%)
Assets
Interest-earning assets:
Federal funds sold $ 1,059 $ 2 0.75 $ 57 $ - -
Interest bearing deposits in other banks 36,963 47 0.50 38,308 25 0.26
Investment securities (1):
Taxable 17,555 83 1.88 20,311 100 1.95
Tax-exempt (2) 4,086 44 4.27 6,009 70 4.62
Loans held for sale 197 2 4.03 44 1 -
Loans (3)     301,045     3,360   4.43       273,463     3,234   4.69  
Total interest-earning assets     360,905     3,538   3.89       338,192     3,430   4.02  
Noninterest-earning assets     19,154   18,492
Total assets   $ 380,059 $ 356,684
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 34,796 $ 15 0.17 $ 30,540 $ 13 0.17
Savings accounts 11,502 1 0.03 9,766 1 0.04
Money market accounts 99,993 72 0.29 98,360 69 0.28
Certificates of deposit 92,850 175 0.75 95,058 202 0.84
Federal funds purchased - - - 18 - -
Short-term borrowings 3,300 29 3.49 3,300 26 3.13
FHLB advances 15,000 26 0.69 13,967 55 1.56
Junior subordinated debentures     6,186     39   2.50       6,186     32   2.05  
Total interest-bearing liabilities     263,627     357   0.54       257,195     398   0.61  
Noninterest-bearing deposits 83,954 69,452
Noninterest-bearing liabilities   1,027   757
Total liabilities     348,608   327,404
Total shareholders’ equity     31,451   29,280

Total liabilities and shareholders’ equity

  $ 380,059     $ 356,684    
Net interest income       $ 3,181     $ 3,032
Net interest spread 3.35 % 3.41 %
Net interest margin 3.50 % 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 $15 thousand in 2016 and $24 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 $20 thousand in 2016 and $29 thousand in 2015 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $(4) thousand in 2016 and $18 in 2015.
 
 
For the Years Ended December 31,   2016   2015
  Average   Interest   Average   Average   Interest   Average
(dollars in thousands) daily Income/ Yield/ daily Income/ Yield/
    balance   Expense   Rate(%)   balance   Expense   Rate(%)
Assets
Interest-earning assets:
Federal funds sold $ 1,064 $ 6 0.56 $ 32 $ - -
Interest bearing deposits in other banks 32,566 155 0.48 38,180 84 0.22
Investment securities (1):
Taxable 18,472 347 1.88 20,489 384 1.87
Tax-exempt (2) 4,937 223 4.52 6,231 268 4.30
Loans held for sale 142 7 4.93 32 3 9.38
Loans (3)     290,736     13,296   4.57       266,414     12,591   4.73  
Total interest-earning assets     347,917     14,034   4.03       331,378     13,330   4.02  
Noninterest-earning assets     18,727   18,102
Total assets   $ 366,644 $ 349,480
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 31,705 $ 54 0.17 $ 27,619 $ 43 0.16
Savings accounts 11,130 3 0.03 9,541 3 0.03
Money market accounts 97,368 279 0.29 101,332 299 0.30
Certificates of deposit 93,605 736 0.79 89,906 721 0.80
Federal funds purchased - - - 5 - -
Short-term borrowings 3,300 113 3.42 3,300 103 3.12
FHLB advances 15,000 110 0.73 15,973 311 1.95
Junior subordinated debentures     6,186     146   2.36       6,186     121   1.96  
Total interest-bearing liabilities     258,294     1,441   0.56       253,857     1,601   0.63  
Noninterest-bearing deposits 76,711 66,107
Noninterest-bearing liabilities   877   726
Total liabilities     335,882   320,690
Total shareholders’ equity     30,762   28,785

Total liabilities and shareholders’ equity

  $ 366,644     $ 349,480    
Net interest income       $ 12,593     $ 11,729
Net interest spread 3.47 % 3.39 %
Net interest margin 3.62 % 3.54 %
 
(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 $76 thousand in 2016 and $76 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 $105 thousand in 2016 and $123 thousand in 2015 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $53 thousand in 2016 and $45 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.