ASB BANCORP INC ASHEVILLE, N.C., May 1, 2015 /PRNewswire/ -- ASB Bancorp, Inc. (the "Company") (NASDAQ GM: ASBB), the holding company for Asheville Savings Bank, S.S.B. (the "Bank"), announced today its operating results for the three-month period ended March 31, 2015. The Company reported net income of $622,000, or $0.16 per diluted common share, for the quarter ended March 31, 2015 compared to $404,000, or $0.09 per diluted common share, for the same quarter of 2014.
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Suzanne DeFerie, President and CEO, noted, "Our latest quarterly financial results show increased net interest income over the previous four quarters with a continued improvement in our net interest margin to 3.01% compared to 2.94% in the previous quarter and 2.90% in the comparable quarter of 2014. We grew loans by $19.9 million during the first quarter and increased interest income from loans by 12.2% compared to the first quarter of 2014. The growth in loans for the quarter was funded in part by a $9.2 million growth in lower cost core deposits since December 31, 2014. We continue our focus on building relationships with clients while we explore ways in which we can more quickly and profitably leverage our capital."
2015 First Quarter Highlights
-- Net income for the first quarter of 2015 was $622,000, or $0.16 per
diluted common share, compared to $404,000, or $0.09 per diluted common
share, for the first quarter of 2014.
-- Net interest income increased 9.0% to $5.3 million for the three months
ended March 31, 2015 from $4.9 million for the three months ended March
31, 2014. The net interest margin improved to 3.01% for the first
quarter of 2015 compared to 2.90% for the first quarter of 2014.
-- Interest income from loans increased 12.2% in the first quarter of 2015
compared to the first quarter of 2014, primarily reflecting an $80.5
million increase in average loan balances when comparing the two
quarters.
-- Interest expense decreased 2.9% in the first quarter of 2015 compared to
the first quarter of 2014.
-- The Company recorded a $194,000 provision for loan losses in the first
quarter of 2015 compared to a recovery of loan losses of $(68,000) in
the first quarter of 2014. The allowance for loan losses declined to
1.12% of total loans at March 31, 2015 from 1.14% at December 31, 2014,
and the allowance coverage of nonperforming loans was 197.5% at March
31, 2015 compared to 221.3% at December 31, 2014.
-- Loan balances increased $19.9 million, or 3.8%, to $541.7 million during
the first quarter of 2015 and increased $86.3 million, or 18.9%, since
March 31, 2014 as new loan originations exceeded loan repayments,
prepayments and foreclosures.
-- Noninterest expenses decreased 1.5% to $5.8 million for the first
quarter of 2015 from $5.9 million for the first quarter of 2014, due to
decreases in foreclosed property expenses and overhead expense reduction
initiatives.
-- Delinquent and nonperforming loans were 0.27% and 0.56%, respectively,
of total loans at March 31, 2015, compared to 0.60% and 0.52%,
respectively, of total loans at December 31, 2014.
-- Nonperforming assets, including foreclosed properties, were 1.61% of
total assets at March 31, 2015 compared to 1.51% of total assets at
December 31, 2014 and 2.07% of total assets at March 31, 2014.
-- Core deposits, which exclude certificates of deposit, increased $9.2
million, or 2.0%, since December 31, 2014 and $34.9 million, or 8.2%,
since March 31, 2014. Noninterest-bearing deposits have increased $5.3
million, or 5.4%, since December 31, 2014, while commercial non-maturity
deposits increased $5.7 million, or 4.7%, over the same period.
-- Book value per common share increased to $21.93 at March 31, 2015 from
$21.56 at December 31, 2014 and $20.53 at March 31, 2014.
-- Capital remained strong with consolidated regulatory capital ratios of
18.42% common equity tier 1 capital, 13.16% tier 1 leverage capital,
18.42% tier 1 risk-based capital and 19.53% total risk-based capital.
-- On March 31, 2015, the Company announced a plan to repurchase up to 5%,
or 218,920 shares, of its common stock.
DeFerie commented, "We are encouraged by our improving core performance and remain optimistic about our Company's prospects in 2015 to create shareholder value through increased earnings and prudent balance sheet management."
Income Statement Analysis
Net Interest Income. Net interest income increased by $439,000, or 9.0%, to $5.3 million for the three months ended March 31, 2015 compared to $4.9 million for the three months ended March 31, 2014. Interest income on loans increased $599,000, primarily resulting from an $80.5 million increase in the average loan balances, partially offset by a 21 basis point decrease in the average yield on loans. Interest on securities decreased $168,000, attributable to a $34.0 million decrease in the average balance in mortgage-backed and other investment securities and a 9 basis point reduction in the average yield earned on the investment portfolio. Interest expense decreased $26,000, or 2.9%, to $861,000 for the three months ended March 31, 2015 from $887,000 for the three months ended March 31, 2014, due to a 3 basis point reduction in the average rate paid on interest-bearing deposits, partially offset by an increase of $7.0 million in the average balance of interest-bearing deposits. The lower cost of interest-bearing deposits was primarily attributable to a lower average balance of certificates of deposit, as well as an average rate reduction of 2 basis points on certificates of deposit, and reductions in average rates paid on NOW and savings accounts, which were partially offset by increases in the average balances of NOW, money market and savings accounts as the Company continued its focus on core deposit growth.
DeFerie commented, "We believe an important measure of our performance is the improvement demonstrated in increasing interest income through loan growth, lowering interest expense through disciplined deposit pricing and core deposit growth, resulting in net interest margin improvement."
Noninterest Income. Noninterest income increased $154,000, or 10.6%, to $1.6 million for the three months ended March 31, 2015 from $1.5 million for the three months ended March 31, 2014. Factors that contributed to the increase in noninterest income during the 2015 period included increases of $135,000 in mortgage banking income, $46,000 in income from debit card services and $21,000 in income from an investment in a Small Business Investment Company, which were partially offset by $58,000 in lower securities gains. The increase in mortgage banking income was attributable to higher volumes of residential mortgage loans originated and sold. Increased transaction volume also drove the rise in income from debit card services.
Noninterest Expenses. Noninterest expenses decreased $88,000, or 1.5%, to $5.8 million for the three months ended March 31, 2015 from $5.9 million for the three months ended March 31, 2014. The lower 2015 noninterest expenses primarily reflected decreases of $84,000 in foreclosed property expenses, $71,000 in data processing expenses and $19,000 in occupancy expenses, which were partially offset by increases of $46,000 in compensation expenses and $48,000 in various other expenses. The decrease in foreclosed property expenses included a reduction of $19,000 in valuation write-downs of foreclosed properties. Increased pension plan expense was the primary factor contributing to higher compensation expenses.
Balance Sheet Review
Assets. Total assets increased $14.4 million, or 1.9%, to $774.4 million at March 31, 2015 from $760.0 million at December 31, 2014. Cash and cash equivalents increased $3.2 million, or 5.6%, to $60.1 million at March 31, 2015 from $56.9 million at December 31, 2014 in anticipation of loan growth. Investment securities decreased $12.3 million, or 8.5%, to $133.1 million at March 31, 2015 from $145.4 million at December 31, 2014, primarily due to the sale of investment securities to fund anticipated loan growth. Loans receivable, net of deferred fees, increased $19.9 million, or 3.8%, to $541.7 million at March 31, 2015 from $521.8 million at December 31, 2014 as new loan originations exceeded loan repayments, prepayments and foreclosures.
Liabilities. Total deposits increased $8.9 million, or 1.5%, to $612.3 million at March 31, 2015 from $603.4 million at December 31, 2014. During the three months ended March 31, 2015, the Company continued its focus on core deposit growth, from which it excludes certificates of deposit. Core deposits increased $9.2 million, or 2.0%, to $458.5 million at March 31, 2015 from $449.3 million at December 31, 2014.
Commercial checking and money market accounts increased $5.7 million, or 4.7%, to $127.3 million at March 31, 2015 from $121.6 million at December 31, 2014, reflecting expanded sources of lower cost funding. The Company's initiatives to obtain new commercial deposit relationships in conjunction with making new commercial loans significantly contributed to this increase and reflects a commitment to establishing diversified relationships with business clients.
Over the same period, certificates of deposit decreased $272,000, or 0.2%, to $153.8 million at March 31, 2015 from $154.1 million at December 31, 2014 as the Company continued its focus on core deposit growth. Accounts payable and other liabilities increased $3.5 million, or 30.3%, to $15.1 million at March 31, 2015 from $11.6 million at December 31, 2014. The increase in accounts payable and other liabilities at March 31, 2015 was primarily attributable to securities purchased in the process of settlement at the end of the first quarter.
Asset Quality
Provision for Loan Losses. The Company recorded a provision for loan losses in the amount of $194,000 for the three months ended March 31, 2015 compared to a recovery of loan losses of $(68,000) for the three months ended March 31, 2014. Charge-offs were $252,000 for the first three months of 2015 compared to $94,000 for the first three months of 2014. The increase in the provision for loan losses for the quarter was primarily due to growth in loan volume, while the increase in charge-offs was related to two large loans charged off during the first quarter of 2015.
Nonperforming Assets. Nonperforming assets totaled $12.4 million, or 1.61% of total assets, at March 31, 2015, compared to $11.5 million, or 1.51% of total assets, at December 31, 2014. Nonperforming assets included $3.0 million in nonperforming loans and $9.4 million in foreclosed real estate at March 31, 2015 compared to $2.7 million and $8.8 million, respectively, at December 31, 2014.
Nonperforming loans increased $371,000 to $3.0 million, or 0.56% of total loans, at March 31, 2015 from $2.7 million, or 0.52% of total loans, at December 31, 2014. Of the $371,000 increase in nonperforming loans for the quarter, $337,000 related to additional nonperforming mortgage loans. Collateral on nonperforming loans in the amount of $745,000 was moved into foreclosed real estate, while performing troubled debt restructurings decreased $41,000, or 0.9%, when comparing the same periods. Total performing troubled debt restructurings and nonperforming assets increased $899,000, or 5.5%, to $17.2 million, or 2.22% of total assets, at March 31, 2015 compared to $16.3 million, or 2.15% of total assets, at December 31, 2014.
At March 31, 2015, nonperforming loans included six residential mortgage loans that totaled $1.6 million, two commercial mortgage loans that totaled $863,000, five revolving home equity loans that totaled $367,000 and four commercial and industrial loans that totaled $274,000. As of March 31, 2015, the nonperforming loans had specific reserves totaling $174,000.
Foreclosed real estate at March 31, 2015 included ten properties with a total recorded amount of $9.4 million compared to ten properties with a total recorded amount of $8.8 million at December 31, 2014. During the three months ended March 31, 2015, one new property in the amount of $745,000 was added to foreclosed real estate, while one property in the amount of $89,000 was sold. In addition, the Bank sold one of its 15 units in a mixed-use condominium complex for net proceeds of $89,000 during the first quarter of 2015. The Bank recorded no capital additions and no loss provisions during the first three months of 2015.
The Bank's largest foreclosed property resulted from a loan relationship that had an original purpose of constructing a mixed-use retail, commercial office, and residential condominium project located in western North Carolina. As a result of this foreclosure, the Bank acquired 44 of the 48 condominium units in the building. Following an additional write-down of approximately $630,000 on the loans secured by this collateral in the fourth quarter of 2012, the Bank recorded this foreclosed property in the amount of $9.8 million. During 2013, the Bank recorded additional write-downs totaling $1.6 million, which resulted in an adjusted recorded amount of $8.2 million at December 31, 2013. During the year ended December 31, 2014, the Bank recorded an additional write-down of $133,000 on the property and sold 28 residential condominium units and one office unit. During the first quarter of 2015, the Bank sold one office unit. At March 31, 2015, the adjusted recorded amount was $4.4 million for the remaining eight retail units and six office units.
Outlook
DeFerie concluded, "We are pleased with the progress we have made to improve the Company's balance sheet. The ongoing strength of our loan portfolio, asset quality management and improvement in operating efficiencies should have an increasingly positive impact on future earnings and the Company's ability to deliver increasing value to shareholders."
Profile
The Bank is a North Carolina chartered stock savings bank offering traditional financial services through 13 full-service banking centers located in Buncombe, Madison, McDowell, Henderson and Transylvania counties in Western North Carolina and a loan production office in Mecklenburg County. Originally chartered in 1936 and headquartered in Asheville, North Carolina, the Bank is locally managed with a focus on fostering strong relationships with its customers, its employees and the communities it serves. The Bank was recognized as the 2014 #1 Best Bank and #1 Best Bank for Small Business Services by the readers of the Mountain Xpress newspaper in Western North Carolina and was also awarded the Best Bank in McDowell County for 2014 by the readers of The McDowell News newspaper.
This news release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995 (the PSLRA). Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential." For these statements, the Company claims the protection of the safe harbor for forward-looking statements contained in the PSLRA.
The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors described in the Company's Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q as filed with the Securities and Exchange Commission. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Contact: Suzanne S. DeFerie
Chief Executive Officer
(828) 254-7411
Selected Financial Condition Data
March 31, December 31,
(Dollars in thousands) 2015 2014* % Change
---- ---- --------
Total assets $774,420 $760,050 1.9%
Cash and cash equivalents 60,061 56,858 5.6%
Investment securities 133,118 145,461 -8.5%
Loans receivable, net of deferred fees 541,706 521,820 3.8%
Allowance for loan losses (6,042) (5,949) -1.6%
Deposits 612,287 603,379 1.5%
Core deposits** 458,465 449,286 2.0%
FHLB advances 50,000 50,000 0.0%
Accounts payable and other liabilities 15,137 11,614 30.3%
Total equity 96,008 94,397 1.7%
------------
* Derived from audited consolidated financial statements.
** Core deposits are defined as total deposits excluding certificates of deposit.
Selected Operating Data
(Dollars in thousands, Three Months Ended
except per share data) March 31,
---------
2015 2014 % Change
---- ---- --------
Interest and
dividend income $6,154 $5,741 7.2%
Interest expense 861 887 -2.9%
Net interest income 5,293 4,854 9.0%
Provision for
(recovery of) loan losses 194 (68) 385.3%
Net interest income
after provision for
(recovery of) loan losses 5,099 4,922 3.6%
Noninterest income 1,610 1,456 10.6%
Noninterest expenses 5,772 5,860 -1.5%
Income before
income tax
provision 937 518 80.9%
Income tax
provision 315 114 176.3%
Net income $622 $404 54.0%
==== ====
Net income per
common share:
Basic $0.16 $0.09 77.8%
Diluted $0.16 $0.09 77.8%
Average shares outstanding:
Basic 3,899,419 4,461,521 -12.6%
Diluted 3,975,886 4,493,617 -11.5%
Ending shares outstanding 4,378,411 4,964,611 -11.8%
Selected Average Balances and Yields/Costs
For The Three Months Ended March 31,
------------------------------------
2015 2014
---- ----
Average Yield/ Average Yield/
(Dollars in thousands) Balance Cost Balance Cost
------- ---- ------- ----
Loans receivable $535,130 4.18% $454,621 4.39%
Investment securities, including tax-exempt (1) 137,741 1.93% 171,755 2.02%
Other interest-earning assets 52,227 0.50% 68,121 0.49%
Total interest-earning assets (1) 725,098 3.49% 694,497 3.42%
Interest-bearing deposits 506,065 0.30% 499,043 0.33%
Federal Home Loan Bank advances 50,000 3.93% 50,000 3.93%
Total interest-bearing liabilities 557,019 0.63% 549,929 0.65%
Interest rate spread (1) 2.86% 2.77%
Net interest margin (1) 3.01% 2.90%
----------------------
(1) Yields on tax-exempt securities have been included on a tax-equivalent basis using a 34% federal marginal tax rate.
Selected Asset Quality Data
Three Months Ended
Allowance for Loan Losses March 31,
---------
(Dollars in thousands) 2015 2014
---- ----
Allowance for loan losses, beginning of period $5,949 $7,307
Provision for (recovery of) loan losses 194 (68)
Charge-offs (252) (94)
Recoveries 151 44
Net charge-offs (101) (50)
---- ---
Allowance for loan losses, end of period $6,042 $7,189
====== ======
Allowance for loan losses as a percent of:
Total loans 1.12% 1.58%
Total nonperforming loans 197.52% 377.38%
Nonperforming Assets March 31, December 31,
(Dollars in thousands) 2015 2014 % Change
---- ---- --------
Nonperforming loans:
Nonaccruing loans (1)
Commercial:
Commercial mortgage $863 $881 -2.0%
Commercial and industrial 274 221 24.0%
Total commercial 1,137 1,102 3.2%
----- -----
Non-commercial:
Residential mortgage 1,554 1,354 14.8%
Revolving mortgage 367 230 59.6%
Consumer 1 2 -50.0%
Total non-commercial 1,922 1,586 21.2%
----- -----
Total nonaccruing loans (1) 3,059 2,688 13.8%
----- -----
Total loans past due 90 or more days
and still accruing - - 0.0%
--- ---
Total nonperforming loans 3,059 2,688 13.8%
Foreclosed real estate 9,383 8,814 6.5%
----- -----
Total nonperforming assets 12,442 11,502 8.2%
Performing troubled debt restructurings (2) 4,763 4,804 -0.9%
Performing troubled debt restructurings and
total nonperforming assets $17,205 $16,306 5.5%
======= =======
Nonperforming loans as a percent of total loans 0.56% 0.52%
Nonperforming assets as a percent of total assets 1.61% 1.51%
Performing troubled debt restructurings and
total nonperforming assets to total assets 2.22% 2.15%
------------------------------------------
(1) Nonaccruing loans include nonaccruing troubled debt restructurings.
(2) Performing troubled debt restructurings exclude nonaccruing troubled debt restructurings.
Foreclosed Real Estate by Loan Type March 31, 2015 December 31, 2014
-------------- -----------------
(Dollars in thousands) Number Amount Number Amount
------ ------ ------ ------
Commercial construction and land development 8 $8,617 8 $8,706
Residential mortgage 2 766 2 108
Total 10 $9,383 10 $8,814
=== ====== === ======
Foreclosed Real Estate
Three Months Ended
(Dollars in thousands)
March 31, 2015
--------------
Beginning balance $8,814
Transfers from loans 745
Gain on sale of foreclosed properties 2
Net proceeds from sales of foreclosed properties (178)
Ending balance $9,383
======
Selected Average Balances and Performance Ratios
Three Months Ended
March 31,
---------
(Dollars in thousands) 2015 2014
---- ----
Selected Average Balances
Average total loans $535,130 $454,621
Average total interest-earning assets 725,098 694,497
Average total assets 760,842 738,341
Average total interest-bearing deposits 506,065 499,043
Average total deposits 600,612 576,066
Average total interest-bearing liabilities 557,019 549,929
Average total shareholders' equity 95,808 102,636
Selected Performance Ratios
Return on average assets (1) 0.33% 0.22%
Return on average equity (1) 2.63% 1.60%
Interest rate spread (1) (2) 2.86% 2.77%
Net interest margin (1) (3) 3.01% 2.90%
Noninterest expense to average assets (1) 3.08% 3.22%
Efficiency ratio (4) 82.55% 91.15%
(1) Ratios are annualized.
(2) Represents the difference between the weighted average yield on average interest-earning assets and the
weighted average cost of average interest-bearing liabilities. Yields on tax-exempt securities have been
included on a tax-equivalent basis using a 34% federal marginal tax rate.
(3) Represents net interest income as a percent of average interest-earning assets. Yields on tax-exempt
securities have been included on a tax-equivalent basis using a 34% federal marginal tax rate.
(4) Represents noninterest expenses divided by the sum of net interest income, on a tax-equivalent basis
using a 34% federal marginal tax rate, and noninterest income.
Quarterly Earnings Data
Three Month Periods Ended
-------------------------
(Dollars in thousands, March 31, December 31, September 30, June 30, March 31,
except per share data) 2015 2014 2014 2014 2014
---- ---- ---- ---- ----
Income Statement Data:
Interest and dividend income $6,154 $6,117 $5,873 $5,771 $5,741
Interest expense 861 877 886 886 887
Net interest income 5,293 5,240 4,987 4,885 4,854
Provision for (recovery of) loan losses 194 220 240 (1,390) (68)
Net interest income after provision for
(recovery of) loan losses 5,099 5,020 4,747 6,275 4,922
Noninterest income 1,610 1,681 1,642 1,554 1,456
Noninterest expenses 5,772 5,714 5,624 6,350 5,860
Income before income
tax provision 937 987 765 1,479 518
Income tax provision 315 345 263 538 114
Net income $622 $642 $502 $941 $404
==== ==== ==== ==== ====
Data Per Common Share:
Net income per share - Basic $0.16 $0.17 $0.13 $0.22 $0.09
Net income per share - Diluted $0.16 $0.16 $0.12 $0.21 $0.09
Book value per share $21.93 $21.56 $21.53 $21.06 $20.53
Weighted average shares outstanding:
Basic 3,899,419 3,867,296 3,940,229 4,342,618 4,461,521
Diluted 3,975,886 3,952,660 4,018,945 4,384,154 4,493,617
Ending shares outstanding 4,378,411 4,378,411 4,378,411 4,831,311 4,964,611
Quarterly Financial Condition Data
As Of As Of As Of As Of As Of
March 31, December 31, September 30, June 30, March 31,
(Dollars in thousands) 2015 2014 (1) 2014 2014 2014
---- ------- ---- ---- ----
Ending Balance Sheet Data:
Total assets $774,420 $760,050 $749,033 $754,496 $748,089
Cash and cash equivalents 60,061 56,858 78,412 93,825 98,554
Investment securities 133,118 145,461 149,530 153,921 156,036
Loans receivable, net of deferred fees 541,706 521,820 487,904 472,012 455,434
Allowance for loan losses (6,042) (5,949) (5,852) (5,770) (7,189)
Deposits 612,287 603,379 594,798 592,683 585,752
Core deposits (2) 458,465 449,286 433,983 432,201 423,567
FHLB advances 50,000 50,000 50,000 50,000 50,000
Total equity 96,008 94,397 94,285 101,727 101,947
Regulatory Capital Ratios (3):
Common equity tier 1 capital 18.42% n/a n/a n/a n/a
Tier 1 leverage capital 13.16% 13.17% 13.17% 14.16% 14.38%
Tier 1 risk-based capital 18.42% 19.83% 21.17% 23.69% 24.29%
Total risk-based capital 19.53% 21.01% 22.42% 24.94% 25.54%
Asset Quality:
Nonperforming loans $3,059 $2,688 $3,424 $2,034 $1,905
Nonperforming assets 12,442 11,502 12,593 12,409 15,516
Nonperforming loans to total loans 0.56% 0.52% 0.70% 0.43% 0.42%
Nonperforming assets to total assets 1.61% 1.51% 1.68% 1.64% 2.07%
Allowance for loan losses $6,042 $5,949 $5,852 $5,770 $7,189
Allowance for loan losses to total loans 1.12% 1.14% 1.20% 1.22% 1.58%
Allowance for loan losses to
nonperforming loans 197.52% 221.32% 170.91% 283.68% 377.38%
-------------------
(1) Ending balance sheet data as of December 31, 2014 was derived from audited consolidated financial statements.
(2) Core deposits are defined as total deposits excluding certificates of deposit.
(3) Current quarter capital ratios are based on BASEL III and prior quarters are based on BASEL I.
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SOURCE ASB Bancorp, Inc.
