DCB FINANCIAL CORP LEWIS CENTER, Ohio, May 2, 2016 /PRNewswire/ -- DCB Financial Corp (the "Company"), (OTCPink: DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the "Bank") announced net income of $116,000 or $0.02 per diluted share for the three months ended March 31, 2016, compared to net income of $239,000 or $0.03 per diluted share for the same period in 2015.
Ronald J. Seiffert, Chairman, President and CEO of the Company said, "Loan production in the first quarter was both robust and diversified, as the strategic commitments we made to small business and residential mortgage lending in the fourth quarter of 2015 began to favorably impact our loan volumes in the first quarter. The integration of the small business and residential mortgage lending teams and related product development has been completed, and the results so far have met our expectations. Total loans were up $13.1 million in the first quarter, with these two business lines contributing $9.3 million of the loan growth during the quarter. Our traditional commercial lending division also turned in a positive quarter amid a highly competitive environment, with loan growth of $4.4 million during the quarter."
The Company also announced that its board of directors authorized the repurchase of up to three percent of the Company's outstanding common shares, or approximately 220,000 shares, up to $1.7 million. The repurchase program is authorized for up to one year, and the repurchases may be effected through open market purchases or privately negotiated transactions. Management will use its discretion in determining the timing of the repurchases and the prices at which buybacks will be made. The extent to which shares are repurchased will depend on a number of factors including market trends and prices, economic conditions, internal and regulatory trading quiet periods and alternative uses for capital. There can be no assurance that the Company will repurchase any or all of the shares authorized for repurchase.
Seiffert continued, "We believe that this repurchase program is an effective means of deploying our capital which will compliment the impact of strategies that we've recently implemented to expand our residential and small business lending capabilities in delivering value for our shareholders."
Balance Sheet Highlights
Total assets were $553.2 million at March 31, 2016, compared with $541.3 million at December 31, 2015. Much of the increase in assets during the quarter was in the Company's loan portfolio, which increased $13.1 million or 3.5%, to $391.6 million at March 31, 2016. Growth was nearly equally split among the Company's three business lines with traditional residential and home equity loans increasing $5.3 million, SBA loans increasing $4.0 million and traditional commercial loans (including real estate) increasing $4.4 million.
In January 2016, the Bank completed the previously announced sale and leaseback of property it owns that serves as, among other things, its corporate headquarters building. The property was sold for an aggregate purchase price of $8,230,000, and the Bank simultaneously entered into a lease on the property for a fifteen year term, with the Bank having the option to extend the term of the lease for two additional periods of ten years each. The entire gain on the sale of the property of $3.1 million has been deferred and will result in a reduction of depreciation expense over the term of the lease. The lease is being accounted for as a capital lease, resulting in the recognition of a right-of-use asset (net of the deferred gain) of $5.1 million and a capital lease obligation of $8.2 million.
Deposits totaled $462.2 million at March 31, 2016, compared with $474.5 million at December 31, 2015. Most of the decrease during the quarter was the result of a net outflow in municipal deposit balances of $16.2 million during the quarter, which was partially offset by higher commercial and retail deposit balances.
Shareholders' equity was $59.3 million at March 31, 2016, compared with $58.8 million at December 31, 2015. The increase in shareholders' equity is attributable primarily to net income for the quarter of $116,000 and to an increase in accumulated other comprehensive income of $303,000 due to higher unrealized gains on securities available-for-sale. The Company's tangible common equity to tangible assets ratio was 10.7% at March 31, 2016.
The Bank's common equity tier 1 capital ratio was 12.60% and its total risk-based capital ratio was 13.75% at March 31, 2016, both of which were well above the regulatory thresholds required to be classified as a "well-capitalized" institution, which are 6.5% and 10.0%, respectively.
Asset Quality and the Provision for Loan Losses
Delinquent loans (including non-accrual loans) totaled $1.7 million or 0.43% of total loans at March 31, 2016, compared to $1.5 million or 0.41% of total loans at December 31, 2015. Non-accrual loans totaled $1.2 million or 0.30% of total loans at March 31, 2016, compared to $1.2 million or 0.32% of total loans at December 31, 2015.
Non-performing assets were $7.7 million or 1.40% of total assets at March 31, 2016, compared with $7.3 million or 1.35% of total assets at December 31, 2015. 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 $6.4 million at March 31, 2016, compared to $6.0 million at December 31, 2015.
Net recoveries of $2,000 were recorded in the quarter ended March 31, 2016, compared to net charge-offs of $297,000 or 0.31% of average loans in the first quarter of 2015. There was no provision for loan losses recorded in the first quarter of 2016, compared to a provision for loan losses of $150,000 in the year-ago quarter. The allowance for loan losses was $4.3 million at March 31, 2016 and at December 31, 2015. The ratio of the allowance for loan losses to total loans was 1.11% at March 31, 2016, compared to 1.14% at December 31, 2015.
The ratio of the allowance for loan losses to non-performing loans (including TDR's) was 56.6% at March 31, 2016, compared to 59.7% at December 31, 2015. The ratio of the allowance for loan losses to non-accrual loans was 365% at March 31, 2016, compared to 355% at December 31, 2015.
Net Interest Income
Net interest income totaled $4.1 million in the quarter ended March 31, 2016, compared to $4.2 million in each of the first quarter of 2015 and the fourth quarter of 2015. The net interest margin was 3.33% in the first quarter of 2016, compared to 3.50% in the year-ago quarter and 3.33% in the fourth quarter of 2015.
The decline in the net interest margin from the year-ago quarter was due primarily to the reinvestment of loan amortization and payoffs into investment securities and loans with lower current yields, as well as from the effect of higher interest-bearing cash balances. Total average interest-earning assets were $495.9 million in the first quarter of 2016, compared to $484.9 million in the year-ago quarter and $500.4 million in the fourth quarter of 2015. Average loans outstanding in the first quarter of 2016 were $381.7 million or 77.0% of total average interest-earning assets, compared with $381.1 million or 78.6% in the year-ago quarter and $380.5 million or 76.0% in the fourth quarter of 2015.
Total average interest-bearing deposit balances decreased $6.3 million to $349.3 million in the first quarter of 2016 compared to the year-ago quarter, due primarily to a decrease in municipal deposit balances. The average balances of interest-bearing demand, savings and money market accounts (transaction accounts) increased $8.4 million to $287.6 million in the first quarter of 2016 compared to the year-ago quarter, partially offsetting a decrease in the average balance of time deposits of $14.7 million. Transaction accounts comprised 82.3% of total interest-bearing deposits in the first quarter of 2016, compared to 78.5% in the year-ago quarter and 79.7% in the fourth quarter of 2015.
Non-Interest Income and Non-Interest Expenses
Non-interest income was $1.3 million in the first quarter of 2016, compared to $1.2 million in the first quarter of 2015 and $1.3 million in the fourth quarter of 2015. Service charges, wealth management fees and treasury management fees increased an aggregate $121,000 or 13.6% in the first quarter of 2016 compared with the year-ago quarter, primarily from the impact of changes to certain of the Bank's fees and service charges and from business development activities.
Non-interest income accounted for 24.6% of total revenue in the first quarter of 2016, compared with 21.7% in the year-ago quarter and 22.6% in the fourth quarter of 2015.
Non-interest expenses were $5.4 million for the first quarter of 2016, compared with $5.0 million in the year-ago quarter and $5.2 million for the fourth quarter of 2015. Salaries and benefits increased $330,000 and $132,000 in the first quarter of 2016 compared to the year-ago quarter and to the fourth quarter of 2015, respectively, due primarily to the previously-announced hiring of the small business lending team and residential mortgage originators in the fourth quarter of 2015.
The Company's efficiency ratio was 99.6% in the first quarter of 2016, compared with 92.9% in the year-ago quarter and 95.0% in the fourth quarter of 2015.
Income Taxes
An income tax benefit of $95,000 was recognized in the first quarter of 2016 due primarily to the disproportionate amount of pre-tax income that is not subject to federal income taxes, which is comprised primarily of income from bank-owned life insurance of $243,000 in the first quarter of 2016.
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 eight full-service and five limited-service 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, SBA loans, 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, including certain plans, expectations, goals, projections, and statements. 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 in, 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, 2015, 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, 2016 December 31, 2015
-------------- -----------------
(Dollars in thousands, except share and per
share data)
Assets
Cash and due from financial institutions $6,097 $6,929
Interest-bearing deposits 23,700 24,963
------ ------
Total cash and cash equivalents 29,797 31,892
Securities available-for-sale 85,953 87,797
Loans 391,623 378,513
Less allowance for loan losses (4,335) (4,333)
------ ------
Net loans 387,288 374,180
Real estate owned 68 68
Investment in FHLB stock 3,250 3,250
Premises and equipment, net 10,055 5,091
Premises and equipment held-for-sale - 4,771
Bank-owned life insurance 21,003 20,760
Deferred tax asset, net 10,761 10,402
Accrued interest receivable and other assets 5,003 3,053
----- -----
Total assets $553,178 $541,264
======== ========
Liabilities and shareholders' equity
Liabilities:
Deposits:
Non-interest bearing $125,106 $124,023
Interest bearing 337,131 350,514
------- -------
Total deposits 462,237 474,537
Borrowings 19,512 4,520
Obligations under capital lease 8,176 -
Accrued interest payable and other liabilities 3,977 3,360
Total liabilities 493,902 482,417
Shareholders' equity:
Common stock 16,931 16,410
Retained earnings 49,915 49,799
Treasury stock (7,416) (7,416)
Accumulated other comprehensive income 739 436
Deferred stock-based compensation (893) (382)
Total shareholders' equity 59,276 58,847
------ ------
Total liabilities and shareholders' equity $553,178 $541,264
======== ========
Common shares outstanding 7,356,112 7,281,237
Book value per common share $8.06 $8.08
DCB Financial Corp
Consolidated Statements of Operations (Unaudited)
Three months ended March 31,
----------------------------
2016 2015
---- ----
(Dollars in thousands, except share
and per
share data)
Interest income:
Loans $3,882 $3,952
Securities 507 505
Federal funds sold and interest bearing deposits 36 10
--- ---
Total interest income 4,425 4,467
Interest expense:
Deposits:
Savings and money market accounts 178 142
Time accounts 77 92
NOW accounts 17 16
--- ---
272 250
Obligation under capital lease 54 -
Borrowings 41 35
--- ---
Total interest expense 367 285
Net interest income 4,058 4,182
Provision for loan losses - 150
--- ---
Net interest income after provision for loan losses 4,058 4,032
Non-interest income:
Service charges 498 452
Wealth management fees 422 380
Treasury management fees 91 58
Income from bank-owned life insurance 243 244
Gain on sale of REO - 10
Other non-interest income 67 14
--- ---
Total non-interest income 1,321 1,158
Non-interest expense:
Salaries and employee benefits 3,042 2,712
Occupancy and equipment 973 963
Professional services 370 353
Advertising 170 108
Office supplies, postage and courier 88 79
FDIC insurance premium 88 110
State franchise taxes 116 75
Other non-interest expense 511 551
--- ---
Total non-interest expense 5,358 4,951
Income before income tax (benefit) 21 239
Income tax expense (benefit) (95) -
--- ---
Net income $116 $239
==== ====
Share and Per Share Data
Basic average common shares outstanding 7,311,238 7,237,371
Diluted average common shares outstanding 7,330,881 7,253,840
Basic earnings per common share $0.02 $0.03
Diluted earnings per common share $0.02 $0.03
DCB Financial Corp
Consolidated Average Balances (Unaudited)
Three months ended
March 31,
---------
2016 2015
---- ----
(Dollars in thousands)
Earning assets
Interest bearing cash $25,095 $19,742
Securities 85,888 80,388
Tax-exempt securities 3,172 3,601
Loans 381,738 381,125
------- -------
Total earning assets 495,893 484,856
Non-earning assets 48,678 42,201
------ ------
Total assets $544,571 $527,057
======== ========
Interest bearing liabilities
Interest bearing DDA $81,985 $81,409
Money market 157,670 155,038
Savings accounts 47,923 42,757
Time deposits 61,740 76,418
Borrowings 9,517 6,373
Total interest bearing liabilities 358,835 361,995
Non-interest bearing deposits $121,827 $113,067
Other non-interest bearing
liabilities 5,836 5,386
----- -----
Total liabilities 486,498 480,448
Shareholders' equity 58,073 46,609
------ ------
Total liabilities and
shareholders' equity $544,571 $527,057
======== ========
DCB Financial Corp
Loans and Deposits (Unaudited)
The following table sets forth the composition of the Company's loan portfolio at the dates indicated:
March 31, 2016 December 31, 2015 September 30, 2015
-------------- ----------------- ------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Loan portfolio composition (Dollars in thousands)
Commercial and industrial $101,679 26.0% $99,213 26.2% $99,498 26.2%
Commercial real estate 106,742 27.3% 100,743 26.7% 103,891 27.3%
Real estate and home equity 142,907 36.5% 137,645 36.4% 135,934 35.8%
Consumer and credit card 39,829 10.2% 40,587 10.7% 40,689 10.7%
------ ------ ------
Total loans $391,157 100.0% $378,188 100.0% $380,012 100.0%
Net deferred loan costs 466 325 278
Allowance for loan losses (4,335) (4,333) (4,206)
------ ------ ------
Net loans $387,288 $374,180 $376,084
======== ======== ========
The following table sets forth the composition of the Company's deposits at the dates indicated :
March 31, 2016 December 31, 2015 September 30, 2015
-------------- ----------------- ------------------
Amount Percent Amount Percent Amount Percent
------ ------- ------ ------- ------ -------
Deposit composition (Dollars in thousands)
Non-interest bearing demand $125,106 27.0% $124,023 26.1% $123,870 26.1%
Interest bearing demand 75,633 16.4% 77,616 16.4% 81,939 17.3%
------ ---- ------ ---- ------ ----
Total demand 200,739 43.4% 201,639 42.5% 205,809 43.4%
Savings 48,719 10.5% 47,333 10.0% 44,408 9.3%
Money market 158,779 34.4% 154,119 32.5% 151,910 32.0%
Time deposits 54,000 11.7% 71,446 15.0% 72,780 15.3%
------ ---- ------ ---- ------ ----
Total deposits $462,237 100.0% $474,537 100.0% $474,907 100.0%
======== ===== ======== ===== ======== =====
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, 2016 December 31, 2015 September 30, 2015
--------------------------- -------------- ----------------- ------------------
$ %(1) $ %(1) $ %(1)
--- --- --- --- --- ---
(Dollars in thousands)
30 days past due $378 0.10% $191 0.05% $60 0.02%
60 days past due 57 0.01% 111 0.03% 129 0.03%
90 days past due and still accruing 97 0.02% 2 0.01% - 0.00%
Non-accrual 1,187 0.30% 1,222 0.32% 1,338 0.35%
Total $1,719 0.43% $1,526 0.41% $1,527 0.40%
====== ==== ====== ==== ====== ====
(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, 2016 December 31, 2015 September 30, 2015
--------------------- -------------- ----------------- ------------------
(Dollars in thousands)
Non-accruing loans:
Residential real estate loans and home equity $656 $668 $679
Commercial real estate - - 30
Commercial and industrial 531 554 573
Consumer loans and credit cards - - 56
Total non-accruing loans 1,187 1,222 1,338
Accruing loans delinquent 90 days or more 97 2 -
--- --- ---
Total non-performing loans (excluding TDR's) 1,284 1,224 1,338
Other real estate and repossessed assets 68 68 785
--- --- ---
Total non-performing assets (excluding TDR's) $1,352 $1,292 $2,123
====== ====== ======
Troubled debt restructurings(1) $6,374 $6,040 $6,089
Total non-performing loans (including TDR's) $7,658 $7,264 $7,427
Total non-performing assets (including TDR's) $7,726 $7,332 $8,212
(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:
Three months ended
Allowance
for loan
losses March 31,
--------- ---------
2016 2015
---- ----
(Dollars in
thousands)
Allowance
for loan
losses,
beginning
of period $4,333 $4,236
Loans
charged-
off (55) (430)
Recoveries
of loans
previously
charged-
off 57 133
--- ---
Net
recoveries
(charge-
offs) 2 (297)
Provision
for loan
losses - 150
--- ---
Allowance
for loan
losses,
end of
period $4,335 $4,089
====== ======
DCB Financial Corp
Consolidated Financial Information (Unaudited)
At or for the three
months
ended
Key Ratios
March 31,
--- ---------
2016 2015
---- ----
Return on average assets 0.09% 0.18%
Return on average equity 0.80% 2.05%
Yield on earning assets 3.54% 3.73%
Cost of interest-bearing liabilities 0.34% 0.32%
Net interest margin (1) 3.33% 3.50%
Non-interest income to total income (2) 24.6% 21.5%
Efficiency ratio (3) 99.6% 92.9%
Net loans (recovered) charged-off to
average loans, annualized 0.00% 0.31%
Provision for loan losses to average
loans, annualized 0.00% 0.16%
Allowance for loan losses to total loans 1.11% 1.08%
Allowance for loan losses to non-accrual
loans 365% 362%
Non-accrual loans to total loans 0.30% 0.30%
Non-performing assets to total assets 1.40% 2.26%
(including performing TDR's)
Non-performing assets to total assets 0.24% 0.42%
(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)
2016 2015
---- ----
First Fourth Third Second First
----- ------ ----- ------ -----
(Dollars in thousands, except per share data)
Interest income $4,425 $4,500 $4,469 $4,454 $4,467
Interest expense 367 298 292 295 285
--- --- --- --- ---
Net interest income 4,058 4,202 4,177 4,159 4,182
Provision for loan losses - - (150) - 150
--- --- ---- --- ---
Net interest income after provision for loan losses 4,058 4,202 4,327 4,159 4,032
Non-interest income 1,321 1,261 1,223 1,180 1,158
Non-interest expenses 5,358 5,157 5,150 5,195 4,951
----- ----- ----- ----- -----
Income before income tax 21 306 400 144 239
Income tax expense (benefit) (95) 33 (10,688) - -
--- --- ------- --- ---
Net income $116 $273 $11,088 $144 $239
==== ==== ======= ==== ====
Stock and related per share data
Basic and diluted earnings per common share $0.02 $0.04 $1.52 $0.02 $0.03
Basic weighted average common shares outstanding 7,311,238 7,280,480 7,287,435 7,287,435 7,237,371
Diluted weighted average common shares outstanding 7,330,881 7,297,496 7,307,244 7,303,902 7,253,840
Common book value per share $8.06 $8.08 $8.05 $6.51 $6.54
Capital Ratios:
Bank
Tier 1 leverage ratio 8.97% 9.11% 9.18% 8.63% 8.65%
Common equity tier 1 capital ratio 12.60% 13.11% 13.09% 12.68% 12.62%
Tier 1 risk based capital ratio 12.60% 13.11% 13.09% 12.68% 12.62%
Total risk based capital ratio 13.75% 14.29% 14.23% 13.83% 13.75%
Total equity to assets ratio (consolidated) 10.72% 10.87% 10.83% 8.80% 9.15%
Selected ratios:
Return on average assets 0.09% 0.20% 8.26% 0.19% 0.18%
Return on average equity 0.80% 1.90% 94.9% 2.17% 2.05%
Yield on earning assets 3.54% 3.55% 3.57% 3.61% 3.73%
Cost of interest-bearing liabilities 0.34% 0.33% 0.32% 0.33% 0.32%
Net interest margin 3.33% 3.33% 3.35% 3.40% 3.50%
Non-interest income to total income (1) 24.6% 22.6% 22.9% 22.2% 21.5%
Efficiency ratio (2) 99.6% 95.0% 95.0% 95.0% 92.9%
Asset quality ratios:
Net loans (recovered) charged-off to average loans, annualized 0.00% (0.13)% (0.20)% (0.08)% 0.31%
Provision for loan losses to average loans, annualized 0.00% 0.00% (0.16)% 0.00% 0.16%
Allowance for loan losses to total loans 1.11% 1.14% 1.12% 1.09% 1.08%
Allowance for loan losses to non-accrual loans 365% 355% 314% 286% 362%
Non-accrual loans to total loans 0.30% 0.32% 0.35% 0.38% 0.30%
Non-performing assets to total assets (including 1.40% 1.35% 1.52% 2.18% 2.26%
performing TDR's)
Non-performing assets to total assets (excluding 0.24% 0.24% 0.39% 0.51% 0.42%
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
