Frederick County Bancorp, Inc. Reports Results for the First Quarter 2017

FREDERICK, Md.--()--Frederick County Bancorp, Inc. (the “Company”) (OTCPink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended March 31, 2017, the Company recorded net income of $367 thousand and diluted earnings per share of $0.24, as compared to net income of $289 thousand and diluted earnings per share of $0.19 recorded for the first quarter of 2016.

The increase in quarterly earnings was due primarily to a decrease in total noninterest expense of $96 thousand, increases in total noninterest income of $20 thousand and net interest income of $199 thousand in the first quarter of 2017 as compared to the first quarter of 2016, respectively. The decrease in total noninterest expense was due primarily to a decrease in advertising and marketing expenses of $54 thousand in the first quarter of 2017 compared to the first quarter of 2016. The increase in net increase income was due primarily to a higher volume of loans, which was slightly offset by a decrease in the yield of the loan portfolio. However, a provision for loan losses in the amount of $178 thousand was recorded in the first quarter of 2017, while no provision was recognized in the same quarter of 2016.

Net loan charge-offs for the quarters ended March 31, 2017 and 2016 totaled $100 thousand and $20 thousand, respectively. There were $267 thousand in charge-offs in 2017 compared to $30 thousand in 2016, which were offset by recoveries of $167 thousand and $10 thousand for the periods ended March 31, 2017 and 2016, respectively.

The ratio of the allowance for loan losses to total loans stood at 1.23%, 1.07% and 1.22% as of March 31, 2017 and 2016 and December 31, 2016, respectively. Nonperforming assets stood at $7.7 million, $7.4 million and $7.4 million as of March 31, 2017 and 2016 and December 31, 2016, respectively. The corresponding nonperforming assets to total assets ratios were 1.95%, 2.05% and 1.96% as of March 31, 2017 and 2016 and December 31, 2016, respectively.

The Company also reported that, as of March 31, 2017, assets stood at $396.1 million, with total deposits of $332.7 million and gross loans of $311.2 million, representing increases of 9.1%, 8.2%, and 8.9%, respectively, compared to March 31, 2016. Total shareholders’ equity at March 31, 2017 was $31.5 million, an increase of $366 thousand from December 31, 2016. The increase in total shareholders’ equity resulted from an increase in additional paid-in capital of $11 thousand, which was from the exercise of stock options, an increase in retained earnings of $263 thousand and an increase in accumulated other comprehensive income of $92 thousand from December 31, 2016. On a per share basis, book value increased by 23 cents for 2017 to $21.12 per share at March 31, 2017 from $20.89 per share at December 31, 2016. The dividends declared per share remained constant at $0.07 per share for the three month periods ended March 31, 2017 and 2016.

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

     

March 31,

March 31, December 31,
2017   2016 2016
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $396,073 $362,943 $378,753
Loans 311,154 285,614 306,242
Deposits 332,708 307,566 321,952
Shareholders’ equity 31,527 29,945 31,161
 
Nonperforming assets:
Nonaccrual loans $6,620 $3,695 $6,172
Accruing troubled debt restructurings 398 3,024 405
 
Loans 90 days or more past due and still accruing - - -
Foreclosed properties 706   706 866
Total nonperforming assets $7,724   $7,425 $7,443
 
For the Three Months Ended
March 31, March 31,
2017   2016
(dollars in thousands, except for per share data) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $367   $289
Total comprehensive income $459   $406
 
Charge-offs $267 $30
(Recoveries) (167)   (10)
Net charge-offs $100   $20
 
PER COMMON SHARE DATA:
Basic earnings per share $0.25 $0.20
Diluted earnings per share $0.24 $0.19
Basic weighted average number of shares outstanding 1,492,282 1,477,054
Diluted weighted average number of shares outstanding 1,548,504 1,540,323
Common shares outstanding 1,492,764 1,483,129 1,491,844
Dividends declared $0.07 $0.07
Book value per share $21.12 $20.19 $20.89
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.38% 0.33%
Return on average equity 4.65% 3.86%
Allowance for loan losses to total loans 1.23% 1.07% 1.22%
Nonperforming assets to total assets 1.95% 2.05% 1.96%
Ratio of net charge-offs to average loans 0.03% 0.01%
Common Equity Tier 1 to risk-weighted assets 8.65% 9.29% 8.65%
Tier 1 capital to risk-weighted assets 10.33% 11.15% 10.35%
Total capital to risk-weighted assets 11.40% 12.09% 11.40%
Tier 1 capital to average assets 9.63% 10.15% 9.66%
Average equity to average assets 8.23% 8.47%
Net interest margin 3.60% 3.65%
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
March 31, March 31, December 31,
    2017   2016   2016
    (unaudited)   (unaudited)   (audited)
(dollars in thousands)            
ASSETS
Cash and due from banks $ 2,778 $ 2,460 $ 2,811
Federal funds sold 60 1,056 1,059
Interest-bearing deposits in other banks     38,052     32,449     25,804
Cash and cash equivalents     40,890     35,965     29,674
Investment securities available-for-sale at fair value 23,963 23,522 24,644
Restricted stock 1,950 1,636 1,687
Loans held for sale - - 357
Loans 311,154 285,614 306,242
Less: Allowance for loan losses     (3,822)     (3,044)     (3,744)
Net loans     307,332     282,570     302,498
Bank premises and equipment 9,739 7,173 7,490
Bank owned life insurance 8,788 8,567 8,735
Foreclosed properties 706 706 866
Other assets     2,705     2,804     2,802
Total assets   $ 396,073   $ 362,943   $ 378,753
 
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Liabilities
Deposits
Noninterest-bearing deposits $ 88,850 $ 72,795 $ 83,249
Interest-bearing deposits     243,858     234,771     238,703
Total deposits 332,708 307,566 321,952
Short-term borrowings 4,300 3,300 3,300
FHLB advances 19,800 15,000 15,000
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities     1,552     946     1,154
Total liabilities     364,546     332,998     347,592
 
Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,492,764; 1,483,129 and 1,491,844 shares issued and outstanding, respectively

15 15 15
Additional paid-in capital 15,415 15,270 15,404
Retained earnings 15,552 14,635 15,289
Accumulated other comprehensive income     545     25     453
Total shareholders' equity     31,527     29,945     31,161
Total liabilities and shareholders' equity   $ 396,073   $ 362,943   $ 378,753
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
   

For the Three Months Ended

(dollars in thousands, except per share amounts)  

March 31,
2017

 

March 31,
2016

Interest income
Interest and fees on loans $3,383 $3,187
Interest and dividends on investment securities:
Interest – taxable 100 72
Interest – tax exempt 26 45
Dividends 25 25
Interest on federal funds sold 1 -
Other interest income   53   37
Total interest income   3,588   3,366
Interest expense
Interest on deposits 281 279
Interest on short-term borrowings 35 27
Interest on FHLB advances 33 27
Interest on junior subordinated debentures   40   33
Total interest expense   389   366
Net interest income 3,199 3,000
Provision for loan losses   178   -
Net interest income after provision for loan losses   3,021   3,000
Noninterest income
Gain on sale of loans 38 5
Loss on foreclosed properties (34) -
Bank owned life insurance income 53 56
Service fees 87 82
Other operating income   105   86
Total noninterest income   249   229
Noninterest expense
Salaries and employee benefits 1,693 1,681
Occupancy and equipment expenses 458 453
Other operating expenses   576   689
Total noninterest expense   2,727   2,823
Income before provision for income taxes 543 406
Provision for income taxes   176   117
Net income   $367   $289
Basic earnings per share   $0.25   $0.20
Diluted earnings per share   $0.24   $0.19
Basic weighted average number of shares outstanding   1,492,282   1,477,054
Diluted weighted average number of shares outstanding   1,548,504   1,540,323
Dividends declared per share   $0.07   $0.07
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended
(dollars in thousands)  

March 31,
2017

 

March 31,
2016

Net income $367 $289
Changes in net unrealized gains on securities available for sale, net of income taxes of $60 in 2017 and $76 in 2016   92   117
Total comprehensive income   $459   $406
 
 
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, 2016 1,475,929 $15 $15,184 $14,449 $(92) $29,556
Comprehensive income 289 117 406
Dividends declared on common stock, $0.07 per share (103) (103)
Shares issued under stock option transactions 7,200 80 80
Compensation expense from stock option transactions           6           6
Balance, March 31, 2016   1,483,129   $15   $15,270   $14,635   $25   $29,945
January 1, 2017 1,491,844 $15 $15,404 $15,289 $453 $31,161
Comprehensive income 367 92 459
Dividends declared on common stock, $0.07 per share

(104)

(104)

Shares issued under stock option transactions 920 10 10
Compensation expense from stock option transactions           1           1
Balance, March 31, 2017   1,492,764   $15   $15,415   $15,552   $545   $31,527
 
 
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
    For The Three Months Ended
    March 31,   March 31,
(dollars in thousands)   2017   2016
Cash flows from operating activities:    
Net income $ 367 $ 289

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

Depreciation and amortization 118 87
Deferred income (benefit) taxes (82) 26
Provision for loan losses 178 -
Gain on sale of loans (38) (5)
Loans originated for sale (1,768) (377)
Proceeds from loans sold 1,806 382
Net premium amortization on investment securities 35 38
Bank owned life insurance income (53) (56)
Loss on foreclosed property 34 -
Stock-based compensation expense 1 6
Decrease (increase) in accrued interest and other assets 179 (136)
Increase in accrued interest and other liabilities   339   62
Net cash provided by operating activities   1,116   316
Cash flows from investing activities:

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

797

996

Purchase of restricted stock (263) (7)
Net increase in loans (4,655) (6,684)
Purchases of bank premises and equipment (2,367) (815)
Proceeds from sale of foreclosed properties   126   -
Net cash used in investing activities   (6,362)   (6,510)
Cash flows from financing activities:

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

8,934 462
Net increase in time deposits 1,822 11,472
Net increase in short-term borrowings 1,000 -
Proceeds from FHLB advances 4,800 -
Proceeds from issuance of common stock 10 80
Dividends paid on common stock   (104)   (103)
Net cash provided by financing activities   16,462   11,911
Net increase in cash and cash equivalents 11,216 5,717
Cash and cash equivalents – beginning of period   29,674   30,248
Cash and cash equivalents – end of period   $40,890   $35,965
Supplemental cash flow disclosures:
Interest paid   $380   $345
Income taxes paid   $-   $187
 
 

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

 

The following tables show average balances of asset and liability categories, interest income and interest expense, and average yields and rates for the periods indicated.

   
For the Three Months Ended March 31,   2017   2016

 

(dollars in thousands)

 

Average

daily

balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate(%)

 

Average
daily
balance

 

Interest
Income/
Expense

 

Average
Yield/
Rate(%)

Assets        
Interest-earning assets:
Federal funds sold $ 538 $ 1 0.75 $ 1,083 $ - -
Interest bearing deposits in other banks 29,265 53 0.73 30,127 37 0.49
Investment securities (1):
Taxable 22,237 125 2.28 19,836 97 1.96
Tax-exempt (2) 3,803 39 4.16 5,923 68 4.60
Loans (3)     308,377     3,408   4.48     278,865     3,217   4.63
Total interest-earning assets     364,220     3,626   4.04     335,834     3,419   4.08
Noninterest-earning assets     19,758   17,967
Total assets   $ 383,978 $ 353,801
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 34,062 $ 14 0.17% 28,582 $ 12 0.17%
Savings accounts 11,882 1 0.03 10,166 - -
Money market accounts 100,586 70 0.28 99,212 70 0.28
Certificates of deposit 93,982 196 0.85 91,571 197 0.86
Short-term borrowings 4,044 35 3.51 3,300 27 3.28
FHLB advances 16,412 33 0.82 15,000 27 0.72
Junior subordinated debentures     6,186     40   2.62     6,186     33   2.14
Total interest-bearing liabilities     267,154     389   0.59     254,017     366   0.58
Noninterest-bearing deposits 84,096 68,939
Noninterest-bearing liabilities   1,143   874
Total liabilities     352,393   323,830
Total shareholders’ equity     31,585   29,971

Total liabilities and shareholders’ equity

  $ 383,978     $ 353,801    
Net interest income       $ 3,237     $ 3,053
Net interest spread 3.45% 3.50%
Net interest margin 3.60% 3.65%
 
(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 $13 thousand in 2017 and $23 thousand in 2016 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 $25 thousand in 2017 and $30 thousand in 2016 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $10 thousand in 2017 and $3 in 2016.
 

The statements in this press release that are not historical facts constitute "forward-looking statements" as defined by Federal securities laws. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding the Company's intentions regarding growth and market expansion, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, changes in interest rates, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect the Company specifically, its existing and target market areas or the banking industry generally. Forward-looking statements speak only as of the date they are made. The Company will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.

Contacts

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

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