Frederick County Bancorp, Inc. Reports Results for the Second 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 June 30, 2017, the Company recorded net income of $634 thousand and diluted earnings per share of $0.41, as compared to net income of $362 thousand and diluted earnings per share of $0.23 recorded for the second quarter of 2016. The Company earned $1.00 million with diluted earnings per share of $0.65 for the six months ended on June 30, 2017, as compared to $651 thousand in earnings and diluted earnings per share of $0.42 for the same period in 2016.

The increase in quarterly earnings was due primarily to increases in net interest income of $378 thousand and in total noninterest income of $232 thousand in the second quarter of 2017 as compared to the second quarter of 2016, respectively. A provision for loan losses in the amount of $93 thousand was recorded in the second quarter of 2017, while a provision for loan losses of $200 thousand was recognized in the same quarter of 2016. The increase in total noninterest income was due primarily to securities gains of $165 thousand and gain on sale of loans of $49 thousand in the second quarter of 2017 as compared to $51 of securities gains and $13 thousand of loan sale gains in the second quarter of 2016.

The increase in year-to-date earnings was due primarily to increases in net interest income of $492 thousand and in total noninterest income of $252 thousand in the first half of 2017 as compared to the first half of 2016, respectively. The increase in total noninterest income was due primarily to securities gains of $165 thousand and gain on sale of loans of $87 thousand in the first half of 2017 as compared to $51 of securities gains and $18 thousand of loan sale gains in the first half of 2016.

The ratio of the allowance for loan losses to total loans stood at 1.28% and 1.04% as of June 30, 2017 and 2016, respectively, and at 1.22% as of December 31, 2016. Total nonperforming assets stood at $7.1 million and $7.7 million at June 30, 2017 and 2016, respectively, and at $7.4 million at December 31, 2016. The corresponding nonperforming assets to total assets ratios were 1.76% and 2.08% as of June 30, 2017 and 2016, respectively, and 1.96% at December 31, 2016.

The Company also reported that, as of June 30, 2017, assets stood at $406.7 million, with total deposits of $347.9 million and gross loans of $309.3 million, representing increases of 9.5%, 10.3%, and 4.9%, respectively, compared to June 30, 2016. Total shareholders’ equity at June 30, 2017 was $32.1 million, an increase of $958 thousand from December 31, 2016. The increase primarily resulted from an increase in retained earnings of $793 thousand, an increase in accumulated other comprehensive income of $152 thousand and an increase in additional paid-in capital of $13 thousand, which was from the exercise of stock options, from December 31, 2016. On a per share basis, book value increased by $0.62 for 2017 to $21.51 per share at June 30, 2017 from $20.89 per share at December 31, 2016. The dividends declared per share remained constant at $0.14 per share for the six month periods ended June 30, 2017 and 2016.

The Company adopted a new stock repurchase authorization, effective July 1, 2017 and extending until June 30, 2022, authorizing the repurchase of up to 100,000 shares of common stock for an aggregate purchase price of $3 million. The new stock purchase authorization replaces the prior authorization, which expired on June 30, 2017, under which an aggregate of 48,550 shares of common stock were repurchased for aggregate expenditures of approximately $770 thousand dollars during the five years ended June 30, 2017.

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

  June 30,   June 30,       December 31,
2017   2016 2016
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $406,691 $371,372 $378,753
Loans 309,330 294,939 306,242
Deposits 347,918 315,457 321,952
Shareholders’ equity 32,119 30,540 31,161
 
Nonperforming assets:
Nonaccrual loans $6,050 $6,671 $6,172
Accruing troubled debt restructurings 386 363 405
Loans 90 days or more past due and still accruing -- -- --
Foreclosed properties 706   706 866
Total nonperforming assets $7,142   $7,740 $7,443
 
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
2017   2016 2017   2016
(dollars in thousands, except for per share data) (unaudited) (unaudited) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $634   $362 $1,001   $651
Total comprehensive income $695   $594 $1,153   $1,000
 
Charge-offs $ 3 $ 206 $270 $236
(Recoveries) (49)   (34) (216)   (44)
Net (recoveries) charge-offs $(46)   $ 172 $ 54   $192
 
PER COMMON SHARE DATA:
Basic earnings per share $0.42 $0.24 $0.67 $0.44
Diluted earnings per share $0.41 $0.23 $0.65 $0.42
Basic weighted average number of shares outstanding 1,492,874 1,488,890 1,492,579 1,482,972
Diluted weighted average number of shares outstanding 1,550,963 1,542,374 1,549,680 1,541,291
Common shares outstanding 1,492,964 1,489,604 1,492,964 1,489,604 1,491,844
Dividends declared $0.07 $0.07 $0.14 $0.14
Book value per share $21.51 $20.50 $21.51 $20.50 $20.89
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.63% 0.40% 0.51% 0.36%
Return on average equity 7.91% 4.75% 6.29% 4.31%
Allowance for loan losses to total loans 1.28% 1.04% 1.28% 1.04% 1.22%
Nonperforming assets to total assets 1.76% 2.08% 1.76% 2.08% 1.96%
Ratio of net (recoveries) charge-offs to average loans (0.01)% 0.06% 0.02% 0.07%
Common Equity Tier 1 to risk-weighted assets 8.86% 9.17% 8.86% 9.17% 8.65%
Tier 1 capital to risk-weighted assets 10.54% 10.99% 10.54% 10.99% 10.35%
Total capital to risk-weighted assets 11.65% 11.92% 11.65% 11.92% 11.40%
Tier 1 capital to average assets 9.33% 10.05% 9.33% 10.05% 9.66%
Average equity to average assets 7.95% 8.44% 8.09% 8.46%
Net interest margin 3.64% 3.69% 3.60% 3.67%
Frederick County Bancorp, Inc. and Subsidiaries      
Consolidated Balance Sheets
June 30, June 30, December 31,
      2017     2016     2016
    (unaudited)   (unaudited)   (audited)
(dollars in thousands)            
ASSETS
Cash and due from banks $ 2,541 $ 2,453 $ 2,811
Federal funds sold 5 1,057 1,059
Interest-bearing deposits in other banks     52,127     34,392     25,804
Cash and cash equivalents     54,673     37,902     29,674
Investment securities available-for-sale at fair value 22,894 20,514 24,644
Restricted stock 1,733 1,636 1,687
Loans held for sale -- -- 357
Loans 309,330 294,939 306,242
Less: Allowance for loan losses     (3,961)     (3,072)     (3,744)
Net loans     305,369     291,867     302,498
Bank premises and equipment 9,653 7,463 7,490
Bank owned life insurance 8,841 8,623 8,735
Foreclosed properties 706 706 866
Other assets     2,822     2,661     2,802
Total assets   $ 406,691   $ 371,372   $ 378,753
 
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Liabilities
Deposits
Noninterest-bearing deposits $ 92,885 $ 78,739 $ 83,249
Interest-bearing deposits     255,033     236,718     238,703
Total deposits 347,918 315,457 321,952
Short-term borrowings 4,200 3,300 3,300
FHLB advances 14,800 15,000 15,000
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities     1,468     889     1,154
Total liabilities     374,572     340,832     347,592
 
Shareholders' Equity
Common stock, per share par value $0.01;

10,000,000 shares authorized; 1,492,964; 1,489,604 and 1,491,844 shares issued and outstanding, respectively

 

15

 

15

 

15

Additional paid-in capital 15,417 15,376 15,404
Retained earnings 16,082 14,892 15,289
Accumulated other comprehensive income     605     257     453
Total shareholders' equity     32,119     30,540     31,161
Total liabilities and shareholders' equity   $ 406,691   $ 371,372   $ 378,753
Frederick County Bancorp, Inc. and Subsidiaries        
Consolidated Statements of Income (Unaudited)
   

For the Three Months Ended

 

For the Six Months Ended

(dollars in thousands, except per share amounts)   June 30,

2017

  June 30,

2016

  June 30,

2017

  June 30,

2016

Interest income
Interest and fees on loans $3,571 $3,298 $6,954 $6,485
Interest and dividends on investment securities:
Interest – taxable 95 66 195 138
Interest – tax exempt 27 40 53 85
Dividends 26 24 51 49
Interest on federal funds sold -- 3 1 3
Other interest income   120   30   173   67
Total interest income   3,839   3,461   7,427   6,827
Interest expense
Interest on deposits 307 263 588 542
Interest on short-term borrowings 42 29 77 56
Interest on FHLB advances 49 29 82 56
Interest on junior subordinated debentures   44   36   84   69
Total interest expense   442   357   831   723
Net interest income 3,397 3,104 6,596 6,104
Provision for loan losses   93   200   271   200
Net interest income after provision for loan losses   3,304   2,904   6,325   5,904
Noninterest income
Securities gains 165 51 165 51
Gain on sale of loans 49 13 87 18
Loss on foreclosed properties -- -- (34) --
Bank owned life insurance income 53 56 106 112
Service fees 93 91 180 173
Other operating income   169   86   274   172
Total noninterest income   529   297   778   526
Noninterest expense
Salaries and employee benefits 1,647 1,577 3,340 3,258
Occupancy and equipment expenses 479 497 937 950
Other operating expenses   734   609   1,310   1,298
Total noninterest expense   2,860   2,683   5,587   5,506
Income before provision for income taxes 973 518 1,516 924
Provision for income taxes   339   156   515   273
Net income   $ 634   $ 362   $1,001   $ 651
Basic earnings per share   $0.42   $0.24   $0.67   $0.44
Diluted earnings per share   $0.41   $0.23   $0.65   $0.42
Basic weighted average number of shares outstanding   1,492,874   1,488,890   1,492,579   1,482,972
Diluted weighted average number of shares outstanding   1,550,963   1,542,374   1,549,680   1,541,291
Dividends declared per share   $0.07   $0.07   $0.14   $0.14
Frederick County Bancorp, Inc. and Subsidiaries    
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended
(dollars in thousands)   June 30,

2017

  June 30,

2016

Net income   $634   $362
Changes in net unrealized gains on securities available for sale, net of income taxes of $105 in 2017 and $171 in 2016 161 263
Reclassification adjustment for (gains) realized, net of income taxes of $65 in 2017 and $20 in 2016   (100)   (31)
Total other comprehensive income   61   232
Total comprehensive income   $695   $594
 
    For the Six Months Ended
(dollars in thousands)   June 30,

2017

  June 30,

2016

Net income   $1,001   $ 651
Changes in net unrealized gains on securities available for sale, net of income taxes of $165 in 2017 and $248 in 2016 252 380
Reclassification adjustment for (gains) realized, net of income taxes of $65 in 2017 and $20 in 2016   (100)   (31)
Total other comprehensive income   152   349
Total comprehensive income   $1,153   $1,000
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 651 349 1,000
Dividends declared on common stock, $0.14 per share (208) (208)
Shares issued under stock option transactions 13,675 154 154
Compensation expense from stock option transactions 10 10
Excess tax benefit for equity-based awards           28           28
Balance, June 30, 2016   1,489,604   $15   $15,376   $14,892   $257   $30,540
Balance January 1, 2017 1,491,844 $15 $15,404 $15,289 $453 $31,161
Comprehensive income 1,001 152 1,153
Dividends declared on common stock, $0.14 per share (208) (208)
Shares issued under stock option transactions 1,120 12 12
Compensation expense from stock option transactions           1           1
Balance, June 30, 2017   1,492,964   $15   $15,417   $16,082   $605   $32,119
Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

   
    For The Six Months Ended
    June 30,   June 30,
(dollars in thousands)     2017     2016
Cash flows from operating activities:
Net income $ 1,001 $ 651
Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 245 200
Deferred income taxes (benefits) (103) 20
Provision for loan losses 271 200
Securities gains (165) (51)
Gain on sale of loans (87) (18)
Loans originated for sale (3,193) (1,108)
Proceeds from loans sold 3,280 1,126
Net premium amortization on investment securities 70 79
Bank owned life insurance income (106) (112)
Loss on sale of foreclosed property (34) --
Stock-based compensation expense 1 10
Excess tax benefit from equity-based awards -- (28)
Decrease in accrued interest and other assets 83 41
Increase (decrease) in accrued interest and other liabilities     215     (146)
Net cash provided by operating activities     1,546     864
Cash flows from investing activities:
Proceeds from sales of investment securities available for sale 315 1,790
Proceeds from maturities, prepayments and calls

investment securities available for sale

1,781 2,607
Purchase of restricted stock (46) (7)
Net increase in loans (2,785) (16,181)
Purchases of bank premises and equipment (2,408) (1,218)
Proceeds from sale of foreclosed property     126     --
Net cash used in investing activities     (3,017)     (13,009)
Cash flows from financing activities:
Net increase in NOW, money market accounts, savings

accounts and noninterest-bearing deposits

26,817 12,378
Net (decrease) increase in time deposits (851) 7,447
Net increase in short-term borrowings 900 --
Repayment of FHLB advances (200) --
Proceeds from issuance of common stock 12 154
Dividends paid on common stock (208) (208)
Excess tax benefit from equity-based awards     --     28
Net cash provided by financing activities     26,470     19,799
Net increase in cash and cash equivalents 24,999 7,654
Cash and cash equivalents – beginning of period     29,674     30,248
Cash and cash equivalents – end of period   $ 54,673   $ 37,902
Supplemental cash flow disclosures:
Interest paid   $ 822   $ 704
Income taxes paid   $ 469   $ 479

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 June 30,   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 $ 42 $ -- -- $ 1,056 $ 3 1.14
Interest bearing deposits in other banks 47,934 120 1.02 28,162 30 0.43
Investment securities (1):
Taxable 21,678 121 2.26 19,019 90 1.90
Tax-exempt (2) 3,800 41 4.38 5,431 61 4.51
Loans (3)     308,878     3,595   4.72     288,667     3,326   4.62
Total interest-earning assets     382,332     3,877   4.11     342,335     3,510   4.11
Noninterest-earning assets     20,891   18,708
Total assets   $ 403,223 $ 361,043
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 37,549 18 0.19 $ 29,096 11 0.15
Savings accounts 12,493 1 0.03 11,133 2 0.07
Money market accounts 102,047 74 0.29 93,750 67 0.29
Certificates of deposit 94,578 214 0.92 95,470 183 0.77
Short-term borrowings 4,320 42 3.94 3,300 29 3.52
FHLB advances 18,591 49 1.07 15,000 29 0.78
Junior subordinated debentures     6,186     44   2.82     6,186     36   2.33
Total interest-bearing liabilities     275,764     442   0.65     253,935     357   0.56
Noninterest-bearing deposits 93,918 75,959
Noninterest-bearing liabilities   1,471   661
Total liabilities     371,153   330,555
Total shareholders’ equity     32,070   30,488
Total liabilities and shareholders’

equity

  $ 403,223     $ 361,043    
Net interest income       $ 3,435     $ 3,153
Net interest spread 3.46% 3.55%
Net interest margin 3.64% 3.69%
(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 $14 thousand in 2017 and $21 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 $24 thousand in 2017 and $28 thousand in 2016 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $17 thousand in 2017 and $(3) thousand in 2016.
For the Six Months Ended June 30,   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 $ 289 $ 1 0.70 $ 1,070 $ 3 0.56
Interest bearing deposits in other banks 38,652 173 0.90 29,144 67 0.46
Investment securities (1):
Taxable 21,956 246 2.26 19,427 187 1.93
Tax-exempt (2) 3,802 80 4.24 5,677 129 4.56
Loans (3)     308,629     7,003   4.58     283,766     6,543   4.62
Total interest-earning assets     373,328     7,503   4.05     339,084     6,929   4.10
Noninterest-earning assets     20,326   18,338
Total assets   $ 393,654 $ 357,422
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 35,815 32 0.18 $ 28,839 23 0.16
Savings accounts 12,189 2 0.03 10,649 2 0.04
Money market accounts 101,321 144 0.29 96,481 137 0.28
Certificates of deposit 94,282 410 0.88 93,519 380 0.81
Short-term borrowings 4,183 77 3.71 3,300 56 3.40
FHLB advances 17,508 82 0.94 15,000 56 0.75
Junior subordinated debentures     6,186     84   2.74     6,186     69   2.24
Total interest-bearing liabilities     271,484     831   0.62     253,974     723   0.57
Noninterest-bearing deposits 89,034 72,449
Noninterest-bearing liabilities   1,307   769
Total liabilities     361,825   327,192
Total shareholders’ equity     31,829   30,230

Total liabilities and shareholders’ equity

 

  $ 393,654     $ 357,422    
Net interest income       $ 6,672     $ 6,206
Net interest spread 3.43% 3.53%
Net interest margin 3.60% 3.67%
(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 $27 thousand in 2017 and $44 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 $49 thousand in 2017 and $58 thousand in 2016 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $27 thousand in 2017 and $(1) thousand 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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