Frederick County Bancorp, Inc. Reports Results for the Third Quarter 2019

Published

FREDERICK, Md.--(BUSINESS WIRE)-- Frederick County Bancorp, Inc. (the “Company”) (OTCPink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended September 30, 2019, the Company recorded net income of $511 thousand and diluted earnings per share of $0.32, as compared to net income of $536 thousand and diluted earnings per share of $0.34 recorded for the third quarter of 2018. The Company earned $1.5 million and diluted earnings per share of $0.97 for the nine months ended September 30, 2019, as compared to $2.2 million in earnings and diluted earnings per share of $1.43 for the same period in 2018.

The decrease in quarterly earnings was due primarily to total interest expense increasing by $390 thousand from $718 thousand in 2018 to $1.1 million in the third quarter of 2019, along with $354 thousand in nondeductible merger-related expenses incurred during the third quarter of 2019. These additional expenses were off set by an increase in noninterest income of $341 thousand in the third quarter compared to the same period in 2018. This increase was due to a $187 thousand increase in gains on the sale of loans held for sale and an $88 thousand increase in the change in the fair value of equity securities. Adjusted net income was $865 thousand for the third quarter of 2019. This excludes $354 thousand of merger-related expenses incurred related to the proposed merger with ACNB Corporation.

The decrease in year-to-date earnings was due primarily to a negative provision for loan losses of $512 thousand which was recognized in 2018 compared to no provision in 2019. In addition, total interest expense increased from $2.0 million in 2018 to $3.1 million in the first nine months of 2019. This exceeded the $763 thousand increase in interest income recognized in the first nine months of 2019, which was $13.4 million compared to $12.6 million in 2018. Noninterest income increased $367 to $1.5 million as of September 30, 2019 compared to $1.1 million as of September 30, 2018. Adjusted net income was $1.9 million for the nine months ended September 30, 2019. This excludes $354 thousand of merger-related expenses incurred related to the proposed merger with ACNB Corporation.

The ratio of the allowance for loan losses to total loans stood at 0.98% and 1.01% as of September 30, 2019 and 2018, respectively, and at 1.01% as of December 31, 2018. Total nonperforming assets stood at $3.4 million and $3.7 million at September 30, 2019 and 2018, respectively, and at $2.1 million at December 31, 2018. The increase in the nonperforming assets as of September 30, 2019 from year end 2018 primarily relates to one commercial loan relationship. The corresponding nonperforming assets to total assets ratios were 0.75% and 0.87% as of September 30, 2019 and 2018, respectively, and 0.50% at December 31, 2018.

The Company also reported that, as of September 30, 2019, assets stood at $452.7 million, with total deposits of $381.2 million and gross loans of $345.0 million, representing increases of 6.9%, 6.6%, and 4.7%, respectively, compared to September 30, 2018. Total shareholders’ equity at September 30, 2019 was $37.8 million, an increase of $2.3 million from December 31, 2018. The increase primarily resulted from earnings of $1.5 million, offset by dividends of $380 thousand, an increase in additional paid-in capital of $727 thousand, which was from the exercise of stock options, and an increase in the fair value of available-for-sale securities of $394 thousand from December 31, 2018. On a per share basis, book value increased by $0.51 for 2019 to $23.57 per share at September 30, 2019 from $23.06 per share at December 31, 2018. The dividends declared per share decreased to $0.24 per share for the nine month period ended September 30, 2019 as compared to $0.26 for the same period in 2018, due to a special $0.02 dividend paid in addition to the regular $0.08 dividend on August 15, 2018.

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

 

 

Sept. 30,

 

Sept. 30,

 

 

 

 

 

December 31,

 

2019

 

2018

 

 

 

 

 

2018

(dollars in thousands)

(unaudited)

 

(unaudited)

 

 

 

 

 

(audited)

Total assets

$452,693

$423,264

 

 

 

$418,588

Loans

345,045

329,622

 

 

 

339,461

Deposits

381,214

357,711

 

 

 

352,373

Shareholders’ equity

37,837

34,640

 

 

 

35,555

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$2,225

$2,119

 

 

 

$ 492

Accruing troubled debt restructurings

1,156

1,195

 

 

 

1,254

Loans 90 days or more past due and still accruing

 

-

 

-

 

 

 

 

-

Foreclosed properties

-

360

 

 

 

360

Total nonperforming assets

$3,381

$3,674

 

 

 

$2,106

 

 

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

 

 

Sept. 30,

 

Sept. 30,

 

Sept. 30,

 

Sept. 30,

 

 

2019

 

2018

 

2019

 

2018

 

(dollars in thousands, except for per share data)

(unaudited)

 

(unaudited)

 

(unaudited)

 

(unaudited)

 

SUMMARY OF OPERATING RESULTS:

 

 

 

 

 

 

Net income

$511

$536

 

$1,541

$2,249

 

Total comprehensive income

$542

$438

 

$1,935

$1,871

 

 

 

 

 

 

 

 

Charge-offs

$ 157

$ 3

 

$ 176

$ 29

 

(Recoveries)

(78)

(10)

 

(145)

(616)

 

Net charge-offs (recoveries)

$ 79

$ (7)

 

$ 31

$(587)

 

 

 

 

 

 

 

 

PER COMMON SHARE DATA:

 

 

 

 

 

 

Basic earnings per share

$0.32

$0.35

 

$0.97

$1.48

 

Diluted earnings per share

$0.32

$0.34

 

$0.97

$1.43

 

Basic weighted average number of shares outstanding

1,590,557

1,531,376

 

1,561,850

1,515,266

 

Diluted weighted average number of shares outstanding

1,605,840

1,582,177

 

1,591,339

1,571,977

 

Common shares outstanding

1,605,364

1,533,387

 

1,605,364

1,533,387

1,541,737

Dividends declared

$0.08

$0.08

 

$0.24

$0.26

 

Book value per share

$23.57

$22.59

 

$23.57

$22.59

$23.06

 

 

 

 

 

 

 

SELECTED UNAUDITED FINANCIAL RATIOS:

 

 

 

 

 

 

Return on average assets

0.46%

0.50%

 

0.47%

0.71%

 

Return on average equity

5.41%

6.16%

 

5.57%

8.83%

 

Allowance for loan losses to total loans

0.98%

1.01%

 

0.98%

1.01%

1.01%

Nonperforming assets to total assets

0.75%

0.87%

 

0.75%

0.87%

0.50%

Ratio of net charge-offs (recoveries) to average loans

0.02%

0.00%

 

0.01%

(0.18)%

 

Common Equity Tier 1 to risk-weighted assets

9.64%

9.50%

 

9.64%

9.50%

9.44%

Tier 1 capital to risk-weighted assets

11.18%

11.12%

 

11.18%

11.12%

11.02%

Total capital to risk-weighted assets

12.04%

12.02%

 

12.04%

12.02%

11.93%

Tier 1 capital to average assets

9.74%

9.64%

 

9.74%

9.64%

9.83%

Average equity to average assets

8.42%

8.15%

 

8.38%

8.07%

 

Net interest margin

3.32%

3.50%

 

3.34%

3.58%

 

 

 

 

 

 

 

 

 

 

Frederick County Bancorp, Inc. and Subsidiaries

 

 

 

 

Consolidated Balance Sheets

 

 

 

 

 

 

 

September 30,

 

September 30,

 

December 31,

 

 

2019

 

2018

 

2018

 

 

(unaudited)

 

(unaudited)

 

(audited)

(dollars in thousands)

 

 

 

 

ASSETS

 

 

 

 

Cash and due from banks

 

$ 2,614

$ 2,811

$ 2,778

Federal funds sold

 

5

5

5

Interest-bearing deposits in other banks

 

56,901

47,495

33,342

Cash and cash equivalents

 

59,520

50,311

36,125

Investment securities available-for-sale at fair value

 

23,518

22,019

21,558

Restricted stock

 

1,992

1,979

1,979

Loans held for sale

 

1,493

-

268

Loans

 

345,045

329,622

339,461

Less: Allowance for loan losses

 

(3,395)

(3,339)

(3,426)

Net loans

 

341,650

326,283

336,035

Bank premises and equipment

 

11,687

9,251

9,280

Bank owned life insurance

 

10,830

10,560

10,628

Foreclosed properties

 

-

360

360

Other assets

 

2,003

2,501

2,355

Total assets

 

$452,693

$423,264

$418,588

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

Deposits

 

 

 

 

Noninterest-bearing deposits

 

$106,549

$ 97,513

$100,200

Interest-bearing deposits

 

274,665

260,198

252,173

Total deposits

 

381,214

357,711

352,373

Short-term borrowings

 

3,450

3,450

3,450

FHLB advances

 

20,000

20,000

20,000

Junior subordinated debentures

 

6,186

6,186

6,186

Accrued interest and other liabilities

 

4,006

1,277

1,024

Total liabilities

 

414,856

388,624

383,033

 

 

 

 

 

Shareholders' Equity

 

 

 

 

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,605,364; 1,533,387 and 1,541,737 shares issued and outstanding, respectively

 

16

15

15

Additional paid-in capital

 

16,757

15,939

16,031

Retained earnings

 

20,955

19,204

19,794

Accumulated other comprehensive income (loss)

 

109

(518)

(285)

Total shareholders' equity

 

37,837

34,640

35,555

Total liabilities and shareholders' equity

 

$452,693

$423,264

$418,588

 

 

Frederick County Bancorp, Inc. and Subsidiaries

 

 

 

 

Consolidated Statements of Income (Unaudited)

 

 

 

 

 

 

For the Three Months Ended

 

For the Nine Months Ended

(dollars in thousands, except per share amounts)

September 30,

2019

 

September 30,

2018

 

September 30,

2019

 

September 30,

2018

Interest income

 

 

 

 

Interest and fees on loans

$4,208

$3,841

$12,130

$11,469

Interest and dividends on investment securities:

 

 

 

 

Interest – taxable

126

126

383

370

Interest – tax exempt

29

23

83

70

Dividends

33

34

93

113

Other interest income

247

250

714

618

Total interest income

4,643

4,274

13,403

12,640

Interest expense

 

 

 

 

Interest on deposits

881

482

2,416

1,307

Interest on short-term borrowings

46

42

138

138

Interest on FHLB advances

118

129

345

384

Interest on junior subordinated debentures

63

65

197

175

Total interest expense

1,108

718

3,096

2,004

Net interest income

3,535

3,556

10,307

10,636

Provision for loan (recoveries) losses

-

-

-

(512)

Net interest income after provision for loan (recoveries) losses

3,535

3,556

10,307

11,148

Noninterest income

 

 

 

 

Securities gains

-

-

-

1

Change in fair value of equity securities

89

1

78

35

Gain on sale of loans

197

10

379

176

Gain on foreclosed properties

(2)

-

(2)

12

Bank owned life insurance income

68

56

202

157

Service fees

90

115

251

306

Other operating income

212

131

549

403

Total noninterest income

654

313

1,457

1,090

Noninterest expense

 

 

 

 

Salaries and employee benefits

1,910

1,940

5,491

5,344

Occupancy and equipment expenses

447

459

1,396

1,369

Merger-related expense

354

-

354

-

Other operating expenses

676

753

2,360

2,479

Total noninterest expense

3,387

3,152

9,601

9,192

Income before provision for income taxes

802

717

2,163

3,046

Provision for income taxes

291

181

622

797

Net income

$ 511

$ 536

$ 1,541

$ 2,249

Basic earnings per share

$0.32

$0.35

$0.97

$1.48

Diluted earnings per share

$0.32

$0.34

$0.97

$1.43

Basic weighted average number of shares outstanding

1,590,557

1,531,376

1,561,850

1,515,266

Diluted weighted average number of shares outstanding

1,605,840

1,582,177

1,591,339

1,571,977

Dividends declared per share

$0.08

$0.08

$0.24

$0.26

 
 

Frederick County Bancorp, Inc. and Subsidiaries

 

 

Consolidated Statements of Comprehensive Income (Unaudited)

 

 

 

For the Three Months Ended

(dollars in thousands)

September 30,

2019

 

September 30,

2018

Net income

$511

$536

Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $12 in 2019 and income tax benefits of $32 in 2018

31

(98)

Total other comprehensive income (loss)

31

(98)

Total comprehensive income

$542

$438

 

 

For the Nine Months Ended

(dollars in thousands)

September 30,

2019

 

September 30,

2018

Net income

$1,541

$2,249

Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $150 in 2019 and income tax benefits of $143 in 2018

394

(377)

Reclassification adjustment for (gains) realized, net of income taxes of $0 in 2019 and $0 in 2018

-

(1)

Total other comprehensive income (loss)

394

(378)

Total comprehensive income

$1,935

$1,871

 
 

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, 2018

1,493,044

$15

$15,397

$16,829

$ 380

$32,621

Comprehensive income

 

 

 

2,249

(378)

1,871

Cumulative change in accounting principle

 

 

 

520

(520)

-

Dividends declared on common stock, $0.26 per share

 

 

 

(394)

 

(394)

Shares issued under stock option transactions

40,843

 

542

 

 

542

Balance, September 30, 2018

1,533,387

$15

$15,939

$19,204

$(518)

$34,640

Balance January 1, 2019

1,541,737

$15

$16,031

$19,794

$(285)

$35,555

Comprehensive income

 

 

 

1,541

394

1,935

Dividends declared on common stock, $0.24 per share

 

 

 

(380)

 

(380)

Shares issued under stock option transactions

63,627

1

726

 

 

727

Balance, September 30, 2019

1,605,364

$16

$16,757

$20,955

$109

$37,837

 

 

Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 

 

 

 

For The Nine Months Ended

 

September 30,

 

September 30,

(dollars in thousands)

2019

 

2018

Cash flows from operating activities:

 

 

Net income

$ 1,541

$ 2,249

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

 

 

Depreciation and amortization

369

370

Deferred income (benefits) taxes

(54)

177

Recoveries for loan losses

-

(512)

Securities gains

-

(1)

Change in fair value of equity securities

(78)

(35)

Gain on sale of loans

(379)

(176)

Loans originated for sale

(18,147)

(4,428)

Proceeds from loans sold

18,527

4,604

Net (discount accretion) premium amortization on investment securities

102

93

Bank owned life insurance income

(202)

(157)

Loss on surrender of bank owned life insurance

-

19

Loss (gain) on sale of foreclosed property

2

(12)

Provision for foreclosed properties

160

346

Decrease in accrued interest and other assets

295

1

Increase in accrued interest and other liabilities

240

337

Net cash provided by operating activities

2,376

2,875

Cash flows from investing activities:

 

 

Purchases of investment securities available for sale

(4,925)

(1,231)

Proceeds from sales of investment securities available for sale

-

858

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

3,483

2,521

(Purchase) redemption of restricted stock

(13)

388

Net increase in loans

(6,841)

(6,879)

Purchase of bank owned life insurance

-

(1,475)

Purchases of bank premises and equipment

(69)

(79)

Proceeds from sale of foreclosed property

198

570

Net cash used in investing activities

(8,167)

(5,327)

Cash flows from financing activities:

 

 

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

15,226

13,845

Net increase in time deposits

13,615

11,861

Net decrease in short-term borrowings

-

(750)

Decrease in FHLB advances

-

(9,700)

Proceeds from issuance of common stock

725

542

Dividends paid on common stock

(380)

(394)

Net cash provided by financing activities

29,186

15,404

Net increase in cash and cash equivalents

23,395

12,952

Cash and cash equivalents – beginning of period

36,125

37,359

Cash and cash equivalents – end of period

$59,520

$50,311

Supplemental cash flow disclosures:

 

 

Interest paid

$3,112

$1,985

Income taxes paid

$592

$360

 
 

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 September 30,

2019

2018

 

 

(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

$ 5

$ -

-

$ 5

$ -

-

Interest bearing deposits in other banks

47,349

247

2.07

52,722

250

1.88

Investment securities (1):

 

 

 

 

 

 

Taxable

21,990

159

2.87

21,414

160

2.96

Tax-exempt (2)

4,267

37

3.44

3,332

29

3.45

Loans (3)

351,239

4,218

4.76

328,081

3,853

4.66

Total interest-earning assets

424,850

4,661

4.35

405,554

4,292

4.20

Noninterest-earning assets

23,960

 

 

21,286

 

 

Total assets

$448,810

 

 

$426,840

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

NOW accounts

$ 56,126

107

0.76

$ 49,563

43

0.34

Savings accounts

14,053

1

0.03

13,799

1

0.03

Money market accounts

92,101

215

0.93

96,555

78

0.32

Certificates of deposit

107,721

558

2.06

97,989

360

1.46

Short-term borrowings

3,450

46

5.29

3,450

42

4.94

FHLB advances

20,000

118

2.34

24,580

129

2.08

Junior subordinated debentures

6,186

63

4.04

6,186

65

4.17

Total interest-bearing liabilities

299,637

1,108

1.47

292,122

718

0.98

Noninterest-bearing deposits

107,734

 

 

99,006

 

 

Noninterest-bearing liabilities

3,657

 

 

905

 

 

Total liabilities

411,028

 

 

392,033

 

 

Total shareholders’ equity

37,782

 

 

34,807

 

 

Total liabilities and shareholders’ equity

$448,810

 

 

$426,840

 

 

Net interest income

 

$3,553

 

 

$3,574

 

Net interest spread

 

 

2.88%

 

 

3.22%

Net interest margin

 

 

3.32%

 

 

3.50%

 

(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 21%. Taxable-equivalent adjustments of $8 thousand in 2019 and $6 thousand in 2018 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 21%. Taxable-equivalent adjustments of $10 thousand in 2019 and $12 thousand in 2018 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $(17) thousand in 2019 and $(2) thousand in 2018.

 
 

For the Nine Months Ended September 30,

2019

2018

 

 

(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

$

5

$

-

-

$

5

$

-

-

Interest bearing deposits in other banks

 

43,283

 

714

2.21

 

48,601

 

618

1.70

Investment securities (1):

 

 

 

 

 

 

Taxable

 

21,871

 

476

2.91

 

22,116

 

483

2.92

Tax-exempt (2)

 

4,001

 

105

3.51

 

3,336

 

89

3.57

Loans (3)

 

346,655

 

12,177

4.70

 

325,427

 

11,504

4.73

Total interest-earning assets

 

415,815

 

13,472

4.33

 

399,485

 

12,694

4.25

Noninterest-earning assets

 

24,031

 

 

 

21,241

 

 

Total assets

$

439,846

 

 

$

420,726

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

 

Interest-bearing liabilities:

 

 

 

 

 

 

NOW accounts

$

51,145

 

282

0.74

$

45,721

 

98

0.29

Savings accounts

 

14,562

 

3

0.03

 

13,814

 

3

0.03

Money market accounts

 

92,470

 

606

0.88

 

97,515

 

212

0.29

Certificates of deposit

 

104,777

 

1,525

1.95

 

97,156

 

994

1.37

Short-term borrowings

 

3,450

 

138

5.35

 

3,917

 

138

4.74

FHLB advances

 

19,982

 

345

2.31

 

26,905

 

384

1.91

Junior subordinated debentures

 

6,186

 

197

4.26

 

6,186

 

175

3.78

Total interest-bearing liabilities

 

292,572

 

3,096

1.41

 

291,214

 

2,004

0.92

Noninterest-bearing deposits

 

106,966

 

 

 

94,680

 

 

Noninterest-bearing liabilities

 

3,440

 

 

 

862

 

 

Total liabilities

 

402,978

 

 

 

386,756

 

 

Total shareholders’ equity

 

36,868

 

 

 

33,970

 

 

Total liabilities and shareholders’

equity

$

439,846

 

 

$

420,726

 

 

Net interest income

 

$

10,376

 

 

$

10,690

 

Net interest spread

 

 

2.92%

 

 

3.33%

Net interest margin

 

 

3.34%

 

 

3.58%

(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 21%. Taxable-equivalent adjustments of $22 thousand in 2019 and $19 thousand in 2018 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 21%. Taxable-equivalent adjustments of $47 thousand in 2019 and $35 thousand in 2018 are included in the calculation of the loan interest income. Net loan origination income (expense) in interest income totaled $(26) thousand in 2019 and $(11) thousand in 2018.

 

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20191022005829/en/

Crystal L. Wiles, Senior Vice President and Chief Financial Officer, (240) 529-1506

Source: Frederick County Bancorp, Inc.

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