Exhibit 99.1
NEWS RELEASE	FOR IMMEDIATE RELEASE

 

 

 

DCB Financial Corp Announces First Quarter 2015 Results

 

Lewis Center, OH, April 29, 2015 - DCB Financial Corp (the “Company”), (OTCQB:DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the “Bank”) announced net income of $239,000 or $0.03 per diluted share for the three months ended March 31, 2015, compared to net income of $117,000 or $0.02 per diluted share for the first quarter of 2014 and net income of $168,000 or $0.02 per diluted share for the fourth quarter of 2014.

 

Ronald J. Seiffert, President and CEO for the Company said, “Net income in the first quarter of 2015 increased 104% and 42% compared to the first and fourth quarters of 2014, respectively, and was the highest quarterly core net income since the first quarter of 2012. The sharp reduction in problem assets that we achieved during 2014 along with the strong loan growth at the end of 2014 set the stage for a strong start to 2015 and our best overall quarter in three years.”

 

Seiffert continued, “Net interest income was up $194,000 in the first quarter of 2015 compared to the first quarter of 2014, as we made substantial progress over the past year in reshaping and growing our loan portfolio. Non-interest expenses were down $112,000 due in large part to lower expenses associated with the improvement in our asset quality.”

 

Balance Sheet Highlights

Total assets were $520.7 million at March 31, 2015, compared with $515.3 million at December 31, 2014.

 

Total loans were $377.2 million at March 31, 2015, compared with $385.4 million at December 31, 2014 and $369.7 million at September 30, 2014. The Company entered the first quarter of 2015 with a relatively light loan pipeline due primarily to seasonal factors and a large number of commercial loan closings in the fourth quarter of 2014. Growth in the Company’s commercial loan portfolios in the fourth quarter of 2014 totaled $9.8 million. In addition, prepayments and payoffs in the Company’s commercial loan portfolios were unusually high during the first quarter of 2015, including 5 relationships aggregating $5.7 million that paid off during the quarter.

 

Deposits totaled $464.8 million at March 31, 2015, compared with $453.2 million at December 31, 2014 and $445.5 million at September 30, 2014. Money market accounts increased $9.1 million in the first quarter of 2015 due primarily to seasonal inflows of municipal deposits.

 

 

Shareholders’ equity increased $440,000 in the first quarter and was $47.7 million at March 31, 2015. Net income for the first quarter of $239,000 was augmented by an increase in accumulated other comprehensive income of $194,000 due to an increase in unrealized gains on securities available-for-sale.

 

The Bank’s Tier 1 leverage ratio was 8.65% and its total risk-based capital ratio was 13.83% at March 31, 2015, both of which were well above the regulatory thresholds required to be classified as a “well-capitalized” institution, which are 5.0% and 10.0%, respectively.

 

Asset Quality and the Provision for Loan Losses

Delinquent loans (including non-accrual loans) totaled $2.0 million or 0.53% of total loans at March 31, 2015, compared to $2.2 million or 0.58% of total loans at December 31, 2014 and $3.6 million or 0.98% of total loans at September 30, 2014. Non-accrual loans totaled $1.1 million or 0.30% of total loans at March 31, 2015, compared to $1.4 million or 0.36% of total loans at December 31, 2014 and $3.0 million or 0.81% of total loans at September 30, 2014.

 

Non-performing assets were $11.8 million or 2.26% of total assets at March 31, 2015, compared with $12.6 million or 2.45% of total assets at December 31, 2014 and $14.6 million or 2.91% of total assets at September 30, 2014. 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 $9.6 million at March 31, 2015, and at December 31, 2014 and $9.8 million at September 30, 2014.

 

Net charge-offs were $297,000 or 0.31% (annualized) of average loans in the first quarter of 2015, compared to net charge-offs of $1.3 million or 1.43% (annualized) of average loans in the year-ago quarter, and $90,000 or 0.10% (annualized) of average loans in the fourth quarter of 2014. Two relationships comprised nearly all of the charge-offs in the first quarter of 2014, which were charged against allowance allocations established in the fourth quarter of 2013.

 

The provision for loan losses was $150,000 in the first quarter of 2015 and in the fourth quarter of 2014. No provision for loan losses was recorded in the year-ago quarter. The provision for loan losses as a percentage of net charge-offs was 50.5% for the first quarter of 2015, compared to 166.7% in the fourth quarter of 2014.

 

The allowance for loan losses was $4.1 million at March 31, 2015, compared to $4.2 million at December 31, 2014 and at September 30, 2014. The ratio of the allowance for loan losses to total loans was 1.08% at March 31, 2015, compared with 1.10% at December 31, 2014 and 1.13% at September 30, 2014. The ratio of the allowance for loan losses to non-performing loans (including TDR’s) was 37.8% at March 31, 2015, compared to 38.5% at December 31, 2014 and 31.3% at September 30, 2014. The ratio of the allowance for loan losses to non-accrual loans was 362% at March 31, 2015, compared to 306% at December 31, 2014 and 139% at September 30, 2014.

 

 

Net Interest Income

Net interest income totaled $4.2 million in the three months ended March 31, 2015, compared with $4.0 million in the year-ago quarter and $4.2 million in the fourth quarter of 2014. Net interest income in the fourth quarter of 2014 included $171,000 of interest income recognized upon the refinance of a non-accrual commercial mortgage that, upon the refinance, was returned to accrual status.

 

The net interest margin was unchanged at 3.50% in the first quarter of 2015 compared with the first quarter of 2014 and was 3.62% in the fourth quarter of 2014. The net interest margin was 3.48% in the fourth quarter of 2014 without the $171,000 interest recovery.

 

The Company’s earning assets yield (absent non-recurring items) and cost of funds have been relatively stable over the past five quarters, as growth in the loan portfolio has offset the effect of portfolio amortization at historically higher rates, and as the Company’s time deposits have largely repriced to at or near current rates.

 

Average interest-earning assets were $484.9 million in the first quarter of 2015, compared with $466.4 million in the year-ago quarter and $465.7 million in the fourth quarter of 2014. Total period end loans outstanding increased $15.7 million between September 30, 2014 and December 31, 2014; however, much of the impact of this growth on the average balances of the loan portfolio was reflected in the first quarter of 2015 as much of the fourth quarter growth occurred in the latter part of that quarter. The average balance of loans increased $21.7 million in the first quarter of 2015 compared with the year-ago quarter, and were $7.1 million higher than the fourth quarter of 2014. Total average loans were 78.6% of total average interest-earning assets in the first quarter of 2015, compared with 77.1% in the year-ago quarter and 80.5% in the fourth quarter of 2014. Total average interest-bearing deposit balances increased $14.8 million in the first quarter of 2015 compared to the first quarter of 2014, with a decrease in the average balance of time deposits of $9.8 million being offset by an increase of $24.6 million in the average balances of lower-costing interest-bearing demand, savings and money market accounts.

 

Non-Interest Income and Non-Interest Expenses

Non-interest income was $1.2 million in the first quarter of 2015 and the first quarter of 2014, and was $1.1 million in the fourth quarter of 2014. Non-interest income (net of nonrecurring income, gains and losses and gains/losses on the sales of securities in the first quarter of 2014) accounted for 21.5% of total revenue in the first quarter of 2015, compared with 22.2% in the year-ago quarter and 20.6% in the fourth quarter of 2014.

 

Non-interest expenses were $5.0 million for the first quarter of 2015, compared with $5.1 million in the year-ago quarter and in the fourth quarter of 2014. The Company’s efficiency ratio was 92.9% in the first quarter of 2015, compared with 98.5% in the year-ago quarter and 94.6% in the fourth quarter of 2014.

 

 

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 14 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, 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. 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, 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, 2014, 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.

 

Contact:

DCB Financial Corp

Ronald J. Seiffert, President and CEO

(740) 657-7000

 

J. Daniel Mohr, Executive Vice President and CFO

(740) 657-7510

 

 

DCB Financial Corp

Consolidated Balance Sheets (Unaudited)

 

 

		March 31, 2015				December 31, 2014
		(Dollars in thousands, except share and per share data)
Assets
Cash and due from financial institutions		$	5,998			$	6,247
Interest-bearing deposits			18,047				15,027
Total cash and cash equivalents			24,045				21,274
Securities available-for-sale			85,844				75,909
Loans			377,246				385,444
Less allowance for loan losses			(4,089	)			(4,236	)
Net loans			373,157				381,208
Real estate owned			940				1,111
Investment in FHLB stock			3,250				3,250
Premises and equipment, net			9,891				10,016
Bank-owned life insurance			20,270				20,027
Accrued interest receivable and other assets			3,312				2,587
Total assets		$	520,709			$	515,382
Liabilities and shareholders’ equity
Liabilities:
Deposits:
Non-interest bearing		$	111,286			$	111,022
Interest bearing			353,510				342,170
Total deposits			464,796				453,192
Borrowings			4,801				11,808
Accrued interest payable and other liabilities			3,461				3,171
Total liabilities			473,058				468,171
Shareholders’ equity:
Common stock			16,456				16,064
Retained earnings			38,293				38,055
Treasury stock			(7,416	)			(7,416	)
Accumulated other comprehensive income			848				654
Deferred stock-based compensation			(530	)			(146	)
Total shareholders’ equity			47,651				47,211
Total liabilities and shareholders’ equity		$	520,709			$	515,382
Common shares outstanding			7,287,437				7,233,795
Book value per common share		$	6.54			$	6.53

 

 

DCB Financial Corp

Consolidated Statements of Operations (Unaudited)

 

		Three months ended March 31,
		2015				2014
		(Dollars in thousands, except share and per share data)
Interest income:
Loans		$	3,952			$	3,738
Securities			505				553
Federal funds sold and interest bearing deposits			10				13
Total interest income			4,467				4,304
Interest expense:
Deposits:
Savings and money market  accounts			142				131
Time accounts			92				128
NOW accounts			16				21
Total			250				280
Borrowings: FHLB advances			35				36
Total interest expense			285				316
Net interest income			4,182				3,988
Provision for loan losses			150				—
Net interest income after provision for loan losses			4,032				3,988
Non-interest income:
Service charges			452				511
Wealth management fees			380				293
Treasury management fees			58				56
Income from bank-owned life insurance			244				239
Loss on loans held for sale			—				(245	)
Gain on sale of REO			10				—
Loss on sale of securities, available-for-sale			—				(140	)
Gain on sale of branch			—				438
Other non-interest income			14				40
Total non-interest income			1,158				1,192
Non-interest expense:
Salaries and employee benefits			2,712				2,779
Occupancy and equipment			963				804
Professional services			353				421
Advertising			108				81
Office supplies, postage and courier			79				95
FDIC insurance premium			110				168
State franchise taxes			75				65
Other non-interest expense			551				650
Total non-interest expense			4,951				5,063
Income before income taxes			239				117
Income taxes			—				—
Net income		$	239			$	117
Share and Per Share Data
Basic average common shares outstanding			7,233,836				7,192,350
Diluted average common shares outstanding			7,250,350				7,244,716
Basic earnings per common share		$	0.03			$	0.02
Diluted earnings per common share		$	0.03			$	0.02

 

 

DCB Financial Corp

Consolidated Average Balances (Unaudited)

 

		Three months ended March 31,
		2015				2014
		(Dollars in thousands)
Earning assets
Interest bearing cash		$	19,742			$	21,750
Securities			80,388				80,379
Tax-exempt securities			3,601				4,812
Loans (1)			381,125				359,427
Total earning assets			484,856				466,368
Non-earning assets			42,201				41,997
Total assets		$	527,057			$	508,365
Interest bearing liabilities
Interest bearing DDA		$	81,409			$	80,776
Money market			155,038				130,336
Savings accounts			42,757				43,521
Time deposits			76,418				86,204
Overnight borrowings			1,567				—
FHLB advances			4,806				4,835
Total interest bearing liabilities			361,995				345,672
Non-interest bearing deposits		$	113,067			$	110,299
Other non-interest bearing liabilities			5,386				6,574
Total liabilities			480,448				462,545
Shareholders’ equity			46,609				45,820
Total liabilities and shareholders’ equity		$	527,057			$	508,365

 

(1)

Includes loans held for sale in 2014

 

 

DCB Financial Corp

Loans and Deposits (Unaudited)

 

 

The following table sets forth the composition of the Company’s loan portfolio at the dates indicated (includes loans held for sale):

 

		March 31, 2015								December 31, 2014								September 30, 2014
		Amount				Percent				Amount				Percent				Amount				Percent
Loan portfolio composition		(Dollars in thousands)
Commercial and industrial		$	99,946				26.5	%		$	106,222				27.6	%		$	102,629				27.8	%
Commercial real estate			106,334				28.2	%			111,851				29.0	%			105,621				28.6	%
Real estate and home equity			131,658				34.9	%			129,650				33.7	%			125,484				34.0	%
Consumer and credit card			39,074				10.4	%			37,507				9.7	%			35,725				9.6	%
Total loans		$	377,012				100.0	%		$	385,230				100.0	%		$	369,459				100.0	%
Net deferred loan costs			234								214								182
Allowance for loan losses			(4,089	)							(4,236	)							(4,176	)
Net loans		$	373,157							$	381,208							$	365,465

 

The following table sets forth the composition of the Company’s deposits at the dates indicated :

 

		March 31, 2015								December 31, 2014								September 30, 2014
		Amount				Percent				Amount				Percent				Amount				Percent
Deposit composition		(Dollars in thousands)
Non-interest bearing demand		$	111,286				23.9	%		$	111,022				24.5	%		$	104,991				23.6	%
Interest bearing demand			76,390				16.5	%			77,534				17.1	%			72,622				16.3	%
Total demand			187,676				40.4	%			188,556				41.6	%			177,613				39.9	%
Savings			43,568				9.4	%			42,634				9.4	%			42,482				9.5	%
Money market			156,806				33.7	%			147,667				32.6	%			148,628				33.4	%
Time deposits			76,746				16.5	%			74,335				16.4	%			76,811				17.2	%
Total deposits		$	464,796				100.0	%		$	453,192				100.0	%		$	445,534				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, 2015								December 31, 2014								September 30, 2014
		$				%(1)				$				%(1)				$				%(1)
		(Dollars in thousands)
30 days past due		$	250				0.07	%		$	336				0.09	%		$	68				0.02	%
60 days past due			498				0.13	%			37				0.01	%			50				0.01	%
90 days past due and still accruing			105				0.03	%			480				0.12	%			520				0.14	%
Non-accrual			1,130				0.30	%			1,384				0.36	%			3,007				0.81	%
Total		$	1,983				0.53	%		$	2,237				0.58	%		$	3,645				0.98	%

 

(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, 2015				December 31, 2014				September 30, 2014
		(Dollars in thousands)
Non-accruing loans:
Residential real estate loans and home equity		$	340			$	334			$	343
Commercial real estate			60				298				1,889
Commercial and industrial			612				632				651
Consumer loans and credit cards			118				120				124
Total non-accruing loans			1,130				1,384				3,007
Accruing loans delinquent 90 days or more			105				480				520
Total non-performing loans (excluding TDR’s)			1,235				1,864				3,527
Other real estate and repossessed assets			940				1,111				1,215
Total non-performing assets (excluding TDR’s)		$	2,175			$	2,975			$	4,742
Troubled debt restructurings(1)		$	9,575			$	9,633			$	9,834
Total non-performing loans (including TDR’s)		$	10,810			$	11,497			$	13,361
Total non-performing assets (including TDR’s)		$	11,750			$	12,608			$	14,576

 

(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:

 

Allowance for loan losses		Three months ended March 31,
		2015				2014
		(Dollars in thousands)
Allowance for loan losses, beginning of period		$	4,236			$	6,725
Loans charged-off			(430	)			(1,412	)
Recoveries of loans previously charged-off			133				129
Net loans charged-off			(297	)			(1,283	)
Allowance related to loans transferred to held-for-sale			—				(97	)
Provision for loan losses			150				—
Allowance for loan losses, end of period		$	4,089			$	5,345

 

 

DCB Financial Corp

Consolidated Financial Information (Unaudited)

  

Key Ratios		At or for the three months ended March 31,
		2015				2014
Return on average assets			0.18	%			0.09	%
Return on average equity			2.05	%			1.02	%
Yield on earning assets			3.73	%			3.74	%
Cost of interest-bearing liabilities			0.32	%			0.32	%
Net interest margin (1)			3.50	%			3.50	%
Non-interest income to total income (2)			21.5	%			22.2	%
Efficiency ratio (3)			92.89	%			98.54	%
Net loans charged-off to average loans, annualized			0.31	%			1.43	%
Provision for loan losses to average loans, annualized			0.16	%			0.00	%
Allowance for loan losses to total loans			1.08	%			1.51	%
Allowance for loan losses to non-accrual loans			362	%			148	%
Non-accrual loans to total loans			0.30	%			1.02	%
Non-performing assets to total assets (including performing TDR’s)			2.26	%			3.59	%
Non-performing assets to total assets (excluding performing TDR’s)			0.42	%			1.05	%

  

(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)

 

		2015				2014
		First				Fourth				Third				Second				First
		(Dollars in thousands, except per share data)
Interest income		$	4,467			$	4,536			$	4,278			$	4,262			$	4,304
Interest expense			285				291				306				299				316
Net interest income			4,182				4,245				3,972				3,963				3,988
Provision for loan losses			150				150				—				—				—
Net interest income after provision for loan losses			4,032				4,094				3,972				3,963				3,988
Non-interest income			1,158				1,132				1,140				996				1,192
Non-interest expenses			4,951				5,059				5,062				4,922				5,063
Income before income taxes			239				168				50				37				117
Income taxes			—				—				—				—				—
Net income		$	239			$	168			$	50			$	37			$	117
Stock and related per share data
Basic and diluted earnings per common share		$	0.03			$	0.02			$	0.01			$	0.01			$	0.02
Basic weighted average common shares outstanding			7,233,836				7.196,404				7,192,350				7,192,350				7,192,350
Diluted weighted average common shares outstanding			7,250,350				7,232,961				7,249,194				7,250,702				7,244,716
Common book value per share		$	6.59			$	6.53			$	6.49			$	6.51			$	6.45
Capital Ratios:
Bank
Tier 1 leverage ratio			8.65	%			9.00	%			8.96	%			8.97	%			8.83	%
Tier 1 risk based capital			12.62	%			12.40	%			12.42	%			12.77	%			12.78	%
Total risk based capital			13.75	%			13.56	%			13.57	%			14.02	%			14.03	%
Total equity to assets ratio (consolidated)			9.15	%			9.16	%			9.33	%			9.35	%			9.39	%
Selected ratios:
Return on average assets			0.18	%			0.13	%			0.04	%			0.05	%			0.09	%
Return on average equity			2.05	%			1.44	%			0.43	%			0.53	%			1.02	%
Yield on earning assets			3.73	%			3.86	%			3.66	%			3.75	%			3.74	%
Cost of interest-bearing liabilities			0.32	%			0.33	%			0.35	%			0.36	%			0.32	%
Net interest margin			3.50	%			3.62	%			3.40	%			3.51	%			3.50	%
Non-interest income to total income (1)			21.5	%			20.6	%			22.6	%			21.8	%			22.2	%
Efficiency ratio (2)			92.89	%			94.6	%			98.7	%			96.2	%			98.5	%
Asset quality ratios:
Net loans charged off to average loans, annualized			0.31	%			0.10	%			0.43	%			0.87	%			1.43	%
Provision for loan losses to average loans, annualized			0.16	%			0.16	%			0.00	%			0.00	%			0.00	%
Allowance for loan losses to total loans			1.08	%			1.10	%			1.13	%			1.28	%			1.51	%
Allowance for loan losses to non-accrual loans			362	%			306	%			139	%			109	%			148	%
Non-accrual loans to total loans			0.30	%			0.36	%			0.81	%			1.17	%			1.02	%
Non-performing assets to total assets (including performing TDR’s)			2.26	%			2.45	%			2.91	%			3.06	%			3.59	%
Non-performing assets to total assets (excluding performing TDR’s)			0.42	%			0.58	%			0.95	%			1.12	%			1.05	%

 

(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)