Attached files
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| 8-K - FIRST NORTHWEST BANCORP FORM 8-K FOR THE EVENT ON JANUARY 28, 2016 - First Northwest Bancorp | firstnwbanc8k12816.htm |
Exhibit 99.1
|
Contact: Larry Hueth, President, Chief Executive Officer and Director
Regina Wood, EVP and Chief Financial Officer
First Northwest Bancorp
360-457-0461
|
FIRST NORTHWEST BANCORP
REPORTS RESULTS OF OPERATIONS FOR THE SECOND FISCAL QUARTER OF 2016
PORT ANGELES, WA (January 28, 2016) - First Northwest Bancorp (NASDAQ - FNWB) (“Company”), the holding company for First Federal Savings and Loan Association of Port Angeles (“Bank”), announced its operating results for the second fiscal quarter ended December 31, 2015. On January 29, 2015, the Company completed its stock offering in connection with the Bank's conversion from the mutual to stock form of organization. Accordingly, the results prior to that time relate solely to the operations of the Bank. The Company reported net income of $713,000, or $0.06 per share, for the quarter ended December 31, 2015, a decrease of $515,000, or 41.9%, compared to net income of $1.2 million for the prior quarter ended September 30, 2015, and a decrease of $169,000, or 19.2%, compared to net income of $882,000 for the quarter ended December 31, 2014. The decrease from the prior quarter was primarily due to a Federal Home Loan Bank ("FHLB") prepayment penalty of $779,000, a $435,000 increase in compensation and benefits expense, and a decrease of $307,000 in gain on sale of real estate owned, offsetting increases in net interest income of $463,000 and net gain on sale of investment securities of $856,000. We experienced increases in compensation and benefits as we added key personnel, including staffing in support of our market expansion in Whatcom County. The decrease in net income compared to the prior year quarter end December 31, 2014 similarly resulted primarily from increased noninterest expense, including expenditures related to being a public company. Net income for the six months ended December 31, 2015 was $1.9 million compared to net income of $1.7 million for the comparable period in 2014.
Commenting on the second fiscal quarter, Larry Hueth, President and Chief Executive Officer of the Company, said, “We are pleased with the improvements in loan and deposit growth that were achieved during the second quarter and the continued improvement in our net interest margin, which increased to 2.94% from 2.76% for the quarter ended September 30, 2015. Our net interest margins improved as a result of an increase in net loans receivable of $29.8 million, an increase in relatively low cost deposits, and paying down $19.9 million of long-term FHLB advances. We offset the FHLB prepayment penalty by selling investment and mortgage-backed securities at a gain. Our deposit growth of $18.2 million during the quarter includes $5.2 million from our newest full-service branch located in Bellingham, Washington, which opened in November 2015. Our commitments for construction loans increased $7.2 million, or 16.9%, during the quarter to $49.8 million at December 31, 2015. We also have implemented a new automobile dealer lending platform during the quarter, which is expected to generate more indirect auto loans by increasing the availability of our product offerings through dealerships in our existing and expanded market areas."
Second Quarter highlights (at or for the quarter ended December 31, 2015)
|
•
|
Net income decreased $515,000, or 41.9%, compared to the prior quarter primarily due to an increase in noninterest expense related to compensation and benefits and approximately $307,000 decline in net gain on sale of real estate owned and repossessed assets compared to the prior quarter;
|
|
•
|
Net interest income increased $463,000, or 7.4%, compared to the prior quarter, primarily due to increased interest and fees on loans receivable and interest on mortgage-backed and related securities;
|
|
•
|
The Bank sold investment and mortgage-backed securities at a gain of $856,000 in order to offset the prepayment penalty on long-term FHLB advances of $779,000;
|
|
•
|
Net loans, excluding loans held for sale, increased $29.8 million during the quarter, primarily due to purchases and originations of one- to four-family residential loans, originations of commercial real estate loans, and the funding of construction loans;
|
|
•
|
Borrowings decreased $14.8 million, or 16.4%, as a result of prepayment of higher cost long-term advances partially offset by increases in lower cost short-term, overnight borrowings from the FHLB;
|
|
•
|
Deposits increased $18.2 million, or 2.7%, due to promotional activities in new markets and ongoing business development activities in existing markets; and
|
|
•
|
The repurchase of 1,048,029 shares, or 8% of total shares outstanding, for the Employee Stock Ownership Plan ("ESOP") was completed.
|
During the quarter ended December 31, 2015, total assets remained relatively stable with a small decrease of $329,000 to $957.8 million from $958.1 million at September 30, 2015. Year over year, total assets increased $33.7 million, or 3.6%, from $924.2 million at December 31, 2014. Net loans, excluding loans held for sale, increased $29.8 million, or 6.0%, during the quarter to $527.1 million at December 31, 2015, and increased $33.6 million, or 6.8%, compared to the same period in the prior year, primarily due to new loan originations. Investment securities and mortgage-backed securities decreased $14.1 million, or 3.7% during the quarter to $364.0 million at December 31, 2015, primarily due to prepayments on investment securities. Investment securities and mortgage-backed securities increased $121.8 million, or 50.3%, from the prior year as a result of the deployment of capital raised in our initial public offering. Deposits increased $18.2 million, or 2.7%, during the quarter to $685.1 million at December 31, 2015, as we continue to develop commercial and consumer deposit relationships in Silverdale and Bellingham, Washington, as well as within our Clallam and Jefferson County, Washington locations. Deposits decreased $55.7 million, or 7.5%, compared to $740.8 million for the same period in the prior year, primarily due to the reduction in deposits from stock subscriptions held at December 31, 2014 in anticipation of the completion of our initial public offering on January 29, 2015.
The increase of $29.8 million in net loans, excluding loans held for sale, during the three months ended December 31, 2015, was mainly attributable to an increase in one- to four-family residential loans of $17.4 million, or 6.7%, to $275.7 million at December 31, 2015, the result of new loan originations and purchased loan pools of $13.0 million, outpacing prepayment activity. In addition, multi-family loans increased $9.5 million, or 27.4%, to $44.1 million, and construction and land loans increased $4.4 million, or 20.0%, to $26.6 million, during the quarter. These increases were offset by decreases in commercial real estate loans of $1.1 million, or 0.8%, to $130.4 million; home equity loans of $136,000, or 0.4%, to $35.3 million; commercial business loans of $235,000, or 1.7%, to $13.6 million; and other consumer loans of $106,000, or 1.4%, to $7.7 million during the quarter ended December 31, 2015. There were $37.1 million in undisbursed construction loan commitments at December 31, 2015, of which $4.9 million consisted mainly of custom one- to four-family residential construction; $22.5 million was committed to multi-family construction, primarily located in Snohomish, Pierce, and King Counties; $6.8 million was committed to a hotel construction project in Franklin County; and $2.8 million was committed to one- to four-family speculative construction primarily in Thurston County. Compared to the same period in the prior year, net loans, excluding loans held for sale, increased $33.6 million, or 6.8%, mainly attributable to an increase in one- to four-family residential loans of $28.0 million, which resulted from a combination of origination and retention of most one- to four-family residential loans supplemented with bulk loan purchases during the past year. Multi-family and construction and land loans increased $6.9 million and $7.0 million, respectively, over the last year. We continue to focus on increasing our loan balances as a percentage of earning assets.
During the quarter ended December 31, 2015, the total securities portfolio decreased $14.1 million to $364.0 million, mainly due to prepayment activity. Mortgage-backed securities represented the largest portion of the investment portfolio and were $251.0 million at December 31, 2015, an increase during the quarter of $11.0 million, or 4.6%, from $240.0 million at September 30, 2015. Other investment securities, including municipal bonds, were $113.1 million at December 31, 2015, a decrease of $25.0 million, or 18.1%, from $138.1 million at September 30, 2015. During the quarter, $73.5 million of available for sale securities, consisting mainly of variable-rate small business association (SBA) and adjustable rate U.S. government agency issued mortgage-backed securities ("MBS agency"), were sold, taking advantage of market conditions which allowed us to realize a net gain on sale. The cash received from the sale, $74.4 million, was reinvested into a combination of fixed-rate MBS agency securities and fixed and variable rate corporate issued mortgage-backed securities ("MBS corporate"). The MBS corporate securities are secured by residential or commercial real estate. This transaction was executed in order to improve our net interest margin by using the gain on sale of investments to offset the expense of prepayment penalties associated with the early repayment of $19.9 million of long-term FHLB advances. Total investments increased $121.9 million, or 50.3%, compared to December 31, 2014, which included a $26.2 million increase in investment securities and a $95.7 million increase in mortgage-backed securities, primarily due to the investment of proceeds from our initial stock offering.
During the quarter ended December 31, 2015, total liabilities increased $2.6 million, or 0.3%, to $768.4 million at December 31, 2015 from $765.9 million at September 30, 2015. The increase was primarily the result of deposit account
balances increasing $18.2 million, or 2.7%, to $685.1 million at December 31, 2015, from $666.9 million at September 30, 2015. Deposit account balance increases were primarily in transaction and savings account deposit balances which increased $17.9 million, or 3.4%, to $538.8 million at December 31, 2015 from $520.9 million at September 30, 2015. Deposit account increases were primarily the result of business and consumer development efforts with new and existing customers.
During the quarter ended December 31, 2015, borrowings decreased $14.7 million to $75.2 million at December 31, 2015 from $89.9 million at September 30, 2015. During the quarter, $19.9 million of long-term FHLB advances were repaid and replaced mainly through deposit growth and short-term advances of $5.2 million from the FHLB.
Total liabilities decreased $72.7 million, or 8.6%, over the last year. The decrease is attributed to a decline in deposit account balances of $55.7 million, primarily related to a reduction in deposits held as subscriptions for the purchase of stock in our initial public offering and the prepayment of FHLB advances during the current quarter.
Total equity decreased $2.9 million, or 1.5%, from $192.3 million at September 30, 2015 to $189.4 million at December 31, 2015. The decrease during the quarter resulted from a $2.9 million decrease in accumulated other comprehensive income (loss) related to unrealized changes in market values and the realized gain on the sale of available for sale securities noted above. This was combined with a $705,000 increase in the balance of unearned ESOP shares as the remainder of shares were purchased during the quarter. These decreases were partially offset by net income of $713,000.
As of December 31, 2015, the Bank was well capitalized under the minimum capital requirements established by the FDIC, with Tier 1 Leverage-Based Capital, Tier 1 Risk-Based Capital, Common Equity Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios of 14.2%, 22.6%, 22.6%, and 23.9%, respectively. Tier 1 Leverage-Based Capital, Tier 1 Risk-Based Capital, Common Equity Tier 1 Risk-Based Capital, and Total Risk-Based Capital ratios were 14.3%, 23.4%, 23.4%, and 24.7%, respectively, at September 30, 2015.
Asset quality continued to improve during the quarter ended December 31, 2015. Nonperforming loans decreased $1.5 million, real estate owned and repossessed assets decreased $405,000, classified loans decreased $1.6 million, and our allowance for loan losses decreased as a percentage of total loans from 1.4% at September 30, 2015 to 1.3% at December 31, 2015 due primarily to the increase in net loans receivable. Also showing improvement was the allowance for loan losses as a percentage of nonperforming loans, which increased from 186.5% at September 30, 2015, to 309.4% at December 31, 2015.
Net interest income increased $463,000, or 7.4%, to $6.8 million for the quarter ended December 31, 2015, from $6.3 million for the prior quarter ended September 30, 2015, and increased $1.2 million, or 20.7%, from $5.6 million at December 31, 2014. There was no provisioning for loan losses during the quarters ended December 31, 2015, September 30, 2015, or December 31, 2014, as a result of improved credit quality measures during these periods. Total interest income increased $417,000, or 5.5%, to $7.9 million for the three months ended December 31, 2015 from $7.5 million for the three months ended September 30, 2015, and increased $1.2 million, or 18.2%, from $6.7 million for the three months ended December 31, 2014. The increase in interest income for the quarter ended December 31, 2015, compared to the previous quarter and the same quarter last year, was primarily related to increases in the average balance and interest earned on loans and investment securities.
Total interest expense remained virtually unchanged at $1.2 million for the quarters ended December 31, 2015 and September 30, 2015. Total interest expense increased $65,000, or 5.8%, compared to $1.1 million for the quarter ended December 31, 2014, as the result of higher average deposit balances and an increase in the average rate paid on money market and certificates of deposit, partially offset by the reduced cost of FHLB advances.
The net interest margin increased 18 basis points to 2.94% for the quarter ended December 31, 2015 compared to 2.76% for the prior quarter ended September 30, 2015, and increased seven basis points from 2.87% for the same period in 2014. Net interest margin increased for the quarter ended December 31, 2015 compared to the prior quarter and the same period in 2014 primarily due to an increase in the average balance of total loans receivable earning higher yields compared to cash and investment alternatives, as well as an increase in the average yield of investment securities. Reduced borrowing costs related to the prepayment of FHLB advances also contributed to improved margins during the quarter ended December 31, 2015.
Noninterest income was $1.9 million for the quarter ended December 31, 2015, an increase of $615,000, or 48.7%, compared to the prior quarter ended September 30, 2015, and an increase of $899,000, or 91.8%, compared to the same quarter in 2014, due primarily to a gain on sale of investment securities of $856,000.
Noninterest expense increased $1.8 million, or 29.9%, to $7.7 million for the quarter ended December 31, 2015, compared to $5.9 million for the quarter ended September 30, 2015, primarily due to a prepayment penalty of $779,000 incurred as a result of early repayment of $19.9 million of FHLB advances and a $435,000 increase in compensation and benefits expense, primarily due to the addition of personnel in loan production and support of new markets, including staffing of our newest branch in Bellingham, Washington. There was also a gain on sale of real estate owned of $352,000 in the prior quarter ended September 30, 2015 that reduced expenses related to real estate owned and repossessed assets which was not present in the most recent quarter. Occupancy and equipment expenses increased during the quarter, including expenses related
to the opening of our Bellingham, Washington branch. Noninterest expense increased $2.2 million, or 41.2%, for the quarter ended December 31, 2015 compared to $5.4 million for the same period in 2014. The increase was primarily due to the FHLB prepayment penalty and an increase of $659,000 in compensation and benefits as a result of certain market rate and merit increase adjustments for employees and management, additions to management and staff needed to facilitate our growing operations and service new market areas, and increased employee benefits expenses, including expenses related to the ESOP. We have also incurred additional noninterest expenses during the most recent quarter compared to the same period last year relating to doing business as a public company, including an increase in professional fees of $311,000.
First Federal is a Washington-chartered, community-based savings bank primarily serving the North Olympic Peninsula (Clallam and Jefferson counties) region of Washington through nine full-service banking offices, eight of which are located within Clallam and Jefferson counties, Washington, one in Kitsap County, and a full-service branch which opened during the quarter ended December 31, 2015, in Bellingham, Washington located in Whatcom County.
Forward-Looking Statements
Certain matters discussed in this press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to, among other things, expectations of the business environment in which we operate, projections of future performance, perceived opportunities in the market, potential future credit experience, and statements regarding our mission and vision. These forward-looking statements are based upon current management expectations and may, therefore, involve risks and uncertainties. Our actual results, performance, or achievements may differ materially from those suggested, expressed, or implied by forward-looking statements as a result of a wide variety or range of factors including, but not limited to: increased competitive pressures; changes in the interest rate environment; the credit risks of lending activities; changes in general economic conditions and conditions within the securities markets; legislative and regulatory changes; and other factors described in the Company’s latest Annual Report on Form 10-K and other filings with the Securities and Exchange Commission ("SEC")-which are available on our website at www.ourfirstfed.com and on the SEC’s website at www.sec.gov.
Any of the forward-looking statements that we make in this Press Release and in the other public statements we make may turn out to be wrong because of the inaccurate assumptions we might make, because of the factors illustrated above or because of other factors that we cannot foresee. Because of these and other uncertainties, our actual future results may be materially different from those expressed or implied in any forward-looking statements made by or on our behalf and the Company's operating and stock price performance may be negatively affected. Therefore, these factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. We do not undertake
and specifically disclaim any obligation to revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. These risks could cause our actual results for fiscal 2016 and beyond to differ materially from those expressed in any forward-looking statements by, or on behalf of, us and could negatively affect the Company’s operations and stock price performance.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data) (Unaudited)
|
Three
|
One
|
||||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
Month
|
Year
|
|||||||||||||
|
Assets
|
2015
|
2015
|
2014
|
Change
|
Change
|
||||||||||||
|
Cash and due from banks
|
$
|
14,158
|
$
|
10,171
|
$
|
11,867
|
39.2
|
%
|
19.3
|
%
|
|||||||
|
Interest-bearing deposits in banks
|
9,502
|
28,402
|
127,416
|
(66.5
|
)
|
(92.5
|
)
|
||||||||||
|
Investment securities available for sale, at fair
value
|
305,131
|
318,180
|
192,303
|
(4.1
|
)
|
58.7
|
|||||||||||
|
Investment securities held to maturity, at
amortized cost
|
58,872
|
59,873
|
49,854
|
(1.7
|
)
|
18.1
|
|||||||||||
|
Loans held for sale
|
—
|
68
|
—
|
(100.0
|
)
|
n/a
|
|||||||||||
|
Loans receivable (net of allowance for loan
losses of $6,974, $7,076 and $7,666)
|
527,144
|
497,324
|
493,536
|
6.0
|
6.8
|
||||||||||||
|
Federal Home Loan Bank (FHLB) stock, at cost
|
4,197
|
4,797
|
9,843
|
(12.5
|
)
|
(57.4
|
)
|
||||||||||
|
Accrued interest receivable
|
2,868
|
2,664
|
2,218
|
7.7
|
29.3
|
||||||||||||
|
Premises and equipment, net
|
13,563
|
12,773
|
12,073
|
6.2
|
12.3
|
||||||||||||
|
Mortgage servicing rights, net
|
1,055
|
1,122
|
1,139
|
(6.0
|
)
|
(7.4
|
)
|
||||||||||
|
Bank-owned life insurance, net
|
18,190
|
18,207
|
18,089
|
(0.1
|
)
|
0.6
|
|||||||||||
|
Real estate owned and repossessed assets
|
158
|
563
|
2,026
|
(71.9
|
)
|
(92.2
|
)
|
||||||||||
|
Prepaid expenses and other assets
|
2,964
|
3,987
|
3,787
|
(25.7
|
)
|
(21.7
|
)
|
||||||||||
|
Total assets
|
$
|
957,802
|
$
|
958,131
|
$
|
924,151
|
—
|
%
|
3.6
|
%
|
|||||||
|
Liabilities and Stockholders' Equity
|
|||||||||||||||||
|
Deposits
|
$
|
685,093
|
$
|
666,943
|
$
|
740,824
|
2.7
|
%
|
(7.5
|
)%
|
|||||||
|
Borrowings
|
75,154
|
89,924
|
90,033
|
(16.4
|
)
|
(16.5
|
)
|
||||||||||
|
Deferred tax liability, net
|
—
|
—
|
1,256
|
100.0
|
(100.0
|
)
|
|||||||||||
|
Accrued interest payable
|
210
|
243
|
264
|
(13.6
|
)
|
(20.5
|
)
|
||||||||||
|
Accrued expenses and other liabilities
|
6,943
|
7,233
|
7,955
|
(4.0
|
)
|
(12.7
|
)
|
||||||||||
|
Advances from borrowers for taxes and
insurance
|
1,027
|
1,530
|
810
|
(32.9
|
)
|
26.8
|
|||||||||||
|
Total liabilities
|
768,427
|
765,873
|
841,142
|
0.3
|
(8.6
|
)
|
|||||||||||
|
Stockholders' Equity
|
|||||||||||||||||
|
Preferred stock, $0.01 par value, authorized
5,000,000 shares, no shares issued or
outstanding
|
—
|
—
|
—
|
n/a
|
n/a
|
||||||||||||
|
Common stock, $0.01 par value, authorized
75,000,000 shares; issued and outstanding
13,100,360 shares at December 31, 2015
and September 30, 2015, and none at
December 31, 2014
|
131
|
131
|
—
|
—
|
100.0
|
||||||||||||
|
Additional paid-in capital
|
126,810
|
126,808
|
—
|
—
|
100.0
|
||||||||||||
|
Retained earnings
|
76,514
|
75,801
|
81,394
|
0.9
|
(6.0
|
)
|
|||||||||||
|
Accumulated other comprehensive income
(loss), net of tax
|
(1,551
|
)
|
1,342
|
1,615
|
(215.6
|
)
|
(196.0
|
)
|
|||||||||
|
Unearned employee stock ownership plan
(ESOP) shares
|
(12,529
|
)
|
(11,824
|
)
|
—
|
6.0
|
100.0
|
||||||||||
|
Total stockholders' equity
|
189,375
|
192,258
|
83,009
|
(1.5
|
)
|
128.1
|
|||||||||||
|
Total liabilities and stockholders' equity
|
$
|
957,802
|
$
|
958,131
|
$
|
924,151
|
—
|
%
|
3.6
|
%
|
|||||||
CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
|
Quarter Ended
|
Three
|
One
|
|||||||||||||||
|
December 31,
|
September 30,
|
December 31,
|
Month
|
Year
|
|||||||||||||
|
2015
|
2015
|
2014
|
Change
|
Change
|
|||||||||||||
|
INTEREST INCOME
|
|||||||||||||||||
|
Interest and fees on loans receivable
|
$
|
5,766
|
$
|
5,502
|
$
|
5,606
|
4.8
|
%
|
2.9
|
%
|
|||||||
|
Interest on mortgage-backed and related securities
|
1,351
|
1,202
|
757
|
12.4
|
78.5
|
||||||||||||
|
Interest on investment securities
|
776
|
789
|
330
|
(1.6
|
)
|
135.2
|
|||||||||||
|
Interest-bearing deposits and other
|
14
|
20
|
22
|
(30.0
|
)
|
(36.4
|
)
|
||||||||||
|
FHLB dividends
|
34
|
11
|
2
|
209.1
|
1,600.0
|
||||||||||||
|
Total interest income
|
7,941
|
7,524
|
6,717
|
5.5
|
18.2
|
||||||||||||
|
INTEREST EXPENSE
|
|||||||||||||||||
|
Deposits
|
510
|
501
|
382
|
1.8
|
33.5
|
||||||||||||
|
Borrowings
|
671
|
726
|
734
|
(7.6
|
)
|
(8.6
|
)
|
||||||||||
|
Total interest expense
|
1,181
|
1,227
|
1,116
|
(3.7
|
)
|
5.8
|
|||||||||||
|
Net interest income
|
6,760
|
6,297
|
5,601
|
7.4
|
20.7
|
||||||||||||
|
PROVISION FOR LOAN LOSSES
|
—
|
—
|
—
|
n/a |
|
n/a |
|
||||||||||
|
Net interest income after provision for loan losses
|
6,760
|
6,297
|
5,601
|
7.4
|
20.7
|
||||||||||||
|
NONINTEREST INCOME
|
|||||||||||||||||
|
Loan and deposit service fees
|
882
|
929
|
824
|
(5.1
|
)
|
7.0
|
|||||||||||
|
Mortgage servicing fees, net of amortization
|
57
|
58
|
60
|
(1.7
|
)
|
(5.0
|
)
|
||||||||||
|
Net gain on sale of loans
|
26
|
42
|
41
|
(38.1
|
)
|
(36.6
|
)
|
||||||||||
|
Net gain on sale of investment securities
|
856
|
—
|
—
|
100.0
|
100.0
|
||||||||||||
|
(Decrease) increase in cash surrender value of bank-owned life insurance
|
(17
|
)
|
39
|
(16
|
)
|
(143.6
|
)
|
6.3
|
|||||||||
|
Other income
|
74
|
195
|
70
|
(62.1
|
)
|
5.7
|
|||||||||||
|
Total noninterest income
|
1,878
|
1,263
|
979
|
48.7
|
91.8
|
||||||||||||
|
NONINTEREST EXPENSE
|
|||||||||||||||||
|
Compensation and benefits
|
3,708
|
3,273
|
3,049
|
13.3
|
21.6
|
||||||||||||
|
Real estate owned and repossessed assets (income) expenses, net
|
(35
|
)
|
(342
|
)
|
(146
|
)
|
(89.8
|
)
|
(76.0
|
)
|
|||||||
|
Data processing
|
653
|
655
|
622
|
(0.3
|
)
|
5.0
|
|||||||||||
|
Occupancy and equipment
|
908
|
813
|
768
|
11.7
|
18.2
|
||||||||||||
|
Supplies, postage, and telephone
|
200
|
139
|
171
|
43.9
|
17.0
|
||||||||||||
|
Regulatory assessments and state taxes
|
183
|
94
|
78
|
94.7
|
134.6
|
||||||||||||
|
Advertising
|
252
|
189
|
144
|
33.3
|
75.0
|
||||||||||||
|
Professional fees
|
439
|
460
|
128
|
(4.6
|
)
|
243.0
|
|||||||||||
|
FDIC insurance premium
|
99
|
124
|
131
|
(20.2
|
)
|
(24.4
|
)
|
||||||||||
|
FHLB prepayment penalty
|
779
|
—
|
—
|
100.0
|
100.0
|
||||||||||||
|
Other
|
497
|
510
|
497
|
(2.5
|
)
|
—
|
|||||||||||
|
Total noninterest expense
|
7,683
|
5,915
|
5,442
|
29.9
|
41.2
|
||||||||||||
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
955
|
1,645
|
1,138
|
(41.9
|
)
|
(16.1
|
)
|
||||||||||
|
PROVISION FOR INCOME TAXES
|
242
|
417
|
256
|
(42.0
|
)
|
(5.5
|
)
|
||||||||||
|
NET INCOME
|
$
|
713
|
$
|
1,228
|
$
|
882
|
(41.9
|
)%
|
(19.2
|
)%
|
|||||||
|
Basic and diluted earnings per share
|
$
|
0.06
|
$
|
0.10
|
n/a (1)
|
(40.0
|
)%
|
n/a |
|
||||||||
|
(1) Not applicable as no shares were outstanding during this period.
|
|||||||||||||||||
CONSOLIDATED INCOME STATEMENTS
(Dollars in thousands, except per share data) (Unaudited)
|
Six Months Ended
December 31,
|
Percent
|
|||||||||
|
2015
|
2014
|
Change
|
||||||||
|
INTEREST INCOME
|
||||||||||
|
Interest and fees on loans receivable
|
$
|
11,268
|
$
|
11,135
|
1.2
|
%
|
||||
|
Interest on mortgage-backed and related securities
|
2,553
|
1,533
|
66.5
|
|||||||
|
Interest on investment securities
|
1,565
|
647
|
141.9
|
|||||||
|
Interest-bearing deposits and other
|
34
|
27
|
25.9
|
|||||||
|
FHLB dividends
|
45
|
5
|
800.0
|
|||||||
|
Total interest income
|
15,465
|
13,347
|
15.9
|
|||||||
|
INTEREST EXPENSE
|
||||||||||
|
Deposits
|
1,011
|
753
|
34.3
|
|||||||
|
Borrowings
|
1,397
|
1,470
|
(5.0
|
)
|
||||||
|
Total interest expense
|
2,408
|
2,223
|
8.3
|
|||||||
|
Net interest income
|
13,057
|
11,124
|
17.4
|
|||||||
|
PROVISION FOR LOAN LOSSES
|
—
|
—
|
n/a |
|
||||||
|
Net interest income after provision for loan losses
|
13,057
|
11,124
|
17.4
|
|||||||
|
NONINTEREST INCOME
|
||||||||||
|
Loan and deposit service fees
|
1,811
|
1,659
|
9.2
|
|||||||
|
Mortgage servicing fees, net of amortization
|
115
|
133
|
(13.5
|
)
|
||||||
|
Net gain on sale of loans
|
68
|
138
|
(50.7
|
)
|
||||||
|
Net gain on sale of investment securities
|
856
|
—
|
100.0
|
|||||||
|
Increase in cash surrender value of bank-owned life insurance
|
22
|
23
|
(4.3
|
)
|
||||||
|
Other income
|
269
|
168
|
60.1
|
|||||||
|
Total noninterest income
|
3,141
|
2,121
|
48.1
|
|||||||
|
NONINTEREST EXPENSE
|
||||||||||
|
Compensation and benefits
|
6,981
|
6,089
|
14.6
|
|||||||
|
Real estate owned and repossessed assets (income) expenses, net
|
(377
|
)
|
(62
|
)
|
508.1
|
|||||
|
Data processing
|
1,308
|
1,232
|
6.2
|
|||||||
|
Occupancy and equipment
|
1,721
|
1,562
|
10.2
|
|||||||
|
Supplies, postage, and telephone
|
339
|
331
|
2.4
|
|||||||
|
Regulatory assessments and state taxes
|
277
|
163
|
69.9
|
|||||||
|
Advertising
|
441
|
272
|
62.1
|
|||||||
|
Professional fees
|
899
|
297
|
202.7
|
|||||||
|
FDIC insurance premium
|
223
|
267
|
(16.5
|
)
|
||||||
|
FHLB prepayment penalty
|
779
|
—
|
100.0
|
|||||||
|
Other
|
1,007
|
808
|
24.6
|
|||||||
|
Total noninterest expense
|
13,598
|
10,959
|
24.1
|
|||||||
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
2,600
|
2,286
|
13.7
|
|||||||
|
PROVISION FOR INCOME TAXES
|
659
|
555
|
18.7
|
|||||||
|
NET INCOME
|
$
|
1,941
|
$
|
1,731
|
12.1
|
%
|
||||
|
Basic and diluted earnings per share
|
$
|
0.16
|
n/a (1)
|
n/a |
|
|||||
|
(1) Not applicable as no shares were outstanding during this period.
|
||||||||||
Selected Financial Ratios and Other Data
(Unaudited)
|
As of or For the Quarter Ended
(unaudited)
|
||||||||||||||
|
December 31,
|
September 30,
|
June 30,
|
March 31,
|
December 31,
|
||||||||||
|
2015
|
2015
|
2015
|
2015
|
2014
|
||||||||||
|
Performance ratios: (1)
|
||||||||||||||
|
Return on average assets
|
0.30
|
%
|
0.52
|
%
|
0.32
|
%
|
(3.22
|
)%
|
0.43
|
%
|
||||
|
Return on average equity
|
1.49
|
2.56
|
1.58
|
(18.73
|
)
|
4.25
|
||||||||
|
Average interest rate spread
|
2.73
|
2.54
|
2.50
|
2.39
|
2.76
|
|||||||||
|
Net interest margin (2)
|
2.94
|
2.76
|
2.69
|
2.54
|
2.87
|
|||||||||
|
Efficiency ratio (3)
|
88.9
|
78.2
|
86.2
|
224.5
|
82.7
|
|||||||||
|
Average interest-earning assets to average interest-bearing liabilities
|
141.1
|
139.3
|
136.2
|
130.6
|
119.9
|
|||||||||
|
Asset quality ratios:
|
||||||||||||||
|
Nonperforming assets to total assets at end of period (4)
|
0.3
|
%
|
0.5
|
%
|
0.7
|
%
|
0.7
|
%
|
0.7
|
%
|
||||
|
Nonperforming loans to total gross loans (5)
|
0.4
|
0.8
|
1.0
|
0.9
|
0.8
|
|||||||||
|
Allowance for loan losses to nonperforming loans (5)
|
309.4
|
186.5
|
145.6
|
165.2
|
185.6
|
|||||||||
|
Allowance for loan losses to gross loans receivable
|
1.3
|
1.4
|
1.4
|
1.5
|
1.5
|
|||||||||
|
Net charge-offs to average outstanding loans
|
—
|
—
|
0.2
|
0.1
|
0.1
|
|||||||||
|
Capital ratios:
|
||||||||||||||
|
Equity to total assets at end of period
|
19.8
|
%
|
20.1
|
%
|
20.4
|
%
|
20.5
|
%
|
9.0
|
%
|
||||
|
Average equity to average assets
|
20.0
|
20.1
|
20.5
|
17.2
|
10.3
|
|||||||||
|
(1)
|
Performance ratios are annualized, where appropriate.
|
|
(2)
|
Net interest income divided by average interest-earning assets.
|
|
(3)
|
Total noninterest expense, including the Company's contribution to the Foundation, as a percentage of net interest income and total other noninterest income.
|
|
(4)
|
Nonperforming assets consists of nonperforming loans (which include nonaccruing loans and accruing loans more than 90 days past due), foreclosed real estate and repossessed assets.
|
|
(5)
|
Nonperforming loans consists of nonaccruing loans and accruing loans more than 90 days past due.
|