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

FREDERICK, Md.--(BUSINESS WIRE)--

Frederick County Bancorp, Inc. (the “Company”) (OTC Pink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended March 31, 2019, the Company recorded net income of $645 thousand and diluted earnings per share of $0.41, as compared to net income of $849 thousand and diluted earnings per share of $0.55 recorded for the first quarter of 2018.

The decrease in quarterly earnings of $204 thousand for March 31, 2019 as compared to March 31, 2018 was largely due to a negative provision for loan losses realized in the first quarter of 2018. The negative provision for loan losses resulted in a positive earnings impact of $145 thousand for the first quarter of 2018. Net interest income was down $52 thousand for the first three months of 2019 as compared to the first three months of 2018, offset by a 54% or $326 thousand increase in interest expense due to rising funding costs. In addition, there was an increase in total noninterest expense of $105 thousand in the first quarter of 2019 as compared to the same period in 2018, which was primarily due to an increase in salary and benefit expense of $78 thousand.

Net loan recoveries for the quarters ended March 31, 2019 and 2018 totaled $8 thousand and $514 thousand, respectively. There were no charge-offs in the first quarter of 2019 compared to $26 thousand in 2018, which were offset by recoveries of $8 thousand and $540 thousand for the periods ended March 31, 2019 and 2018, respectively.

The ratio of the allowance for loan losses to total loans stood at 1.00%, 1.12% and 1.01% as of March 31, 2019 and 2018 and December 31, 2018, respectively. Nonperforming assets stood at $2.1 million, $4.7 million and $2.1 million as of March 31, 2019 and 2018 and December 31, 2018, respectively. The corresponding nonperforming assets to total assets ratios were 0.57%, 1.13% and 0.50% as of March 31, 2019 and 2018 and December 31, 2018, respectively.

The Company also reported that, as of March 31, 2019, assets stood at $442.4 million, with total deposits of $372.3 million and gross loans of $341.7 million, representing increases of 5.0%, 4.9%, and 7.2%, respectively, compared to March 31, 2018. Total shareholders’ equity at March 31, 2019 was $36.2 million, an increase of $650 thousand from December 31, 2018. The increase in total shareholders’ equity resulted primarily from earnings of $645 thousand in the first quarter, offset by dividends of $123 thousand and an increase in the fair value of available-for-sale securities of $129 thousand from December 31, 2018. On a per share basis, book value increased by 42 cents for 2019 to $23.48 per share at March 31, 2019 from $23.06 per share at December 31, 2018. The dividend declared per share was $0.08 for both the three month period ended March 31, 2019 and 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.

           

March 31,

March 31, December 31,
2019     2018 2018
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $ 442,421 $ 421,556 $ 418,588
Loans 341,729 325,790 339,461
Deposits 372,349 347,221 352,373
Shareholders’ equity 36,205 33,072 35,555
 
Nonperforming assets:
Nonaccrual loans $ 492 $ 3,699 $ 492
Accruing troubled debt restructurings 1,198 341 1,254
Loans 90 days or more past due and still accruing - - -
Foreclosed properties   360       706   360
Total nonperforming assets $ 2,050     $ 4,746 $ 2,106
 
For the Three Months Ended
March 31, March 31,
2019     2018
(dollars in thousands, except for per share data) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $ 645     $ 849
Total comprehensive income $ 773     $ 569
 
Charge-offs $ - $ 26
(Recoveries)   (8)       (540)
Net (recoveries) charge-offs $ (8)     $ (514)
 
PER COMMON SHARE DATA:
Basic earnings per share $ 0.42 $ 0.57
Diluted earnings per share $ 0.41 $ 0.55
Basic weighted average number of shares outstanding

1,541,737

1,493,080

Diluted weighted average number of shares outstanding

1,580,070

1,556,723

Common shares outstanding 1,541,737 1,493,104 1,541,737
Dividends declared $ 0.08 $ 0.08
Book value per share $ 23.48 $ 22.15 $ 23.06
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.60% 0.82%
Return on average equity 7.14% 10.27%
Allowance for loan losses to total loans 1.00% 1.12% 1.01%
Nonperforming assets to total assets .46% 1.13% .50%
Ratio of net charge-offs to average loans 0.00% (0.16)%
Common Equity Tier 1 to risk-weighted assets 9.44% 9.02% 9.44%
Tier 1 capital to risk-weighted assets 11.02% 10.64% 11.02%
Total capital to risk-weighted assets 11.93% 11.62% 11.93%
Tier 1 capital to average assets 9.83% 9.58% 9.83%
Average equity to average assets 8.47% 8.03%
Net interest margin 3.50% 3.66%
 
           
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
 
March 31, March 31, December 31,
      2019     2018     2018
      (unaudited)     (unaudited)     (audited)
(dollars in thousands)                  
ASSETS
Cash and due from banks $ 2,868 $ 2,998 $ 2,778
Federal funds sold 5 5 5
Interest-bearing deposits in other banks       47,312       48,887       33,342
Cash and cash equivalents       50,185       51,890       36,125
Investment securities available-for-sale at fair value 26,055 23,521 21,558
Restricted stock 1,992 2,395 1,979
Loans held for sale 472 - 268
Loans 341,729 325,790 339,461
Less: Allowance for loan losses       (3,434)       (3,633)       (3,426)
Net loans       338,295       322,157       336,035
Bank premises and equipment 12,052 9,450 9,280
Bank owned life insurance 10,694 8,994 10,628
Foreclosed properties 360 706 360
Other assets       2,316       2,443       2,355
Total assets     $ 442,421     $ 421,556     $ 418,588
 
LIABILITIES AND SHAREHOLDERS' EQUITY                  
                   
Liabilities
Deposits
Noninterest-bearing deposits $ 107,171 $ 90,082 $ 100,200
Interest-bearing deposits       265,178       257,139       252,173
Total deposits 372,349 347,221 352,373
Short-term borrowings 3,450 4,200 3,450
FHLB advances 20,000 29,800 20,000
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities       4,231       1,077       1,024
Total liabilities       406,216       388,484       383,033
 
Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,541,737; 1,493,104 and 1,541,737 shares issued and outstanding, respectively

15

15

15

Additional paid-in capital 16,031 15,398 16,031
Retained earnings 20,316 18,079 19,794
Accumulated other comprehensive loss       (157)       (420)       (285)
Total shareholders' equity       36,205       33,072       35,555
Total liabilities and shareholders' equity     $ 442,421     $ 421,556     $ 418,588
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
 
     

For the Three Months Ended

(dollars in thousands, except per share amounts)    

March 31,
2019

   

March 31,
2018

Interest income
Interest and fees on loans $ 3,994 $ 3,791
Interest and dividends on investment securities:
Interest – taxable 126 120
Interest – tax exempt 24 23
Dividends 31 40
Other interest income       212       139
Total interest income       4,387       4,113
Interest expense
Interest on deposits 710 389
Interest on short-term borrowings 45 45
Interest on FHLB advances 110 122
Interest on junior subordinated debentures       68       51
Total interest expense       933       607
Net interest income 3,454 3,506
Provision for loan losses       -       (145)
Net interest income after provision for loan losses       3,454       3,651
Noninterest income
Change in fair value of equity securities 7 6
Gain on sale of loans 58 81
Gain on foreclosed properties - 12
Bank owned life insurance income 66 48
Service fees 77 94
Other operating income       169       123
Total noninterest income       377       364
Noninterest expense
Salaries and employee benefits 1,765 1,687
Occupancy and equipment expenses 472 446
Other operating expenses       727       726
Total noninterest expense       2,964       2,859
Income before provision for income taxes 867 1,156
Provision for income taxes       222       307
Net income     $ 645     $ 849
Basic earnings per share     $ 0.42     $ 0.57
Diluted earnings per share     $ 0.41     $ 0.55
Basic weighted average number of shares outstanding       1,541,737       1,493,080
Diluted weighted average number of shares outstanding       1,580,070       1,556,723
Dividends declared per share     $ 0.08     $ 0.08
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
 
      For the Three Months Ended
(dollars in thousands)    

March 31,
2019

   

March 31,
2018

Net income $ 645 $ 849
Changes in net unrealized gains (losses) on securities available for sale, net of income tax benefits of $49 in 2019 and income benefits of $106 in 2018       128       (280)
Total comprehensive income     $ 773     $ 569
 
 
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

                       
January 1, 2018 1,493,044 $ 15 $ 15,397 $ 16,829 $ 380 $ 32,621
Comprehensive income - - - 849 (280) 569
Cumulative change in accounting principle - - - 520 (520) -
Dividends declared on common stock, $0.08 per share - - -

(119)

- (119)
Shares issued under stock option transactions     60             1                   1
Balance, March 31, 2018     1,493,104     $ 15     $ 15,398     $ 18,079     $ (420)     $ 33,072
January 1, 2019 1,541,737 $ 15 $ 16,031 $ 19,794 $ (285) $ 35,555
Comprehensive income - - - 645 128 773
Dividends declared on common stock, $0.08 per share     -       -       -       (123)       -       (123)
Balance, March 31, 2019     1,541,737     $ 15     $ 16,031     $ 20,316     $ (157)     $ 36,205
 
 
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
 
      For The Three Months Ended
      March 31,     March 31,
(dollars in thousands)     2019     2018
Cash flows from operating activities:        
Net income $ 645 $ 849

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

Depreciation and amortization 122 124
Deferred income taxes 7 35
Provision (recoveries) provision for loan losses - (145)
Change in fair value of equity securities (7) (6)
Securities gains (58) (81)
Loans originated for sale (3,225) (1,123)
Proceeds from loans sold 3,283 1,204
Net premium amortization on investment securities 24 33
Bank owned life insurance income (66) (48)
Gain on foreclosed property - (12)
(Increase)/decrease in accrued interest and other assets (18) 166
Increase in accrued interest and other liabilities       327       137
Net cash provided by operating activities       1,034       1,133
Cash flows from investing activities:
Purchase of investment securities available for sale (4,925) -

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

589 810
Purchase of restricted stock (13) (28)
Net increase in loans (2,464) (3,120)
Purchases of bank premises and equipment (14) (32)
Proceeds from sale of foreclosed properties       -       570
Net cash used in investing activities       (6,827)       (1,800)
Cash flows from financing activities:

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

10,729 3,108
Net increase in time deposits 9,247 12,108
Proceeds from FHLB advances - 100
Proceeds from issuance of common stock - 1
Dividends paid on common stock       (123)       (119)
Net cash provided by financing activities       19,853       15,198
Net increase in cash and cash equivalents 14,060 14,531
Cash and cash equivalents – beginning of period       36,125       37,359
Cash and cash equivalents – end of period     $ 50,185     $ 51,890
Supplemental cash flow disclosures:            
Interest paid     $ 950     $ 593
Supplemental noncash disclosures:            
Right of use assets - operating leases     $ 2,923     $ -
Lease liability arising from right of use assets - operating leases     $ 3,013     $ -
 

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

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

       
For the Three Months Ended March 31,     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 37,760 212 2.28 38,727 139 1.46
Investment securities (1):
Taxable 20,540 157 3.10 23,158 160 2.80
Tax-exempt (2) 3,456 30 3.52 3,340 29 3.52
Loans (3)       341,032       4,015     4.77       325,141       3,803     4.74
Total interest-earning assets       402,793       4,414     4.44       390,371       4,131     4.29
Noninterest-earning assets       23,878   21,719
Total assets     $ 426,671 $ 412,090
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 47,266 $ 83 0.71 $ 42,298 $ 25 0.24
Savings accounts 15,173 1 0.03 13,537 1 0.03
Money market accounts 92,486 177 0.78 97,570 67 0.28
Certificates of deposit 100,932 449 1.80 94,501 296 1.27
Short-term borrowings 3,450 45 4.35 4,200 45 4.35
FHLB advances 19,944 110 2.24 29,729 122 1.66
Junior subordinated debentures       6,186       68     4.46       6,186       51     3.34
Total interest-bearing liabilities       285,437       933     1.33       288,021       607     0.85
Noninterest-bearing deposits 102,179 90,144
Noninterest-bearing liabilities   2,934   845
Total liabilities       390,550   379,010
Total shareholders’ equity       36,121   33,080

Total liabilities and shareholders’ equity

    $ 426,671       $ 412,090      
Net interest income           $ 3,481       $ 3,524
Net interest spread 3.11% 3.44%
Net interest margin 3.50% 3.66%
 
(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 $6 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 $21 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 $(6) thousand in 2019 and $(12) 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.

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