Harvard Illinois Bancorp, Inc. Announces Quarterly Earnings And Date Of Annual Meeting Of Stockholders

HARVARD, Ill., May 12, 2016 /PRNewswire/ -- Harvard Illinois Bancorp, Inc. (the "Company") HARI, the holding company for Harvard Savings Bank (the "Bank"), announced today its unaudited results of operations for the three months ended March 31, 2016.

Results of operations. The Company reported unaudited net income for the three months ended March 31, 2016 of $273,000, compared to unaudited net income of $136,000 for the three months ended March 31, 2015. Net income increased $137,000, or 100.7%, during the first quarter of 2016, compared to the first quarter of 2015. The increase in net income was due to decreases in interest expense, provision for loan losses and noninterest expense of $84,000, $102,000 and $195,000, respectively, partially offset by decreases in interest and dividend income and noninterest income of $189,000 and $55,000, respectively. The decrease in interest expense was primarily due to deposits and borrowings re-pricing at current lower rates as average interest-bearing liabilities decreased $20.1 million, and the average cost of interest-bearing liabilities decreased 14 basis points to 0.71%. The decrease in the provision for loan losses was primarily due to a decrease in nonaccrual loans of $7.4 million. The decrease in noninterest expense was primarily due to a decrease in legal and professional fees of $261,000 related to the transaction with The State Bank Group, ongoing regulatory issues, and recovery efforts with respect to the defaulted repurchase agreement purchased through Pennant Management, Inc. The decrease in interest and dividend income was primarily due to a decrease of $24.5 million in average interest-earning assets, partially offset by an increase in the average yield on interest-earning assets of 17 basis points to 4.17%. The decrease in noninterest income was primarily due to a decrease in net realized gains on loan sales of $55,000.

Stockholders' equity. Total stockholders' equity increased $312,000 to $11.6 million at March 31, 2016 from $11.3 million at December 31, 2015, primarily as a result of net income of $273,000 for the three months ended March 31, 2016. As of May 12, 2016, Harvard Illinois Bancorp, Inc. had outstanding 797,088 shares of common stock.

Non-performing assets. Non-performing assets decreased $6.5 million to $13.2 million or 9.29% as a percent of total assets at March 31, 2016, compared to $19.7 million or 12.21% as a percent of total assets at March 31, 2015. Included in non-performing assets were non-performing loans which decreased $7.3 million to $4.2 million or 4.12% as a percent of loans at March 31, 2016, compared to $11.5 million or 9.48% as a percent of loans at March 31, 2015. Non-performing assets at March 31, 2016 included $8.1 million related to the Bank's investment in the defaulted repurchase agreement purchased through Pennant Management, Inc., none of which was included in non-performing loans. At March 31, 2015, the net recognized receivable for the defaulted repurchase agreement totaled $7.5 million, net of a valuation allowance of $5.9 million recognized.

Selected Consolidated Financial and Other Data

The financial condition data at March 31, 2016 and December 31, 2015, and the operating data for the three months ended March 31, 2016 and 2015 are derived in part from the consolidated financial statements of Harvard Illinois Bancorp, Inc. and are unaudited. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the unaudited periods have been made. The selected operating data presented below are not necessarily indicative of the results that may be expected for future periods.

	At March 31,	At December 31,
	2016 (Unaudited)	2015 (Unaudited)
	(Dollars in thousands)
Financial Condition Data:

Total assets	$ 142,125	$ 143,268
Cash and cash equivalents	5,682	6,695
Other interest-bearing deposits	12,440	10,948
Securities	5,060	5,577
Loans, net	100,431	101,555
Federal Home Loan Bank stock	565	544
Deposits	121,134	120,648
Federal Home Loan Bank advances	6,104	8,216
Total stockholders' equity	11,595	11,283

	For the Three Months Ended March 31,
	2016 (Unaudited)	2015 (Unaudited)
	(Dollars in thousands)
Operating Data
Interest and dividend income	$ 1,312	$ 1,501
Interest expense	217	301
Net interest income	1,095	1,200
Provision for loan losses	(122)	(20)
Net interest income after provision for loan losses	1,217	1,220
Noninterest income:
Net realized gains (losses) on loan sales	(29)	26
Other noninterest income	168	168
Total noninterest income	139	194
Noninterest expense	1,083	1,278
Income before income taxes	273	136
Provision for income taxes	0	0
Net income	$ 273	$ 136

	At or For the Three Months Ended March 31,
	2016 (Unaudited)	2015 (Unaudited)

Performance Ratios:
Return on average assets (annualized)	0.76%	0.34%
Interest rate spread (annualized)⁽¹⁾	3.46%	3.15%
Net interest margin (annualized)⁽²⁾	3.48%	3.20%
Noninterest expense to average total assets (annualized)	3.02%	3.15%
Average interest-earning assets to average interest-bearing liabilities	103.15%	105.81%

Capital Ratios:
Total risk-based capital to risk-weighted assets⁽³⁾	13.17%	10.85%
Tier 1 risk-based capital to risk-weighted assets⁽³⁾	11.92%	9.54%
Tier 1 leverage (core) capital to adjusted tangible assets⁽³⁾	9.51%	7.47%
Equity to total assets	8.16%	6.36%
Average equity to average total assets	7.94%	6.28%

Asset Quality Ratios:
Total non-performing assets to total assets⁽⁴⁾	9.29%	12.21%
Total non-performing assets and troubled debt restructurings to total assets⁽⁴⁾	10.03%	12.61%
Total non-performing loans to total loans⁽⁵⁾	4.12%	9.48%
Total non-performing loans and troubled debt restructurings to total loans⁽⁵⁾	5.14%	10.00%
Allowance for loan losses to total non-performing loans and troubled debt restructurings ⁽⁵⁾	28.62%	65.23%
Allowance for loan losses to non-performing loans⁽⁵⁾	35.73%	68.81%
Allowance for loan losses to total loans	1.47%	6.52%
Net charge-offs (recoveries) to average total loans (annualized)	(0.50)%	0.47%


(1)	The interest rate spread represents the difference between the weighted average yield on average interest-earning assets and the weighted average cost of interest-bearing liabilities.
(2)	The net interest margin represents net interest income as a percent of average interest-earning assets.
(3)	For Harvard Savings Bank only.
(4)	Nonperforming assets consist of nonperforming loans, other real estate owned, repossessed automobiles, and $8.1 million and $7.4 million, related to the defaulted repurchase agreement reported with other assets at March 31, 2016 and 2015, respectively.
(5)	Nonperforming loans consist of nonaccrual loans and accruing loans past due 90 days or more, including $0 and $6.0 million, related to the defaulted repurchase agreement reported with loans at March 31, 2016 and 2015, respectively.

Annual Meeting

Harvard Illinois Bancorp, Inc. has set the 2016 annual meeting of stockholders for November 2, 2016. The Company currently intends to present a plan of liquidation for stockholder consideration at such meeting.

Harvard Illinois Bancorp, Inc. is a Maryland chartered stock holding company. The Company is headquartered at 58 North Ayer Street, Harvard, Illinois. The Company's operations are limited to its ownership of Harvard Savings Bank, an Illinois chartered savings bank, which operates three offices located in McHenry and Grundy Counties in Illinois. All information at December 31, 2015, and all information at and for the periods ended March 31, 2016 and 2015, have been derived from unaudited financial information.

This news release contains certain forward-looking statements within the meaning of the federal securities laws. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and experiences of the Company, are generally identified by use of the words "believe", "expect", "intend", "anticipate", "estimate", "project", or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company's market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.

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SOURCE Harvard Illinois Bancorp, Inc.

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