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Frederick County Bancorp, Inc. Reports Results for the Third Quarter 2017

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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 September 30, 2017, the Company
recorded net income of $708 thousand and diluted earnings per share of
$0.46, as compared to net income of $457 thousand and diluted earnings
per share of $0.30 recorded for the third quarter of 2016. The Company
earned $1.7 million with diluted earnings per share of $1.10 for the
nine months ended on September 30, 2017, as compared to $1.1 million in
earnings and diluted earnings per share of $0.72 for the same period in
2016.

The increase in quarterly earnings was due primarily to increases in net
interest income of $215 thousand and in total noninterest income of $301
thousand in the third quarter of 2017 as compared to the third quarter
of 2016, respectively. A provision for loan losses in the amount of $93
thousand was recorded in the third quarter of 2017, while a provision
for loan losses of $50 thousand was recognized in the same quarter of
2016. The increase in total noninterest income was due primarily to gain
on sale of loans of $311 thousand and other operating income of $150
thousand in the third quarter of 2017 as compared to $70 thousand of
loan sale gains and other operating income of $89 thousand in the third
quarter of 2016.

The increase in year-to-date earnings was due primarily to increases in
net interest income of $707 thousand and in total noninterest income of
$553 thousand in the first nine months of 2017 as compared to the same
period in 2016, respectively. The increase in total noninterest income
was due primarily to increases in gain on sale of loans of $310
thousand, in other operating income of $163 thousand and in securities
gains of $114 thousand in the first nine months of 2017 as compared to
the same period in 2016.

Earnings in 2017 are benefitting from the continued emphasis on Small
Business Administration (SBA) loans as reflected in the year on year
increases in gain on sale of loans. For two years in a row FCB has been
recognized as a top 10 SBA lender in the greater Baltimore area.

The ratio of the allowance for loan losses to total loans stood at 1.28%
and 1.05% as of September 30, 2017 and 2016, respectively, and at 1.22%
as of December 31, 2016. Total nonperforming assets stood at $6.8
million and $7.4 million at September 30, 2017 and 2016, respectively,
and at $7.4 million at December 31, 2016. The corresponding
nonperforming assets to total assets ratios were 1.72% and 1.94% as of
September 30, 2017 and 2016, respectively, and 1.96% at December 31,
2016.

The Company also reported that, as of September 30, 2017, assets stood
at $397.8 million, with total deposits of $333.4 million and gross loans
of $316.8 million, representing increases of 3.8%, 2.0%, and 5.9%,
respectively, compared to September 30, 2016. Total shareholders' equity
at September 30, 2017 was $32.8 million, an increase of $1.6 million
from December 31, 2016. The increase primarily resulted from an increase
in retained earnings of $1.5 million, an increase in accumulated other
comprehensive income of $98 thousand and an increase in additional
paid-in capital of $14 thousand, which was from the exercise of stock
options. On a per share basis, book value increased by $1.06 for 2017 to
$21.95 per share at September 30, 2017 from $20.89 per share at December
31, 2016. The dividends declared per share were $0.14 for the nine month
period ended September 30, 2017 compared to $0.21 per share the same
period in 2016. However, on October 2, 2017, the Board declared a
quarterly dividend of $0.08 per share, an increase of $0.01 per share.

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,
2017   2016 2016
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $397,767 $383,309 $378,753
Loans 316,795 299,236 306,599
Deposits 333,366 326,704 321,952
Shareholders' equity 32,774 30,964 31,161
 
Nonperforming assets:
Nonaccrual loans $5,746 $6,322 $6,172
Accruing troubled debt restructurings 386 402 405
Loans 90 days or more past due and still accruing - - --
Foreclosed properties 706     706   866  
Total nonperforming assets $6,838     $7,430   $7,443  
 
For the Three Months Ended For the Nine Months Ended
Sept. 30, Sept. 30, Sept. 30, Sept. 30,
2017   2016 2017   2016
(dollars in thousands, except for per share data) (unaudited) (unaudited) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $708     $457   $1,709     $1,108  
Total comprehensive income $653     $525   $1,807     $1,525  
 
Charge-offs $ 8 $ - $278 $236
(Recoveries) (21 )   (11 ) (237 )   (44 )
Net (recoveries) charge-offs $(13 )   $(11 ) $41     $192  
 
PER COMMON SHARE DATA:
Basic earnings per share $0.47 $0.31 $1.14 $0.75
Diluted earnings per share $0.46 $0.30 $1.10 $0.72
Basic weighted average number of shares outstanding 1,492,984 1,489,731 1,492,716 1,485,242
Diluted weighted average number of shares outstanding 1,552,714 1,543,379 1,550,744 1,541,944
Common shares outstanding 1,493,004 1,489,844 1,493,004 1,489,844 1,491,844
Dividends declared (1) $- $0.07 $0.14 $0.21
Book value per share $21.95 $20.78 $21.95 $20.78 $20.89
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.71 % 0.49 % 0.58 % 0.41 %
Return on average equity 8.67 % 5.87 % 7.10 % 4.84 %
Allowance for loan losses to total loans 1.28 % 1.05 % 1.28 % 1.05 % 1.22 %
Nonperforming assets to total assets 1.72 % 1.94 % 1.72 % 1.94 % 1.96 %
Ratio of net (recoveries) charge-offs to average loans 0.00 % 0.00 % 0.01 % 0.07 %
Common Equity Tier 1 to risk-weighted assets 8.85 % 9.05 % 8.85 % 9.05 % 8.65 %
Tier 1 capital to risk-weighted assets 10.49 % 10.82 % 10.49 % 10.82 % 10.35 %
Total capital to risk-weighted assets 11.61 % 11.75 % 11.61 % 11.75 % 11.40 %
Tier 1 capital to average assets 9.52 % 9.86 % 9.52 % 9.86 % 9.66 %
Average equity to average assets 8.14 % 8.38 % 8.10 % 8.43 %
Net interest margin 3.56 % 3.61 % 3.59 % 3.66 %
(1) Dividend of $0.08 per share was declared on October
2, 2017.
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
September 30, September 30, December 31,
    2017   2016   2016
    (unaudited)   (unaudited)   (audited)
(dollars in thousands)            
ASSETS
Cash and due from banks $ 2,837 $ 2,818 $ 2,811
Federal funds sold

 

5 1,058 1,059
Interest-bearing deposits in other banks     35,424       42,623       25,804  
Cash and cash equivalents     38,266       46,499       29,674  
Investment securities available-for-sale at fair value 22,680 19,503 24,644
Restricted stock 1,942 1,636 1,687
Loans held for sale 99 670 357
Loans 316,696 298,566 306,242
Less: Allowance for loan losses     (4,067 )     (3,133 )     (3,744 )
Net loans     312,629       295,433       302,498  
Bank premises and equipment 9,606 7,580 7,490
Bank owned life insurance 8,894 8,679 8,735
Foreclosed properties 706 706 866
Other assets     2,945       2,603       2,802  
Total assets   $ 397,767     $ 383,309     $ 378,753  
 
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Liabilities
Deposits
Noninterest-bearing deposits $ 90,332 $ 79,783 $ 83,249
Interest-bearing deposits     243,034       246,921       238,703  
Total deposits 333,366 326,704 321,952
Short-term borrowings 4,200 3,300 3,300
FHLB advances 19,700 15,000 15,000
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities     1,541       1,155       1,154  
Total liabilities     364,993       352,345       347,592  
 
Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares
authorized; 1,493,004; 1,489,844 and 1,491,844 shares issued and
outstanding, respectively

 

15

 

15

 

15

Additional paid-in capital 15,418 15,379 15,404
Retained earnings 16,790 15,245 15,289
Accumulated other comprehensive income     551       325       453  
Total shareholders' equity     32,774       30,964       31,161  
Total liabilities and shareholders' equity   $ 397,767     $ 383,309     $ 378,753  
 
       
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,
2017

 

September 30,
2016

 

September 30,
2017

 

September 30,
2016

Interest income
Interest and fees on loans $3,558 $3,371 $10,512 $ 9,856
Interest and dividends on investment securities:
Interest – taxable 100 52 295 190
Interest – tax exempt 26 33 79 118
Dividends 25 25 76 74
Interest on federal funds sold - 1 1 4
Other interest income   130   41   303     108
Total interest income   3,839   3,523   11,266     10,350
Interest expense
Interest on deposits 330 267 918 809
Interest on short-term borrowings 44 29 121 85
Interest on FHLB advances 42 28 124 84
Interest on junior subordinated debentures   46   37   130     106
Total interest expense   462   361   1,293     1,084
Net interest income 3,377 3,162 9,973 9,266
Provision for loan losses   93   50   364     250
Net interest income after provision for loan losses   3,284   3,112   9,609     9,016
Noninterest income
Securities gains - - 165 51
Gain on sale of loans 311 70 398 88
Loss on foreclosed properties - - (34 ) -
Bank owned life insurance income 53 56 159 168
Service fees 99 97 279 270
Other operating income   150   89   424     261
Total noninterest income   613   312   1,391     838
Noninterest expense
Salaries and employee benefits 1,694 1,626 5,034 4,884
Occupancy and equipment expenses 431 469 1,368 1,419
Other operating expenses   665   652   1,975     1,950
Total noninterest expense   2,790   2,747   8,377     8,253
Income before provision for income taxes 1,107 677 2,623 1,601
Provision for income taxes   399   220   914     493
Net income   $ 708   $ 457   $ 1,709     $ 1,108
Basic earnings per share   $0.47   $0.31   $1.14     $0.75
Diluted earnings per share   $0.46   $0.30   $1.10     $0.72
Basic weighted average number of shares outstanding   1,492,984   1,489,731   1,492,716     1,485,242
Diluted weighted average number of shares outstanding   1,552,714   1,543,379   1,550,744     1,541,944
Dividends declared per share (1)   $-   $0.07   $0.14     $0.21

(1) Dividend of $0.08 per share was declared on October
2, 2017.

 
 
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended
  September 30,   September 30,
(dollars in thousands)   2017   2016
Net income   $708     $457  
Changes in net unrealized (losses) gains on securities available for
sale, net of income tax benefits of $36 in 2017 and income taxes of
$44 in 2016
  (55 )   68  
Total other comprehensive (loss) income   (55 )   68  
Total comprehensive income   $653     $525  
 
    For the Nine Months Ended
September 30, September 30,
(dollars in thousands)   2017   2016
Net income   $1,709     $ 1,108  
Changes in net unrealized gains on securities available for sale,
net of income taxes of $129 in 2017 and $292 in 2016
198 448
Reclassification adjustment for (gains) realized, net of income
taxes of $65 in 2017 and $20 in 2016
  (100 )   (31 )
Total other comprehensive income   98     417  
Total comprehensive income   $1,807     $1,525  
 
 
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, 2016 1,475,929 $15 $15,184 $14,449 $ (92 ) $29,556
Comprehensive income 1,108 417 1,525
Dividends declared on common stock, $0.21 per share (312 ) (312 )
Shares issued under stock option transactions 13,915 156 156
Compensation expense from stock option transactions 11 11
Excess tax benefit for equity-based awards           28           28  
Balance, September 30, 2016   1,489,844   $15   $15,379   $15,245     $325     $30,964  
Balance January 1, 2017 1,491,844 $15 $15,404 $15,289 $453 $31,161
Comprehensive income 1,709 98 1,807
Dividends declared on common stock, $0.14 per share (208 ) (208 )
Shares issued under stock option transactions 1,160 13 13
Compensation expense from stock option transactions           1           1  
Balance, September 30, 2017   1,493,004   $15   $15,418   $16,790     $551     $32,774  
 
 
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Cash Flows (Unaudited)
    For The Nine Months Ended
    September 30,   September 30,
(dollars in thousands)   2017   2016
Cash flows from operating activities:    
Net income $ 1,709 $ 1,108

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

Depreciation and amortization 372 335
Deferred income taxes (benefits) (168 ) 247
Provision for loan losses 364 250
Securities gains (165 ) (51 )
Gain on sale of loans (398 ) (88 )
Loans originated for sale (6,979 ) (2,543 )
Proceeds from loans sold 7,377 2,631
Net premium amortization on investment securities 102 115
Loss on disposal of bank premises and equipment - 6
Bank owned life insurance income (159 ) (168 )
Loss on sale of foreclosed property 34 -
Stock-based compensation expense 1 11
Excess tax benefit from equity-based awards - (28 )
Decrease (increase) in accrued interest and other assets 26 (128 )
Increase in accrued interest and other liabilities   323     75  
Net cash provided by operating activities   2,439     1,772  
Cash flows from investing activities:
Purchases of investment securities available for sale (700 ) -
Proceeds from sales of investment securities available for sale 315 1,790
Proceeds from maturities, prepayments and calls

investment securities available for sale

2,573 3,695
Purchase of restricted stock (255 ) (7 )
Net increase in loans (10,237 ) (20,467 )
Purchases of bank premises and equipment (2,488 ) (1,476 )
Proceeds from sale of foreclosed property   126     -  
Net cash used in investing activities   (10,666 )   (16,465 )
Cash flows from financing activities:
Net increase in NOW, money market accounts, savings

accounts and noninterest-bearing deposits

19,854 24,012
Net (decrease) increase in time deposits (8,440 ) 7,060
Net increase in short-term borrowings 900 -
Increase in FHLB advances 4,700 -
Proceeds from issuance of common stock 13 156
Dividends paid on common stock (208 ) (312 )
Excess tax benefit from equity-based awards   -     28  
Net cash provided by financing activities   16,819     30,944  
Net increase in cash and cash equivalents 8,592 16,251
Cash and cash equivalents – beginning of period   29,674     30,248  
Cash and cash equivalents – end of period   $38,266     $46,499  
Supplemental cash flow disclosures:
Interest paid   $1,271     $1,084  
Income taxes paid   $899     $599  
 

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,   2017   2016

 

(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 $ - - $ 1,058 $ 1 0.37
Interest bearing deposits in other banks 42,918 130 1.20 34,935 41 0.47
Investment securities (1):
Taxable 21,023 125 2.36 17,502 77 1.75
Tax-exempt (2) 3,796 39 4.08 4,323 50 4.59
Loans (3)     312,604     3,582   4.55       294,585     3,398   4.58  
Total interest-earning assets     380,346     3,876   4.04       352,403     3,567   4.02  
Noninterest-earning assets     20,982   19,087
Total assets   $ 401,328 $ 371,490
 
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts $ 41,779 23 0.22 $ 34,285 16 0.19
Savings accounts 12,651 1 0.03 11,707 - -
Money market accounts 103,461 73 0.28 96,498 70 0.29
Certificates of deposit 91,139 233 1.01 94,524 181 0.76
Short-term borrowings 4,200 44 4.16 3,300 29 3.49
FHLB advances 14,196 42 1.17 15,000 28 0.74
Junior subordinated debentures     6,186     46   2.95       6,186     37   2.37  
Total interest-bearing liabilities     273,612     462   0.67       261,500     361   0.55  
Noninterest-bearing deposits 93,643 77,899
Noninterest-bearing liabilities   1,411   964
Total liabilities     368,666   340,363
Total shareholders' equity     32,662   31,127
Total liabilities and shareholders'

equity

 

$

401,328

$ 371,490
Net interest income       $ 3,414     $ 3,206
Net interest spread 3.37 % 3.47 %
Net interest margin 3.56 % 3.61 %
 
(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 34%. Taxable-equivalent adjustments of $13
thousand in 2017 and $17 thousand in 2016 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 34%. Taxable-equivalent adjustments of $24
thousand in 2017 and $27 thousand in 2016 are included in the
calculation of the loan interest income. Net loan origination income
(expense) in interest income totaled $21 thousand in 2017 and $58
thousand in 2016.
 
   
For the Nine Months Ended September 30,   2017   2016

 

(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 $ 193 $ 1 0.69 $ 1,066 $ 4 0.50
Interest bearing deposits in other banks 40,089 302 1.01 31,089 108 0.46
Investment securities (1):
Taxable 21,641 371 2.29 18,781 264 1.88
Tax-exempt (2) 3,800 120 4.22 5,222 179 4.58
Loans (3)     309,969     10,586   4.57       287,399     9,940   4.62  
Total interest-earning assets     375,692     11,380   4.05       343,557     10,495   4.08  
Noninterest-earning assets     20,548   18,588
Total assets   $ 396,240 $ 362,145
 
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts $ 37,825 55 0.19 $ 30,667 39 0.17
Savings accounts 12,345 3 0.03 11,005 2 0.02
Money market accounts 102,042 217 0.28 96,487 207 0.29
Certificates of deposit 93,221 643 0.92 93,858 561 0.80
Short-term borrowings 4,189 121 3.86 3,300 85 3.44
FHLB advances 16,392 124 1.01 15,000 84 0.75
Junior subordinated debentures     6,186     130   2.81       6,186     106   2.29  
Total interest-bearing liabilities     272,200     1,293   0.64       256,503     1,084   0.57  
Noninterest-bearing deposits 90,587 74,279
Noninterest-bearing liabilities   1,343   832
Total liabilities     364,130   331,614
Total shareholders' equity     32,110   30,531
Total liabilities and shareholders'

equity

  $ 396,240 $ 362,145
Net interest income       $ 10,087     $ 9,411
Net interest spread 3.41 % 3.51 %
Net interest margin 3.59 % 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 34%. Taxable-equivalent adjustments of $41
thousand in 2017 and $61 thousand in 2016 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 34%. Taxable-equivalent adjustments of $74
thousand in 2017 and $84 thousand in 2016 are included in the
calculation of the loan interest income. Net loan origination income
(expense) in interest income totaled $48 thousand in 2017 and $57
thousand in 2016.
 

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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