Market Overview

Frederick County Bancorp, Inc. Reports Results for the Second Quarter 2018

Share:

Frederick County Bancorp, Inc. (the "Company") (OTCPink Marketplace:
FCBI), the parent company for Frederick County Bank ("FCB"), announced
today that, for the quarter ended June 30, 2018, the Company recorded
net income of $864 thousand and diluted earnings per share of $0.57, as
compared to net income of $634 thousand and diluted earnings per share
of $0.41 recorded for the second quarter of 2017. The Company earned
$1.7 million with diluted earnings per share of $1.09 for the six months
ended on June 30, 2018, as compared to $1.0 million in earnings and
diluted earnings per share of $0.65 for the same period in 2017.

The increase in quarterly earnings was due primarily to an increase in
net interest income of $637 thousand in the second quarter of 2018 as
compared to the second quarter of 2017. In addition, a negative
provision for loan losses of $367 thousand was recognized in 2018
compared to a provision of $93 thousand in 2017. Securities gains of $1
thousand were recognized in the second quarter of 2018 compared to $165
thousand for the same period in 2017. An increase in total noninterest
expense of $321 thousand which was due primarily to a provision for
foreclosed properties of $346 thousand in the second quarter of 2018
compared to no provision for foreclosed properties in the same period in
2017.

The increase in year-to-date earnings was due primarily to an increase
in net interest income after provision for loan losses of $1.3 million
in the first half of 2018 as compared to the first half of 2017,
respectively. In addition, a negative provision for loan losses of $512
thousand was recognized in 2018 compared to a provision of $271 thousand
in 2017. Securities gains of $1 thousand were recognized in 2018
compared to $165 thousand in 2017. An increase in total noninterest
expense of $453 thousand which was due primarily to a provision for
foreclosed properties of $346 thousand in the in 2018 compared to no
provision for foreclosed properties in 2017.

The ratio of the allowance for loan losses to total loans stood at 1.02%
and 1.28% as of June 30, 2018 and 2017, respectively, and at 1.01% as of
December 31, 2017. Total nonperforming assets stood at $2.9 million and
$7.1 million at June 30, 2018 and 2017, respectively, and at $5.4
million at December 31, 2017. The corresponding nonperforming assets to
total assets ratios were 0.67% and 1.76% as of June 30, 2018 and 2017,
respectively, and 1.32% at December 31, 2017.

The Company also reported that, as of June 30, 2018, assets stood at
$424.8 million, with total deposits of $354.9 million and gross loans of
$326.3 million, representing increases of 4.5%, 2.0%, and 5.5%,
respectively, compared to June 30, 2017. Total shareholders' equity at
June 30, 2018 was $34.3 million, an increase of $514 thousand from
December 31, 2017. The increase primarily resulted from earnings of $1.7
million, offset by dividends of $271 thousand, an increase in additional
paid-in capital of $514 thousand, which was from the exercise of stock
options, and a decline in the fair value of available-for-sale
securities of $295 thousand from December 31, 2017. On a per share
basis, book value increased by $0.54 for 2018 to $22.39 per share at
June 30, 2018 from $21.85 per share at December 31, 2017. The dividends
declared per share increased to $0.18 per share for the six month period
ended June 30, 2018 as compared to $0.14 for the same period in 2017. A
quarterly cash dividend was declared on the Company's common stock of
$0.08 per share, plus a special cash dividend of $0.02 per share for the
second quarter of 2018, as compared to $0.07 per share for the same
period in 2017.

Frederick County Bank is headquartered in Frederick, Maryland, and
conducts full service commercial banking services through five bank
centers located in Frederick County, Maryland.

         
June 30, June 30, December 31,
2018   2017 2017
(dollars in thousands) (unaudited) (unaudited) (audited)
Total assets $424,780 $406,691 $405,796
Loans 326,344 309,330 322,156
Deposits 354,892 347,918 332,005
Shareholders' equity 34,282 32,119 32,621
 
Nonperforming assets:
Nonaccrual loans $1,84 $6,050 $3,756
Accruing troubled debt restructurings 1,208 386 345
Loans 90 days or more past due and still accruing

-

-

-

Foreclosed properties 360   706 1,264
Total nonperforming assets $2,852   $7,142 $5,365
 
For the Three Months Ended For the Six Months Ended
June 30, June 30, June 30, June 30,
2018   2017 2018   2017
(dollars in thousands, except for per share data) (unaudited) (unaudited) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $864   $634 $1,713   $1,001
Total comprehensive income $848   $695 $1,418   $1,153
 
Charge-offs $ - $ 3 $ 26 $ 270
(Recoveries) (66)   (49) (606)   (216)
Net (recoveries) charge-offs $(66)   $(46) $(580)   $ 54
 
PER COMMON SHARE DATA:
Basic earnings per share $0.57 $0.42 $1.14 $0.67
Diluted earnings per share $0.55 $0.41 $1.09 $0.65
Basic weighted average number of shares outstanding 1,520,922 1,492,874 1,507,078 1,492,579
Diluted weighted average number of shares outstanding 1,573,857 1,550,963 1,570,014 1,549,680
Common shares outstanding 1,530,887 1,492,964 1,530,887 1,492,964 1,493,044
Dividends declared $0.10 $0.07 $0.18 $0.14
Book value per share $22.39 $21.51 $22.39 $21.51 $21.85
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 0.82% 0.63% 0.82% 0.51%
Return on average equity 10.16% 7.91% 10.21% 6.29%
Allowance for loan losses to total loans 1.02% 1.28% 1.02% 1.28% 1.01%
Nonperforming assets to total assets 0.67% 1.76% 0.67% 1.76% 1.32%
Ratio of net (recoveries) charge-offs to average loans (0.02)% (0.01)% (0.18)% 0.02%
Common Equity Tier 1 to risk-weighted assets 9.57% 8.86% 9.57% 8.86% 8.72%
Tier 1 capital to risk-weighted assets 11.23% 10.54% 11.23% 10.54% 10.35%
Total capital to risk-weighted assets 12.15% 11.65% 12.15% 11.65% 11.23%
Tier 1 capital to average assets 9.62% 9.33% 9.62% 9.33% 9.65%
Average equity to average assets 8.04% 7.95% 8.03% 8.09%
Net interest margin 3.62% 3.64% 3.62% 3.60%
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
June 30, June 30, December 31,
    2018   2017   2017
    (unaudited)   (unaudited)   (audited)
(dollars in thousands)            
ASSETS
Cash and due from banks $ 2,649 $ 2,541 $ 2,726
Federal funds sold 5 5 5
Interest-bearing deposits in other banks   52,768   52,127   34,628
Cash and cash equivalents   55,422   54,673   37,359
Investment securities available-for-sale at fair value 23,021 22,894 24,745
Restricted stock 2,187 1,733 2,367
Loans 326,344 309,330 322,156
Less: Allowance for loan losses   (3,333)   (3,961)   (3,265)
Net loans   323,011   305,369   318,891
Bank premises and equipment 9,346 9,653 9,542
Bank owned life insurance 9,047 8,841 8,946
Foreclosed properties 360 706 1,264
Other assets   2,386   2,822   2,682
Total assets   $424,780   $406,691   $405,796
 
LIABILITIES AND SHAREHOLDERS' EQUITY            
             
Liabilities
Deposits
Noninterest-bearing deposits $ 98,501 $ 92,885 $ 89,616
Interest-bearing deposits   256,391   255,033   242,389
Total deposits 354,892 347,918 332,005
Short-term borrowings 3,450 4,200 4,200
FHLB advances 24,900 14,800 29,700
Junior subordinated debentures 6,186 6,186 6,186
Accrued interest and other liabilities   1,070   1,468   1,084
Total liabilities   390,498   374,572   373,175
 
Shareholders' Equity

Common stock, per share par value $0.01; 10,000,000 shares
authorized; 1,530,887; 1,492,964 and 1,493,044 shares issued and
outstanding, respectively

 

15

 

15

15
Additional paid-in capital 15,911 15,417 15,397
Retained earnings 18,791 16,082 16,829
Accumulated other comprehensive (loss) income   (435)   605   380
Total shareholders' equity   34,282   32,119   32,621
Total liabilities and shareholders' equity   $424,780   $406,691   $405,796
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
 
   

For the Three Months Ended

 

For the Six Months Ended

(dollars in thousands, except per share amounts)  

June 30,
2018

 

June 30,
2017

 

June 30,
2018

 

June 30,
2017

Interest income
Interest and fees on loans $3,837 $3,571 $7,628 $6,954
Interest and dividends on investment securities:
Interest – taxable 124 95 244 195
Interest – tax exempt 24 27 47 53
Dividends 39 26 79 51
Interest on federal funds sold -

-

- 1
Other interest income   229   120   368   173
Total interest income   4,253   3,839   8,366   7,427
Interest expense
Interest on deposits 436 307 825 588
Interest on short-term borrowings 51 42 96 77
Interest on FHLB advances 133 49 255 82
Interest on junior subordinated debentures   59   44   110   84
Total interest expense   679   442   1,286   831
Net interest income 3,574 3,397 7,080 6,596
Provision for loan (recoveries) losses   (367)   93   (512)   271
Net interest income after provision for loan (recoveries) losses   3,941   3,304   7,592   6,325
Noninterest income
Securities gains 1 165 1 165
Change in fair value of equity securities 28 - 34 -
Gain on sale of loans 85 49 166 87
Gain (loss) on foreclosed properties - - 12 (34)
Bank owned life insurance income 53 53 101 106
Service fees 97 93 191 180
Other operating income   149   169   272   274
Total noninterest income   413   529   777   778
Noninterest expense
Salaries and employee benefits 1,717 1,647 3,404 3,340
Occupancy and equipment expenses 464 479 910 937
Other operating expenses   1,000   734   1,726   1,310
Total noninterest expense   3,181   2,860   6,040   5,587
Income before provision for income taxes 1,173 973 2,329 1,516
Provision for income taxes   309   339   616   515
Net income   $ 864   $ 634   $ 1,713   $1,001
Basic earnings per share   $0.57   $0.42   $1.14   $0.67
Diluted earnings per share   $0.55   $0.41   $1.09   $0.65
Basic weighted average number of shares outstanding   1,520,922   1,492,874   1,507,078   1,492,579
Diluted weighted average number of shares outstanding   1,573,857   1,550,963   1,570,014   1,549,680
Dividends declared per share   $0.10   $0.07   $0.18   $0.14
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended
(dollars in thousands)  

June 30,
2018

 

June 30,
2017

Net income   $864   $634
Changes in net unrealized (losses) gains on securities available for
sale, net of income tax benefits of $5 in 2018 and income taxes of
$105 in 2017
(15) 161

Reclassification adjustment for (gains) realized, net of income
taxes of $0 in 2018 and $65 in 2017

  (1)   (100)
Total other comprehensive (loss) income   (16)   61
Total comprehensive income   $848   $695
 
    For the Six Months Ended
(dollars in thousands)  

June 30,
2018

 

June 30,
2017

Net income   $1,713   $ 1,001
Changes in net unrealized (losses) gains on securities available for
sale, net of income tax benefits of $112 in 2018 and income taxes of
$165 in 2017
(294) 252

Reclassification adjustment for (gains) realized, net of income
taxes of $0 in 2018 and $65 in 2017

  (1)   (100)
Total other comprehensive (loss) income   (295)   152
Total comprehensive income   $1,418   $1,153
 
 
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, 2017 1,491,844 $15 $15,404 $15,289 $ 453 $31,161
Comprehensive income 1,001 152 1,153
Dividends declared on common stock, $0.14 per share (208) (208)
Shares issued under stock option transactions 1,120 12 12
Compensation expense from stock option transactions           1           1
Balance, June 30, 2017   1,492,964   $15   $15,417   $16,082   $605   $32,119
Balance January 1, 2018 1,493,044 $15 $15,397 $16,829 $380 $32,621
Comprehensive income 1,713 (295) 1,418
Cumulative change in accounting principle 520 (520) -
Dividends declared on common stock, $0.18 per share (271) (271)
Shares issued under stock option transactions   37,843       514           514
Balance, June 30, 2018   1,530,887   $15   $15,911   $18,791   $(435)   $34,282
 
       
Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

 
      For The Six Months Ended
      June 30,       June 30,  
(dollars in thousands)     2018       2017  
Cash flows from operating activities:
Net income $ 1,713 $ 1,001

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

Depreciation and amortization 247 245
Deferred income taxes (benefits) 186 (103 )
(Recoveries) provision for loan losses (512 ) 271
Securities gains (1 ) (165 )
Change in fair value of equity securities (34 ) -
Gain on sale of loans (166 ) (87 )
Loans originated for sale (3,853 ) (3,193 )
Proceeds from loans sold 4,019 3,280
Net premium amortization on investment securities 62 70
Bank owned life insurance income (101 ) (106 )
(Gain) loss on sale of foreclosed property (12 ) 34
Stock-based compensation expense - 1
Provision for foreclosed properties 346 -
Decrease in accrued interest and other assets 79 83
Increase in accrued interest and other liabilities       130         215  
Net cash provided by operating activities       2,103         1,546  
Cash flows from investing activities:
Purchases of investment securities available for sale (1,231 ) -
Proceeds from sales of investment securities available for sale 858 315

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

1,662 1,781
Redemption (purchase) of restricted stock 180 (46 )
Net increase in loans (3,608 ) (2,785 )
Purchases of bank premises and equipment (51 ) (2,408 )
Proceeds from sale of foreclosed property       570         126  
Net cash used in investing activities       (1,620 )       (3,017 )
Cash flows from financing activities:

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

9,467 26,817
Net increase (decrease) increase in time deposits 13,420 (851 )
Net (decrease) increase in short-term borrowings (750 ) 900
Decrease in FHLB advances (4,800 ) (200 )
Proceeds from issuance of common stock 514 12
Dividends paid on common stock       (271 )       (208 )
Net cash provided by financing activities       17,580         26,470  
Net increase in cash and cash equivalents 18,063 24,999
Cash and cash equivalents – beginning of period       37,359         29,674  
Cash and cash equivalents – end of period     $ 55,422       $ 54,673  
Supplemental cash flow disclosures:
Interest paid     $ 1,271       $ 822  
Income taxes paid     $ 125       $ 469  
 
 

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 June 30,     2018     2017

 

(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 $ - - $ 42 $ -- --
Interest bearing deposits in other banks 54,200 229 1.71 47,934 120 1.02
Investment securities (1):
Taxable 21,795 163 3.03 21,678 121 2.26
Tax-exempt (2) 3,336 30 3.65 3,800 41 4.38
Loans (3)       323,027       3,849     4.83         308,878       3,595     4.72  
Total interest-earning assets       402,363       4,271     4.30         382,332       3,877     4.11  
Noninterest-earning assets       20,721   20,891
Total assets     $ 423,084 $ 403,223
 
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts $ 45,222 30 0.27 $ 37,549 18 0.19
Savings accounts 14,101 1 0.03 12,493 1 0.03
Money market accounts 98,430 68 0.28 102,047 74 0.29
Certificates of deposit 98,939 337 1.38 94,578 214 0.92
Short-term borrowings 4,109 51 5.03 4,320 42 3.94
FHLB advances 26,462 133 2.04 18,591 49 1.07
Junior subordinated debentures       6,186       59     3.87         6,186       44     2.82  
Total interest-bearing liabilities       293,449       679     0.94         275,764       442     0.65  
Noninterest-bearing deposits 94,793 93,918
Noninterest-bearing liabilities   839   1,471
Total liabilities       389,081   371,153
Total shareholders' equity       34,003   32,070

Total liabilities and shareholders' equity

    $ 423,084 $ 403,223
Net interest income             $ 3,592         $ 3,435
Net interest spread 3.37 % 3.46 %
Net interest margin 3.62 % 3.64 %
 

(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% for 2018 and 34% for 2017. Taxable-equivalent
adjustments of $6 thousand in 2018 and $14 thousand in 2017 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% for 2018 and 34% for 2017. Taxable-equivalent
adjustments of $12 thousand in 2018 and $24 thousand in 2017 are
included in the calculation of the loan interest income. Net loan
origination income (expense) in interest income totaled $3 thousand
in 2018 and $17 thousand in 2017.
 
                       
For the Nine Months Ended June 30,     2018     2017

 

(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 $ - - $ 289 $ 1 0.70
Interest bearing deposits in other banks 46,507 368 1.60 38,652 173 0.90
Investment securities (1):
Taxable 22,474 323 2.90 21,956 246 2.26
Tax-exempt (2) 3,337 59 3.57 3,802 80 4.24
Loans (3)       324,079       7,651     4.76         308,629       7,003     4.58  
Total interest-earning assets       396,402       8,401     4.27         373,328       7,503     4.05  
Noninterest-earning assets       21,216   20,326
Total assets     $ 417,618 $ 393,654
 
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts $ 43,768 55 0.25 $ 35,815 32 0.18
Savings accounts 13,821 2 0.03 12,189 2 0.03
Money market accounts 98,002 135 0.28 101,321 144 0.29
Certificates of deposit 96,733 633 1.32 94,282 410 0.88
Short-term borrowings 4,154 96 4.66 4,183 77 3.71
FHLB advances 28,086 255 1.83 17,508 82 0.94
Junior subordinated debentures       6,186       110     3.59         6,186       84     2.74  
Total interest-bearing liabilities       290,750       1,286     0.89         271,484       831     0.62  
Noninterest-bearing deposits 92,481 89,034
Noninterest-bearing liabilities   843   1,307
Total liabilities       384,074   361,825
Total shareholders' equity       33,544   31,829

Total liabilities and shareholders' equity

    $ 417,618 $ 393,654
Net interest income             $ 7,115         $ 6,672
Net interest spread 3.38 % 3.43 %
Net interest margin 3.62 % 3.60 %
 

(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% for 2018 and 34% for 2017. Taxable-equivalent
adjustments of $12 thousand in 2018 and $27 thousand in 2017 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% for 2018 and 34% for 2017. Taxable-equivalent
adjustments of $23 thousand in 2018 and $49 thousand in 2017 are
included in the calculation of the loan interest income. Net loan
origination income (expense) in interest income totaled $(9)
thousand in 2018 and $27 thousand in 2017.
 

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.

View Comments and Join the Discussion!