MSB Financial Corp. Releases Second Quarter Earnings

MILLINGTON, N.J., July 31, 2017 (GLOBE NEWSWIRE) -- MSB Financial Corp. (NASDAQ:MSBF) (the “Company”), parent company of Millington Bank, reported today the results of its operations for the three and six months ended June 30, 2017.

The Company reported net income of $732,000, or $0.13 per diluted common share, for the three months ended June 30, 2017, compared to net income of $223,000, or $0.04 per diluted common share, for the three months ended June 30, 2016. Net income for the six months ended June 30, 2017 was $1.3 million, or $0.23 per diluted common share, compared to net income of $382,000, or $0.07 per diluted common share, for the six months ended June 30, 2016.

Growth in net interest income and margin reflect growth in commercial loans
Net interest income for the three months ended June 30, 2017 increased $993,000, or 33.9%, to $3.9 million compared to $2.9 million for the second quarter of 2016. For the six months ended June 30, 2017, net interest income grew $1.8 million, or 31.5%, to $7.5 million compared to $5.7 million for the six months ended June 30, 2016. Net interest margin for the three months ended June 30, 2017 was 3.35% compared to 3.17% for the same period in 2016 while for the six months ended June 30, 2017, net interest margin was 3.32%, an improvement of 17 basis points, compared to 3.15% for the six months ended June 30, 2016. Net interest income and net interest margin continue to increase due primarily to the growth in the Company’s commercial real estate and commercial loan portfolios.

Commercial loan growth year to date
At June 30, 2017, the Company’s net loan portfolio totaled $426.4 million, an increase of $58.4 million or 15.9%, compared to $368.0 million at December 31, 2016. Commercial real estate loans increased $29.3 million or 23.5% while commercial and industrial loans increased $22.4 million or 49.6% from December 31, 2016 as the Company continues to focus on the origination of commercial relationships. Additionally, construction loans increased $13.1 million or 78.9% from December 31, 2016.

The following table summarizes loan balances and composition at June 30, 2017 and December 31, 2016:

	At				At
	June 30,				December 31,
(In thousands)	2017				2016

Residential mortgage:
One-to-four family	$	164,448	37.0	%	$	160,534	42.3	%
Home equity		29,021	6.5			32,262	8.5

Total residential mortgage		193,469	43.5			192,796	50.8

Commercial and multi-family real estate		153,984	34.6			124,656	32.8
Construction		29,623	6.6			16,554	4.4
Commercial and industrial		67,686	15.2			45,246	11.9

Total commercial loans		251,293	56.4			186,456	49.1
.
Consumer loans		434	0.1			446	0.1

Total loans receivable		445,196	100.0	%		379,698	100.0	%

Less:
Loans in process		13,315				6,557
Deferred loan fees		586				658
Allowance		4,925				4,476

Total loans receivable, net	$	426,370			$	368,007

Credit quality
Overall credit quality remained stable during first half of 2017. Total delinquent loans (including nonperforming delinquent loans) were $8.8 million at June 30, 2017, a reduction of $1.3 million from March 31, 2017 and $2.1 million from December 31, 2016. Total nonperforming loans were $6.9 million at June 30, 2017 compared to $7.4 million at March 31, 2017 and $7.0 million at December 31, 2016. Included in total delinquency and nonperforming loans is one large residential mortgage of $1.9 million that has been paid off, as a result of a short sale in July. The allowance for loan losses as a percentage of total loans was 1.14%, 1.15% and 1.20% at June 30, 2017, March 31, 2017 and December 31, 2016, respectively, while the allowance for loan losses as a percentage of non-performing loans increased to 71.21% at June 30, 2017 from 62.47% at March 31, 2017 and 64.13% at December 31, 2016. Non-performing loans to total loans declined to 1.60% at June 30, 2017 from 1.84% at March 31, 2017 and 1.87% at December 31, 2016.

Consumer deposit growth during the year
Total deposits at June 30, 2017 were $390.1 million compared with $362.3 million at December 31, 2016. Overall, deposits increased by $27.8 million, or 7.6% with growth occurring across most product types. Most of the growth occurred in the certificates of deposit as the Company utilized a deposit listing service to bring in $19.6 million in institutional funds. In addition, a promotional campaign was implemented to bring in more consumer deposits.

The following table summarizes deposit balances and composition at June 30, 2017 and December 31, 2016:

	At				At
(Dollars in thousands)	June 30, 2017				December 31, 2016

Noninterest demand	$	44,584	11.43	%	$	44,365	12.25	%
Interest demand		95,196	24.41			99,879	27.57
Savings		105,560	27.06			103,163	28.47
Money Market		15,842	4.06			11,265	3.11

Total demand deposits		261,182	66.96			258,672	71.40

Certificates of Deposit		128,881	33.04			103,627	28.60

Total Deposits	$	390,063	100.00	%	$	362,299	100.00	%

CEO outlook:

“Reaching $500 million in assets during the quarter was a significant milestone for our Company,” stated Michael A. Shriner, President and Chief Executive Officer. Mr. Shriner added, “As an organization, we are very proud of this accomplishment and the timeframe in which it was achieved. Continued growth in commercial loans has also had a significant, positive impact on our earnings.”

Forward Looking Statement Disclaimer

The foregoing release may contain forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. Factors that may cause actual results to differ from those contemplated include our continued ability to grow the loan portfolio and our continued ability to manage cybersecurity risks.


MSB FINANCIAL CORP
(In Thousands, except for per share amount)	(Unaudited)
Statement of Financial Condition Data:	06/30/2017		12/31/2016
Total assets	$507,098		$461,646

Cash and cash equivalents		9,034		21,382

Loans receivable, net		426,370		368,007

Securities held to maturity		42,441		44,104

Deposits		390,063		362,299

Federal Home Loan Bank advances		38,675		22,675

Total stockholders' equity		74,989		73,185

Stock Information:
Number of shares of common stock outstanding		5,737		5,714
Book value per share of common stock	$13.07		$12.81
Closing market price	$17.45		$14.70

	(Unaudited) For the three months ended June 30,					(Unaudited) For the six months ended June 30,
Summary of Operations: (In Thousands, except for per share amounts)		2017		2016			2017		2016
Total interest income		$4,727		$3,453			$9,020		$6,751

Total interest expense		803		522			1,501		1,032

Net interest income		3,924		2,931			7,519		5,719

Provision for loan losses		300		190			495		320

Net interest income after provision for loan losses		3,624		2,741			7,024		5,399

Non-interest income		219		512			406		653

Non-interest expense		2,818		2,909			5,535		5,473

Income before taxes		1,025		344			1,895		579

Income tax expense		293		121			614		197

Net income		$732		$223			$1,281		$382

Net income per common share - basic		$0.13		$0.04			$0.23		$0.07
Net income per common share - diluted		$0.13		$0.04			$0.23		$0.07

Weighted average number of shares - basic		5,540		5,743			5,530		5,744
Weighted average number of shares - diluted		5,679		5,821			5,661		5,818

Performance Ratios:
Return on average assets annualized		0.59	%	0.23	%		0.54	%	0.20	%
Return on average common equity annualized		3.91	%	1.15	%		3.44	%	0.99	%
Net interest margin		3.35	%	3.17	%		3.32	%	3.15	%
Efficiency ratio		68.02	%	84.49	%		69.83	%	85.89	%
Operating expenses / average assets annualized		2.29	%	3.00	%		2.32	%	2.87	%

	For the three months ended
	06/30/2017							06/30/2016
*Average Balance Sheet* (In Thousands)	Average Balance			Interest Income/ Expense		Yield		Average Balance			Interest Income/ Expense		Yield
Interest-earning assets:
Loans receivable	$417,065			$4,444		4.26	%	$285,649			$3,082		4.32	%
Securities held to maturity		41,885			247	2.36			62,585			331	2.12
Other interest-earning assets		9,625			36	1.50			21,430			40	0.75
Total interest-earning assets		468,575			4,727	4.04			369,664			3,453	3.74

Allowance for loan loss		(4,695)							(3,718)
Non-interest-earning assets		28,978							21,833
Total non-interest-earning assets		24,283							18,115
Total Assets	$492,858							$387,779

Interest-bearing liabilities:
Demand & money market	$106,094			$102		0.38	%	$60,006			$37		0.25	%
Savings and club deposits		104,953			62	0.24			104,283			58	0.22
Certificates of deposit		122,855			415	1.35			85,702			244	1.14
Total interest-bearing deposits		333,902			579	0.69			249,991			339	0.54

Federal Home Loan Bank advances		37,715			224	2.38			22,675			183	3.23
Total interest-bearing liabilities		371,617			803	0.86			272,666			522	0.77

Non-interest-bearing deposit		43,030							33,964
Other non-interest-bearing liabilities		3,363							3,745
Total Liabilities		418,010							310,375

Equity		74,848							77,404
Total Liabilities and Equity	$492,858							$387,779

Net Interest Spread					3,924	3.18	%					2,931	2.97	%

Net Interest Margin						3.35	%						3.17	%

Ratio of Interest Earning Assets to Interest Bearing Liabilities		126.09	%						135.57	%

	For the six months ended
	06/30/2017							06/30/2016
*Average Balance Sheet* (In Thousands)	Average Balance			Interest Income/ Expense		Yield		Average Balance			Interest Income/ Expense		Yield
Interest-earning assets:
Loans receivable	$399,822			$8,444		4.22	%	$278,732			$5,920		4.25	%
Securities held to maturity		42,581			498	2.34			69,758			762	2.18
Other interest-earning assets		10,475			78	1.49			14,930			69	0.92
Total interest-earning assets		452,878			9,020	3.98			363,420			6,751	3.72

Allowance for loan loss		(4,610)							(3,670)
Non-interest-earning assets		28,674							21,740
Total non-interest-earning assets		24,064							18,070
Total Assets	$476,942							$381,490

Interest-bearing liabilities:
Demand & money market	$106,066			$197		0.37	%	$54,228			$58		0.21	%
Savings and club deposits		104,367			120	0.23			103,364			114	0.22
Certificates of deposit		114,729			764	1.33			85,070			481	1.13
Total interest-bearing deposits		325,162			1,081	0.66			242,662			653	0.54

Federal Home Loan Bank advances		33,874			420	2.48			26,214			379	2.89
Total interest-bearing liabilities		359,036			1,501	0.84			268,876			1,032	0.77

Non-interest-bearing deposit		40,440							31,793
Other non-interest-bearing liabilities		3,078							3,783
Total Liabilities		402,554							304,452

Equity		74,388							77,038
Total Liabilities and Equity	$476,942							$381,490

Net Interest Spread					7,519	3.14	%					5,719	2.95	%

Net Interest Margin						3.32	%						3.15	%

Ratio of Interest Earning Assets to Interest Bearing Liabilities		126.14	%						135.16	%

Contact:
Michael A. Shriner, President & CEO
(908) 647-4000
mshriner@millingtonbank.com

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