MSB Financial Corp. Releases Third Quarter Earnings
MILLINGTON, N.J., Oct. 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 nine months ended September 30, 2017.
The Company reported net income of $1.2 million, or $0.21 per diluted common share, for the three months ended September 30, 2017, compared to net income of $301,000, or $0.05 per diluted common share, for the three months ended September 30, 2016. Net income for the nine months ended September 30, 2017 was $2.5 million, or $0.44 per diluted common share, compared to net income of $683,000, or $0.12 per diluted common share, for the nine months ended September 30, 2016.
On August 4, 2017, certain directors, executive officers and directors emeriti executed options to purchase 212,468 shares of Common Stock at a per share exercise price of $9.4323. In lieu of issuing shares of Common Stock upon the exercise of such options, the Company made a cash payment to such optionees equal to the excess of the closing price of the Common Stock on the Nasdaq Stock Market on August 4, 2017 of $17.30 over the per share exercise price of such options of $9.4323 multiplied by the number of options being exercised. An aggregate of $1.7 million was paid to the optionees. In addition, the transaction resulted in approximately a $406,000 tax benefit to the Company during the quarter which resulted in a net tax benefit of $86,000 for the quarter ended September 30, 2017 as compared to a net income tax expense of $146,000 for the quarter ended September 30, 2016. The options were issued in 2008 and were related to the Company’s conversion from a Mutual Holding Company to a minority owned, public Bank Holding Company.
Growth in net interest income and margin reflect growth in commercial loans
Net interest income for the three months ended September 30, 2017 increased $1.3 million, or 44.8%, to $4.2 million compared to $2.9 million for the third quarter of 2016. For the nine months ended September 30, 2017, net interest income grew $3.0 million, or 34.5%, to $11.7 million compared to $8.7 million for the nine months ended September 30, 2016. Net interest margin for the three months ended September 30, 2017 was 3.37% compared to 3.05% for the same period in 2016 while for the nine months ended September 30, 2017, net interest margin was 3.34%, an improvement of 23 basis points, compared to 3.11% for the nine months ended September 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 September 30, 2017, the Company’s net loan portfolio totaled $461.3 million, an increase of $93.3 million or 25.4%, compared to $368.0 million at December 31, 2016. Commercial real estate loans increased $60.1 million or 48.2% while commercial and industrial loans increased $28.2 million or 62.2% from December 31, 2016 as the Company continues to focus on the origination of commercial relationships. Additionally, construction loans, net of loans in process, increased $9.1 million or 91.4% from December 31, 2016.
The following table summarizes loan balances and composition at September 30, 2017 and December 31, 2016:
| At | At | ||||||||||||
| September 30, | December 31, | ||||||||||||
| (In thousands) | 2017 | 2016 | |||||||||||
| Residential mortgage: | |||||||||||||
| One-to-four family | $ | 161,679 | 33.4 | % | $ | 160,534 | 42.3 | % | |||||
| Home equity | 27,409 | 5.7 | 32,262 | 8.5 | |||||||||
| Total residential mortgage | 189,088 | 39.1 | 192,796 | 50.8 | |||||||||
| Commercial and multi-family real estate | 184,791 | 38.2 | 124,656 | 32.8 | |||||||||
| Construction | 36,002 | 7.4 | 16,554 | 4.4 | |||||||||
| Commercial and industrial | 73,409 | 15.2 | 45,246 | 11.9 | |||||||||
| Total commercial loans | 294,202 | 60.8 | 186,456 | 49.1 | |||||||||
| Consumer loans | 659 | 0.1 | 446 | 0.1 | |||||||||
| Total loans receivable | 483,949 | 100.0 | % | 379,698 | 100.0 | % | |||||||
| Less: | |||||||||||||
| Loans in process | 16,864 | 6,557 | |||||||||||
| Deferred loan fees | 525 | 658 | |||||||||||
| Allowance | 5,275 | 4,476 | |||||||||||
| Total loans receivable, net | $ | 461,285 | $ | 368,007 | |||||||||
Credit quality
Overall credit quality improved quarter over quarter. Total delinquent loans (including nonperforming delinquent loans) were $6.1 million at September 30, 2017, a reduction of $2.7 million from June 30, 2017. Total nonperforming loans were $4.4 million at September 30, 2017 compared to $6.9 million at June 30, 2017. The allowance for loan losses as a percentage of total loans was 1.13% and 1.14% at September 30, 2017 and June 30, 2017, respectively, while the allowance for loan losses as a percentage of non-performing loans increased to 118.69% at September 30, 2017 from 71.21% at June 30, 2017. Non-performing loans to total loans declined to 0.95% at September 30, 2017 from 1.60% at June 30, 2017.
Consumer deposit growth during the year
Total deposits at September 30, 2017 were $397.5 million compared with $362.3 million at December 31, 2016. Overall, deposits increased by $35.2 million, or 9.7% with growth occurring across substantially all 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, other deposit categories grew as a result of a promotional campaign implemented during the second quarter that attracted new deposits.
The following table summarizes deposit balances and composition at September 30, 2017 and December 31, 2016:
| At | At | |||||||||||||
| (Dollars in thousands) | September 30, 2017 | December 31, 2016 | ||||||||||||
| Noninterest demand | $ | 40,504 | 10.19 | % | $ | 44,365 | 12.25 | % | ||||||
| Interest demand | 107,419 | 27.02 | 99,879 | 27.57 | ||||||||||
| Savings | 108,249 | 27.23 | 103,163 | 28.47 | ||||||||||
| Money Market | 16,517 | 4.16 | 11,265 | 3.11 | ||||||||||
| Total demand deposits | 272,689 | 68.60 | 258,672 | 71.40 | ||||||||||
| Certificates of Deposit | 124,821 | 31.40 | 103,627 | 28.60 | ||||||||||
| Total Deposits | $ | 397,510 | 100.00 | % | $ | 362,299 | 100.00 | % | ||||||
CEO outlook:
“Our management team and staff have worked extremely hard to ensure the Company meets its strategic goals for 2017, and our 3rd quarter results further validate these efforts,” stated Michael A. Shriner, President and Chief Executive Officer. Mr. Shriner added, “Deposit and loan growth are up, the diversification of the loan portfolio continues, and earnings have improved significantly since the beginning of the year. We were pleased to be able to pay the $0.425 special dividend in September.”
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.
| Contact: | Michael A. Shriner, President & CEO | |
| (908) 647-4000 | ||
| mshriner@millingtonbank.com | ||
| MSB FINANCIAL CORP | ||
| (In Thousands, except for per share amount) | (Unaudited) | |
| Statement of Financial Condition Data: | 09/30/2017 | 12/31/2016 |
| Total assets | $541,757 | $461,646 |
| Cash and cash equivalents | 8,771 | 21,382 |
| Loans receivable, net | 461,285 | 368,007 |
| Securities held to maturity | 40,752 | 44,104 |
| Deposits | 397,510 | 362,299 |
| Federal Home Loan Bank advances | 68,375 | 22,675 |
| Total stockholders' equity | 72,540 | 73,185 |
| Stock Information: | ||
| Number of shares of common stock outstanding | 5,769 | 5,714 |
| Book value per share of common stock | $12.57 | $12.81 |
| Closing market price | $17.85 | $14.70 |
|
Summary of Operations: (In Thousands, except for per share amounts) |
(Unaudited) For the three months ended September 30, |
(Unaudited) For the nine months ended September 30, |
|||||
| 2017 | 2016 |
2017 |
2016 |
||||
| Total interest income | $5,083 | $3,510 | $14,103 | $10,261 | |||
| Total interest expense | 893 | 566 | 2,394 | 1,598 | |||
| Net interest income | 4,190 | 2,944 | 11,709 | 8,663 | |||
| Provision for loan losses | 490 | 180 | 985 | 500 | |||
| Net interest income after provision for loan losses | 3,700 | 2,764 | 10,724 | 8,163 | |||
| Non-interest income | 205 | 183 | 611 | 836 | |||
| Non-interest expense | 2,822 | 2,500 | 8,357 | 7,973 | |||
| Income before taxes | 1,083 | 447 | 2,978 | 1,026 | |||
| Income tax (benefit) expense | (86) | 146 | 528 | 343 | |||
| Net income | $1,169 | $301 | $2,450 | $683 | |||
| Net income per common share - basic | $0.21 | $0.05 | $0.44 | $0.12 | |||
| Net income per common share - diluted | $0.21 | $0.05 | $0.44 | $0.12 | |||
| Weighted average number of shares - basic | 5,564 | 5,588 | 5,541 | 5,692 | |||
| Weighted average number of shares - diluted | 5,575 | 5,670 | 5,545 | 5,768 | |||
| Performance Ratios: | |||||||
| Return on average assets annualized | 0.90% | 0.29% | 0.66% | 0.23% | |||
| Return on average common equity annualized | 6.31% | 1.62% | 4.40% | 1.20% | |||
| Net interest margin | 3.37% | 3.05% | 3.34% | 3.11% | |||
| Efficiency ratio | 64.21% | 79.95% | 67.83% | 83.94% | |||
| Operating expenses / average assets annualized | 2.16% | 2.45% | 2.27% | 2.72% | |||
| For the three months ended | ||||||||||||||||
| 09/30/2017 | 09/30/2016 | |||||||||||||||
|
Average Balance Sheet (In Thousands) |
Average Balance |
Interest Income/Expense |
Yield |
Average Balance |
Interest Income/Expense |
Yield |
||||||||||
| Interest-earning assets: | ||||||||||||||||
| Loans receivable | $446,383 | $4,769 | 4.27 | % | $305,405 | $3,177 | 4.16 | % | ||||||||
| Securities held to maturity | 41,423 | 264 | 2.55 | 47,293 | 276 | 2.33 | ||||||||||
| Other interest-earning assets | 9,526 | 50 | 2.10 | 33,412 | 57 | 0.68 | ||||||||||
| Total interest-earning assets | 497,332 | 5,083 | 4.09 | 386,110 | 3,510 | 3.64 | ||||||||||
| Allowance for loan loss | (4,922) | (3,905) | ||||||||||||||
| Non-interest-earning assets | 29,019 | 26,133 | ||||||||||||||
| Total non-interest-earning assets | 24,097 | 22,228 | ||||||||||||||
| Total Assets | $521,429 | $408,338 | ||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Demand & money market | $118,084 | $118 | 0.40 | % | $81,020 | $60 | 0.30 | % | ||||||||
| Savings and club deposits | 106,950 | 73 | 0.27 | 103,166 | 57 | 0.22 | ||||||||||
| Certificates of deposit | 125,555 | 431 | 1.37 | 89,365 | 266 | 1.19 | ||||||||||
| Total interest-bearing deposits | 350,589 | 622 | 0.71 | 273,551 | 383 | 0.56 | ||||||||||
| Federal Home Loan Bank advances | 47,788 | 271 | 2.27 | 22,675 | 183 | 3.23 | ||||||||||
| Total interest-bearing liabilities | 398,377 | 893 | 0.90 | 296,226 | 566 | 0.76 | ||||||||||
| Non-interest-bearing deposit | 44,970 | 34,455 | ||||||||||||||
| Other non-interest-bearing liabilities | 3,964 | 3,430 | ||||||||||||||
| Total Liabilities | 447,311 | 334,111 | ||||||||||||||
| Equity | 74,118 | 74,227 | ||||||||||||||
| Total Liabilities and Equity | $521,429 | $408,338 | ||||||||||||||
| Net Interest Spread | 4,190 | 3.19 | % | 2,944 | 2.88 | % | ||||||||||
| Net Interest Margin | 3.37 | % | 3.05 | % | ||||||||||||
| Ratio of Interest Earning Assets to Interest Bearing Liabilities | 124.84 | % | 130.34 | % | ||||||||||||
| For the nine months ended | ||||||||||||||||
| 09/30/2017 | 09/30/2016 | |||||||||||||||
|
Average Balance Sheet (In Thousands) |
Average Balance |
Interest Income/Expense |
Yield |
Average Balance |
Interest Income/Expense |
Yield | ||||||||||
| Interest-earning assets: | ||||||||||||||||
| Loans receivable | $415,512 | $13,213 | 4.24 | % | $287,688 | $9,097 | 4.22 | % | ||||||||
| Securities held to maturity | 42,190 | 762 | 2.41 | 62,215 | 1,038 | 2.22 | ||||||||||
| Other interest-earning assets | 10,156 | 128 | 1.68 | 21,136 | 126 | 0.79 | ||||||||||
| Total interest-earning assets | 467,858 | 14,103 | 4.02 | 371,039 | 10,261 | 3.69 | ||||||||||
| Allowance for loan loss | (4,715) | (3,749) | ||||||||||||||
| Non-interest-earning assets | 28,791 | 23,215 | ||||||||||||||
| Total non-interest-earning assets | 24,076 | 19,466 | ||||||||||||||
| Total Assets | $491,934 | $390,505 | ||||||||||||||
| Interest-bearing liabilities: | ||||||||||||||||
| Demand & money market | $110,116 | $315 | 0.38 | % | $63,224 | $118 | 0.25 | % | ||||||||
| Savings and club deposits | 105,237 | 193 | 0.24 | 103,298 | 171 | 0.22 | ||||||||||
| Certificates of deposit | 118,378 | 1,195 | 1.35 | 86,512 | 747 | 1.15 | ||||||||||
| Total interest-bearing deposits | 333,731 | 1,703 | 0.68 | 253,034 | 1,036 | 0.55 | ||||||||||
| Federal Home Loan Bank advances | 38,563 | 691 | 2.39 | 25,026 | 562 | 2.99 | ||||||||||
| Total interest-bearing liabilities | 372,294 | 2,394 | 0.86 | 278,060 | 1,598 | 0.77 | ||||||||||
| Non-interest-bearing deposit | 41,966 | 32,687 | ||||||||||||||
| Other non-interest-bearing liabilities | 3,377 | 3,664 | ||||||||||||||
| Total Liabilities | 417,637 | 314,411 | ||||||||||||||
| Equity | 74,297 | 76,094 | ||||||||||||||
| Total Liabilities and Equity | $491,934 | $390,505 | ||||||||||||||
| Net Interest Spread | 11,709 | 3.16 | % | 8,663 | 2.92 | % | ||||||||||
| Net Interest Margin | 3.34 | % | 3.11 | % | ||||||||||||
| Ratio of Interest Earning Assets to Interest Bearing Liabilities | 125.67 | % | 133.44 | % | ||||||||||||
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