GLBZ Glen Burnie Bancorp

Glen Burnie Bancorp (“Bancorp”) (NASDAQ:GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $0.48 million, or $0.17 per basic and diluted common share for the three-month period ended June 30, 2018, as compared to net income of $0.34 million, or $0.12 per basic and diluted common share for the three-month period ended June 30, 2017.

Bancorp reported net income of $0.73 million, or $0.26 per basic and diluted common share for the six-month period ended June 30, 2018, compared to $0.65 million, or $0.23 per basic and diluted common share for the same period in 2017.  Net loans grew by $18.7 million, or 7.0% for the six-month period ended June 30, 2018, as compared to the same period of 2017.  At June 30, 2018, Bancorp had total assets of $401.5 million.  Bancorp, the oldest independent commercial bank in Anne Arundel County, will pay its 104th consecutive quarterly dividend on August 3, 2018.

"Our transformative journey which began in 2017, continued into the second quarter of 2018 as we executed our strategic plan and delivered increased shareholder value.  We achieved strong financial and operating performance across the Company, positioning us well for sustained growth and creating increased franchise value throughout this year and beyond,” said John D. Long, President and CEO.  “Our experienced leadership team, upgraded leverageable infrastructure, diversified business model, positive interest rate risk management, strong indirect lending capabilities, strong asset quality, and attractive deposit mix bode well for the Company’s future.  Net interest income continued to rise during the second quarter, driving a consistent core earnings expansion.  Net interest income grew by $160,000 or 5.5%, this quarter compared to the same quarter last year, as the balance of our net loan portfolio grew at an annualized rate of 7.0%, when compared to the same period last year.  The overall credit environment remained favorable, although the charge off of a single impaired loan led to an increase in our historical loss rate and loan loss provision for the residential real estate loan segment.  Headquartered in the dynamic Northern Anne Arundel County market, we believe the Bank is well-positioned and we remain deeply committed to serving the financial needs of the community through the development of new loan and deposit products.”

Highlights for the First Six Months of 2018

Bancorp continued to grow organically in the second quarter of 2018 driven primarily by favorable net loan growth and supported by an improving 0.53% cost of funds, as compared to 0.55% for the same period in 2017.  Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Bank’s total regulatory capital to risk weighted assets of 12.78% at June 30, 2018, as compared to 14.65% for the same period of 2017.

Return on average assets for the three-month period ended June 30, 2018 was 0.49%, as compared to 0.35% for the three-month period ended June 30, 2017.  Return on average equity for the three-month period ended June 30, 2018 was 5.80%, as compared to 4.01% for the three-month period ended June 30, 2017. 

The book value per share of Bancorp’s common stock was $11.95 at June 30, 2018, as compared to $12.45 per share at June 30, 2017.

At June 30, 2018, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 11.94% at June 30, 2018, as compared to 13.60% at June 30, 2017.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Balance Sheet Review

Total assets were $401.5 million at June 30, 2018, an increase of $5.3 million or 1.34%, from $396.2 million at June 30, 2017.  Investment securities were $87.3 million at June 30, 2018, a decrease of $3.3 million or 3.66%, from $90.6 million at June 30, 2017.  Loans, net of deferred fees and costs, were $289.4 million at June 30, 2018, an increase of $18.4 million or 6.78%, from $271.0 million at June 30, 2017.  Other assets increased $1.9 million and bank owned life insurance decreased $1.6 million from June 30, 2017 to June 30, 2018 primarily due to the redemption of BOLI policies.

Total deposits were $341.8 million at June 30, 2018, an increase of $6.3 million or 1.88%, from $335.5 million at June 30, 2017.  Noninterest-bearing deposits were $108.4 million at June 30, 2018, an increase of $2.8 million or 2.67%, from $105.6 million at June 30, 2017.  Interest-bearing deposits were $233.4 million at June 30, 2018, an increase of $3.5 million or 1.52%, from $229.9 million at June 30, 2017.  Total borrowings were $25.0 million at June 30, 2018, unchanged from $25.0 million at June 30, 2017.

Stockholders’ equity was $33.5 million at June 30, 2018, a decrease of $1.0 million from $34.5 million at June 30, 2017.  The decrease was driven primarily by $1.1 million increase in net unrealized losses associated with the available for sale bond portfolio and interest rate swap contracts.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned, represented 1.05% of total assets at June 30, 2018, as compared to 0.99% for the same period of 2017.

Review of Financial Results

For the three-month periods ended June 30, 2018 and 2017

Net income for the three-month period ended June 30, 2018 was $0.48 million, as compared to net income of $0.34 million for the three-month period ended June 30, 2017.

Net interest income for the three-month period ended June 30, 2018 totaled $3.1 million, as compared to $2.9 million for the three-month period ended June 30, 2017.  Average earning loan balances increased to $281.1 million for the three-month period ended June 30, 2018, as compared to $269.5 million for the same period of 2017.

Net interest margin for the three-month period ended June 30, 2018 was 3.21%, as compared to 3.09% for the same period of 2017.  Higher yields on interest-earning assets supported by lower funding costs were the primary drivers of year-over-year results, as the yield on interest-earning assets increased 0.11% from 3.62% to 3.73% and the cost of funds decreased 0.01% from 0.55% to 0.54% for the three-month periods ending June 30, 2018 and 2017, respectively.

The provision for loan losses for the three-month period ended June 30, 2018 was $5,000, as compared to $30,000 for the same period of 2017.  The decrease for the three-month period ended June 30, 2018 was primarily the result of the positive resolution of a single problem loan, offset by the negative effect on the loss history rate used to establish the required reserves for residential real estate loans of a single loan charge off.  As a result, the allowance for loan losses was $2.3 million at June 30, 2018, representing 0.79% of total loans, as compared to $2.6 million, or 0.96% of total loans at June 30, 2017.

Noninterest income for the three-month period ended June 30, 2018 was $0.39 million, as compared to $0.29 million for the three-month period ended June 30, 2017.  The results for the second quarter of 2018 include a $100,540 gain on redemption of BOLI policy.

For the three-month period ended June 30, 2018, noninterest expense was $3.01 million, as compared to $2.81 million for the three-month period ended June 30, 2017.  The primary contributors to the $0.20 million increase, when compared to the three-month period ended June 30, 2017 were increases in salary and employee benefits, legal, accounting and other professional fees and loan collection costs.

For the six-month periods ended June 30, 2018 and 2017

Net income for the six-month period ended June 30, 2018 was $0.73 million, as compared to net income of $0.65 million for the six-month period ended June 30, 2017.

Net interest income for the six-month period ended June 30, 2018 totaled $6.0 million, as compared to $5.7 million for the six-month period ended June 30, 2017.  Average earning loan balances increased to $278 million for the six-month period ended June 30, 2018, as compared to $269 million for the same period of 2017.

Net interest margin for the six-month period ended June 30, 2018 was 3.22%, as compared to 3.08% for the same period of 2017.  Higher yields on interest-earning assets supported by lower funding costs were the primary drivers of year-over-year results, as the yield on interest-earning assets increased 0.11% from 3.61% to 3.72% and the cost of funds decreased 0.02% from 0.55% to 0.53% for the six-month periods ending June 30, 2018 and 2017, respectively.

The provision for loan losses for the six-month period ended June 30, 2018 was $0.36 million, as compared to $0.17 million for the same period of 2017.  The increase for the six-month period ended June 30, 2018 was primarily the negative effect of a single charge off on the loss history rate used to establish the required reserves for residential real estate loans.  As a result, the allowance for loan losses was $2.3 million at June 30, 2018, representing 0.79% of total loans, as compared to $2.6 million, or 0.96% of total loans for the same period of 2017.

Noninterest income for the six-month period ended June 30, 2018 was $0.87 million, as compared to $0.57 million for the six-month period ended June 30, 2017.  The results for the first half of 2018 include gains on redemptions of BOLI policies of $306,877.

For the six-month period ended June 30, 2018, noninterest expense was $5.85 million, as compared to $5.38 million for the six-month period ended June 30, 2017.  The primary contributors to the $0.47 million increase, when compared to the six-month period ended June 30, 2017 were increases in salary and employee benefits, accounting and other professional fees and loan collection costs, partially offset by decreases in data processing and item processing services and advertising and marketing related expenses.  

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland.  Founded in 1949, The Bank of Glen Burnie® is a locally-owned community bank with 8 branch offices serving Anne Arundel County.  The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations.  The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans.  The Bank also originates automobile loans through arrangements with local automobile dealers.  Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

For further information contact:

Jeffrey D. Harris, Chief Financial Officer410-768-8883jdharris@bogb.net106 Padfield BlvdGlen Burnie, MD 21061

GLEN BURNIE BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
	June 30,				March 31,				December 31,				June 30,
	2018				2018				2017				2017
	(unaudited)				(unaudited)				(audited)				(unaudited)
ASSETS
Cash and due from banks	$	2,584			$	2,449			$	2,610			$	3,055
Interest bearing deposits with banks and federal funds sold		5,498				6,079				9,995				14,283
Total Cash and Cash Equivalents		8,082				8,528				12,605				17,338
Investment securities available for sale, at fair value		87,314				90,329				89,349				90,629
Restricted equity securities, at cost		1,443				1,231				1,232				1,440
Loans, net of deferred fees and costs		289,408				275,716				271,612				271,035
Less:  Allowance for loan losses		(2,284	)			(2,899	)			(2,589	)			(2,599	)
Loans, net		287,124				272,817				269,023				268,436
Real estate acquired through foreclosure		114				114				114				114
Premises and equipment, net		3,195				3,271				3,371				3,547
Bank owned life insurance		7,780				8,290				8,713				9,428
Deferred tax assets, net		2,713				2,759				2,429				2,803
Accrued interest receivable		1,142				1,182				1,133				1,092
Accrued taxes receivable		-				-				465				631
Prepaid expenses		471				554				433				493
Other assets		2,093				1,295				583				210
Total Assets	$	401,471			$	390,370			$	389,450			$	396,161
LIABILITIES
Noninterest-bearing deposits	$	108,414			$	107,073			$	104,017			$	105,597
Interest-bearing deposits		233,393				229,097				230,221				229,899
Total Deposits		341,807				336,170				334,238				335,496
Short-term borrowings		25,000				20,000				20,000				20,000
Long-term borrowings		-				-				-				5,000
Defined pension liability		317				341				335				374
Accrued Taxes Payable		28				134				-				-
Accrued expenses and other liabilities		775				538				835				757
Total Liabilities		367,927				357,183				355,408				361,627
STOCKHOLDERS' EQUITY
Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,807,819, 2,804,456, 2,801,149, and 2,793,748 shares as of June 30, 2018, March 31, 2018, December 31, 2017, and June 30, 2017, respectively.		2,808				2,804				2,801				2,794
Additional paid-in capital		10,335				10,301				10,267				10,199
Retained earnings		21,778				21,581				21,605				21,803
Accumulated other comprehensive loss		(1,377	)			(1,499	)			(631	)			(262	)
Total Stockholders' Equity		33,544				33,187				34,042				34,534
Total Liabilities and Stockholders' Equity	$	401,471			$	390,370			$	389,450			$	396,161

GLEN BURNIE BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share amounts)
(unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2018				2017				2018				2017
Interest income
Interest and fees on loans		$	2,958			$	2,842			$	5,830			$	5,616
Interest and dividends on securities			535				507				1,059				1,025
Interest on deposits with banks and federal funds sold			50				31				98				62
Total Interest Income			3,543				3,380				6,987				6,703
Interest expense
Interest on deposits			325				327				634				659
Interest on short-term borrowings			165				84				308				167
Interest on long-term borrowings			-				76				-				152
Total Interest Expense			490				487				942				978
Net Interest Income			3,053				2,893				6,045				5,725
Provision for loan losses			(5	)			(30	)			355				165
Net interest income after provision for loan losses			3,058				2,923				5,690				5,560
Noninterest income
Service charges on deposit accounts			61				68				128				136
Other fees and commissions			179				168				347				328
Gains on redemption of BOLI policies			101				-				308				-
Income on life insurance			45				51				89				100
Other income			-				1				-				3
Total Noninterest Income			386				288				872				567
Noninterest expenses
Salary and employee benefits			1,649				1,615				3,371				3,036
Occupancy and equipment expenses			274				286				579				584
Legal, accounting and other professional fees			277				197				509				403
Data processing and item processing services			154				143				286				312
FDIC insurance costs			65				63				122				123
Advertising and marketing related expenses			32				42				49				73
Loan collection costs			80				29				121				47
Telephone costs			67				59				124				114
Other expenses			413				376				685				689
Total Noninterest Expenses			3,011				2,810				5,846				5,381
Income before income taxes			433				401				716				746
Income tax expense			(45	)			63				(17	)			92
Net income		$	478			$	338			$	733			$	654
Basic and diluted net income per share of common stock		$	0.17			$	0.12			$	0.26			$	0.23

GLEN BURNIE BANCORP AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the six months ended June 30, 2018 and 2017 (unaudited)
(dollars in thousands)
												Accumulated
												Other
					Additional							Comprehensive				Total
		Common			Paid-in			Retained				(Loss)				Stockholders'
		Stock			Capital			Earnings				Income				Equity
Balance, December 31, 2016		$	2,787		$	10,130		$	21,708			$	(810	)		$	33,815
Net income			-			-			654				-				654
Cash dividends, $0.20 per share			-			-			(559	)			-				(559	)
Dividends reinvested under
dividend reinvestment plan			7			69			-				-				76
Other comprehensive income			-			-			-				548				548
Balance, June 30, 2017		$	2,794		$	10,199		$	21,803			$	(262	)		$	34,534
												Accumulated
					Additional							Other				Total
		Common			Paid-in			Retained				Comprehensive				Stockholders'
		Stock			Capital			Earnings				(Loss)				Equity
Balance, December 31, 2017		$	2,801		$	10,267		$	21,605			$	(631	)		$	34,042
Net income			-			-			733				-				733
Cash dividends, $0.20 per share			-			-			(560	)			-				(560	)
Dividends reinvested under
dividend reinvestment plan			7			68			-				-				75
Other comprehensive loss			-			-			-				(746	)			(746	)
Balance, June 30, 2018		$	2,808		$	10,335		$	21,778			$	(1,377	)		$	33,544

THE BANK OF GLEN BURNIE
CAPITAL RATIOS
(dollars in thousands)
								To Be Well
								Capitalized Under
					To Be Considered			Prompt Corrective
					Adequately Capitalized			Action Provisions
	Amount		Ratio		Amount	Ratio		Amount	Ratio
As of June 30, 2018:
(unaudited)
Common Equity Tier 1 Capital	$ 33,335		11.94%		$ 12,559	4.50%		$ 18,140	6.50%
Total Risk-Based Capital	$ 35,662		12.78%		$ 22,326	8.00%		$ 27,908	10.00%
Tier 1 Risk-Based Capital	$ 33,335		11.94%		$ 16,745	6.00%		$ 22,326	8.00%
Tier 1 Leverage	$ 33,335		8.39%		$ 15,883	4.00%		$ 19,854	5.00%
As of March 31, 2018:
(unaudited)
Common Equity Tier 1 Capital	$ 33,132		12.73%		$ 11,712	4.50%		$ 16,917	6.50%
Total Risk-Based Capital	$ 36,047		13.85%		$ 20,822	8.00%		$ 26,027	10.00%
Tier 1 Risk-Based Capital	$ 33,132		12.73%		$ 15,616	6.00%		$ 20,822	8.00%
Tier 1 Leverage	$ 33,126		8.40%		$ 15,774	4.00%		$ 19,718	5.00%
As of December 31, 2017:
(audited)
Common Equity Tier 1 Capital	$ 32,946		12.83%		$ 11,553	4.50%		$ 16,687	6.50%
Total Risk-Based Capital	$ 35,543		13.84%		$ 20,538	8.00%		$ 25,673	10.00%
Tier 1 Risk-Based Capital	$ 32,946		12.83%		$ 15,404	6.00%		$ 20,538	8.00%
Tier 1 Leverage	$ 32,928		8.43%		$ 15,617	4.00%		$ 19,521	5.00%
As of June 30, 2017:
(unaudited)
Common Equity Tier 1 Capital	$ 33,837		13.60%		$ 11,198	4.50%		$ 16,175	6.50%
Total Risk-Based Capital	$ 36,458		14.65%		$ 19,907	8.00%		$ 24,884	10.00%
Tier 1 Risk-Based Capital	$ 33,837		13.60%		$ 14,931	6.00%		$ 19,907	8.00%
Tier 1 Leverage	$ 33,837		8.61%		$ 15,717	4.00%		$ 19,647	5.00%

GLEN BURNIE BANCORP AND SUBSIDIARIES
SELECTED FINANCIAL DATA
(dollars in thousands, except per share amounts)
		Three Months Ended												Six Months Ended								Year Ended
		June 30,				March 31,				June 30,				June 30,				June 30,				December 31,
		2018				2018				2017				2018				2017				2017
		(unaudited)				(unaudited)				(unaudited)				(unaudited)				(unaudited)				(audited)
Financial Data
Assets		$	401,471			$	390,353			$	396,161			$	401,471			$	396,161			$	389,450
Investment securities			87,314				90,329				90,629				87,314				90,629				89,349
Loans, (net of deferred fees & costs)			289,408				275,699				271,035				289,408				271,035				271,612
Allowance for loan losses			2,284				2,899				2,599				2,284				2,599				2,589
Deposits			341,807				336,169				335,496				341,807				335,496				334,238
Borrowings			25,000				20,000				25,000				25,000				25,000				20,000
Stockholders' equity			33,544				33,188				34,534				33,544				34,534				34,042
Net income			478				255				338				733				654				911
Average Balances
Assets		$	396,033			$	391,832			$	392,959			$	393,934			$	392,263			$	392,363
Investment securities			91,290				92,449				92,364				91,870				93,213				91,634
Loans, (net of deferred fees & costs)			281,104				273,964				269,533				277,534				268,514				269,600
Deposits			335,479				334,492				336,724				334,985				336,585				335,805
Borrowings			26,394				22,752				21,278				24,573				20,832				21,458
Stockholders' equity			33,404				33,817				34,205				33,532				34,027				34,322
Performance Ratios
Annualized return on average assets			0.49	%			0.26	%			0.35	%			0.38	%			0.34	%			0.23	%
Annualized return on average equity			5.80	%			3.06	%			4.01	%			4.43	%			3.90	%			2.65	%
Net interest margin			3.21	%			3.22	%			3.09	%			3.22	%			3.08	%			3.12	%
Dividend payout ratio			59	%			109	%			83	%			76	%			85	%			123	%
Book value per share		$	11.95			$	11.83			$	12.37			$	11.96			$	12.37			$	12.15
Basic and diluted net income per share			0.17				0.09				0.12				0.26				0.23				0.33
Cash dividends declared per share			0.10				0.10				0.10				0.10				0.10				0.40
Basic and diluted weighted average shares outstanding			2,806,599				2,802,509				2,792,656				2,804,565				2,791,824				2,794,381
Asset Quality Ratios
Allowance for loan losses to loans			0.79	%			1.05	%			0.96	%			0.79	%			0.96	%			0.95	%
Nonperforming loans to avg. loans			1.46	%			2.09	%			1.33	%			1.48	%			1.33	%			1.32	%
Allowance for loan losses to nonaccrual & 90+ past due loans			58.6	%			52.7	%			72.5	%			58.6	%			72.5	%			77.7	%
Net charge-offs annualize to avg. loans			0.94	%			0.07	%			0.04	%			0.48	%			0.04	%			0.09	%
Capital Ratios
Common Equity Tier 1 Capital			11.94	%			12.73	%			13.60	%			11.94	%			13.60	%			12.83	%
Tier 1 Risk-based Capital Ratio			11.94	%			12.73	%			13.60	%			11.94	%			13.60	%			12.83	%
Leverage Ratio			8.39	%			8.40	%			8.61	%			8.39	%			8.61	%			8.43	%
Total Risk-Based Capital Ratio			12.78	%			13.85	%			14.65	%			12.78	%			14.65	%			13.84	%