MSB Financial Corp. (NASDAQ: MSBF) (the
“Company”), parent company of Millington Bank, reported today the
results of its operations for the three months ended March 31,
2019.
The Company reported net income of $514,000, or
$0.10 per diluted common share, for the three months ended
March 31, 2019, compared to net income of $1,022,000, or $0.19
per diluted common share, for the three months ended March 31,
2018. The reduction in the current period was due to an
$862,000 increase in professional expenses year over year in
connection with the first audit of the Company's internal control
over financial reporting. As the Company previously
disclosed, in connection with the audit, management and outside
auditors identified certain material weaknesses in internal
control. While none of these material weaknesses resulted in
any misstatement or material change to the reported results, they
did cause the scope of the audit and consequently the related
expense to increase significantly. Adjusting for the expense
associated with the change in procedures, net income would have
been $1.1 million or $0.21 per diluted share.
Michael A. Shriner, President and Chief
Executive Officer, stated "We believe we have addressed the
weaknesses and will continue to closely monitor compliance with the
new procedures we have established. We are very hopeful that,
going forward, the expense associated with the audits of our
financial statements and internal control over financial reporting
will be reduced."
Mr Shriner commented, "While many of these
procedures are more common in larger, more complex institutions, I
believe the Company as a whole, and consequently shareholders, will
more than benefit in the long run from the comprehensive review of
our loans and deposits, as well as the efficiencies we will pick up
from the implementation of these enhancements to our internal
controls. Apart from this expense, I was pleased with our
quarterly results. Net income, adjusted for the additional
expense, would have been $1.1 million, or $0.21 per diluted share,
as compared to $1.0 million, or $0.19 per diluted share, for the
first quarter of 2018. Asset quality continues to improve as
well."
Highlights for the quarter:
- Return on average assets was 0.36%
for the three months ended March 31, 2019 compared to 0.74%
for the three months ended March 31, 2018 and return on
average equity was 3.05% for the three months ended March 31,
2019 compared to 5.65% for the three months ended March 31,
2018.
- Net interest margin decreased five
basis points to 3.19% for the quarter ended March 31, 2019
from 3.24% for the quarter ended March 31, 2018.
- The efficiency ratio, which is
calculated by dividing non-interest expense by the sum of net
interest income and non-interest income, was 83.83% for the quarter
ended March 31, 2019 as compared to 66.29% for the quarter
ended March 31, 2018.
- Non-performing assets represented
0.68% of total assets at March 31, 2019 compared with 0.71% at
December 31, 2018. The allowance for loan losses as a
percentage of total non-performing loans was 147.38% at
March 31, 2019 compared to 136.83% at December 31,
2018.
- The Company’s balance sheet at
March 31, 2019 reflected a decline in total assets of $16.4
million compared to December 31, 2018, improved asset quality,
and capital levels that exceeded regulatory standards for a
well-capitalized institution.
- The effective tax rate increased to
31.1% for the quarter ended March 31, 2019 compared to 28.5%
for the quarter ended March 31, 2018.
| Selected
Financial Ratios |
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|
|
|
|
|
| (unaudited;
annualized where applicable) |
|
|
|
|
|
|
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| |
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| As of or
for the quarter ended: |
|
|
3/31/2019 |
|
|
|
12/31/2018 |
|
|
|
9/30/2018 |
|
|
|
6/30/2018 |
|
|
|
3/31/2018 |
|
| Return on average
assets |
|
0.36 |
% |
|
0.87 |
% |
|
0.92 |
% |
|
0.87 |
% |
|
0.74 |
% |
| Return on average
equity |
|
3.05 |
% |
|
7.20 |
% |
|
7.56 |
% |
|
7.17 |
% |
|
5.65 |
% |
| Net interest
margin |
|
3.19 |
% |
|
3.22 |
% |
|
3.44 |
% |
|
3.24 |
% |
|
3.24 |
% |
| Net loans / deposit
ratio |
|
113.10 |
% |
|
119.43 |
% |
|
113.08 |
% |
|
113.64 |
% |
|
110.85 |
% |
| Shareholders' equity /
total assets |
|
11.77 |
% |
|
11.40 |
% |
|
11.86 |
% |
|
11.39 |
% |
|
12.37 |
% |
| Efficiency ratio |
|
83.83 |
% |
|
62.51 |
% |
|
61.96 |
% |
|
62.49 |
% |
|
66.29 |
% |
| Book value per common
share |
|
$ |
12.46 |
|
|
$ |
12.37 |
|
|
$ |
12.70 |
|
|
$ |
12.43 |
|
|
$ |
12.63 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
Total interest income for the three months ended
March 31, 2019 increased $679,000, or 12.5%, to $6.1 million
compared to $5.4 million for the first quarter of 2018. Interest
income increased in the quarter ended March 31, 2019 compared
to the comparable period in 2018, primarily due to a $18.9 million
increase in average loan balances. Total interest expense increased
by $558,000, or 49.5%, to $1.7 million, for the three months ended
March 31, 2019 compared to the same period in 2018 due to a
combination of higher deposit rates and an increase in the average
balance of borrowings outstanding during the 2019 period.
Net interest income for the three months ended
March 31, 2019 increased $121,000, or 2.8%, to $4.4 million
compared to $4.3 million for the same three-month period in 2018.
The change for the three months ended March 31, 2019 was
primarily a result of an increase in average earning assets of
$23.8 million partially offset by decreasing margin. The annualized
net interest spread was 2.94% and 3.07% for the three months ended
March 31, 2019 and 2018, respectively. For the quarter ended
March 31, 2019, the Company's annualized net interest margin
decreased to 3.19% compared to 3.24% for the corresponding
three-month period in 2018.
Provision for Loan Losses
The loan loss provision for the three months
ended March 31, 2019 was zero compared to $90,000 for the same
period in 2018. The decrease in the level of provision for
loan loss primarily reflects lower loan growth in the current
period in addition to the improvement of other credit metrics year
over year.
Non-Interest Income and Non-Interest
Expense
Non-interest income for the three months ended
March 31, 2019 was $190,000, as compared to $204,000 for the
same period in 2018 primarily due to a decrease in fees and service
charges. Non-interest expense, which consists of salaries and
employee benefits, occupancy expense, professional services and
other non-interest expenses totaled $3.9 million for the quarter
ended March 31, 2019 as compared to $3.0 million for the same
period in 2018. The increase in non-interest expense was primarily
related to an increase professional service expense. As the Company
previously disclosed, in connection with the audit, management and
outside auditors identified certain material weaknesses in internal
control.
Taxes
For the three months ended March 31, 2019,
the Company recorded a $232,000 tax provision compared to $407,000
for the three months ended March 31, 2018. The effective tax
rate increased to 31.1% for the quarter ended March 31, 2019
compared to 28.5% for the quarter ended March 31, 2018.
Quarterly Earnings Summary
The following table presents condensed
consolidated statements of income data for the periods
indicated.
Condensed Consolidated Statements of
Income (unaudited)
(dollars in thousands, except for per
share data)
|
For the quarter ended: |
|
3/31/2019 |
|
12/31/2018 |
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
| Net interest income |
|
$ |
4,423 |
|
$ |
4,459 |
|
$ |
4,755 |
|
$ |
4,431 |
|
$ |
4,302 |
| Provision for loan
losses |
|
— |
|
— |
|
60 |
|
90 |
|
90 |
| Net interest income
after provision for loan losses |
|
4,423 |
|
4,459 |
|
4,695 |
|
4,341 |
|
4,212 |
| Other income |
|
190 |
|
198 |
|
190 |
|
208 |
|
204 |
| Other expense |
|
3,867 |
|
2,911 |
|
3,064 |
|
2,899 |
|
2,987 |
| Income before income
taxes |
|
746 |
|
1,746 |
|
1,821 |
|
1,650 |
|
1,429 |
| Income taxes
(benefit) |
|
232 |
|
491 |
|
506 |
|
407 |
|
407 |
| Net income |
|
$ |
514 |
|
$ |
1,255 |
|
$ |
1,315 |
|
$ |
1,243 |
|
$ |
1,022 |
| Earnings per common
share: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
$ |
0.10 |
|
$ |
0.24 |
|
$ |
0.25 |
|
$ |
0.23 |
|
$ |
0.19 |
|
Diluted |
|
$ |
0.10 |
|
$ |
0.24 |
|
$ |
0.24 |
|
$ |
0.23 |
|
$ |
0.19 |
| Weighted average common
shares outstanding: |
|
|
|
|
|
|
|
|
|
|
|
Basic |
|
5,198,432 |
|
5,276,116 |
|
5,330,029 |
|
5,331,090 |
|
5,470,349 |
|
Diluted |
|
5,237,329 |
|
5,317,305 |
|
5,388,577 |
|
5,375,090 |
|
5,507,443 |
| |
|
|
|
|
|
|
|
|
|
|
Statement of Condition Highlights at March 31,
2019
- Total assets amounting to $568.1 million at March 31,
2019, a decrease of $16.4 million, or 2.81%, compared to
December 31, 2018.
- The Company’s total gross loans receivable were $495.1 million
at March 31, 2019, a decrease of $12.9 million, or 2.5%, from
December 31, 2018.
- Securities held to maturity were $37.0 million at
March 31, 2019, a decrease of $2.5 million, or 6.3%, compared
to December 31, 2018.
- Deposits increased $12.2 million or 2.89%, to $432.8 million at
March 31, 2019 compared to $420.6 million at December 31,
2018.
- Borrowings totaled $64.3 million at March 31, 2019, a
decrease of $30.0 million, or 31.8%, compared to $94.3 million at
December 31, 2018.
The following table presents condensed
consolidated statements of condition data as of the dates
indicated.
Condensed Consolidated Statements of
Condition (unaudited)
(in thousands)
|
At: |
|
3/31/2019 |
|
12/31/2018 |
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
| Cash and due from
banks |
|
$ |
1,040 |
|
$ |
1,558 |
|
$ |
1,254 |
|
$ |
1,654 |
|
$ |
1,871 |
| Interest-earning demand
deposits with banks |
|
9,771 |
|
10,242 |
|
20,817 |
|
14,660 |
|
15,484 |
| Securities held to
maturity |
|
36,982 |
|
39,476 |
|
43,009 |
|
44,770 |
|
36,375 |
| Loans receivable, net
of allowance |
|
489,445 |
|
502,299 |
|
494,848 |
|
509,689 |
|
480,916 |
| Premises and
equipment |
|
9,221 |
|
8,180 |
|
8,323 |
|
8,461 |
|
8,580 |
| Federal home Loan Bank
of New York stock, at cost |
|
3,406 |
|
4,756 |
|
4,117 |
|
4,212 |
|
3,049 |
| Bank owned life
insurance |
|
14,679 |
|
14,585 |
|
14,489 |
|
14,392 |
|
14,294 |
| Accrued interest
receivable |
|
1,772 |
|
1,615 |
|
1,734 |
|
1,754 |
|
1,642 |
| Other assets |
|
1,777 |
|
1,789 |
|
1,803 |
|
1,657 |
|
1,816 |
| Total
assets |
|
$ |
568,093 |
|
$ |
584,500 |
|
$ |
590,394 |
|
$ |
601,249 |
|
$ |
564,027 |
| Deposits |
|
$ |
432,754 |
|
$ |
420,579 |
|
$ |
437,597 |
|
$ |
448,512 |
|
$ |
433,843 |
| Borrowings |
|
64,275 |
|
94,275 |
|
80,075 |
|
82,175 |
|
58,075 |
| Other liabilities |
|
4,172 |
|
3,000 |
|
2,714 |
|
2,056 |
|
2,350 |
| Shareholders'
equity |
|
66,892 |
|
66,646 |
|
70,008 |
|
68,506 |
|
69,759 |
| Total
liabilities and shareholders' equity |
|
$ |
568,093 |
|
$ |
584,500 |
|
$ |
590,394 |
|
$ |
601,249 |
|
$ |
564,027 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loans
At March 31, 2019, the Company’s net loan
portfolio totaled $489.4 million, a decrease of $12.9 million, or
2.6%, compared to $502.3 million at December 31, 2018.
The allowance for loan losses amounted to $5.7 million at
March 31, 2019 and December 31, 2018.
At March 31, 2019, the loan portfolio
primarily consisted of commercial real estate loans (40.3%) and
residential mortgages (32.2%). Commercial and industrial loans
represented 20.2% of the portfolio while construction loans
accounted for 7.3% of the portfolio. Total gross loans receivable
decreased $6.0 million to $513.1 million at March 31, 2019
compared to $519.1 million at December 31, 2018. The decrease
primarily reflects a $10.8 million decrease in commercial and
industrial - secured loans and a $6.0 million decrease in
commercial real estate loans. Additionally there was a $2.6 million
decrease in residential mortgages as the Company continues to focus
on commercial lending. Offsetting these decreases was an
increase in the construction loan portfolio of $7.7 million
compared to December 31, 2018.
The following table shows the composition of the
Company's loan portfolio as of the dates indicated.
Loans (unaudited)
(dollars in thousands)
|
At quarter ended: |
|
3/31/2019 |
|
12/31/2018 |
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
| Residential
mortgage: |
|
|
|
|
|
|
|
|
|
|
| One-to-four family |
|
$ |
140,043 |
|
$ |
143,391 |
|
$ |
147,127 |
|
$ |
151,372 |
|
$ |
154,576 |
| Home
equity |
|
25,160 |
|
24,365 |
|
25,494 |
|
26,174 |
|
27,051 |
| Total residential
mortgage |
|
165,203 |
|
167,756 |
|
172,621 |
|
177,546 |
|
181,627 |
| Commercial and
multi-family real estate |
|
206,653 |
|
212,606 |
|
209,283 |
|
214,653 |
|
195,951 |
| Construction |
|
37,319 |
|
29,628 |
|
28,788 |
|
48,423 |
|
49,397 |
| Commercial and
industrial - Secured |
|
49,640 |
|
60,426 |
|
56,331 |
|
52,879 |
|
48,662 |
| Commercial and
industrial - Unsecured |
|
53,791 |
|
48,176 |
|
45,518 |
|
41,261 |
|
34,050 |
| Total commercial
loans |
|
347,403 |
|
350,836 |
|
339,920 |
|
357,216 |
|
328,060 |
| Consumer loans |
|
470 |
|
540 |
|
580 |
|
608 |
|
595 |
| Total loans
receivable |
|
513,076 |
|
519,132 |
|
513,121 |
|
535,370 |
|
510,282 |
| Less: |
|
|
|
|
|
|
|
|
|
|
| Loans in
process |
|
17,443 |
|
10,677 |
|
12,142 |
|
19,594 |
|
23,398 |
| Deferred
loan fees |
|
530 |
|
501 |
|
475 |
|
491 |
|
462 |
|
Allowance |
|
5,658 |
|
5,655 |
|
5,656 |
|
5,596 |
|
5,506 |
| Total loans receivable,
net |
|
$ |
489,445 |
|
$ |
502,299 |
|
$ |
494,848 |
|
$ |
509,689 |
|
$ |
480,916 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset Quality
At March 31, 2019 and December 31,
2018 non-performing loans totaled $3.8 million and $4.1 million, or
0.68% and 0.71% of total assets, respectively. Nonperforming
loans decreased slightly since year end as one relationship was
resolved in the quarter. Total delinquent loans (including
nonperforming delinquent loans) were $5.8 million at March 31,
2019, a decrease of $476,000 from December 31, 2018 due to a
decrease in loans past due 90 days or more. The allowance for
loan losses as a percentage of total loans was 1.14% and 1.11% at
March 31, 2019 and at December 31, 2018, respectively,
while the allowance for loan losses as a percentage of
non-performing loans increased to 147.38% at March 31, 2019
from 136.83% at December 31, 2018. Non-performing loans to
total loans decreased to 0.78% at March 31, 2019 from 0.81% at
December 31, 2018 primarily due to a decrease in nonperforming
loans.
The following table presents the components of
non-performing assets and other asset quality data for the periods
indicated.
(dollars in thousands,
unaudited)
| As of or
for the quarter ended: |
|
|
3/31/2019 |
|
|
|
12/31/2018 |
|
|
|
9/30/2018 |
|
|
|
6/30/2018 |
|
|
|
3/31/2018 |
|
| Non-accrual loans |
|
$ |
3,839 |
|
|
$ |
4,131 |
|
|
$ |
2,746 |
|
|
$ |
3,430 |
|
|
$ |
3,548 |
|
| Loans 90 days or more
past due and still accruing |
|
— |
|
|
2 |
|
|
101 |
|
|
699 |
|
|
1,266 |
|
| Total
non-performing loans |
|
$ |
3,839 |
|
|
$ |
4,133 |
|
|
$ |
2,847 |
|
|
$ |
4,129 |
|
|
$ |
4,814 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Non-performing assets /
total assets |
|
0.68 |
% |
|
0.71 |
% |
|
0.48 |
% |
|
0.69 |
% |
|
0.85 |
% |
| Non-performing loans /
total loans |
|
0.78 |
% |
|
0.81 |
% |
|
0.57 |
% |
|
0.8 |
% |
|
0.99 |
% |
| Net charge-offs
(recoveries) |
|
$ |
(3 |
) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
(2 |
) |
| Net charge-offs
(recoveries) / average loans (annualized) |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
|
— |
% |
| Allowance for loan loss
/ total loans |
|
1.14 |
% |
|
1.11 |
% |
|
1.13 |
% |
|
1.09 |
% |
|
1.13 |
% |
| Allowance for loan
losses / non-performing loans |
|
147.38 |
% |
|
136.83 |
% |
|
198.67 |
% |
|
135.53 |
% |
|
114.37 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
568,093 |
|
|
$ |
584,500 |
|
|
$ |
590,394 |
|
|
$ |
601,249 |
|
|
$ |
564,027 |
|
| Gross loans, excluding
ALLL |
|
$ |
495,103 |
|
|
$ |
507,954 |
|
|
$ |
500,504 |
|
|
$ |
515,285 |
|
|
$ |
486,422 |
|
| Average loans |
|
$ |
502,149 |
|
|
$ |
499,368 |
|
|
$ |
499,082 |
|
|
$ |
500,959 |
|
|
$ |
483,255 |
|
| Allowance for loan
losses |
|
$ |
5,658 |
|
|
$ |
5,655 |
|
|
$ |
5,656 |
|
|
$ |
5,596 |
|
|
$ |
5,506 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deposits
Total deposits at March 31, 2019 increased
to $432.8 million from $420.6 million compared to year-end
2018. Certificates of deposits (including IRAs) and
non-interest demand balances increased $18.7 million and $2.7
million, respectively. Certificates of deposits increased to
$139.6 million compared to $120.9 million at year end while
non-interest demand deposit account balances increased to $49.4
million compared to $46.7 million. Additionally, money market
balances increased $1.0 million to $17.2 million compared to $16.2
million at year-end 2018. Offsetting these increases was a
decline in interest demand deposit account balances of $10.7
million to $123.4 million at March 31, 2019 from $134.1
million from year end at December 31, 2018.
The following table shows the composition of the
Company's deposits as of the dates indicated.
Deposits (unaudited)
(dollars in thousands)
|
At quarter ended: |
|
3/31/2019 |
|
12/31/2018 |
|
9/30/2018 |
|
6/30/2018 |
|
3/31/2018 |
| Demand: |
|
|
|
|
|
|
|
|
|
|
| Non-interest
bearing |
|
$ |
49,429 |
|
$ |
46,690 |
|
$ |
45,501 |
|
$ |
42,687 |
|
$ |
36,751 |
|
Interest-bearing |
|
123,420 |
|
134,123 |
|
150,248 |
|
153,968 |
|
148,888 |
| Savings |
|
103,109 |
|
102,740 |
|
102,434 |
|
109,254 |
|
109,215 |
| Money market |
|
17,182 |
|
16,171 |
|
12,822 |
|
14,381 |
|
20,251 |
| Time |
|
139,614 |
|
120,855 |
|
126,592 |
|
128,222 |
|
118,738 |
| Total
deposits |
|
$ |
432,754 |
|
$ |
420,579 |
|
$ |
437,597 |
|
$ |
448,512 |
|
$ |
433,843 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital
At March 31, 2019, the Company's total
stockholders' equity amounted to $66.9 million, or 11.77% of total
assets, compared to $66.6 million at December 31, 2018.
The Company’s book value per common share was $12.46 at
March 31, 2019, compared to $12.37 at December 31, 2018.
The increase in shareholders' equity was primarily due to net
income of $514,000, offset by the repurchase of 22,200 shares
common stock during the quarter at a total cost of $398,000, with
the remaining difference related to ESOP, restricted stock and
stock option accounting activity.
At March 31, 2019, the Bank’s common equity
tier 1 ratio was 12.25%, tier 1 leverage ratio was 10.86%, tier 1
capital ratio was 12.25% and the total capital ratio was 13.38%. At
December 31, 2018, the Bank’s common equity tier 1 ratio was
11.90%, tier 1 leverage ratio was 10.71%, tier 1 capital ratio was
11.90%, and the total capital ratio was 13.00%. At
March 31, 2019, the Bank was in compliance with all applicable
regulatory capital requirements.
The following table sets forth the Company's
consolidated average statements of condition for the periods
presented.
Condensed Consolidated Average
Statements of Condition (unaudited)
(dollars in thousands)
| For the
quarter ended: |
|
|
3/31/2019 |
|
|
|
12/31/2018 |
|
|
|
9/30/2018 |
|
|
|
6/30/2018 |
|
|
|
3/31/2018 |
|
| Loans |
|
$ |
502,149 |
|
|
$ |
499,368 |
|
|
$ |
499,082 |
|
|
$ |
500,959 |
|
|
$ |
483,255 |
|
| Securities held to
maturity |
|
37,899 |
|
|
41,460 |
|
|
43,871 |
|
|
36,494 |
|
|
37,661 |
|
| Allowance for loan
losses |
|
(5,656 |
) |
|
(5,686 |
) |
|
(5,624 |
) |
|
(5,538 |
) |
|
(5,461 |
) |
| All other assets |
|
42,778 |
|
|
41,211 |
|
|
37,466 |
|
|
38,053 |
|
|
38,851 |
|
| Total
assets |
|
$ |
577,170 |
|
|
$ |
576,353 |
|
|
$ |
574,795 |
|
|
$ |
569,968 |
|
|
$ |
554,306 |
|
| Non-interest bearing
deposits |
|
$ |
46,962 |
|
|
$ |
48,172 |
|
|
$ |
43,495 |
|
|
$ |
38,903 |
|
|
$ |
36,211 |
|
| Interest-bearing
deposits |
|
367,434 |
|
|
372,474 |
|
|
386,364 |
|
|
385,047 |
|
|
390,522 |
|
| Borrowings |
|
92,780 |
|
|
83,440 |
|
|
73,077 |
|
|
74,192 |
|
|
53,191 |
|
| Other liabilities |
|
2,623 |
|
|
2,585 |
|
|
2,320 |
|
|
2,495 |
|
|
1,972 |
|
| Stockholders'
Equity |
|
67,371 |
|
|
69,682 |
|
|
69,539 |
|
|
69,331 |
|
|
72,410 |
|
| Total
liabilities and shareholders' equity |
|
$ |
577,170 |
|
|
$ |
576,353 |
|
|
$ |
574,795 |
|
|
$ |
569,968 |
|
|
$ |
554,306 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Measures
This release references adjusted net income,
which is a non-GAAP (Generally Accepted Accounting Principles)
financial measure. Adjusted net income is derived from GAAP
net income less the $862,000 in additional expenses associated with
the expanded audit scope and identification of material weaknesses
and tax effected rate of 31%. We believe the presentation of
adjusted net income is appropriate as it better enables an investor
to analyze the performance of our core business year over year
without the impact of unusual items.
The following tables reconcile adjusted net
income to net income and adjusted diluted earnings per share to
diluted earnings per share:
| |
Three months ended March 31, |
| |
2019 |
|
2018 |
| (dollars in
thousands) |
|
|
|
| Net income |
$ |
514 |
|
|
$ |
1,022 |
|
| Professional expenses
associated with increased audit scope and identification of
material weaknesses |
862 |
|
|
— |
|
| Tax adjustment using an
assumed tax rate of 31% |
(267 |
) |
|
— |
|
| Adjusted net
income |
$ |
1,109 |
|
|
$ |
1,022 |
|
| |
|
|
|
|
|
|
|
| |
Three Months Ended |
|
|
March 31, |
| (In Thousands, Except
Per Share Data) |
2019 |
|
2018 |
|
Numerator: |
|
|
|
| Net income |
$ |
1,109 |
|
|
$ |
1,022 |
|
| |
|
|
|
|
Denominator: |
|
|
|
| Weighted average common
shares |
5,198 |
|
|
5,470 |
|
| Dilutive potential
common shares |
39 |
|
|
37 |
|
| Weighted
average fully diluted shares |
5,237 |
|
|
5,507 |
|
| |
|
|
|
| Earnings per
share: |
|
|
|
|
Dilutive |
$ |
0.21 |
|
|
$ |
0.19 |
|
|
|
|
|
|
|
|
|
|
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, the
impact of the passage of the Tax Cuts and Jobs Act, our continued
ability to manage cybersecurity risks and our continued ability to
successfully remediate our identified internal control
weaknesses.
| |
Michael A. Shriner,
President & CEO |
|
Contact: |
(908)
647-4000 |
| |
mshriner@millingtonbank.com |
| |
|
|
|
|
|
| MSB Financial Corp. and
Subsidiaries |
| |
| Consolidated Statements of Financial
Condition |
|
|
At |
At |
|
|
March 31, |
December
31, |
|
|
2019 |
2018 |
|
(Dollars in thousands, except per share amounts) |
|
|
| Cash and due from
banks |
$ |
1,040 |
|
$ |
1,558 |
|
|
Interest-earning demand deposits with banks |
9,771 |
|
10,242 |
|
|
Cash and Cash Equivalents |
10,811 |
|
11,800 |
|
|
Securities held to maturity (fair value of $36,444 and $38,569,
respectively) |
36,982 |
|
39,476 |
|
|
Loans receivable, net of allowance for loan losses of $5,658 and
$5,655, respectively |
489,445 |
|
502,299 |
|
|
Premises and equipment |
8,088 |
|
8,180 |
|
|
Federal Home Loan Bank of New York stock, at cost |
3,406 |
|
4,756 |
|
|
Bank owned life insurance |
14,679 |
|
14,585 |
|
|
Accrued interest receivable |
1,772 |
|
1,615 |
|
|
Other assets |
2,910 |
|
1,789 |
|
|
Total Assets |
$ |
568,093 |
|
$ |
584,500 |
|
|
Liabilities and Stockholders' Equity |
|
|
|
Liabilities |
|
|
|
Deposits: |
|
|
|
Non-interest bearing |
$ |
49,429 |
|
$ |
46,690 |
|
|
Interest bearing |
383,325 |
|
373,889 |
|
|
Total Deposits |
432,754 |
|
420,579 |
|
|
Advances from Federal Home Loan Bank of New York |
64,275 |
|
94,275 |
|
|
Advance payments by borrowers for taxes and insurance |
719 |
|
749 |
|
|
Other liabilities |
3,453 |
|
2,251 |
|
|
Total Liabilities |
501,201 |
|
517,854 |
|
|
Stockholders' Equity |
|
|
|
Preferred stock, par value $0.01; 1,000,000 shares authorized; no
shares issued or outstanding |
— |
|
— |
|
|
Common stock, par value $0.01; 49,000,000 shares authorized;
5,366,854 and 5,389,054 issued and outstanding at March 31, 2019
and December 31, 2018, respectively |
54 |
|
54 |
|
|
Paid-in capital |
44,431 |
|
44,726 |
|
|
Retained earnings |
24,012 |
|
23,498 |
|
|
Unearned common stock held by ESOP (176,740 and 179,464 shares,
respectively) |
(1,605 |
) |
(1,632 |
|
|
Total Stockholders' Equity |
66,892 |
|
66,646 |
|
|
Total Liabilities and Stockholders' Equity |
$ |
568,093 |
|
$ |
584,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| MSB Financial Corp. and
Subsidiaries |
| |
|
Consolidated Statements of Income |
| |
Three months ended March 31, |
| |
2019 |
|
2018 |
| (in thousands
except per share amounts) |
|
|
|
| Interest
Income |
|
|
|
| Loans receivable,
including fees |
$ |
5,691 |
|
|
$ |
5,136 |
|
|
Securities held to maturity |
285 |
|
|
219 |
|
|
Other |
132 |
|
|
74 |
|
|
Total Interest Income |
6,108 |
|
|
5,429 |
|
| Interest
Expense |
|
|
|
|
Deposits |
1,126 |
|
|
846 |
|
|
Borrowings |
559 |
|
|
281 |
|
|
Total Interest Expense |
1,685 |
|
|
1,127 |
|
|
Net Interest Income |
4,423 |
|
|
4,302 |
|
| Provision for
Loan Losses |
— |
|
|
90 |
|
|
Net Interest Income after Provision for Loan
Losses |
4,423 |
|
|
4,212 |
|
| Non-Interest
Income |
|
|
|
| Fees and
service charges |
72 |
|
|
83 |
|
| Income
from bank owned life insurance |
94 |
|
|
97 |
|
|
Other |
24 |
|
|
24 |
|
|
Total Non-Interest Income |
190 |
|
|
204 |
|
| Non-Interest
Expenses |
|
|
|
| Salaries
and employee benefits |
1,728 |
|
|
1,805 |
|
| Directors
compensation |
129 |
|
|
122 |
|
| Occupancy
and equipment |
375 |
|
|
386 |
|
| Service
bureau fees |
95 |
|
|
66 |
|
|
Advertising |
7 |
|
|
4 |
|
| FDIC
assessment |
46 |
|
|
54 |
|
|
Professional services |
1,278 |
|
|
353 |
|
|
Other |
209 |
|
|
197 |
|
|
Total Non-Interest Expenses |
3,867 |
|
|
2,987 |
|
| Income before
Income Taxes |
746 |
|
|
1,429 |
|
| Income
Tax Expense |
232 |
|
|
407 |
|
| Net
Income |
$ |
514 |
|
|
$ |
1,022 |
|
| Earnings per
share: |
|
|
|
|
Basic |
$ |
0.10 |
|
|
$ |
0.19 |
|
|
Diluted |
$ |
0.10 |
|
|
$ |
0.19 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
| MSB Financial Corp. and
Subsidiaries |
|
|
| |
|
|
|
|
|
| Selected
Quarterly Financial and Statistical Data |
|
|
|
|
|
| |
Three Months Ended |
| (in thousands,
except for share and per share data) (annualized where
applicable) |
3/31/2019 |
|
12/31/2018 |
|
3/31/2018 |
|
(unaudited) |
|
|
|
|
|
| Statements of
Operations Data |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest income |
$ |
6,108 |
|
|
$ |
6,003 |
|
|
$ |
5,429 |
|
| Interest
expense |
1,685 |
|
|
1,544 |
|
|
1,127 |
|
| Net
interest income |
4,423 |
|
|
4,459 |
|
|
4,302 |
|
| Provision
for loan losses |
— |
|
|
— |
|
|
90 |
|
| Net
interest income after provision for loan losses |
4,423 |
|
|
4,459 |
|
|
4,212 |
|
| Other
income |
190 |
|
|
198 |
|
|
204 |
|
| Other
expense |
3,867 |
|
|
2,911 |
|
|
2,987 |
|
| Income
before income taxes |
746 |
|
|
1,746 |
|
|
1,429 |
|
| Income
tax expense (benefit) |
232 |
|
|
491 |
|
|
407 |
|
| Net
Income |
$ |
514 |
|
|
$ |
1,255 |
|
|
$ |
1,022 |
|
| Earnings (per
Common Share) |
|
|
|
|
|
|
Basic |
$ |
0.10 |
|
|
$ |
0.24 |
|
|
$ |
0.19 |
|
|
Diluted |
$ |
0.10 |
|
|
$ |
0.24 |
|
|
$ |
0.19 |
|
| Statements of
Condition Data (Period-End) |
|
|
|
|
|
|
Investment securities held to maturity (fair value of $36,444,
$38,569, and $35,561) |
$ |
36,982 |
|
|
$ |
39,476 |
|
|
$ |
36,375 |
|
| Loans
receivable, net of allowance for loan losses |
489,445 |
|
|
502,299 |
|
|
480,916 |
|
| Total
assets |
568,093 |
|
|
584,500 |
|
|
564,027 |
|
|
Deposits |
432,754 |
|
|
420,579 |
|
|
433,843 |
|
|
Borrowings |
64,275 |
|
|
94,275 |
|
|
58,075 |
|
|
Stockholders' equity |
66,892 |
|
|
66,646 |
|
|
69,759 |
|
| Common Shares
Dividend Data |
|
|
|
|
|
| Cash
dividends |
$ |
— |
|
|
$ |
2,522 |
|
|
$ |
— |
|
| Weighted
Average Common Shares Outstanding |
|
|
|
|
|
|
Basic |
5,198,432 |
|
|
5,276,116 |
|
|
5,470,349 |
|
|
Diluted |
5,237,329 |
|
|
5,317,305 |
|
|
5,507,443 |
|
| Operating
Ratios |
|
|
|
|
|
| Return on
average assets |
0.36 |
% |
|
0.87 |
% |
|
0.74 |
% |
| Return on
average equity |
3.05 |
% |
|
7.20 |
% |
|
5.65 |
% |
| Average
equity / average assets |
11.67 |
% |
|
12.09 |
% |
|
13.06 |
% |
| Book
value per common share (period-end) |
$ |
12.46 |
|
|
$ |
12.37 |
|
|
$ |
12.63 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
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