Emclaire Financial Corp (NASDAQ:EMCF), the parent holding company
of The Farmers National Bank of Emlenton, reported consolidated net
income of $1.4 million, or $0.62 per common share, for the three
months ended June 30, 2018, an increase of $372,000, or 35.7%, from
net income of $1.0 million, or $0.48 per common share, reported for
the same period in 2017. Net income for the six-month period
ended June 30, 2018 was $2.8 million, or $1.21 per diluted share,
an increase of $778,000, or 38.9%, from net income of $2.0 million,
or $0.92 per diluted share, for the same period in 2017.
The increase in net income for both periods
compared to the same period in 2017 resulted from increases in net
interest income and noninterest income, partially offset by
increases in noninterest expense and the provision for loan
losses. The Corporation realized an annualized return on
average assets of 0.74% and an annualized return on average equity
of 9.58% for the quarter ended June 30, 2018, compared to 0.58% and
7.50%, respectively, for the same period in 2017.
William C. Marsh, Chairman, President and Chief
Executive Officer of the Corporation and the Bank, noted, “The
Board of Directors, management and I are pleased with the results
for the first half of 2018. We achieved strong earnings and
balance sheet growth while managing expenses and maintaining strong
asset quality. We have recently announced plans to acquire
Community First Bancorp, Inc., which will strengthen our market
position in Clarion and Jefferson counties and build a stronger
franchise in the Pittsburgh and Western Pennsylvania region.
We remain focused on sustaining a sound capital base while
providing an attractive return to our shareholders and are
well-positioned for future profitable growth.”
OPERATING RESULTS OVERVIEW
Net income increased $372,000, or 35.7%, to $1.4
million, or $0.62 per common share, for the three months ended June
30, 2018, compared to $1.0 million, or $0.48 per common share, for
the same period in 2017. The increase resulted from increases
in net interest income and noninterest income of $826,000 and
$181,000, respectively, and a decrease in provision for income
taxes of $32,000, partially offset by increases in noninterest
expense and the provision for loan losses of $568,000 and $99,000,
respectively.
Net interest income increased $826,000, or
15.4%, to $6.2 million for the three months ended June 30, 2018
from $5.4 million for the same period in 2017. The increase
in net interest income resulted from an increase in interest income
of $1.0 million, or 15.6%, as the Corporation experienced a $45.5
million increase in the average balance of loans. Partially
offsetting the increase in interest income, interest expense
increased $176,000, or 16.5%, as the Corporation's average balance
of interest-bearing deposits increased $68.6 million, partially
offset by a $20.9 million decrease in the average balance of
borrowed funds. The increases in the Corporation's loans and
interest-bearing deposit balances resulted from strong production
across the Bank's franchise and the third quarter 2017 acquisition
of Northern Hancock Bank and Trust Co. (NHBT), which added
approximately $18.5 million in loans and $19.7 million in deposits
to the Bank.
Noninterest income increased $181,000, or 20.9%,
to $1.0 million for the three months ended June 30, 2018 from
$868,000 for the same period in 2017. During the quarter
ended June 30, 2017, the Corporation recorded a $508,000
other-than-temporary impairment charge on a subordinated debt
investment issued by First NBC Bank Holding Company.
Partially offsetting the impairment charge, the Corporation
realized security gains of $350,000 during the quarter ended June
30, 2017. Fees and service charges increased $28,000 as overdraft
charges for the three months ended June 30, 2018 outpaced the same
period in the prior year and other income increased $117,000 due to
increased interchange fee income and fair value adjustments related
to the Corporation's equity securities. Partially offsetting
these favorable items, gains on the sales of loans totaled $2,000
for the quarter ended June 30, 2018, compared to $124,000 for the
same period in 2017.
The provision for loan losses increased $99,000,
or 49.3%, to $300,000 for the three months ended June 30, 2018 from
$201,000 for the same period in 2017 due to general increases in
the Corporation's loan portfolio and higher than normal loan
charge-offs experienced in the second quarter of 2018.
Noninterest expense increased $568,000, or
12.1%, to $5.2 million for the three months ended June 30, 2018
from $4.7 million for the same period in 2017. The increase
primarily related to increases in acquisition costs, compensation
and benefits expense and federal deposit insurance of $252,000,
$174,000 and $49,000, respectively. Acquisition costs
incurred during the second quarter of 2018 related to the pending
acquisition of Community First Bancorp, Inc. totaled $358,000,
compared to acquisition costs of $106,000 incurred during the
second quarter of 2017 related to the acquisition of NHBT.
The increase in compensation and benefits expense related to costs
associated with the operation of the new full-service banking
office in Chester, West Virginia which was acquired from NHBT,
increased health insurance costs and normal salary and
benefit increases.
The provision for income taxes decreased
$32,000, or 10.2%, to $282,000 for the three months ended June 30,
2018 from $314,000 million for the same period in 2017 as a result
of the enactment of the Tax Cuts and Jobs Act of 2017 and the
decrease in the corporate tax rate to 21%.
CONSOLIDATED YEAR-TO-DATE OPERATING
RESULTS OVERVIEW
Net income increased $778,000, or 38.9%, to $2.8
million or $1.21 per diluted share for the six months ended June
30, 2018, compared to $2.0 million or $0.92 per diluted share for
the same period in 2017. The increase resulted from increases
in net interest income and noninterest income of $1.5 million and
$224,000, respectively, and a decrease in provision for income
taxes of $38,000, partially offset by increases in noninterest
expense and the provision for loan losses of $683,000 and $317,000,
respectively.
Net interest income increased $1.5 million, or
14.4%, to $12.0 million for the six months ended June 30, 2018,
compared to $10.5 million for the same period in 2017. The
increase in net interest income resulted from an increase in
interest income of $1.8 million, or 14.5%, as the Corporation
experienced a $47.8 million increase in the average balance of
loans. Partially offsetting the increase in interest income,
interest expense increased $308,000, or 14.8%, as the Corporation's
average balance of interest-bearing deposits increased $67.8
million, partially offset by a $20.4 million decrease in the
average balance of borrowed funds. The increases in the
Corporation's loans and interest-bearing deposit balances resulted
from strong production across the Bank's franchise and the
aforementioned third quarter 2017 acquisition of NHBT.
The provision for loan losses increased
$317,000, or 87.3%, to $680,000 for the six months ended June 30,
2018 from $363,000 for the same period in 2017 due to general
increases in the Corporation's loan portfolio and higher than
normal loan charge-offs experienced in the first half of 2018.
Noninterest income increased $224,000, or 13.0%,
to $1.9 million for the six months ended June 30, 2018 from $1.7
million for the same period in 2017. During the six months
ended June 30, 2017, the Corporation recorded a $508,000
other-than-temporary impairment charge on a subordinated debt
investment issued by First NBC Bank Holding Company.
Partially offsetting the impairment charge, the Corporation
realized security gains of $350,000 during the six months ended
June 30, 2017. During the six months ended June 30, 2018, the
Corporation realized security losses of $30,000. Additionally, fees
and service charges increased $58,000 as overdraft charges for the
six months ended June 30, 2018 outpaced the same period in the
prior year and other income increased $140,000 due to increased
interchange fee income and fair value adjustments related to the
Corporation's equity securities. Partially offsetting these
favorable items, gains on the sales of loans totaled $24,000 for
the six months ended June 30, 2018, compared to $130,000 for the
same period in 2017.
Noninterest expense increased $683,000, or 7.4%,
to $10.0 million for the six months ended June 30, 2018 from $9.3
million for the same period in 2017. The increase primarily
related to increases in compensation and benefits expense,
acquisition costs, federal deposit insurance and professional fees
of $304,000, $251,000, $78,000 and $53,000, respectively. The
increase in compensation and benefits expense related to costs
associated with the operation of the new full-service banking
office in Chester, West Virginia which was acquired from NHBT,
increased health insurance costs and normal salary and benefit
increases. Acquisition costs incurred during the first half of 2018
related to the pending acquisition of Community First Bancorp, Inc.
totaled $358,000, compared to acquisition costs of $107,000
incurred during the first half of 2017 related to the acquisition
of NHBT.
The provision for income taxes decreased
$38,000, or 6.5%, to $548,000 for the six months ended June 30,
2018 from $586,000 million for the same period in 2017 as a
result of the enactment of the Tax Cuts and Jobs Act of 2017 and
the decrease in the corporate tax rate to 21%.
CONSOLIDATED BALANCE SHEET & ASSET
QUALITY OVERVIEW
Total assets increased $25.2 million to $775.3
million at June 30, 2018 from $750.1 million at December 31,
2017. Asset growth was driven by increases in cash and
equivalents and net loans receivable of $16.2 million and $9.5
million, respectively. Liabilities increased $24.8 million to
$715.8 million at June 30, 2018 from $691.0 million at December 31,
2017 due to an increase in customer deposits of $30.9 million,
partially offset by a $6.0 million reduction in borrowed funds.
Total nonperforming assets decreased to $3.3
million, or 0.43% of total assets at June 30, 2018, compared to
$4.2 million, or 0.56% of total assets at December 31, 2017.
Stockholders’ equity increased $402,000 to $59.5
million at June 30, 2018 from $59.1 million at December 31, 2017
primarily due to a $1.6 million increase in retained earnings as a
result of $2.8 million of net income, partially offset by $1.3
million of common dividends paid, and a $1.4 million decrease in
accumulated other comprehensive income. The Corporation
remains well capitalized and is positioned for continued growth
with total stockholders’ equity at 7.7% of total assets.
Tangible book value per common share was $21.51 at June 30, 2018,
compared to $21.28 at December 31, 2017.
Emclaire Financial Corp is the parent company of
The Farmers National Bank of Emlenton, an independent, nationally
chartered, FDIC-insured community bank headquartered in Emlenton,
Pennsylvania, operating 17 full service banking offices in Venango,
Allegheny, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson
and Mercer counties, Pennsylvania and Hancock County, West
Virginia. The Corporation’s common stock is quoted on and
traded through the NASDAQ Capital Market under the symbol
“EMCF”. For more information, visit the Corporation’s website
at “www.emclairefinancial.com”.
This news release may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements may contain words such as
“believe”, “expect”, “anticipate”, “estimate”, “should”, “may”,
“can”, “will”, “outlook”, “project”, “appears” or similar
expressions. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of
factors. Such factors include, but are not limited to, changes in
interest rates which could affect net interest margins and net
interest income, the possibility that increased demand or prices
for the Corporation's financial services and products may not
occur, changing economic and competitive conditions, technological
and regulatory developments, and other risks and uncertainties,
including those detailed in the Corporation's filings with the
Securities and Exchange Commission. The Corporation does not
undertake, and specifically disclaims any obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
INVESTOR RELATIONS CONTACT:
William C. MarshChairman, President andChief Executive
OfficerPhone: (844) 800-2193Email:
investor.relations@farmersnb.com
|
EMCLAIRE FINANCIAL CORP |
Consolidated Financial
Highlights |
(Unaudited - Dollar amounts in thousands, except share
data) |
|
|
|
CONSOLIDATED OPERATING RESULTS DATA: |
Three month period |
|
Six month period |
|
|
|
ended June 30, |
|
ended June 30, |
|
|
|
2018 |
|
2017 |
|
2018 |
|
2017 |
Interest
income |
$ |
7,434 |
|
|
$ |
6,432 |
|
|
$ |
14,429 |
|
|
$ |
12,605 |
|
Interest
expense |
|
1,243 |
|
|
|
1,067 |
|
|
|
2,392 |
|
|
|
2,084 |
|
|
Net interest
income |
|
|
6,191 |
|
|
|
5,365 |
|
|
|
12,037 |
|
|
|
10,521 |
|
Provision
for loan losses |
|
300 |
|
|
|
201 |
|
|
|
680 |
|
|
|
363 |
|
Noninterest income |
|
1,049 |
|
|
|
868 |
|
|
|
1,947 |
|
|
|
1,723 |
|
Noninterest expense |
|
5,245 |
|
|
|
4,677 |
|
|
|
9,981 |
|
|
|
9,298 |
|
|
Income before provision
for income taxes |
|
|
1,695 |
|
|
|
1,355 |
|
|
|
3,323 |
|
|
|
2,583 |
|
Provision
for income taxes |
|
282 |
|
|
|
314 |
|
|
|
548 |
|
|
|
586 |
|
|
Net income |
|
$ |
1,413 |
|
|
$ |
1,041 |
|
|
$ |
2,775 |
|
|
$ |
1,997 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
earnings per common share |
$ |
0.62 |
|
|
$ |
0.48 |
|
|
$ |
1.22 |
|
|
$ |
0.93 |
|
Diluted
earnings per common share |
$ |
0.62 |
|
|
$ |
0.48 |
|
|
$ |
1.21 |
|
|
$ |
0.92 |
|
Dividends
per common share |
$ |
0.28 |
|
|
$ |
0.27 |
|
|
$ |
0.56 |
|
|
$ |
0.54 |
|
Return on
average assets (1) |
|
0.74 |
% |
|
|
0.58 |
% |
|
|
0.74 |
% |
|
|
0.57 |
% |
Return on
average equity (1) |
|
9.58 |
% |
|
|
7.50 |
% |
|
|
9.48 |
% |
|
|
7.31 |
% |
Yield on
average interest-earning assets |
|
4.18 |
% |
|
|
3.94 |
% |
|
|
4.13 |
% |
|
|
3.94 |
% |
Cost of
average interest-bearing liabilities |
|
0.88 |
% |
|
|
0.82 |
% |
|
|
0.86 |
% |
|
|
0.81 |
% |
Cost of
funds |
|
0.72 |
% |
|
|
0.66 |
% |
|
|
0.70 |
% |
|
|
0.65 |
% |
Net
interest margin |
|
3.48 |
% |
|
|
3.30 |
% |
|
|
3.45 |
% |
|
|
3.30 |
% |
Efficiency
ratio |
|
71.06 |
% |
|
|
76.75 |
% |
|
|
69.72 |
% |
|
|
72.45 |
% |
____________________ |
|
|
|
|
|
|
|
(1)
Returns are annualized for the three and six month periods ended
June 30, 2018 and 2017. |
|
|
|
|
|
CONSOLIDATED BALANCE SHEET DATA: |
|
As of |
|
As of |
|
|
|
|
|
|
|
6/30/2018 |
|
12/31/2017 |
Total
assets |
|
|
|
|
$ |
775,319 |
|
|
$ |
750,084 |
|
Cash and
equivalents |
|
|
|
|
|
30,576 |
|
|
|
14,374 |
|
Securities |
|
|
|
|
|
100,360 |
|
|
|
101,167 |
|
Loans,
net |
|
|
|
|
|
587,258 |
|
|
|
577,738 |
|
Deposits |
|
|
|
|
|
685,551 |
|
|
|
654,643 |
|
Borrowed
funds |
|
|
|
|
|
20,050 |
|
|
|
26,000 |
|
Stockholders' equity |
|
|
|
|
|
59,493 |
|
|
|
59,091 |
|
Book value
per common share |
|
|
|
|
$ |
26.20 |
|
|
$ |
26.02 |
|
Tangible
book value per common share |
|
|
|
|
$ |
21.51 |
|
|
$ |
21.28 |
|
Net loans
to deposits |
|
|
|
|
|
85.66 |
% |
|
|
88.18 |
% |
Allowance
for loan losses to total loans |
|
|
|
|
|
1.03 |
% |
|
|
1.05 |
% |
Nonperforming assets to total assets |
|
|
|
|
|
0.43 |
% |
|
|
0.56 |
% |
Stockholders' equity to total assets |
|
|
|
|
|
7.67 |
% |
|
|
7.88 |
% |
Shares of
common stock outstanding |
|
|
|
|
|
2,271,139 |
|
|
|
2,271,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
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