MCKENNEY, Va., Oct. 8 /PRNewswire-FirstCall/ -- Bank of
McKenney (OTC Bulletin Board:
BOMK) today announced strong third quarter 2010 earnings of
$316,000 as compared to a loss of
$417,000 during the third quarter of
2009. The prior year's quarterly loss was due primarily to a
$1.2 million provision charge to
bolster the reserve for loan losses during September 2009. Basic and diluted earnings
per share of $0.17 were recorded for
the quarter ended September 30, 2010,
compared to a prior year's basic and diluted loss per share of
$0.22 for the same period. For
the nine-month period ended September 30,
2010, the Bank reported earnings of $1,070,000, an increase of 777.05% when compared
to earnings of $122,000 through the
first nine months of 2009. Again, the 2009 reduced earnings
were largely the result of provision charges to increase reserves.
For the first three quarters of 2010 and 2009, earnings per
basic and diluted share of $0.56 and
$0.06, respectively, were recorded.
Annualized returns on average assets and average equity for
the first nine months of 2010 were 0.78% and 7.43%, respectively,
compared to 0.04% and 0.42%, respectively, for the same period in
2009. Margins had contracted during the first two quarters as
the Bank implemented a plan to raise its loan-to-deposit ratio to a
projected target of 85% to 90%. Certain investments were
liquidated in preparation thereof, and the short term placements of
these funds put pressure on the margin. These pressures are
already abating with solid loan growth to date contributing an
additional 5 basis points to the targeted ratio. For the first
three quarters of 2010, the net interest margin stood at 4.28%, a
24 basis point decline in comparison with the same period of
2009.
At the end of the third quarter, total assets were $187.8 million, representing a $3.9 million or 2.12% increase over the
December 31, 2009 level of $183.9
million. Total deposits amounted to $163.6 million as of September 30, 2010, which represents a
$3.2 million or 2.00% increase from
the $160.4 million level as of
December 31, 2009. On an annualized basis, deposits grew
during the third quarter at a rate of 2.66%. During the same
period, total loans expanded by 6.28% or $7.7 million to the September 30, 2010 balance of $130.4 million. Loans, on an annualized
basis, grew at a rate of 8.37%. At September 30, 2010, the investment portfolio,
including time deposits in other banks, was $26.3 million, a 15.16% decrease in comparison to
the December 31, 2009 $31.0 million level. Overnight federal
funds sold grew slightly to a September 30,
2010 level of $11.0 million, a
5.77% increase over the $10.4 million
level reported on December 31, 2009.
Cumulatively, earning assets grew $3.6
million for the first three quarters or 2.93% on an
annualized basis and represent 89.30% of total assets. The
Bank continues to focus on delinquencies and nonperforming loans
within the portfolio. While these ratios remain elevated,
improvement continued through the third quarter. On
September 30, 2010, the delinquency
and nonperforming ratios stood at 0.47% and 2.69%, respectively.
These ratios, at December 31,
2009, were 1.25% and 3.01%, respectively. The severe
economic conditions that resulted in increases in these categories
seem to have begun moderating, and management continues to feel
comfortable that losses will be minimized by collateral positions
as well as the Bank's ability and willingness to work with the
borrowers where possible. The Bank is committed to returning
these levels to pre-recession norms of less than 1%.
The allowance for loan losses was $1,901,000 as of September
30, 2010, or 1.46% of loans outstanding, compared to
$1,950,000 as of December 31,
2009 or 1.59% of outstanding loans. Charges to the Reserve
account for loan losses amounted to $514,000 as of September
30, 2010 or 0.41% of average outstanding loans for 2010.
For the first nine months of 2009, charges to the reserve of
$575,000 were taken representing
0.49% of average loans outstanding for the period.
Allocations to the reserve account of $465,000 were provisioned for the nine months of
2010 compared to provision allocations of $1,473,000 for the same period of 2009.
Net interest income increased 9.38% to $1,855,000 in the third quarter of 2010 from
$1,696,000 in the comparable period
in 2009. Noninterest income, exclusive of securities
transactions, declined 8.28% or $42,000 in the third quarter of 2010 to
$465,000 when compared to
$507,000 for the same period in 2009.
Service charges posted higher results with an $18,000 or 8.18% increase when comparing the
third quarter of 2010 to the third quarter of 2009. The
mortgage originations department experienced a decrease in revenue
for the period. The department reported income for the 2010
third quarter of $142,000 which
represents a $49,000 or 25.65%
decline during the period when compared to the third quarter of
2009. Other noninterest products and services, including
those of the insurance and investment departments, decreased to
$85,000 for the third quarter of
2010, $11,000 below the $96,000 level recorded in the third quarter of
2009. Noninterest expense decreased $76,000 or 4.32% to $1,684,000 during the third quarter of 2010 from
$1,760,000 for the same period in
2009. Salaries and benefits lowered 1.29% or $13,000 while occupancy and furniture &
equipment expenses increased $11,000
or 5.07%. Other operating expenses for the third quarter of
2010 fell $74,000 or 13.73% to a
level of $465,000 due primarily to
lower accounting and legal expenses associated with being a private
rather than public company.
For the first nine months of 2010, net interest income increased
to $5,201,000 from $5,023,000 in the comparable period in 2009.
Average loans through the third quarter of 2010, when
compared to the same period in 2009, grew to $126.9 million from $116.0
million, an increase of 9.40%. The average investment
portfolio declined from a 2009 nine-month average balance of
$30.5 million to a $22.7 million average through the third quarter
of 2010, or a decrease of 25.57%. Average deposit growth
through the nine months of 2010 has increased 9.45% or $11.6 million to $134.4 million over the same
prior year period's average of $122.8
million. The Bank's prime based loan portfolio yields
decreased 30 basis points when comparing the first nine months of
2010 to that period in 2009 while the investment portfolio in the
same periods lost 164 basis points. Cumulatively, yields on
earning assets decreased 78 basis points from a 2009 nine-month
average of 6.55% to an average of 5.77% for the current year's same
period. The cost of funds has plummeted for the nine months
ended September 30, 2010 as a result
of the current and prolonged low rate environment to a level of
1.77% or 65 basis points below the 2.42% level reported for the
same period in 2009.
Noninterest income, exclusive of securities transactions,
declined 4.47% or $61,000 during the
first nine months of 2010 to $1,303,000 when compared to $1,364,000 for the same period in 2009.
Service charges posted higher results with a $22,000 or 3.35% increase when comparing the
first nine months of 2010 to that of 2009. In comparing these
same two periods, the mortgage originations department revenues
dipped $53,000 or 12.71%. Other
noninterest income decreased by $30,000 or 10.31% to $261,000 from the level recorded through the
third quarter of 2009. Noninterest expense increased
$65,000 or 1.32% to $4,988,000 during the first three quarters of
2010 from $4,923,000 for the same
period in 2009. Separately within this category, salaries and
benefits rose 2.37% or $68,000 for
the nine months ended September 30,
2010 while occupancy and furniture & equipment expenses
increased $22,000 or 3.34%.
Other operating expenses through September 30, 2010 fell $24,000 or 1.72% to a level of $1,374,000, again a result of lower audit and
legal expenses associated with being a private rather than public
company.
Richard M. Liles, President and
Chief Executive Officer, stated, "Last year, I had to report, post
third quarter, our first quarterly loss in over twenty years.
Today, I am very pleased with the current quarter's results
as we are on track to set new record earnings for 2010. We
have a committed, loyal, longstanding team as well as conservative,
risk-balanced policies set forth by our Board to which we all
adhere. We constantly monitor our loan portfolio for emerging
issues, work with borrowers having problems where feasible, and
immediately address unsolvable troubled debts as each is
identified. With these two methodologies in place, we are
successfully lending, growing deposits at a manageable pace,
maintaining reserves, reducing non-performing assets and
experiencing record earnings. This being said, I would be
remiss in not acknowledging that there are many uncertainties
remaining in our world as well as banking in general. Our
local economy, while improving, is soft with a housing market still
very sluggish. Moreover, we are in the early stages of new
regulations being defined by the hundreds from the financial
regulatory reforms passed earlier this year by congress.
Nevertheless, we have come a long way from last year at this
time, and I wish to express my thanks to our Board, employees,
customers and shareholders for their dedication and support in both
good and difficult times."
Bank of McKenney is a
full-service community bank headquartered in McKenney, Virginia with six branches serving
Southeastern Virginia.
Certain statements in this document are "forward-looking
statements" within the meaning of the Private Securities Litigation
Reform Act. These statements are based on management's current
expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from those
included in these statements due to a variety of factors. More
information about these factors is contained in Bank of
McKenney's filings with the Board
of Governors of the Federal Reserve.
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BANK OF MCKENNEY AND
SUBSIDIARY
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Consolidated Balance Sheets
Summary Data
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September 30, 2010 (unaudited)
and December 31, 2009
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September 30,
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December 31,
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ASSETS
|
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2010
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2009
|
|
|
|
|
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|
|
|
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|
Cash and due from
banks
|
|
|
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|
$
6,663,960
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$
5,942,984
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Federal funds sold
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|
|
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10,997,000
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10,418,000
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Interest-bearing time deposits
in banks
|
|
|
|
|
2,040,098
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|
2,009,923
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Securities available for sale,
at fair market value
|
|
|
|
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23,471,155
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28,245,341
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Restricted
investments
|
|
|
|
|
771,025
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794,725
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Loans, net
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|
|
|
|
128,470,176
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120,753,227
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Land, premises and equipment,
net
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|
|
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7,796,845
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8,006,392
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Other real estate
owned
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|
|
|
|
504,879
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|
375,000
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Other assets
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|
|
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|
7,084,528
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|
7,312,465
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Total
Assets
|
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|
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|
$
187,799,666
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$
183,858,057
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LIABILITIES
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Deposits
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|
|
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$
163,642,890
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$
160,384,510
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Borrowed Funds
|
|
|
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|
2,750,000
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3,000,000
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Other liabilities
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|
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|
1,561,057
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|
1,887,733
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Total
Liabilities
|
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|
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$
167,953,947
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$
165,272,243
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SHAREHOLDERS'
EQUITY
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Total shareholders'
equity
|
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|
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$
19,845,719
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$
18,585,814
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Total Liabilities
and Shareholders' Equity
|
|
|
|
|
$
187,799,666
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|
$
183,858,057
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|
|
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BANK OF MCKENNEY AND
SUBSIDIARY
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Consolidated Statements of
Income Summary Data
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(unaudited)
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
|
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|
2010
|
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2009
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|
2010
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
Interest and dividend
income
|
$
2,412,567
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|
$
2,442,495
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|
$
7,018,456
|
|
$
7,305,523
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|
Interest expense
|
557,613
|
|
746,249
|
|
1,817,391
|
|
2,282,692
|
|
Net interest
income
|
$
1,854,954
|
|
$
1,696,246
|
|
$
5,201,065
|
|
$
5,022,831
|
|
Provision for loan
losses
|
205,000
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|
1,150,000
|
|
465,000
|
|
1,473,000
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|
Net interest income
after provision for loan losses
|
$
1,649,954
|
|
$
546,246
|
|
$
4,736,065
|
|
$
3,549,831
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|
|
|
|
|
|
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Noninterest income
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$
473,218
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|
$
536,455
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|
$
1,760,613
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|
$
1,434,215
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Noninterest expense
|
1,684,282
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|
1,760,248
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|
4,988,283
|
|
4,922,613
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Net noninterest
expense
|
1,211,064
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|
1,223,793
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|
3,227,670
|
|
3,488,398
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Net income before
taxes
|
$
438,890
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|
$
(677,547)
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|
$
1,508,395
|
|
$
61,433
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|
Income taxes
|
122,866
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|
(260,197)
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|
438,796
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|
(60,761)
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|
Net income (loss)
|
$
316,024
|
|
$
(417,350)
|
|
$
1,069,599
|
|
$
122,194
|
|
|
|
|
|
|
|
|
|
|
Basic & diluted earnings
(loss) per share
|
$
0.17
|
|
$
(0.22)
|
|
$
0.56
|
|
$
0.06
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding
|
1,894,053
|
|
1,926,656
|
|
1,894,053
|
|
1,926,656
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|
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SOURCE Bank of McKenney
Copyright t. 8 PR Newswire