Frederick County Bancorp, Inc. Reports Results for the Fourth Quarter 2014

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Jan 22, 2015, 04:56 ET

FREDERICK, Md., Jan. 22, 2015 /PRNewswire/ --Frederick County Bancorp, Inc. (the "Company") (OTCQB Marketplace: FCBI), the parent company for Frederick County Bank ("FCB"), announced today that, for the quarter ended December 31, 2014, the Company recorded net income of $352 thousand and diluted earnings per share of $0.23, as compared to net income of $304 thousand and diluted earnings per share of $0.20 recorded for the same quarter of 2013. The Company earned $1.7 million with diluted earnings per share of $1.12 for the year ended on December 31, 2014, as compared to $1.7 million in earnings and diluted earnings per share of $1.10 for the same period in 2013.

The increase in quarterly earnings was due primarily to the lower level of the provision for loan losses of $0 in 2014, as compared to $200 thousand recorded in 2013, the total noninterest income of $318 thousand in 2014 as compared to $207 thousand in 2013, which was partially offset by the increase in noninterest expense which was $2.7 million in 2014 compared to $2.4 million in 2013. This increase was primarily in the salaries and benefits expense which increased by $271 thousand.

Earnings for 2014 were relatively flat compared to 2013. Net interest income for 2014 increased by $453 thousand over 2013, due primarily to an increase in interest earned on the loan portfolio. Noninterest income increased by $242 thousand in 2014 compared to 2013, primarily due to gains recognized on the sale of SBA loans. There was no provision recorded in 2014 and $275 thousand in 2013. All of these items were offset by an increase in noninterest expenses which increased from $9.2 million in 2013 to $10.0 million in 2014, primarily as a result of salaries and benefits expense which increased by $271 thousand, and other expenses which increased by $253 thousand.

Net loan recoveries for the quarter ended December 31, 2014 totaled $69 thousand as compared to net loan charge-offs for the quarter ended December 31, 2013 totaled $412 thousand. For the entire years of 2014 and 2013, the net loan charge-offs totaled $61 thousand and $422 thousand, respectively.

The ratio of the allowance for loan losses to total loans stood at 1.28% and 1.35% as of December 31, 2014 and 2013, respectively. Nonperforming assets stood at $5.6 million and $5.3 million at December 31, 2014 and 2013, respectively. The corresponding nonperforming assets to total assets ratios were 1.63% and 1.67% as of December 31, 2014 and 2013, respectively.

The Company also reported that, as of December 31, 2014, assets stood at $343.1 million, with total deposits of $285.0 million and gross loans of $262.5 million, representing increases of 7.9%, 6.7%, and 3.4%, respectively, compared to December 31, 2013. Total shareholders' equity at December 31, 2014 was $27.9 million, an increase of $1.7 million from December 31, 2013. The increase primarily results from an increase in retained earnings of $1.3 million at December 31, 2014 as compared to December 31, 2013 and the decrease in the accumulated other comprehensive loss from $586 thousand to $17 thousand at December 31, 2013 and 2014, respectively. On a per share basis, book value per share increased by $1.28 for 2014 to $18.92 per share at December 31, 2014.

Frederick County Bank is headquartered in Frederick, Maryland, and conducts full service commercial banking services through five bank centers, four of which are located in the City of Frederick and one in Walkersville, Maryland.

	December 31,	December 31,
	2014	2013
(dollars in thousands)	(unaudited)	(unaudited)
Total assets	$343,116	$318,131
Loans	262,525	253,913
Deposits	284,985	266,988
Shareholders' equity	27,914	26,187

Nonperforming assets:
Nonaccrual loans	$3,684	$3,379
Accruing troubled debt restructurings	1,179	976
Loans 90 days or more past due and still accruing	--	--
Foreclosed properties	729	972
Total nonperforming assets	$5,592	$5,327

	For the Three Months Ended		For the Years Ended
	December 31,	December 31,	December 31,	December 31,
	2014	2013	2014	2013
(dollars in thousands, except for per share data)	(unaudited)	(unaudited)	(unaudited)	(unaudited)
SUMMARY OF OPERATING RESULTS:
Net income	$352	$304	$1,714	$1,691
Total comprehensive income	489	233	2,283	637

Charge-offs	$ --	$412	$186	$606
(Recoveries)	(69)	--	(125)	(184)
Net charge-offs	$(69)	$412	$ 61	$422

PER COMMON SHARE DATA:
Basic earnings per share	$0.24	$0.20	$1.16	$1.12
Diluted earnings per share	$0.23	$0.20	$1.12	$1.10
Basic weighted average number of shares outstanding	1,475,034	1,493,173	1,474,026	1,503,888
Diluted weighted average number of shares outstanding	1,532,913	1,536,375	1,528,678	1,543,503
Common shares outstanding	1,475,154	1,484,174	1,475,154	1,484,174
Dividends declared	$0.07	$0.06	$0.28	$0.23
Book value per share	$18.92	$17.64	$18.92	$17.64

SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets	0.42%	0.37%	0.52%	0.53%
Return on average equity	5.04%	4.57%	6.28%	6.33%
Allowance for loan losses to total loans	1.28%	1.35%	1.28%	1.35%
Nonperforming assets to total assets	1.63%	1.67%	1.63%	1.67%
Ratio of net charge-offs to average loans	(0.03)%	0.16%	0.02%	0.18%
Tier 1 capital to risk-weighted assets	11.85%	11.83%	11.85%	11.83%
Total capital to risk-weighted assets	13.02%	13.07%	13.02%	13.07%
Tier 1 capital to average assets	10.05%	10.29%	10.05%	10.29%
Average equity to average assets	8.28%	8.36%	8.22%	8.40%
Net interest margin	3.64%	3.82%	3.67%	3.71%

Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets

	December 31,	December 31
	2014	2013
	(unaudited)	(unaudited)
(dollars in thousands)
ASSETS
Cash and due from banks	$ 2,402	$ 1,922
Federal funds sold	21	22
Interest-bearing deposits in other banks	37,365	18,166
Cash and cash equivalents	39,788	20,110
Investment securities available-for-sale at fair value	24,190	27,016
Restricted stock	1,805	1,669
Loans	262,525	253,913
Less: Allowance for loan losses	(3,362)	(3,423)
Net loans	259,163	250,490
Bank premises and equipment	6,373	6,570
Bank owned life insurance	8,280	8,040
Foreclosed properties	729	972
Other assets	2,788	3,264
Total assets	$343,116	$318,131

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities
Deposits
Noninterest-bearing deposits	$ 63,705	$ 50,286
Interest-bearing deposits	221,280	216,702
Total deposits	284,985	266,988
Short-term borrowings	3,300	3,050
FHLB advances	20,000	15,000
Junior subordinated debentures	6,186	6,186
Accrued interest and other liabilities	731	720
Total liabilities	315,202	291,944

Shareholders' Equity
Common stock, per share par value $0.01; 10,000,000 shares authorized; 1,475,154 and 1,484,174 shares issued and outstanding	15	15
Additional paid-in capital	15,158	15,302
Retained earnings	12,758	11,456
Accumulated other comprehensive loss	(17)	(586)
Total shareholders' equity	27,914	26,187
Total liabilities and shareholders' equity	$343,116	$318,131

Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
	For the Three Months Ended		For the Years Ended
(dollars in thousands, except per share amounts)	December 31, 2014	December 31, 2013	December 31, 2014	December 31, 2013
Interest income
Interest and fees on loans	$3,118	$3,077	$12,316	$11,840
Interest and dividends on investment securities:
Interest – taxable	84	100	349	419
Interest – tax exempt	51	51	204	239
Dividends	23	16	80	60
Other interest income	20	10	73	63
Total interest income	3,296	3,254	13,022	12,621
Interest expense
Interest on deposits	272	291	1,144	1,227
Interest on short-term borrowings	24	15	83	65
Interest on FHLB advances	87	84	339	324
Interest on junior subordinated debentures	30	30	117	119
Total interest expense	413	420	1,683	1,735
Net interest income	2,883	2,834	11,339	10,886
Provision for loan losses	-	200	-	275
Net interest income after provision for loan losses	2,883	2,634	11,339	10,611
Noninterest income
Securities (losses) gains	-	(17)	-	(17)
Gain on sale of loans	83	-	285	-
(Loss) gain on sale of foreclosed properties	-	(8)	(37)	20
Bank owned life insurance income	60	62	240	252
Service fees	84	88	336	353
Other operating income	91	82	341	315
Total noninterest income	318	207	1,165	923
Noninterest expense
Salaries and employee benefits	1,477	1,206	5,635	5,112
Occupancy and equipment expenses	386	386	1,530	1,480
Other operating expenses	843	845	2,843	2,590
Total noninterest expense	2,706	2,437	10,008	9,182
Income before provision for income taxes	495	404	2,496	2,352
Provision for income taxes	143	100	782	661
Net income	$352	$304	$1,714	$1,691
Basic earnings per share	$0.24	$0.20	$1.16	$1.12
Diluted earnings per share	$0.23	$0.20	$1.12	$1.10
Basic weighted average number of shares outstanding	1,475,034	1,493,173	1,474,026	1,503,888
Diluted weighted average number of shares outstanding	1,532,913	1,536,375	1,528,678	1,543,503
Dividends declared per share	$0.07	$0.06	$0.28	$0.23

Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
	For the Three Months Ended
(dollars in thousands)	December 31, 2014	December 31, 2013
Net income	$352	$304
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $89 in 2014 and net of income tax benefits of $53 in 2013	137	(81)
Reclassification adjustment for losses realized, net of
income tax benefits of $7 in 2013	--	10
Total comprehensive income	$489	$233


Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
	For the Years Ended
(dollars in thousands)	December 31, 2014	December 31, 2013
Net income	$1,714	$1,691
Changes in net unrealized gains (losses) on securities available for sale, net of income taxes of $371 in 2014 and net of income tax benefits of $693 in 2013	569	(1,064)
Reclassification adjustment for losses realized, net of
income tax benefits of $7 in 2013	--	10
Total comprehensive income	$2,283	$637

Frederick County Bancorp, Inc. and Subsidiaries Consolidated Statement of Changes in Shareholders' Equity (Unaudited)
(dollars in thousands)	Shares Outstanding	Common Stock	Additional Paid-in Capital	Retained Earnings	Accumulated Other Comprehensive Income (Loss)	Total Shareholders' Equity

Balance, January 1, 2013	1,508,574	$15	$15,663	$10,110	$ 468	$26,256
Comprehensive income				1,691	(1,054)	637
Dividends declared on common stock, $0.23 per share				(345)		(345)
Shares Repurchased	(24,900)		(405)			(405)
Shares issued under stock options transactions	500		6			6
Compensation expense from stock option transactions			38			38
Balance, December 31, 2013	1,484,174	$15	$15,302	$11,456	$(586)	$26,187
Comprehensive income				1,714	569	2,283
Dividends declared on common stock, $0.28 per share				(412)		(412)
Shares repurchased	(15,000)		(267)			(267)
Shares issued under stock option transactions	5,980		68			68
Compensation expense from stock option transactions			36			36
Excess tax benefit from equity-based awards			19			19
Balance, December 31, 2014	1,475,154	$15	$15,158	$12,758	$(17)	$27,914

Frederick County Bancorp, Inc. and Subsidiaries Consolidated Statements of Cash Flows (Unaudited)
	Years Ended
	December 31, 2014	December 31, 2013
(dollars in thousands)
Cash flows from operating activities:
Net income	$1,714	$1,691
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	344	366
Deferred income (benefits) taxes	(70)	257
Provision for loan losses	--	275
Securities losses	--	17
Gain on sale of loans	(285)	--
Loans originated for sale	(3,050)	--
Proceeds from loans sold	3,335	--
Net premium amortization on investment securities	168	321
Bank owned life insurance income	(240)	(252)
Loss (gain) on sale of foreclosed properties	37	(20)
Stock-based compensation expense	36	38
Provision for foreclosed properties	14	196
Excess tax benefit from stock-based awards	(19)	--
Decrease in accrued interest and other assets	195	189
Increase (decrease) in accrued interest and other liabilities	11	(179)
Net cash provided by operating activities	2,190	2,899
Cash flows from investing activities:
Purchases of investment securities available for sale	--	(6,058)
Proceeds from sales of investment securities available for sale	--	5,581
Proceeds from maturities, prepayments and calls investment securities available for sale	3,597	6,170
Purchase of restricted stock	(136)	(165)
Net increase in loans	(8,673)	(25,047)
Purchases of bank premises and equipment	(147)	(202)
Proceeds from sale of foreclosed properties	192	900
Net cash used in investing activities	(5,167)	(18,821)
Cash flows from financing activities:
Net increase in NOW, money market accounts, savings accounts and noninterest-bearing deposits	21,662	10,976
Net decrease in time deposits	(3,665)	(12,101)
Net increase in short-term borrowings	250	350
Proceeds from FHLB advances	5,000	5,000
Proceeds from issuance of common stock	68	6
Repurchase of common stock	(267)	(405)
Dividends paid on common stock	(412)	(345)
Excess tax benefit from equity-based awards	19	--
Net cash provided by financing activities	22,655	3,481
Net increase (decrease) in cash and cash equivalents	19,678	(12,441)
Cash and cash equivalents – beginning of period	20,110	32,551
Cash and cash equivalents – end of period	$39,788	$20,110
Supplemental cash flow disclosures:
Interest paid	$1,688	$1,746
Income taxes paid	$750	$700

Distribution of Assets, Liabilities and Shareholders' Equity; Interest Rates and Interest Differential

The following tables show average balances of asset and liability categories, interest income and interest expense, and average yields and rates for the periods indicated.

Three Months Ended December 31,	2014			2013
(dollars in thousands)	Average daily balance	Interest Income/ Expense	Average Yield/ Rate(%)	Average daily balance	Interest Income/ Expense	Average Yield/ Rate(%)
Assets
Interest-earning assets:
Federal funds sold	$ 21	$ -	--	$ 23	$ -	-
Interest bearing deposits in other banks	33,638	20	0.24	20,030	10	0.20
Investment securities ⁽¹⁾:
Taxable	19,798	107	2.14	23,377	116	1.97
Tax-exempt ⁽²⁾	6,541	77	4.67	6,637	77	4.62
Loans ⁽³⁾	260,595	3,147	4.79	250,693	3,112	4.93
Total interest-earning assets	320,593	3,351	4.15	300,760	3,315	4.37
Noninterest-earning assets	16,866			17,826
Total assets	$337,459			$318,586

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts	$ 23,231	10	0.17	$ 20,494	8	0.15
Savings accounts	8,286	1	0.05	7,840	-	-
Money market accounts	93,743	67	0.28	89,492	64	0.28
Certificates of deposit
$100,000 or more	42,701	95	0.88	41,204	111	1.07
Certificates of deposit
less than $100,000	49,948	99	0.79	54,573	108	0.79
Short-term borrowings	3,104	24	3.07	2,734	15	2.18
FHLB advances	20,000	87	1.73	15,000	84	2.22
Junior subordinated debentures	6,186	30	1.92	6,186	30	1.92
Total interest-bearing liabilities	247,199	413	0.66	237,523	420	0.70
Noninterest-bearing deposits	61,660			53,661
Noninterest-bearing liabilities	669			777
Total liabilities	309,528			291,961
Total shareholders' equity	27,931			26,625
Total liabilities and shareholders' equity	$337,459			$318,586
Net interest income		$2,938			$2,895
Net interest spread			3.49%			3.67%
Net interest margin			3.64%			3.82%

⁽¹⁾Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which is reflected as a component of shareholders' equity.

⁽²⁾Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $26 thousand in 2014 and $26 thousand in 2013 are included in the calculation of the tax-exempt investment interest income.

⁽³⁾ Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $29 thousand in 2014 and $35 thousand in 2013 are included in the calculation of the loan interest income. Net loan origination income in interest income totaled $23 thousand in 2014 and $2 thousand in 2013.

For the Year Ended December 31,	2014			2013
(dollars in thousands)	Average daily balance	Interest Income/ Expense	Average Yield/ Rate(%)	Average daily balance	Interest Income/ Expense	Average Yield/ Rate(%)
Assets
Interest-earning assets:
Federal funds sold	$ 21	$ -	-	$ 18	$ -	-
Interest bearing deposits in other banks	31,489	73	0.23	27,622	63	0.23
Investment securities ⁽¹⁾:
Taxable	20,793	429	2.06	25,903	479	1.85
Tax-exempt ⁽²⁾	6,549	309	4.72	8,094	362	4.47
Loans ⁽³⁾	256,335	12,424	4.85	238,241	11,967	5.02
Total interest-earning assets	315,187	13,235	4.20	299,878	12,871	4.29
Noninterest-earning assets	17,135			18,140
Total assets	$332,322			$318,018

Liabilities and Shareholders' Equity
Interest-bearing liabilities:
NOW accounts	$ 21,970	34	0.15	$ 20,042	32	0.16
Savings accounts	8,138	2	0.02	7,361	2	0.03
Money market accounts	95,157	270	0.28	88,643	261	0.29
Certificates of deposit
$100,000 or more	43,476	454	1.04	45,343	468	1.03
Certificates of deposit
less than $100,000	51,461	384	0.75	56,642	464	0.82
Short-term borrowings	3,064	83	2.71	2,709	65	2.40
FHLB advances	17,575	339	1.93	11,260	324	2.88
Junior subordinated debentures	6,186	117	1.89	6,186	119	1.92
Total interest-bearing liabilities	247,027	1,683	0.68	238,186	1,735	0.73
Noninterest-bearing deposits	57,351			52,345
Noninterest-bearing liabilities	641			790
Total liabilities	305,019			291,321
Total shareholders' equity	27,303			26,697
Total liabilities and shareholders' equity	$332,322			$318,018
Net interest income		$11,552			$11,136
Net interest spread			3.52%			3.56%
Net interest margin			3.67%			3.71%

⁽²⁾Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $105 thousand in 2014 and $123 thousand in 2013 are included in the calculation of the tax-exempt investment interest income.

⁽³⁾ Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $108 thousand in 2014 and $127 thousand in 2013 are included in the calculation of the loan interest income. Net loan origination income in interest income totaled $92 thousand in 2014 and $30 thousand in 2013.

The statements in this press release that are not historical facts constitute "forward-looking statements" as defined by Federal securities laws. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding the Company's intentions regarding growth and market expansion, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, changes in interest rates, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect the Company specifically, its existing and target market areas or the banking industry generally. Forward-looking statements speak only as of the date they are made. The Company will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.

SOURCE Frederick County Bancorp, Inc.

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