Oneida Financial Corp. Reports 2015 First Quarter Operating Results (unaudited)

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Apr 29, 2015, 05:00 ET

ONEIDA, N.Y., April 29, 2015 /PRNewswire/ -- Oneida Financial Corp. (NASDAQ Global: ONFC), the parent company of The Oneida Savings Bank, has announced first quarter operating results. Net income for the three months ended March 31, 2015 was $2.0 million or $0.28 diluted earnings per share, compared to $1.9 million or $0.28 diluted earnings per share, for the three months ended March 31, 2014. The increase in net income during the respective first quarter periods is primarily the result of an increase in net interest income, an increase in net investment gains, an increase in non-interest income and a decrease in income tax provision; partially offset by a reduction in the change in fair value of our equity investments and an increase in non-interest expenses.

Key balance sheet changes at March 31, 2015

The Bank is categorized as well capitalized at March 31, 2015 with a Tier 1 leverage ratio of 9.32% and a total risk-based capital ratio of 15.92%. The Company's average equity ratio as a percent of average assets was 11.76% at March 31, 2015 compared to 12.04% at March 31, 2014.
Deposit accounts were $771.5 million at March 31, 2015, an increase of $92.6 million from March 31, 2014. The increase in total deposits from March 31, 2014, represents an increase of $50.9 million in retail deposits and further supported by an increase of $41.7 million in municipal deposits over the past twelve months. The increase in deposits was held in cash equivalents and invested in securities and loans receivable.
Net loans receivable totaled $379.9 million at March 31, 2015 compared to $339.0 million at March 31, 2014. The increase in net loan balances over the past twelve months reflect the Company's continued loan origination efforts partially offset by loan sales activity. The Company has sold $8.3 million in newly originated fixed rate residential loans, which represents the majority of the Company's fixed-rate residential loan origination volume with terms exceeding 15 years, during the trailing twelve months ended March 31, 2015.
Investment and mortgage-backed securities totaled $304.3 million at March 31, 2015, an increase of $13.9 million from March 31, 2014. The increase in investment and mortgage-backed securities is primarily the result of the increase in pledged collateral needed to support the increase in municipal deposit activities.
There were no borrowings outstanding at March 31, 2015 compared with $1.0 million in borrowings outstanding at March 31, 2014.
Total equity at March 31, 2015 was $97.6 million, an increase of $4.5 million from March 31, 2014. The change in total equity is the result of the contribution of net earnings combined with valuation adjustments made for the Company's available for sale investment and mortgage-backed securities over the trailing twelve months, partially offset by the declaration of cash dividends during the trailing twelve month period.

Key operating items for first quarter 2015 include:

Net interest income was $5.2 million for the three months ended March 31, 2015 compared to $4.8 million for the three months ended March 31, 2014. Net interest margin was 2.88% for the first quarter of 2015 compared to 2.92% for the first quarter of 2014.
Non-interest income was $8.5 million for the three months ended March 31, 2015 compared to $8.1 million for the three months ended March 31, 2014. This increase is primarily the result of an increase in other revenue from operations of $348,000 during the current quarter as compared with the 2014 period combined with an increase in revenue derived from the Company's insurance and other non-banking operations to $7.0 million in the first quarter of 2015 compared to $6.9 million in the comparable 2014 period.
An increase in the fair value recognized on trading (equity) securities of $242,000 was recognized for the three months ended March 31, 2015 compared to an increase in fair value of $810,000 for the three months ended March 31, 2014.
Non-interest expense increased to $11.4 million for the three months ended March 31, 2015 compared to $10.9 million for the comparable period in 2014.

Michael R. Kallet, President and Chief Executive Officer of Oneida Financial Corp., said, "Through the execution of our diversified banking, insurance and financial services strategy, Oneida Financial continues to report a record level of total assets, total deposits, total loans and non-interest income." Kallet stated, "In February we announced the signing of a definitive merger agreement with Community Bank System." Under the terms of the agreement, shareholders of Oneida Financial Corp. can elect to receive either 0.5635 shares of Community Bank System, Inc. common stock or $20.00 in cash for each share of Oneida Financial Corp. common stock they hold, subject to an overall 60% stock and 40% cash split. Kallet continued, "This is an ideal opportunity for Oneida Financial to partner with a true community bank that has been nationally recognized for its financial strength, exceptional customer service and a company equally skilled at integrating non-interest income producing businesses. Our customers will benefit from an expanded network of branch locations and ATM's, and broader product and service offerings." Mr. Kallet continued, "We are pleased with the attractive market premium our shareholders will be receiving, in addition to a greater dividend and substantial market liquidity. Community Bank System has an impressive history of creating shareholder value through both earnings and dividend growth."

Net Interest Income and Margin

First quarter 2015 compared with first quarter 2014

Net interest income was $5.2 million for the three months ended March 31, 2015, an increase of $388,000 from the first quarter of 2014. The net interest margin was 2.88% for the first quarter of 2015, compared to 2.92% for the first quarter of 2014. The increase in net interest income is primarily the result of an increase in average interest-earning assets of $62.8 million partially offset by a decrease in the yield on interest-earning assets of 9 basis points to 3.21%. The average balance of interest-bearing liabilities increased $47.0 million with the average cost of interest-bearing deposits decreasing by 8 basis points to 0.39% for the first quarter of 2015 as compared to 0.47% for the first quarter of 2014.