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MSB Financial Corp. Releases Second Quarter Earnings

MILLINGTON, N.J., July 31, 2017 (GLOBE NEWSWIRE) -- MSB Financial Corp. (NASDAQ:MSBF) (the “Company”), parent company of Millington Bank, reported today the results of its operations for the three and six months ended June 30, 2017.

The Company reported net income of $732,000, or $0.13 per diluted common share, for the three months ended June 30, 2017, compared to net income of $223,000, or $0.04 per diluted common share, for the three months ended June 30, 2016. Net income for the six months ended June 30, 2017 was $1.3 million, or $0.23 per diluted common share, compared to net income of $382,000, or $0.07 per diluted common share, for the six months ended June 30, 2016.

Growth in net interest income and margin reflect growth in commercial loans
Net interest income for the three months ended June 30, 2017 increased $993,000, or 33.9%, to $3.9 million compared to $2.9 million for the second quarter of 2016. For the six months ended June 30, 2017, net interest income grew $1.8 million, or 31.5%, to $7.5 million compared to $5.7 million for the six months ended June 30, 2016. Net interest margin for the three months ended June 30, 2017 was 3.35% compared to 3.17% for the same period in 2016 while for the six months ended June 30, 2017, net interest margin was 3.32%, an improvement of 17 basis points, compared to 3.15% for the six months ended June 30, 2016. Net interest income and net interest margin continue to increase due primarily to the growth in the Company’s commercial real estate and commercial loan portfolios.

Commercial loan growth year to date
At June 30, 2017, the Company’s net loan portfolio totaled $426.4 million, an increase of $58.4 million or 15.9%, compared to $368.0 million at December 31, 2016. Commercial real estate loans increased $29.3 million or 23.5% while commercial and industrial loans increased $22.4 million or 49.6% from December 31, 2016 as the Company continues to focus on the origination of commercial relationships. Additionally, construction loans increased $13.1 million or 78.9% from December 31, 2016.

The following table summarizes loan balances and composition at June 30, 2017 and December 31, 2016:

At At
June 30, December 31,
(In thousands)2017 2016
Residential mortgage:
One-to-four family$164,448 37.0% $160,534 42.3%
Home equity 29,021 6.5 32,262 8.5
Total residential mortgage 193,469 43.5 192,796 50.8
Commercial and multi-family real estate 153,984 34.6 124,656 32.8
Construction 29,623 6.6 16,554 4.4
Commercial and industrial 67,686 15.2 45,246 11.9
Total commercial loans 251,293 56.4 186,456 49.1
.
Consumer loans 434 0.1 446 0.1
Total loans receivable 445,196 100.0% 379,698 100.0%
Less:
Loans in process 13,315 6,557
Deferred loan fees 586 658
Allowance 4,925 4,476
Total loans receivable, net$426,370 $368,007

Credit quality
Overall credit quality remained stable during first half of 2017. Total delinquent loans (including nonperforming delinquent loans) were $8.8 million at June 30, 2017, a reduction of $1.3 million from March 31, 2017 and $2.1 million from December 31, 2016. Total nonperforming loans were $6.9 million at June 30, 2017 compared to $7.4 million at March 31, 2017 and $7.0 million at December 31, 2016. Included in total delinquency and nonperforming loans is one large residential mortgage of $1.9 million that has been paid off, as a result of a short sale in July. The allowance for loan losses as a percentage of total loans was 1.14%, 1.15% and 1.20% at June 30, 2017, March 31, 2017 and December 31, 2016, respectively, while the allowance for loan losses as a percentage of non-performing loans increased to 71.21% at June 30, 2017 from 62.47% at March 31, 2017 and 64.13% at December 31, 2016. Non-performing loans to total loans declined to 1.60% at June 30, 2017 from 1.84% at March 31, 2017 and 1.87% at December 31, 2016.

Consumer deposit growth during the year
Total deposits at June 30, 2017 were $390.1 million compared with $362.3 million at December 31, 2016. Overall, deposits increased by $27.8 million, or 7.6% with growth occurring across most product types. Most of the growth occurred in the certificates of deposit as the Company utilized a deposit listing service to bring in $19.6 million in institutional funds. In addition, a promotional campaign was implemented to bring in more consumer deposits.

The following table summarizes deposit balances and composition at June 30, 2017 and December 31, 2016:

At At
(Dollars in thousands)June 30, 2017 December 31, 2016
Noninterest demand$44,584 11.43% $44,365 12.25%
Interest demand 95,196 24.41 99,879 27.57
Savings 105,560 27.06 103,163 28.47
Money Market 15,842 4.06 11,265 3.11
Total demand deposits 261,182 66.96 258,672 71.40
Certificates of Deposit 128,881 33.04 103,627 28.60
Total Deposits$390,063 100.00% $362,299 100.00%

CEO outlook:

“Reaching $500 million in assets during the quarter was a significant milestone for our Company,” stated Michael A. Shriner, President and Chief Executive Officer. Mr. Shriner added, “As an organization, we are very proud of this accomplishment and the timeframe in which it was achieved. Continued growth in commercial loans has also had a significant, positive impact on our earnings.”

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 and our continued ability to manage cybersecurity risks.

MSB FINANCIAL CORP
(In Thousands, except for per share amount)(Unaudited)
Statement of Financial Condition Data:06/30/201712/31/2016
Total assets$507,098$461,646
Cash and cash equivalents 9,034 21,382
Loans receivable, net 426,370 368,007
Securities held to maturity 42,441 44,104
Deposits 390,063 362,299
Federal Home Loan Bank advances 38,675 22,675
Total stockholders' equity 74,989 73,185
Stock Information:
Number of shares of common stock outstanding 5,737 5,714
Book value per share of common stock$13.07$12.81
Closing market price$17.45$14.70


(Unaudited)
For the three months
ended June 30,
(Unaudited)
For the six months ended
June 30,
Summary of Operations:
(In Thousands, except for per share amounts)
2017 2016 2017 2016
Total interest income $4,727 $3,453 $9,020 $6,751
Total interest expense 803 522 1,501 1,032
Net interest income 3,924 2,931 7,519 5,719
Provision for loan losses 300 190 495 320
Net interest income after provision for loan losses 3,624 2,741 7,024 5,399
Non-interest income 219 512 406 653
Non-interest expense 2,818 2,909 5,535 5,473
Income before taxes 1,025 344 1,895 579
Income tax expense 293 121 614 197
Net income $732 $223 $1,281 $382
Net income per common share - basic $0.13 $0.04 $0.23 $0.07
Net income per common share - diluted $0.13 $0.04 $0.23 $0.07
Weighted average number of shares - basic 5,540 5,743 5,530 5,744
Weighted average number of shares - diluted 5,679 5,821 5,661 5,818
Performance Ratios:
Return on average assets annualized 0.59% 0.23% 0.54% 0.20%
Return on average common equity annualized 3.91% 1.15% 3.44% 0.99%
Net interest margin 3.35% 3.17% 3.32% 3.15%
Efficiency ratio 68.02% 84.49% 69.83% 85.89%
Operating expenses / average assets annualized 2.29% 3.00% 2.32% 2.87%


For the three months ended
06/30/201706/30/2016
Average Balance Sheet
(In Thousands)
Average
Balance
Interest
Income/
Expense
YieldAverage
Balance
Interest
Income/
Expense
Yield
Interest-earning assets:
Loans receivable$417,065 $4,4444.26%$285,649 $3,0824.32%
Securities held to maturity 41,885 2472.36 62,585 3312.12
Other interest-earning assets 9,625 361.50 21,430 400.75
Total interest-earning assets 468,575 4,7274.04 369,664 3,4533.74
Allowance for loan loss (4,695) (3,718)
Non-interest-earning assets 28,978 21,833
Total non-interest-earning assets 24,283 18,115
Total Assets$492,858 $387,779
Interest-bearing liabilities:
Demand & money market$106,094 $1020.38%$60,006 $370.25%
Savings and club deposits 104,953 620.24 104,283 580.22
Certificates of deposit 122,855 4151.35 85,702 2441.14
Total interest-bearing deposits 333,902 5790.69 249,991 3390.54
Federal Home Loan Bank advances 37,715 2242.38 22,675 1833.23
Total interest-bearing liabilities 371,617 8030.86 272,666 5220.77
Non-interest-bearing deposit 43,030 33,964
Other non-interest-bearing liabilities 3,363 3,745
Total Liabilities 418,010 310,375
Equity 74,848 77,404
Total Liabilities and Equity$492,858 $387,779
Net Interest Spread 3,9243.18% 2,9312.97%
Net Interest Margin 3.35% 3.17%
Ratio of Interest Earning Assets to Interest Bearing Liabilities 126.09% 135.57%


For the six months ended
06/30/201706/30/2016
Average Balance Sheet
(In Thousands)
Average
Balance
Interest
Income/
Expense
YieldAverage
Balance
Interest
Income/
Expense
Yield
Interest-earning assets:
Loans receivable$399,822 $8,4444.22%$278,732 $5,9204.25%
Securities held to maturity 42,581 4982.34 69,758 7622.18
Other interest-earning assets 10,475 781.49 14,930 690.92
Total interest-earning assets 452,878 9,0203.98 363,420 6,7513.72
Allowance for loan loss (4,610) (3,670)
Non-interest-earning assets 28,674 21,740
Total non-interest-earning assets 24,064 18,070
Total Assets$476,942 $381,490
Interest-bearing liabilities:
Demand & money market$106,066 $1970.37%$54,228 $580.21%
Savings and club deposits 104,367 1200.23 103,364 1140.22
Certificates of deposit 114,729 7641.33 85,070 4811.13
Total interest-bearing deposits 325,162 1,0810.66 242,662 6530.54
Federal Home Loan Bank advances 33,874 4202.48 26,214 3792.89
Total interest-bearing liabilities 359,036 1,5010.84 268,876 1,0320.77
Non-interest-bearing deposit 40,440 31,793
Other non-interest-bearing liabilities 3,078 3,783
Total Liabilities 402,554 304,452
Equity 74,388 77,038
Total Liabilities and Equity$476,942 $381,490
Net Interest Spread 7,5193.14% 5,7192.95%
Net Interest Margin 3.32% 3.15%
Ratio of Interest Earning Assets to Interest Bearing Liabilities 126.14% 135.16%


Contact: Michael A. Shriner, President & CEO (908) 647-4000 mshriner@millingtonbank.com

Source:MSB Financial Corp.