DCB Financial Corp Announces Second Quarter 2014 Results

LEWIS CENTER, Ohio, July 24, 2014 /PRNewswire/ -- DCB Financial Corp (the "Company"), (OTC Bulletin Board DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the "Bank") announced net income of $61,000 or $0.01 per diluted share for the three months ended June 30, 2014, compared to net income of $156,000 or $0.02 per diluted share for the same period in 2013. Non-recurring gains and losses in the second quarter of 2014 aggregated $118,000 of net losses or $0.02 per diluted share, compared to net non-recurring gains, negative provision for loan losses and income tax benefit aggregating $631,000, or $0.09 per diluted share in the year-ago quarter. There was no loan loss provision or income tax benefit in the second quarter of 2014.

Net income was $180,000 or $0.02 per diluted share for the six months ended June 30, 2014, compared to net income of $298,000 or $0.04 per diluted share for the same period in 2013. Non-recurring gains and losses in the first half of 2014 aggregated $63,000 of net losses, compared to net non-recurring gains, negative provision for loan losses and income tax benefit aggregating $1.4 million in the prior year. There was no loan loss provision or income tax benefit in the first half of 2014.

Ronald J. Seiffert, President and CEO for the Company said, "Net income excluding non-recurring items in the second quarter of 2014 was the highest since the third quarter of 2012, and it's the first time in six years that we have reported two consecutive quarters of positive net income exclusive of non-recurring items. We continue to make progress on improving our asset quality, with non-performing assets at the end of the second quarter of 2014 at their lowest level since the third quarter of 2008 and down 70% from their peak in the first quarter of 2011." 

Seiffert continued, "Investor's growing confidence in the strength of our balance sheet is reflected in our stock price as a percentage of tangible book value, which was 116% at the end of the second quarter, and is at its highest level since the fourth quarter of 2007. We have accomplished a lot in the first half of 2014, and with the dedication of the Company's employees, management and board of directors, along with the strong support of the communities in which we operate, I am confident in our Company's future as we continue to build the premier community banking franchise in Central Ohio."


Balance Sheet Highlights
Total assets were $500.5 million at June 30, 2014, which was a decrease of $1.9 million from $502.4 million at December 31, 2013. Assets sold in connection with the sale of the Company's Marysville branch in the first quarter totaled $18.7 million and included cash of $12.5 million, loans of $4.8 million and fixed assets of $1.4 million. Deposits attributable to the branch totaling $19.4 million were assumed by the buyer. 

Total loans, including loans held for sale, increased $3.3 million in the second quarter, and were $357.7 million at June 30, 2014, compared with $354.4 million at March 31, 2014.  Residential mortgages and consumer loans increased at annualized rates of 32.1% and 16.4%, respectively, in the second quarter primarily as the result of business development initiatives including ongoing engagement with and calling on local real estate agencies and a successful cross-selling program to existing customers. Commercial and industrial loans decreased $5.9 million in the second quarter, through a combination of weakness in demand, normal amortization, prepayments and chargeoffs. 

Deposits totaled $436.1 million at June 30, 2014, which was a slight decrease from $439.8 million at the end of the first quarter. Time accounts decreased $7.1 million in the second quarter, which was partially offset by increases in savings, demand and money market accounts aggregating $3.4 million. Consistent with the financial sector generally, the very low interest rate environment continues to influence the Company's deposit composition, as customer preference for non-maturity savings, demand and money market accounts outweighs that of time accounts.    

Stockholders' equity was $46.8 million at June 30, 2014, compared with $46.4 million at March 31, 2014, and $45.3 million at December 31, 2013. The increase since December is primarily the result of the difference between the unrealized loss of $940,000 on one collateralized debt obligation ("CDO") at December 31, 2013, and the actual loss recognized upon the sale of that security in the first quarter of $140,000. Sharply higher demand for these types of securities in the first quarter of 2014 contributed to the increase in the value of the CDO during that quarter. The remaining increase in stockholder's equity is due primarily to an increase in unrealized gains on securities available-for-sale and to net income in the first half of 2014.

The Bank's Tier 1 leverage ratio was 8.97% and its total risk-based capital ratio was 14.02% at the end of the second quarter, both of which were well above the regulatory thresholds required to be classified as a "well-capitalized" institution, which are 5.0% and 10.0%, respectively.

Asset Quality and the Provision for Loan Losses
Delinquent loans (including non-accrual) totaled $5.3 million or 1.48% of total loans at June 30, 2014, compared to $4.6 million or 1.29% of total loans at March 31, 2014 and $8.1 million or 2.24% at the end of 2013. Nonaccrual loans totaled $4.2 million or 1.17% of total loans at June 30, 2014, compared to $3.6 million or 1.02% of total loans at March 31, 2014 and $6.9 million or 1.90% of total loans at December 31, 2013.

Non-performing assets were $14.9 million or 2.97% of total assets at June 30, 2014, compared with $17.7 million or 3.59% of total assets at March 31, 2014 and $21.9 million or 4.36% of total assets at December 31, 2013. Troubled debt restructurings ("TDR's") which are performing in accordance with the restructured terms and accruing interest, but are included in non-performing assets, were $9.3 million at June 30, 2014, compared to $12.6 million at March 31, 2014 and $12.8 million at December 31, 2013.

Much of the improvement in asset quality in the first half of 2014 has resulted from the execution of previously disclosed strategies developed in the fourth quarter of 2013 to accelerate the disposition of certain troubled assets, in particular two commercial relationships which totaled $5.7 million at the end of 2013.  As of June 30, 2014, a total of $4.7 million of cash has been collected on these relationships. One of the relationships, with a carrying amount of $2.7 million at the end of 2013, was paid off for the full carrying amount in the first quarter. A second relationship with an outstanding balance of $3.0 million and an allowance allocation of $1.5 million at the end of 2013 has been paid down by $2.0 million in the first half of 2014, of which $554,000 was received in the second quarter.  The Company recorded a partial chargeoff on this second relationship of $750,000 in the first quarter, using the specific loan loss allocation established for this relationship in the fourth quarter of 2013. As a result of the $554,000 that was collected on this relationship in the second quarter, an identical amount of allowance for loan losses allocated to this relationship at the end of 2013 has been freed up and incorporated into the general and qualitative components of the allowance for loan losses, as of June 30, 2014. The Company maintains a 100% reserve allocation against the remaining balance of $197,000 at the end of the second quarter (net of the partial chargeoff), due to uncertainty as to the collectability of the remaining balance. The Company has retained legal counsel in anticipation of exploring claims to be made against the third-party purchaser of certain of the borrowers assets which, the Company maintains, were and remain subject to a perfected first lien position of the Company.

Certain troubled loans totaling $418,000 and classified as held-for-sale at the end of 2013 were sold during the second quarter of 2014 for $395,000.  Writedowns and losses on loans held-for-sale totaled $114,000 in the second quarter, with $23,000 realized upon sales of loans and $91,000 from writedowns on remaining loans held-for-sale at the end of the second quarter.

Net charge-offs were $777,000 or 0.87% (annualized) of average loans in the second quarter, compared to net charge-offs of $15,000 in the year-ago quarter. Net charge-offs were $2.1 million or 1.15% (annualized) of average loans in the first half of 2014, compared to net recoveries of $511,000 in the year-ago period. Three relationships comprised nearly all of the charge-offs in the first half of 2014, which were charged against specific allowance allocations established in the fourth quarter of 2013.

There was no provision for loan losses recorded in the first half of 2014, as the $3.3 million loan loss provision recorded in the fourth quarter of 2013 included specific allocations for the three large relationships charged-off in the first half of 2014. Negative provisions for loan losses of $240,000 and $890,000 were recorded in the quarter and six months ended June 30, 2013 as the result of the net recoveries and other credit quality indicators in those periods. The provision for loan losses as a percentage of net charge-offs was not meaningful for first half of 2014 and 2013. On a linked-quarters basis, the provision for loan losses as a percentage of net charge-offs was 97.2% for the four calendar quarters ending June 30, 2014.    

The allowance for loan losses was $4.6 million at June 30, 2014, compared with $5.3 million at March 31, 2014 and $6.7 million at December 31, 2013.  The ratio of the allowance for loan losses to total loans was 1.28% at June 30, 2014, compared with 1.51% at March 31, 2014 and 1.85% at December 31, 2013.  The ratio of the allowance for loan losses to non-performing loans (including TDR's) was 33.9% at June 30, 2014, compared with 33.0% at March 30, 2014 and 34.1% at December 31, 2013. The ratio of the allowance for loan losses to non-accrual loans was 109% at June 30, 2014, compared with 148% at March 30, 2014 and  97% at December 31, 2013.

Net Interest Income
Net interest income totaled $4.0 million in the three months ended June 30, 2014, compared with $3.8 million in the year-ago quarter and $4.0 million in the first quarter of 2014.  Average interest-earning assets decreased $3.3 million in the second quarter compared to the year-ago quarter, and were $12.9 million lower than the first quarter of 2014, due primarily to the effect on average assets, net of organic loan growth over the last four quarters, of the sale of the Company's Marysville branch in the first quarter of 2014, and to payoffs of two large commercial relationships totaling $5.7 million late in the first quarter of 2014.  The net interest margin increased 24 basis points in the second quarter compared with the year-ago quarter and was 3 basis points higher than the first quarter of 2014. 

The net interest margin was 3.53% in the second quarter of 2014, compared with 3.29% in the year-ago quarter and 3.50% in the first quarter of 2014.  The earning assets yield increased 4 basis points in the second quarter of 2014 compared with the year-ago quarter, due largely to growth in our loan portfolio which was funded primarily from cash on deposit with the Federal Reserve and cash flows from our securities portfolio. The cost of interest-bearing liabilities decreased 23 basis points over the same period as a result of maturing time accounts which either were renewed at lower rates or were transferred into our interest-bearing demand and money market accounts, which earn interest at lower rates than time accounts.  Also, we restructured advances from the Federal Home Loan Bank in November, 2013 which contributed to a 176 basis point decrease in the cost of borrowings in the second quarter compared to the year-ago quarter.  

Average interest-earning assets were $453.4 million in the second quarter, compared with $456.7 million in the year-ago quarter and $466.4 million in the first quarter of 2014. The average balance of loans increased by $27.9 million, while average balance of interest earning cash and cash equivalents decreased $22.7 million and average investments decreased $8.5 million when compared with the year-ago quarter, as we used our excess liquidity position to fund organic loan growth. Total average loans were 78.7% of total average interest-earning assets in the second quarter of 2014, compared with 72.0% in the year-ago quarter and 77.1% in the first quarter of 2014.  The average balance of time deposits declined $43.3 million in the second quarter compared with the year-ago quarter, while average balances in lower-costing interest-bearing demand, savings and money market accounts increased $21.2 million, and the average balance of non-interest-bearing demand accounts increased $15.7 million over that same period.

Net interest income totaled $8.0 million in the first half 2014, which was an increase of $609,000 or 8.3% compared with $7.4 million in the year-ago period.  The net interest margin was 3.49% for the six months ended June 30, 2014, compared with 3.29% in the year-ago period. The earning asset yield increased 2 basis points in the first half of 2014 compared with the year-ago period, and the cost of interest-bearing liabilities decreased 19 basis points over the same period.

Average interest-earning assets were $460.4 million in the first half of 2014, which was an increase of $6.2 million or 1.37% from the first half of 2013. Total average loans and leases were 77.8% of total interest-earning assets in the six months ended June 30, 2014, compared with 70.5% in the first half of 2013. The average balance in time deposits decreased $45.7 million in the first half of 2014 compared with the year-ago period, while the average balances in lower-costing interest-bearing demand, savings and money market accounts increased $28.1 million, and the average balance of non-interest-bearing demand accounts increased $16.7 million.

Non-Interest Income and Non-Interest Expenses
Non-interest income was $996,000 in the second quarter of 2014, compared to $1.4 million in the second quarter of 2013 and $1.2 million in the first quarter of 2014. Non-recurring gains, writedowns and losses accounted for much of the changes in non-interest income in the second quarter compared to the year-ago quarter and to the first quarter of 2014. Nonrecurring writedowns and losses, net of nonrecurring gains were $118,000 in the second quarter of 2014 (writedowns and losses on loans held-for-sale and loss on sale of REO), compared to net nonrecurring gains of $137,000 in the year-ago quarter (gains on sales of securities and REO) and net non-recurring gains $53,000 in the first quarter of 2014 (gain on sale of branch, writedowns of loans held-for-sale and loss on sale of securities available-for-sale). 

Noninterest income was $2.2 million in the first half of 2014, compared to $2.7 million in the first half of 2013. Nonrecurring writedowns and losses, net of nonrecurring gains were $63,000 in the first half of 2014, compared to net nonrecurring gains of $221,000 in the year-ago period.

Non-interest income (net of nonrecurring income, gains and losses and gains/losses on the sales of securities) accounted for 21.8% of total revenue in the second quarter of 2014, compared with 24.5% in the year-ago quarter and 22.2% in the first quarter of 2014. Non-interest income accounted for 22.0% of total revenue in the first half of 2014, compared with 24.9% in the year-ago period.

Non-interest expenses were $4.9 million for the second quarter of 2014, compared with $5.4 million in the year-ago quarter and $5.1 million for the first quarter of 2014. The decrease from the year-ago quarter is primarily attributable to a $294,000 decrease in professional services, a $152,000 decrease in salaries and benefits, a $120,000 decrease in other non-interest expenses, and a $66,000 decrease in state franchise taxes. The decrease in professional services is due primarily to the substantial improvement in our asset quality which has reduced the need for outside professional services related to the workout of classified assets. The decrease in salaries and benefits is attributable to a decline in incentive compensation expense as loan originations during the quarter are down from the year-ago quarter, and to the elimination of $47,000 of salaries expense attributable to the Company's former Marysville branch. The decrease in state franchise taxes is the result of a change in the tax law which changed how the tax is calculated in the current year. 

The Company's efficiency ratio was 96.2% in the second quarter of 2014, compared with 109.5% in the year-ago quarter, and 98.5% in the first quarter of 2014. 

Non-interest expenses were $10.0 million in the first half of 2014, which was a decrease of $913,000 or 8.4% compared to the the first half of 2013 as salaries and benefits expense decreased $346,000, franchise taxes decreased $122,000, and professional services decreased $330,000 for the same reasons discussed above.

The Company's efficiency ratio was 97.4% for the first half of 2014, compared to 110.9% in the prior year.

Income Taxes
The Company had net deferred tax assets totaling $11.0 million and $11.6 million with valuation allowances of $11.3 million and $11.2 million, respectively, at June 30, 2014 and December 31, 2013.  Included in net deferred tax assets are gross deferred tax assets of $12.0 million and $11.7 million at June 30, 2014 and December 31, 2013, respectively. Deferred tax liabilities at June 30, 2014 were comprised entirely of the tax liability generated by the unrealized gains on securities available-for-sale.

About DCB Financial Corp
DCB Financial Corp is a financial holding company formed under the laws of the State of Ohio. The Company is the parent of The Delaware County Bank & Trust Company, a state-chartered commercial bank. The Bank conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 14 branch offices located in Delaware County, Ohio and surrounding communities. The Bank provides customary retail and commercial banking and cash management services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, commercial leases, real estate mortgage loans, night depository facilities and trust and personalized wealth management services.

Forward-Looking Statements
This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of DCB Financial Corp.  These forward-looking statements involve certain risks and uncertainties.  Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: an increase in competitive pressure in the banking industry; changes in the interest rate environment which may affect the net interest margin; changes in the regulatory environment; general economic conditions, either nationally or regionally, resulting, among other things, in a deterioration in credit quality; changes in business conditions and inflation; changes in the securities markets; changes in technology used in the banking business; our ability to maintain and increase market share and control expenses; increases in FDIC insurance premiums may cause earnings to decrease; and other risks set forth under the caption "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in subsequent filings with the Securities and Exchange Commission.

The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 

DCB Financial Corp
Consolidated Balance Sheets (Unaudited)

 



June 30, 2014


December 31, 2013



(Dollars in thousands, except share and per share data)

Assets





Cash and due from financial institutions


$  5,632


$   6,110

Interest-bearing deposits


23,189


19,247

   Total cash and cash equivalents


28,821


25,357






Securities available-for-sale


80,690


79,948






Loans


356,339


356,048

Less allowance for loan losses


(4,568)


(6,724)

   Net loans


351,771


349,324






Loans held for sale


1,329


7,806

Real estate owned


1,406


1,219

Investment in FHLB stock


3,250


3,799

Premises and equipment, net


10,326


10,641

Premises and equipment held for sale



1,405

Bank-owned life insurance


19,699


19,297

Accrued interest receivable and other assets


3,182


3,623

   Total assets


$500,474


$502,419






Liabilities and stockholders' equity





Liabilities:





Deposits:





    Non-interest bearing


$108,547


$109,622

    Interest bearing


327,563


317,237

Total deposits


436,110


426,859






Deposits held for sale



22,571

Federal Home Loan Bank advances


4,823


4,838

Accrued interest payable and other liabilities


12,701


2,887

Total liabilities


453,634


457,155






Stockholders' equity:





Common stock


15,771


15,771

Retained earnings


37,863


37,683

Treasury stock


(7,416)


(7,416)

Accumulated other comprehensive income (loss)


622


(774)

   Total stockholders' equity


46,840


45,264

   Total liabilities and stockholders' equity


$500,474


$502,419











Common shares outstanding


7,192,350


7,192,350

Book value per common share


$6.51


$6.29

 

 


DCB Financial Corp
Consolidated Statements of Operations (Unaudited)

 



Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013



(Dollars in thousands, except share and per share data)

Interest income:









Loans


$3,743


$3,735


$7,480


$7,286

Securities


534


489


1,088


1,055

Federal funds sold and interest bearing deposits


9


21


23


50

   Total interest income


4,286


4,245


8,591


8,391










Interest expense:









Deposits:









  Savings and money market  accounts


136


115


269


608

  Time accounts


108


284


237


220

  NOW accounts


19


23


37


45

Total


263


422


543


873










Borrowings:

  FHLB advances


36


72


72


151

Total interest expense


299


494


615


1,024










Net interest income


3,987


3,751


7,976


7,367

Provision for loan losses



(240)



(890)

Net interest income after provision for loan losses


3,987


3,991


7,976


8,257










Non-interest income:









Service charges


489


573


1,000


1,121

Wealth management fees


378


355


671


671

Treasury management fees


59


64


115


126

Income from bank-owned life insurance


164


165


402


405

Writedowns and losses on loans held for sale


(114)



(357)


Gain (loss) on sale of REO


(4)


2


(4)


86

Gain (loss) on sale of securities, available-for-sale



135


(140)


135

Gain on sale of branch




438


Other non-interest income


24


57


62


116

Total non-interest income


996


1,351


2,187


2,659










Non-interest expense:









Salaries and employee benefits


2,712


2,864


5,490


5,836

Occupancy and equipment


837


800


1,641


1,593

Professional services


197


491


617


947

Advertising


77


66


158


173

Office supplies, postage and courier


89


94


184


199

FDIC insurance premium


172


101


340


254

State franchise taxes


67


133


132


344

Other non-interest expense


771


891


1,421


1,550

Total non-interest expense


4,922


5,440


9,983


10,896










Income (loss) before income tax benefit


61


(98)


180


20

Income tax benefit



(254)



(278)

Net income


$    61


$   156


$   180


$    298










Share and Per Share Data









Basic average common shares outstanding


7,192,350


7,192,350


7,192,350


7,192,350

Diluted average common shares outstanding


7,250,702


7,227,901


7,254,203


7,225,573

Basic earnings per common share


$0.01


$0.02


$0.03


$0.04

Diluted earnings per common share


$0.01


$0.02


$0.02


$0.04

 

 

 

DCB Financial Corp
Consolidated Average Balances (Unaudited)

 



Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013



(Dollars in thousands)

Earning assets:









Interest bearing cash


$13,566


$  36,271


$17,635


$ 42,163

Securities


78,587


75,509


79,827


76,175

Tax-exempt securities


4,603


16,179


4,707


15,790

Loans (1)


356,678


328,769


358,252


320,086

Total earning assets


453,434


456,728


460,421


454,214










Non-earning assets


40,778


48,182


40,828


50,581

Total assets


$494,212


$504,910


$501,249


$504,795










Interest bearing liabilities:









Interest bearing DDA


$  76,555


$  57,184


$78,655


$  57,859

Money market


130,370


130,930


130,352


127,028

Savings accounts


42,720


40,344


43,118


39,153

Time deposits


81,415


124,760


83,797


129,522

FHLB advances


4,894


6,145


5,086


6,584

Total interest bearing liabilities


335,954


359,363


341,008


360,146










Non-interest bearing deposits


$109,486


93,820


110,490


93,791

Other non-interest bearing liabilities


3,043


2,529


4,578


2,059

Total liabilities


448,483


455,712


456,076


455,996

Stockholders' equity


45,729


49,198


45,173


48,799

Total liabilities and stockholders' equity


$494,212


$504,910


$501,249


$504,795

 

(1) Includes loans held for sale


 

 

 


DCB Financial Corp
Loans and Deposits (Unaudited)









The following table sets forth the composition of the Company's loan portfolio at the dates indicated (includes loans held for sale):











June 30, 2014


March 31, 2014


December 31, 2013




Amount


Percent


Amount


Percent


Amount


Percent


Loan portfolio
composition


(Dollars in thousands)


Commercial and
industrial  


$104,959


29.4%


$110,886


31.3%


$122,901


33.8%


Commercial real estate


104,387


29.2%


105,077


29.7%


106,901


29.4%


Real estate and home

     equity


114,038


31.9%


105,573


29.8%


98,622


27.1%


Consumer and credit card


34,102


9.5%


32,759


9.2%


35,265


9.7%


Total loans


$357,486


100.0%


$354,295


100.0%


363,689


100.0%
















Net deferred loan costs


182




164




165




Allowance for loan losses   


(4,568)




(5,345)




(6,724)




Net loans


$353,100




$349,114




$357,130






















 

The following table sets forth the composition of the Company's deposits at the dates indicated (includes deposits held for sale):















June 30, 2014


March 31, 2014


December 31, 2013




Amount


Percent


Amount


Percent


Amount


Percent


Deposit composition


(Dollars in thousands)


Non-interest bearing demand


$108,547


24.9%


$104,615


23.8%


$112,711


25.1%


Interest bearing demand


77,304


17.7%


79,945


18.2%


78,229


17.4%


Total demand


185,851


42.6%


184,560


42.0%


190,940


42.5%
















Savings


42,784


9.8%


42,675


9.7%


43,448


9.7%


Money market


131,820


30.2%


129,846


29.5%


125,635


27.9%


Time deposits


75,655


17.4%


82,716


18.8%


89,407


19.9%


Total deposits


$436,110


100.0%


$439,797


100.0%


$449,430


100.0%
























































 

 

 

DCB Financial Corp
Asset Quality (Unaudited)








The following table represents a summary of delinquent loans grouped by the number of days delinquent at the dates indicated
(includes loans held-for-sale):








Delinquent loans and leases


June 30, 2014


March 31, 2014


December 31, 2013



$

%(1)


$

%(1)


$

%(1)



(Dollars in thousands)

30 days past due


$ 1,022

0.29%


$834

0.23%


$  945

0.26%

60 days past due


80

0.02%


132

0.04%


290

0.08%

90 days past due and still accruing




Non-accrual


4,186

1.17%


3,607

1.02%


6,904

1.90%

Total


$5,288

1.48%


$4,573

1.29%


$8,139

2.24%


(1) As a percentage of total loans, excluding deferred costs

 

The following table represents information concerning the aggregate amount of non-performing assets (includes loans held for
sale):


Non-performing assets


June 30, 2014


March 31, 2014


December 31, 2013



(Dollars in thousands)

Non-accruing loans:







   Residential real estate loans and home equity


$     425


$511


$    352

   Commercial real estate


2,779


1,647


1,850

   Commercial and industrial


981


1,449


4,702

   Consumer loans and credit cards


1



Total non-accruing loans


4,186


3,607


6,904

Accruing loans delinquent 90 days or more




Total non-performing loans (excluding TDR's)


4,186


3,607


6,904








Collateralized debt obligations




976

Other real estate and repossessed assets


1,406


1,563


1,219

Total non-performing assets (excluding TDR's)


$  5,592


$5,170


$9,099








Troubled debt restructurings(1)


$  9,297


$12,569


$12,788

Total non-performing loans (including TDR's)


$13,483


$16,176


$19,692

Total non-performing assets (including TDR's)


$14,889


$17,739


$21,887








(1) TDR's that are in compliance with their modified terms and accruing interest.





 


The following table summarizes changes in the allowance for loan losses arising from loans charged off, recoveries on loans and
leases previously charged off and additions to the allowance which have been charged to expense:


Allowance for loan losses


Three months ended

June 30,


Six months ended

June 30,



2014


2013


2014


2013



(Dollars in thousands)

Allowance for loan losses, beginning of period


$5,345


$6,758


$6,724


$6,882










Loans charged-off


(846)


(187)


(2,258)


(434)

Recoveries of loans previously charged-off


69


172


199


945

Net loans charged-off


(777)


(15)


(2,059)


511

Allowance related to loans transferred to held-for-sale




(97)


Provision for loan losses



(240)



(890)

Allowance for loan losses, end of period


$4,568


$6,503


$4,568


$6,503










 

 

DCB Financial Corp
Consolidated Financial Information (Unaudited)






Key Ratios


At or for the three
months ended    

June 30,


At or for the six

          months ended          

June 30,



2014


2013


2014


2013

Return on average assets


0.05%


0.12%


0.07%


0.12%

Return on average equity


0.53%


1.27%


0.80%


1.22%

Yield on earning assets


3.77%


3.73%


3.75%


3.73%

Cost of funds


0.36%


0.59%


0.36%


0.55%

Net interest margin (1)


3.53%


3.29%


3.49%


3.29%

Non-interest income to total income (2)


21.84%


24.45%


22.00%


24.86%

Efficiency ratio (3)


96.20%


109%


97.37%


111%










Net loans charged-off to average loans,    

  annualized


0.87%


0.02%


1.15%


(0.32)%

Provision for loan losses to average loans,

  annualized


0.00%


(0.29)%


0.00%


(0.56)%

Allowance for loan losses to total loans


1.28%


1.88%


1.28%


1.88%

Allowance for loan losses to non-accrual loans


109%


114%


109%


114%

Non-accrual loans to total loans


1.17%


1.65%


1.17%


1.65%

Non-performing assets to total assets

   (including performing TDR's)


2.97%


4.72%


2.97%


4.72%

Non-performing assets to total assets

  (excluding performing TDR's)


1.12%


1.76%


1.12%


1.76%



















(1) Net interest income divided by average earning assets

(2) Non-interest income (excluding net realized gains and losses on securities and other non-recurring gains and losses) divided by the sum of net interest income and non-interest income (as adjusted)

(3) Non-interest expense (less OREO expense and non-recurring expenses and losses) divided by the sum of net interest income and non-interest income (as adjusted)

 

DCB Financial Corp
Selected Quarterly Financial Data (Unaudited)

 


2014


2013


Second


First


Fourth


Third


Second


(Dollars in thousands, except per share data)

Interest income

$4,286


$4,304


$4,372


$4,316


$4,245

Interest expense

299


316


369


425


494

Net interest income

3,987


3,988


4,003


3,891


3,751

Provision for loan losses



3,307



(240)

Net interest income after provision for loan losses

3,987


3,988


696


3,891


3,991

Non-interest income

996


1,192


1,116


1,192


1,351

Non-interest expenses

4,922


5,063


4,914


5,230


5,440

Income (loss) before income tax benefit

61


117


(3,102)


(147)


(98)

Income tax benefit




(20)


(254)

Net income (loss)

$     61


$117


$(3,102)


$ (127)


$ 156











Stock and related per share data










Basic and diluted earnings (loss) per common share

$0.01


$0.02


$ (0.43)


$  (0.02)


$  0.02

Basic weighted average common shares outstanding

7,192,350


7,192,350


7,192,350


7,192,350


7,192,350

Diluted weighted average common shares outstanding

7,250,702


7,244,716


7,192,350


7,192,350


7,227,901

Common book value per share

$6.51


$6.45


$6.29


$6.74


$6.84











Capital Ratios (Bank)










Tier 1 leverage ratio

8.97%


8.83%


8.77%


9.44%


9.51%

Tier 1 risk based capital

12.80%


12.78%


12.24%


13.12%


13.25%

Total risk based capital

14.02%


14.03%


13.50%


14.38%


14.49%











Selected ratios










Return on average assets

0.05%


0.09%


(2.43)%


(0.10)%


0.12%

Return on average equity

0.53%


1.02%


(25.42)%


(1.04)%


1.27%

Yield on earning assets

3.77%


3.74%


3.68%


3.67%


3.73%

Cost of funds

0.36%


0.32%


0.42%


0.48%


0.59%

Net interest margin

3.53%


3.50%


3.37%


3.31%


3.29%

Non-interest income to total income (1)

21.84%


22.22%


21.86%


24.21%


24.45%

Efficiency ratio (2)

96.20%


98.54%


95.82%


101.77%


109.45%











Asset quality ratios










Net loans charged off to average loans, annualized

0.87%


1.43%


1.21%


0.04%


0.02%

Provision for loan losses to average loans, annualized

0.00%


0.00%


3.66%


0.00%


(0.29)%

Allowance for loan losses to total loans

1.28%


1.51%


1.85%


1.81%


1.82%

Allowance for loan losses to non-accrual loans

109.13%


148.18%


97.39%


116.57%


114.15%

Non-accrual loans to total loans

1.17%


1.02%


1.90%


1.55%


1.65%

Non-performing assets to total assets (including 

   performing TDR's)

2.97%


3.59%


4.36%


4.33%


4.72%

Non-performing assets to total assets (excluding

   performing TDR's)

1.12%


1.05%


1.81%


1.57%


1.76%





















(1) Non-interest income (net of realized gains and losses on securities and other non-recurring items) divided by the sum of net interest income and non-interest income (as adjusted)

(2) Non-interest expense (less OREO expense) divided by the sum of net interest income and non-interest income (as adjusted)


 

SOURCE DCB Financial Corp



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