Bank Of McKenney Reports Second Quarter Earnings

MCKENNEY, Va., Aug. 5, 2016 /PRNewswire/ -- Bank of McKenney (OTCBB: BOMK) today announced earnings of $350,000 for the three-month period ending June 30, 2016, compared to net income of $376,000 for the same period in 2015. 

Net interest income dropped $295,000 from the period ended June 30, 2015, which was offset by a reduction in the provision for loan losses of $299,000. Basic and diluted earnings per share of $0.18 were recorded for the three months ended June 30, 2016.  Income for the six months ended June 30, 2016 was $731,000 compared to $761,000 for the same period last year.

Richard M. Liles, President and Chief Executive Officer, stated, "Net interest income has decreased in 2016 due to a reduction in outstanding loans and maturities of higher yielding investment securities. Increased competition for loans and deposits in our markets continues to be a significant issue. While we continue to maintain our underwriting discipline, we have become much more aggressive in pricing our loans and deposits. We have seen modest growth in the first half of 2016, but our earnings have decreased due to lower loan balances. We expect net interest income to improve in the second half of 2016 as our loan pipeline continues to grow."

Return on average equity on an annualized basis for the six months ended June 30, 2016 was 5.81% as compared to 6.36% for the first half of 2015.  Return on average assets during the same period of 2016 decreased to 0.67% from the prior year level of 0.70%. 

Tier 1 leverage capital was 11.57% and total regulatory capital was 16.36% as of June 30, 2016 compared to 11.33% and 15.66% respectively at December 31, 2015.

Balance Sheet

At the end of the second quarter, total assets were $221.4 million, representing a 1.4% increase over the December 31, 2015 level of $218.3 million.  Total loans decreased $2.6 million to 155.1 million compared to the balance at December 31, 2015. The investment portfolio increased $5.3 million over the same period. Federal funds sold decreased from $7.8 million on December 31, 2015 to $6.7 million on June 30, 2016.  Cumulatively, earning assets grew $1.7 million in the first six months of 2016, and represent 87.9% of total assets.  Other Real Estate Owned (OREO) amounted to $696,000 and $835,000 at June 30, 2016 and December 31, 2015, respectively. Total deposits increased to $192.9 million at June 30, 2016 compared to $190.7 million at December 31, 2015. Total shareholders' equity has increased $853,000 year-to-date.

Allowance for Loan Losses

The Allowance for Loan and Lease Losses (ALLL) was $2.7 million as of June 30, 2016, or 1.72% of loans outstanding, compared to $2.6 million as of December 31, 2015 or 1.65% of outstanding loans.  There was no change in the Allowance due to charges, and recoveries totaled $67,000 for the six-month period ended June 30, 2016. Provisions to the Allowance of $0 were recorded year-to-date for 2016 compared to a provision of $300,000 for the same period of 2015.

On June 30, 2016, loans past due more than 30 days as a percentage of total loans were 1.39% and were 0.97% of total assets. These ratios as of December 31, 2015 were 1.56% and 1.13%, respectively. Delinquent loans as of June 30, 2016 totaled $2.2 million and at December 31, 2015 totaled $2.5 million. Loans past due more than 90 days totaled $2.0 million as of June 30, 2016 compared to $1.8 million at December 31, 2015. Twenty two loans were on nonaccrual at June 30, 2016 totaling $2.7 million compared to twenty loans of $2.5 million at December 31, 2015. Specific impairments of $1.2 million are included in the ALLL as of June 30, 2016 related to the past due and nonaccrual loans. One borrower in bankruptcy accounts for $1.2 million of the loans past due greater than 90 days and all are on nonaccrual.

Quarterly Results

Net interest income decreased $295,000 or 12.6% to $2.1 million in the second quarter of 2016 from the comparable period in 2015. Decreased loan volume was primarily responsible for the decrease. This reduction in income was largely offset by the reduction during the period in Provision for Loan Loss of $300,000 compared to the same period of 2015. Noninterest income and expense remained largely unchanged in the second quarter of 2016 compared to same period in 2015.  

Year to Date Results

Net interest income decreased $388,000 during the six months ended June 30, 2016 over the same period in 2015 to $4.2 million. This decrease was primarily due to reduced loan balances. Provisions for loan loss during the first half of the year totaled $0 compared to $300,000 in 2015. Noninterest income was $53,000 greater in 2016 due to small increases from several sources. Noninterest expense increased $10,000 and income taxes are virtually unchanged one year over the other.

Bank of McKenney is a full-service community bank headquartered in McKenney, Virginia with seven 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.

SOURCE Bank of McKenney

Related Links

http://www.bankofmckenney.com