Delmarva Bancshares, Inc. Third Quarter 2017 Earnings

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Nov 01, 2017, 09:21 ET

CAMBRIDGE, Md., Nov. 1, 2017 /PRNewswire/ -- Delmarva Bancshares, Inc. (the "Company" or "Delmarva"), parent company for 1880 Bank, today reported net income of $597 thousand or $0.10 per share for the quarter ended September 30, 2017, compared to $746 thousand or $0.13 per share for the quarter ended June 30, 2017 and net income of $1.3 million or $0.22 per share for the third quarter of 2016. The Company's net income for the nine months ended September 30, 2017 was $2.9 million or $0.49 per share, compared to $7.0 million or $1.18 per share for the September 2016 nine month period. Excluding the impact of recapturing deferred tax assets (DTAs) and assuming a comparable full year's tax effect on 2016 earnings, core net income was $597 thousand and $1.9 million, or $0.10 and $0.33 per share respectively, for the September 2017 three and nine month periods, compared to $460 thousand and $1.7 million, or $0.08 and $0.28 respectively, for the September 2016 three and nine month periods.

Delmarva's total assets were $328 million at September 30, 2017, compared to $324 million and $315 million at June 30, 2017 and September 30, 2016, respectively. Total loans increased by $5.6 million or 2.4% to $242 million from September 2016. Total deposits were $274 million at September 30, 2017, compared to $270 million at June 30, 2017 and $263 million at September 30, 2016. Non-interest bearing deposits represented 28% of total deposits at September 30, 2017. As of September 30, 2017, non-performing assets were 1.69% of total assets compared to 1.80% at June 30, 2017 and 2.44% at September 30, 2016. The remaining valuation allowance on DTAs at September 30, 2017 was $3.4 million.

Core earnings resulted in continued improvement in fully diluted tangible book value per share, which increased to $6.60 at September 30, 2017 from $6.47 and $5.96 at June 30, 2017 and September 30, 2016, respectively.

Third Quarter Performance Highlights:

Core net income was $597 thousand or $0.10 per share for the September 2017 quarter, compared to core net income of $460 thousand or $0.08 per share in the third quarter of 2016.
Core net income was $1.9 million or $0.33 per share for the September 2017 nine month period, compared to core net income of $1.7 million or $0.28 per share for the nine months ended September 30, 2016.
Total loans increased by $5.6 million, or 2.4%, to $242 million compared to the third quarter of 2016.
Non-performing assets were 1.69% of total assets at September 30, 2017, compared to 1.80% and 2.44% of total assets at June 30, 2017 and September 30, 2016, respectively.
Total assets at September 30, 2017 were $328 million versus $324 million and $315 million at June 30, 2017 and September 30, 2016, respectively.
Cost of funds at the Bank was 0.25% and 0.23% for the three and nine months ended September 30, 2017, respectively, compared to 0.18% and 0.15% for the September 30, 2016 three and nine month periods, respectively.
Net interest margin at the Bank was 4.13% and 4.09% for the three and nine months ended September 30, 2017, respectively, compared to 4.27% and 4.15% for the three and nine months ended September 30, 2016, respectively.
Core return on assets (ROA) was 0.74% and core return on equity (ROE) was 5.73% for the three months ended September 30, 2017, compared to 0.60% and 4.96%, respectively, for the three months ended September 30, 2016.
Core ROA was 0.80% and core ROE was 6.38% for the nine months ended September 30, 2017, compared to 0.73% and 6.64%, respectively, for the nine months ended September 30, 2016.
The efficiency ratio was 70.47% and 68.69% for the three and nine months ended September 30, 2017, respectively, compared to 72.87% and 71.87% for the September 2016 three and nine month periods, respectively.
Fully diluted tangible book value per share was $6.60 at September 30, 2017 compared to $6.47 and $5.96 at June 30, 2017 and September 30, 2016, respectively.
Liquidity remained strong and capital ratios exceeded all regulatory guidelines for a "well-capitalized" financial institution.

"Our approach to prudent loan growth and relationship building continues to produce solid performance results. The strength of our franchise is the core deposits and strong banking relationships that take time to cultivate. Those cultivation activities and effort of our team should bear more future business. The Company is well positioned for organic growth and acquisition opportunities," said Kim C. Liddell, Delmarva's Chairman and President.

Delmarva Bancshares, Inc. and Subsidiary
Consolidated Balance Sheets
September 30, 2017



	September 30, 2017	September 30, 2016	June 30, 2017
Assets

Cash and due from banks	$ 4,631,945	$ 2,714,456	$ 4,012,049
Interest-bearing deposits in other banks	16,633,128	8,423,535	16,736,817
Federal funds sold	126,629	7,000	7,000
Total cash and cash equivalents	21,391,702	11,144,991	20,755,866

Investment securities available-for-sale, at fair value	35,926,265	39,394,611	32,410,599
Restricted stock, at cost	1,706,600	1,951,952	1,689,400
Total investment securities	37,632,865	41,346,563	34,099,999

Loans receivable, gross	241,528,168	235,944,318	240,677,930
Allowance for loan losses	(1,639,922)	(1,607,559)	(1,616,207)
Loans receivable, net of allowance for loan losses	239,888,246	234,336,759	239,061,723
Bank premises and equipment, net	5,221,651	5,547,194	5,325,078
Other real estate owned, net of valuation allowance	516,671	1,164,221	289,421
Accrued interest receivable	658,804	627,746	702,445
Cash surrender value of life insurance	13,834,802	11,052,842	13,769,470
Goodwill	1,852,120	1,852,120	1,852,120
Core Deposit Intangible	671,556	1,013,670	750,505
Deferred tax asset	5,432,586	4,977,300	5,733,143
Other assets	1,160,949	1,827,306	1,316,274

Total Assets	$ 328,261,952	$ 314,890,712	$ 323,656,044

Liabilities and Stockholders' Equity

Liabilities:
Deposits:
Non-interest-bearing	$ 77,881,183	$ 79,447,979	$ 79,561,193
Interest-bearing	196,209,163	183,211,015	190,630,973
Total deposits	274,090,346	262,658,994	270,192,166

Accrued interest payable	90,795	678,404	150,904
Accrued benefit obligations	4,748,619	4,786,215	4,697,361
FRB/FHLB Borrowings	-	-	-
Noncumulative subordinated notes	4,100,000	4,100,000	4,100,000
Trust preferred	2,495,753	2,455,621	2,487,574
Other liabilities	926,012	1,965,783	770,947
Total Liabilities	286,451,525	276,645,017	282,398,952

Commitments and Contingent Liabilities	-	-	-

Stockholders' Equity:
Preferred stock, $.01 par value per share -
2,059,713 shares authorized, issued and outstanding	20,597	20,597	20,597
Common stock, $.01 par value per share -
10,000,000 shares authorized, 3,883,593, 3,872,168 and
3,883,593 issued and outstanding, respectively	38,836	38,721	38,836
Additional paid-in capital	43,616,099	43,498,431	43,603,597
Retained earnings (deficit)	(1,818,074)	(5,583,677)	(2,415,459)
Accumulated other comprehensive income	(47,031)	271,623	9,521
Total Stockholders' Equity	41,810,427	38,245,695	41,257,092

Total Liabilities and Stockholders' Equity	$ 328,261,952	$ 314,890,712	$ 323,656,044

Delmarva Bancshares, Inc. and Subsidiary
Consolidated Statements of Operations
September 30, 2017


	Three Months Ended		Year to Date
	September 30, 2017	September 30, 2016	September 30, 2017	September 30, 2016
Interest and Dividend Income
Loans, including fees	$ 2,938,258	$ 2,915,041	$ 8,728,329	$ 8,447,094
Investment securities	175,611	172,342	483,424	586,662
Dividends on restricted stock	7,804	2,121	58,691	43,059
Interest on deposits in other banks	38,089	9,282	102,684	32,673
Interest on federal funds sold/due from banks	314	27	597	45
Total interest income	3,160,076	3,098,813	9,373,725	9,109,533

Interest Expense
Deposits	164,393	113,004	457,466	292,378
Junior subordinated debt	40,691	41,964	122,451	122,175
Senior subordinated debt	73,345	72,813	217,642	217,907
Borrowed funds	-	279	2	311
Total interest expense	278,429	228,060	797,561	632,771

Net interest income	2,881,647	2,870,753	8,576,164	8,476,762

Provision for Loan Losses	52,000	150,401	64,952	150,071

Net interest income after provision
for loan losses	2,829,647	2,720,352	8,511,212	8,326,691

Noninterest Income
Service charges on deposit accounts	206,385	170,839	575,671	498,726
Other fees and commissions	154,867	180,598	455,744	442,085
Net gains on sale of securities	-	-	-	150,033
Income on bank owned life insurance	65,332	34,420	231,645	221,586
Other income	35,211	26,535	79,357	108,403
Total noninterest income	461,795	412,392	1,342,417	1,420,833

Noninterest Expense
Salaries and employee benefits	1,009,781	996,088	2,994,911	2,985,056
Premises and equipment	328,607	368,357	876,431	1,062,779
Data processing	396,472	329,437	1,119,224	854,933
OREO write-downs, net losses on sales and operating expenses	10,303	53,037	25,866	100,214
Professional fees	184,123	192,751	565,800	765,718
Director fees	77,876	54,249	202,125	155,747
Core deposit amortization	78,949	97,108	250,006	302,640
FDIC assessments	25,473	63,168	79,987	196,835
Regulatory examination assessments	10,287	10,287	30,861	30,861
Other insurance expense	28,140	28,508	83,393	84,126
Other expense	206,265	199,378	584,167	574,403
Total noninterest expense	2,356,276	2,392,368	6,812,771	7,113,312

Net Income before income taxes	935,166	740,376	3,040,858	2,634,212

Provision for Income Taxes	337,781	(539,738)	102,186	(4,387,602)

Net Income	$ 597,385	$ 1,280,114	$ 2,938,672	$ 7,021,814

Net Income Per Common Share: Basic	$ 0.10	$ 0.22	$ 0.49	$ 1.18

Net Income Per Common Share: Diluted	$ 0.10	$ 0.22	$ 0.49	$ 1.18

Average Common Shares Outstanding: Basic	5,943,306	5,931,881	5,938,057	5,931,881
Average Common Shares Outstanding: Diluted	5,953,704	5,931,881	5,948,021	5,931,881