Oxford Bank Corporation Announces Improved Fourth Quarter & Year-End Operating Results for 2009

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Jan 26, 2010, 03:02 ET

OXFORD, Mich., Jan. 26 /PRNewswire-FirstCall/ -- Oxford Bank Corporation ("the Corporation") (OTC Bulletin Board: OXBC), the holding company for Oxford Bank ("the Bank"), today announced improved year-end and fourth quarter operating results for 2009.

The Corporation posted fourth quarter net income of $758,000, or $0.66 per share, on net revenues (net interest income plus noninterest income) of $3,638,000. This represents a $14,642,000 improvement compared to the same quarter last year. During the twelve-month period ending December 31, 2009, a net loss of $3,762,000, or $3.25 per share, was reported on net revenues of $14,787,000; an 81.4-percent improvement over 2008.

The Corporation's operating performance continues to be negatively effected by the economic environment, elevated levels of non-performing loans, maintenance costs associated with bank owned property and FDIC insurance expense. However, the financial results of the Corporation improved in 2009 as a result of the increased look back period for net operating losses, aggressive cost reduction initiatives and strategic balance sheet management.

In 2009, the net operating loss carry-back provision of the United States tax code was expanded as part of the Worker, Homeownership, and Business Assistance Act of 2009, providing a limited, one time benefit to the Corporation. The modification allowed the Corporation to recover $3.1 million in previously paid income taxes.

During the year, management implemented aggressive cost-cutting initiatives designed to reduce total expenditures. Measures included managing interest expense, containing problem asset costs and improving the efficiency of the organization. These efforts resulted in a $3.2 million decline in interest expense, a $2 million decrease in noninterest expense, and an $11.5 million reduction in loan loss provision in 2009. Due to these initiatives, the year-to-date pre-tax loss for 2009 was reduced by 62.4-percent relative to 2008.

Management also continued to strategically reduce the Bank's asset size in 2009 to preserve capital and improve the earnings capacity of the balance sheet. This decision resulted in a $31.7 million reduction in total assets. As a result of this tactic, the Corporation was able to maintain a Tier 1 capital ratio of 4.02-percent for the quarter ending December 31, 2009. Management also was able to generate a strong net interest margin despite a depressed rate environment. Net interest margin on a tax equivalent basis was 3.69-percent in 2009 compared to 3.74-percent in 2008. Liquidity also remains strong, with a combined total of $88.2 million in cash, cash equivalents and securities.

C. James Bess, President and Chief Executive Officer of the Corporation, issued the results and commented: "Although substantial progress has been made over the past six months, it is essential that we remain fully engaged with corrective-action and the reduction of non-performing loan assets. The Bank's long-term prospects rest with replenishing the capital account. Therefore, in order to maintain franchise value for the benefit of shareholders, employees, customers, and communities served, we continue to vigorously pursue new sources of capital that will allow us to purge problem loan assets from the balance sheet and facilitate a return to profitability."

Oxford Bank is a subsidiary of Oxford Bank Corporation, a registered holding company. It is the oldest commercial bank in Oakland County and operates eight full-service offices in Clarkston, Davison, Dryden, Goodrich, Lake Orion, Oakland Township, Ortonville and Oxford. It also manages a consumer lending center in Oxford and a commercial banking office in Lake Orion. The Bank has operated continuously under local ownership and management since it first opened for business in 1884. For more information about Oxford Bank and its complete line of financial services, please visit www.oxfordbank.com.

Except for the historical information contained herein, the matters discussed in the Release may be deemed forward-looking statements that involve risk and uncertainties. Words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to differ, include, but are not limited to, fluctuations in interest rates, changes in economic conditions of the Bank's market area, changes in policies by regulatory agencies, the acceptance of new products, the impact of competitive products and pricing and the other risks detailed from time to time in the Bank's and Corporation's reports. These forward-looking statements represent the Bank's judgment as of the date of this report. The Bank, disclaims, however, any intent or obligation to update these forward-looking statements.

Oxford Bank Corporation
Consolidated Balance Sheet (Unaudited)
(Dollars in thousands except per share data)

			December 31,
			2009	2008
ASSETS
		Cash and due from banks	$ 37,701	$ 20,338
		Federal funds sold	-	1,177
	Total cash and cash equivalents		37,701	21,515

		Securities available-for-sale	43,407	47,369
		Securities held-to-maturity	6,001	9,174
		Federal Home Loan Bank Stock	1,096	1,096
	Total securities		50,504	57,639

	Portfolio loans
		Consumer loans	46,409	60,504
		Mortgage loans	64,102	76,624
		Commercial loans	117,438	136,764
	Total loans		227,949	273,892
		Less: Allowance for loan loss	9,348	10,664
	Net loans		218,601	263,228

		Premises and equipment, net	9,061	9,255
		Other real estate owned	10,068	6,873
		Accrued interest receivable and other assets	4,886	4,047

	*TOTAL ASSETS*		$ 330,821	$ 362,557

LIABILITIES
	Deposits
		Noninterest-bearing	$ 56,340	$ 55,545
		Interest-bearing	258,856	285,355
	Total deposits		315,196	340,900

		Short term borrowings	414	1,258
		Accrued interest payable, taxes and other liabilities	1,899	2,565
	Total Liabilities		317,509	344,723

SHAREHOLDERS' EQUITY

		Common stock, no par value; 10,000,000 and 3,200,000 shares
		authorized; 1,156,690 shares issued and outstanding	16,271	16,271
		Retained (deficit) earnings	(2,921)	841
		Accumulated other comprehensive income, net of tax	(38)	722
	Total shareholders' equity		13,312	17,834

	*TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY*		$ 330,821	$ 362,557
			-	-
*Book value per share*			$11.51	$15.42

Oxford Bank Corporation Consolidated Statement of Income (Unaudited) (dollars in thousands except per share data)
				Quarter to Date		Year to Date
				December 31,		December 31,
				2009	2008	2009	2008
Interest Income
		Interest and fees on loans
			Commercial loans	$ 1,900	$ 2,175	$ 7,908	$ 9,193
			Installment loans	342	536	1,641	2,524
			Mortgage loans	861	1,180	4,004	5,509
			Open end loans	358	467	1,528	2,053
			Late charges and fees	63	72	296	323
	*Total loan interest and fee income*			3,524	4,430	15,377	19,602

		Interest on investment securities
			Taxable	180	512	1,172	2,540
			Tax-exempt	73	144	423	656
	*Total investment income*			253	656	1,595	3,196

	*Total interest income*			3,777	5,086	16,972	22,798

Interest Expense
		Interest on deposits		1,109	1,632	5,618	8,792
		Interest on borrowed funds		-	32	-	44
	*Total interest expense*			1,109	1,664	5,618	8,836

	*Net Interest Income*			2,668	3,422	11,354	13,962
		Provision for loan losses		2,000	7,300	5,850	17,300
	*Net Interest Income After Provision for Loan Losses*			668	(3,878)	5,504	(3,338)

Noninterest Income
		Service charge income		330	374	1,364	1,548
		Mortgage banking activities		38	60	303	458
		Other income		602	392	1,766	761
	*Total noninterest income*			970	826	3,433	2,767

Noninterest Expense
		Salaries and employee benefits		1,129	1,826	5,723	6,822
		Occupancy expense		268	301	1,216	1,306
		Equipment expense		117	115	521	447
		Other Loan Expense		1,373	1,844	3,523	4,703
		Other expense		1,159	1,398	4,882	4,587
	*Total noninterest expense*			4,046	5,484	15,865	17,865

	*Loss Before Income Taxes*			(2,408)	(8,536)	(6,928)	(18,436)
		Income tax (recovery) expense		(3,166)	5,348	(3,166)	1,777
	*Net Income (Loss)*			$ 758	$ (13,884)	$ (3,762)	$ (20,213)

*Income (Loss) per Share - Basic*				$ 0.66	$ (12.00)	$ (3.25)	$ (17.47)

Oxford Bank Corporation Financial Summary and Selected Ratios (Unaudited) (Dollars in thousands except per share data)
			Year to Date
			December 31,		Change
			2009	2008	Amount	Percentage
Financial Summary
		Interest Income	$ 16,972	$ 22,798	$ (5,826)	-25.6%
		Interest Expense	5,618	8,836	(3,218)	-36.4%
	Net Interest Income		11,354	13,962	(2,608)	-18.7%
		Provision for loan loss	5,850	17,300	(11,450)	-66.2%
		Noninterest income	3,433	2,767	666	24.1%
		Noninterest expense	15,865	17,865	(2,000)	-11.2%
	Loss before Income Taxes		(6,928)	(18,436)	11,508	62.4%
		Income tax recovery	(3,166)	1,777	(4,943)	-278.2%
	Net Loss		$ (3,762)	$ (20,213)	$ 16,451	81.4%

Balance Sheet Data
	Total assets		330,821	362,557	(31,736)	-8.8%
	Earning assets		278,452	332,708	(54,256)	-16.3%
	Total loans		227,949	273,892	(45,944)	-16.8%
	Allowance for loan loss		9,348	10,664	(1,316)	-12.3%
	Total deposits		315,196	340,900	(25,704)	-7.5%
	Other borrowings		414	1,258	(844)	-67.1%
	Shareholders' equity		13,312	17,834	(4,522)	-25.4%

Asset Quality
	Other real estate owned		10,068	6,873	3,195	46.5%
	Net charge-offs		7,166	16,328	(9,162)	-56.1%
	Non-accrual loans		17,984	15,255	2,730	17.9%
	Nonperforming assets		28,053	22,128	5,925	26.8%
	Non-accrual loans / total loans		7.89%	5.57%	2.32%	41.7%
	Allowance for loan loss / total loans		4.10%	3.89%	0.21%	5.3%
	Allowance for loan loss / non-accrual loans		51.98%	69.91%	-17.93%	-25.6%

Performance Measurements
	Net interest margin (tax equivalent)		3.69%	3.74%	-0.05%	-1.3%
	Return on average assets (annualized)		-1.05%	-5.03%	3.98%	79.1%
	Return on average equity (annualized)		-24.6%	-61.0%	36.4%	59.6%
	Equity / Assets		4.0%	4.9%	-0.9%	-18.2%
	Loans / Deposits		72.3%	80.3%	-8.0%	-10.0%
	Book Value		$ 11.51	$ 15.42	$ (3.91)	-25.4%
	Loss per share - Basic		$ (3.25)	$ (17.47)	$ 14.22	81.4%
	Shares Outstanding		1,156,690	1,156,690	-	0.0%

	Oxford Bank Corporation Financial Summary and Selected Ratios (Unaudited) (Dollars in thousands except per share data)
			Quarter Ended
			December 31,	September 30,	June 30,	March 31,	December 31,
			2009	2009	2009	2009	2008
Financial Summary
		Interest Income	$ 3,777	$ 3,995	$ 4,458	$ 4,742	$ 5,086
		Interest Expense	1,109	1,346	1,554	1,608	1,664
	Net Interest Income		2,668	2,649	2,904	3,135	3,422
		Provision for loan loss	2,000	2,050	1,000	800	7,300
		Noninterest income	970	469	1,023	970	826
		Noninterest expense	4,046	3,676	4,344	3,800	5,484
	Loss before Income Taxes		(2,408)	(2,608)	(1,417)	(495)	(8,537)
		Income tax (recovery) expense	(3,166)	-	-	-	5,348
	Net Income (Loss)		$ 758	$ (2,608)	$ (1,417)	$ (495)	$ (13,885)

Balance Sheet Data
	Total assets		330,821	347,956	366,223	361,315	362,557
	Earning assets		278,452	298,061	312,092	321,017	332,708
	Total loans		227,949	240,924	253,222	263,431	273,892
	Allowance for loan loss		9,348	10,089	9,473	10,045	10,664
	Total deposits		315,196	332,865	348,070	341,567	340,900
	Other borrowings		414	170	459	468	1,258
	Shareholders' equity		13,312	12,980	15,418	17,151	17,834

Asset Quality
	Other real estate owned		10,068	11,374	8,873	9,743	6,873
	Net charge-offs		2,741	1,434	1,572	1,419	4,734
	Non-accrual loans		17,984	18,954	11,540	12,553	15,255
	Nonperforming assets		28,053	30,328	20,413	22,296	22,128
	Non-accrual loans / total loans		7.89%	7.87%	4.56%	4.77%	5.57%
	Allowance for loan loss / total loans		4.10%	4.19%	3.74%	3.81%	3.89%
	Allowance for loan loss / non-accrual loans		51.98%	53.23%	82.09%	80.02%	69.91%

Performance Measurements
	Net interest margin (tax equivalent)		3.58%	3.46%	3.75%	3.98%	4.06%
	Return on average assets (annualized)		0.91%	-2.82%	-1.56%	-0.55%	-15.33%
	Return on average equity (annualized)		24.2%	-70.5%	-34.3%	-11.5%	-203.4%
	Equity / Assets		4.0%	3.7%	4.2%	4.7%	4.9%
	Loans / Deposits		72.3%	72.4%	72.8%	77.1%	80.3%
	Book Value		$ 11.51	$ 11.22	$ 13.33	$ 14.83	$ 15.42
	Income (loss) per share - Basic		$ 0.66	$ (2.25)	$ (1.22)	$ (0.43)	$ (12.00)
	Shares Outstanding		1,156,690	1,156,690	1,156,690	1,156,690	1,156,690