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

Jan 26, 2010, 15:02 ET from Oxford Bank Corporation

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   

SOURCE Oxford Bank Corporation



RELATED LINKS

http://www.oxfordbank.com