Oxford Bank Corporation Announces Improved Second Quarter & Six-Month Operating Results for 2010

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Aug 03, 2010, 04:21 ET

OXFORD, Mich., Aug. 3 /PRNewswire-FirstCall/ -- Oxford Bank Corporation ("the Corporation") (OTC Bulletin Board: OXBC), the holding company for Oxford Bank ("the Bank"), today announced improved second quarter and six-month operating results for 2010.

The Corporation reported a 2010 second quarter net loss of $1.241 million, or $1.07 per share, compared to a 2009 second quarter loss of $1.417 million, or $1.22 per share. For the six-month period ending June 30, 2010, the Corporation reported a net loss of $1.217 million, or $1.05 per share, compared to a $1.912 million net loss, or $1.65 per share, for the same period in 2009.

Net interest margin, representing net interest income to average earning assets, was 3.86-percent in the second quarter of 2010. Management was able to improve margin during the quarter despite a decrease in earning assets. This was achieved by strategically reducing funding costs and maintaining asset yields. Total interest expense for the second quarter of 2010 was $0.769 million compared to $1.554 million for the second quarter of 2009, a 50.5-percent decline. For the six-months ending June 30, 2010, interest expense was $1.618 million compared to $3.162 million for the same period of 2009, a decrease of $1.544 million. C. James Bess, president and chief executive officer of the Corporation, issued the results and noted, "An adherence to sound pricing strategies on deposits and loan products during the past twelve months has helped preserve the earnings capacity of the balance sheet. Despite the on-going expense burden related to high levels of non-performing loans, maintenance costs associated with Bank owned property and FDIC insurance premiums, the core earnings of the Bank remain strong."

Noninterest expense was $2.662 million for the second quarter of 2010, compared to $4.344 million for the same quarter of 2009, a 38.7-percent reduction. For the six months ending June 30, 2010, total noninterest expense was $5.246 million, a $2.898 million decline from the $8.143 million reported for the same period of 2009. Mr. Bess explained, "Since June 30, 2009, management has successfully implemented numerous cost-cutting initiatives that have substantially reduced our overall operating expenses. As Oxford Bank continues to experience elevated costs associated with the credit quality issues of the loan portfolio, it is imperative that we maintain an aggressive approach to analyzing and controlling the expense structure of the Bank." Noninterest income for the second quarter of 2010 was $0.433 million. For the six months ending June 30, 2010, noninterest income was $0.811 million compared to $1.993 million for the same period in 2009.

Management also continues to strategically reduce the Bank's assets to preserve capital and reduce costs. Total assets as of June 30, 2010 were $305.261 million, a decline of $60.962 million from June 30, 2009. Despite the asset reduction, liquidity remains strong with a combined total of $86.708 million in cash, cash equivalents and securities.

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)

			June 30,
			2010	2009
ASSETS
		Cash and due from banks	$ 45,723	$ 42,886
		Federal funds sold	-	-
	Total cash and cash equivalents		45,723	42,886

		Securities available-for-sale	34,540	50,039
		Securities held-to-maturity	5,349	6,571
		Federal Home Loan Bank Stock	1,096	1,096
	Total securities		40,985	57,706

	Portfolio loans
		Consumer loans	39,501	53,742
		Mortgage loans	59,007	71,413
		Commercial loans	107,699	128,067
	Total loans		206,207	253,222
		Less: Allowance for loan loss	11,756	9,473
	Net loans		194,451	243,749

		Premises and equipment, net	8,867	9,304
		Other real estate owned	13,854	8,873
		Accrued interest receivable and other assets	1,381	3,705

	*TOTAL ASSETS*		$ 305,261	$ 366,223

LIABILITIES
	Deposits
		Noninterest-bearing	$ 53,769	$ 60,653
		Interest-bearing	241,105	287,417
	Total deposits		294,874	348,070

		Short term borrowings	89	459
		Accrued interest payable, taxes and other liabilities	1,936	2,276
	Total Liabilities		296,899	350,805

SHAREHOLDERS' EQUITY

		Common stock, no par value; 10,000,000 shares authorized;
		1,156,690 shares issued and outstanding	16,271	16,271
		Retained (deficit) earnings	(7,940)	(1,072)
		Accumulated other comprehensive income, net of tax	31	219
	Total shareholders' equity		8,362	15,418

	*TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY*		$ 305,261	$ 366,223
			-	-
*Book value per share*			$7.23	$13.33

Oxford Bank Corporation
Consolidated Statement of Income (Unaudited)
(Dollars in thousands except per share data)

				Quarter to Date		Year to Date
				June 30,		June 30,
				2010	2009	2010	2009
Interest Income
		Interest and fees on loans
			Commercial loans	$ 1,725	$ 2,039	$ 3,527	$ 4,072
			Installment loans	254	438	534	913
			Mortgage loans	825	1,085	1,679	2,273
			Open end loans	332	376	677	797
			Late charges and fees	46	91	116	150
	*Total loan interest and fee income*			3,182	4,029	6,533	8,205

		Interest on investment securities
			Taxable	98	312	224	741
			Tax-exempt	54	117	112	254
	*Total investment income*			152	429	336	995

	*Total interest income*			3,334	4,458	6,869	9,200

Interest Expense
		Interest on deposits		769	1,554	1,618	3,162
		Interest on borrowed funds		-	-	-	-
	*Total interest expense*			769	1,554	1,618	3,162

	*Net Interest Income*			2,565	2,904	5,251	6,038
		Provision for loan losses		1,577	1,000	2,033	1,800
	*Net Interest Income After Provision for Loan Losses*			988	1,904	3,218	4,238

Noninterest Income
		Service charge income		274	350	557	676
		Mortgage banking activities		12	65	35	243
		Other income		147	608	219	1,074
	*Total noninterest income*			433	1,023	811	1,993

Noninterest Expense
		Salaries and employee benefits		1,047	1,563	2,156	3,122
		Occupancy expense		182	257	411	686
		Equipment expense		102	120	207	236
		Other Loan Expense		445	890	698	1,521
		FDIC Insurance		367	592	745	961
		Other expense		519	922	1,029	1,617
	*Total noninterest expense*			2,662	4,344	5,246	8,143

	*Loss Before Income Taxes*			(1,241)	(1,417)	(1,217)	(1,912)
		Income tax recovery		-	-	-	-
	*Net Loss*			$ (1,241)	$ (1,417)	$ (1,217)	$ (1,912)

*Loss per Share - Basic*				$ (1.07)	$ (1.22)	$ (1.05)	$ (1.65)

Oxford Bank Corporation
Financial Summary and Selected Ratios (Unaudited)
(Dollars in thousands except per share data)

			Year to Date
			June 30,		Change
			2010	2009	Amount	Percentage
Financial Summary
		Interest Income	$ 6,869	$ 9,200	$ (2,331)	-25.3%
		Interest Expense	1,618	3,162	(1,544)	-48.8%
	Net Interest Income		5,251	6,038	(786)	-13.0%
		Provision for loan loss	2,033	1,800	233	12.9%
		Noninterest income	811	1,993	(1,183)	-59.3%
		Noninterest expense	5,246	8,143	(2,898)	-35.6%
	Loss before Income Taxes		(1,217)	(1,912)	695	36.4%
		Income tax recovery	-	-	-	0.0%
	Net Loss		$ (1,217)	$ (1,912)	$ 695	36.4%

Balance Sheet Data
	Total assets		305,261	366,223	(60,962)	-16.6%
	Earning assets		247,192	310,928	(63,736)	-20.5%
	Total loans		206,207	253,222	(47,015)	-18.6%
	Allowance for loan loss		11,756	9,473	2,283	24.1%
	Total deposits		294,874	348,070	(53,196)	-15.3%
	Other borrowings		89	459	(370)	-80.6%
	Shareholders' equity		8,362	15,418	(7,056)	-45.8%

Asset Quality
	Other real estate owned		13,854	8,873	4,981	56.1%
	Net charge-offs		3,127	2,991	136	4.6%
	Non-accrual loans		13,654	11,540	2,114	18.3%
	Nonperforming assets		27,507	20,413	7,094	34.8%
	Non-accrual loans / total loans		6.62%	4.56%	2.06%	45.3%
	Allowance for loan loss / total loans		5.70%	3.74%	1.96%	52.4%
	Allowance for loan loss / non-accrual loans		86.10%	82.09%	4.01%	4.9%

Performance Measurements
	Net interest margin (tax equivalent)		3.86%	3.86%	0.00%	0.0%
	Return on average assets (annualized)		-0.61%	-0.81%	0.20%	24.7%
	Return on average equity (annualized)		-21.4%	-17.4%	-3.9%	-22.5%
	Equity / Assets		2.7%	4.2%	-1.5%	-34.9%
	Loans / Deposits		69.9%	72.8%	-2.8%	-3.9%
	Book Value		$ 7.23	$ 13.33	$ (6.10)	-45.8%
	Loss per share - Basic		$ (1.05)	$ (1.65)	$ 0.60	36.4%
	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
			June 30,	March 31,	December 31,	September 30,	June 30,
			2010	2010	2009	2009	2009
Financial Summary
		Interest Income	$ 3,334	$ 3,535	$ 3,777	$ 3,995	$ 4,458
		Interest Expense	769	848	1,109	1,346	1,554
	Net Interest Income		2,565	2,687	2,668	2,649	2,904
		Provision for loan loss	1,577	456	2,591	4,961	1,000
		Noninterest income	433	377	970	469	1,023
		Noninterest expense	2,662	2,584	4,346	3,676	4,344
	Loss before Income Taxes		(1,241)	24	(3,299)	(5,519)	(1,417)
		Income tax expense (recovery)	-	-	(3,166)	-	-
	Net Loss		$ (1,241)	$ 24	$ (133)	$ (5,519)	$ (1,417)

Balance Sheet Data
	Total assets		305,261	314,665	327,111	345,045	366,223
	Earning assets		247,192	267,997	278,452	298,061	312,092
	Total loans		206,207	218,302	227,949	240,924	253,222
	Allowance for loan loss		11,756	12,000	12,850	13,000	9,473
	Total deposits		294,874	302,872	315,195	332,865	348,070
	Other borrowings		89	218	414	170	459
	Shareholders' equity		8,362	9,606	9,510	10,069	15,418

Asset Quality
	Other real estate owned		13,854	10,494	9,862	11,374	8,873
	Net charge-offs		1,821	1,306	2,741	1,434	1,572
	Non-accrual loans		13,654	16,466	17,984	18,954	11,540
	Nonperforming assets		27,507	26,960	27,847	30,328	20,413
	Non-accrual loans / total loans		6.62%	7.54%	7.89%	7.87%	4.56%
	Allowance for loan loss / total loans		5.70%	5.50%	5.64%	5.40%	3.74%
	Allowance for loan loss / non-accrual loans		86.10%	72.88%	71.45%	68.59%	82.09%

Performance Measurements
	Net interest margin (tax equivalent)		3.86%	3.85%	3.58%	3.46%	3.75%
	Return on average assets (annualized)		-1.54%	0.03%	-0.16%	-5.98%	-1.56%
	Return on average equity (annualized)		-55.1%	1.1%	-5.6%	-150.7%	-34.3%
	Equity / Assets		2.7%	3.1%	2.9%	2.9%	4.2%
	Loans / Deposits		69.9%	72.1%	72.3%	72.4%	72.8%
	Book Value		$ 7.23	$ 8.30	$ 8.22	$ 8.71	$ 13.33
	Loss per share - Basic		$ (1.07)	$ 0.02	$ (0.12)	$ (4.77)	$ (1.22)
	Shares Outstanding		1,156,690	1,156,690	1,156,690	1,156,690	1,156,690