| Contact: DCB Financial Corp | Exhibit 99.1 For Immediate Release |
| Ronald J. Seiffert, President and CEO | February 11, 2014 |
| (740) 657-7000 | |
DCB Financial Corp Announces Fourth Quarter and Full Year 2013 Results
Lewis Center, OH, February 11, 2014 -DCB Financial Corp (the “Company”), (OTC Bulletin Board DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the “Bank”) announced a net loss of $3.1 million or $(0.43) per diluted share for the three months ended December 31, 2013, compared to a net loss of $146,000 or $(0.03) per diluted share for the same period in 2012. The Company recorded a provision for loan losses of $3.3 million in the fourth quarter of 2013 as a result of specific strategies developed in the fourth quarter, including collateral liquidations and planned loan sales, which are intended to accelerate the disposition of certain classified commercial loans with outstanding balances totaling $13.8 million at the end of 2013.
The net loss for the year ended December 31, 2013 was $2.9 million or $(0.41) per diluted share, compared with net income of $602,000 or $0.15 per diluted share in 2012.
Ronald J. Seiffert, President and CEO for the Company said,“The fourth quarter loan loss provision was a difficult but necessary step to take in our efforts to aggressively dispose of a specifically identified group of problem loans. The strategies we are employing to accelerate the reduction of our exposure to these classified loans, and the related expense and management distractions, are in the long-term best interests of our Company, its shareholders and employees. We have made significant progress over the past three years in reducing the level of delinquencies and classified assets. These actions taken in the fourth quarter are a continuation of those efforts, and, we believe, have greatly reduced the uncertainties surrounding the ultimate disposition of the affected loans.”
Seiffert continued, “We continued to strengthen the fundamental operations and future earnings potential of our Company in the fourth quarter, as reflected by a 6.3% rate of annualized growth in our loan portfolio and increases in net interest income and net interest margin. In January of this year, we announced the sale of our Marysville branch, which was a strategic move in our goal to better allocate our capital, financial and management resources where our strengths and strategic opportunities lie. As we move through 2014, we will continue to implement our growth strategy by leveraging our existing resources and expense base, and will continue to assess all aspects of our organization for opportunities to reduce expenses through process improvements and efficiencies.”
Balance Sheet Highlights
Total assets were $502.4 million at December 31, 2013 compared with $506.8 million at September 30, 2013 and $506.5 million at December 31, 2012. Total loans, including loans held for sale, were $363.9 million at the end of 2013, representing growth of $5.6 million from September 30, 2013 and $46.4 million from the end of 2012. The loan growth was broad-based in 2013, with the commercial portfolios up $6.6 million, residential loans up $26.8 million and consumer loans up $12.9 million. The loan growth was funded primarily from cash and amortization of securities. Cash decreased to $25.4 million at December 31, 2013 from $63.3 million at the end of 2012 and $34.8 million at September 30, 2013. Investment securities decreased to $79.9 million at December 31, 2013 from $88.3 million at the end of 2012 and $81.1 million at September 30, 2013.
Deposits totaled $449.4 million at December 31, 2013 and were relatively unchanged throughout 2013. Low-cost transaction accounts comprised 37.5% of total deposits at the end of the fourth quarter, compared with 35.6% at September 30, 2013 and 38.1% at December 31, 2012.The Bank’s liability mix remained favorably weighted toward transaction accounts in the fourth quarter as retail and municipal depositors continue to prefer transaction and money market accounts over time accounts in the low interest rate environment, and also because of the buildup of cash on commercial customers’ balance sheets.
Shareholders’ equity was $45.2 million at December 31, 2013, compared with $48.5 million at the end of the third quarter.
Asset Quality and the Provision for Loan Losses
Delinquent loans (including non-performing) totaled $8.9 million at December 31, 2013, compared with $6.1 million at September 30, 2013 and $6.9 million at December 31, 2012.
Non-performing assets were $23.0 million or 4.38% of total assets at December 31, 2013, compared with $21.9 million or 4.33% of total assets at September 30, 2013 and $31.2 million or 6.16% of total assets at December 31, 2012. Troubled debt restructurings (“TDR’s”) which are performing in accordance with the restructured terms and accruing interest, but are included in non-performing assets, were $13.1 million at December 31, 2013, $14.0 at September 30, 2013 and $20.1 million at December 31, 2012. The decline in non-performing assets in 2013 resulted primarily frompaydowns, payoffs and charge-downs of non-performing assets during the year.
Non-accrual loans (included in non-performing assets) were $7.7 million or 2.11% of total loans at December 31, 2013, compared with $5.6 million or 1.55% of total loans at September 30, 2013, and $5.3 million or 1.68% of total loans at December 31, 2012.The increase in non-accrual loans resulted primarily from one commercial relationship in the amount of $3.0 million, which was less than 90 days past due at the end of 2013, but which the Company placed on non-accrual status due to deterioration in the borrowers’ financial condition. In February 2014 the Company received a payment of $1.0 million which was applied against the outstanding principal balance of this relationship. The Company is vigorously working to collect the entire amount owed on this relationship, and retains secured positions on non-real estate assets of the business. The ultimate value and collectability of this secured position is unclear at this time, and as a result, an allowance allocation of $1.5 million was made to this relationship as of December 31, 2013.
Net charge-offs were $1.1 million in the fourth quarter of 2013 and $610,000 in the year ended December 31, 2013, compared with net charge-offs of $970,000 and $3.2 million in the year-ago periods, respectively.Net charge-offs annualized equaled 1.21% and 0.18%, respectively, of average loans during the quarter and year ended December 31, 2013, compared with 1.22% and 0.97% in the year-ago periods, respectively.
The provision for loan losses was $3.3 million in the fourth quarter of 2013, compared to a negative provision of $300,000 in the year-ago quarter. The provision for loan losses was $2.4 million in 2013, compared to $495,000 in 2012.The provision for loan losses as a percentage of net charge-offs was 303% in the fourth quarter. The provision for loan losses as a percentage of net charge-offs was 396% in 2013 compared with 15% in 2012.
The increase in provision expense in the fourth quarter of 2013 is attributable to the strategies we are employing to accelerate the reduction of our exposure to three commercial relationships and a group of homogenous single-family residential investment properties. Taken together, loan loss provisions allocated to these four exposures totaled $3.3 million or 100% of the provision expense for the quarter.
The largest of the three commercial relationships is a $3.5 million commercial real estate relationship secured by a shopping center. The Company has agreed to the terms of a sale of the collateral to a third party for $2.9 million, which is expected to close in February 2014. In connection with the settlement of this relationship, the Company recognized provision expense in the fourth quarter of $452,000 to increase the reserve allocated to this relationship to $840,000. The relationship was charged down by the amount of the reserve, resulting in a net carrying value of $2.7 million.
The second relationship is a $3.1 million commercial real estate relationship secured by single family residential investor properties. Interest payments are being made in accordance with the loan terms, and principal reduction occurs with the sale of each property. The Company is actively working with the borrower to develop a plan to accelerate the liquidation of the collateral, and in connection with this, recognized provision expense in the fourth quarter of $525,000, bringing the total allowance allocation to this relationship of $616,000.
The third commercial relationship, had an outstanding balance of $3.0 million and an allowance allocation of $1.5 million at the end of 2013. A $1.0 million principal payment was received subsequent to year-end, and the Company continues to actively pursue full collection of the outstanding balance. The Company has determined that a charge-down on the balance of this relationship is not warranted at this time based on the present circumstances and the active collection activities.
Separately, the Company identified a group of 54 homogenous individual loans aggregating $4.2 million, each separately secured by single family residential investor properties, which it plans to offer for sale in 2014. A provision expense of $946,000 was recognized in the fourth quarter in connection with the decision to sell these loans, to increase the total allowance allocation on these loans to $2.0 million. The loans, net of the allowance allocation, are classified as held-for-sale at the end of 2013 with a carrying value of $2.2 million.
The allowance for loan losses was $6.7 million at December 31, 2013 compared with $6.5 million at September 30, 2013 and $6.9 million at December 31, 2012. The ratio of the allowance for credit losses to total loans was 1.85% at December 31, 2013, compared with 1.81% at September 30, 2013 and 2.17% at December 31, 2012.The ratio of the allowance for loan losses to non-performing loans (including TDR’s) was 32.3% at December 31, 2013, compared with 33.0% at September 30, 2013 and 27.1% at December 31, 2012. The ratio of the allowance for loan losses to non-accrual loans was 87.6% at December 31, 2013, compared with 116.6% at September 30, 2013 and 129.1% at December 31, 2012.
Net Interest Income
Net interest income totaled $4.0 million in the three months ended December 30, 2013, compared with $3.9 million in the year-ago quarter and $3.9 million in the third quarter of 2013. Average interest-earning assets increased $15.7 million in the fourth quarter compared to the year-ago quarter, and increased $4.1 million compared with the third quarter of 2013.The net interest margin decreased 3 basis points in the fourth quarter compared with the year-ago quarter, but increased 9 basis points from the third quarter of 2013. The growth in interest-earning assets and net interest margin compared to the third quarter of 2013 is attributable to increases in average loan balances that were primarily funded from low yielding excess cash.
The net interest margin was 3.37% in the fourth quarter of 2013, compared with 3.40% in the year-ago quarter and 3.31% in the third quarter of 2013. The increase in the net interest margin compared with the third quarter of 2013 was the result of a decrease in the cost of interest-bearing liabilities of 6 basis points that resulted from higher average balances of low-cost transaction accounts and an increase in the earning asset yield of 1 basis point resulting from higher average loan balances.
Average interest-earning assets were $470.7 million in the fourth quarter, compared with $455.1 million in the year-ago quarter and $466.6 million in the third quarter of 2013. The average balance of interest earning cash and cash equivalents decreased $22.1 million compared with the year-ago quarter, and was offset by a $43.5 million increase in the average balance of loans as we used our excess liquidity position to fund loan growth. Total average loans and leases were 76.7% of total average interest-earning assets in the fourth quarter of 2013, compared with 69.8% in the year-ago quarter and 75.8% in the third quarter of 2013.
Net interest income for the year ended December 31, 2013 totaled $15.3 million, which was down $322,000 or 2.2% compared with 2012. The net interest margin was 3.28% in 2013, compared with 3.31% in 2012. The earning asset yield decreased 32 basis points in 2013 compared with 2012, and the cost of interest-bearing liabilities decreased 33 basis points over the same period.
Average interest-earning assets were $464.7 million in 2013, which was a decrease of $1.9 million or 0.4% from 2012. Total average loans and leases were 73.6% of total interest-earning assets in 2013, compared with 70.7% in 2012.
Non-Interest Income and Non-Interest Expenses
Non-interest income was $1.1 million in the fourth quarter of 2013, compared with $944,000 in the fourth quarter of 2012 and $1.2 million in the third quarter of 2013. The increase from 2012 is attributable to an increase in wealth management income of $162,000 and to a loss on the sale of REO of $134,000 in the year-ago quarter, which were partially offset by a decrease in service charges of $159,000 in 2013. The year over year decline in service charges is the result of lower fee-based transaction volume due to changes in customer deposit account utilization as well as regulatory changes relating to the manner in which financial institutions administer fee-based services.
Non-interest income totaled $5.0 million in 2013 and 2012.Decreases in service charges and gains on the sales of securities in 2013 were offset by increases in wealth management income and lower REO losses. Service charges decreased $406,000 due primarily to lower fee-based transaction volume due to changes in customer deposit account utilization as well as regulatory changes relating to the manner in which financial institutions administer fee-based services, and to a decline in fees collected on referrals of mortgage loans as the Bank has retained most originated mortgage loans in the portfolio in the current year. Wealth management income increased $303,000 due to increases in client accounts and assets under management resulting from the business development activities of new wealth management professionals that the Company hired at the end of 2012.
Non-interest income accounted for 21.8% of total revenue in the fourth quarter of 2013, compared with 21.9% in the year-ago quarter. Non-interest income accounted for 23.9% of total revenue in 2013, compared with 23.9% in 2012.
Non-interest expenses were $4.9 million in the fourth quarter of 2013, compared with $5.0 million in the year-ago quarter and $5.2 million in the third quarter of 2013.Increases in salaries and benefits and occupancy and equipment in 2013 were offset by decreases in FDIC insurance premiums and other non-interest expenses. Salaries and benefits expense increased $144,000 due primarily to the addition of business development professionals, which has contributed to higher wealth management income and growth in loans and net interest income. Salaries and benefits expense decreased $397,000 compared with the third quarter of 2013 due primarily to the reversal of senior management bonus and deferred compensation accruals. Occupancy and equipment expense increased $166,000 in the fourth quarter compared to the year-ago period due to an increase in maintenance and repairs. Other non-interest expenses decreased $370,000 in the fourth quarter compared to the year-ago period due primarily to higher costs associated with REO properties in 2012’s fourth quarter.
Non-interest expenses were $21.0 million in 2013, compared with $19.6 million in 2012. The increase is attributable to a $1.7 million increase in salaries and benefits, a $480,000 increase in professional services, and a $161,000 increase in occupancy expense, partially offset by a $530,000 decrease in other expense and a $450,000 decrease in FDIC insurance premiums. The increase in salary and benefits is driven by the previously mentioned addition of new business development professionals, which has contributed to higher wealth management income and growth in loans and net interest income. The increase in professional expenses primarily relates to expenses related to the workout and disposition of criticized and classified assets. The decrease in other expenses is attributable to expenses in the prior year associated with operating and disposing of REO properties, and a decrease in data processing expenses. The decrease in the FDIC deposit insurance premiums is a result of an upgrade in the Bank’s risk classification for insurance assessment purposes.
The Company’s efficiency ratio was 95.82% in the fourth quarter of 2013, compared with 98.47% in the year-ago quarter. The Company’s efficiency ratio was 104.71% in 2013, compared with 93.94% in 2012.
About DCB Financial Corp
DCB Financial Corp is a financial holding company formed under the laws of the State of Ohio. The Company is the parent of The Delaware County Bank & Trust Company, a state-chartered commercial bank. The Bank conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 14 branch offices located in Delaware County, Ohio and surrounding communities. The Bank provides customary retail and commercial banking and cash management services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, commercial leases, real estate mortgage loans, night depository facilities and trust and personalized wealth management services.
Forward-Looking Statements
This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of DCB Financial Corp. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: an increase in competitive pressure in the banking industry; changes in the interest rate environment which may affect the net interest margin; changes in the regulatory environment; general economic conditions, either nationally or regionally, resulting, among other things, in a deterioration in credit quality; changes in business conditions and inflation; changes in the securities markets; changes in technology used in the banking business; our ability to maintain and increase market share and control expenses; increases in FDIC insurance premiums may cause earnings to decrease; and other risks set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, and in subsequent filings with the Securities and Exchange Commission.
The Company does not undertake, and specifically disclaims any obligation, to publicly revise any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
| Contact: | DCB Financial Corp |
| | Ronald J. Seiffert, President and CEO |
| | (740) 657-7000 |
| | |
| | J. Daniel Mohr, Executive Vice President and CFO |
| | (740) 657-7510 |
DCB Financial Corp
Consolidated Balance Sheets (Unaudited)
| | | December 31, 2013 | | | December 31, 2012 | |
| | | (Dollars in thousands, except share and per share data) | |
| Assets | | | | �� | | | | |
| Cash and due from financial institutions | | $ | 6,110 | | | $ | 9,663 | |
| Interest-bearing deposits | | | 19,247 | | | | 53,644 | |
| Total cash and cash equivalents | | | 25,357 | | | | 63,307 | |
| Securities available-for-sale | | | 79,948 | | | | 87,197 | |
| Securities held-to-maturity | | | - | | | | 1,149 | |
| Total securities | | | 79,948 | | | | 88,346 | |
| | | | | | | | | |
| Loans | | | 356,048 | | | | 317,504 | |
| Less allowance for loan losses | | | (6,724 | ) | | | (6,881 | ) |
| Net loans | | | 349,324 | | | | 310,623 | |
| | | | | | | | | |
| Loans held for sale | | | 7,806 | | | | - | |
| Real estate owned | | | 1,219 | | | | 3,671 | |
| Investment in FHLB stock | | | 3,799 | | | | 3,799 | |
| Premises and equipment, net | | | 11,015 | | | | 12,036 | |
| Premises and equipment held for sale | | | 1,031 | | | | - | |
| Bank-owned life insurance | | | 19,297 | | | | 18,564 | |
| Accrued interest receivable and other assets | | | 3,623 | | | | 6,146 | |
| Total assets | | $ | 502,419 | | | $ | 506,492 | |
| | | | | | | | | |
| Liabilities and stockholders’ equity | | | | | | | | |
| Liabilities: | | | | | | | | |
| Deposits: | | | | | | | | |
| Non-interest bearing | | $ | 112,517 | | | $ | 95,847 | |
| Interest bearing | | | 314,342 | | | | 352,443 | |
| Total deposits | | | 426,859 | | | | 448,290 | |
| | | | | | | | | |
| Deposits held for sale | | | 22,571 | | | | - | |
| Federal Home Loan Bank advances | | | 4,838 | | | | 7,498 | |
| Accrued interest payable and other liabilities | | | 2,888 | | | | 2,315 | |
| Total liabilities | | | 457,156 | | | | 458,103 | |
| | | | | | | | | |
| Stockholders’ equity: | | | | | | | | |
| Common stock | | | 15,771 | | | | 15,771 | |
| Retained earnings | | | 37,681 | | | | 40,614 | |
| Treasury stock | | | (7,416 | ) | | | (7,416 | ) |
| Accumulated other comprehensive income | | | (773 | ) | | | (580 | ) |
| Total stockholders’ equity | | | 45,263 | | | | 48,389 | |
| Total liabilities and stockholders’ equity | | $ | 502,419 | | | $ | 506,492 | |
| | | | | | | | | |
| | | | | | | | | |
| Common shares outstanding | | | 7,192,050 | | | | 7,192,050 | |
| Book value per common share | | $ | 6.29 | | | $ | 6.73 | |
DCB Financial Corp
Consolidated Statements of Operations (Unaudited)
| | | Three months ended
December 31, | | | Twelve months ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Dollars in thousands, except share and per share data) | |
| Interest income: | | | | | | | | | | | | | | | | |
| Loans | | $ | 3,828 | | | $ | 3,929 | | | $ | 14,928 | | | $ | 16,343 | |
| Securities | | | 528 | | | | 548 | | | | 2,064 | | | | 2,407 | |
| Federal funds sold and interest bearing deposits | | | 16 | | | | 28 | | | | 87 | | | | 98 | |
| Total interest income | | | 4,372 | | | | 4,505 | | | | 17,079 | | | | 18,848 | |
| | | | | | | | | | | | | | | | | |
| Interest expense: | | | | | | | | | | | | | | | | |
| Deposits: | | | | | | | | | | | | | | | | |
| Savings and money market accounts | | | 131 | | | | 102 | | | | 474 | | | | 380 | |
| Time accounts | | | 166 | | | | 364 | | | | 989 | | | | 1,894 | |
| NOW accounts | | | 22 | | | | 23 | | | | 91 | | | | 77 | |
| Total | | | 319 | | | | 489 | | | | 1,554 | | | | 2,351 | |
| | | | | | | | | | | | | | | | | |
Borrowings:
FHLB advances | | | 50 | | | | 116 | | | | 264 | | | | 887 | |
| Total interest expense | | | 369 | | | | 605 | | | | 1,818 | | | | 3,238 | |
| | | | | | | | | | | | | | | | | |
| Net interest income | | | 4,003 | | | | 3,900 | | | | 15,261 | | | | 15,610 | |
| Provision for loan losses | | | 3,307 | | | | (300 | ) | | | 2,417 | | | | 495 | |
| Net interest income after provision for loan losses | | | 696 | | | | 4,200 | | | | 12,844 | | | | 15,115 | |
| | | | | | | | | | | | | | | | | |
| Non-interest income: | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 530 | | | | 689 | | | | 2,195 | | | | 2,601 | |
| Wealth management fees | | | 329 | | | | 120 | | | | 1,418 | | | | 1,073 | |
| Treasury management fees | | | 61 | | | | 64 | | | | 244 | | | | 257 | |
| Income from bank-owned life insurance | | | 162 | | | | 167 | | | | 733 | | | | 742 | |
| Gain (loss) on the sale of REO | | | (4 | ) | | | (150 | ) | | | 31 | | | | (396 | ) |
| Gain on the sale of securities | | | - | | | | - | | | | 135 | | | | 508 | |
| Other non-interest income | | | 38 | | | | 54 | | | | 211 | | | | 239 | |
| Total non-interest income | | | 1,116 | | | | 944 | | | | 4,967 | | | | 5,024 | |
| | | | | | | | | | | | | | | | | |
| Non-interest expense: | | | | | | | | | | | | | | | | |
| Salaries and employee benefits | | | 2,527 | | | | 2,383 | | | | 11,287 | | | | 9,538 | |
| Occupancy and equipment | | | 791 | | | | 625 | | | | 3,069 | | | | 2,908 | |
| Professional services | | | 465 | | | | 441 | | | | 1,791 | | | | 1,311 | |
| Advertising | | | 54 | | | | 74 | | | | 293 | | | | 396 | |
| Office supplies, postage and courier | | | 118 | | | | 193 | | | | 481 | | | | 411 | |
| FDIC insurance premium | | | 168 | | | | 287 | | | | 699 | | | | 1,149 | |
| State franchise taxes | | | 104 | | | | 143 | | | | 478 | | | | 421 | |
| Other non-interest expense | | | 687 | | | | 1,057 | | | | 2,942 | | | | 3,472 | |
| Total non-interest expense | | | 4,914 | | | | 5,203 | | | | 21,040 | | | | 19,606 | |
| | | | | | | | | | | | | | | | | |
| (Loss) income before income tax expense | | | (3,102 | ) | | | (59 | ) | | | (3,229 | ) | | | 533 | |
| Income tax expense (benefit) | | | - | | | | 87 | | | | (298 | ) | | | (69 | ) |
| Net (loss) income | | $ | (3,102 | ) | | $ | (146 | ) | | $ | (2,931 | ) | | $ | 602 | |
| | | | | | | | | | | | | | | | | |
| Share and Per Share Data | | | | | | | | | | | | | | | | |
| Basic average common shares outstanding | | | 7,192,350 | | | | 4,937,993 | | | | 7,192,350 | | | | 3,902,196 | |
| Diluted average common shares outstanding | | | 7,192,350 | | | | 4,937,993 | | | | 7,192,350 | | | | 3,919,080 | |
| Basic and diluted (loss) earnings per common share | | $ | (0.43 | ) | | $ | (0.03 | ) | | $ | (0.41 | ) | | $ | 0.15 | |
| | | | | | | | | | | | | | | | | |
DCB Financial Corp
Consolidated Average Balances (Unaudited)
| | | Three months ended
December 31, | | | Twelve months ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Dollars in thousands) | |
| Earning assets: | | | | | | | | | | | | | | | | |
| Interest bearing cash | | $ | 23,295 | | | $ | 45,394 | | | $ | 32,799 | | | $ | 41,389 | |
| Securities | | | 81,622 | | | | 86,979 | | | | 85,052 | | | | 89,767 | |
| Tax-exempt securities | | | 4,838 | | | | 5,148 | | | | 4,738 | | | | 5,564 | |
| Loans (1) | | | 360,994 | | | | 317,542 | | | | 342,112 | | | | 329,878 | |
| Total earning assets | | | 470,749 | | | | 455,063 | | | | 464,701 | | | | 466,598 | |
| | | | | | | | | | | | | | | | | |
| Non-earning assets | | | 39,595 | | | | 44,365 | | | | 42,111 | | | | 43,535 | |
| Total assets | | $ | 510,344 | | | $ | 499,428 | | | $ | 506,812 | | | $ | 510,133 | |
| | | | | | | | | | | | | | | | | |
| Interest bearing liabilities: | | | | | | | | | | | | | | | | |
| Interest bearing DDA | | $ | 74,461 | | | $ | 70,308 | | | $ | 74,853 | | | $ | 69,277 | |
| Money market | | | 126,031 | | | | 101,963 | | | | 116,872 | | | | 95,123 | |
| Savings accounts | | | 43,184 | | | | 36,003 | | | | 40,953 | | | | 35,039 | |
| Time deposits | | | 96,294 | | | | 142,243 | | | | 116,151 | | | | 158,724 | |
| FHLB advances | | | 5,037 | | | | 10,714 | | | | 5,916 | | | | 21,118 | |
| Total interest bearing liabilities (2) | | | 345,008 | | | | 361,232 | | | | 354,745 | | | | 387,156 | |
| | | | | | | | | | | | | | | | | |
| Non-interest bearing deposits (2) | | | 114,680 | | | | 99,927 | | | | 100,385 | | | | 84,063 | |
| Other non-interest bearing liabilities | | | 1,852 | | | | 1,510 | | | | 2,883 | | | | 4,075 | |
| Total liabilities | | | 461,541 | | | | 462,669 | | | | 458,013 | | | | 475,294 | |
| Stockholders’ equity | | | 48,803 | | | | 36,759 | | | | 48,799 | | | | 34,839 | |
| Total liabilities and stockholders’ equity | | $ | 510,344 | | | $ | 499,428 | | | $ | 506,812 | | | $ | 510,133 | |
| (1) | Includes loans held for sale |
| (2) | Includes deposits held for sale |
DCB Financial Corp
Loans and Deposits (Unaudited)
The following table sets forth the composition of the Company’s loan portfolio at the dates indicated (includes loans held for sale):
| | | December 31, 2013 | | | September 30, 2013 | | | December 31, 2012 | |
| | | Amount | | | Percent | | | Amount | | | Percent | | | Amount | | | Percent | |
| Loan portfolio composition | | (Dollars in thousands) | |
| Commercial and industrial | | $ | 118,789 | | | | 32.7 | % | | $ | 122,687 | | | | 34.3 | % | | $ | 112,300 | | | | 35.4 | % |
| Commercial real estate | | | 111,474 | | | | 30.7 | % | | | 109,933 | | | | 30.7 | % | | | 111,417 | | | | 35.1 | % |
| Real estate and home equity | | | 98,909 | | | | 27.2 | % | | | 93,349 | | | | 26.0 | % | | | 72,137 | | | | 22.7 | % |
| Consumer and credit card | | | 34,517 | | | | 9.4 | % | | | 32,169 | | | | 9.0 | % | | | 21,620 | | | | 6.8 | % |
| Total loans and leases | | | 363,689 | | | | 100.0 | % | | | 358,138 | | | | 100.0 | % | | | 317,474 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Net deferred loan costs | | | 165 | | | | | | | | 152 | | | | | | | | 30 | | | | | |
| Allowance for loan losses | | | (6,724 | ) | | | | | | | (6,471 | ) | | | | | | | (6,881 | ) | | | | |
| Net loans and leases | | $ | 357,130 | | | | | | | $ | 351,819 | | | | | | | $ | 310,623 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
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| | |
| The following table sets forth the composition of the Company’s deposits at the dates indicated (includes deposits held for sale): | |
| | | | | | | | | | | | | | | | |
| | | December 31, 2013 | | | September 30, 2013 | | | December 31, 2012 | |
| | | Amount | | | Percent | | | Amount | | | Percent | | | Amount | | | Percent | |
| Deposit composition | | (Dollars in thousands) | |
| Non-interest bearing demand | | $ | 112,711 | | | | 25.1 | % | | $ | 103,762 | | | | 23.0 | % | | $ | 95,847 | | | | 21.4 | % |
| Interest bearing demand | | | 55,580 | | | | 12.4 | % | | | 56,636 | | | | 12.6 | % | | | 74,993 | | | | 16.7 | % |
| Total demand | | | 168,291 | | | | 37.5 | % | | | 160,398 | | | | 35.6 | % | | | 170,840 | | | | 38.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Savings | | | 169,083 | | | | 37.6 | % | | | 167,510 | | | | 37.1 | % | | | 36,895 | | | | 8.2 | % |
| Money market | | | 22,649 | | | | 5.0 | % | | | 19,947 | | | | 4.4 | % | | | 101,954 | | | | 22.8 | % |
| Time deposits | | | 89,407 | | | | 19.9 | % | | | 103,210 | | | | 22.9 | % | | | 138,601 | | | | 30.9 | % |
| Total deposits | | $ | 449,430 | | | | 100.0 | % | | $ | 451,065 | | | | 100.0 | % | | $ | 448,290 | | | | 100.0 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
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DCB Financial Corp
Asset Quality (Unaudited)
The following table represents a summary of delinquent loans grouped by the number of days delinquent at the dates indicated (includes loans held-for-sale):
| Delinquent loans and leases | | December 31, 2013 | | | September 30, 2013 | | | December 31, 2012 | |
| | $ | | | %(1) | | | $ | | | %(1) | | | $ | | | %(1) | |
| | (Dollars in thousands) | |
| 30 days past due | | $ | 945 | | | | 0.26 | % | | $ | 148 | | | | 0.04 | % | | $ | 1,039 | | | | 0.33 | % |
| 60 days past due | | | 290 | | | | 0.08 | % | | | 301 | | | | 0.08 | % | | | 504 | | | | 0.16 | % |
| 90 days past due and still accruing | | | - | | | | — | | | | 87 | | | | 0.02 | % | | | 28 | | | | 0.01 | % |
| Non-accrual | | | 7,678 | | | | 2.11 | % | | | 5,551 | | | | 1.55 | % | | | 5,331 | | | | 1.68 | % |
| Total | | $ | 8,913 | | | | 2.45 | % | | $ | 6,087 | | | | 1.70 | % | | $ | 6,902 | | | | 2.17 | % |
(1) As a percentage of total loans, excluding deferred costs
The following table represents information concerning the aggregate amount of non-performing assets (includes loans held for sale):
| Non-performing assets | | December 31, 2013 | | | September 30, 2013 | | | December 31, 2012 | |
| | | (Dollars in thousands) | |
| Non-accruing loans: | | | | | | | | | | | | |
| Residential real estate loans and home equity | | $ | 352 | | | $ | 257 | | | $ | 321 | |
| Commercial real estate | | | 4,702 | | | | 3,529 | | | | 2,195 | |
| Commercial and industrial | | | 2,624 | | | | 1,765 | | | | 2,815 | |
| Consumer loans and credit cards | | | - | | | | - | | | | - | |
| Total non-accruing loans | | | 7,678 | | | | 5,551 | | | | 5,331 | |
| Accruing loans delinquent 90 days or more | | | - | | | | 87 | | | | 28 | |
| Total non-performing loans (excluding TDR’s) | | | 7,678 | | | | 5,638 | | | | 5,359 | |
| | | | | | | | | | | | | |
| Collateralized debt obligations | | | 976 | | | | 1,004 | | | | 2,090 | |
| Other real estate and repossessed assets | | | 1,219 | | | | 1,291 | | | | 3,671 | |
| Total non-performing assets (excluding TDR’s) | | $ | 9,873 | | | $ | 7,933 | | | $ | 11,120 | |
| | | | | | | | | | | | | |
| Troubled debt restructurings(1) | | $ | 13,122 | | | $ | 13,992 | | | $ | 20,080 | |
| Total non-performing loans (including TDR’s) | | $ | 20,800 | | | $ | 19,630 | | | $ | 25,439 | |
| Total non-performing assets (including TDR’s) | | $ | 22,995 | | | $ | 21,925 | | | $ | 31,200 | |
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(1) TDR’s that are in compliance with their modified terms and accruing interest.
The following table summarizes changes in the allowance for credit losses arising from loans charged off, recoveries on loans and leases previously charged off and additions to the allowance which have been charged to expense:
| Allowance for credit losses | | Three months ended
December 31, | | | Twelve months ended
December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| | | (Dollars in thousands) | |
| Allowance for loan losses, beginning of period | | $ | 6,471 | | | $ | 8,151 | | | $ | 6,881 | | | $ | 9,584 | |
| | | | | | | | | | | | | | | | | |
| Loans charged-off | | | (1,162 | ) | | | (1,078 | ) | | | (1,742 | ) | | | (3,738 | ) |
| Recoveries of loans previously charged-off | | | 72 | | | | 108 | | | | 1,132 | | | | 540 | |
| Net loans charged-off | | | (1,090 | ) | | | (970 | ) | | | (610 | ) | | | (3,198 | ) |
| Allowance related to loans transferred to held-for-sale | | | (1,965 | ) | | | - | | | | (1,965 | ) | | | - | |
| Provision for loan losses | | | 3,308 | | | | (300 | ) | | | 2,418 | | | | 495 | |
| Allowance for loan losses, end of period | | $ | 6,724 | | | $ | 6,881 | | | $ | 6,724 | | | $ | 6,881 | |
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DCB Financial Corp
Consolidated Financial Information (Unaudited)
| Key Ratios | | At or for the three months
ended December 31, | | | At or for the twelve months
ended December 31, | |
| | | 2013 | | | 2012 | | | 2013 | | | 2012 | |
| Return on average assets | | | (2.43 | )% | | | (0.12 | )% | | | (0.58 | )% | | | 0.12 | % |
| Return on average equity | | | (25.42 | )% | | | (1.59 | )% | | | (6.01 | )% | | | 1.67 | % |
| Yield on earning assets | | | 3.68 | % | | | 3.93 | % | | | 3.68 | % | | | 4.00 | % |
| Cost of funds | | | 0.42 | % | | | 0.66 | % | | | 0.51 | % | | | 0.84 | % |
| Net interest margin (1) | | | 3.37 | % | | | 3.40 | % | | | 3.28 | % | | | 3.31 | % |
| Non-interest income to total income (2) | | | 21.86 | % | | | 21.91 | % | | | 23.93 | % | | | 23.94 | % |
| Efficiency ratio (3) | | | 95.82 | % | | | 98.47 | % | | | 104.71 | % | | | 93.94 | % |
| | | | | | | | | | | | | | | | | |
Net loans charged-off to average loans,
annualized | | | 1.21 | % | | | 1.22 | % | | | 0.18 | % | | | 0.97 | % |
Provision for loan losses to average loans,
annualized | | | 3.66 | % | | | (0.38 | )% | | | 0.71 | % | | | 0.15 | % |
| Allowance for loan losses to total loans | | | 1.85 | % | | | 2.17 | % | | | 1.85 | % | | | 2.17 | % |
| Allowance for loan losses to non-performing loans | | | 32.3 | % | | | 27.1 | % | | | 32.3 | % | | | 27.1 | % |
| Non-accrual loans to total loans | | | 2.11 | % | | | 1.68 | % | | | 2.11 | % | | | 1.68 | % |
| Non-performing assets to total assets | | | 4.58 | % | | | 5.97 | % | | | 4.58 | % | | | 5.97 | % |
| | | | | | | | | | | | | | | | | |
| (1) | Net interest income divided by average earning assets |
| (2) | Non-interest income (excluding net realized gains and losses on securities and other non-recurring gains and losses) divided by the sum of net interest income and non-interest income (as adjusted) |
| (3) | Non-interest expense (less OREO expense) divided by the sum of net interest income and non-interest income (as adjusted) |
DCB Financial Corp
Selected Quarterly Financial Data (Unaudited)
| | | 2013 | | | 2012 | |
| | | Fourth | | | Third | | | Second | | | First | | | Fourth | |
| | | (Dollars in thousands, except share and per share data) | |
| Interest income | | $ | 4,372 | | | $ | 4,316 | | | $ | 4,245 | | | $ | 4,146 | | | $ | 4,505 | |
| Interest expense | | | 369 | | | | 425 | | | | 494 | | | | 530 | | | | 605 | |
| Net interest income | | | 4,003 | | | | 3,891 | | | | 3,751 | | | | 3,616 | | | | 3,900 | |
| Provision for loan losses | | | 3,307 | | | | - | | | | (240 | ) | | | (650 | ) | | | (300 | ) |
| Net interest income after provision for loan losses | | | 696 | | | | 3,891 | | | | 3,991 | | | | 4,266 | | | | 4,200 | |
| Other non-interest income | | | 1,116 | | | | 1,192 | | | | 1,351 | | | | 1,308 | | | | 944 | |
| Other non-interest expense | | | 4,914 | | | | 5,230 | | | | 5,440 | | | | 5,456 | | | | 5,203 | |
| (Loss) income before income tax expense | | | (3,102 | ) | | | (147 | ) | | | (98 | ) | | | 118 | | | | (59 | ) |
| Income tax (benefit) expense | | | - | | | | (20 | ) | | | (254 | ) | | | (24 | ) | | | 87 | |
| Net (loss) income | | $ | (3,102 | ) | | $ | (127 | ) | | $ | 156 | | | $ | 142 | | | $ | (146 | ) |
| | | | | | | | | | | | | | | | | | | | | |
| Stock and related per share data | | | | | | | | | | | | | | | | | | | | |
| Basic and diluted (loss) earnings per common share | | $ | (0.43 | ) | | $ | (0.02 | ) | | $ | 0.02 | | | $ | 0.02 | | | $ | (0.03 | ) |
| Basic and diluted weighted average common shares outstanding | | | 7,192,350 | | | | 7,192,350 | | | | 7,192,350 | | | | 7,192,350 | | | | 7,192,350 | |
| Common book value per share | | $ | 6.29 | | | $ | 6.74 | | | $ | 6.84 | | | $ | 6.75 | | | $ | 6.73 | |
| | | | | | | | | | | | | | | | | | | | | |
| Capital Ratios (Bank) | | | | | | | | | | | | | | | | | | | | |
| Tier 1 leverage ratio | | | 8.77 | % | | | 9.44 | % | | | 9.51 | % | | | 9.47 | % | | | 7.93 | % |
| Tier 1 risk based capital | | | 12.24 | % | | | 13.12 | % | | | 13.25 | % | | | 12.26 | % | | | 9.82 | % |
| Total risk based capital | | | 13.50 | % | | | 14.38 | % | | | 14.49 | % | | | 13.48 | % | | | 11.02 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Selected ratios | | | | | | | | | | | | | | | | | | | | |
| Return on average assets | | | (2.43 | )% | | | (0.10 | )% | | | 0.12 | % | | | 0.11 | % | | | (0.12 | )% |
| Return on average equity | | | (25.42 | )% | | | (1.04 | )% | | | 1.27 | % | | | 1.17 | % | | | (1.59 | )% |
| Yield on earning assets | | | 3.68 | % | | | 3.67 | % | | | 3.73 | % | | | 3.67 | % | | | 3.93 | % |
| Cost of funds | | | 0.42 | % | | | 0.48 | % | | | 0.59 | % | | | 0.60 | % | | | 0.66 | % |
| Net interest margin | | | 3.37 | % | | | 3.31 | % | | | 3.29 | % | | | 3.20 | % | | | 3.40 | % |
| Non-interest income to total income (1) | | | 21.86 | % | | | 24.21 | % | | | 24.45 | % | | | 25.29 | % | | | 21.91 | % |
| Efficiency ratio (2) | | | 95.82 | % | | | 101.77 | % | | | 109.45 | % | | | 112.38 | % | | | 98.47 | % |
| | | | | | | | | | | | | | | | | | | | | |
| Asset quality ratios | | | | | | | | | | | | | | | | | | | | |
| Net loans charged off to average loans, annualized | | | 1.21 | % | | | 0.04 | % | | | 0.02 | % | | | (0.68 | )% | | | 1.25 | % |
| Provision for loan losses to average loans, annualized | | | 3.66 | % | | | 0.00 | % | | | (0.29 | )% | | | (0.82 | )% | | | (0.38 | )% |
| Allowance for loan losses to total loans | | | 1.85 | % | | | 1.81 | % | | | 1.82 | % | | | 2.06 | % | | | 2.17 | % |
| Allowance for loan losses to non-accrual loans | | | 87.57 | % | | | 116.57 | % | | | 114.13 | % | | | 124.23 | % | | | 129.08 | % |
| Non-accrual loans to total loans | | | 2.11 | % | | | 1.55 | % | | | 1.65 | % | | | 1.65 | % | | | 1.68 | % |
| Non-performing assets to total assets | | | 4.58 | % | | | 4.33 | % | | | 4.72 | % | | | 5.49 | % | | | 5.97 | % |
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(1) Non-interest income (net of realized gains and losses on securities and other non-recurring items) divided by the sum of net interest income and non-interest income (as adjusted)
(2) Non-interest expense (less OREO expense) divided by the sum of net interest income and non-interest income (as adjusted)
