MSB Financial Corp. Announces Quarterly Results
MILLINGTON, N.J., May 13, 2014 -- MSB Financial Corp. (Nasdaq: MSBF) (the "Company"), the holding company for Millington Savings Bank (the "Bank"), reported net income of $243,000 for the three months ended March 31, 2014 compared to net income of $89,000 for the quarter ended March 31, 2013. Correspondingly, the Company reported net income of $742,000 for the nine months ended March 31, 2014 compared to a net loss of $1.6 million for the nine months ended March 31, 2013. The increase in net income for the nine months ended March 31, 2014 compared to the nine months ended March 31, 2013, was primarily a result of a $3.4 million decrease in the provision for loan losses and to a lesser extent, increases in net interest and non-interest income and a decrease in non-increase expense.
Net interest income for the three and nine months ended March 31, 2014 increased to $2.5 million and $7.2 million, respectively, from $2.3 million and $7.1 million for the three and nine month periods ended March 31, 2013, respectively, with the increases attributable to declines in interest expense primarily due to decreases in the average rate of interest-bearing liabilities and, in the three-month period, a decrease in the average balance of interest-bearing liabilities. For the three months ended March 31, 2014, the average yield on interest earning assets was 3.76%, a decrease of 1 basis point when compared to the same period in 2013. For the nine months ended March 31, 2014, the yield on interest earning assets was 3.73%, a decrease of 18 basis points when compared to the same period in 2013. The decline in yields on average earning assets, for both the three and nine month comparative periods, is representative of the effects that the prolonged low interest rate environment has had on the Company’s earning assets portfolio. During the three months ended March 31, 2014, average interest-earning assets increased by $6.7 million when compared to the same period in 2013. For the nine months ended March 31, 2014, average interest earning-assets increased by $10.4 million when compared to the same period in the prior fiscal year.
The average rate paid on interest-bearing liabilities for the three months ended March 31, 2014 was 0.83%, a decrease of 8 basis points when compared to the same period in 2013. For the nine months ended March 31, 2014, the average rate paid on interest-bearing liabilities was 0.86%, a decrease of 11 basis points when compared to the same period in 2013. The net interest margin increased to 3.04% for the three months ended March 31, 2014, compared to 2.95% for the three months ended March 31, 2013, an increase of 9 basis points. The net interest margin decreased to 2.97% for the nine months ended March 31, 2014, compared to 3.02% for the nine months ended March 31, 2013, a decrease of 5 basis points.
Non-interest income for the quarter ended March 31, 2014 totaled $184,000, an increase of $25,000 or 15.7% compared to the same period in 2013. For the nine months ended March 31, 2014, non-interest income totaled $547,000, an increase of $67,000, or 14.0%, when compared to the same period in 2013. The increase in non-interest income for both the three and nine months ended March 31, 2014 compared to the three and nine months
ended March 31, 2013, was primarily attributable to an increase in fees and service charges for the respective periods.
Total non-interest expense decreased by $71,000 or 3.2% to $2.1 million for the three month period ended March 31, 2014 compared to $2.2 million for the three month period ended March 31, 2013. For the nine months ended March 31, 2014, non-interest expense totaled $6.1 million, compared to $6.3 million for the nine months ended March 31, 2013, a decrease of $173,000 or 2.7%. The decrease in non-interest expense for both the three and nine months ended March 31, 2014 compared to the three and nine month months ended March 31, 2013, was primarily the result of decreases in other non-interest expense, salaries and employee benefits, occupancy and equipment, directors’ compensation, advertising and professional services, offset by an increase in service bureau fees and FDIC assessment expense for the respective periods.
The loan loss provision for the three and nine months ended March 31, 2014 was $150,000 and $450,000, respectively, compared to $175,000 and $3.9 million for the same periods ended March 31, 2013. The provision for loan losses for the nine months ended March 31, 2013 included an additional provision of $2.0 million deemed necessary to support the Company’s planned asset disposition strategy approved by the Company’s Board of Directors during the quarter ended December 31, 2012, the goal of which was to rapidly reduce (through strategies such as short sales, cash for keys, deeds in lieu of foreclosure and/or bulk sales) the dollar amount of non-performing loans in the Company’s loan portfolio and thereby reduce the costs associated with the foreclosure process. The Company’s management reviews the level of the allowance for loan losses on a quarterly basis based on a variety of factors including, but not limited to, (1) the risk characteristics of the loan portfolio, (2) current economic conditions, (3) actual losses previously experienced, (4) the Company’s level of loan growth and (5) the existing level of reserves for loan losses that are probable and estimable. The reduction in the level of provision for loan loss primarily reflects lower levels of specific reserves related to non-performing loans individually evaluated for impairment which continued to decrease as a result of the various above mentioned disposition activities. Also, there was a stabilization of the quantitative and qualitative factors during the nine months ended March 31, 2014 compared to upward-trending factors during the nine-month period ended March 31, 2013, thus further reducing the need for additional provisions as of March 31, 2014. The Company experienced $2,000 in net charge-offs (consisting of $2,000 in charge-offs and no recoveries) for the three-month period ended March 2014 compared to $952,000 in net charge-offs (consisting of $952,000 in charge-offs and no recoveries) for the three-month period ended March 31, 2013. In addition, the Company experienced $993,000 in net charge-offs (consisting of $1,013,000 in charge-offs and $20,000 in recoveries) for the nine months ended March 31, 2014 compared to $2,416,000 in net charge-offs (consisting of $2,465,000 in charge-offs and $49,000 in recoveries) for the nine months ended March 31, 2013. The Company had $9.1 million in non-performing loans as of March 31, 2014, compared to $14.1 million as of June 30, 2013. The allowance for loan losses to total loans ratio was 1.57% at March 31, 2014, compared to 1.87% at June 30, 2013, while the allowance for loan losses to non-performing loans ratio increased from 30.30% at June 30, 2013 to 40.82% at March 31,
2014, primarily due to decreases in total non-performing loans at March 31, 2014 compared to June 30, 2013. Non-performing loans to total loans and net charge-offs to average loans outstanding ratios were at 3.84% and 0.43%, respectively, at and for the nine month period ended March 31, 2014 compared to 5.74% and 1.01% at and for the nine month period ended June 30, 2013.
Total assets decreased $7.2 million or 2.0%, from $352.6 million at June 30, 2013 to $345.4 million at March 31, 2014, primarily due to a decrease of $20.0 million in cash and cash equivalents, offset by a $7.8 million increase in loans receivable, net and a $4.3 million increase in securities held to maturity balances. Deposits were $271.8 million at March 31, 2014, down $8.6 million compared to $280.4 million at June 30, 2013. The decrease in deposit balances was primarily due to the Company lowering its offering rates. Total borrowings at March 31, 2014 and June 30, 2013 amounted to $30.0 million. Stockholders’ equity was $40.5 million at March 30, 2014 compared to $39.5 at June 30, 2013, an increase of $972,000 or 2.5%. The increase in retained earnings of $742,000, as well as the $126,000 decrease in unallocated common stock held by ESOP and $107,000 increase in paid-in capital accounted for the major changes in the Company’s shareholder’s equity as of March 31, 2014 compared to the period ended June 30, 2013.
Shares of the Company’s common stock trade on the NASDQ Global Market under the symbol “MSBF.” The Company is majority owned by its mutual holding company parent, MSB Financial, MHC.
Forward Looking Statements
The foregoing release may contain forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements.
CONTACT: MSB Financial Corp.
Michael Shriner, President & CEO
908-647-4000
mshriner@millingtonsb.com
