FOR IMMEDIATE RELEASE
Date: January 30, 2004
CONTACT: Paul Zogas, President (708) 598-9400
MIDLAND CAPITAL HOLDINGS CORPORATION
REPORTS FISCAL 2nd QUARTER EARNINGS
AND DECLARES REGULAR CASH DIVIDEND
BRIDGEVIEW, ILLINOIS - Midland Capital Holdings Corporation (OTC Bulletin
Board: MCPH) (the "Company") the holding company for Midland Federal Savings and
Loan Association ("Midland Federal") today announced that net income for the
quarter ended December 31, 2003 totaled $118,000, or $0.32 per diluted share,
compared to net income of $171,000, or $0.46 per diluted share, for the quarter
ended December 31, 2002. Net income for the six months ended December 31, 2003
totaled $665,000, or $1.78 per diluted share, compared to net income totaling
$382,000, or $1.04 per diluted share, for the six months ended December 31,
2002.
The increase in net income in the current six month period was due to the
collection of non-accruing loan interest in the amount of $142,000, net of
income taxes, as well as a $286,000 gain, net of income taxes, from the
satisfaction of foreclosure judgments, both of which were the result of a loan
workout agreement that was paid in full during the quarter ended September 30,
2003. Absent the gain from these non-recurring items, net income for the six
months ended December 31, 2003 would have been $236,000, or $0.63 per diluted
share. The prior year six month period also included the collection of
non-accruing loan interest under the same loan workout agreement in the amount
of $28,000, net of income taxes, or $.07 per diluted share.
Midland Capital Holdings Corporation also announced that it will pay a
regular cash dividend of $0.17 per share for the quarter ended December 31,
2003. The dividend will be payable February 19, 2004 to shareholders of record
as of February 9, 2004.
Annualized return on average assets and annualized return on average equity
during the quarter ended December 31, 2003 were .30% and 4.11%, respectively
compared to .44% and 6.44%, respectively, for the comparable prior year quarter.
For the six months ended December 31, 2003, annualized return on average assets
and annualized return on average equity were .84% and 11.76%, respectively,
compared to .50% and 7.24% for the six months ended December 31, 2002.
-MORE-
Net interest income decreased $41,000 to $1.08 million in the quarter ended
December 31, 2003 compared to the prior year quarter. The decrease in net
interest income was primarily the result of a decrease in interest rate spread
to 2.75% in the current quarter compared to 2.82% in the prior year quarter. The
decrease in interest rate spread was primarily due to a decrease in the
Company's average yield on interest earning assets, which declined at a faster
rate than the decrease in the average yield paid on interest costing deposits.
The decline in asset yields occurred as a result of significant refinancing
activity as well as declining investment yields on maturing securities. The
decrease in interest rate spread was offset by an increase in the average
balance of net earning assets. For the quarter ended December 31, 2003 the
average balance of net earning assets increased to $16.4 million from $13.9
million in the prior year quarter.
For the six months ended December 31, 2003 net interest income increased
$59,000 to $2.35 million. The increase in net interest income was primarily the
result of the collection of non-accruing loan interest during the current six
month period in the amount of $216,000 as compared to $42,000 in the prior year
period. Net of the collection of non-accruing loan interest in both six month
periods, discussed above, the Company's interest rate spread decreased to 2.71%
for the six months ended December 31, 2003 from 2.84% for the prior year period.
The decrease in interest rate spread was offset by a $1.8 million increase in
the average balance of net earning assets to $16.1 million compared with the
prior year period.
Non-interest income decreased $57,000 to $260,000 in the quarter ended
December 31, 2003 from $317,000 in the quarter ended December 31, 2002. The
primary factors for the decrease in non-interest income in the current quarter
were a $43,000 decrease in loan fees and service charges, a $10,000 decrease in
deposit related fees and a $4,000 decrease in commission income. The decrease in
loan fees and service charges is attributed to a decrease in loan origination
activity as loan originations decreased to $10.1 million in the current quarter
from $15.2 million in the prior year quarter.
For the six months ended December 31, 2003 non-interest income increased
$428,000 to $1.05 million from $623,000 in the prior year period. The increase
in non-interest income in the current six month period compared with the prior
year period is primarily attributed to a $433,000 gain on the satisfaction of
foreclosure judgments resulting from the payment in full of the loan workout
agreement, discussed above. Non-interest income was decreased in the six months
ended December 31, 2003 by a $15,000 decrease in deposit related fees, a $5,000
decrease in profit on the sale of loans and a $4,000 decrease in commission
income.
-MORE-
Non-interest expense decreased $17,000 to $1.15 million in the quarter
ended December 31, 2003 compared to the prior year quarter. The decrease in
non-interest expense is primarily the result of an $11,000 decrease in staffing
costs, a $6,000 decrease in office occupancy expense, a $4,000 decrease in
professional fees and a $4,000 decrease in computer software and support
expense. The decrease in staffing costs is primarily attributed to a $23,000
decrease in loan origination commissions, due to a decrease in lending volume,
offset by a $13,000 increase in costs for employee medical and pension benefits.
For the six months ended December 31, 2003 non-interest expense increased
$59,000 to $2.37 million from $2.31 million in the prior year period. The
primary factors for the increase in non-interest expense in the current six
month period were a $64,000 increase in staffing costs, an 8,000 increase in
advertising expense, a $6,000 increase in professional fees, a $5,000 increase
in office occupancy expense and a $5,000 increase in data processing fees,
offset by a $30,000 decrease in computer software and support expense. The
increase in staffing costs is primarily attributed to a $34,000 increase in
costs for employee medical and pension benefits and an $8,000 increase in loan
origination commissions compared with the prior year period.
Non-performing assets were .31% of total assets at December 31, 2003 and
consisted of $485,000 in non-performing loans. The allowance for loan losses
increased during the current quarter by $20,000 to $430,000, or 0.45% of total
loans, at December 31, 2003. The $20,000 increase in the allowance for loan
losses was the result of $30,000 in loan loss provisions net of $10,000 in loan
charge offs during the six months ended December 31, 2003. At December 31, 2003
the Company's ratio of allowance for loan losses to non-performing loans was
88.48% compared to 84.80% at June 30, 2003.
At December 31, 2003 the Company's assets totaled $155.8 million, compared
to total assets of $160.0 million at June 30, 2003. Net loans receivable
increased $834,000 to $94.1 million at December 31, 2003. Total deposits
decreased $4.5 million to $143.0 million at December 31, 2003 from $147.5
million at June 30, 2003. The decrease in savings deposits is primarily
attributed to a $3.4 million decrease in certificate of deposit accounts as a
result of increased competition for such deposits.
Stockholders' equity in the Company totaled $11.52 million at December 31,
2003 resulting in a book value per common share of $30.91 based upon 372,600
shares outstanding. At December 31, 2003 Midland Federal's capital ratios
exceeded all of its regulatory capital requirements with both tangible and core
capital ratios of 6.50% and a risk-based capital ratio of 13.00%. Midland
Federal's deposits are insured up to applicable limits by the Federal Deposit
Insurance Corporation. Midland Federal operates four banking offices located in
Chicago, Homer Glen and Bridgeview, Illinois. (Selected Consolidated Financial
Information follows)
FINANCIAL HIGHLIGHTS
Unaudited
SELECTED FINANCIAL CONDITION DATA: December 31, 2003 June 30, 2003
----------------- -------------
Total assets ................................. $155,809,173 159,976,384
Loans receivable, net ........................ 94,133,361 93,299,553
Mortgage-backed securities ................... 4,181,239 6,272,466
Cash and cash equivalents .................... 51,711,657 49,421,065
Investment securities ........................ 1,274,375 6,388,900
Deposits ..................................... 143,029,005 147,489,604
Stockholders' equity ......................... 11,517,644 11,056,147
PER SHARE DATA:
Book value per common share at period end .... $ 30.91 $ 29.67
SELECTED ASSET QUALITY RATIOS:
Non-performing loans to
loans receivable, net ...................... .52% .44%
Non-performing assets to total assets ........ .31% .30%
Allowance for loan losses to
non-performing loans ....................... 88.48% 84.80%
Allowance for loan losses to total loans ..... .45% .44%
SELECTED OPERATIONS DATA: Three Months Ended Six Months Ended
December 31, December 31,
------------ ------------
2003 2002 2003 2002
---- ---- ---- ----
Total interest income ................ $1,537,675 1,864,888 3,302,501 3,823,654
Total interest expense ............... 457,903 743,802 948,630 1,528,935
---------- --------- --------- ---------
Net interest income .................. 1,079,772 1,121,086 2,353,871 2,294,719
Provision for loan losses ............ 15,000 15,000 30,000 30,000
---------- --------- --------- ---------
Net interest income after provision
for loan losses .................... 1,064,772 1,106,086 2,323,871 2,264,719
---------- --------- --------- ---------
Non-interest income .................. 260,331 317,481 1,051,239 622,963
Non-interest expense ................. 1,146,738 1,164,035 2,368,143 2,308,882
---------- --------- --------- ---------
Income before income taxes ........... 178,365 259,532 1,006,967 578,800
Income tax expense ................... 60,644 88,241 342,369 196,792
---------- --------- --------- ---------
Net income ........................... 117,721 171,291 664,598 382,008
========== ========= ========= =========
PER SHARE DATA:
Earnings per basic share ............. $ .32 .47 1.78 1.05
Earnings per diluted share ........... $ .32 .46 1.78 1.04
Dividends declared per common share .. $ .17 .15 .34 .30
SELECTED OPERATING RATIOS:
Annualized return on average assets .. .30% .44% .84% .50%
Annualized return on average equity .. 4.11% 6.44% 11.76% 7.24%
Annualized operating expenses to
average total assets ............... 2.91% 2.98% 2.99% 3.00%
Interest rate spread during the period 2.75% 2.82% 3.00% 2.90%
Net interest margin .................. 2.90% 3.02% 3.15% 3.12%
Average interest-earning assets to
average interest-bearing liabilities 112.41% 110.36% 112.07% 110.76%