EXHIBIT 99.1
OHIO LEGACY CORP ANNOUNCES EARNINGS OF $.07 PER SHARE VERSUS LOSS OF ($.22) PER
SHARE
Wooster, Ohio - February 12, 2002 - Ohio Legacy Corp (Nasdaq: OLCB) today
reported net earnings for the three months ended December 31, 2002, of $71,000
or $.07 per share. The fourth quarter results represented a significant
improvement over the comparable period in the prior year when Ohio Legacy Corp
reported a net loss of ($216,000), or ($.22) per share. The fourth quarter
results also improved from the net earnings of the September 30, 2002, quarter
of $44,000, or $.05 per share.
For the year ended December 31, 2002, Ohio Legacy Corp ("Ohio Legacy" or the
"Company") reported a net loss of ($51,000), or ($.05) per share, compared to a
loss in 2001 of ($1.1 million), or ($1.16) per share. At December 31, 2002, the
Company's book value per share was $7.63, compared to $7.16 per share at
December 31, 2001.
Total assets at the end of 2002 were $136.0 million, an increase of 73.2% over
the $78.6 million in assets at December 31, 2001. During 2002, net loans
increased 52.2% to $78.3 million, as compared to $51.4 million at December 31,
2001. Deposit growth was even stronger, as deposits increased by 62.9% from
$70.5 million at the end of 2001 to $114.9 million at the end of 2002.
Total shareholders' equity increased from $6.9 million at December 31, 2001, to
$15.0 million at December 31, 2002. On December 24, 2002, the Company completed
a common stock offering, resulting in the issuance of 1.0 million new shares of
Ohio Legacy stock. An additional 150,000 shares were issued at $8.50 per share
in January 2003 to cover over-allotments, but those shares and the related net
proceeds are not included in the year-end results. Coupled with the
over-allotment issuance, the offering infused approximately $8.5 million of
capital to the Company, the majority of which is being contributed to Ohio
Legacy Bank to support continued growth in loans and deposits.
Ohio Legacy Chairman, CEO and President L. Dwight Douce said, "We are very
pleased with the progress of Ohio Legacy in both earnings and asset growth after
just two years of operations. We continue to focus on managing the balance sheet
by adding quality assets and deposits to provide a sound foundation which will
drive the future earnings of Ohio Legacy. Our employees have accepted the
challenges of organizing a new company, and their ability to meet those
challenges is reflected in our operating results."
"We believe that the market is continuing to validate our business model. Our
strategy is to provide a high level of community banking service to small
businesses and consumers in Wayne, Stark and Holmes counties in Ohio," Douce
continued. "As a result of the high level of acceptance of Ohio Legacy Bank in
the marketplace, our growth since formation in October 2000 has exceeded our
expectations. We are pleased that our new capital will give us the ability to
continue our growth and serve a greater number of customers in the years ahead."
"While we are pleased with our growth, we are very mindful of the need to
maintain excellent asset quality," Douce continued. "We are particularly proud
of the fact that, despite a 52% increase in net loans during the year and a
sluggish economy, we had only $2,000 of charge-offs during the year, and we had
no non-performing assets at December 31, 2002. While we realize that our
portfolio is still relatively unseasoned and that loan losses will be incurred
in the future, we feel very good about our asset quality in this environment."
KEY ISSUE REVIEW AND OUTLOOK
NET INTEREST MARGIN - Net interest margin improved to 2.84% in the fourth
quarter of 2002, compared to 2.28% in the fourth quarter of 2001 and 2.73% in
the third quarter of 2002. In the declining interest rate environment
experienced during the year, the Company's net interest spread increased to
2.69% for the fourth quarter of 2002, compared to 1.87% for the fourth quarter
of 2001 and 2.57% for the third quarter of 2002.
For the year ended December 31, 2002, the Company's net interest margin improved
to 2.60% from 2.56% during 2001, and the interest rate spread improved to 2.41%
in 2002 from 1.75% in 2001. While the increase in the spread was significant,
the impact on the net interest margin was muted by the fact that the Company's
average equity-to-assets ratio declined from 17.23% during 2001 to 6.24% during
2002.
Although the current interest rate environment is volatile, management believes
that general interest rates will increase in late 2003. With Ohio Legacy Bank's
asset/liability portfolios currently being somewhat "asset sensitive," net
interest margin should improve if interest rates increase. The Company also
believes that its net interest margin will increase as a result of the new
capital infusion, and as the Company is able to increase its loan-to-deposit
ratio somewhat over the next year, thereby substituting higher yielding loans on
the balance sheet for investment securities.
NONINTEREST INCOME - Noninterest income increased to $73,000 in the three months
ended December 31, 2002, as compared to $47,000 in the prior year period and
$67,000 in the three months ended September 30, 2002. Noninterest income as a
percentage of average assets remained relatively consistent, on an annualized
basis, at 0.24% for the three months ended December 31, 2002, compared to 0.28%
for the three months ended December 31, 2001, and 0.23% for the three months
ended September 30, 2002.
For the year ended December 31, 2002, noninterest income increased 143.0%, from
$107,000 to $261,000. Noninterest income to average assets was 0.23% in 2002 and
0.25% in 2001. In all periods, the increase in noninterest income was
attributable to a higher level of service fees, commensurate with the increase
in demand deposit balances during the respective periods.
NONINTEREST EXPENSE - Noninterest expense increased to $731,000 for the quarter
ended December 31, 2002, as compared to $493,000 in the prior year period and
$678,000 in the three months ended September 30, 2002. The annualized ratio of
noninterest expenses to average assets was 2.35% in the fourth quarter of 2002,
as compared to 2.90% in the fourth quarter of 2001 and 2.28% in the third
quarter of 2002.
For the year ended December 31, 2002, noninterest expense totaled $2.6 million,
an increase of 35.7% from $1.9 million in 2001. However, the efficiency ratio
(noninterest expense to net interest income and noninterest income) declined
from 167.5% in 2001 to 86.6% in 2002, and the ratio of noninterest expense to
average assets declined from 4.42% in 2001 to 2.32% in 2002. The largest nominal
increase in noninterest expense was in the salaries and benefits component, as
the Company launched its third full-service banking office in Millersburg, Ohio,
in March 2002. Management expects noninterest expense to continue to increase in
the future through controlled growth in employees and banking facilities.
However, management expects the ratio of noninterest expense to average assets
to continue to decline somewhat in the next year, as the Company can attain
asset growth without a commensurate increase in noninterest expenses. As a
result, the Company's efficiency ratio should improve.
ASSET QUALITY - The Company's provision for loan losses was $98,000 in the three
months ended December 31, 2002, compared to $135,000 during the quarter ended
December 31, 2001, and $104,000 during the quarter ended September 30, 2002. As
a result of the Company's capital constraints prior to the completion of the
offering in late December, loan growth during the fourth quarter of 2002 was at
a slower pace than growth during the prior year period and during the third
quarter of 2002, leading to a slightly lower provision.
The Company did not have any charge-offs during the three months ended December
31, 2002, December 31, 2001, or September 30, 2002. Also, the Company did not
have any nonperforming assets during these periods. The allowance for loan
losses increased to $837,000 at December 31, 2002, an increase from $386,000 at
December 31, 2001, and $739,000 at September 30, 2002. The allowance for loan
losses as a percentage of loans increased to 1.06% at December 31, 2002, as
compared to 0.75% at December 31, 2001, and 0.98% at September 30, 2002.
Management expects that the allowance for loan losses as a percentage of loans
will continue to increase as residential loans will comprise a smaller portion
of the total loan portfolio over the next year.
REGULATORY MATTERS - On June 18, 2002, Ohio Legacy Bank entered into an
agreement with the Office of the Comptroller of the Currency ("OCC") to address
certain issues identified during the Bank's examination in January 2002.
Management has worked toward resolving the issues identified in the agreement,
including adoption of a strategic plan, a capital plan, a staffing plan and
improved internal controls related to operations and information technology
security. Commenting on management's progress thus far, Mr. Douce said, "We look
forward to continued success in 2003 in meeting the goals and objectives we set
forth in our strategic plan. We are pleased to have the infusion of new capital
as a result of our December offering, and we will work with the OCC to ensure we
continue to grow profitably, in a safe and sound manner."
ABOUT OHIO LEGACY CORP
Ohio Legacy Corp is a bank holding company headquartered in Wooster, Ohio.
Through its subsidiary, Ohio Legacy Bank N.A., it provides financial services to
small businesses and consumers in Stark, Holmes and Wayne counties with three
full-service banking locations in Canton, Millersburg and Wooster, Ohio
FORWARD-LOOKING STATEMENTS DISCLOSURE
This release contains certain forward-looking statements related to the future
performance and condition of Ohio Legacy Corp. These statements, which are
subject to numerous risks and uncertainties, are presented in good faith based
on the Company's current condition and management's understanding, expectations,
and assumptions regarding its future prospects as of the date of this release.
Actual results could differ materially from those projected or implied by the
statements contained herein. The factors that could affect the Company's future
results are set forth in the periodic reports and registration statements filed
by the Company with the Securities and Exchange Commission.
Contact: L. Dwight Douce, Chairman, CEO and President
Eric S. Nadeau, Chief Financial Officer, Vice President
(330) 263-1955
OHIO LEGACY CORP
CONSOLIDATED BALANCE SHEETS
December 31, 2002 and 2001
- --------------------------------------------------------------------------------
2002 2001
------------- ------------
ASSETS
Cash and due from banks $ 5,301,451 $ 2,102,438
Federal funds sold 10,418,000 6,596,000
------------- ------------
Cash and cash equivalents 15,719,451 8,698,438
Securities available for sale 38,722,169 16,177,938
Loans, net 78,291,832 51,426,133
Federal Reserve Bank stock 318,900 221,300
Premises and equipment, net 2,185,108 1,592,977
Accrued interest receivable and other assets 810,017 452,771
------------- ------------
Total assets $ 136,047,477 $ 78,569,557
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 4,992,413 $ 2,466,958
Interest bearing demand 10,864,605 9,434,851
Savings 36,229,165 14,830,102
Certificates of deposit 62,805,167 43,784,548
------------- ------------
Total deposits 114,891,350 70,516,459
Redeemable capital securities of subsidiary trust 3,325,000 --
Other borrowings 105,000 --
Capital lease obligation 983,439 541,130
Accrued interest payable and other liabilities 1,739,633 595,618
------------- ------------
Total liabilities 121,044,422 71,653,207
SHAREHOLDERS' EQUITY
Preferred stock -- --
Common stock 16,546,465 8,988,710
Accumulated deficit (2,164,585) (2,114,024)
Accumulated other comprehensive income 621,175 41,664
------------- ------------
Total shareholders' equity 15,003,055 6,916,350
------------- ------------
Total liabilities and shareholders' equity $ 136,047,477 $ 78,569,557
============= ============
Book value per outstanding common share $ 7.63 $ 7.16
Common shares outstanding 1,965,700 965,500
Common stock warrants outstanding, $10.00 per share 339,600 339,800
Common stock options outstanding, $10.00 per share 87,000 --
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS For
the quarters and years ended December 31, 2002 and 2001
- --------------------------------------------------------------------------------
For the quarter ended For the year ended
December 31, December 31,
------------------------- ---------------------------
2002 2001 2002 2001
---------- ----------- ----------- -----------
Interest income:
Loans $1,405,469 $ 837,011 $ 5,034,267 $ 2,033,780
Securities 362,427 158,499 1,411,037 298,834
Federal funds sold and other 32,197 41,700 127,209 370,036
---------- ----------- ----------- -----------
Total interest income 1,800,093 1,037,210 6,572,513 2,702,650
Interest expense:
Deposits 860,691 651,359 3,476,439 1,615,869
Other borrowings 112,900 21,861 356,397 51,046
---------- ----------- ----------- -----------
Total interest expense 973,591 673,220 3,832,836 1,666,915
---------- ----------- ----------- -----------
Net interest income 826,502 363,990 2,739,677 1,035,735
Provision for loan losses 97,500 134,700 452,456 349,798
---------- ----------- ----------- -----------
Net interest income after
provision for loan losses 729,002 229,290 2,287,221 685,937
Noninterest income:
Service charges and other fees 70,772 45,498 251,845 99,756
Other income 2,625 1,846 8,858 7,531
---------- ----------- ----------- -----------
Total other income 73,397 47,344 260,703 107,287
Noninterest expense:
Salaries and benefits 328,634 212,813 1,149,196 868,927
Occupancy and equipment 136,826 90,444 483,451 323,738
Professional fees 54,993 36,966 234,382 134,683
Franchise tax 20,028 21,006 88,424 104,569
Data processing 64,644 45,085 233,199 155,945
Marketing and advertising 28,028 32,072 81,183 96,276
Stationery and supplies 19,195 15,342 85,979 65,427
Other expenses 79,301 39,020 242,671 164,852
---------- ----------- ----------- -----------
Total noninterest expense 731,649 492,748 2,598,485 1,914,417
---------- ----------- ----------- -----------
Net income (loss) $ 70,750 $ (216,114) $ (50,561) $(1,121,193)
========== =========== =========== ===========
Basic and diluted net loss per
share $ 0.07 $ (0.22) $ (0.05) $ (1.16)
========== =========== =========== ===========
OHIO LEGACY CORP
QUARTERLY BALANCE SHEET INFORMATION
(Dollars in thousands)
- --------------------------------------------------------------------------------
2002 2001
--------------------------------------------------- --------
March 31 June 30 Sept. 30 Dec. 31 Dec. 31
--------- --------- --------- --------- --------
Cash and cash equivalents $ 12,421 $ 9,615 $ 9,816 $ 15,719 $ 8,698
Securities 25,807 35,847 30,750 38,722 16,178
Loans 64,678 70,604 75,509 79,129 51,812
Allowance for loan losses (512) (635) (739) (837) (386)
Premises and equipment, net 2,187 2,287 2,231 2,185 1,593
Other assets 1,082 1,147 1,183 1,129 674
--------- --------- --------- --------- --------
Total assets $ 105,663 $ 118,865 $ 118,750 $ 136,047 $ 78,569
========= ========= ========= ========= ========
Noninterest-bearing demand $ 2,876 $ 5,620 $ 3,882 $ 4,992 $ 2,467
Interest-bearing demand 9,994 8,677 5,823 10,864 9,435
Savings 34,419 38,774 38,208 36,229 14,830
Certificates of deposit 46,648 53,861 58,188 62,806 43,784
--------- --------- --------- --------- --------
Total deposits 93,937 106,932 106,101 114,891 70,516
Other borrowings, leases and capital
securities 4,527 4,416 4,415 4,413 541
Other liabilities 627 576 847 1,740 596
--------- --------- --------- --------- --------
Total liabilities 99,091 111,924 111,363 121,044 71,653
Shareholders' equity 6,572 6,941 7,387 15,003 6,916
--------- --------- --------- --------- --------
Total liabilities and
shareholders' equity $ 105,663 $ 118,865 $ 118,750 $ 136,047 $ 78,569
========= ========= ========= ========= ========
LOAN PORTFOLIO:
Commercial $ 10,695 $ 8,924 $ 10,323 $ 10,206 $ 9,599
1-4 family residential 27,090 29,376 29,965 31,346 22,052
Multifamily residential 3,413 4,268 5,702 6,732 1,990
Commercial real estate 14,707 17,469 18,262 18,385 11,575
Construction 2,979 3,751 3,985 4,636 1,313
Consumer 5,882 6,908 7,371 7,926 5,363
Net deferred loan fees (88) (92) (99) (102) (80)
--------- --------- --------- --------- --------
Loans $ 64,678 $ 70,604 $ 75,509 $ 79,129 $ 51,812
========= ========= ========= ========= ========
CAPITAL:
Tier 1 to risk-weighted assets 15.3% 13.6% 13.3% 17.5% 13.4%
Tier 1 to average assets 10.8% 8.7% 8.6% 11.4% 10.1%
Total to risk-weighted assets 16.1% 14.5% 14.2% 18.5% 14.1%
AVERAGE BALANCES:
Fed funds and securities $ 27,896 $ 39,063 $ 38,039 $ 40,816 $ 19,302
Loans, net 58,418 68,945 73,068 75,692 44,437
Total interest-earning assets 86,314 108,008 111,107 116,508 63,739
Total assets 91,746 113,814 118,736 124,255 68,044
Total assets, full year 112,138 43,305
Deposits 80,052 98,515 101,680 107,062 57,510
Other borrowings and leases 777 4,420 4,416 4,414 542
Total interest-bearing liabilities 80,829 102,935 106,096 111,476 58,052
Shareholders' equity 6,744 6,757 7,164 7,325 7,182
Shareholders' equity, full year 6,998 7,463
OHIO LEGACY CORP
QUARTERLY STATEMENT OF OPERATIONS INFORMATION
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
2002 2001
--------------------------------------------------- ---------
March 31 June 30 Sept. 30 Dec. 31 Dec. 31
--------- --------- --------- --------- ---------
Interest income $ 1,350 $ 1,682 $ 1,740 $ 1,800 $ 1,037
Interest expense (837) (1,041) (981) (973) (673)
--------- --------- --------- --------- ---------
Net interest income 513 641 759 827 364
Provision for loan losses (126) (125) (104) (98) (135)
Noninterest income 58 62 67 73 47
Noninterest expense (547) (642) (678) (731) (492)
--------- --------- --------- --------- ---------
Net income (loss) $ (102) $ (64) $ 44 $ 71 $ (216)
========= ========= ========= ========= =========
Net income (loss) per share $ (0.11) $ (0.07) $ 0.05 $ 0.07 $ (0.22)
========= ========= ========= ========= =========
SELECTED RATIOS:
Net interest margin (1) 2.38% 2.37% 2.73% 2.84% 2.28%
Yield on interest-earning assets 6.26% 6.23% 6.27% 6.18% 6.51%
Cost of funds 4.14% 4.05% 3.70% 3.49% 4.64%
Interest rate spread (2) 2.12% 2.18% 2.57% 2.69% 1.87%
Efficiency ratio (3) 95.8% 91.3% 82.0% 81.2% 120.0%
Allowance as a percent of loans 0.79% 0.90% 0.98% 1.06% 0.75%
Net loans as a percent of deposits 68.3% 65.4% 70.5% 68.1% 72.9%
Annualized net charge-offs to loans 0.0% 0.0% 0.0% 0.0% 0.0%
Annualized noninterest income to
average assets 0.28% 0.25% 0.22% 0.23% 0.24%
Annualized noninterest expense to
average assets 2.38% 2.26% 2.28% 2.35% 2.90%
Annualized return on average assets NM NM 0.15% 0.23% NM
Annualized return on average equity NM NM 2.46% 3.86% NM
- --------------
(1) Net interest income, annualized, divided by average interest-earning assets
for the period
(2) Difference between the yield on interest-earning assets and the cost of
funds
(3) Noninterest expense divided by net interest income and noninterest income
NM Not meaningful