EXHIBIT 99
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FOR IMMEDIATE RELEASE CONTACT:
Thursday April 20, 2006 John A. Ustaszewski
Chief Financial Officer
(740) 657-7000
DCB FINANCIAL CORP ANNOUNCES
FIRST QUARTER 2006 EARNINGS
17% INCREASE IN EPS, INCREASES DIVIDEND
LEWIS CENTER, Ohio, April 20 -- DCB Financial Corp, (OTC Bulletin Board DCBF)
announced earnings of $1.86 million, or $0.49 per basic and diluted share for
the three months ended March 31, 2006. This represents a $0.07, or 17% increase
from the $0.42 basic and diluted earnings per share reported for the first
quarter of 2005. Return on assets for the first quarter improved to 1.08% from
1.04% reported for the same period in 2005, while return on equity was 13.3%, an
11% increase from the same period in 2005. Strong loan growth, stable credit
trends and increased efficiency have all contributed to the continued
improvement in core earnings.
Because of the continued earnings growth of the Corporation, the Board of
Directors declared an increase in the quarterly dividend from $0.13 to $0.14 per
share payable May 15, 2006, to shareholders of record as of April 28, 2006.
President and Chief Executive Officer Jeffrey T. Benton commented, "The first
quarter of 2006 was another positive quarter for us. We continue to focus on
growth opportunities and improving our performance. This quarter's results
demonstrate continued progress toward our high performance goals."
Mr. Benton added, "We are very excited about new technology that we are ready to
offer to businesses. We have successfully completed testing our new remote
deposit capture product, "Smart Deposit Solutions," that allows business
customers to deposit checks directly into their accounts from their offices.
This will save time and courier costs, and accelerate deposit availability. We
are also introducing this same check image transfer technology at our new "Smart
ATM" in Powell that should be operational by the end of April. This exciting
technology offers more "Smart Banking" options to our customers."
NET INCOME
Net income for the three months ended March 31, 2006 totaled $1.86 million,
compared to net income of $1.64 million for the same period in 2005. Earnings
per share was $.49 for the three months ended March 31, 2006 compared to $.42
for the three months ended March 31, 2005. The increase in earnings is mainly
attributed to the increase in net interest income due to the growth in earning
assets.
NET INTEREST INCOME
Net interest income was $5.8 million for the three months ended March 31, 2006,
compared to $5.5 million for the same period in 2005. The $329 thousand increase
in the first quarter 2006 compared to 2005 was mainly attributed to an increase
in loan balances, as average earning assets increased by $64 million from the
first quarter 2005. The Company's first quarter's net interest margin decreased
to 3.62% on a fully tax equivalent basis, from 3.76% during the first quarter
2005. The decline is primarily attributed to funding continued loan growth
through higher cost borrowings and deposits associated with the current interest
rate environment. The Bank has seen deposit growth primarily in products such as
time deposits and money market accounts, which generally carry higher costs
compared to checking and savings products. Funding costs may further negatively
impact the net interest margin in future periods if the current competitive and
rising rate environments remain in effect.
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NONINTEREST INCOME
Total noninterest income decreased $33, or 2.3%, for the three months ended
March 31, 2006, compared to the same period in 2005. The change in non-interest
revenues from period to period is mainly attributed to a $184K gain recognized
on the sale of an investment in an unconsolidated affiliate during the first
three months of 2005. The noninterest income decrease was offset by an increase
in cash management revenues, trust revenue, and an increase in service charges
and retail fees.
NONINTEREST EXPENSE
Total noninterest expense decreased $96, or 2.3%, for the three months ended
March 31, 2006, compared to the same period in 2005. The decrease was primarily
the result of a decrease in professional expenses incurred coupled with a
decline in occupancy and advertising expenses. The Company's quarterly
efficiency ratio improved to 54.7% in the first quarter 2006 from 59.3% for the
same period in 2005. This reflects the Company's increased revenue growth, as
well as stringent control of non-interest expense.
ANALYSIS OF SELECTED FINANCIAL CONDITION
The Corporation's assets totaled $703,748 at March 31, 2006, compared to
$690,896 at December 31, 2005, an increase of $12,852, or 1.9%. The increase in
assets was mainly attributed to loan growth the Corporation experienced within
its normal markets, particularly in commercial and residential real estate. The
funding that accommodated this loan growth was supplied through increased
borrowings, mainly Federal Home Loan Bank advances, and wholesale deposits.
Cash and cash equivalents decreased $3,954 from December 31, 2005 to March 31,
2006. Total securities increased $1,534, or 1.6%, from $96,580 at December 31,
2005 to $98,114 at March 31, 2006. Securities and investment securities
classified as available for sale at March 31, 2006 totaled $98,114, or 100% of
the total securities portfolio. Management classifies securities as available
for sale to provide the Corporation with the flexibility to move funds into
loans as demand warrants. The mortgage-backed securities portfolio, totaling
$39,611 at March 31, 2006, provides the Corporation with a constant cash flow
stream from principal repayments and interest payments. The Corporation held no
structured notes during any period presented.
Total loans, including loans held for sale, increased $14,135, or 2.5%, from
$554,685 at December 31, 2005 to $568,820 at March 31, 2006, while on an
annualized basis total loans, including loans held for sale, increased $59,548,
or 11.7% from year to year. The increase is attributed mainly to the continued
growth of residential real estate and home equity, real estate construction and
land development, and commercial real estate loans. Other loan categories in
which the Corporation participates, commercial, industrial, and consumer
financing, remained relatively stable or experienced small increases in loans
outstanding. The Bank's local market continues to experience increases in the
amount of commercial real estate development activity.
Total deposits increased $36,212, or 7.2%, from $503,906 at December 31, 2005 to
$540,118 at March 31, 2006. This growth is mainly attributed to the increase in
deposit activity from the Corporation's larger public fund customers. The
Corporation utilizes a variety of alternative deposit funding sources to
overcome the competitive challenges experienced within its primary market.
Utilizing brokered certificates of deposits and money market sweeps, the
Corporation is able to provide additional funding for the Company's loan
portfolio. The Bank had approximately $32,133 in brokered certificates of
deposit outstanding. The slower growth of core deposits is attributed to the
competition in the Corporation's geographic area, where the growth of
competitors' branch locations have made it increasingly difficult to obtain
deposits. Management intends to continue to develop new products, and to monitor
the rate structure of its deposit products to encourage the growth within its
deposit liabilities. Noninterest-bearing deposits decreased $4,822, or 7.0%,
while interest-bearing deposits increased $41,034, or 9.4%. Total borrowings
decreased to $104,819 from $128,535 during the three months ended March 31,
2006.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses totaled $560 for the three months ended March 31,
2006, compared to $470 for the same period in 2005. The growth in the provision
is reflective of the overall growth in the Corporation's loan portfolio, and an
increase in net charge offs between the two periods. Non-accrual loans for the
three months ended March 31, 2006 were $1,334 compared to non-accrual loans of
$1,939 for the same period in 2005. Net charge-offs for the three months ended
March 31, 2006 increased to $477, compared to $173 for the three months ended
March 31, 2005. Annualized net charge-offs for the three months ended March 31,
2006 were 0.34% compared to 0.14% at March 31, 2005. Delinquent loans over
thirty days improved from period to period, decreasing to 1.38% at March 31,
2006 from 1.53% at March 31, 2005. Non-performing loans to total loans totaled
..24% of loans at March 31, 2006, compared to .39% at Mach 31, 2005. Management
will continue to monitor the credit quality of the lending portfolio and will
recognize additional provisions in the future to maintain the allowance for loan
losses at an appropriate level. The balance for allowance for loan losses
increased to $5,617, or .99% of total loans at March 31, 2006, compared to
$5,115, or 1.01% of total loans at March 31, 2005.
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SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
April 20, 2006 Press Release
DCB FINANCIAL CORP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
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March 31, December 31,
2006 2005
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(unaudited)
ASSETS
Cash and due from financial institutions $ 14,115 $ 18,069
Securities available for sale 98,114 96,580
Loans held for sale 915 1,640
Loans 567,905 553,045
Less allowance for loan losses (5,617) (5,535)
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Net loans 562,288 547,510
Real estate owned 263 386
Investment in FHLB stock 3,375 3,327
Premises and equipment, net 8,976 8,854
Investment in unconsolidated affiliates 983 614
Bank owned life insurance 9,026 8,898
Accrued interest receivable and other assets 5,693 5,018
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Total assets $ 703,748 $ 690,896
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LIABILITIES
Deposits
Noninterest-bearing $ 64,155 $ 68,977
Interest-bearing 475,963 434,929
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Total deposits 540,118 503,906
Federal funds purchased and other short-term borrowings 13,729 25,610
Federal Home Loan Bank advances 91,090 102,925
Accrued interest payable and other liabilities 1,627 2,201
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Total liabilities 646,564 634,642
SHAREHOLDERS' EQUITY
Common stock, no par value, 7,500,000 shares authorized,
4,273,200 issued at March 31, 2006 and December 31, 2005 3,780 3,780
Retained earnings 64,916 63,552
Treasury stock, at cost, 458,786 and 447,112
shares at March 31, 2006 and December 31, 2005 (10,841) (10,506)
Accumulated other comprehensive loss (671) (572)
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Total shareholders' equity 57,184 56,254
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Total liabilities and shareholders' equity $ 703,748 $ 690,896
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DCB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
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Three Months Ended
March 31,
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2006 2005
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INTEREST AND DIVIDEND INCOME
Loans $ 9,427 $ 7,218
Taxable securities 854 760
Tax-exempt securities 233 184
Federal funds sold and other 30 -
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Total interest income 10,544 8,162
INTEREST EXPENSE
Deposits 3,646 1,818
Borrowings 1,075 850
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Total interest expense 4,721 2,668
NET INTEREST INCOME 5,823 5,494
Provision for loan losses 560 470
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 5,263 5,024
NONINTEREST INCOME
Service charges on deposit accounts 628 571
Trust department income 218 165
Net loss on sales of assets (4) (12)
Gains on sale of loans 51 49
Gain on sale of investment in unconsolidated affiliate - 184
Treasury management fees 153 101
Data processing servicing fees 83 73
Earnings on bank owned life insurance 128 96
Other 127 190
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Total noninterest income 1,384 1,417
NONINTEREST EXPENSE
Salaries and other employee benefits 2,217 2,212
Occupancy and equipment 787 880
Professional services 115 182
Advertising 74 87
Postage, freight and courier 97 94
Supplies 68 61
State franchise taxes 134 108
Other 510 474
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Total noninterest expense 4,002 4,098
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INCOME BEFORE INCOME TAXES 2,645 2,343
Federal income tax expense 785 707
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NET INCOME $ 1,860 $ 1,636
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Basic and diluted earnings per common share $ 0.49 $ 0.42
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DCB FINANCIAL CORP
Selected Key Ratios and Other Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
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Three Months Ended
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3/31/06 3/31/05
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KEY FINANCIAL INFORMATION
Net interest income $ 5,823 $ 5,494
Provision for loan and lease losses $ 560 $ 470
Non-interest income $ 1,384 $ 1,417
Non-interest expense $ 4,002 $ 4,098
Net income $ 1,860 $ 1,636
Loan balances (average) $ 562,527 $ 494,711
Deposit balances (average) $ 529,036 $ 474,755
Basic earnings per common share $ 0.49 $ 0.42
Diluted earnings per common share $ 0.49 $ 0.42
Weighted Average Shares Outstanding (000)
Basic 3,821 3,935
Diluted 3,826 3,935
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DCB FINANCIAL CORP
Selected Consolidated Financial Information
(Unaudited)
(Dollars in thousands, except per share data)
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Three Months Ended
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3/31/06 3/31/05
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KEY RATIOS
Return on average assets 1.08% 1.04%
Return on average shareholders' equity 13.29% 11.97%
Annualized non-interest expense to average assets 2.28% 2.58%
Efficiency ratio 54.66% 59.30%
Net interest margin 3.62% 3.76%
Equity to assets at period end 8.13% 8.64%
Allowance for loan losses as a percentage of period-end loans 0.99% 1.01%
Total allowance for losses on loans to non-performing loans 421.06% 263.80%
Net charge-offs (annualized) as a percent of average loans 0.34% 0.14%
Non-performing loans to total loans (net) 0.24% 0.39%
Delinquent loans (30+ days) 1.38% 1.53%
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BUSINESS OF DCB FINANCIAL CORP
DCB Financial Corp (the "Corporation") is a financial holding company formed
under the laws of the State of Ohio. The Corporation is the parent of The
Delaware County Bank & Trust Company, (the "Bank") a state-chartered commercial
bank. The Bank conducts business from its main offices at 110 Riverbend Avenue
in Lewis Center, Ohio, and through its 16 full-service branch offices located in
Delaware County, Ohio and surrounding communities. The Bank provides customary
retail and commercial banking services to its customers, including checking and
savings accounts, time deposits, IRAs, safe deposit facilities, personal loans,
commercial loans, real estate mortgage loans, night depository facilities and
trust and personalized wealth management services. The Bank also provides cash
management, bond registrar and payment services. The Bank offers data processing
services to other financial institutions; however such services are not a
significant part of its current operations or revenues.
APPLICATION OF CRITICAL ACCOUNTING POLICIES
DCB's consolidated financial statements are prepared in accordance with
accounting principles generally accepted in the United States and follow general
practices within the financial services industry. The application of these
principles requires management to make estimates, assumptions, and judgments
that affect the amounts reported in the financial statements and accompanying
notes. These estimates, assumptions, and judgments are based on information
available as of the date of the financial statements; as this information
changes, the financial statements could reflect different estimates,
assumptions, and judgments.
The most significant accounting policies followed by the Corporation are
presented in Note 1 of the audited consolidated financial statements contained
in the Corporation's 2005 Annual Report to Shareholders. These policies, along
with the disclosures presented in the other financial statement notes and in
this financial review, provide information on how significant assets and
liabilities are valued in the financial statements and how those values are
determined.
FORWARD-LOOKING STATEMENTS
Certain statements in this report constitute "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995, such as
statements relating to the financial condition and prospects, lending risks,
plans for future business development and marketing activities, capital spending
and financing sources, capital structure, the effects of regulation and
competition, and the prospective business of both the Corporation and its
wholly-owned subsidiary The Delaware County Bank & Trust Company (the "Bank").
Where used in this report, the word "anticipate," "believe," "estimate,"
"expect," "intend," and similar words and expressions, as they relate to the
Corporation or the Bank or their respective management, identify forward-looking
statements. Such forward-looking statements reflect the current views of the
Corporation and are based on information currently available to the management
of the Corporation and the Bank and upon current expectations, estimates, and
projections about the Corporation and its industry, management's belief with
respect thereto, and certain assumptions made by management. These
forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties, and other factors that could cause actual
results to differ materially from those expressed or implied by such
forward-looking statements. Potential risks and uncertainties include, but are
not limited to: (i) significant increases in competitive pressure in the banking
and financial services industries; (ii) changes in the interest rate environment
which could reduce anticipated or actual margins; (iii) changes in political
conditions or the legislative or regulatory environment; (iv) general economic
conditions, either nationally or regionally (especially in central Ohio),
becoming less favorable than expected resulting in, among other things, a
deterioration in credit quality of assets; (v) changes occurring in business
conditions and inflation; (vi) changes in technology; (vii) changes in monetary
and tax policies; (viii) changes in the securities markets; and (ix) other risks
and uncertainties detailed from time to time in the filings of the Corporation
with the Commission.
The Corporation 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.
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