EXHIBIT 99
FOR IMMEDIATE RELEASE CONTACT:
Thursday July 20, 2006 John A. Ustaszewski
Chief Financial Officer
(740) 657-7000
DCB FINANCIAL CORP ANNOUNCES INCREASED
SECOND QUARTER 2006 EARNINGS
AND QUARTERLY DIVIDEND
LEWIS CENTER, Ohio, July 20 -- DCB Financial Corp, (OTC Bulletin Board DCBF)
announced earnings of $1.89 million, or $0.50 per basic and diluted share for
the three months ended June 30, 2006. This represents a $0.02, or 4.2% increase
from the $0.48 basic and diluted earnings per share reported for the second
quarter of 2005. The Corporation also reported earnings of $3.75 million, or
$0.98 per basic and diluted share for the six months ended June 30, 2006,
representing a $0.09, or 10.1% increase from the $0.89 earnings per share for
the same period in 2005. Return on assets for the second quarter 2006 was 1.07%,
while return on equity was 13.2%.
With the continued ability to grow earnings, The Board of Directors also
approved a $0.14 per share, payable August 15, 2006 to shareholders of record as
of July 31, 2006.
President and Chief Executive Officer Jeffrey T. Benton commented, "We are
pleased to report increased earnings per share in a challenging environment, due
to increased competition and rising interest rates. While our net interest
margin has experienced significant pressure due to these forces, our noninterest
income has increased and credit quality remains good. Our efficiency also
continues to be among the best in Ohio."
"The Bank continues to grow and our recent technology initiatives are doing
well. We successfully introduced Smart Deposit Solutions, our new remote check
capture product for commercial customers, and our new Smart ATM, with deposit
image transfer capabilities. We are currently in the planning stages for several
new branch locations to continue to take advantage of growth in our market area"
NET INCOME
Net income for the three months ended June 30, 2006 totaled $1.89 million,
compared to net income of $1.88 million for the same period in 2005. Earnings
per share was $.50 for the three months ended June 30, 2006 compared to $.48 for
the three months ended June 30, 2005. The increase in earnings is mainly
attributed to the increase in net interest income due to the growth in earning
assets, and an increase in noninterest income associated with core product
offerings.
NET INTEREST INCOME
Net interest income was $5.8 million for the three months ended June 30, 2006,
compared to $5.7 million for the same period in 2005. The $155 thousand increase
in the second quarter 2006 compared to 2005 was mainly attributed to an increase
in loan balances, as average earning assets increased by $47 million from the
second quarter 2005. The second quarter's net interest margin decreased to 3.57%
on a fully tax equivalent basis, from 3.74% during the second 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.
NONINTEREST INCOME
Total noninterest income increased $76, or 5.4%, for the three months ended June
30, 2006, compared to the same period in 2005. The change in non-interest
revenues from period to period is mainly attributed to an
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increase in service charges on deposit accounts coupled with an increase in
treasury management fees. With The Bank's continued efforts to provide
competitive products with real personal service, new products in the treasury
management and wealth management divisions have been added.
NONINTEREST EXPENSE
Total noninterest expense increased $312, or 8.0%, for the three months ended
June 30, 2006, compared to the same period in 2005. The increase was primarily
due to increases in salary and employee benefits expenses, professional expenses
incurred, and franchise tax expenses incurred, offset with a decline in
occupancy, advertising and other administrative expenses. The increase in salary
and benefits expense is mainly associated with the addition of revenue
generating staff in lending and wealth management, in addition to compliance and
credit personnel utilized to continue to improve the infrastructure supporting
the Company's growth. Additionally, the Company has experienced an increase in
consulting, auditing, and legal fees due to the expansion in the complexity of
its operations. The Company's quarterly efficiency ratio fell slightly to 57.5%
in the second quarter 2006 from 55.0% for the same period in 2005.
ANALYSIS OF SELECTED FINANCIAL CONDITION
The Corporation's assets totaled $704,481 at June 30, 2006, compared to $690,896
at December 31, 2005, an increase of $13,585, or 2.0%. Since June 30, 2005
assets have increased $40,273 or 6.1% from $664,208. 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 money market and wholesale deposits.
Cash and cash equivalents increased $4,366, mainly due to Federal funds sold,
from December 31, 2005 to June 30, 2006. Total securities decreased $2,744, or
2.8%, from $96,580 at December 31, 2005 to $93,836 at June 30, 2006. All
securities and investment securities classified as available for sale at June
30, 2006 totaled $93,836, 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 $36,604 at June 30, 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 increased $37,041, or 7.0%, from $527,831 at June 30, 2005 to
$564,872 at June 30, 2006. 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. The Bank has recently seen
loan balance declines from unscheduled payoffs in the commercial portfolio due
to irrational competition pricing and from problem loan resolutions, which has
improved overall credit quality. 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 $45,114, or 9.0%, from $503,906 at December 31, 2005 to
$549,020 at June 30, 2006. This growth is mainly attributed to the increase in
deposit activity from the Corporation's large public fund customers, brokered
certificates of deposit and money market accounts. The Bank had approximately
$37,175 in brokered certificates of deposit outstanding at June 30, 2006. The
slower growth of core deposits is attributed to the competition in the
Corporation's geographic area, where the increase in 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 growth in deposit liabilities.
Noninterest-bearing deposits decreased $5,041, or 7.3%, while interest-bearing
deposits increased $50,155, or 11.5%. Total borrowings decreased to $96,683 from
$100,570 during the three months ended June 30, 2006.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses totaled $420 for the three months ended June 30,
2006, compared to $520 for the same period in 2005. Non-accrual loans for the
three months ended June 30, 2006 were $1.393 million compared to $1.962 million
for the same period in 2005. Net charge-offs for the three months ended June 30,
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2006 decreased to $245, compared to $265 for the three months ended June 30,
2005. Annualized net charge-offs for the three months ended June 30, 2006 were
0.17% compared to 0.21% at June 30, 2005. Delinquent loans over thirty days from
period to period increased to 1.56% at June 30, 2006 from 1.37% at June 30,
2005. Non-performing loans to total loans declined to .25% of loans at June 30,
2006, from .38% at June 30, 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 $5,792, or 1.03% of total
loans at June 30, 2006, compared to $5,370, or 1.02% of total loans at June 30,
2005.
SELECTED CONSOLIDATED FINANCIAL INFORMATION (unaudited)
July 20, 2006 Press Release
DCB FINANCIAL CORP
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
July 30, December 31,
2006 2005
----------- -------------
(unaudited)
ASSETS
Cash and due from financial institutions $ 22,435 $ 18,069
Securities available for sale 93,836 96,580
Loans held for sale 1,606 1,640
Loans 563,266 553,045
Less allowance for loan losses (5,792) (5,535)
----------- -----------
Net loans 557,474 547,510
Real estate owned 244 386
Investment in FHLB stock 3,495 3,327
Premises and equipment, net 9,264 8,854
Investment in unconsolidated affiliates 968 614
Bank owned life insurance 9,146 8,898
Accrued interest receivable and other assets 6,013 5,018
----------- -----------
Total assets $ 704,481 $ 690,896
=========== ===========
LIABILITIES
Deposits
Noninterest-bearing $ 63,936 $ 68,977
Interest-bearing 485,084 434,929
----------- -----------
Total deposits 549,020 503,906
Federal funds purchased and other short-term borrowings 4,252 25,610
Federal Home Loan Bank advances 92,431 102,925
Accrued interest payable and other liabilities 716 2,201
----------- -----------
Total liabilities 646,419 634,642
SHAREHOLDERS' EQUITY
Common stock, no par value, 7,500,000 shares authorized,
4,273,200 issued at June 30, 2006 and December 31, 2005 3,780 3,780
Retained earnings 66,276 63,552
Treasury stock, at cost, 458,786 and 447,112
shares at June 30, 2006 and December 31, 2005 (10,841) (10,506)
Accumulated other comprehensive loss (1,153) (572)
----------- -----------
Total shareholders' equity 58,062 56,254
----------- -----------
Total liabilities and shareholders' equity $ 704,481 $ 690,896
=========== ===========
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DCB FINANCIAL CORP
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
-------- -------- -------- --------
INTEREST AND DIVIDEND INCOME
Loans $ 9,934 $ 7,836 $ 19,360 $ 15,053
Taxable securities 881 820 1,735 1,528
Tax-exempt securities 238 188 470 372
Federal funds sold and other 36 2 68 3
-------- -------- -------- --------
Total interest income 11,089 8,846 21,633 16,956
INTEREST EXPENSE
Deposits 4,241 2,178 7,887 3,997
Borrowings 999 974 2,074 1,822
-------- -------- -------- --------
Total interest expense 5,240 3,152 9,961 5,819
NET INTEREST INCOME 5,849 5,694 11,672 11,137
Provision for loan losses 420 520 980 990
-------- -------- -------- --------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 5,429 5,174 10,692 10,147
NONINTEREST INCOME
Service charges on deposit accounts 670 634 1,298 1,205
Trust department income 192 187 410 352
Net loss on sale of assets (5) (20) (10) (32)
Gains on sale of loans 123 122 175 171
Treasury management fees 162 113 315 215
Data processing servicing fees 85 76 168 148
Earnings on bank owned life insurance 120 148 248 244
Other 126 137 254 562
-------- -------- -------- --------
1,473 1,397 2,858 2,865
NONINTEREST EXPENSE
Salaries and other employee benefits 2,294 2,071 4,511 4,283
Occupancy and equipment 815 842 1,603 1,722
Professional services 157 88 275 270
Advertising 98 121 192 207
Postage, freight and courier 104 91 201 185
Supplies 42 60 128 125
State franchise taxes 129 107 263 215
Other 574 521 1,043 992
-------- -------- -------- --------
4,213 3,901 8,216 7,999
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 2,689 2,670 5,334 5,013
Federal income tax expense 795 786 1,580 1,494
-------- -------- -------- --------
NET INCOME $ 1,894 $ 1,884 $ 3,754 $ 3,519
======== ======== ======== ========
Basic and diluted earnings
per common share $ 0.50 $ 0.48 $ 0.98 $ 0.89
======== ======== ======== ========
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DCB FINANCIAL CORP
Selected Key Ratios and Other Financial Data
(Unaudited)
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
------------------ ------------------
6/30/06 6/30/05 6/30/06 6/30/05
------- ------- ------- -------
KEY FINANCIAL INFORMATION
- -------------------------
Net interest income $ 5,849 $ 5,694 $ 11,672 $ 11,137
Provision for loan and lease losses $ 420 $ 520 $ 980 $ 990
Non-interest income $ 1,473 $ 1,397 $ 2,858 $ 2,865
Non-interest expense $ 4,213 $ 3,901 $ 8,216 $ 7,999
Net income $ 1,894 $ 1,884 $ 3,754 $ 3,519
Loan balances (average) $567,346 $515,991 $564,937 $505,351
Deposit balances (average) $543,058 $483,427 $536,047 $479,091
Basic earnings per common share $ 0.50 $ 0.48 $ 0.98 $ 0.89
Diluted earnings per common share $ 0.50 $ 0.48 $ 0.98 $ 0.89
Weighted Average Shares Outstanding (000)
Basic 3,815 3,930 3,818 3,932
Diluted 3,822 3,932 3,824 3,935
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DCB FINANCIAL CORP
Selected Consolidated Financial Information
(Unaudited)
(Dollars in thousands, except per share data)
- --------------------------------------------------------------------------------
Three Months Ended Six Months Ended
------------------ -------------------
6/30/06 6/30/05 6/30/06 6/30/05
------- ------- ------- -------
KEY RATIOS
- ----------
Return on average assets 1.07% 1.15% 1.07% 1.10%
Return on average shareholders' equity 13.2% 13.6% 13.3% 12.8%
Annualized non-interest expense to average assets 2.38% 2.37% 2.33% 2.47%
Efficiency ratio 57.5% 55.0% 56.6% 57.1%
Net interest margin 3.57% 3.74% 3.59% 3.75%
Equity to assets at period end 8.24% 8.27% 8.24% 8.27%
Allowance for loan losses as a percentage of
period-end loans 1.03% 1.02% 1.03% 1.02%
Total allowance for losses on loans to
non-performing loans 416% 274% 416% 274%
Net charge-offs (annualized) as a percent
of average loans 0.17% 0.21% 0.26% 0.17%
Non-performing loans to total loans (net) 0.25% 0.38% 0.25% 0.38%
Delinquent loans (30+ days) 1.56% 1.37% 1.56% 1.37%
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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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