Exhibit 99.1
Ohio Legacy Corp Announces Second Quarter Earnings of
$0.08 Per Share Versus Loss of -$0.07 Per Share
WOOSTER, Ohio--(BUSINESS WIRE)--Aug. 7, 2003--Ohio Legacy Corp
(NASDAQ:OLCB), the parent of Ohio Legacy Bank, N.A. ("Bank"), today
reported net income for the three months ending June 30, 2003, of
$160,000 or $0.08 per share, an 18% increase in net income from the
first quarter of 2003. The Company incurred a loss of ($64,000) or
($0.07) per share during the second quarter of 2002. During the second
quarter of 2003, net loans increased $5.7 million to $87.4 million and
deposits increased $2.5 million to $118.6 million.
Net interest income - During the three months ended June 30, 2003,
net interest income was $1.0 million compared to $641,000 during the
second quarter of 2002, primarily as a result of a higher balance of
interest-earning assets. Net interest margin improved to 3.09% in 2003
from 2.38% in the second quarter of 2002 and 2.90% during the first
quarter of 2003. Interest rate spread improved to 2.75% during the
second quarter of 2003 compared to 2.19% during the second quarter of
2002 and 2.53% during the first quarter of 2003. The yield on
interest-earning assets fell to 5.85% during the second quarter of
2003 compared to 6.24% in the second quarter of 2002. A shift from
securities to loans during the second quarter of 2003 kept the yield
steady compared to the 5.82% earned during the first quarter of 2003.
The Company's cost of funds declined to 3.10% in the second quarter of
2003, compared to 4.05% in the second quarter of 2002 and 3.29% in the
first quarter of 2003, as approximately 17% of the certificate of
deposit portfolio repriced downward during the second quarter of 2003.
Noninterest income - Total noninterest income was $105,000 for the
three months ended June 30, 2003, compared to $62,000 for the same
period in 2002. The 2003 amount includes $17,000 of gains from the
sale of securities. Annualized noninterest income, excluding gains on
securities sales, improved as a percent of average assets to 0.25%
during the second quarter of 2003 compared to 0.22% during the second
quarter of 2002 and 0.20% during the first quarter of 2003.
Noninterest Expense - Total noninterest expense increased to
$873,000 for the three months ended June 30, 2003, as compared to
$642,000 for the same period in 2002 and $856,000 in the first quarter
in 2003. The Company's efficiency ratio improved to 79.8% during the
second quarter of 2003 compared to 91.3% during the second quarter of
2002 and 84.4% during the first quarter of 2003 while annualized
noninterest expense as a percent of average assets increased to 2.51%
in the second quarter of 2003 compared to 2.26% in 2002 and 2.49%
during the first quarter of 2003. This dichotomy is caused by the
significant improvement in the Company's net interest margin as a
result of falling deposit rates outweighing the increase in overhead
expenses and slower asset growth.
Salaries and benefits are higher in 2003 reflecting a higher level
of employment at the Bank, including the hiring of two new members of
management and additional support staff hired during the second half
of 2002 to support the lending function and the Millersburg branch
launched in early 2002. Salaries and benefits will continue to
increase as the Bank hired a Chief Operations Officer ("COO") in July
2003 and plans to hire additional lenders during the second half of
this year. However, these investments should provide for higher
profitability in the future through the increase in loan volume with
the addition of lenders and improvement in overhead efficiency to be
gained through the dedicated oversight and standardization of
operations in each of the Bank's offices by the COO. Commenting on
future growth plans, L. Dwight Douce, President and CEO of the Company
said, "Our strategic plan calls for sound but strong growth in assets
and profitability. We are laying the foundation for an efficient and
flexible Bank through the hiring of key management members.
Additionally, we plan to focus our lending team on further penetration
of our existing market areas by hiring experienced and competent
commercial lending officers."
Professional fees have increased as the Bank utilized outside
consultants to assist management with the OCC Agreement, described
below, and enhance the corporate governance and oversight
responsibilities of management and the board of directors under the
requirements of the Sarbanes-Oxley Act and new rules promulgated by
the National Association of Securities Dealers. Management expects
professional fees to increase over prior year comparable quarters as
the Company continues to address the compliance and information
technology reviews required by the OCC Agreement.
Loans - At June 30, 2003, the loan portfolio (before the allowance
for loan losses) was $88.4 million, an increase of $9.2 million from
December 31, 2002, and $5.7 million during the quarter. "We are
pleased with the performance of our loan portfolio during the second
quarter of 2003," added Mr. Douce. "Even as we experience competitive
pressures as a result of continued low interest rates, we were able to
grow all loan types during the second quarter, with our commercial
credits leading the increase. Additionally, our loan portfolio
continued to yield over 7% during the second quarter. However, the
reduction in short-term rates, especially the Prime rate, in late June
will have some impact on our loan yield. While only 20% of our loan
portfolio is based on Prime, the overall rate environment will
probably lower the yields on new loans added during the third
quarter."
Asset Quality - The Company's provision for loan losses was
$78,000 during the three months ended June 30, 2003, compared to
$125,000 during the quarter ended June 30, 2002, and $80,000 during
the quarter ended March 31, 2003. However, the allowance for loan
losses as a percentage of total loans increased to 1.09% at June 30,
2003, compared to 1.06% at December 31, 2002, and 1.07% at March 31,
2003. Net charge-offs during the three months ended June 30, 2003,
totaled $3,000. At June 30, 2003, the Company had three nonperforming
assets with total balances of $35,000, including $33,000 in nonaccrual
status. Mr. Douce responded, "While we did see loans move into the
ninety day past due and nonaccrual categories during the second
quarter, we're comfortable with the quality of assets in our loan
portfolio and its resilience to the challenging economic times and
increasing unemployment."
Regulatory Matters - On June 18, 2002, Ohio Legacy Bank and the
Office of the Comptroller of the Currency ("OCC") entered into an
agreement ("OCC Agreement") to address certain issues identified
during the OCC's examination of the Bank in January 2002. The Bank is
enhancing its comprehensive staffing plan, as required by the OCC
Agreement, and is working to improve internal controls related to
operations and information security. Among other requirements, the OCC
Agreement restricts the Bank's average asset growth to no more than 5%
each calendar quarter.
About Ohio Legacy Corp
Ohio Legacy Corp is a bank holding company headquartered in
Wooster, Ohio. Its operating subsidiary, Ohio Legacy Bank, N.A.,
provides financial services to small businesses and consumers though
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 financial 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.
OHIO LEGACY CORP
CONSOLIDATED BALANCE SHEETS
June 30, 2003, and December 31, 2002
June 30, December 31,
2003 2002
------------- -------------
(unaudited)
ASSETS
Cash and due from banks $6,120,308 $5,301,451
Federal funds sold 9,745,000 10,418,000
------------- -------------
Cash and cash equivalents 15,865,308 15,719,451
Securities available for sale 35,543,333 38,722,169
Loans, net 87,405,580 78,291,832
Federal Reserve Bank stock 537,900 318,900
Premises and equipment, net 2,116,961 2,185,108
Accrued interest receivable and other
assets 1,012,021 810,017
------------- -------------
Total assets $142,481,103 $136,047,477
============= =============
LIABILITIES
Deposits:
Noninterest-bearing demand $6,078,109 $4,992,413
Interest-bearing demand 7,862,407 7,206,953
Savings 42,141,977 39,886,817
Certificates of deposit 62,526,410 62,805,167
------------- -------------
Total deposits 118,608,903 114,891,350
Other borrowed funds - 105,000
Trust preferred securities 3,325,000 3,325,000
Capital lease obligations 980,174 983,439
Accrued interest payable and other
liabilities 3,236,170 1,739,633
------------- -------------
Total liabilities 126,150,247 121,044,422
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 500,000
shares authorized, none outstanding - -
Common stock, no par value, 5,000,000
shares authorized, 2,115,700 and
1,965,700 shares issued and
outstanding at June 30, 2003, and
December 31, 2002, respectively 17,678,955 16,546,465
Accumulated deficit (1,868,585) (2,164,585)
Accumulated other comprehensive income 520,486 621,175
------------- -------------
Total shareholders' equity 16,330,856 15,003,055
------------- -------------
Total liabilities and shareholders'
equity $142,481,103 $136,047,477
============= =============
Book value per share, end of period $7.71 $7.63
============= =============
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ending June 30, 2003 and 2002
Three Months Ending Six Months Ending
June 30, June 30,
----------------------- -----------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Interest income:
Loans $1,517,081 $1,259,810 $2,944,736 $2,312,449
Securities 353,978 381,649 794,215 646,456
Federal funds sold
and other 33,669 40,118 63,516 73,158
----------- ----------- ----------- -----------
Total interest
income 1,904,728 1,681,577 3,802,467 3,032,063
Interest expense:
Deposits 787,398 934,415 1,627,272 1,746,423
Other borrowings 111,111 106,029 223,754 131,255
----------- ----------- ----------- -----------
Total interest
expense 898,509 1,040,444 1,851,026 1,877,678
----------- ----------- ----------- -----------
Net interest income 1,006,219 641,133 1,951,441 1,154,385
Provision for loan
losses 77,500 125,000 157,500 250,956
----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses 928,719 516,133 1,793,941 903,429
Noninterest income:
Service charges and
other fees 85,696 59,653 152,256 116,211
Gain on sales of
securities 16,640 - 74,489 -
Other income 2,322 2,042 4,976 3,823
----------- ----------- ----------- -----------
Total other income 104,658 61,695 231,721 120,034
Noninterest expense:
Salaries and benefits 355,882 277,839 736,042 514,167
Occupancy and
equipment 137,797 122,042 276,971 219,720
Professional fees 129,541 50,580 209,805 97,418
Franchise tax 46,197 22,106 94,997 48,369
Data processing 76,515 58,572 152,576 110,688
Marketing and
advertising 25,650 21,980 53,897 37,848
Stationery and
supplies 21,339 24,525 40,095 49,078
Other expenses 80,456 64,067 165,279 111,835
----------- ----------- ----------- -----------
Total noninterest
expense 873,377 641,711 1,729,662 1,189,123
----------- ----------- ----------- -----------
Income before income
taxes 160,000 (63,883) 296,000 (165,660)
Income tax benefit
(expense) - - - -
----------- ----------- ----------- -----------
Net income (loss) $160,000 $(63,883) $296,000 $(165,660)
=========== =========== =========== ===========
Basic earnings (loss)
per share $0.08 $(0.07) $0.14 $(0.17)
Diluted earnings (loss)
per share $0.08 $(0.07) $0.14 $(0.17)
Basic weighted average
shares outstanding 2,115,700 965,500 2,101,612 965,500
Diluted weighted
average shares
outstanding 2,118,674 965,500 2,103,450 965,500
OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)
2003 2002
------------------- -----------------------------------
June 30 March 31 Dec. 31 Sept. 30 June 30
---------- ---------- ---------- ---------- ----------
Cash and cash
equivalents $15,865 $8,349 $15,719 $9,816 $9,616
Securities 35,543 40,562 38,722 30,750 35,847
Loans 88,372 82,636 79,129 75,509 70,604
Allowance for
loan losses (966) (891) (837) (739) (635)
Premises and
equipment, net 2,117 2,146 2,185 2,231 2,287
Other assets 1,550 5,174 1,129 1,183 1,146
---------- ---------- ---------- ---------- ----------
Total assets $142,481 $137,976 $136,047 $118,750 $118,865
========== ========== ========== ========== ==========
Noninterest-
bearing demand $6,078 $5,264 $4,992 $3,882 $5,620
Interest-bearing
demand 7,862 6,537 7,207 5,823 5,678
Savings 42,142 40,559 39,886 38,208 41,773
Certificates of
deposit 62,527 63,751 62,806 58,188 53,861
---------- ---------- ---------- ---------- ----------
Total deposits 118,609 116,111 114,891 106,101 106,932
Other borrowings 4,305 4,307 4,413 4,415 4,416
Other
liabilities 3,236 1,448 1,740 847 576
---------- ---------- ---------- ---------- ----------
Total
liabilities 126,150 121,866 121,044 111,363 111,924
Shareholders'
equity 16,331 16,110 15,003 7,387 6,941
---------- ---------- ---------- ---------- ----------
Total
liabilities
and
shareholders'
equity $ 142,481 $ 137,976 $136,047 $ 118,750 $ 118,865
========== ========== ========== ========== ==========
LOAN PORTFOLIO:
- ----------------
Commercial $12,924 $12,196 $10,206 $10,323 $8,924
1-4 family
residential 32,483 31,455 31,346 29,965 29,376
Multifamily
residential 6,464 6,383 6,732 5,702 4,268
Commercial real
estate 21,006 20,051 18,385 18,262 17,469
Construction 5,949 4,675 4,636 3,985 3,751
Consumer and
home equity 9,677 8,022 7,926 7,371 6,908
Net deferred
loan fees (131) (146) (102) (99) (92)
---------- ---------- ---------- ---------- ----------
Loans $88,372 $82,636 $79,129 $75,509 $70,604
========== ========== ========== ========== ==========
QUARTERLY
AVERAGES:
- ----------
Fed funds and
securities (1) $46,243 $50,804 $40,816 $38,039 $39,063
Loans 84,898 79,346 75,692 73,068 68,945
Total interest-
earning assets 131,141 130,150 116,508 111,107 108,008
Total assets 139,038 137,793 124,255 118,736 113,814
Total assets,
year to date 138,109 112,138 102,780
Interest-bearing
deposits 111,936 111,305 107,062 101,680 98,515
Other borrowings
and leases 4,306 4,405 4,414 4,416 4,420
Total interest-
bearing
liabilities 116,242 115,710 111,476 106,096 102,935
Shareholders'
equity 16,220 15,557 7,325 7,164 6,757
Shareholders'
equity, year to
date 15,667 6,998 6,750
(1) Includes Federal Reserve Bank stock not classified in securities
on the consolidated balance sheets
OHIO LEGACY CORP
QUARTERLY STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
2003 2002
---------------- ------------------------
For the three months ending June 30 March 31 Dec. 31 Sept. 30 June 30
------- -------- ------- -------- -------
Interest income $1,905 $1,898 $1,800 $1,740 $1,681
Interest expense (899) (953) (973) (981) (1,040)
------- -------- ------- -------- -------
Net interest income 1,006 945 827 759 641
Provision for loan losses (78) (80) (98) (104) (125)
Noninterest income 105 127 73 67 62
Noninterest expense (873) (856) (731) (678) (642)
------- -------- ------- -------- -------
Net income (loss) $160 $136 $71 $44 $(64)
======= ======== ======= ======== =======
Income (Loss) per share,
diluted $0.08 $0.07 $0.07 $0.05 $(0.07)
Common and dilutive shares 2,119 2,088 1,042 966 966
SELECTED RATIOS:
- ----------------
Net interest margin (1) 3.09% 2.90% 2.84% 2.73% 2.38%
Yield on interest-earning
assets 5.85% 5.82% 6.18% 6.27% 6.24%
Cost of funds 3.10% 3.29% 3.49% 3.70% 4.05%
Interest rate spread (2) 2.75% 2.53% 2.69% 2.57% 2.19%
Efficiency ratio (3) 79.8% 84.4% 81.2% 82.0% 91.3%
Allowance as a percent of
loans 1.09% 1.07% 1.06% 0.98% 0.90%
Net loans as a percent of
deposits 73.7% 70.4% 68.1% 70.5% 65.4%
Annualized net charge-offs to
loans 0.01% 0.13% 0.00% 0.00% 0.00%
Annualized noninterest income
to average assets (4) 0.25% 0.20% 0.24% 0.23% 0.22%
Annualized noninterest
expense to average assets 2.51% 2.49% 2.35% 2.28% 2.26%
Annualized return on average
assets 0.46% 0.39% 0.23% 0.15% NM
Annualized return on average
equity 3.95% 3.50% 3.86% 2.46% 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, excluding gains on securities sales
(4) Excludes gains on securities sales
NM Not meaningful
CONTACT: Ohio Legacy Corp
L. Dwight Douce or Eric S. Nadeau, 330-263-1955
http://www.ohiolegacycorp.com