EXHIBIT 99.1
Ohio Legacy Corp Announces Third Quarter Results
WOOSTER, Ohio--(BUSINESS WIRE)--Nov. 5, 2004--Ohio Legacy Corp
(Nasdaq:OLCB), the parent of Ohio Legacy Bank, N.A., today reported
net earnings for the three months ended September 30, 2004, of
$400,000 or $0.19 per share, compared to $125,000, or $0.06 per share,
during the third quarter of 2003. At September 30, 2004, assets
totaled $182.8 million.
Key factors impacting the Company's results of operations during
the three months ended September 30, 2004, are summarized below:
-- Net income increased 77% from the second quarter of 2004 and
220% over the third quarter of 2003;
-- Net interest income increased 11% over the second quarter of
2004 and 46% over the third quarter last year;
-- Margin improved 24 basis points (bp) over the second quarter
of 2004, driven by a 21 bp decline in our cost of funds due to
significant maturities of high-costing certificates of deposit
(CDs);
-- The efficiency ratio improved over the second quarter and last
year as increases in net interest margin and other income
outweighed increases in noninterest expense;
-- Annualized return on equity improved to 9.86%; and,
-- The Bank's primary regulator terminated its regulatory order
against the Bank, which previously placed significant
restrictions on the Company's operations.
Impact of branch acquisition - The following section includes
forward-looking statements based on management's estimates. Actual
results may differ materially from these expectations.
The Bank purchased a full-service office in Wooster in late August
2004 and only one month of its impact is reported in the third
quarter. This branch addition should improve customer service and
attract new customers by providing another banking location in a
thriving retail district. Deposits acquired in the purchase
transaction totaled $15.3 million. The core deposit intangible asset
acquired totaled $327,000. Amortization of this intangible was $9,000
during the third quarter. Additionally, the $10.6 million CD portfolio
acquired was recorded at fair value. This resulted in an adjustment of
$211,000, which will be amortized through interest expense over the
life of the portfolio as a yield adjustment. Amortization of the fair
value adjustment totaled $17,000 during the third quarter and lowered
spread and margin by 4 bp.
Amortization of both adjustments in the fourth quarter of 2004
should be $76,000. Management believes the quarterly noninterest
expense impact of the branch, excluding intangible asset and fair
value amortization, will be $100,000.
Net Interest Income - During the three months ended September 30,
2004, net interest income increased to $1.5 million compared to $1.0
million during the third quarter of 2003, primarily as a result of a
higher average balance of interest-earning assets and a shift in asset
composition to higher yielding loans from securities. During the
quarter ended September 30, 2004, average loans as a percent of
average interest-earning assets was 76% compared to 69% during the
third quarter of 2003. The shift in asset mix helped to offset a lower
overall yield on assets.
During the third quarter of 2004, interest rate spread increased
to 3.21% compared to 2.72% in 2003 and 3.01% during the second quarter
of 2004. Net interest margin increased to 3.52% in 2004 compared to
3.06% in the third quarter of 2003 and 3.28% during the second quarter
of 2004.
Noninterest Income - Excluding gains and losses on sales of
securities, noninterest income increased $21,000, or 22% during the
third quarter of 2004 compared to 2003. The Bank did not have a
borrowing facility in place with the Federal Home Loan Bank until late
2003 and instead sold securities to fund loan growth in 2003. The
increase in overdraft fees and other service charges on deposit
accounts was due to higher volume of deposit customers and the related
fees associated with those accounts in 2004.
Noninterest Expense - Total noninterest expense increased 28% for
the three months ended September 30, 2004, compared to the three
months ending September 30, 2003, and 5% over the second quarter of
2004. The efficiency ratio improved to 71% during the third quarter of
2004 compared to 80% during the third quarter of 2003 and 75% during
the second quarter of 2004. Annualized noninterest expense as a
percent of average assets was 2.58% during the third quarter of 2004
compared to 2.54% during the third quarter of 2003 and 2.56% during
the second quarter of 2004.
Salaries and benefits were higher during the third quarter of
2004, reflecting a higher level of employment. The branch acquisition
increased salaries and benefits by $15,000 during the third quarter
and will add approximately $50,000 of compensation expense per
quarter. Management expects salaries and benefits expense to continue
to increase in 2005 as a number of sales and back office positions
need to be filled in order to meet the Company's growth objectives,
implement and monitor sections of the Sarbanes-Oxley Act of 2002 and
to ensure safe and sound management of operational, credit and
interest rate risks.
Occupancy and equipment expense was higher in 2004 due to rent
expense from the addition of an operations center in late 2003 and the
branch acquisition in August 2004. These transactions also increased
depreciation expense through related leasehold improvements. The
Company is planning to launch another banking office in the Stark
County Region in 2005, which will require capital expenditures and
result in additional depreciation expense. The Company's current
strategy is to launch or acquire at least one banking office each
fiscal year.
Data processing costs are higher in 2004 due to an increase in the
volume of transactions and accounts resulting from the growth in our
loan and deposit portfolios. Additional data processing expenses were
incurred during the third quarter of 2004 in connection with the
branch acquisition.
Loans and Asset Quality - At September 30, 2004, the loan
portfolio (excluding the allowance for loan losses) was $130.7
million, an increase of $20.8 million, or 19%, from December 31, 2003.
The strongest increases during the nine months of 2004 came in the
commercial real estate and residential real estate categories, with
each increasing 38% and 16%, respectively. Demand for loans subsided
during the third quarter of 2004 and a large construction project was
completed and the related loan matured. The loan portfolio increased
$1.3 million, net, during the third quarter of 2004. Nearly 59% of the
growth in the residential real estate loan category during the first
nine months of 2004 is attributable to commercial credits secured by
residential real estate, which are mostly variable rate and currently
yield 100 basis points higher than conventional owner-occupied
residential real estate loans in the Bank's portfolio.
At September 30, 2004, the allowance for loan losses was $1.3
million or 0.98% of total loans, an increase from $1.1 million, or
1.02% of loans at December 31, 2003. Nonperforming loans (nonaccrual
and impaired loans) totaled $273,000, or 0.21% of total loans,
compared to $154,000 at December 31, 2003. Annualized net charge-offs
during the first nine months of 2004 equated to 0.15% of average loans
during that period.
Deposits - Deposits increased $19.1 million during 2004 to $142.2
million at September 30, 2004. Purchased deposits totaled $15.3
million. Organically, deposits increased $3.8 million during the first
nine months of 2004 despite the loss of $8.0 million of CDs during
June and August. Those balances were primarily part of a large pool of
a single CD product that began to mature early in the second quarter
of 2004. At September 30, 2004, approximately $1.6 million of this
product remained in the CD portfolio. At December 31, 2003, this
product totaled $27.1 million.
Core deposits (checking and savings accounts) increased $400,000
during the third quarter of 2004 and by $8.0 million year to date.
Excluding the core deposits acquired in the branch purchase, growth
totaled $3.1 million during the first nine months of 2004. The
increase in core deposit balances in 2004 has been driven by
interest-bearing checking accounts. Organic growth in noninterest
checking accounts this year has been offset by decreases in savings
account balances. However, such a shift to lower-costing deposits
serves to improve interest rate spread and margin.
Regulatory Matters - On June 18, 2002, the Bank and its primary
regulator, the OCC, entered into an agreement to address certain
issues identified during the OCC's examination of the Bank in January
2002. While under the agreement, the Bank's average asset growth was
restricted to no greater than 22% and the Bank was required to meet
higher minimum capital requirements in addition to other regulatory
restrictions. On October 1, 2004, the OCC terminated the agreement as
the Bank was found to be materially in compliance with the agreement's
requirements. As of that date, the Bank was no longer bound by the
restrictions imposed by the OCC Agreement.
ABOUT OHIO LEGACY CORP
Ohio Legacy Corp is a bank holding company headquartered in
Wooster, Ohio. Its subsidiary, Ohio Legacy Bank, N.A., provides
financial services to small businesses and consumers though four
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
As of September 30, 2004, and December 31, 2003
September 30, December 31,
2004 2003
------------- -------------
(unaudited)
ASSETS
Cash and due from banks $ 4,020,858 $ 4,370,383
Federal funds sold and interest-bearing
deposits in financial institutions 10,735,371 3,814,436
------------- -------------
Cash and cash equivalents 14,756,229 8,184,819
Securities available for sale 32,872,940 38,054,644
Securities held to maturity (fair value of
$649,423) 649,423 -
Loans, net 129,457,491 108,792,368
Federal bank stock 1,366,950 1,039,200
Premises and equipment, net 2,169,768 2,036,544
Other real estate owned - 70,000
Intangible asset 317,750 -
Accrued interest receivable and other
assets 1,225,813 880,904
------------- -------------
Total assets $182,816,364 $159,058,479
============= =============
LIABILITIES
Deposits:
Noninterest-bearing demand $ 11,621,269 $ 7,133,620
Interest-bearing demand 13,160,954 8,962,743
Savings 38,940,343 39,667,717
Certificates of deposit, net 78,565,210 67,387,021
------------- -------------
Total deposits 142,287,776 123,151,101
Federal Home Loan Bank advances 18,664,432 14,759,314
Subordinated debentures 3,325,000 3,325,000
Capital lease obligations 970,812 976,643
Accrued interest payable and other
liabilities 701,498 801,954
------------- -------------
Total liabilities 165,949,518 143,014,012
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 500,000
shares authorized, none outstanding - -
Common stock, no par value, 5,000,000
shares authorized, 2,120,720 and
2,118,000 shares issued and outstanding
at September 30, 2004, and
December 31, 2003, respectively 17,729,155 17,701,955
Accumulated deficit (707,585) (1,555,585)
Accumulated other comprehensive income
(loss) (154,724) (101,903)
------------- -------------
Total shareholders' equity 16,866,846 16,044,467
------------- -------------
Total liabilities and shareholders'
equity $182,816,364 $159,058,479
============= =============
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and nine months ended September 30, 2004 and 2003
For the three months ended For the nine months ended
September 30, September 30,
-------------------------- -------------------------
2004 2003 2004 2003
------------- ------------ ------------ ------------
Interest income:
Loans, including
fees $ 2,075,429 $ 1,621,437 $ 5,862,717 $ 4,566,173
Securities 311,123 278,570 981,559 1,072,785
Interest-bearing
deposits and
federal funds
sold 40,240 23,664 91,048 87,180
------------- ------------ ------------ ------------
Total interest
income 2,426,792 1,923,671 6,935,324 5,726,138
Interest expense:
Deposits 672,052 770,067 2,142,855 2,397,339
Other borrowings 237,229 111,346 659,076 331,063
------------- ------------ ------------ ------------
Total interest
expense 909,281 881,413 2,801,931 2,728,402
------------- ------------ ------------ ------------
Net interest
income 1,517,511 1,042,258 4,133,393 2,997,736
Provision for
loan losses 71,000 146,000 306,000 303,500
------------- ------------ ------------ ------------
Net interest
income after
provision for
loan losses 1,446,511 896,258 3,827,393 2,694,236
Noninterest
income:
Service charges
and other fees 110,335 89,094 310,700 241,350
Gain (loss) on
sales of
securities, net (5,237) 41,753 7,910 116,242
Other income 2,610 3,145 7,167 8,121
------------- ------------ ------------ ------------
Total
noninterest
income 107,708 133,992 325,777 365,713
Noninterest
expense:
Salaries and
benefits 531,797 423,008 1,482,402 1,159,050
Occupancy and
equipment 166,591 143,459 468,051 420,430
Professional fees 109,288 80,707 305,911 290,512
Franchise tax 56,034 44,921 177,440 139,918
Data processing 111,819 84,616 323,311 237,192
Marketing and
advertising 38,416 22,860 122,069 76,757
Stationery and
supplies 28,756 21,299 67,717 61,394
Amortization of
intangible asset 9,042 - 9,042 -
Other expenses 102,476 84,380 349,227 253,696
------------- ------------ ------------ ------------
Total
noninterest
expense 1,154,219 905,250 3,305,170 2,638,949
------------- ------------ ------------ ------------
Earnings before
income tax
expense 400,000 125,000 848,000 421,000
Income tax
expense - - - -
------------- ------------ ------------ ------------
Net earnings $ 400,000 $ 125,000 $ 848,000 $ 421,000
============= ============ ============ ============
Basic earnings
per share $ 0.19 $ 0.06 $ 0.40 $ 0.20
Diluted earnings
per share $ 0.19 $ 0.06 $ 0.39 $ 0.20
Basic weighted
average shares
outstanding 2,120,720 2,115,700 2,119,540 2,106,359
Diluted weighted
average shares
outstanding 2,156,897 2,119,627 2,172,605 2,108,479
OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)
2004 2003
----------------------------- -------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
--------- --------- --------- --------- ---------
Cash and cash
equivalents $ 14,756 $ 6,760 $ 11,541 $ 8,185 $ 13,533
Securities 33,522 33,054 36,754 38,055 29,972
Loans, net of fees 130,745 129,405 117,463 109,914 100,536
Allowance for loan
losses (1,288) (1,226) (1,189) (1,122) (1,063)
Premises and
equipment, net 2,170 1,935 1,988 2,036 2,066
Core deposit
intangible 318 - - - -
Other assets 2,593 2,603 2,293 1,990 1,920
--------- --------- --------- --------- ---------
Total assets $182,816 $172,531 $168,850 $159,058 $146,964
========= ========= ========= ========= =========
Noninterest-bearing
demand $ 11,621 $ 7,800 $ 7,095 $ 7,133 $ 6,028
Interest-bearing
demand 13,161 11,702 9,214 8,963 8,622
Savings 38,941 38,987 38,443 39,668 42,361
Certificates of
deposit 78,565 70,228 73,071 67,387 64,227
--------- --------- --------- --------- ---------
Total deposits 142,288 128,717 127,823 123,151 121,238
Other borrowings 22,960 27,329 23,697 19,061 9,304
Other liabilities 701 685 777 802 673
--------- --------- --------- --------- ---------
Total liabilities 165,949 156,731 152,297 143,014 131,215
Shareholders' equity 16,867 15,800 16,553 16,044 15,749
--------- --------- --------- --------- ---------
Total liabilities
and
shareholders'
equity $182,816 $172,531 $168,850 $159,058 $146,964
========= ========= ========= ========= =========
LOAN PORTFOLIO:
- ---------------
Commercial $ 11,751 $ 11,733 $ 11,491 $ 12,699 $ 12,600
Residential real
estate 49,459 48,449 43,865 42,511 38,564
Multifamily
residential 10,119 10,049 9,690 8,121 6,255
Commercial real
estate 33,856 32,338 28,206 24,457 23,342
Construction 13,591 15,331 13,104 11,791 8,990
Consumer and home
equity 12,127 11,677 11,286 10,511 10,952
Net deferred loan
fees (158) (172) (179) (176) (167)
--------- --------- --------- --------- ---------
Loans $130,745 $129,405 $117,463 $109,914 $100,536
========= ========= ========= ========= =========
QUARTERLY AVERAGES:
- -------------------
Fed funds and
securities (1) $ 40,794 $ 40,745 $ 43,815 $ 36,135 $ 41,890
Loans 131,248 125,102 111,273 106,260 93,287
Total interest-
earning assets 172,042 165,847 155,088 142,395 135,177
Total assets 178,296 172,672 161,396 148,516 142,019
Total assets, year
to date 170,997 167,036 161,396 141,946 139,617
Interest-bearing
deposits 124,158 123,176 117,658 115,275 113,942
Other borrowings and
leases 27,982 25,203 19,903 10,682 4,694
Total interest-
bearing liabilities 152,140 148,379 137,561 125,957 118,636
Shareholders' equity 16,235 16,093 16,182 15,856 16,394
Shareholders'
equity, year to
date 16,167 16,139 16,182 16,007 16,057
(1) Includes federal agency stock not classified in securities on the
consolidated balance sheets and interest-earning deposits in financial
institutions
OHIO LEGACY CORP
QUARTERLY STATEMENTS OF OPERATIONS
(In thousands, except per share data and ratios)
2004 2003
-------------------------- ----------------
For the three months ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30
-------- -------- -------- ------- --------
Interest income $ 2,427 $ 2,321 $ 2,188 $2,071 $ 1,923
Interest expense (910) (956) (937) (898) (881)
-------- -------- -------- ------- --------
Net interest income 1,517 1,365 1,251 1,173 1,042
Provision for loan losses (71) (150) (85) (114) (146)
Gain (Loss) on sales of
securities (5) - 13 (3) 42
Noninterest income 113 115 90 105 92
Noninterest expense (1,154) (1,104) (1,047) (973) (905)
-------- -------- -------- ------- --------
Net income $ 400 $ 226 $ 222 $ 188 $ 125
======== ======== ======== ======= ========
Income per share, diluted $ 0.19 $ 0.10 $ 0.10 $ 0.08 $ 0.06
Common and dilutive
shares, avg. 2,157 2,181 2,181 2,178 2,120
SELECTED RATIOS:
- ----------------
Net interest margin (1) 3.52% 3.28% 3.23% 3.28% 3.06%
Yield on interest-earning
assets 5.58 5.59 5.66 5.77 5.67
Cost of funds 2.37 2.58 2.73 2.84 2.95
Interest rate spread (2) 3.21 3.01 2.93 2.93 2.72
Efficiency ratio (3) 70.80 74.59 78.09 76.00 79.70
Allowance as a percent of
loans 0.98 0.95 1.01 1.02 1.06
Net loans as a percent of
deposits 90.98 99.58 90.96 88.34 82.00
Annualized net charge-offs
to loans 0.03 0.36 0.06 0.21 0.20
Annualized noninterest
income to average assets
(4) 0.25 0.27 0.22 0.29 0.26
Annualized noninterest
expense to average assets 2.58 2.56 2.60 2.61 2.54
Annualized return on
average assets 0.89 0.52 0.55 0.51 0.35
Annualized return on
average equity 9.86 5.62 5.49 4.74 3.05
(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
CONTACT: Ohio Legacy Corp
L. Dwight Douce or Eric S. Nadeau, 330-263-1955
http://www.ohiolegacycorp.com