Exhibit 99.1
Ohio Legacy Corp Announces Third Quarter Results
WOOSTER, Ohio--(BUSINESS WIRE)--Nov. 2, 2005--Ohio Legacy Corp
(NASDAQ:OLCB), parent company of Ohio Legacy Bank, N.A., today reported net
earnings for the three months ended September 30, 2005, of $140,000, or $0.06
per share, compared to $400,000, or $0.19 per share, during the third quarter of
2004. Earnings before federal income tax expense were $211,000 during the third
quarter of 2005 compared to $400,000 in 2004. The Company did not recognize
federal income tax expense in 2004 due to a valuation allowance on its deferred
tax assets. Net earnings for the first nine months of 2005 totaled $406,000, or
$0.19 per share. Assets totaled $206.6 million at September 30, 2005.
The following key items summarize the Company's financial results during
the third quarter of 2005:
-- The loan portfolio increased $8.1 million, resulting in a 16% increase
for the nine month period
-- The deposit portfolio decreased $4.3 million due to runoff in money
market accounts
-- Spread fell slightly and margin was flat due to an increase in cost of
funds
-- Net interest income increased $171,000 from the third quarter of 2004
and $40,000 from the linked quarter
-- Noninterest expense fell 2% from the second quarter of 2005
-- A provision for loan losses of $103,000 was recorded in the third
quarter, compared to $15,000 in the second quarter of 2005
Net Interest Income - During the three months ended September 30, 2005, net
interest income grew 11% to $1.7 million from $1.5 million in the third quarter
of 2004. Net interest margin was 3.50% in the third quarter of 2005, flat
compared to 3.52% in the third quarter of 2004 and 3.49% in the second quarter
of 2005. Interest rate spread was 3.16% in 2005 compared to 3.21% in the
year-ago period, which is reflective of the cost of funds increasing faster than
in the yield on assets. The yield on performing assets was 6.02% during the
third quarter of 2005, an increase of 14 basis points from the linked-quarter
and 44 basis points from the third quarter of 2004. The cost of funds increased
17 basis points during the third quarter of 2005 due to a shift in the mix of
funds, which became more dependent on certificates of deposits and borrowings,
and increasing rates on those funds.
Noninterest Income - Service charges on deposit accounts increased to
$138,000 from $110,000 in 2004 due to a higher volume of overdraft fees and
returned check charges. A loss on disposal of fixed assets totaled $3,000 during
the third quarter of 2005. A loss on the sale of securities was recorded in 2004
for $5,000.
Noninterest Expense - Total noninterest expense was $1.5 million in the
third quarter of 2005 compared to $1.2 million in the third quarter of 2004.
Noninterest expense in the third quarter of 2005 was slightly lower than the
second quarter of 2005. Compared to 2004, salaries were higher in 2005 due to
the addition of a branch in Wooster in the third quarter of 2004, of which only
one month of personnel costs were recorded in 2004. Additionally, personnel
expenses in 2005 increased due the hiring of operations employees in the first
half of 2005 and the employment of branch personnel in the third quarter of 2005
for the Company's fifth banking office in North Canton. This banking office
opened on October 24, 2005. Personnel expense is expected to increase in the
fourth quarter of 2005 as the Company hired a Chief Deposit Executive in October
2005 and to reflect a full quarter of employment costs related to the North
Canton personnel.
Occupancy and equipment expenses increased with the addition of the Wooster
Milltown banking office in August 2004. Rent and depreciation expense increased
$13,000 each in the third quarter of 2005. The Company expects occupancy and
equipment expense to increase during the fourth quarter of 2005 as a result of
the launch of the North Canton banking office.
Professional fees were higher in the first half of 2005 due to management
succession costs, consulting fees incurred to assist management with performing
due diligence on information technology service contracts and audit fees as a
result of the Sarbanes-Oxley Act. Professional fees decreased during the third
quarter of 2005 as these costs abated.
Data processing expense increased during 2005 as a result of higher
transaction volumes, more deposit and loan accounts and additional services
offered to customers, including set-up costs for internet banking and online
bill payment. Data processing expense in the third quarter of 2005 decreased
from the second quarter of 2005 as the Company realized a full quarter of the
benefit from pricing discounts related to the renewal of information technology
service agreements, which became effective late in the second quarter of 2005.
Intangible asset amortization relates to core deposit and other intangibles
recognized with the acquisition of the Milltown banking office in Wooster in
August 2004. Amortization in the third quarter of 2005 was $52,000 compared to
$9,000 in 2004. The third quarter of 2004 reflects only one month of
amortization.
Loans and Asset Quality - At September 30, 2005, the loan portfolio, net of
the allowance for loan losses and deferred fees, totaled $153.7 million, an
increase of $8.1 million from June 2005. The loan portfolio has increased $21.6
million, or 16%, during the nine months of 2005. During the third quarter of
2005, the largest increase in loans came in the commercial real estate
portfolio, which grew $5.2 million. Loans secured by residential real estate and
commercial loans increased $1.4 million and $1.2 million, respectively, during
the third quarter.
The weighted average rate of loans originated during the third quarter of
2005 was 7.02%. This compares favorably to the 6.53% rate earned on the rest of
the portfolio. At September 30, 2005, approximately 21% of the loan portfolio
reprices with changes in the Prime rate and 41% of the portfolio is indexed to
the three-year constant maturity Treasury note rate. Approximately 25% of the
loan portfolio is comprised of fixed-rate loans.
Credit quality remained strong as nonperforming loans totaled $465,000 at
September 30, 2005, compared to $419,000 at June 30, 2005, and $1.1 million at
December 31, 2004. Loans are considered nonperforming if they are impaired or if
they are in nonaccrual status. Net charge-offs and the provision for loan losses
totaled $30,000 and $103,000, respectively, during the third quarter of 2005.
Deposits - The deposit portfolio decreased $4.2 million during the third
quarter of 2005. Core deposit balances decreased $5.3 million as the Company has
continues to experience strong competitive pricing of money market deposits in
its market areas. For the full nine months, core deposits have decreased $4.1
million while certificates of deposit have grown $5.2 million.
Borrowings and repurchase agreements - The decrease in the deposit
portfolio and the growth in the loan portfolio resulted in the need to draw
additional net borrowings from the Federal Home Loan Bank of $5.6 million during
the third quarter of 2005. At September 30, 2005, the Company held $8.5 million
in overnight borrowings. The Company launched a new repurchase sweep product
during the third quarter to attract commercial relationships. Repurchase
agreements totaled $2.4 million at September 30, 2005, with a rate of 3.50%.
Common stock warrant redemption - On June 9, 2005, the Company announced
that it called for redemption of the stock purchase warrants that were issued in
connection with the Company's initial public offering in October 2000 ("IPO
Warrants"). Warrant holders had until August 5, 2005, to exercise their right to
purchase the Company's common stock underlying the warrants at a price of $10.00
per share. All outstanding IPO Warrants terminated at 5:00 P.M., New York Time,
on August 5, 2005. The Company received $791,240 after the redemption
announcement. The Company redeemed 92,394 IPO warrants at a redemption price of
$0.10 (ten cents) per warrant after the redemption date.
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 through five full-service banking offices in Wooster,
Canton, Millersburg and North Canton, 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, 2005, and December 31, 2004
September 30, December 31,
2005 2004
------------- -------------
(unaudited)
ASSETS
Cash and due from banks $4,252,511 $4,571,131
Federal funds sold and interest-bearing
deposits in financial institutions 5,220,691 12,418,192
------------- -------------
Cash and cash equivalents 9,473,202 16,989,323
Certificate of deposit in financial
institution 100,000 -
Securities available for sale 35,296,036 39,357,929
Securities held to maturity (fair value of
$832,000 and $640,000 at September 30,
2005, and December 31, 2004) 840,571 647,981
Loans, net of allowance of $1,289,160 and
$1,263,655 at September 30, 2005 and
December 31, 2004 153,731,653 132,084,072
Federal bank stock 1,466,400 1,375,650
Premises and equipment, net 3,315,672 2,269,068
Intangible asset 504,876 669,174
Accrued interest receivable and other
assets 1,868,524 1,658,860
------------- -------------
Total assets $206,596,934 $195,052,057
============= =============
LIABILITIES
Deposits:
Noninterest-bearing demand $12,535,072 $11,914,867
Interest-bearing demand 10,018,559 13,262,252
Savings 42,389,388 43,847,951
Certificates of deposit 93,829,922 88,617,541
------------- -------------
Total deposits 158,772,941 157,642,611
Federal Home Loan Bank advances 22,174,117 15,295,144
Repurchase agreements 2,400,137 -
Subordinated debentures 3,325,000 3,325,000
Capital lease obligations 961,901 968,712
Accrued interest payable and other
liabilities 608,396 580,216
------------- -------------
Total liabilities 188,242,492 177,811,683
SHAREHOLDERS' EQUITY
Preferred stock, no par value, 500,000
shares authorized, none outstanding - -
Common stock, no par value, 5,000,000
shares authorized, 2,214,564 and 2,121,220
shares issued and outstanding at
September 30, 2005, and December 31, 2004,
respectively 18,658,386 17,734,155
Accumulated earnings (deficit) 123,415 (282,585)
Accumulated other comprehensive loss (427,359) (211,196)
------------- -------------
Total shareholders' equity 18,354,442 17,240,374
------------- -------------
Total liabilities and shareholders'
equity $206,596,934 $195,052,057
============= =============
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended September 30, 2005 and 2004
(Unaudited)
For the Three For the Nine
Months Ended Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Interest income:
Loans, including
fees $2,515,946 $2,075,429 $6,992,354 $5,862,717
Securities 347,840 311,123 1,115,008 981,559
Interest-bearing
deposits and federal
funds sold 30,040 23,893 121,951 47,300
Dividends on federal
bank stock 19,405 16,347 55,757 43,748
----------- ----------- ----------- -----------
Total interest
income 2,913,231 2,426,792 8,285,070 6,935,324
Interest expense:
Deposits 982,651 672,052 2,757,245 2,142,855
Federal Home Loan
Bank advances 128,524 128,493 312,831 332,638
Subordinated
debentures 70,722 70,722 212,166 212,166
Repurchase agreements 4,896 - 4,896 -
Capital leases 37,676 38,014 113,294 114,272
----------- ----------- ----------- -----------
Total interest
expense 1,224,469 909,281 3,400,432 2,801,931
----------- ----------- ----------- -----------
Net interest income 1,688,762 1,517,511 4,884,638 4,133,393
Provision for loan
losses 103,000 71,000 210,046 306,000
----------- ----------- ----------- -----------
Net interest income
after provision for
loan losses 1,585,762 1,446,511 4,674,592 3,827,393
Noninterest income:
Service charges and
other fees 138,058 110,335 392,345 310,700
Gain (loss) on sales
of securities
available for sale,
net - (5,237) - 7,910
Gain on sale of loans - - 9,782 -
Other gains (losses) (2,505) - 71 -
Other income 7,957 2,610 18,750 7,167
----------- ----------- ----------- -----------
Total noninterest
income 143,510 107,708 420,948 325,777
Noninterest expense:
Salaries and benefits 792,251 531,797 2,117,255 1,482,402
Occupancy and
equipment 192,253 166,591 589,350 468,051
Professional fees 95,780 109,288 371,497 305,911
Franchise tax 58,269 56,034 191,782 177,440
Data processing 132,201 111,819 442,426 323,311
Marketing and
advertising 36,141 38,416 117,811 122,069
Stationery and
supplies 29,622 28,756 89,448 67,717
Intangible asset
amortization 52,199 9,042 164,298 9,042
Other expenses 129,011 102,476 398,657 349,227
----------- ----------- ----------- -----------
Total noninterest
expense 1,517,727 1,154,219 4,482,524 3,305,170
----------- ----------- ----------- -----------
Earnings before income
tax expense 211,545 400,000 613,016 848,000
Income tax expense 71,545 - 207,016 -
----------- ----------- ----------- -----------
NET EARNINGS 140,000 400,000 406,000 848,000
Other comprehensive
income (loss), net of
tax (121,628) 667,560 (216,163) (52,821)
----------- ----------- ----------- -----------
Comprehensive income $18,372 $1,067,560 $189,837 $795,179
=========== =========== =========== ===========
Basic earnings per
share $0.06 $0.19 $0.19 $0.40
Diluted earnings per
share 0.06 0.19 0.18 0.39
OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)
2005 2004
----------------------------- -------------------
Sept. 30 June 30 March 31 Dec. 31 Sept. 30
--------- --------- --------- --------- ---------
Cash and cash
equivalents $9,473 $11,040 $11,587 $16,989 $14,756
Securities and time
deposits 36,236 38,821 41,267 40,006 33,522
Loans, net of fees 155,021 146,874 142,805 133,348 130,745
Allowance for loan
losses (1,289) (1,216) (1,344) (1,264) (1,288)
Premises and
equipment, net 3,316 2,676 2,262 2,269 2,170
Core deposit
intangible 505 557 612 669 741
Other assets 3,335 3,251 3,287 3,035 2,593
--------- --------- --------- --------- ---------
Total assets $206,597 $202,003 $200,476 $195,052 $183,239
========= ========= ========= ========= =========
Noninterest-bearing
demand $12,535 $12,901 $11,885 $11,915 $11,621
Interest-bearing
demand 10,019 10,089 11,265 13,262 13,161
Savings and money
market 42,389 47,251 49,477 43,848 38,941
Certificates of
deposit 93,830 92,779 90,774 88,618 78,988
--------- --------- --------- --------- ---------
Total deposits 158,773 163,020 163,401 157,643 142,711
Other borrowings 28,861 20,839 19,215 19,589 22,960
Other liabilities 609 557 673 580 701
--------- --------- --------- --------- ---------
Total liabilities 188,243 184,416 183,289 177,812 166,372
Shareholders' equity 18,354 17,587 17,187 17,240 16,867
--------- --------- --------- --------- ---------
Total liabilities
and shareholders'
equity $206,597 $202,003 $200,476 $195,052 $183,239
========= ========= ========= ========= =========
LOAN PORTFOLIO:
- ---------------------
Residential real
estate $56,405 $55,031 $53,593 $50,728 $49,459
Commercial real
estate 51,053 45,817 44,847 36,365 33,856
Consumer and home
equity 11,716 11,915 12,586 12,250 12,127
Commercial 14,606 13,412 11,567 10,710 11,751
Construction 11,617 10,948 10,506 13,315 13,591
Multifamily
residential 9,832 9,955 9,903 10,148 10,119
Net deferred loan
fees (208) (204) (197) (168) (158)
--------- --------- --------- --------- ---------
Loans 155,021 146,874 $142,805 $133,348 $130,745
========= ========= ========= ========= =========
QUARTERLY AVERAGES:
- ---------------------
Fed funds sold and
securities (1) $41,471 $45,773 $55,041 $49,690 $40,794
Loans 149,183 143,907 136,073 132,607 131,248
Total interest-
earning assets 192,110 189,680 191,114 182,297 172,042
Total assets 201,152 198,832 198,487 190,032 178,296
Noninterest-bearing
deposits 12,449 12,192 11,860 11,784 9,078
Interest-bearing
deposits 147,546 149,085 149,477 138,666 124,158
Other borrowings and
leases 22,418 19397 19,349 22,204 27,982
Total interest-
bearing liabilities 169,964 168,482 168,826 160,870 152,140
Shareholders' equity 18,028 17,337 17,238 16,851 16,235
(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)
2005 2004
------------------------- ----------------
For the three months ended Sept. 30 June 30 March 31 Dec. 31 Sept. 30
-------- ------- -------- ------- --------
Interest income $2,913 $2,779 $2,593 $2,537 $2,427
Interest expense (1,224) (1,130) (1,046) (897) (910)
-------- ------- -------- ------- --------
Net interest income 1,689 1,649 1,547 1,640 1,517
Provision for loan losses (103) (15) (92) - (71)
Loss on sales of securities - - - - (5)
Gain on sale of loans - - 10 - -
Other gains and losses, net (3) 3 - - -
Noninterest income 146 133 131 120 113
Amortization of intangible
asset (52) (55) (57) (71) (9)
Noninterest expense (1,466) (1,487) (1,366) (1,350) (1,145)
-------- ------- -------- ------- --------
Net earnings before taxes 211 228 173 339 400
Income tax (expense) benefit (71) (77) (58) 86 -
-------- ------- -------- ------- --------
Net earnings $140 $151 $115 $425 $400
======== ======= ======== ======= ========
Earnings per share, diluted $0.06 $0.07 $0.05 $0.19 $0.19
Common and dilutive shares,
avg. 2,199 2,219 2,123 2,206 2,157
KEY RATIOS:
- ----------------------------
Net interest margin (1) 3.50% 3.49% 3.28% 3.52% 3.52%
Yield on interest-earning
assets 6.02 5.88 5.50 5.53 5.58
Cost of funds 2.86 2.69 2.51 2.30 2.37
Interest rate spread (2) 3.16 3.19 2.99 3.23 3.21
Efficiency ratio (3) 79.87 83.32 84.76 76.68 70.80
Allowance as a percent of
loans 0.83 0.83 0.94 0.95 0.98
Net loans as a percent of
deposits 96.82 89.35 86.57 83.79 90.98
Annualized net charge-offs
to loans 0.08 0.40 0.04 0.08 0.03
Annualized noninterest
income to average
assets (4) 0.29 0.27 0.27 0.25 0.25
Annualized noninterest
expense to average
assets (5) 2.91 2.99 2.75 2.84 2.58
Annualized return on average
assets (6) 0.28 0.30 0.23 0.71 0.89
Annualized return on average
equity (6) 3.11 5.26 2.67 8.05 9.86
(1) Tax-equivalent 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, excluding intangible asset amortization
divided by the sum of net interest income and noninterest income,
excluding gains and losses
(4) Excludes gains and losses
(5) Excludes intangible asset amortization
(6) Excludes income tax benefit recorded in the three months ended
December 31, 2004. The Company did not record income tax expense prior
to December 31, 2004
CONTACT: Ohio Legacy Corp
L. Dwight Douce, D. Michael Kramer or Eric S. Nadeau,
330-263-1955
http://www.ohiolegacycorp.com