EX-99.1 2 v384595_ex99-1.htm EXHIBIT 99.1

 

 

Exhibit 99.1

For Immediate Release

  July 24, 2014
   

 

 

 

DCB Financial Corp Announces Second Quarter 2014 Results

 

Lewis Center, OH, July 24, 2014 - DCB Financial Corp (the “Company”), (OTC Bulletin Board DCBF), parent holding company of The Delaware County Bank & Trust Company, Lewis Center, Ohio (the “Bank”) announced net income of $61,000 or $0.01 per diluted share for the three months ended June 30, 2014, compared to net income of $156,000 or $0.02 per diluted share for the same period in 2013. Non-recurring gains and losses in the second quarter of 2014 aggregated $118,000 of net losses or $0.02 per diluted share, compared to net non-recurring gains, negative provision for loan losses and income tax benefit aggregating $631,000, or $0.09 per diluted share in the year-ago quarter. There was no loan loss provision or income tax benefit in the second quarter of 2014.

 

Net income was $180,000 or $0.02 per diluted share for the six months ended June 30, 2014, compared to net income of $298,000 or $0.04 per diluted share for the same period in 2013. Non-recurring gains and losses in the first half of 2014 aggregated $63,000 of net losses, compared to net non-recurring gains, negative provision for loan losses and income tax benefit aggregating $1.4 million in the prior year. There was no loan loss provision or income tax benefit in the first half of 2014.

 

Ronald J. Seiffert, President and CEO for the Company said, “Net income excluding non-recurring items in the second quarter of 2014 was the highest since the third quarter of 2012, and it’s the first time in six years that we have reported two consecutive quarters of positive net income exclusive of non-recurring items. We continue to make progress on improving our asset quality, with non-performing assets at the end of the second quarter of 2014 at their lowest level since the third quarter of 2008 and down 70% from their peak in the first quarter of 2011.”

 

Seiffert continued, “Investor’s growing confidence in the strength of our balance sheet is reflected in our stock price as a percentage of tangible book value, which was 116% at the end of the second quarter, and is at its highest level since the fourth quarter of 2007. We have accomplished a lot in the first half of 2014, and with the dedication of the Company’s employees, management and board of directors, along with the strong support of the communities in which we operate, I am confident in our Company’s future as we continue to build the premier community banking franchise in Central Ohio.”

 

 
 

  

Balance Sheet Highlights

Total assets were $500.5 million at June 30, 2014, which was a decrease of $1.9 million from $502.4 million at December 31, 2013. Assets sold in connection with the sale of the Company’s Marysville branch in the first quarter totaled $18.7 million and included cash of $12.5 million, loans of $4.8 million and fixed assets of $1.4 million. Deposits attributable to the branch totaling $19.4 million were assumed by the buyer.

 

Total loans, including loans held for sale, increased $3.3 million in the second quarter, and were $357.7 million at June 30, 2014, compared with $354.4 million at March 31, 2014. Residential mortgages and consumer loans increased at annualized rates of 32.1% and 16.4%, respectively, in the second quarter primarily as the result of business development initiatives including ongoing engagement with and calling on local real estate agencies and a successful cross-selling program to existing customers. Commercial and industrial loans decreased $5.9 million in the second quarter, through a combination of weakness in demand, normal amortization, prepayments and chargeoffs.

 

Deposits totaled $436.1 million at June 30, 2014, which was a slight decrease from $439.8 million at the end of the first quarter. Time accounts decreased $7.1 million in the second quarter, which was partially offset by increases in savings, demand and money market accounts aggregating $3.4 million. Consistent with the financial sector generally, the very low interest rate environment continues to influence the Company’s deposit composition, as customer preference for non-maturity savings, demand and money market accounts outweighs that of time accounts.

 

Stockholders’ equity was $46.8 million at June 30, 2014, compared with $46.4 million at March 31, 2014, and $45.3 million at December 31, 2013. The increase since December is primarily the result of the difference between the unrealized loss of $940,000 on one collateralized debt obligation (“CDO”) at December 31, 2013, and the actual loss recognized upon the sale of that security in the first quarter of $140,000. Sharply higher demand for these types of securities in the first quarter of 2014 contributed to the increase in the value of the CDO during that quarter. The remaining increase in stockholder’s equity is due primarily to an increase in unrealized gains on securities available-for-sale and to net income in the first half of 2014.

 

The Bank’s Tier 1 leverage ratio was 8.97% and its total risk-based capital ratio was 14.02% at the end of the second quarter, both of which were well above the regulatory thresholds required to be classified as a “well-capitalized” institution, which are 5.0% and 10.0%, respectively.

 

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Asset Quality and the Provision for Loan Losses

Delinquent loans (including non-accrual) totaled $5.3 million or 1.48% of total loans at June 30, 2014, compared to $4.6 million or 1.29% of total loans at March 31, 2014 and $8.1 million or 2.24% at the end of 2013. Nonaccrual loans totaled $4.2 million or 1.17% of total loans at June 30, 2014, compared to $3.6 million or 1.02% of total loans at March 31, 2014 and $6.9 million or 1.90% of total loans at December 31, 2013.

 

Non-performing assets were $14.9 million or 2.97% of total assets at June 30, 2014, compared with $17.7 million or 3.59% of total assets at March 31, 2014 and $21.9 million or 4.36% of total assets at December 31, 2013. Troubled debt restructurings (“TDR’s”) which are performing in accordance with the restructured terms and accruing interest, but are included in non-performing assets, were $9.3 million at June 30, 2014, compared to $12.6 million at March 31, 2014 and $12.8 million at December 31, 2013.

 

Much of the improvement in asset quality in the first half of 2014 has resulted from the execution of previously disclosed strategies developed in the fourth quarter of 2013 to accelerate the disposition of certain troubled assets, in particular two commercial relationships which totaled $5.7 million at the end of 2013. As of June 30, 2014, a total of $4.7 million of cash has been collected on these relationships. One of the relationships, with a carrying amount of $2.7 million at the end of 2013, was paid off for the full carrying amount in the first quarter. A second relationship with an outstanding balance of $3.0 million and an allowance allocation of $1.5 million at the end of 2013 has been paid down by $2.0 million in the first half of 2014, of which $554,000 was received in the second quarter. The Company recorded a partial chargeoff on this second relationship of $750,000 in the first quarter, using the specific loan loss allocation established for this relationship in the fourth quarter of 2013. As a result of the $554,000 that was collected on this relationship in the second quarter, an identical amount of allowance for loan losses allocated to this relationship at the end of 2013 has been freed up and incorporated into the general and qualitative components of the allowance for loan losses, as of June 30, 2014. The Company maintains a 100% reserve allocation against the remaining balance of $197,000 at the end of the second quarter (net of the partial chargeoff), due to uncertainty as to the collectability of the remaining balance. The Company has retained legal counsel in anticipation of exploring claims to be made against the third-party purchaser of certain of the borrowers assets which, the Company maintains, were and remain subject to a perfected first lien position of the Company.

 

Certain troubled loans totaling $418,000 and classified as held-for-sale at the end of 2013 were sold during the second quarter of 2014 for $395,000. Writedowns and losses on loans held-for-sale totaled $114,000 in the second quarter, with $23,000 realized upon sales of loans and $91,000 from writedowns on remaining loans held-for-sale at the end of the second quarter.

 

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Net charge-offs were $777,000 or 0.87% (annualized) of average loans in the second quarter, compared to net charge-offs of $15,000 in the year-ago quarter. Net charge-offs were $2.1 million or 1.15% (annualized) of average loans in the first half of 2014, compared to net recoveries of $511,000 in the year-ago period. Three relationships comprised nearly all of the charge-offs in the first half of 2014, which were charged against specific allowance allocations established in the fourth quarter of 2013.

 

There was no provision for loan losses recorded in the first half of 2014, as the $3.3 million loan loss provision recorded in the fourth quarter of 2013 included specific allocations for the three large relationships charged-off in the first half of 2014. Negative provisions for loan losses of $240,000 and $890,000 were recorded in the quarter and six months ended June 30, 2013 as the result of the net recoveries and other credit quality indicators in those periods. The provision for loan losses as a percentage of net charge-offs was not meaningful for first half of 2014 and 2013. On a linked-quarters basis, the provision for loan losses as a percentage of net charge-offs was 97.2% for the four calendar quarters ending June 30, 2014.

 

The allowance for loan losses was $4.6 million at June 30, 2014, compared with $5.3 million at March 31, 2014 and $6.7 million at December 31, 2013. The ratio of the allowance for loan losses to total loans was 1.28% at June 30, 2014, compared with 1.51% at March 31, 2014 and 1.85% at December 31, 2013. The ratio of the allowance for loan losses to non-performing loans (including TDR’s) was 33.9% at June 30, 2014, compared with 33.0% at March 30, 2014 and 34.1% at December 31, 2013. The ratio of the allowance for loan losses to non-accrual loans was 109% at June 30, 2014, compared with 148% at March 30, 2014 and 97% at December 31, 2013.

 

Net Interest Income

Net interest income totaled $4.0 million in the three months ended June 30, 2014, compared with $3.8 million in the year-ago quarter and $4.0 million in the first quarter of 2014. Average interest-earning assets decreased $3.3 million in the second quarter compared to the year-ago quarter, and were $12.9 million lower than the first quarter of 2014, due primarily to the effect on average assets, net of organic loan growth over the last four quarters, of the sale of the Company’s Marysville branch in the first quarter of 2014, and to payoffs of two large commercial relationships totaling $5.7 million late in the first quarter of 2014. The net interest margin increased 24 basis points in the second quarter compared with the year-ago quarter and was 3 basis points higher than the first quarter of 2014.

 

The net interest margin was 3.53% in the second quarter of 2014, compared with 3.29% in the year-ago quarter and 3.50% in the first quarter of 2014. The earning assets yield increased 4 basis points in the second quarter of 2014 compared with the year-ago quarter, due largely to growth in our loan portfolio which was funded primarily from cash on deposit with the Federal Reserve and cash flows from our securities portfolio. The cost of interest-bearing liabilities decreased 23 basis points over the same period as a result of maturing time accounts which either were renewed at lower rates or were transferred into our interest-bearing demand and money market accounts, which earn interest at lower rates than time accounts. Also, we restructured advances from the Federal Home Loan Bank in November, 2013 which contributed to a 176 basis point decrease in the cost of borrowings in the second quarter compared to the year-ago quarter.

 

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Average interest-earning assets were $453.4 million in the second quarter, compared with $456.7 million in the year-ago quarter and $466.4 million in the first quarter of 2014. The average balance of loans increased by $27.9 million, while average balance of interest earning cash and cash equivalents decreased $22.7 million and average investments decreased $8.5 million when compared with the year-ago quarter, as we used our excess liquidity position to fund organic loan growth. Total average loans were 78.7% of total average interest-earning assets in the second quarter of 2014, compared with 72.0% in the year-ago quarter and 77.1% in the first quarter of 2014. The average balance of time deposits declined $43.3 million in the second quarter compared with the year-ago quarter, while average balances in lower-costing interest-bearing demand, savings and money market accounts increased $21.2 million, and the average balance of non-interest-bearing demand accounts increased $15.7 million over that same period.

 

Net interest income totaled $8.0 million in the first half 2014, which was an increase of $609,000 or 8.3% compared with $7.4 million in the year-ago period. The net interest margin was 3.49% for the six months ended June 30, 2014, compared with 3.29% in the year-ago period. The earning asset yield increased 2 basis points in the first half of 2014 compared with the year-ago period, and the cost of interest-bearing liabilities decreased 19 basis points over the same period.

 

Average interest-earning assets were $460.4 million in the first half of 2014, which was an increase of $6.2 million or 1.37% from the first half of 2013. Total average loans and leases were 77.8% of total interest-earning assets in the six months ended June 30, 2014, compared with 70.5% in the first half of 2013. The average balance in time deposits decreased $45.7 million in the first half of 2014 compared with the year-ago period, while the average balances in lower-costing interest-bearing demand, savings and money market accounts increased $28.1 million, and the average balance of non-interest-bearing demand accounts increased $16.7 million.

 

Non-Interest Income and Non-Interest Expenses

Non-interest income was $996,000 in the second quarter of 2014, compared to $1.4 million in the second quarter of 2013 and $1.2 million in the first quarter of 2014. Non-recurring gains, writedowns and losses accounted for much of the changes in non-interest income in the second quarter compared to the year-ago quarter and to the first quarter of 2014. Nonrecurring writedowns and losses, net of nonrecurring gains were $118,000 in the second quarter of 2014 (writedowns and losses on loans held-for-sale and loss on sale of REO), compared to net nonrecurring gains of $137,000 in the year-ago quarter (gains on sales of securities and REO) and net non-recurring gains $53,000 in the first quarter of 2014 (gain on sale of branch, writedowns of loans held-for-sale and loss on sale of securities available-for-sale).

 

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Noninterest income was $2.2 million in the first half of 2014, compared to $2.7 million in the first half of 2013. Nonrecurring writedowns and losses, net of nonrecurring gains were $63,000 in the first half of 2014, compared to net nonrecurring gains of $221,000 in the year-ago period.

 

Non-interest income (net of nonrecurring income, gains and losses and gains/losses on the sales of securities) accounted for 21.8% of total revenue in the second quarter of 2014, compared with 24.5% in the year-ago quarter and 22.2% in the first quarter of 2014. Non-interest income accounted for 22.0% of total revenue in the first half of 2014, compared with 24.9% in the year-ago period.

 

Non-interest expenses were $4.9 million for the second quarter of 2014, compared with $5.4 million in the year-ago quarter and $5.1 million for the first quarter of 2014. The decrease from the year-ago quarter is primarily attributable to a $294,000 decrease in professional services, a $152,000 decrease in salaries and benefits, a $120,000 decrease in other non-interest expenses, and a $66,000 decrease in state franchise taxes. The decrease in professional services is due primarily to the substantial improvement in our asset quality which has reduced the need for outside professional services related to the workout of classified assets. The decrease in salaries and benefits is attributable to a decline in incentive compensation expense as loan originations during the quarter are down from the year-ago quarter, and to the elimination of $47,000 of salaries expense attributable to the Company’s former Marysville branch. The decrease in state franchise taxes is the result of a change in the tax law which changed how the tax is calculated in the current year.

 

The Company’s efficiency ratio was 96.2% in the second quarter of 2014, compared with 109.5% in the year-ago quarter, and 98.5% in the first quarter of 2014.

 

Non-interest expenses were $10.0 million in the first half of 2014, which was a decrease of $913,000 or 8.4% compared to the the first half of 2013 as salaries and benefits expense decreased $346,000, franchise taxes decreased $122,000, and professional services decreased $330,000 for the same reasons discussed above.

 

The Company’s efficiency ratio was 97.4% for the first half of 2014, compared to 110.9% in the prior year.

 

Income Taxes

The Company had net deferred tax assets totaling $11.0 million and $11.6 million with valuation allowances of $11.3 million and $11.2 million, respectively, at June 30, 2014 and December 31, 2013. Included in net deferred tax assets are gross deferred tax assets of $12.0 million and $11.7 million at June 30, 2014 and December 31, 2013, respectively. Deferred tax liabilities at June 30, 2014 were comprised entirely of the tax liability generated by the unrealized gains on securities available-for-sale.

 

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About DCB Financial Corp

DCB Financial Corp is a financial holding company formed under the laws of the State of Ohio. The Company is the parent of The Delaware County Bank & Trust Company, a state-chartered commercial bank. The Bank conducts business from its main offices at 110 Riverbend Avenue in Lewis Center, Ohio, and through its 14 branch offices located in Delaware County, Ohio and surrounding communities. The Bank provides customary retail and commercial banking and cash management services to its customers, including checking and savings accounts, time deposits, IRAs, safe deposit facilities, personal loans, commercial loans, commercial leases, real estate mortgage loans, night depository facilities and trust and personalized wealth management services.

 

Forward-Looking Statements

This press release contains certain forward-looking statements with respect to the financial condition, results of operations and business of DCB Financial Corp. These forward-looking statements involve certain risks and uncertainties. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, the following possibilities: an increase in competitive pressure in the banking industry; changes in the interest rate environment which may affect the net interest margin; changes in the regulatory environment; general economic conditions, either nationally or regionally, resulting, among other things, in a deterioration in credit quality; changes in business conditions and inflation; changes in the securities markets; changes in technology used in the banking business; our ability to maintain and increase market share and control expenses; increases in FDIC insurance premiums may cause earnings to decrease; and other risks set forth under the caption “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and in subsequent filings with the Securities and Exchange Commission.

 

The Company 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.

 

Contact: DCB Financial Corp
  Ronald J. Seiffert, President and CEO
  (740) 657-7000
   
  J. Daniel Mohr, Executive Vice President and CFO
  (740) 657-7510

 

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DCB Financial Corp

Consolidated Balance Sheets (Unaudited)

 

   June 30, 2014   December 31, 2013 
   (Dollars in thousands, except share and per share data) 
Assets          
Cash and due from financial institutions  $5,632   $6,110 
Interest-bearing deposits   23,189    19,247 
   Total cash and cash equivalents   28,821    25,357 
           
Securities available-for-sale   80,690    79,948 
           
Loans   356,339    356,048 
Less allowance for loan losses   (4,568)   (6,724)
   Net loans   351,771    349,324 
           
Loans held for sale   1,329    7,806 
Real estate owned   1,406    1,219 
Investment in FHLB stock   3,250    3,799 
Premises and equipment, net   10,326    10,641 
Premises and equipment held for sale   —    1,405 
Bank-owned life insurance   19,699    19,297 
Accrued interest receivable and other assets   3,182    3,623 
   Total assets  $500,474   $502,419 
           
Liabilities and stockholders’ equity          
Liabilities:          
Deposits:          
    Non-interest bearing  $108,547   $109,622 
    Interest bearing   327,563    317,237 
Total deposits   436,110    426,859 
           
Deposits held for sale   —    22,571 
Federal Home Loan Bank advances   4,823    4,838 
Accrued interest payable and other liabilities   12,701    2,887 
Total liabilities   453,634    457,155 
           
Stockholders’ equity:          
Common stock   15,771    15,771 
Retained earnings   37,863    37,683 
Treasury stock   (7,416)   (7,416)
Accumulated other comprehensive income (loss)   622    (774)
   Total stockholders’ equity   46,840    45,264 
   Total liabilities and stockholders’ equity  $500,474   $502,419 
           
Common shares outstanding   7,192,350    7,192,350 
Book value per common share  $6.51   $6.29 

 

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DCB Financial Corp

Consolidated Statements of Operations (Unaudited)

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2014   2013   2014   2013 
   (Dollars in thousands, except share and per share data) 
Interest income:                    
Loans  $3,743   $3,735   $7,480   $7,286 
Securities   534    489    1,088    1,055 
Federal funds sold and interest bearing deposits   9    21    23    50 
Total interest income   4,286    4,245    8,591    8,391 
                     
Interest expense:                    
Deposits:                    
Savings and money market  accounts   136    115    269    608 
Time accounts   108    284    237    220 
NOW accounts   19    23    37    45 
Total   263    422    543    873 
                     
Borrowings:                    
FHLB advances   36    72    72    151 
Total interest expense   299    494    615    1,024 
                     
Net interest income   3,987    3,751    7,976    7,367 
Provision for loan losses   —    (240)   —    (890)
Net interest income after provision for loan losses   3,987    3,991    7,976    8,257 
                     
Non-interest income:                    
Service charges   489    573    1,000    1,121 
Wealth management fees   378    355    671    671 
Treasury management fees   59    64    115    126 
Income from bank-owned life insurance   164    165    402    405 
Writedowns and losses on loans held for sale   (114)   —    (357)   — 
Gain (loss) on sale of REO   (4)   2    (4)   86 
Gain (loss) on sale of securities, available-for-sale   —    135    (140)   135 
Gain on sale of branch   —    —    438    — 
Other non-interest income   24    57    62    116 
Total non-interest income   996    1,351    2,187    2,659 
                     
Non-interest expense:                    
Salaries and employee benefits   2,712    2,864    5,490    5,836 
Occupancy and equipment   837    800    1,641    1,593 
Professional services   197    491    617    947 
Advertising   77    66    158    173 
Office supplies, postage and courier   89    94    184    199 
FDIC insurance premium   172    101    340    254 
State franchise taxes   67    133    132    344 
Other non-interest expense   771    891    1,421    1,550 
Total non-interest expense   4,922    5,440    9,983    10,896 
                     
Income (loss) before income tax benefit   61    (98)   180    20 
Income tax benefit   —    (254)   —    (278)
Net income  $61   $156   $180   $298 
                     
Share and Per Share Data                    
Basic average common shares outstanding   7,192,350    7,192,350    7,192,350    7,192,350 
Diluted average common shares outstanding   7,250,702    7,227,901    7,254,203    7,225,573 
Basic earnings per common share  $0.01   $0.02   $0.03   $0.04 
Diluted earnings per common share  $0.01   $0.02   $0.02   $0.04 

 

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DCB Financial Corp

Consolidated Average Balances (Unaudited)

 

   Three months ended
June 30,		   Six months ended
June 30,		 
   2014   2013   2014   2013 
   (Dollars in thousands) 
Earning assets:                    
Interest bearing cash  $13,566   $36,271   $17,635   $42,163 
Securities   78,587    75,509    79,827    76,175 
Tax-exempt securities   4,603    16,179    4,707    15,790 
Loans (1)   356,678    328,769    358,252    320,086 
Total earning assets   453,434    456,728    460,421    454,214 
                     
Non-earning assets   40,778    48,182    40,828    50,581 
Total assets  $494,212   $504,910   $501,249   $504,795 
                     
Interest bearing liabilities:                    
Interest bearing DDA  $76,555   $57,184   $78,655   $57,859 
Money market   130,370    130,930    130,352    127,028 
Savings accounts   42,720    40,344    43,118    39,153 
Time deposits   81,415    124,760    83,797    129,522 
FHLB advances   4,894    6,145    5,086    6,584 
Total interest bearing liabilities   335,954    359,363    341,008    360,146 
                     
Non-interest bearing deposits  $109,486    93,820    110,490    93,791 
Other non-interest bearing liabilities   3,043    2,529    4,578    2,059 
Total liabilities   448,483    455,712    456,076    455,996 
Stockholders’ equity   45,729    49,198    45,173    48,799 
Total liabilities and stockholders’ equity  $494,212   $504,910   $501,249   $504,795 

 

(1)Includes loans held for sale

 

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DCB Financial Corp

Loans and Deposits (Unaudited)

 

The following table sets forth the composition of the Company’s loan portfolio at the dates indicated (includes loans held for sale):

 

   June 30, 2014   March 31, 2014   December 31, 2013 
   Amount   Percent   Amount   Percent   Amount   Percent 
   (Dollars in thousands) 
Loan portfolio composition                              
Commercial and industrial  $104,959    29.4%  $110,886    31.3%  $122,901    33.8%
Commercial real estate   104,387    29.2%   105,077    29.7%   106,901    29.4%
Real estate and home equity   114,038    31.9%   105,573    29.8%   98,622    27.1%
Consumer and credit card   34,102    9.5%   32,759    9.2%   35,265    9.7%
Total loans  $357,486    100.0%  $354,295    100.0%   363,689    100.0%
                               
Net deferred loan costs   182         164         165      
Allowance for loan losses   (4,568)        (5,345)        (6,724)     
Net loans  $353,100        $349,114        $357,130      

 

The following table sets forth the composition of the Company’s deposits at the dates indicated (includes deposits held for sale):

 

   June 30, 2014   March 31, 2014   December 31, 2013 
   Amount   Percent   Amount   Percent   Amount   Percent 
   (Dollars in thousands) 
Deposit composition                              
Non-interest bearing demand  $108,547    24.9%  $104,615    23.8%  $112,711    25.1%
Interest bearing demand   77,304    17.7%   79,945    18.2%   78,229    17.4%
Total demand   185,851    42.6%   184,560    42.0%   190,940    42.5%
                               
Savings   42,784    9.8%   42,675    9.7%   43,448    9.7%
Money market   131,820    30.2%   129,846    29.5%   125,635    27.9%
Time deposits   75,655    17.4%   82,716    18.8%   89,407    19.9%
Total deposits  $436,110    100.0%  $439,797    100.0%  $449,430    100.0%

 

11
 

 

DCB Financial Corp

Asset Quality (Unaudited)

 

The following table represents a summary of delinquent loans grouped by the number of days delinquent at the dates indicated (includes loans held-for-sale):

 

Delinquent loans and leases  June 30, 2014   March 31, 2014   December 31, 2013 
   $   %(1)   $   %(1)   $   %(1) 
   (Dollars in thousands) 
30 days past due  $1,022    0.29%  $834    0.23%  $945    0.26%
60 days past due   80    0.02%   132    0.04%   290    0.08%
90 days past due and still accruing   —    —    —    —    —    — 
Non-accrual   4,186    1.17%   3,607    1.02%   6,904    1.90%
Total  $5,288    1.48%  $4,573    1.29%  $8,139    2.24%

 

(1) As a percentage of total loans, excluding deferred costs

 

The following table represents information concerning the aggregate amount of non-performing assets (includes loans held for sale):

 

 

Non-performing assets  June 30, 2014   March 31, 2014   December 31, 2013 
   (Dollars in thousands) 
Non-accruing loans:               
Residential real estate loans and home equity  $425   $511   $352 
Commercial real estate   2,779    1,647    1,850 
Commercial and industrial   981    1,449    4,702 
Consumer loans and credit cards   1    —    — 
Total non-accruing loans   4,186    3,607    6,904 
Accruing loans delinquent 90 days or more   —    —    — 
Total non-performing loans (excluding TDR’s)   4,186    3,607    6,904 
                
Collateralized debt obligations   —    —    976 
Other real estate and repossessed assets   1,406    1,563    1,219 
Total non-performing assets (excluding TDR’s)  $5,592   $5,170   $9,099 
                
Troubled debt restructurings(1)  $9,297   $12,569   $12,788 
Total non-performing loans (including TDR’s)  $13,483   $16,176   $19,692 
Total non-performing assets (including TDR’s)  $14,889   $17,739   $21,887 

 

(1) TDR’s that are in compliance with their modified terms and accruing interest.

 

The following table summarizes changes in the allowance for loan losses arising from loans charged off, recoveries on loans and leases previously charged off and additions to the allowance which have been charged to expense:

 

Allowance for loan losses  Three months ended
June 30,		   Six months ended
June 30,		 
   2014   2013   2014   2013 
   (Dollars in thousands) 
Allowance for loan losses, beginning of period  $5,345   $6,758   $6,724   $6,882 
                     
Loans charged-off   (846)   (187)   (2,258)   (434)
Recoveries of loans previously charged-off   69    172    199    945 
Net loans charged-off   (777)   (15)   (2,059)   511 
Allowance related to loans transferred to held-for-sale   —    —    (97)   — 
Provision for loan losses   —    (240)   —    (890)
Allowance for loan losses, end of period  $4,568   $6,503   $4,568   $6,503 

 

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DCB Financial Corp

Consolidated Financial Information (Unaudited)

 

Key Ratios  At or for the three
months ended
June 30,		   At or for the six
months ended
June 30,		 
   2014   2013   2014   2013 
Return on average assets   0.05%   0.12%   0.07%   0.12%
Return on average equity   0.53%   1.27%   0.80%   1.22%
Yield on earning assets   3.77%   3.73%   3.75%   3.73%
Cost of funds   0.36%   0.59%   0.36%   0.55%
Net interest margin (1)   3.53%   3.29%   3.49%   3.29%
Non-interest income to total income (2)   21.84%   24.45%   22.00%   24.86%
Efficiency ratio (3)   96.20%   109%   97.37%   111%
                     
Net loans charged-off to average loans, annualized   0.87%   0.02%   1.15%   (0.32)%
Provision for loan losses to average loans, annualized   0.00%   (0.29)%   0.00%   (0.56)%
Allowance for loan losses to total loans   1.28%   1.88%   1.28%   1.88%
Allowance for loan losses to non-accrual loans   109%   114%   109%   114%
Non-accrual loans to total loans   1.17%   1.65%   1.17%   1.65%
Non-performing assets to total assets (including performing TDR’s)   2.97%   4.72%   2.97%   4.72%
Non-performing assets to total assets (excluding performing TDR’s)   1.12%   1.76%   1.12%   1.76%

 

(1)Net interest income divided by average earning assets
(2)Non-interest income (excluding net realized gains and losses on securities and other non-recurring gains and losses) divided by the sum of net interest income and non-interest income (as adjusted)
(3)Non-interest expense (less OREO expense and non-recurring expenses and losses) divided by the sum of net interest income and non-interest income (as adjusted)

 

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DCB Financial Corp

Selected Quarterly Financial Data (Unaudited)

 

   2014   2013 
   Second   First   Fourth   Third   Second 
   (Dollars in thousands, except per share data) 
Interest income  $4,286   $4,304   $4,372   $4,316   $4,245 
Interest expense   299    316    369    425    494 
Net interest income   3,987    3,988    4,003    3,891    3,751 
Provision for loan losses   —    —    3,307    —    (240)
Net interest income after provision for loan losses   3,987    3,988    696    3,891    3,991 
Non-interest income   996    1,192    1,116    1,192    1,351 
Non-interest expenses   4,922    5,063    4,914    5,230    5,440 
Income (loss) before income tax benefit   61    117    (3,102)   (147)   (98)
Income tax benefit   —    —    —    (20)   (254)
Net income (loss)  $61   $117   $(3,102)  $(127)  $156 
                          
Stock and related per share data                         
Basic and diluted earnings (loss) per common share  $0.01   $0.02   $(0.43)  $(0.02)  $0.02 
Basic weighted average common shares outstanding   7,192,350    7,192,350    7,192,350    7,192,350    7,192,350 
Diluted weighted average common shares outstanding   7,250,702    7,244,716    7,192,350    7,192,350    7,227,901 
Common book value per share  $6.51   $6.45   $6.29   $6.74   $6.84 
                          
Capital Ratios (Bank)                         
Tier 1 leverage ratio   8.97%   8.83%   8.77%   9.44%   9.51%
Tier 1 risk based capital   12.80%   12.78%   12.24%   13.12%   13.25%
Total risk based capital   14.02%   14.03%   13.50%   14.38%   14.49%
                          
Selected ratios                         
Return on average assets   0.05%   0.09%   (2.43)%   (0.10)%   0.12%
Return on average equity   0.53%   1.02%   (25.42)%   (1.04)%   1.27%
Yield on earning assets   3.77%   3.74%   3.68%   3.67%   3.73%
Cost of funds   0.36%   0.32%   0.42%   0.48%   0.59%
Net interest margin   3.53%   3.50%   3.37%   3.31%   3.29%
Non-interest income to total income (1)   21.84%   22.22%   21.86%   24.21%   24.45%
Efficiency ratio (2)   96.20%   98.54%   95.82%   101.77%   109.45%
                          
Asset quality ratios                         
Net loans charged off to average loans, annualized   0.87%   1.43%   1.21%   0.04%   0.02%
Provision for loan losses to average loans, annualized   0.00%   0.00%   3.66%   0.00%   (0.29)%
Allowance for loan losses to total loans   1.28%   1.51%   1.85%   1.81%   1.82%
Allowance for loan losses to non-accrual loans   109.13%   148.18%   97.39%   116.57%   114.15%
Non-accrual loans to total loans   1.17%   1.02%   1.90%   1.55%   1.65%
Non-performing assets to total assets (including performing TDR’s)   2.97%   3.59%   4.36%   4.33%   4.72%
Non-performing assets to total assets (excluding performing TDR’s)   1.12%   1.05%   1.81%   1.57%   1.76%

 

(1) Non-interest income (net of realized gains and losses on securities and other non-recurring items) divided by the sum of net interest income and non-interest income (as adjusted)

(2) Non-interest expense (less OREO expense) divided by the sum of net interest income and non-interest income (as adjusted)

 

14