EX-99 2 ex99.htm EXHIBIT 99 - PRESS RELEASE

MSB FINANCIAL CORP. RELEASES THIRD QUARTER EARNINGS
 
Millington, New Jersey, October 31, 2017 – MSB Financial Corp. (NASDAQ: MSBF) (the "Company"), parent company of Millington Bank, reported today the results of its operations for the three and nine months ended September 30, 2017.
 
The Company reported net income of $1.2 million, or $0.21 per diluted common share, for the three months ended       September 30, 2017, compared to net income of $301,000, or $0.05 per diluted common share, for the three months ended September 30, 2016. Net income for the nine months ended September 30, 2017 was $2.5 million, or $0.44 per diluted common share, compared to net income of $683,000, or $0.12 per diluted common share, for the nine months ended September 30, 2016.

On August 4, 2017, certain directors, executive officers and directors emeriti executed options to purchase 212,468 shares of Common Stock at a per share exercise price of $9.4323.  In lieu of issuing shares of Common Stock upon the exercise of such options, the Company made a cash payment to such optionees equal to the excess of the closing price of the Common Stock on the Nasdaq Stock Market on August 4, 2017 of $17.30 over the per share exercise price of such options of $9.4323 multiplied by the number of options being exercised.  An aggregate of $1.7 million was paid to the optionees. In addition, the transaction resulted in approximately a $406,000 tax benefit to the Company during the quarter which resulted in a net tax benefit of $86,000 for the quarter ended September 30, 2017 as compared to a net income tax expense of $146,000 for the quarter ended September 30, 2016. The options were issued in 2008 and were related to the Company's conversion from a Mutual Holding Company to a minority owned, public Bank Holding Company.

Growth in net interest income and margin reflect growth in commercial loans
Net interest income for the three months ended September 30, 2017 increased $1.3 million, or 44.8%, to $4.2 million compared to $2.9 million for the third quarter of 2016.  For the nine months ended September 30, 2017, net interest income grew $3.0 million, or 34.5%, to $11.7 million compared to $8.7 million for the nine months ended September 30, 2016. Net interest margin for the three months ended September 30, 2017 was 3.37% compared to 3.05% for the same period in 2016 while for the nine months ended September 30, 2017, net interest margin was 3.34%, an improvement of 23 basis points, compared to 3.11% for the nine months ended September 30, 2016. Net interest income and net interest margin continue to increase due primarily to the growth in the Company's commercial real estate and commercial loan portfolios.

Commercial loan growth year to date
At September 30, 2017, the Company's net loan portfolio totaled $461.3 million, an increase of $93.3 million or 25.4%, compared to $368.0 million at December 31, 2016. Commercial real estate loans increased $60.1 million or 48.2% while commercial and industrial loans increased $28.2 million or 62.2% from December 31, 2016 as the Company continues to focus on the origination of commercial relationships. Additionally, construction loans, net of loans in process, increased $9.1 million or 91.4% from December 31, 2016.

The following table summarizes loan balances and composition at September 30, 2017 and December 31, 2016:

 
At
    
At
  
September 30,
  
December 31,
  
(In thousands)
2017
    
2016
  
                       
Residential mortgage:
                      
   One-to-four family
$
161,679
  
33.4
%
  
$
160,534
  
42.3
%
   Home equity
 
27,409
 
5.7
    
 
32,262
 
   8.5
  
                       
Total residential mortgage
 
189,088
 
39.1
    
 
192,796
 
50.8
  
                       
 Commercial and multi-family real estate
  
184,791
  
38.2
      
124,656
  
32.8
  
 Construction
  
36,002
  
7.4
      
16,554
  
4.4
  
 Commercial and industrial
 
73,409
 
15.2
    
 
45,246
 
  11.9
  
                       
Total commercial loans
 
294,202
 
60.8
    
 
186,456
 
49.1
  
                       
Consumer loans
 
659
 
0.1
    
 
446
 
     0.1
  
                       
Total loans receivable
  
483,949
  
100.0
%
    
379,698
  
 100.0
%
                       
Less:
                      
   Loans in process
  
16,864
          
6,557
      
   Deferred loan fees
  
525
          
658
      
   Allowance
  
5,275
          
4,476
      
                       
Total loans receivable, net
$
461,285
        
$
368,007
      
                       

Credit quality
Overall credit quality improved quarter over quarter. Total delinquent loans (including nonperforming delinquent loans) were $6.1 million at September 30, 2017, a reduction of $2.7 million from June 30, 2017. Total nonperforming loans were $4.4 million at September 30, 2017 compared to $6.9 million at June 30, 2017. The allowance for loan losses as a percentage of total loans was 1.13% and 1.14% at September 30, 2017 and June 30, 2017, respectively, while the allowance for loan losses as a percentage of non-performing loans increased to 118.69% at September 30, 2017 from 71.21% at June 30, 2017. Non-performing loans to total loans declined to 0.95% at September 30, 2017 from 1.60% at June 30, 2017.

Consumer deposit growth during the year
Total deposits at September 30, 2017 were $397.5 million compared with $362.3 million at December 31, 2016.  Overall, deposits increased by $35.2 million, or 9.7% with growth occurring across substantially all product types. Most of the growth occurred in the certificates of deposit as the Company utilized a deposit listing service to bring in $19.6 million in institutional funds. In addition, other deposit categories grew as a result of a promotional campaign implemented during the second quarter that attracted new deposits.

The following table summarizes deposit balances and composition at September 30, 2017 and December 31, 2016:

 
At
    
At
  
(Dollars in thousands)
September 30, 2017
    
December 31, 2016
  
                   
Noninterest demand
 $     40,504
  
10.19
%
  
 $     44,365
  
12.25
%
Interest demand
 107,419
  
27.02
    
99,879
  
27.57
  
Savings
108,249
  
27.23
    
  103,163
  
28.47
  
Money Market
    16,517
  
4.16
    
     11,265
  
3.11
  
                   
   Total demand deposits
           272,689
  
68.60
    
  258,672
  
71.40
  
                   
Certificates of Deposit
           124,821
  
31.40
    
  103,627
  
28.60
  
                   
Total Deposits
 $   397,510
  
100.00
%
  
 $   362,299
  
100.00
%


CEO outlook:

"Our management team and staff have worked extremely hard to ensure the Company meets its strategic goals for 2017, and our 3rd quarter results further validate these efforts," stated Michael A. Shriner, President and Chief Executive Officer.  Mr. Shriner added, "Deposit and loan growth are up, the diversification of the loan portfolio continues, and earnings have improved significantly since the beginning of the year. We were pleased to be able to pay the $0.425 special dividend in September." 

Forward Looking Statement Disclaimer
The foregoing release may contain forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements. Factors that may cause actual results to differ from those contemplated include our continued ability to grow the loan portfolio and our continued ability to manage cybersecurity risks.
 
Contact:
Michael A. Shriner, President & CEO
 
(908) 647-4000
 
mshriner@millingtonbank.com


 


MSB FINANCIAL CORP
            
(In Thousands, except for per share amount)
  
(Unaudited)
        
Statement of Financial Condition Data:
  
09/30/2017
    
12/31/2016
  
Total assets
  
$
541,757
    
$
461,646
  
 
                
Cash and cash equivalents
    
8,771
      
21,382
  
 
                
Loans receivable, net
    
461,285
      
368,007
  
 
                
Securities held to maturity
    
40,752
      
44,104
  
 
                
Deposits
    
397,510
      
362,299
  
 
                
Federal Home Loan Bank advances
    
68,375
      
22,675
  
 
                
Total stockholders' equity
    
72,540
      
73,185
  
                 
Stock Information:
                
Number of shares of common stock outstanding
    
5,769
      
5,714
  
Book value per share of common stock
  
$
12.57
    
$
12.81
  
Closing market price
  
$
17.85
    
$
14.70
  
   



 
(Unaudited)
For the three months ended
September 30,
    
(Unaudited)
For the nine months ended
September 30,
  
Summary of Operations:
(In Thousands, except for per share amounts)
  
2017
    
2016
    

2017
    

2016
  
Total interest income
  
$
5,083
    
$
3,510
    
$
14,103
    
$
10,261
  
 
                                
Total interest expense
    
893
      
566
      
2,394
      
1,598
  
 
                                
Net interest income
    
4,190
      
2,944
      
11,709
      
8,663
  
 
                                
Provision for loan losses
    
490
      
180
      
985
      
500
  
 
                                
Net interest income after provision for loan losses
    
3,700
      
2,764
      
10,724
      
8,163
  
 
                                
Non-interest income
    
205
      
183
      
611
      
836
  
 
                                
Non-interest expense
    
2,822
      
2,500
      
8,357
      
7,973
  
 
                                
Income before taxes
    
1,083
      
447
      
2,978
      
1,026
  
 
                                
Income tax (benefit) expense
    
(86
)
    
146
      
528
      
343
  
 
                                
Net income
  
$
1,169
    
$
301
    
$
2,450
    
$
683
  
 
                                
Net income per common share - basic
  
$
0.21
    
$
0.05
    
$
0.44
    
$
0.12
  
Net income per common share - diluted
  
$
0.21
    
$
0.05
    
$
0.44
    
$
0.12
  
 
                                
Weighted average number of shares - basic
    
5,564
      
5,588
      
5,541
      
5,692
  
Weighted average number of shares - diluted
    
5,575
      
5,670
      
5,545
      
5,768
  
                                 
Performance Ratios:
                                
Return on average assets annualized
    
0.90
%
    
0.29
%
    
0.66
%
    
0.23
%
Return on average common equity annualized
    
6.31
%
    
1.62
%
    
4.40
%
    
1.20
%
Net interest margin
    
3.37
%
    
3.05
%
    
3.34
%
    
3.11
%
Efficiency ratio
    
64.21
%
    
79.95
%
    
67.83
%
    
83.94
%
Operating expenses / average assets annualized
    
2.16
%
    
2.45
%
    
2.27
%
    
2.72
%
                                 



   
For the three months ended
  
   
09/30/2017
    
09/30/2016
  
Average Balance Sheet
(In Thousands)
  
Average
Balance
    
Interest
Income/
Expense
    
Yield
    
Average
Balance
    
Interest
Income/
Expense
    
Yield
  
Interest-earning assets:
                                    
Loans receivable
  
$
446,383
    
$
4,769
      
4.27
%
  
$
305,405
    
$
3,177
      
4.16
%
Securities held to maturity
    
41,423
      
264
      
2.55
      
47,293
      
276
      
2.33
  
Other interest-earning assets
    
9,526
      
50
      
2.10
      
33,412
      
57
      
0.68
  
Total interest-earning assets
    
497,332
      
5,083
      
4.09
      
386,110
      
3,510
      
3.64
  
                                                 
Allowance for loan loss
    
(4,922
)
                    
(3,905
)
                
Non-interest-earning assets
    
29,019
                      
26,133
                  
Total non-interest-earning assets
    
24,097
                      
22,228
                  
Total Assets
  
$
521,429
                    
$
408,338
                  
                                                 
Interest-bearing liabilities:
                                                
Demand & money market
  
$
118,084
    
$
118
      
0.40
%
  
$
81,020
    
$
60
      
0.30
%
Savings and club deposits
    
106,950
      
73
      
0.27
      
103,166
      
57
      
0.22
  
Certificates of deposit
    
125,555
      
431
      
1.37
      
89,365
      
266
      
1.19
  
Total interest-bearing deposits
    
350,589
      
622
      
0.71
      
273,551
      
383
      
0.56
  
                                                 
Federal Home Loan Bank advances
    
47,788
      
271
      
2.27
      
22,675
      
183
      
3.23
  
Total interest-bearing liabilities
    
398,377
      
893
      
0.90
      
296,226
      
566
      
0.76
  
                                                 
Non-interest-bearing deposit
    
44,970
                      
34,455
                  
Other non-interest-bearing liabilities
    
3,964
                      
3,430
                  
Total Liabilities
    
447,311
                      
334,111
                  
                                                 
Equity
    
74,118
                      
74,227
                  
Total Liabilities and Equity
  
$
521,429
                    
$
408,338
                  
                                                 
Net Interest Spread
            
4,190
      
3.19
%
            
2,944
      
2.88
%
                                                 
Net Interest Margin
                    
3.37
%
                    
3.05
%
                                                 
Ratio of Interest Earning Assets to Interest Bearing Liabilities
    
124.84
%
                    
130.34
%
                
                                                 



   
For the nine months ended
  
   
09/30/2017
    
09/30/2016
  
Average Balance Sheet
(In Thousands)
  
Average
Balance
    
Interest
Income/
Expense
    
Yield
    
Average
Balance
    
Interest
Income/
Expense
    
Yield
  
Interest-earning assets:
                                    
Loans receivable
  
$
415,512
    
$
13,213
      
4.24
%
  
$
287,688
    
$
9,097
      
4.22
%
Securities held to maturity
    
42,190
      
762
      
2.41
      
62,215
      
1,038
      
2.22
  
Other interest-earning assets
    
10,156
      
128
      
1.68
      
21,136
      
126
      
0.79
  
Total interest-earning assets
    
467,858
      
14,103
      
4.02
      
371,039
      
10,261
      
3.69
  
                                                 
Allowance for loan loss
    
(4,715
)
                    
(3,749
)
                
Non-interest-earning assets
    
28,791
                      
23,215
                  
Total non-interest-earning assets
    
24,076
                      
19,466
                  
Total Assets
  
$
491,934
                    
$
390,505
                  
                                                 
Interest-bearing liabilities:
                                                
Demand & money market
  
$
110,116
    
$
315
      
0.38
%
  
$
63,224
    
$
118
      
0.25
%
Savings and club deposits
    
105,237
      
193
      
0.24
      
103,298
      
171
      
0.22
  
Certificates of deposit
    
118,378
      
1,195
      
1.35
      
86,512
      
747
      
1.15
  
Total interest-bearing deposits
    
333,731
      
1,703
      
0.68
      
253,034
      
1,036
      
0.55
  
                                                 
Federal Home Loan Bank advances
    
38,563
      
691
      
2.39
      
25,026
      
562
      
2.99
  
Total interest-bearing liabilities
    
372,294
      
2,394
      
0.86
      
278,060
      
1,598
      
0.77
  
                                                 
Non-interest-bearing deposit
    
41,966
                      
32,687
                  
Other non-interest-bearing liabilities
    
3,377
                      
3,664
                  
Total Liabilities
    
417,637
                      
314,411
                  
                                                 
Equity
    
74,297
                      
76,094
                  
Total Liabilities and Equity
  
$
491,934
                    
$
390,505
                  
                                                 
Net Interest Spread
            
11,709
      
3.16
%
            
8,663
      
2.92
%
                                                 
Net Interest Margin
                    
3.34
%
                    
3.11
%
                                                 
Ratio of Interest Earning Assets to Interest Bearing Liabilities
    
125.67
%
                    
133.44
%