UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) October 24, 2014
Emclaire Financial Corp.
(Exact name of registrant as specified in its charter)
| Pennsylvania | 001-34527 | 25-1606091 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer Identification No.) |
| 612 Main Street, Emlenton, PA | 16373 |
| (Address of principal executive offices) | (Zip Code) |
Registrant's telephone number, including area code: (724) 867-2311
________________________________________________________________________________
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
EMCLAIRE FINANCIAL CORP.
CURRENT REPORT ON FORM 8-K
Item 2.02. Results of Operations and Financial Condition.
On October 24, 2014, Emclaire Financial Corp announced its results of operations for the quarter ended September 30, 2014. A copy of the related press release is being filed as Exhibit 99.1 to this Form 8-K and is incorporated herein by reference in its entirety. The information furnished under Item 9.01 of this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be "filed" for purposes of the Securities Exchange Act of 1934, as amended.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number
Description
99.1
Press Release dated October 24, 2014 issued by Emclaire Financial Corp.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Emclaire Financial Corp.
(Registrant) |
||
| October 24, 2014
(Date) |
/s/ WILLIAM C. MARSH
William C. Marsh Chief Executive Officer President |
EXHIBIT 99.1
EMLENTON, Pa., Oct. 24, 2014 (GLOBE NEWSWIRE) -- Emclaire Financial Corp (Nasdaq:EMCF), the parent holding company of The Farmers National Bank of Emlenton, reported an increase in consolidated net income available to common stockholders of $30,000, or 3.1%, to $997,000 or $0.56 per diluted common share for the three months ended September 30, 2014, compared to $967,000 or $0.54 per diluted common share for the same period in 2013. Net income available to common shareholders for the nine month period ended September 30, 2014 was $2.7 million or $1.49 per diluted common share, compared to $2.5 million or $1.42 per diluted common share, for the same period in 2013.
The increase in net income available to common stockholders for both periods was driven by an increase in net interest income and a decrease in preferred stock dividends. The Corporation realized a return on average assets of 0.68% and a return on average common equity of 8.50% for the quarter ended September 30, 2014, compared to 0.82% and 8.85%, respectively, reported for the same period in 2013.
William C. Marsh, Chairman, President and Chief Executive Officer of the Corporation and the Bank, noted, "We continue to be pleased with the positive earnings and balance sheet growth experienced in the first nine months of 2014, particularly the significant increase in deposits. Our new Cranberry Township, PA and Saint Mary's, PA full-service banking offices have over $20 million in combined deposits after 12 and four months of operations, respectively, thus exceeding our expectations. We are excited about future growth in these markets and the opportunity to deliver our style of community banking. Adding these two new branches while continuing to deliver earnings per share growth is a big win for our franchise."
OPERATING RESULTS OVERVIEW
Net income available to common stockholders increased $30,000, or 3.1%, to $997,000 or $0.56 per diluted common share for the three months ended September 30, 2014, compared to $967,000 or $0.54 per diluted common share for the same period last year. The increase primarily resulted from an increase in net interest income of $140,000 and decreases in the provision for income taxes and preferred stock dividends of $31,000 and $90,000, respectively, partially offset by a decrease in noninterest income of $73,000 and increases in the provision for loan losses and noninterest expense of $20,000 and $138,000, respectively.
Net interest income increased $140,000, or 3.5%, to $4.2 million for the quarter ended September 30, 2014 from $4.0 million for the same period in 2013. The increase in net interest income resulted from an increase in interest income of $70,000, or 1.4%, and a decrease in interest expense of $70,000, or 8.1%. The Corporation's cost of funds decreased 15 basis points to 0.57% for the third quarter of 2014 from 0.72% for the same quarter in 2013. Driving this improvement was a $46,000 decrease in interest paid on deposits and a $24,000 decrease in interest paid on borrowings, the latter of which resulted primarily from the early retirement of a $5.0 million Federal Home Loan Bank (FHLB) advance during the first quarter of 2014. The Corporation improved its non-time deposit ratio to 76.6% at September 30, 2014 from 74.9% at September 30, 2013, resulting in an overall reduction in deposit costs. Despite the management of funding costs, the net interest margin decreased 34 basis points to 3.07% for the third quarter of 2014 compared to 3.41% for the same period in 2013 as the overall yield on earning assets decreased 48 basis points. This was due, in part, to management's decision to maintain higher levels of lower yielding cash and equivalents to cover anticipated deposit fluctuations and the decision to purchase of shorter term investment securities.
Noninterest income decreased $73,000, or 7.3%, to $929,000 for the quarter ended September 30, 2014 from $1.0 million for the same quarter in 2013. This resulted from decreases in commissions on financial services, fees and service charges and net gains on the sale of securities of $40,000, $17,000 and $16,000, respectively.
Noninterest expense increased $138,000, or 3.9%, to $3.7 million for the quarter ended September 30, 2014 from $3.5 million for the same period in 2013. The increase primarily related to increases in premises and equipment expense and other noninterest expense of $118,000 and $80,000, respectively, partially offset by decreases in compensation and benefits, professional fees and intangible asset amortization of $22,000, $16,000 and $13,000, respectively. Noninterest expense for the third quarter of 2014 included $175,000 of normal operating expense related to the Bank's two new full-service banking offices. Absent the new offices, noninterest expense would have decreased $37,000, or 1.0%, for the quarter ended September 2014 compared to the same period in the prior year.
The provision for income taxes decreased $31,000, or 11.4%, to $241,000 for the quarter ended September 30, 2014 from $272,000 for the same period in 2013. This increase related to a decrease in the Corporation's effective tax rate to 19.1% for the third quarter of 2014 from 20.1% for the same period in 2013.
Preferred stock dividends decreased $90,000, or 78.3%, to $25,000 for the quarter ended September 30, 2014 from $115,000 for the same period in 2013. This resulted from the September 2013 redemption of $5.0 million, or 50%, of the $10.0 million in outstanding preferred shares issued to the U.S. Treasury under the Small Business Lending Fund (SBLF) program. In addition, due to an increase in the Corporation's qualified small business loan portfolio, the dividend rate on the preferred shares for the first quarter of 2014, and each quarter thereafter in 2014 and 2015, is fixed at 2% compared to a rate of 5% for the third quarter of 2013.
CONSOLIDATED YEAR-TO-DATE OPERATING RESULTS OVERVIEW
Net income available to common stockholders increased $153,000, or 6.1%, to $2.7 million or $1.49 per diluted common share in for the nine months ended September 30, 2014, compared to $2.5 million or $1.42 per diluted common share for the same period in the prior year. The increase primarily resulted from increases in net interest income and noninterest income of $517,000 and $238,000, respectively, and decreases in the provision for income taxes and preferred stock dividends of $36,000 and $290,000, respectively, partially offset by increases in the provision for loan losses and noninterest expense of $70,000 and $858,000, respectively.
Net interest income increased $517,000, or 4.4%, to $12.3 million for the nine months ended September 30, 2014 from $11.8 million for the same period in 2013. The increase in net interest income resulted from a decrease in interest expense of $608,000, or 21.0%, as the Corporation's cost of funds decreased 24 basis points to 0.60% for the first nine months of 2014 from 0.84% for the same period in 2013. Driving this improvement was a $521,000 decrease in interest paid on deposits and an $87,000 decrease in interest paid on borrowings, the latter of which resulted primarily from the early retirement of a $5.0 million FHLB advance during the first quarter of 2014. Despite the management of funding costs, the net interest margin decreased 13 basis points to 3.25% for the nine months ended September 30, 2014, compared to 3.38% for the same period in 2013, as the overall yield on earning assets decreased 35 basis points. This was due, in part, to management's decision to maintain higher levels of lower yielding cash and equivalents to cover anticipated deposit fluctuations and the decision to purchase shorter term investment securities.
Noninterest income increased $238,000, or 8.0%, to $3.2 million for the nine months ended September 30, 2014 from $3.0 million for the same period in 2013. The increase resulted from a $457,000 increase in net gains on the sale of securities. During the nine months ended September 30, 2014, the Corporation realized securities gains of $748,000, of which $657,000 related to a balance sheet management strategy whereby securities were sold to prepay a $5.0 million FHLB long term advance and the associated securities gains were used to offset the impact of prepayment penalties associated with the early retirement of the advance. During the nine months ended September 30, 2013, the Corporation realized securities gains of $291,000 related to the sale of certain mortgage-backed securities that were experiencing accelerated prepayments. Partially offsetting this increase in noninterest income for the nine months ended September 30, 2014 were decreases in commissions on financial services and fees and service charges of $156,000 and $72,000, respectively.
Noninterest expense increased $858,000, or 8.0%, to $11.6 million for the nine months ended September 30, 2014 from $10.8 million for the same period in 2013. The increase primarily related to increases in other noninterest expense of $803,000, $550,000 of which was attributed to a prepayment penalty assessed on the aforementioned early retirement of debt, and premises and equipment expense of $251,000, primarily related to expenses for the two new full-service banking offices. These increases were partially offset by decreases in compensation and benefits, intangible asset amortization and FDIC expense of $85,000, $45,000 and $41,000, respectively. Noninterest expense for the first nine months of 2014 included $408,000 of normal operating expenses related to the Bank's two new full-service banking offices. Absent the prepayment penalty and the new offices, noninterest expense would have decreased $100,000, or 1.0%, for the nine months ended September 30, 2014 compared to the same period last year.
Preferred stock dividends decreased $290,000, or 79.5%, to $75,000 for the nine months ended September 30, 2014 from $365,000 for the same period in 2013 due to the aforementioned partial redemption and rate reduction.
CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW
Total assets increased $67.7 million, or 12.9%, to $593.5 million at September 30, 2014 from $525.8 million at December 31, 2013. Asset growth was driven by increases in securities, cash and equivalents and loans receivable of $33.0 million, $18.7 million and $15.8 million, respectively, which was funded by an $87.9 million increase in customer deposits. This deposit increase also funded a $27.0 million decrease in borrowed funds, which included a $22.0 million reduction in FHLB short-term advances and the aforementioned repayment of a $5.0 million FHLB long term advance.
Total nonperforming assets were $7.8 million, or 1.32% of total assets, at September 30, 2014 compared to $5.3 million, or 1.01% of total assets, at December 31, 2013. This $2.5 million, or 47.2%, increase in nonperforming assets was primarily due to two commercial relationships being placed on nonaccrual status during the first nine months of 2014.
Stockholders' equity increased $2.9 million, or 6.4%, to $47.9 million at September 30, 2014 from $45.1 million at December 31, 2013. This resulted from a $1.5 million increase in retained earnings and a $1.2 million increase in accumulated comprehensive income as unrealized gains on the Corporation's securities portfolio increased following recent fluctuations in market interest rates. The Corporation remains well capitalized and is positioned for continued growth with total stockholders' equity at 8.1% of total assets. Tangible book value per common share was $21.73 at September 30, 2014, compared to $20.04 at December 31, 2013.
Emclaire Financial Corp is the parent company of The Farmers National Bank of Emlenton, an independent, nationally chartered, FDIC-insured community bank headquartered in Emlenton, Pennsylvania, operating 15 full service banking offices in Venango, Butler, Clarion, Clearfield, Crawford, Elk, Jefferson and Mercer counties, Pennsylvania. The Corporation's common stock is quoted on and traded through the NASDAQ Capital Market under the symbol "EMCF." For more information, visit the Corporation's website at www.emclairefinancial.com.
This news release may contain forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements may contain words such as "believe," "expect," "anticipate," "estimate," "should," "may," "can," "will," "outlook," "project," "appears" or similar expressions. Such forward-looking statements are subject to risk and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. Such factors include, but are not limited to, changes in interest rates which could affect net interest margins and net interest income, the possibility that increased demand or prices for the Corporation's financial services and products may not occur, changing economic and competitive conditions, technological and regulatory developments, and other risks and uncertainties, including those detailed in the Corporation's filings with the Securities and Exchange Commission. The Corporation does not undertake, and specifically disclaims any obligation to update any forward-looking statements to reflect occurrences or unanticipated events or circumstances after the date of such statements.
| EMCLAIRE FINANCIAL CORP | ||||
| Consolidated Financial Highlights | ||||
| (Unaudited - Dollar amounts in thousands, except share data) | ||||
| CONSOLIDATED OPERATING RESULTS DATA: | Three month period | Nine month period | ||
| ended September 30, | ended September 30, | |||
| 2014 | 2013 | 2014 | 2013 | |
| Interest income | $ 4,968 | $ 4,898 | $ 14,619 | $ 14,710 |
| Interest expense | 790 | 860 | 2,287 | 2,895 |
| Net interest income | 4,178 | 4,038 | 12,332 | 11,815 |
| Provision for loan losses | 163 | 143 | 508 | 438 |
| Noninterest income | 929 | 1,002 | 3,201 | 2,963 |
| Noninterest expense | 3,681 | 3,543 | 11,608 | 10,750 |
| Income before provision for income taxes | 1,263 | 1,354 | 3,417 | 3,590 |
| Provision for income taxes | 241 | 272 | 675 | 711 |
| Net income | 1,022 | 1,082 | 2,742 | 2,879 |
| Accumulated preferred stock dividends | 25 | 115 | 75 | 365 |
| Net income available to common stockholders | $ 997 | $ 967 | $ 2,667 | $ 2,514 |
| Basic earnings per common share | $0.56 | $0.55 | $1.51 | $1.43 |
| Diluted earnings per common share | $0.56 | $0.54 | $1.49 | $1.42 |
| Dividends per common share | $0.22 | $0.20 | $0.66 | $0.60 |
| Return on average assets (1) | 0.68% | 0.82% | 0.65% | 0.74% |
| Return on average equity (1) | 8.50% | 8.85% | 7.81% | 7.59% |
| Return on average common equity (1) | 9.26% | 9.77% | 8.50% | 8.21% |
| Yield on average interest-earning assets | 3.62% | 4.10% | 3.82% | 4.17% |
| Cost of average interest-bearing liabilities | 0.73% | 0.93% | 0.76% | 1.08% |
| Cost of funds | 0.57% | 0.72% | 0.60% | 0.84% |
| Net interest margin | 3.07% | 3.41% | 3.25% | 3.38% |
| Efficiency ratio | 69.58% | 67.70% | 74.55% | 69.99% |
| (1) Returns are annualized for the three and nine month periods ended September 30, 2014 and 2013. | ||||
| CONSOLIDATED BALANCE SHEET DATA: | As of | As of | ||
| 9/30/2014 | 12/31/2013 | |||
| Total assets | $ 593,537 | $ 525,842 | ||
| Cash and equivalents | 35,318 | 16,658 | ||
| Securities | 150,321 | 117,304 | ||
| Loans, net | 368,219 | 352,430 | ||
| Deposits | 519,908 | 432,006 | ||
| Borrowed funds | 17,150 | 44,150 | ||
| Common stockholders' equity | 42,941 | 40,072 | ||
| Stockholders' equity | 47,941 | 45,072 | ||
| Book value per common share | $24.24 | $22.66 | ||
| Tangible book value per common share | $21.73 | $20.04 | ||
| Net loans to deposits | 70.82% | 81.58% | ||
| Allowance for loan losses to total loans | 1.37% | 1.36% | ||
| Nonperforming assets to total assets | 1.32% | 1.01% | ||
| Earning assets to total assets | 94.35% | 94.16% | ||
| Stockholders' equity to total assets | 8.08% | 8.57% | ||
| Shares of common stock outstanding | 1,771,158 | 1,768,658 | ||
CONTACT: William C. Marsh
Chairman, President and
Chief Executive Officer
Phone: (844) 800-2193
Email: investor.relations@farmersnb.com