TrustCo Announces 17% Increase in Second Quarter 2017 Earnings

Executive Snapshot:

  • Continued solid financial results:
    • Key metrics for Second quarter of 2017 results:
      • Net income of $12.2 million in the second quarter of 2017, up 17.0% compared to $10.5 million in the second quarter of 2016
      • Return on average assets (ROA) of 1.00% compared to 0.88% in the second quarter of 2016
      • Return on average equity (ROE) of 11.05% compared to 9.88% in the second quarter of 2016
      • Efficiency ratio of 53.33% compared to 57.70% in the second quarter of 2016 (Non-GAAP measure; see P. 14 for definition)
         
  • Asset quality remains solid:
    • Asset quality measures improved compared to the second quarter of 2016
    • Nonperforming assets (NPAs) fell by $4.7 million compared to June 30, 2016
    • NPAs to total assets improved to 0.57%, compared to 0.68% at June 30, 2016
    • Quarterly net chargeoffs decreased to 0.05% of average loans on an annualized basis, compared to 0.14% for the second quarter of 2016, the lowest level since 2008
       
  • Continued expansion of customer base:
    • Focus on capitalizing on opportunities presented by expanded branch network
    • Average deposits per branch grew $399 thousand to $29.2 million from June 30, 2016 to June 30, 2017
    • Average core (non-maturity) deposits were $110 million higher in the second quarter of 2017 compared to the second quarter of 2016
       
  • Loan portfolio reaches all-time high:
    • Average loans were up $150 million for the second quarter of 2017 compared to second quarter of 2016
    • At $3.51 billion as of June 30, 2017, loans reached an all-time high

                         
                         

TrustCo Announces 17% Increase in Second Quarter 2017 Earnings

GLENVILLE, N.Y., July 21, 2017 (GLOBE NEWSWIRE) —

TrustCo Bank Corp NY (TrustCo) (Nasdaq:TRST) today announced second quarter of 2017 net income of $12.2 million compared to $10.5 million for the second quarter of 2016, an increase of 17.0%. 

Summary

Robert J. McCormick, President and Chief Executive Officer noted, “We are pleased to be able to report a 17% increase in net income in the second quarter of 2017 as compared to the second quarter of 2016.  Improved revenue growth and expense control combined to produce a solid quarter and an encouraging first half of 2017.  Our focus on traditional lending criteria and conservative balance sheet management has enabled us to produce consistent earnings, maintain strong liquidity and capital and allowed us to continue to grow our business and take advantage of changes in market and competitive conditions.  In terms of our core business, we continue to add customer relationships, which ultimately drive future growth.  We will continue to take advantage of opportunities as they are presented during the balance of 2017 and beyond.” 

TrustCo saw continued solid loan growth in the second quarter of 2017 compared to the prior year, led by an increase in residential mortgages.  Loan portfolio expansion was funded by a combination of utilizing a portion of our strong cash balances and by the growth of our deposit base.  The continued shift toward loans helped offset the margin impact from continued comparatively low yields on cash and investments.  Recent decisions by the Federal Reserve to raise short term interest rates have contributed to our results and will provide a further benefit in the second half of 2017 and beyond.  The growth in average deposits in the second quarter of 2017 versus the prior year was led by lower cost checking and savings deposits.  TrustCo’s strong liquidity position continues to allow it to take advantage of opportunities as they arise.

Asset quality measures improved versus June 30, 2016, with nonperforming assets (NPAs) declining $4.7 million.

Details

Average loans were up $150.1 million or 4.5% in the second quarter of 2017 over the same period in 2016. Average residential loans, our primary lending focus, were up $200.0 million or 7.2% in the second quarter of 2017, over the same period in 2016.  Overall loan growth was constrained by a $15.6 million decline in average commercial loans, which have become less attractive on a risk adjusted basis, and a $34.0 million decline in average outstandings on home equity lines of credit, as well as a small decline in installment loans. Average deposits were up $36.0 million or 0.9% for the second quarter of 2017 over the same period a year earlier.  The increase in deposits came from core deposit accounts, which consist of checking, savings and money market deposits, with checking and savings entirely responsible for the growth within core deposits.  Average core deposits increased $110.3 million from the second quarter of 2016 to the second quarter of 2017, while average time deposit balances were down.  Within core, money market balances were down $2.6 million, while checking was up $100.2 million (including interest bearing and non-interest bearing balances) and savings were up $12.7 million.  Core deposits typically represent longer term customer relationships and are generally lower cost than time deposits.  The cost of interest bearing deposits declined from 0.38% in the second quarter of 2016 to 0.34% in the second quarter of 2017.  The shift out of money market balances was also beneficial, as that category is the most expensive type of core deposit.  Mr. McCormick noted that, “The year-over-year growth of our loans and core deposit base reflect the long term strategic focus of the Company.”

For the second quarter of 2017, return on average assets and return on average equity were 1.00% and 11.05%, respectively, compared to 0.88% and 9.88% for the second quarter of 2016.  Diluted earnings per share were $0.127 for the second quarter of 2017, compared to $0.109 for the second quarter of 2016.  As previously discussed, some operating costs remain at elevated levels in response to regulatory requirements, however overall expense control remains a key area of focus.  Total operating expenses declined by $1.1 million in the second quarter of 2017 as compared to the second quarter of 2016, led by lower deposit insurance, ORE costs and equipment expense.  The decline in expenses coupled with $1.5 million of revenue growth over the same period resulted in the bottom line improvement noted.  We anticipate being able to control expense growth effectively in the second half of 2017.  Some of the costs associated with regulatory issues will be recurring, but others will diminish over time.

“While some banks have backed away from branches, a customer-friendly branch franchise continues to be the key to our long term plans.  We continue to make good progress expanding loans and deposits throughout our entire branch network.  We expect that trend to continue as the newer branches continue to mature.”

“At June 30, 2017, our average deposits per branch were $29.2 million, compared to $28.8 million a year earlier.  We have always designed our branches to be smaller and more cost effective than those built by many of our competitors.  We use open floor plans that help maximize the value of our branches.  We remain mindful that fully achieving our goals for newer branches will take time and continued work.  We believe success in growing customer relationships provides basic building blocks that will help drive profit growth for the coming years.”

Asset quality and loan loss reserve measures improved versus June 30, 2016.  Nonperforming loans (NPLs) were $24.5 million at June 30, 2017, compared to $28.2 million at June 30, 2016.  NPLs were equal to 0.70% of total loans at June 30, 2017, compared to 0.84% at June 30, 2016.  The coverage ratio, or allowance for loan losses to NPLs, was 180.0% at June 30, 2017, compared to 156.0% at June 30, 2016.  Nonperforming assets (NPAs) were $28.1 million at June 30, 2017 compared to $32.8 million at June 30, 2016.  The ratio of loan loss allowance to total loans was 1.26% as of June 30, 2017, compared to 1.32% at June 30, 2016 and reflects both the improvement in asset quality and economic conditions in our lending areas.  The allowance for loan losses was $44.2 million at June 30, 2017 compared to $44.1 million at June 30, 2016.  The provision for loan losses was $550 thousand for the second quarter of 2017, compared to $800 thousand in the second quarter of 2016.  Net chargeoffs for the second quarter of 2017 decreased versus the second quarter of 2016, falling to $436 thousand from $1.1 million in the year earlier period.  The annualized net chargeoff ratio was 0.05% for the second quarter of 2017, compared to 0.14% in the second quarter of 2016, remaining at the lowest level since the first quarter of 2008. 

The net interest margin for the second quarter of 2017 was 3.21%, up twelve basis points versus the second quarter of 2016, as increases in short term interest rates led to significantly higher earnings on cash, while slightly better returns were also achieved in the investment portfolio.  Loan yields did decline, but that was more than offset by higher volumes in terms of income.  During the same period, the cost of interest bearing liabilities declined, reflecting TrustCo’s strong funding base.

For the first half of 2017, net income was $23.2 million, up 11.1% as compared to $20.9 million in the first half of 2016, or $0.241 and $0.219, respectively, per diluted share. 

At June 30, 2017 the equity to asset ratio was 9.09%, compared to 8.91% at June 30, 2016.  Book value per share at June 30, 2017 was $4.66 compared to $4.51 a year earlier.

TrustCo Bank Corp NY is a $4.9 billion savings and loan holding company and through its subsidiary, Trustco Bank, operated 144 offices in New York, New Jersey, Vermont, Massachusetts, and Florida at June 30, 2017.

In addition, the Bank’s Financial Services Department offers a full range of investment services, retirement planning and trust and estate administration services. The common shares of TrustCo are traded on the NASDAQ Global Select Market under the symbol TRST.

A conference call to discuss Second quarter 2017 results will be held at 9:00 a.m. Eastern Time on July 24, 2017.  Those wishing to participate in the call may dial toll-free 1-888-339-0764.  International callers must dial 1-412-902-4195.   Please ask to be joined into the TrustCo Bank Corp NY / TRST call.  A replay of the call will be available for thirty days by dialing 1-877-344-7529 (1-412-317-0088 for international callers), Conference Number 10110582. The call will also be audio webcast at: http://services.choruscall.com/links/trst170724.html, and will be available for one year.

Safe Harbor Statement 

All statements in this news release that are not historical are forward-looking statements within the meaning of the Securities Exchange Act of 1934, as amended.  Forward-looking statements can be identified by words such as “anticipate,” “intend,” “plan,” “goal,” “seek,” “believe,” “project,” “estimate,” “expect,” “strategy,” “future,” “likely,” “may,” “should,” “will” and similar references to future periods. Examples of forward-looking statements include, among others, statements we make regarding our expectations for our performance during 2017, the impact of Federal Reserve actions regarding interest rates and the growth of loans and deposits throughout our branch network, our ability to capitalize on economic changes in the areas in which we operate and the extent to which higher expenses to fulfill operating and regulatory requirements recur or diminish over time.  Such forward-looking statements are subject to factors that could cause actual results to differ materially for TrustCo from those discussed. TrustCo wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The following important factors, among others, in some cases have affected and in the future could affect TrustCo’s actual results and could cause TrustCo’s actual financial performance to differ materially from that expressed in any forward-looking statement:  our ability to continue to originate a significant volume of one-to-four family mortgage loans in our market areas; our ability to continue to maintain noninterest expense and other overhead costs at reasonable levels relative to income; our ability to comply with the supervisory agreement entered into with Trustco Bank’s regulator and potential regulatory actions if we fail to comply; restrictions or conditions imposed by our regulators on our operations that may make it more difficult for us to achieve our goals; the future earnings and capital levels of Trustco Bank and the continued ability of Trustco Bank under regulatory rules and the supervisory agreement to distribute capital to TrustCo, which could affect our ability to pay dividends; results of supervisory monitoring or examinations of Trustco Bank and TrustCo by our respective regulators; our ability to make accurate assumptions and judgments regarding the credit risks associated with lending and investing activities; the effect of changes in financial services laws and regulations and the impact of other governmental initiatives affecting the financial services industry; the effects of, and changes in, trade, monetary and fiscal policies and laws, including interest rate policies of the Federal Reserve Board, inflation, interest rates, market and monetary fluctuations; adverse conditions on the securities markets that lead to impairment in the value of securities in our investment portfolio; changes in law and policy accompanying the new presidential administration and uncertainty or speculation pending the enactment of such changes; the perceived overall value of our products and services by users, including in comparison to competitors’ products and services and the willingness of current and prospective customers to substitute competitors’ products and services for our products and services; ; changes in consumer spending, borrowing and saving habits; technological changes and electronic, cyber, and physical security breaches; real estate and collateral values; changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the FASB or PCAOB; changes in local market areas and general business and economic trends, as well as changes in consumer spending and saving habits; our success at managing the risks involved in the foregoing and managing our business; and other risks and uncertainties under the heading “Risk Factors” in our most recent annual report on Form 10-K and, if any, in our subsequent quarterly reports on Form 10-Q or other securities filings.

TRUSTCO BANK CORP NY                    
GLENVILLE, NY                    
                     
FINANCIAL HIGHLIGHTS                    
                     
(dollars in thousands, except per share data)                    
(Unaudited)                    
             Three Months Ended
            06/30/17   03/31/17     06/30/16
Summary of operations                    
Net interest income (TE)         $ 38,553     37,413   36,311
Provision for loan losses           550     600   800
Net gain on securities transactions                 668
Noninterest income, excluding net gain on securities transactions           4,504     4,727   4,531
Noninterest expense           22,913     24,019   23,974
Net income           12,240     10,947   10,464
                     
Per common share                    
Net income per share:                    
– Basic         $ 0.127     0.114   0.110
– Diluted           0.127     0.114   0.109
Cash dividends           0.066     0.066   0.066
Book value at period end           4.66     4.57   4.51
Market price at period end           7.75     7.85   6.41
                     
At period end                    
Full time equivalent employees           813     802   801
Full service banking offices           144     144   145
                     
Performance ratios                    
Return on average assets           1.00 %   0.91   0.88
Return on average equity           11.05     10.17   9.88
Efficiency (1)           53.33     55.81   57.70
Net interest spread (TE)           3.15     3.08   3.03
Net interest margin (TE)           3.21     3.14   3.09
Dividend payout ratio           51.48     57.47   59.89
                       
Capital ratio at period end                    
Consolidated equity to assets           9.09 %   8.98   8.91
Consolidated tangible equity to tangible assets (2)           9.08 %   8.97   8.90
                     
Asset quality analysis at period end                    
Nonperforming loans to total loans           0.70     0.77   0.84
Nonperforming assets to total assets           0.57     0.61   0.68
Allowance for loan losses to total loans           1.26     1.28   1.32
Coverage ratio (3)           1.8x     1.7   1.6
                     
                     
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense)
divided by taxable equivalent net interest income plus noninterest income                    
less gain on sale of nonperforming loans).                    
(2)  Non-GAAP measure; calculated as total equity less $553 of intangible assets divided by                    
total assets less $553 of intangible assets.                    
(3)  Calculated as allowance for loan losses divided by total nonperforming loans.                    
                     
                     
TE = Taxable equivalent.                              

FINANCIAL HIGHLIGHTS, Continued                  
                   
(dollars in thousands, except per share data)                        
(Unaudited)                  
                Six Months Ended
                06/30/17
  06/30/16
Summary of operations                  
Net interest income (TE)             $ 75,966     72,508
Provision for loan losses               1,150     1,600
Net gain on securities transactions                   668
Noninterest income, excluding net gain on securities transactions               9,231     9,103
Noninterest expense               46,932     47,412
Net income               23,187     20,875
                   
Per common share                  
Net income per share:                  
– Basic             $ 0.242     0.219
– Diluted               0.241     0.219
Cash dividends               0.131     0.131
Book value at period end               4.66     4.51
Market price at period end               7.75     6.41
                   
Performance ratios                  
Return on average assets               0.96 %   0.88
Return on average equity               10.62     9.93
Efficiency (1)               54.56     56.96
Net interest spread (TE)               3.11     3.05
Net interest margin (TE)               3.17     3.11
Dividend payout ratio               54.31     60.00
                   
                   
(1)  Non-GAAP measure; calculated as noninterest expense (excluding ORE income/expense)                  
divided by taxable equivalent net interest income plus noninterest income                  
less gain on sale of nonperforming loans).                  
TE = Taxable equivalent.                          

CONSOLIDATED STATEMENTS OF INCOME              
               
(dollars in thousands, except per share data)              
(Unaudited)              
      Three Months Ended
      6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
Interest and dividend income:              
Interest and fees on loans   $ 36,662   36,044 36,251 36,171 35,652
Interest and dividends on securities available for sale:              
U. S. government sponsored enterprises     607   595 422 408 404
State and political subdivisions     11   12 12 13 13
Mortgage-backed securities and collateralized mortgage obligations-residential     1,944   1,958 1,849 1,829 2,169
Corporate bonds                   154   151 149 97
Small Business Administration-guaranteed participation securities     394   415 430 445 450
Mortgage-backed securities and collateralized mortgage obligations-commercial     21   23 23 36 38
Other securities     4   4 4 4 4
Total interest and dividends on securities available for sale     3,135   3,158 2,889 2,832 3,078
               
Interest on held to maturity securities:              
Mortgage-backed securities and collateralized mortgage obligations-residential     296   316 331 347 374
Corporate bonds     154   154 153 156 154
Total interest on held to maturity securities     450   470 484 503 528
               
Federal Reserve Bank and Federal Home Loan Bank stock     134   134 133 131 118
               
Interest on federal funds sold and other short-term investments     1,727   1,246 865 866 832
Total interest income     42,108   41,052 40,622 40,503 40,208
               
Interest expense:              
Interest on deposits:              
Interest-bearing checking     134   124 123 120 116
Savings     435   430 436 504 604
Money market deposit accounts     468   466 459 463 467
Time deposits     2,181   2,283 2,406 2,468 2,460
Interest on short-term borrowings     349   349 291 281 262
Total interest expense     3,567   3,652 3,715 3,836 3,909
               
Net interest income     38,541   37,400 36,907 36,667 36,299
               
Provision for loan losses     550   600 600 750 800
Net interest income after provision for loan losses     37,991   36,800 36,307 35,917 35,499
               
Noninterest income:              
Trustco Financial Services income     1,425   1,858 1,422 1,347 1,512
Fees for services to customers     2,797   2,637 2,795 2,664 2,737
Net gain on securities transactions       668
Other     282   232 295 718 282
Total noninterest income     4,504   4,727 4,512 4,729 5,199
               
Noninterest expenses:              
Salaries and employee benefits     9,559   10,210 9,576 8,995 8,934
Net occupancy expense     4,267   4,109 4,185 3,887 3,918
Equipment expense     1,428   1,556 1,370 1,596 1,840
Professional services     1,963   1,928 1,997 1,959 2,098
Outsourced services     1,500   1,500 1,775 1,465 1,425
Advertising expense     607   713 727 489 570
FDIC and other insurance     1,012   1,047 901 1,127 1,949
Other real estate (income) expense, net     (4 ) 499 721 895 423
Other     2,581   2,457 2,113 2,636 2,817
Total noninterest expenses     22,913   24,019 23,365 23,049 23,974
               
Income before taxes     19,582   17,508 17,454 17,597 16,724
Income taxes     7,342   6,561 6,656 6,667 6,260
               
Net income   $ 12,240   10,947 10,798 10,930 10,464
Net income per common share:              
– Basic   $ 0.127   0.114 0.113 0.114 0.110
               
– Diluted     0.127   0.114 0.113 0.114 0.109
               
Average basic shares (in thousands)     96,003   95,879 95,732 95,603 95,487
Average diluted shares (in thousands)     96,073   95,987 95,877 95,722 95,580
               
Note:  Taxable equivalent net interest income                   $ 38,553   37,413 36,921 36,681 36,311

CONSOLIDATED STATEMENTS OF INCOME          
           
(dollars in thousands, except per share data)          
(Unaudited)                                                            
                              Six Months Ended
        6/30/2017 6/30/2016
           
Interest and dividend income:          
Interest and fees on loans     $ 72,706 71,257
Interest and dividends on securities available for sale:          
U. S. government sponsored enterprises       1,202 659
State and political subdivisions       23 27
Mortgage-backed securities and collateralized mortgage obligations-residential       3,902 4,285
Corporate bonds       305
Small Business Administration-guaranteed participation securities       809 926
Mortgage-backed securities and collateralized mortgage obligations-commercial       44 74
Other securities       8 8
Total interest and dividends on securities available for sale       6,293 5,979
           
Interest on held to maturity securities:          
Mortgage-backed securities-residential       612 775
Corporate bonds       308 308
Total interest on held to maturity securities       920 1,083
           
Federal Reserve Bank and Federal Home Loan Bank stock       268 238
           
Interest on federal funds sold and other short-term investments       2,973 1,677
Total interest income       83,160 80,234
           
Interest expense:          
Interest on deposits:          
Interest-bearing checking       258 230
Savings       865 1,208
Money market deposit accounts       934 962
Time deposits       4,464 4,833
Interest on short-term borrowings       698 519
Total interest expense       7,219 7,752
           
Net interest income       75,941 72,482
           
Provision for loan losses       1,150 1,600
Net interest income after provision for loan losses       74,791 70,882
           
Noninterest income:          
Trust department income       3,283 3,117
Fees for services to customers       5,434 5,398
Net gain on securities transactions       668
Other       514 588
Total noninterest income       9,231 9,771
           
Noninterest expenses:          
Salaries and employee benefits       19,769 17,937
Net occupancy expense       8,376 8,006
Equipment expense       2,984 3,354
Professional services       3,891 4,244
Outsourced services       3,000 2,976
Advertising expense       1,320 1,299
FDIC and other insurance       2,059 3,939
Other real estate expense, net       495 942
Other       5,038 4,715
Total noninterest expenses       46,932 47,412
           
Income before taxes       37,090 33,241
Income taxes       13,903 12,366
           
Net income     $ 23,187 20,875
           
Net income per Common Share:          
– Basic     $ 0.242 0.219
           
– Diluted       0.241 0.219
           
Average basic shares (thousands)       95,944 95,426
Average diluted shares (thousands)       96,034 95,496
           
Note:  Taxable equivalent net interest income                                                       $ 75,966 72,508

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION              
               
(dollars in thousands)              
(Unaudited)              
                   
               
      6/30/2017 3/31/2017 12/31/2016 9/30/2016 6/30/2016
ASSETS:              
               
Cash and due from banks   $ 43,783   41,352   48,719   42,296   39,787  
Federal funds sold and other short term investments     663,360   641,839   658,555   622,132   718,609  
Total cash and cash equivalents     707,143   683,191   707,274   664,428   758,396  
             
Securities available for sale:            
U. S. government sponsored enterprises     128,386   162,341   117,266   116,327   116,595  
States and political subdivisions     536   887   886   970   974  
Mortgage-backed securities and collateralized mortgage obligations-residential     352,591   357,683   372,308   400,575   404,138  
Small Business Administration-guaranteed participation securities     72,858   75,429   78,499   84,687   87,740  
Mortgage-backed securities and collateralized mortgage obligations-commercial     9,903   9,923   10,011   10,233   10,374  
Corporate bonds     40,498   40,612   40,705   41,025    
Other securities     685   685   685   685   685  
Total securities available for sale     605,457   647,560   620,360   654,502   620,506  
               
Held to maturity securities:              
Mortgage-backed securities and collateralized mortgage obligations-residential     31,211   33,276   35,500   38,044   40,702  
Corporate bonds     9,997   9,994   9,990   9,986   9,982  
Total held to maturity securities     41,208   43,270   45,490   48,030   50,684  
               
Federal Reserve Bank and Federal Home Loan Bank stock     9,723   9,579   9,579   9,579   9,579  
             
Loans:            
Commercial     183,035   184,451   191,194   189,795   195,698  
Residential mortgage loans     2,999,306   2,929,928   2,895,733   2,845,876   2,786,951  
Home equity line of credit     316,674   326,280   334,841   343,445   352,069  
Installment loans     8,458   8,277   8,818   8,515   8,476  
Loans, net of deferred net costs     3,507,473   3,448,936   3,430,586   3,387,631   3,343,194  
Less:            
Allowance for loan losses     44,162   44,048   43,890   43,950   44,064  
Net loans     3,463,311   3,404,888   3,386,696   3,343,681   3,299,130  
               
Bank premises and equipment, net     35,174   35,175   35,466   36,110   36,793  
Other assets     58,466   63,080   63,941   56,519   55,825  
             
Total assets   $ 4,920,482   4,886,743   4,868,806   4,812,849   4,830,913  
             
  LIABILITIES:            
Deposits:            
Demand   $ 390,120   373,930   377,755   380,090   376,669  
Interest-bearing checking     871,004   838,936   815,534   785,118   766,322  
Savings accounts     1,285,886   1,287,802   1,271,449   1,277,734   1,282,006  
Money market deposit accounts     572,580   583,909   571,962   566,097   577,063  
Time deposits     1,088,824   1,113,892   1,159,463   1,159,199   1,178,567  
Total deposits     4,208,414   4,198,469   4,196,163   4,168,238   4,180,627  
             
Short-term borrowings     233,621   220,946   209,406   179,204   190,542  
Accrued expenses and other liabilities     31,081   28,628   30,551   29,799   29,479  
             
Total liabilities     4,473,116   4,448,043   4,436,120   4,377,241   4,400,648  
             
  SHAREHOLDERS’ EQUITY:            
Capital stock     99,511   99,493   99,214   99,121   99,071  
Surplus     172,603   172,628   171,425   171,093   171,174  
Undivided profits     212,112   206,173   201,517   197,013   192,356  
Accumulated other comprehensive (loss) income, net of tax     (3,593 ) (5,568 ) (6,251 ) 2,328   2,395  
Treasury stock at cost     (33,267 ) (34,026 ) (33,219 ) (33,947 ) (34,731 )
             
Total shareholders’ equity     447,366   438,700   432,686   435,608   430,265  
               
Total liabilities and shareholders’ equity   $ 4,920,482   4,886,743   4,868,806   4,812,849   4,830,913  
               
Outstanding shares (in thousands)         96,015   95,917   95,780   95,614   95,493  

NONPERFORMING ASSETS                
                 
(dollars in thousands)                
(Unaudited)                
                 
Nonperforming Assets                
        06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
New York and other states*                
Loans in nonaccrual status:                
Commercial     $ 1,711   1,858   1,843   2,366   2,690  
Real estate mortgage – 1 to 4 family       20,639   22,772   21,198   21,678   23,559  
Installment                                            25   41   48   70   49  
Total non-accrual loans       22,375   24,671   23,089   24,114   26,298  
Other nonperforming real estate mortgages – 1 to 4 family       41   41   42   44   45  
Total nonperforming loans       22,416   24,712   23,131   24,158   26,343  
Other real estate owned       3,585   3,191   4,268   4,768   4,602  
Total nonperforming assets     $ 26,001   27,903   27,399   28,926   30,945  
                 
Florida                
Loans in nonaccrual status:                
Commercial     $          
Real estate mortgage – 1 to 4 family       2,112   1,712   1,929   1,844   1,900  
Installment                
Total non-accrual loans       2,112   1,712   1,929   1,844   1,900  
Other nonperforming real estate mortgages – 1 to 4 family                
Total nonperforming loans       2,112   1,712   1,929   1,844   1,900  
Other real estate owned                
Total nonperforming assets     $ 2,112   1,712   1,929   1,844   1,900  
                 
Total                
Loans in nonaccrual status:                
Commercial     $ 1,711   1,858   1,843   2,366   2,690  
Real estate mortgage – 1 to 4 family       22,751   24,484   23,127   23,522   25,459  
Installment       25   41   48   70   49  
Total non-accrual loans       24,487   26,383   25,018   25,958   28,198  
Other nonperforming real estate mortgages – 1 to 4 family       41   41   42   44   45  
Total nonperforming loans       24,528   26,424   25,060   26,002   28,243  
Other real estate owned       3,585   3,191   4,268   4,768   4,602  
Total nonperforming assets     $ 28,113   29,615   29,328   30,770   32,845  
                 
                 
Quarterly Net Chargeoffs (Recoveries)                
        06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
New York and other states*                
Commercial     $   64   (56 ) 353   67  
Real estate mortgage – 1 to 4 family       334   261   619   471   973  
Installment       37   31   55   37   77  
Total net chargeoffs     $ 371   356   618   861   1,117  
                 
Florida                
Commercial     $          
Real estate mortgage – 1 to 4 family       52   84   23     16  
Installment       13   2   19   3   1  
Total net chargeoffs     $ 65   86   42   3   17  
                 
Total                
Commercial     $   64   (56 ) 353   67  
Real estate mortgage – 1 to 4 family       386   345   642   471   989  
Installment       50   33   74   40   78  
Total net chargeoffs     $ 436   442   660   864   1,134  
                 
                 
Asset Quality Ratios                
        06/30/17 03/31/17 12/31/16 09/30/16 06/30/16
                 
Total nonperforming loans(1)     $ 24,528   26,424   25,060   26,002   28,243  
Total nonperforming assets(1)       28,113   29,615   29,328   30,770   32,845  
Total net chargeoffs(2)       436   442   660   864   1,134  
                 
Allowance for loan losses(1)       44,162   44,048   43,890   43,950   44,064  
                 
Nonperforming loans to total loans       0.70 % 0.77 % 0.73 % 0.77 % 0.84 %
Nonperforming assets to total assets       0.57 % 0.61 % 0.60 % 0.64 % 0.68 %
Allowance for loan losses to total loans       1.26 % 1.28 % 1.28 % 1.30 % 1.32 %
Coverage ratio(1)       180.0 % 166.7 % 175.1 % 169.0 % 156.0 %
Annualized net chargeoffs to average loans(2)       0.05 % 0.05 % 0.08 % 0.10 % 0.14 %
Allowance for loan losses to annualized net chargeoffs(2)       25.3x   24.9x   16.6x   12.7x   9.7x  
                 
* Includes New York, New Jersey, Vermont and Massachusetts.                
(1)  At period-end                
(2)  For the period ended                              

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
                             
(dollars in thousands)     Three months ended       Three months ended  
(Unaudited)     June 30, 2017       June 30, 2016  
      Average   Interest   Average       Average   Interest   Average  
      Balance     Rate       Balance     Rate  
                             
Assets                                    
                             
Securities available for sale:                            
U. S. government sponsored enterprises   $ 153,552     607   1.58 %   $ 107,190     404   1.51 %
Mortgage backed securities and                                  
collateralized mortgage obligations-residential     359,085     1,944   2.17       445,162     2,169   1.95  
State and political subdivisions     816     16   7.84       955     19   7.96  
Corporate bonds     42,699     154   1.44              
Small Business Administration-guaranteed participation securities     75,561     394   2.09       87,801     450   2.05  
Mortgage backed securities and                            
collateralized mortgage obligations-commercial     10,003     21   0.84       10,321     38   1.47  
Other     685     4   2.34       677     4   2.36  
                             
Total securities available for sale     642,401     3,140   1.96       652,106     3,084   1.89  
                             
Federal funds sold and other                            
short-term Investments     643,557     1,727   1.07       668,395     832   0.50  
                             
Held to maturity securities:                            
Corporate bonds     9,996     154   6.16       9,981     154   6.17  
Mortgage backed securities and                            
collateralized mortgage obligations-residential     32,188     296   3.68       42,188     374   3.55  
                             
Total held to maturity securities     42,184     450   4.27       52,169     528   4.05  
                             
Federal Reserve Bank and Federal Home Loan Bank stock     9,709     134   5.52       9,576     118   4.93  
                             
Commercial loans     183,382     2,401   5.24       198,938     2,563   5.15  
Residential mortgage loans     2,958,994     30,943   4.18       2,759,024     29,725   4.31  
Home equity lines of credit     320,872     3,131   3.90       354,897     3,179   3.58  
Installment loans     8,029     194   9.66       8,316     191   9.19  
                             
Loans, net of unearned income     3,471,277     36,669   4.23       3,321,175     35,658   4.29  
                             
Total interest earning assets     4,809,128     42,120   3.50       4,703,421     40,220   3.42  
                             
Allowance for loan losses     (44,429 )             (44,754 )        
Cash & non-interest earning assets     130,998               136,724          
                             
                             
Total assets   $ 4,895,697             $ 4,795,391          
                             
                             
Liabilities and shareholders’ equity                            
                             
Deposits:                            
Interest bearing checking accounts   $ 849,965     134   0.06 %   $ 759,546     116   0.06 %
Money market accounts     577,464     468   0.32       580,100     467   0.32  
Savings     1,286,282     435   0.14       1,273,575     604   0.19  
Time deposits     1,102,777     2,181   0.79       1,177,084     2,460   0.84  
                             
Total interest bearing deposits     3,816,488     3,218   0.34       3,790,305     3,647   0.38  
Short-term borrowings     226,455     349   0.62       181,247     262   0.58  
                             
Total interest bearing liabilities     4,042,943     3,567   0.35       3,971,552     3,909   0.39  
                             
Demand deposits     380,611               370,781          
Other liabilities     28,026               27,121          
Shareholders’ equity     444,117               425,937          
                             
Total liabilities and shareholders’ equity   $ 4,895,697             $ 4,795,391          
                             
Net interest income, tax equivalent         38,553               36,311      
                             
Net interest spread           3.15 %           3.03 %
                             
Net interest margin (net interest income                            
to total interest earning assets)           3.21 %           3.09 %
                             
Tax equivalent adjustment         (12 )             (12 )    
                             
                             
Net interest income         38,541               36,299      
                             

DISTRIBUTION OF ASSETS, LIABILITIES AND SHAREHOLDERS’ EQUITY-  
INTEREST RATES AND INTEREST DIFFERENTIAL  
(dollars in thousands)     Six Months ended       Six Months ended  
(Unaudited)     June 30, 2017       June 30, 2016  
      Average   Interest   Average       Average   Interest   Average  
      Balance       Rate       Balance     Rate  
                             
Assets                            
                             
Securities available for sale:                            
U. S. government sponsored enterprises   $ 148,054     1,202   1.62 %   $ 91,111     659   1.45 %
Mortgage backed securities and                            
collateralized mortgage obligations-residential     363,496     3,902   2.15       428,831     4,285   2.00  
State and political subdivisions           844     35   8.29       1,034     41   7.93  
Corporate bonds             42,143     305   1.45              
Small Business Administration-guaranteed participation securities     77,068     809   2.10       89,206     926   2.08  
Mortgage backed securities and                            
collateralized mortgage obligations-commercial     10,046     44   0.88       10,357     74   1.43  
Other     685     8   2.34       682     8   2.35  
                             
Total securities available for sale     642,336     6,305   1.96       621,221     5,993   1.93  
                             
Federal funds sold and other                            
short-term Investments     642,348     2,973   0.93       671,990     1,677   0.50  
                             
Held to maturity securities:                            
Corporate bonds     9,994     308   6.16       9,979     308   6.17  
Mortgage backed securities and                            
collateralized mortgage obligations-residential     33,240     612   3.68       43,650     775   3.55  
                             
Total held to maturity securities     43,234     920   4.26       53,629     1,083   4.04  
                             
Federal Reserve Bank and Federal Home Loan Bank stock     9,645     268   5.56       9,527     238   5.00  
                             
Commercial loans     185,474     4,830   5.21       200,152     5,180   5.18  
Residential mortgage loans     2,935,620     61,310   4.18       2,742,918     59,348   4.33  
Home equity lines of credit     325,579     6,216   3.82       356,857     6,358   3.56  
Installment loans     8,128     363   8.93       8,488     383   9.02  
                             
Loans, net of unearned income     3,454,801     72,719   4.21       3,308,415     71,269   4.31  
                             
Total interest earning assets     4,792,364     83,185   3.47       4,664,782     80,260   3.44  
                             
Allowance for loan losses     (44,333 )             (45,013 )        
Cash & non-interest earning assets     130,575               136,138          
                             
                             
Total assets   $ 4,878,606             $ 4,755,907          
                             
                             
Liabilities and shareholders’ equity                            
                             
Deposits:                            
Interest bearing checking accounts   $ 829,615     258   0.06 %   $ 747,322     230   0.06 %
Money market accounts     578,728     934   0.32       591,937     962   0.33  
Savings     1,280,552     865   0.14       1,268,021     1,208   0.19  
Time deposits     1,118,274     4,464   0.80       1,155,773     4,833   0.84  
                             
Total interest bearing deposits     3,807,169     6,521   0.34       3,763,053     7,233   0.38  
Short-term borrowings     228,078     698   0.61       178,683     519   0.58  
                             
Total interest bearing liabilities     4,035,247     7,219   0.36       3,941,736     7,752   0.39  
                             
Demand deposits     375,610               364,503          
Other liabilities     27,408               27,019          
Shareholders’ equity     440,341               422,649          
                             
Total liabilities and shareholders’ equity   $ 4,878,606             $ 4,755,907          
                             
Net interest income, tax equivalent         75,966               72,508      
                             
Net interest spread           3.11 %           3.05 %
                             
Net interest margin (net interest income                            
to total interest earning assets)           3.17 %           3.11 %
                             
Tax equivalent adjustment         (25 )             (26 )    
                             
                             
Net interest income         75,941               72,482      
                             

Non-GAAP Financial Measures Reconciliation

Tangible equity as a percentage of tangible assets at period end is a non-GAAP financial measure derived from GAAP-based amounts. We calculate tangible equity and tangible assets by excluding the balance of intangible assets from shareholders’ equity and total assets, respectively. We calculate tangible equity as a percentage of tangible assets at period end by dividing tangible equity by tangible assets at period end. We believe that this is consistent with the treatment by bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios. 

The efficiency ratio is a non-GAAP measure of expense control relative to revenue from net interest income and fee income.  We calculate the efficiency ratio by dividing total noninterest expenses as determined under GAAP, but excluding other real estate expense, net, by net interest income (fully taxable equivalent) and total noninterest income as determined under GAAP, but excluding net gains on the sale of nonperforming loans and securities from this calculation.  We believe that this provides a reasonable measure of primary banking expenses relative to primary banking revenue. 

We believe that these non-GAAP financial measures provide information that is important to investors and that is useful in understanding our financial results. Our management internally assesses our performance based, in part, on these measures.  However, these non-GAAP financial measures are supplemental and not a substitute for an analysis based on GAAP measures. As other companies may use different calculations for these measures, this presentation may not be comparable to other similarly titled measures reported by other companies. A reconciliation of the non-GAAP measures of tangible common equity, tangible book value per share, efficiency ratio, net income and net income per share to the underlying GAAP numbers is set forth below.

NON-GAAP FINANCIAL MEASURES RECONCILIATION                  
                   
(dollars in thousands, except per share amounts)                  
(Unaudited)                  
        06/30/17 03/31/17 06/30/16      
Tangible Equity to Tangible Assets                  
Total Assets                                     4,920,482   4,886,743   4,830,913        
Less: Intangible assets       553   553   553        
Tangible assets       4,919,929   4,886,190   4,830,360        
                   
Equity     $ 447,366   438,700   430,265        
Less: Intangible assets       553   553   553        
Tangible equity       446,813   438,147   429,712        
Tangible Equity to Tangible Assets       9.08 % 8.97 % 8.90 %      
Equity to Assets       9.09 % 8.98 % 8.91 %      
                   
        3 Months Ended   Six Months Ended
Efficiency Ratio       06/30/17 03/31/17 06/30/16   06/30/17 06/30/16
                   
Net interest income     $ 38,541   37,400   36,299     75,941   72,482  
Taxable equivalent adjustment       12   13   12     25   26  
Net interest income (fully taxable equivalent)       38,553   37,413   36,311     75,966   72,508  
Non-interest income       4,504   4,727   5,199     9,231   9,771  
Less:  Net gain on sale of nonperforming loans       84     24     84   24  
Less:  Net gain on securities           668       668  
Revenue used for efficiency ratio       42,973   42,140   40,818     85,113   81,587  
                   
Total noninterest expense       22,913   24,019   23,974     46,932   47,412  
Less:  Other real estate (income) expense, net       (4 ) 499   423     495   942  
Expense used for efficiency ratio       22,917   23,520   23,551     46,437   46,470  
                   
Efficiency Ratio       53.33 % 55.81 % 57.70 %   54.56 % 56.96 %

 

Contact:  
Kevin T. Timmons
Vice President/Treasurer
(518) 381-3607

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Emclaire Financial Corp Reports 11.9% Increase in Quarterly Earnings

EMLENTON, Pa., July 21, 2017 (GLOBE NEWSWIRE) — Emclaire Financial Corp (NASDAQ:EMCF), the parent holding company of The Farmers National Bank of Emlenton, reported consolidated net income of $1.0 million, or $0.48 per share, for the three months ended June 30, 2017, an increase of $111,000, or 11.9%, from $930,000, or $0.43 per share, reported for the same period in 2016.  Net income for the six-month period ended June 30, 2017 was $2.0 million, or $0.92 per diluted share, an increase of $265,000, or 15.3%, from $1.7 million, or $0.80 per diluted share, for the same period in 2016.

The increase in net income for both periods was primarily driven by growth in loans outstanding, which led to increases in net interest income of 10.4% and 12.2% for the current quarter and year-to-date period, respectively.  Partially offsetting this increase were increases in noninterest expense, the provision for loan losses and the provision for income taxes.  The Corporation realized an annualized return on average assets of 0.58% and an annualized return on average equity of 7.50% for the quarter ended June 30, 2017, compared to 0.56% and 6.90%, respectively, for the same period in 2016.

William C. Marsh, Chairman, President and Chief Executive Officer of the Corporation and the Bank, noted, “The Board of Directors, management and I are pleased with the results for the first half of 2017, including strong earnings and balance sheet growth. We realized significant loan production and deposit growth across our franchise and are experiencing favorable results in the new offices in the Allegheny County market.  Efforts in the upcoming quarters will be focused on continued expansion through the completion of the acquisition of Northern Hancock Bank and Trust Co. (NHBT) in Chester, West Virginia.  We remain focused on sustaining a sound capital base while providing an attractive return to our shareholders and are well-positioned for future profitable growth.”

OPERATING RESULTS OVERVIEW

Net income increased $111,000, or 11.9%, to $1.0 million or $0.48 per common share for the three months ended June 30, 2017, compared to $930,000 or $0.43 per common share for the same period in 2016. The increase resulted from an increase in net interest income of $505,000, partially offset by a $74,000 decrease in noninterest income and increases in noninterest expense, the provision for loan losses and the provision for income taxes of $213,000, $80,000 and $27,000, respectively.

Net interest income increased $505,000, or 10.4%, to $5.4 million for the three months ended June 30, 2017 from $4.9 million for the same period in 2016.  The increase in net interest income resulted from an increase in interest income of $555,000, or 9.4%, primarily due to a $66.5 million increase in the average balance of loans.  Partially offsetting the increase in interest income, interest expense increased $50,000, or 4.9%, as the Corporation’s average balance of interest-bearing deposits and borrowed funds increased $33.3 million and $2.9 million, respectively.  Driving the increases in the Corporation’s interest-earning assets and interest-bearing liabilities was the acquisition of United-American Savings Bank (UASB) in late April 2016, which added $66.1 million in loans and $72.7 million in deposits to the Corporation.  In addition, the Bank experienced strong loan production in 2016 and through the first half of 2017.

The provision for loan losses increased $80,000, or 66.1%, to $201,000 for the three months ended June 30, 2017 from $121,000 for the same period in 2016 due to general increases in the Corporation’s loan portfolio.  Asset quality continues to be strong as the Corporation’s nonperforming loans and criticized and classified asset levels have both decreased.  Nonperforming loans decreased $278,000, or 8.4%, to $3.0 million at June 30, 2017 compared to $3.3 million at December 31, 2016, due primarily to the payoff of two residential mortgage loans totaling $391,000 which were on nonaccrual status. Criticized and classified assets decreased $3.1 million, or 24.2%, to $9.7 million at June 30, 2017 compared to $12.8 million at December 31, 2016, due primarily to the risk rating upgrade of one commercial loan relationship.

Noninterest income decreased $74,000, or 7.9%, to $868,000 for the three months ended June 30, 2017 from $942,000 for the same period in 2016.  During the quarter ended June 30, 2017, the Corporation recorded a $508,000 other-than-temporary impairment charge on a subordinated debt investment issued by First NBC Bank Holding Company.  On April 28, 2017, the Louisiana Office of Financial Institutions closed First NBC Bank, the wholly owned banking subsidiary of First NBC Bank Holding Company, and named the FDIC as receiver for the bank.  Partially offsetting this impairment charge, the Corporation realized securities gains of $350,000 during the quarter ended June 30, 2017, compared to $81,000 during the same period in 2016.  Additionally, gains on the sale of loans totaled $124,000 for the quarter ended June 30, 2017 and customer service fees increased $49,000 as overdraft charges for the second quarter of 2017 outpaced the same quarter last year.

Noninterest expense increased $213,000, or 4.8%, to $4.7 million for the quarter ended June 30, 2017 from $4.5 million for the same period in 2016.  The increase related to increases in compensation and benefits, premises and equipment, professional fees, acquisition costs, federal deposit insurance and intangible asset amortization of $170,000, $34,000, $26,000, $14,000, $13,000 and $3,000, respectively.  These increases in expenses were primarily related to normal salary and benefit increases and the operation of two new full-service banking offices: the South Side office which was acquired from UASB in April 2016 and the new Aspinwall office which opened in August 2016.  Partially offsetting these increases, other noninterest expense decreased $47,000.

The provision for income taxes increased $27,000 or 9.4%, to $314,000 for the three months ended June 30, 2017 from $287,000 for the same period in 2016.  This related to an increase in the Corporation’s taxable income, partially offset by a decrease in the Corporation’s effective tax rate to 23.2% for the second quarter of 2017 from 23.6% for the same period in 2016.

CONSOLIDATED YEAR-TO-DATE OPERATING RESULTS OVERVIEW

Net income increased $265,000, or 15.3%, to $2.0 million or $0.92 per diluted share for the six months ended June 30, 2017, compared to $1.7 million or $0.80 per diluted share for the same period in 2016. The increase resulted from an increase in net interest income of $1.1 million, partially offset by increases in noninterest expense, the provision for loan losses and the provision for income taxes of $816,000, $61,000 and $3,000, respectively.

Net interest income increased $1.1 million, or 12.2%, to $10.5 million for the six months ended June 30, 2017 from $9.4 million for the same period in 2016.  The increase in net interest income resulted from an increase in interest income of $1.4 million, or 12.3%, as the Corporation experienced an $81.6 million increase in the average balance of loans.  Partially offsetting the increase in interest income, interest expense increased $235,000, or 12.7%, as the Corporation’s average balance of interest-bearing deposits and borrowed funds increased $54.0 million and $5.5 million, respectively.  The increases in the Corporation’s interest-earning assets and interest-bearing liabilities primarily relate to the aforementioned acquisition of UASB and strong loan and deposit production across the Bank’s franchise.

The provision for loan losses increased $61,000, or 20.2%, to $363,000 for the six months ended June 30, 2017 from $302,000 for the same period in 2016 due to general increases in the Corporation’s loan portfolio.

Noninterest income was $1.7 million for the six month periods ended June 30, 2017 and 2016.  During the six months ended June 30, 2017, the Corporation recorded the aforementioned $508,000 other-than-temporary impairment charge.  Partially offsetting this impairment charge, the Corporation realized securities gains of $350,000 during the six months ended June 30, 2017, compared to $83,000 during the same period in 2016.  Additionally, gains on the sale of loans totaled $130,000 for the six months ended June 30, 2017 and customer service fees increased $111,000 as overdraft charges for the first half of 2017 outpaced the same period last year.

Noninterest expense increased $816,000, or 9.6%, to $9.3 million for the six months ended June 30, 2017 from $8.5 million for the same period in 2016.  The increase related to increases in other noninterest expense, compensation and benefits, premises and equipment, professional fees, federal deposit insurance and intangible asset amortization of $473,000, $445,000, $106,000, $44,000, $28,000 and $14,000, respectively, partially offset by a $294,000 decrease in acquisition costs.  These increases in expenses were primarily related to the operation of two new full-service banking offices as well as normal salary and benefit increases.  During the six months ended June 30, 2017, the Corporation realized costs of $107,000 related to the acquisition of NHBT, compared to $401,000 of costs related to the acquisition of UASB during the same period in 2016.

CONSOLIDATED BALANCE SHEET & ASSET QUALITY OVERVIEW

Total assets increased $44.7 million, or 6.5%, to $736.9 million at June 30, 2017 from $692.1 million at December 31, 2016.  Asset growth was driven by increases in net loans receivable and cash and equivalents of $30.3 million and $17.1 million, respectively.  Liabilities increased $42.2 million, or 6.6%, to $680.2 million at June 30, 2017 from $638.1 million at December 31, 2016 due to an increase in customer deposits of $44.2 million.

Total nonperforming assets were $3.3 million, or 0.44% of total assets at June 30, 2017 compared to $3.6 million, or 0.52% of total assets at December 31, 2016. This $363,000, or 10.0%, decrease in nonperforming assets was primarily due to the payoff of two residential mortgage loans on nonaccrual status totaling $391,000.

Stockholders’ equity increased $2.6 million, or 4.8%, to $56.6 million at June 30, 2017 from $54.1 million at December 31, 2016 primarily due to proceeds from the exercise of stock options of $1.3 million and net income of $2.0 million for the six month period, offset by common stock dividends paid of $1.2 million. The Corporation remains well capitalized and is positioned for continued growth with total stockholders’ equity at 7.7% of total assets.  Tangible book value per common share was $20.86 at June 30, 2017, compared to $20.08 at December 31, 2016.

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 17 full service banking offices in Venango, Allegheny, 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   Six month period  
      ended June 30,   ended June 30,  
       2017
   2016
   2017
   2016
 
Interest income $ 6,432     $ 5,877     $ 12,605     $ 11,226    
Interest expense   1,067       1,017       2,084       1,849    
  Net interest income     5,365       4,860       10,521       9,377    
Provision for loan losses   201       121       363       302    
Noninterest income   868       942       1,723       1,722    
Noninterest expense   4,677       4,464       9,298       8,482    
  Income before provision for income taxes     1,355       1,217       2,583       2,315    
Provision for income taxes   314       287       586       583    
  Net income   $ 1,041     $ 930     $ 1,997     $ 1,732    
                                             
Basic earnings per common share $ 0.48     $ 0.43     $ 0.93     $ 0.81    
Diluted earnings per common share $ 0.48     $ 0.43     $ 0.92     $ 0.80    
Dividends per common share $ 0.27     $ 0.26     $ 0.54     $ 0.52    
Return on average assets (1)   0.58 %     0.56 %     0.57 %     0.54 %  
Return on average equity (1)   7.50 %     6.90 %     7.31 %     6.47 %  
Yield on average interest-earning assets   3.94 %     3.86 %     3.94 %     3.88 %  
Cost of average interest-bearing liabilities   0.82 %     0.84 %     0.81 %     0.81 %  
Cost of funds   0.66 %     0.67 %     0.65 %     0.64 %  
Net interest margin   3.30 %     3.21 %     3.30 %     3.24 %  
Efficiency ratio   76.75 %     75.09 %     75.47 %     74.00 %  
____________________                
(1) Returns are annualized for the three and six month periods ended June 30, 2017 and 2016.  
           
CONSOLIDATED BALANCE SHEET DATA:   As of   As of  
              6/30/2017   12/31/2016  
Total assets         $ 736,865     $ 692,135    
Cash and equivalents           34,715       17,568    
Securities           99,828       101,560    
Loans, net           545,766       515,435    
Deposits           629,174       584,940    
Borrowed funds           41,500       44,000    
Stockholders’ equity           56,647       54,073    
Book value per common share         $ 25.74     $ 25.12    
Tangible book value per common share         $ 20.86     $ 20.08    
Net loans to deposits           86.74 %     88.13 %  
Allowance for loan losses to total loans           1.05 %     1.06 %  
Nonperforming assets to total assets           0.44 %     0.52 %  
Stockholders’ equity to total assets           7.69 %     7.81 %  
Shares of common stock outstanding           2,200,944       2,152,358    
                         

INVESTOR RELATIONS CONTACT:
William C. Marsh
Chairman, President and
Chief Executive Officer
Phone: (844) 800-2193
Email:  investor.relations@farmersnb.com

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First Bancshares, Inc. Announces Second Quarter 2016 Results

MOUNTAIN GROVE, Mo., July 21, 2017 (GLOBE NEWSWIRE) — First Bancshares, Inc. (“Company”), (OTCQB:FBSI), the holding company for First Home Bank (“Bank”), today announced its financial results for the quarter ended June 30, 2017.

For the quarter ended June 30, 2017, the Company had net income of $122,000, or $0.08 per share – diluted, compared to net income of $160,000, or $0.11 per share – diluted for the quarter ended June 30, 2016.  The $38,000 decrease in net income for the quarter ended June 30, 2017 compared to the quarter ended June 30, 2016 is attributable to an increase of $30,000 in provision for loan losses, a $23,000 increase in loss on sale of investments, a $20,000 decrease in non-interest income and a $31,000 increase in non-interest expense.  This was partially offset by an increase of $56,000 in net interest income and a $10,000 decrease in income tax expense.

During the quarter ended June 30, 2017, net interest income increased by $56,000, or 3.67%, to $1.58 million from $1.53 million during the same quarter in 2016.  This increase in net interest income was the result of an increase in interest income of $72,000, or 3.92% and was partially offset by an increase of $16,000, or 5.19%, in interest expense.  The increase in interest income is due to the growth in the Company’s loan portfolio.  The increase in interest expense was primarily the result of an increase in the Company’s deposit portfolio.

Provision for loan losses for the quarter ended June 30, 2017 were $30,000 compared to no provision for loan losses for the quarter ended June 30, 2016.  Provision for loan losses during the June 30, 2017 quarter is attributable to growth in the Company’s loan portfolio.  The allowance for loan losses at June 30, 2017 was $1.80 million, or 1.22% of total loans at June 30, 2017 compared to $1.71 million, or 1.25% of total loans at June 30, 2016.  Classified loans at June 30, 2017 were $1.42 million compared to $813,000 at June 30, 2016.

For the quarter ended June 30, 2017, the Company had a loss on sale of investments of $14,000 compared to a $9,000 gain on sale of investments during the quarter ended June 30, 2016.  Market conditions during both quarters presented management with opportunities to continue to sell certain securities to improve the Company’s interest rate risk profile.  The Company used the proceeds from these sales to fund loans and the results are an increase in the Company’s interest income.

Non-interest income decreased by $20,000, or 8.30% to $221,000 for the quarter ended June 30, 2017 from $241,000 for the same quarter in 2016.  The decrease was the result of a decrease of $13,000 in service charges on deposit accounts and a decrease of $7,000 in debit card and ATM fees.

Non-interest expense increased by $31,000, or 2.03%, to $1.56 million for the quarter ended June 30, 2017 from $1.53 million for the quarter ended June 30, 2016.  The increase in non-interest expense reflects an increase of $63,000 in professional fees consisting of legal, accounting and consulting service related expenses directly related to the upcoming merger with Stockmens Bank, Colorado Springs, CO.  This is partially offset by a decrease of $9,000 in salaries and employee benefits, a decrease of $4,000 in premises and fixed asset expenses, a decrease of $7,000 in FDIC deposit insurance premiums and a decrease of $12,000 in other non-interest expense items.

For the six months ended June 30, 2017, the Company had net income of $174,000, or $0.11 per share – diluted, compared to net income of $319,000, or $0.21 per share – diluted for the six months ended June 30, 2016.  The $145,000 decrease in net income for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 is attributable to an increase of $90,000 in provision for loan losses, an increase of $30,000 in loss on sale of investments, a decrease of $53,000 in non-interest income and an increase of $154,000 in non-interest expense.  This is partially offset by an increase of $106,000 in net interest income and a decrease of $76,000 in income tax expense.

For the six months ended June 30, 2017, the Company had provision for loan losses of $90,000 compared to no provision for loan losses during the six months ended June 30, 2016.  The Company’s provision for loan loss expense for 2017 is attributable to growth in the loan portfolio.

During the six months ended June 30, 2017, the Company had a loss on sale of investments of $23,000 compared to a gain on sale of investments of $7,000 during the same period in 2016. 

Non-interest income decreased by $53,000, or 10.73%, to $441,000 for the six months ended June 30, 2017, compared to $494,000 for the same period in 2016.  The decrease in non-interest income reflects a decrease of $28,000 in service charges on deposit accounts, a $16,000 decrease in debit card and ATM fees and a $14,000 decrease in the sale of repossessed assets and OREO.  This was partially offset by a $5,000 increase in other non-interest income items.

Non-interest expense increased by $154,000, or 5.11%, to $3.17 million for the six months ended June 30, 2017, compared to $3.01 million for the six months ended June 30, 2016.  The increase is attributable to professional fees consisting of legal, accounting and consulting service related expenses directly related to the upcoming merger with Stockmens Bank, Colorado Springs, CO of $159,000.  This was partially offset by a decrease of $5,000 in other non-interest expense items.

Total consolidated assets at June 30, 2017 were $227.93 million, compared to $219.48 million at December 31, 2016, representing an increase of $8.45 million, or 3.85%.  Stockholders’ equity at June 30, 2017 was $20.26 million, or 8.89% of assets, compared with $19.77 million, or 9.01% of assets at December 31, 2016.  Book value per common share increased to $13.08 at June 30, 2017 from $12.76 at December 31, 2016.  The $492,000, or 2.49% increase in stockholders’ equity was attributable to an increase in the unrealized gains on available-for-sale securities, net of income taxes of $318,000 and by net income of $174,000 million for the six months ended June 30, 2017.

Net loans receivable increased $8.34 million, or 6.10%, to $145.14 million at June 30, 2017 from $136.80 million at December 31, 2016.  While loan growth has been the key focus for the Company, we have continued to concentrate on maintaining high asset quality within the loan portfolio.  Nonperforming loans at June 30, 2017 were $489,000, or 0.34% of net loans, compared to $246,000 in nonperforming loans, or 0.18% of net loans at December 31, 2016.  Deposits increased $10.17 million, or 5.60% to $191.90 million at June 30, 2017 from $181.73 million at December 31, 2016.  FHLB advances decreased $2.0 million or 16.67%, to $10.00 million at June 30, 2017 from $12.0 million at December 31, 2016.

First Bancshares, Inc. is the holding company for First Home Bank, a FDIC-insured commercial bank chartered by the State of Missouri that conducts business from its home office in Mountain Grove, Missouri, and seven full service offices in Marshfield, Ava, Gainesville, Sparta, Springfield, Crane, and Kissee Mills, Missouri.

The Company and its wholly-owned subsidiary, First Home Bank, may from time to time make written or oral “forward-looking statements” in its reports to shareholders, and in other communications by the Company, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995.

These forward-looking statements include statements with respect to the Company’s beliefs, expectations, estimates and intentions that are subject to significant risks and uncertainties, and are subject to change based on various factors, some of which are beyond the Company’s control. Such statements address the following subjects: future operating results; customer growth and retention; loan and other product demand; earnings growth and expectations; new products and services; credit quality and adequacy of reserves; results of examinations by our bank regulators, technology, and our employees. The following factors, among others, could cause the Company’s financial performance to differ materially from the expectations, estimates and intentions expressed in such forward-looking statements: the strength of the United States economy in general and the strength of the local economies in which the Company conducts operations; the effects of, and changes in, trade, monetary, and fiscal policies and laws, including interest rate policies of the Federal Reserve Board; inflation, interest rate, market, and monetary fluctuations; the timely development and acceptance of new products and services of the Company and the perceived overall value of these products and services by users; the impact of changes in financial services’ laws and regulations; technological changes; acquisitions; changes in consumer spending and savings habits; and the success of the Company at managing and collecting assets of borrowers in default and managing the risks of the foregoing. 

The foregoing list of factors is not exclusive. The Company does not undertake, and expressly disclaims any intent or obligation, to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company.

 
First Bancshares, Inc. and Subsidiaries
Financial Highlights
(In thousands, except per share amounts)
                   
                   
      Quarter Ended   Six Months Ended
      June 30,   June 30,
        2017       2016     2017       2016
Operating Data:                
                   
Total interest income   $   1,907     $   1,835   $   3,736     $   3,593
Total interest expense       324         308       635         598
  Net interest income       1,583         1,527       3,101         2,995
Provision for loan losses       30         –       90         –
  Net interest income after provision for loan losses       1,553         1,527       3,011         2,995
Gain (loss) on sale of investments       (14 )       9       (23 )       7
Non-interest income       221         241       441         494
Non-interest expense       1,556         1,525       3,166         3,012
Income before taxes       204         252       263         484
Income tax expense        82         92       89         165
  Net income    $   122     $   160   $   174     $   319
                   
  Earnings per share   $   0.08     $   0.11   $   0.11     $   0.21
                   
       At     At         
       June 30,     December 31,         
Financial Condition Data:     2017       2016        
                   
Cash and cash equivalents   $   12,407     $   4,708        
  (excludes CDs)            
Investment securities        55,176         62,531        
  (includes CDs)            
Loans receivable, net       145,142         136,802        
Total assets       227,934         219,482        
Deposits       191,898         181,727        
Repurchase agreements       5,188         5,185        
FHLB advances       10,000         12,000        
Stockholders’ equity       20,259         19,767        
Book value per share   $   13.08     $   12.76        
                   

Contact: R. Bradley Weaver, Chairman, President and CEO - (417) 926-5151