ASB BANCORP INC ASHEVILLE, N.C., Oct. 30, 2015 /PRNewswire/ -- ASB Bancorp, Inc. (the "Company") (NASDAQ GM: ASBB), the holding company for Asheville Savings Bank, S.S.B. (the "Bank"), announced today its operating results for the three- and nine-month periods ended September 30, 2015. The Company reported net income of $1.1 million, or $0.28 per diluted common share, for the quarter ended September 30, 2015 compared to $502,000, or $0.12 per diluted common share, for the same quarter of 2014. For the nine months ended September 30, 2015, the Company reported net income of $2.6 million compared to net income of $1.8 million for the same period of 2014. For the year-to-date periods, net income per share increased 51.2% to $0.65 per diluted common share for the nine months ended September 30, 2015 from $0.43 per diluted common share for the nine months ended September 30, 2014. The nine-month period ended September 30, 2014 included a nonrecurring pre-tax earnings credit of $1.3 million that was attributable to the release of loan loss reserves, which distorted the comparisons of the year-over-year loan loss provisions and earnings.
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Suzanne DeFerie, President and CEO, commented, "In the third quarter, we continued to see the positive impact of our strategic plan to achieve sustainable, superior performance. We have achieved significant improvement in almost every key performance metric by focusing on our commercial and small business relationships, taking steps to grow mortgage banking, and driving efficiencies and greater productivity. When comparing the September 30 year-over-year periods, loan balances have increased 16.6%, core deposits are up 12.8%, with commercial non-maturity deposits a focus area increasing 32.1% over the period and we saw a 14 basis point improvement in the net interest margin."
DeFerie continued, "With the first nine months of 2015 completed and as we begin the fourth quarter, we are well positioned to attain our full-year 2015 growth and performance targets. As indicated in the table below that compares our year-to-date actual performance to our full-year growth and performance targets, we are achieving or very close to achieving all of our targets. We remain resolutely focused on growing the areas where we see the greatest potential, while also taking steps to further reduce nonperforming assets and improve our efficiency ratio. We are pleased with the traction we have already established, and are confident about the further opportunities we see ahead."
2015 Third Quarter Highlights
-- Net income for the third quarter of 2015 was $1.1 million, or $0.28 per
diluted common share, compared to $502,000, or $0.12 per diluted common
share, for the third quarter of 2014.
-- Net interest income increased 11.9% to $5.6 million for the three months
ended September 30, 2015 from $5.0 million for the three months ended
September 30, 2014. The net interest margin improved to 3.00% for the
third quarter of 2015 compared to 2.84% for the third quarter of 2014.
-- Interest income from loans increased 11.5% in the third quarter of 2015
compared to the third quarter of 2014, which primarily reflected an
$84.5 million increase in average loan balances when comparing the two
quarters.
-- Provisions for loan losses were $191,000 in the third quarter of 2015
compared to $240,000 in the third quarter of 2014. The allowance for
loan losses declined to 1.11% of total loans at September 30, 2015 from
1.14% at December 31, 2014, although the allowance coverage of
nonperforming loans was 223.7% at September 30, 2015 compared to 221.3%
at December 31, 2014.
-- Loan balances increased $16.1 million, or 2.9%, to $569.1 million from
June 30, 2015. Loans increased $47.3 million, or 9.1%, since December
31, 2014 and increased $81.2 million, or 16.6%, since September 30, 2014
as new loan originations exceeded loan repayments, prepayments and
foreclosures. The 2015 increase in loan balances is net of a decrease in
the indirect auto lending portfolio due to a strategic decision during
the second quarter of 2015 to cease production in this lending area.
-- Noninterest income increased 26.9% to $2.1 million for the third quarter
of 2015 from $1.6 million for the third quarter of 2014, primarily due
to the increase in mortgage banking income and gains realized from the
sale of investment securities.
-- Noninterest expenses increased 3.8% to $5.8 million for the third
quarter of 2015 from $5.6 million for the third quarter of 2014,
primarily due to increases in compensation and employee benefits, which
included increases of $174,000 for employee incentives and $61,000 for
pension plan expenses in 2015.
-- Delinquent and nonperforming loans were 0.45% and 0.49%, respectively,
of total loans at September 30, 2015, compared to 0.60% and 0.52%,
respectively, of total loans at December 31, 2014.
-- Nonperforming assets, including foreclosed properties, were 1.46% of
total assets at September 30, 2015 compared to 1.51% of total assets at
December 31, 2014 and 1.68% of total assets at September 30, 2014.
-- Core deposits, which exclude certificates of deposit, increased $40.2
million, or 9.0%, since December 31, 2014 and $55.5 million, or 12.8%,
since September 30, 2014. Noninterest-bearing deposits increased $25.3
million, or 25.9%, and commercial non-maturity deposits increased $31.9
million, or 26.2%, since December 31, 2014.
-- Book value per common share increased to $22.41 at September 30, 2015
from $21.56 at December 31, 2014 and $21.53 at September 30, 2014.
-- Capital remained strong with consolidated regulatory capital ratios of
18.33% common equity tier 1 capital, 13.09% tier 1 leverage capital,
18.33% tier 1 risk-based capital and 19.44% total risk-based capital.
DeFerie concluded, "The results of the third quarter, and of the first nine months of 2015, demonstrate the positive impact of our strategic plan. We have achieved year-over-year and year-to-date improvement on almost every measure of performance, from core deposits and efficiency ratio to earnings and book value per share. For the remainder of the year and into 2016, we expect to continue growing our core focus areas and looking for effective ways to reduce costs, enhance productivity and increase shareholders' returns."
Income Statement Analysis
Net Interest Income. Net interest income increased by $595,000, or 11.9%, to $5.6 million for the three months ended September 30, 2015 compared to $5.0 million for the three months ended September 30, 2014. Total interest and dividend income increased $586,000, or 10.0%, to $6.5 million for the three months ended September 30, 2015 from $5.9 million for the three months ended September 30, 2014, primarily as a result of an increase of $84.5 million in average loan balances, partially offset by a 22 basis point decrease in the average yield on loans. The average yield on mortgage-backed and other investment securities increased 31 basis points for the three months ended September 30, 2015 compared to the same period of 2014, which was partially offset by a decrease of $13.2 million in average mortgage-backed and other investment security balances. Interest expense decreased $9,000, or 1.0%, to $877,000 for the three months ended September 30, 2015 from $886,000 for the three months ended September 30, 2014, primarily due to a $12.0 million decrease in the average balances of certificates of deposit. When comparing these same three-month periods, average noninterest-bearing deposits grew $27.0 million, or 29.9%, which contributed to minimizing deposit interest expense while deposit funding grew.
Net interest income increased by $1.6 million, or 10.6%, to $16.3 million for the nine months ended September 30, 2015 compared to $14.7 million for the nine months ended September 30, 2014. Interest income on loans increased $1.8 million, primarily resulting from an $85.1 million increase in the average loan balances, partially offset by a 23 basis point decrease in the average yield on loans. Interest on securities decreased $260,000, attributable to a $22.5 million decrease in the average balance in mortgage-backed and other investment securities, partially offset by an 8 basis point increase in the average yield earned on the investment portfolio. Interest expense decreased $41,000, or 1.5%, for the nine months ended September 30, 2015. The lower interest expense was primarily attributable to lower average balances of certificates of deposit, as well as average rate reductions of 1 basis point each on certificates of deposit and savings accounts. The decreases in interest expense were partially offset by higher average balances of NOW, money market and savings accounts. For the same nine-month periods, as was the case for the comparable quarterly periods, average noninterest-bearing deposits grew $4.8 million, or 19.1%, which contributed to minimizing deposit interest expense while deposit funding grew.
Noninterest Income. Noninterest income increased $442,000, or 26.9%, to $2.1 million for the three months ended September 30, 2015 from $1.6 million for the three months ended September 30, 2014. Factors that contributed to the increase in noninterest income during the 2015 period included increases of $269,000 in mortgage banking income, $202,000 in net gains from the sale of investment securities, $79,000 in deposit and other service charge income and $36,000 from debit card services, which were partially offset by a decrease of $98,000 in loan fees. The increase in mortgage banking income was attributable to higher volumes of residential mortgage loans originated and sold. Increased transaction volume drove the rise in income from debit card services.
Noninterest income increased $1.0 million, or 21.7%, to $5.7 million for the nine months ended September 30, 2015 from $4.7 million for the nine months ended September 30, 2014. Factors that contributed to the increase in noninterest income during the 2015 period included increases of $686,000 in mortgage banking income, $194,000 in net gains from the sale of investment securities, $119,000 in fees from debit card services, $68,000 in deposit and other service charge income and $21,000 in income from an investment in a Small Business Investment Company. As was the case for the third quarter of 2015, the increase in mortgage banking income was attributable to higher volumes of residential mortgage loans originated and sold, and increased transaction volume that resulted in increased income from debit card services.
Noninterest Expenses. Noninterest expenses increased $213,000, or 3.8%, to $5.8 million for the three months ended September 30, 2015 from $5.6 million for the three months ended September 30, 2014. The increase for the third quarter of 2015 was primarily attributable to increases of $326,000 in compensation and employee benefits and $74,000 in data processing fees, which were partially offset by decreases of $77,000 in professional and outside services and $74,000 in advertising. The increase in compensation and employee benefits included increases of $174,000 for employee incentives and $61,000 in pension plan expenses.
Noninterest expenses decreased $215,000, or 1.2%, to $17.6 million for the nine months ended September 30, 2015 from $17.8 million for the nine months ended September 30, 2014. The lower 2015 noninterest expenses primarily reflected decreases of $248,000 in foreclosed property expenses, $82,000 in occupancy expenses, $76,000 in advertising and $56,000 in professional and outside services, which were partially offset by increases of $195,000 in compensation and employee benefits, $63,000 in consumer loan expenses and $57,000 in indirect auto expenses. The decrease in foreclosed property expenses included a reduction of $119,000 in valuation write-downs of foreclosed properties. Compensation and employee benefits for the nine months ended September 30, 2015 included increases of $319,000 in incentive compensation expenses and $183,000 in pension plan expenses, which were partially offset by a decrease of $403,000 in equity incentive plan expenses primarily due to additional expense of $380,000 in 2014 for accelerated vesting related to the disability of a participant.
Balance Sheet Review
Assets. Total assets increased $37.8 million, or 5.0%, to $797.9 million at September 30, 2015 from $760.1 million at December 31, 2014. Cash and cash equivalents decreased $1.1 million, or 1.9%, to $55.8 million at September 30, 2015 from $56.9 million at December 31, 2014. Investment securities decreased $7.0 million, or 4.8%, to $138.5 million at September 30, 2015 from $145.5 million at December 31, 2014, primarily due to the sale of investment securities to fund loan growth. Loans receivable, net of deferred fees, increased $47.3 million, or 9.1%, to $569.1 million at September 30, 2015 from $521.8 million at December 31, 2014 as new loan originations exceeded loan repayments, prepayments and foreclosures.
Liabilities. Total deposits increased $31.7 million, or 5.3%, to $635.1 million at September 30, 2015 from $603.4 million at December 31, 2014. During the nine months ended September 30, 2015, we continued our focus on core deposit growth, from which we exclude certificates of deposit. Core deposits increased $40.2 million, or 9.0%, to $489.5 million at September 30, 2015 from $449.3 million at December 31, 2014.
Commercial checking and money market accounts increased $31.9 million, or 26.2%, to $153.5 million at September 30, 2015 from $121.6 million at December 31, 2014, reflecting expanded sources of lower cost funding that included a $25.2 million increase in commercial noninterest-bearing demand deposits. Our efforts to obtain new commercial deposit relationships in conjunction with making new commercial loans significantly contributed to this increase and reflects our commitment to establishing diversified relationships with business clients.
Since December 31, 2014, certificates of deposit decreased $8.5 million, or 5.5%, to $145.6 million at September 30, 2015 from $154.1 million at December 31, 2014 as we continued our focus on core deposit growth. Accounts payable and other liabilities increased $2.3 million, or 19.8%, to $13.9 million at September 30, 2015 from $11.6 million at December 31, 2014. The increase in accounts payable and other liabilities at September 30, 2015 was primarily attributable to a $1.0 million increase in escrowed payments from mortgage borrowers, a $605,000 increase in pension plan liabilities and a $513,000 increase in accrued income taxes.
Asset Quality
Provision for Loan Losses. The provision for loan losses was $191,000 for the three months ended September 30, 2015 compared to $240,000 for the three months ended September 30, 2014. The decrease in the provision for loan losses for the third quarter of 2015 was due to improvement in loan delinquencies and the credit quality of the loan portfolio, in addition to fewer charge-offs. The allowance for loan losses totaled $6.3 million, or 1.11% of total loans, at September 30, 2015 compared to $5.9 million, or 1.14% of total loans, at December 31, 2014. We charged off $46,000 in loans during the three months ended September 30, 2015 compared to $172,000 during the three months ended September 30, 2014.
We recorded a provision for loan losses in the amount of $450,000 for the nine months ended September 30, 2015 compared to a recovery of loan losses of $(1.2) million for the nine months ended September 30, 2014. Net charge-offs were $102,000 for the first nine months of 2015 compared to $237,000 for the first nine months of 2014. The increase in the nine-month provision for loan losses primarily resulted from a 2014 reduction in loan loss reserves due to a modification of our loan loss methodology for unimpaired commercial construction and land development, unimpaired residential construction and land development, and unimpaired commercial and industrial loans, which resulted in a nonrecurring reduction of approximately $1.3 million in the reserves for loans not considered impaired. The provision for loan losses for the nine-month period of 2015 was primarily due to loan growth.
Nonperforming Assets. Nonperforming assets totaled $11.7 million, or 1.46% of total assets, at September 30, 2015 compared to $11.5 million, or 1.51% of total assets, at December 31, 2014. Nonperforming assets included $2.8 million in nonperforming loans and $8.9 million in foreclosed real estate at September 30, 2015 compared to $2.7 million and $8.8 million, respectively, at December 31, 2014.
Nonperforming loans increased $127,000 to $2.8 million, or 0.49% of total loans, at September 30, 2015 from $2.7 million, or 0.52% of total loans, at December 31, 2014. Of the $127,000 increase in nonperforming loans for the nine months, $187,000 related to additional nonperforming residential mortgage loans and $24,000 related to commercial and industrial loans, which were partially offset by decreases in commercial mortgages, revolving mortgages and consumer loans. Collateral on nonperforming loans in the amount of $812,000 was moved into foreclosed real estate, while performing troubled debt restructurings ("TDRs") decreased $74,000, or 1.5%, when comparing the same periods. Total performing TDRs and nonperforming assets increased $110,000, or 0.7%, to $16.4 million, or 2.06% of total assets, at September 30, 2015 compared to $16.3 million, or 2.15% of total assets, at December 31, 2014.
At September 30, 2015, nonperforming loans included eight residential mortgage loans that totaled $1.5 million, two commercial mortgage loans that totaled $824,000, four commercial and industrial loans that totaled $245,000 and three revolving home equity loans that totaled $204,000. As of September 30, 2015, the nonperforming loans had specific reserves totaling $111,000.
Foreclosed real estate at September 30, 2015 included nine properties with a total recorded amount of $8.9 million compared to ten properties with a total recorded amount of $8.8 million at December 31, 2014. During the nine months ended September 30, 2015, two new properties that totaled $812,000 were added to foreclosed real estate, while three properties that totaled $119,000 were sold. In addition, the Bank sold three of its 15 units in a mixed-use condominium complex for net proceeds of $508,000 along with two residential lots in a mixed-use lot subdivision and one parcel of land which was a portion of a residential property for net proceeds of $121,000. We recorded $6,000 in loss provisions on foreclosed real estate during the first nine months of 2015, and there were no capital additions during the period.
The Bank's largest foreclosed property resulted from a loan relationship that had an original purpose of constructing a mixed-use retail, commercial office, and residential condominium project located in Western North Carolina. As a result of this foreclosure, the Bank acquired 44 of the 48 condominium units in the building. Following an additional write-down of approximately $630,000 on the loans secured by this collateral in the fourth quarter of 2012, the Bank recorded this foreclosed property in the amount of $9.8 million. During 2013, the Bank recorded additional write-downs totaling $1.6 million, which resulted in an adjusted recorded amount of $8.2 million at December 31, 2013. During the year ended December 31, 2014, the Bank recorded an additional write-down of $133,000 on the property and sold 28 residential condominium units and one office unit. During the first nine months of 2015, the Bank sold one retail unit and two office units. At September 30, 2015, the adjusted recorded amount was $4.0 million for the remaining seven retail units and five office units.
Profile
The Bank is a North Carolina chartered stock savings bank offering traditional financial services through 13 full-service banking centers located in Buncombe, Madison, McDowell, Henderson and Transylvania counties in Western North Carolina and a loan production office in Mecklenburg County. Originally chartered in 1936 and headquartered in Asheville, North Carolina, the Bank is locally managed with a focus on fostering strong relationships with its customers, its employees and the communities it serves. The Bank was recognized as the 2015 #1 Best Bank Overall, #1 Best Bank for Small Business Services and #1 Best Bank for Mortgages by the readers of the Mountain Xpress newspaper in Western North Carolina.
This news release, as well as other written communications made from time to time by the Company and its subsidiaries and oral communications made from time to time by authorized officers of the Company, may contain statements relating to the future results of the Company (including certain projections, performance and growth targets and business trends) that are considered "forward-looking statements" as defined in the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated," "intend" and "potential," and are subject to the protections of the safe harbors created by such acts.
The Company cautions you that a number of important factors could cause actual results to differ materially from those currently anticipated in any forward-looking statement. Such factors include, but are not limited to: prevailing economic and geopolitical conditions; changes in interest rates, loan demand, real estate values and competition; changes in accounting principles, policies, and guidelines; changes in any applicable law, rule, regulation or practice with respect to tax or legal issues; and other economic, competitive, governmental, regulatory and technological factors affecting the Company's operations, pricing, products and services and other factors described in the Company's filings with the Securities and Exchange Commission, including its Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. The forward-looking statements are made as of the date of this release, and, except as may be required by applicable law or regulation, the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements.
Contact: Suzanne S. DeFerie
Chief Executive Officer
(828) 254-7411
Selected Financial Condition Data
September 30, December 31,
(Dollars in thousands) 2015 2014 (1) % Change
---- ------- --------
Total assets $797,856 $760,050 5.0%
Cash and cash equivalents 55,765 56,858 -1.9%
Investment securities 138,459 145,461 -4.8%
Loans receivable, net of deferred fees 569,085 521,820 9.1%
Allowance for loan losses (6,297) (5,949) -5.8%
Deposits 635,083 603,379 5.3%
Core deposits (2) 489,519 449,286 9.0%
FHLB advances 50,000 50,000 0.0%
Accounts payable and other liabilities 13,911 11,614 19.8%
Total equity 98,736 94,397 4.6%
------------
(1) Derived from audited consolidated financial statements.
(2) Core deposits are defined as total deposits excluding certificates of deposit.
Selected Operating Data
(Dollars in thousands, Three Months Ended Nine Months Ended
except per share data) September 30, September 30,
------------- -------------
2015 2014 % Change 2015 2014 % Change
---- ---- -------- ---- ---- --------
Interest and
dividend income $6,459 $5,873 10.0% $18,902 $17,385 8.7%
Interest expense 877 886 -1.0% 2,618 2,659 -1.5%
Net interest income 5,582 4,987 11.9% 16,284 14,726 10.6%
Provision for
(recovery of) loan losses 191 240 -20.4% 450 (1,218) 136.9%
--- ---
Net interest income
after provision for
(recovery of) loan losses 5,391 4,747 13.6% 15,834 15,944 -0.7%
Noninterest income 2,084 1,642 26.9% 5,662 4,652 21.7%
Noninterest expenses 5,837 5,624 3.8% 17,619 17,834 -1.2%
----- -----
Income before
income tax
provision 1,638 765 114.1% 3,877 2,762 40.4%
Income tax
provision 496 263 88.6% 1,248 915 36.4%
Net income $1,142 $502 127.5% $2,629 $1,847 42.3%
====== ==== ====== ======
Net income per
common share:
Basic $0.29 $0.13 123.1% $0.67 $0.43 55.8%
Diluted $0.28 $0.12 133.3% $0.65 $0.43 51.2%
Average shares outstanding:
Basic 3,947,445 3,940,229 0.2% 3,923,531 4,246,213 -7.6%
Diluted 4,079,029 4,018,945 1.5% 4,025,431 4,290,201 -6.2%
Ending shares outstanding 4,405,266 4,378,411 0.6% 4,405,266 4,378,411 0.6%
Selected Average Balances and Yields/Costs
For The Three Months Ended September 30,
----------------------------------------
2015 2014
---- ----
Average Yield/ Average Yield/
(Dollars in thousands) Balance Cost Balance Cost
------- ---- ------- ----
Loans receivable $564,562 4.05% $480,074 4.27%
Investment securities, including tax-exempt (1) 138,923 2.19% 152,142 1.88%
Other interest-earning assets 52,843 0.49% 78,551 0.39%
Total interest-earning assets (1) 756,328 3.46% 710,767 3.33%
Interest-bearing deposits 513,519 0.30% 501,698 0.31%
Federal Home Loan Bank advances 50,000 3.93% 50,000 3.93%
Total interest-bearing liabilities 563,678 0.62% 551,969 0.64%
Interest rate spread (1) 2.84% 2.69%
Net interest margin (1) 3.00% 2.84%
For The Nine Months Ended September 30,
---------------------------------------
2015 2014
---- ----
Average Yield/ Average Yield/
(Dollars in thousands) Balance Cost Balance Cost
------- ---- ------- ----
Loans receivable $551,179 4.11% $466,076 4.34%
Investment securities, including tax-exempt (1) 136,537 2.05% 159,057 1.97%
Other interest-earning assets 55,000 0.48% 80,110 0.42%
Total interest-earning assets (1) 742,716 3.46% 705,243 3.36%
Interest-bearing deposits 510,645 0.30% 500,979 0.32%
Federal Home Loan Bank advances 50,000 3.93% 50,000 3.93%
Total interest-bearing liabilities 561,230 0.62% 551,570 0.64%
Interest rate spread (1) 2.84% 2.72%
Net interest margin (1) 2.99% 2.85%
----------------------
(1) Yields on tax-exempt securities have been included on a tax-equivalent basis using a 34% federal marginal tax rate.
Selected Asset Quality Data
Three Months Ended Nine Months Ended
Allowance for Loan Losses September 30, September 30,
------------- -------------
(Dollars in thousands) 2015 2014 2015 2014
---- ---- ---- ----
Allowance for loan losses, beginning of period $6,124 $5,770 $5,949 $7,307
Provision for (recovery of) loan losses 191 240 450 (1,218)
Charge-offs (46) (172) (435) (322)
Recoveries 28 14 333 85
Net charge-offs (18) (158) (102) (237)
--- ---- ---- ----
Allowance for loan losses, end of period $6,297 $5,852 $6,297 $5,852
====== ====== ====== ======
Allowance for loan losses as a percent of:
Total loans 1.11% 1.20% 1.11% 1.20%
Total nonperforming loans 223.69% 170.91% 223.69% 170.91%
Nonperforming Assets September 30, December 31,
(Dollars in thousands) 2015 2014 % Change
---- ---- --------
Nonperforming loans:
Nonaccruing loans (1)
Commercial:
Commercial mortgage $824 $881 -6.5%
Commercial and industrial 245 221 10.9%
Total commercial 1,069 1,102 -3.0%
----- -----
Non-commercial:
Residential mortgage 1,541 1,354 13.8%
Revolving mortgage 204 230 -11.3%
Consumer 1 2 -50.0%
Total non-commercial 1,746 1,586 10.1%
----- -----
Total nonaccruing loans (1) 2,815 2,688 4.7%
----- -----
Total loans past due 90 or more days
and still accruing - - 0.0%
--- ---
Total nonperforming loans 2,815 2,688 4.7%
Foreclosed real estate 8,871 8,814 0.6%
----- -----
Total nonperforming assets 11,686 11,502 1.6%
Performing troubled debt restructurings (2) 4,730 4,804 -1.5%
Performing troubled debt restructurings and
total nonperforming assets $16,416 $16,306 0.7%
======= =======
Nonperforming loans as a percent of total loans 0.49% 0.52%
Nonperforming assets as a percent of total assets 1.46% 1.51%
Performing troubled debt restructurings and
total nonperforming assets to total assets 2.06% 2.15%
------------------------------------------
(1) Nonaccruing loans include nonaccruing troubled debt restructurings.
(2) Performing troubled debt restructurings exclude nonaccruing troubled debt restructurings.
Foreclosed Real Estate by Loan Type September 30, 2015 December 31, 2014
------------------ -----------------
(Dollars in thousands) Number Amount Number Amount
------ ------ ------ ------
Commercial construction and land development 7 $8,102 8 $8,706
Residential mortgage 2 769 2 108
Total 9 $8,871 10 $8,814
=== ====== === ======
Foreclosed Real Estate Nine Months Ended
(Dollars in thousands) September 30, 2015
------------------
Beginning balance $8,814
Transfers from loans 812
Loss provisions (6)
Loss on sale of foreclosed properties (1)
Net proceeds from sales of foreclosed properties (748)
Ending balance $8,871
======
Selected Average Balances and Performance Ratios
Three Months Ended Nine Months Ended
September 30, September 30,
------------- -------------
(Dollars in thousands) 2015 2014 2015 2014
---- ---- ---- ----
Selected Average Balances
Average total loans $564,562 $480,074 $551,179 $466,076
Average total interest-earning assets 756,328 710,767 742,716 705,243
Average total assets 792,225 747,794 778,555 745,015
Average total interest-bearing deposits 513,519 501,698 510,645 500,979
Average total deposits 630,733 591,883 617,479 584,905
Average total interest-bearing liabilities 563,678 551,969 561,230 551,570
Average total shareholders' equity 97,813 95,756 96,850 100,106
Selected Performance Ratios
Return on average assets (1) 0.57% 0.27% 0.45% 0.33%
Return on average equity (1) 4.63% 2.08% 3.63% 2.47%
Interest rate spread (1) (2) 2.84% 2.69% 2.84% 2.72%
Net interest margin (1) (3) 3.00% 2.84% 2.99% 2.85%
Noninterest expense to average assets (1) 2.92% 2.98% 3.03% 3.20%
Efficiency ratio (4) 74.81% 83.68% 79.09% 90.53%
(1) Ratios are annualized.
(2) Represents the difference between the weighted average yield on average interest-earning assets and the
weighted average cost of average interest-bearing liabilities. Yields on tax-exempt securities have been
included on a tax-equivalent basis using a 34% federal marginal tax rate.
(3) Represents net interest income as a percent of average interest-earning assets. Yields on tax-exempt
securities have been included on a tax-equivalent basis using a 34% federal marginal tax rate.
(4) Represents noninterest expenses divided by the sum of net interest income, on a tax-equivalent basis
using a 34% federal marginal tax rate, and noninterest income.
Quarterly Earnings Data
Three Month Periods Ended
-------------------------
(Dollars in thousands, September 30, June 30, March 31, December 31, September 30,
except per share data) 2015 2015 2015 2014 2014
---- ---- ---- ---- ----
Income Statement Data:
Interest and dividend income $6,459 $6,289 $6,154 $6,117 $5,873
Interest expense 877 880 861 877 886
Net interest income 5,582 5,409 5,293 5,240 4,987
Provision for loan losses 191 65 194 220 240
Net interest income after provision for
loan losses 5,391 5,344 5,099 5,020 4,747
Noninterest income 2,084 1,968 1,610 1,681 1,642
Noninterest expenses 5,837 6,010 5,772 5,714 5,624
Income before income
tax provision 1,638 1,302 937 987 765
Income tax provision 496 437 315 345 263
Net income $1,142 $865 $622 $642 $502
====== ==== ==== ==== ====
Data Per Common Share:
Net income per share - Basic $0.29 $0.22 $0.16 $0.17 $0.13
Net income per share - Diluted $0.28 $0.22 $0.16 $0.16 $0.12
Book value per share $22.41 $21.96 $21.93 $21.56 $21.53
Weighted average shares outstanding:
Basic 3,947,445 3,923,199 3,899,419 3,867,296 3,940,229
Diluted 4,079,029 4,013,332 3,975,886 3,952,660 4,018,945
Ending shares outstanding 4,405,266 4,378,411 4,378,411 4,378,411 4,378,411
Quarterly Financial Condition Data
As Of As Of As Of As Of As Of
September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands) 2015 2015 2015 2014 (1) 2014
---- ---- ---- ------- ----
Ending Balance Sheet Data:
Total assets $797,856 $783,299 $774,420 $760,050 $749,033
Cash and cash equivalents 55,765 52,990 60,061 56,858 78,412
Investment securities 138,459 138,712 133,118 145,461 149,530
Loans receivable, net of deferred fees 569,085 552,999 541,706 521,820 487,904
Allowance for loan losses (6,297) (6,124) (6,042) (5,949) (5,852)
Deposits 635,083 623,963 612,287 603,379 594,798
Core deposits (2) 489,519 473,674 458,465 449,286 433,983
FHLB advances 50,000 50,000 50,000 50,000 50,000
Total equity 98,736 96,163 96,008 94,397 94,285
Regulatory Capital Ratios(3):
Common equity tier 1 capital 18.33% 18.40% 18.42% n/a n/a
Tier 1 leverage capital 13.09% 13.02% 13.16% 13.17% 13.17%
Tier 1 risk-based capital 18.33% 18.40% 18.42% 19.83% 21.17%
Total risk-based capital 19.44% 19.49% 19.53% 21.01% 22.42%
Asset Quality:
Nonperforming loans $2,815 $2,912 $3,059 $2,688 $3,424
Nonperforming assets 11,686 12,293 12,442 11,502 12,593
Nonperforming loans to total loans 0.49% 0.53% 0.56% 0.52% 0.70%
Nonperforming assets to total assets 1.46% 1.57% 1.61% 1.51% 1.68%
Allowance for loan losses $6,297 $6,124 $6,042 $5,949 $5,852
Allowance for loan losses to total loans 1.11% 1.11% 1.12% 1.14% 1.20%
Allowance for loan losses to
nonperforming loans 223.69% 210.30% 197.52% 221.32% 170.91%
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(1) Derived from audited consolidated financial statements.
(2) Core deposits are defined as total deposits excluding certificates of deposit.
(3) Regulatory capital ratios are based on BASEL III capital standards for 2015 quarters and BASEL I capital
standards for 2014 quarters.
Comparison of Actual Performance to Key Performance Indicator (KPI) Targets
Key 2013 2014 2015 2015 2016 2017 2018
Performance Full- Year Full -Year Nine-Month Full-Year Full-Year Full-Year Full-Year
Indicator Actual Actual Actual Target Target Target Target
September 30
------------
Net income
growth 68.7% 71.2% 42.3% 40%-50% 60%-70% 25%-35% 15%-25%
Return on
average
equity 1.37% 2.51% 3.63%(1) 3.7%-4.2% 5.8%-6.5% 7.2%-8.0% 8.1%-9.0%
Return on
average
assets 0.19% 0.33% 0.45%(1) 0.4%-0.5% 0.6%-0.8% 0.8%-1.0% 1.0%-1.1%
Efficiency (2) 93.16% 88.17% 79.09% 72%-82% 63%-73% 58%-68% 54%-64%
Net interest
margin (3) 2.72% 2.87% 2.99%(1) 2.9%-3.1% 3.1%-3.3% 3.4%-3.5% 3.5%-3.6%
Loan
growth 15.9% 16.2% 12.1%(1) 9%-13% 8%-12% 5%-9% 2%-7%
Asset
growth -2.2% 3.7% 6.7%(1) 5%-9% 4%-8% 0%-4% 3%-7%
Deposit
growth -1.0% 5.3% 7.0%(1) 6%-10% 4%-8% 4%-8% 4%-8%
Core
deposit (4)
growth 4.3% 10.7% 12.0%(1) 10%-14% 5%-9% 5%-9% 5%-9%
(1) Ratios are annualized.
(2) Represents noninterest expenses divided by the sum of net interest income, on a tax-equivalent basis
using a 34% federal marginal tax rate, and noninterest income.
(3) Represents net interest income as a percent of average interest-earning assets. Yields on tax-exempt
securities have been included on a tax-equivalent basis using a 34% federal marginal tax rate.
(4) Core deposits are defined as total deposits excluding certificates of deposit.
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SOURCE ASB Bancorp, Inc.
