CHEVIOT FINANCIAL CORP.
Contact:
Thomas J.Linneman
513-661-0457
For Immediate Release
CINCINNATI, Ohio - November 3, 2014 - Cheviot Financial Corp. (NASDAQ: CHEV), the parent company of Cheviot Savings Bank, today reported net earnings for the third fiscal quarter of 2014 of $902,000, or $0.14 per share based upon 6,539,499 weighted average shares outstanding at September 30, 2014. Net earnings for the three months ended September 30, 2013 totaled $21,000 or $0.00 per share based upon 6,628,648 weighted average shares outstanding at September 30, 2013 ((view the full report in PDF format).
For the three months ended September 30, 2014:
Net earnings for the three months ended September 30, 2014 totaled $902,000, an $881,000 increase from the $21,000 earnings reported in the September 2013 period. The increase in net earnings reflects a decrease of $516,000 in general, administrative and other expenses, an increase in other income of $412,000, a decrease of $330,000 in the provision for losses on loans and an increase in net interest income of $88,000, which were partially offset by an increase of $465,000 in the provision for federal income taxes.
Total interest income decreased $109,000, or 2.3%, to $4.6 million for the three months ended September 30, 2014, from the comparable quarter in 2013. Interest income on loans decreased $203,000, or 5.3%, to $3.6 million during the 2014 quarter from $3.8 million for the 2013 quarter. This decrease was due primarily to a $7.1 million, or 2.1%, decrease in the average balance of loans outstanding and a 15 basis point decrease in the average yield on loans to 4.40% for the 2014 quarter from 4.55% for the three months ended September 30, 2013. Interest income on mortgage-backed securities increased $33,000, or 61.1%, to $87,000 for the three months ended September 30, 2014, from $54,000 for the comparable 2013 quarter, due primarily to a $6.5 million, or 52.2% increase in the average balance of securities outstanding and by a 10 basis point increase in the average yield. Interest income on investment securities increased $66,000, or 9.3%, to $778,000 for the three months ended September 30, 2014, compared to $712,000 for the same quarter in 2013, due primarily to a 43 basis point increase in the average yield to 2.16% in the 2014 quarter, which was partially offset by a decrease of $20.4 million in the average balance of investment securities outstanding. Interest income on other interest-earning deposits decreased $5,000, or 5.3% to $89,000 for the three months ended September 30, 2014.
Interest expense decreased $197,000, or 18.5% to $868,000 for the three months ended September 30, 2014, from $1.1 million for the same quarter in 2013. Interest expense on deposits decreased by $153,000, or 17.1%, to $741,000, from $894,000, due primarily to an 11 basis point decrease in the average costs of deposits to 0.64% and a $13.4 million, or 2.8% decrease in the average balance of deposits outstanding. The decrease in the average cost of deposits is due to the overall changes in the deposit composition and lower market rates for the period. Interest expense on borrowings decreased by $44,000, or 25.7%, due primarily to a $4.9 million decrease in the average balance outstanding and a 10 basis point decrease in the average cost of borrowings.
As a result of the foregoing changes in interest income and interest expense, net interest income increased by $88,000, or 2.4%, to $3.7 million for the three months ended September 30, 2014, as compared to the same quarter in 2013. The average interest rate spread increased to 2.94% for the three months ended September 30, 2014 from 2.75% for the three months ended September 30, 2013. The net interest margin increased to 2.97% for the three months ended September 30, 2014 from 2.79% for the three months ended September 30, 2013.
For the three months ended September 30, 2014, the company recorded a provision for losses on loans of $255,000, as compared to $585,000 for the three months ended September 30, 2013. At September 30, 2014 non-performing loans as a percent of net loans decreased to 1.7% from 2.8% at September 30, 2013.
Other income increased $412,000, or 80.6%, to $923,000 for the three months ended September 30, 2014, compared to the same quarter in 2013, due primarily to the increase in the gain on sale of loans of $238,000 and the gain on sale of investment securities designated as available for sale of $74,000 and an increase in the gain on sale of real estate acquired through foreclosure of $91,000.
General, administrative and other expense decreased $516,000, or 14.4%, to $3.1 million for the three months ended September 30, 2014. This decrease is a result of a decrease of $138,000 in the impairment of real estate owned expense, a decrease of $198,000 in other operating expense and a decrease of $60,000 in property, payroll and other taxes.
The provision for federal income taxes increased $465,000 for the three months ended September 30, 2014. The effective tax rate for the three months ended September 30, 2014 was 31.2%.
For the nine months ended September 30, 2014:
Net earnings for the nine months ended September 30, 2014 totaled $2.2 million, a $1.2 million increase from the $1.1 million in net earnings reported for the September 2013 period. The increase in net earnings reflects an increase in other income of $902,000, a decrease of $909,000 in general, administrative and other expense, and a decrease in the provision for losses on loans of $115,000, which were partially offset by a decrease in net interest income of $132,000, and an increase in the provision for federal income taxes of $628,000.
Total interest income decreased $768,000, or 5.3%, to $13.9 million for the nine months ended September 30, 2014, from the comparable period in 2013. Interest income on loans decreased $777,000, or 6.6%, to $11.1 million during the 2014 period from $11.8 million for the 2013 period. This decrease was due primarily to a $4.6 million decrease in the average balance of loans outstanding and by a 25 basis point decrease in the average yield to 4.46% from 4.71% in the 2013 period. Interest income on mortgage-backed securities increased $63,000, or 46.3%, to $199,000 for the nine months ended September 30, 2014, from $136,000 for the 2013 period, due primarily to an increase of $4.2 million in the average balance of securities outstanding and by an eight basis point increase in yield period over period. Interest income on investment securities decreased $31,000, or 1.3%, to $2.3 million for the nine months ended September 30, 2014, compared to $2.4 million for the same period in 2013, due primarily to a decrease of $27.7 million, or 15.8%, in the average balance of investment securities outstanding, which was partially offset by a 31 basis point increase in the average yield to 2.10% for the 2014 period. Interest income on other interest-earning deposits decreased $23,000, or 7.9%, to $267,000 for the nine months ended September 30, 2014, as compared to the same period in 2013.
Interest expense decreased $636,000, or 19.1%, to $2.7 million for the nine months ended September 30, 2014, from $3.3 million for the same period in 2013. Interest expense on deposits decreased by $501,000, or 18.0%, to $2.3 million from $2.8 million, due primarily to a $17.1 million decrease in the average balance outstanding, which was partially offset by 11 basis point decrease in the average costs of deposits to 0.66% during the 2014 period. Interest expense on borrowings decreased by $135,000, or 24.6%, due primarily to a $4.9 million, or 22.2%, decrease in the average balance outstanding and an 11 basis point decrease in the average cost of borrowings.
As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $132,000, or 1.2%, to $11.2 million for the nine months ended September 30, 2014. The average interest rate spread increased 14 basis points to 2.95% for the nine months ended September 30, 2014 from 2.81% for the nine months ended September 30, 2013. The net interest margin increased to 2.98% for the nine months ended September 30, 2014 from 2.85% for the nine months ended September 30, 2013.
For the nine months ended September 30, 2014, the company recorded a provision for losses on loans of $810,000, as compared to $925,000 for the nine months ended September 30, 2013.
Other income increased $902,000, or 45.1%, to $2.9 million for the nine months ended September 30, 2014, compared to the same period in 2013, due primarily to the gain on sale of investment securities designated as available for sale of $795,000 and the absence during the 2014 period of a loss on sale of office premises and equipment of $255,000. During the nine months ended September 30, 2013, the Company sold the former Franklin Savings headquarters.
General, administrative and other expense decreased $909,000, or 8.3%, to $10.1 million for the nine months ended September 30, 2014, from $11.0 million for the comparable period in 2013. The decrease is a result of a decrease of $472,000 in employee compensation and benefits, a decrease of $156,000 in occupancy and equipment, a decrease of $218,000 in property, payroll and other taxes, which were partially offset by an increase of $99,000 in real estate owned loss expense.
The provision for federal income taxes increased $628,000 for the nine months ended September 30, 2014. The effective tax rate for the nine months ended September 30, 2013 was 30.0%.
Financial Condition Changes at September 30, 2014 and December 31, 2013:
At September 30, 2014, total assets were $572.8 million, compared with $587.1 million at December 31, 2013. Total assets decreased $14.3 million, or 2.4%, primarily due to the decrease in investment securities of $9.7 million and a decrease in loans receivable of $1.6 million. The decrease in investment securities was a result of calls of $30.0 million and the sale of corporate securities of $2.7 million, which were offset by an increase in the fair market value of securities designated as available for sale of $7.2 million. The decrease in loans receivable resulted from the sale of loans in the secondary market of $17.2 million and principal repayments of $49.8 million, which were partially offset by loan originations of $66.3 million.
Total liabilities were $478.1 million at September 30, 2014, a decrease of $18.1 million, or 3.6% compared to $496.2 million at December 31, 2013. The decrease in total liabilities is a result of a decrease of $13.6 million, or 2.9% in total deposits which totaled $455.8 million at September 30, 2014, as compared to $469.4 million at December 31, 2013. Advances from the Federal Home Loan Bank of Cincinnati decreased by $3.8 million, or 19.8%, to $15.4 million at September 30, 2014, from $19.3 million at December 31, 2013. The decrease is a result of approximately $3.8 million in repayments during the nine months ended September 30, 2014.
Shareholders' equity at September 30, 2014 was $94.8 million, an increase of $3.8 million, or 4.2%, from December 31, 2013. The increase primarily resulted from net income of $2.2 million and a decrease in the unrealized loss on securities designated as available for sale of $4.8 million, which were partially offset by repurchasing 127,000 shares at an average price of $11.37 per share through the stock buyback program for a total cost of $1.5 million and dividend payments on common stock of $1.8 million. At September 30, 2014, tangible book value per share was $12.53 as compared to $11.72 at December 31, 2013. Tangible book value per share was affected by the increase in the fair market value of investment securities designated as available for sale as other comprehensive loss decreased during the 2014 period. At September 30, 2014, other comprehensive loss was $2.5 million. Over time, the impact of the other comprehensive loss on our tangible book value per share will decrease as investments are called or mature at par; however, a sudden increase in interest rates can have an adverse effect, as increases in rates may increase accumulated comprehensive loss.
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