CHEVIOT FINANCIAL CORP. Contact: Mark T. Reitzes For immediate release 513-661-0457
CINCINNATI, Ohio - November 4, 2015 -Cheviot Financial Corp. (NASDAQ: CHEV), the parent company of Cheviot Savings Bank, today reported net earnings for the third fiscal quarter of 2015 of $330,000, or $0.05 per share based upon 6,636,500 weighted average shares outstanding at September 30, 2015. Net earnings for the three months ended September 30, 2014 totaled $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, 2015 totaled $330,000, a $572,000 decrease from the $902,000 earnings reported in the September 2014 period. The decrease in net earnings reflects an increase of $405,000 in the provision for losses on loans, an increase of $225,000 in general, administrative and other expense, a decrease in other income of $173,000 and a decrease in net interest income of $44,000, which were partially offset by a decrease of
$275,000 in the provision for federal income taxes.
Total interest income decreased $73,000, or 1.6%, to $4.5 million for the three months ended September 30, 2015, from the comparable quarter in 2014. Interest income on loans increased $128,000, or 3.5%, to $3.7 million during the 2015 quarter from $3.6 million for the 2014 quarter. This increase was due primarily to a $26.5 million, or 8.1%, increase in the average balance of loans outstanding, which was partially offset by an 18 basis point decrease in the average yield on loans to 4.22% for the 2015 quarter from 4.40% for the three months ended September 30, 2014. Interest income on mortgage-backed securities decreased $52,000, or 59.8%, to $35,000 for the three months ended September 30, 2015, from $87,000 for the comparable 2014 quarter, due primarily to a $10.8 million, or 56.7% decrease in the average balance of securities outstanding and by a 13 basis point decrease in the average yield. Interest income on investment securities decreased $160,000, or 20.6%, to $618,000 for the three months ended September 30, 2015, compared to
$778,000 for the same quarter in 2014, due primarily to a decrease of $31.5 million in the average balance of investment securities outstanding, which was partially offset by a four basis point increase in the average yield to 2.20% in the 2015 quarter. Interest income on other interest-earning deposits increased $11,000, or 12.4% to $100,000 for the three months ended September 30, 2015.
Interest expense decreased $29,000, or 3.3% to $839,000 for the three months ended September 30, 2015, from
$868,000 for the same quarter in 2014. Interest expense on deposits decreased by $9,000, or 1.2%, to $732,000, from
$741,000, due primarily to a decrease of $2.4 million, or 0.5% in the average balance of deposits outstanding. The average cost of deposits was 0.64% during both three month periods ended September 30, 2015 and 2014. Interest expense on borrowings decreased by $20,000, or 15.7%, due primarily to a 143 basis point decrease in the average cost of borrowings, which was partially offset by an $8.4 million increase in the average balance outstanding.
As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $44,000, or 1.2%, to $3.7 million for the three months ended September 30, 2015, as compared to the same quarter in 2014. The average interest rate spread increased to 2.90% for the three months ended September 30, 2015 from 2.88% for the three months ended September 30, 2014. The net interest margin was 2.92% for both of the three months ended September 30, 2015 and 2014, respectively.
As a result of the overall change in the composition of our loan portfolio, we recorded a provision for losses on loans of
$660,000 for the three months ended September 30, 2015, as compared to $255,000 for the three months ended September 30, 2014. At September 30, 2015, our gross loan portfolio consisted of 40.7% in multifamily, construction and commercial loans as compared to 32.1% at December 31, 2014.
Other income decreased $173,000, or 18.7%, to $750,000 for the three months ended September 30, 2015, compared to the same quarter in 2014, due primarily to the absence of the gain on sale of investment securities designated as available for sale during the 2015 quarter compared to gains of $74,000 during the 2014 quarter, a decrease in the gain on sale of real estate acquired through foreclosure of $98,000, which was partially offset by an increase in the gain on sale of loans of $13,000.
General, administrative and other expense increased $225,000, or 7.3%, to $3.3 million for the three months ended September 30, 2015. This increase is a result of an increase of $105,000 in employee compensation and benefits
expense, an increase of $57,000 in property, payroll and other taxes and an increase of $61,000 in data processing expense.
The provision for federal income taxes decreased $275,000 for the three months ended September 30, 2015. The effective tax rate for the three months ended September 30, 2015 was 28.9%.
Net earnings for the nine months ended September 30, 2015 totaled $879,000, a $1.4 million decrease from the $2.2 million in net earnings reported for the 2014 period. The decrease in net earnings reflects an increase of $743,000 in general, administrative and other expense, a decrease in other income of $688,000, an increase in the provision for losses on loans of $273,000 and a decrease of $198,000 in net interest income, which were partially offset by a decrease in the provision for federal income taxes of $538,000.
Total interest income decreased $300,000, or 2.2%, to $13.6 million for the nine months ended September 30, 2015, from the comparable period in 2014. Interest income on loans increased $98,000, or 0.9%, to $11.2 million during the 2015 period from $11.1 million for the 2014 period. This increase was due primarily to a $16.5 million increase in the average balance of loans outstanding, which was partially offset by a 17 basis point decrease in the average yield to 4.29% from 4.46% in the 2014 period. Interest income on mortgage-backed securities decreased $84,000, or 42.2%, to
$115,000 for the nine months ended September 30, 2015, from $199,000 for the 2014 period, due primarily to a decrease of $5.7 million in the average balance of securities outstanding and an eight basis point decrease in yield period over period. Interest income on investment securities decreased $332,000, or 14.3%, to $2.0 million for the nine months ended September 30, 2015, compared to $2.3 million for the same period in 2014, due primarily to a decrease of $21.3 million, or 14.4%, in the average balance of investment securities outstanding. The average yield on investment securities was 2.10% for both of the nine month periods ended September 30, 2015 and 2014. Interest income on other interest- earning deposits increased $18,000, or 6.7%, to $285,000 for the nine months ended September 30, 2015, as compared to the same period in 2014.
Interest expense decreased $102,000, or 3.8%, to $2.6 million for the nine months ended September 30, 2015, from $2.7 million for the same period in 2014. Interest expense on deposits decreased by $16,000, or 0.7%, to $2.3 million, due primarily to an $8.5 million decrease in the average balance outstanding. The average cost of deposits was 0.66% for both of the nine month periods ended September 30, 2015 and 2014. Interest expense on borrowings decreased by
$86,000, or 20.8%, due primarily to a 91 basis point decrease in the average cost of borrowings, which was partially offset by a $1.8 million, or 10.7%, increase in the average balance outstanding.
As a result of the foregoing changes in interest income and interest expense, net interest income decreased by $198,000, or 1.8%, to $11.0 million for the nine months ended September 30, 2015. The average interest rate spread decreased two basis points to 2.87% for the nine months ended September 30, 2015 from 2.89% for the nine months ended September 30, 2014. The net interest margin decreased to 2.91% for the nine months ended September 30, 2015 from 2.93% for the nine months ended September 30, 2014.
For the nine months ended September 30, 2015, the company recorded a provision for losses on loans of $1.1 million, as compared to $810,000 for the nine months ended September 30, 2014.
Other income decreased $688,000, or 23.7%, to $2.2 million for the nine months ended September 30, 2015, compared to the same period in 2014, due primarily to the absence of the gain on sale of investment securities designated as available for sale in the 2015 period compared to gains of $795,000 during the 2014 period, a decrease in the gain on the sale of real estate acquired through foreclosure of $131,000 and a decrease of $62,000 in service fee income, which was partially offset by an increase in the gain on sale of loans of $312,000.
General, administrative and other expense increased $743,000, or 7.4%, to $10.8 million for the nine months ended September 30, 2015, from $10.1 million for the comparable period in 2014. The increase is a result of an increase of
$1.1 million in employee compensation and benefits and an increase of $132,000 in property, payroll and other taxes, which were partially offset by a decrease of $419,000 in real estate owned impairment expense and decrease of $112,000 in occupancy and equipment expense.
The provision for federal income taxes decreased $538,000 for the nine months ended September 30, 2015. The effective tax rate for the nine months ended September 30, 2015 was 32.4%.
As previously announced, on February 3, 2015 we entered into a severance agreement (the 'Agreement') with our former President and Chief Executive Officer in connection with his retirement. The Agreement included non-
competition, non-solicitation and confidentiality provisions and a full and final release of claims, in exchange for which we paid the former President and Chief Executive officer a total of approximately $765,000 upon his retirement. The execution of the Agreement and resulting payments caused the majority of the increase in employee compensation and benefits and related property, payroll and other taxes for the nine months ended September 30, 2015.
At September 30, 2015, total assets were $576.6 million, compared with $571.2 million at December 31, 2014. Total assets increased $5.3 million, or 0.9%, primarily due to an increase in loans receivable, including loans held for sale, of
$28.0 million and an increase in cash and cash equivalents of $10.5 million, which were partially offset by a decrease in investment securities of $30.4 million. The decrease in investment securities was a result of securities called at par of
$62.0 million, which were offset by purchases of $30.0 million. The increase in loans receivable resulted from loan originations of $124.4 million, which was partially offset by the sale of loans in the secondary market of $36.2 million and principal repayments of $59.8 million. During the nine months ended September 30, 2015, our commercial loan portfolio increased $19.3 million, or 23.8% to $100.7 million. As a result, our gross loan portfolio at September 30, 2015 consisted of $223.8 million or 58.5% in one-to four-family residential loans, $32.0 million, or 8.3% in multifamily residential loans, $23.1 million, or 6.0% in gross construction loans, $100.7 million, or 26.3% in commercial loans and
$3.0 million, or 0.8% in consumer loans in relation to total loans.
Total liabilities were $479.7 million at September 30, 2015, an increase of $4.6 million, or 0.9% compared to $475.1 million at December 31, 2014. The increase in total liabilities is a result of an increase of $8.1 million, or 1.8% in total deposits which totaled $459.9 million at September 30, 2015, as compared to $451.8 million at December 31, 2014. Advances from the Federal Home Loan Bank of Cincinnati decreased by $2.0 million, or 13.5%, to $12.8 million at September 30, 2015, from $14.9 million at December 31, 2014. The decrease is a result of new advances during the year of $12.0 million, which was offset by repayments of $13.9 million.
Shareholders' equity at September 30, 2015 was $96.9 million, an increase of $708,000, or 0.7%, from December 31, 2014. The increase resulted primarily from a decrease in the unrealized loss on securities designated as available for sale, net of tax, of $1.1 million, net earnings of $879,000 and common stock issued for stock options exercised of $535,000, which was partially offset by dividend payments on common stock of $2.0 million. At September 30, 2015, tangible book value per share was $12.68 as compared to $12.72 at December 31, 2014.
SUMMARIZED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION AND CONSOLIDATED STATEMENTS OF INCOMEThe following tables set forth consolidated selected financial and other data of Cheviot Financial Corp. at the dates and for the periods presented.
9/30/2015 9/30/2014
Selected Operating Data: (In thousands, except per share data)Total interest income……………………………….. | $13,555 | $13,855 |
Total interest expense………………………………. | 2,590 | 2,692 |
Net interest income………………………………… | 10,965 | 11,163 |
Provision for losses on loans……………………….. | 1,083 | 810 |
Net interest income after | ||
provision for losses on loans......................................... | 9,882 | 10,353 |
Total other income…………………………………. | 2,213 | 2,901 |
Total general, administrative and | ||
other expense……………………………………. | 10,795 | 10,052 |
Earnings before income taxes……………………… | 1,300 | 3,202 |
Federal income taxes………………………………. | 421 | 959 |
Net earnings……………………………………….. | $ 879 | $ 2,243 |
Earnings per share - basic and diluted……………..$0.13 $0.34
(Unaudited) 9/30/2015 | (Unaudited) 6/30/2015 | (Unaudited) 3/31/2015 | 12/31/2014 | (Unaudited) 9/30/2014 | |
ASSETS: Cash and cash equivalents………………………….. | $52,973 | $46,455 | (In thousands) $32,553 | $42,439 | $16,298 |
Investment securities available for sale …………… | 96,568 | 116,191 | 138,735 | 126,999 | 144,289 |
Mortgage-backed securities available for sale…….. | 7,925 | 8,474 | 8,933 | 9,400 | 17,902 |
Mortgage-backed securities held to maturity - at cost | - | - | - | - | 2,769 |
Loans receivable, net (1)……………………………. | 365,095 | 354,478 | 338,035 | 337,095 | 335,199 |
Other assets…………………………………………. | 54,002 | 55,394 | 54,446 | 55,304 | 56,376 |
Total Assets………………………………………… | $576,563 | $580,992 | $572,702 | $571,237 | $572,833 |
LIABILITIES: Deposits……………………………………………… | $459,856 | $452,237 | $455,523 | $451,784 | $455,805 |
Advances from the Federal Home Loan Bank……… | 12,849 | 25,284 | 13,857 | 14,851 | 15,444 |
Other liabilities……………………………………… | 6,968 | 7,408 | 6,435 | 8,420 | 6,831 |
Total Liabilities……………………………………. | 479,673 | 484,929 | 475,815 | 475,055 | 478,080 |
Total Shareholders' equity…………………………. | 96,890 | 96,063 | 96,887 | 96,182 | 94,753 |
Total Liabilities & Shareholders' equity………… | $576,563 | $580,992 | $572,702 | $571,237 | $572,833 |
(1) Includes loans held for sale, net of allowance for loan losses and deferred loan costs.
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