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News Article | April 27, 2017
Site: globenewswire.com

BROOKLYN, N.Y., April 27, 2017 (GLOBE NEWSWIRE) -- Dime Community Bancshares, Inc. (NASDAQ:DCOM) (the “Company” or “Dime”), the parent company of Dime Community Bank (the “bank”), today reported net income of $11.2 million for the quarter ended March 31, 2017, or $0.30 per diluted common share, compared with net income of $732,000 for the quarter ended December 31, 2016, or $0.02 per diluted common share, and net income of $50.0 million for the quarter ended March 31, 2016, or $1.36 per diluted common share. During the quarter ended December 31, 2016, the Company recognized a non-cash, non-tax deductible expense of $11.3 million, or $0.31 per diluted common share, on the prepayment of the Employee Stock Ownership Plan (“ESOP”) share acquisition loan. Excluding the prepayment of the ESOP share acquisition loan (“ESOP Charge”), net income was $12.1 million, or $0.33 per diluted common share. During the quarter ended March 31, 2016, the Company recognized an after tax gain on real estate sale of $37.5 million, or $1.02 per diluted common share. Excluding the after tax gain on real estate sale, net income was $12.6 million, or $0.34 per diluted common share. Highlights for the first quarter of 2017 included: Kenneth J. Mahon, President and Chief Executive Officer of the Company, commented, “During this quarter, we were able to successfully launch our Business Banking division, and the initial results are positive, giving us a great deal of confidence in achieving the loan growth goals we have set for the full year. As importantly, the Business Banking division brought in approximately $14.0 million of new deposits at an average rate of four (4) basis points, which highlights the ability to source high quality, low cost deposits through the relationship-based nature of this business.” “In addition, our existing multifamily lending business remains strong and builds on the momentum from last year, while credit quality continues to be a key strength. We will continue to execute on our strategic plan and remain steadfastly focused on building our lending and business banking relationships, as well as on the communities we serve.” Mr. Mahon continued, “This quarter, Dime opened its two newest branches; one near Bedford Avenue and North 6th Street in the Williamsburg section of Brooklyn, and a second at the intersection of Fifth Avenue and Union Street in the Park Slope section of Brooklyn. In addition, the Business Banking division’s Long Island office is now open at 1 Huntington Quadrangle, Melville, and its midtown Manhattan office is scheduled to open soon.” Net interest income in the first quarter of 2017 was $37.5 million, a decrease of $411,000 (-1.1%) from the fourth quarter of 2016 and an increase of $2.9 million (8.3%) over the first quarter of 2016.  Net Interest Margin ("NIM") was 2.57% during the first quarter of 2017, compared to 2.67% during the fourth quarter of 2016, and 2.80% during the first quarter of 2016.  The linked quarter decrease was due to lower income recognized from loan prepayment activity, which varies from quarter to quarter. For the first quarter 2017, income from prepayment activity totaled $1.4 million, benefiting NIM by 9 basis points, compared to $2.7 million, or 19 basis points, during the fourth quarter of 2016, and $2.6 million, or 22 basis points, during the first quarter of 2016. NIM, adjusted for the impact of prepayment activity, was 2.48% during the first quarter of 2017, consistent with the fourth quarter of 2016. Average earning assets were $5.82 billion for the first quarter of 2017, a 9.7% (annualized) increase from $5.69 billion for the fourth quarter of 2016 and a 17.5% increase from $4.96 billion for the first quarter of 2016. For the first quarter of 2017, the average yield on interest earning assets (excluding prepayment income) was 3.44%, 2 basis points lower than the 3.46% for the fourth quarter 2016 and 10 basis points lower than the 3.54% for first quarter 2016, while the average cost of funds was 1.13% for the first quarter of 2017, flat with fourth quarter 2016, and 1 basis point higher than the first quarter of 2016. Real estate loan portfolio growth was $88.0 million (6.3% annualized) during the first quarter of 2017. Real estate loan originations were $240.5 million during the quarter (including $7.1 million from the Business Banking division), at a weighted average interest rate of 3.41%. Of this amount, $57.6 million represented loan refinances from the existing portfolio. Loan amortization and satisfactions totaled $153.4 million, or 10.8% (annualized) of the portfolio balance, at an average rate of 3.93%. The annualized loan payoff rate of 10.8% for first quarter 2017 was lower than both fourth quarter 2016 (15.1%) and first quarter 2016 (13.9%). The average yield on the real estate loan portfolio (excluding income recognized from prepayment activity) was 3.45% during the first quarter of 2017, down 1 basis point compared to 3.46% in the fourth quarter of 2016 and 12 basis points compared to 3.57% in the first quarter of 2016. Average real estate loans were $5.69 billion in the first quarter of 2017, an increase of $127.0 million (9.1% annualized) from the fourth quarter of 2016 and an increase of $869.9 million (18.1%) from the first quarter of 2016. C&I loan portfolio growth was $28.1 million during the first quarter of 2017, with most of the closings occurring towards the end of the quarter, at a weighted average interest rate of 4.04%. Deposit growth was $113.1 million (10.3% annualized) during the first quarter of 2017. The loan-to-deposit ratio fell to 127.6% at March 31, 2017, from 128.2% at December 31, 2016, and 147.0% at March 31, 2016. Core deposits increased to $3.54 billion during the first quarter of 2017, from $3.35 billion during the fourth quarter of 2016 and $2.46 billion during the first quarter of 2016. The average cost of deposits decreased one basis point on a linked quarter basis to 0.86%. Total borrowings decreased $67.4 million during the first quarter of 2017 as compared to the fourth quarter of 2016, which reflected management’s desire to decrease reliance on borrowed funds and to grow both its number of customers and deposits. Non-interest income was $1.8 million during the first quarter of 2017, which was flat compared to the fourth quarter of 2016. Non-interest income was $69.7 million during the first quarter of 2016.  Excluding the $68.2 million pre-tax gain on the sale of real estate recognized during the first quarter of 2016, non-interest income was $1.5 million, due primarily to lower administrative fees collected on portfolio loans in the prior year period. Non-interest expense was $20.8 million during the first quarter of 2017. Non-interest expense, excluding the ESOP Charge, was $18.3 million during the fourth quarter of 2016, and $17.9 million during the first quarter of 2016. Non-interest expense was $2.5 million (13.4%) higher than the fourth quarter of 2016, mostly due to salaries and employee benefits given the build-out of the Business Banking division as well as occupancy and marketing expenses primarily related to the opening of two new branches, both of which occurred early in the quarter. The ratio of non-interest expense to average assets was 1.38% during the first quarter of 2017, compared to 1.25% during the fourth quarter of 2016 excluding the ESOP Charge, and 1.38% during the first quarter of 2016. The efficiency ratio was 53.0% during the first quarter of 2017, higher than the 46.1% during the fourth quarter of 2016 excluding the ESOP Charge, and above the 49.5% during the first quarter of 2016. Both the efficiency ratio and the ratio of non-interest expense to average assets were impacted by the cost of the Business Banking division initial build-out and the fact that asset growth lags expense recognition. At current staffing and interest rate levels, breakeven on a direct cost basis for the division, is expected to occur by year end. The effective income tax rate was 38.2% during the March 2017 quarter. Non-performing loans were $3.8 million, or 0.07% of total loans, at March 31, 2017, a decrease of $436,000 from December 31, 2016. The allowance for loan losses was 0.36% of total loans at March 31, 2017, consistent with December 31, 2016. At March 31, 2017, non-performing assets represented 1.1% of the sum of tangible capital plus the allowance for loan losses (this statistic is otherwise known as the "Texas Ratio") (see table at the end of this news release). A loan loss provision of $450,000 was recorded during the first quarter of 2017, compared to a loan loss provision of $529,000 during the fourth quarter of 2016. The Company’s consolidated Tier 1 capital to average assets (“leverage ratio”) was 9.91% at March 31, 2017, in excess of Basel III requirements, inclusive of the conservation buffer. The bank’s regulatory capital ratios continued to be in excess of Basel III requirements as well, inclusive of conservation buffer amounts. At March 31, 2017, the bank’s leverage ratio was 8.88%, while Tier 1 capital to risk-weighted assets and Total capital to risk-weighted assets ratios were 11.25% and 11.70%, respectively. Diluted earnings per common share exceeded the quarterly cash dividend per share by 114.3% during the first quarter of 2017, equating to a 46.7% payout ratio. Tangible book value per share was $13.92 at March 31, 2017, a 5.6% increase from $13.18 at March 31, 2016. As of the date of this earnings release, the bank had outstanding real estate loan commitments totaling $155.3 million, at an average interest rate approximating 3.86% (including $35.9 million from the Business Banking division at an interest rate of 4.60%), all of which are likely to close during the quarter ending June 30, 2017. Loan prepayments and amortization are expected to fall within the projected annualized range of 10% - 15% during the June 2017 quarter. In addition, the bank’s C&I pipeline totaled $41.3 million as of the date of this earnings release, at an average interest rate of 4.54%. The Company has a balance sheet growth objective of 10% for the year ending December 31, 2017, with a continued preference toward utilizing retail deposits for most of its funding needs. Despite the recent policy actions of the Federal Open Market Committee, deposit and borrowing funding costs are expected to remain near current historically low levels through the June 2017 quarter. At March 31, 2017, the bank had $170.2 million of Certificates of Deposit at an average rate of 1.25%, and $165.0 million of borrowings, at an average rate of 2.10%, scheduled to mature during the June 2017 quarter. No significant increase or reduction in funding costs is anticipated from the rollover or re-positioning of these funds. Loan loss provisions will be driven by loan portfolio growth (with C&I loans contributing to a large part of the incremental growth of the provision) in the June 2017 quarter, subject to management’s assessment of the adequacy of the allowance for loan losses. Non‐interest expense is expected to approximate $20.5 million during the June 2017 quarter, reflecting several remaining hires and occupancy expense related to the new locations. The sale of the Williamsburg branch office property is now expected to close during the third quarter of 2017, with the branch being relocated to a new nearby location by year end. The Company projects that the consolidated effective tax rate will approximate 38.5% in the June 2017 quarter. The Company had $6.10 billion in consolidated assets as of March 31, 2017. The bank was founded in 1864, is headquartered in Brooklyn, New York, and currently has twenty-seven branches located throughout Brooklyn, Queens, the Bronx and Nassau County, New York. More information on the Company and the bank can be found on Dime's website at www.dime.com. This News Release contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These statements may be identified by use of words such as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based upon various assumptions and analyses made by the Company in light of management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors it believes are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond the Company's control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond the Company’s control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins; changes in deposit flows, loan demand or real estate values may adversely affect the business of Dime; changes in accounting principles, policies or guidelines may cause the Company’s financial condition to be perceived differently; changes in corporate and/or individual income tax laws may adversely affect the Company's financial condition or results of operations; general economic conditions, either nationally or locally in some or all areas in which the Company conducts business, or conditions in the securities markets or the banking industry may be less favorable than the Company currently anticipates; legislation or regulatory changes may adversely affect the Company’s business; technological changes may be more difficult or expensive than the Company anticipates; success or consummation of new business initiatives may be more difficult or expensive than the Company anticipates; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than the Company anticipates.


EAU CLAIRE, Wis., May 01, 2017 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the "Company") (Nasdaq:CZWI), the parent company of Citizens Community Federal N.A. (the “Bank”), today reported GAAP earnings increased 38% to $934,000, or $0.17 per diluted share, in its fiscal second quarter of 2017, ended March 31, 2017, compared to GAAP earnings of $675,000, or $0.13 per diluted share, for the second fiscal quarter one year ago.  GAAP earnings remained relatively flat from $940,000, or $0.18 per diluted share, for the preceding quarter.  For the first six months of fiscal 2017, the Company reported earnings increased 23% to $1.9 million, or $0.35 per diluted share, from $1.5 million, or $0.29 per diluted share, in the first six months of fiscal 2016. Excluding merger expenses related to the recently announced Agreement and Plan of Merger (the "Merger Agreement") with Wells Financial Corp. ("Wells") (OTCQB:WEFP), and costs for closing four branches last November, core earnings (non-GAAP) increased 13% to $933,000 million, or $0.17 per core diluted share (non-GAAP)for Q2 fiscal 2017, compared to $825,000, or $0.15 per core diluted share (non-GAAP), a year ago and declined 31% from $1.3 million, or $0.26 per core diluted share in the preceding quarter.  For the first six months of fiscal 2017, core earnings (non-GAAP) were $2.3 million, or $0.43 per core diluted share, up from $1.7 million, or $0.32 per core diluted share, in the first six months one year ago. Core earnings is a non-GAAP measure that we believe provides additional understanding of the underlying business performance and trends related to core business activities.  For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of GAAP Earnings and Core Earnings (non-GAAP)". “We achieved record earnings for the first six months of fiscal 2017, fueled by 15% year-over-year growth in loans and a 12% increase in deposits, primarily as a result of the Community Bank of Northern Wisconsin ("CBN") acquisition,” said Stephen Bianchi, President and Chief Executive Officer.  “As we continue to focus on strategically expanding our franchise through acquisitions, we are simultaneously building our commercial lending business and service capabilities to replace the transactional indirect paper and on balance sheet one to four family loan portfolios which have been declining.  Gain on sale from mortgages decreased as home purchases slowed seasonally and refinancing activity decreased after rates rose following the election.  We were also internally focused on upgrading our mortgage lending system to support future originations.  Agricultural lending grew through acquired loans from our recent acquisition by 133%, but organic demand was muted due to weak commodity prices and tight margins for operators." Second Quarter Fiscal 2017 Financial Highlights: (at or for the periods ended March 31, 2017, compared to March 31, 2016 and /or December 31, 2016.) Total assets grew 11% to $668.5 million at March 31, 2017, compared to $601.8 million at March 31, 2016, and declined 3% from $686.4 million at December 31, 2016.  The increase in total assets from a year ago, primarily reflects higher loans outstanding primarily due to the CBN acquisition, while the decline in total assets on a linked quarter basis, is mainly due to the decision made to discontinue indirect lending and reduced emphasis on one to four family residential portfolio loans. Total net loans grew 15% to $529.0 million at March 31, 2017, from $460.2 million at March 31, 2016, and decreased 3% from $543.0 million at December 31, 2016.  The increase in loans year-over-year was primarily due to the CBN acquisition, which included $111.7 million of net loans.  The decline in the loan balances from the immediate prior quarter was primarily due to decreased levels of one to four family loans and a decreased investment in indirect consumer loans.  At the same time, commercial and agricultural loan balances increased over the past quarter reflecting increased emphasis on internally underwritten loans.  Since September 30, 2016, commercial and agricultural loan balances have increased $12.5 million from $198.5 million at September 30, 2016 to $211.0 million at March 31, 2017. At March 31, 2017, commercial and agricultural real estate and non-real estate loans totaled 39.4% of the total loan portfolio.  One to four family residential real estate loans represented 31.1% of the total loan portfolio, while consumer related non-real estate loans totaled 29.5% of the total loan portfolio - down from 31.7% in the preceding quarter. Total deposits grew 12% to $530.9 million at March 31, 2017, compared to $473.8 million at March 31, 2016, and declined slightly from $535.1 million at December 31, 2016.  Non-interest bearing demand deposits represented 9% of total deposits; interest bearing demand deposits and savings, each accounted for 10% of the deposit mix, and money market accounts represented 23% of total deposits at March 31, 2017.  At March 31, 2016, non-interest bearing and interest bearing demand deposits each represented 6% of total deposits; savings deposits accounted for 7% of the deposit mix, and money market accounts represented 28% of total deposits.  The change in composition of deposits from one year ago, reflects a combination of deposit run-off related to the announced closure of the four Eastern Wisconsin branches, as well as previous branch closures, and an increase in commercial deposit accounts from the CBN acquisition. Federal Home Loan Bank ("FHLB") advances and other borrowings totaled $61.5 million at March 31, 2016, compared to $71.5 million at March 31, 2017.  To facilitate the purchase of CBN in May 2016, the Company obtained an adjustable-rate, $11.0 million loan with a maturity date of May 15, 2021.  In March 2017, the Bank prepaid $9.8 million in FHLB borrowings with an average rate of 2.10% and average remaining maturity of 13.17 months.  The prepayment fee totaled $104,000 and is included in other non-interest expense for the current three and six months ended, March 31, 2017.  The Bank replaced these FHLB borrowings with shorter term borrowings maturing in one month at 0.75%. The weighted average remaining term of the borrowings at March 31, 2017 was 2.59 months compared to 8.32 months at September 30, 2016. Nonperforming assets (“NPAs”) totaled $7.0 million, or 1.05% of total assets, at March 31, 2017, compared to $7.4 million, or 1.08% of total assets, three months earlier, and $2.3 million, or 0.38% of total assets, at March 31, 2016.  The increase in NPAs at March 31, 2017, was primarily due to the deterioration of two larger, acquired agricultural loans as reported three months earlier. The allowance for loan and lease losses at March 31, 2017, totaled $5.8 million and represented 1.09% of total loans, compared to $6.3 million and 1.35% of total loans at March 31, 2016.  Net charge off loans totaled $82,000 and represented 0.06% of average loans on an annualized basis, at March 31, 2017.   One year earlier, net charge offs totaled $138,000 and represented 0.12% of average loans on an annualized basis. Tangible common stockholders' equity was 8.89% of tangible assets at March 31, 2017, compared to 8.55% at September 30, 2016.  Tangible book value per common share was $11.19 at March 31, 2017 compared to $11.22 at September 30, 2016. Capital ratios for the Bank continued to remain well above regulatory requirements with Tier 1 capital to risk weighted assets of 13.6% at March 31, 2017, up from 12.9% at September 30, 2016.  Tier 1 leverage capital to adjusted total assets improved to 9.8% at March 31, 2017 compared to 9.3% at September 30, 2016.  These regulatory ratios were higher than the required minimum levels of 6.00% for Tier 1 capital to risk weighted assets and 4.00% for Tier 1 leverage capital to adjusted total assets. Primarily due to growth in the loan portfolio, net interest income increased 13% to $5.2 million for the second quarter of fiscal 2017, compared to $4.6 million for the second quarter of fiscal 2016.  Net interest income declined 6% from $5.6 million on a linked quarter basis mainly due to a reduction in the loan portfolio.  For the first six months of fiscal 2017, net interest income grew 17% to $10.8 million, compared to $9.2 million for the first six months of fiscal 2016. The net interest margin (“NIM”) was 3.31% for the fiscal second quarter of 2017, compared to 3.28% for the same quarter one year earlier, and 3.36% for the preceding quarter ended December 31, 2016.  For the first six months of fiscal 2017, the NIM expanded 9 basis points to 3.34% compared to 3.25% for the first six months of fiscal 2016.  The year-over-year higher quarterly margin was primarily due to higher earning asset yields. No provision for loan losses was recorded during the first six months of fiscal 2017.  “We haven’t taken any provision for loan losses since the first quarter of fiscal 2016,” said Mark Oldenberg, EVP and Chief Financial Officer.   “The balance of the allowance for loan and lease losses was $5.8 million, or 1.09% of our loan portfolio at March 31, 2017.” Net charge offs were $82,000 for the second quarter of fiscal 2017, compared to $138,000 a year ago and $151,000 for the first quarter of fiscal 2017.  Allowance for loan and lease losses totaled 1.09%, at March 31, 2017, compared to 1.35% at March 31, 2016 and 1.08%, at December 31, 2016. Noninterest income increased $394,000 to $1.2 million for the second quarter of fiscal 2017, compared to $810,000 one year ago, and declined from $1.3 million for the immediate prior quarter.  For the first six months of fiscal 2017, noninterest income increased 43% to $2.5 million, compared to $1.8 million for the first six months of fiscal 2016, mainly due to gains on payoffs from purchased credit impaired loans in the amount of $206,000 during the first fiscal quarter of 2017, an increase in secondary market fee income generated from customer mortgage activity due to advantages over the ARM loan portfolio mortgage offerings and an increase in commercial loan origination and servicing fee income.  Settlement proceeds increased $283,000 in the current three month period ended March 31, 2017.  "In March 2017, the Bank received litigation settlement proceeds from a JP Morgan Residential Mortgage Backed Security (RMBS) claim in the amount of $283,000.  This JP Morgan RMBS was previously owned by the Bank and sold in 2011," said Oldenberg. Total noninterest expense was $5.0 million in the second quarter of fiscal 2017 compared to $4.4 million for the quarter ended March 31, 2016.  The increase in expenses for the current quarter was primarily related to salaries and related benefits cost increases due to the addition of new employees related to the CBN acquisition and professional services related to the Wells acquisition.  The FHLB borrowings prepayment fee totaled $104,000 and is included in other non-interest expense for the current three and six months ended, March 31, 2017.  For the first six months of fiscal 2017, noninterest expense increased to $10.5 million compared to $8.5 million for the first six months of fiscal 2016. In addition to the increased costs mentioned above, occupancy expense increased during the first fiscal quarter of 2017, primarily due to rent termination costs related to the four branch closures in Eastern Wisconsin. These financial results are preliminary until the Form 10-Q is filed in May 2017. Citizens Community Federal N.A., a wholly owned subsidiary of Citizens Community Bancorp, Inc., is a full-service national bank based in Altoona, Wisconsin, serving more than 50,000 customers in Wisconsin, Minnesota and Michigan through 16 branch locations. Subsequent to the branch closures in June 2017, the Company will operate through 14 branch locations. The Company’s stock trades on the NASDAQ Global Market under the symbol “CZWI.” This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Additional Information About The Proposed Transaction and Where To Find It Investors are urged to read the Merger Agreement for a more complete understanding of the terms of the transactions discussed herein. This release does not constitute a solicitation of any vote or approval. In connection with the merger, the Company will be filing with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 and other relevant documents. STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 TO BE FILED BY THE COMPANY WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY THE COMPANY WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The Registration Statement, including the proxy statement/prospectus, and other relevant materials (when they become available), and any other documents filed by the Company with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. Documents filed by the Company with the SEC, including the registration statement, may also be obtained free of charge from the Company’s website http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=4091023 by clicking the “SEC Filings” heading, or by directing a request to the Company’s CEO, Stephen Bianchi at sbianchi@ccf.us. The directors, executive officers and certain other members of management and employees of Wells may be deemed to be “participants” in the solicitation of proxies for stockholder approval. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of stockholder approval will be set forth in the proxy statement/prospectus and the other relevant documents to be filed with the SEC. Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of Citizens Community Federal N.A. (“CCFBank”). These uncertainties include the timing to consummate the proposed transaction; the risk that a condition to closing of the proposed transaction may not be satisfied and the transaction may not close; the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained or is obtained subject to conditions that are not anticipated; the combined company’s ability to achieve the synergies and value creation contemplated by the proposed transaction; management’s ability to promptly and effectively integrate the businesses of the two companies; the diversion of management time on transaction-related issues; the effects of governmental regulation of the financial services industry; industry consolidation; technological developments and major world news events; general economic conditions, in particular, relating to consumer demand for CCFBank’s products and services; CCFBank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; CCFBank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit CCFBank’s operations and potential growth; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting estimates and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies overseeing CCFBank; CCFBank’s ability to implement its cost-savings and revenue enhancement initiatives, including costs associated with its branch consolidation and new market branch growth initiatives; legislative or regulatory changes or actions or significant litigation adversely affecting CCFBank; fluctuation of the Company’s stock price; CCFBank's ability to attract and retain key personnel; CCFBank's ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended September 30, 2016 filed with the Securities and Exchange Commission on December 29, 2016. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release. This press release contains non-GAAP financial measures, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods.  Non-GAAP measures eliminates the impact of certain one-time expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees.  Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms.  These costs are unique to each transaction based on the contracts in existence at the merger date.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions. (1)  Costs incurred are included as data processing, advertising, marketing and public relations, professional fees and other non-interest expense in the consolidated statement of operations. (2)  Branch closure costs include severance pay recorded in salaries and other benefits, accelerated depreciation expense and lease termination fees included in occupancy and other non-interest expense in the consolidated statement of operations. (3) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage Backed Security (RMBS) claim.  This JP Morgan RMBS was previously owned by the Bank and sold in 2011. (4) The prepayment fee, includes the cost to restructure our FHLB borrowings and is included in other non-interest expense in the consolidated statement of operations. (5)  Core earnings is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. (1)  Total Nonperforming assets increased due to the CBN acquisition in Fiscal 2016.  Acquired nonperforming loans were $4,322, $5,090 and $1,778 at March 31, 2017, December 31, 2016 and September 30, 2016, respectively.  Acquired real estate owned property balances were $160, $143 and $212 at March 31, 2017, December 31, 2016 and September 30, 2016, respectively. (1)  For the 3 months ended March 31, 2017, December 31, 2016 and March 31, 2016, the average balance of the tax exempt investment securities, included in investment securities, were $31,445, $31,986 and $28,565 respectively.  The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented. (1)  For the 6 months ended March 31, 2017 and March 31, 2016, the average balance of the tax exempt investment securities, included in investment securities, were $31,738 and $27,455 respectively.  The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented.


EAU CLAIRE, Wis., May 01, 2017 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the "Company") (Nasdaq:CZWI), the parent company of Citizens Community Federal N.A. (the “Bank”), today reported GAAP earnings increased 38% to $934,000, or $0.17 per diluted share, in its fiscal second quarter of 2017, ended March 31, 2017, compared to GAAP earnings of $675,000, or $0.13 per diluted share, for the second fiscal quarter one year ago.  GAAP earnings remained relatively flat from $940,000, or $0.18 per diluted share, for the preceding quarter.  For the first six months of fiscal 2017, the Company reported earnings increased 23% to $1.9 million, or $0.35 per diluted share, from $1.5 million, or $0.29 per diluted share, in the first six months of fiscal 2016. Excluding merger expenses related to the recently announced Agreement and Plan of Merger (the "Merger Agreement") with Wells Financial Corp. ("Wells") (OTCQB:WEFP), and costs for closing four branches last November, core earnings (non-GAAP) increased 13% to $933,000 million, or $0.17 per core diluted share (non-GAAP)for Q2 fiscal 2017, compared to $825,000, or $0.15 per core diluted share (non-GAAP), a year ago and declined 31% from $1.3 million, or $0.26 per core diluted share in the preceding quarter.  For the first six months of fiscal 2017, core earnings (non-GAAP) were $2.3 million, or $0.43 per core diluted share, up from $1.7 million, or $0.32 per core diluted share, in the first six months one year ago. Core earnings is a non-GAAP measure that we believe provides additional understanding of the underlying business performance and trends related to core business activities.  For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table "Reconciliation of GAAP Earnings and Core Earnings (non-GAAP)". “We achieved record earnings for the first six months of fiscal 2017, fueled by 15% year-over-year growth in loans and a 12% increase in deposits, primarily as a result of the Community Bank of Northern Wisconsin ("CBN") acquisition,” said Stephen Bianchi, President and Chief Executive Officer.  “As we continue to focus on strategically expanding our franchise through acquisitions, we are simultaneously building our commercial lending business and service capabilities to replace the transactional indirect paper and on balance sheet one to four family loan portfolios which have been declining.  Gain on sale from mortgages decreased as home purchases slowed seasonally and refinancing activity decreased after rates rose following the election.  We were also internally focused on upgrading our mortgage lending system to support future originations.  Agricultural lending grew through acquired loans from our recent acquisition by 133%, but organic demand was muted due to weak commodity prices and tight margins for operators." Second Quarter Fiscal 2017 Financial Highlights: (at or for the periods ended March 31, 2017, compared to March 31, 2016 and /or December 31, 2016.) Total assets grew 11% to $668.5 million at March 31, 2017, compared to $601.8 million at March 31, 2016, and declined 3% from $686.4 million at December 31, 2016.  The increase in total assets from a year ago, primarily reflects higher loans outstanding primarily due to the CBN acquisition, while the decline in total assets on a linked quarter basis, is mainly due to the decision made to discontinue indirect lending and reduced emphasis on one to four family residential portfolio loans. Total net loans grew 15% to $529.0 million at March 31, 2017, from $460.2 million at March 31, 2016, and decreased 3% from $543.0 million at December 31, 2016.  The increase in loans year-over-year was primarily due to the CBN acquisition, which included $111.7 million of net loans.  The decline in the loan balances from the immediate prior quarter was primarily due to decreased levels of one to four family loans and a decreased investment in indirect consumer loans.  At the same time, commercial and agricultural loan balances increased over the past quarter reflecting increased emphasis on internally underwritten loans.  Since September 30, 2016, commercial and agricultural loan balances have increased $12.5 million from $198.5 million at September 30, 2016 to $211.0 million at March 31, 2017. At March 31, 2017, commercial and agricultural real estate and non-real estate loans totaled 39.4% of the total loan portfolio.  One to four family residential real estate loans represented 31.1% of the total loan portfolio, while consumer related non-real estate loans totaled 29.5% of the total loan portfolio - down from 31.7% in the preceding quarter. Total deposits grew 12% to $530.9 million at March 31, 2017, compared to $473.8 million at March 31, 2016, and declined slightly from $535.1 million at December 31, 2016.  Non-interest bearing demand deposits represented 9% of total deposits; interest bearing demand deposits and savings, each accounted for 10% of the deposit mix, and money market accounts represented 23% of total deposits at March 31, 2017.  At March 31, 2016, non-interest bearing and interest bearing demand deposits each represented 6% of total deposits; savings deposits accounted for 7% of the deposit mix, and money market accounts represented 28% of total deposits.  The change in composition of deposits from one year ago, reflects a combination of deposit run-off related to the announced closure of the four Eastern Wisconsin branches, as well as previous branch closures, and an increase in commercial deposit accounts from the CBN acquisition. Federal Home Loan Bank ("FHLB") advances and other borrowings totaled $61.5 million at March 31, 2016, compared to $71.5 million at March 31, 2017.  To facilitate the purchase of CBN in May 2016, the Company obtained an adjustable-rate, $11.0 million loan with a maturity date of May 15, 2021.  In March 2017, the Bank prepaid $9.8 million in FHLB borrowings with an average rate of 2.10% and average remaining maturity of 13.17 months.  The prepayment fee totaled $104,000 and is included in other non-interest expense for the current three and six months ended, March 31, 2017.  The Bank replaced these FHLB borrowings with shorter term borrowings maturing in one month at 0.75%. The weighted average remaining term of the borrowings at March 31, 2017 was 2.59 months compared to 8.32 months at September 30, 2016. Nonperforming assets (“NPAs”) totaled $7.0 million, or 1.05% of total assets, at March 31, 2017, compared to $7.4 million, or 1.08% of total assets, three months earlier, and $2.3 million, or 0.38% of total assets, at March 31, 2016.  The increase in NPAs at March 31, 2017, was primarily due to the deterioration of two larger, acquired agricultural loans as reported three months earlier. The allowance for loan and lease losses at March 31, 2017, totaled $5.8 million and represented 1.09% of total loans, compared to $6.3 million and 1.35% of total loans at March 31, 2016.  Net charge off loans totaled $82,000 and represented 0.06% of average loans on an annualized basis, at March 31, 2017.   One year earlier, net charge offs totaled $138,000 and represented 0.12% of average loans on an annualized basis. Tangible common stockholders' equity was 8.89% of tangible assets at March 31, 2017, compared to 8.55% at September 30, 2016.  Tangible book value per common share was $11.19 at March 31, 2017 compared to $11.22 at September 30, 2016. Capital ratios for the Bank continued to remain well above regulatory requirements with Tier 1 capital to risk weighted assets of 13.6% at March 31, 2017, up from 12.9% at September 30, 2016.  Tier 1 leverage capital to adjusted total assets improved to 9.8% at March 31, 2017 compared to 9.3% at September 30, 2016.  These regulatory ratios were higher than the required minimum levels of 6.00% for Tier 1 capital to risk weighted assets and 4.00% for Tier 1 leverage capital to adjusted total assets. Primarily due to growth in the loan portfolio, net interest income increased 13% to $5.2 million for the second quarter of fiscal 2017, compared to $4.6 million for the second quarter of fiscal 2016.  Net interest income declined 6% from $5.6 million on a linked quarter basis mainly due to a reduction in the loan portfolio.  For the first six months of fiscal 2017, net interest income grew 17% to $10.8 million, compared to $9.2 million for the first six months of fiscal 2016. The net interest margin (“NIM”) was 3.31% for the fiscal second quarter of 2017, compared to 3.28% for the same quarter one year earlier, and 3.36% for the preceding quarter ended December 31, 2016.  For the first six months of fiscal 2017, the NIM expanded 9 basis points to 3.34% compared to 3.25% for the first six months of fiscal 2016.  The year-over-year higher quarterly margin was primarily due to higher earning asset yields. No provision for loan losses was recorded during the first six months of fiscal 2017.  “We haven’t taken any provision for loan losses since the first quarter of fiscal 2016,” said Mark Oldenberg, EVP and Chief Financial Officer.   “The balance of the allowance for loan and lease losses was $5.8 million, or 1.09% of our loan portfolio at March 31, 2017.” Net charge offs were $82,000 for the second quarter of fiscal 2017, compared to $138,000 a year ago and $151,000 for the first quarter of fiscal 2017.  Allowance for loan and lease losses totaled 1.09%, at March 31, 2017, compared to 1.35% at March 31, 2016 and 1.08%, at December 31, 2016. Noninterest income increased $394,000 to $1.2 million for the second quarter of fiscal 2017, compared to $810,000 one year ago, and declined from $1.3 million for the immediate prior quarter.  For the first six months of fiscal 2017, noninterest income increased 43% to $2.5 million, compared to $1.8 million for the first six months of fiscal 2016, mainly due to gains on payoffs from purchased credit impaired loans in the amount of $206,000 during the first fiscal quarter of 2017, an increase in secondary market fee income generated from customer mortgage activity due to advantages over the ARM loan portfolio mortgage offerings and an increase in commercial loan origination and servicing fee income.  Settlement proceeds increased $283,000 in the current three month period ended March 31, 2017.  "In March 2017, the Bank received litigation settlement proceeds from a JP Morgan Residential Mortgage Backed Security (RMBS) claim in the amount of $283,000.  This JP Morgan RMBS was previously owned by the Bank and sold in 2011," said Oldenberg. Total noninterest expense was $5.0 million in the second quarter of fiscal 2017 compared to $4.4 million for the quarter ended March 31, 2016.  The increase in expenses for the current quarter was primarily related to salaries and related benefits cost increases due to the addition of new employees related to the CBN acquisition and professional services related to the Wells acquisition.  The FHLB borrowings prepayment fee totaled $104,000 and is included in other non-interest expense for the current three and six months ended, March 31, 2017.  For the first six months of fiscal 2017, noninterest expense increased to $10.5 million compared to $8.5 million for the first six months of fiscal 2016. In addition to the increased costs mentioned above, occupancy expense increased during the first fiscal quarter of 2017, primarily due to rent termination costs related to the four branch closures in Eastern Wisconsin. These financial results are preliminary until the Form 10-Q is filed in May 2017. Citizens Community Federal N.A., a wholly owned subsidiary of Citizens Community Bancorp, Inc., is a full-service national bank based in Altoona, Wisconsin, serving more than 50,000 customers in Wisconsin, Minnesota and Michigan through 16 branch locations. Subsequent to the branch closures in June 2017, the Company will operate through 14 branch locations. The Company’s stock trades on the NASDAQ Global Market under the symbol “CZWI.” This communication is for informational purposes only and is neither an offer to purchase, nor a solicitation of an offer to sell, any securities in any jurisdiction pursuant to the proposed transaction or otherwise, nor shall there be any sale, issuance or transfer of securities in any jurisdiction in contravention of any applicable law. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended. Additional Information About The Proposed Transaction and Where To Find It Investors are urged to read the Merger Agreement for a more complete understanding of the terms of the transactions discussed herein. This release does not constitute a solicitation of any vote or approval. In connection with the merger, the Company will be filing with the Securities and Exchange Commission (“SEC”) a Registration Statement on Form S-4 and other relevant documents. STOCKHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT ON FORM S-4 TO BE FILED BY THE COMPANY WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS FILED BY THE COMPANY WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. The Registration Statement, including the proxy statement/prospectus, and other relevant materials (when they become available), and any other documents filed by the Company with the SEC, may be obtained free of charge at the SEC’s website at www.sec.gov. Documents filed by the Company with the SEC, including the registration statement, may also be obtained free of charge from the Company’s website http://www.snl.com/IRWebLinkX/corporateprofile.aspx?iid=4091023 by clicking the “SEC Filings” heading, or by directing a request to the Company’s CEO, Stephen Bianchi at sbianchi@ccf.us. The directors, executive officers and certain other members of management and employees of Wells may be deemed to be “participants” in the solicitation of proxies for stockholder approval. Information regarding the persons who may, under the rules of the SEC, be considered participants in the solicitation of stockholder approval will be set forth in the proxy statement/prospectus and the other relevant documents to be filed with the SEC. Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified by the use of forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “intend,” “may,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of Citizens Community Federal N.A. (“CCFBank”). These uncertainties include the timing to consummate the proposed transaction; the risk that a condition to closing of the proposed transaction may not be satisfied and the transaction may not close; the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained or is obtained subject to conditions that are not anticipated; the combined company’s ability to achieve the synergies and value creation contemplated by the proposed transaction; management’s ability to promptly and effectively integrate the businesses of the two companies; the diversion of management time on transaction-related issues; the effects of governmental regulation of the financial services industry; industry consolidation; technological developments and major world news events; general economic conditions, in particular, relating to consumer demand for CCFBank’s products and services; CCFBank’s ability to maintain current deposit and loan levels at current interest rates; competitive and technological developments; deteriorating credit quality, including changes in the interest rate environment reducing interest margins; prepayment speeds, loan origination and sale volumes, charge-offs and loan loss provisions; CCFBank’s ability to maintain required capital levels and adequate sources of funding and liquidity; maintaining capital requirements may limit CCFBank’s operations and potential growth; changes and trends in capital markets; competitive pressures among depository institutions; effects of critical accounting estimates and judgments; changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board (FASB) or other regulatory agencies overseeing CCFBank; CCFBank’s ability to implement its cost-savings and revenue enhancement initiatives, including costs associated with its branch consolidation and new market branch growth initiatives; legislative or regulatory changes or actions or significant litigation adversely affecting CCFBank; fluctuation of the Company’s stock price; CCFBank's ability to attract and retain key personnel; CCFBank's ability to secure confidential information through the use of computer systems and telecommunications networks; and the impact of reputational risk created by these developments on such matters as business generation and retention, funding and liquidity. Shareholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended September 30, 2016 filed with the Securities and Exchange Commission on December 29, 2016. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release. This press release contains non-GAAP financial measures, which management believes may be helpful in understanding the Company's results of operations or financial position and comparing results over different periods.  Non-GAAP measures eliminates the impact of certain one-time expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees.  Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms.  These costs are unique to each transaction based on the contracts in existence at the merger date.  Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions. (1)  Costs incurred are included as data processing, advertising, marketing and public relations, professional fees and other non-interest expense in the consolidated statement of operations. (2)  Branch closure costs include severance pay recorded in salaries and other benefits, accelerated depreciation expense and lease termination fees included in occupancy and other non-interest expense in the consolidated statement of operations. (3) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage Backed Security (RMBS) claim.  This JP Morgan RMBS was previously owned by the Bank and sold in 2011. (4) The prepayment fee, includes the cost to restructure our FHLB borrowings and is included in other non-interest expense in the consolidated statement of operations. (5)  Core earnings is a non-GAAP measure that management believes enhances investors' ability to better understand the underlying business performance and trends related to core business activities. (1)  Total Nonperforming assets increased due to the CBN acquisition in Fiscal 2016.  Acquired nonperforming loans were $4,322, $5,090 and $1,778 at March 31, 2017, December 31, 2016 and September 30, 2016, respectively.  Acquired real estate owned property balances were $160, $143 and $212 at March 31, 2017, December 31, 2016 and September 30, 2016, respectively. (1)  For the 3 months ended March 31, 2017, December 31, 2016 and March 31, 2016, the average balance of the tax exempt investment securities, included in investment securities, were $31,445, $31,986 and $28,565 respectively.  The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented. (1)  For the 6 months ended March 31, 2017 and March 31, 2016, the average balance of the tax exempt investment securities, included in investment securities, were $31,738 and $27,455 respectively.  The interest income on tax exempt securities is computed on a tax-equivalent basis using a tax rate of 34% for all periods presented.


News Article | April 17, 2017
Site: globenewswire.com

LOS ANGELES, April 17, 2017 (GLOBE NEWSWIRE) -- PacWest Bancorp (Nasdaq:PACW) today announced net earnings for first quarter of 2017 of $78.7 million, or $0.65 per diluted share, compared to net earnings for the fourth quarter of 2016 of $85.6 million, or $0.71 per diluted share.  The decrease in net earnings from the prior quarter was primarily due to a decrease in interest income due to a $14.7 million decrease in acquired loan discount accretion as the fourth quarter of 2016 included $13.5 million of discount accretion from the payoff of a single loan. Matt Wagner, President and CEO, commented, “First quarter 2017 earnings were below our expectations due mostly to an elevated credit provision and significant loan repayment activity. While the higher than expected provision was not driven by newly classified or impaired loans, it was a disappointment. We remain focused on driving high quality growth and minimizing credit costs.” Patrick Rusnak, Executive Vice President and CFO stated, “Our first quarter tax equivalent NIM excluding acquired loan discount accretion increased one basis point to 5.02%. While the NIM benefitted from the repricing of variable-rate loans, this was partially offset by the mix of loan types that were paid off and originated during the quarter, combined with higher balances and rates on non-core deposits and borrowings.” Mr. Wagner continued, “We recently announced our pending acquisition of CU Bancorp and are excited about the opportunities created through this transaction. CU Bancorp’s exceptional core deposit franchise and asset sensitive balance sheet will strengthen our position in a rising rate environment. This transaction will increase our scale and operating efficiencies, and will also increase our market share in the highly attractive Southern California market.” Net interest income decreased by $15.9 million to $232.5 million in the first quarter of 2017 compared to $248.3 million in the fourth quarter of 2016 due to lower discount accretion on acquired loans, offset by higher average loan and lease balances.   Total accretion on acquired loans was $6.4 million in the first quarter of 2017 (17 basis points on the loan and lease yield) compared to $21.2 million in the fourth quarter of 2016 (56 basis points on the loan and lease yield).  The decrease in accretion was due primarily to lower accelerated accretion from payoffs on acquired loans, including $13.5 million from the payoff of a nonaccrual purchased credit impaired (“PCI”) loan in the fourth quarter of 2016.  The loan and lease yield for the first quarter of 2017 was 5.94% compared to 6.31% for the fourth quarter of 2016.  The decrease in the loan and lease yield was principally due to the lower discount accretion on acquired loans. Excluding acquired loan discount accretion, the loan and lease yield was 5.77% in the first quarter of 2017 compared to 5.75% in the fourth quarter of 2016. The tax equivalent NIM for the first quarter of 2017 was 5.16% compared to 5.47% for the fourth quarter of 2016. The decrease in the NIM was mostly due to lower discount accretion on acquired loans. Such accretion contributed 14 basis points to the NIM in the first quarter of 2017 and 46 basis points to the NIM in the fourth quarter of 2016.  Excluding acquired loan discount accretion, the tax equivalent NIM was 5.02% in the first quarter of 2017 compared to 5.01% in the fourth quarter of 2016. The cost of total deposits increased to 0.21% in the first quarter of 2017 from 0.19% in the fourth quarter of 2016 due to higher average costs and balances of non-core interest-bearing deposits. The tax equivalent net interest income and NIM as well as the loan and lease interest income and loan and lease yield are impacted by volatility in accretion of acquisition discounts on acquired loans and leases. The effects of this are shown in the following tables for the periods indicated: Noninterest income increased by $6.2 million to $35.1 million in the first quarter of 2017 compared to $28.9 million in the fourth quarter of 2016 due mostly to a $7.9 million increase in other income attributable mainly to a $5.0 million legal settlement with a former borrower and a $1.2 million increase in loan syndication fees. This was offset by a decrease in other commissions and fees of $1.6 million driven by a decrease in loan prepayment and unused commitment fees of $2.0 million. Warrant income decreased $0.9 million mainly due to lower realized gains on exercised warrants. The following table presents details of noninterest income for the periods indicated: Noninterest expense decreased by $2.1 million to $116.5 million in the first quarter of 2017 compared to $118.6 million in the fourth quarter of 2016. The decrease was due mostly to a decrease in foreclosed assets expense of $2.6 million, a decrease in other professional services expense of $1.5 million, and a decrease in compensation expense of $1.1 million, offset by an increase in other expense of $1.5 million.  Foreclosed assets expense decreased primarily due to a $2.6 million write-down recorded in the fourth quarter of 2016.  Other professional services expense decreased due to lower legal expense and consulting expense. The $1.1 million reduction in compensation expense was attributable to lower bonus and severance expense, offset by a seasonal increase in payroll taxes. The increase in other expense is mainly attributable to a $1.5 million accrual to increase our reserve for probable loss contingencies. The following table presents details of noninterest expense for the periods indicated: The overall effective income tax rate was 37.7% in the first quarter of 2017 and 36.7% in the fourth quarter of 2016.  The estimated effective tax rate for the full year 2017 is approximately 38.1%. Total loans and leases increased by $100.7 million in the first quarter of 2017 to $15.6 billion at March 31, 2017.  The net increase was driven by first quarter originations and purchases of $1.0 billion, offset partially by principal repayments of $0.9 billion. A portfolio of 56 multi-family loans with an aggregate principal balance of $183 million was purchased from another bank during the first quarter of 2017. The following table presents a roll forward of the loan and lease portfolio for the periods indicated: The following table presents the composition of our loan and lease portfolio as of the dates indicated: Loan growth in the first quarter came primarily from the multi-family mortgage and construction portfolios. High repayment activity in our lender finance portfolio drove the $220 million decline in asset-based loans for the quarter. The following table presents the composition of our deposit portfolio as of the dates indicated: At March 31, 2017, core deposits totaled $12.8 billion, or 78% of total deposits, including $6.8 billion of noninterest-bearing demand deposits, or 42% of total deposits. In addition to deposit products, we also offer alternative non-depository cash investment options for select clients; these alternatives include investments managed by Square 1 Asset Management, Inc. (“S1AM”), our registered investment advisor subsidiary, and third-party sweep products.  Total off-balance sheet client investment funds at March 31, 2017 were $1.5 billion, of which $1.3 billion was managed by S1AM. A provision for credit losses of $24.7 million was recorded in the first quarter of 2017 compared to $23.2 million in the fourth quarter of 2016. The first quarter provision consisted of $24.5 million for non-purchased credit impaired (“Non-PCI”) loans and leases and $0.2 million for PCI loans; this compares to $21.0 million and $2.2 million for the fourth quarter of 2016.  The level of provision for the first quarter of 2017 was mainly attributable to specific provisions for impaired loans that were classified or impaired at December 31, 2016 and general provisions from increased general reserve loss factors which are influenced by net charge-off experience. The allowance for Non-PCI credit losses to Non-PCI loans and leases coverage ratio was 1.08% and 1.05% at March 31, 2017 and December 31, 2016. The following tables show roll forwards of the allowance for credit losses for the periods indicated: The gross charge-offs for the first quarter of 2017 included approximately $12.5 million related to two healthcare cash flow loans for which $7.5 million of specific reserves were recorded as of the prior quarter-end. Approximately $5.5 million of the gross charge-offs were associated with four venture capital loans for which $3.2 million of specific reserves were recorded as of the prior quarter-end. The annualized ratio of net charge-offs to total average loans for the quarter ended March 31, 2017 was 0.48%. All acquired loans are recorded initially at their estimated fair value including an estimate of credit losses. The table below presents two alternative views of credit risk coverage ratios for Non-PCI loans reflecting adjustments for acquired loans and leases and associated purchase accounting discounts: The following table presents Non-PCI loan and lease credit quality metrics as of the dates indicated: The following table presents Non-PCI nonaccrual loans and leases and accruing loans and leases past due between 30 and 89 days by portfolio segment and class as of the dates indicated: The following table presents nonperforming assets as of the dates indicated: On April 6, 2017, PacWest announced the signing of a definitive agreement and plan of merger (the “Agreement”) whereby PacWest will acquire CU Bancorp in a transaction valued at approximately $705 million. CU Bancorp, headquartered in Los Angeles, California, is the parent of California United Bank, a California state-chartered non-member bank, with approximately $3.0 billion in assets and nine branches located in Los Angeles, Orange, Ventura, and San Bernardino counties at December 31, 2016. In connection with the transaction, California United Bank will be merged into Pacific Western Bank, the principal operating subsidiary of PacWest Bancorp. The transaction, which was approved by the PacWest and CU Bancorp boards of directors, is expected to close in the fourth quarter of 2017 and is subject to customary closing conditions, including obtaining approval by CU Bancorp’s shareholders and bank regulatory authorities. As of December 31, 2016, on a pro forma consolidated basis, the combined company would have approximately $25.0 billion in assets and 87 branches, prior to contemplated consolidations. Under terms of the Agreement, CU Bancorp shareholders will receive 0.5308 shares of PacWest common stock and $12.00 in cash for each share of CU Bancorp. Based on PacWest’s April 5, 2017 closing price of $51.72, the total value of the merger consideration is $39.45 per CU Bancorp share. PacWest Bancorp (“PacWest”) is a bank holding company with over $21 billion in assets with one wholly-owned banking subsidiary, Pacific Western Bank (the “Bank”). The Bank has 74 full-service branches located throughout the state of California and one branch in Durham, North Carolina. We provide commercial banking services, including real estate, construction, and commercial loans, and comprehensive deposit and treasury management services to small and medium-sized businesses.  We offer additional products and services through our CapitalSource and Square 1 Bank divisions. Our CapitalSource Division provides cash flow, asset-based, equipment and real estate loans and treasury management services to established middle market businesses on a national basis.  Our Square 1 Bank Division offers a comprehensive suite of financial services focused on entrepreneurial businesses and their venture capital and private equity investors, with offices located in key innovation hubs across the United States.  For more information about PacWest Bancorp, visit www.pacwestbancorp.com, or to learn more about Pacific Western Bank, visit www.pacificwesternbank.com. This release contains certain “forward-looking statements” about the Company and its subsidiaries within the meaning of the Private Securities Litigation Reform Act of 1995, including forward-looking statements relating to the Company’s current business plans and expectations regarding future operating results and metrics and including statements about our expectations regarding our pending merger between the Company and CU Bancorp. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “assume,” “intend,” “believe,” “forecast,” “expect,” “estimate,” “plan,” “continue,” “will,” “should,” “look forward” and similar expressions are generally intended to identify forward-looking statements. All forward-looking statements (including statements regarding future financial and operating results and future transactions and their results) involve risks, uncertainties and contingencies, many of which are beyond our control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements. These risks and uncertainties include, but are not limited to, our ability to compete effectively against other financial institutions in our banking markets; the impact of changes in interest rates or levels of market activity, especially on our loan and investment portfolios; deterioration, weaker than expected improvement, or other changes in the state of the economy or the markets in which we conduct business (including the levels of IPOs and M&A activities); changes in credit quality and the effect of credit quality on our provision for loan and lease losses and allowance for loan and leases losses; our ability to attract deposits and other sources of funding or liquidity; our capital requirements and our ability to generate capital internally or raise capital on favorable terms; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the impact of adverse judgments or settlements in litigation, the initiation and resolution of regulatory or other governmental inquiries or investigations, and/or the results of regulatory examinations or reviews; the Company’s ability to complete the proposed CU Bancorp transaction, including by obtaining regulatory approvals and approval by the shareholders of CU Bancorp, or any future transaction, successfully integrate such acquired entities, or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected timeframes or at all; changes in the Company’s stock price before completion of the CU Bancorp merger, including as a result of the financial performance of the Company or CU Bancorp before closing; and our success at managing the risks involved in the foregoing items and all other factors set forth in the Company’s public reports, including the Annual Report on Form 10-K for the year ended December 31, 2016, and particularly the discussion of risk factors within that document. All forward-looking statements included in this release are based on information available at the time of the release. We are under no obligation to (and expressly disclaim any such obligation to) update or alter our forward-looking statements, whether as a result of new information, future events or otherwise except as required by law. ADDITIONAL INFORMATION ABOUT THE PROPOSED TRANSACTION AND WHERE TO FIND IT Investors and security holders are urged to carefully review and consider each of PacWest’s and CU Bancorp’s public filings with the SEC, including but not limited to their Annual Reports on Form 10-K, their proxy statements, their Current Reports on Form 8-K and their Quarterly Reports on Form 10-Q. The documents filed by PacWest with the SEC may be obtained free of charge at PacWest’s website at www.pacwestbancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from PacWest by requesting them in writing to PacWest Bancorp, 9701 Wilshire Boulevard, Suite 700, Beverly Hills, CA 90212; Attention: Investor Relations, by submitting an email request to investor-relations@pacwestbancorp.com or by telephone at (310) 887-8521. The documents filed by CU Bancorp with the SEC may be obtained free of charge at CU Bancorp’s website at www.cubancorp.com or at the SEC’s website at www.sec.gov. These documents may also be obtained free of charge from CU Bancorp by requesting them in writing to CU Bancorp, 818 W. 7th Street, Suite 220, Los Angeles, CA 90017; Attention: Investor Relations, or by telephone at 818-257-7700. PacWest intends to file a registration statement with the SEC which will include a proxy statement of CU Bancorp and a prospectus of PacWest, and each party will file other documents regarding the proposed transaction with the SEC. Before making any voting or investment decision, investors and security holders of CU Bancorp are urged to carefully read the entire registration statement and proxy statement/prospectus, when they become available, as well as any amendments or supplements to these documents, because they will contain important information about the proposed transaction. A definitive proxy statement/prospectus will be sent to the shareholders of CU Bancorp seeking any required shareholder approvals. Investors and security holders will be able to obtain the registration statement and the proxy statement/prospectus free of charge from the SEC’s website or from PacWest or CU Bancorp by writing to the addresses provided for each company set forth in the paragraphs above. PacWest, CU Bancorp, their directors, executive officers and certain other persons may be deemed to be participants in the solicitation of proxies from CU Bancorp shareholders in favor of the approval of the transaction. Information about the directors and executive officers of PacWest and their ownership of PacWest common stock is set forth in the proxy statement for PacWest’s 2017 annual meeting of stockholders, as previously filed with the SEC. Information about the directors and executive officers of CU Bancorp and their ownership of CU Bancorp common shares is set forth in the proxy statement for CU Bancorp’s 2016 annual meeting of shareholders, as previously filed with the SEC. Shareholders may obtain additional information regarding the interests of such participants by reading the registration statement and the proxy statement/prospectus when they become available. This press release contains certain non-GAAP financial disclosures for return on average tangible equity, tangible common equity ratio, tangible book value per share, net interest margin excluding acquired loan discount accretion, loan and lease yield excluding acquired loan discount accretion, and adjusted allowance for credit losses to loans and leases. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance.  In particular, the use of return on average tangible equity, tangible common equity ratio, and tangible book value per share is prevalent among banking regulators, investors and analysts.  Accordingly, we disclose the non-GAAP measures in addition to the related GAAP measures of return on average equity, equity to assets ratio, book value per share, net interest margin, loan and lease yield, and allowance for credit losses to loans and leases, respectively. The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented earlier in this press release: (1) net interest margin to net interest margin excluding acquired loan discount accretion, (2) loan and lease yield to loan and lease yield excluding acquired loan discount accretion, and (3) allowance for credit losses to loans and leases to adjusted allowance for credit losses to loans and leases. The reconciliations for the following GAAP financial measures to the non-GAAP financial measures are presented below: (1) return on average equity to return on average tangible equity, (2) equity to assets ratio to tangible common equity ratio, and (3) book value per share to tangible book value per share.


News Article | January 30, 2017
Site: globenewswire.com

SIOUX FALLS, S.D., Jan. 30, 2017 (GLOBE NEWSWIRE) -- Meta Financial Group, Inc.® (Nasdaq:CASH) (“MFG,” “Meta” or the “Company”) Financial Highlights for the 2017 fiscal first quarter ended December 31, 2016 "We are excited that we closed two separate FinTech acquisitions during the first quarter of fiscal 2017," said Chairman and CEO J. Tyler Haahr. "In early November, we acquired EPS Financial and have already seen positive effects from this transaction. Then in mid-December, we closed the acquisition with SCS. We welcome EPS President Clark Gill and the entire EPS team along with SCS CEO Brent Turner and the SCS team to the Meta family. We believe that these transactions solidify Meta as a leader in the tax payments industry. "Much to our satisfaction, we didn't stop with the EPS and SCS acquisitions during the quarter, as we entered into agreements with both H&R Block and Jackson Hewitt. Meta will provide underwriting services, servicing and funding for interest-free refund advance loans for H&R Block customers throughout the 2017 tax season. Our agreement with Jackson Hewitt includes underwriting, servicing and originating Express Refund Advances to Jackson Hewitt customers during the upcoming tax season. Our collective tax businesses will see a significantly increased expense burden in the first and fourth quarters of fiscal year 2017, with approximately 85% to 90% of tax-related income expected to come in during the second quarter. The levels of income and expenses during the first quarter of fiscal 2017 were in line with our expectations. While it is too early in the tax season to accurately predict volume levels, we believe that our infrastructure and funding capacity is well prepared for the upcoming peak period. Meta is excited about these business developments and we are looking forward to continuing Meta's success into 2017 and beyond.” Total revenue for the fiscal 2017 first quarter was $39.2 million, compared to $34.4 million for the same quarter in 2016, an increase of $4.8 million, or 14%, primarily due to growth in card fee income, income from tax-exempt securities (included in other investment securities), and interest from loans, which was partially offset, as expected, by delayed securities purchases and higher cash balances. The Company recorded net income of $1.2 million, or $0.14 per diluted share, for the three months ended December 31, 2016, compared to net income of $4.1 million, or $0.49 per diluted share, for the three months ended December 31, 2015. The decrease in net income was due to an increase of $6.7 million in non-interest expense, partially offset by increases of $2.3 million in net interest income and $2.5 million in non-interest income. The 2017 fiscal first quarter pre-tax results included $1.5 million of amortization of intangibles and $1.0 million of acquisition related expenses. In preparation for the upcoming tax season, 2017 first quarter pre-tax results also included $1.2 million in securities losses, and $1.0 million in direct tax season startup expenses, which consisted primarily of legal and wholesale deposit interest expense. In addition, pre-tax results included $1.2 million in named executive officer ("NEO") non-cash stock related compensation associated with stock awards granted in connection with the Company's three highest paid executives signing long-term employment agreements to solidify their long term commitment to the Company. These stock awards vest over eight years. We expect non-cash stock related compensation associated with these agreements to be $8.0 million in fiscal year 2017 and $5.1 million in fiscal year 2018. The 2017 fiscal first quarter results highlight the increased seasonality of the Company's revenue due to the addition of the aforementioned tax-related acquisitions and agreements. Our tax divisions are expected to continue to generate the vast majority of their revenues in the Company's fiscal second quarter, with some additional revenues in the third quarter, while most expenses are spread throughout the year with some additional elevated expenses in the December and March quarters. Net interest income for the fiscal 2017 first quarter was $19.8 million, up $2.3 million, or 13%, from the same quarter in 2016, primarily due to increases in volume and rate in tax exempt and asset backed investments and continued sizable loan growth funded by non-interest bearing prepaid deposit growth.  Additionally, the overall increase was driven by a better mix and higher percentage of loans and higher yielding investments primarily in high credit quality tax-exempt municipal bonds.  While the Company carried a higher than typical cash balance due to testing and implementation of new funding programs to support the interest-free refund advance loans, overall net interest income was not materially affected as the funding costs were similar to the rate earned on excess cash balances. However, due to the student loan portfolio purchase and tax-related lending, the Company deferred significant securities purchases that would have historically taken place in the August to December months. As a result of the deferral of securities purchases, net interest income was negatively affected, as compared to the comparable prior fiscal year period. Given the significant, recent increase in interest rates, we expect these deferred purchases, which the Company anticipates will take place in February and March, will have significantly higher yields, providing a strong positive effect on earnings going forward. Net Interest Margin ("NIM") decreased from 3.21% in the fiscal 2016 first quarter to 2.90% in the 2017 first quarter. Excluding the subordinated debt issuance in 2016, NIM would have been 13 basis points higher for the quarter. As mentioned above, NIM during the 2017 first quarter was adversely impacted as the Company carried a higher than typical cash balance due to testing and implementation of new funding programs to support the interest-free tax refund advance lending program.  Removing the excess cash and its corresponding funding cost, the Company estimates NIM would have been an additional approximate 13-17 basis points higher. While the subordinated debt issuance in 2016 increased the cost of funds at the Company level, MetaBank's cost of funds remained at levels much lower than the overall Company cost of funds, though somewhat higher than historical levels due to preparation for the new tax season funding programs.  The overall tax equivalent yield (“TEY”) on average earning asset yields decreased by 9 basis points when comparing the fiscal 2017 first quarter to the 2016 first quarter, primarily due to the aforementioned higher cash balance.  Adjusting for a more normalized cash balance, the Company estimates the TEY earning asset yield would have been between 15 to 18 basis points higher. We believe that the Company's expanded portfolio of floating rate assets provides a runway for higher NIM levels should short-term interest rates continue to rise. The Company also seeks to remain diligent and disciplined when evaluating loan pool deal flow to continue to optimize the deployment of our national, non-interest bearing deposit base. We anticipate that many of these loan pools could add immediate earnings accretion with acceptable risk parameters, as we believe to be the case with the recent student loan portfolio purchase. In that respect, while the addition of the student loan portfolio did not materially affect NIM or the TEY on average earning assets in the current quarter as the portfolio purchase was completed near the end of the quarter, the impact should be positive going forward. The fiscal 2017 first quarter TEY on the securities portfolio increased by two basis points compared to the comparable prior year fiscal quarter primarily due to a shifting mix in the investment portfolio with new investments in overall higher yielding investment securities rather than mortgage-backed securities ("MBS").  We also expect margins to increase in 2017 with slower premium amortization on the MBS portfolio due to recent higher rates. The Company’s average interest-earning assets for the fiscal 2017 first quarter grew by $719.8 million, or 29%, to $3.22 billion, from the same quarter in 2016, primarily from growth in tax exempt investment securities, loan portfolios, and cash and fed funds sold of $230.3 million, $147.9 million, and $140.8 million, respectively. Overall, the cost of funds for all deposits and borrowings averaged 0.36% during the fiscal 2017 first quarter, compared to 0.12% for the 2016 first quarter, primarily due to the issuance of the Company's subordinated debt in 2016 and the testing and implementation of additional funding programs throughout the quarter. Notwithstanding this increase, the Company believes that its growing, low-cost deposit base gives it a distinct and significant competitive advantage over most banks, and even more so if interest rates rise, because the Company anticipates that its cost of funds will likely remain relatively low, increasing less than at many other banks. Average earning assets for the three months ended December 31, 2016 increased 29% from the comparable prior year period, while interest-bearing liabilities increased by 61% related to the wholesale deposits described above. The TEY of MBS and other investments was 2.92% for the three months ended December 31, 2016, and 2.90% for the same period in 2015, and is expected to increase further early in 2017 because of the recent increase in rates. Fiscal 2017 first quarter non-interest income of $19.3 million increased $2.5 million, or 15%, from $16.8 million in the same quarter of 2016, primarily due to an increase in card fee income of $3.2 million, or 21%, mainly from new and existing business partners and sales promotions from one of our largest business partners. This increase was partially offset by a loss on the sale of securities of $1.2 million. Non-interest expense increased $6.7 million, or 22%, to $36.8 million for the 2017 fiscal first quarter, compared to the same quarter in 2016.  Between these quarters, compensation expense increased $3.2 million, legal and consulting expense increased $1.6 million due primarily to the aforementioned acquisitions and loan funding transactions, other expense increased $0.6 million, occupancy and equipment expense increased $0.6 million and amortization expense increased $0.3 million, primarily due to the recent acquisitions. The increase in compensation was primarily due to the EPS and SCS acquisitions, non-cash stock related compensation associated with three NEOs signing long-term employment agreements, and additional staffing to support the Company’s growth initiatives. We expect the growth rate in compensation expense to decrease during the remainder of 2017 as staffing levels grow more modestly. Income tax expense for the fiscal 2017 first quarter was $0.3 million, or an effective tax rate of 21.6%, compared to a tax benefit of $0.5 million, or an effective tax rate of (12.9)%, for the 2016 first quarter. The increase in the effective tax rate is mainly due to increased annual projected taxable earnings for the fiscal 2017 year and the effective tax rate is expected to stay approximately at that level for the remainder of fiscal 2017. Total loans receivable, net of allowance for loan losses, increased $369.9 million, or 50%, from December 31, 2015 to December 31, 2016.  Among lending categories, this included a $138.3 million increase in consumer, $134.0 million of which was due to the student loan portfolio purchase, and a $118.4 million increase, or 37%, in commercial real estate, partially offset by a $7.0 million decrease, or 7%, in total agricultural loans. Premium finance loans increased $68.9 million, or 62%, from December 31, 2015 to December 31, 2016. Retail bank loans increased $158.4 million, or 26%, from December 31, 2015 to December 31, 2016. Excluding the purchased student loan portfolio, total loans receivable, net of allowance for loan losses, were up $236.0 million, or 32%, from December 31, 2015 to December 31, 2016. The Company recorded a provision for loan losses of $0.8 million during the three months ended December 31, 2016, primarily related to loan growth. The Company’s allowance for loan losses was $1.0 million, or 0.1% of total loans, at December 31, 2016, compared to an allowance of $0.8 million, or 0.1% of total loans, at September 30, 2016. MetaBank’s NPAs at December 31, 2016 were $2.3 million, representing 0.05% of total assets, compared to $6.6 million and 0.22% of total assets at December 31, 2015 and $1.2 million and 0.03% at September 30, 2016. Consistent with December 31, 2015 and September 30, 2016, the Payments segment did not include any NPAs at December 31, 2016. Total investment securities and MBS increased by $325.5 million, or 19%, to $2.08 billion at December 31, 2016, as compared to December 31, 2015. This included an increase in investment securities of $312.9 million, primarily from purchases of high credit quality non-bank qualified (“NBQ”) municipal securities and government-related asset-backed securities, and an increase in MBS of $12.6 million as purchases exceeded sales and pay downs. Average TEY on the securities portfolio increased two basis points in the first quarter of fiscal 2017 from the same quarter of 2016.  Overall TEY yields increased by five basis points on non-MBS investment securities over that same time period.  Yields decreased within MBS by 27 basis points in the first quarter of 2017 from the same quarter of 2016 due to the significant downward movement in longer term interest rates in late fiscal 2016 and the time it takes for rate increases late in the calendar year to funnel through the mortgage and refinancing market. The Company anticipates prepayments on its MBS holdings to decrease meaningfully by no later than March 2017, due to the recent increase in longer term rates, thereby slowing premium amortization and increasing yields and income realized from the MBS portfolio. For example, the Company estimates, based on projections provided by the Yield Book software in concert with management assumptions, on its fixed rate MBS portfolio as of December 31, 2016, in the base (Yield Book lifetime projected speeds at current rates) and in a +50 and +100 immediate, parallel shocked interest rate environment, interest earned on its fixed rate MBS securities and reinvested principal at market rates over one year’s time would increase by $3.48 million, $3.98 million and $4.45 million, respectively, from the current, historical three-month CPR income amount. MBS duration extension is also muted with extension expectations near 1.5 years in a +300 immediate, parallel interest rate shocked environment. The focus of the MBS portfolio remains on minimizing prepayment speed volatility by selecting agency MBS with characteristics intended to make the Company’s agency MBS holdings less susceptible to increased prepayment speeds, while still allowing yields to increase if interest rates increase with controlled extension risk. The Company continues to purchase high-quality investments within certain sectors of the municipal market, at what it believes to be attractive yields. Many of these new purchases are tax-exempt and also backed, or collateralized, by Ginnie Mae, Fannie Mae, and Freddie Mac, thereby enhancing credit quality. The Company also has opportunistically and carefully selected certain government related and guaranteed floating rate securities at yields that are expected to enhance the portfolio's projected performance in a rising interest rate environment. The Company continues to execute its investment strategy of primarily purchasing U.S. Government-related securities and U.S. Government-related MBS, as well as AAA and AA rated NBQ municipal bonds; however, the Company is also reviewing opportunities to add other diverse, high-quality securities at attractive relative rates when opportunities arise.  With the Company’s large percentage of non-interest bearing deposits, the TEY for these NBQ bonds is higher than a similar term investment in other investment categories of similar risk and higher than many other banks can realize on the same instruments due to the Company’s current cost of funds and its projected cost of funds if interest rates rise. Total end-of-period deposits increased $1.23 billion, or 51%, to $3.66 billion at December 31, 2016, compared to September 30, 2016. The increase in end-of-period deposits is primarily a result of wholesale deposits executed by the Company during the fiscal 2017 first quarter to prepare for the upcoming tax season and the student loan portfolio purchase. Total wholesale deposits at December 31, 2016 were $927.0 million. Total average deposits for the fiscal 2017 first quarter increased by $712.4 million, or 36%, compared to the same period in 2016; a portion of the growth is directly related to the testing and implementation of new funding programs to support the interest-free refund advance loans. Average non-interest bearing deposits for the 2017 first quarter were up $298.2 million, or 17%, compared to the same period in 2016. The Company experienced some volatility in the growth rate of its Meta Payment Systems (MPS)-related non-interest bearing deposits as a one-time program expires and the timing of new programs begins to accelerate, though long-term growth rates are expected to remain strong. The average balance of total deposits and interest-bearing liabilities was $3.06 billion for the three-month period ended December 31, 2016, compared to $2.38 billion for the same period in fiscal 2016. A portion of this increase was due to the previously mentioned testing and implementation of new funding programs as well as the Company's completion of the public offering of its subordinated notes in August 2016, which are due August 15, 2026. For the fiscal 2017 first quarter, Payments recorded income before tax of $0.7 million, compared to $1.2 million during the same period last year. As expected, our combined tax businesses (Refund Advantage, EPS, and SCS) incurred a pre-tax loss of $4.7 million during the quarter, compared to a loss of $1.6 million during the same quarter of the prior year. Total first quarter 2017 average Payments-generated deposits increased by $280.2 million, or 16%, compared to the same quarter in 2016. The Banking segment recorded income before tax of $5.2 million for the first quarter of fiscal 2017, compared to $3.5 million in the first quarter of 2016. This increase is primarily driven by the increase in interest income of $1.9 million as a result of growth in our loan portfolio. The Company and the Bank remain above the federal regulatory minimum capital requirements to remain classified as well-capitalized institutions. Regulatory capital ratios are stated in the table below. The tables below also include certain non-GAAP financial measures that are used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies.  Management reviews these measures along with other measures of capital as part of its financial analysis. The following table provides certain non-GAAP financial measures used to compute certain of the ratios included in the table above, as well as a reconciliation of such non-GAAP financial measures to the most directly comparable financial measure in accordance with GAAP: (1) Capital ratios were determined using the Basel III capital rules that became effective on January 1, 2015. Basel III revised the definition of capital, increased minimum capital ratios, and introduced a minimum CET1 ratio; those changes are being fully phased in through the end of 2021. The following table provides a reconciliation of tangible common equity used in calculating tangible book value data. Due to the predictable, quarterly cyclicality of MPS deposits in conjunction with tax season business activity, management believes that a six-month capital calculation is a useful metric to monitor the Company’s overall capital management process. As such, the Bank’s six-month average Tier 1 leverage ratio, Common equity Tier 1 capital ratio, Tier 1 capital ratio, and Total qualifying capital ratio as of December 31, 2016 were 9.80%, 21.14%, 21.14%, and 21.58%, respectively. The Company and MetaBank (the “Bank”) may from time to time make written or oral “forward-looking statements,” including statements contained in this press release, the Company’s filings with the Securities and Exchange Commission (“SEC”), the Company’s reports to stockholders, and in other communications by the Company and the Bank, which are made in good faith by the Company pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. You can identify forward-looking statements by words such as “may,” “hope,” “will,” “should,” “expect,” “plan,” “anticipate,” “intend,” “believe,” “estimate,” “predict,” “potential,” “continue,” “could,” “future,” or the negative of those terms, or other words of similar meaning or similar expressions. You should carefully read statements that contain these words because they discuss our future expectations or state other “forward-looking” information. These forward-looking statements are based on information currently available to us and assumptions about future events, and include statements with respect to the Company’s beliefs, expectations, estimates, and intentions, which 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 risks, uncertainties and other factors may cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.  Such statements address, among others, the following subjects: the potential benefits of the acquisitions of assets from SCS and EPS, including, but not limited to, whether such acquisitions may increase the Company's growth; future operating results; customer retention; loan and other product demand; important components of the Company's statements of financial condition and operations; growth and expansion; new products and services, such as those offered by the Bank or MPS, a division of the Bank; credit quality and adequacy of reserves; technology; and the Company's employees. The following factors, among others, could cause the Company's financial performance and results of operations to differ materially from the expectations, estimates, and intentions expressed in such forward-looking statements: the risk that the businesses of the Bank, EPS and SCS may not be combined successfully, or any such combination may take longer or be more difficult, time-consuming or costly to accomplish than expected; the risk that sales of EPS and SCS products by the Bank may not be as high as anticipated; the risk that the expected growth opportunities or cost savings from the EPS and SCS acquisitions may not be fully realized or may take longer to realize than expected, that customer losses and business disruption following the EPS and SCS acquisitions, including adverse effects on relationships with former or current employees of EPS and SCS, may be greater than expected; the risk that the Company may incur unanticipated or unknown losses or liabilities in connection with the EPS and SCS acquisitions; the risk that loan production levels and other anticipated benefits related to the recent agreements signed with H&R Block and Jackson Hewitt may not be as much as anticipated, and that the Company may incur unanticipated or unknown risks, losses or liabilities in connection with such transactions; maintaining our executive management team; 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 Board of Governors of the Federal Reserve System (the “Federal Reserve”), as well as efforts of the United States Treasury in conjunction with bank regulatory agencies to stimulate the economy and protect the financial system; inflation, interest rate, market, and monetary fluctuations; the timely development of, and acceptance of new products and services offered by the Company, as well as risks (including reputational and litigation) attendant thereto, and the perceived overall value of these products and services by users; the risks of dealing with or utilizing third parties; any actions which may be initiated by our regulators in the future; the impact of changes in financial services laws and regulations, including, but not limited to, laws and regulations relating to the tax refund industry and the insurance premium finance industry, our relationship with our primary regulators, the Office of the Comptroller of the Currency (“OCC”) and the Federal Reserve, as well as the Federal Deposit Insurance Corporation (“FDIC”), which insures the Bank’s deposit accounts up to applicable limits; technological changes, including, but not limited to, the protection of electronic files or databases; acquisitions; litigation risk, in general, including, but not limited to, those risks involving the Bank's divisions; the growth of the Company’s business, as well as expenses related thereto; continued maintenance by the Bank of its status as a well-capitalized institution, particularly in light of our growing deposit base, a substantial portion of which has been characterized as “brokered”; changes in consumer spending and saving habits; and the success of the Company at maintaining its high quality asset level and managing and collecting assets of borrowers in default should problem assets increase. The foregoing list of factors is not exclusive. We caution you not to place undue reliance on these forward-looking statements. The forward-looking statements included in this press release speak only as of the date hereof. Additional discussions of factors affecting the Company’s business and prospects are reflected under the caption “Risk Factors” and in other sections of the Company’s Annual Report on Form 10-K for the Company’s fiscal year ended September 30, 2016, and in other filings made with the SEC. The Company expressly disclaims any intent or obligation to update any forward-looking statements, whether written or oral, that may be made from time to time by or on behalf of the Company or its subsidiaries, whether as a result of new information, changed circumstances or future events or for any other reason. The following table presents, for the periods indicated, the total dollar amount of interest income from average interest-earning assets and the resulting yields, as well as the interest expense on average interest-bearing liabilities, expressed both in dollars and rates. Only the yield/rate have tax equivalent adjustments. Non-Accruing loans have been included in the table as loans carrying a zero yield. *Specialty Finance Loan Receivables include loan portfolios the Company deems as non-retail bank product offerings or loans not generated by the Retail Bank itself (for example, premium finance and purchased loan portfolios). The loan receivables included in this line item are included in the customary loan categories presented elsewhere within the Company's SEC filings. Meta Financial Group, Inc. ("MFG") is the holding company for MetaBank®, a federally chartered savings bank. MFG shares are traded on the NASDAQ Global Select Market® under the symbol CASH. Headquartered in Sioux Falls, S.D., MetaBank operates in both the Banking and Payments industries through: MetaBank, its traditional retail banking operation; Meta Payment Systems, its electronic payments division; AFS/IBEX, its insurance premium financing division; and Refund Advantage, EPS and SCS, its tax-related financial solutions divisions. For more information about Meta Financial Group, visit metafinancialgroup.com.


MOLINE, Ill., Oct. 27, 2016 (GLOBE NEWSWIRE) -- QCR Holdings, Inc. (NASDAQ:QCRH) today announced net income of $6.1 million and diluted earnings per share (“EPS”) of $0.46 for the quarter ended September 30, 2016.  This included $1.5 million of acquisition costs (after-tax) related to the previously announced acquisition of Community State Bank (“CSB”).  Excluding these acquisition costs and other non-core items, the Company reported core net income (non-GAAP) of $7.5 million and diluted EPS of $0.57.  By comparison, for the quarter ended June 30, 2016, the Company reported net income of $6.7 million and diluted EPS of $0.53.  This included $231 thousand of acquisition costs (after-tax) related to CSB.  For the third quarter of 2015, the Company reported net income of $6.5 million and diluted EPS of $0.55. For the nine months ended September 30, 2016, the Company reported net income of $19.2 million and diluted EPS of $1.52.  Excluding acquisition costs and other non-core items, the Company reported core net income (non-GAAP) of $20.6 million and diluted EPS of $1.64.  By comparison, for the nine months ended September 30, 2015, the Company reported net income of $10.1 million and diluted EPS of $1.01.  This included several nonrecurring items, including $4.5 million of losses on debt extinguishments (after-tax) related to the balance sheet restructuring that took place in the second quarter of 2015. “Our core operating performance for the first nine months of 2016 has been solid,” commented Douglas M. Hultquist, President and Chief Executive Officer, “and we continue to strategize and explore ways to improve our profitability through our ongoing key initiatives.  Our core return on average assets (non-GAAP) has improved from 0.77% to 1.02%, when comparing the first nine months of 2015 to the same period of the current year.  This is the result of solid loan growth, reductions in wholesale borrowings, continued margin improvements, and strong fee income.” Organic Loan and Lease Growth Strong at 10.6% Annualized Year-To-Date Swap Fee Income and Gains on the Sale of Government Guaranteed Loans Total $4.1 Million Year-To-Date During the third quarter of 2016, the Company’s total assets increased $597.6 million, or 22%, to a total of $3.28 billion, while total loans and leases grew $437.8 million.  Of the $437.8 million of loan growth, $419.5 million related to the acquisition of CSB, while the remaining $18.3 million was organic growth.  The organic loan and lease growth was funded primarily by deposits, which increased $140.1 million in the third quarter, excluding the acquisition of CSB.  This deposit growth also allowed the Company to further reduce borrowings. “Loan and lease growth, excluding the effects of the acquisition, totaled $143.1 million, or an annualized rate of 10.6%, for the first nine months of the year,” commented Todd A. Gipple, Executive Vice President, Chief Operating Officer and Chief Financial Officer.  “Strong loan and lease growth has helped us meet our targeted annual organic growth rate of 10-12% and continues to keep our loan and leases to asset ratio within our targeted range of 70-75%.” “Swap fee income and gains on the sale of government guaranteed loans were strong for the first nine months of 2016, totaling $4.1 million,” said Mr. Gipple.  “We plan to continue executing these types of transactions, as they provide unique and beneficial solutions for our clients.  We also look forward to offering these products in our newest market, Des Moines/Ankeny.” Net interest income totaled $23.6 million for the quarter ended September 30, 2016.  By comparison, net interest income totaled $21.0 million and $20.1 million for the quarters ended June 30, 2016 and September 30, 2015, respectively.  Net interest income totaled $65.2 million for the nine months ended September 30, 2016, an increase of 15.6% from the same period of the prior year.  Net interest income attributable to CSB totaled $2.3 million for the partial quarter. “Net interest margin increased nine basis points from the prior quarter to 3.71%,” stated Mr. Gipple.  He added, “The improvement in margin this quarter was attributable to the addition of Community State Bank.  CSB’s strong margin and solid earnings will contribute significantly to our efforts to achieve upper-quartile ROAA performance and continue to drive shareholder value.  For the month of September 2016, CSB had $546.0 million in average earning assets with a net interest margin of 4.99%.  CSB’s net interest margin prior to acquisition typically ranged from 3.80% to 4.00%.  This has increased due to purchase accounting adjustments, primarily the accretion of the loan discount, including the acceleration of discounts related to the payoff of purchased credit impaired loans.” Nonperforming Assets to Total Assets Ratio Flat During the Third Quarter Nonperforming assets (“NPAs”) increased $3.8 million in the current quarter, which was due to the acquisition of CSB.  The ratio of NPAs to total assets was 0.69% at September 30, 2016, which was down from 0.70% at June 30, 2016 and down from 0.80% a year ago. “Asset quality at our newest charter, CSB, is strong and very much in line with the rest of our subsidiaries, resulting in a slight reduction of our NPAs to total assets ratio this quarter.  We remain committed to further improving asset quality,” stated Mr. Hultquist. The Company’s provision for loan and lease losses totaled $1.6 million for the third quarter of 2016, which was up $410 thousand from the prior quarter, and flat as compared to the third quarter of 2015.  The increase in provision in the third quarter of 2016 is primarily attributable to the addition of CSB.  As of September 30, 2016, the Company’s allowance to total loans and leases was 1.22%, which was down from 1.46% at June 30, 2016 and down from 1.45% at September 30, 2015. In accordance with generally accepted accounting principles for acquisition accounting, the loans acquired through the acquisition of CSB were recorded at market value; therefore, there was no allowance associated with CSB’s loans at acquisition.  Management continues to evaluate the allowance needed on the acquired CSB loans factoring in the net remaining discount ($12.7 million at September 30, 2016).  When factoring this remaining discount into the Company’s allowance to total loans and leases calculation, the Company’s allowance as a percentage of total loans and leases increases from 1.22% to 1.76%. The Company’s total risk-based capital ratio was 11.45%, the common equity tier 1 ratio was 9.32% and the tangible common equity to tangible assets ratio decreased to 7.92%, all as of September 30, 2016.  For comparison, these respective ratios were 14.29%, 11.72% and 10.10% as of June 30, 2016.  The decrease in the Company’s capital ratios was primarily due to the acquisition of CSB. “We are excited about adding such a talented team to the Company and are encouraged by the opportunity for strong growth in Ankeny and the entire Des Moines MSA,” stated Mr. Gipple. As of September 30, 2016, CSB had total assets of $580.2 million, consisting primarily of loans totaling $419.5 million and a securities portfolio of $90.2 million.  These assets were funded by $481.3 million of deposits and $15.3 million of borrowings.  CSB reported net income for the partial quarter of $189 thousand, which included $473 thousand of after tax acquisition costs. Preliminary purchase accounting adjustments were recorded in the third quarter and the resulting accounting marks and the net dilution to tangible book value per share were more favorable than projected when the Company announced the CSB transaction in May of 2016. Actual dilution to tangible book value per share from the transaction, including the common stock issuance of $30.1 million in May of 2016, was only $1.03 per share, or 4.91%.  This compares favorably to the $1.25 per share and 6.11% dilution that was projected. “The terms of the transaction required CSB to retain its earnings through the closing date.  Due to better than projected CSB earnings and more favorable valuation marks, our earn-back on the tangible book value dilution from the transaction should be even more rapid than the three year earn-back we cited in our transaction announcement this past May,” stated Mr. Gipple. Significant One-Time Gain Used to Further Restructure Balance Sheet And Strengthen Net Interest Margin This quarter, the Company had the opportunity to sell an investment and recognize a gain of approximately $4.0 million.  This gain was utilized to further reduce wholesale borrowings by $60 million at a blended rate of 3.24% and further de-lever the balance sheet with the sale of $28 million in securities yielding 1.48%.  The remaining funding was replaced by a mix of core deposits and overnight borrowings.  These transactions were recorded near the end of the quarter.  The positive impact on future earnings will be an increase in net interest income of approximately $1.3 million annually, increasing NIM by approximately 10 basis points. The Company today filed a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission ("SEC").  When declared effective by the SEC, the registration statement will allow QCR Holdings, Inc. to offer and sell various types of securities, including common stock, preferred stock, debt securities and/or warrants, from time to time up to an aggregate amount of $100 million.  The Company utilized $30.1 million of its previous shelf registration filing through the offer and sale of its common stock in the second quarter of 2016 to help fund the acquisition of CSB.  This Form S-3 filing will replenish the amount available to the previous $100 million.  The specific terms and prices of any securities offered pursuant to the registration statement will be determined at the time of any future offering and described in a separate prospectus supplement, which would be filed with the SEC at the time of the particular offering, if any. QCR Holdings, Inc., headquartered in Moline, Illinois, is a relationship-driven, multi-bank holding company, which serves the Quad City, Cedar Rapids, Cedar Valley, Des Moines/Ankeny, and Rockford communities through its wholly owned subsidiary banks.  Quad City Bank & Trust Company, which is based in Bettendorf, Iowa, and commenced operations in 1994, Cedar Rapids Bank & Trust Company, which is based in Cedar Rapids, Iowa, and commenced operations in 2001, Community State Bank, which is based in Ankeny, Iowa and was acquired by the Company in 2016, and Rockford Bank & Trust Company, which is based in Rockford, Illinois, and commenced operations in 2005, provide full-service commercial and consumer banking and trust and wealth management services.  Quad City Bank & Trust Company also provides correspondent banking services.  In addition, Quad City Bank & Trust Company engages in commercial leasing through its wholly owned subsidiary, m2 Lease Funds, LLC, based in Milwaukee, Wisconsin.  Additionally, the Company serves the Waterloo/Cedar Falls, Iowa community through Community Bank & Trust, a division of Cedar Rapids Bank & Trust Company. Special Note Concerning Forward-Looking Statements.  This document contains, and future oral and written statements of the Company and its management may contain, forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of the Company.  Forward-looking statements, which may be based upon beliefs, expectations and assumptions of the Company’s management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “predict,” “suggest,” “appear,” “plan,” “intend,” “estimate,” ”annualize,” “may,” “will,” “would,” “could,” “should” or other similar expressions.  Additionally, all statements in this document, including forward-looking statements, speak only as of the date they are made, and the Company undertakes no obligation to update any statement in light of new information or future events.                 A number of factors, many of which are beyond the ability of the Company to control or predict, could cause actual results to differ materially from those in its forward-looking statements.  These factors include, among others, the following: (i) the strength of the local, national and international economies; (ii) the economic impact of any future terrorist threats and attacks, and the response of the United States to any such threats and attacks; (iii) changes in state and federal laws, regulations and governmental policies concerning the Company’s general business, including the Basel III regulatory capital reforms, the Dodd-Frank Wall Street Reform and Consumer Protection Act and the regulations issued thereunder; (iv) changes in interest rates and prepayment rates of the Company’s assets; (v) increased competition in the financial services sector and the inability to attract new customers; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) unexpected results of acquisitions (including the acquisition of CSB), which may include failure to realize the anticipated benefits of the acquisition and the possibility that the transaction costs may be greater than anticipated; (viii) the loss of key executives or employees; (ix) changes in consumer spending; (x)  unexpected outcomes of existing or new litigation involving the Company; and (xi) changes in accounting policies and practices.  These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements.  Additional information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the SEC.


News Article | February 15, 2017
Site: www.eurekalert.org

Modern computer technology is based on the transport of electric charge in semiconductors. But this technology's potential will be reaching its limits in the near future, since the components deployed cannot be miniaturized further. But, there is another option: using an electron's spin, instead of its charge, to transmit information. A team of scientists from Munich and Kyoto is now demonstrating how this works. Computers and mobile devices continue providing ever more functionality. The basis for this surge in performance has been progressively extended miniaturization. However, there are fundamental limits to the degree of miniaturization possible, meaning that arbitrary size reductions will not be possible with semiconductor technology. Researchers around the world are thus working on alternatives. A particularly promising approach involves so-called spin electronics. This takes advantage of the fact that electrons possess, in addition to charge, angular momentum - the spin. The experts hope to use this property to increase the information density and at the same time the functionality of future electronics. Together with colleagues at the Kyoto University in Japan scientists at the Walther-Meißner-Institute (WMI) and the Technical University of Munich (TUM) in Garching have now demonstrated the transport of spin information at room temperature in a remarkable material system. In their experiment, they demonstrated the production, transport and detection of electronic spins in the boundary layer between the materials lanthanum-aluminate (LaAlO2) and strontium-titanate (SrTiO3). What makes this material system unique is that an extremely thin, electrically conducting layer forms at the interface between the two non-conducting materials: a so-called two-dimensional electron gas. The German-Japanese team has now shown that this two-dimensional electron gas transports not only charge, but also spin. "To achieve this we first had to surmount several technical hurdles," says Dr Hans Hübl, scientist at the Chair for Technical Physics at TUM and Deputy Director of the Walther-Meißner-Institute. "The two key questions were: How can spin be transferred to the two-dimensional electron gas and how can the transport be proven?" The scientists solved the problem of spin transfer using a magnetic contact. Microwave radiation forces its electrons into a precession movement, analogous to the wobbling motion of a top. Just as in a top, this motion does not last forever, but rather, weakens in time - in this case by imparting its spin onto the two-dimensional electron gas. The electron gas then transports the spin information to a non-magnetic contact located one micrometer next to the contact. The non-magnetic contact detects the spin transport by absorbing the spin, building up an electric potential in the process. Measuring this potential allowed the researchers to systematically investigate the transport of spin and demonstrate the feasibility of bridging distances up to one hundred times larger than the distance of today's transistors. Based on these results, the team of scientists is now researching to what extent spin electronic components with novel functionality can be implemented using this system of materials. The research was funded by the German Research Foundation (DFG) in the context of the Cluster of Excellence "Nanosystems Initiative Munich" (NIM). Strong evidence for d-electron spin transport at room temperature at a LaAlO3/SrTiO3 interface. R. Ohshima, Y. Ando, K. Matsuzaki, T. Susaki, M. Weiler, S. Klingler, H. Huebl, E. Shikoh, T. Shinjo, S.T.B Goennenwein and M. Shiraishi. Nature Materials, Advanced Online Publication 13. Februar 2017.


News Article | October 28, 2016
Site: www.marketwired.com

COLUMBUS, OH--(Marketwired - October 26, 2016) - Huntington Bancshares Incorporated ( : HBAN) (www.huntington.com) reported net income for the 2016 third quarter of $127 million, a $26 million, or 17%, decrease from the year-ago quarter, impacted by FirstMerit acquisition-related expenses. Earnings per common share for the 2016 third quarter were $0.11, down $0.07, or 39%, from the year-ago quarter. FirstMerit acquisition-related expenses totaled $159 million pretax, or $0.11 per common share. Total revenue increased 24% over the year-ago quarter. "We are very excited about the third-quarter acquisition of FirstMerit, which has strengthened the return profile of the company," said Steve Steinour, chairman, president and CEO. "We delivered solid core fundamental performance for the quarter. Acquisition-related expenses continue to be in line with our expectations and guidance. Auto and mortgage lending were among the significant drivers of organic loan growth during the quarter, complemented by acquisition-related growth. We are entering a new era for Huntington, as we introduce our customer-centric strategies and operating model to new geographies and improve our operating efficiency due to increased scale." "Integration execution is proceeding on schedule as we move closer to operating as one expanded company with each passing day," Steinour said. "We have completed workforce onboarding and initial training, and we are laser-focused on customer experience and retention. In addition, we remain confident we will complete the majority of system conversions during the first quarter of 2017, swiftly moving toward our target of realizing $255 million of annualized cost savings." "We continue to implement revenue synergies that were not included in the original FirstMerit financial model," Steinour said. "For example, as we look forward to further deploying Huntington's Small Business Administration lending expertise within our expanded customer base and geographies, we are again pleased to rank as the second-highest SBA 7(a) lender nationwide in terms of number of loans. Within our combined geography of Ohio, Indiana, Kentucky, Michigan, Pennsylvania and West Virginia, Huntington was ranked first in number of SBA 7(a) loans and total dollars lent. We look forward to an even stronger SBA fiscal year in 2017 as we add lending capabilities in Chicago and Wisconsin." "Finally, Huntington is honored today to have been recognized in MONEY Magazine's Best Banks in America for 2016-2017, as the Best Regional Bank: Great Lakes," Steinour said. "We are humbled that MONEY has chosen to recognize our commitment to value, transparency, fairness, service and convenience for our customers, including Huntington as a Best Bank for four out of the past six years." Table 2 lists certain items that we believe are significant in understanding corporate performance and trends (see Basis of Presentation). There was one Significant Item in the 2016 third quarter: $159 million of FirstMerit acquisition-related expense. On August 16, 2016, Huntington closed the previously announced acquisition of FirstMerit Corporation and its subsidiary FirstMerit Bank. The acquisition added approximately $26.8 billion of total assets, $15.5 billion of total loans and leases, $21.2 billion of total deposits, and 340 branches. 2016 third quarter results reflect inclusion of FirstMerit since August 16, 2016. Immediately following completion of the acquisition, FirstMerit Bank was merged into The Huntington National Bank. In addition, the management and organization structure was updated to reflect the combined organization. On-boarding of former FirstMerit colleagues and their initial training is complete. Certain of Huntington's products and services are being introduced across the legacy FirstMerit customer base, and customer-facing colleagues are focused on both growing and retaining customers. Technology conversions have commenced and are scheduled to be substantially complete by the middle of the 2017 first quarter. The branch conversion and 102 branch consolidations are scheduled to be completed during the 2017 first quarter. As part of the FirstMerit transaction, Huntington entered into an agreement to divest thirteen branches in the Canton, Ohio and Ashtabula, Ohio markets, including approximately $0.7 billion of total deposits and $0.1 billion of total loans and leases, to First Commonwealth Financial Corporation. This transaction is expected to close during the 2016 fourth quarter. Fully-taxable equivalent (FTE) net interest income for the 2016 third quarter increased $132 million, or 26%, from the 2015 third quarter. This reflected the benefit from the $16.4 billion, or 26%, increase in average earning assets coupled with a 2 basis point improvement in the FTE net interest margin (NIM) to 3.18%. Average earning asset growth included an $11.7 billion, or 24%, increase in average loans and leases, impacted by the mid-quarter FirstMerit acquisition, and a $4.4 billion, or 32%, increase in average securities, impacted by the mid-quarter FirstMerit acquisition. The NIM expansion reflected a 10 basis point increase in earning asset yields and a 2 basis point increase in the benefit from noninterest-bearing funds, partially offset by a 10 basis point increase in funding costs. The 2016 third quarter NIM included 11 basis points of purchase accounting favorable impact. Compared to the 2016 second quarter, FTE net interest income increased $120 million, or 23%. Average earning assets increased $11.8 billion, or 17%, sequentially, and the NIM increased 12 basis points. The increase in the NIM reflected an 11 basis point increase in earning asset yields and a 1 basis point decrease in the cost of interest-bearing liabilities. Average earning assets for the 2016 third quarter increased $16.4 billion, or 26%, from the year-ago quarter. The increase was driven by: Compared to the 2016 second quarter, average earning assets increased $11.8 billion, or 17%. On a reported basis, average loans and leases increased $8.8 billion, or 17%, primarily reflecting a $3.6 billion increase in average C&I loans, a $1.1 billion increase in average CRE loans, a $1.3 billion increase in average automobile loans, a $0.8 billion increase in home equity loans, and a $0.8 billion increase in residential mortgage loans, as well as the addition of $0.9 billion in RV & marine finance loans. Average securities increased $2.9 billion, or 19%. These increases primarily reflected the FirstMerit acquisition. While not affecting quarterly average balances, approximately $2.6 billion of total loans and leases, comprised of $1.5 billion of automobile loans, $1.0 billion of predominantly non-relationship C&I loans and leases, and $0.1 billion of predominantly non-relationship CRE loans were moved to loans held-for-sale at the end of the 2016 third quarter as part of a continued balance sheet optimization strategy following the closing of the FirstMerit acquisition. As shown on Page 5 of the Quarterly Financial Supplement, total originated loans and leases were $51.8 billion at the end of the 2016 third quarter, a $0.7 billion decrease from the end of the prior quarter. This decrease reflects the previously mentioned movement of loans to loans held-for-sale partially offset by organic loan growth across all categories except other consumer loans. Average total deposits for the 2016 third quarter increased $12.1 billion, or 22%, from the year-ago quarter, impacted by the mid-quarter FirstMerit acquisition, while average total core deposits increased $11.1 billion, or 22%, impacted by the mid-quarter FirstMerit acquisition. Average total interest-bearing liabilities increased $12.0 billion, or 27%, from the year-ago quarter, impacted by the mid-quarter FirstMerit acquisition. Year-over-year changes in total liabilities reflected: Compared to the 2016 second quarter, average total core deposits increased $10.1 billion, or 20%. The increase primarily reflected a $3.9 billion, or 46%, increase in average interest-bearing demand deposits, a $3.5 billion, or 21%, increase in average noninterest-bearing demand deposits, and a $3.5 billion, or 65%, increase in savings and other domestic deposits, partially offset by a $1.1 billion, or 6%, decrease in money market deposits. These increases primarily reflected the mid-quarter FirstMerit acquisition. Average total debt increased $0.9 billion, or 10%, reflecting the $1.0 billion senior debt issuance during the 2016 third quarter. Noninterest income for the 2016 third quarter increased $49 million, or 19%, from the year-ago quarter. The year-over-year increase primarily reflected: Compared to the 2016 second quarter, total noninterest income increased $31 million, or 12%. Service charges on deposit accounts increased $11 million, or 15%, primarily reflecting the benefit of continued new customer acquisition. Of the increase, $7 million was attributable to consumer deposit accounts, while $4 million was attributable to commercial deposit accounts. Mortgage banking income increased $9 million, or 29%, primarily driven by a 9% increase in mortgage origination volume and a $3 million impact from net MSR activity. Reported noninterest expense for the 2016 third quarter increased $186 million, or 35%, from the year-ago quarter. Changes in reported noninterest expense primarily reflect: Reported noninterest expense increased $189 million, or 36%, from the 2016 second quarter. Personnel costs increased $106 million, or 35%, primarily related to $76 million of Significant Items in the 2016 third quarter compared to $5 million of Significant Items in the prior quarter as well as a 17% increase in average full-time equivalent employees related to FirstMerit. Outside data processing and other services increased $28 million, or 45%, primarily reflecting the $28 million of Significant Items in the 2016 third quarter compared to $3 million of Significant Items in the prior quarter. Professional services expense increased $26 million, or 119%, primarily reflecting $34 million of Significant Items in the 2016 third quarter compared to $11 million of Significant Items in the prior quarter. Overall asset quality remains strong, with modest volatility, including the impact of the FirstMerit loan portfolio. The FirstMerit portfolio quality, composition, and geographic distribution was similar to the legacy Huntington portfolio. The only new loan classification is the RV/marine portfolio, which we are planning to continue offering. Nonaccrual loans and leases (NALs) increased $48 million, or 13%, from the year-ago quarter to $404 million, or 0.61% of total loans and leases. The year-over-year increase was exclusively centered in the Commercial portfolio and was primarily associated with a small number of energy sector loan relationships which were added to NALs during the 2016 first quarter. Nonperforming assets (NPAs) increased $94 million, or 25%, from the year-ago quarter to $475 million, or 0.72% of total loans and leases and net OREO. NALs decreased $56 million, or 12%, from the prior quarter, while NPAs decreased $14 million, or 3%, from the prior quarter. The linked-quarter decreases primarily resulted from significant pay-downs, offset by an increase in OREO balances from the FirstMerit acquisition. While the energy sector was a primary driver of the NAL activity over the last two quarters, the oil and gas exploration and production (E&P) portfolio continues to represent less than 1% of total loans outstanding at quarter end. The provision for credit losses increased $41 million, or 184%, year-over-year to $64 million in the 2016 third quarter. Net charge-offs (NCOs) increased $24 million, or 148%, to $40 million. NCOs represented an annualized 0.26% of average loans and leases in the current quarter, up from 0.13% in the prior quarter and 0.13% in the year-ago quarter. The linked-quarter increase was centered in the C&I portfolio and normal seasonal changes in the consumer portfolios. The year-over-year change was a function of material commercial recoveries in the year ago quarter combined with higher automobile and other consumer losses based on portfolio growth. We continue to be pleased with the net charge-off performance within each portfolio and in total. Commercial charge-offs were positively impacted by continued recoveries in the CRE portfolio and broader continued successful workout strategies, while consumer charge-offs remained within our expected range. Overall consumer credit metrics, led by the residential mortgage and home equity portfolios, continued to show an improving trend, while the commercial portfolios continued to experience some quarter-to-quarter volatility based on the absolute low level of problem loans. The period-end allowance for credit losses (ACL) as a percentage of total loans and leases decreased to 1.06% from 1.32% a year ago, while the ACL as a percentage of period-end total NALs decreased to 174% from 184%. We believe the level of the ACL is appropriate given the improvement in the credit quality metrics and the current composition of the overall loan and lease portfolio. The decline in the coverage ratios is a function of the purchase accounting impact associated with FirstMerit. The tangible common equity to tangible assets ratio was 7.14% at September 30, 2016, down 75 basis points from a year ago. Common Equity Tier 1 (CET1) risk-based capital ratio was 9.09% at September 30, 2016, down from 9.72% a year ago. The regulatory Tier 1 risk-based capital ratio was 10.40% compared to 10.49% at September 30, 2015. All capital ratios were impacted by the $1.3 billion of goodwill created and the issuance of $2.8 billion of common stock as part of the FirstMerit acquisition, as well as to a lesser extent the repurchase of 2.5 million common shares during the 2015 fourth quarter under the repurchase authorization included in the 2015 CCAR capital plan. The regulatory Tier 1 risk-based and total risk-based capital ratios benefited from the issuance of $400 million and $200 million of Class D preferred equity during the 2016 first and second quarters, respectively, and the issuance of $100 million of Class C preferred equity during the 2016 third quarter in exchange for FirstMerit preferred equity in conjunction with the acquisition. The total risk-based capital ratio was impacted by the repurchase of $25 million of trust preferred securities during the 2016 third quarter. The provision for income taxes in the 2016 third quarter was $25 million, compared to $47 million in the 2015 third quarter. The effective tax rates for the 2016 third quarter and 2015 third quarter were 16.3% and 23.5%, respectively. The variance between the 2016 third quarter and 2015 third quarter provision for income taxes and effective tax rates relates primarily to the Significant Items. At September 30, 2016, we had a net federal deferred tax asset of $172 million and a net state deferred tax asset of $43 million. "Our priority for the remainder of the year and for 2017 is the successful integration of FirstMerit," Steinour said. "We anticipate improving U.S. economic conditions in the fourth quarter. Guidance from the Federal Reserve also makes an interest rate increase appear likely in the near term, which would be incrementally helpful to our bottom line. We will remain diligent in the execution of our strategies, sensibly balancing investment and risk to stay on course for long-term growth. Our balance sheet optimization strategy will help rebuild our capital ratios more quickly, providing greater flexibility in our capital planning for 2017." Excluding Significant Items, we expect total revenues for the full year 2016 to increase 16%-18%, while we expect noninterest expenses to increase 13%-15%. We expect to deliver positive operating leverage for the fourth consecutive year. We expect the effective tax rate for the full year 2016 to be in the 24%-25% range, excluding Significant Items which are taxed at an approximate 35% rate. Overall, asset quality metrics are expected to remain near current levels, with moderate quarterly volatility. We anticipate NCOs for the full year 2016 will remain below our long-term normalized range of 35 to 55 basis points. Huntington's senior management will host an earnings conference call on October 26, 2016, at 9:00 a.m. (Eastern Daylight Time). The call may be accessed via a live Internet webcast at the Investor Relations section of Huntington's website, www.huntington.com, or through a dial-in telephone number at (844) 318-8148; Conference ID #84440833. Slides will be available in the Investor Relations section of Huntington's website about an hour prior to the call. A replay of the webcast will be archived in the Investor Relations section of Huntington's website. A telephone replay will be available approximately two hours after the completion of the call through November 3, 2016 at (855) 859-2056 or (404) 537-3406; conference ID #84440833. Please see the 2016 Third Quarter Quarterly Financial Supplement for additional detailed financial performance metrics. This document can be found on Huntington's Investor Relations website, www.huntington-ir.com. This communication contains certain forward-looking statements, including, but not limited to, certain plans, expectations, goals, projections, and statements, which are not historical facts and are subject to numerous assumptions, risks, and uncertainties. Statements that do not describe historical or current facts, including statements about beliefs and expectations, are forward-looking statements. Forward-looking statements may be identified by words such as expect, anticipate, believe, intend, estimate, plan, target, goal, or similar expressions, or future or conditional verbs such as will, may, might, should, would, could, or similar variations. The forward-looking statements are intended to be subject to the safe harbor provided by Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995. While there is no assurance that any list of risks and uncertainties or risk factors is complete, below are certain factors which could cause actual results to differ materially from those contained or implied in the forward-looking statements: changes in general economic, political, or industry conditions; uncertainty in U.S. fiscal and monetary policy, including the interest rate policies of the Federal Reserve Board; volatility and disruptions in global capital and credit markets; movements in interest rates; competitive pressures on product pricing and services; success, impact, and timing of our business strategies, including market acceptance of any new products or services implementing our "Fair Play" banking philosophy; the nature, extent, timing, and results of governmental actions, examinations, reviews, reforms, regulations, and interpretations, including those related to the Dodd-Frank Wall Street Reform and Consumer Protection Act and the Basel III regulatory capital reforms, as well as those involving the OCC, Federal Reserve, FDIC, and CFPB; the possibility that the anticipated benefits of the merger with FirstMerit Corporation are not realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where we do business; diversion of management's attention from ongoing business operations and opportunities; potential adverse reactions or changes to business or employee relationships, including those resulting from the completion of the merger with FirstMerit Corporation; our ability to complete the integration of FirstMerit Corporation successfully; and other factors that may affect our future results. Additional factors that could cause results to differ materially from those described above can be found in our Annual Report on Form 10-K for the year ended December 31, 2015 and our subsequent Quarterly Reports on Form 10-Q, including for the quarters ended March 31, 2016 and June 30, 2016, each of which is on file with the Securities and Exchange Commission (the "SEC") and available in the "Investor Relations" section of our website, http://www.huntington.com, under the heading "Publications and Filings" and in other documents we file with the SEC. All forward-looking statements speak only as of the date they are made and are based on information available at that time. We do not assume any obligation to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements were made or to reflect the occurrence of unanticipated events except as required by federal securities laws. As forward-looking statements involve significant risks and uncertainties, caution should be exercised against placing undue reliance on such statements. Use of Non-GAAP Financial Measures This document contains GAAP financial measures and non-GAAP financial measures where management believes it to be helpful in understanding Huntington's results of operations or financial position. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this document, conference call slides, or the Form 8-K related to this document, all of which can be found on Huntington's website at www.huntington-ir.com. Certain returns, yields, performance ratios, or quarterly growth rates are presented on an "annualized" basis. This is done for analytical and decision-making purposes to better discern underlying performance trends when compared to full-year or year-over-year amounts. For example, loan and deposit growth rates, as well as net charge-off percentages, are most often expressed in terms of an annual rate like 8%. As such, a 2% growth rate for a quarter would represent an annualized 8% growth rate. Income from tax-exempt earning assets is increased by an amount equivalent to the taxes that would have been paid if this income had been taxable at statutory rates. This adjustment puts all earning assets, most notably tax-exempt municipal securities and certain lease assets, on a common basis that facilitates comparison of results to results of competitors. Significant income or expense items may be expressed on a per common share basis. This is done for analytical and decision-making purposes to better discern underlying trends in total corporate earnings per share performance excluding the impact of such items. Investors may also find this information helpful in their evaluation of the company's financial performance against published earnings per share mean estimate amounts, which typically exclude the impact of Significant Items. Earnings per share equivalents are usually calculated by applying an effective tax rate to a pre-tax amount to derive an after-tax amount, which is divided by the average shares outstanding during the respective reporting period. Occasionally, when the item involves special tax treatment, the after-tax amount is disclosed separately, with this then being the amount used to calculate the earnings per share equivalent. Please note that columns of data in this document may not add due to rounding. From time to time, revenue, expenses, or taxes are impacted by items judged by Management to be outside of ordinary banking activities and/or by items that, while they may be associated with ordinary banking activities, are so unusually large that their outsized impact is believed by Management at that time to be infrequent or short term in nature. We refer to such items as "Significant Items." Most often, these Significant Items result from factors originating outside the company -- e.g., regulatory actions/assessments, windfall gains, changes in accounting principles, one-time tax assessments/refunds, litigation actions, etc. In other cases they may result from Management decisions associated with significant corporate actions out of the ordinary course of business -- e.g., merger/restructuring charges, recapitalization actions, goodwill impairment, etc. Even though certain revenue and expense items are naturally subject to more volatility than others due to changes in market and economic environment conditions, as a general rule volatility alone does not define a Significant Item. For example, changes in the provision for credit losses, gains/losses from investment activities, asset valuation write-downs, etc., reflect ordinary banking activities and are, therefore, typically excluded from consideration as a Significant Item. Management believes the disclosure of "Significant Items," when appropriate, aids analysts/investors in better understanding corporate performance and trends so that they can ascertain which of such items, if any, they may wish to include/exclude from their analysis of the company's performance -- i.e., within the context of determining how that performance differed from their expectations, as well as how, if at all, to adjust their estimates of future performance accordingly. To this end, Management has adopted a practice of listing "Significant Items" in its external disclosure documents (e.g., earnings press releases, quarterly performance discussions, investor presentations, Forms 10-Q and 10-K). "Significant Items" for any particular period are not intended to be a complete list of items that may materially impact current or future period performance. A number of items could materially impact these periods, including those described in Huntington's 2015 Annual Report on Form 10-K and other factors described from time to time in Huntington's other filings with the Securities and Exchange Commission. Huntington Bancshares Incorporated is a regional bank holding company headquartered in Columbus, Ohio, with $101 billion of assets and a network of 1,103 branches and 1,979 ATMs across eight Midwestern states. Founded in 1866, The Huntington National Bank and its affiliates provide consumer, small business, commercial, treasury management, wealth management, brokerage, trust, and insurance services. Huntington also provides auto dealer, equipment finance, national settlement and capital market services that extend beyond its core states. Visit huntington.com for more information.


TBC Bank Group PLC ("TBC PLC") Announces Full Year 2016 and 4Q 2016 IFRS Consolidated Unaudited Preliminary Results; Net Profit for 2016 up by 36.4% YoY to GEL 298.3 million   The European Union Market Abuse Regulation EU 596/2014 requires TBC Bank Group PLC to disclose that this announcement contains Inside Information, as defined in that Regulation       FY 2016 P&L Highlights    Net Profit for 2016 up by 36.4% YoY to GEL 298.3 million   Return on equity (ROE) amounted to 22.4% (20.6% without one-off effects) and Return on assets (ROA) to 3.9% (3.6% without one-off effects)   Total operating income for 2016 up by 18.0% YoY to GEL 681.1 million   Cost to income ratio stood at 45.8% (42.9% without one-off effects), compared to 43.9% in 2015   Cost of risk on loans stood at 1.0%, down by 0.7pp YoY   Net interest margin (NIM) stood at 7.8% in 2016, unchanged from 2015         Balance Sheet Highlights 31 December 2016   Total assets reached GEL 10,769.0 million as of 31 December 2016, up by 55.3% YoY and up by 42.0% QoQ   Gross loans and advances to customers increased to GEL 7,358.7 million as of 31 December 2016, up by 58.6% YoY and by 47.1% QoQ   Net loans to deposits and IFI funding stood at 93.4% and Net Stable Funding Ratio (NSFR) stood at 108.4%   NPLs stood at 3.5%, down by 1.3pp YoY and 1.1pp QoQ   NPLs coverage stood at 88.4%, (221.4% with collateral), compared to 84.3% as of 30 September 2016   Total customer deposits stood at GEL 6,454.9 million as of 31 December 2016, up by 54.5% YoY and up by 40.5% QoQ   Tier I and Total Capital Adequacy Ratios per Basel II/III stood at 10.4% and 14.2% respectively   Tier I and Total Capital Adequacy Ratios per Basel I stood at 21.3% and 28.1% respectively     4Q 2016 P&L Highlights   Net Profit for 4Q 2016 up by 31.6% YoY to GEL 88.0 million and up by 24.0% QoQ   Return on equity (ROE) amounted to 24.2% (23.5% without one-off effects) and return on assets (ROA) to 3.7% (3.5% without one-off effects)   Total operating income in 4Q 2016 up by 39.0% YoY and by 34.9% QoQ to GEL 218.3 million   Cost to income ratio stood at 51.2% (47.0% without one-offs), compared to 49.3% in 4Q 2015 and 40.5% in 3Q 2016   Cost of risk on loans stood at 0.6%, up by 0.5pp YoY and down by 0.5pp QoQ   Net interest margin (NIM) stood at 7.9%in 4Q 2016, compared to 8.3% in 3Q 2016 and 7.4% in 4Q 2015   FY 2016 P&L Highlights    Net Profit for 2016 up by 31.5% YoY to GEL 287.6 million   Return on equity (ROE) amounted to 21.6% (19.7% without one-off effects) and Return on assets (ROA) to 3.9% (3.6% without one-off effects).   Total operating income for 2016 up by 11.4% YoY to GEL 643.0 million   Cost to income ratio stood at 46.1% (43.4% without one-off effects), compared to 43.9% in 2015.   Cost of risk on loans stood at 0.8%, down by 0.9pp YoY.   Net interest margin (NIM) stood at 7.9% in 2016, up by 0.1pp   Balance Sheet Highlights 31 December 2016   Total assets reached GEL 9,212.5 million as of 31 December 2016, up by 32.8% YoY and up by 21.5% QoQ   Gross loans and advances to customers increased to GEL 5,911.2 million as of 31 December 2016, up by 27.4% YoY and by 18.1% QoQ   Net loans to deposits and IFI funding stood at 90.7%   NPLs stood at 4.0%, down by 0.8pp YoY and down 0.6pp QoQ   NPLs coverage stood at 90.5%, (216.8% with collateral), compared to 84.3% as of 30 September 2016.   Total customer deposits stood at GEL 5,641.1 million as of 31 December 2016, up by 35.0% YoY and up by 22.8% QoQ   4Q 2016 P&L Highlights   Net Profit for 4Q 2016 up by 15.6% YoY and up by 9.0% QoQ to GEL 77.4 million   Return on equity (ROE) amounted to 21.4% (20.0% without one-off effects) and return on assets (ROA) to 3.7% (3.4% without one-off effects).   Total operating income in 4Q 2016 up by 14.8% YoY and up by 11.4% QoQ to GEL 180.2 million   Cost to income ratio stood at 53.5% (49.7% without one-offs), compared to 49.3% in 4Q 2015 and 40.5% in 3Q 2016   Cost of risk on loans stood at -0.1%, down by 0.3pp YoY and down by 1.2pp QoQ.   Net interest margin (NIM) stood at 7.8%in 4Q 2016, compared to 8.3% in 3Q 2016 and 7.4% in 4Q 2015.   Description of One-off Incomes and Expenses Incurred during 2016   Recovery of previously written off principal and interest (FY '16: GEL35.8 million; Q4: GEL35.8 million)   Tax credit (FY '16: GEL17.9 million; Q4: GEL 0 million)   Premium Listing costs (FY '16: GEL16.2 million; Q4:  GEL0.3 million)   Currency effect on provisions (FY '16: GEL9.6 million; Q4: GEL16.8 million) or w/o BR (FY '16: GEL8.7 million; Q4: GEL16.0 million)   Gain on sale of investment securities (FY '16: GEL8.8 million; Q4: GEL 0 million)   Bank Republic acquisition related consulting costs (FY'16: GEL8.0 million; Q4: GEL8.0 million)   Interest income related to one large corporate customer (FY '16: GEL4.2 million; Q4: GEL 0 million)   Interest expense related to prepayment of subordinated loans (FY'16: GEL2.5 million; Q4:GEL2.5 million)   Staff redundancy provision (FY '16: GEL2.2 million; Q4: GEL 2.2 million)   Impairment of intangible assets of Bank Republic (FY '16: GEL2.0 million; Q4: GEL2.0 million)   Additional Information Disclosure   The following materials in connection with TBC PLC's financial results are disclosed on our Investor Relations website on http://tbcbankgroup.com/ under Results Announcement section:   4Q and FY 2016 Results Report   4Q and FY 2016 Results Call Presentation       For further enquiries, please contact: Head of Investor Relations Anna Romelashvili  ir@tbcbank.com.ge         About TBC PLC TBC PLC is a public limited company registered in England and Wales that was incorporated in February 2016. TBC PLC became the parent company of JSC TBC Bank ("TBC Bank") on 10 August 2016. TBC PLC is listed on the London Stock Exchange under the symbol TBCG.     About TBC Bank TBC Bank, together with its subsidiaries, is the leading universal banking group in Georgia, with a total market share of 31.1% of loans (or 38.9% taking into account TBC Bank's holding in JSC Bank Republic and 33.0% of non-banking deposits (or 37.8% taking into account TBC Bank's holding in JSC Bank Republic) as at 31 December 2016, according to the data published by the National Bank of Georgia.


News Article | October 25, 2016
Site: globenewswire.com

CORTLAND, Ohio, Oct. 25, 2016 (GLOBE NEWSWIRE) -- Cortland Bancorp (OTCQB:CLDB), the holding company for Cortland Savings and Banking Company, today reported that for the first nine months of 2016, net income grew 13% to $3.7 million, or $0.85 per share, compared to $3.3 million, or $0.73 per share, for the first nine months of 2015. Net income was stable at $1.2 million, or $0.27 per share, for the third quarters of 2016 and 2015 and for the second quarter of 2016. All results are unaudited. “We achieved solid financial results in the third quarter, with strong loan and deposit growth, solid contributions from our mortgage operation and improving asset quality.,” said James M. Gasior, President and Chief Executive Officer.  “Compared to a year ago, deposits grew by $54 million, or 12%, and our loan portfolio increased by $36 million, or 10%.  We delivered a 17% year-over-year increase and an 82% increase year-to-date in mortgage banking revenue, driven by new purchases, including new construction, and by strong refinancing activities because of lower long-term interest rates.  Asset quality improved with NPAs to total assets at 1.46%. “During the quarter we made important investments for our future by refreshing our brand, creating a unique image for our products and our presence in the market. “Branding is very important to us, as we aim to effectively establish a significant and differentiated presence in our markets to attract and retain loyal customers and generate long-term growth, commented Gasior.”  During the quarter, we also received regulatory approval to locate our fourteenth full-service branch in Hudson, Ohio, with an expected opening in the fourth quarter this year. Third Quarter 2016 (at, or for the period September 30, 2016): Net Interest Income Primarily due to higher average loan balances, third quarter net interest income increased 6% to $4.9 million, compared to $4.6 million for the third quarter a year ago.  Net interest income was $5.0 million for the second quarter of 2016.  The decline in net interest income on a linked quarter basis was mainly due to additional interest collected on nonaccrual loans in the prior quarter.  Year-to-date, net interest income increased 6% to $14.6 million, compared to $13.8 million for the first nine months of 2015. Net Interest Margin Net interest margin (“NIM”) was 3.63% for the third quarter of 2016, compared to 3.67% for the third quarter of 2015, and 3.77% for the second quarter of 2016.  Year-to-date, and for the first nine months of 2015, NIM was flat at 3.66%.  “Both the mix of our assets and slightly lower yields on loans and investment securities accounts for the slight compression in NIM from prior quarters,” said David Lucido, Senior Vice President and Chief Financial Officer. “After repaying the $4.5 million in high-cost Federal Home Loan Bank (“FHLB”) advances in the first quarter of this year, the remaining $13.5 million in long-term FHLB advances are scheduled to mature in December 2016, January, May and September, 2017.  These advances represent 19% of our third quarter funding costs.  Upon maturity, we anticipate refinancing these advances at a much lower interest rate, reducing annual interest expense by approximately $300,000.  The resulting improved funding mix is expected to have a positive impact on our net interest margin, which is already strong,” said Lucido. Provision for loan losses for the third quarter of 2016 was $50,000, compared to $100,000 for the third quarter a year ago.  No provision was taken for the second quarter of 2016, primarily because of the positive outcome on a customer bankruptcy case in the second quarter, which improved asset quality.  For the first nine months of 2016, provision for loan losses was $50,000, compared to $390,000 for the first nine months of 2015.  The loan loss allowance, as a percentage of loans, was 1.24%, at the September quarter end remaining in line with the 1.27% ratio at the June quarter end. Non-Interest Income Total non-interest income, excluding investment gains and losses, increased 4% to $1.0 million for the third quarter of 2016, compared to the third quarter of 2015, and declined 11% from $1.2 million for the second quarter of 2016.  Non-interest income increased 12% to $3.3 million for the first nine months of 2016, from $2.9 million for the first nine months of 2015. “Mortgage banking revenue increased 17% from a year ago and contributed meaningfully to our non-interest income in the quarter.  Although mortgage banking revenues were down on a linked quarter basis, year-to-date, our mortgage banking gains grew 82%, compared to the first nine months of 2015,” added Gasior.  “Strong loan demand and refinancing activities are robust reflecting the affordable interest rates currently available.”  New home purchases and construction accounted for 74% of mortgage volume while refinancing transactions represented 26% of loan volumes for the second quarter. Non-interest expense for the third quarter of 2016 totaled $4.5 million, compared to $4.0 million for the third quarter of 2015, and $4.7 million for the second quarter of 2016.  For the first nine months of 2016, non-interest expense was $13.7 million, compared to $12.2 million for the first nine months of 2015.   “The higher non-interest expense in 2016 is mainly related to additional staff to support commercial and private bank business growth.  Investments in continued brand marketing and equipment expenses also contributed to the increase,” said Lucido. The efficiency ratio for the third quarter of 2016 was 72.42%, compared to 67.42% for the third quarter of 2015, and 73.84% for the second quarter of 2016.  The efficiency ratio for the nine months ended September 30, 2016 was 72.49%, compared to 69.86% for the nine months ended September 30, 2015.  “We continue our efforts to increase our investment in personnel across business lines with a view to increasing revenues and reducing our efficiency ratio as the bank executes on organic growth initiatives.” “The effective tax rate for the third quarter of 2016 was 20.8% compared to 23.4% in the third quarter a year ago reflecting the benefits of investments with tax incentives and tax free components of our revenue stream,” added Lucido. Total assets grew 9% year-over-year to $621.2 million at September 30, 2016, compared to $570.3 million at September 30, 2015, and increased 2% from $606.4 million at June 30, 2016. Investment securities totaled $164.1 million at September 30, 2016, compared to $159.8 million at September 30, 2015, and $163.8 million at June 30, 2016.  As of September 30, 2016, the securities primarily comprised of high-grade mortgage-back securities issued by U.S. Government sponsored entities.  The increase in investment securities year-over-year, and from the preceding quarter, reflects the strong deposit growth generated during the year. Total loans increased 10% to $395.8 million at September 30, 2016, compared to $359.8 million a year ago and grew 3% from $384.1 million at June 30, 2016.  The loan portfolio remains diversified, and comprise of both retail and business relationships with commercial real estate loans accounting for 63%, of which 20% were owner-occupied by businesses.  Commercial loans accounted for 16% while residential 1-4 loans accounted for 14%.  Consumer and home equity loans accounted for 7% of total loans.  “Our loan production remains solid, again boosted by the growth in commercial real estate and business loans,” added Gasior. Total deposits grew $53.9 million, or 12%, to $508.5 million at September 30, 2016, from $454.5 million at September 30, 2015, and were up $19.8 million, or 4%, compared to $488.7 million at June 30, 2016.  Both the new Canfield branch and the Kasasa brand of deposit products introduced last fall have played significantly into improving deposit levels.  Noninterest-bearing deposits accounted for 22% of total deposits; interest-bearing demand deposits accounted for 9%, while money market and savings accounted for 43% of total deposits.  Certificates of deposits were 26% of the deposit mix. At September 30, 2016, nonperforming assets as a percentage of total assets was 1.46% of total assets, compared 1.63% of total assets at September 30, 2015, and 1.54% of total assets on a linked quarter basis.  Nonperforming loans were $8.3 million at September 30, 2015, compared to $8.4 million a year earlier and $8.5 million, at June 30, 2016. Performing restructured loans, that were not included in nonaccrual loans at the end of the third quarter of 2016, were $6.0 million compared to $3.5 million at the end of the third quarter a year ago and $6.1 million on a linked quarter basis.  Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, term extensions, or payment alterations are categorized as restructured loans. “We present restructured loans that are performing separately from those that are classified as nonaccrual to provide more information on this category of loans and to differentiate between accruing performing and nonperforming restructured loans,” explained Lucido. Cortland Bancorp continues to remain well capitalized under all regulatory measures, with capital ratios exceeding the statutory well-capitalized thresholds by an ample margin.  For the quarter ended September 30, 2016, capital ratios were as follows: Cortland Bancorp is a financial holding company headquartered in Cortland, Ohio.  Founded in 1892, the bank subsidiary, The Cortland Savings and Banking Company conducts business through thirteen full-service community banking offices located in the counties of Trumbull, Mahoning, Portage, and Ashtabula in Northeastern Ohio and two financial services centers, in Beachwood and Fairlawn, Ohio.  For additional information about Cortland Banks visit http://www.cortland-banks.com. Forward Looking Statement This release may contain “forward-looking statements” that are subject to risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy and management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Cortland Bancorp or management, are intended to help identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include our ability to maintain or expand our market share or net interest margins, and to implement our marketing and growth strategies. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy, as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in our other filings with the SEC. However, you should be aware that these factors are not an exhaustive list, and you should not assume these are the only factors that may cause our actual results to differ from our expectations.

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