Carrollton Bancorp Reports Second Quarter and Year to Date Loss

  Carrollton Bancorp Reports Second Quarter and Year to Date Loss

Business Wire

COLUMBIA, Md. -- July 27, 2012

Carrollton Bancorp (NASDAQ: CRRB), the parent company of Carrollton Bank,
announced net losses of $164,804 and $417,268 for the three and six month
periods ended June 30, 2012, compared to net losses of $697,358 and $526,063
for the comparable periods in 2011. Net losses attributable to common
stockholders for the three and six month periods ended June 30, 2012 were
$301,883 ($0.12 loss per diluted share) and $691,426 ($0.27 loss per diluted
share) compared to net losses attributable to common stockholders of $834,437
($0.32 loss per diluted share) and $800,220 ($0.31 loss per diluted share) for
the comparable periods in 2011.

The Company’s pre-tax loss was $289,526 for the quarter ended June 30, 2012
compared to a pre-tax loss of $1.2 million for the quarter ended June 30,
2011.

The improvement in operating results for the quarter, as compared to the same
period in 2011, are primarily a result of a $1.0 million decrease in the
provision for loan losses, a reduction in securities write downs of $414,000
and a $298,000 improvement in mortgage fee income. These improvements are
partially offset by a $345,000 decrease in net interest income, a $305,000
increase in professional fees and a $108,000 increase in costs and write downs
associated with foreclosed real estate. The increases in professional fees are
associated with legal and investment banking expenses incurred in connection
with the planned merger with Jefferson Bancorp, Inc. announced on April 9,
2012.

Nonperforming assets (nonaccrual loans and foreclosed real estate) decreased
by 32.6% from $9.9 million at June 30, 2011 to $6.7 million at June 30, 2012.
The allowance for loan losses represented 1.86% of outstanding loans as of
June 30, 2012 compared to 1.75% at June 30, 2011. The Company experienced net
charge-offs of $753,000 for the quarter ended June 30, 2012 as compared to
$1.2 million for the same period in 2011.

The Company’s strategy of aggressively managing the size of the balance sheet,
continued to benefit capital ratios. The balance sheet reductions over the
past 30 months have improved the Company’s regulatory capital ratios even
though it has generated no capital growth after accounting for dividends on
preferred stock. We continue to believe that the announced agreement to merge
with Jefferson Bancorp will, upon completion, create a larger and better
capitalized bank which will enable us to pursue opportunities to grow
organically and through additional acquisitions.

Noninterest expenses increased by $426,000 for the three month period ended
June 30, 2012, compared to the same period in 2011. The quarterly increase
resulted from increased mortgage related incentives included in salaries,
increased professional fees associated with legal and investment banking costs
related to the announced agreement to merge with Jefferson Bancorp, Inc. and
an increase in expenses associated with the management and disposal of
foreclosed real estate. These increases were somewhat offset by decreases in
FDIC assessments, employee benefit costs, utility costs and other costs.

President and Chief Executive Officer Bob Altieri stated, “We continue to
aggressively clean up our balance sheet through our normal course of business
and in anticipation of the merger with Jefferson Bancorp. The Company’s
non-performing assets continue to see signs of improvement and fortunately we
are not experiencing a migration of loans moving to a delinquent status (loans
greater than 30 days past due). As of June 30, 2012 the Company’s delinquency
rate was 1.01%, which is at its lowest level in four years. All of the
Company’s Other Real Estate Owned (OREO) has been reassessed and appropriate
writedowns taken in the second quarter. As it relates to other divisions of
the Company, noninterest income continues to improve led by Electronic Banking
Division and our mortgage division, Carrollton Mortgage Services (CMS). For
the six months ended June 30, 2012, noninterest income increased $407,000
compared to the same time last year. CMS continues to grow with total year to
date loan originations of $159 million, while maintaining solid margins. We
are optimistic that these levels will continue throughout 2012.”

Total assets as of June 30, 2012 compared to June 30, 2011 reflect a 4.5%, or
$16.8 million, decrease to $359.6 million. Gross loans, including loans held
for sale, decreased 6.5%, or $20.3 million, from $313.0 million at June 30,
2011 to $292.8 million at June 30, 2012. Investment securities decreased
14.5%, or $4.3 million, to $25.6 million at June 30, 2012 from $30.0 million
as of June 30, 2011. This decrease is a result of management’s decision to use
cash flow from investments to shrink the balance sheet by reducing high cost
borrowings.

Total deposits increased 4.1%, or $12.5 million, to $319.4 million while
borrowings decreased $31.2 million from balances at June 30, 2011. The
increase in deposits was comprised of a $12.8 million increase in non-interest
bearing deposits, a similar $12.8 million increase in interest bearing
transaction accounts and a $13.1 million decrease in certificates of deposit.
The combined $44.3 million decrease in high cost funding sources is consistent
with our strategy of reducing our cost of funds while concentrating on core
deposit growth.

Mr. Altieri continued and stated, “We are pleased with the Company’s increased
deposit base and continued effort of our employees to focus on our strategic
initiative of increasing non-interest bearing deposits. As of June 30, 2012,
non-interest bearing deposits comprise 25.9% of our total deposit base, which
is a healthy percentage for a community bank.”

Carrollton Bancorp is the parent company of Carrollton Bank, a commercial bank
serving the deposit and financing needs of both consumers and businesses
through a system of 10 branch offices in central Maryland. The Company
provides brokerage services through its Carrollton Financial Services, Inc.
subsidiary, and mortgage services through its Carrollton Mortgage Services
division of the Bank.

The statements in this press release regarding the proposed merger with
Jefferson Bancorp, Inc. and our expectation that upon the merger with
Jefferson Bancorp the merged entity will be better capitalized and in a
position to pursue opportunities to grow organically and through additional
acquisitions, our statement regarding continued higher levels of non-interest
income, and statements regarding our business strategy are forward-looking
statements within the meaning of and pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. A forward-looking
statement encompasses any estimate, prediction, opinion or statement of belief
contained in this release and the underlying management assumptions. Although
the Company believes this statement is based on reasonable estimates and
assumptions, the Company is unable to provide any assurance that its
expectations will, in fact, occur or that its estimates or assumptions will be
correct. Actual results could differ materially from those expressed or
implied by such forward-looking statement and such statement is not a
guarantee of future performance. Potential risks and uncertainties that could
cause anticipated results to differ from those expressed or implied by such
forward-looking statement include, but are not limited to: (i) the risk that
necessary stockholder and regulatory approvals for the merger will not be
obtained; (ii) the businesses of Carrollton Bancorp may not be integrated into
Jefferson Bancorp successfully or such integration may be more difficult,
time-consuming or costly than expected; (iii) expected revenue synergies and
cost savings from the merger may not be fully realized, or realized within the
expected timeframe; (iv) disruption in the parties’ businesses as a result of
the announcement and pendency of the merger; (v) revenues following the merger
may be lower than expected; (vi) customer and employee relationships and
business operations may be disrupted by the merger; (vii) the ability to
complete the merger may be more difficult, time-consuming or costly than
expected, or the merger may not be completed at all; (viii) unexpected changes
in the housing market or in general economic conditions in our market area and
Jefferson Bancorp’s market area; (ix) unexpected changes in market interest
rates; (x) the impact of new governmental regulations that might require
changes in our and Jefferson Bancorp’s business model; (xi) changes in laws,
regulations, policies and guidelines impacting our ability to collect on
outstanding loans or otherwise negatively impacting Carrollton Bancorp’s and
Jefferson Bancorp’s business; (xiii) changes in competitive, governmental,
regulatory, technological and other factors that may affect Carrollton Bancorp
or Jefferson Bancorp specifically or the banking industry generally; and (xiv)
other risks and uncertainties as described in reports Carrollton Bancorp files
with the Securities and Exchange Commission. The Company undertakes no
obligation to update or revise forward looking statements.

A summary of financial information follows. For additional information,
contact Mark A. Semanie, Chief Financial Officer, (410) 536-7308.

                                                                                         
FINANCIAL
HIGHLIGHTS
Carrollton
Bancorp
                Three Months Ended June 30,                   Six Months Ended June 30,
                2012             2011             % Change    2012             2011             % Change
                (unaudited)      (unaudited)                  (unaudited)      (unaudited)
Results of
Operations
Net interest    3,273,160        3,617,833        (9.53  %)   6,633,295        7,043,353        (5.82  %)
income
Provision for   435,161          1,427,601        (69.52 %)   680,674          1,541,818        (55.85 %)
loan losses
Noninterest     2,588,412        1,907,074        35.73  %    3,931,447        3,524,391        11.55  %
income
Noninterest     5,715,937        5,289,796        8.06   %    10,629,738       9,993,654        6.36   %
expenses
Income tax
expense         (124,722    )    (495,132    )    74.81  %    (328,402    )    (441,665    )    25.64  %
(benefit)
Net income      (164,804    )    (697,358    )    76.37  %    (417,268    )    (526,063    )    20.68  %
(loss)
Net income
(loss) to       (301,883    )    (834,437    )    63.82  %    (691,426    )    (800,220    )    13.60  %
common
stockholders
                                                                                                
Per Share
Diluted net
income (loss)   (0.12       )    (0.32       )    63.86  %    (0.27       )    (0.31       )    13.70  %
per common
share
Dividends
declared per    -                -                0.00   %    -                -                0.00   %
common share
Book value
per common      9.08             9.30             (2.35  %)   9.08             9.30             (2.35  %)
share
Common stock    5.35             3.63             47.38  %    5.35             3.63             47.38  %
closing price
                                                                                                
At June 30
Short term      16,928,476       5,035,630        236.17 %    16,928,476       5,035,630        236.17 %
investments
Investment
securities      28,744,819       34,147,874       (15.82 %)   28,744,819       34,147,874       (15.82 %)
(b)
Loans held      38,349,944       36,448,670       5.22   %    38,349,944       36,448,670       5.22   %
for sale
Loans (net of
unearned        254,446,807      276,600,079      (8.01  %)   254,446,807      276,600,079      (8.01  %)
income) (a)
Earning         339,443,246      355,201,953      (4.44  %)   339,443,246      355,201,953      (4.44  %)
assets
Total assets    359,640,899      376,397,504      (4.45  %)   359,640,899      376,397,504      (4.45  %)
Total           319,370,466      306,907,051      4.06   %    319,370,466      306,907,051      4.06   %
deposits
Shareholders'   32,482,677       32,917,008       (1.32  %)   32,482,677       32,917,008       (1.32  %)
equity
                                                                                                
Common shares   2,579,388        2,576,388                    2,579,388        2,576,388
outstanding
                                                                                                
Average
Balances
Short term      28,834,186       5,246,806        449.56 %    25,930,432       5,231,966        395.62 %
investments
Investment
securities      29,672,436       35,526,995       (16.48 %)   30,706,557       36,191,883       (15.16 %)
(b)
Loans held      29,491,250       27,359,550       7.79   %    27,032,738       25,378,727       6.52   %
for sale
Loans (net of
unearned        252,527,437      283,110,836      (10.80 %)   257,439,830      283,689,420      (9.25  %)
income) (a)
Earning         341,952,591      354,390,427      (3.51  %)   342,878,848      353,795,741      (3.09  %)
assets
Total assets    362,971,201      374,169,296      (2.99  %)   363,764,273      373,798,968      (2.68  %)
Total           323,033,750      307,441,900      5.07   %    319,994,716      307,581,668      4.04   %
deposits
Shareholders'   32,369,667       33,814,820       (4.27  %)   32,379,122       33,586,950       (3.60  %)
equity
                                                                                                
Earnings
Ratios
Return on
average total   (0.18       %)   (0.75       %)               (0.23       %)   (0.28       %)
assets
Return on
average         (2.05       %)   (8.27       %)               (2.59       %)   (3.16       %)
shareholders'
equity
Net interest    3.85        %    4.09        %                3.89        %    4.01        %
margin
                                                                                                
Credit Ratios
Nonperforming
assets as
percent of
period end      2.58        %    3.52        %                2.58        %    3.52        %
loans and
foreclosed
real estate
(a)(c)
Allowance to
total loans     1.86        %    1.75        %                1.86        %    1.75        %
(a)
Net loan
losses to       0.30        %    0.43        %                0.32        %    0.42        %
average loans
(a)(d)
                                                                                                
Capital
Ratios
(period end)
Shareholders'
equity to       9.03        %    8.75        %                9.03        %    8.75        %
total assets
Leverage        9.59        %    9.47        %                9.59        %    9.47        %
capital
Tier 1
risk-based      10.91       %    10.18       %                10.91       %    10.18       %
capital
Total
risk-based      12.19       %    11.44       %                12.19       %    11.44       %
capital
                                                                                                
(a) Excludes loans held for sale
(b) Excludes market value adjustment on securities available for sale
(c) Nonperforming assets are comprised of non-accrual loans and foreclosed real estate
(d) Ratio is not annualized
                                                                                                

Contact:

Carrollton Bancorp
Mark A. Semanie, Chief Financial Officer
410-536-7308