MSB Financial Corp. Announces Quarterly Results

MSB Financial Corp. Announces Quarterly Results

MILLINGTON, N.J., Feb. 15, 2013 (GLOBE NEWSWIRE) -- MSB Financial Corp.
(Nasdaq:MSBF) (the "Company"), the holding company for Millington Savings Bank
(the "Bank"), reported a net loss of $1.6 million for the three months ended
December 31, 2012 compared to net income of $224,000 for the quarter ended
December 31, 2011. Correspondingly, the Company reported a net loss of $1.7
million for the six months ended December 31, 2012 compared to net income of
$335,000 for the six months ended December 31, 2011. The reported losses for
the three and six month periods ended December 31, 2012 compared to the same
periods ending December 31, 2011, were primarily due to increases in the
provision for loan losses of $2.6 million and $2.7 million for the respective
periods.

Net interest income for the three and six months ended December 31, 2012
decreased to $2.3 million and $4.7 million, respectively, from $2.7 million
and $5.4 million for the three and six month periods ended December 31, 2011,
with the decreases attributable to declines in interest income due to a
combination of lower levels of average interest earning assets as well as
decreases in the average yield earned. For the three months ended December 31,
2012, the average yield on interest earning assets was 3.85%, a decrease of 62
basis points when compared to the same period in 2011. For the six months
ended December 31, 2012, the yield on interest earning assets was 3.98%, a
decrease of 54 basis points when compared to the same period in 2011. The
decline in yields on average earning assets, for both the three and six month
comparative periods, is representative of the effects that the prolonged low
interest rate environment has had on the Company's loans receivable and
investments held to maturity portfolios. During the three months ended
December 31, 2012, average interest earning assets had decreased by $6.4
million when compared to the same period in 2011. For the six months ended
December 31, 2012, the decline was $8.3 million when compared to the same
period in the prior fiscal year.

The decreased levels of interest income were partially offset by decreases in
interest expense. The average rate paid on interest-bearing liabilities for
the three months ended December 31, 2012 was 0.98%, a decrease of 23 basis
points when compared to the same period in 2011. For the six months ended
December 31, 2012, the average rate paid on interest-bearing liabilities was
1.00%, a decrease of 23 basis points when compared to the same period in 2011.
The net interest margin decreased to 2.97% for the three months ended December
31, 2012, compared to 3.36% for the three months ended December 31, 2011, a
decrease of 39 basis points. The net interest margin decreased to 3.06% for
the six months ended December 31, 2012, compared to 3.38% for the six months
ended December 31, 2011, a decrease of 32 basis points. The reduction in
average earning assets and yields, and interest-bearing liabilities and rates
for both the three month and six month comparative periods resulted in lower
levels of net interest income and net interest margins.

Non-interest income for the quarter ended December 31, 2012 totaled $162,000,
a decrease of $11,000 or 6.4% compared to the same period in 2011. For the six
months ended December 31, 2012, non-interest income totaled $321,000, an
increase of $4,000, or 1.3%, when compared to the same period in 2011. The
decrease in non-interest income for the three months ended December 31, 2012
compared to the three months ended December 31, 2011, was attributed to
decreases in other non-interest income, fees and service charges and an
unrealized gain in the trading security portfolio, offset by an increase in
income from bank owned life insurance. The increase for the six months ended
December 31, 2012, compared to the six months ended December 31, 2011, was
attributed to an unrealized gain in the trading security portfolio, an
increase in income from bank owned life insurance, offset by decreases in
other non-interest income and fees and service charges during the period. The
decrease in fees and service charge income for both the three and six month
comparative periods, was in part, due to the Company waiving its fees for a
period of time following Hurricane Sandy.

Total non-interest expense was essentially flat when comparing the three and
six month periods ended December 31, 2012 with their respective corresponding
periods in the prior fiscal year. For the three months ended December 31,
2012, total non-interest expense increased by $63,000 or 3.1% compared to the
same period ended December 31, 2011. Professional services, salaries and
employee benefits, and directors' compensation increased by $46,000, $29,000
and $13,000, respectively, as did service bureau fees by $19,000 and other
non-interest expense by $3,000, while occupancy and equipment, advertising,
and FDIC assessment expenses decreased by $28,000, $16,000 and $3,000,
respectively, for the three months ended December 31, 2012 compared to the
three months ended December 31, 2011. The increase in employee benefits
expense was primarily due to an increase in staffing for the quarter ended
December 31, 2012 and higher benefit cost related to retirement plans.

For the six months ended December 31, 2012, non-interest expense increased by
$7,000 or 0.2% compared to the same period ended December 31, 2011. Service
bureau and other non-interest expense increased by $50,000 and $38,000,
respectively, as did professional services by $23,000 and directors'
compensation by $25,000, while occupancy and equipment, advertising, and
salaries and employee benefits expenses decreased by $82,000, $24,000 and
$21,000, respectively, as did FDIC assessment expense by $2,000 for the six
months ended December 31, 2012 compared to the six months ended December 31,
2011. The decrease in salaries and employee benefits expense was primarily
attributable to the retirement of the former President & CEO of the Company,
as of December 31, 2011, who was succeeded by the former Executive Vice
President whose position was not replaced. The former President & CEO
continues to serve on the Board of Directors.

The loan loss provision for the three and six months ended December 31, 2012
was $3.0 million and $3.7 million, respectively, compared to $375,000 and
$988,000 for the same periods ended December 31, 2011. The Company's
management reviews the level of the allowance for loan losses on a quarterly
basis based on a variety of factors including, but not limited to, (1) the
risk characteristics of the loan portfolio, (2) current economic conditions,
(3) actual losses previously experienced, (4) the Company's level of loan
growth and (5) the existing level of reserves for loan losses that are
probable and estimable. The Company experienced $507,000 in net charge-offs
(consisting of $549,000 in charge-offs and $42,000 in recoveries) for the
three month period ended December 2012 compared to $463,000 in net charge-offs
(consisting of $463,000 in charge-offs and no recoveries) for the three month
period ended December 31, 2011. In addition, the Company experienced
$1,464,000 in net charge-offs (consisting of $1,513,000 in charge-offs,
comprising of $628,000 in one-to-four family loans, $404,000 in home equity
loans, $249,000 in construction loans and $232,000 in commercial and
industrial loans, respectively, and $49,000 in recoveries) for the six month
period ended December 31, 2012 compared to $495,000 in net charge-offs
(consisting of $495,000 in charge-offs and no recoveries) for the six months
ended December 31, 2011. The Company's provision for loan losses for the three
months ended December 31, 2012 totaled $3.0 million based on the level of
allowance for loan losses the Company's management deemed necessary, based on
its quarterly review of the allowance for loan losses as of December 31, 2012.
The provision for loan losses for the quarter ended December 31, 2012 included
$2.0 million deemed necessary to support the Company's planned asset
disposition strategy approved by the Board Directors during the quarter ended
December 31, 2012. This strategy was implemented in an attempt to rapidly
reduce the dollar amount of non-performing loans in the Company's loan
portfolio. The Company has incurred this additional loss at this time in order
to mitigate significant costs associated with the foreclosure process, which
can currently take up to three years to complete. Based on the Company's prior
history, loans in the foreclosure process will experience prolonged expenses
in the form of legal fees, property taxes, utilities, property maintenance, as
well as asset depreciation due to neglect of the property. As part of the
aforementioned strategy, the Company performed an analysis to identify loans
which will be part of this disposition strategy made available to the Company,
which includes short sales, cash for keys, deeds in lieu of foreclosure and/or
the bulk sale of loans. The analysis provided management with a way to
estimate the additional reserves required to complete the asset disposition
strategy. The Company feels that these losses are both probable and estimable
and, accordingly, has recorded an additional provision for the quarter ended
December 31, 2012. The Company's management team is actively engaged with
borrowers and buyers to expedite the asset disposition strategy and will
continue doing so until desired amount of non-performing loans have been
removed from the Company's loan portfolio. The Company had $15.8 million in
non-performing loans as of December 31, 2012, compared to $15.7 million as of
December 31, 2011. The allowance for loan losses to total loans ratio was
2.20% at December 31, 2012, compared to 1.06% at December 31, 2011, while the
allowance for loan losses to non-performing loans ratio increased from 16.93%
at December 31, 2011 to 33.71% at December 31, 2012, primarily due to the
increase in the allowance for loan losses during the first six months of this
fiscal year. Non-performing loans to total loans and net charge-offs to
average loans outstanding ratios were at 6.54% and 0.61%, respectively, at and
for the six months ended December 31, 2012 compared to 6.28% and 0.20% at and
for the six months ended December 31, 2011.

Total assets decreased to $343.6 million at December 31, 2012, from $347.3
million at June 30, 2012, primarily due to a decrease of $18.1 million in cash
and cash equivalents and a $6.8 million decrease in loans receivable, net,
offset by an increase of $19.2 million in securities held to maturity.
Deposits were $282.0 million at December 31, 2012, down $1.8 million compared
to $283.8 million at June 30, 2012. The decrease in deposit balances was
primarily due to the Company lowering its offering rates. FHLB advances were
$20.0 million at both December 31, and June 30, 2012. Stockholders' equity was
$39.0 million at December 31, 2012, compared to $40.9 million at June 30,
2012. The decrease in shareholders' equity was primarily due a decrease in
earnings for the six months ended December 31, 2012, which was negatively
impacted by the additional increase in the provision for loan losses and
decrease in net interest income.

Shares of the Company's common stock trade on the NASDAQ Global Market under
the symbol "MSBF." The Company is majority owned by its mutual holding company
parent, MSB Financial, MHC.

Forward-Looking Statements

The foregoing release may contain forward-looking statements concerning the
financial condition, results of operations and business of the Company. We
caution that such statements are subject to a number of uncertainties and
actual results could differ materially, and, therefore, readers should not
place undue reliance on any forward-looking statements.

                                                              
                                                              
MSB FINANCIAL CORP                                               
(Dollars in Thousands, except for per share amount)              
                                                              
SELECTED FINANCIAL AND OTHER DATA                                
                                                              
                                                              
Statement of Financial                                         
Condition Data:
                          (Unaudited)                           
                          At December  At June 30,              
                           31,
                          2012         2012                     
                                                              
Total assets               $343,637     $347,347                 
                                                              
Cash and cash equivalents  15,637       33,757                   
                                                              
Loans receivable, net      233,752      240,520                  
                                                              
Securities held to         69,938       50,706                   
maturity
                                                              
Deposits                   282,009      283,798                  
                                                              
Federal Home Loan Bank     20,000       20,000                   
advances
                                                              
Total stockholders' equity 39,034       40,878                   
                                                              
                                                              
                                                              
                                                              
Summary of Operations:                                         
                          (Unaudited)               (Unaudited)
                          For the Six               For the Three
                           Months Ended              Months Ended
                          December 31, December 31, December 31, December 31,
                          2012         2011         2012         2011
                                                              
Total interest income      $6,142       $7,160       $3,000       $3,549
                                                              
Total interest expense     1,416        1,795        689          882
                                                              
Net interest income        4,726        5,365        2,311        2,667
                                                              
Provision for loan losses  3,719        988          2,973        375
                                                              
Net interest income after  1,007        4,377        (662)        2,292
provision for loan losses
                                                              
Noninterest income         321          317          162          173
                                                              
Noninterest expense        4,126        4,119        2,122        2,059
                                                              
Income before taxes        (2,798)      575          (2,622)      406
                                                              
Income tax provision       (1,131)      240          (1,047)      182
                                                              
Net income                 ($1,667)     $335         ($1,575)     $224
                                                              
                                                              
Net income per common                                          
share:
                                                              
basic and diluted          ($0.34)      $0.07        ($0.32)      $0.04
                                                              
Weighted average number of
shares of common stock     4,950,014    5,027,968    4,939,606    5,015,095
outstanding
                                                              
                                                              
Performance Ratios:                                            
                          (Unaudited)               (Unaudited)
                          For the Six               For the Three
                           Months Ended              Months Ended
                          December 31, December 31, December 31, December 31,
                          2012         2011         2012         2011
                                                              
Return on average assets
(ratio of net income to    -0.65%       0.13%        -1.83%       0.26%
average total assets)
                                                              
Return on average equity
(ratio of net income to    (5.43)       1.09         (15.43)      2.19
average equity)
                                                              
Net interest rate spread   2.98         3.28         2.88         3.26
                                                              
Net interest margin on
average interest-earning   3.06         3.38         2.97         3.36
assets
                                                              
Average interest-earning
assets to average          109.18       108.83       110.56       108.90
interest-bearing
liabilities
                                                              
Operating expense ratio
(noninterest expenses to   1.60         1.57         2.47         2.35
average total assets)
                                                              
Efficiency ratio
(noninterest expense
divided by sum of net      81.75        72.49        85.81        72.50
interest income and
noninterest income)
                                                              
                                                              
                          (Unaudited)                           
                          At of For the                         
                           Six Months Ended
                          December 31, December 31,             
                          2012         2011                     
Asset Quality Ratios:                                          
                                                              
Non-performing loans to    6.54%        6.28%                    
total loans
                                                              
Non-performing assets to   4.82         4.49                     
total assets
                                                              
Net charge-offs to average 0.61         0.20                     
loans outstanding
                                                              
Allowance for loan losses  33.71        16.93                    
to non-performing loans
                                                              
Allowance for loan losses  2.20         1.06                     
to total loans
                                                              
                                                              
Capital Ratios:                                                
                                                              
Equity to total assets at  11.36%       11.63%                   
end of period
                                                              
Average equity to average  11.89        11.69                    
assets
                                                              
Number of Offices          5            5                        

CONTACT: MSB Financial Corp.
         Michael Shriner, President & CEO
         908-647-4000
         mshriner@millingtonsb.com
 
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