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MSB Financial Corp. Announces Quarterly Results



MSB Financial Corp. Announces Quarterly Results

MILLINGTON, N.J., May 9, 2013 (GLOBE NEWSWIRE) -- MSB Financial Corp.
(Nasdaq:MSBF) (the "Company"), the holding company for Millington Savings Bank
(the "Bank"), reported net income of $89,000 for the three months ended March
31, 2013 compared to net income of $194,000 for the quarter ended March 31,
2012. Correspondingly, the Company reported a net loss of $1.6 million for the
nine months ended March 31, 2013 compared to net income of $529,000 for the
nine months ended March 31, 2012. The net loss for the nine months ended March
31, 2013 primarily was the result of a $2.0 million additional provision that
was made to the allowance for loan losses as of December 31, 2012.

Net interest income for the three and nine months ended March 31, 2013
decreased to $2.3 million and $7.1 million, respectively, from $2.6 million
and $7.9 million for the three and nine month periods ended March 31, 2012,
with the decreases attributable to declines in interest income primarily due
to decreases in average yield. For the three months ended March 31, 2013, the
average yield on interest earning assets was 3.77%, a decrease of 51 basis
points when compared to the same period in 2012. For the nine months ended
March 31, 2012, the yield on interest earning assets was 3.91%, a decrease of
53 basis points when compared to the same period in 2012. The decline in
yields on average earning assets, for both the three and nine 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 March
31, 2013, average interest earning assets increased by $2.0 million when
compared to the same period in 2012. For the nine months ended March 31, 2013,
average interest earning assets declined by $4.9 million when compared to the
same period in the prior fiscal year.

The average rate paid on interest-bearing liabilities for the three months
ended March 31, 2013 was 0.91%, a decrease of 19 basis points when compared to
the same period in 2012. For the nine months ended March 31, 2013, the average
rate paid on interest-bearing liabilities was 0.97%, a decrease of 22 basis
points when compared to the same period in 2012. The net interest margin
decreased to 2.95% for the three months ended March 31, 2013, compared to
3.28% for the three months ended March 31, 2012, a decrease of 33 basis
points. The net interest margin decreased to 3.02% for the nine months ended
March 31, 2013, compared to 3.35% for the nine months ended March 31, 2012, a
decrease of 33 basis points.

Non-interest income for the quarter ended March 31, 2013 totaled $159,000, a
decrease of $1,000 or 0.6% compared to the same period in 2012. For the nine
months ended March 31, 2013, non-interest income totaled $480,000, an increase
of $3,000, or 0.6%, when compared to the same period in 2012. The decrease in
non-interest income for the three months ended March 31, 2013 compared to the
three months ended March 31, 2012, was attributed a decrease in fees and
service charges, offset by an increase in other non-interest income and income
from bank owned life insurance. In addition, the Company did not have an
unrealized gain on its trading security portfolio during the three month
period ended March 31, 2013, compared to a $9,000 unrealized gain recorded for
the three months ended March 31, 2012. The increase for the nine months ended
March 31, 2013, compared to the nine months ended March 31, 2012, was
attributed to an increase in income from bank owned life insurance and an
unrealized gain in the trading security portfolio, offset by decreases in fees
and service charges and other non-interest income during the period. The
decrease in fees and service charges for the nine month period ended March 31,
2013, was in part, due to the Company waiving its fees for a period of time
following Hurricane Sandy.

Total non-interest expense increased by $226,000 or 11.5% to $2.2 million for
the three month period ended March 31, 2013 compared to $2.0 million for the
three month period ended March 31, 2012. For the nine months ended March 31,
2013, non-interest expense totaled $6.3 million, compared to $6.1 million for
the nine months ended March 31, 2012, an increase of $233,000 or 3.8%. For the
three month period ended March 31, 2013 compared to the three month period
ended March 31, 2012, other non-interest expense increased by $117,000, salary
and employee benefits by $48,000, professional services by $32,000, and
service bureau fees by $22,000, as did occupancy and equipment and advertising
expenses which increased by $13,000 and $4,000, respectively, while director's
compensation decreased by $9,000, as did FDIC assessment expense which
decreased by $1,000. For the nine months ended March 31, 2013, other
non-interest expense increased by $155,000, service bureau fees by $72,000, as
did professional services by $55,000, salaries and employee benefits by
$27,000 and directors' compensation by $16,000, while occupancy and equipment,
advertising and FDIC assessment expenses decreased by $69,000, $20,000 and
$3,000, respectively, compared to the nine month period ended March 31, 2012.
The increase in other non-interest expense for both the three and nine month
periods ended March 31, 2013, was primarily attributed to the increase in
other real estate expense associated with the other real estate owned
properties the Company manages.

The loan loss provision for the three and nine months ended March 31, 2013 was
$175,000 and $3.9 million, respectively, compared to $471,000 and $1.5 million
for the same periods ended March 31, 2012. 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 $952,000 in charge-offs  and no recoveries for the
three month period ended March 31, 2013 compared to $260,000 in charge-offs
and no recoveries during the three month period ended March 31, 2012. In
addition, the Company experienced $2.4 million in net charge-offs (consisting
of $2.5 million in charge-offs and $49,000 in recoveries) for the nine month
period ended March 31, 2013 compared to $755,000 in charge-offs and no
recoveries for the nine months ended March 31, 2012. The Company's Board of
Directors approved an asset disposition strategy during the quarter ended
December 31, 2012 in an attempt to rapidly reduce the dollar amount of
non-performing loans in the Company's loan portfolio. As part of the
aforementioned strategy, the Company performed an analysis to identify loans
to be included in the disposition strategy, which would include short sales,
cash for keys, deeds in lieu of foreclosure and/or the bulk sale of loans. The
analysis provided management with an estimate of losses to be incurred as a
result of the asset dispositions. The Company felt that these losses were both
probable and estimable and, accordingly, recorded an additional $2.0 provision
for the quarter ended December 31, 2012. As of March 31, 2013, the Company has
utilized $326,000 of this additional provision in implementing this
strategy. 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 $13.6 million in non-performing
loans as of March 31, 2013, compared to $16.7 million as of March 31, 2012 and
$15.8 million as of December 31, 2012. The allowance for loan losses to total
loans ratio was 1.92% at March 31, 2013, compared to 1.15% at March 31, 2012,
while the allowance for loan losses to non-performing loans ratio increased
from 17.22% at March 31, 2012 to 33.49% at March 31, 2013, primarily due to
the increase in the allowance for loan losses during the first nine months of
this fiscal year. Non-performing loans to total loans and net charge-offs to
average loans outstanding ratios were 5.74% and 1.01%, respectively, at and
for the nine months ended March 31, 2013 compared to 6.70% and 0.10% at and
for the nine months ended March 31, 2012.

Total assets increased to $353.7 million at March 31, 2013, from $347.3
million at June 30, 2012, primarily due to an increase of $29.2 million in
securities held to maturity and a $1.6 million increase in real estate owned,
offset by a decrease of $15.4 million in cash and cash equivalents and a $10.5
million decrease in loans receivable, net. Deposits were $281.9 million at
March 31, 2013, down $1.9 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 $30.0 million at March 31,
2013 compared to $20.0 million at June 30, 2012. Stockholders' equity was
$39.2 million at March 31, 2013, compared to $40.9 million at June 30,
2012. The decrease in shareholders' equity was primarily due a decrease in
earnings for the nine months ended March 31, 2013, 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 March 31, At June 30,
                                2013         2012
                                              
Total assets                    $353,704     $347,347
                                              
Cash and cash equivalents       18,347       33,757
                                              
Loans receivable, net           230,049      240,520
                                              
Securities held to maturity     79,945       50,706
                                              
Deposits                        281,876      283,798
                                              
Federal Home Loan Bank advances 30,000       20,000
                                              
Total stockholders' equity      39,179       40,878

                                                                      
Summary of Operations:                                                
                                       (Unaudited)         (Unaudited)
                                        For the Nine        For the Three
                                        Months Ended        Months Ended
                                       March 31, March 31, March 31, March 31,
                                       2013      2012      2013      2012
                                                                      
Total interest income                  $9,127    $10,530   $2,985    $3,370
                                                                      
Total interest expense                 2,064     2,582     648       787
                                                                      
Net interest income                    7,063     7,948     2,337     2,583
                                                                      
Provision for loan losses              3,894     1,459     175       471
                                                                      
Net interest income after provision    3,169     6,489     2,162     2,112
for loan losses
                                                                      
Non-interest income                    480       477       159       160
                                                                      
Non-interest expense                   6,314     6,081     2,188     1,962
                                                                      
Income before taxes                    (2,665)   885       133       310
                                                                      
Income tax (benefit) expense           (1,087)   356       44        116
                                                                      
Net (loss) income                      ($1,578)  $529      $89       $194
                                                                      
                                                                      
Net income per common share:                                          
                                                                      
basic and diluted                      ($0.32)   $0.11     $0.02     $0.04
                                                                      
Weighted average number of shares of   4,939,010 5,009,710 4,916,418 4,972,748
common stock outstanding
                                                                      
 Performance Ratios:                                                  
                                                                      
                                       (Unaudited)         (Unaudited)
                                        For the Nine        For the Three
                                        Months Ended        Months Ended
                                       March 31, March 31, March 31, March 31,
                                       2013      2012      2013      2012
                                                                      
Return on average assets (ratio of net -0.61%    0.20%     0.10%     0.23%
income to average total assets)
                                                                      
Return on average equity (ratio of net (5.22)    1.72      0.91      1.89
income to average equity)
                                                                      
Net interest rate spread               2.94      3.25      2.86      3.18
                                                                      
Net interest margin on average         3.02      3.35      2.95      3.28
interest-earning assets
                                                                      
Average interest-earning assets to     109.70    109.19    110.75    109.94
average interest-bearing liabilities
                                                                      
Operating expense ratio (noninterest   2.44      2.33      2.54      2.28
expenses to average total assets)
                                                                      
Efficiency ratio (noninterest expense
divided by sum of net interest income  83.71     72.18     87.66     71.53
and noninterest income)

                                                   
                                                   (Unaudited)
                                                   At or For the
                                                   Nine Months Ended,
                                                  March 31, March 31,
                                                  2013      2012
Asset Quality Ratios:                                        
                                                             
Non-performing loans to total loans               5.74%     6.70%
                                                             
Non-performing assets to total assets             4.29      4.90
                                                             
Net charge-offs to average loans outstanding      1.01      0.10
                                                             
Allowance for loan losses to non-performing loans 33.49     17.22
                                                             
Allowance for loan losses to total loans          1.92      1.15
                                                             
                                                             
Capital Ratios:                                              
                                                             
Equity to total assets at end of period           11.08%    11.78%
                                                             
Average equity to average assets                  11.71     11.76
                                                             
                                                             
Number of Offices                                 5         5

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