MSB Financial Corp. Announces Quarterly Results

MSB Financial Corp. Announces Quarterly Results  MILLINGTON, N.J., May 13, 2014 (GLOBE NEWSWIRE) -- MSB Financial Corp. (Nasdaq:MSBF) (the "Company"), the holding company for Millington Savings Bank (the "Bank"), reported net income of $243,000 for the three months ended March 31, 2014 compared to net income of $89,000 for the quarter ended March 31, 2013. Correspondingly, the Company reported net income of $742,000 for the nine months ended March 31, 2014 compared to a net loss of $1.6 million for the nine months ended March 31, 2013. The increase in net income for the nine months ended March 31, 2014 compared to the nine months ended March 31, 2013, was primarily a result of a $3.4 million decrease in the provision for loan losses and to a lesser extent, increases in net interest and non-interest income and a decrease in non-increase expense.  Net interest income for the three and nine months ended March 31, 2014 increased to $2.5 million and $7.2 million, respectively, from $2.3 million and $7.1 million for the three and nine month periods ended March 31, 2013, respectively, with the increases attributable to declines in interest expense primarily due to decreases in the average rate of interest-bearing liabilities and, in the three-month period, a decrease in the average balance of interest-bearing liabilities. For the three months ended March 31, 2014, the average yield on interest earning assets was 3.76%, a decrease of 1 basis point when compared to the same period in 2013. For the nine months ended March 31, 2014, the yield on interest earning assets was 3.73%, a decrease of 18 basis points when compared to the same period in 2013. 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 earning assets portfolio. During the three months ended March 31, 2014, average interest-earning assets increased by $6.7 million when compared to the same period in 2013. For the nine months ended March 31, 2014, average interest earning-assets increased by $10.4 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, 2014 was 0.83%, a decrease of 8 basis points when compared to the same period in 2013. For the nine months ended March 31, 2014, the average rate paid on interest-bearing liabilities was 0.86%, a decrease of 11 basis points when compared to the same period in 2013. The net interest margin increased to 3.04% for the three months ended March 31, 2014, compared to 2.95% for the three months ended March 31, 2013, an increase of 9 basis points. The net interest margin decreased to 2.97% for the nine months ended March 31, 2014, compared to 3.02% for the nine months ended March 31, 2013, a decrease of 5 basis points.  Non-interest income for the quarter ended March 31, 2014 totaled $184,000, an increase of $25,000 or 15.7% compared to the same period in 2013. For the nine months ended March 31, 2014, non-interest income totaled $547,000, an increase of $67,000, or 14.0%, when compared to the same period in 2013. The increase in non-interest income for both the three and nine months ended March 31, 2014 compared to the three and nine months ended March 31, 2013, was primarily attributable to an increase in fees and service charges for the respective periods.  Total non-interest expense decreased by $71,000 or 3.2% to $2.1 million for the three month period ended March 31, 2014 compared to $2.2 million for the three month period ended March 31, 2013. For the nine months ended March 31, 2014, non-interest expense totaled $6.1 million, compared to $6.3 million for the nine months ended March 31, 2013, a decrease of $173,000 or 2.7%. The decrease in non-interest expense for both the three and nine months ended March 31, 2014 compared to the three and nine month months ended March 31, 2013, was primarily the result of decreases in other non-interest expense, salaries and employee benefits, occupancy and equipment, directors' compensation, advertising and professional services, offset by an increase in service bureau fees and FDIC assessment expense for the respective periods.  The loan loss provision for the three and nine months ended March 31, 2014 was $150,000 and $450,000, respectively, compared to $175,000 and $3.9 million for the same periods ended March 31, 2013. The provision for loan losses for the nine months ended March 31, 2013 included an additional provision of $2.0 million deemed necessary to support the Company's planned asset disposition strategy approved by the Company's Board of Directors during the quarter ended December 31, 2012, the goal of which was to rapidly reduce (through strategies such as short sales, cash for keys, deeds in lieu of foreclosure and/or bulk sales) the dollar amount of non-performing loans in the Company's loan portfolio and thereby reduce the costs associated with the foreclosure process. 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 reduction in the level of provision for loan loss primarily reflects lower levels of specific reserves related to non-performing loans individually evaluated for impairment which continued to decrease as a result of the various above mentioned disposition activities. Also, there was a stabilization of the quantitative and qualitative factors during the nine months ended March 31, 2014 compared to upward-trending factors during the nine-month period ended March 31, 2013, thus further reducing the need for additional provisions as of March 31, 2014. The Company experienced $2,000 in net charge-offs (consisting of $2,000 in charge-offs and no recoveries) for the three-month period ended March 2014 compared to $952,000 in net charge-offs (consisting of $952,000 in charge-offs and no recoveries) for the three-month period ended March 31, 2013. In addition, the Company experienced $993,000 in net charge-offs (consisting of $1,013,000 in charge-offs and $20,000 in recoveries) for the nine months ended March 31, 2014 compared to $2,416,000 in net charge-offs (consisting of $2,465,000 in charge-offs and $49,000 in recoveries) for the nine months ended March 31, 2013. The Company had $9.1 million in non-performing loans as of March 31, 2014, compared to $14.1 million as of June 30, 2013. The allowance for loan losses to total loans ratio was 1.57% at March 31, 2014, compared to 1.87% at June 30, 2013, while the allowance for loan losses to non-performing loans ratio increased from 30.30% at June 30, 2013 to 40.82% at March 31, 2014, primarily due to decreases in total non-performing loans at March 31, 2014 compared to June 30, 2013. Non-performing loans to total loans and net charge-offs to average loans outstanding ratios were at 3.84% and 0.43%, respectively, at and for the nine month period ended March 31, 2014 compared to 5.74% and 1.01% at and for the nine month period ended June 30, 2013.  Total assets decreased $7.2 million or 2.0%, from $352.6 million at June 30, 2013 to $345.4 million at March 31, 2014, primarily due to a decrease of $20.0 million in cash and cash equivalents, offset by a $7.8 million increase in loans receivable, net and a $4.3 million increase in securities held to maturity balances. Deposits were $271.8 million at March 31, 2014, down $8.6 million compared to $280.4 million at June 30, 2013. The decrease in deposit balances was primarily due to the Company lowering its offering rates. Total borrowings at March 31, 2014 and June 30, 2013 amounted to $30.0 million. Stockholders' equity was $40.5 million at March 30, 2014 compared to $39.5 at June 30, 2013, an increase of $972,000 or 2.5%. The increase in retained earnings of $742,000, as well as the $126,000 decrease in unallocated common stock held by ESOP and $107,000 increase in paid-in capital accounted for the major changes in the Company's shareholder's equity as of March 31, 2014 compared to the period ended June 30, 2013.  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,                                            2014         2013                                                                                    Total assets                      $345,366     $352,592                                                                                Cash and cash equivalents         4,731        24,755                                                                                  Loans receivable, net             231,063      223,256                                                                                 Securities held to maturity       85,247       80,912                                                                                  Deposits                          271,829      280,467                                                                                 Federal Home Loan Bank advances   30,000       30,000                                                                                  Total stockholders' equity        40,485       39,513                                                                                                                                                    Summary of Operations:                                                                              (Unaudited)              (Unaudited)                                  For the Nine            For the Three                                  Months Ended            Months Ended                                  March 31,    March 31,   March 31, March 31,                                  2014         2013        2014      2013                                                                   Total interest income             $9,008       $9,127      $3,038    $2,985                                                                   Total interest expense            1,834        2,064       585       648                                                                   Net interest income               7,174        7,063       2,453     2,337                                                                   Provision for loan losses         450          3,894       150       175                                                                   Net interest income after         6,724        3,169       2,303     2,162 provision for loan losses                                                                   Non-interest income               547          480         184       159                                                                   Non-interest expense              6,141        6,314       2,117     2,188                                                                   Income before taxes               1,130        (2,665)     370       133                                                                   Income tax (benefit) expense      388          (1,087)     127       44                                                                   Net (loss) income                 $742         ($1,578)    $243      $89                                                                                                                                     Net income per common share:                                                                                                         basic and diluted                 $0.15        ($0.32)     $0.05     $0.02                                                                   Weighted average number of shares 4,924,020    4,939,010   4,928,236 4,916,418 of 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,                                  2014         2013        2014      2013                                                                   Return on average assets (ratio of net income to average total    0.29%        -0.61%      0.28%     0.10% assets)                                                                   Return on average equity (ratio   2.47         (5.22)      2.41      0.91 of net income to average equity)                                                                   Net interest rate spread          2.87         2.94        2.93      2.86                                                                   Net interest margin on average    2.97         3.02        3.04      2.95 interest-earning assets                                                                   Average interest-earning assets to average interest-bearing       113.49       109.70      115.18    110.75 liabilities                                                                   Operating expense ratio (noninterest expenses to average  2.36         2.44        2.45      2.54 total assets)                                                                   Efficiency ratio (noninterest expense divided by sum of net     79.54        83.71       80.28     87.66 interest income and noninterest income)                                                                                                                                                                      (Unaudited)                                                        At or For the                                                      Nine Months Ended,                                                 March 31,    March 31,                                              2014         2013                  Asset Quality Ratios:                                                                                                                Non-performing loans to total     3.84%        5.74%                 loans                                                                   Non-performing assets to total    2.99         4.29                  assets                                                                   Net charge-offs to average loans  0.43         1.01                  outstanding                                                                   Allowance for loan losses to      40.82        33.49                 non-performing loans                                                                   Allowance for loan losses to      1.57         1.92                  total loans                                                                                                                                     Capital Ratios:                                                                                                                      Equity to total assets at end of  11.72%       11.08%                period                                                                   Average equity to average assets  11.55        11.71                                                                                   Number of Offices                 5            5                      CONTACT: MSB Financial Corp.          Michael Shriner, President & CEO          908-647-4000          mshriner@millingtonsb.com  
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