Emclaire Financial Corp (NASDAQ:EMCF), the parent holding company
of The Farmers National Bank of Emlenton, reported consolidated net
income available to common stockholders of $2.2 million, or
$0.80 per diluted common share, for the three months ended
September 30, 2019, an increase of $1.0 million, or 86.7%,
from $1.2 million, or $0.51 per diluted common share,
reported for the same period in 2018. Net income
available to common stockholders for the nine-month period ended
September 30, 2019 was $6.3 million, or $2.32 per
diluted common share, an increase of $2.4 million, or 60.1%, from
$3.9 million, or $1.72 per diluted common share, for the
same period in 2018. Earnings growth for the quarterly and
year-to-date periods was largely driven by the Corporation's
acquisition of Community First Bancorp, Inc (Community First) in
October 2018.
The increase in net income for both periods
compared to the same periods in 2018 resulted from
increases in net interest income and noninterest income and a
decrease in the provision for loan losses, partially offset by
increases in noninterest expense, the provision for income taxes
and preferred stock dividends. The Corporation realized an
annualized return on average assets of 0.93% and an annualized
return on average common equity of 10.63% for the quarter ended
September 30, 2019, compared to 0.60% and 7.68%, respectively,
for the same period in 2018.
William C. Marsh, Chairman, President and Chief
Executive Officer of the Corporation and the Bank, noted, “The
Board of Directors, management and I are extremely pleased with
the results for the quarter and first nine months of
2019. The considerable strategic investments we have made
to grow our franchise through denovo offices and whole-bank
acquisitions continue to deliver strong financial
performance, including significant earnings growth,
and provide a solid foundation for continued profitable
expansion and sound shareholder returns.”
OPERATING RESULTS OVERVIEW
Net income available to common stockholders
increased $1.0 million, or 86.7%, to $2.2 million, or
$0.80 per diluted common share, for the three months ended
September 30, 2019, compared to net income of
$1.2 million, or $0.51 per diluted common share, for the
same period in 2018. The increase resulted
from increases in net interest income and noninterest income
of $875,000 and $147,000, respectively, and a $445,000
decrease in the provision for loan losses, partially offset by
increases in the provision for income taxes and noninterest expense
of $257,000 and $203,000, respectively.
Net interest income increased $875,000, or
14.3%, to $7.0 million for the three months ended September
30, 2019 from $6.1 million for the same period in 2018.
The increase in net interest income resulted from an increase in
interest income of $1.7 million, or 23.1%, as a result of a
$100.9 million increase in the average balance of loans
outstanding. Partially offsetting the increase in interest income,
interest expense increased $846,000, or 63.9%, as the Corporation's
average balance of interest-bearing deposits and borrowed funds
increased $85.4 million and $14.0 million,
respectively. The increases in the Corporation's loans and
interest-bearing deposit balances resulted primarily from the
Corporation's acquisition of Community First, which added
approximately $111.6 million in loans and $106.1 million in total
deposits to the Corporation.
The provision for loan losses decreased $445,000
to a recovery of $145,000 for the three months ended
September 30, 2019 from an expense of $300,000 for the
same period in 2018. This was primarily due to a decrease in
loan portfolio balances and a $4.7 million improvement in
criticized and classified loans during the third quarter of
2019.
Noninterest income increased $147,000, or 13.8%,
to $1.2 million for the three months ended
September 30, 2019 from $1.1 million in the same
period in 2018 due to increases in gains on the sale of loans,
gains on the sale of securities and other income of $45,000,
$42,000 and $66,000, respectively. The increase in other
income was primarily driven by increases in ATM fees.
Noninterest expense increased $203,000, or 3.7%,
to $5.8 million for the three months ended
September 30, 2019 from $5.6 million in the same
period in 2018. The increase primarily related to increases
in compensation and benefits expense, other noninterest
expense, occupancy and equipment expense and
professional fees of $668,000, $229,000, $74,000 and $35,000,
respectively. The increases related to costs associated with
the new banking offices acquired in the Community First
acquisition and normal salary and benefit and operating
expense increases. Partially offsetting these increases,
acquisition costs, FDIC insurance expense and intangible asset
amortization decreased $677,000, $103,000 and $23,000,
respectively.
The provision for income taxes increased
$257,000 to $444,000 for the three months ended
September 30, 2019 from $187,000 in the same period in
2018 as a result of the increase in net income before
provision for income taxes.
CONSOLIDATED YEAR-TO-DATE OPERATING RESULTS
OVERVIEW
Net income available to common stockholders
increased $2.4 million, or 60.1%, to $6.3 million, or
$2.32 per diluted common share, for the nine months ended
September 30, 2019, compared to net income of
$3.9 million, or $1.72 per diluted common share, for the
same period in 2018. The increase resulted
from increases in net interest income and noninterest income
of $3.1 million and $388,000, respectively, and a $675,000
decrease in the provision for loan losses, partially offset by
increases in noninterest expense, the provision for income taxes
and preferred stock dividends of $1.1 million, $637,000 and
$91,000, respectively.
Net interest income increased $3.1 million,
or 17.3%, to $21.3 million for the nine months ended
September 30, 2019 from $18.2 million for the same
period in 2018. The increase in net interest income resulted from
an increase in interest income of $5.2 million, or 23.9%, as a
result of a $111.6 million increase in the average
balance of loans outstanding. Partially offsetting the increase in
interest income, interest expense increased $2.1 million, or
56.4%, as the Corporation's average balance of interest-bearing
deposits and borrowed funds increased $75.1 million and $16.1
million, respectively. The increases in the Corporation's
loans and interest-bearing deposit balances resulted primarily from
the aforementioned fourth quarter 2018 acquisition of
Community First.
The provision for loan losses decreased
$675,000, or 68.9%, to $305,000 for the nine months ended
September 30, 2019 from $980,000 for the same period in
2018. The decrease in the provision for loan losses recorded
for the nine months ended September 30, 2019 was
primarily due to decreases in net loan portfolio balances, a $2.1
million improvement in criticized and classified loans during
the nine month period in 2019 and lower net charge-offs
compared to the same period in 2018.
Noninterest income increased $388,000, or 12.9%,
to $3.4 million for the nine months ended
September 30, 2019 from $3.0 million in the same
period in 2018. Fees and service charges increased
$194,000, primarily associated with the operation of the new
full-service banking offices and general increases
in overdraft fee income. Additionally, gains on the
sale of loans, gains on the sale of securities and other
income increased $69,000, $52,000 and $70,000, respectively.
Noninterest expense increased $1.1 million, or
7.2%, to $16.6 million for the nine months ended
September 30, 2019 from $15.5 million in the same
period in 2018. The increase primarily related to increases
in compensation and benefits expense, other noninterest
expense and occupancy and equipment expense of $1.4
million, $718,000 and $272,000, respectively. The
increases related to costs associated with the aforementioned
new banking offices and normal salary and benefit and
operating expense increases. Partially offsetting these
increases, acquisition costs, FDIC insurance expense, intangible
asset amortization and professional fees decreased $1.0 million,
$124,000, $69,000 and $48,000, respectively.
The provision for income taxes increased
$637,000, or 86.7%, to $1.4 million for the
nine months ended September 30, 2019 from $735,000
in the same period in 2018 as a result of the increase in net
income before provision for income taxes.
CONSOLIDATED BALANCE SHEET & ASSET QUALITY
OVERVIEW
Total assets increased $42.6 million, or
4.7%, to $941.4 million at September 30,
2019 from $898.9 million at December 31, 2018. The
increase in assets was driven primarily by increases in
cash and cash equivalents, securities and interest-earning time
deposits of $38.3 million, $20.2 million and
$3.5 million, respectively, partially offset by a decrease
in net loans receivable of $20.2 million. Liabilities
increased $36.6 million, or 4.5%, to $855.5 million at
September 30, 2019 from $818.9 million at December
31, 2018 due to an increase in customer deposits of
$46.5 million, partially offset by a decrease in borrowed
funds of $11.6 million.
Nonperforming assets increased
$1.7 million to $5.5 million, or 0.58% of total
assets at September 30, 2019, compared to $3.7 million,
or 0.42% of total assets at December 31, 2018. This increase
was primarily the result of downgrading one $2.4 million commercial
real estate loan to non-accrual status during the period.
Stockholders’ equity increased
$5.9 million, or 7.4%, to $85.9 million at
September 30, 2019 from $80.0 million at December 31,
2018 primarily due to a $3.8 million increase
in retained earnings as a result of $6.3 million of net
income available to common stockholders, partially offset by
$2.4 million of common dividends paid. Additionally,
accumulated other comprehensive income increased
$1.9 million. The Corporation remains well capitalized
and is well positioned for continued growth with total
stockholders’ equity at 9.1% of total assets. Book value per
common share was $30.28 at September 30, 2019, compared
to $28.09 at December 31, 2018.
This news release may contain forward-looking
statements as defined in the Private Securities Litigation Reform
Act of 1995. Forward-looking statements may contain words such as
“believe”, “expect”, “anticipate”, “estimate”, “should”, “may”,
“can”, “will”, “outlook”, “project”, “appears” or similar
expressions. Such forward-looking statements are subject to
risk and uncertainties which could cause actual results to differ
materially from those currently anticipated due to a number of
factors. Such factors include, but are not limited to, changes in
interest rates which could affect net interest margins and net
interest income, the possibility that increased demand or prices
for the Corporation's financial services and products may not
occur, changing economic and competitive conditions, technological
and regulatory developments, and other risks and uncertainties,
including those detailed in the Corporation's filings with the
Securities and Exchange Commission. The Corporation does not
undertake, and specifically disclaims any obligation to update any
forward-looking statements to reflect occurrences or unanticipated
events or circumstances after the date of such statements.
INVESTOR RELATIONS CONTACT:William C. MarshChairman, President
andChief Executive OfficerPhone: (844) 800-2193Email:
investor.relations@farmersnb.com
EMCLAIRE FINANCIAL CORP |
Consolidated Financial Highlights |
(Unaudited - Dollar amounts in thousands, except share data) |
|
CONSOLIDATED OPERATING
RESULTS DATA: |
|
Three month period |
|
|
Nine month period |
|
|
|
ended September 30, |
|
|
ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
$ |
9,187 |
|
|
$ |
7,466 |
|
|
$ |
27,134 |
|
|
$ |
21,894 |
|
Interest expense |
|
|
2,171 |
|
|
|
1,325 |
|
|
|
5,814 |
|
|
|
3,717 |
|
Net interest income |
|
|
7,016 |
|
|
|
6,141 |
|
|
|
21,320 |
|
|
|
18,177 |
|
Provision for (recovery of)
loan losses |
|
|
(145 |
) |
|
|
300 |
|
|
|
305 |
|
|
|
980 |
|
Noninterest income |
|
|
1,209 |
|
|
|
1,062 |
|
|
|
3,396 |
|
|
|
3,009 |
|
Noninterest expense |
|
|
5,758 |
|
|
|
5,555 |
|
|
|
16,648 |
|
|
|
15,536 |
|
Income before provision for income taxes |
|
|
2,612 |
|
|
|
1,348 |
|
|
|
7,763 |
|
|
|
4,670 |
|
Provision for income
taxes |
|
|
444 |
|
|
|
187 |
|
|
|
1,372 |
|
|
|
735 |
|
Net income |
|
|
2,168 |
|
|
|
1,161 |
|
|
|
6,391 |
|
|
|
3,935 |
|
Preferred stock dividends |
|
|
- |
|
|
|
- |
|
|
|
91 |
|
|
|
- |
|
Net income available to common stockholders |
|
$ |
2,168 |
|
|
$ |
1,161 |
|
|
$ |
6,300 |
|
|
$ |
3,935 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings per common
share |
|
$ |
0.80 |
|
|
$ |
0.51 |
|
|
$ |
2.33 |
|
|
$ |
1.73 |
|
Diluted earnings per common
share |
|
$ |
0.80 |
|
|
$ |
0.51 |
|
|
$ |
2.32 |
|
|
$ |
1.72 |
|
Dividends per common
share |
|
$ |
0.29 |
|
|
$ |
0.28 |
|
|
$ |
0.87 |
|
|
$ |
0.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return on average assets
(1) |
|
|
0.93 |
% |
|
|
0.60 |
% |
|
|
0.95 |
% |
|
|
0.69 |
% |
Return on average equity
(1) |
|
|
10.11 |
% |
|
|
7.68 |
% |
|
|
10.31 |
% |
|
|
8.87 |
% |
Return on average common
equity (1) |
|
|
10.63 |
% |
|
|
7.68 |
% |
|
|
10.71 |
% |
|
|
8.87 |
% |
Yield on average
interest-earning assets |
|
|
4.28 |
% |
|
|
4.12 |
% |
|
|
4.36 |
% |
|
|
4.13 |
% |
Cost of average
interest-bearing liabilities |
|
|
1.29 |
% |
|
|
0.92 |
% |
|
|
1.18 |
% |
|
|
0.88 |
% |
Cost of funds |
|
|
1.05 |
% |
|
|
0.75 |
% |
|
|
0.96 |
% |
|
|
0.72 |
% |
Net interest margin |
|
|
3.27 |
% |
|
|
3.39 |
% |
|
|
3.43 |
% |
|
|
3.43 |
% |
Efficiency ratio |
|
|
69.44 |
% |
|
|
75.63 |
% |
|
|
66.54 |
% |
|
|
71.82 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Returns are
annualized for the periods reported. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED BALANCE
SHEET DATA: |
|
As of |
|
|
As of |
|
|
|
9/30/2019 |
|
|
12/31/2018 |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
941,430 |
|
|
$ |
898,875 |
|
Cash and equivalents |
|
|
49,302 |
|
|
|
10,955 |
|
Securities |
|
|
117,922 |
|
|
|
97,725 |
|
Loans, net |
|
|
688,511 |
|
|
|
708,664 |
|
Deposits |
|
|
808,025 |
|
|
|
761,546 |
|
Borrowed funds |
|
|
33,800 |
|
|
|
45,350 |
|
Common stockholders'
equity |
|
|
81,725 |
|
|
|
75,802 |
|
Stockholders' equity |
|
|
85,931 |
|
|
|
80,008 |
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
|
$ |
30.28 |
|
|
$ |
28.09 |
|
|
|
|
|
|
|
|
|
|
Net loans to deposits |
|
|
85.21 |
% |
|
|
93.06 |
% |
Allowance for loan losses to
total loans |
|
|
0.94 |
% |
|
|
0.91 |
% |
Nonperforming assets to total
assets |
|
|
0.58 |
% |
|
|
0.42 |
% |
Stockholders' equity to total
assets |
|
|
9.13 |
% |
|
|
8.90 |
% |
Shares of common stock
outstanding |
|
|
2,698,712 |
|
|
|
2,698,712 |
|
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