Frederick County Bancorp, Inc. (the “Company”) (OTC PINK: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended December 31, 2015, the Company recorded net income of $891 thousand and diluted earnings per share of $0.57, as compared to net income of $352 thousand and diluted earnings per share of $0.23 recorded for the same quarter of 2014. The Company earned $2.1 million, with diluted earnings per share of $1.36 for the year ended on December 31, 2015, as compared to $1.7 million in earnings and diluted earnings per share of $1.12 for the same period in 2014.

The increase in quarterly earnings was due primarily to increases in net interest income in the amount of $96 thousand and in total noninterest income in the amount of $438 thousand, and a decrease in total noninterest expense of $157 thousand in the fourth quarter of 2015 as compared to the fourth quarter of 2014. In addition, the Company recorded a negative provision for loan losses in the amount of $178 thousand in 2015, while no provision was taken in 2014. The increase in total noninterest income was due primarily to an increase in gain on sale of loans to $370 thousand in the fourth quarter of 2015 as compared to $83 thousand in the fourth quarter of 2014 and a gain for $131 thousand on the sale of foreclosed properties in the fourth quarter of 2015 as compared to a loss of $37 thousand in the fourth quarter of 2014.

The increase in year-to-date earnings was due primarily to an increase in net interest income to $11.6 million for the year 2015 as compared to $11.3 million in the same period of 2014, and to an increase in total noninterest income to $1.9 million for the year 2015 as compared to $1.2 million for the same period in 2014. In addition, the Company recorded a negative provision for loan losses in the amount of $178 thousand in 2015, while no provision was taken in 2014. The increase in total noninterest income was due primarily to securities gains of $98 thousand in 2015 as compared to none in 2014, an increase in gain on sale of loans to $729 thousand in 2015 as compared to $285 thousand in 2014, and a gain for $131 thousand on the sale of foreclosed properties in 2015 as compared to a loss of $37 thousand in 2014. These increases were offset by an increase in noninterest expense to $10.6 million in 2015 from $10.0 million in 2014.

The ratio of the allowance for loan losses to total loans stood at 1.10% and 1.28% as of December 31, 2015 and 2014, respectively. Nonperforming assets stood at $5.9 million and $5.6 million at December 31, 2015 and 2014, respectively. The corresponding nonperforming assets to total assets ratios were 1.68% and 1.63% as of December 31, 2015 and 2014, respectively.

The Company also reported that, as of December 31, 2015, assets stood at $350.5 million, with total deposits of $295.6 million and gross loans of $278.9 million, representing increases of 2.2%, 3.7%, and 6.3%, respectively, compared to December 31, 2014.

Frederick County Bank is headquartered in Frederick, Maryland, and conducts full service commercial banking services through five bank centers located in Frederick County, Maryland.

       
December 31, December 31,
2015   2014
(dollars in thousands) (unaudited) (unaudited)
Total assets $ 350,542 343,116
Loans 278,950 262,525
Deposits 295,632 284,985
Shareholders’ equity 29,556 27,914
 
Nonperforming assets:
Nonaccrual loans $ 2,160 $ 3,684
Accruing troubled debt restructurings 3,031 1,179
Loans 90 days or more past due and still accruing -- --
Foreclosed properties   706       729  
Total nonperforming assets $ 5,897     $ 5,592  
 
For the Three Months Ended For the Year Ended
December 31, December 31, December 31, December 31,
2015   2014 2015   2014
(dollars in thousands, except for per share data) (unaudited) (unaudited) (unaudited) (unaudited)
SUMMARY OF OPERATING RESULTS:
Net income $ 891 $ 352 $ 2,104 $ 1,714
Total comprehensive income 839 489 2,029 2,283
 
Charge-offs $ -- $ -- $ 362 $ 186
(Recoveries)   (189 )     (69 )   (242 )     (125 )
Net charge-offs $ 53     $ 88   $ 309     $ 130  
 
PER COMMON SHARE DATA:
Basic earnings per share $ 0.60 $ 0.24 $ 1.43 $ 1.16
Diluted earnings per share $ 0.57 $ 0.23 $ 1.36 $ 1.12
Basic weighted average number of shares outstanding 1,475,929 1,475,034 1,475,569 1,474,026
Diluted weighted average number of shares outstanding 1,552,907 1,532,913 1,543,502 1,528,678
Common shares outstanding 1,475,929 1,475,154 1,475,929 1,475,154
Dividends declared $ 0.07 $ 0.07 $ 0.28 $ 0.28
Book value per share $ 20.03 $ 18.92 $ 20.03 $ 18.92
 
SELECTED UNAUDITED FINANCIAL RATIOS:
Return on average assets 1.00 % 0.42 % 0.60 % 0.52 %
Return on average equity 12.17 % 5.04 % 7.31 % 6.28 %
Allowance for loan losses to total loans 1.10 % 1.28 % 1.10 % 1.28 %
Nonperforming assets to total assets 1.68 % 1.63 % 1.68 % 1.63 %
Ratio of net (recoveries) charge-offs to average loans (0.07 )% (0.03 )% 0.05 % 0.02 %
Common Equity Tier 1 to risk-weighted assets 9.63 % 9.76 % 9.63 % 9.76 %
Tier 1 capital to risk-weighted assets 11.58 % 11.85 % 11.58 % 11.85 %
Total capital to risk-weighted assets 12.57 % 13.02 % 12.57 % 13.02 %
Tier 1 capital to average assets 9.99 % 10.05 % 9.99 % 10.05 %
Average equity to average assets 8.21 % 8.28 % 8.24 % 8.22 %
Net interest margin 3.56 % 3.64 % 3.54 % 3.67 %
 
     
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, December 31,
      2015   2014
      (unaudited)   (unaudited)
(dollars in thousands)          
ASSETS
Cash and due from banks $ 2,683 $ 2,402
Federal funds sold 1,083 21
Interest-bearing deposits in other banks       26,482       37,365  
Cash and cash equivalents       30,248       39,788  
Investment securities available-for-sale at fair value 24,363 24,190
Restricted stock 1,629 1,805
Loans 278,950 262,525
Less: Allowance for loan losses       (3,064 )   (3,362 )
Net loans       275,886       259,163  
Bank premises and equipment 6,445 6,373
Bank owned life insurance 8,511 8,280
Foreclosed properties 706 729
Other assets       2,754       2,788  
Total assets     $ 350,542     $ 343,116  
 
LIABILITIES AND SHAREHOLDERS' EQUITY          
           
Liabilities
Deposits
Noninterest-bearing deposits $ 67,816 $ 63,705
Interest-bearing deposits       227,816       221,280  
Total deposits 295,632 284,985
Short-term borrowings 3,300 3,300
FHLB advances 15,000 20,000
Junior subordinated debentures 6,186 6,186
Accrued interest and other liabilities       868       731  
Total liabilities       320,986       315,202  
 
Shareholders' Equity
Common stock, per share par value $0.01;

10,000,000 shares authorized; 1,475,929 and 1,475,154 shares issued and outstanding, respectively

15 15
Additional paid-in capital 15,184 15,158
Retained earnings 14,449 12,758
Accumulated other comprehensive loss       (92 )     (17 )
Total shareholders' equity       29,556       27,914  
Total liabilities and shareholders' equity     $ 350,542     $ 343,116  
 
       
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Income (Unaudited)
   

For the Three Months Ended

  

For the Year Ended

(dollars in thousands, except per share amounts)   December 31,

2015

   December 31,

2014

   December 31,

2015

   December 31,

2014

Interest income
Interest and fees on loans $ 3,206 $ 3,118 $ 12,471 $ 12,316
Interest and dividends on investment securities:
Interest – taxable 79 84 320 349
Interest – tax exempt 46 51 192 204
Dividends 21 23 97 80
Other interest income     25       20     92       73  
Total interest income     3,377       3,296     13,172       13,022  
Interest expense
Interest on deposits 285 272 1,066 1,144
Interest on short-term borrowings 26 24 103 83
Interest on FHLB advances 55 87 311 339
Interest on junior subordinated debentures     32       30     121       117  
Total interest expense     398       413     1,601       1,683  
Net interest income 2,979 2,883 11,571 11,339
Provision for loan losses     (178 )     --     (178 )     --  
Net interest income after provision for loan losses     3,157       2,883     11,749       11,339  
Noninterest income
Securities gains -- -- 98 --
Gain on sale of loans 370 83 729 285
Gain (loss) on sale of foreclosed properties 131 -- 131 (37 )
Bank owned life insurance income 57 60 231 240
Service fees 96 84 366 336
Other operating income     102       91     371       341  
Total noninterest income     756       318     1,926       1,165  
Noninterest expense
Salaries and employee benefits 1,409 1,477 6,038 5,635
Occupancy and equipment expenses 483 386 1,791 1,530
Other operating expenses     657       843     2,747       2,843  
Total noninterest expense     2,549       2,706     10,576       10,008  
Income before provision for income taxes 1,364 495 3,099 2,496
Provision for income taxes     473       143     995       782  
Net income   $ 891     $ 352   $ 2,104     $ 1,714  
Basic earnings per share   $ 0. 60     $ 0.24   $ 1.43     $ 1.16  
Diluted earnings per share   $ 0.57     $ 0.23   $ 1.36     $ 1.12  
Basic weighted average number of shares outstanding     1,475,929       1,475,034     1,475,569       1,474,026  
Diluted weighted average number of shares outstanding     1,552,907       1,532,913     1,543,502       1,528,678  
Dividends declared per share   $ 0.07     $ 0.07   $ 0.28     $ 0.28  
 
   
Frederick County Bancorp, Inc. and Subsidiaries
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Three Months Ended
(dollars in thousands)   December 31,

2015

  

December 31,
2014

Net income $ 891 $ 352
Changes in net unrealized (losses) gains on securities available for sale, net of income tax benefits of $34 in 2015 and income taxes of $89 in 2014    

(52

)

    137
Total comprehensive income   $ 839     $ 489
Frederick County Bancorp, Inc. and Subsidiaries    
Consolidated Statements of Comprehensive Income (Unaudited)
    For the Year Ended
(dollars in thousands)   December 31,

2015

  

December 31,
2014

Net income $ 2,104 $ 1,714
Changes in net unrealized (losses) gains on securities available for sale, net of income tax benefits of $10 in 2015 and income taxes of $371 in 2014 (16 ) 569
Reclassification adjustment for (gains) realized, net of income taxes of $39 in 2015 and $0 in 2014     (59 )     --
Total comprehensive income   $ 2,029     $ 2,283
 
Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statement of Changes in Shareholders’ Equity (Unaudited)

 

(dollars in thousands)   Shares

Outstanding

   Common

Stock

  

Additional
Paid-in

Capital

Retained

Earnings

   Accumulated

Other

Comprehensive

Income

(Loss)

   Total

Shareholders'

Equity

       
Balance, January 1, 2014 1,484,174 $ 15 $ 15,302 $ 11,456 $ (586 ) $ 26,187
Comprehensive income 1,714 569 2,283
Dividends declared on common stock, $0.28 per share (412 ) (412 )
Shares repurchased (15,000 ) (267 ) (267 )
Shares issued under stock options transactions 5,980 68 68
Compensation expense from stock option transactions 36 36
Excess tax benefit from equity-based awards             19             19  
Balance, December 31, 2014 1,475,154 15 15,158 12,758 (17 ) 27,914
Comprehensive income 2,104 (75 ) 2,029
Dividends declared on common stock, $0.28 per share (413 ) (413 )
Shares issued under stock option transactions 775 9 9
Compensation expense from stock option transactions             17             17  
Balance, December 31, 2015   1,475,929     $ 15   $ 15,184   $ 14,449     $ (92 )   $ 29,556  
 
   
Frederick County Bancorp, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

    For the Years Ended
    December 31,

2015

   December 31,

2014

(dollars in thousands)        
Cash flows from operating activities:
Net income $ 2,104 $ 1,714
Adjustments to reconcile net income to net cash provided by

operating activities:

Depreciation and amortization 477 344
Deferred income taxes (benefits) 87 (70 )
Provision for loan losses (178 ) --
Securities gains (98 ) --
Gain on sale of loans (729 ) (285 )
Loans originated for sale (7,763 ) (3,050 )
Proceeds from loans sold 8,492 3,335
Net premium amortization on investment securities 163 168
Bank owned life insurance income (231 ) (240 )
(Gain) loss on sale of foreclosed property (131 ) 37
Stock-based compensation expense 17 36
Provision for foreclosed properties -- 14
Excess tax benefit from equity-based awards -- (19 )
(Increase) decrease in accrued interest and other assets (5 ) 195
Increase in accrued interest and other liabilities     137       11  
Net cash provided by operating activities     2,342       2,190  
Cash flows from investing activities:
Purchases of investment securities available for sale (5,930 ) --
Proceeds from sales of investment securities available for sale 1,511 --
Proceeds from maturities, prepayments and calls

investment securities available for sale

4,058 3,597
Redemption (purchase) of restricted stock 176 (136 )
Net increase in loans (17,251 ) (8,673 )
Purchases of bank premises and equipment (549 ) (147 )
Proceeds from sale of foreclosed properties     860       192  
Net cash used in investing activities     (17,125 )     (5,167 )
Cash flows from financing activities:
Net increase in NOW, money market accounts, savings

accounts and noninterest-bearing deposits

17,063 21,662
Net decrease in time deposits (6,416 ) (3,665 )
Proceeds from short-term borrowings -- 250
(Repayment) proceeds from FHLB advances (5,000 ) 5,000
Proceeds from issuance of common stock 9 68
Repurchase of common stock -- (267 )
Dividends paid on common stock (413 ) (412 )
Excess tax benefit from equity-based awards     --       19  
Net cash provided by financing activities     5,243       22,655  
Net (decrease) increase in cash and cash equivalents (9,540 ) 19,678
Cash and cash equivalents – beginning of period     39,788       20,110  
Cash and cash equivalents – end of period   $ 30,248     $ 39,788  
Supplemental cash flow disclosures:
Interest paid   $ 1,646     $ 1,688  
Income taxes paid   $ 697     $ 750  
Transfer of loans to foreclosed properties   $ 706     $ --  
 

Distribution of Assets, Liabilities and Shareholders’ Equity; Interest Rates and Interest Differential

The following tables show average balances of asset and liability categories, interest income and interest expense, and average yields and rates for the periods indicated.

For the Three Months Ended December 31,   2015     2014  

 

(dollars in thousands)

   Average

daily

balance

   Interest

Income/

Expense

   Average

Yield/

Rate(%)

   Average

daily

balance

   Interest

Income/

Expense

   Average

Yield/

Rate(%)

Assets            
Interest-earning assets:
Federal funds sold $ 57 $ -- -- $ 21 $ -- --
Interest bearing deposits in other banks 38,308 25 0.26 33,638 20 0.24
Investment securities (1):
Taxable 20,311 100 1.95 19,798 107 2.00
Tax-exempt (2) 6,009 70 4.62 6,541 77 4.67
Loans (3)     273,507     3,235   4.69       260,595     3,147   4.79  
Total interest-earning assets     338,192     3,430   4.02       320,593     3,351   4.15  
Noninterest-earning assets     18,492   16,866
Total assets   $ 356,684 $ 337,459
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 30,540 13 0.07 23,231 10 0.17
Savings accounts 9,766 1 0.04 8,286 1 0.05
Money market accounts 98,360 69 0.28 93,743 67 0.28
Certificates of deposit
$100,000 or more 51,295 113 0.87 42,701 95 0.88
Certificates of deposit
less than $100,000 43,763 89 0.81 49,948 99 0.79
Federal funds purchased 18 -- -- -- -- --
Short-term borrowings 3,300 26 3.13 3,104 24 3.07
FHLB advances 13,967 55 1.56 20,000 87 1.73
Junior subordinated debentures     6,186     32   2.05       6,186     30   1.92  
Total interest-bearing liabilities     257,195     398   0.61       247,199     413   0.66  
Noninterest-bearing deposits 69,452 61,660
Noninterest-bearing liabilities     757   669
Total liabilities     327,404 309,528
Total shareholders’ equity     29,280   27,931
Total liabilities and shareholders’

equity

  $ 356,684     $ 337,459    
Net interest income       $ 3,032     $ 2,938
Net interest spread 3.41 % 3.49 %
Net interest margin 3.56 % 3.64 %
(1)   Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which is reflected as a component of shareholders’ equity.
(2) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $24 thousand in 2015 and $26 thousand in 2014 are included in the calculation of the tax-exempt investment interest income.
(3) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $29 thousand in 2015 and $29 thousand in 2014 are included in the calculation of the loan interest income. Net loan origination income in interest income totaled $18 thousand in 2015 and $24 thousand in 2014.
   
For the Year Ended December 31,   2015     2014  

 

(dollars in thousands)

   Average

daily

balance

   Interest

Income/

Expense

   Average

Yield/

Rate(%)

   Average

daily

balance

   Interest

Income/

Expense

   Average

Yield/

Rate(%)

Assets        
Interest-earning assets:
Federal funds sold $ 32 $ -- -- $ 21 $ -- --
Interest bearing deposits in other banks 38,180 84 0.22 31,489 73 0.23
Investment securities (1):
Taxable 20,489 384 1.87 20,793 429 2.06
Tax-exempt (2) 6,231 268 4.30 6,549 309 4.72
Loans (3)     266,446     12,594   4.73       256,335     12,424   4.85  
Total interest-earning assets     331,378     13,330   4.02       315,187     13,235   4.20  
Noninterest-earning assets     18,102   17,135
Total assets   $ 349,480 $ 332,322
 
Liabilities and Shareholders’ Equity
Interest-bearing liabilities:
NOW accounts $ 27,619 43 0.16 $ 21,970 34 0.15
Savings accounts 9,541 3 0.03 8,138 2 0.02
Money market accounts 101,332 299 0.30 95,157 270 0.28
Certificates of deposit
$100,000 or more 43,474 358 0.82 43,476 454 1.04
Certificates of deposit
less than $100,000 46,432 363 0.78 51,461 384 0.75
Federal funds purchased 5 -- -- -- -- --
Short-term borrowings 3,300 103 3.12 3,064 83 2.71
FHLB advances 15,973 311 1.95 17,575 339 1.93
Junior subordinated debentures     6,186     121   1.96       6,186     117   1.89  
Total interest-bearing liabilities     253,862     1,601   0.63       247,027     1,683   0.68  
Noninterest-bearing deposits 66,107 57,351
Noninterest-bearing liabilities     726   641
Total liabilities 320,695 305,019
Total shareholders’ equity     28,785   27,303

Total liabilities and shareholders’ equity

  $ 349,480     $ 332,322    
Net interest income       $ 11,729     $ 11,552
Net interest spread 3.39 % 3.52 %
Net interest margin 3.54 % 3.67 %
 
(1)   Yields on securities available-for-sale have been calculated on the basis of historical cost and do not give effect to changes in the fair value of those securities, which is reflected as a component of shareholders’ equity.
(2) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $76 thousand in 2015 and $105 thousand in 2014 are included in the calculation of the tax-exempt investment interest income.
(3) Presented on a taxable-equivalent basis using the statutory federal income tax rate of 34%. Taxable-equivalent adjustments of $123 thousand in 2015 and $108 thousand in 2014 are included in the calculation of the loan interest income. Net loan origination income in interest income totaled $45 thousand in 2015 and $93 thousand in 2014.

The statements in this press release that are not historical facts constitute "forward-looking statements" as defined by Federal securities laws. Forward-looking statements can generally be identified by the use of forward- looking terminology such as "believes," "expects," "intends," "may," "will," "should," "anticipates" or similar terminology. Such statements, specifically regarding the Company's intentions regarding growth and market expansion, are subject to risks and uncertainties that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, changes in interest rates, deposit flows, loan demand and real estate values, as well as changes in economic, competitive, governmental, regulatory, technological and other factors which may affect the Company specifically, its existing and target market areas or the banking industry generally. Forward-looking statements speak only as of the date they are made. The Company will not update forward-looking statements to reflect factual assumptions, circumstances or events that have changed after a forward-looking statement was made.