WOOSTER, Ohio, May 3, 2004 (PRIMEZONE) -- Ohio Legacy Corp (Nasdaq:OLCB), the parent of Ohio Legacy Bank, N.A., today reported net earnings for the three months ending March 31, 2004, of $222,000 or $0.10 per share, compared to $136,000, or $0.07 per share, during the first quarter of 2003. At March 31, 2004, total assets were $168.9 million, an increase of $9.8 million, or 6%, from December 31, 2003. The funding for the asset growth was equally distributed between increases in deposit balances and borrowings from the Federal Home Loan Bank of Cincinnati. During the first quarter of 2004, total loans increased $7.6 million, or 7%, to $117.6 million.
Loans and Asset Quality - Growth in the loan portfolio was seasonally strong and credit quality continues to remain a point of pride for us. At March 31, 2004, total loan balances (before the allowance for loan losses and deferred fees) were $117.6 million. The increase in loan balances outpaced deposit growth during the first quarter of 2004, which required us to borrow an additional $5.0 million from the Federal Home Loan Bank. The first quarter is typically a period of slower loan growth as inclement weather impedes construction and development of commercial real estate projects. However, demand for credit was strong during the first quarter of 2004 as multifamily and commercial real estate loans led the portfolio's growth, increasing 19% and 15% respectively.
Net charge-offs during the quarter totaled $18,000. Nonperforming loans (nonaccrual and impaired loans) fell to $112,000, or 0.10% of total loans, from $154,000 at December 31, 2003. Accordingly, a modest provision of $85,000 allowed the allowance for loan losses to increase to $1.2 million, or 1.01%, of total loans at March 31, 2004. We continue to closely monitor credit quality and delinquencies as our loan portfolio seasons and may increase the allowance for loan losses if we believe losses are imminent.
"Our lending portfolio continues to perform well," commented Dwight Douce, President and Chief Executive Officer of Ohio Legacy Corp. "Our underwriting standards have provided for sound growth in our loan portfolio and demand for our credit and loan services is keeping our pipeline full."
Securities - Total securities decreased by $1.3 million during the first quarter of 2004. The decrease was the result of the prepayments on mortgage-backed securities (MBS), which comprise over 75% of our securities portfolio. We anticipate continued growth in loan originations through 2004 and, thus, have given preference to MBS with short average lives and duration to provide an additional source of liquidity through principal paydowns.
In late December 2003, to leverage our strong capital position, we borrowed $10.0 million from the FHLB and purchased $10.0 million of MBS. We structured the transaction by laddering maturities of advances to coincide with the cash flows from the MBS, with some maturity mismatches. However, we were cautious in our selection of securities as we were willing to sacrifice net yield on the mismatch in order to reduce the extension risk of the assets in an assumed increasing rate environment.
Deposits - Total deposits increased $4.7 million during the quarter to $127.8 million at March 31, 2004. Certificates of deposit accounts comprised 57% of our deposit portfolio at March 31, 2004, compared to 55% at December 31, 2003. Most of that shift is the result of new time deposit accounts from public agencies and a decrease in core deposits (checking and savings accounts). While public funds are not a strong source of liquidity due to the collateral pledge requirements, we entered the public funds market during the first quarter of 2004 to improve our relationship with our local communities and to offset potential deposit losses as a large portion of our CD portfolio will mature during 2004. Approximately 26% and 22% of the March 2004 portfolio will mature during the second and third quarters of this year with average rates of 4.20% and 4.11%.
"In April 2004, we launched a new suite of checking accounts that offers a number of benefits and services to customers," Mr. Douce noted. "We believe these features will attract new customers and potentially increase fee income as some of the features require a monthly fee for access. We are focused on continuing to grow our deposit base, preferably through core deposits."
Net Interest Income - During the three months ended March 31, 2004, net interest income increased to $1.3 million, compared to $947,000 during the first quarter of 2003, primarily as a result of a higher average balance of interest-earning assets and a shift in asset composition to higher yielding loans from securities. During the quarter ended March 31, 2004, average loans as a percent of average interest-earning assets was 72% compared to 61% during the first quarter of 2003.
Interest rate spread increased to 2.93% in 2004 from 2.53% during the first quarter of 2003. The shift in asset mix improved net interest margin, which increased to 3.23% in 2004 from 2.90% in the first quarter of 2003. Margin declined slightly during the first quarter of 2004 from the 3.28% recorded during the fourth quarter of 2003 as a result of the securities transaction of December 2003, discussed above.
Noninterest Income - Total noninterest income decreased in 2004 compared to 2003 due to fewer gains on sales of securities in 2004. The increase in overdraft fees and other service charges on deposit accounts was due to higher volume of deposit customers and the related fees associated with those accounts. Noninterest income, excluding securities gains, as a percent of average assets increased to 0.22% during the first quarter of 2004 from 0.20% in 2003. The ratio was lower in the first quarter of 2004 compared to the ratio for the full year of 2003 as the increase in assets has been driven primarily by borrowings since late 2003.
Noninterest Expense - The efficiency ratio was 78.1% during the first quarter of 2004 compared to 84.4% during the first quarter of 2003. The efficiency ratio increased slightly from the fourth quarter of 2003 primarily as a result of additional personnel and deposit related expenses. Annualized noninterest expense as a percent of average assets was 2.60% in 2004 compared to 2.49% during the first quarter of 2003.
Occupancy and equipment expense was higher in 2004 due to rent expense from the addition of an operations center in late 2003, which also increased depreciation expense from leasehold improvements. Professional fees increased due to incremental year-end reporting costs. Franchise tax is assessed on the Bank's capital balance and can be expected to increase each year as the Bank's capital balance grows. Data processing is higher in 2004 due to additional staff and an increase in the volume of transactions and accounts resulting from the growth in our loan and deposit portfolios. Marketing and advertising is higher in 2004 as we launched a marketing campaign to increase awareness and visibility of the Bank in our market areas. Other expenses are higher primarily due to check printing costs, higher deposit insurance premiums and other deposit maintenance costs.
Regulatory Matters - On June 18, 2002, the Bank and its primary regulator, the Office of the Comptroller of the Currency (OCC), entered into an agreement to address certain issues identified during the OCC's examination of the Bank in January 2002. We have implemented comprehensive strategic, capital and staffing plans and are working to comply with other requirements under the agreement. The OCC modified the agreement during the third quarter of 2003 in response to our progress. Previously, the Bank's average asset growth was restricted to no greater than 5% each calendar quarter. The modification removes the quarterly compliance requirement and implements an annual growth restriction of no greater than 22%, commencing October 1, 2003.
ABOUT OHIO LEGACY CORP
Ohio Legacy Corp is a bank holding company headquartered in Wooster, Ohio. Its subsidiary, Ohio Legacy Bank, N.A., provides financial services to small businesses and consumers though three full-service banking locations in Canton, Millersburg and Wooster, Ohio.
FORWARD-LOOKING STATEMENTS DISCLOSURE
This release contains certain forward-looking statements related to the future performance and financial condition of Ohio Legacy Corp. These statements, which are subject to numerous risks and uncertainties, are presented in good faith based on the Company's current condition and management's understanding, expectations, and assumptions regarding its future prospects as of the date of this release. Actual results could differ materially from those projected or implied by the statements contained herein. The factors that could affect the Company's future results are set forth in the periodic reports and registration statements filed by the Company with the Securities and Exchange Commission.
OHIO LEGACY CORP
CONSOLIDATED BALANCE SHEETS
As of March 31, 2004, and December 31, 2003
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March 31, December 31,
2004 2003
------------- -------------
(unaudited)
ASSETS
Cash and due from banks $ 4,868,829 $ 4,370,383
Federal funds sold and
interest-bearing deposits
in financial institutions 6,672,000 3,814,436
------------- -------------
Cash and cash equivalents 11,540,829 8,184,819
Securities available for sale 36,753,553 38,054,644
Loans, net 116,274,302 108,792,368
Federal agency stock 1,144,350 1,039,200
Premises and equipment, net 1,988,360 2,036,544
Other real estate owned 70,000 70,000
Accrued interest receivable
and other assets 1,078,906 880,904
------------- -------------
Total assets $ 168,850,300 $ 159,058,479
============= =============
LIABILITIES
Deposits:
Noninterest-bearing demand $ 7,095,095 $ 7,133,620
Interest-bearing demand 9,214,448 8,962,743
Savings 38,443,499 39,667,717
Certificates of deposit 73,070,433 67,387,021
------------- -------------
Total deposits 127,823,475 123,151,101
Federal Home Loan Bank advances 19,396,504 14,759,314
Subordinated debentures 3,325,000 3,325,000
Capital lease obligations 974,773 976,643
Accrued interest payable and
other liabilities 777,089 801,954
------------- -------------
Total liabilities 152,296,841 143,014,012
SHAREHOLDERS' EQUITY
Preferred stock, no par value,
500,000 shares authorized,
none outstanding -- --
Common stock, no par value,
2,500,000 shares authorized,
2,119,020 and 2,118,000 shares
issued and outstanding at
March 31, 2004, and December 31,
2003, respectively 17,712,155 17,701,955
Accumulated deficit (1,333,585) (1,555,585)
Accumulated other comprehensive
income 174,889 (101,903)
------------- -------------
Total shareholders' equity 16,553,459 16,044,467
------------- -------------
Total liabilities and
shareholders' equity $ 168,850,300 $ 159,058,479
============= =============
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended March 31, 2004 and 2003
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For the three months ended
March 31,
2004 2003
---------- ----------
Interest income:
Loans $1,805,449 $1,427,655
Securities 356,366 440,237
Federal funds sold and other 25,933 29,847
---------- ----------
Total interest income 2,187,748 1,897,739
Interest expense:
Deposits 739,035 839,874
Other borrowings 197,820 110,625
---------- ----------
Total interest expense 936,855 950,499
---------- ----------
Net interest income 1,250,893 947,240
Provision for loan losses 85,000 80,000
---------- ----------
Net interest income after
provision for loan losses 1,165,893 867,240
Noninterest income:
Service charges and other fees 87,932 66,560
Gain on sales of securities
available for sale 13,147 57,849
Other income 2,286 2,654
---------- ----------
Total other income 103,365 127,063
Noninterest expense:
Salaries and benefits 464,702 380,160
Occupancy and equipment 150,283 139,174
Professional fees 87,967 80,264
Franchise tax 63,050 48,800
Data processing 100,925 76,061
Marketing and advertising 43,897 28,247
Stationery and supplies 17,418 18,756
Other expenses 119,016 86,841
---------- ----------
Total noninterest expense 1,047,258 858,303
---------- ----------
Earnings before income taxes 222,000 136,000
Income tax expense -- --
---------- ----------
Net earnings $ 222,000 $ 136,000
========== ==========
Basic earnings per share $ 0.10 $ 0.07
Diluted earnings per share $ 0.10 $ 0.07
Basic weighted average
shares outstanding 2,118,750 2,087,367
Diluted weighted average
shares outstanding 2,180,894 2,087,930
OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)
--------------------------------------------------------------------
2004 2003
-------- --------------------------------------
March 31 Dec. 31 Sept. 30 June 30 March 31
-------- -------- -------- -------- --------
Cash and cash
equivalents $ 11,541 $ 8,185 $ 13,533 $ 15,865 $ 8,349
Securities 36,754 38,055 29,972 35,543 40,562
Loans 117,463 109,914 100,536 88,372 82,636
Allowance for loan
losses (1,189) (1,122) (1,063) (966) (891)
Premises and
equipment, net 1,988 2,036 2,066 2,117 2,146
Other assets 2,293 1,990 1,920 1,550 5,174
-------- -------- -------- -------- --------
Total assets 168,850 159,058 146,964 $142,481 $137,976
======== ======== ======== ======== ========
Noninterest-bearing
demand $ 7,095 $ 7,133 $ 6,028 $ 6,078 $ 5,264
Interest-bearing
demand 9,214 8,963 8,622 7,862 6,537
Savings 38,443 39,668 42,361 42,142 40,559
Certificates of
deposit 73,071 67,387 64,227 62,527 63,751
-------- -------- -------- -------- --------
Total deposits 127,823 123,151 121,238 118,609 116,111
Other borrowings 23,697 19,061 9,304 4,305 4,307
Other liabilities 777 802 673 3,236 1,448
-------- -------- -------- -------- --------
Total liabilities 152,297 143,014 131,215 126,150 121,866
Shareholders' equity 16,553 16,044 15,749 16,331 16,110
-------- -------- -------- -------- --------
Total liabilities
and shareholders'
equity $168,850 $159,058 $146,964 $142,481 $137,976
======== ======== ======== ======== ========
LOAN PORTFOLIO:
--------------
Commercial $ 11,491 $ 12,699 $ 12,600 $ 12,924 $ 12,196
Residential real
estate 43,865 42,511 38,564 32,483 31,455
Multifamily
residential 9,690 8,121 6,255 6,464 6,383
Commercial real
estate 28,206 24,457 23,342 21,006 20,051
Construction 13,104 11,791 8,990 5,949 4,675
Consumer and home
equity 11,286 10,511 10,952 9,677 8,022
Net deferred loan
fees (179) (176) (167) (131) (146)
-------- -------- -------- -------- --------
Loans $117,463 $109,914 $100,536 $ 88,372 $ 82,636
======== ======== ======== ======== ========
QUARTERLY AVERAGES:
------------------
Fed funds and
securities(1) $ 43,815 $ 36,135 $ 41,890 $ 46,243 $ 50,804
Loans 111,273 106,260 93,287 84,898 79,346
Total interest-
earning assets 155,088 142,395 135,177 131,141 130,150
Total assets 161,396 148,516 142,019 139,038 137,793
Total assets, year
to date 161,396 141,946 139,617 138,109 137,793
Interest-bearing
deposits 117,658 115,275 113,942 111,936 111,305
Other borrowings
and leases 19,903 10,682 4,694 4,306 4,405
Total interest-
bearing liabilities 137,561 125,957 118,636 116,242 115,710
Shareholders'
equity 16,182 15,856 16,394 16,220 15,557
Shareholders' equity,
year to date 16,182 16,007 16,057 15,667 15,557
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(1) Includes federal agency stock not classified in securities on the
consolidated balance sheets and interest-earning deposits in
financial institutions
OHIO LEGACY CORP
QUARTERLY STATEMENTS OF OPERATIONS
(In thousands, except per share data and ratios)
--------------------------------------------------------------------
2004 2003
------ ---------------------------------
For the
three months ended March 31 Dec. 31 Sept. 30 June 30 March 31
------ ------ ------ ------ ------
Interest income $2,188 $2,071 $1,923 $1,905 $1,898
Interest expense (937) (898) (881) (897) (951)
------ ------ ------ ------ ------
Net interest income 1,251 1,173 1,042 1,008 947
Provision for loan losses (85) (114) (146) (78) (80)
Noninterest income 103 102 134 105 127
Noninterest expense 1,047 (973) (905) (875) (858)
------ ------ ------ ------ ------
Net income $ 222 $ 188 $ 125 $ 160 $ 136
====== ====== ====== ====== ======
Income per share,
diluted $ 0.10 $ 0.08 $ 0.06 $ 0.08 $ 0.07
Common and dilutive
shares, avg 2,181 2,178 2,120 2,119 2,088
SELECTED RATIOS:
---------------
Net interest margin(1) 3.23% 3.28% 3.06% 3.09% 2.90%
Yield on interest-
earning assets 5.66 5.77 5.67 5.85 5.82
Cost of funds 2.73 2.84 2.95 3.10 3.29
Interest rate spread(2) 2.93 2.93 2.72 2.75 2.53
Efficiency ratio(3) 78.09 76.00 79.70 79.80 84.40
Allowance as a percent
of loans 1.01 1.02 1.06 1.09 1.08
Net loans as a percent
of deposits 90.96 88.30 82.00 73.70 70.40
Annualized net charge-
offs to loans 0.06 0.21 0.20 0.01 0.13
Annualized noninterest
income to average
assets(4) 0.22 0.29 0.26 0.25 0.20
Annualized noninterest
expense to average
assets 2.60 2.61 2.54 2.51 2.49
Annualized return on
average assets 0.55 0.51 0.35 0.46 0.39
Annualized return on
average equity 5.49 4.74 3.05 3.95 3.50
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(1) Net interest income, annualized, divided by average
interest-earning assets for the period
(2) Difference between the yield on interest-earning assets and the
cost of funds
(3) Noninterest expense divided by net interest income and
noninterest income, excluding gains on securities sales
(4) Excludes gains on securities sales