WOOSTER, Ohio, Aug. 2, 2004 (PRIMEZONE) -- Ohio Legacy Corp (Nasdaq:OLCB), the parent of Ohio Legacy Bank, N.A., today reported net earnings for the three months ended June 30, 2004, of $226,000 or $0.10 per share, compared to $160,000, or $0.08 per share, during the second quarter of 2003. At June 30, 2004, total assets were $172.5 million, an increase of $13.4 million, or 8%, from December 31, 2003. Total loans increased nearly $12.0 million during the second quarter.
Loans and Asset Quality -- During the first half of 2004, net loans increased $19.4 million, or 18%, to $129.4 million with net loans to deposits and interest-earning assets increasing to 100% and 75%, respectively. The strongest increases during the first half came in the commercial real estate and residential real estate categories, with each increasing 32% and 14% respectively.
The Company has yet to encounter material deterioration in the credit quality of its loan portfolio. Asset quality remained strong as nonperforming loans (nonaccrual and impaired loans) totaled $218,000, or 0.17% of total loans at June 30, 2004, compared to $154,000 at December 31, 2003. Nonperforming loans are comprised of two residential real estate loans secured by first mortgage liens. There were no loans past due greater than 90 days and still accruing interest.
The provision for loan losses was $150,000 during the second quarter of 2004 compared to $77,500 in 2003 and $85,000 during the first quarter of 2004. The provision increased during the second quarter as loan growth was greater and delinquencies were slightly higher. Net charge offs during the second quarter of 2004 totaled $113,000, an annualized rate of 0.36% of average loans.
Deposits -- Total deposits increased $5.6 million during the half to $128.7 million at June 30, 2004. Deposits increased $894,000 during the second quarter of 2004 despite the loss of $5.0 million of deposits in June. The loss of deposits was primarily in the certificate of deposit ("CD") portfolio as a large pool of a single product began to mature during the quarter.
The Company anticipates continued liquidity pressure during the third quarter as the rest of this CD pool matures. Approximately $17.7 million, or 25% of the June 30, 2004, CD portfolio will mature during the third quarter of 2004 compared to $18.8 million that matured during the second quarter. However, the Company believes the likelihood of further significant runoff of the CD portfolio is less than it was at March 31, 2004, as the average balance and interest rate of the CDs maturing during the third quarter of 2004 are less than those that matured during the second quarter of 2004.
Core deposits increased $3.7 million during the second quarter of 2004, reversing the loss of $1.0 million of core deposits during the first quarter. The increase in core deposit balances in 2004 has been driven by interest-bearing checking accounts. Growth in noninterest checking accounts this year has been offset by decreases in savings account balances. Such a shift to lower-costing deposits serves to improve interest rate spread and margin. In April 2004, the Bank launched a new suite of checking accounts that offers a number of benefits and services to customers. These features should attract new customers and potentially increase fee income as some of the features require a monthly fee for access.
Branch Acquisition -- In May 2004, the Company announced that the Bank entered a purchase and assumption agreement with Unizan Bank to acquire Unizan's branch in Wooster, Ohio. The Office of the Comptroller of the Currency ("OCC") approved the Bank's application in July. The branch acquisition includes a physical location, which will become the Bank's fourth banking office, and approximately $15 million of deposits. The acquisition is scheduled to close in August 2004.
Net Interest Income -- During the three months ended June 30, 2004, net interest income increased to $1.4 million compared to $1.0 million during the second quarter of 2003 as a result of a higher average balance of interest-earning assets, a decreasing cost of funds and a shift in asset composition to higher yielding loans from securities. During the quarter ended June 30, 2004, average loans as a percent of average interest-earning assets was 75% compared to 65% during the second quarter of 2003.
During the second quarter of 2004, interest rate spread increased to 3.01% compared to 2.75% in 2003 and 2.93% during the first quarter of 2004 and was driven by the maturity of high-cost certificates of deposits and growth in core deposits. The shift in asset mix improved net interest margin, which increased to 3.28% during the second quarter of 2004 compared to 3.09% in the second quarter of 2003 and 3.23% during the first quarter of 2004. Spread and margin should continue to increase during the second half of 2004 as a result of further maturing and repricing of high-cost CDs during the third quarter of 2004.
Noninterest Income -- Total noninterest income increased during the second quarter of 2004 compared to 2003. The increase in overdraft fees and other service charges on deposit accounts was due to higher number of deposit customers and the related fees associated with those accounts. Annualized noninterest income, excluding securities gains, as a percent of average assets increased to 0.27% during the second quarter of 2004 from 0.25% in 2003 and 0.22% during the first quarter of 2004.
Noninterest Expense -- The efficiency ratio improved to 75% during the second quarter of 2004 compared to 80% during the second quarter of 2003 and 78% during the first quarter of 2004. Annualized noninterest expense as a percent of average assets was 2.56% in 2004 compared to 2.51% during the second quarter of 2003. This is a reflection of the improvement in the interest margin outweighing the Company's ability to leverage overhead costs through asset growth as it builds infrastructure to support its strategic plan and future expansion.
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 decreased compared to the 2003 period as management used outside consultants last year to assist with operational reviews and improvements to address concerns identified under the Bank's written agreement with the OCC. 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 an increase in the volume of transactions and accounts from the growth in the loan and deposit portfolios. Marketing and advertising is higher in 2004 as the Bank launched a marketing campaign to increase awareness and visibility of the Bank's products and services. Other expenses are higher primarily due to check printing costs, director fees, higher deposit insurance premiums and other deposit maintenance costs.
Regulatory Matters -- On June 18, 2002, the Bank and its primary regulator, the OCC, entered into an agreement to address certain issues identified during the OCC's examination of the Bank in January 2002. Management has implemented comprehensive strategic, capital and staffing plans and is working to comply with other requirements under the agreement. The OCC modified the agreement during the third quarter of 2003 in response to management's 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 June 30, 2004, and December 31, 2003
June 30, December 31,
2004 2003
------------- -------------
(unaudited)
ASSETS
Cash and due from banks $ 5,197,182 $ 4,370,383
Federal funds sold and
interest-bearing deposits
in financial institutions 1,563,124 3,814,436
------------- -------------
Cash and cash
equivalents 6,760,306 8,184,819
Securities available
for sale 33,053,465 38,054,644
Loans, net 128,178,255 108,792,368
Federal agency stock 1,250,050 1,039,200
Premises and equipment, net 1,935,167 2,036,544
Other real estate owned 70,000 70,000
Accrued interest receivable
and other assets 1,283,430 880,904
------------- -------------
Total assets $ 172,530,673 $ 159,058,479
============= =============
LIABILITIES
Deposits:
Noninterest-bearing
demand $ 7,799,869 $ 7,133,620
Interest-bearing demand 11,701,908 8,962,743
Savings 38,987,329 39,667,717
Certificates of deposit 70,227,998 67,387,021
------------- -------------
Total deposits 128,717,104 123,151,101
Federal Home Loan Bank
advances 23,031,548 14,759,314
Subordinated debentures 3,325,000 3,325,000
Capital lease obligations 972,833 976,643
Accrued interest payable
and other liabilities 684,902 801,954
------------- -------------
Total liabilities 156,731,387 143,014,012
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
June 30, 2004,
and December 31, 2003,
respectively 17,729,155 17,701,955
Accumulated deficit (1,107,585) (1,555,585)
Accumulated other
comprehensive income (822,284) (101,903)
------------- -------------
Total shareholders' equity 15,799,286 16,044,467
------------- -------------
Total liabilities and
shareholders' equity $ 172,530,673 $ 159,058,479
============= =============
OHIO LEGACY CORP
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three and six months ended June 30, 2004 and 2003
For the Three Months For the Six Months
Ended Ended
June 30, June 30,
----------------------- ----------------------
2004 2003 2004 2003
---------- ---------- ---------- ----------
Interest income:
Loans, including
fees $1,981,839 $1,517,081 $3,787,288 $2,944,736
Securities 314,070 353,978 670,436 794,215
Interest-bearing
deposits and
federal funds
sold 24,875 33,669 50,808 63,516
---------- ---------- ---------- ----------
Total interest
income 2,320,784 1,904,728 4,508,532 3,802,467
Interest expense:
Deposits 731,768 787,398 1,470,803 1,627,272
Other borrowings 224,027 109,092 421,847 219,717
---------- ---------- ---------- ----------
Total interest
expense 955,795 896,490 1,892,650 1,846,989
---------- ---------- ---------- ----------
Net interest
income 1,364,989 1,008,238 2,615,882 1,955,478
Provision for
loan losses 150,000 77,500 235,000 157,500
---------- ---------- ---------- ----------
Net interest
income after
provision for
loan losses 1,214,989 930,738 2,380,882 1,797,978
Noninterest income:
Service charges
and other fees 112,433 85,696 200,365 152,256
Gain on sales
of securities,
net -- 16,640 13,147 74,489
Other income 2,271 2,322 4,557 4,976
---------- ---------- ---------- ----------
Total
noninterest
income 114,704 104,658 218,069 231,721
Noninterest expense:
Salaries and
benefits 485,903 355,882 950,605 736,042
Occupancy and
equipment 151,177 137,797 301,460 276,971
Professional
fees 108,656 129,541 196,623 209,805
Franchise tax 58,356 46,197 121,406 94,997
Data processing 110,567 76,515 211,492 152,576
Marketing and
advertising 39,756 25,650 83,653 53,897
Stationery and
supplies 21,543 21,339 38,961 40,095
Other expenses 127,735 82,475 246,751 169,316
---------- ---------- ---------- ----------
Total
noninterest
expense 1,103,693 875,396 2,150,951 1,733,699
---------- ---------- ---------- ----------
Earnings before
income tax
expense 226,000 160,000 448,000 296,000
Income tax expense -- -- -- --
---------- ---------- ---------- ----------
Net earnings $ 226,000 $ 160,000 $ 448,000 $ 296,000
========== ========== ========== ==========
Basic earnings
per share $ 0.11 $ 0.08 $ 0.21 $ 0.14
Diluted earnings
per share $ 0.10 $ 0.08 $ 0.21 $ 0.14
Basic weighted
average shares
outstanding 2,119,138 2,115,700 2,118,944 2,101,612
Diluted weighted
average shares
outstanding 2,180,962 2,118,674 2,181,649 2,103,450
OHIO LEGACY CORP
QUARTERLY BALANCE SHEETS
(Dollars in thousands)
2004 2003
------------------- ------------------------------
June 30 March 31 Dec. 31 Sept. 30 June 30
-------- -------- -------- -------- --------
Cash and cash
equivalents $ 6,760 $ 11,541 $ 8,185 $ 13,533 $ 15,865
Securities 33,054 36,754 38,055 29,972 35,543
Loans, net
of fees 129,405 117,463 109,914 100,536 88,372
Allowance for
loan losses (1,226) (1,189) (1,122) (1,063) (966)
Premises and
equipment,
net 1,935 1,988 2,036 2,066 2,117
Other assets 2,603 2,293 1,990 1,920 1,550
-------- -------- -------- -------- --------
Total assets 172,531 168,850 159,058 146,964 $142,481
======== ======== ======== ======== ========
Noninterest-
bearing
demand $ 7,800 $ 7,095 $ 7,133 $ 6,028 $ 6,078
Interest-
bearing
demand 11,702 9,214 8,963 8,622 7,862
Savings 38,987 38,443 39,668 42,361 42,142
Certificates
of deposit 70,228 73,071 67,387 64,227 62,527
-------- -------- -------- -------- --------
Total
deposits 128,717 127,823 123,151 121,238 118,609
Other
borrowings 27,329 23,697 19,061 9,304 4,305
Other
liabilities 685 777 802 673 3,236
-------- -------- -------- -------- --------
Total
liabilities 156,731 152,297 143,014 131,215 126,150
-------- -------- -------- -------- --------
Shareholders'
equity 15,800 16,553 16,044 15,749 16,331
-------- -------- -------- -------- --------
Total
liabilities
and
shareholders'
equity $172,531 $168,850 $159,058 $146,964 $142,481
======== ======== ======== ======== ========
LOAN PORTFOLIO:
--------------
Commercial $ 11,733 $ 11,491 $ 12,699 $ 12,600 $ 12,924
Residential
real estate 48,449 43,865 42,511 38,564 32,483
Multifamily
residential 10,049 9,690 8,121 6,255 6,464
Commercial
real estate 32,338 28,206 24,457 23,342 21,006
Construction 15,331 13,104 11,791 8,990 5,949
Consumer and
home equity 11,677 11,286 10,511 10,952 9,677
Net deferred
loan fees (172) (179) (176) (167) (131)
-------- -------- -------- -------- --------
Loans $129,405 $117,463 $109,914 $100,536 $ 88,372
======== ======== ======== ======== ========
QUARTERLY AVERAGES:
------------------
Fed funds
and
securities(1) $ 40,745 $ 43,815 $ 36,135 $ 41,890 $ 46,243
Loans 125,102 111,273 106,260 93,287 84,898
Total
interest-
earning
assets 165,847 155,088 142,395 135,177 131,141
Total assets 172,672 161,396 148,516 142,019 139,038
Total assets,
year to date 167,036 161,396 141,946 139,617 138,109
Interest-
bearing
deposits 123,176 117,658 115,275 113,942 111,936
Other
borrowings
and leases 25,203 19,903 10,682 4,694 4,306
Total interest-
bearing
liabilities 148,379 137,561 125,957 118,636 116,242
Shareholders'
equity 16,093 16,182 15,856 16,394 16,220
Shareholders'
equity, year
to date 16,139 16,182 16,007 16,057 15,667
(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 June 30 March 31 Dec. 31 Sept. 30 June 30
-------- -------- -------- -------- --------
Interest
income $ 2,321 $ 2,188 $ 2,071 $ 1,923 $ 1,905
Interest
expense (956) (937) (898) (881) (897)
-------- -------- -------- -------- --------
Net interest
income 1,365 1,251 1,173 1,042 1,008
Provision for
loan losses (150) (85) (114) (146) (78)
Noninterest
income 115 103 102 134 105
Noninterest
expense (1,104) (1,047) (973) (905) (875)
-------- -------- -------- -------- --------
Net income $ 226 $ 222 $ 188 $ 125 $ 160
======== ======== ======== ======== ========
Income per
share,
diluted $ 0.10 $ 0.10 $ 0.08 $ 0.06 $ 0.08
Common and
dilutive
shares, avg 2,181 2,181 2,178 2,120 2,119
SELECTED RATIOS:
---------------
Net interest
margin (1) 3.28% 3.23% 3.28% 3.06% 3.09%
Yield on
interest-earning
assets 5.59 5.66 5.77 5.67 5.85
Cost of funds 2.58 2.73 2.84 2.95 3.10
Interest rate
spread (2) 3.01 2.93 2.93 2.72 2.75
Efficiency
ratio (3) 74.59 78.09 76.00 79.70 79.85
Allowance as
a percent of
loans 0.95 1.01 1.02 1.06 1.09
Net loans as
a percent
of deposits 99.58 90.96 88.30 82.00 73.70
Annualized net
charge-offs
to loans 0.36 0.06 0.21 0.20 0.01
Annualized
noninterest
income to
average
assets (4) 0.27 0.22 0.29 0.26 0.25
Annualized
noninterest
expense to
average
assets 2.56 2.60 2.61 2.54 2.51
Annualized
return on
average
assets 0.52 0.55 0.51 0.35 0.46
Annualized
return on
average
equity 5.62 5.49 4.74 3.05 3.95
(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