Glen Burnie Bancorp Announces Year and Fourth Quarter 2017 Results

GLEN BURNIE, Md., Feb. 15, 2018 (GLOBE NEWSWIRE) — Glen Burnie Bancorp (“Bancorp”) (NASDAQ:GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $0.91 million, or $0.33 per basic and diluted common share for the year ended December 31, 2017, compared to $1.10 million, or $0.40 per basic and diluted common share for the year ended December 31, 2016.

For the fourth quarter ended December 31, 2017, Bancorp reported a net loss of $0.15 million, or $0.05 per basic and diluted common share, compared to net income of $0.40 million or $0.14 per basic and diluted common share for the fourth quarter of 2016.

The Tax Cuts and Jobs Act (“the Tax Act”) was enacted on December 22, 2017, reducing the corporate federal income tax rate from 34% to 21% and making other changes to U.S. corporate income tax laws.  Generally accepted accounting principles (“GAAP”) require that the impact of the provisions of the Tax Act be accounted for in the period of enactment.  Accordingly, the estimated incremental income tax expense recorded by the Bancorp in the fourth quarter of 2017 related to the Tax Act was $0.6 million, representing $0.21 of basic and diluted earnings per common share.  The additional expense was largely attributable to the reduction in carrying value of net deferred tax assets reflecting lower future tax benefits resulting from the lower corporate tax rate.  The enactment of the tax legislation is expected to reflect positively in our future results due to the lower federal income tax rate.

For the year ended December 31, 2017, net loans grew by $6.4 million, or 2% when compared to December 31, 2016.  At December 31, 2017, Bancorp had total assets of $389.5 million.  Bancorp, the oldest independent commercial bank in Anne Arundel County, will pay its 102nd consecutive quarterly dividend on February 23, 2018.

“We continue to make significant progress and believe we remain on track to achieve growth and earnings expectations as our outlook continues to improve across our business lines,” said John D. Long, President and Chief Executive Officer.  “I am very proud to announce financial results for 2017 that highlight another successful year for the company.  Growth in net interest income, credit costs significantly below our historical norms, and well controlled expenses led to a 79% rise in income before taxes for the year.  Although fourth quarter and annual results were negatively impacted by the newly enacted tax legislation, a lower corporate tax rate in the future should provide many benefits to the company.  Growing our lending business while increasing profitability continues to be a priority as we believe that our community bank delivery model offers an attractive option to borrowers.  We also continue to make progress in expanding our lending platforms.  Consumer indirect lending is a unique core competency for us that is based on the foundation of a consistent and disciplined underwriting process and an experienced management team.  We remain deeply committed to serving the needs of the community through the development of new loan and deposit products designed to meet the financial needs in our community.”

Highlights for the Quarter and Year ended December 31, 2017

Bancorp continued its organic growth strategy in the fourth quarter of 2017 driven by favorable net loan growth and supported by an improving 0.51% cost of funds.  Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Bank’s total regulatory capital to risk weighted assets of 13.84% at December 31, 2017.

Specific highlights include the following:

  • Return on average assets for the year ended December 31, 2017 was 0.23%, as compared to 0.28% for the year ended and December 31, 2016.  Return on average equity for the year ended December 31, 2017 was 2.65%, as compared to 3.17% for the year ended December 31, 2016.  Return on average assets for the quarter ended December 31, 2017 was -0.16%, as compared to 0.41% and 0.40% for the quarters ended September 30, 2017 and December 31, 2016, respectively.  Return on average equity for the quarter ended December 31, 2017 was -1.75%, as compared to 4.74% and 4.55% for the quarter ended September 30, 2017 and December 31, 2016, respectively.
     
  • Total assets were $389.5 million at December 31, 2017, as compared to $389.9 million at September 30, 2017 and $388.4 million at December 31, 2016.
     
  • Total loans were $271.6 million at December 31, 2017, an increase of 0.04% from $271.5 million at September 30, 2017, and an increase of 2.45% from $265.1 million at December 31, 2016.
     
  • Total deposits were $334.2 at December 31, 2017, an increase of 0.03% from $334.1 million at September 30, 2017, and an increase of 0.30% from $333.2 million at December 31, 2016.  Non-interest bearing deposits were $104.0 million at December 31, 2017, a decrease of 0.57% from $104.6 million at September 30, 2017, and an increase of 3.90% from $100.1 million at December 31, 2016.
     
  • Total borrowings were $20.0 million at December 31, 2017, unchanged from $20.0 million at September 30, 2017 and December 31, 2016.
     
  • Stockholders’ equity was $34.0 million at December 31, 2017, a decrease of $0.6 million from $34.6 million at September 30, 2017, and an increase of $0.2 million from $33.8 million at December 31, 2016.  The decrease in the fourth quarter was related to lower corporate earnings which included the increased tax expense related to the revaluation of our deferred tax assets and liabilities upon enactment of the Tax Act, and the increase in other comprehensive income associated with the available for sale bond portfolio and interest rates swaps.
     
  • The book value per share of Bancorp’s common stock was $12.15 at December 31, 2017, compared to $12.38 per share at September 30, 2017, and $12.13 per share at December 31, 2016.
     
  • At December 31, 2017, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 12.83% at December 31, 2017, as compared to 13.63% at September 30, 2017 and December 31, 2016.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.
     
  • Net interest income for the year ended December 31, 2017 totaled $11.7 million, compared to $11.2 million for the year ended December 31, 2016.  Net interest income for the three-month period ended December 31, 2017 totaled $3.0 million, compared to $2.9 million for the third quarter of 2017 and $2.8 million for the three-month period ended December 31, 2016. 
  • Net interest margin for the year ended December 31, 2017 was 3.12%, compared to 2.98% for the year ended December 31, 2016.  Net interest margin for the quarter ended December 31, 2017 was 3.20%, compared to 3.03% for the same periods of 2016.  Earning asset leverage was the primary driver in year over year results, as the yield on interest earning assets increased 0.12% from 3.57% to 3.69% for the three month periods ended December 31, 2016 and December 31, 2017, respectively.  The cost of funds decreased 0.06% from 0.57% to 0.51% for the same periods.
  • Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned, represented 0.94% of total assets at December 31, 2017, compared to 1.10% at September 30, 2017, and 1.06% at December 31, 2016.
  • The provision for loan losses for the quarter and year ended December 31, 2017 was $0.09 million and $0.3 million, respectively, compared to $0.6 million and $0.9 million, respectively, for the same periods of 2016.  The decrease for the year ended December 31, 2017 was primarily the result of improved credit quality of the overall loan portfolio.  As a result, the allowance for loan losses was $2.6 million at December 31, 2017, representing 0.95% of total loans, compared to $2.6 million, or 0.97% of total loans, at September 30, 2017, and $2.5 million, or 0.94% of total loans, at December 31, 2016.

Review of Financial Results

For the three-month periods ended December 31, 2017 and 2016

Net loss for the three-month period ended December 31, 2017 was $0.15 million, compared to net income of $0.41 million and $0.40 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.

Net interest income for the three-month period ended December 31, 2017 totaled $3.0 million compared to $2.9 million for the previous quarter and $2.8 million for the fourth quarter of 2016.  The increase in interest income primarily resulted from interest-earning asset growth from expansion of the Bank’s loan portfolio.

The provision for loan losses for the three-month period ended December 31, 2017 totaled $0.09 million compared to $0.08 million for the previous quarter and $0.64 million for the same period of 2016 resulting from the improving credit quality of the overall loan portfolio combined with the resolution of nonperforming loans. 

Noninterest income for the three-month period ended December 31, 2017 was $0.35 million compared to $0.37 million and $0.64 million for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.  The results for the fourth quarter 2016 includes a $0.22 million gain on redemption of BOLI policy.

For the three-month period ended December 31, 2017, noninterest expense was $2.70 million, compared to $2.71 million and $2.55 for the three-month periods ended September 30, 2017 and December 31, 2016, respectively.  The primary contributor to the $0.01 million decrease when compared to the third quarter of 2017 was a decrease in salaries and employee benefit expense, occupancy and equipment expense, loan collection costs and telephone costs, partially offset by an increase in legal and professional fees.  The primary contributor to the $0.15 million increase when compared to the fourth quarter of 2016 was an increase in salaries and employee benefit expense, occupancy and equipment expenses and legal and professional fees, partially offset by a decrease in data processing services and loan collection costs.

For the twelve-month periods ended December 31, 2017 and 2016

Net income for the year ended December 31, 2017 was $0.91 million compared to net income of $1.10 million for the year ended December 31, 2016.

Net interest income for the year ended December 31, 2017 totaled $11.7 million, compared to $11.2 million for the same period of 2016.  The increase in interest income resulted primarily from interest-earning asset growth in the loan portfolio.

The provision for loan losses for the year ended December 31, 2017 was $0.3 million compared to $0.9 million for the year ended December 31, 2016, resulting from the improving credit quality of the overall loan portfolio combined with the resolution of nonperforming loans. 

Noninterest income for the year ended December 31, 2017 was $1.3 million compared to $1.6 million recorded for the year ended December 31, 2016, which included a $0.22 million gain on redemption of BOLI policy

For the year ended December 31, 2017, noninterest expense was $10.8 million, compared to $10.9 million for the same period in 2016.  The primary contributors to the $0.1 million decrease in noninterest expenses were a decrease in data processing services, loan collection costs, partially offset by an increase in occupancy and equipment expenses, legal and professional fees, advertising and marketing expenses, and telephone costs.

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland.  Founded in 1949, The Bank of Glen Burnie® is a locally-owned community bank with 8 branch offices serving Anne Arundel County.  The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations.  The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans.  The Bank also originates automobile loans through arrangements with local automobile dealers.  Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

For further information contact:

Jeffrey D. Harris, Chief Financial Officer
410-768-8883
jdharris@bogb.net 
106 Padfield Blvd
Glen Burnie, MD 21061

GLEN BURNIE BANCORP AND SUBSIDIARIES          
CONSOLIDATED BALANCE SHEETS          
(dollars in thousands)          
           
           
  December 31,   September 30,   December 31,
    2017       2017       2016  
  (unaudited)   (unaudited)   (audited)
ASSETS          
Cash and due from banks $ 2,610     $ 4,371     $  3,195  
Interest bearing deposits with banks and federal funds sold   9,995       7,126       7,427  
Total Cash and Cash Equivalents   12,605       11,497       10,622  
           
Investment securities available for sale, at fair value   89,349       89,903       94,606  
Restricted equity securities, at cost   1,232         1,228       1,230  
           
Loans, net of deferred fees and costs   271,612       271,463       265,058  
Less:  Allowance for loan losses   (2,589 )     (2,623 )     (2,484 )
Loans, net   269,023       268,840       262,574  
           
Real estate acquired through foreclosure   114       114       114  
Premises and equipment, net   3,371       3,451       3,638  
Bank owned life insurance   8,713       9,479       9,328  
Deferred tax assets, net   2,429       2,847       3,160  
Accrued interest receivable   1,133       1,140       1,135  
Accrued taxes receivable   465       638       674  
Prepaid expenses   433       512       546  
Other assets   583       235       814  
Total Assets $ 389,450     $ 389,884     $ 388,441  
           
LIABILITIES          
Noninterest-bearing deposits $ 104,017     $ 104,571     $  100,099  
Interest-bearing deposits   230,221       229,534       233,147  
Total Deposits   334,238       334,105       333,246  
           
Short-term borrowings   20,000       20,000       20,000  
Defined pension liability   335       328         369  
Accrued expenses and other liabilities   835       815       1,012  
Total Liabilities   355,408       355,248       354,627  
           
STOCKHOLDERS’ EQUITY          
Common stock, par value $1, authorized 15,000,000
shares, issued and outstanding 2,801,149, 2,797,477,
2,786,855 and shares as of December 31, 2017,
September 30, 2017, and December 31, 2016,
respectively. 
  2,801       2,797       2,787  
Additional paid-in capital   10,267       10,233       10,130  
Retained earnings   21,605       21,935       21,707  
Accumulated other comprehensive loss   (631 )     (329 )     (810 )
Total Stockholders’ Equity   34,042       34,636       33,814  
Total Liabilities and Stockholders’ Equity $ 389,450     $ 389,884     $ 388,441  
           

GLEN BURNIE BANCORP AND SUBSIDIARIES    
CONSOLIDATED STATEMENTS OF INCOME    
(dollars in thousands, except per share amounts)    
                 
                 
      Three Months Ended
December 31,
    Twelve Months Ended
December 31,
      2017       2016       2017     2016  
     (unaudited)    (unaudited)    (unaudited)    (audited)
Interest income:                
Loans, including fees   $   2,918     $   2,809     $   11,421   $   11,190  
Interest and dividends on securities       484         506         2,007       1,972  
Deposits with banks and federal funds sold       64         28         179       119  
Total Interest Income     3,466       3,343       13,607     13,281  
                 
Interest expense:                
Deposits       316         348         1,300       1,481  
Short-term borrowings       143         –         452       –  
Long term borrowings       –         161         185       642  
Total Interest Expense     459       509       1,937     2,123  
                 
Net Interest Income     3,007       2,834       11,670     11,158  
                 
Provision for loan losses       93         635         336       868  
                 
Net interest income after provision for loan losses     2,914       2,199       11,334     10,290  
                 
Noninterest income:                
Service charges on deposit accounts       73         76         281       323  
Other fees and commissions       228         120         802       641  
Gain on securities sold       –         2         1       2  
Income on life insurance       48         53         199       215  
Other income       –         387         2       399  
Total Noninterest Income     349       638       1,285     1,580  
                 
Noninterest expenses:                
Salary and employee benefits       1,550         1,430         6,165       6,212  
Occupancy and equipment expenses       315         262         1,180       1,063  
Legal, accounting and other professional fees       247         162         895       757  
Data processing and item processing services       132         187         574       706  
FDIC insurance costs       63         56         251       288  
Advertising and marketing related expenses       52         29         162       78  
Loan collection costs       5         45         78       203  
Telephone costs       64         47         276       192  
Other expenses       269         330         1,214       1,353  
Total Noninterest Expenses     2,697       2,548       10,795     10,852  
                 
Income before income taxes     566       289       1,824     1,018  
Income tax expense       719         (106 )       913       (83 )
                 
Net (loss) income   $ (153 )   $ 395     $ 911   $ 1,101  
                 
Basic and diluted net (loss) income per common share   $ (0.05 )   $ 0.14     $ 0.33   $ 0.40  
                 

GLEN BURNIE BANCORP AND SUBSIDIARIES            
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the year ended December, 2017 (unaudited) and 2016            
(dollars in thousands)                      
                         
                Accumulated        
                Other        
        Additional       Comprehensive   Total    
    Common   Paid-in   Retained   (Loss)   Stockholders’    
    Stock   Capital   Earnings   Income   Equity    
Balance, December 31, 2015 $   2,773   $   9,986   $   21,718     $   (301 )   $   34,176      
                         
Net income     –       –       1,101         –         1,101      
Cash dividends, $0.40 per share     –       –       (1,112 )       –         (1,112 )    
Dividends reinvested under                      
dividend reinvestment plan     14       144       –         –         158      
Other comprehensive loss             –       (509 )     (509 )    
Balance, December 31, 2016 $   2,787   $   10,130   $   21,707     $   (810 )   $   33,814      
                         
                Accumulated        
                Other        
        Additional       Comprehensive   Total    
    Common   Paid-in   Retained   (Loss)   Stockholders’    
    Stock   Capital   Earnings   Income   Equity    
Balance, December 31, 2016 $   2,787   $   10,130   $   21,707     $   (810 )   $   33,814      
                         
Net income     –       –       911         –         911      
Cash dividends, $0.40 per share     –       –       (1,117 )       –         (1,117 )    
Dividends reinvested under                      
dividend reinvestment plan     14       137       –         –         151      
Reclassification adjustment for
   stranded income tax effects in
   accumulated other
   comprehensive income
            104         (104 )       –      
Other comprehensive income     –       –       –         283         283      
Balance, December 31, 2017 $ 2,801   $ 10,267   $ 21,605     $ (631 )   $ 34,042      
                         

THE BANK OF GLEN BURNIE                
CAPITAL RATIOS                      
(dollars in thousands)                      
                       
                    To Be Well
                    Capitalized Under
            To Be Considered     Prompt Corrective
            Adequately Capitalized     Action Provisions
  Amount Ratio   Amount Ratio   Amount Ratio
As of December 31, 2017:                      
(unaudited)                      
Common Equity Tier 1 Capital $ 32,946 12.83 %   $ 11,553 4.50 %   $ 16,687 6.50 %
Total Risk-Based Capital $ 35,543 13.84 %   $ 20,538 8.00 %   $ 25,673 10.00 %
Tier 1 Risk-Based Capital $ 32,946 12.83 %   $ 15,404 6.00 %   $ 20,538 8.00 %
Tier 1 Leverage $ 32,928 8.43 %   $ 15,617 4.00 %   $ 19,521 5.00 %
                       
As of September 30, 2017:                      
(unaudited)                      
Common Equity Tier 1 Capital $ 34,064 13.63 %   $ 11,250 4.50 %   $ 16,251 6.50 %
Total Risk-Based Capital $ 36,699 14.68 %   $ 20,001 8.00 %   $ 25,001 10.00 %
Tier 1 Risk-Based Capital $ 34,064 13.63 %   $ 15,001 6.00 %   $ 20,001 8.00 %
Tier 1 Leverage $ 34,064 8.56 %   $ 15,919 4.00 %   $ 19,898 5.00 %
                       
As of December 31, 2016:
(audited)
                     
Common Equity Tier 1 Capital $ 33,962 13.63 %   $ 11,213 4.50 %   $ 16,197 6.50 %
Total Risk-Based Capital $ 36,471 14.64 %   $ 19,935 8.00 %   $ 24,918 10.00 %
Tier 1 Risk-Based Capital $ 33,962 13.63 %   $ 14,951 6.00 %   $ 19,935 8.00 %
Tier 1 Leverage $ 33,962 8.68 %   $ 15,659 4.00 %   $ 19,574 5.00 %

GLEN BURNIE BANCORP AND SUBSIDIARIES          
SELECTED FINANCIAL DATA                  
(dollars in thousands, except per share amounts)          
                       
                       
    Three Months Ended   Year Ended  
    December 31,   September 30,   December 31,   December 31,   December 31,  
      2017       2017       2016       2017       2016    
    (unaudited)   (unaudited)   (unaudited)   (unaudited)   (audited)  
                       
Financial Data:                      
Assets   $   389,450     $   389,884     $   388,441     $   389,450     $   388,441    
Investment securities       89,349         89,903         94,607         89,349         94,607    
Loans, (net of deferred fees and costs)       271,612         271,463       265,057         271,612         265,057    
Allowance for loan losses       2,589         2,623       2,484         2,589         2,484    
Deposits       334,238         334,105       333,247         334,238         333,247    
Borrowings       20,000         20,000       20,000         20,000         20,000    
Stockholders’ equity       34,042         34,636       33,814         34,042         33,814    
Net income     (153 )     410       395       911       1,101    
                       
Average Balances:                      
Assets   $   391,254     $   393,936     $   391,240     $   392,363     $   393,036    
Investment securities     90,084       90,028       97,991       91,634       99,281    
Loans, (net of deferred fees and costs)     270,402       270,973       260,986       269,600       258,585    
Deposits     335,312       334,740       335,696       335,805       337,422    
Borrowings     20,501       23,667       20,000       21,458       20,000    
Stockholders’ equity     34,638       34,643       34,412       34,322       34,737    
                       
Performance Ratios:                      
Annualized return on average assets     -0.16 %     0.41 %     0.40 %     0.23 %     0.28 %  
Annualized return on average equity     -1.75 %     4.74 %     4.55 %     2.65 %     3.17 %  
Net Interest Margin     3.20 %     3.10 %     3.03 %     3.12 %     2.98 %  
Dividend payout ratio     -183 %     68 %     70 %     123 %     101 %  
Book value per share   $   12.15     $   12.38     $   12.13     $   12.15     $   12.13    
Basic and diluted net income per share     (0.05 )     0.15       0.14       0.33       0.40    
Cash dividends declared per share     0.10       0.10       0.10       0.40       0.40    
Basic and diluted weighted average                      
shares outstanding     2,799,832       2,797,396       2,786,713       2,794,381       2,780,477    
                       
Asset Quality Ratios:                      
Allowance for loan losses to loans     0.95 %     0.97 %     0.94 %     0.95 %     0.94 %  
Nonperforming loans to avg. loans     1.31 %     1.57 %     0.84 %     1.32 %     0.84 %  
Allowance for Credit Losses to Non-Accrual                  
and 90+ Past Due Loans     77.7 %     67.4 %     127.1 %     77.7 %     127.1 %  
Net charge-offs annualize to Avg. loans     0.19 %     0.08 %     0.71 %     0.09 %     0.59 %  
                       
Capital Ratios:                      
Common Equity Tier 1 Capital     12.83 %     13.63 %     13.63 %     12.83 %     13.63 %  
Tier 1 Risk-based Capital Ratio     12.83 %     13.63 %     13.63 %     12.83 %     13.63 %  
Leverage Ratio     8.43 %     8.56 %     8.68 %     8.43 %     8.68 %  
Total Risk-Based Capital Ratio     13.84 %     14.68 %     14.64 %     13.84 %     14.64 %  
                       

 

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