Fourth Quarter Earnings 2017

January 24, 2018
Fourth Quarter Earnings 2017

FREDERICK COUNTY BANCORP, INC.

NEWS RELEASE

Frederick County Bancorp, Inc. Reports Results for
the Fourth Quarter 2017

January 23, 2018, Frederick, MD --- Frederick County Bancorp, Inc. (the “Company”) (OTC Pink Marketplace: FCBI), the parent company for Frederick County Bank (“FCB”), announced today that, for the quarter ended December 31, 2017, the Company recorded net income of $341 thousand and diluted earnings per share of $0.22, as compared to net income of $149 thousand and diluted earnings per share of $0.10 recorded for the fourth quarter of 2016.  The Company earned $2.1 million with diluted earnings per share of $1.32 for the year ended on December 31, 2017, as compared to $1.3 million in earnings and diluted earnings per share of $0.82 for the same period in 2016. 

The increase in quarterly earnings was due primarily to increases in net interest income of $201 thousand and in total noninterest income of $57 thousand and a decrease in total noninterest expense of $108 thousand in the fourth quarter of 2017 as compared to the third quarter of 2016, respectively.  A provision for loan losses in the amount of $281 thousand was recorded in the fourth quarter of 2017, while a provision for loan losses of $600 thousand was recognized in the same quarter of 2016.  The provision for income taxes increased by $493 thousand in the fourth quarter of 2017 as compared to the same period of 2016 due to a higher level of pre-tax income and the recognition of a decrease in the deferred tax assets of $231 thousand in 2017 due to the reduction in the federal corporate income tax rate from 35% to 21% enacted in December 2017 and effective January 1, 2018.  The Company’s effective tax rate was 34% at the time of enactment.

The increase in full-year earnings was due primarily to increases in net interest income of $908 thousand and in total noninterest income of $610 thousand in the full year of 2017 as compared to the same period in 2016, respectively.  The increase in total noninterest income was due primarily to increases in securities gains of $365 thousand, gain on sale of loans of $187 thousand, and in other operating income of $118 thousand in the full year of 2017 as compared to the same period in 2016. The provision for income taxes increased by $914 thousand in the full year of 2017 as compared to the same period of 2016 due to a higher level of pre-tax income and the recognition of a decrease in the deferred tax assets of $231 thousand in 2017 due to the reduction in the federal corporate income tax rate.

Earnings in 2017 benefitted from the continued emphasis on Small Business Administration (SBA) loans as reflected in the year on year increases in gain on sale of loans.  For two years in a row FCB has been recognized as a top 10 SBA lender in the greater Baltimore area.

The ratio of the allowance for loan losses to total loans stood at 1.01% and 1.22% as of December 31, 2017 and 2016, respectively.  The improvement in loan asset quality was the driver behind the reduction in the ratio of the allowance to total loans at December 31, 2017.  Total nonperforming assets stood at $5.4 million and $7.4 million at December 31, 2017 and 2016, respectively.  The corresponding nonperforming assets to total assets ratios were 1.32% and 1.96% as of December 31, 2017 and 2016, respectively. 

The Company also reported that, as of December 31, 2017, assets stood at $405.8 million, with total deposits of $332.0 million and gross loans of $322.2 million, representing increases of 7.1%, 3.1%, and 5.2%, respectively, compared to December 31, 2016.  Total shareholders’ equity at December 31, 2017 was $32.6 million, an increase of $1.5 million from December 31, 2016.  The increase primarily resulted from an increase in retained earnings of $1.6 million.  On a per share basis, book value increased by $0.96 for 2017 to $21.85 per share at December 31, 2017 from $20.89 per share at December 31, 2016.  The dividends declared per share were $0.30 for the twelve month period ended December 31, 2017 as compared to $0.28 per share for the same period in 2016.  On December 18, 2017 and October 2, 2017, the Board declared quarterly dividends of $0.08 per share, an increase of $0.01 per share relative to prior quarters.

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