SENECA, S.C. -- (Business Wire)
Oconee Federal Financial Corp. (Nasdaq: OFED) (the “Company”), the
holding company for Oconee Federal Savings and Loan Association (“Oconee
Federal”), announced today net income of $1.2 million, or $0.21 per
diluted share, for the three months ended June 30, 2015, compared to net
income of $854 thousand, or $0.15 per diluted share, for the three
months ended June 30, 2014. The Company had net income of $4.5 million,
or $0.78 per diluted share, for the year ended June 30, 2015, compared
to net income of $3.6 million, or $0.64 per diluted share, for the year
ended June 30, 2014.
June 30, 2015 Three Months and Year Ended Highlights:
-
Improved earnings for the three months and year ended June 30, 2015 as
compared to the prior year periods
-
Completion of acquisition of Stephens Federal Bank (“Stephens
Federal”) on December 1, 2014.
-
Eight consecutive quarterly dividends of $0.10 per share for the years
ended June 30, 2015 and 2014.
-
Strong asset quality even though nonperforming assets increased as a
result of the acquisition.
“Fiscal year 2015 was a remarkable year. We completed the acquisition of
Stephens Federal. This was our first expansion outside of Oconee County
in our 92 year history. Our footprint now extends into Stephens and
Rabun counties of northeast Georgia” stated T. Rhett Evatt, Chief
Executive Officer. “We believe that access into these markets will
provide an additional source of deposits and lending opportunities.
Since the acquisition was completed on December 1, we have been
successful in liquidating significant portions of purchased credit
impaired loans and real estate owned with favorable outcomes. The
combined effects of the liquidation of problem assets and additional
interest income from acquired loans resulted in a significant increase
in our quarterly and year end net income.”
“We had an exceptional year for earnings. We realized significant
increases in net income for both the three months and year ended June
30, 2015” stated H. Allen Salter, Chief Financial Officer and Treasurer.
“Our strong return on average assets is a testament to not only strong
core earnings but sustained low overhead as we strive to operate as
efficiently as possible. Additionally, our earnings have been positively
impacted by the successful liquidation of a portion of the nonperforming
assets acquired from Stephens Federal. The acquisition of a secondary
mortgage platform with Freddie Mac through the Stephens Federal
acquisition has opened new opportunities for us to reach customers with
lower interest rate mortgage products that we have never before been
able to offer. We see the ability to originate and sell certain
conforming, longer-term residential mortgages, such as the 30 year fixed
rate loans, as a way to better manage our interest rate risk into the
future. The bright side of the low interest rate environment is a lower
cost of funds, which has led to an increase in our net interest margins
for both the three months ended June 30, 2015 and year ended June 30,
2015 over the same periods in fiscal year 2014.”
Results of Operations
Interest income increased by $1.3 million, or 39.4%, to $4.6 million for
the three months ended June 30, 2015 from $3.3 million for the three
months ended June 30, 2014. The increase was the result of the increase
in the average balance of our interest-earning assets of $96.4 million
to $441.7 million for the three months ended June 30, 2015 from $345.3
million for the three months ended June 30, 2014. The increase in the
average balance of our interest-earning assets was primarily the result
of the increase in our loan portfolio from the acquisition of Stephens
Federal during the year ended June 30, 2015. The average yield on our
interest-earning assets increased to 4.12% for the three months ended
June 30, 2015 from 3.77% for the three months ended June 30, 2014 as a
result of higher-yielding loans within the Stephens Federal loan
portfolio acquired Interest expense decreased to $297 thousand for the
three months ended June 30, 2015 from $324 thousand for the three months
ended June 30, 2014. The decline in interest expense reflected a
decrease in the average rate paid on deposits during the three months
ended June 30, 2015 to 0.32% from 0.48% during the three months ended
June 30, 2014, partially offset by an increase in the average balance of
interest-bearing deposits to $377.6 million for the three months ended
June 30, 2015 from $273.0 million for the three months ended June 30,
2014.
Net interest income increased by $1.4 million, or 48.3%, to $4.3 million
for the three months ended June 30, 2015 from $2.9 million for the three
months ended June 30, 2014. Net interest margin for the three months
ended June 30, 2015 increased to 3.90% from 3.39% for the three months
ended June 30, 2014. This increase in net interest margin was reflective
of the decrease in our average cost of funds to 0.32% for the three
months ended June 30, 2015 from 0.48% for the three months ended June
30, 2014 and an increase in the average yield on interest-earning assets
to 4.12% for the three months ended June 30, 2015 from 3.77% the three
months ended June 30, 2014.
Interest income increased by $3.2 million, or 24.6%, to $16.2 million
for the year ended June 30, 2015 from $13.0 million for the year ended
June 30, 2014. The increase was the result of both an increase in the
average balance of interest-earning assets and an increase in the
average yield on these assets during the year ended June 30, 2015 as
compared to the year ended June 30, 2014. The average balance of
interest-earning assets increased to $401.2 million for the year ended
June 30, 2015 from $347.9 million for the year ended June 30, 2014. The
average yield on interest-earning assets increased to 4.04% for the year
ended June 30, 2015 from 3.73% for the year ended June 30, 2014. The
increase in the average balance of our interest-earning assets was
primarily the result of the increase in our loan portfolio from the
acquisition of Stephens Federal during the year ended June 30, 2015 as a
result of higher-yielding loans within the Stephens Federal loan
portfolio acquired. The average balance of our loans increased to $285.2
million for the year ended June 30, 2015 from $224.3 million for the
year ended June 30, 2014. Interest expense decreased to $1.2 million for
the year ended June 30, 2015 from $1.5 million for the year ended June
30, 2014. The decrease reflected a decrease in the average rate paid on
deposits during the year ended June 30, 2015 to 0.37% from 0.53% during
the year ended June 30, 2014, which more than offset the increase in the
average balance of interest-bearing deposits to $335.5 million for the
year ended June 30, 2015 from $280.3 million for the year ended June 30,
2014.
Net interest income increased by $3.5 million, or 30.4%, to $15.0
million for the year ended June 30, 2015 compared to $11.5 million for
2014. Net interest margin for the year ended June 30, 2015 was 3.73%, up
43 basis-points from 3.30% for the year ended June 30, 2014. This
increase in net interest margin was reflective of the decrease in our
average cost of funds to 0.37% for the year ended June 30, 2015 from
0.53% for the year ended June 30, 2014 and an increase in the average
yield on interest-earning assets to 4.03% for the year ended June 30,
2015 from 3.73% for the year ended June 30, 2014.
Noninterest income for the three months ended June 30, 2015 increased by
$483 thousand, or 439.1%, to $593 thousand from $110 thousand for the
same period in 2014. As a result of the acquisition of Stephens Federal,
we obtained a mortgage loan servicing portfolio and staff expertise in
origination and selling mortgage loans to Freddie Mac. As a result, we
recognized $170 thousand of mortgage banking income in the three months
ended June 30, 2015. Additionally, other significant increases were
related to an increase in the service charges on deposit accounts and
other noninterest income. Service charges increased $92 thousand to $112
thousand for the three months ended June 30, 2015 from $20 thousand for
the three months ended June 30, 2014, primarily as a result of the
additional deposits added from the Stephens Federal acquisition. The
increase of $314 thousand in other noninterest income was primarily
related to a $255 thousand gain on sale of certain purchased credit
impaired loans plus the increase in fair value of our mortgage servicing
asset of $77 thousand. For the year ended June 30, 2015, noninterest
income increased $811 thousand, or 133.4%, to $1.4 million from $608
thousand for the year ended June 30, 2014. The increase in noninterest
income was reflective of the addition of mortgage banking income of $351
thousand, an increase in other noninterest income, and an increase in
service charges on deposit accounts for the year ended June 30, 2015.
Service charges on deposit accounts increased by $247 thousand, or
325.0%, to $323 thousand for the year ended June 30, 2015 from $76
thousand for the year ended June 30, 2014 due to the aforementioned
increase in deposits. The increase in other noninterest income of $314
thousand was primarily related to a $255 thousand gain on sale of
certain purchased credit impaired loans plus the increase in fair value
of our mortgage servicing asset of $27 thousand.
Noninterest expense for the three months ended June 30, 2015 increased
by $929 thousand, or 55.4%, to $2.6 million from $1.7 million for the
same period in 2014. The increase was primarily related to an increase
in salaries and employee benefits, occupancy and equipment, and data
processing expenses. Salaries and employee benefits increased $640
thousand, or 71.2%, to $1.5 million for the three months ended June 30,
2015 from $899 thousand for the three months ended June 30, 2014,
reflecting the additional salaries and benefits of approximately 45
additional employees from the Stephens Federal acquisition. Occupancy
and equipment expenses increased by $176 thousand, or 104.8%, to
$344 thousand for the three months ended June 30, 2015 from
$168 thousand for the same period in 2014 reflecting the increased
maintenance costs and depreciation associated with three additional
branches and their furnishings and equipment from the Stephens Federal
acquisition. Data processing expenses increased $51 thousand, or 79.7%,
to $115 thousand for the three months ended June 30, 2015 from $64
thousand for the same period in 2014. Data processing cost increases
were a direct reflection of the increased processing costs associated
with the addition of loans and deposits from the Stephens Federal
acquisition. Noninterest expense increased $2.7 million, or 42.9%, to
$9.0 million for the year ended June 30, 2015 from $6.3 million for the
year ended June 30, 2014. The increase in noninterest expenses was
reflective of increases in salaries and employee benefits of $1.7
million, or 47.2%, to $5.3 million for the year ended June 30, 2015 from
$3.6 million for the year ended June 30, 2014 and increased occupancy
and equipment expenses to $1.0 million for the year ended June 30, 2015
from $664 thousand for the year ended June 30, 2014 and increased data
processing expenses to $424 thousand for the year ended June 30, 2015
from $264 thousand for the year ended June 30, 2014. All of these
increases were reflective of an increase in employees, the addition of
new facilities and associated furnishings and equipment, and loans and
deposits resulting from the acquisition of Stephens Federal.
We recorded a provision for loan losses of $179 thousand for the three
months ended June 30, 2015, compared with a provision of $26 thousand
for the three months ended June 30, 2014. Net charge-offs for the three
months ended June 30, 2015 were $39 thousand and were $0 for the three
months ended June 30, 2014. The provision for loan losses for the year
ended June 30, 2015 was $195 thousand compared with a provision of $108
thousand for the year ended June 30, 2014. Net charge-offs for the year
ended June 30, 2015 were $41 thousand compared with $4 thousand for the
year ended June 30, 2014.
The increase in our provision of $87 thousand is related to the increase
in net charge offs for fiscal year 2015 of $37 thousand to $41 thousand
as compared to $4 thousand for fiscal year 2014 and to an increase in
impaired loans to $10.1 million at June 30, 2015 compared to $1.6
million at June 30, 2014. The related allowance for impaired loans at
June 30, 2015 was $220 thousand compared to $52 thousand at June 30,
2014. A significant portion of the increase in impaired loans is related
to the acquired purchased credit impaired loans as part of the Stephens
Federal acquisition. At June 30, 2015, there was $7.4 million in
carrying value of purchased credit impaired loans.
Of the acquired portion of our loan portfolio, we had a total of $7.9
million in impaired loans, $7.4 million of which were purchased credit
impaired. The remaining $546 thousand of impaired loans were identified
as having evidence of credit deterioration not existing before the
acquisition date. Therefore, these loans required an additional specific
credit discount in excess of that which was included in the initial
valuation of these loans as part of their fair value determination for
acquisition accounting purposes. The amount of impairment measured on
these loans was $89 thousand. Of our originated portfolio, we had $2.1
million in impaired loans, and the impairment amount on these loans was
$115 thousand. Impaired loans at June 30, 2014 were $1.6 million with a
related impairment amount of $52 thousand. We did recognize an
additional $15 thousand in impairment on purchased credit impaired loans
as the fair value of certain loans at June 30, 2015 was less than their
respective carrying values. We have not changed our policy with respect
to identifying loans for individual impairment analysis. We measure the
amount of impairment, if any, on all loans regardless of size if deemed
to be impaired.
Our ratio of nonperforming loans to total loans increased to 1.35% at
June 30, 2015 from 0.71% at June 30, 2014, and our ratio of
nonperforming assets to total assets increased to 1.42% from 0.66% at
the same dates. Total nonperforming loans was $4.1 million at June 30,
2015 compared to $1.6 million at June 30, 2014. A total of $1.0 million
of nonperforming loans was related to our originated portfolio and $3.1
million was related to our acquired loan portfolio. Of the $3.1 million
in nonperforming loans within our acquired portfolio, $2.8 million are
loans identified as purchased credit impaired.
Income tax expense for the three months ended June 30, 2015 and 2014 was
$865 thousand and $483 thousand, respectively, with effective income tax
rates of 41.0% and 36.1%, respectively. Income tax expense for the years
ended June 30, 2015 and 2014 was $2.7 million and $2.0 million,
respectively, with effective income tax rates of 37.4% and 36.0%,
respectively. The increase in our effective tax rates for both the three
months and year to date periods ended June 30, 2015 is a result of
certain nondeductible acquisition related costs for income tax purposes
that gave rise to permanent tax adjustments in determining income tax
expense for book purposes. The total amount of nondeductible costs
included in the calculation of income tax expense for the year was $242
thousand.
Financial Condition at June 30, 2015 and June 30, 2014
Our total assets increased by $114.9 million, or 31.9%, to $475.4
million at June 30, 2015 from $360.5 million at June 30, 2014. The
increase is due to the acquisition of Stephens Federal on December 1,
2014. As a result of the acquisition, we added $138.0 million in total
assets at fair value, which included the recognition of $2.9 million in
goodwill and approximately $4.7 million in deferred tax assets resulting
from the fair value adjustments related to the acquired assets and
liabilities, identifiable intangibles and other deferred tax items.
Total gross loans increased to $309.3 million at June 30, 2015 from
$230.8 million at June 30, 2014. This increase was largely due to the
increase in loans from the acquisition. The net fair value of loans
acquired was $95.5 million. Excluding the loans we acquired, loans
actually decreased by approximately $16 million due to lower demand
during this period of slow economic recovery. Deposits increased to
$394.1 million at June 30, 2015 from $281.0 million at June 30, 2014.
The net fair value of deposits acquired was $139.2 million. Excluding
the deposits we acquired, total deposits declined by approximately $26
million, most of the decline coming from a decrease in our certificates
of deposits. The sustained low interest rate environment has prompted
many depositors to move their funds to the market seeking higher
yielding investments. Total stockholders’ equity increased $3.8 million
to $80.8 million at June 30, 2015 from $77.0 million at June 30, 2014.
The increase is primarily the result of net income for the year ended
June 30, 2015 of $4.5 million, plus the issuance of common stock for the
acquisition of Stephens Federal of $700 thousand, and the approximate
$750 thousand reduction in the unearned ESOP balance and recognition of
compensation expense associated with our equity incentive plans, which
both increased equity. These increases to equity were offset by
dividends of $2.3 million.
Cash Dividend Declared
Total dividends paid during the three months ended June 30, 2015 were
$584 thousand. Total dividends paid during the year ended June 30, 2015
were $2.3 million. On July 30, 2015, the Board of Directors of the
Company declared a quarterly cash dividend of $0.10 per share of the
Company’s common stock payable to stockholders of record as of August
13, 2015, which is to be paid on or about August 27, 2015.
Stock Repurchase Program
During the year ended June 30, 2015, the Company repurchased 1,800
shares of its common stock at a weighted average purchase price of
$19.60 pursuant to the authorized stock repurchase program approved by
the Board of Directors on June 19, 2013. No shares were repurchased
during the three months ended June 30, 2015. Of the 150,000 shares
approved pursuant to this program, 113,400 shares have been purchased.
The timing of the purchases of the remaining shares will depend on
certain factors, including but not limited to, market conditions and
prices, available funds and alternative uses of capital.
About Oconee Federal
Oconee Federal Financial Corp. (NASDAQ Capital Market: OFED) is the
holding company of Oconee Federal Savings and Loan Association. Oconee
Federal Savings and Loan Association is a federally chartered savings
and loan association founded in 1924 and headquartered in Seneca, South
Carolina. Oconee Federal Savings and Loan Association is a community
oriented financial institution operating seven full-service branch
locations in Oconee County, South Carolina, Stephens County, Georgia and
Rabun County, Georgia.
Forward-Looking Statements
This release contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 that are
based on current expectations, estimates and projections about the
Company’s and the Association’s industry, and management’s beliefs and
assumptions. Words such as anticipates, expects, intends, plans,
believes, estimates and variations of such words and expressions are
intended to identify fiscal year forward-looking statements. Such
statements are not guarantees of future performance and are subject to
certain risks, uncertainties and assumptions that are difficult to
forecast. Therefore, actual results may differ materially from those
expressed or forecast in such forward-looking statements. The Company
undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information or otherwise.
Oconee Federal Financial Corp. Selected Financial Information | | |
|
| June 30, 2015 | | June 30, 2014 | * |
| | | | |
|
| | (Dollars in thousands) | |
| | | | |
|
Financial condition data: | |
(Unaudited)
| | | |
Total assets
| |
$
|
475,427
| |
$
|
360,501
| |
Investment securities
| | |
111,167
| | |
103,806
| |
Loans receivable, net
| | |
308,259
| | |
229,931
| |
Deposits
| | |
394,093
| | |
281,015
| |
Total stockholders' equity
| | |
80,790
| | |
76,981
| |
| | | | |
|
Condition ratios: | | (Unaudited) | |
Total equity to total assets
| | |
16.99
|
%
| |
21.35
|
%
|
Total capital to risk weighted assets
| | |
32.39
| | |
42.31
| |
Common equity tier 1 capital to risk weighted assets
| | |
31.92
| |
NA
| |
Tier I capital to risk weighted assets
| | |
31.92
| | |
41.73
| |
Tier I capital to adjusted total assets
| | |
15.44
| | |
19.61
| |
| | | | |
|
Total nonperforming loans to total loans
| | |
1.35
|
%
| |
0.71
|
%
|
Total nonperforming assets to total assets
| | |
1.42
| | |
0.66
| |
Total nonperforming assets to loans and real estate owned
| | |
2.16
| | |
1.03
| |
Allowance for loan losses as a percentage of total loans
| | |
0.32
| | |
0.37
| |
Allowance for loan losses as a percentage of nonperforming loans
| | |
24.13
| | |
51.91
| |
| | | | |
|
* Derived from audited consolidated financial statements | | | | | |
|
| For the Three Months Ended | | For the Year Ended | |
| | June 30, 2015 | | June 30, 2014 | | June 30, 2015 | | June 30, 2014 |
*
|
| | (Dollars in thousands, except per share amounts) | |
| | | | | | | | |
|
Operating data: | | (Unaudited) | |
Interest and dividend income
| |
$
|
4,598
| |
$
|
3,253
| |
$
|
16,185
| |
$
|
12,976
| |
Interest expense
| |
| 297 | |
| 324 | |
| 1,229 | |
| 1,480 | |
Net interest income
| | |
4,301
| | |
2,929
| | |
14,956
| | |
11,496
| |
Provision for loan losses
| | |
179
| | |
26
| | |
195
| | |
108
| |
Non-interest income
| | |
593
| | |
110
| | |
1,419
| | |
608
| |
Non-interest expenses
| |
| 2,605 | |
| 1,676 | |
| 8,978 | |
| 6,307 | |
Income before income taxes
| | |
2,110
| | |
1,337
| | |
7,202
| | |
5,689
| |
Income taxes
| |
| 865 | |
| 483 | |
| 2,690 | |
| 2,050 | |
Net income
| | $ | 1,245 | | $ | 854 | | $ | 4,512 | | $ | 3,639 | |
| | | | | | | | |
|
Basic net income per share
| |
$
|
0.22
| |
$
|
0.15
| |
$
|
0.79
| |
$
|
0.64
| |
Diluted net income per share
| |
$
|
0.21
| |
$
|
0.15
| |
$
|
0.78
| |
$
|
0.64
| |
Dividends declared per share
| |
$
|
0.10
| |
$
|
0.10
| |
$
|
0.40
| |
$
|
0.40
| |
| | | | | | | | |
|
Performance ratios: | | (Unaudited) | |
Return on average assets
| | |
1.03
|
%
| |
0.95
|
%
| |
1.04
|
%
| |
1.00
|
%
|
Return on average equity
| | |
6.17
| | |
4.46
| | |
5.64
| | |
4.78
| |
Interest rate spread
| | |
3.81
| | |
3.29
| | |
3.67
| | |
3.20
| |
Net interest margin
| | |
3.90
| | |
3.39
| | |
3.73
| | |
3.30
| |
Average interest-earning assets to
| | | | | | | | | |
average interest-bearing liabilities
| | |
1.17
|
x
| |
1.26
|
x
| |
1.20
|
x
| |
1.24
|
x
|
| | | | | | | | |
|
* Derived from audited consolidated financial statements | | | | | | | |
View source version on businesswire.com: http://www.businesswire.com/news/home/20150904005561/en/
Contacts:
Oconee Federal Financial Corp.
H. Allen Salter, 864-882-2765
CPA,
Chief Financial Officer
Source: Oconee Federal Financial Corp.
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