"FRANKLIN BANCORP, INC. REPORTS IMPROVED FIRST QUARTER EARNINGS; STRONG DEPOSIT GROWTH; AND STABILIZATION OF ASSET QUALITY"
Southfield, Michigan, April 27, 2004 - Franklin Bancorp, Inc. (NASDAQ: FBCP),
parent company of Franklin Bank, N. A., reported net income for the first quarter
2004 of $755,767, or $0.20 per fully diluted share. Included in the results
were $321,197 in merger and severance related expenses (pre-tax and non-recurring)
associated with the pending merger with First Place Financial Corporation. Net
income represented a 7.7% increase over fourth quarter 2003 earnings, which
included $304,000 in pre-tax, non-recurring merger charges. Net income for the
first quarter ending March 31, 2003 was a net loss of $777,683 that included
previously reported severance compensation of $2,759,740.
Total deposits showed strong growth during the quarter, up $32,718,000 or 32% on an annualized basis. Over 72% of the increase represented growth in core deposits (checking, savings and money market accounts). The cost of retail deposits for the quarter was 0.68%.
Asset quality continued to stabilize in the quarter, with total non-performing assets remaining constant with the prior quarter at $2.4 million. Delinquencies (loans with scheduled payments 30 days or more past due) for the quarter were at 0.88% of total loans outstanding, well-below peer group averages. Net charge-offs for the quarter were only $223,785, or 25 basis points of average loans on an annualized basis. Net charge-offs on an annualized basis as of March 31, 2003 were 1.62% of average loans.
The company’s loan portfolio showed an increase when compared to December 31, 2003. Total loans ended the quarter at $361.7 million, up 7.4% on an annualized basis. The majority of the growth in assets was in loans secured by commercial real estate in the company’s primary business market.
“Overall, we are very pleased with the results for the quarter,” commented Craig L. Johnson, President and Chief Executive Officer. “With the stabilization of asset quality issues, we were able to concentrate our efforts on more productive activities such as improving earnings, growing our earning asset base, and increasing retail deposits. In addition, we opened Lending Center Offices in Northville and Grand Blanc during the quarter to take advantage of opportunities in two affluent high growth markets.”
The allowance for loan losses as a percentage of loans outstanding was 1.47% at March 31, 2004. This was up from 1.39% at December 31, 2003. For the quarter, the Bank provided $600,000 to the loan loss reserve, and net charge-offs were $223,785, resulting in an increase in the overall reserve of $376,216.
Operating expenses (excluding severance and merger-related expenses) for the quarter ended March 31, 2004 were $4.3 million down, 8.5% from the fourth quarter of 2003 and 12.2% from the same quarter last year. Net interest margin for the quarter was 4.28% which was down slightly from the previous quarter.
Total assets as of March 31, 2004 were $543.2 million, up 4.7% during the quarter.
Franklin remains well-capitalized with a total risk based ratio of 11.12% and
a tier one capital ratio of 8.68%.
FRANKLIN BANCORP, INC.
Financial Summary
March 31, March 31,
Quarter Ended (unaudited) 2004 2003
Interest income $6,458,065 $7,290,180
Interest expense 1,356,921 1,682,720
Provision for loan losses 600,000 625,653
Net interest income after provision
for loan losses 4,501,144 4,981,807
Net income/(loss) 755,767 (777,683)
Net income/(loss) per common share - basic $0.20 $(0.21)
Net income/(loss) per common share - diluted $0.20 $(0.21)
Common shares outstanding 3,782,882 3,681,904
March 31, December 31,
At 2004 2003
Assets $543,241,870 $518,962,978
Securities available for sale 84,941,303 91,570,290
Loans (before allowance for loan losses) 361,663,954 355,124,239
Allowance for loan losses (5,299,685) (4,923,469)
Deposits 439,098,059 406,379,774
Borrowings 55,000,000 65,000,000
Total shareholders' equity 46,861,080 45,737,282
Book value per common share 12.39 12.18
Common shares outstanding 3,782,882 3,753,667
Tier 1 leverage capital ratio 8.68% 8.32%
Non-performing assets $2,402,626 $2,399,869
Non-performing assets/total assets 0.44% 0.46%
Allowance for loan losses/loans outstanding 1.47 1.39
March 31, March 31,
Other Information (Quarter Ended) unaudited 2004 2003
Return on average shareholders' equity 6.53% (6.93)%
Return on average assets 0.58 (0.60)
Net interest margin 4.28 4.75
Net charge-offs/average loans 0.25 1.62
Cash dividends per share $0.08 $0.08
FRANKLIN BANCORP, INC.
Consolidated Statements of Financial Condition
(unaudited)
March 31, December 31,
2004 2003
Assets
Cash and due from banks $21,048,984 $46,995,714
Interest-earning deposits 777,107 744,479
Time deposits with FHLB 51,211,730 103,983
Cash and cash equivalents 73,037,822 47,844,176
Securities available for sale 84,941,303 91,570,290
Federal Home Loan Bank stock - cost 5,946,700 5,946,700
Federal Reserve Bank stock - cost 920,500 932,750
Loans (before allowance for
loan losses) 361,663,954 355,124,239
Allowance for loan losses (5,299,685) (4,923,469)
Net loans 356,364,270 350,200,770
Accrued interest receivable 2,341,878 2,717,721
Real estate owned 89,894 147,144
Premises and equipment, net 2,886,782 3,075,976
Bank Owned Life Insurance 11,270,367 11,144,263
Prepaid expenses and other assets 5,442,355 5,383,188
Total assets $543,241,870 $518,962,978
Liabilities
Deposits $439,098,059 $406,379,774
Borrowings 55,000,000 65,000,000
Accrued interest payable 198,044 214,827
Other liabilities 2,084,686 1,631,095
Total liabilities 496,380,789 473,225,696
Shareholders' Equity
Common stock - No par value;
stated value $1.00; authorized
6,000,000 shares; issued and
outstanding 3,782,882 shares
at March 31, 2004 and 3,753,667
shares at December 31, 2003 3,782,882 3,753,667
Additional paid-in capital 28,636,036 28,214,668
Retained earnings 12,764,501 12,310,373
Accumulated other comprehensive income 1,677,662 1,458,574
Total shareholders' equity 46,861,080 45,737,282
Total Liabilities and
Shareholders' Equity $543,241,870 $518,962,978
FRANKLIN BANCORP, INC.
Consolidated Statements of Operations (unaudited)
(unaudited) (unaudited)
Three Months Ended
March 31,
2004 2003
Interest Income
Interest on loans $5,446,570 $5,679,714
Interest on securities 604,638 1,051,594
Other interest and dividends 406,857 558,872
Total interest income 6,458,065 7,290,180
Interest Expense
Interest on deposits 694,065 964,969
Interest on other borrowings 662,856 717,751
Total interest expense 1,356,921 1,682,720
Net interest income 5,101,144 5,607,460
Provision for loan losses 600,000 625,653
Net interest income after provision
for loan losses 4,501,144 4,981,807
Non Interest Income
Deposit account service charges 795,999 756,057
Net gain on sale of securities 0 455,511
Net gain/(loss) on sale of
other assets (17,250) (77,304)
Other fee income 270,617 405,419
Total non interest income 1,049,366 1,539,683
Non Interest Expense
Compensation and benefits 2,234,367 2,462,092
Severance compensation 92,977 2,759,740
Occupancy and equipment 820,420 804,999
Advertising 135,960 154,626
Federal insurance premiums 15,611 17,495
Communication expense 104,082 126,481
Outside service expense 596,398 718,282
Other 627,038 588,758
Total non interest expense 4,626,853 7,632,473
Income/(Loss) before provision for
federal income taxes 923,657 (1,110,983)
Provision/(Benefit) for
federal income taxes 167,890 (333,300)
Net income/(loss) $755,767 $(777,683)
Income per common share:
Average common shares outstanding:
Basic 3,777,708 3,666,688
Diluted 3,823,928 3,754,431
Net income/(loss) per common share:
Basic $0.20 $(0.21)
Diluted $0.20 $(0.21)
As previously announced in November of 2003, Franklin Bancorp entered into a definitive agreement to be acquired by First Place Financial Corp. (NASDAQ:FPFC), the holding company for First Place Bank headquartered in Warren, Ohio. Franklin shareholders approved the merger at a special meeting held on April 5, 2004. Pending regulatory approval, the merger is expected to close by the end of the second quarter of 2004.
Franklin Bancorp serves as the holding company of Franklin Bank, National Association and is headquartered in Southfield , Michigan . Franklin Bank specializes in serving small and medium-sized business customers and their owners throughout the metropolitan Detroit area. Franklin Bank's executive offices, Business Center and one regional branch are located in Southfield , with additional regional branches in Birmingham , Troy and Grosse Pointe Woods . Visit Franklin 's website at http://www.franklinbank.com
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The matters discussed in this press release contain forward-looking statements that involve risk and uncertainties. Words or phrases “will result,” “expect,” “are expected to,” “will continue,” “is anticipated,” “estimate,” “project,” or similar expressions are intended to identify “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Factors which could cause actual results to differ, include, but are not limited to, changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and non-traditional competitors; changes in banking regulations; changes in tax laws; changes in prices, levies and assessments; the impact of technological advances and issues; governmental and regulatory policy changes; the outcomes of pending and future litigation and contingencies; trends in customer behavior as well as their ability to repay loans; changes in the national economy and changes in economic conditions of the Bank's market area and the other risks detailed from time to time in Franklin Bancorp's SEC reports, including Franklin Bancorp's report on Form 10-K for the year ended December 31, 2002 and quarterly reports on Form 10-Q. These forward-looking statements represent Franklin Bancorp's judgment as of the date of this report. Franklin Bancorp disclaims, however, any intent or obligation to update these forward-looking statements.