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8-K - FNBH BANCORP INCfnbh8k_05312011.htm

 

Exhibit 99.1

 

 

Dear Shareholder,

 

FNBH Bancorp, Inc. reported a net loss of $223,000 or $.07 per share for the quarter ended March 31, 2011.  This compares to a net loss of $620,000 or $.19 per share for first quarter 2010.

 

As a result of improved economic conditions and asset quality metrics, the provision for loan losses was reduced by $400,000 from the prior year.  In addition, ongoing efficiency initiatives contributed to a $441,000 decrease in noninterest expense compared to first quarter 2010.

 

While pleased with the Company’s improved financial performance and asset quality metrics, we remain vigilant in pursuit of further asset quality enhancement and are striving for a return to profitability.

 

At March 31, 2011, the Bank’s total capital to risk-weighted assets ratio and Tier One capital ratios were 5.59% and 3.40%, respectively.  These ratios are significantly less than the minimum capital requirements imposed by the Bank’s primary regulator.  As discussed in prior shareholder letters, the terms of our Consent Order with the Office of the Comptroller of the Currency requires the Bank to maintain total capital of at least 11% of risk-weighted assets and Tier One capital equal to at least 8.50% of adjusted total assets. 

 

In addition to the time spent on improved asset quality and financial performance, the management team and the Board have continued their efforts to raise capital.  We hope to be able to report on the success of those efforts as the year progresses.

 

The Bank’s first quarter 4.23% net interest margin (tax equivalent) remains strong and we believe above our peer group average.  Quarter end on balance sheet liquidity consisted of $18.6 million in cash and cash equivalents and $43.2 million in investment securities.  The improving economy, stable funding and our enhanced asset quality metrics provided the opportunity to invest $15 million of on balance sheet cash into low risk, liquid investments during first quarter 2011.

 

We look forward to and welcome your participation at the Annual Shareholder Meeting to be held at 10:00 a.m. on Thursday, June 23rd.

 

On behalf of the FNBH Bancorp family, we thank you for your investment in the Company and your commitment to community banking.   If you have questions, please call me at 517-545-2221.  I always enjoy speaking with shareholders and welcome the opportunity to become better acquainted.

 

Sincerely,

 

 

 

 

Ronald L. Long

President and CEO

 


 

 

 

FNBH Bancorp, Inc.

Consolidated Balance Sheets (Unaudited)

 

March 31,

December 31,

Assets

 

2011

   

2010

 

Cash and due from banks

$

18,414,764

$

40,376,267

Short term investments

 

196,388

   

196,159

 

Total cash and cash equivalents

18,611,152

40,572,426

Investment securities:

Investment securities available for sale, at fair value

42,288,433

27,269,670

FHLBI and FRB stock, at cost

 

901,350

   

901,350

 

Total investment securities

43,189,783

28,171,020

Loans held for investment:

Commercial

199,992,047

203,025,518

Consumer

16,042,891

16,641,544

Real estate mortgage

 

15,851,269

   

16,271,284

 

Total loans held for investment

231,886,207

235,938,346

Less allowance for loan losses

 

(13,734,387

)

 

(13,970,170

)

Net loans held for investment

218,151,820

221,968,176

Premises and equipment, net

7,705,568

7,692,185

Other real estate owned, held for sale

3,518,667

4,294,212

Accrued interest and other assets

 

2,356,105

   

2,642,511

 

Total assets

$

293,533,095

 

$

305,340,530

 

Liabilities and Shareholders' Equity

Liabilities

Deposits:

Demand (non-interest bearing)

$

75,070,847

$

62,294,189

NOW

28,064,897

52,018,941

Savings and money market

77,103,747

75,226,475

Time deposits

98,007,532

100,382,011

Brokered certificates of deposit

 

3,363,014

   

3,358,573

 

Total deposits

281,610,037

293,280,189

Accrued interest, taxes, and other liabilities

 

1,930,318

   

1,926,543

 

Total liabilities

283,540,355

295,206,732

Shareholders' Equity

Preferred stock, no par value.  Authorized 30,000 shares; no shares

issued and outstanding

-    

-

Common stock, no par value. Authorized 7,000,000 shares at March 31, 2011

and December 31, 2010; 3,171,523 shares issued and outstanding at March 31,

2011 and 3,165,392 shares issued and outstanding at December 31, 2010

7,070,181

6,935,140

Retained earnings

2,524,857

2,747,615

Deferred directors' compensation

577,111

708,372

Accumulated other comprehensive income

(179,409

)

(257,329

)

Total shareholders' equity

9,992,740

   

10,133,798

Total liabilities and shareholders' equity

$

293,533,095

 

$

305,340,530

 


 

 

 

FNBH Bancorp, Inc.

Consolidated Statements of Operations (Unaudited)

 

             Three months ended March 31

 

2011

   

2010

 

Interest and dividend income:

Interest and fees on loans

$

2,964,246

$

3,445,008

Interest and dividends on investment securities:

U.S. Treasury, agency securities and CMOs

193,445

210,621

Obligations of states and political subdivisions

63,764

73,277

Other securities

5,715

4,793

Interest on short term investments

 

323

   

89

 

Total interest and dividend income

 

3,227,493

   

3,733,788

 

Interest expense:

Interest on deposits

451,003

708,814

Interest on other borrowings

 

-    

   

1,174

 

Total interest expense

 

451,003

   

709,988

 

Net interest income

2,776,490

3,023,800

Provision for loan losses

 

799,998

   

1,200,000

 

Net interest income after provision for loan losses

 

1,976,492

   

1,823,800

 

Noninterest income:

Service charges and other fee income

627,006

774,273

Trust income

53,511

71,571

Other

 

31,402

 

1,447

Total noninterest income

 

711,919

   

847,291

 

Noninterest expense:

Salaries and employee benefits

1,212,190

1,399,247

Net occupancy expense

270,973

284,374

Equipment expense

78,922

90,150

Professional and service fees

350,552

390,381

Loan collection and foreclosed property expenses

152,524

266,425

Computer service fees

112,641

117,101

Computer software amortization expense

59,952

66,044

FDIC assessment fees

325,167

356,361

Insurance

147,440

161,278

Printing and supplies

29,633

34,797

Director fees

19,187

16,950

Net loss on sale/writedown of OREO and repossessions

25,155

31,250

Other

126,833

138,193

Total noninterest expense

 

2,911,169

   

3,352,551

 

Loss before federal income taxes

(222,758

)

(681,460

)

Federal income tax expense (benefit)

 

-

   

(61,316

)

Net loss

$

(222,758

)

$

(620,144

)

Per share statistics:

Basic and Diluted EPS

$

(0.07

)

$

(0.19

)

Dividends

$

-

$

-

Basic and diluted average shares outstanding

3,197,620

3,189,393