President’s Message

To Our Shareholders

Earnings for the second quarter were $1,006,000, representing an unusual quarter from an earnings perspective.  The quarter includes a tax exempt gain of $129,000 for a Bank Owned Life Insurance Policy and also a negative Provision for loan losses of $800,000 (representing an after tax net income increase of $536,000). Core Earnings for Home City Financial Corporation continue to be at budget.  For the remainder of the year, I do not anticipate any further tax-exempt gains on Bank Owned Life Insurance Policies or any further adjustments to our Allowance for Loan Losses.

Asset quality continues to be our primary focus.  As a result of continued improvements in our Asset Quality over the previous 5 years, we have adjusted the Allowance for Loan Losses in the amount of $800,000 reflecting the continued trends. Loans past due 90 days or more were $253,792 or .18% to Total loans outstanding which represents an improvement over June 2016.  Loans past due 60-89 days were $116,415 or .08% to Total loans outstanding which represents an improvement over June 2016. Our allowance for loan losses was $1,770,000 or 1.24% to Total loans outstanding. The Allowance for Loan Losses continues to represent seven times our non-performing loans (loans past due 90 days plus).  Year-to-Date Net Charge Offs were $39,865.  Properties classified as Other Real Estate Owned (OREO) were $360,316.  Two OREO residential properties were sold on a land contract basis where the Bank is receiving monthly payments.  The remaining OREO is a commercial property which the Bank has a contract to sell subject to inspections. 

Non-interest expense for the quarter was $959,000.  During the quarter we accrued for some anticipated yearend IT expenses in the amount of $50,000.  Total Non Interest Expense Year-to-Date was $1,877,000 which continues to reflect good efficiency ratios.

Net interest income was $1,375,000 showing an improvement over June 2016.  Loans outstanding closed the quarter at $142,637,000 which is a substantial increase when compared to loans outstanding at December 31, 2016.  Loan volume is critical to the improvement of net interest income and with the control of non-interest expense should result in continued improvement in our net income. 

Shareholders’ equity of $19,319,000 reflected a book value of $23.69 per share on 815,618 shares outstanding.  Your Board of Directors declared a $.12 dividend payable in June of 2017.  

We continue to stay focused on our Community (market that we serve), Shareholder Values (ownership) and Staff. Each group has different agendas, but the ultimate goal of all is a Safe, Sound, and Well Managed Bank.

Sincerely,

J. William Stapleton, President & CEO

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