updated 11/1/2010 12:45:53 PM ET 2010-11-01T16:45:53

MILLINGTON, N.J., Nov. 1, 2010 (GLOBE NEWSWIRE) -- MSB Financial Corp. (Nasdaq:MSBF) (the "Company"), the holding company for Millington Savings Bank (the "Bank"), reported net income of $215,000 for the three months ended September 30, 2010. This compares to net income of $194,000 for the quarter ended September 30, 2009. The increase was due to increases in net interest income and non-interest income offset by increases in non-interest expense, income tax provision and the provision for loan losses.

Net interest income for the quarter ended September 30, 2010 was $2.7 million, as compared to $2.5 million for the quarter ended September 30, 2009, with the increase primarily due to a reduction in interest expense attributed to a reduction in average cost of funds. The interest rate spread for the September 30, 2010 quarter was 3.28%, compared to 2.82% for the quarter ended September 2009. The average yield on interest earning assets for the September 2010 quarter was 4.84% compared to 5.14% for the quarter ended September 2009. The average cost of interest bearing liabilities for the September 30, 2010 quarter was 1.56% compared to 2.32% for the quarter ended September 2009.   

The provision for loan losses was $475,000 during the quarter ended September 30, 2010, an increase over the $345,000 provided during the quarter ended September 30, 2009. The Bank's management reviews the level of the allowance for loan losses on a quarterly basis and establishes the provision for loan losses based upon the volume and types of lending, delinquency levels, loss experience, the amount of impaired and classified loans, economic conditions and other factors related to the collectability of the loan portfolio. The significant increase in the provision during the current period was primarily due to higher delinquency levels and economic conditions. The Bank had $15.7 million in nonperforming loans as of September 30, 2010 compared to $11.8 million as of September 30, 2009.

Noninterest income was $257,000 for the quarter ended September 30, 2010 compared to $167,000 for the quarter ended September 30, 2009. The increase for the quarter ending September 30, 2010 compared to the quarter ended September 30, 2009 resulted primarily from an increase of $97,000 in fees and service charges, which included $78,000 in fees that were received from the early prepayment of an investment security, and a $6,000 increase in bank owned life insurance income, offset by decreases of $12,000 in unrealized gains on trading securities and $1,000 in other noninterest income.

Noninterest expense was $2.2 million for the quarter ended September 30, 2010, and $2.0 million for the quarter ended September 30, 2009. The increase for the quarter ending September 30, 2010 as compared to the quarter ended September 30, 2009 resulted primarily from increases in salaries and benefits, directors' compensation, FDIC assessment and noninterest expenses; offset in part by  a decrease in occupancy and equipment expense. Between the September 2010 and September 2009 quarters there were increases of $49,000 in salaries and employee benefits, $41,000 in other noninterest expense, $20,000 in directors' compensation and decreases of $11,000 and $2,000 in occupancy and equipment and advertising expense, respectively. The increases in salaries and employee benefits and directors' compensation expenses reflect expenses related to the Bank's restricted stock award program that was instituted in December 2009.   The primary increase in other noninterest expense was largely attributed to the increase in other real estate expense.   

Total assets were $355.9 million at September 30, 2010, compared to $358.7 million at June 30, 2010 with the decrease due primarily to a $2.7 million decrease in loans receivable, net, and a $1.5 million decrease in securities held to maturity, offset in part by an increase of $1.3 million in cash and cash equivalents. Deposits were $293.3 million at September 30, 2010, compared to $296.4 million at June 30, 2010, and FHLB advances remained the same for both periods. Total equity was $40.2 million, compared to $40.0, primarily due to an increase in net income and a decrease in unearned ESOP shares.  

At September 30, 2010 the Company had 5,180,168 shares outstanding compared to 5,183,468 shares outstanding as of June 30, 2010. Shares of the Company's common stock trade on the NASDAQ Global Market under the symbol "MSBF."   The Company is majority owned by its mutual holding company parent, MSB Financial, MHC.

Forward Looking Statements

The forgoing release may contain forward-looking statements concerning the financial condition, results of operations and business of the Company. We caution that such statements are subject to a number of uncertainties and actual results could differ materially, and, therefore, readers should not place undue reliance on any forward-looking statements.

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