Net income for the three months ended
Robert R. Chapman III, CEO,
“Working closely with customers to meet their banking needs, manage their finances and maintain credit quality during challenging times has contributed to low levels of nonperforming loans. The Company has not needed to make any provision for loan losses in 2021, which has had a positive impact on net interest income after provision for loan losses and reflects the continuing financial and economic health of our customer base.
“We actively participated in the Payroll Protection Program (PPP), which has been a significant element of our 2021 operations as our team dedicated considerable time and energy to working with customers to secure loans, and processing and managing these loans. As the program is in the final stages of winding down, we believe it has provided meaningful support for the hundreds of commercial customers who participated. We assisted existing customers and welcomed many businesses who were working with
“Throughout the communities we serve, the signs of economic recovery are very encouraging. While it is too early to declare victory over COVID-19, the Delta variant and the lingering impact of the pandemic, all signs point to continuing normalization of life and activities. Consistent with our Company’s safe, secure operating philosophy, we are maintaining significant cash reserves and an adequate allowance for loan loss given the risks and uncertainties in the current environment. While we maintain a prudent, cautious stance, we are moving forward with confidence.”
Highlights
- Net income in the third quarter and nine months of 2021 reflected significant noninterest income contributions from mortgage loan processing fees, gains on the sale of originated residential mortgages to the secondary market and continuing growth in the Bank’s fee-based corporate electronic treasury services.
- Total interest income was
$7.32 million in the third quarter of 2021 compared with$7.34 million a year earlier, and$21.91 million in the nine months of 2021 compared with$21.91 million a year earlier. Interest income from loans in the third quarter of 2021 reflected increasing organic commercial loan activity offset by declining income related to PPP loans as the program continues to wind down. - Net interest income after provision for loan losses was
$6.82 million in the third quarter of 2021 and$20.28 million in the nine months of 2021, up 24% and 28%, respectively, compared with the 2020 periods. Net interest income in the three and nine-month periods endedSeptember 30, 2021 reflected 57% and 55% year-over-year reductions respectively of interest expense and no provision for loan losses in both periods of 2021. - Noninterest income in the third quarter and nine months of 2021 primarily reflected income from residential mortgage loan processing fees and gains on the sale of originated mortgage loans as the Bank’s mortgage lending maintained brisk activity.
- Loans, net of the allowance for loan losses, were
$583.6 million atSeptember 30, 2021 , compared with$601.9 million atDecember 31, 2020 , primarily reflecting ongoing paydowns of PPP loans. - Commercial real estate loans (owner occupied and non-owner occupied) increased in the third quarter of 2021 from the second quarter of 2021 and have grown by
$24.3 million sinceSeptember 30, 2020 . - Asset quality was sound with a 0.32% ratio of nonperforming loans to total loans, reflecting customers’ strong credit quality, and nonperforming loans remained at low levels. The allowance for loan losses to total loans was 1.23% at
September 30, 2021 (approximately 1.27% excluding government-guaranteed PPP loans). - Total deposits increased to
$853.8 million atSeptember 30, 2021 compared with$765.0 million atDecember 31, 2020 , reflecting continued core deposit growth (noninterest-bearing demand, NOW, savings and money market accounts) and continued trimming of time deposits. Growth has reflected factors including increased market presence and new and expanded commercial and retail banking relationships. - Total stockholders’ equity was
$68.9 million atSeptember 30, 2021 compared with$66.7 million atDecember 31, 2020 . Book value per share was$14.53 atSeptember 30, 2021 compared with$15.38 per share atDecember 31, 2020 , primarily reflecting the 10% stock dividend declared in the second quarter of 2021. - On
October 19, 2021 the Company’s board of directors approved a quarterly$0.07 per share dividend payable to stockholders of record onNovember 26, 2021 , to be paid onDecember 10, 2021 . - The Company’s current stock repurchase plan remains in effect through
January 20, 2022 . Although the Company did not repurchase any stock pursuant to this program during the third quarter of 2021, the Company continues to look for opportunities to repurchase shares within the safe harbor and when consistent with the Company’s goals. - In
October 2021 Michael A. Syrek was named President of the Bank. He has served as Executive Vice President and Chief Loan Officer since joining the Bank in 2012 and continues to head commercial banking operations and a growing team of bankers.Robert Chapman continues to serve as the CEO of the Bank and President of the Company.
Third Quarter, Nine Months of 2021 Operational Review
Net interest income after provision for loan losses in the third quarter of 2021 was
Total interest income was
In the nine months of 2021, net interest income after provision for loan losses was
Lower interest expense in both periods of 2021 reflected reduced costs of time deposits and borrowings, a retirement of higher-cost debt in 2020, and continued growth of lower-cost core deposits (noninterest-bearing demand, NOW, savings and money market accounts). The rate paid on total interest-bearing liabilities was 0.28% in the third quarter of 2021, down from 0.71% a year earlier. The net interest margin was 3.11% and interest spread was 3.05% in the third quarter of 2021. The margin and interest spread in the third quarter and nine months of 2021 were relatively consistent with the margin and interest spread in the comparable 2020 periods.
In the third quarter of 2021, noninterest income, including gains from the sale of residential mortgages to the secondary market and income from the Bank’s line of treasury management services for commercial customers, was
For the nine months of 2021, noninterest income was
Balance Sheet Review: Asset Quality, Positive Commercial Lending Outlook
Total assets were
Loans, net of allowance for loan losses of
Commercial loans, including outstanding PPP loans, were
“Importantly, we continue to expand banking relationships with a host of customers in our served markets, and are earning new business because of our extensive product capabilities and services that we believe exceed those of our competitors. Electronic commercial treasury services, cash management, and depository products complement lending. We have continued to approve and close a large volume of new commercial loans, although not at a sufficient pace to offset significant PPP forgiveness payoffs combined with normal amortization.
“As a regional community bank with significant scope and scale, our wide range of sophisticated products combined with expertise and personalized financial solutions give us a significant competitive advantage. As a result, we can look beyond transactional banking and focus on establishing and growing full-service banking relationships with business customers. Our commercial loan pipeline is robust, and we are regularly earning new customers. We believe that as the climate for businesses continues to normalize, we will experience even greater momentum.”
Commercial real estate and commercial construction lending have increased modestly during the past year despite the pandemic and economic uncertainties. At
Consumer loans increased slightly year-over-year. Retained residential mortgage totals declined to
Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.32% at
The Company maintained a 382% allowance for loan losses to nonperforming loans ratio. While loan and asset quality have remained sound throughout the pandemic period, management has maintained adequate reserves against continued loan portfolio risk primarily attributable to the continuing economic uncertainties arising from COVID-19 and the Delta variant.
Total deposits at
The Company’s measures of shareholder value included total stockholders’ equity of
About the Company
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "estimate," "expect," "intend," "anticipate," "plan" and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made.
CONTACT:
tscruggs@bankofthejames.com
FINANCIAL STATEMENTS FOLLOW
Dollar amounts in thousands, except per share data
unaudited
Selected Data: | Three months ending 2021 | Three months ending 2020 | Change | Year to date 2021 | Year to date 2020 | Change | ||||||||||||
Interest income | $ | 7,315 | $ | 7,338 | -0.31 | % | $ | 21,914 | $ | 21,907 | 0.03 | % | ||||||
Interest expense | 493 | 1,135 | -56.56 | % | 1,634 | 3,650 | -55.23 | % | ||||||||||
Net interest income | 6,822 | 6,203 | 9.98 | % | 20,280 | 18,257 | 11.08 | % | ||||||||||
Provision for loan losses | - | 700 | -100.00 | % | - | 2,348 | -100.00 | % | ||||||||||
Noninterest income | 2,822 | 3,064 | -7.90 | % | 8,305 | 8,039 | 3.31 | % | ||||||||||
Noninterest expense | 7,298 | 6,744 | 8.21 | % | 21,424 | 19,876 | 7.79 | % | ||||||||||
Income taxes | 465 | 369 | 26.02 | % | 1,431 | 802 | 78.43 | % | ||||||||||
Net income | 1,881 | 1,454 | 29.37 | % | 5,730 | 3,270 | 75.23 | % | ||||||||||
Weighted average shares outstanding - basic (1) | 4,740,657 | 4,773,380 | (32,723 | ) | 4,750,235 | 4,776,523 | (26,288 | ) | ||||||||||
Weighted average shares outstanding - diluted (1) | 4,740,657 | 4,773,380 | (32,723 | ) | 4,750,235 | 4,776,523 | (26,288 | ) | ||||||||||
Basic net income per share (1) | $ | 0.40 | $ | 0.30 | $ | 0.10 | $ | 1.21 | $ | 0.68 | $ | 0.53 | ||||||
Fully diluted net income per share (1) | $ | 0.40 | $ | 0.30 | $ | 0.10 | $ | 1.21 | $ | 0.68 | $ | 0.53 |
(1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in
Balance Sheet at period end: | 2021 | 2020 | Change | 2020 | 2019 | Change | ||||||||||||
Loans, net | $ | 583,572 | $ | 601,934 | -3.05 | % | $ | 616,581 | $ | 573,274 | 7.55 | % | ||||||
Loans held for sale | 6,462 | 7,102 | -9.01 | % | 10,232 | 4,221 | 142.41 | % | ||||||||||
Total securities | 155,957 | 93,856 | 66.17 | % | 79,303 | 63,343 | 25.20 | % | ||||||||||
Total deposits | 853,829 | 764,967 | 11.62 | % | 763,933 | 649,459 | 17.63 | % | ||||||||||
Stockholders' equity | 68,902 | 66,732 | 3.25 | % | 65,782 | 61,445 | 7.06 | % | ||||||||||
Total assets | 942,631 | 851,386 | 10.72 | % | 849,129 | 725,394 | 17.06 | % | ||||||||||
Shares outstanding | 4,740,657 | 4,339,436 | 401,221 | 4,339,436 | 4,357,436 | (18,000 | ) | |||||||||||
Book value per share | $ | 14.53 | $ | 15.38 | $ | (0.85 | ) | $ | 15.16 | $ | 14.10 | $ | 1.06 |
Daily averages: | Three months ending 2021 | Three months ending 2020 | Change | Year to date 2021 | Year to date 2020 | Change | ||||||||||
Loans, net | $ | 587,129 | $ | 619,574 | -5.24 | % | $ | 598,135 | $ | 601,382 | -0.54 | % | ||||
Loans held for sale | 5,638 | 8,881 | -36.52 | % | 5,777 | 6,072 | -4.86 | % | ||||||||
Total securities | 142,670 | 63,743 | 123.82 | % | 118,662 | 59,358 | 99.91 | % | ||||||||
Total deposits | 843,452 | 768,618 | 9.74 | % | 820,517 | 720,009 | 13.96 | % | ||||||||
Stockholders' equity | 67,657 | 62,309 | 8.58 | % | 66,183 | 61,778 | 7.13 | % | ||||||||
Interest earning assets | 869,899 | 793,709 | 9.60 | % | 847,730 | 744,246 | 13.90 | % | ||||||||
Interest bearing liabilities | 692,709 | 638,166 | 8.55 | % | 669,535 | 608,968 | 9.95 | % | ||||||||
Total assets | 930,846 | 849,820 | 9.53 | % | 906,389 | 798,106 | 13.57 | % |
Financial Ratios: | Three months ending 2021 | Three months ending 2020 | Change | Year to date 2021 | Year to date 2020 | Change | ||||||
Return on average assets | 0.80 | % | 0.68 | % | 0.12 | 0.85 | % | 0.55 | % | 0.30 | ||
Return on average equity | 11.03 | % | 9.26 | % | 1.77 | 11.58 | % | 7.05 | % | 4.53 | ||
Net interest margin | 3.11 | % | 3.10 | % | 0.01 | 3.20 | % | 3.27 | % | (0.07 | ) | |
Efficiency ratio | 75.67 | % | 72.77 | % | 2.90 | 74.95 | % | 75.59 | % | (0.64 | ) | |
Average equity to | ||||||||||||
average assets | 7.27 | % | 7.33 | % | (0.06 | ) | 7.30 | % | 7.74 | % | (0.44 | ) |
Allowance for loan losses: | Three months ending 2021 | Three months ending 2020 | Change | Year to date 2021 | Year to date 2020 | Change | ||||||||||
Beginning balance | $ | 7,212 | $ | 6,193 | 16.45 | % | $ | 7,156 | $ | 4,829 | 48.19 | % | ||||
Provision for losses | - | 700 | -100.00 | % | - | 2,348 | -100.00 | % | ||||||||
Charge-offs | (16 | ) | (57 | ) | -71.93 | % | (80 | ) | (396 | ) | -79.80 | % | ||||
Recoveries | 80 | 130 | -38.46 | % | 200 | 185 | 8.11 | % | ||||||||
Ending balance | 7,276 | 6,966 | 4.45 | % | 7,276 | 6,966 | 4.45 | % |
Nonperforming assets: | 2021 | 2020 | Change | 2020 | 2019 | Change | ||||||||||
Total nonperforming loans | $ | 1,904 | $ | 2,064 | -7.75 | % | $ | 2,538 | $ | 1,301 | 95.08 | % | ||||
Other real estate owned | 806 | 1,105 | -27.06 | % | 1,405 | 2,339 | -39.93 | % | ||||||||
Total nonperforming assets | 2,710 | 3,169 | -14.48 | % | 3,943 | 3,640 | 8.32 | % | ||||||||
Troubled debt restructurings - (performing portion) | 376 | 392 | -4.08 | % | 397 | 410 | -3.17 | % |
Asset quality ratios: | 2021 | 2020 | Change | 2020 | 2019 | Change | ||||||
Nonperforming loans to total loans | 0.32 | % | 0.34 | % | (0.02 | ) | 0.41 | % | 0.23 | % | 0.18 | |
Allowance for loan losses to total loans | 1.23 | % | 1.17 | % | 0.06 | 1.12 | % | 0.84 | % | 0.28 | ||
Allowance for loan losses to nonperforming loans | 382.14 | % | 346.71 | % | 35.43 | 274.47 | % | 371.18 | % | (96.71 | ) |
Consolidated Balance Sheets
(dollar amounts in thousands, except per share amounts)
(unaudited) | |||||||
Assets | |||||||
Cash and due from banks | $ | 30,340 | $ | 31,683 | |||
Federal funds sold | 116,956 | 69,203 | |||||
Total cash and cash equivalents | 147,296 | 100,886 | |||||
Securities held-to-maturity (fair value of | 3,659 | 3,671 | |||||
Securities available-for-sale, at fair value | 152,298 | 90,185 | |||||
Restricted stock, at cost | 1,324 | 1,551 | |||||
Loans, net of allowance for loan losses of | 583,572 | 601,934 | |||||
Loans held for sale | 6,462 | 7,102 | |||||
Premises and equipment, net | 17,030 | 16,621 | |||||
Software, net | 208 | 361 | |||||
Interest receivable | 2,106 | 2,350 | |||||
Cash value - bank owned life insurance | 18,670 | 16,355 | |||||
Other real estate owned | 806 | 1,105 | |||||
Income taxes receivable | 312 | - | |||||
Deferred tax asset | 1,798 | 1,219 | |||||
Other assets | 7,090 | 8,046 | |||||
Total assets | $ | 942,631 | $ | 851,386 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Noninterest bearing demand | 163,510 | 143,345 | |||||
NOW, money market and savings | 549,989 | 463,506 | |||||
Time | 140,330 | 158,116 | |||||
Total deposits | 853,829 | 764,967 | |||||
Capital notes | 10,031 | 10,027 | |||||
Income taxes payable | - | 286 | |||||
Interest payable | 49 | 85 | |||||
Other liabilities | 9,820 | 9,289 | |||||
Total liabilities | $ | 873,729 | $ | 784,654 | |||
Stockholders' equity | |||||||
Common stock | |||||||
4,740,657 and 4,339,436 as of | 10,145 | 9,286 | |||||
Additional paid-in-capital | 37,230 | 30,989 | |||||
Accumulated other comprehensive (loss) income | (386 | ) | 1,792 | ||||
Retained earnings | 21,913 | 24,665 | |||||
Total stockholders' equity | $ | 68,902 | $ | 66,732 | |||
Total liabilities and stockholders' equity | $ | 942,631 | $ | 851,386 | |||
Consolidated Statements of Income
(dollar amounts in thousands, except per share amounts)
(unaudited)
For the Three Months | For the Nine Months | ||||||||||||||
Ended | Ended | ||||||||||||||
Interest Income | 2021 | 2020 | 2021 | 2020 | |||||||||||
Loans | $ | 6,605 | $ | 6,958 | $ | 20,089 | $ | 20,695 | |||||||
Securities | |||||||||||||||
230 | 168 | 640 | 506 | ||||||||||||
Mortgage backed securities | 138 | 50 | 299 | 164 | |||||||||||
Municipals | 243 | 94 | 599 | 249 | |||||||||||
Dividends | 4 | 15 | 39 | 48 | |||||||||||
Other (Corporates) | 55 | 25 | 155 | 71 | |||||||||||
Interest bearing deposits | 7 | 15 | 26 | 85 | |||||||||||
Federal Funds sold | 33 | 13 | 67 | 89 | |||||||||||
Total interest income | 7,315 | 7,338 | 21,914 | 21,907 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | |||||||||||||||
NOW, money market savings | 146 | 177 | 419 | 669 | |||||||||||
Time Deposits | 239 | 798 | 890 | 2,559 | |||||||||||
Finance leases | 26 | 29 | 80 | 87 | |||||||||||
Brokered time deposits | - | 46 | - | 143 | |||||||||||
Capital notes | 82 | 85 | 245 | 192 | |||||||||||
Total interest expense | 493 | 1,135 | 1,634 | 3,650 | |||||||||||
Net interest income | 6,822 | 6,203 | 20,280 | 18,257 | |||||||||||
Provision for loan losses | - | 700 | - | 2,348 | |||||||||||
Net interest income after provision for loan losses | 6,822 | 5,503 | 20,280 | 15,909 | |||||||||||
Noninterest income | |||||||||||||||
Gains on sale of loans held for sale | 2,091 | 2,459 | 6,175 | 5,586 | |||||||||||
Service charges, fees and commissions | 612 | 498 | 1,803 | 1,500 | |||||||||||
Life insurance income | 117 | 101 | 315 | 289 | |||||||||||
Other | 2 | 6 | 12 | 20 | |||||||||||
Gain on sales of available-for-sale securities | - | - | - | 644 | |||||||||||
Total noninterest income | 2,822 | 3,064 | 8,305 | 8,039 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 4,093 | 3,713 | 11,901 | 11,040 | |||||||||||
Occupancy | 437 | 419 | 1,270 | 1,237 | |||||||||||
Equipment | 626 | 560 | 1,883 | 1,738 | |||||||||||
Supplies | 120 | 120 | 354 | 353 | |||||||||||
Professional, data processing, and other outside expense | 1,029 | 990 | 2,978 | 2,884 | |||||||||||
Marketing | 209 | 185 | 720 | 500 | |||||||||||
Credit expense | 309 | 359 | 869 | 831 | |||||||||||
Other real estate expenses | 1 | 15 | 74 | 135 | |||||||||||
137 | 76 | 425 | 220 | ||||||||||||
Other | 337 | 307 | 950 | 938 | |||||||||||
Total noninterest expenses | 7,298 | 6,744 | 21,424 | 19,876 | |||||||||||
Income before income taxes | 2,346 | 1,823 | 7,161 | 4,072 | |||||||||||
Income tax expense | 465 | 369 | 1,431 | 802 | |||||||||||
Net Income | $ | 1,881 | $ | 1,454 | $ | 5,730 | $ | 3,270 | |||||||
Weighted average shares outstanding - basic (1) | 4,740,657 | 4,773,380 | 4,750,235 | 4,776,523 | |||||||||||
Weighted average shares outstanding - diluted (1) | 4,740,657 | 4,773,380 | 4,750,235 | 4,776,523 | |||||||||||
Net income per common share - basic (1) | $ | 0.40 | $ | 0.30 | $ | 1.21 | $ | 0.68 | |||||||
Net income per common share - diluted (1) | $ | 0.40 | $ | 0.30 | $ | 1.21 | $ | 0.68 |
(1) Shares and per share amounts for all periods have been adjusted to reflect a 10% stock dividend declared in
Source:
2021 GlobeNewswire, Inc., source