Net income for the full year of 2023 decreased 17% to
Dividends per share in the fourth quarter of 2023 remained consistent with the third quarter of 2023 at
“We are pleased with our 2023 results,” said
Fourth Quarter 2023 Highlights:
- Net interest income in the fourth quarter of 2023 increased 1% to
$26.7 million compared to$26.4 million in the third quarter of 2023 and decreased 2% compared to$27.3 million in the fourth quarter of 2022. - Net interest margin on a tax equivalent basis (“NIMTE”)* was 4.12% for the fourth quarter of 2023, a 9-basis point decrease from the third quarter of 2023 and a 24-basis point decrease compared to the fourth quarter of 2022.
- The weighted average interest rate for new loans booked in the fourth quarter of 2023 was 8.03% compared to 7.39% in the third quarter of 2023 and 6.26% in the fourth quarter a year ago.
- Return on average assets (“ROAA”) was 0.93% and return on average equity ("ROAE") was 11.36% for the fourth quarter of 2023.
- Portfolio loans were
$1.79 billion atDecember 31, 2023 , up 4% from the preceding quarter and up 19% from a year ago, primarily due to new customer relationships, expanding market share and retaining certain mortgages originated by Residential Mortgage, a subsidiary ofNorthrim Bank (the“Bank”), in the loan portfolio. - Total deposits were
$2.49 billion atDecember 31, 2023 , up 2% from the preceding quarter, and up 4% from$2.39 billion a year ago. Noninterest bearing demand deposits represented 31% of total deposits at bothDecember 31, 2023 andSeptember 30, 2023 , down from 34% atDecember 31, 2022 . Average interest-bearing deposits were$1.72 billion for the fourth quarter of 2023, up 6% from the preceding quarter, and up 9% from the fourth quarter a year ago. - The average cost of interest-bearing deposits was 2.00% in the fourth quarter of 2023, up from 1.75% in the third quarter of 2023 and 0.56% in the fourth quarter a year ago.
- The net unrealized loss, net of tax on the available for sale investment portfolio reflected in accumulated other comprehensive income was
$17.4 million atDecember 31, 2023 , down from$26.5 million in the preceding quarter.
Financial Highlights | Three Months Ended | |||||||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2022 | |||||||
Total assets | ||||||||||
Total portfolio loans | ||||||||||
Total deposits | ||||||||||
Total shareholders' equity | ||||||||||
Net income | ||||||||||
Diluted earnings per share | ||||||||||
Return on average assets | 0.93 | % | 1.22 | % | 0.85 | % | 0.76 | % | 1.26 | % |
Return on average shareholders' equity | 11.36 | % | 14.67 | % | 9.85 | % | 8.73 | % | 15.71 | % |
NIM | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % | 4.31 | % |
NIMTE* | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % | 4.36 | % |
Efficiency ratio | 72.21 | % | 66.64 | % | 74.03 | % | 78.51 | % | 65.23 | % |
Total shareholders' equity/total assets | 8.36 | % | 8.07 | % | 8.39 | % | 8.70 | % | 8.18 | % |
Tangible common equity/tangible assets* | 7.84 | % | 7.54 | % | 7.83 | % | 8.13 | % | 7.62 | % |
Book value per share | ||||||||||
Tangible book value per share* | ||||||||||
Dividends per share | ||||||||||
Common shares outstanding | 5,513,459 | 5,548,436 | 5,610,841 | 5,672,841 | 5,700,728 | |||||
* References to NIMTE, tangible book value per share, tangible common equity to tangible common assets, and tangible common equity to tangible assets, excluding the unrealized losses on the available for sale securities portfolio, (all of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.
Alaska Economic Update
(Note: sources for information included in this section are included on page 12.)
According to the DOL, Health Care had the largest growth in new jobs in
Alaska’s Gross State Product (“GSP”) in the third quarter of 2023, was estimated to be
The BEA also calculated Alaska’s seasonally adjusted personal income at
The monthly average price of Alaska North Slope (“ANS”) crude oil was in a range between
According to the Alaska Multiple Listing Services, the average sales price of a single family home in
Average sales prices for single family homes in the Matanuska Susitna Borough rose 4% in 2023 to
However, the Alaska Multiple Listing Services reported a large decrease in the number of units sold in both communities. There were 2,162 housing units sold in
Review of Income Statement
Consolidated Income Statement
In the fourth quarter of 2023, Northrim generated a ROAA of 0.93% and a ROAE of 11.36%, compared to 1.22% and 14.67%, respectively, in the third quarter of 2023 and 1.26% and 15.71%, respectively, in the fourth quarter a year ago. For the year 2023, Northrim generated a ROAA of 0.94% and a ROAE of 11.17%, compared to 1.16% and 13.68% for 2022.
Net Interest Income/Net Interest Margin
Net interest income increased 1% to
NIMTE* was 4.12% in the fourth quarter of 2023 compared to 4.21% in the preceding quarter and 4.36% in the fourth quarter a year ago. NIMTE* decreased 9 basis points in the fourth quarter of 2023 compared to the prior quarter and 24 basis points compared to the fourth quarter of 2022 primarily due to higher costs on interest bearing demand deposits that was only partially offset by higher earning asset balances and higher loan yields. The weighted average interest rate for new loans booked in the fourth quarter of 2023 was 8.03% compared to 7.39% in the third quarter of 2023 and 6.26% in the fourth quarter a year ago. Long-term investments were purchased in the fourth quarter of 2023 with a weighted average yield of 5.33%. The yield on the investment portfolio increased to 2.48% for the quarter as a result of repricing of the variable rate investments which represent 10% of the investment portfolio. “We expect our net interest margin to continue to remain relatively stable as estimated increases in earning-asset yields from the repricing of earning assets will likely be offset by increases in deposit costs,” said
Provision for Credit Losses
Northrim recorded a provision for credit losses of
Nonperforming loans, net of government guarantees, decreased during the quarter to
The allowance for credit losses was 345% of nonperforming loans, net of government guarantees, at the end of the fourth quarter of 2023, compared to 326% three months earlier and 215% a year ago.
Other Operating Income
In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed
1As of |
Other Operating Expenses
Operating expenses were
Income Tax Provision
In the fourth quarter of 2023, Northrim recorded
Community Banking
In the most recent deposit market share data from the
Net interest income in the Community Banking segment totaled
The following table provides highlights of the Community Banking segment of Northrim:
Three Months Ended | |||||
(Dollars in thousands, except per share data) | 2023 | 2023 | 2023 | 2022 | |
Net interest income | |||||
Provision for credit losses | 885 | 1,190 | 1,407 | 360 | 1,886 |
Other operating income | 4,048 | 3,597 | 3,067 | 2,900 | 3,819 |
Other operating expense | 18,516 | 16,946 | 17,805 | 17,417 | 16,678 |
Income before provision for income taxes | 9,103 | 9,511 | 6,555 | 9,875 | 11,996 |
Provision for income taxes | 1,941 | 1,709 | 1,192 | 2,315 | 1,884 |
Net income Community Banking segment | |||||
Weighted average shares outstanding, diluted | 5,578,491 | 5,624,906 | 5,677,292 | 5,757,458 | 5,769,415 |
Diluted earnings per share | |||||
Year Ended | ||||
(Dollars in thousands, except per share data) | December 31, 2023 | December 31, 2022 | ||
Net interest income | ||||
Provision for credit losses | 3,842 | 1,846 | ||
Other operating income | 13,612 | 12,505 | ||
Other operating expense | 70,684 | 63,901 | ||
Income before provision for income taxes | 35,044 | 39,679 | ||
Provision for income taxes | 7,157 | 8,041 | ||
Net income Community Banking segment | ||||
Weighted average shares outstanding, diluted | 5,661,460 | 5,829,412 | ||
Diluted earnings per share | ||||
Home Mortgage Lending
During the fourth quarter of 2023, mortgage loans funded for sale decreased to
The Company has developed mortgage products including adjustable rate mortgages, a second home product, and extended locks, which are intended to appeal to customers given the current interest rate environment. During the fourth quarter of 2023, our home mortgage lending subsidiary, Residential Mortgage originated
The expansion efforts of mortgage production in the
The net change in fair value of mortgage servicing rights decreased mortgage banking income by
As of
The following table provides highlights of the Home Mortgage Lending segment of Northrim:
Three Months Ended | |||||||||||||||
(Dollars in thousands, except per share data) | December 31, 2023 | 2023 | 2023 | December 31, 2022 | |||||||||||
Mortgage loan commitments | |||||||||||||||
Mortgage loans funded for sale | |||||||||||||||
Mortgage loans funded for investment | 27,114 | 21,585 | 55,595 | 41,964 | 34,622 | ||||||||||
Total mortgage loans funded | |||||||||||||||
Mortgage loan refinances to total fundings | 4 | % | 5 | % | 3 | % | 5 | % | 11 | % | |||||
Mortgage loans serviced for others | |||||||||||||||
Net realized gains on mortgage loans sold | |||||||||||||||
Change in fair value of mortgage loan commitments, net | (296 | ) | (289 | ) | 358 | 125 | (446 | ) | |||||||
Total production revenue | 1,166 | 2,202 | 2,928 | 1,430 | 1,121 | ||||||||||
Mortgage servicing revenue | 2,180 | 2,396 | 1,424 | 1,368 | 2,120 | ||||||||||
Change in fair value of mortgage servicing rights: | |||||||||||||||
Due to changes in model inputs of assumptions1 | (707 | ) | — | (3 | ) | (212 | ) | 93 | |||||||
Other2 | (301 | ) | (310 | ) | (571 | ) | (583 | ) | (411 | ) | |||||
Total mortgage servicing revenue, net | 1,172 | 2,086 | 850 | 573 | 1,802 | ||||||||||
Other mortgage banking revenue | 99 | 117 | 135 | 5 | 33 | ||||||||||
Total mortgage banking income | |||||||||||||||
Net interest income | |||||||||||||||
Mortgage banking income | 2,437 | 4,405 | 3,913 | 2,008 | 2,956 | ||||||||||
Other operating expense | 5,477 | 5,951 | 5,977 | 6,092 | 5,548 | ||||||||||
Income before provision for income taxes | (764 | ) | 754 | 378 | (3,804 | ) | (2,046 | ) | |||||||
Provision for income taxes | (215 | ) | 182 | 164 | (1,074 | ) | (529 | ) | |||||||
Net (loss) income Home Mortgage Lending segment | ( | ) | ( | ) | ( | ) | |||||||||
Weighted average shares outstanding, diluted | 5,578,491 | 5,624,906 | 5,805,870 | 5,757,458 | 5,769,415 | ||||||||||
Diluted (loss) earnings per share | ( | ) | ( | ) | ( | ) |
1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2Represents changes due to collection/realization of expected cash flows over time.
Year Ended | ||||
(Dollars in thousands, except per share data) | December 31, 2023 | December 31, 2022 | ||
Mortgage loans funded for sale | ||||
Mortgage loans funded for investment | 146,258 | 34,622 | ||
Total mortgage loans funded | ||||
Mortgage loan refinances to total fundings | 4 | % | 12 | % |
Net realized gains on mortgage loans sold | ||||
Change in fair value of mortgage loan commitments, net | (102 | ) | (1,035 | ) |
Total production revenue | 7,726 | 12,838 | ||
Mortgage servicing revenue | 7,368 | 7,944 | ||
Change in fair value of mortgage servicing rights: | ||||
Due to changes in model inputs of assumptions1 | (922 | ) | 1,615 | |
Other2 | (1,765 | ) | (1,327 | ) |
Total mortgage servicing revenue, net | 4,681 | 8,232 | ||
Other mortgage banking revenue | 356 | 502 | ||
Total mortgage banking income | ||||
Net interest income | ||||
Mortgage banking income | 12,763 | 21,572 | ||
Other operating expense | 23,497 | 24,950 | ||
Income before provision for income taxes | (3,436 | ) | (1,185 | ) |
Provision for income taxes | (943 | ) | (288 | ) |
Net (loss) income Home Mortgage Lending segment | ( | ) | ( | ) |
Weighted average shares outstanding, diluted | 5,661,460 | 5,829,412 | ||
Diluted (loss) earnings per share | ( | ) | ( | ) |
1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2Represents changes due to collection/realization of expected cash flows over time.
Balance Sheet Review
Northrim’s total assets were
At
Average interest-earning assets were
Average investment securities decreased to
Total unrealized losses, net of tax, on available for sale securities decreased by
Average interest bearing deposits in other banks increased to
Portfolio loans were
Alaskans continue to account for substantially all of Northrim’s deposit base. Total deposits were
Shareholders’ equity was
Asset Quality
Northrim believes it has a consistent lending approach throughout the economic cycles, which emphasizes appropriate loan-to-value ratios, adequate debt coverage ratios, and competent management.
Nonperforming assets (“NPAs”) net of government guarantees were
Net adversely classified loans were
The Company adopted Accounting Standards Update 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures ("ASU 2022-02") on
Northrim had
Northrim estimates that
About
www.northrim.com
Forward-Looking Statement
This release may contain “forward-looking statements” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are, in effect, management’s attempt to predict future events, and thus are subject to various risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim and its management are intended to help identify forward-looking statements. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements, are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: potential further increases in interest rates; the value of securities held in our investment portfolio; the impact of the results of government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; the impact of declines in the value of commercial and residential real estate markets, high unemployment rates, inflationary pressures and slowdowns in economic growth; changes in banking regulation or actions by bank regulators, including, the continued availability of the
References:
www.sba.gov/ak
https://www.bea.gov/
http://almis.labor.state.ak.us/
http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx
http://www.tax.state.ak.us/
www.mba.org
https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx
https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1markets/indexFinancials
Income Statement | ||||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Year-to-date | ||||||||||||||
(Unaudited) | ||||||||||||||||
2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Interest Income: | ||||||||||||||||
Interest and fees on loans | ||||||||||||||||
Interest on investments | 4,677 | 4,727 | 4,380 | 18,695 | 11,878 | |||||||||||
Interest on deposits in banks | 1,743 | 584 | 2,758 | 4,644 | 5,665 | |||||||||||
Total interest income | 35,928 | 34,408 | 29,718 | 131,951 | 100,328 | |||||||||||
Interest Expense: | ||||||||||||||||
Interest expense on deposits | 8,676 | 7,138 | 2,247 | 26,511 | 4,485 | |||||||||||
Interest expense on borrowings | 520 | 920 | 184 | 2,184 | 728 | |||||||||||
Total interest expense | 9,196 | 8,058 | 2,431 | 28,695 | 5,213 | |||||||||||
Net interest income | 26,732 | 26,350 | 27,287 | 103,256 | 95,115 | |||||||||||
Provision (benefit) for credit losses | 885 | 1,190 | 1,886 | 3,842 | 1,846 | |||||||||||
Net interest income after provision (benefit) for loan losses | 25,847 | 25,160 | 25,401 | 99,414 | 93,269 | |||||||||||
Other Operating Income: | ||||||||||||||||
Mortgage banking income | 2,437 | 4,405 | 2,956 | 12,763 | 21,572 | |||||||||||
Purchased receivable income | 1,307 | 1,180 | 473 | 4,482 | 2,002 | |||||||||||
Bankcard fees | 946 | 1,022 | 974 | 3,862 | 3,697 | |||||||||||
Unrealized gain (loss) on marketable equity securities | 565 | 12 | 81 | 120 | (1,119 | ) | ||||||||||
Service charges on deposit accounts | 532 | 550 | 403 | 2,044 | 1,611 | |||||||||||
Commercial servicing revenue | 203 | 87 | 1,186 | 554 | 1,628 | |||||||||||
Keyman insurance proceeds | — | — | — | — | 2,002 | |||||||||||
Other income | 495 | 746 | 702 | 2,550 | 2,684 | |||||||||||
Total other operating income | 6,485 | 8,002 | 6,775 | 26,375 | 34,077 | |||||||||||
Other Operating Expense: | ||||||||||||||||
Salaries and other personnel expense | 15,417 | 15,657 | 14,155 | 61,741 | 58,172 | |||||||||||
Data processing expense | 2,500 | 2,589 | 2,309 | 9,821 | 8,926 | |||||||||||
Occupancy expense | 1,783 | 1,857 | 1,731 | 7,394 | 6,915 | |||||||||||
Marketing expense | 933 | 499 | 984 | 2,929 | 2,747 | |||||||||||
Professional and outside services | 802 | 803 | 669 | 3,128 | 2,993 | |||||||||||
Insurance expense | 675 | 640 | 427 | 2,519 | 2,054 | |||||||||||
Intangible asset amortization expense | 6 | 4 | 6 | 17 | 25 | |||||||||||
OREO expense, net rental income and gains on sale | (28 | ) | (784 | ) | 384 | (794 | ) | 500 | ||||||||
Other operating expense | 1,905 | 1,631 | 1,561 | 7,426 | 6,520 | |||||||||||
Total other operating expense | 23,993 | 22,896 | 22,226 | 94,181 | 88,852 | |||||||||||
Income before provision for income taxes | 8,339 | 10,266 | 9,950 | 31,608 | 38,494 | |||||||||||
Provision for income taxes | 1,726 | 1,892 | 1,355 | 6,214 | 7,753 | |||||||||||
Net income | ||||||||||||||||
Basic EPS | ||||||||||||||||
Diluted EPS | ||||||||||||||||
Weighted average common shares outstanding, basic | 5,513,041 | 5,569,238 | 5,690,354 | 5,601,471 | 5,765,088 | |||||||||||
Weighted average shares outstanding, diluted | 5,578,491 | 5,624,906 | 5,769,415 | 5,661,460 | 5,829,412 |
Balance Sheet | ||||||||||
(Dollars in thousands) | ||||||||||
(Unaudited) | ||||||||||
2023 | 2023 | 2022 | ||||||||
Assets: | ||||||||||
Cash and due from banks | ||||||||||
Interest bearing deposits in other banks | 91,073 | 79,952 | 231,603 | |||||||
Investment securities available for sale, at fair value | 637,936 | 652,150 | 677,029 | |||||||
Investment securities held to maturity | 36,750 | 36,750 | 36,750 | |||||||
Marketable equity securities, at fair value | 13,153 | 10,615 | 10,740 | |||||||
Investment in | 2,980 | 6,334 | 3,816 | |||||||
Loans held for sale | 31,974 | 63,151 | 27,538 | |||||||
Portfolio loans | 1,789,497 | 1,720,091 | 1,501,785 | |||||||
Allowance for credit losses, loans | (17,270 | ) | (16,491 | ) | (13,838 | ) | ||||
Net portfolio loans | 1,772,227 | 1,703,600 | 1,487,947 | |||||||
Purchased receivables, net | 36,842 | 34,578 | 19,994 | |||||||
Mortgage servicing rights, at fair value | 19,564 | 19,396 | 18,635 | |||||||
Other real estate owned, net | — | 150 | — | |||||||
Premises and equipment, net | 40,693 | 40,920 | 37,821 | |||||||
Operating lease right-of-use assets | 9,092 | 9,673 | 9,868 | |||||||
15,967 | 15,973 | 15,984 | ||||||||
Other assets | 71,789 | 85,671 | 68,846 | |||||||
Total assets | ||||||||||
Liabilities: | ||||||||||
Demand deposits | ||||||||||
Interest-bearing demand | 927,291 | 875,814 | 767,686 | |||||||
Savings deposits | 255,338 | 265,799 | 320,917 | |||||||
Money market deposits | 221,492 | 230,814 | 308,317 | |||||||
Time deposits | 331,251 | 290,856 | 192,857 | |||||||
Total deposits | 2,485,055 | 2,427,930 | 2,387,211 | |||||||
Other borrowings | 13,675 | 63,781 | 14,095 | |||||||
Junior subordinated debentures | 10,310 | 10,310 | 10,310 | |||||||
Operating lease liabilities | 9,092 | 9,673 | 9,865 | |||||||
Other liabilities | 54,647 | 53,236 | 34,208 | |||||||
Total liabilities | 2,572,779 | 2,564,930 | 2,455,689 | |||||||
Shareholders' Equity: | ||||||||||
Total shareholders' equity | 234,718 | 225,259 | 218,629 | |||||||
Total liabilities and shareholders' equity | ||||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Composition of Portfolio Loans | |||||||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
Commercial loans | 38 | % | 39 | % | 40 | % | 39 | % | 41 | % | |||||||||||||||||||
SBA Paycheck Protection Program loans | 2,875 | — | % | 3,287 | — | % | 3,723 | — | % | 4,375 | — | % | 7,331 | — | % | ||||||||||||||
CRE owner occupied loans | 267,264 | 15 | % | 259,010 | 15 | % | 274,716 | 16 | % | 254,911 | 17 | % | 255,470 | 17 | % | ||||||||||||||
CRE nonowner occupied loans | 465,358 | 26 | % | 460,878 | 27 | % | 432,679 | 27 | % | 432,679 | 28 | % | 438,680 | 29 | % | ||||||||||||||
Construction loans | 161,868 | 9 | % | 135,706 | 8 | % | 115,522 | 7 | % | 119,641 | 8 | % | 125,739 | 8 | % | ||||||||||||||
Consumer loans | 223,937 | 12 | % | 195,061 | 11 | % | 173,584 | 10 | % | 123,707 | 8 | % | 82,883 | 5 | % | ||||||||||||||
Subtotal | 1,798,053 | 1,728,377 | 1,667,173 | 1,543,812 | 1,510,395 | ||||||||||||||||||||||||
Unearned loan fees, net | (8,556 | ) | (8,286 | ) | (7,934 | ) | (8,625 | ) | (8,610 | ) | |||||||||||||||||||
Total portfolio loans | |||||||||||||||||||||||||||||
Composition of Deposits | ||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | |||||||||||||||
Demand deposits | 31 | % | 31 | % | 31 | % | 34 | % | 34 | % | ||||||||||||||
Interest-bearing demand | 927,291 | 37 | % | 875,814 | 36 | % | 795,128 | 35 | % | 717,910 | 31 | % | 767,686 | 32 | % | |||||||||
Savings deposits | 255,338 | 10 | % | 265,799 | 11 | % | 275,602 | 12 | % | 292,857 | 13 | % | 320,917 | 13 | % | |||||||||
Money market deposits | 221,492 | 9 | % | 230,814 | 10 | % | 232,698 | 10 | % | 262,478 | 11 | % | 308,317 | 13 | % | |||||||||
Time deposits | 331,251 | 13 | % | 290,856 | 12 | % | 287,493 | 12 | % | 255,256 | 11 | % | 192,857 | 8 | % | |||||||||
Total deposits | ||||||||||||||||||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Asset Quality | ||||||||||||
2023 | 2023 | 2022 | ||||||||||
Nonaccrual loans | ||||||||||||
Loans 90 days past due and accruing | — | 28 | — | |||||||||
Total nonperforming loans | 6,069 | 6,520 | 7,076 | |||||||||
Nonperforming loans guaranteed by government | (1,067 | ) | (1,455 | ) | (646 | ) | ||||||
Net nonperforming loans | 5,002 | 5,065 | 6,430 | |||||||||
Other real estate owned | — | 150 | — | |||||||||
Nonperforming purchased receivables | 808 | — | — | |||||||||
Net nonperforming assets | ||||||||||||
Nonperforming loans, net of government guarantees / portfolio loans | 0.28 | % | 0.29 | % | 0.43 | % | ||||||
Nonperforming loans, net of government guarantees / portfolio loans, net of government guarantees | 0.30 | % | 0.31 | % | 0.46 | % | ||||||
Nonperforming assets, net of government guarantees / total assets | 0.21 | % | 0.19 | % | 0.24 | % | ||||||
Nonperforming assets, net of government guarantees / total assets net of government guarantees | 0.21 | % | 0.19 | % | 0.25 | % | ||||||
Adversely classified loans, net of government guarantees | ||||||||||||
Special mention loans, net of government guarantees | ||||||||||||
Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans | 0.03 | % | — | % | 0.01 | % | ||||||
Loans 30-89 days past due and accruing, net of government guarantees / portfolio loans, net of government guarantees | 0.03 | % | — | % | 0.01 | % | ||||||
Allowance for credit losses / portfolio loans | 0.97 | % | 0.96 | % | 0.92 | % | ||||||
Allowance for credit losses / portfolio loans, net of government guarantees | 1.02 | % | 1.02 | % | 0.99 | % | ||||||
Allowance for credit losses / nonperforming loans, net of government guarantees | 345 | % | 326 | % | 215 | % | ||||||
Gross loan charge-offs for the quarter | $— | |||||||||||
Gross loan recoveries for the quarter | ( | ) | ( | ) | ( | ) | ||||||
Net loan (recoveries) charge-offs for the quarter | ( | ) | ( | ) | ||||||||
Net loan (recoveries) charge-offs year-to-date | ( | ) | ( | ) | ( | ) | ||||||
Net loan (recoveries) charge-offs for the quarter / average loans, for the quarter | 0.01 | % | (0.01 | ) | % | (0.01 | ) | % | ||||
Net loan (recoveries) charge-offs year-to-date / average loans, year-to-date annualized | — | % | (0.01 | ) | % | (0.08 | ) | % | ||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Nonperforming Assets Rollforward | ||||||||||||||||||||||
Balance at September 30, 2023 | Additions this quarter | Payments this quarter | Writedowns /Charge- offs this quarter | Transfers to OREO/ REPO | Transfers to Performing Status this quarter | Sales this quarter | Balance at December 31, 2023 | |||||||||||||||
Commercial loans | ( | ) | ( | ) | $— | $— | $— | |||||||||||||||
Commercial real estate | 1,482 | — | (34 | ) | — | — | — | — | 1,448 | |||||||||||||
Construction loans | 109 | — | — | — | — | — | — | 109 | ||||||||||||||
Consumer loans | 137 | 308 | (33 | ) | (84 | ) | — | — | — | 328 | ||||||||||||
Non-performing loans guaranteed by government | (1,455 | ) | (111 | ) | 499 | — | — | — | — | (1,067 | ) | |||||||||||
Total non-performing loans | 5,065 | 623 | (405 | ) | (281 | ) | — | — | — | 5,002 | ||||||||||||
Other real estate owned | 150 | — | — | — | — | — | (150 | ) | — | |||||||||||||
Nonperforming purchased receivables | — | 808 | — | — | — | — | — | 808 | ||||||||||||||
Total non-performing assets, net of government guarantees | ( | ) | ( | ) | $— | $— | ( | ) | ||||||||||||||
The following table details loan charge-offs, by industry:
Loan Charge-offs by Industry | ||||||||||
Three Months Ended | ||||||||||
2023 | 2023 | 2023 | 2022 | |||||||
Charge-offs: | ||||||||||
Geophysical surveying and mapping services | $— | $— | $— | $— | ||||||
Offices of physicians | — | 91 | — | — | — | |||||
Residential intellectual & developmental disability facility | — | — | 49 | — | — | |||||
Consumer | 84 | — | — | 14 | — | |||||
Total charge-offs | $— | |||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Average Balances, Yields, and Rates | |||||||||||||||||
Three Months Ended | |||||||||||||||||
Average | Average | Average | |||||||||||||||
Average | Tax Equivalent | Average | Tax Equivalent | Average | Tax Equivalent | ||||||||||||
Balance | Yield/Rate | Balance | Yield/Rate | Balance | Yield/Rate | ||||||||||||
Assets | |||||||||||||||||
Interest bearing deposits in other banks | 5.40 | % | 5.39 | % | 3.67 | % | |||||||||||
Portfolio investments | 690,659 | 2.48 | % | 715,767 | 2.43 | % | 712,842 | 2.30 | % | ||||||||
Loans held for sale | 45,732 | 6.55 | % | 62,350 | 6.34 | % | 40,186 | 5.52 | % | ||||||||
Portfolio loans | 1,749,732 | 6.55 | % | 1,695,736 | 6.61 | % | 1,466,567 | 5.98 | % | ||||||||
Total interest-earning assets | 2,612,297 | 5.51 | % | 2,516,126 | 5.48 | % | 2,513,862 | 4.74 | % | ||||||||
Nonearning assets | 214,934 | 205,770 | 182,884 | ||||||||||||||
Total assets | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||
Interest-bearing deposits | 2.00 | % | 1.75 | % | 0.56 | % | |||||||||||
Borrowings | 47,964 | 4.25 | % | 76,681 | 4.73 | % | 24,470 | 2.92 | % | ||||||||
Total interest-bearing liabilities | 1,772,373 | 2.06 | % | 1,696,159 | 1.88 | % | 1,604,315 | 0.60 | % | ||||||||
Noninterest-bearing demand deposits | 760,566 | 747,147 | 831,841 | ||||||||||||||
Other liabilities | 63,321 | 52,078 | 43,500 | ||||||||||||||
Shareholders' equity | 230,971 | 226,512 | 217,090 | ||||||||||||||
Total liabilities and shareholders' equity | |||||||||||||||||
Net spread | 3.45 | % | 3.60 | % | 4.14 | % | |||||||||||
NIM | 4.06 | % | 4.15 | % | 4.31 | % | |||||||||||
NIMTE* | 4.12 | % | 4.21 | % | 4.36 | % | |||||||||||
Cost of funds | 1.44 | % | 1.31 | % | 0.40 | % | |||||||||||
Average portfolio loans to average interest-earning assets | 66.98 | % | 67.39 | % | 58.34 | % | |||||||||||
Average portfolio loans to average total deposits | 70.41 | % | 71.65 | % | 60.81 | % | |||||||||||
Average non-interest deposits to average total deposits | 30.61 | % | 31.57 | % | 34.49 | % | |||||||||||
Average interest-earning assets to average interest-bearing liabilities | 147.39 | % | 148.34 | % | 156.69 | % | |||||||||||
The components of the change in NIMTE* are detailed in the table below:
4Q23 vs. 3Q23 | 4Q23 vs. 4Q22 | ||||
Nonaccrual interest adjustments | (0.01) | % | (0.02) | % | |
Impact of SBA Paycheck Protection Program loans | — | % | (0.01) | % | |
Interest rates and loan fees | (0.17) | % | (0.41 | )% | |
Volume and mix of interest-earning assets and liabilities | 0.09 | % | 0.20 | % | |
Change in NIMTE* | (0.09) | % | (0.24) | % | |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Average Balances, Yields, and Rates | |||||||||||
Year-to-date | |||||||||||
Average | Average | ||||||||||
Average | Tax Equivalent | Average | Tax Equivalent | ||||||||
Balance | Yield/Rate | Balance | Yield/Rate | ||||||||
Assets | |||||||||||
Interest bearing deposits in other banks | 5.02 | % | 1.46 | % | |||||||
Portfolio investments | 715,367 | 2.43 | % | 618,782 | 1.84 | % | |||||
Loans held for sale | 41,769 | 6.19 | % | 51,537 | 4.34 | % | |||||
Portfolio loans | 1,643,943 | 6.49 | % | 1,415,125 | 5.71 | % | |||||
Total interest-earning assets | 2,492,240 | 5.36 | % | 2,469,383 | 4.10 | % | |||||
Nonearning assets | 198,107 | 171,625 | |||||||||
Total assets | |||||||||||
Liabilities and Shareholders' Equity | |||||||||||
Interest-bearing deposits | 1.64 | % | 0.29 | % | |||||||
Borrowings | 51,038 | 4.24 | % | 24,623 | 2.92 | % | |||||
Total interest-bearing liabilities | 1,665,424 | 1.72 | % | 1,558,957 | 0.33 | % | |||||
Noninterest-bearing demand deposits | 749,859 | 820,547 | |||||||||
Other liabilities | 47,820 | 36,731 | |||||||||
Shareholders' equity | 227,244 | 224,773 | |||||||||
Total liabilities and shareholders' equity | |||||||||||
Net spread | 3.64 | % | 3.77 | % | |||||||
NIM | 4.14 | % | 3.85 | % | |||||||
NIMTE* | 4.21 | % | 3.89 | % | |||||||
Cost of funds | 1.19 | % | 0.22 | % | |||||||
Average portfolio loans to average interest-earning assets | 65.96 | % | 57.31 | % | |||||||
Average portfolio loans to average total deposits | 69.53 | % | 60.09 | % | |||||||
Average non-interest deposits to average total deposits | 31.72 | % | 34.84 | % | |||||||
Average interest-earning assets to average interest-bearing liabilities | 149.65 | % | 158.40 | % | |||||||
The components of the change in NIMTE* are detailed in the table below:
YTD23 vs.YTD22 | ||
Nonaccrual interest adjustments | (0.06) | % |
Impact of SBA Paycheck Protection Program loans | (0.12) | % |
Interest rates and loan fees | 0.38 | % |
Volume and mix of interest-earning assets and liabilities | 0.12 | % |
Change in NIMTE* | 0.32 | % |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Capital Data (At quarter end) | ||||||||||||
2023 | 2022 | |||||||||||
Book value per share | ||||||||||||
Tangible book value per share* | ||||||||||||
Total shareholders' equity/Total assets | 8.36 | % | 8.07 | % | 8.18 | % | ||||||
Tangible common equity/Tangible assets* | 7.84 | % | 7.54 | % | 7.62 | % | ||||||
Tier 1 capital / Risk adjusted assets | 11.43 | % | 11.67 | % | 12.81 | % | ||||||
Total capital / Risk adjusted assets | 12.35 | % | 12.58 | % | 13.64 | % | ||||||
Tier 1 capital / Average assets | 8.72 | % | 9.02 | % | 9.01 | % | ||||||
Common shares outstanding | 5,513,459 | 5,548,436 | 5,700,728 | |||||||||
Unrealized gain on AFS debt securities, net of income taxes | ( | ) | ( | ) | ( | ) | ||||||
Unrealized (loss) on derivatives and hedging activities, net of income taxes |
Profitability Ratios | ||||||||||
2023 | 2023 | 2023 | 2022 | |||||||
For the quarter: | ||||||||||
NIM | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % | 4.31 | % |
NIMTE* | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % | 4.36 | % |
Efficiency ratio | 72.21 | % | 66.64 | % | 74.03 | % | 78.51 | % | 65.23 | % |
Return on average assets | 0.93 | % | 1.22 | % | 0.85 | % | 0.76 | % | 1.26 | % |
Return on average equity | 11.36 | % | 14.67 | % | 9.85 | % | 8.73 | % | 15.71 | % |
2023 | 2022 | |||
Year-to-date: | ||||
NIM | 4.14 | % | 3.85 | % |
NIMTE* | 4.21 | % | 3.89 | % |
Efficiency ratio | 72.64 | % | 68.76 | % |
Return on average assets | 0.94 | % | 1.16 | % |
Return on average equity | 11.17 | % | 13.68 | % |
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of the Company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.
Net interest margin on a tax equivalent basis
Net interest margin on a tax equivalent basis ("NIMTE") is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax equivalent basis using a combined federal and state statutory rate of 28.43% in both 2023 and 2022. The most comparable GAAP measure is net interest margin and the following table sets forth the reconciliation of NIMTE to net interest margin.
Three Months Ended | |||||||||||||||||||
2023 | 2023 | 2023 | 2022 | ||||||||||||||||
Net interest income | |||||||||||||||||||
Divided by average interest-bearing assets | 2,612,297 | 2,516,126 | 2,434,611 | 2,403,570 | 2,513,862 | ||||||||||||||
Net interest margin ("NIM")2 | 4.06 | % | 4.15 | % | 4.14 | % | 4.22 | % | 4.31 | % | |||||||||
Net interest income | |||||||||||||||||||
Plus: reduction in tax expense related to tax-exempt interest income | 374 | 373 | 400 | 429 | 325 | ||||||||||||||
Divided by average interest-bearing assets | 2,612,297 | 2,516,126 | 2,434,611 | 2,403,570 | 2,513,862 | ||||||||||||||
NIMTE2 | 4.12 | % | 4.21 | % | 4.21 | % | 4.30 | % | 4.36 | % |
Year-to-date | |||||||
2023 | 2022 | ||||||
Net interest income | |||||||
Divided by average interest-bearing assets | 2,492,240 | 2,469,383 | |||||
Net interest margin ("NIM")3 | 4.14 | % | 3.85 | % | |||
Net interest income | |||||||
Plus: reduction in tax expense related to tax-exempt interest income | 1,576 | 939 | |||||
Divided by average interest-bearing assets | 2,492,240 | 2,469,383 | |||||
NIMTE3 | 4.21 | % | 3.89 | % | |||
2Calculated using actual days in the quarter divided by 365 for the quarter ended in 2023 and 2022.
3Calculated using actual days in the year divided by 365 for year-to-date period in 2023 and 2022.
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Tangible Book Value
Tangible book value is a non-GAAP measure defined as shareholders' equity, less intangible assets, divided by common shares outstanding. The most comparable GAAP measure is book value per share and the following table sets forth the reconciliation of tangible book value per share and book value per share.
2023 | 2023 | 2023 | 2022 | |||||||||||
Total shareholders' equity | ||||||||||||||
Divided by common shares outstanding | 5,513 | 5,548 | 5,611 | 5,673 | 5,701 | |||||||||
Book value per share |
2023 | 2023 | 2023 | 2022 | |||||||||||
Total shareholders' equity | ||||||||||||||
Less: goodwill and intangible assets | 15,967 | 15,973 | 15,977 | 15,980 | 15,984 | |||||||||
Divided by common shares outstanding | 5,513 | 5,548 | 5,611 | 5,673 | 5,701 | |||||||||
Tangible book value per share | ||||||||||||||
Tangible Common Equity to Tangible Assets
Tangible common equity to tangible assets is a non-GAAP ratio that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.
2023 | 2023 | 2023 | 2022 | ||||||||||||||||
Total shareholders' equity | |||||||||||||||||||
Total assets | 2,807,497 | 2,790,189 | 2,638,207 | 2,580,037 | 2,674,318 | ||||||||||||||
Total shareholders' equity to total assets | 8.36 | % | 8.07 | % | 8.39 | % | 8.70 | % | 8.18 | % |
2023 | 2023 | 2023 | 2022 | ||||||||||||||||
Total shareholders' equity | |||||||||||||||||||
Less: goodwill and other intangible assets, net | 15,967 | 15,973 | 15,977 | 15,980 | 15,984 | ||||||||||||||
Tangible common shareholders' equity | |||||||||||||||||||
Total assets | |||||||||||||||||||
Less: goodwill and other intangible assets, net | 15,967 | 15,973 | 15,977 | 15,980 | 15,984 | ||||||||||||||
Tangible assets | |||||||||||||||||||
Tangible common equity ratio | 7.84 | % | 7.54 | % | 7.83 | % | 8.13 | % | 7.62 | % | |||||||||
Tangible Common Equity to Tangible Assets, excluding the unrealized losses on the available for sales securities portfolio
Tangible common equity to tangible assets, excluding the unrealized losses on the available for sales securities portfolio, is a non-GAAP ratio that represents total equity less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes divided by total assets less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.
2023 | 2023 | 2022 | |||||||||
Total shareholders' equity | |||||||||||
Total assets | 2,807,497 | 2,790,189 | 2,672,041 | ||||||||
Total shareholders' equity to total assets | 8.36 | % | 8.07 | % | 8.18 | % |
2023 | 2023 | 2022 | |||||||||
Total shareholders' equity | |||||||||||
Less: goodwill and other intangible assets, net | 15,967 | 15,973 | 15,984 | ||||||||
Less: unrealized (loss) on available for sale securities, net of income taxes | (17,415 | ) | (26,526 | ) | (30,121 | ) | |||||
Tangible common shareholders' equity, excluding unrealized losses on available for sale securities | |||||||||||
Total assets | |||||||||||
Less: goodwill and other intangible assets, net | 15,967 | 15,973 | 15,984 | ||||||||
Less: unrealized (loss) on available for sale securities, net of income taxes | (17,415 | ) | (26,526 | ) | (30,121 | ) | |||||
Tangible assets, excluding unrealized losses on available for sale securities | |||||||||||
Tangible common equity ratio, excluding unrealized losses on available for sale securities | 8.41 | % | 8.42 | % | 8.67 | % | |||||
Note Transmitted on GlobeNewswire on
Contact: | |
(907) 261-3308 | |
(907) 261-3539 |
Source:
2024 GlobeNewswire, Inc., source