Net income for the first nine months of 2020 was
“The effort put forth by all of our employees to meet the needs of our community during the pandemic has resulted in tremendous growth during the last two quarters,” said
“Several events came together during the first nine months of 2020 that contributed to our profitability this year including economic stimulus programs such as the PPP, expanded unemployment benefits, repayment and foreclosure forbearance and other accommodations. These programs have been helpful to Alaskans and to
“Northrim’s participation in the PPP helped service the needs of our customers and the community,” Schierhorn continued. “We continued to offer PPP loans to new and existing customers up until the last day of the SBA program in August. According to the SBA, Northrim originated more PPP loans in
1Estimated based on the
COVID-19 Issues:
- Industry Exposure: Northrim has identified various industries that may be adversely impacted by the COVID-19 pandemic and the significant decline in oil prices. Though the industries affected may change through the progression of the pandemic, the following sectors for which Northrim has exposure, as a percent of the total loan portfolio excluding SBA PPP loans as of
September 30, 2020 , are: Tourism (6%), Oil and Gas (6%), Aviation (non-tourism) (5%), Healthcare (7%), Accommodations (3%), Retail (2%) and Restaurants (2%).
- Customer Accommodations: The Company has implemented assistance to help its customers in the event that they experience financial hardship as a result of COVID-19 in addition to participation in PPP lending. These accommodations include interest only and deferral options on loan payments, as well as the waiver of various fees related to loans, deposits and other services. The total outstanding principal balance of loan modifications due to the impacts of COVID-19 as of
September 30, 2020 andJune 30, 2020 were as follows:
Loan Modifications due to COVID-19 as of | |||||||||
(Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
Portfolio loans | $ | 46,056 | $ | 74,337 | $ | 120,393 | |||
Number of modifications | 16 | 59 | 75 |
Loan Modifications due to COVID-19 as of | |||||||||
(Dollars in thousands) | Interest Only | Full Payment Deferral | Total | ||||||
Portfolio loans | $ | 64,298 | $ | 293,224 | $ | 357,522 | |||
Number of modifications | 76 | 403 | 479 |
Consumer loans represent 1% of total loan modifications identified above. Of the
- Loan Loss Reserve: Northrim booked a loan loss provision of
$567,000 for the quarter endedSeptember 30, 2020 . This compares to a provision for loan losses of$404,000 during the previous quarter and a$2.1 million benefit for loan loss provisions in the third quarter a year ago.
- Credit Quality: Net adversely classified loans improved from
$24.2 million atSeptember 30, 2019 to$14.5 million atSeptember 30, 2020 . Net loan recoveries were$463,000 in the third quarter of 2020, compared to net loan recoveries of$694,000 in the third quarter of 2019.
- Branch Operations: All branches are fully operational, while a number of customer and employee safety measures continue to be implemented.
- Growth and Paycheck Protection Program:
o The Company’s asset base increased during the third quarter endedSeptember 30, 2020 , due primarily to commercial and PPP loan originations.
o During the third quarter, Northrim funded an additional 426 PPP loans totaling$22.7 million to both existing and new customers, bringing the PPP portfolio to approximately 2,888 loans totaling$375.6 million atSeptember 30, 2020 .
o According to the SBA, the Company originated more SBA PPP loans in theState of Alaska than any other financial institution, funding 23% of the number and 28% of the value of all Alaska PPP loans for the period endingJune 30, 2020 .
o As ofSeptember 30, 2020 Northrim has submitted 17 PPP loans totaling$9.2 million for forgiveness through the SBA.
o The Company initially utilized theFederal Reserve Bank's Paycheck Protection Program Liquidity Facility (the "PPPLF") to fund PPP loans, but has since paid back those funds in full and has funded the SBA PPP loans through core deposits and maturity of long-term investments.
- Capital Management: At
September 30, 2020 , the Company’s tangible common equity to tangible assets* ratio was 9.54% and the capital ofNorthrim Bank (the "Bank") was well in excess of all regulatory requirements. The Company resumed its stock repurchase program at the end of August and repurchased 89,000 shares of its common stock in the third quarter of 2020 at an average price of$26.66 , leaving 45,549 shares available under the previously announced repurchase authorization.
Third Quarter 2020 Highlights:
- Total revenue, which includes net interest income plus other operating income, increased 14% to
$39.9 million in the third quarter of 2020, compared to$35.0 million in the second quarter of 2020 and increased 49% compared to$26.8 million in the third quarter a year ago.
o Community Banking provided 53% of total revenues and 41% of earnings in the third quarter of 2020.
o Home Mortgage Lending provided 47% of total revenue and 59% of earnings in the third quarter of 2020. - Net interest income in the third quarter of 2020 was
$18.3 million , up 5% from$17.5 million in the preceding quarter and up 12% from$16.3 million in the third quarter a year ago. - Net interest margin on a tax equivalent basis (“NIMTE”)* was 3.93% in the third quarter of 2020, a 9-basis point contraction compared to the preceding quarter, and a 72-basis point contraction compared to the third quarter a year ago.
- Return on average assets ("ROAA") was 2.31% and return on average equity ("ROAE") was 22.10% for the third quarter of 2020 and ROAA was 1.62% and ROAE was 14.58% for the first nine months of 2020.
- Net loans increased 4% to
$1.47 billion atSeptember 30, 2020 , compared to$1.41 billion atJune 30, 2020 , and increased 45% compared to$1.02 billion atSeptember 30, 2019 . - Total deposits increased 4% to
$1.81 billion atSeptember 30, 2020 , compared to$1.74 billion atJune 30, 2020 , and increased 34% compared to$1.35 billion a year earlier. - The Company's wholly owned subsidiary,
Residential Mortgage, LLC , generated$122 million or 51% more production during the quarter endedSeptember 30, 2020 , as compared to the same period in 2019. - The decrease in mortgage interest rates resulted in a decrease of the Bank's mortgage servicing rights by
$1.5 million for the quarter endedSeptember 30, 2020 , compared to a decrease of$1.9 million for the preceding quarter and a decrease of$662,000 for the third quarter a year ago.
Financial Highlights | Three Months Ended | ||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||
Total assets | $ | 2,097,738 | $ | 2,016,705 | $ | 1,691,262 | $ | 1,643,996 | $ | 1,616,631 | |||||
Total portfolio loans | $ | 1,492,720 | $ | 1,433,201 | $ | 1,081,873 | $ | 1,043,371 | $ | 1,036,547 | |||||
Average portfolio loans | $ | 1,465,839 | $ | 1,342,717 | $ | 1,059,023 | $ | 1,027,728 | $ | 1,020,186 | |||||
Total deposits | $ | 1,806,133 | $ | 1,737,359 | $ | 1,395,492 | $ | 1,372,351 | $ | 1,351,029 | |||||
Average deposits | $ | 1,750,167 | $ | 1,620,008 | $ | 1,359,206 | $ | 1,361,786 | $ | 1,307,795 | |||||
Total shareholders' equity | $ | 214,616 | $ | 206,923 | $ | 197,723 | $ | 207,117 | $ | 204,039 | |||||
Net income | $ | 11,855 | $ | 9,900 | $ | 1,033 | $ | 4,580 | $ | 7,538 | |||||
Diluted earnings per share | $ | 1.84 | $ | 1.52 | $ | 0.16 | $ | 0.69 | $ | 1.11 | |||||
Return on average assets | 2.31 | % | 2.04 | % | 0.25 | % | 1.11 | % | 1.90 | % | |||||
Return on average shareholders' equity | 22.10 | % | 19.44 | % | 2.00 | % | 8.74 | % | 14.45 | % | |||||
NIM | 3.90 | % | 3.98 | % | 4.32 | % | 4.48 | % | 4.60 | % | |||||
NIMTE* | 3.93 | % | 4.02 | % | 4.37 | % | 4.52 | % | 4.65 | % | |||||
Efficiency ratio | 58.85 | % | 64.76 | % | 84.87 | % | 78.79 | % | 72.01 | % | |||||
Total shareholders' equity/total assets | 10.23 | % | 10.26 | % | 11.69 | % | 12.60 | % | 12.62 | % | |||||
Tangible common equity/tangible assets* | 9.54 | % | 9.54 | % | 10.84 | % | 11.73 | % | 11.74 | % | |||||
Book value per share | $ | 34.18 | $ | 32.49 | $ | 31.06 | $ | 31.58 | $ | 31.20 | |||||
Tangible book value per share* | $ | 31.62 | $ | 29.97 | $ | 28.53 | $ | 29.12 | $ | 28.74 | |||||
Dividends per share | $ | 0.35 | $ | 0.34 | $ | 0.34 | $ | 0.33 | $ | 0.33 |
* References to NIMTE, tangible book value per share, and tangible common equity and tangible assets (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.)
When 2020 began, it appeared that Alaska’s economy was on track for a solid year of growth. A three year mild recession starting in 2016 ended in the 4th quarter of 2018. For the next 18 consecutive months, Alaska’s total number of jobs grew month over month compared to the prior year according to the
Oil prices have been fluctuating significantly in 2020 as the global economy reacts to the COVID-19 pandemic. Average monthly Alaska North Slope (“ANS”) crude oil prices began the year averaging
Despite the serious economic challenges of COVID, there has been extensive government spending to offset the negative impacts of shutdown mandates in the interest of public health. “For Alaska this has meant approximately
The stimulus is most easily seen in the personal income data.
Inflation is still very low in the
The housing market has been remarkably stable and even positive in
Alaska’s delinquency and foreclosure levels continue to be better than most of the nation. According to the
The
Review of Income Statement
Consolidated Income Statement
In the third quarter of 2020, Northrim generated a ROAA of 2.31% and a ROAE of 22.10%, compared to 2.04% and 19.44%, respectively, in the second quarter of 2020 and 1.90% and 14.45%, respectively, in the third quarter a year ago. Northrim’s ROAA and ROAE are well above peer averages posted by the SNL Small Cap
1As of
Net Interest Income/Net Interest Margin
Net interest income increased 12% to
NIMTE* was 3.93% in the third quarter of 2020 compared to 4.02% in the preceding quarter and 4.65% in the third quarter a year ago. “The decline in our NIMTE* compared to the prior quarter was largely due to the 175 basis point reduction in short-term interest rates during the last twelve months and the resulting effect on yields in the loan portfolio,” said
The yield on interest earning assets in the third quarter of 2020 was 4.25%, down 13 basis points from the second quarter of 2020 and down 83 basis points compared to the third quarter a year ago. The cost of funds was 54 basis points in the third quarter of 2020, down 3 basis points compared to the preceding quarter and down 14 basis points compared to the third quarter a year ago.
Provision for Loan Losses
Northrim recorded a provision for loan losses of
Nonperforming loans, net of government guarantees, improved during the quarter to
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
Other Operating Expenses
Operating expenses were
Income Tax Provision
For the third quarter of 2020, Northrim recorded a larger effective tax rate as compared to the second quarter of 2020 as a result of a decrease in tax credits and tax exempt interest income as a percentage of net income, as well as the reversal of a
Community Banking
“We are proud of the work we are doing to address the needs of our customers in our communities, and as a result we are growing our market share across all of our major markets,” said Schierhorn. “Our new branch in
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) | |||||||||||||||||
Net interest income | $ | 17,388 | $ | 16,649 | $ | 15,261 | $ | 16,080 | $ | 16,000 | |||||||
Provision (benefit) for loan losses | 567 | 404 | 2,060 | (150 | ) | (2,075 | ) | ||||||||||
Other operating income | 3,696 | 2,308 | 1,768 | 3,347 | 2,944 | ||||||||||||
Compensation expense, net RML acquisition payments | — | — | — | 468 | — | ||||||||||||
Other operating expense | 14,353 | 14,113 | 13,612 | 14,765 | 13,126 | ||||||||||||
Income before provision for income taxes | 6,164 | 4,440 | 1,357 | 4,344 | 7,893 | ||||||||||||
Provision (benefit) for income taxes | 1,249 | (124 | ) | 266 | 719 | 1,550 | |||||||||||
Net income | $ | 4,915 | $ | 4,564 | $ | 1,091 | $ | 3,625 | $ | 6,343 | |||||||
Weighted average shares outstanding, diluted | 6,413,221 | 6,440,898 | 6,560,593 | 6,647,510 | 6,707,523 | ||||||||||||
Diluted earnings per share | $ | 0.76 | $ | 0.70 | $ | 0.17 | $ | 0.55 | $ | 0.93 |
Year-to-date | |||||||
(Dollars in thousands, except per share data) | |||||||
Net interest income | $ | 49,298 | $ | 47,121 | |||
Provision for loan losses | 3,031 | (1,025 | ) | ||||
Other operating income | 7,772 | 9,798 | |||||
Other operating expense | 42,078 | 39,755 | |||||
Income before provision for income taxes | 11,961 | 18,189 | |||||
Provision for income taxes | 1,391 | 3,689 | |||||
Net income | $ | 10,570 | $ | 14,500 | |||
Weighted average shares outstanding, diluted | 6,467,991 | 6,861,973 | |||||
Diluted earnings per share | $ | 1.63 | $ | 2.11 |
Home Mortgage Lending
“The significant activity in the mortgage market has continued through the third quarter of 2020, due to the low interest rate environment and the hard work of our lending teams,” said Ballard. “Refinance activity was particularly robust, up 77% compared to the third quarter a year ago, while strong home purchases in our market also continue to increase.”
During the third quarter of 2020, mortgage loan volume was
Loan fundings increased during the quarter and year-over-year driven by both increased refinance activity and new home purchase activity. This was partially offset by the net change in fair value of mortgage servicing rights, which decreased mortgage banking income by
“Our mortgage servicing business, which we initiated to service loans primarily for the
Total mortgage servicing income fluctuates based on the amount of mortgage servicing rights originated during the period and changes in the fair value of those servicing rights, which is driven by interest rate volatility and the amount of serviced mortgages that payoff during the period as well as fluctuations in estimated prepayment speeds based on published industry metrics. The change in the fair value of mortgage servicing rights was a decrease of
The following table provides highlights of the Home Mortgage Lending segment of Northrim:
Three Months Ended | ||||||||||||||||||||
(Dollars in thousands, except per share data) | ||||||||||||||||||||
Mortgage commitments | $ | 257,304 | $ | 206,274 | $ | 197,892 | $ | 48,796 | $ | 86,044 | ||||||||||
Mortgage loans funded for sale | $ | 364,159 | $ | 381,086 | $ | 168,224 | $ | 181,102 | $ | 241,795 | ||||||||||
Mortgage loan refinances to total fundings | 39 | % | 65 | % | 46 | % | 30 | % | 33 | % | ||||||||||
Mortgage loans serviced for others | $ | 655,733 | $ | 655,183 | $ | 678,096 | $ | 659,048 | $ | 634,059 | ||||||||||
Net realized gains on mortgage loans sold | $ | 14,736 | $ | 11,322 | $ | 4,643 | $ | 5,215 | $ | 6,768 | ||||||||||
Change in fair value of mortgage loan commitments, net | 1,943 | 3,579 | (545 | ) | (455 | ) | (535 | ) | ||||||||||||
Total production revenue | 16,679 | 14,901 | 4,098 | 4,760 | 6,233 | |||||||||||||||
Mortgage servicing revenue | 2,044 | 1,633 | 1,327 | 1,679 | 1,649 | |||||||||||||||
Change in fair value of mortgage servicing rights: | ||||||||||||||||||||
Due to changes in model inputs of assumptions1 | (699 | ) | (891 | ) | (701 | ) | 72 | (377 | ) | |||||||||||
Other2 | (806 | ) | (1,037 | ) | (229 | ) | (393 | ) | (285 | ) | ||||||||||
Total mortgage servicing revenue, net | 539 | (295 | ) | 397 | 1,358 | 987 | ||||||||||||||
Other mortgage banking revenue | 714 | 621 | 170 | 270 | 345 | |||||||||||||||
Total mortgage banking income | $ | 17,932 | $ | 15,227 | $ | 4,665 | $ | 6,388 | $ | 7,565 | ||||||||||
Net interest income | $ | 906 | $ | 808 | $ | 429 | $ | 330 | $ | 306 | ||||||||||
Mortgage banking income | 17,932 | 15,227 | 4,665 | 6,388 | 7,565 | |||||||||||||||
Other operating expense | 9,153 | 8,561 | 5,175 | 5,382 | 6,198 | |||||||||||||||
Income (loss) before provision for income taxes | 9,685 | 7,474 | (81 | ) | 1,336 | 1,673 | ||||||||||||||
Provision (benefit) for income taxes | 2,745 | 2,138 | (23 | ) | 381 | 478 | ||||||||||||||
Net income (loss) | $ | 6,940 | $ | 5,336 | $ | (58 | ) | $ | 955 | $ | 1,195 | |||||||||
Weighted average shares outstanding, diluted | 6,413,221 | 6,440,898 | 6,560,593 | 6,647,510 | 6,707,523 | |||||||||||||||
Diluted earnings (loss) per share | $ | 1.08 | $ | 0.82 | $ | (0.01 | ) | $ | 0.14 | $ | 0.18 |
1 Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2 Represents changes due to collection/realization of expected cash flows over time.
Year-to-date | ||||||||
(Dollars in thousands, except per share data) | ||||||||
Mortgage loans funded for sale | $ | 913,469 | $ | 503,195 | ||||
Mortgage loan refinances to total fundings | 51 | % | 25 | % | ||||
Net realized gains on mortgage loans sold | $ | 30,701 | $ | 14,598 | ||||
Change in fair value of mortgage loan commitments, net | 4,977 | 476 | ||||||
Total production revenue | 35,678 | 15,074 | ||||||
Mortgage servicing revenue | 5,004 | 4,436 | ||||||
Change in fair value of mortgage servicing rights: | ||||||||
Due to changes in model inputs of assumptions1 | (2,291 | ) | (1,384 | ) | ||||
Other2 | (2,072 | ) | (902 | ) | ||||
Total mortgage servicing revenue, net | 641 | 2,150 | ||||||
Other mortgage banking revenue | 1,505 | 589 | ||||||
Total mortgage banking income | $ | 37,824 | $ | 17,813 | ||||
Net interest income | $ | 2,143 | $ | 911 | ||||
Mortgage banking income | 37,824 | 17,813 | ||||||
Other operating expense | 22,889 | 16,468 | ||||||
Income before provision for income taxes | 17,078 | 2,256 | ||||||
Provision for income taxes | 4,860 | 645 | ||||||
Net income | $ | 12,218 | $ | 1,611 | ||||
Weighted average shares outstanding, diluted | 6,467,991 | 6,861,973 | ||||||
Diluted earnings per share | $ | 1.89 | $ | 0.24 |
1 Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2 Represents changes due to collection/realization of expected cash flows over time.
Balance Sheet Review
Northrim’s total assets increased to
Average interest-earning assets were
Average investment securities decreased to
“In addition to the
Alaskans continue to account for substantially all of Northrim’s deposit base, which is primarily made up of low-cost transaction accounts. At
“Our lenders, retail bankers and commercial cash managers have worked hard to meet the needs of our existing and new customers, and as a result we are capturing market share in all of our markets by adding new relationships with strong future growth opportunities,” said
Shareholders’ equity was
Asset Quality
“While several of our credit quality metrics improved during the third quarter of this year compared to three months earlier, we are being diligent with monitoring the loan portfolio given the current economic environment,” said Martin.
Nonperforming assets ("NPAs") net of government guarantees were
Net adversely classified loans improved to
Performing restructured loans that were not included in nonaccrual loans at
As of
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, and statements related to the expected or potential impact of the novel coronavirus (COVID-19) pandemic and the related responses of the government 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, whether concerning the COVID-19 pandemic and the government responses related thereto or otherwise, 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: the uncertainties relating to the impact of COVID-19 on the Company's credit quality, business, operations and employees; the availability and terms of funding from government sources related to COVID-19; the timing of PPP loan forgiveness; our ability to maintain strong asset quality and to maintain or expand our market share or net interest margins; and our ability to execute our business plan. Further, actual results may be affected by our ability to compete on price and other factors with other financial institutions; customer acceptance of new products and services; the regulatory environment in which we operate; and general trends in the local, regional and national banking industry and economy as those factors relate to our cost of funds and return on assets. In addition, there are risks inherent in the banking industry relating to collectability of loans and changes in interest rates. Many of these risks, as well as other risks that may have a material adverse impact on our operations and business, are identified in the “Risk Factors” section of our Annual Report on Form 10-K for the fiscal year ended
Contact: | |
(907) 261-3308 | |
(907) 261-3539 |
References:
https://www.bea.gov/data/gdp/gdp-state
https://live.laborstats.alaska.gov/
http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx
https://www.bea.gov/news/2020/personal-income-state-2nd-quarter-2020
https://www.bls.gov/regions/west/news-release/consumerpriceindex_anchorage.htm
https://www.kitco.com/charts/
http://www.freddiemac.com/pmms/pmms_archives.html
https://ua-ced.org/blog/2020/7/10/analysis-of-paycheck-protection-program-loans-in-alaska
www.mba.org
www.mba.org/research
Alaska Economics Report,
Income Statement | ||||||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Year-to-date | ||||||||||||||||
(Unaudited) | ||||||||||||||||||
2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||
Interest Income: | ||||||||||||||||||
Interest and fees on loans | $ | 18,691 | $ | 17,454 | $ | 15,863 | $ | 51,504 | $ | 46,193 | ||||||||
Interest on portfolio investments | 1,086 | 1,519 | 1,661 | 4,349 | 5,237 | |||||||||||||
Interest on deposits in banks | 17 | 31 | 313 | 284 | 591 | |||||||||||||
Total interest income | 19,794 | 19,004 | 17,837 | 56,137 | 52,021 | |||||||||||||
Interest Expense: | ||||||||||||||||||
Interest expense on deposits | 1,320 | 1,331 | 1,365 | 4,135 | 3,477 | |||||||||||||
Interest expense on borrowings | 180 | 216 | 166 | 561 | 512 | |||||||||||||
Total interest expense | 1,500 | 1,547 | 1,531 | 4,696 | 3,989 | |||||||||||||
Net interest income | 18,294 | 17,457 | 16,306 | 51,441 | 48,032 | |||||||||||||
Provision (benefit) for loan losses | 567 | 404 | (2,075 | ) | 3,031 | (1,025 | ) | |||||||||||
Net interest income after provision (benefit) for loan losses | 17,727 | 17,053 | 18,381 | 48,410 | 49,057 | |||||||||||||
Other Operating Income: | ||||||||||||||||||
Mortgage banking income | 17,932 | 15,227 | 7,565 | 37,824 | 17,813 | |||||||||||||
Bankcard fees | 770 | 681 | 820 | 2,094 | 2,214 | |||||||||||||
Purchased receivable income | 516 | 675 | 709 | 2,112 | 2,355 | |||||||||||||
Service charges on deposit accounts | 269 | 171 | 398 | 802 | 1,224 | |||||||||||||
Unrealized gain (loss) on marketable equity securities | 375 | 149 | 130 | (347 | ) | 782 | ||||||||||||
Interest rate swap income | 726 | 17 | — | 743 | 734 | |||||||||||||
Gain on sale of securities | — | — | — | 98 | 23 | |||||||||||||
Other income | 1,040 | 615 | 887 | 2,270 | 2,466 | |||||||||||||
Total other operating income | 21,628 | 17,535 | 10,509 | 45,596 | 27,611 | |||||||||||||
Other Operating Expense: | ||||||||||||||||||
Salaries and other personnel expense | 16,418 | 15,637 | 13,186 | 44,311 | 37,433 | |||||||||||||
Data processing expense | 1,851 | 2,033 | 1,849 | 5,653 | 5,324 | |||||||||||||
Occupancy expense | 1,648 | 1,618 | 1,576 | 4,923 | 4,989 | |||||||||||||
Professional and outside services | 884 | 714 | 610 | 2,206 | 1,850 | |||||||||||||
Marketing expense | 302 | 696 | 357 | 1,581 | 1,609 | |||||||||||||
Insurance expense | 315 | 301 | 102 | 928 | 592 | |||||||||||||
OREO expense, net rental income and gains on sale | 23 | 21 | (31 | ) | 8 | (186 | ) | |||||||||||
Intangible asset amortization expense | 12 | 12 | 15 | 36 | 45 | |||||||||||||
Other operating expense | 2,053 | 1,642 | 1,660 | 5,321 | 4,567 | |||||||||||||
Total other operating expense | 23,506 | 22,674 | 19,324 | 64,967 | 56,223 | |||||||||||||
Income before provision for income taxes | 15,849 | 11,914 | 9,566 | 29,039 | 20,445 | |||||||||||||
Provision for income taxes | 3,994 | 2,014 | 2,028 | 6,251 | 4,334 | |||||||||||||
Net income | $ | 11,855 | $ | 9,900 | $ | 7,538 | $ | 22,788 | $ | 16,111 | ||||||||
Basic EPS | $ | 1.87 | $ | 1.54 | $ | 1.13 | $ | 3.57 | $ | 2.38 | ||||||||
Diluted EPS | $ | 1.84 | $ | 1.52 | $ | 1.11 | $ | 3.52 | $ | 2.35 | ||||||||
Weighted average shares outstanding, basic | 6,338,465 | 6,367,397 | 6,604,044 | 6,391,164 | 6,760,672 | |||||||||||||
Weighted average shares outstanding, diluted | 6,413,221 | 6,440,898 | 6,707,523 | 6,467,991 | 6,861,973 |
Balance Sheet | ||||||||||||
(Dollars in thousands) | ||||||||||||
(Unaudited) | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
Assets: | ||||||||||||
Cash and due from banks | $ | 31,165 | $ | 34,331 | $ | 45,381 | ||||||
Interest bearing deposits in other banks | 69,964 | 55,081 | 46,807 | |||||||||
Investment securities available for sale | 215,369 | 202,347 | 257,270 | |||||||||
Marketable equity securities | 8,534 | 7,758 | 8,045 | |||||||||
Investment in | 2,508 | 2,428 | 2,140 | |||||||||
Loans held for sale | 128,105 | 133,975 | 81,942 | |||||||||
Portfolio loans | 1,492,720 | 1,433,201 | 1,036,547 | |||||||||
Allowance for loan losses | (21,683 | ) | (20,653 | ) | (19,137 | ) | ||||||
Net portfolio loans | 1,471,037 | 1,412,548 | 1,017,410 | |||||||||
Purchased receivables, net | 13,520 | 11,549 | 13,673 | |||||||||
Mortgage servicing rights, at fair value | 10,589 | 10,721 | 11,206 | |||||||||
Other real estate owned, net | 6,962 | 7,205 | 7,043 | |||||||||
Premises and equipment, net | 38,615 | 39,055 | 38,556 | |||||||||
Lease right of use asset | 12,943 | 13,189 | 14,307 | |||||||||
16,058 | 16,070 | 16,109 | ||||||||||
Other assets | 72,369 | 70,448 | 56,742 | |||||||||
Total assets | $ | 2,097,738 | $ | 2,016,705 | $ | 1,616,631 | ||||||
Liabilities: | ||||||||||||
Demand deposits | $ | 697,363 | $ | 680,033 | $ | 460,327 | ||||||
Interest-bearing demand | 427,811 | 400,138 | 292,198 | |||||||||
Savings deposits | 272,624 | 261,934 | 228,739 | |||||||||
Money market deposits | 227,106 | 215,735 | 214,352 | |||||||||
Time deposits | 181,229 | 179,519 | 155,413 | |||||||||
Total deposits | 1,806,133 | 1,737,359 | 1,351,029 | |||||||||
Other borrowings | 13,737 | 11,754 | 8,933 | |||||||||
Junior subordinated debentures | 10,310 | 10,310 | 10,310 | |||||||||
Lease liability | 12,881 | 13,121 | 14,224 | |||||||||
Other liabilities | 40,061 | 37,238 | 28,096 | |||||||||
Total liabilities | 1,883,122 | 1,809,782 | 1,412,592 | |||||||||
Shareholders' Equity: | ||||||||||||
Total shareholders' equity | 214,616 | 206,923 | 204,039 | |||||||||
Total liabilities and shareholders' equity | $ | 2,097,738 | $ | 2,016,705 | $ | 1,616,631 | ||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Composition of Portfolio Investments | |||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||
$ | 37,691 | 16.8 | % | $ | 47,832 | 22.8 | % | $ | 65,303 | 24.6 | % | ||||||
119,861 | 53.6 | % | 92,171 | 43.8 | % | 123,197 | 46.5 | % | |||||||||
Corporate securities | 27,215 | 12.2 | % | 32,043 | 15.3 | % | 42,460 | 16.0 | % | ||||||||
Marketable equity securities | 8,534 | 3.8 | % | 7,758 | 3.7 | % | 8,045 | 3.0 | % | ||||||||
Collateralized loan obligations | 28,266 | 12.6 | % | 27,974 | 13.3 | % | 22,930 | 8.6 | % | ||||||||
2,336 | 1.0 | % | 2,327 | 1.1 | % | 3,230 | 1.2 | % | |||||||||
Other municipality, utility, or state bonds | — | — | % | — | — | % | 150 | 0.1 | % | ||||||||
Total portfolio investments | $ | 223,903 | $ | 210,105 | $ | 265,315 | |||||||||||
Composition of Portfolio Loans | ||||||||||||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | |||||||||||||||||||||||||
Commercial loans | $ | 460,542 | 31 | % | $ | 426,675 | 29 | % | $ | 434,832 | 40 | % | $ | 412,690 | 39 | % | $ | 398,231 | 39 | % | ||||||||||||||
SBA Payment Protection loans | 375,636 | 25 | % | 353,485 | 24 | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||||
CRE owner occupied loans | 148,993 | 10 | % | 154,741 | 11 | % | 146,453 | 13 | % | 138,891 | 13 | % | 127,045 | 12 | % | |||||||||||||||||||
CRE nonowner occupied loans | 364,232 | 24 | % | 360,533 | 25 | % | 355,753 | 33 | % | 355,466 | 34 | % | 377,311 | 36 | % | |||||||||||||||||||
Construction loans | 120,619 | 8 | % | 114,464 | 8 | % | 109,849 | 10 | % | 100,626 | 10 | % | 98,716 | 9 | % | |||||||||||||||||||
Consumer loans | 37,183 | 2 | % | 38,310 | 3 | % | 39,923 | 4 | % | 40,783 | 4 | % | 39,868 | 4 | % | |||||||||||||||||||
Subtotal | 1,507,205 | 1,448,208 | 1,086,810 | 1,048,456 | 1,041,171 | |||||||||||||||||||||||||||||
Unearned loan fees, net | (14,485 | ) | (15,007 | ) | (4,937 | ) | (5,085 | ) | (4,624 | ) | ||||||||||||||||||||||||
Total portfolio loans | $ | 1,492,720 | $ | 1,433,201 | $ | 1,081,873 | $ | 1,043,371 | $ | 1,036,547 | ||||||||||||||||||||||||
Composition of Deposits | |||||||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
Demand deposits | $ | 697,363 | 38 | % | $ | 680,033 | 40 | % | $ | 453,003 | 33 | % | $ | 451,896 | 33 | % | $ | 460,327 | 33 | % | |||||||||
Interest-bearing demand | 427,811 | 24 | % | 400,138 | 23 | % | 333,352 | 24 | % | 320,264 | 23 | % | 292,198 | 22 | % | ||||||||||||||
Savings deposits | 272,624 | 15 | % | 261,934 | 15 | % | 228,383 | 16 | % | 229,918 | 17 | % | 228,739 | 17 | % | ||||||||||||||
Money market deposits | 227,106 | 13 | % | 215,735 | 12 | % | 207,418 | 15 | % | 205,801 | 15 | % | 214,352 | 16 | % | ||||||||||||||
Time deposits | 181,229 | 10 | % | 179,519 | 10 | % | 173,336 | 12 | % | 164,472 | 12 | % | 155,413 | 12 | % | ||||||||||||||
Total deposits | $ | 1,806,133 | $ | 1,737,359 | $ | 1,395,492 | $ | 1,372,351 | $ | 1,351,029 |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Asset Quality | ||||||||||||
2020 | 2020 | 2019 | ||||||||||
Nonaccrual loans | $ | 12,647 | $ | 14,365 | $ | 17,442 | ||||||
Loans 90 days past due and accruing | — | — | — | |||||||||
Total nonperforming loans | 12,647 | 14,365 | 17,442 | |||||||||
Nonperforming loans guaranteed by government | (1,600 | ) | (1,635 | ) | (1,935 | ) | ||||||
Net nonperforming loans | 11,047 | 12,730 | 15,507 | |||||||||
Other real estate owned | 6,962 | 7,205 | 7,043 | |||||||||
Repossessed assets | 779 | 919 | 231 | |||||||||
Nonperforming purchased receivables | 410 | 1,226 | — | |||||||||
Other real estate owned guaranteed by government | (1,279 | ) | (1,279 | ) | (1,279 | ) | ||||||
Net nonperforming assets | $ | 17,919 | $ | 20,801 | $ | 21,502 | ||||||
Nonperforming loans, net of government guarantees / portfolio loans | 0.74 | % | 0.89 | % | 1.50 | % | ||||||
Nonperforming loans, net of government guarantees / portfolio loans, | ||||||||||||
net of government guarantees | 1.02 | % | 1.21 | % | 1.54 | % | ||||||
Nonperforming assets, net of government guarantees / total assets | 0.85 | % | 1.03 | % | 1.33 | % | ||||||
Nonperforming assets, net of government guarantees / total assets | ||||||||||||
net of government guarantees | 1.06 | % | 1.27 | % | 1.35 | % | ||||||
Performing restructured loans | $ | 2,367 | $ | 2,887 | $ | 1,498 | ||||||
Performing restructured loans guaranteed by government | (1,502 | ) | (1,921 | ) | — | |||||||
Net performing restructured loans | $ | 865 | $ | 966 | $ | 1,498 | ||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees | $ | 11,912 | $ | 13,696 | $ | 17,005 | ||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees / portfolio loans | 0.80 | % | 0.96 | % | 1.64 | % | ||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees / portfolio loans, net of government guarantees | 1.10 | % | 1.30 | % | 1.69 | % | ||||||
Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
guarantees / total assets | 0.90 | % | 1.08 | % | 1.42 | % | ||||||
Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
guarantees / total assets, net of government guarantees | 1.12 | % | 1.34 | % | 1.45 | % | ||||||
Adversely classified loans, net of government guarantees | $ | 14,492 | $ | 15,703 | $ | 24,199 | ||||||
Special mention loans, net of government guarantees | $ | 18,141 | $ | 16,079 | $ | 14,450 | ||||||
Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
portfolio loans | 0.16 | % | 0.05 | % | 0.12 | % | ||||||
Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
portfolio loans, net of government guarantees | 0.22 | % | 0.06 | % | 0.13 | % | ||||||
Allowance for loan losses / portfolio loans | 1.45 | % | 1.44 | % | 1.85 | % | ||||||
Allowance for loan losses / portfolio loans, net of government guarantees | 2.00 | % | 1.96 | % | 1.90 | % | ||||||
Allowance for loan losses / nonperforming loans, net of government guarantees | 196 | % | 162 | % | 123 | % | ||||||
Gross loan charge-offs for the quarter | $ | 141 | $ | 804 | $ | 29 | ||||||
Gross loan recoveries for the quarter | $ | (604 | ) | $ | (36 | ) | $ | (723 | ) | |||
Net loan (recoveries) charge-offs for the quarter | $ | (463 | ) | $ | 768 | $ | (694 | ) | ||||
Net loan charge-offs (recoveries) year-to-date | $ | 436 | $ | 899 | $ | (643 | ) | |||||
Net loan charge-offs (recoveries) for the quarter / average loans, for the quarter | (0.03 | )% | 0.06 | % | (0.07 | )% | ||||||
Net loan charge-offs (recoveries) year-to-date / average loans, | ||||||||||||
year-to-date annualized | 0.05 | % | 0.15 | % | (0.09 | )% |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Nonperforming Assets Rollforward | |||||||||||||||||||||
Writedowns | Transfers to | ||||||||||||||||||||
Balance at | Additions this quarter | Payments this quarter | /Charge-offs this quarter | Transfers to OREO/ REPO | Performing Status this quarter | Sales this quarter | Balance at | ||||||||||||||
Commercial loans | $ | 8,362 | $ | 386 | $ | (1,861 | ) | $ | (56 | ) | $ | — | $ | — | $ | — | $ | 6,831 | |||
Commercial real estate | 5,123 | — | (98 | ) | (85 | ) | — | — | — | 4,940 | |||||||||||
Construction loans | 702 | — | — | — | — | — | — | 702 | |||||||||||||
Consumer loans | 178 | — | (4 | ) | — | — | — | — | 174 | ||||||||||||
Non-performing loans guaranteed by government | (1,635 | ) | — | 35 | — | — | — | — | (1,600 | ) | |||||||||||
Total non-performing loans | 12,730 | 386 | (1,928 | ) | (141 | ) | — | — | — | 11,047 | |||||||||||
Other real estate owned | 7,205 | — | — | — | — | — | (243 | ) | 6,962 | ||||||||||||
Repossessed assets | 919 | — | — | (140 | ) | — | — | — | 779 | ||||||||||||
Nonperforming purchased receivables | 1,226 | — | (816 | ) | — | — | — | — | 410 | ||||||||||||
Other real estate owned guaranteed | |||||||||||||||||||||
by government | (1,279 | ) | — | — | — | — | — | — | (1,279 | ) | |||||||||||
Total non-performing assets, | |||||||||||||||||||||
net of government guarantees | $ | 20,801 | $ | 386 | $ | (2,744 | ) | $ | (281 | ) | $ | — | $ | — | $ | (243 | ) | $ | 17,919 |
The following table details loan charge-offs, by industry:
Loan Charge-offs by Industry | |||||||||||||||
Three Months Ended | |||||||||||||||
Charge-offs: | |||||||||||||||
Support for oil and gas operations | $ | — | $ | — | $ | 36 | $ | — | $ | — | |||||
Retail sales | — | — | 16 | — | 22 | ||||||||||
Food service contractors | — | — | 99 | — | — | ||||||||||
Excavation and construction | 33 | — | — | — | — | ||||||||||
Health care and social assistance | 108 | 804 | — | — | — | ||||||||||
Consumer | — | — | 14 | 11 | 7 | ||||||||||
Total charge-offs | $ | 141 | $ | 804 | $ | 165 | $ | 11 | $ | 29 |
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 | $ | 60,504 | 0.11 | % | $ | 51,448 | 0.24 | % | $ | 58,754 | 2.08 | % | |||||
Portfolio investments | 217,599 | 2.11 | % | 256,500 | 2.50 | % | 253,364 | 2.73 | % | ||||||||
Loans held for sale | 122,994 | 3.11 | % | 111,475 | 3.12 | % | 74,181 | 3.79 | % | ||||||||
Portfolio loans | 1,465,839 | 4.83 | % | 1,342,717 | 4.99 | % | 1,020,186 | 5.92 | % | ||||||||
Total interest-earning assets | 1,866,936 | 4.25 | % | 1,762,140 | 4.38 | % | 1,406,485 | 5.08 | % | ||||||||
Nonearning assets | 172,853 | 186,583 | 169,907 | ||||||||||||||
Total assets | $ | 2,039,789 | $ | 1,948,723 | $ | 1,576,392 | |||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||
Interest-bearing deposits | $ | 1,077,193 | 0.49 | % | $ | 1,017,544 | 0.53 | % | $ | 870,369 | 0.62 | % | |||||
Borrowings | 23,574 | 3.02 | % | 73,349 | 1.17 | % | 19,749 | 3.27 | % | ||||||||
Total interest-bearing liabilities | 1,100,767 | 0.54 | % | 1,090,893 | 0.57 | % | 890,118 | 0.68 | % | ||||||||
Noninterest-bearing demand deposits | 672,974 | 602,464 | 437,426 | ||||||||||||||
Other liabilities | 52,611 | 50,525 | 41,946 | ||||||||||||||
Shareholders' equity | 213,437 | 204,841 | 206,902 | ||||||||||||||
Total liabilities and shareholders' equity | $ | 2,039,789 | $ | 1,948,723 | $ | 1,576,392 | |||||||||||
Net spread | 3.71 | % | 3.81 | % | 4.40 | % | |||||||||||
NIM | 3.90 | % | 3.98 | % | 4.60 | % | |||||||||||
NIMTE* | 3.93 | % | 4.02 | % | 4.65 | % | |||||||||||
Average portfolio loans to average | |||||||||||||||||
interest-earning assets | 78.52 | % | 76.20 | % | 72.53 | % | |||||||||||
Average portfolio loans to average total deposits | 83.75 | % | 82.88 | % | 78.01 | % | |||||||||||
Average non-interest deposits to average | |||||||||||||||||
total deposits | 38.45 | % | 37.19 | % | 33.45 | % | |||||||||||
Average interest-earning assets to average | |||||||||||||||||
interest-bearing liabilities | 169.60 | % | 161.53 | % | 158.01 | % |
The components of the change in NIMTE* are detailed in the table below:
3Q20 vs. 2Q20 | 3Q20 vs. 3Q19 | |||
Nonaccrual interest adjustments | 0.17 | % | 0.19 | % |
Impact of SBA Paycheck Protection Program loans | (0.19 | )% | (0.33 | )% |
Interest rates and loan fees, all other loans | (0.09 | )% | (0.63 | )% |
Volume and mix of interest-earning assets and liabilities | 0.02 | % | 0.05 | % |
Change in NIMTE* | (0.09 | )% | (0.72 | )% |
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 | $ | 60,011 | 0.62 | % | $ | 35,394 | 2.20 | % | |||
Portfolio investments | 252,594 | 2.42 | % | 271,645 | 2.69 | % | |||||
Loans held for sale | 95,050 | 3.18 | % | 52,379 | 4.05 | % | |||||
Portfolio loans | 1,289,838 | 5.12 | % | 1,004,157 | 5.97 | % | |||||
Total interest-earning assets | 1,697,493 | 4.46 | % | 1,363,575 | 5.16 | % | |||||
Nonearning assets | 177,811 | 166,548 | |||||||||
Total assets | $ | 1,875,304 | $ | 1,530,123 | |||||||
Liabilities and Shareholders' Equity | |||||||||||
Interest-bearing deposits | $ | 1,007,122 | 0.55 | % | $ | 829,916 | 0.56 | % | |||
Borrowings | 39,645 | 1.87 | % | 38,618 | 1.74 | % | |||||
Total interest-bearing liabilities | 1,046,767 | 0.60 | % | 868,534 | 0.61 | % | |||||
Noninterest-bearing demand deposits | 569,972 | 417,719 | |||||||||
Other liabilities | 49,800 | 35,053 | |||||||||
Shareholders' equity | 208,765 | 208,817 | |||||||||
Total liabilities and shareholders' equity | $ | 1,875,304 | $ | 1,530,123 | |||||||
Net spread | 3.86 | % | 4.55 | % | |||||||
NIM | 4.05 | % | 4.71 | % | |||||||
NIMTE* | 4.09 | % | 4.76 | % | |||||||
Average portfolio loans to average interest-earning assets | 75.98 | % | 73.64 | % | |||||||
Average portfolio loans to average total deposits | 81.79 | % | 80.48 | % | |||||||
Average non-interest deposits to average total deposits | 36.14 | % | 33.48 | % | |||||||
Average interest-earning assets to average interest-bearing liabilities | 162.17 | % | 157.00 | % |
The components of the change in NIMTE* are detailed in the table below:
YTD20 vs.YTD19 | ||
Nonaccrual interest adjustments | 0.08 | % |
Impact of SBA Paycheck Protection Program loans | (0.18 | )% |
Interest rates and loan fees, all other loans | (0.54 | )% |
Volume and mix of interest-earning assets and liabilities | (0.03 | )% |
Change in NIMTE* | (0.67 | )% |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Capital Data (At quarter end) | |||||||||||
Book value per share | $ | 34.18 | $ | 32.49 | $ | 31.20 | |||||
Tangible book value per share* | $ | 31.62 | $ | 29.97 | $ | 28.74 | |||||
Total shareholders' equity/total assets | 10.23 | % | 10.26 | % | 12.62 | % | |||||
Tangible Common Equity/Tangible Assets* | 9.54 | % | 9.54 | % | 11.74 | % | |||||
Tier 1 Capital / Risk Adjusted Assets | 14.11 | % | 13.99 | % | 14.57 | % | |||||
Total Capital / Risk Adjusted Assets | 15.36 | % | 15.24 | % | 15.82 | % | |||||
Tier 1 Capital / Average Assets | 10.31 | % | 11.92 | % | 12.68 | % | |||||
Shares outstanding | 6,279,304 | 6,368,046 | 6,539,796 | ||||||||
Unrealized gain (loss) on AFS debt securities, net of income taxes | $ | 1,308 | $ | 1,269 | $ | 930 | |||||
Unrealized gain (loss) on derivatives and hedging activities, net of income taxes | $ | (1,543 | ) | $ | (1,718 | ) | $ | (1,064 | ) |
Profitability Ratios | ||||||||||
For the quarter: | ||||||||||
NIM | 3.90 | % | 3.98 | % | 4.32 | % | 4.48 | % | 4.60 | % |
NIMTE* | 3.93 | % | 4.02 | % | 4.37 | % | 4.52 | % | 4.65 | % |
Efficiency ratio | 58.85 | % | 64.76 | % | 84.87 | % | 78.79 | % | 72.01 | % |
Return on average assets | 2.31 | % | 2.04 | % | 0.25 | % | 1.11 | % | 1.90 | % |
Return on average equity | 22.10 | % | 19.44 | % | 2.00 | % | 8.74 | % | 14.45 | % |
Year-to-date: | ||||
NIM | 4.05 | % | 4.71 | % |
NIMTE* | 4.09 | % | 4.76 | % |
Efficiency ratio | 66.91 | % | 74.27 | % |
Return on average assets | 1.62 | % | 1.41 | % |
Return on average equity | 14.58 | % | 10.32 | % |
*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 2020 and 2019. 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 | |||||||||||||||||||
Net interest income | $ | 18,294 | $ | 17,457 | $ | 15,690 | $ | 16,410 | $ | 16,306 | |||||||||
Divided by average interest-bearing assets | 1,866,936 | 1,762,140 | 1,461,542 | 1,454,756 | 1,406,485 | ||||||||||||||
Net interest margin ("NIM")2 | 3.90 | % | 3.98 | % | 4.32 | % | 4.48 | % | 4.60 | % | |||||||||
Net interest income | $ | 18,294 | $ | 17,457 | $ | 15,690 | $ | 16,410 | $ | 16,306 | |||||||||
Plus: reduction in tax expense related to | |||||||||||||||||||
tax-exempt interest income | 136 | 168 | 187 | 180 | 163 | ||||||||||||||
$ | 18,430 | $ | 17,625 | $ | 15,877 | $ | 16,590 | $ | 16,469 | ||||||||||
Divided by average interest-bearing assets | 1,866,936 | 1,762,140 | 1,461,542 | 1,454,756 | 1,406,485 | ||||||||||||||
NIMTE2 | 3.93 | % | 4.02 | % | 4.37 | % | 4.52 | % | 4.65 | % |
Year-to-date | |||||||
Net interest income | $ | 51,441 | $ | 48,032 | |||
Divided by average interest-bearing assets | 1,697,493 | 1,363,575 | |||||
Net interest margin ("NIM")3 | 4.05 | % | 4.71 | % | |||
Net interest income | $ | 51,441 | $ | 48,032 | |||
Plus: reduction in tax expense related to | |||||||
tax-exempt interest income | 491 | 554 | |||||
$ | 51,932 | $ | 48,586 | ||||
Divided by average interest-bearing assets | 1,697,493 | 1,363,575 | |||||
NIMTE3 | 4.09 | % | 4.76 | % |
2 Calculated using actual days in the quarter divided by 366 for the quarter ended in 2020 and 365 for quarters ended in 2019.
3 Calculated using actual days in the year divided by 366 for year-to-date period in 2020 and 365 for year-to-date period in 2019.
*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 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.
Total shareholders' equity | $ | 214,616 | $ | 206,923 | $ | 197,723 | $ | 207,117 | $ | 204,039 | |||||||||
Divided by shares outstanding | 6,279 | 6,368 | 6,366 | 6,559 | 6,540 | ||||||||||||||
Book value per share | $ | 34.18 | $ | 32.49 | $ | 31.06 | $ | 31.58 | $ | 31.20 |
Total shareholders' equity | $ | 214,616 | $ | 206,923 | $ | 197,723 | $ | 207,117 | $ | 204,039 | |||||||||
Less: goodwill and intangible assets | 16,058 | 16,070 | 16,082 | 16,094 | 16,109 | ||||||||||||||
$ | 198,558 | $ | 190,853 | $ | 181,641 | $ | 191,023 | $ | 187,930 | ||||||||||
Divided by shares outstanding | 6,279 | 6,368 | 6,366 | 6,559 | 6,540 | ||||||||||||||
Tangible book value per share | $ | 31.62 | $ | 29.97 | $ | 28.53 | $ | 29.12 | $ | 28.74 |
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.
Total shareholders' equity | $ | 214,616 | $ | 206,923 | $ | 197,723 | $ | 207,117 | $ | 204,039 | |||||||||
Total assets | 2,097,738 | 2,016,705 | 1,691,262 | 1,643,996 | 1,616,631 | ||||||||||||||
Total shareholders' equity to total assets | 10.23 | % | 10.26 | % | 11.69 | % | 12.60 | % | 12.62 | % |
Total shareholders' equity | $ | 214,616 | $ | 206,923 | $ | 197,723 | $ | 207,117 | $ | 204,039 | |||||||||
Less: goodwill and other intangible assets, net | 16,058 | 16,070 | 16,082 | 16,094 | 16,109 | ||||||||||||||
Tangible common shareholders' equity | $ | 198,558 | $ | 190,853 | $ | 181,641 | $ | 191,023 | $ | 187,930 | |||||||||
Total assets | $ | 2,097,738 | $ | 2,016,705 | $ | 1,691,262 | $ | 1,643,996 | $ | 1,616,631 | |||||||||
Less: goodwill and other intangible assets, net | 16,058 | 16,070 | 16,082 | 16,094 | 16,109 | ||||||||||||||
Tangible assets | $ | 2,081,680 | $ | 2,000,635 | $ | 1,675,180 | $ | 1,627,902 | $ | 1,600,522 | |||||||||
Tangible common equity ratio | 9.54 | % | 9.54 | % | 10.84 | % | 11.73 | % | 11.74 | % |
Source:
2020 GlobeNewswire, Inc., source