First Quarter 2023 Highlights
- Stable Financial Performance: Net income totaled
$7.3 million for the quarter endedMarch 31, 2023 , or$1.30 per diluted common share compared to net income of$6.3 million or$1.10 per diluted common share for the quarter endedMarch 31, 2022 and$7.6 million or$1.35 per diluted common share for the quarter endedDecember 31, 2022 .
Return on average assets ("ROAA"), return on average common equity ("ROACE") and return on average tangible common equity ("ROATCE") were 1.21%, 15.10% and 16.19% respectively, for the three months endedMarch 31, 2023 compared to 1.08%, 12.30% and 13.22% for the three months endedMarch 31, 2022 . ROAA, ROACE and ROATCE were 1.28%, 16.61% and 17.88% for the three months endedDecember 31, 2022 .
- Merger with
Shore Bancshares : OnDecember 14, 2022 , the Company entered into a definitive agreement to undertake a merger of equals pursuant to which the Company and Bank will merge intoShore Bancshares, Inc. (NASDAQ: SHBI) ("Shore") in an all-stock transaction. The combined company will have total assets of approximately$6 .0 billion on a pro forma basis. Under the terms of the agreement, which was unanimously approved by the boards of directors of both companies and which remains subject to shareholder approval, as well as the satisfaction of customary closing conditions, holders of TCFC common stock will have the right to receive 2.3287 shares of SHBI common stock.
OnMarch 7, 2023 SHBI and TCFC announced that they received the required regulatory approvals from theOffice of the Comptroller of the Currency and theMaryland Office of the Commissioner of Financial Regulation . SHBI and TCFC expect that the merger transaction will close on or aboutJuly 1, 2023 .James M. Burke , TCFC's current President and Chief Executive Officer, will serve as President and Chief Executive Officer of the combined company.
The Company incurred$1 .0 million of merger and acquisition costs during the year endedDecember 31, 2022 ,$0.3 million during the first quarter of 2023 and anticipates additional expenses in 2023. The net impact for the three months endedMarch 31, 2023 was a decrease to EPS of$0.04 per diluted share and a decrease to ROAA of five basis points. The resulting non-GAAP diluted EPS and non-GAAP ROAA were$1.34 and 1.25%, respectively.
- Net Interest Margin Compression: Net interest margin decreased to 3.32% for the three months ended
March 31, 2023 from 3.64% for the fourth quarter of 2022, due, primarily to increasing cost of funds. During the first quarter of 2023, loan and overall interest-earning asset yields increased 19 and 24 basis points to 5.11% and 4.74% from 4.92% and 4.50% for the three months endedDecember 31, 2022 . The Company's cost of funds increased 59 basis points for the comparable three month period from 0.89% to 1.48%.
Management anticipates that the cost on interest-bearing deposit accounts will continue to increase more quickly than the yield on loans and investments in the first six months of 2023, which could compress net interest margin to between 3.10% and 3.40% in the first half of 2023.
- Stable Funding and Liquidity: Total funding, which includes deposits and FHLB advances, increased
$8.4 million from$2,167.5 million atDecember 31, 2022 to$2,175.8 million atMarch 31, 2023 . During the first quarter of 2023, a small decrease in retail deposits of$27.6 million was offset by an increase in wholesale funding of$35.9 million .
The Bank's uninsured deposits atMarch 31, 2023 were$394 million or 18.3% of total deposits. Uninsured deposits include amounts either greater than theFederal Deposit Insurance Corporation's ("FDIC")$250,000 insurance limit or amounts not secured by the market value of collateral.
AtMarch 31, 2023 , the Bank had approximately$762 million of available liquidity including:$27 million in cash,$652 million in secured borrowing capacity at the FHLB and theFederal Reserve , and$82 million in unsecured lines of credit.
- Moderating Loan Growth: Total portfolio loans increased to
$1,844.3 million atMarch 31, 2023 , an increase of$23.3 million or 5.1% annualized, compared toDecember 31, 2022 . The loan pipeline atMarch 31, 2023 was$85.0 million . Management anticipates 2023 loan growth of between four and six percent.
Goals for lenders and business development teams have been aligned to build on 2022 progress in acquiring customer operating deposit accounts which should contribute to building franchise-enhancing relationships with customers while mitigating potential margin compression from the use of more costly non-core funding sources.
- Stable Asset Quality: Non-accrual loans, OREO and loan modifications to borrowers' experiencing financial difficulties ("BEFDs") were
$8.1 million or 0.33% of total assets atMarch 31, 2023 compared to$6.5 million or 0.27% of total assets atDecember 31, 2022 , and$7.9 million or 0.34% atMarch 31, 2022 . Classified assets increased$2.0 million to$8.1 million atMarch 31, 2023 from$6.1 million atDecember 31, 2022 .
Management Commentary
“The first quarter was a strong start to the year, despite the well-publicized challenges to the industry,” stated
Burke continued, “Our merger of equals with
Results of Operations
(UNAUDITED) | |||||||||||||||
Three Months Ended | |||||||||||||||
(dollars in thousands) | 2023 | 2022 | $ Change | % Change | |||||||||||
Interest and dividend income | $ | 27,264 | $ | 17,336 | $ | 9,928 | 57.3 | % | |||||||
Interest expense | 8,196 | 867 | 7,329 | 845.3 | % | ||||||||||
Net interest income | 19,068 | 16,469 | 2,599 | 15.8 | % | ||||||||||
Provision for credit losses | 670 | 450 | 220 | 48.9 | % | ||||||||||
Recovery for unfunded commitments | (18 | ) | (31 | ) | 13 | (41.9)% | |||||||||
Noninterest income | 1,449 | 1,451 | (2 | ) | (0.1)% | ||||||||||
Noninterest expense | 10,170 | 9,080 | 1,090 | 12.0 | % | ||||||||||
Income before income taxes | 9,695 | 8,421 | 1,274 | 15.1 | % | ||||||||||
Income tax expense | 2,368 | 2,133 | 235 | 11.0 | % | ||||||||||
Net income | $ | 7,327 | $ | 6,288 | $ | 1,039 | 16.5 | % |
Net Interest Income
Net interest income for the comparable quarters increased primarily from increases in interest-earning asset yields for loans and investments and growth in loans, partially offset by increased interest expense from higher funding costs. Net interest margin of 3.32% for the three months ended March 31, 2023 increased 20 basis points from 3.12% for the three months ended
Loan interest income increased
Net interest margin compressed during the first quarter of 2023, primarily due to the Bank's cost of funding increasing at a faster rate than interest-earning asset yields. In the Company's 2022 10-K, management communicated expectations that interest-bearing deposit accounts would reprice faster than loans and investments in the first six months of 2023 based on late fourth quarter 2022 trends and provided guidance that margins could compress to between 3.10% and 3.40% in the first half of 2023. The overall expectation is that margin will continue to contract in the second quarter, but at a slower rate than the first quarter of 2023.
During the first quarter average yields on interest-earning assets increased to 4.74% for the three months ended
Noninterest Income
Noninterest income was flat at
Noninterest Expense
Noninterest expense of
The increase from the comparable period was primarily due to increases of
The Company’s efficiency ratio was 49.57% for the three months ended
Income Tax Expense
The effective tax rate for the three months ended
Balance Sheet
Assets
Total assets increased
Non-owner occupied commercial real estate ("CRE") loans as a percentage of risk-based capital at
The Bank's office CRE portfolio, which included owner-occupied and non-owner occupied CRE loans, was
The Bank had 18 CRE office loans totaling
Funding
Total funding, which includes deposits and FHLB advances, increased
Total deposits increased
The Bank's deposit cycle generally sees deposit balances decrease in the first and fourth quarters as business customers and municipalities use funds for operating needs and build in the second and third quarters. The Company's business development efforts continue to focus on increasing non-interest bearing and lower-cost transaction accounts.
The Bank's uninsured deposits at
At
In
The Bank monitors large deposit relationships and concentration risks in accordance with
The aggregate amount of our top 25 deposit relationships at
During the three months ended
The Company's common equity to assets ratio increased to 8.19% at March 31, 2023 from 7.76% at December 31, 2022. The Company’s ratio of tangible common equity ("TCE") to tangible assets increased to 7.75% at March 31, 2023 from 7.32% at December 31, 2022 (see Non-GAAP reconciliation schedules). The TCE ratio increased from the prior quarter due primarily to a similar asset base and
Asset Quality
Allowance for credit losses ("ACL") and provision for credit losses ("PCL"); Classified and Non-Performing Assets
On
ACL balances increased to 1.27% of portfolio loans at
Management believes that the allowance is adequate at
Classified assets increased
Non-accrual loans increased
About
Use of non-GAAP Financial Measures - Statements included in this press release include non-GAAP financial measures and should be read along with the accompanying tables, which provide a reconciliation of non-GAAP financial measures to GAAP financial measures. The Company’s management uses these non-GAAP financial measures, and believes that non-GAAP financial measures provide additional useful information that allows readers to evaluate the ongoing performance of the Company. Non-GAAP financial measures should not be considered as an alternative to any measure of performance or financial condition as promulgated under GAAP, and investors should consider the Company’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Company. Non-GAAP financial measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the results or financial condition as reported under GAAP.
Forward-looking Statements - Certain statements contained in this news release may not be based on historical facts and are “forward-looking statements” within the meaning Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements can generally be identified by the fact that they do not relate strictly to historical or current facts. They often include words or phrases such as “is optimistic,” “project,” “believe,” “expect,” “anticipate,” “estimate”, “assume” and “intend” or future or conditional verbs such as “will,” “would,” “should,” “could” or “may.” Statements in this release that are not strictly historical are forward-looking and are based upon current expectations that may differ materially from actual results. These forward-looking statements include, without limitation: (i) those relating to the Company’s and the Bank’s future growth and management’s outlook or expectations for revenue, assets, asset quality, profitability, business prospects, net interest margin (including expectations with respect to margin compression), non-interest revenue, allowance for loan losses, the level of credit losses from lending, liquidity levels, capital levels, or future financial or business performance strategies or expectations; (ii) any statements of the plans, objectives, or expected benefits associated with the proposed merger of the Company with and into
Data is unaudited as of
CONTACTS:
(888) 745-2265
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
CONSOLIDATED INCOME STATEMENT (UNAUDITED)
Three Months Ended | |||||||||||||||||||
(dollars in thousands) | |||||||||||||||||||
Interest and Dividend Income | |||||||||||||||||||
Loans, including fees | $ | 23,116 | $ | 21,621 | $ | 18,735 | $ | 16,772 | $ | 15,610 | |||||||||
Interest and dividends on securities | 3,992 | 3,445 | 2,454 | 1,924 | 1,666 | ||||||||||||||
Interest on deposits with banks | 156 | 186 | 156 | 78 | 60 | ||||||||||||||
Total Interest and Dividend Income | 27,264 | 25,252 | 21,345 | 18,774 | 17,336 | ||||||||||||||
Interest Expense | |||||||||||||||||||
Deposits | 6,729 | 4,029 | 1,850 | 819 | 513 | ||||||||||||||
Short-term borrowings | 998 | 358 | 52 | 16 | — | ||||||||||||||
Long-term debt | 469 | 434 | 386 | 371 | 354 | ||||||||||||||
Total Interest Expense | 8,196 | 4,821 | 2,288 | 1,206 | 867 | ||||||||||||||
Net Interest Income ("NII") | 19,068 | 20,431 | 19,057 | 17,568 | 16,469 | ||||||||||||||
Provision for credit losses | 670 | 868 | 694 | 425 | 450 | ||||||||||||||
(Recovery) provision for unfunded commitments | (18 | ) | 145 | 6 | 26 | (31 | ) | ||||||||||||
NII After Provision For Credit Losses | 18,416 | 19,418 | 18,357 | 17,117 | 16,050 | ||||||||||||||
Noninterest Income | |||||||||||||||||||
Loan appraisal, credit, and misc. charges | 93 | 137 | 65 | 44 | 176 | ||||||||||||||
Gain on sale of assets | — | 695 | — | — | — | ||||||||||||||
Unrealized gains (losses) on equity securities | 69 | 9 | (187 | ) | (155 | ) | (222 | ) | |||||||||||
Income from bank owned life insurance | 217 | 219 | 220 | 217 | 214 | ||||||||||||||
Service charges | 1,069 | 1,215 | 1,130 | 1,108 | 926 | ||||||||||||||
Referral fee income | — | 14 | — | — | 361 | ||||||||||||||
Net gains (losses) on sale of loans originated for sale | 1 | — | 1 | 1 | (4 | ) | |||||||||||||
Gains on sale of loans | — | — | — | 209 | — | ||||||||||||||
Total Noninterest Income | 1,449 | 2,289 | 1,229 | 1,424 | 1,451 | ||||||||||||||
Noninterest Expense | |||||||||||||||||||
Compensation and benefits | 5,481 | 5,584 | 5,116 | 5,051 | 5,055 | ||||||||||||||
OREO valuation allowance and expenses | — | — | — | — | 6 | ||||||||||||||
Merger and acquisition costs | 259 | 1,004 | — | — | — | ||||||||||||||
Sub Total | 5,740 | 6,588 | 5,116 | 5,051 | 5,061 | ||||||||||||||
Operating Expenses | |||||||||||||||||||
Occupancy expense | 847 | 834 | 826 | 820 | 732 | ||||||||||||||
Advertising | 88 | 177 | 149 | 159 | 64 | ||||||||||||||
Data processing expense | 1,037 | 1,049 | 1,062 | 1,008 | 1,007 | ||||||||||||||
Professional fees | 835 | 991 | 923 | 845 | 731 | ||||||||||||||
Depreciation of premises and equipment | 177 | 181 | 177 | 150 | 149 | ||||||||||||||
180 | 185 | 160 | 177 | 179 | |||||||||||||||
Core deposit intangible amortization | 84 | 90 | 97 | 102 | 109 | ||||||||||||||
Fraud losses | 28 | 179 | 37 | 30 | 40 | ||||||||||||||
Other expenses | 1,154 | 1,116 | 1,079 | 996 | 1,008 | ||||||||||||||
Total Operating Expenses | 4,430 | 4,802 | 4,510 | 4,287 | 4,019 | ||||||||||||||
Total Noninterest Expense | 10,170 | 11,390 | 9,626 | 9,338 | 9,080 | ||||||||||||||
Income before income taxes | 9,695 | 10,317 | 9,960 | 9,203 | 8,421 | ||||||||||||||
Income tax expense | 2,368 | 2,702 | 2,380 | 2,369 | 2,133 | ||||||||||||||
Net Income | $ | 7,327 | $ | 7,615 | $ | 7,580 | $ | 6,834 | $ | 6,288 |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Cash and due from banks | $ | 11,905 | $ | 11,511 | $ | 18,008 | $ | 16,164 | $ | 80,702 | ||||||||||
Federal funds sold | 2,290 | 2,140 | 20,325 | 37,320 | — | |||||||||||||||
Interest-bearing deposits with banks | 13,297 | 11,822 | 14,970 | 34,659 | 32,460 | |||||||||||||||
Securities available for sale ("AFS"), at fair value | 463,949 | 462,746 | 464,502 | 485,456 | 507,527 | |||||||||||||||
Equity securities carried at fair value through income | 4,380 | 4,286 | 4,254 | 4,423 | 4,562 | |||||||||||||||
Non-marketable equity securities held in other financial institutions | 207 | 207 | 207 | 207 | 207 | |||||||||||||||
2,181 | 4,584 | 1,226 | 1,234 | 1,685 | ||||||||||||||||
Loans held for sale | — | — | — | — | 373 | |||||||||||||||
— | 339 | 1,211 | 5,022 | 15,279 | ||||||||||||||||
Portfolio Loans Receivable net of allowance for credit losses of | 1,820,806 | 1,798,178 | 1,721,250 | 1,631,055 | 1,608,156 | |||||||||||||||
Net Loans | 1,820,806 | 1,798,517 | 1,722,461 | 1,636,077 | 1,623,435 | |||||||||||||||
10,835 | 10,835 | 10,835 | 10,835 | 10,835 | ||||||||||||||||
Premises and equipment, net | 20,987 | 21,308 | 21,626 | 21,802 | 21,304 | |||||||||||||||
Accrued interest receivable | 8,526 | 8,335 | 6,791 | 6,099 | 5,389 | |||||||||||||||
Investment in bank owned life insurance | 40,019 | 39,802 | 39,583 | 39,363 | 39,145 | |||||||||||||||
Core deposit intangible | 550 | 634 | 725 | 821 | 924 | |||||||||||||||
Net deferred tax assets | 21,914 | 24,657 | 24,755 | 20,223 | 15,523 | |||||||||||||||
Right of use assets - operating leases | 5,817 | 5,920 | 6,022 | 6,123 | 6,033 | |||||||||||||||
Other assets | 873 | 2,713 | 3,331 | 2,708 | 1,819 | |||||||||||||||
Total Assets | $ | 2,428,536 | $ | 2,410,017 | $ | 2,359,621 | $ | 2,323,514 | $ | 2,351,923 | ||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||
Liabilities | ||||||||||||||||||||
Deposits | ||||||||||||||||||||
Non-interest-bearing deposits | $ | 599,763 | $ | 630,120 | $ | 647,432 | $ | 635,649 | $ | 644,385 | ||||||||||
Interest-bearing deposits | 1,554,560 | 1,458,343 | 1,479,125 | 1,449,727 | 1,450,698 | |||||||||||||||
Total deposits | 2,154,323 | 2,088,463 | 2,126,557 | 2,085,376 | 2,095,083 | |||||||||||||||
Short-term borrowings | 21,500 | 79,000 | — | — | — | |||||||||||||||
Long-term debt | — | — | — | — | 12,213 | |||||||||||||||
Guaranteed preferred beneficial interest in junior subordinated debentures ("TRUPs") | 12,000 | 12,000 | 12,000 | 12,000 | 12,000 | |||||||||||||||
Subordinated notes - 4.75% | 19,580 | 19,566 | 19,552 | 19,538 | 19,524 | |||||||||||||||
Lease liabilities - operating leases | 6,114 | 6,202 | 6,288 | 6,372 | 6,266 | |||||||||||||||
Accrued expenses and other liabilities | 16,213 | 17,775 | 16,070 | 15,357 | 13,697 | |||||||||||||||
Total Liabilities | 2,229,730 | 2,223,006 | 2,180,467 | 2,138,643 | 2,158,783 | |||||||||||||||
Stockholders' Equity | ||||||||||||||||||||
Common stock | 57 | 56 | 56 | 56 | 57 | |||||||||||||||
Additional paid in capital | 98,246 | 97,986 | 97,712 | 97,455 | 97,189 | |||||||||||||||
Retained earnings | 138,573 | 132,235 | 125,608 | 119,523 | 115,179 | |||||||||||||||
Accumulated other comprehensive losses | (37,896 | ) | (43,092 | ) | (43,906 | ) | (31,847 | ) | (18,969 | ) | ||||||||||
Unearned ESOP shares | (174 | ) | (174 | ) | (316 | ) | (316 | ) | (316 | ) | ||||||||||
Total Stockholders' Equity | 198,806 | 187,011 | 179,154 | 184,871 | 193,140 | |||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,428,536 | $ | 2,410,017 | $ | 2,359,621 | $ | 2,323,514 | $ | 2,351,923 | ||||||||||
Common shares issued and outstanding | 5,666,904 | 5,648,435 | 5,644,186 | 5,649,729 | 5,686,799 |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued
SELECTED FINANCIAL INFORMATION AND RATIOS (UNAUDITED)
Three Months Ended | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
KEY OPERATING RATIOS | ||||||||||||||||||||
Return on average assets ("ROAA") | 1.21 | % | 1.28 | % | 1.31 | % | 1.19 | % | 1.08 | % | ||||||||||
Pre-tax Pre-Provision ROAA** | 1.76 | 1.97 | 1.85 | 1.70 | 1.54 | |||||||||||||||
Return on average common equity ("ROACE") | 15.10 | 16.61 | 15.97 | 14.39 | 12.30 | |||||||||||||||
Pre-tax Pre-Provision ROACE** | 22.04 | 25.53 | 22.67 | 20.54 | 17.50 | |||||||||||||||
Return on Average Tangible Common Equity ("ROATCE")** | 16.19 | 17.88 | 17.18 | 15.50 | 13.22 | |||||||||||||||
Pre-tax Pre-Provision ROATCE** | 23.42 | 27.24 | 24.14 | 21.89 | 18.57 | |||||||||||||||
Average total equity to average total assets | 8.00 | 7.73 | 8.17 | 8.28 | 8.79 | |||||||||||||||
Interest rate spread | 2.70 | 3.24 | 3.26 | 3.14 | 3.05 | |||||||||||||||
Net interest margin | 3.32 | 3.64 | 3.47 | 3.25 | 3.12 | |||||||||||||||
Yield on loans portfolio | 5.11 | 4.92 | 4.46 | 4.13 | 3.99 | |||||||||||||||
Cost of funds | 1.48 | 0.89 | 0.43 | 0.23 | 0.17 | |||||||||||||||
Cost of deposits | 1.29 | 0.77 | 0.36 | 0.16 | 0.10 | |||||||||||||||
Cost of debt | 5.04 | 4.67 | 4.40 | 3.81 | 3.24 | |||||||||||||||
Efficiency ratio | 49.57 | 50.13 | 47.45 | 49.17 | 50.67 | |||||||||||||||
Non-interest income to average assets | 0.24 | 0.39 | 0.21 | 0.25 | 0.25 | |||||||||||||||
Non-interest expense to average assets | 1.68 | 1.92 | 1.66 | 1.63 | 1.56 | |||||||||||||||
Net operating expense to average assets | 1.44 | 1.53 | 1.45 | 1.38 | 1.31 | |||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 143.31 | 146.44 | 149.96 | 150.34 | 141.56 | |||||||||||||||
Net charge-offs to average portfolio loans | 0.01 | 0.00 | 0.02 | 0.10 | 0.00 | |||||||||||||||
COMMON SHARE DATA | ||||||||||||||||||||
Basic net income per common share | $ | 1.30 | $ | 1.35 | $ | 1.34 | $ | 1.21 | $ | 1.11 | ||||||||||
Diluted net income per common share | 1.30 | 1.35 | 1.34 | 1.21 | 1.10 | |||||||||||||||
Cash dividends paid per common share | 0.175 | 0.175 | 0.175 | 0.18 | 0.18 | |||||||||||||||
Basic - weighted average common shares outstanding | 5,651,750 | 5,638,059 | 5,636,640 | 5,647,821 | 5,688,221 | |||||||||||||||
Diluted - weighted average common shares outstanding | 5,655,582 | 5,645,703 | 5,644,822 | 5,657,733 | 5,699,038 | |||||||||||||||
ASSET QUALITY | ||||||||||||||||||||
Total assets | $ | 2,428,536 | $ | 2,410,017 | $ | 2,359,621 | $ | 2,323,514 | $ | 2,351,923 | ||||||||||
Total portfolio loans (1) | 1,844,321 | 1,821,068 | 1,743,277 | 1,652,459 | 1,629,538 | |||||||||||||||
Classified assets | 8,116 | 6,115 | 5,967 | 6,062 | 4,745 | |||||||||||||||
Allowance for credit losses | 23,515 | 22,890 | 22,027 | 21,404 | 21,382 | |||||||||||||||
Past due loans - 31 to 89 days | 954 | 604 | 713 | 900 | 386 | |||||||||||||||
Past due loans >=90 days | 514 | 438 | 428 | 147 | 1,233 | |||||||||||||||
Total past due loans | 1,468 | 1,042 | 1,141 | 1,047 | 1,619 | |||||||||||||||
Non-accrual loans (3) | 8,124 | 6,115 | 6,290 | 6,235 | 7,465 | |||||||||||||||
Accruing borrowers experiencing financial difficulty ("BEFDs") modifications (2) | — | 429 | 433 | 439 | 442 | |||||||||||||||
Non-accrual loans, OREO and BEFDs modifications (2) | $ | 8,124 | $ | 6,544 | $ | 6,723 | $ | 6,674 | $ | 7,907 |
** Non-GAAP financial measure. See reconciliation of GAAP and Non-GAAP measures.
____________________________________
(1) | Portfolio loans include all loan portfolios except the |
(2) | On |
(3) | Non-accrual loans include all loans that are 90 days or more delinquent and loans that are non-accrual due to the operating results or cash flows of a customer. Non-accrual loans can include loans that are current with all loan payments. At |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA - Continued
SELECTED FINANCIAL INFORMATION AND RATIOS (UNAUDITED)
Three Months Ended | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
ASSET QUALITY RATIOS (1) | ||||||||||||||||||||
Classified assets to total assets | 0.33 | % | 0.25 | % | 0.25 | % | 0.26 | % | 0.20 | % | ||||||||||
Classified assets to risk-based capital | 2.89 | 2.23 | 2.25 | 2.35 | 1.87 | |||||||||||||||
Allowance for credit losses to total portfolio loans | 1.27 | 1.26 | 1.26 | 1.30 | 1.31 | |||||||||||||||
Allowance for credit losses to non-accrual loans | 289.45 | 374.33 | 350.19 | 343.29 | 286.43 | |||||||||||||||
Past due loans - 31 to 89 days to total portfolio loans | 0.05 | 0.03 | 0.04 | 0.05 | 0.02 | |||||||||||||||
Past due loans >=90 days to total portfolio loans | 0.03 | 0.02 | 0.02 | 0.01 | 0.08 | |||||||||||||||
Total past due (delinquency) to total portfolio loans | 0.08 | 0.06 | 0.07 | 0.06 | 0.10 | |||||||||||||||
Non-accrual loans to total portfolio loans | 0.44 | 0.34 | 0.36 | 0.38 | 0.46 | |||||||||||||||
Non-accrual loans and BEFDs modifications to total portfolio loans (2) | 0.44 | 0.36 | 0.39 | 0.40 | 0.49 | |||||||||||||||
Non-accrual loans and OREO to total portfolio assets | 0.33 | 0.25 | 0.27 | 0.27 | 0.32 | |||||||||||||||
Non-accrual loans and OREO to total portfolio loans and OREO | 0.44 | 0.34 | 0.36 | 0.38 | 0.46 | |||||||||||||||
Non-accrual loans, OREO and BEFDs modification to total assets (2) | 0.33 | 0.27 | 0.28 | 0.29 | 0.34 | |||||||||||||||
COMMON SHARE DATA | ||||||||||||||||||||
Book value per common share | $ | 35.08 | $ | 33.11 | $ | 31.74 | $ | 32.72 | $ | 33.96 | ||||||||||
Tangible book value per common share** | 33.07 | 31.08 | 29.69 | 30.66 | 31.90 | |||||||||||||||
Common shares outstanding at end of period | 5,666,904 | 5,648,435 | 5,644,186 | 5,649,729 | 5,686,799 | |||||||||||||||
OTHER DATA | ||||||||||||||||||||
Full-time equivalent employees | 199 | 196 | 199 | 190 | 191 | |||||||||||||||
Branches | 12 | 12 | 12 | 12 | 11 | |||||||||||||||
Loan Production Offices | 5 | 4 | 4 | 4 | 4 | |||||||||||||||
CAPITAL RATIOS | ||||||||||||||||||||
Tier 1 capital to average assets | 9.68 | % | 9.60 | % | 9.56 | % | 9.42 | % | 9.17 | % | ||||||||||
Tier 1 common capital to risk-weighted assets | 11.52 | 11.26 | 11.40 | 11.66 | 11.58 | |||||||||||||||
Tier 1 capital to risk-weighted assets | 12.14 | 11.87 | 12.05 | 12.34 | 12.28 | |||||||||||||||
Total risk-based capital to risk-weighted assets | 14.36 | 14.08 | 14.30 | 14.68 | 14.65 | |||||||||||||||
Common equity to assets | 8.19 | 7.76 | 7.59 | 7.96 | 8.21 | |||||||||||||||
Tangible common equity to tangible assets ** | 7.75 | 7.32 | 7.14 | 7.49 | 7.75 |
** Non-GAAP financial measure. See reconciliation of GAAP and Non-GAAP measures.
____________________________________
(1) | Asset quality ratios are calculated using total portfolio loans. Portfolio loans include all loan portfolios except the |
(2) | On |
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Reconciliation of
This press release, including the accompanying financial statement tables, contains financial information determined by methods other than in accordance with generally accepted accounting principles, or GAAP. This financial information includes certain performance measures, which exclude intangible assets. These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
Total assets | $ | 2,428,536 | $ | 2,410,017 | $ | 2,359,621 | $ | 2,323,514 | $ | 2,351,923 | ||||||||||
Less: intangible assets | ||||||||||||||||||||
10,835 | 10,835 | 10,835 | 10,835 | 10,835 | ||||||||||||||||
Core deposit intangible | 550 | 634 | 725 | 821 | 924 | |||||||||||||||
Total intangible assets | 11,385 | 11,469 | 11,560 | 11,656 | 11,759 | |||||||||||||||
Tangible assets | $ | 2,417,151 | $ | 2,398,548 | $ | 2,348,061 | $ | 2,311,858 | $ | 2,340,164 | ||||||||||
Total common equity | $ | 198,806 | $ | 187,011 | $ | 179,154 | $ | 184,871 | $ | 193,140 | ||||||||||
Less: intangible assets | 11,385 | 11,469 | 11,560 | 11,656 | 11,759 | |||||||||||||||
Tangible common equity | $ | 187,421 | $ | 175,542 | $ | 167,594 | $ | 173,215 | $ | 181,381 | ||||||||||
Common shares outstanding at end of period | 5,666,904 | 5,648,435 | 5,644,186 | 5,649,729 | 5,686,799 | |||||||||||||||
Common equity to assets | 8.19 | % | 7.76 | % | 7.59 | % | 7.96 | % | 8.21 | % | ||||||||||
Tangible common equity to tangible assets | 7.75 | % | 7.32 | % | 7.14 | % | 7.49 | % | 7.75 | % | ||||||||||
Common book value per share | $ | 35.08 | $ | 33.11 | $ | 31.74 | $ | 32.72 | $ | 33.96 | ||||||||||
Tangible common book value per share | $ | 33.07 | $ | 31.08 | $ | 29.69 | $ | 30.66 | $ | 31.90 | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Reconciliation of US GAAP Net Income, Earnings Per Share (EPS), Return on Average Assets (ROAA) and Return on Average Common Equity (ROACE) to Non-GAAP Operating Net Income, EPS, ROAA and ROACE
This financial information includes certain operating performance measures, which exclude merger and acquisition costs, and core deposit intangibles, that are not considered part of recurring operations. These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.
Three Months Ended | ||||||||||||||||||||
(dollars in thousands, except per share amounts) | ||||||||||||||||||||
Net income (as reported) | $ | 7,327 | $ | 7,615 | $ | 7,580 | $ | 6,834 | $ | 6,288 | ||||||||||
Merger and acquisition costs (net of tax) | 196 | 741 | — | — | — | |||||||||||||||
Core deposit intangible amortization (net of tax) | 63 | 66 | 74 | 76 | 81 | |||||||||||||||
Less: Gain on Infinex sale (net of tax) | — | (532 | ) | — | — | — | ||||||||||||||
Non-GAAP operating net income | $ | 7,586 | $ | 7,890 | $ | 7,654 | $ | 6,910 | $ | 6,369 | ||||||||||
GAAP diluted earnings per share ("EPS") | $ | 1.30 | $ | 1.35 | $ | 1.34 | $ | 1.21 | $ | 1.10 | ||||||||||
Non-GAAP operating diluted EPS | $ | 1.34 | $ | 1.40 | $ | 1.36 | $ | 1.22 | $ | 1.12 | ||||||||||
GAAP return on average assets ("ROAA") | 1.21 | % | 1.28 | % | 1.31 | % | 1.19 | % | 1.08 | % | ||||||||||
Non-GAAP operating ROAA | 1.25 | % | 1.33 | % | 1.32 | % | 1.21 | % | 1.10 | % | ||||||||||
GAAP return on average common equity ("ROACE") | 15.10 | % | 16.61 | % | 15.97 | % | 14.39 | % | 12.30 | % | ||||||||||
Non-GAAP operating ROACE | 15.64 | % | 17.21 | % | 16.12 | % | 14.55 | % | 12.46 | % | ||||||||||
Weighted average common shares outstanding | 5,655,582 | 5,645,703 | 5,644,822 | 5,657,733 | 5,699,038 | |||||||||||||||
Average assets | $ | 2,425,520 | $ | 2,372,263 | $ | 2,322,315 | $ | 2,293,536 | $ | 2,325,992 | ||||||||||
Average equity | 194,053 | 183,359 | 189,838 | 189,992 | 204,554 | |||||||||||||||
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
This financial information includes certain operating performance measures, which exclude merger and acquisition costs, and core deposit intangibles, that are not considered part of recurring operations. These non-GAAP measures are included because the Company believes they may provide useful supplemental information for evaluating the underlying performance trends of the Company.
Three Months Ended | ||||||||||||||||||||
(dollars in thousands, except per share amounts ) | ||||||||||||||||||||
Efficiency ratio - GAAP basis | ||||||||||||||||||||
Noninterest expense | $ | 10,170 | $ | 11,390 | $ | 9,626 | $ | 9,338 | $ | 9,080 | ||||||||||
Net interest income plus noninterest income | 20,517 | 22,720 | 20,286 | 18,992 | 17,920 | |||||||||||||||
Efficiency ratio - GAAP basis | 49.57 | % | 50.13 | % | 47.45 | % | 49.17 | % | 50.67 | % | ||||||||||
Efficiency ratio - Non-GAAP basis | ||||||||||||||||||||
Noninterest Expense | $ | 10,170 | $ | 11,390 | $ | 9,626 | $ | 9,338 | $ | 9,080 | ||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||
Merger and acquisition costs | (259 | ) | (1,004 | ) | — | — | — | |||||||||||||
Core deposit intangible amortization | (84 | ) | (90 | ) | (97 | ) | (102 | ) | (109 | ) | ||||||||||
Noninterest expense - as adjusted | $ | 9,827 | $ | 10,296 | $ | 9,529 | $ | 9,236 | $ | 8,971 | ||||||||||
Net interest income plus noninterest income | 20,517 | 22,720 | 20,286 | 18,992 | 17,920 | |||||||||||||||
Less: Gain on Infinex sale | — | (721 | ) | — | — | — | ||||||||||||||
Net interest income plus noninterest income - adjusted | $ | 20,517 | $ | 21,999 | $ | 20,286 | $ | 18,992 | $ | 17,920 | ||||||||||
Efficiency ratio - Non-GAAP basis | 47.90 | % | 46.80 | % | 46.97 | % | 48.63 | % | 50.06 | % | ||||||||||
RECONCILIATION OF NON-GAAP MEASURES (UNAUDITED)
Pre-Tax Pre-Provision ("PTPP") Income, PTPP Return on Average Assets ("ROAA"), PTPP Return on Average Common Equity ("ROACE"), and Return on Average Tangible Common Equity ("ROATCE")
Management believes that PTPP income, which reflects the Company's profitability before income taxes and provision credit losses, and exclude merger and acquisition costs and the Infinex equity settlement, allows investors to better assess the Company's operating income and expenses in relation to the Company's core operating revenue by removing the volatility that is associated with credit provisions and different state income tax rates for comparable institutions. ROATCE is computed by dividing net earnings applicable to common shareholders by average tangible common shareholders' equity, and exclude merger and acquisition costs and the Infinex equity settlement. Management believes that ROATCE is meaningful because it measures the performance of a business consistently, whether acquired or internally developed. ROATCE is a non-GAAP measure and may not be comparable to similar non-GAAP measures used by other companies. Management also believes that during a crisis such as the COVID-19 pandemic, this information is useful as the impact of the pandemic on the loan loss provisions of various institutions will likely vary based on the geography of the communities served by a particular institution.
Three Months Ended | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Net income (as reported) | $ | 7,327 | $ | 7,615 | $ | 7,580 | $ | 6,834 | $ | 6,288 | ||||||||||
Provision for credit losses & unfunded commitments | 652 | 1,013 | 700 | 451 | 419 | |||||||||||||||
Income tax expenses | 2,368 | 2,702 | 2,380 | 2,369 | 2,133 | |||||||||||||||
Merger and acquisition costs | 259 | 1,004 | — | — | — | |||||||||||||||
Core deposit intangible amortization | 84 | 90 | 97 | 102 | 109 | |||||||||||||||
Less: Gain on Infinex sale | — | (721 | ) | — | — | — | ||||||||||||||
Pre-tax Pre-Provision income | $ | 10,690 | $ | 11,703 | $ | 10,757 | $ | 9,756 | $ | 8,949 | ||||||||||
GAAP ROAA | 1.21 | % | 1.28 | % | 1.31 | % | 1.19 | % | 1.08 | % | ||||||||||
Pre-tax Pre-Provision ROAA | 1.76 | % | 1.97 | % | 1.85 | % | 1.70 | % | 1.54 | % | ||||||||||
GAAP ROACE | 15.10 | % | 16.61 | % | 15.97 | % | 14.39 | % | 12.30 | % | ||||||||||
Pre-tax Pre-Provision ROACE | 22.04 | % | 25.53 | % | 22.67 | % | 20.54 | % | 17.50 | % | ||||||||||
Average assets | $ | 2,425,520 | $ | 2,372,263 | $ | 2,322,315 | $ | 2,293,536 | $ | 2,325,992 | ||||||||||
Average equity | $ | 194,053 | $ | 183,359 | $ | 189,838 | $ | 189,992 | $ | 204,554 | ||||||||||
Average tangible assets | $ | 2,414,080 | $ | 2,360,735 | $ | 2,310,692 | $ | 2,281,813 | $ | 2,314,163 | ||||||||||
Average tangible common equity | $ | 182,613 | $ | 171,831 | $ | 178,215 | $ | 178,269 | $ | 192,725 |
Three Months Ended | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Net income (as reported) | $ | 7,327 | $ | 7,615 | $ | 7,580 | $ | 6,834 | $ | 6,288 | ||||||||||
Core deposit intangible amortization (net of tax) | 63 | 66 | 74 | 76 | 81 | |||||||||||||||
Net earnings applicable to common shareholders | $ | 7,390 | $ | 7,681 | $ | 7,654 | $ | 6,910 | $ | 6,369 | ||||||||||
Net income (as reported) | $ | 7,327 | $ | 7,615 | $ | 7,580 | $ | 6,834 | $ | 6,288 | ||||||||||
Provision for credit losses & unfunded commitments | 652 | 1,013 | 700 | 451 | 419 | |||||||||||||||
Income tax expenses | 2,368 | 2,702 | 2,380 | 2,369 | 2,133 | |||||||||||||||
Merger and acquisition costs | 259 | 1,004 | — | — | — | |||||||||||||||
Core deposit intangible amortization | 84 | 90 | 97 | 102 | 109 | |||||||||||||||
Less: Gain on Infinex sale | — | (721 | ) | — | — | — | ||||||||||||||
Pre-tax Pre-Provision income | $ | 10,690 | $ | 11,703 | $ | 10,757 | $ | 9,756 | $ | 8,949 | ||||||||||
ROATCE | 16.19 | % | 17.88 | % | 17.18 | % | 15.50 | % | 13.22 | % | ||||||||||
Pre-tax Pre-Provision ROATCE | 23.42 | % | 27.24 | % | 24.14 | % | 21.89 | % | 18.57 | % | ||||||||||
Average tangible common equity | $ | 182,613 | $ | 171,831 | $ | 178,215 | $ | 178,269 | $ | 192,725 | ||||||||||
AVERAGE CONSOLIDATED BALANCE SHEETS AND NET INTEREST INCOME (UNAUDITED)
For the Three Months Ended | For the Three Months Ended | |||||||||||||||||||||||||||||||||||||||
2023 | 2022 | |||||||||||||||||||||||||||||||||||||||
(dollars in thousands) | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | Average Balance | Interest | Average Yield/Cost | ||||||||||||||||||||||||||||
Assets | ||||||||||||||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 1,229,000 | $ | 15,830 | 5.15 | % | $ | 1,112,108 | $ | 10,737 | 3.86 | % | $ | 1,229,000 | $ | 15,830 | 5.15 | % | $ | 1,217,998 | $ | 15,010 | 4.93 | % | ||||||||||||||||
Residential first mortgages | 77,802 | 721 | 3.71 | % | 86,805 | 713 | 3.29 | % | 77,802 | 721 | 3.71 | % | 79,859 | 732 | 3.67 | % | ||||||||||||||||||||||||
Residential rentals | 352,722 | 3,933 | 4.46 | % | 197,312 | 1,831 | 3.71 | % | 352,722 | 3,933 | 4.46 | % | 322,135 | 3,393 | 4.21 | % | ||||||||||||||||||||||||
Construction and land development | 17,709 | 324 | 7.32 | % | 33,669 | 407 | 4.84 | % | 17,709 | 324 | 7.32 | % | 20,194 | 342 | 6.77 | % | ||||||||||||||||||||||||
Home equity and second mortgages | 25,516 | 480 | 7.52 | % | 25,946 | 245 | 3.78 | % | 25,516 | 480 | 7.52 | % | 25,442 | 426 | 6.70 | % | ||||||||||||||||||||||||
Commercial loans | 43,927 | 877 | 7.99 | % | 46,668 | 550 | 4.71 | % | 43,927 | 877 | 7.99 | % | 27,619 | 776 | 11.24 | % | ||||||||||||||||||||||||
Commercial equipment loans | 80,461 | 838 | 4.17 | % | 61,715 | 642 | 4.16 | % | 80,461 | 838 | 4.17 | % | 78,965 | 814 | 4.12 | % | ||||||||||||||||||||||||
18 | 9 | 200.00 | % | 20,444 | 452 | 8.84 | % | 18 | 9 | 200.00 | % | 482 | 34 | 28.22 | % | |||||||||||||||||||||||||
Consumer loans | 6,523 | 104 | 6.38 | % | 3,213 | 33 | 4.11 | % | 6,523 | 104 | 6.38 | % | 5,987 | 94 | 6.28 | % | ||||||||||||||||||||||||
Allowance for credit losses | (23,086 | ) | — | 0.00 | % | (21,043 | ) | — | 0.00 | % | (23,086 | ) | — | 0.00 | % | (22,275 | ) | — | 0.00 | % | ||||||||||||||||||||
Loan portfolio (1) | $ | 1,810,592 | $ | 23,116 | 5.11 | % | $ | 1,566,837 | $ | 15,610 | 3.99 | % | $ | 1,810,592 | $ | 23,116 | 5.11 | % | $ | 1,756,406 | $ | 21,621 | 4.92 | % | ||||||||||||||||
Taxable investment securities | 451,202 | 3,876 | 3.44 | % | 484,157 | 1,572 | 1.30 | % | 451,202 | 3,876 | 3.44 | % | 445,252 | 3,329 | 2.99 | % | ||||||||||||||||||||||||
Nontaxable investment securities | 21,160 | 116 | 2.19 | % | 17,513 | 94 | 2.15 | % | 21,160 | 116 | 2.19 | % | 21,208 | 115 | 2.17 | % | ||||||||||||||||||||||||
Interest-bearing deposits in other banks | 13,984 | 112 | 3.20 | % | 42,608 | 60 | 0.56 | % | 13,984 | 112 | 3.20 | % | 14,257 | 110 | 3.09 | % | ||||||||||||||||||||||||
Federal funds sold | 3,154 | 44 | 5.58 | % | — | — | 0.00 | % | 3,154 | 44 | 5.58 | % | 8,004 | 77 | 3.85 | % | ||||||||||||||||||||||||
Total Interest-Earning Assets | 2,300,092 | 27,264 | 4.74 | % | 2,111,115 | 17,336 | 3.28 | % | 2,300,092 | 27,264 | 4.74 | % | 2,245,127 | 25,252 | 4.50 | % | ||||||||||||||||||||||||
Cash and cash equivalents | 13,052 | 116,560 | 13,052 | 13,203 | ||||||||||||||||||||||||||||||||||||
10,835 | 10,835 | 10,835 | 10,835 | |||||||||||||||||||||||||||||||||||||
Core deposit intangible | 605 | 994 | 605 | 693 | ||||||||||||||||||||||||||||||||||||
Other assets | 100,936 | 86,488 | 100,936 | 102,405 | ||||||||||||||||||||||||||||||||||||
Total Assets | $ | 2,425,520 | $ | 2,325,992 | $ | 2,425,520 | $ | 2,372,263 | ||||||||||||||||||||||||||||||||
Liabilities and Stockholders' Equity | ||||||||||||||||||||||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 603,203 | $ | — | 0.00 | % | $ | 609,945 | $ | — | 0.00 | % | $ | 603,203 | $ | — | 0.00 | % | $ | 634,187 | $ | — | 0.00 | % | ||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||||||||||||||||||
Savings | 122,995 | 76 | 0.25 | % | 121,236 | 15 | 0.05 | % | 122,995 | 76 | 0.25 | % | 124,537 | 46 | 0.15 | % | ||||||||||||||||||||||||
Demand deposits | 613,182 | 3,970 | 2.59 | % | 625,241 | 103 | 0.07 | % | 613,182 | 3,970 | 2.59 | % | 669,722 | 3,101 | 1.85 | % | ||||||||||||||||||||||||
Money market deposits | 353,960 | 502 | 0.57 | % | 378,781 | 100 | 0.11 | % | 353,960 | 502 | 0.57 | % | 0.24 | % | ||||||||||||||||||||||||||
Certificates of deposit | 398,408 | 2,181 | 2.19 | % | 322,346 | 295 | 0.37 | % | 398,408 | 2,181 | 2.19 | % | 309,321 | 661 | 0.85 | % | ||||||||||||||||||||||||
Total interest-bearing deposits | 1,488,545 | 6,729 | 1.81 | % | 1,447,604 | 513 | 0.14 | % | 1,488,545 | 6,729 | 1.81 | % | 1,465,275 | 4,029 | 1.10 | % | ||||||||||||||||||||||||
Total Deposits | 2,091,748 | 6,729 | 1.29 | % | 2,057,549 | 513 | 0.10 | % | 2,091,748 | 6,729 | 1.29 | % | 2,099,462 | 4,029 | 0.77 | % | ||||||||||||||||||||||||
Long-term debt | — | — | 0.00 | % | 12,219 | 25 | 0.82 | % | — | — | 0.00 | % | — | — | 0.00 | % | ||||||||||||||||||||||||
Short-term debt | 84,856 | 998 | 4.70 | % | — | — | 0.00 | % | 84,856 | 998 | 4.70 | % | 36,332 | 358 | 3.94 | % | ||||||||||||||||||||||||
Subordinated Notes | 19,571 | 251 | 5.13 | % | 19,515 | 251 | 5.14 | % | 19,571 | 251 | 5.13 | % | 19,557 | 252 | 5.15 | % | ||||||||||||||||||||||||
Guaranteed preferred beneficial interest in junior subordinated debentures | 12,000 | 218 | 7.27 | % | 12,000 | 78 | 2.60 | % | 12,000 | 218 | 7.27 | % | 12,000 | 182 | 6.07 | % | ||||||||||||||||||||||||
Total Debt | 116,427 | 1,467 | 5.04 | % | 43,734 | 354 | 3.24 | % | 116,427 | 1,467 | 5.04 | % | 67,889 | 792 | 4.67 | % | ||||||||||||||||||||||||
Interest-Bearing Liabilities | 1,604,972 | 8,196 | 2.04 | % | 1,491,338 | 867 | 0.23 | % | 1,604,972 | 8,196 | 2.04 | % | 1,533,164 | 4,821 | 1.26 | % | ||||||||||||||||||||||||
Total Funds | 2,208,175 | 8,196 | 1.48 | % | 2,101,283 | 867 | 0.17 | % | 2,208,175 | 8,196 | 1.48 | % | 2,167,351 | 4,821 | 0.89 | % | ||||||||||||||||||||||||
Other liabilities | 23,292 | 20,155 | 23,292 | 21,553 | ||||||||||||||||||||||||||||||||||||
Stockholders' equity | 194,053 | 204,554 | 194,053 | 183,359 | ||||||||||||||||||||||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 2,425,520 | $ | 2,325,992 | $ | 2,425,520 | $ | 2,372,263 | ||||||||||||||||||||||||||||||||
Net interest income | $ | 19,068 | $ | 16,469 | $ | 19,068 | $ | 20,431 | ||||||||||||||||||||||||||||||||
Interest rate spread | 2.70 | % | 3.05 | % | 2.70 | % | 3.24 | % | ||||||||||||||||||||||||||||||||
Net yield on interest-earning assets | 3.32 | % | 3.12 | % | 3.32 | % | 3.64 | % | ||||||||||||||||||||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 143.31 | % | 141.56 | % | 143.31 | % | 146.44 | % | ||||||||||||||||||||||||||||||||
Average loans to average deposits | 86.56 | % | 76.15 | % | 86.56 | % | 83.66 | % | ||||||||||||||||||||||||||||||||
Average transaction deposits to total average deposits ** | 80.95 | % | 84.33 | % | 80.95 | % | 85.27 | % | ||||||||||||||||||||||||||||||||
Cost of funds | 1.48 | % | 0.17 | % | 1.48 | % | 0.89 | % | ||||||||||||||||||||||||||||||||
Cost of deposits | 1.29 | % | 0.10 | % | 1.29 | % | 0.77 | % | ||||||||||||||||||||||||||||||||
Cost of debt | 5.04 | % | 3.24 | % | 5.04 | % | 4.67 | % |
(1) | Loan average balance includes non-accrual loans. There are no tax equivalency adjustments. There were |
____________________________________
** Transaction deposits exclude time deposits.
SUMMARY OF LOAN PORTFOLIO (UNAUDITED)
(dollars in thousands)
Portfolio loans, net of deferred costs and fees, are summarized by type as follows:
As of | |||||||||||||||||||||||||||||||||||
BY LOAN TYPE | % | % | % | % | % | ||||||||||||||||||||||||||||||
Portfolio Loans: | |||||||||||||||||||||||||||||||||||
Commercial real estate | $ | 1,265,519 | 68.63 | % | $ | 1,232,826 | 67.69 | % | $ | 1,202,660 | 68.98 | % | $ | 1,178,758 | 71.33 | % | $ | 1,177,761 | 72.28 | % | |||||||||||||||
Residential first mortgages | 78,186 | 4.24 | 79,872 | 4.39 | 83,081 | 4.77 | 84,782 | 5.13 | 86,416 | 5.30 | |||||||||||||||||||||||||
Residential rentals | 329,417 | 17.86 | 338,292 | 18.58 | 282,365 | 16.20 | 210,116 | 12.72 | 191,065 | 11.73 | |||||||||||||||||||||||||
Construction and land development | 18,474 | 1.00 | 17,259 | 0.95 | 23,197 | 1.33 | 31,068 | 1.88 | 30,649 | 1.88 | |||||||||||||||||||||||||
Home equity and second mortgages | 25,492 | 1.38 | 25,602 | 1.41 | 26,054 | 1.49 | 25,200 | 1.53 | 26,445 | 1.62 | |||||||||||||||||||||||||
Commercial loans | 40,666 | 2.20 | 42,055 | 2.31 | 41,615 | 2.39 | 43,472 | 2.63 | 48,948 | 3.00 | |||||||||||||||||||||||||
Consumer loans | 7,271 | 0.39 | 6,272 | 0.34 | 5,754 | 0.33 | 4,511 | 0.27 | 3,592 | 0.22 | |||||||||||||||||||||||||
Commercial equipment | 79,296 | 4.30 | 78,890 | 4.33 | 78,551 | 4.51 | 74,552 | 4.51 | 64,662 | 3.97 | |||||||||||||||||||||||||
Total portfolio loans | 1,844,321 | 100.00 | % | 1,821,068 | 100.00 | % | 1,743,277 | 100.00 | % | 1,652,459 | 100.00 | % | 1,629,538 | 100.00 | % | ||||||||||||||||||||
Less: Allowance for Credit Losses | (23,515 | ) | (1.27 | ) | (22,890 | ) | (1.26 | ) | (22,027 | ) | (1.26 | ) | (21,404 | ) | (1.30 | ) | (21,382 | ) | (1.31 | ) | |||||||||||||||
Total net portfolio loans | 1,820,806 | 1,798,178 | 1,721,250 | 1,631,055 | 1,608,156 | ||||||||||||||||||||||||||||||
— | 339 | 1,211 | 5,022 | 15,279 | |||||||||||||||||||||||||||||||
Total net loans | $ | 1,820,806 | $ | 1,798,517 | $ | 1,722,461 | $ | 1,636,077 | $ | 1,623,435 | |||||||||||||||||||||||||
END OF PERIOD CONTRACTUAL RATES (UNAUDITED)
The following table is based on end of period ("EOP") contractual interest rates and does not include the amortization of deferred costs and fees or assumptions regarding non-accrual interest:
(dollars in thousands) | EOP Contractual Interest rate | EOP Contractual Interest rate | EOP Contractual Interest rate | EOP Contractual Interest rate | EOP Contractual Interest rate | ||||||||||
Commercial real estate | 5.01 | % | 4.86 | % | 4.36 | % | 4.00 | % | 3.79 | % | |||||
Residential first mortgages | 3.84 | % | 3.84 | % | 3.84 | % | 3.83 | % | 3.80 | % | |||||
Residential rentals | 4.63 | % | 4.53 | % | 4.34 | % | 4.03 | % | 3.78 | % | |||||
Construction and land development | 7.26 | % | 6.73 | % | 5.61 | % | 4.57 | % | 4.36 | % | |||||
Home equity and second mortgages | 7.87 | % | 7.14 | % | 5.64 | % | 4.19 | % | 3.50 | % | |||||
Commercial loans | 8.07 | % | 7.34 | % | 5.93 | % | 4.79 | % | 4.47 | % | |||||
Consumer loans | 5.34 | % | 5.26 | % | 5.12 | % | 5.13 | % | 4.33 | % | |||||
Commercial equipment | 4.54 | % | 4.43 | % | 4.37 | % | 4.30 | % | 4.29 | % | |||||
0.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | 1.00 | % | ||||||
Total Loans | 5.00 | % | 4.84 | % | 4.41 | % | 4.04 | % | 3.81 | % | |||||
Yields without | 5.00 | % | 4.84 | % | 4.41 | % | 4.05 | % | 3.85 | % |
ALLOWANCE FOR CREDIT LOSSES AND ALLOWANCE FOR LOAN LOSSES (UNAUDITED)
(dollars in thousands) | For the Three Months Ended | |||||||||||||||||||
Beginning of period | $ | 22,890 | $ | 22,027 | $ | 21,404 | $ | 21,382 | $ | 18,417 | ||||||||||
Impact of ASC 326 Adoption | — | — | — | — | 2,496 | |||||||||||||||
Charge-offs | (65 | ) | (29 | ) | (92 | ) | (447 | ) | — | |||||||||||
Recoveries | 20 | 24 | 21 | 44 | 19 | |||||||||||||||
Net (charge-offs) recoveries | (45 | ) | (5 | ) | (71 | ) | (403 | ) | 19 | |||||||||||
Provision for credit losses | 670 | 868 | 694 | 425 | 450 | |||||||||||||||
End of period | $ | 23,515 | $ | 22,890 | $ | 22,027 | $ | 21,404 | $ | 21,382 | ||||||||||
Net (charge-offs) recoveries to average portfolio loans (annualized)(1) | (0.01) % | 0.00 | % | (0.02) % | (0.10) % | 0.00 | % | |||||||||||||
Breakdown of general and specific allowance as a percentage of total portfolio loans (1) | ||||||||||||||||||||
General allowance | $ | 23,036 | $ | 22,781 | $ | 21,919 | $ | 21,108 | $ | 21,087 | ||||||||||
Specific allowance | 479 | 109 | 108 | 296 | 295 | |||||||||||||||
$ | 23,515 | $ | 22,890 | $ | 22,027 | $ | 21,404 | $ | 21,382 | |||||||||||
General allowance | 1.25 | % | 1.25 | % | 1.26 | % | 1.28 | % | 1.29 | % | ||||||||||
Specific allowance | 0.02 | % | 0.01 | % | — | % | 0.02 | % | 0.02 | % | ||||||||||
Allowance to total portfolio loans | 1.27 | % | 1.26 | % | 1.26 | % | 1.30 | % | 1.31 | % | ||||||||||
Total portfolio loans (1) | $ | 1,844,321 | $ | 1,821,068 | $ | 1,743,277 | $ | 1,652,459 | $ | 1,629,538 |
____________________________________
(1) | Portfolio loans include all loan portfolios except the |
CLASSIFIED AND SPECIAL MENTION ASSETS1 (UNAUDITED)
The following is a breakdown of the Company’s classified and special mention assets at
As of | ||||||||||||||||||||
(dollars in thousands) | ||||||||||||||||||||
Classified loans | ||||||||||||||||||||
Substandard | $ | 8,116 | $ | 6,115 | $ | 5,211 | $ | 19,249 | $ | 26,863 | ||||||||||
Doubtful | — | — | — | — | — | |||||||||||||||
Total classified loans | 8,116 | 6,115 | 5,211 | 19,249 | 26,863 | |||||||||||||||
Special mention loans | 9,885 | 4,361 | — | 7,672 | — | |||||||||||||||
Total classified and special mention loans | $ | 18,001 | $ | 10,476 | $ | 5,211 | $ | 26,921 | $ | 26,863 | ||||||||||
Classified loans | $ | 8,116 | $ | 6,115 | $ | 5,211 | $ | 19,249 | $ | 26,863 | ||||||||||
Classified securities | — | — | — | — | — | |||||||||||||||
Other real estate owned | — | — | — | 3,109 | 7,773 | |||||||||||||||
Total classified assets | $ | 8,116 | $ | 6,115 | $ | 5,211 | $ | 22,358 | $ | 34,636 | ||||||||||
Total classified assets as a percentage of total assets | 0.33 | % | 0.25 | % | 0.22 | % | 1.10 | % | 1.93 | % | ||||||||||
Total classified assets as a percentage of | 2.89 | % | 2.23 | % | 2.10 | % | 9.61 | % | 16.21 | % | ||||||||||
SUMMARY OF DEPOSITS (UNAUDITED)
(dollars in thousands) | Balance | % | Balance | % | Balance | % | Balance | % | Balance | % | ||||||||||||||||||||
Noninterest-bearing demand | $ | 599,763 | 27.84 | % | $ | 630,120 | 30.17 | % | $ | 647,432 | 30.45 | % | $ | 635,649 | 30.48 | % | $ | 644,385 | 30.75 | % | ||||||||||
Interest-bearing: | ||||||||||||||||||||||||||||||
Demand deposits | 697,312 | 32.37 | % | 638,876 | 30.59 | % | 691,987 | 32.54 | % | 635,344 | 30.47 | % | 618,869 | 29.54 | % | |||||||||||||||
Money market deposits | 305,329 | 14.17 | % | 347,872 | 16.66 | % | 371,175 | 17.45 | % | 380,712 | 18.26 | % | 387,700 | 18.51 | % | |||||||||||||||
Savings | 121,007 | 5.62 | % | 124,533 | 5.96 | % | 123,564 | 5.81 | % | 119,363 | 5.72 | % | 124,038 | 5.92 | % | |||||||||||||||
Certificates of deposit | 430,912 | 20.00 | % | 347,062 | 16.62 | % | 292,399 | 13.75 | % | 314,308 | 15.07 | % | 320,091 | 15.28 | % | |||||||||||||||
Total interest-bearing | 1,554,560 | 72.16 | % | 1,458,343 | 69.83 | % | 1,479,125 | 69.55 | % | 1,449,727 | 69.52 | % | 1,450,698 | 69.25 | % | |||||||||||||||
Total Deposits | $ | 2,154,323 | 100.00 | % | $ | 2,088,463 | 100.00 | % | $ | 2,126,557 | 100.00 | % | $ | 2,085,376 | 100.00 | % | $ | 2,095,083 | 100.00 | % | ||||||||||
Transaction accounts | $ | 1,723,411 | 80.00 | % | $ | 1,741,401 | 83.38 | % | $ | 1,834,158 | 86.25 | % | $ | 1,771,068 | 84.93 | % | $ | 1,774,992 | 84.72 | % |
1 Classified loans are not net of deferred costs and fees before the quarter ended
Source:
2023 GlobeNewswire, Inc., source