Fourth Quarter 2021
Highlights
-
Record Net Income: Net income totaled $6.8 million
for the quarter ended December 31, 2021, or $1.18 per diluted
common share compared to net income of $6.1 million or $1.04 per
diluted common share for the quarter ended December 31, 2020
and $6.4 million or $1.12 per diluted common share for the quarter
ended September 30, 2021.
-
Continued Solid Profitability: Return on average
assets ("ROAA") and return on average common equity ("ROACE") were
1.18% and 13.00% for the three months ended December 31, 2021
compared to 1.18% and 12.51% for the three months ended
December 31, 2020 and 1.17% and 12.45% for the three months
ended September 30, 2021.
Pre-tax, pre-provision ("PTPP") ROAA and PTPP ROACE remained strong
at 1.57% and 17.31% for the quarter ended December 31, 2021
compared to 1.71% and 18.08% for the quarter ended
December 31, 2020 and 1.57% and 16.65% for the quarter ended
September 30, 2021.
-
Robust Portfolio Loan Growth: Gross portfolio
loans increased to $1,578.9 million, an increase of $45.9 million
or 12.0% annualized, compared to the prior quarter. Portfolio loans
increased $74.7 million or 5.0% during the year ended
December 31, 2021. The loan pipeline at December 31, 2021
was $160.0 million compared to $192.0 million at
September 30, 2021.
-
Continued Growth of Core Deposits: Transaction
deposits increased $63.8 million or 15.33% annualized during the
fourth quarter of 2021. Overall transaction deposits increased
$337.0 million or 24.21% from $1,391.7 million at December 31,
2020 to $1,728.7 million at December 31, 2021. The Bank
increased noninterest-bearing accounts by $83.7 million to $445.8
million or 21.68% of deposits at December 31, 2021 from 20.74%
of deposits at December 31, 2020.
-
Resumption of Stock Repurchases: On December 9,
2021, the Company announced its Board of Directors approved the
resumption of repurchases allowed under the 2020 Stock Purchase
Plan. The Company may repurchase the 99,450 shares remaining under
the October 2020 stock repurchase plan using up to
$4.0 million in the aggregate and up to $1.5 million in
the aggregate on a quarterly basis. During the month of December
2021, the Company repurchased 8,737 shares at an average price of
$38.34 per share.
-
Strong Asset Quality: Non-accrual loans, OREO and
TDRs were $8.1 million or 0.35% of total assets at
December 31, 2021 compared to $7.2 million or 0.31% of total
assets and $21.9 million or 1.08% of total assets at
September 30, 2021 and December 31, 2020, respectively.
Classified assets decreased $17.2 million to $5.2 million at
December 31, 2021 from $22.4 million at December 31,
2020. The Company had no COVID-19 deferred loans at
December 31, 2021.
-
Common Dividend Increase: On November 30, 2021,
the Company announced a 17% increase of its quarterly per share
dividend from $0.15 to $0.175 for the fourth quarter dividend that
was paid in the first quarter of 2022.
WALDORF, Md., Jan. 27, 2022 (GLOBE NEWSWIRE) --
The Community Financial Corporation (NASDAQ: TCFC) (the “Company”),
the holding company for Community Bank of the Chesapeake (the
“Bank”), today reported its results of operations for the fourth
quarter and year ended December 31, 2021. Net income for the
three months ended December 31, 2021 of $6.8 million, or $1.18
per diluted common share compared with net income of $6.4 million,
or $1.12 per diluted common share for the third quarter of 2021,
and net income of $6.1 million, or $1.04 per diluted common share
for the quarter ended December 31, 2020. The Company reported
net income for the year ended December 31, 2021 of $25.9
million, or $4.47 per diluted common share compared to a net income
of $16.1 million, or $2.74 per diluted common share for the year
ended December 31, 2020. Results for 2020 included a $10.7
million provision for loan losses("PLL") impacted by the COVID-19
pandemic compared to $0.6 million for 2021.
Management
Commentary
“Record earnings in the fourth quarter of 2021
contributed to a record year of earnings and growth at The
Community Financial Corporation,” stated William J. Pasenelli,
Chief Executive Officer. “Our work over the past few years has
successfully repositioned the Bank and is delivering on our
commitments to our communities, our customers, and our
shareholders. Efforts in Southern Maryland have solidified our
market share and improved our deposit franchise. Expansion into new
markets and products has accelerated our loan growth and delivered
five consecutive quarters of record earnings. Our persistent focus
on credit quality and resolution of long-standing classified assets
has reduced classified assets to $5.2 million, their lowest
level since before 2008. I am proud of everything we have
accomplished and believe we are exceptionally well-positioned to
continue to build on these improved results as we expand into new
markets.”
“Investments in technology have begun to deliver
growth in non-interest income, increased efficiency and improved
customer service,” stated James M. Burke, President. “We anticipate
these technology initiatives will continue to drive results and
facilitate our expansion into new markets and products. Our growth
in Virginia continues ahead of plan as we open our new branch in
Spotsylvania. We continue to expect net loan growth of between 8%
and 10% in 2022.”
During the second quarter of 2021, the Bank
introduced a new residential mortgage program and a retail and
commercial credit card program that merge the technology and
expertise of two proven FinTech firms with our business development
team's demonstrated capabilities. The Company expects these
programs to improve non-interest income and interest income
beginning in 2022-2023. The Bank's credit card program balances
increased from approximately $50,000 at June 30, 2021 to just over
$1.6 million at December 31, 2021.
The Bank’s expansion into Virginia significantly
contributed to our growth over the last five years. Fredericksburg,
Spotsylvania and surrounding areas provide significant
opportunities for continued organic growth supported by our
efficient operating model and ability to leverage technology. At
December 31, 2021, loans in the greater Fredericksburg,
Virginia area accounted for approximately 49% of the Bank's
outstanding portfolio loans. Portfolio loans include all loan
portfolios except the U.S. SBA PPP loan portfolio. In addition,
Fredericksburg branch deposits were $93.2 million with an
average cost of deposits of four basis points.
On April 21, 2021, the Bank purchased its second
full-service branch location in Virginia at 5831 Plank Road,
Spotsylvania. The full-service branch is expected to open in the
second quarter of 2022 and will provide banking, lending and wealth
management services with a focus on digital banking.
Effective March 31, 2021, the Bank consolidated
its St. Patrick's Drive branch in Waldorf, Maryland into the Bank's
nearby main office branch. This realignment of our branches will
enable the Company to serve a wider customer base. The net
financial impact of the new Spotsylvania branch and the closing of
the St. Patrick's Drive branch is expected to be neutral to the
Company's expense run rate.
On December 8, 2021, the Company announced that
effective August 31, 2022, James M. Burke will succeed William J.
Pasenelli as Chief Executive Officer of the Company and the Bank.
On August 31, 2022, Mr. Pasenelli will retire from his executive
roles and as a member of the Board of Directors of each of the
Company and the Bank. In connection with the foregoing
announcements, on December 8, 2021, Mr. Pasenelli and the Company
entered into a Retirement and Consulting Agreement (the
“Agreement”) pursuant to which Mr. Pasenelli will provide the
Company with consulting and advisory services through August 31,
2023.
During the third quarter of 2021, the Company
completed its repurchase of $7.0 million of shares of the
Company’s common stock. Pursuant to the repurchase plan announced
on October 20, 2020 (the “2020 Repurchase Plan”), the Company was
authorized by the Board of Directors to use up to $7.0 million
of the proceeds raised in its October 2020 $20.0 million
subordinated debt offering to repurchase up to 300,000 outstanding
shares of common stock. Between November 2020 and August 2021,
200,550 shares were repurchased at a total cost of approximately
$6.98 million. On December 9, 2021, the Company announced its
Board of Directors approved the resumption of repurchases allowed
under the 2020 Stock Purchase Plan. The Company may repurchase the
99,450 shares remaining under the October 2020 stock repurchase
plan using up to $4.0 million in the aggregate and up to
$1.5 million in the aggregate on a quarterly basis.
Results of Operations
|
|
(UNAUDITED) |
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
|
|
(dollars in thousands) |
|
|
2021 |
|
|
|
2020 |
|
|
$ Change |
|
% Change |
|
|
|
|
|
|
|
|
|
Interest and dividend income |
|
$ |
17,778 |
|
|
$ |
17,913 |
|
|
$ |
(135 |
) |
|
(0.8 |
)% |
Interest expense |
|
|
897 |
|
|
|
1,941 |
|
|
|
(1,044 |
) |
|
(53.8 |
)% |
Net interest income |
|
|
16,881 |
|
|
|
15,972 |
|
|
|
909 |
|
|
5.7 |
% |
Provision for loan losses |
|
|
— |
|
|
|
600 |
|
|
|
(600 |
) |
|
(100.0 |
)% |
Noninterest income |
|
|
2,290 |
|
|
|
2,370 |
|
|
|
(80 |
) |
|
(3.4 |
)% |
Noninterest expense |
|
|
10,179 |
|
|
|
9,472 |
|
|
|
707 |
|
|
7.5 |
% |
Income before income
taxes |
|
|
8,992 |
|
|
|
8,270 |
|
|
|
722 |
|
|
8.7 |
% |
Income tax expense |
|
|
2,241 |
|
|
|
2,131 |
|
|
|
110 |
|
|
5.2 |
% |
Net income |
|
$ |
6,751 |
|
|
$ |
6,139 |
|
|
$ |
612 |
|
|
10.0 |
% |
|
|
(UNAUDITED) |
|
|
|
|
|
|
Year Ended December 31, |
|
|
|
|
(dollars in thousands) |
|
|
2021 |
|
|
|
2020 |
|
|
$ Change |
|
% Change |
|
|
|
|
|
|
|
|
|
Interest and dividend income |
|
$ |
70,559 |
|
|
$ |
71,073 |
|
|
$ |
(514 |
) |
|
(0.7 |
)% |
Interest expense |
|
|
4,125 |
|
|
|
10,156 |
|
|
|
(6,031 |
) |
|
(59.4 |
)% |
Net interest income |
|
|
66,434 |
|
|
|
60,917 |
|
|
|
5,517 |
|
|
9.1 |
% |
Provision for loan losses |
|
|
586 |
|
|
|
10,700 |
|
|
|
(10,114 |
) |
|
(94.5 |
)% |
Noninterest income |
|
|
7,906 |
|
|
|
8,416 |
|
|
|
(510 |
) |
|
(6.1 |
)% |
Noninterest expense |
|
|
39,152 |
|
|
|
38,003 |
|
|
|
1,149 |
|
|
3.0 |
% |
Income before income
taxes |
|
|
34,602 |
|
|
|
20,630 |
|
|
|
13,972 |
|
|
67.7 |
% |
Income tax expense |
|
|
8,716 |
|
|
|
4,494 |
|
|
|
4,222 |
|
|
94.0 |
% |
Net income |
|
$ |
25,886 |
|
|
$ |
16,136 |
|
|
$ |
9,750 |
|
|
60.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest
Income
Net interest income increased for the three
months ended December 31, 2021 compared to the three months
ended December 31, 2020. Net interest margin of 3.22% for the
three months ended December 31, 2021 decreased 18 basis points
from 3.40% for the comparable period. The increase in net interest
income resulted primarily from decreases in interest expense from
lower funding costs and increased interest income from larger loan
and investment average balances. These increases to net interest
income were partially offset by the impacts of lower
interest-earning asset repricing.
Net interest income increased for the twelve
months ended December 31, 2021 compared to the twelve months
ended December 31, 2020. Net interest margin of 3.34% for the
twelve months ended December 31, 2021 was 2 basis points lower
than the 3.36% for the twelve months ended December 31, 2020.
The increase in net interest income resulted primarily from
decreases in interest expense from lower funding costs and
increased interest income from larger loan and investment average
balances. These increases to net interest income were partially
offset by the impacts of lower interest-earning asset repricing.
Interest earning asset yields decreased 37 basis points from 3.92%
for the twelve months ended December 31, 2020 to 3.55% for the
twelve months ended December 31, 2021. The Company’s cost of
funds decreased 36 basis points from 0.57% for the twelve months
ended December 31, 2020 to 0.21% for the twelve months ended
December 31, 2021.
Excluding the recognition of interest income
related to U.S. SBA PPP loan forgiveness, compression of our net
interest margin is likely to continue in the first quarter of 2022
as interest-earning assets reprice faster than interest-bearing
liabilities and the Bank continues to invest excess liquidity into
securities. The speed at which the Federal Reserve may increase
interest rates could impact the Company’s net interest margins in
2022. Average investments and interest-bearing cash accounts have
increased $221.7 million from $303.3 million for the three months
ended December 31, 2020 to $525.0 million for the three months
ended December 31, 2021. We expect U.S. SBA PPP loan
forgiveness to positively impact margins and net interest income in
the first quarter of 2022 with the recognition of remaining net
deferred fees.
For the fourth quarter of 2021 interest income
decreased compared to the fourth quarter of 2020 as asset yields
declined and the accelerated interest recognition following the
forgiveness of U.S. SBA PPP loans slowed. Increased interest income
from larger average loan and investment balances partially offset
the slight decrease in interest income for the comparable periods.
For 2021, interest income decreased from significantly lower asset
yields partially offset by increased interest income from larger
average balances and U.S. SBA PPP loan income. Interest income from
the Company's participation in the U.S. SBA PPP program was
$0.8 million and $5.2 million for the three and twelve
months ended December 31, 2021 compared to $1.3 million
and $2.7 million for the three and twelve months ended
December 31, 2020. For the three and twelve months ended
December 31, 2021, net interest margin increased 10 and 13
basis points as a result of net U.S. SBA PPP loan interest income
recognition compared to decreased net interest margin of six basis
points and increased net interest margin of three basis points for
the comparable periods in 2020. For the three months ended
September 30, 2021, net interest margin of 3.28% increased 13 basis
points as result of net U.S. SBA PPP loan interest income.
The Company's net interest margin was stable in
2020 after adjusting for U.S. SBA PPP loan and funding activity.
The sharp decline in interest rates in 2020 and 2021 not only
reduced interest income on floating-rate loans, liquid
interest-earning assets and investments, but has also reduced
competitive pressures and depositor expectations concerning deposit
interest rates. The repricing of time deposits, the increase in
noninterest-bearing accounts as a percentage of total deposits and
lower costs for transaction deposit accounts all contributed to
lowering the Bank's cost of funds in 2020 and 2021. Cost of funds
decreased from 0.42% for the three months ended December 31,
2020 to 0.17% for the three months ended December 31, 2021.
During the third quarter of 2021, the Company's cost of funds was
0.21%. Cost of funds decreased from 0.57% for the twelve months
ended December 31, 2020 to 0.21% for the twelve months ended
December 31, 2021.
In the last six months of 2020, FHLB advances of
$30.0 million were repaid early with a 2.2% average rate.
Prepayment fees increased interest expense $0.6 million for
the year ended December 31, 2020. FHLB advances of $15.0
million were repaid early with a 0.4% average rate in the third
quarter of 2021, increasing interest expense $0.1 million for the
year ended December 31, 2021.
Noninterest Income
Noninterest income decreased for the
three months ended December 31, 2021 compared to the
three months ended December 31, 2020. The decrease for
the comparable periods was primarily due to gains on the sale of
investment securities in the fourth quarter of 2020 partially
offset by increases in service charge income, interest rate
protection referral fee income and miscellaneous fee income. In the
fourth quarter of 2021, miscellaneous loan charges increased
$0.1 million due to prepayment penalty income related to
$4.9 million in loan payoffs. Noninterest income as a
percentage of average assets was 0.40% and 0.46%, respectively, for
the three months ended December 31, 2021 and 2020.
Noninterest income decreased for the
twelve months ended December 31, 2021 compared to the
twelve months ended December 31, 2020. The decrease was
primarily due to larger gains on the sale of investment securities
in 2020, decreased interest rate protection referral fee income,
unrealized losses on equity securities, and a loss on the sale of
impaired loans. These decreases to noninterest income were
partially offset by increased service charge income and
miscellaneous fee income. During the quarter ended March 31, 2021,
the Bank sold non-accrual and classified commercial real estate and
residential mortgage loans with an amortized cost, net of
charge-offs, of $9.1 million and recognized a loss on the sale
of $191,000. Noninterest income as a percentage of assets was 0.36%
and 0.42%, respectively, for the twelve months ended
December 31, 2021 and 2020.
Noninterest
Expense
Noninterest expense for the three months ended
December 31, 2021, increased compared to the three months
ended December 31, 2020 as increased compensation and
benefits, professional fees and data processing costs were
partially offset by decreased FDIC insurance, occupancy expense and
OREO expenses. Compensation and benefits increased for the
comparable periods primarily due to increased incentive
compensation resulting from improvements in profitability and asset
quality as well as the Company's decision to pay employees for
unused vacation in December 2021 that was not available to
carryover into 2022. Data processing and professional fees have
increased due to the Bank's larger balance sheet, more customer
transaction activity and investments in technology, new products
and services. FDIC insurance and OREO costs decreased due to
improved credit trends. Occupancy expense decreased primarily due
to the consolidation of the St. Patrick's Drive branch in March
2021.
During the first quarter of 2021, the Company
reported an expense of $1.3 million related to an isolated
wire transfer fraud incident. Our investigation has found no
evidence that information systems of the Bank were compromised or
that employee fraud was involved. In the second quarter of 2021,
the Company recovered $0.2 million of the funds transferred
and submitted an insurance claim. Any recovery of insurance
proceeds would be recognized in the quarter received.
The Company’s efficiency ratio was 53.10% for
the three months ended December 31, 2021 compared to 51.64%
for the three months ended December 31, 2020. The Company’s
net operating expense ratio was 1.38% for the three months ended
December 31, 2021 compared to 1.37% for the three months ended
December 31, 2020.
Including the wire transfer fraud expense, the
Company quarterly expense run rate for the twelve months ended
December 31, 2021 averaged $9.8 million. The Company's
quarterly expense run rate, excluding the wire transfer fraud
expense, for the twelve months ended December 31, 2021
averaged $9.5 million. Management's projected quarterly
expense run rate for the first quarter of 2022 is estimated between
$9.6 million and $9.8 million and includes base
compensation increases given to select employee groups in January
2022 to address local wage competitive pressures.
Noninterest expense increased $1.1 million or
3.0% for the twelve months ended December 31, 2021 compared to
the twelve months ended December 31, 2020. The increase in
noninterest expense for the comparable periods was primarily due to
the $1.3 million wire fraud reported in the first quarter and
increases in compensation and benefits, professional fees and data
processing costs. These increases to noninterest expense were
partially offset by decreased OREO, FDIC insurance and occupancy
expense. Compensation and benefits increased for the comparable
periods primarily due to modest increases in base compensation,
increased incentive compensation, higher 2021 healthcare costs as
well as the Company's decision to pay employees for unused vacation
in December 2021 that was not available to carryover into 2022.
Data processing and professional fees have increased due to the
Bank's larger balance sheet, more customer transaction activity and
investments in technology, new products and services. FDIC
insurance and OREO costs decreased due to improved credit trends.
Occupancy expense decreased primarily due to the closure of the St.
Patrick's Drive branch in March 2021.
Compensation and benefits for the twelve months
ended December 31, 2021 and 2020 were reduced
$0.3 million and $0.5 million, respectively, for the
allocation of deferred costs for U.S. SBA PPP loans originated.
The Company’s efficiency ratio was 52.67% for
the twelve months ended December 31, 2021 compared to 54.81%
for the twelve months ended December 31, 2020. The
Company’s net operating expense ratios were 1.44% and
1.49%, respectively for the comparable periods. The efficiency and
net operating expense ratios have improved (decreased) as the
Company has been able to generate more net interest income and
noninterest income while controlling expense growth.
Income Tax Expense
For the three months and year ended
December 31, 2021 the effective tax rate was 24.9% and 25.2%.
The Company’s consolidated effective tax rate was 25.8% and 21.8%
for the three months and year ended December 31, 2020. The
Company's new state tax apportionment approach was implemented
during the first quarter of 2020 and included the impact of amended
income tax filings of the Company and Bank. Management evaluated
the tax position and determined the change in tax position
qualified as a change in estimate under FASB ASC Section 250. The
following table shows a breakdown of income tax expense for the
year ended December 31, 2020 split between the apportionment
adjustment and a normalized 2020 income tax provision:
|
|
(UNAUDITED) |
|
|
For the Year Ended December 31, 2020 |
(dollars in thousands) |
|
Tax Provision |
|
Effective Tax Rate |
Income tax apportionment adjustment |
|
$ |
(743 |
) |
|
(3.6 |
)% |
Income taxes before
apportionment adjustment |
|
|
5,237 |
|
|
25.4 |
|
Income tax expense as
reported |
|
$ |
4,494 |
|
|
21.8 |
% |
|
|
|
|
|
Income before income
taxes |
|
$ |
20,630 |
|
|
|
|
|
|
|
|
|
|
Balance Sheet
Assets
Total assets increased $300.9 million, or 14.8%,
to $2.3 billion at December 31, 2021 compared to total assets
of $2.0 billion at December 31, 2020, primarily due to
increased cash of $62.6 million and investments of $250.3 million.
The increase in cash and investments was principally driven by
increases to our customer deposits accounts and cash received from
the SBA from the forgiveness of U.S. SBA PPP loans. In addition,
net loans decreased $7.3 million. The Company’s loan
pipeline was approximately $160.0 million
at December 31, 2021.
During the fourth quarter of 2021, total net
loans, which include portfolio loans and U.S. SBA PPP loans,
increased 4.4% annualized or $17.1 million from $1,569.6 million
at September 30, 2021 to $1,586.8 million at
December 31, 2021. Gross portfolio loans increased 12.0%
annualized or $45.9 million from $1,533.1 million
at September 30, 2021 to $1,578.9 million at
December 31, 2021. Portfolio loans increased $74.7 million or
5.0% in 2021, growing from $1,504.3 million at
December 31, 2020 to $1,578.9 million at
December 31, 2021.
Non-owner occupied commercial real estate as a
percentage of risk-based capital at December 31, 2021 and
December 31, 2020 were $813.0 million or 331% and $695.8
million or 316%, respectively. Construction loans as a percentage
of risk-based capital at December 31, 2021 and
December 31, 2020 were $140.4 million or 57% and $139.2
million or 63%, respectively.
Funding
Total deposits increased $310.6 million
or 17.8% at December 31, 2021 compared to
December 31, 2020. The increase included a $337.0 million
increase to transaction deposits offset by a $26.4 million decrease
to time deposits. Non-interest-bearing demand deposits increased
$83.7 million or 23.12% at December 31, 2021, representing
21.68% of deposits, compared to 20.74% of deposits at
December 31, 2020. Customer deposit balances have
increased during the last two years due to sales efforts as well as
lower levels of consumer and business spending related to the
COVID-19 pandemic.
Stockholders' Equity and Regulatory
Capital
During the twelve months ended December 31,
2021, total stockholders’ equity increased $10.1 million. Increases
in equity included net income of $25.9 million and stock-based
compensation and ESOP activity $0.9 million. These increases to
equity were partially offset by common stock repurchases of $7.0
million, common dividends paid of $3.2 million and an increase in
accumulated other comprehensive loss of $6.5 million due to a
reduction in unrealized gains in the investment portfolio.
The Company's common equity to assets ratio
decreased to 8.94% at December 31, 2021 from 9.77% at
December 31, 2020. The Company’s ratio of tangible common
equity ("TCE") to tangible assets decreased to 8.48%
at December 31, 2021 from 9.22%
at December 31, 2020 (see Non-GAAP reconciliation
schedules). The decrease in the TCE ratio was due primarily to
significant increases in cash, investments and loans.
In April 2020, banking regulators issued an
interim final rule that excluded U.S. SBA PPP loans pledged under
the Paycheck Protection Program Liquidity Facility ("PPPLF") from
the calculation of the leverage ratio. The Bank did not have any
PPPLF advances at December 31, 2021 and December 31,
2020. In addition, the interim final rule excluded U.S. SBA PPP
loans from the calculation of risk-based capital ratios by
assigning a zero percent risk weight. The Company remains well
capitalized at December 31, 2021 with a Tier
1 capital to average assets ("leverage ratio")
of 9.23% at December 31, 2021 compared to
9.56% at December 31, 2020.
Asset Quality
Allowance for loan losses ("ALLL")
and provision for loan losses ("PLL") and Non-Performing
Assets
The Company's allowance methodology considers
quantitative historical loss factors and qualitative factors to
determine the estimated level of incurred losses in the Company's
loan portfolios. The ALLL increased in 2020 primarily due to the
economic effects of the COVID-19 pandemic and continues to provide
for economic uncertainty. ALLL levels decreased to 1.17% of
portfolio loans at December 31, 2021 compared to 1.29% at
December 31, 2020. At December 31, 2021, the Company's
ALLL decreased $1.0 million or 5.2% to $18.4 million from $19.4
million at December 31, 2020.
The Company recorded $0.6 million of PLL for the
twelve months ended December 31, 2021 compared to $10.7
million for the twelve months ended months ended December 31,
2020. Net charge-offs also decreased for the comparable periods
from $2.2 million in 2020 to $1.6 million in 2021.
The Company's general allowance was stable at
$18.1 million at December 31, 2020 increasing modestly to
$18.2 million at December 31, 2021. The stability in the
general allowance was primarily due to improvements in some
qualitative factors partially offset by 2021 growth in the higher
risk commercial portfolios. During the first quarter of 2021, the
Bank sold non-accrual and classified commercial real estate and
residential mortgage loans with an amortized cost of
$9.1 million, net of charge-offs of $1.4 million, and
recognized a loss on the sale of $191,000. In the third quarter of
2021, the Bank resolved $7.8 million of non-accrual loans
through $0.5 million in charge-offs that resulted in a loan
sale and a payoff. The Company's resolution of these impaired loans
decreased the specific reserve, improved asset quality and improved
several ALLL qualitative factors. The Company's specific reserves
decreased $1.1 million from $1.4 million at December 31,
2020 to $0.3 million at December 31, 2021.
Management believes that loans included in the
COVID-19 deferral program in 2020 and 2021 are more likely to
default in the future and that the identification and resolution of
problem credits could be delayed. As of December 31, 2021,
there were no COVID-19 deferral agreements compared to
$35.4 million or 2.4% of gross portfolio loans at
December 31, 2020. As of December 31, 2021 there were
previously COVID-19 deferred loans of $3.9 million (4
relationships - with $3.8 million current and
$0.1 million delinquent) deemed to be non-accrual and
substandard based on internal reviews. As of December 31, 2020
there were $3.4 million of COVID-19 deferred loans deemed to
be non-accrual and substandard. In our evaluation of previously
deferred loans, we considered the length of the deferral period,
the type and amount of collateral and customer industries.
Gross U.S. SBA PPP loans at December 31,
2021 totaled $27.3 million (201 loans), a decrease of
$83.1 million compared to December 31, 2020. U.S. SBA PPP
loans are guaranteed by the SBA and the Bank's allowance for loan
loss does not include an allowance for U.S. SBA PPP loans.
Management believes that the allowance is
adequate at December 31, 2021.
During 2020, classified assets decreased
$12.3 million. Asset quality has continued to improve in 2021
with the resolution of $16.9 million in non-accrual and
impaired loans through loan sales and negotiated payoffs as well as
the resolution of $3.1 million in OREO. Management remains
committed to expeditiously resolve non-performing or substandard
credits that are not likely to become performing or passing credits
in a reasonable timeframe.
Classified assets decreased $17.1 million from
$22.4 million at December 31, 2020 to $5.2 million at
December 31, 2021. Management considers classified assets to
be an important measure of asset quality. The Company's risk rating
process for classified loans is an important input into the
Company's allowance methodology. Risk ratings are expected to be an
important indicator in assessing ongoing credit risks of COVID-19
previously deferred loans.
Non-accrual loans and OREO to total gross
portfolio loans and OREO decreased 94 basis points from 1.42%
at December 31, 2020 to 0.48%
at December 31, 2021. Non-accrual loans, OREO and TDRs to
total assets decreased 73 basis points from
1.08% at December 31, 2020 to 0.35%
at December 31, 2021.
Non-accrual loans decreased $10.6 million from
$18.2 million at December 31, 2020 to $7.6 million at
December 31, 2021. Non-accrual loans of $6.7 million (87%)
were current with all payments of principal and interest with
specific reserves of $0.3 million at December 31, 2021.
Delinquent non-accrual loans were $0.9 million (13%) with no
specific reserves at December 31, 2021. There were no OREO
balances at December 31, 2021 compared to $3.1 million at
December 31, 2020.
The Company is planning for adoption of the
current expected credit loss (“CECL”) model or ASU 2016-13
"Financial Instruments - Credit Losses (Topic 326) - Measurement of
Credit Losses on Financial Instruments". Our CECL model has been
substantially developed and the third-party model validation is
complete. We conducted parallel runs of the CECL loss estimation
model and the Company's existing incurred loss model throughout
2021. We are refining the qualitative and forecasting components of
the CECL model. ASU 2016-13 will also require the establishment of
an allowance for expected credit losses for certain debt securities
and other financial assets.
The Company is required to adopt ASU No. 2016-13
for fiscal years beginning after December 15, 2022. Early adoption
is permitted, and the Company expects to adopt ASU No. 2016-13 in
the first quarter of 2022. Management expects to recognize a
one-time cumulative effect adjustment to the allowance for credit
losses as of the January 1, 2022. At this time, we expect our
implementation of CECL to increase our reserve for credit losses
and we plan to provide an estimate of the range of the impact of
adoption in the Company's Annual 10-K filing during the first
quarter of 2022. The one-time cumulative adjustment is not expected
materially impact capital.
About The Community Financial
Corporation - Headquartered in Waldorf, MD, The Community
Financial Corporation is the bank holding Company for Community
Bank of the Chesapeake, a full-service commercial bank with assets
of approximately $2.3 billion. Through its branch offices and
commercial lending centers, Community Bank of the Chesapeake offers
a broad range of financial products and services to individuals and
businesses. The Company’s branches are located at its main office
in Waldorf, Maryland, and branch offices in Bryans Road, Dunkirk,
Leonardtown, La Plata, Charlotte Hall, Prince Frederick, Lusby and
California, Maryland; and downtown Fredericksburg, Virginia. More
information about Community Bank of the Chesapeake can be found at
www.cbtc.com.
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 -
This news release contains forward-looking statements within the
meaning of the federal securities laws. 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
like “believe,” “expect,” “anticipate,” “estimate” 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, 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,
non-interest revenue, allowance for loan losses, the level of
credit losses from lending, liquidity levels, capital levels, or
other future financial or business performance strategies or
expectations, and any statements of the plans and objectives of
management for future operations products or services, including
the expected benefits from, and/or the execution of integration
plans relating to any acquisition we have undertaking or that we
undertake in the future; plans and cost savings regarding branch
closings or consolidation; projections related to certain financial
metrics; expected benefits of programs we introduce, including
residential mortgage programs and retail and commercial credit card
programs; and any statement of expectation or belief, and any
assumptions underlying the foregoing. These forward-looking
statements express management’s current expectations or forecasts
of future events, results and conditions, and by their nature are
subject to and involve risks and uncertainties that could cause
actual results to differ materially from those anticipated by the
statements made herein. Factors that might cause actual results to
differ materially from those made in such statements include, but
are not limited to: risks, uncertainties and other factors relating
to the COVID-19 pandemic (including the length of time that the
pandemic continues, the ability of states and local governments to
successfully implement the lifting of restrictions on movement and
the potential imposition of further restrictions on movement and
travel in the future, the effect of the pandemic on the general
economy and on the businesses of our borrowers and their ability to
make payments on their obligations; the remedial actions and
stimulus measures adopted by federal, state and local governments,
and the inability of employees to work due to illness, quarantine,
or government mandates); the synergies and other expected financial
benefits from any acquisition that we have undertaken or may
undertake in the future; may or may not be realized within the
expected time frames; changes in the Company's or the Bank's
strategy, costs or difficulties related to integration matters
might be greater than expected; availability of and costs
associated with obtaining adequate and timely sources of liquidity;
the ability to maintain credit quality; general economic trends;
changes in interest rates; loss of deposits and loan demand to
other financial institutions; substantial changes in financial
markets; changes in real estate value and the real estate market;
regulatory changes; the impact of government shutdowns or
sequestration; the possibility of unforeseen events affecting the
industry generally; the uncertainties associated with newly
developed or acquired operations; the outcome of pending or
threatened litigation, or of matters before regulatory agencies,
whether currently existing or commencing in the future; market
disruptions and other effects of terrorist activities; and the
matters described in “Item 1A Risk Factors” in the Company’s Annual
Report on Form 10-K for the Year Ended December 31, 2020, and
in its other Reports filed with the Securities and Exchange
Commission (the “SEC”). The Company’s forward-looking statements
may also be subject to other risks and uncertainties, including
those that it may discuss elsewhere in this news release or in its
filings with the SEC, accessible on the SEC’s Web site at www.sec.gov. The Company
undertakes no obligation to update these forward-looking statements
to reflect events or circumstances after the date hereof or to
reflect the occurrence of unforeseen events, except as required
under the rules and regulations of the SEC.
Data is unaudited as of December 31, 2021.
This selected information should be read in conjunction with the
financial statements and notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2020.
CONTACTS:
William J. Pasenelli, Chief Executive Officer
Todd L. Capitani, Chief Financial Officer
888.745.2265
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
(UNAUDITED)
CONDENSED CONSOLIDATED INCOME STATEMENT
(dollars in thousands, except per share amounts)
|
|
Three Months Ended |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
16,222 |
|
|
$ |
16,342 |
|
|
$ |
16,320 |
|
|
$ |
16,592 |
|
|
$ |
16,776 |
|
Interest and dividends on securities |
|
|
1,531 |
|
|
|
1,296 |
|
|
|
1,101 |
|
|
|
1,064 |
|
|
|
1,091 |
|
Interest on deposits with banks |
|
|
25 |
|
|
|
21 |
|
|
|
23 |
|
|
|
22 |
|
|
|
46 |
|
Total Interest and
Dividend Income |
|
|
17,778 |
|
|
|
17,659 |
|
|
|
17,444 |
|
|
|
17,678 |
|
|
|
17,913 |
|
Interest
Expense |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
565 |
|
|
|
594 |
|
|
|
640 |
|
|
|
802 |
|
|
|
1,166 |
|
Long-term debt |
|
|
332 |
|
|
|
456 |
|
|
|
369 |
|
|
|
367 |
|
|
|
775 |
|
Total Interest
Expense |
|
|
897 |
|
|
|
1,050 |
|
|
|
1,009 |
|
|
|
1,169 |
|
|
|
1,941 |
|
Net Interest Income
(NII) |
|
|
16,881 |
|
|
|
16,609 |
|
|
|
16,435 |
|
|
|
16,509 |
|
|
|
15,972 |
|
Provision for loan losses |
|
|
— |
|
|
|
— |
|
|
|
291 |
|
|
|
295 |
|
|
|
600 |
|
NII After Provision
For Loan Losses |
|
|
16,881 |
|
|
|
16,609 |
|
|
|
16,144 |
|
|
|
16,214 |
|
|
|
15,372 |
|
Noninterest
Income |
|
|
|
|
|
|
|
|
|
|
Loan appraisal, credit, and miscellaneous charges |
|
|
257 |
|
|
|
29 |
|
|
|
44 |
|
|
|
198 |
|
|
|
76 |
|
Gain on sale of asset |
|
|
— |
|
|
|
— |
|
|
|
68 |
|
|
|
— |
|
|
|
— |
|
Net gains on sale of investment securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
586 |
|
|
|
714 |
|
Unrealized (losses) gains on equity securities |
|
|
(45 |
) |
|
|
(22 |
) |
|
|
13 |
|
|
|
(85 |
) |
|
|
(14 |
) |
Loss on premises and equipment held for sale |
|
|
(5 |
) |
|
|
(20 |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
Income from bank owned life insurance |
|
|
219 |
|
|
|
220 |
|
|
|
218 |
|
|
|
214 |
|
|
|
220 |
|
Service charges |
|
|
1,235 |
|
|
|
987 |
|
|
|
892 |
|
|
|
1,187 |
|
|
|
960 |
|
Referral fee income |
|
|
574 |
|
|
|
176 |
|
|
|
621 |
|
|
|
451 |
|
|
|
414 |
|
Net gain on sale of loans originated for sale |
|
|
55 |
|
|
|
30 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss on sale of loans |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(191 |
) |
|
|
— |
|
Total Noninterest
Income |
|
|
2,290 |
|
|
|
1,400 |
|
|
|
1,856 |
|
|
|
2,360 |
|
|
|
2,370 |
|
Noninterest
Expense |
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
5,265 |
|
|
|
5,650 |
|
|
|
5,332 |
|
|
|
4,788 |
|
|
|
4,552 |
|
OREO valuation allowance and expenses |
|
|
767 |
|
|
|
20 |
|
|
|
488 |
|
|
|
181 |
|
|
|
897 |
|
Sub
Total |
|
|
6,032 |
|
|
|
5,670 |
|
|
|
5,820 |
|
|
|
4,969 |
|
|
|
5,449 |
|
Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
Occupancy expense |
|
|
656 |
|
|
|
731 |
|
|
|
688 |
|
|
|
761 |
|
|
|
806 |
|
Advertising |
|
|
128 |
|
|
|
145 |
|
|
|
148 |
|
|
|
79 |
|
|
|
145 |
|
Data processing expense |
|
|
1,006 |
|
|
|
840 |
|
|
|
990 |
|
|
|
936 |
|
|
|
829 |
|
Professional fees |
|
|
937 |
|
|
|
676 |
|
|
|
604 |
|
|
|
640 |
|
|
|
658 |
|
Depreciation of premises and equipment |
|
|
139 |
|
|
|
137 |
|
|
|
135 |
|
|
|
147 |
|
|
|
154 |
|
FDIC Insurance |
|
|
90 |
|
|
|
120 |
|
|
|
140 |
|
|
|
252 |
|
|
|
260 |
|
Core deposit intangible amortization |
|
|
115 |
|
|
|
121 |
|
|
|
126 |
|
|
|
133 |
|
|
|
139 |
|
Fraud losses (recovery) |
|
|
16 |
|
|
|
133 |
|
|
|
(218 |
) |
|
|
1,329 |
|
|
|
14 |
|
Other expenses |
|
|
1,060 |
|
|
|
874 |
|
|
|
945 |
|
|
|
902 |
|
|
|
1,018 |
|
Total Operating
Expenses |
|
|
4,147 |
|
|
|
3,777 |
|
|
|
3,558 |
|
|
|
5,179 |
|
|
|
4,023 |
|
Total Noninterest
Expense |
|
|
10,179 |
|
|
|
9,447 |
|
|
|
9,378 |
|
|
|
10,148 |
|
|
|
9,472 |
|
Income before income taxes |
|
|
8,992 |
|
|
|
8,562 |
|
|
|
8,622 |
|
|
|
8,426 |
|
|
|
8,270 |
|
Income tax expense |
|
|
2,241 |
|
|
|
2,158 |
|
|
|
2,190 |
|
|
|
2,127 |
|
|
|
2,131 |
|
Net
Income |
|
$ |
6,751 |
|
|
$ |
6,404 |
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
$ |
6,139 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
(UNAUDITED) - Continued
CONDENSED CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
(Audited) |
(dollars in thousands, except per share amounts) |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
Assets |
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
108,990 |
|
|
$ |
112,314 |
|
|
$ |
40,881 |
|
|
$ |
126,834 |
|
|
$ |
56,887 |
|
Federal funds sold |
|
|
— |
|
|
|
— |
|
|
|
79,404 |
|
|
|
43,614 |
|
|
|
— |
|
Interest-bearing deposits with
banks |
|
|
30,664 |
|
|
|
34,929 |
|
|
|
18,626 |
|
|
|
17,390 |
|
|
|
20,178 |
|
Securities available for sale
("AFS"), at fair value |
|
|
497,839 |
|
|
|
456,664 |
|
|
|
347,678 |
|
|
|
253,348 |
|
|
|
246,105 |
|
Equity securities carried at
fair value through income |
|
|
4,772 |
|
|
|
4,805 |
|
|
|
4,814 |
|
|
|
4,787 |
|
|
|
4,855 |
|
Non-marketable equity
securities held in other financial institutions |
|
|
207 |
|
|
|
207 |
|
|
|
207 |
|
|
|
207 |
|
|
|
207 |
|
Federal Home Loan Bank
("FHLB") stock - at cost |
|
|
1,472 |
|
|
|
1,472 |
|
|
|
2,036 |
|
|
|
2,036 |
|
|
|
2,777 |
|
Net U.S. Small Business
Administration ("SBA") Paycheck Protection ("PPP") Loans |
|
|
26,398 |
|
|
|
54,807 |
|
|
|
86,482 |
|
|
|
112,485 |
|
|
|
107,960 |
|
Portfolio Loans Receivable net
of allowance for loan losses of $18,417, $18,579, $18,516, $18,256,
and $19,424 |
|
|
1,560,393 |
|
|
|
1,514,837 |
|
|
|
1,515,893 |
|
|
|
1,489,806 |
|
|
|
1,486,115 |
|
Net Loans |
|
|
1,586,791 |
|
|
|
1,569,644 |
|
|
|
1,602,375 |
|
|
|
1,602,291 |
|
|
|
1,594,075 |
|
Goodwill |
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
Premises and equipment,
net |
|
|
21,427 |
|
|
|
21,795 |
|
|
|
21,630 |
|
|
|
20,540 |
|
|
|
20,271 |
|
Other real estate owned
(OREO) |
|
|
— |
|
|
|
1,536 |
|
|
|
1,536 |
|
|
|
2,329 |
|
|
|
3,109 |
|
Accrued interest
receivable |
|
|
5,588 |
|
|
|
6,045 |
|
|
|
6,590 |
|
|
|
7,337 |
|
|
|
8,717 |
|
Investment in bank owned life
insurance |
|
|
38,932 |
|
|
|
38,713 |
|
|
|
38,493 |
|
|
|
38,275 |
|
|
|
38,061 |
|
Core deposit intangible |
|
|
1,032 |
|
|
|
1,147 |
|
|
|
1,267 |
|
|
|
1,394 |
|
|
|
1,527 |
|
Net deferred tax assets |
|
|
9,033 |
|
|
|
8,790 |
|
|
|
8,139 |
|
|
|
8,671 |
|
|
|
7,909 |
|
Right of use assets -
operating leases |
|
|
6,124 |
|
|
|
6,215 |
|
|
|
6,305 |
|
|
|
6,391 |
|
|
|
7,831 |
|
Other assets |
|
|
3,600 |
|
|
|
3,581 |
|
|
|
4,243 |
|
|
|
3,252 |
|
|
|
3,095 |
|
Total
Assets |
|
$ |
2,327,306 |
|
|
$ |
2,278,692 |
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
Deposits |
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing deposits |
|
$ |
445,778 |
|
|
$ |
432,606 |
|
|
$ |
423,165 |
|
|
$ |
406,319 |
|
|
$ |
362,079 |
|
Interest-bearing deposits |
|
|
1,610,386 |
|
|
|
1,572,001 |
|
|
|
1,484,973 |
|
|
|
1,461,577 |
|
|
|
1,383,523 |
|
Total deposits |
|
|
2,056,164 |
|
|
|
2,004,607 |
|
|
|
1,908,138 |
|
|
|
1,867,896 |
|
|
|
1,745,602 |
|
Long-term debt |
|
|
12,231 |
|
|
|
12,249 |
|
|
|
27,267 |
|
|
|
27,285 |
|
|
|
27,302 |
|
Guaranteed preferred
beneficial interest in junior subordinated debentures
("TRUPs") |
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
Subordinated notes -
4.75% |
|
|
19,510 |
|
|
|
19,496 |
|
|
|
19,482 |
|
|
|
19,468 |
|
|
|
19,526 |
|
Lease liabilities - operating
leases |
|
|
6,343 |
|
|
|
6,418 |
|
|
|
6,512 |
|
|
|
6,614 |
|
|
|
8,088 |
|
Accrued expenses and other
liabilities |
|
|
12,925 |
|
|
|
19,794 |
|
|
|
17,698 |
|
|
|
15,509 |
|
|
|
15,908 |
|
Total
Liabilities |
|
|
2,119,173 |
|
|
|
2,074,564 |
|
|
|
1,991,097 |
|
|
|
1,948,772 |
|
|
|
1,828,426 |
|
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
Common stock |
|
|
57 |
|
|
|
57 |
|
|
|
58 |
|
|
|
59 |
|
|
|
59 |
|
Additional paid in
capital |
|
|
96,896 |
|
|
|
96,649 |
|
|
|
96,411 |
|
|
|
96,181 |
|
|
|
95,965 |
|
Retained earnings |
|
|
113,448 |
|
|
|
107,890 |
|
|
|
104,889 |
|
|
|
103,294 |
|
|
|
97,944 |
|
Accumulated other
comprehensive (loss) income |
|
|
(1,952 |
) |
|
|
(9 |
) |
|
|
3,063 |
|
|
|
1,684 |
|
|
|
4,504 |
|
Unearned ESOP shares |
|
|
(316 |
) |
|
|
(459 |
) |
|
|
(459 |
) |
|
|
(459 |
) |
|
|
(459 |
) |
Total Stockholders'
Equity |
|
|
208,133 |
|
|
|
204,128 |
|
|
|
203,962 |
|
|
|
200,759 |
|
|
|
198,013 |
|
Total Liabilities and
Stockholders' Equity |
|
$ |
2,327,306 |
|
|
$ |
2,278,692 |
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued and
outstanding |
|
|
5,718,528 |
|
|
|
5,724,011 |
|
|
|
5,786,928 |
|
|
|
5,897,685 |
|
|
|
5,903,613 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
(UNAUDITED) - Continued
SELECTED FINANCIAL INFORMATION AND RATIOS
(dollars in thousands, except per share amounts)
|
|
Three Months Ended |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
KEY OPERATING RATIOS |
|
|
|
|
|
|
|
|
|
|
Return on average assets ("ROAA") |
|
|
1.18 |
% |
|
|
1.17 |
% |
|
|
1.22 |
% |
|
|
1.22 |
% |
|
|
1.18 |
% |
Pre-tax Pre-Provision
ROAA** |
|
|
1.57 |
|
|
|
1.57 |
|
|
|
1.68 |
|
|
|
1.68 |
|
|
|
1.71 |
|
Return on average common
equity ("ROACE") |
|
|
13.00 |
|
|
|
12.45 |
|
|
|
12.62 |
|
|
|
12.53 |
|
|
|
12.51 |
|
Pre-tax Pre-Provision
ROACE** |
|
|
17.31 |
|
|
|
16.65 |
|
|
|
17.49 |
|
|
|
17.34 |
|
|
|
18.08 |
|
Return on Average Tangible
Common Equity ("ROATCE")** |
|
|
13.97 |
|
|
|
13.41 |
|
|
|
13.62 |
|
|
|
13.56 |
|
|
|
13.58 |
|
Average total equity to
average total assets |
|
|
9.06 |
|
|
|
9.40 |
|
|
|
9.63 |
|
|
|
9.71 |
|
|
|
9.46 |
|
Interest rate spread |
|
|
3.17 |
|
|
|
3.22 |
|
|
|
3.30 |
|
|
|
3.43 |
|
|
|
3.29 |
|
Net interest margin |
|
|
3.22 |
|
|
|
3.28 |
|
|
|
3.37 |
|
|
|
3.50 |
|
|
|
3.40 |
|
Cost of funds |
|
|
0.17 |
|
|
|
0.21 |
|
|
|
0.21 |
|
|
|
0.25 |
|
|
|
0.42 |
|
Cost of deposits |
|
|
0.11 |
|
|
|
0.12 |
|
|
|
0.14 |
|
|
|
0.18 |
|
|
|
0.26 |
|
Cost of debt |
|
|
3.04 |
|
|
|
3.19 |
|
|
|
2.51 |
|
|
|
2.50 |
|
|
|
3.45 |
|
Efficiency ratio |
|
|
53.10 |
|
|
|
52.46 |
|
|
|
51.27 |
|
|
|
53.78 |
|
|
|
51.64 |
|
Noninterest expense to average
assets |
|
|
1.78 |
|
|
|
1.73 |
|
|
|
1.77 |
|
|
|
1.96 |
|
|
|
1.83 |
|
Net operating expense to
average assets |
|
|
1.38 |
|
|
|
1.47 |
|
|
|
1.42 |
|
|
|
1.50 |
|
|
|
1.37 |
|
Avg. int-earning assets to
avg. int-bearing liabilities |
|
|
129.68 |
|
|
|
132.54 |
|
|
|
131.36 |
|
|
|
128.84 |
|
|
|
126.18 |
|
Net charge-offs to average
portfolio loans |
|
|
0.04 |
|
|
|
(0.02 |
) |
|
|
0.01 |
|
|
|
0.40 |
|
|
|
— |
|
COMMON SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
Basic net income per common
share |
|
$ |
1.18 |
|
|
$ |
1.12 |
|
|
$ |
1.10 |
|
|
$ |
1.07 |
|
|
$ |
1.04 |
|
Diluted net income per common
share |
|
|
1.18 |
|
|
|
1.12 |
|
|
|
1.10 |
|
|
|
1.07 |
|
|
|
1.04 |
|
Cash dividends paid per common
share |
|
|
0.150 |
|
|
|
0.150 |
|
|
|
0.150 |
|
|
|
0.125 |
|
|
|
0.125 |
|
Weighted average common shares
outstanding: |
|
|
|
|
|
|
|
|
|
|
Basic |
|
|
5,711,746 |
|
|
|
5,709,814 |
|
|
|
5,845,009 |
|
|
|
5,888,250 |
|
|
|
5,892,751 |
|
Diluted |
|
|
5,723,011 |
|
|
|
5,720,001 |
|
|
|
5,856,954 |
|
|
|
5,897,698 |
|
|
|
5,894,494 |
|
ASSET
QUALITY |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ |
2,327,306 |
|
|
$ |
2,278,692 |
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
Gross portfolio loans
(1) |
|
|
1,578,943 |
|
|
|
1,533,051 |
|
|
|
1,533,876 |
|
|
|
1,507,183 |
|
|
|
1,504,275 |
|
Classified assets |
|
|
5,211 |
|
|
|
6,663 |
|
|
|
14,918 |
|
|
|
16,145 |
|
|
|
22,358 |
|
Allowance for loan losses |
|
|
18,417 |
|
|
|
18,579 |
|
|
|
18,516 |
|
|
|
18,256 |
|
|
|
19,424 |
|
|
|
|
|
|
|
|
|
|
|
|
Past due loans - 31 to 89
days |
|
|
568 |
|
|
|
189 |
|
|
|
101 |
|
|
|
1,373 |
|
|
|
179 |
|
Past due loans >=90
days |
|
|
961 |
|
|
|
1,400 |
|
|
|
5,836 |
|
|
|
5,453 |
|
|
|
11,965 |
|
Total past due loans
(2) |
|
|
1,529 |
|
|
|
1,589 |
|
|
|
5,937 |
|
|
|
6,826 |
|
|
|
12,144 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-accrual loans
(3) |
|
|
7,631 |
|
|
|
5,160 |
|
|
|
13,802 |
|
|
|
13,623 |
|
|
|
18,222 |
|
Accruing troubled debt
restructures ("TDRs") |
|
|
447 |
|
|
|
455 |
|
|
|
503 |
|
|
|
504 |
|
|
|
572 |
|
Other real estate owned
("OREO") |
|
|
— |
|
|
|
1,536 |
|
|
|
1,536 |
|
|
|
2,329 |
|
|
|
3,109 |
|
Non-accrual loans, OREO and
TDRs |
|
$ |
8,078 |
|
|
$ |
7,151 |
|
|
$ |
15,841 |
|
|
$ |
16,456 |
|
|
$ |
21,903 |
|
** Non-GAAP financial measure. See
reconciliation of GAAP and NON-GAAP measures.
____________________________________
(1) Portfolio loans include all loan portfolios
except the U.S. SBA PPP loan portfolio. Asset quality ratios for
loans exclude U.S. SBA PPP loans.
(2) Delinquency excludes Purchase Credit Impaired
("PCI") loans.
(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.
SUPPLEMENTAL QUARTERLY FINANCIAL DATA
(UNAUDITED) - Continued
SELECTED FINANCIAL INFORMATION AND RATIOS
(dollars in thousands, except per share amounts)
|
|
Three Months Ended |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
ASSET QUALITY RATIOS
(1) |
|
|
|
|
|
|
|
|
|
|
Classified assets to total assets |
|
|
0.22 |
% |
|
|
0.29 |
% |
|
|
0.68 |
% |
|
|
0.75 |
% |
|
|
1.10 |
% |
Classified assets to
risk-based capital |
|
|
2.10 |
|
|
|
2.75 |
|
|
|
6.24 |
|
|
|
6.81 |
|
|
|
9.61 |
|
Allowance for loan losses to
portfolio loans |
|
|
1.17 |
|
|
|
1.21 |
|
|
|
1.21 |
|
|
|
1.21 |
|
|
|
1.29 |
|
Allowance for loan losses to
non-accrual loans |
|
|
241.34 |
|
|
|
360.06 |
|
|
|
134.15 |
|
|
|
134.01 |
|
|
|
106.60 |
|
Past due loans - 31 to 89 days
to portfolio loans |
|
|
0.04 |
|
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.09 |
|
|
|
0.01 |
|
Past due loans >=90 days to
portfolio loans |
|
|
0.06 |
|
|
|
0.09 |
|
|
|
0.38 |
|
|
|
0.36 |
|
|
|
0.80 |
|
Total past due (delinquency)
to portfolio loans |
|
|
0.10 |
|
|
|
0.10 |
|
|
|
0.39 |
|
|
|
0.45 |
|
|
|
0.81 |
|
Non-accrual loans to portfolio
loans |
|
|
0.48 |
|
|
|
0.34 |
|
|
|
0.90 |
|
|
|
0.90 |
|
|
|
1.21 |
|
Non-accrual loans and TDRs to
portfolio loans |
|
|
0.51 |
|
|
|
0.37 |
|
|
|
0.93 |
|
|
|
0.94 |
|
|
|
1.25 |
|
Non-accrual loans and OREO to
total assets |
|
|
0.33 |
|
|
|
0.29 |
|
|
|
0.70 |
|
|
|
0.74 |
|
|
|
1.05 |
|
Non-accrual loans and OREO to
portfolio loans and OREO |
|
|
0.48 |
|
|
|
0.44 |
|
|
|
1.00 |
|
|
|
1.06 |
|
|
|
1.42 |
|
Non-accrual loans, OREO and
TDRs to total assets |
|
|
0.35 |
|
|
|
0.31 |
|
|
|
0.72 |
|
|
|
0.77 |
|
|
|
1.08 |
|
COMMON SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
Book value per common
share |
|
$ |
36.40 |
|
|
$ |
35.66 |
|
|
$ |
35.25 |
|
|
$ |
34.04 |
|
|
$ |
33.54 |
|
Tangible book value per common
share** |
|
|
34.32 |
|
|
|
33.57 |
|
|
|
33.15 |
|
|
|
31.97 |
|
|
|
31.45 |
|
Common shares outstanding at
end of period |
|
|
5,718,528 |
|
|
|
5,724,011 |
|
|
|
5,786,928 |
|
|
|
5,897,685 |
|
|
|
5,903,613 |
|
OTHER
DATA |
|
|
|
|
|
|
|
|
|
|
Full-time equivalent
employees |
|
|
186 |
|
|
|
196 |
|
|
|
189 |
|
|
|
192 |
|
|
|
189 |
|
Branches |
|
|
11 |
|
|
|
11 |
|
|
|
11 |
|
|
|
11 |
|
|
|
12 |
|
Loan Production Offices |
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
|
|
4 |
|
CAPITAL
RATIOS |
|
|
|
|
|
|
|
|
|
|
Tier 1 capital to average
assets |
|
|
9.23 |
% |
|
|
9.41 |
% |
|
|
9.57 |
% |
|
|
9.70 |
% |
|
|
9.56 |
% |
Tier 1 common capital to
risk-weighted assets |
|
|
11.92 |
|
|
|
11.89 |
|
|
|
11.56 |
|
|
|
11.72 |
|
|
|
11.47 |
|
Tier 1 capital to
risk-weighted assets |
|
|
12.64 |
|
|
|
12.64 |
|
|
|
12.30 |
|
|
|
12.47 |
|
|
|
12.23 |
|
Total risk-based capital to
risk-weighted assets |
|
|
14.92 |
|
|
|
14.99 |
|
|
|
14.62 |
|
|
|
14.83 |
|
|
|
14.69 |
|
Common equity to assets |
|
|
8.94 |
|
|
|
8.96 |
|
|
|
9.29 |
|
|
|
9.34 |
|
|
|
9.77 |
|
Tangible common equity to
tangible assets ** |
|
|
8.48 |
|
|
|
8.48 |
|
|
|
8.79 |
|
|
|
8.82 |
|
|
|
9.22 |
|
** 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 U.S. SBA PPP loan portfolio.
SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA
(UNAUDITED)
CONDENSED CONSOLIDATED INCOME STATEMENT
|
|
|
|
|
|
|
|
(Audited) |
(dollars in thousands, except per share amounts)
|
|
Three Months Ended December 31, |
|
Years Ended December 31, |
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
Interest and Dividend Income |
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
16,222 |
|
|
$ |
16,776 |
|
|
$ |
65,476 |
|
|
$ |
65,731 |
|
Interest and dividends on securities |
|
|
1,531 |
|
|
|
1,091 |
|
|
|
4,992 |
|
|
|
5,170 |
|
Interest on deposits with banks |
|
|
25 |
|
|
|
46 |
|
|
|
91 |
|
|
|
172 |
|
Total Interest and
Dividend Income |
|
|
17,778 |
|
|
|
17,913 |
|
|
|
70,559 |
|
|
|
71,073 |
|
Interest
Expense |
|
|
|
|
|
|
|
|
Deposits |
|
|
565 |
|
|
|
1,166 |
|
|
|
2,601 |
|
|
|
7,681 |
|
Short-term borrowings |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
111 |
|
Long-term debt |
|
|
332 |
|
|
|
775 |
|
|
|
1,524 |
|
|
|
2,364 |
|
Total Interest
Expense |
|
|
897 |
|
|
|
1,941 |
|
|
|
4,125 |
|
|
|
10,156 |
|
Net Interest Income
("NII") |
|
|
16,881 |
|
|
|
15,972 |
|
|
|
66,434 |
|
|
|
60,917 |
|
Provision for loan losses |
|
|
— |
|
|
|
600 |
|
|
|
586 |
|
|
|
10,700 |
|
NII After Provision
For Loan Losses |
|
|
16,881 |
|
|
|
15,372 |
|
|
|
65,848 |
|
|
|
50,217 |
|
Noninterest Income |
|
|
|
|
|
|
|
|
Loan appraisal, credit, and misc. charges |
|
|
257 |
|
|
|
76 |
|
|
|
528 |
|
|
|
174 |
|
Gain on sale of assets |
|
|
— |
|
|
|
— |
|
|
|
68 |
|
|
|
6 |
|
Net gains on sale of investment securities |
|
|
— |
|
|
|
714 |
|
|
|
586 |
|
|
|
1,384 |
|
Unrealized (loss) gain on equity securities |
|
|
(45 |
) |
|
|
(14 |
) |
|
|
(139 |
) |
|
|
101 |
|
Loss on premises and equipment held for sale |
|
|
(5 |
) |
|
|
— |
|
|
|
(25 |
) |
|
|
— |
|
Income from bank owned life insurance |
|
|
219 |
|
|
|
220 |
|
|
|
871 |
|
|
|
881 |
|
Service charges |
|
|
1,235 |
|
|
|
960 |
|
|
|
4,301 |
|
|
|
3,490 |
|
Referral fee income |
|
|
574 |
|
|
|
414 |
|
|
|
1,822 |
|
|
|
2,380 |
|
Net gain on sale of loans originated for sale |
|
|
55 |
|
|
|
— |
|
|
|
85 |
|
|
|
— |
|
Loss on sale of loans |
|
|
— |
|
|
|
— |
|
|
|
(191 |
) |
|
|
— |
|
Total Noninterest
Income |
|
|
2,290 |
|
|
|
2,370 |
|
|
|
7,906 |
|
|
|
8,416 |
|
Noninterest
Expense |
|
|
|
|
|
|
|
|
Compensation and benefits |
|
|
5,265 |
|
|
|
4,552 |
|
|
|
21,035 |
|
|
|
19,553 |
|
OREO valuation allowance and expenses |
|
|
767 |
|
|
|
897 |
|
|
|
1,456 |
|
|
|
3,200 |
|
Sub-total |
|
|
6,032 |
|
|
|
5,449 |
|
|
|
22,491 |
|
|
|
22,753 |
|
Operating
Expense |
|
|
|
|
|
|
|
|
Occupancy expense |
|
|
656 |
|
|
|
806 |
|
|
|
2,836 |
|
|
|
3,010 |
|
Advertising |
|
|
128 |
|
|
|
145 |
|
|
|
500 |
|
|
|
525 |
|
Data processing expense |
|
|
1,006 |
|
|
|
829 |
|
|
|
3,772 |
|
|
|
3,671 |
|
Professional fees |
|
|
937 |
|
|
|
658 |
|
|
|
2,857 |
|
|
|
2,413 |
|
Depreciation of premises and equipment |
|
|
139 |
|
|
|
154 |
|
|
|
558 |
|
|
|
605 |
|
FDIC Insurance |
|
|
90 |
|
|
|
260 |
|
|
|
602 |
|
|
|
939 |
|
Core deposit intangible amortization |
|
|
115 |
|
|
|
139 |
|
|
|
495 |
|
|
|
591 |
|
Fraud losses |
|
|
16 |
|
|
|
14 |
|
|
|
1,260 |
|
|
|
79 |
|
Other expenses |
|
|
1,060 |
|
|
|
1,018 |
|
|
|
3,781 |
|
|
|
3,417 |
|
Total Operating
Expense |
|
|
4,147 |
|
|
|
4,023 |
|
|
|
16,661 |
|
|
|
15,250 |
|
Total Noninterest
Expense |
|
|
10,179 |
|
|
|
9,472 |
|
|
|
39,152 |
|
|
|
38,003 |
|
Income before income taxes |
|
|
8,992 |
|
|
|
8,270 |
|
|
|
34,602 |
|
|
|
20,630 |
|
Income tax expense |
|
|
2,241 |
|
|
|
2,131 |
|
|
|
8,716 |
|
|
|
4,494 |
|
Net
Income |
|
$ |
6,751 |
|
|
$ |
6,139 |
|
|
$ |
25,886 |
|
|
$ |
16,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA
(UNAUDITED)
|
|
Year Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
KEY OPERATING RATIOS |
|
|
|
|
Return on average assets
("ROAA") |
|
|
1.19 |
% |
|
|
0.81 |
% |
Pre-tax Pre-Provision
ROAA** |
|
|
1.62 |
|
|
|
1.58 |
|
Return on average common
equity ("ROACE") |
|
|
12.65 |
|
|
|
8.46 |
|
Pre-tax Pre-Provision
ROACE** |
|
|
17.19 |
|
|
|
16.43 |
|
Return on Average Tangible
Common Equity ("ROATCE")** |
|
|
13.64 |
|
|
|
9.32 |
|
Average total equity to
average total assets |
|
|
9.44 |
|
|
|
9.61 |
|
Interest rate spread |
|
|
3.28 |
|
|
|
3.22 |
|
Net interest margin |
|
|
3.34 |
|
|
|
3.36 |
|
Cost of funds |
|
|
0.21 |
|
|
|
0.57 |
|
Cost of deposits |
|
|
0.14 |
|
|
|
0.47 |
|
Cost of debt |
|
|
2.79 |
|
|
|
1.74 |
|
Efficiency ratio |
|
|
52.67 |
|
|
|
54.81 |
|
Noninterest expense to average
assets |
|
|
1.81 |
|
|
|
1.91 |
|
Net operating expense to
average assets |
|
|
1.44 |
|
|
|
1.49 |
|
Avg. int-earning assets to
avg. int-bearing liabilities |
|
|
130.61 |
|
|
|
125.41 |
|
Net charge-offs to average
portfolio loans (1) |
|
|
0.11 |
|
|
|
0.15 |
|
COMMON SHARE
DATA |
|
|
|
|
Basic net income per common
share |
|
$ |
4.47 |
|
|
$ |
2.74 |
|
Diluted net income per common
share |
|
|
4.47 |
|
|
|
2.74 |
|
Cash dividends paid per common
share |
|
|
0.58 |
|
|
|
0.50 |
|
Weighted average
common shares outstanding: |
|
|
|
|
Basic |
|
|
5,788,005 |
|
|
|
5,892,269 |
|
Diluted |
|
|
5,797,527 |
|
|
|
5,893,559 |
|
____________________________________
** 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 U.S. SBA PPP loan portfolio.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Reconciliation of US GAAP total assets,
common equity, common equity to assets and book value to Non-GAAP
tangible assets, tangible common equity, tangible common equity to
tangible assets and tangible book value.
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) |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
Total assets |
|
$ |
2,327,306 |
|
|
$ |
2,278,692 |
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
Less: Intangible assets |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
Core deposit intangible |
|
|
1,032 |
|
|
|
1,147 |
|
|
|
1,267 |
|
|
|
1,394 |
|
|
|
1,527 |
|
Total intangible assets |
|
|
11,867 |
|
|
|
11,982 |
|
|
|
12,102 |
|
|
|
12,229 |
|
|
|
12,362 |
|
Tangible assets |
|
$ |
2,315,439 |
|
|
$ |
2,266,710 |
|
|
$ |
2,182,957 |
|
|
$ |
2,137,302 |
|
|
$ |
2,014,077 |
|
|
|
|
|
|
|
|
|
|
|
|
Total common equity |
|
$ |
208,133 |
|
|
$ |
204,128 |
|
|
$ |
203,962 |
|
|
$ |
200,759 |
|
|
$ |
198,013 |
|
Less: Intangible assets |
|
|
11,867 |
|
|
|
11,982 |
|
|
|
12,102 |
|
|
|
12,229 |
|
|
|
12,362 |
|
Tangible common equity |
|
$ |
196,266 |
|
|
$ |
192,146 |
|
|
$ |
191,860 |
|
|
$ |
188,530 |
|
|
$ |
185,651 |
|
|
|
|
|
|
|
|
|
|
|
|
Common shares outstanding at
end of period |
|
|
5,718,528 |
|
|
|
5,724,011 |
|
|
|
5,786,928 |
|
|
|
5,897,685 |
|
|
|
5,903,613 |
|
|
|
|
|
|
|
|
|
|
|
|
GAAP common equity to
assets |
|
|
8.94 |
% |
|
|
8.96 |
% |
|
|
9.29 |
% |
|
|
9.34 |
% |
|
|
9.77 |
% |
Non-GAAP tangible common
equity to tangible assets |
|
|
8.48 |
% |
|
|
8.48 |
% |
|
|
8.79 |
% |
|
|
8.82 |
% |
|
|
9.22 |
% |
|
|
|
|
|
|
|
|
|
|
|
GAAP common book value per
share |
|
$ |
36.40 |
|
|
$ |
35.66 |
|
|
$ |
35.25 |
|
|
$ |
34.04 |
|
|
$ |
33.54 |
|
Non-GAAP tangible common book
value per share |
|
$ |
34.32 |
|
|
$ |
33.57 |
|
|
$ |
33.15 |
|
|
$ |
31.97 |
|
|
$ |
31.45 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 loan
loss provisions, 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. 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 |
|
For the Year Ended |
(dollars in thousands) |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
|
December 31,
2021 |
|
December 31,
2020 |
Net income (as reported) |
|
$ |
6,751 |
|
|
$ |
6,404 |
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
$ |
6,139 |
|
|
$ |
25,886 |
|
|
$ |
16,136 |
|
Provision for loan losses |
|
|
— |
|
|
|
— |
|
|
|
291 |
|
|
|
295 |
|
|
|
600 |
|
|
|
586 |
|
|
|
10,700 |
|
Income tax expenses |
|
|
2,241 |
|
|
|
2,158 |
|
|
|
2,190 |
|
|
|
2,127 |
|
|
|
2,131 |
|
|
|
8,716 |
|
|
|
4,494 |
|
Non-GAAP PTPP income |
|
$ |
8,992 |
|
|
$ |
8,562 |
|
|
$ |
8,913 |
|
|
$ |
8,721 |
|
|
$ |
8,870 |
|
|
$ |
35,188 |
|
|
$ |
31,330 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROAA |
|
|
1.18 |
% |
|
|
1.17 |
% |
|
|
1.22 |
% |
|
|
1.22 |
% |
|
|
1.18 |
% |
|
|
1.19 |
% |
|
|
0.81 |
% |
Pre-tax Pre-Provision
ROAA |
|
|
1.57 |
% |
|
|
1.57 |
% |
|
|
1.68 |
% |
|
|
1.68 |
% |
|
|
1.71 |
% |
|
|
1.62 |
% |
|
|
1.58 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROACE |
|
|
13.00 |
% |
|
|
12.45 |
% |
|
|
12.62 |
% |
|
|
12.53 |
% |
|
|
12.51 |
% |
|
|
12.65 |
% |
|
|
8.46 |
% |
Pre-tax Pre-Provision
ROACE |
|
|
17.31 |
% |
|
|
16.65 |
% |
|
|
17.49 |
% |
|
|
17.34 |
% |
|
|
18.08 |
% |
|
|
17.19 |
% |
|
|
16.43 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average assets |
|
$ |
2,293,264 |
|
|
$ |
2,187,986 |
|
|
$ |
2,116,939 |
|
|
$ |
2,070,575 |
|
|
$ |
2,074,707 |
|
|
$ |
2,167,859 |
|
|
$ |
1,985,275 |
|
Average equity |
|
$ |
207,745 |
|
|
$ |
205,723 |
|
|
$ |
203,893 |
|
|
$ |
201,124 |
|
|
$ |
196,279 |
|
|
$ |
204,643 |
|
|
$ |
190,720 |
|
|
|
Three Months Ended |
|
For the Year Ended |
(dollars in thousands) |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
|
December 31,
2021 |
|
December 31,
2020 |
Net income (as reported) |
|
$ |
6,751 |
|
|
$ |
6,404 |
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
$ |
6,139 |
|
|
$ |
25,886 |
|
|
$ |
16,136 |
|
Core deposit intangible
amortization (net of tax) |
|
|
86 |
|
|
|
91 |
|
|
|
94 |
|
|
|
99 |
|
|
|
103 |
|
|
|
370 |
|
|
|
462 |
|
Net earnings applicable to
common shareholders |
|
$ |
6,837 |
|
|
$ |
6,495 |
|
|
$ |
6,526 |
|
|
$ |
6,398 |
|
|
$ |
6,242 |
|
|
$ |
26,256 |
|
|
$ |
16,598 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ROATCE |
|
|
13.97 |
% |
|
|
13.41 |
% |
|
|
13.62 |
% |
|
|
13.56 |
% |
|
|
13.58 |
% |
|
|
13.64 |
% |
|
|
9.32 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Average tangible common
equity |
|
$ |
195,803 |
|
|
$ |
193,662 |
|
|
$ |
191,708 |
|
|
$ |
188,808 |
|
|
$ |
183,827 |
|
|
$ |
192,518 |
|
|
$ |
178,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE CONSOLIDATED BALANCE SHEETS AND
NET INTEREST INCOME (UNAUDITED)
|
|
Three Months Ended December 31, |
|
For the Three Months Ended |
|
|
|
2021 |
|
|
|
2020 |
|
|
December 31, 2021 |
|
September 30, 2021 |
(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 |
|
$ |
1,099,088 |
|
|
$ |
10,911 |
|
3.97 |
% |
|
$ |
1,027,831 |
|
|
$ |
10,833 |
|
4.22 |
% |
|
$ |
1,099,088 |
|
|
$ |
10,911 |
|
3.97 |
% |
|
$ |
1,094,089 |
|
|
$ |
10,977 |
|
4.01 |
% |
Residential first mortgages |
|
|
93,997 |
|
|
|
756 |
|
3.22 |
|
|
|
140,303 |
|
|
|
1,132 |
|
3.23 |
|
|
|
93,997 |
|
|
|
756 |
|
3.22 |
|
|
|
100,195 |
|
|
|
742 |
|
2.96 |
|
Residential rentals |
|
|
173,238 |
|
|
|
1,760 |
|
4.06 |
|
|
|
134,564 |
|
|
|
1,468 |
|
4.36 |
|
|
|
173,238 |
|
|
|
1,760 |
|
4.06 |
|
|
|
154,481 |
|
|
|
1,565 |
|
4.05 |
|
Construction and land development |
|
|
38,345 |
|
|
|
431 |
|
4.50 |
|
|
|
35,910 |
|
|
|
435 |
|
4.85 |
|
|
|
38,345 |
|
|
|
431 |
|
4.50 |
|
|
|
34,810 |
|
|
|
399 |
|
4.58 |
|
Home equity and second mortgages |
|
|
26,160 |
|
|
|
232 |
|
3.55 |
|
|
|
30,045 |
|
|
|
268 |
|
3.57 |
|
|
|
26,160 |
|
|
|
232 |
|
3.55 |
|
|
|
27,751 |
|
|
|
246 |
|
3.55 |
|
Commercial and equipment loans |
|
|
114,616 |
|
|
|
1,260 |
|
4.40 |
|
|
|
107,245 |
|
|
|
1,320 |
|
4.92 |
|
|
|
114,616 |
|
|
|
1,260 |
|
4.40 |
|
|
|
104,845 |
|
|
|
1,161 |
|
4.43 |
|
SBA PPP loans |
|
|
40,376 |
|
|
|
847 |
|
8.39 |
|
|
|
120,473 |
|
|
|
1,308 |
|
4.34 |
|
|
|
40,376 |
|
|
|
847 |
|
8.39 |
|
|
|
71,751 |
|
|
|
1,236 |
|
6.89 |
|
Consumer loans |
|
|
2,629 |
|
|
|
25 |
|
3.80 |
|
|
|
1,058 |
|
|
|
12 |
|
4.54 |
|
|
|
2,629 |
|
|
|
25 |
|
3.80 |
|
|
|
1,742 |
|
|
|
16 |
|
3.67 |
|
Allowance for loan losses |
|
|
(18,434 |
) |
|
|
— |
|
— |
|
|
|
(19,138 |
) |
|
|
— |
|
— |
|
|
|
(18,434 |
) |
|
|
— |
|
— |
|
|
|
(18,852 |
) |
|
|
— |
|
— |
|
Net loans (1) |
|
|
1,570,015 |
|
|
|
16,222 |
|
4.13 |
|
|
|
1,578,291 |
|
|
|
16,776 |
|
4.25 |
|
|
|
1,570,015 |
|
|
|
16,222 |
|
4.13 |
|
|
|
1,570,812 |
|
|
|
16,342 |
|
4.16 |
|
Taxable investment
securities |
|
|
465,771 |
|
|
|
1,441 |
|
1.24 |
|
|
|
211,101 |
|
|
|
978 |
|
1.85 |
|
|
|
465,771 |
|
|
|
1,441 |
|
1.24 |
|
|
|
370,498 |
|
|
|
1,212 |
|
1.31 |
|
Nontaxable investment
securities |
|
|
17,509 |
|
|
|
90 |
|
2.06 |
|
|
|
20,378 |
|
|
|
113 |
|
2.22 |
|
|
|
17,509 |
|
|
|
90 |
|
2.06 |
|
|
|
16,204 |
|
|
|
84 |
|
2.07 |
|
Interest-bearing deposits in
other banks |
|
|
41,736 |
|
|
|
25 |
|
0.24 |
|
|
|
28,970 |
|
|
|
23 |
|
0.32 |
|
|
|
41,736 |
|
|
|
25 |
|
0.24 |
|
|
|
36,516 |
|
|
|
16 |
|
0.18 |
|
Federal funds sold |
|
|
— |
|
|
|
— |
|
— |
|
|
|
42,841 |
|
|
|
23 |
|
0.21 |
|
|
|
— |
|
|
|
— |
|
— |
|
|
|
30,266 |
|
|
|
5 |
|
0.07 |
|
Total Interest-Earning
Assets |
|
|
2,095,031 |
|
|
|
17,778 |
|
3.39 |
|
|
|
1,881,581 |
|
|
|
17,913 |
|
3.81 |
|
|
|
2,095,031 |
|
|
|
17,778 |
|
3.39 |
|
|
|
2,024,296 |
|
|
|
17,659 |
|
3.49 |
|
Cash and cash equivalents |
|
|
100,480 |
|
|
|
|
|
|
|
88,963 |
|
|
|
|
|
|
|
100,480 |
|
|
|
|
|
|
|
66,292 |
|
|
|
|
|
Goodwill |
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
Core deposit intangible |
|
|
1,107 |
|
|
|
|
|
|
|
1,617 |
|
|
|
|
|
|
|
1,107 |
|
|
|
|
|
|
|
1,226 |
|
|
|
|
|
Other assets |
|
|
85,811 |
|
|
|
|
|
|
|
91,711 |
|
|
|
|
|
|
|
85,811 |
|
|
|
|
|
|
|
85,340 |
|
|
|
|
|
Total
Assets |
|
$ |
2,293,264 |
|
|
|
|
|
|
$ |
2,074,707 |
|
|
|
|
|
|
$ |
2,293,264 |
|
|
|
|
|
|
$ |
2,187,989 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
449,272 |
|
|
$ |
— |
|
— |
% |
|
$ |
366,726 |
|
|
$ |
— |
|
— |
% |
|
$ |
449,272 |
|
|
$ |
— |
|
— |
% |
|
$ |
434,316 |
|
|
$ |
— |
|
— |
% |
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
|
114,123 |
|
|
|
14 |
|
0.05 |
|
|
|
96,529 |
|
|
|
17 |
|
0.07 |
|
|
|
114,123 |
|
|
|
14 |
|
0.05 |
|
|
|
110,873 |
|
|
|
14 |
|
0.05 |
|
Demand deposits |
|
|
754,656 |
|
|
|
87 |
|
0.05 |
|
|
|
605,790 |
|
|
|
135 |
|
0.09 |
|
|
|
754,656 |
|
|
|
87 |
|
0.05 |
|
|
|
659,625 |
|
|
|
75 |
|
0.05 |
|
Money market deposits |
|
|
369,414 |
|
|
|
100 |
|
0.11 |
|
|
|
342,659 |
|
|
|
133 |
|
0.16 |
|
|
|
369,414 |
|
|
|
100 |
|
0.11 |
|
|
|
358,017 |
|
|
|
100 |
|
0.11 |
|
Certificates of deposit |
|
|
333,658 |
|
|
|
364 |
|
0.44 |
|
|
|
356,261 |
|
|
|
881 |
|
0.99 |
|
|
|
333,658 |
|
|
|
364 |
|
0.44 |
|
|
|
341,672 |
|
|
|
405 |
|
0.47 |
|
Total interest-bearing
deposits |
|
|
1,571,851 |
|
|
|
565 |
|
0.14 |
|
|
|
1,401,239 |
|
|
|
1,166 |
|
0.33 |
|
|
|
1,571,851 |
|
|
|
565 |
|
0.14 |
|
|
|
1,470,187 |
|
|
|
594 |
|
0.16 |
|
Total Deposits |
|
|
2,021,123 |
|
|
|
565 |
|
0.11 |
|
|
|
1,767,965 |
|
|
|
1,166 |
|
0.26 |
|
|
|
2,021,123 |
|
|
|
565 |
|
0.11 |
|
|
|
1,904,503 |
|
|
|
594 |
|
0.12 |
|
Long-term debt |
|
|
12,237 |
|
|
|
6 |
|
0.20 |
|
|
|
28,341 |
|
|
|
457 |
|
6.45 |
|
|
|
12,237 |
|
|
|
6 |
|
0.20 |
|
|
|
25,625 |
|
|
|
131 |
|
2.04 |
|
PPPLF Advance |
|
|
— |
|
|
|
— |
|
— |
|
|
|
32,677 |
|
|
|
29 |
|
0.35 |
|
|
|
— |
|
|
|
— |
|
— |
|
|
|
— |
|
|
|
— |
|
— |
|
Subordinated Notes |
|
|
19,501 |
|
|
|
252 |
|
5.17 |
|
|
|
16,888 |
|
|
|
211 |
|
5.00 |
|
|
|
19,501 |
|
|
|
252 |
|
5.17 |
|
|
|
19,487 |
|
|
|
251 |
|
5.15 |
|
Guaranteed preferred
beneficial interest in junior subordinated debentures |
|
|
12,000 |
|
|
|
74 |
|
2.47 |
|
|
|
12,000 |
|
|
|
78 |
|
2.60 |
|
|
|
12,000 |
|
|
|
74 |
|
2.47 |
|
|
|
12,000 |
|
|
|
74 |
|
2.47 |
|
Total Debt |
|
|
43,738 |
|
|
|
332 |
|
3.04 |
|
|
|
89,906 |
|
|
|
775 |
|
3.45 |
|
|
|
43,738 |
|
|
|
332 |
|
3.04 |
|
|
|
57,112 |
|
|
|
456 |
|
3.19 |
|
Total Interest-Bearing
Liabilities |
|
|
1,615,589 |
|
|
|
897 |
|
0.22 |
|
|
|
1,491,145 |
|
|
|
1,941 |
|
0.52 |
|
|
|
1,615,589 |
|
|
|
897 |
|
0.22 |
|
|
|
1,527,299 |
|
|
|
1,050 |
|
0.27 |
|
Total Funds |
|
|
2,064,861 |
|
|
|
897 |
|
0.17 |
|
|
|
1,857,871 |
|
|
|
1,941 |
|
0.42 |
|
|
|
2,064,861 |
|
|
|
897 |
|
0.17 |
|
|
|
1,961,615 |
|
|
|
1,050 |
|
0.21 |
|
Other liabilities |
|
|
20,658 |
|
|
|
|
|
|
|
20,557 |
|
|
|
|
|
|
|
20,658 |
|
|
|
|
|
|
|
20,648 |
|
|
|
|
|
Stockholders' equity |
|
|
207,745 |
|
|
|
|
|
|
|
196,279 |
|
|
|
|
|
|
|
207,745 |
|
|
|
|
|
|
|
205,723 |
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
2,293,264 |
|
|
|
|
|
|
$ |
2,074,707 |
|
|
|
|
|
|
$ |
2,293,264 |
|
|
|
|
|
|
$ |
2,187,986 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
$ |
16,881 |
|
|
|
|
|
$ |
15,972 |
|
|
|
|
|
$ |
16,881 |
|
|
|
|
|
$ |
16,609 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
|
|
|
|
|
3.17 |
% |
|
|
|
|
|
3.29 |
% |
|
|
|
|
|
3.17 |
% |
|
|
|
|
|
3.22 |
% |
Net yield on interest-earning
assets |
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.40 |
% |
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.28 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
|
|
|
|
|
129.68 |
% |
|
|
|
|
|
126.18 |
% |
|
|
|
|
|
129.68 |
% |
|
|
|
|
|
132.54 |
% |
Average loans to average
deposits |
|
|
|
|
|
77.68 |
% |
|
|
|
|
|
89.27 |
% |
|
|
|
|
|
77.68 |
% |
|
|
|
|
|
82.48 |
% |
Average transaction deposits
to total average deposits ** |
|
|
|
|
|
83.49 |
% |
|
|
|
|
|
79.85 |
% |
|
|
|
|
|
83.49 |
% |
|
|
|
|
|
82.06 |
% |
____________________________________
(1) Loan average balance includes non-accrual loans.
There are no tax equivalency adjustments. There was $161,000,
$96,000 and $91,000 of accretion interest for the three months
ended December 31, 2021 and 2020, and September 30, 2021,
respectively.
** Transaction deposits exclude time
deposits.
AVERAGE CONSOLIDATED BALANCE SHEETS AND
NET INTEREST INCOME (UNAUDITED)
|
|
For the Years Ended December 31, |
|
|
|
2021 |
|
|
|
2020 |
|
(dollars in thousands) |
|
Average
Balance |
|
Interest |
|
Average
Yield/Cost |
|
Average
Balance |
|
Interest |
|
Average
Yield/Cost |
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
1,085,823 |
|
|
$ |
43,536 |
|
4.01 |
% |
|
$ |
993,478 |
|
|
$ |
43,239 |
|
4.35 |
% |
Residential first mortgages |
|
|
107,011 |
|
|
|
3,250 |
|
3.04 |
|
|
|
159,265 |
|
|
|
5,229 |
|
3.28 |
|
Residential rentals |
|
|
151,606 |
|
|
|
6,180 |
|
4.08 |
|
|
|
132,524 |
|
|
|
5,841 |
|
4.41 |
|
Construction and land development |
|
|
36,891 |
|
|
|
1,658 |
|
4.49 |
|
|
|
37,930 |
|
|
|
1,795 |
|
4.73 |
|
Home equity and second mortgages |
|
|
28,051 |
|
|
|
977 |
|
3.48 |
|
|
|
33,458 |
|
|
|
1,334 |
|
3.99 |
|
Commercial and equipment loans |
|
|
107,235 |
|
|
|
4,599 |
|
4.29 |
|
|
|
113,886 |
|
|
|
5,539 |
|
4.86 |
|
SBA PPP loans |
|
|
82,901 |
|
|
|
5,203 |
|
6.28 |
|
|
|
90,345 |
|
|
|
2,704 |
|
2.99 |
|
Consumer loans |
|
|
1,783 |
|
|
|
73 |
|
4.09 |
|
|
|
1,099 |
|
|
|
50 |
|
4.55 |
|
Allowance for loan losses |
|
|
(18,788 |
) |
|
|
— |
|
— |
|
|
|
(15,681 |
) |
|
|
— |
|
— |
|
Net loans (1) |
|
|
1,582,513 |
|
|
|
65,476 |
|
4.14 |
|
|
|
1,546,304 |
|
|
|
65,731 |
|
4.25 |
|
Taxable investment
securities |
|
|
336,267 |
|
|
|
4,623 |
|
1.37 |
|
|
|
214,187 |
|
|
|
4,832 |
|
2.26 |
|
Nontaxable investment
securities |
|
|
17,515 |
|
|
|
369 |
|
2.11 |
|
|
|
14,214 |
|
|
|
338 |
|
2.38 |
|
Interest-bearing deposits in
other banks |
|
|
33,095 |
|
|
|
70 |
|
0.21 |
|
|
|
19,444 |
|
|
|
110 |
|
0.57 |
|
Federal funds sold |
|
|
20,916 |
|
|
|
21 |
|
0.10 |
|
|
|
20,890 |
|
|
|
62 |
|
0.30 |
|
Total Interest-Earning
Assets |
|
|
1,990,306 |
|
|
|
70,559 |
|
3.55 |
|
|
|
1,815,039 |
|
|
|
71,073 |
|
3.92 |
|
Cash and cash equivalents |
|
|
78,849 |
|
|
|
|
|
|
|
68,651 |
|
|
|
|
|
Goodwill |
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
Core deposit intangible |
|
|
1,290 |
|
|
|
|
|
|
|
1,837 |
|
|
|
|
|
Other assets |
|
|
86,579 |
|
|
|
|
|
|
|
88,913 |
|
|
|
|
|
Total
Assets |
|
$ |
2,167,859 |
|
|
|
|
|
|
$ |
1,985,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
Noninterest-bearing demand
deposits |
|
$ |
417,935 |
|
|
$ |
— |
|
— |
% |
|
$ |
324,597 |
|
|
$ |
— |
|
— |
% |
Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
|
108,189 |
|
|
|
54 |
|
0.05 |
|
|
|
84,463 |
|
|
|
85 |
|
0.10 |
|
Demand deposits |
|
|
660,330 |
|
|
|
345 |
|
0.05 |
|
|
|
537,043 |
|
|
|
1,591 |
|
0.30 |
|
Money market deposits |
|
|
358,006 |
|
|
|
397 |
|
0.11 |
|
|
|
312,980 |
|
|
|
795 |
|
0.25 |
|
Certificates of deposit |
|
|
342,755 |
|
|
|
1,805 |
|
0.53 |
|
|
|
370,743 |
|
|
|
5,210 |
|
1.41 |
|
Total Interest-bearing
deposits |
|
|
1,469,280 |
|
|
|
2,601 |
|
0.18 |
|
|
|
1,305,229 |
|
|
|
7,681 |
|
0.59 |
|
Total Deposits |
|
|
1,887,215 |
|
|
|
2,601 |
|
0.14 |
|
|
|
1,629,826 |
|
|
|
7,681 |
|
0.47 |
|
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
|
23,072 |
|
|
|
219 |
|
0.95 |
|
|
|
53,615 |
|
|
|
1,373 |
|
2.56 |
|
Short-term borrowings |
|
|
— |
|
|
|
— |
|
— |
|
|
|
8,156 |
|
|
|
111 |
|
1.36 |
|
PPPLF Advances |
|
|
— |
|
|
|
— |
|
— |
|
|
|
60,360 |
|
|
|
211 |
|
0.35 |
|
Subordinated Notes |
|
|
19,488 |
|
|
|
1,006 |
|
5.16 |
|
|
|
7,953 |
|
|
|
395 |
|
4.97 |
|
Guaranteed preferred beneficial interest in junior subordinated
debentures |
|
|
12,000 |
|
|
|
299 |
|
2.49 |
|
|
|
12,000 |
|
|
|
385 |
|
3.21 |
|
Total Debt |
|
|
54,560 |
|
|
|
1,524 |
|
2.79 |
|
|
|
142,084 |
|
|
|
2,475 |
|
1.74 |
|
Total Interest-Bearing
Liabilities |
|
|
1,523,840 |
|
|
|
4,125 |
|
0.27 |
|
|
|
1,447,313 |
|
|
|
10,156 |
|
0.70 |
|
Total funds |
|
|
1,941,775 |
|
|
|
4,125 |
|
0.21 |
|
|
|
1,771,910 |
|
|
|
10,156 |
|
0.57 |
|
Other liabilities |
|
|
21,441 |
|
|
|
|
|
|
|
22,645 |
|
|
|
|
|
Stockholders' equity |
|
|
204,643 |
|
|
|
|
|
|
|
190,720 |
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
2,167,859 |
|
|
|
|
|
|
$ |
1,985,275 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
|
$ |
66,434 |
|
|
|
|
|
$ |
60,917 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest rate spread |
|
|
|
|
|
3.28 |
% |
|
|
|
|
|
3.22 |
% |
Net yield on interest-earning
assets |
|
|
|
|
|
3.34 |
% |
|
|
|
|
|
3.36 |
% |
Average interest-earning
assets to average interest-bearing liabilities |
|
|
|
|
|
130.61 |
% |
|
|
|
|
|
125.41 |
% |
Average loans to average
deposits |
|
|
|
|
|
83.85 |
% |
|
|
|
|
|
94.88 |
% |
Average transaction deposits
to total average deposits ** |
|
|
|
|
|
81.84 |
% |
|
|
|
|
|
77.25 |
% |
____________________________________
(1) Loan average balance includes non-accrual loans.
There are no tax equivalency adjustments. There was $0.4 million
and $0.6 million of accretion interest years ended
December 31, 2021 and 2020, respectively.
** Transaction deposits exclude time
deposits.
SUMMARY OF LOAN PORTFOLIO
(UNAUDITED)
(dollars in thousands)
BY LOAN TYPE |
|
December 31,
2021 |
|
% |
|
September 30,
2021 |
|
% |
|
June 30,
2021 |
|
% |
|
March 31,
2021 |
|
% |
|
December 31,
2020 |
|
% |
Portfolio Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
1,115,485 |
|
|
70.66 |
% |
|
$ |
1,088,636 |
|
|
71.02 |
% |
|
$ |
1,111,613 |
|
|
72.47 |
% |
|
$ |
1,081,111 |
|
|
71.74 |
% |
|
$ |
1,049,147 |
|
|
69.75 |
% |
Residential first mortgages |
|
|
91,120 |
|
|
5.77 |
|
|
|
96,835 |
|
|
6.32 |
|
|
|
105,482 |
|
|
6.88 |
|
|
|
115,803 |
|
|
7.68 |
|
|
|
133,779 |
|
|
8.89 |
|
Residential rentals |
|
|
195,035 |
|
|
12.35 |
|
|
|
172,082 |
|
|
11.22 |
|
|
|
142,210 |
|
|
9.27 |
|
|
|
137,522 |
|
|
9.12 |
|
|
|
139,059 |
|
|
9.24 |
|
Construction and land development |
|
|
35,590 |
|
|
2.25 |
|
|
|
37,139 |
|
|
2.42 |
|
|
|
36,918 |
|
|
2.41 |
|
|
|
38,446 |
|
|
2.55 |
|
|
|
37,520 |
|
|
2.49 |
|
Home equity and second mortgages |
|
|
25,638 |
|
|
1.62 |
|
|
|
26,518 |
|
|
1.73 |
|
|
|
28,726 |
|
|
1.87 |
|
|
|
29,363 |
|
|
1.95 |
|
|
|
29,129 |
|
|
1.94 |
|
Commercial loans |
|
|
50,574 |
|
|
3.20 |
|
|
|
48,327 |
|
|
3.15 |
|
|
|
47,567 |
|
|
3.10 |
|
|
|
42,689 |
|
|
2.83 |
|
|
|
52,921 |
|
|
3.52 |
|
Consumer loans |
|
|
3,002 |
|
|
0.19 |
|
|
|
2,168 |
|
|
0.14 |
|
|
|
1,442 |
|
|
0.09 |
|
|
|
1,415 |
|
|
0.09 |
|
|
|
1,027 |
|
|
0.07 |
|
Commercial equipment |
|
|
62,499 |
|
|
3.96 |
|
|
|
61,346 |
|
|
4.00 |
|
|
|
59,918 |
|
|
3.91 |
|
|
|
60,834 |
|
|
4.04 |
|
|
|
61,693 |
|
|
4.10 |
|
Gross portfolio loans |
|
|
1,578,943 |
|
|
100.00 |
|
|
|
1,533,051 |
|
|
100.00 |
|
|
|
1,533,876 |
|
|
100.00 |
|
|
|
1,507,183 |
|
|
100.00 |
|
|
|
1,504,275 |
|
|
100.00 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net deferred (fees) costs |
|
|
(133 |
) |
|
(0.01 |
) |
|
|
365 |
|
|
0.02 |
|
|
|
533 |
|
|
0.03 |
|
|
|
879 |
|
|
0.06 |
|
|
|
1,264 |
|
|
0.08 |
|
Allowance for loan losses |
|
|
(18,417 |
) |
|
(1.17 |
) |
|
|
(18,579 |
) |
|
(1.21 |
) |
|
|
(18,516 |
) |
|
(1.21 |
) |
|
|
(18,256 |
) |
|
(1.21 |
) |
|
|
(19,424 |
) |
|
(1.29 |
) |
|
|
|
(18,550 |
) |
|
|
|
|
(18,214 |
) |
|
|
|
|
(17,983 |
) |
|
|
|
|
(17,377 |
) |
|
|
|
|
(18,160 |
) |
|
|
Net portfolio loans |
|
|
1,560,393 |
|
|
|
|
|
1,514,837 |
|
|
|
|
|
1,515,893 |
|
|
|
|
|
1,489,806 |
|
|
|
|
|
1,486,115 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross U.S. Small Business
Administration ("SBA") Paycheck Protection Program ("PPP)
loans |
|
|
27,276 |
|
|
|
|
|
56,424 |
|
|
|
|
|
89,129 |
|
|
|
|
|
115,700 |
|
|
|
|
|
110,320 |
|
|
|
Net deferred fees |
|
|
(878 |
) |
|
|
|
|
(1,617 |
) |
|
|
|
|
(2,647 |
) |
|
|
|
|
(3,215 |
) |
|
|
|
|
(2,360 |
) |
|
|
Net U.S. SBA PPP loans |
|
|
26,398 |
|
|
|
|
|
54,807 |
|
|
|
|
|
86,482 |
|
|
|
|
|
112,485 |
|
|
|
|
|
107,960 |
|
|
|
Total net loans |
|
$ |
1,586,791 |
|
|
|
|
$ |
1,569,644 |
|
|
|
|
$ |
1,602,375 |
|
|
|
|
$ |
1,602,291 |
|
|
|
|
$ |
1,594,075 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total gross loans |
|
$ |
1,606,219 |
|
|
|
|
$ |
1,589,475 |
|
|
|
|
$ |
1,623,005 |
|
|
|
|
$ |
1,622,883 |
|
|
|
|
$ |
1,614,595 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD CONTRACTUAL RATES
(UNAUDITED)
The following table is based on contractual
interest rates and does not include the amortization of deferred
costs and fees or assumptions regarding non-accrual interest:
|
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
(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 |
|
3.79 |
% |
|
3.91 |
% |
|
3.96 |
% |
|
4.02 |
% |
|
4.11 |
% |
Residential first
mortgages |
|
3.80 |
% |
|
3.84 |
% |
|
3.87 |
% |
|
3.87 |
% |
|
3.93 |
% |
Residential rentals |
|
3.81 |
% |
|
3.97 |
% |
|
4.11 |
% |
|
4.20 |
% |
|
4.26 |
% |
Construction and land
development |
|
4.38 |
% |
|
4.32 |
% |
|
4.31 |
% |
|
4.32 |
% |
|
4.28 |
% |
Home equity and second
mortgages |
|
3.51 |
% |
|
3.51 |
% |
|
3.50 |
% |
|
3.52 |
% |
|
3.54 |
% |
Commercial loans |
|
4.48 |
% |
|
4.48 |
% |
|
4.44 |
% |
|
4.63 |
% |
|
4.56 |
% |
Consumer loans |
|
4.37 |
% |
|
5.26 |
% |
|
5.65 |
% |
|
5.75 |
% |
|
5.99 |
% |
Commercial equipment |
|
4.32 |
% |
|
4.39 |
% |
|
4.42 |
% |
|
4.40 |
% |
|
4.42 |
% |
U.S. SBA PPP loans |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
Total Loans |
|
3.80 |
% |
|
3.85 |
% |
|
3.84 |
% |
|
3.84 |
% |
|
3.92 |
% |
|
|
|
|
|
|
|
|
|
|
|
Yields without U.S. SBA PPP
Loans |
|
3.84 |
% |
|
3.95 |
% |
|
4.00 |
% |
|
4.06 |
% |
|
4.13 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR LOAN LOSSES
(UNAUDITED)
|
|
Three Months Ended |
(dollars in thousands) |
|
December 31,
2021 |
|
September 30,
2021 |
|
June 30,
2021 |
|
March 31,
2021 |
|
December 31,
2020 |
Beginning of period |
|
$ |
18,579 |
|
|
$ |
18,516 |
|
|
$ |
18,256 |
|
|
$ |
19,424 |
|
|
$ |
18,829 |
|
|
|
|
|
|
|
|
|
|
|
|
Charge-offs |
|
|
(181 |
) |
|
|
(491 |
) |
|
|
(61 |
) |
|
|
(1,485 |
) |
|
|
(30 |
) |
Recoveries |
|
|
19 |
|
|
|
554 |
|
|
|
30 |
|
|
|
22 |
|
|
|
25 |
|
Net charge-offs |
|
|
(162 |
) |
|
|
63 |
|
|
|
(31 |
) |
|
|
(1,463 |
) |
|
|
(5 |
) |
|
|
|
|
|
|
|
|
|
|
|
Provision for loan losses |
|
|
— |
|
|
|
— |
|
|
|
291 |
|
|
|
295 |
|
|
|
600 |
|
End of period |
|
$ |
18,417 |
|
|
$ |
18,579 |
|
|
$ |
18,516 |
|
|
$ |
18,256 |
|
|
$ |
19,424 |
|
|
|
|
|
|
|
|
|
|
|
|
Net charge-offs to average
portfolio loans (annualized)(1) |
|
(0.04) % |
|
|
0.02 |
% |
|
(0.01) % |
|
(0.40) % |
|
|
— |
% |
|
|
|
|
|
|
|
|
|
|
|
Breakdown of general and specific allowance as a
percentage of gross portfolio loans(1) |
General allowance |
|
$ |
18,151 |
|
|
$ |
18,204 |
|
|
$ |
17,686 |
|
|
$ |
17,365 |
|
|
$ |
18,068 |
|
Specific allowance |
|
|
266 |
|
|
|
323 |
|
|
|
778 |
|
|
|
891 |
|
|
|
1,356 |
|
Total allowance to
non-acquired loans |
|
$ |
18,417 |
|
|
$ |
18,527 |
|
|
$ |
18,464 |
|
|
$ |
18,256 |
|
|
$ |
19,424 |
|
PCI loans |
|
|
— |
|
|
|
52 |
|
|
|
52 |
|
|
|
— |
|
|
|
— |
|
Total allowance to gross
portfolio loans with PCI loans |
|
$ |
18,417 |
|
|
$ |
18,579 |
|
|
$ |
18,516 |
|
|
$ |
18,256 |
|
|
$ |
19,424 |
|
|
|
|
|
|
|
|
|
|
|
|
General allowance |
|
|
1.15 |
% |
|
|
1.19 |
% |
|
|
1.15 |
% |
|
|
1.15 |
% |
|
|
1.20 |
% |
Specific allowance |
|
|
0.02 |
% |
|
|
0.02 |
% |
|
|
0.05 |
% |
|
|
0.06 |
% |
|
|
0.09 |
% |
Total allowance to gross
portfolio loans(1) |
|
|
1.17 |
% |
|
|
1.21 |
% |
|
|
1.20 |
% |
|
|
1.21 |
% |
|
|
1.29 |
% |
Total allowance to gross
portfolio loans with PCI loans(2) |
|
|
1.17 |
% |
|
|
1.21 |
% |
|
|
1.21 |
% |
|
|
1.21 |
% |
|
|
1.29 |
% |
|
|
|
|
|
|
|
|
|
|
|
Allowance to non-acquired
gross loans(3) |
|
|
1.20 |
% |
|
|
1.25 |
% |
|
|
1.25 |
% |
|
|
1.26 |
% |
|
|
1.35 |
% |
|
|
|
|
|
|
|
|
|
|
|
Allowance+ Non-PCI FV
Mark |
|
$ |
18,815 |
|
|
$ |
19,070 |
|
|
$ |
19,090 |
|
|
$ |
18,939 |
|
|
$ |
20,174 |
|
Allowance+ Non-PCI FV Mark to
gross portfolio loans |
|
|
1.19 |
% |
|
|
1.24 |
% |
|
|
1.24 |
% |
|
|
1.26 |
% |
|
|
1.34 |
% |
____________________________________
(1) Portfolio loans include all loan portfolios
except the U.S. SBA PPP loan portfolio
(2) There were no allowance for loan loss on the
PCI portfolios prior to the three months ended June 30, 2021.
(3) Non-acquired loans include loans transferred
from acquired pools following release of acquisition accounting FMV
adjustments. Non-acquired loans exclude U.S. SBA PPP loans.
CLASSIFIED AND SPECIAL MENTION ASSETS
(UNAUDITED)
The following is a breakdown of the Company’s
classified and special mention assets at December 31,
2021, 2020, 2019, 2018 and 2017, respectively:
|
|
As of |
(dollars in thousands) |
|
12/31/2021 |
|
12/31/2020 |
|
12/31/2019 |
|
12/31/2018 |
|
12/31/2017 |
Classified loans |
|
|
|
|
|
|
|
|
|
|
Substandard |
|
$ |
5,211 |
|
|
$ |
19,249 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,306 |
|
Doubtful |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total classified loans |
|
|
5,211 |
|
|
|
19,249 |
|
|
|
26,863 |
|
|
|
32,226 |
|
|
|
40,306 |
|
Special mention loans |
|
|
— |
|
|
|
7,672 |
|
|
|
— |
|
|
|
— |
|
|
|
96 |
|
Total classified and special
mention loans |
|
$ |
5,211 |
|
|
$ |
26,921 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,402 |
|
|
|
|
|
|
|
|
|
|
|
|
Classified loans |
|
$ |
5,211 |
|
|
$ |
19,249 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,306 |
|
Classified securities |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
482 |
|
|
|
651 |
|
Other real estate owned |
|
|
— |
|
|
|
3,109 |
|
|
|
7,773 |
|
|
|
8,111 |
|
|
|
9,341 |
|
Total classified assets |
|
$ |
5,211 |
|
|
$ |
22,358 |
|
|
$ |
34,636 |
|
|
$ |
40,819 |
|
|
$ |
50,298 |
|
|
|
|
|
|
|
|
|
|
|
|
Total classified assets as a
percentage of total assets |
|
|
0.22 |
% |
|
|
1.10 |
% |
|
|
1.93 |
% |
|
|
2.42 |
% |
|
|
3.58 |
% |
Total classified assets as a
percentage of Risk Based Capital |
|
|
2.10 |
% |
|
|
9.61 |
% |
|
|
16.21 |
% |
|
|
21.54 |
% |
|
|
32.10 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF DEPOSITS
(UNAUDITED)
|
|
December 31, 2021 |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
(dollars in thousands) |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
Noninterest-bearing demand |
|
$ |
445,778 |
|
21.68 |
% |
|
$ |
432,606 |
|
21.58 |
% |
|
$ |
423,165 |
|
22.18 |
% |
|
$ |
406,319 |
|
21.75 |
% |
|
$ |
362,079 |
|
20.74 |
% |
Interest-bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand deposits |
|
|
790,481 |
|
38.45 |
% |
|
|
764,482 |
|
38.14 |
% |
|
|
685,023 |
|
35.90 |
% |
|
|
651,639 |
|
34.89 |
% |
|
|
590,159 |
|
33.81 |
% |
Money market deposits |
|
|
372,717 |
|
18.13 |
% |
|
|
355,582 |
|
17.74 |
% |
|
|
351,262 |
|
18.41 |
% |
|
|
355,680 |
|
19.04 |
% |
|
|
340,725 |
|
19.52 |
% |
Savings |
|
|
119,767 |
|
5.82 |
% |
|
|
112,282 |
|
5.60 |
% |
|
|
107,288 |
|
5.62 |
% |
|
|
105,590 |
|
5.65 |
% |
|
|
98,783 |
|
5.66 |
% |
Certificates of deposit |
|
|
327,421 |
|
15.92 |
% |
|
|
339,655 |
|
16.94 |
% |
|
|
341,400 |
|
17.89 |
% |
|
|
348,668 |
|
18.67 |
% |
|
|
353,856 |
|
20.27 |
% |
Total interest-bearing |
|
|
1,610,386 |
|
78.32 |
% |
|
|
1,572,001 |
|
78.42 |
% |
|
|
1,484,973 |
|
77.82 |
% |
|
|
1,461,577 |
|
78.25 |
% |
|
|
1,383,523 |
|
79.26 |
% |
Total Deposits |
|
$ |
2,056,164 |
|
100.00 |
% |
|
$ |
2,004,607 |
|
100.00 |
% |
|
$ |
1,908,138 |
|
100.00 |
% |
|
$ |
1,867,896 |
|
100.00 |
% |
|
$ |
1,745,602 |
|
100.00 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transaction accounts |
|
$ |
1,728,743 |
|
84.08 |
% |
|
$ |
1,664,952 |
|
83.06 |
% |
|
$ |
1,566,738 |
|
82.11 |
% |
|
$ |
1,519,228 |
|
81.33 |
% |
|
$ |
1,391,746 |
|
79.73 |
% |
Community Financial (NASDAQ:TCFC)
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