The Community Financial Corporation (NASDAQ: TCFC) (the “Company”),
the holding company for Community Bank of the Chesapeake (the
“Bank”), today reported net income for the three months ended
March 31, 2023 of $7.3 million, or $1.30 per diluted common
share. This compares to net income of $7.6 million, or $1.35 per
diluted common share for the fourth quarter of 2022, and net income
of $6.3 million or $1.10 per diluted common share for the quarter
ended March 31, 2022.
First Quarter
2023 Highlights
-
Stable Financial Performance: Net income totaled
$7.3 million for the quarter ended March 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 ended March 31,
2022 and $7.6 million or $1.35 per diluted common share for the
quarter ended December 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 ended March 31, 2023
compared to 1.08%, 12.30% and 13.22% for the three months ended
March 31, 2022. ROAA, ROACE and ROATCE were 1.28%, 16.61% and
17.88% for the three months ended December 31, 2022.
-
Merger with Shore Bancshares: On December 14,
2022, the Company entered into a definitive agreement to undertake
a merger of equals pursuant to which the Company and Bank will
merge into Shore 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.On March 7,
2023 SHBI and TCFC announced that they received the required
regulatory approvals from the Office of the Comptroller of the
Currency and the Maryland Office of the Commissioner of Financial
Regulation. SHBI and TCFC expect that the merger transaction will
close on or about July 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 ended December 31, 2022, $0.3 million during the first
quarter of 2023 and anticipates additional expenses in 2023. The
net impact for the three months ended March 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
ended December 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 at December 31, 2022 to $2,175.8 million at
March 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 at March 31, 2023 were $394 million or 18.3% of total
deposits. Uninsured deposits include amounts either greater than
the Federal Deposit Insurance Corporation's ("FDIC") $250,000
insurance limit or amounts not secured by the market value of
collateral.At March 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 the Federal
Reserve, and $82 million in unsecured lines of credit.
-
Moderating Loan Growth: Total portfolio loans
increased to $1,844.3 million at March 31, 2023, an increase
of $23.3 million or 5.1% annualized, compared to December 31,
2022. The loan pipeline at March 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 at
March 31, 2023 compared to $6.5 million or 0.27% of total
assets at December 31, 2022, and $7.9 million or 0.34% at
March 31, 2022. Classified assets increased $2.0 million to
$8.1 million at March 31, 2023 from $6.1 million at
December 31, 2022.
Management Commentary
“The first quarter was a strong start to the
year, despite the well-publicized challenges to the industry,”
stated James M. Burke, President and Chief Executive Officer of The
Community Financial Corporation. “While increasing deposit costs
compressed margins, profitability remained very strong, thanks in
part to our continued focus on non-interest expenses. We continue
to operate with ample liquidity, solid capital, excellent credit,
and a stable deposit base that is well-diversified among consumer
and commercial clients.”
Burke continued, “Our merger of equals with
Shore Bancshares continues on schedule and is expected to close
around the first week of July. The combined bank, with its greater
scale, diversification and resources, will be better positioned to
manage risks and provide existing and new customers with new
products and services.”
Results of Operations
|
|
(UNAUDITED) |
|
|
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
(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 March 31, 2022 and decreased 32 basis
points from 3.64% for the three months ended December 31,
2022.
Loan interest income increased $7.5 million to
$23.1 million for the three months ended March 31, 2023
from $15.6 million for the three months ended March 31,
2022. Investment income increased $2.4 million to $4.1 million
from $1.7 million for the comparable periods. Interest expense
increased $7.3 million to $8.2 million for the three months
ended March 31, 2023 from $0.9 million for the
three months ended March 31, 2022. Interest-bearing
deposits costs increased $6.2 million to $6.7 million and debt and
borrowings costs increased $1.1 million to $1.5 million for the
comparable periods.
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 March 31, 2023 from 3.28% for the three months ended
March 31, 2022 and 4.50% for the three months ended
December 31, 2022. The Company’s cost of funds was 1.48%
during the first quarter of 2023, 0.89% for the prior quarter and
0.17% for the three months ended March 31, 2022. The average
cost of funds increased 61 basis points from 1.06% for the month of
December 2022 to 1.67% for the month of March 2023. For the same
comparative periods, average interest-earning asset yields
increased 18 basis points from 4.66% to 4.84%.
Noninterest Income
Noninterest income was flat at $1.4 million for
the three months ended March 31, 2023 compared to the
three months ended March 31, 2022. The similar
performance for the comparable periods was due to decreases in loan
appraisal charges and interest rate protection referral fee income,
offset by higher service charge income and a $0.3 million decrease
in unrealized losses in the first quarter of 2023 on securities
invested in a Community Reinvestment Act mutual fund. Noninterest
income as a percentage of average assets was 0.24% and 0.25%,
respectively, for the three months ended March 31, 2023 and
2022.
Noninterest Expense
Noninterest expense of $10.2 million for the
three months ended March 31, 2023 increased $1.1 million or
12.0% compared to the three months ended March 31, 2022.
Management expects a $10.1-$10.3 million normalized quarterly
expense run rate, excluding merger related costs, during 2023. The
Company incurred merger and acquisition costs of $1.0 million
during the year ended December 31, 2022, $0.3 million during
the first quarter of 2023 and anticipates additional expenses in
2023.
The increase from the comparable period was
primarily due to increases of $0.4 million in compensation and
benefits, $0.3 million in merger and acquisition costs, $0.1
million in occupancy expense, $30,000 in data processing, $0.1
million in professional fees as well as an increase in other
operating expenses of $0.1 million. Professional fees, occupancy
and data processing have increased substantially compared to the
same quarter in the prior year due in large part to increased cost
of labor and materials due to inflation. Compensation and benefits
increased in the second half of 2022 with the Company's decision to
increase base compensation to address local wage pressure caused by
inflation and to attract and retain our employees. Additionally,
the occupancy costs increased during the second half of 2022 with
the opening of a new branch in Fredericksburg - Harrison Crossing,
Virginia.
The Company’s efficiency ratio was 49.57% for
the three months ended March 31, 2023 compared to 50.67% for
the three months ended March 31, 2022. The Company’s net
operating expense ratio was 1.44% for the three months ended
March 31, 2023 compared to 1.31% for the three months ended
March 31, 2022. The efficiency and net operating expense
ratios have improved (decreased) over the last four years as the
Company improved asset quality and increased operating revenues
while controlling expenses.
Income Tax Expense
The effective tax rate for the three months
ended March 31, 2023 was 24.42% compared to an effective tax
rate of 25.33% for the three months ended March 31, 2022. The
Company's effective tax rate decreased due to a decrease in the
state tax apportionment percentage.
Balance Sheet
Assets
Total assets increased $18.5 million, or 0.8%,
to $2.43 billion at March 31, 2023 compared to total assets of
$2.41 billion at December 31, 2022, primarily due to net loan
growth. During the first quarter of 2023, total net loans increased
5.0% annualized or $22.3 million from $1,798.5 million
at December 31, 2022 to $1,820.8 million at
March 31, 2023. The Company’s loan pipeline was
$85.0 million at March 31, 2023. Available for sale
("AFS") debt securities, which are reported at fair value,
increased $1.2 million to $463.9 million, primarily due to a
decrease in unrealized losses in the first quarter of 2023 from
changes in interest rates. These increases in assets were offset by
a decrease in deferred tax assets of $2.7 million to $21.9 million
primarily due to decreases in unrealized losses from changes in
interest rates of the Bank's AFS investment portfolio. FHLB stock
held decreased $2.4 million to $2.2 million due to a reduction in
advances from $79.0 million at December 31, 2022 to $21.5
million at March 31, 2023. Other assets decreased $1.8 million
to $0.9 million due to a decrease in income taxes receivable,
partially offset by increases in prepaid expenses.
Non-owner occupied commercial real estate
("CRE") loans as a percentage of risk-based capital at
March 31, 2023 and December 31, 2022 were $1,054.6
million or 379% and $1,032.6 million or 381%, respectively.
Construction loans as a percentage of risk-based capital at
March 31, 2023 and December 31, 2022 were $134.4 million
or 48% and $135.0 million or 50%, respectively.
The Bank's office CRE portfolio, which included
owner-occupied and non-owner occupied CRE loans, was
$386.6 million or 20.96% of total loans of $1,844.3 million at
March 31, 2023, which included $127.1 million or 32.9%
with medical tenants and $64.8 million or 16.8% with
government or government contractor tenants. There were 295 loans
in the office CRE portfolio with an average and median loan size of
$1.3 million and $0.5 million, respectively. Loan to
Value ("LTV") estimates are less than 70% for $295.0 million
or 76.3% of the office CRE portfolio and Debt Service Coverage
("DSC") ratios exceed 1.25x for $320.3 million or 82.9% of the
office CRE portfolio at March 31, 2023. For the $91.6 million
of loans with LTVs that exceed 70%, $2.2 million have DSC
ratios of less than 1.25x.
The Bank had 18 CRE office loans totaling
$170.5 million that were greater than $5.0 million at
March 31, 2023. For this subset of the office CRE portfolio,
at March 31, 2023, the average loan DSC ratio was 1.69x and
average LTV was 57.6%. Most buildings in the Bank's office CRE
portfolio are two stories or less with no buildings exceeding five
stories.
Funding
Total funding, which includes deposits and FHLB
advances, increased $8.4 million from $2,167.5 million at
December 31, 2022 to $2,175.8 million at March 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.
Total deposits increased $65.9 million in first
quarter of 2023 from $2,088.5 million at December 31, 2022 to
$2,154.3 million at March 31, 2023. Retail deposits, which
exclude brokered deposits, decreased $27.6 million during the first
quarter from $2,034.0 million at December 31, 2022 to $2,006.4
million at March 31, 2023. The Company's wholesale funding
increased $35.9 million, which includes brokered deposits and
Federal Home Loan Bank advances, from $133.5 million at
December 31, 2022 to $169.4 million at March 31, 2023.
During the first three months of 2023, non-interest-bearing demand
deposits decreased $30.4 million to $599.8 million at
March 31, 2023, representing 27.8% of deposits, compared to
30.2% of deposits at December 31, 2022.
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 March 31,
2023 were $394 million or 18.3% of total deposits. Uninsured
deposits include amounts either greater than the Federal Deposit
Insurance Corporation's ("FDIC") $250,000 insurance limit or
amounts not secured by the market value of collateral.
At March 31, 2023, available liquidity of
approximately $762 million was 194% of uninsured deposits of $394
million. Available liquidity included $27 million in cash; $652
million borrowing capacity at FHLB and the Federal Reserve's
Borrower in Custody Program ("BIC") in secured collateral (market
value availability), and $82 million in unsecured lines of
credit.
In March 2023, the Bank enrolled in, but has not
used, the Federal Reserve's Bank Term Funding Program (“BTFP”).
Management considers the BTFP facility a source of liquidity and
has updated its contingency funding plan and internal liquidity
stress tests to consider the facility as an alternative to FHLB
available lines of credit.
The Bank monitors large deposit relationships
and concentration risks in accordance with FDIC policy. This
includes monitoring deposit concentrations and maintaining fund
management policies and strategies that take into account
potentially volatile concentrations and significant deposits that
mature simultaneously. The FDIC defines a large depositor as a
customer or entity that owns or controls 2% or more of the Bank’s
total deposits. The FDIC’s examination policies require that we
monitor all customer deposit concentrations at or above 2% of total
deposits. At March 31, 2023 and December 31, 2022, the
Bank had two local municipal customer deposit relationships that
exceeded 2% of total deposits, totaling $320.9 million and
$346.4 million, respectively, which represented 14.9% and
16.6%, respectively, of total deposits. All municipal relationships
are secured by FDIC deposit insurance or collateral.
The aggregate amount of our top 25 deposit
relationships at March 31, 2023 was $645.5 million, or
26.6% of total assets and $662.9 million, or 27.5% of our
total assets at December 31, 2022.
Stockholders' Equity and Regulatory
Capital
During the three months ended March 31,
2023, total stockholders’ equity increased $11.8 million. The
increase in equity was primarily due to an increase in net income
of $7.3 million and decrease of $5.2 million in accumulated other
comprehensive loss ("AOCL") related to the Bank's AFS securities
portfolio due to changes in market interest rates. In addition,
equity increased due to stock-based compensation and ESOP activity
of $0.2 million. Increases in equity were partially offset by
common dividends paid of $0.9 million.
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 $12.5 million in additional
stockholders' equity from decreases in AOCL and first quarter 2023
net income. Regulatory capital is not impacted by AOCL and Tier 1
capital to average asset ratios at the Bank and the Company
remained strong at 10.38% and 9.68% at March 31, 2023 compared
to 10.33% and 9.60% at December 31, 2022.
Asset Quality
Allowance for credit losses
("ACL") and provision for credit
losses ("PCL"); Classified and
Non-Performing Assets
On January 1, 2022, the Company early adopted
ASU 2016-13, Financial Instruments - Credit Losses (Topic
326) - Measurement of Credit Losses on Financial Instruments,
which replaced the incurred loss methodology for determining our
ACL with an expected loss methodology that is referred to as the
CECL. We adopted ASU 2016-13 using the modified retrospective
method. Results for reporting periods beginning after January 1,
2022, are presented under ASU 2016-13. At adoption, the Company did
not hold Held to Maturity ("HTM") investment debt securities. The
impact at adoption on January 1, 2022, was an increase to the
ACL of $2.5 million, the recording of a reserve for unfunded
commitments of $0.2 million, an increase in deferred tax
assets of $0.7 million, and a decrease in retained earnings of
$2.0 million.
ACL balances increased to 1.27% of portfolio
loans at March 31, 2023 compared to 1.26% of portfolio loans
at December 31, 2022. At and for the three months ended
March 31, 2023, the Company's ACL increased $0.6 million or
2.7% to $23.5 million from $22.9 million at December 31, 2022.
The Company recorded a $0.7 million PCL for the three months ended
March 31, 2023 compared to $0.5 million PCL for the three
months ended March 31, 2022. There were $45,000 in net
charge-offs during the three months ended March 31, 2023
compared to $19,000 in net recoveries for the three months ended
March 31, 2022.
Management believes that the allowance is
adequate at March 31, 2023.
Classified assets increased $2.0 million from
$6.1 million at December 31, 2022 to $8.1 million
at March 31, 2023 due primarily to customer relationships
that were current with payments at March 31, 2023, but were
showing deterioration in their debt service coverage
ratios. Management considers classified assets to be an
important measure of asset quality. The Company's risk rating
process for classified loans is an important factor in the
Company's ACL qualitative framework. Management remains committed
to expeditiously resolving non-performing or substandard credits
that are not likely to become performing or passing credits in a
reasonable timeframe.
Non-accrual loans increased $2.0 million from
$6.1 million at December 31, 2022 to $8.1 million at
March 31, 2023 due primarily to customer relationships that
were current with payments at March 31, 2023, but were showing
deterioration in their debt service coverage ratios. There were no
OREO balances at March 31, 2023 and December 31, 2022.
The ratio of non-accrual loans and OREO to total portfolio loans
and OREO increased 10 basis points from 0.34%
at December 31, 2022 to 0.44% at March 31,
2023. The ratio of non-accrual loans, OREO and BEFDs modifications
to total assets increased six basis points from
0.27% at December 31, 2022 to 0.33%
at March 31, 2023.
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 $2.4 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 Fredericksburg - Downtown and
Fredericksburg - Harrison Crossing, 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 -
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 Shore Bancshares, Inc.; (iii) 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 undertaken; (iv) plans and cost savings regarding branch
closings or consolidation; (v) projections related to certain
financial metrics, including with respect to the quarterly expense
run rate; (vi) expected benefits of programs we introduce,
including residential mortgage programs and retail and commercial
credit card programs; and (vii) 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: (i) risks,
uncertainties and other factors relating to the COVID-19 pandemic;
(ii) 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; (iii) the
impacts related to or resulting from Russia’s military action in
Ukraine, including the broader impacts to financial markets and the
global macroeconomic and geopolitical environments; (iv)
assumptions that interest-earning assets will reprice faster than
interest-bearing liabilities and the Bank’s ability to maintain its
current favorable funding mix; (v) our proposed merger with Shore
Bancshares, Inc. may not close when expected or at all because
required shareholder approvals are not received or other conditions
to the closings are not satisfied on a timely basis or at all; (vi)
the synergies and other expected financial benefits from any
acquisition or transaction that we have undertaken, including from
our proposed merger with Shore Bancshares, Inc., may or may not be
realized within the expected time frames or at all; (vii) the
impact of our adoption of the CECL standard; (viii) limitations on
our ability to declare and pay dividends or engage in share
repurchases; (ix) changes in the Company's or the Bank's strategy,
costs or difficulties related to integration matters might be
greater than expected; (x) availability of and costs associated
with obtaining adequate and timely sources of liquidity; (xi) the
ability to maintain credit quality; (xii) general economic trends
and conditions, including inflation and its impacts; (xiii) changes
in interest rates; (xiv) loss of deposits and loan demand to other
financial institutions; (xv) substantial changes in financial
markets; (xvi) changes in real estate value and the real estate
market; (xvii) regulatory changes; (xviii) the impact of government
shutdowns or sequestration; (xix) the possibility of unforeseen
events affecting the industry generally; (xx) the uncertainties
associated with newly developed or acquired operations; (xxi) the
outcome of pending or threatened litigation, including litigation
pertaining to the proposed merger with Shore Bancshares, Inc., or
of matters before regulatory agencies, whether currently existing
or commencing in the future; (xxii) market disruptions and other
effects of terrorist activities; and (xxiii) the matters described
in “Item 1A Risk Factors” in the Company’s Annual Report on Form
10-K for the Year Ended December 31, 2022, 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 March 31, 2023.
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, 2022.
CONTACTS:James M. Burke, Chief
Executive OfficerTodd L. Capitani, Chief Financial Officer(888)
745-2265
SUPPLEMENTAL QUARTERLY FINANCIAL
DATACONSOLIDATED INCOME STATEMENT
(UNAUDITED)
|
|
Three Months Ended |
(dollars in thousands) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 |
|
FDIC Insurance |
|
|
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 -
ContinuedCONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands, except per share amounts) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 |
|
Federal Home Loan Bank
("FHLB") stock - at cost |
|
|
2,181 |
|
|
|
4,584 |
|
|
|
1,226 |
|
|
|
1,234 |
|
|
|
1,685 |
|
Loans held for sale |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
373 |
|
Net U.S. Small Business
Administration ("SBA") Paycheck Protection ("PPP") Loans |
|
|
— |
|
|
|
339 |
|
|
|
1,211 |
|
|
|
5,022 |
|
|
|
15,279 |
|
Portfolio Loans Receivable net
of allowance for credit losses of $23,515, $22,890, $22,027,
$21,404 and $21,382, respectively |
|
|
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 |
|
Goodwill |
|
|
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) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 U.S. SBA PPP
loan portfolio. Asset quality ratios for loans exclude U.S. SBA PPP
loans. December 31, 2021 and September 30, 2021 reported balance
are shown net of deferred costs and fees to conform with the
current period's presentation. |
(2) |
On January 1, 2023, the Company
adopted ASU 2022-02 –Financial Instruments-Credit Losses (Topic
326): Troubled Debt Restructurings and Vintage Disclosures, which
eliminated the TDR recognition and measurement guidance. As such,
loans designated as TDRs prior to January 1, 2023 and are currently
performing are no longer reported as a BEFDs in the quarter ending
March 31, 2023, while prior period amounts continue to be reported
in accordance with previously applicable GAAP. |
(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 March 31, 2023 and December 31,
2022, the Company had current non-accrual loans of $7.4
million and $5.5 million, respectively. |
|
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA -
Continued SELECTED FINANCIAL INFORMATION AND
RATIOS (UNAUDITED)
|
|
Three Months Ended |
(dollars in thousands, except per share amounts) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 U.S. SBA PPP
loan portfolio. |
(2) |
On January 1, 2023, the Company
adopted ASU 2022-02 –Financial Instruments-Credit Losses (Topic
326): Troubled Debt Restructurings and Vintage Disclosures, which
eliminated the TDR recognition and measurement guidance. As such,
loans designated as TDRs prior to January 1, 2023 and are currently
performing are no longer reported as a BEFDs in the quarter ending
March 31, 2023, while prior period amounts continue to be
reported in accordance with previously applicable
GAAP. |
|
|
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Reconciliation of U.S. 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) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
Total assets |
|
$ |
2,428,536 |
|
|
$ |
2,410,017 |
|
|
$ |
2,359,621 |
|
|
$ |
2,323,514 |
|
|
$ |
2,351,923 |
|
Less: intangible assets |
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
|
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) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 ) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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) |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 March 31, |
|
For the Three Months Ended |
|
|
|
2023 |
|
|
|
2022 |
|
|
March 31, 2023 |
|
December 31, 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 |
% |
U.S. SBA PPP loans |
|
|
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 |
|
|
|
|
|
Goodwill |
|
|
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 $23,000, $50,000 and $22,000 of
accretion interest for the three months ended March 31, 2023
and 2022, and December 31, 2022, respectively. |
____________________________________**
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 |
|
March 31, 2023 |
|
% |
|
December 31, 2022 |
|
% |
|
September 30, 2022 |
|
% |
|
June 30, 2022 |
|
% |
|
March 31, 2022 |
|
% |
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 |
|
|
|
U.S. SBA PPP loans |
|
|
— |
|
|
|
|
|
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:
|
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
(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 |
% |
U.S. SBA PPP loans |
|
0.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
Total
Loans |
|
5.00 |
% |
|
4.84 |
% |
|
4.41 |
% |
|
4.04 |
% |
|
3.81 |
% |
|
|
|
|
|
|
|
|
|
|
|
Yields without U.S.
SBA PPP Loans |
|
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 |
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
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 U.S. SBA PPP
loan portfolio. |
|
|
CLASSIFIED AND SPECIAL MENTION
ASSETS1 (UNAUDITED)
The following is a breakdown of the Company’s classified and
special mention assets at March 31, 2023
and December 31, 2022, 2021, 2020, and 2019,
respectively:
|
|
As of |
(dollars in thousands) |
|
3/31/2023 |
|
12/31/2022 |
|
12/31/2021 |
|
12/31/2020 |
|
12/31/2019 |
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 Risk Based Capital |
|
|
2.89 |
% |
|
|
2.23 |
% |
|
|
2.10 |
% |
|
|
9.61 |
% |
|
|
16.21 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF DEPOSITS
(UNAUDITED)
|
|
March 31, 2023 |
|
December 31, 2022 |
|
September 30, 2022 |
|
June 30, 2022 |
|
March 31, 2022 |
(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 March 31, 2022.
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