Jefferson Security Bank (OTCPK: JFWV) reported unaudited
financial results for the fourth quarter and year ended December
31, 2022. Net income for the fourth quarter of 2022 was $1.3
million, representing an increase of $415 thousand, or 44.82%, when
compared to net income of $926 thousand for the quarter ended
December 31, 2021. Basic and diluted earnings per common share was
$4.86 for the fourth quarter of 2022, compared to $3.36 for the
same period in 2021.
Net income for the year ended December 31, 2022 totaled $3.9
million, representing an increase of $286 thousand or 8.01% when
compared to $3.6 million for the year ended December 31, 2021.
Basic and diluted earnings per common share was $14.01 and $12.93
for the year ended December 31, 2022 and 2021, respectively. Return
on average assets and return on average equity for December 31,
2022 was 0.87% and 16.37%, respectively, compared to 0.87% and
11.43%, respectively, for December 31, 2021.
“We are pleased to report record earnings for the fifth
consecutive year,” said President and Chief Executive Officer,
Cindy Kitner. “Throughout the year, we experienced organic growth,
including record loan originations, while asset quality remained
strong with loss rates at historically low levels. Our net interest
margin has improved throughout the year and expense management
remains a focus. As we navigate an uncertain environment in the
short term, our focus on our long term goals and our core values
drives our strategic initiatives. I am extremely proud of our team
and their commitment to exceptional customer service.”
Net Interest Income
For the fourth quarter of 2022, net interest income totaled $3.8
million, representing an increase of $995 thousand, or 35.52%, from
$2.8 million for the fourth quarter of 2021. For the year ended
December 31, 2022, net interest income totaled $13.0 million,
representing an increase of $1.7 million, or 14.91%, from $11.3
million for the year ended December 31, 2021. The increase in net
interest income was driven by significant loan growth, higher
yields on earning assets and an interest recovery from one customer
relationship, which were in part offset by higher interest expense
as interest bearing deposit balances increased and repriced due to
the continued rise in market interest rates and increasing
competition. For the year ended December 31, 2022, the net interest
margin was 3.08%, representing an increase of 21 basis points when
compared to 2.87% for the year ended December 31, 2021.
Balance Sheet
As of December 31, 2022, total assets increased $34.5 million,
or 8.07%, to $461.2 million compared to total assets of $426.8
million as of December 31, 2021. Loans, net of the allowance for
loan losses, increased $59.4 million or 24.28% to $304.2 million as
of December 31, 2022, compared to $244.8 million as of December 31,
2021. Deposits totaled $414.8 million at December 31, 2022,
representing an increase of $24.1 million or 6.16%, when compared
to $390.7 million at December 31, 2021. As of December 31, 2022,
book value per share declined to $81.64 per share compared to
$119.52 per share at December 31, 2021. The reasons for this
decline are set forth under the Capital section below.
Asset Quality
The Bank’s asset quality was strong at December 31, 2022 with
noncurrent assets totaling $55 thousand, or 0.01% of total assets.
This represents a decline from noncurrent assets totaling $892
thousand, or 0.21% of total assets at December 31, 2021. Nonaccrual
loans totaled $55 thousand and $618 thousand at December 31, 2022
and 2021, respectively. Past due loans still accruing interest
totaled $17 thousand with no loans past due 90 days or more at
December 31, 2022. This represents an improvement from $303
thousand in past due loans still accruing interest with $274
thousand in loans past due 90 days or more at December 31, 2021.
The Bank had net recoveries on loans totaling $3 thousand for the
year ended December 31, 2022 compared to net charge offs totaling
$35 thousand for the year ended December 31, 2021.
Allowance for Loan Losses
At December 31, 2022, the allowance for loan losses was $3.5
million, or 1.12% of total loans compared to $2.8 million, or 1.14%
of total loans at December 31, 2021. With improving credit quality
metrics and historically low charge offs, the increase in the
allowance for loan losses resulted directly from loan growth and
was not related to specific credit quality concerns. The Bank
closely monitors the loan portfolio with a focus on credit quality
and risk management.
The Bank’s provision for loan losses was $225 thousand for the
fourth quarter of 2022 and $630 thousand for the year ended
December 31, 2022, compared to no provision for loan losses for the
fourth quarter of 2021 and $80 thousand for the year ended December
31, 2021.
Capital
Total shareholders’ equity was $22.5 million at December 31,
2022, representing a decline from $33.0 million at December 31,
2021. This change resulted in a decline in book value per share to
$81.64 per share at December 31, 2022 compared to $119.52 per share
at December 31, 2021. During 2022, shareholders’ equity and book
value per share declined as a result of market adjustments to the
investment portfolio. The decline in equity, related to the change
in net unrealized losses on the investment portfolio, totaled $14.5
million, when comparing year end 2022 to the same period in 2021.
The unrealized losses recognized in shareholders’ equity will
decline over time or if market interest rates decline. Management
continues to closely monitor the Bank’s capital position based on
growth expectations and market fluctuations.
The decline in shareholders’ equity related to unrealized losses
and gains on the investment portfolio does not impact the Bank’s
regulatory capital ratios. At December 31, 2022, the Bank’s
regulatory capital ratios exceeded the well capitalized standard
based upon regulatory guidelines. The Bank’s Tier 1 capital ratio
declined to 8.09% at December 31, 2022 from 8.24% at December 31,
2021. The ratio of Common Equity Tier 1 capital and Tier 1 capital
to risk weighted assets was 13.61% and 16.01% at December 31, 2022
and 2021, respectively, and the total risk-based capital ratio was
14.84% and 17.26% at December 31, 2022 and 2021, respectively. The
decline in the Bank’s regulatory capital ratios reflect the impact
from the significant increase in total assets and historic growth
of the loan portfolio. Management maintains regular monitoring of
capital planning strategies to support and maintain adequate
capital levels.
Available for Sale Securities Transferred to Held to
Maturity
During the third quarter of 2022, the Bank transferred 93
municipal securities designated as available for sale with a
combined book value of $56.0 million and a market value of $46.5
million to securities designated as held to maturity. The
unrealized losses at the time of transfer totaled $9.5 million and
are being amortized monthly over the life of the securities with an
increase to the carrying value of securities and a decrease to the
related accumulated other comprehensive loss impacting total
shareholders’ equity. For the third and fourth quarter of 2022, the
amortization of the unrealized losses from the transferred
securities totaled $110 thousand, or $83 thousand net of tax and
$120 thousand, or $90 thousand net of tax, respectively. The net
effect of the amortization has no impact on the Bank’s reported net
income. The transfer of securities mitigates the further decline in
carrying value of these securities and the related impact on
accumulated other comprehensive loss in shareholders’ equity
resulting from higher market interest rates.
Fourth Quarter Highlights Compared to Third Quarter of
2022
Net income for the fourth quarter of 2022 totaled $1.3 million,
an increase of $442 thousand, or 49.22%, from net income of $898
thousand for the third quarter of 2022. During the fourth quarter,
net interest income increased by $553 thousand, or 17.06%, from the
third quarter of 2022. The increase in net interest income was in
part driven by continued growth in loans and rising yields on
earning assets along with an interest recovery from one customer
relationship. These changes were in part offset by an increase in
interest expense as market interest rates and deposit competition
has risen. Provision for loan losses totaled $225 thousand,
representing an increase of $35 thousand during the fourth quarter,
when compared to provision for loan losses of $190 thousand for the
third quarter of 2022. This increase is attributed to loan growth
as credit quality metrics improved through the fourth quarter of
2022.
When comparing December 31, 2022 to September 30, 2022, total
assets increased $6.6 million, or 1.45%, loans, net of the
allowance for loan losses, increased by $10.8 million, or 3.69%,
and total deposits decreased by $16.9 million, or 3.92%. Book value
per share increased to $81.64 per share at December 31, 2022
compared to $71.48 per share at September 30, 2022.
About Jefferson Security Bank
Jefferson Security Bank is an independent community bank
evolving with the needs of the customers and the communities it
serves. Serving individuals, businesses and community
organizations, Jefferson Security Bank strives to support
entrepreneurial efforts within its target markets. Delivering
long-term value to its shareholders is at the core of the
organization’s culture. Jefferson Security Bank is a West Virginia
state-chartered bank that was formed and opened for business on May
19, 1869, making it the oldest bank in Jefferson County, West
Virginia. The bank provides general banking services in Berkeley
County and Jefferson County, West Virginia, and Washington County,
Maryland. Visit www.JSB.bank for more information
This press release may contain forward-looking statements, as
defined by federal securities laws, which may involve significant
risks and uncertainties. The statements are based on estimates and
assumptions made by management in conjunction with other factors
deemed appropriate under the circumstances. Actual results could
differ materially from current projections.
Offices:
105 East Washington Street, Shepherdstown, WV
(304-876-9000) 7994 Martinsburg Pike, Shepherdstown, WV
(304-876-2800) 873 East Washington Street, Suite 100, Charles Town,
WV (304-725-9752) 277 Mineral Drive, Suite 1, Inwood, WV
(304-229-6000) 1861 Edwin Miller Boulevard, Martinsburg, WV
(304-264-0900) 103 West Main Street, Sharpsburg, MD
(301-432-3900)
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version on businesswire.com: https://www.businesswire.com/news/home/20230208006006/en/
Jenna Kesecker, CPA, Executive Vice President and Chief
Financial Officer 304-876-9016