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| 8-K - 8-K - MVB FINANCIAL CORP | mvbf-20201102.htm |
Exhibit 99.1
N E W S R E L E A S E
MEDIA CONTACT
Amy Baker
VP, Corporate Communications and Marketing
MVB Bank
abaker@mvbbanking.com
844-682-2265
MVB Financial Corp. Reports Strong Third Quarter 2020 Results with a 50% Increase in Net Income, a 134% Increase in Noninterest-Bearing Deposits, and a 25% Increase In Tangible Book Value from Previous Year
(FAIRMONT, W.Va.) November 2, 2020 – MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB,” or the “Company”) today reported net income of $6.5 million, or $0.53 basic and diluted earnings per share for the three months ended September 30, 2020.
| Quarterly | Year-to-Date | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| Third Quarter | Second Quarter | Third Quarter | ||||||||||||||||||||||||||||||
| Net income from continuing operations | $ | 6,491 | $ | 18,034 | $ | 4,346 | $ | 25,573 | $ | 22,469 | ||||||||||||||||||||||
| Net income from discontinued operations | — | — | (19) | — | 427 | |||||||||||||||||||||||||||
| Net income | $ | 6,491 | $ | 18,034 | $ | 4,327 | $ | 25,573 | $ | 22,896 | ||||||||||||||||||||||
| Earnings per share from continuing operations - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.89 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - basic | — | — | — | — | 0.04 | |||||||||||||||||||||||||||
| Earnings per share - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.93 | ||||||||||||||||||||||
| Earnings per share from continuing operations - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.84 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - diluted | — | — | — | — | 0.04 | |||||||||||||||||||||||||||
| Earnings per share - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.88 | ||||||||||||||||||||||
THIRD QUARTER 2020 HIGHLIGHTS
•Transactions: The Company continued to be active during the third quarter of 2020 and completed two strategic transactions: the MVB Mortgage combination with Intercoastal Mortgage Company (“ICM”) and the acquisition of the assets of Invest Forward, Inc.
•Growth in Tangible Book Value (“TBV”) per Share: TBV per share was $18.66 as of September 30, 2020, an increase of $2.01, or 12.1%, from June 30, 2020, and an increase of $3.79, or 25.5%, from September 30, 2019.
•Mortgage: MVB Mortgage’s income from its equity method investment of ICM was $13.6 million for the quarter ended September 30, 2020. The Company also recognized a gain on the mortgage combination
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transaction of $3.3 million.
•Deposits: Noninterest-bearing deposits were $642.8 million as of September 30, 2020, an increase of $114.3 million, or 21.6%, from June 30, 2020, and an increase of $367.9 million, or 133.8%, from September 30, 2019. As of September 30, 2020, total noninterest-bearing deposits were 33.9% of total deposits, compared to 28.4% as of June 30, 2020, and 18.9% as of September 30, 2019.
•Asset Quality: Allowance for loan losses to total loans was 1.81% as of September 30, 2020, an increase of 62 basis points from June 30, 2020, and an increase of 95 basis points from September 30, 2019. Excluding Paycheck Protection Program (“PPP”) loans of $87.9 million, allowance for loan losses to total loans was 1.93% as of September 30, 2020, an increase of 67 basis points from June 30, 2020, and an increase of 107 basis points from September 30, 2019.
•Capital: MVB Bank, Inc. (“MVB Bank” or the “Bank”) finished the third quarter with strong capital ratios. The Bank’s leverage ratio was 10.64%, the Tier 1 risk-based capital ratio was 14.63%, and the total risk-based capital ratio was 15.89%. The Company’s tangible common equity to tangible assets was 10.04% as of September 30, 2020.
FINTECH HIGHLIGHTS
•Fintech deposits were $364.8 million as of September 30, 2020, an increase of $138.6 million, or 61.3%, from June 30, 2020, and an increase of $251.5 million, or 221.9%, from September 30, 2019.
•Gaming deposits, included in total fintech deposits, were $206.6 million as of September 30, 2020, an increase of $64.7 million, or 45.6%, from June 30, 2020, and an increase of $129.8 million, or 169.0%, from September 30, 2019.
•Through the existing partnership with Credit Karma, MVB is now a Top 30 bank in terms of total number of deposit accounts in the United States. Also in the third quarter, MVB signed a sponsorship agreement with Credit Karma to launch a debit card program.
•In an effort to increase noninterest income, MVB signed agreements with two of the largest payment processors for card acquiring sponsorships.
MANAGEMENT OVERVIEW
The Company continued to be “offensively defensive” to further strengthen capital and to bolster the provision for loan losses, all while generating competitive earnings of $6.5 million to position the Company for success now and in the future. As a result of increasing the provision for loan losses, allowance for loan losses as a percentage of total loans of 1.81% as of September 30, 2020, increased 62 basis points from June 30, 2020, and increased 95 basis points from September 30, 2019.
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As the COVID-19 pandemic continues, the Company is fulfilling its purpose of being a trusted partner to Clients, Communities, Team Members, and Shareholders. Members of the Commercial and Retail Banking Team are serving Clients with social distancing measures in place and a majority of Team Members are still working remotely. The Company remains committed to the Community by continuing to partner with non-profit entities and local businesses and was able to return value to Shareholders through meaningful growth in earnings and tangible book value for the second straight quarter. In addition, the Company saw a decrease in commercial loans requiring additional modifications, down from $223.9 million in the second quarter to $41.1 million in the third quarter of 2020.
In addition, the Company reduced its reliance on brokered CDs and higher-cost deposits by replacing these deposits with noninterest-bearing deposits. Total noninterest-bearing deposits increased $114.3 million, or 21.6%, from June 30, 2020, and increased $367.9 million, or 133.8%, from September 30, 2019, to a balance of $642.8 million as of September 30, 2020. The growth in noninterest-bearing deposits was primarily driven by MVB’s continued execution of strategic initiatives in Fintech and specialty deposits. As of September 30, 2020, total noninterest-bearing deposits were 33.9% of total deposits, compared to 28.4% as of June 30, 2020, and 18.9% as of September 30, 2019.
During the third quarter of 2020, the Company completed MVB Mortgage’s combination with ICM on July 1, 2020 to become one of the largest independently-owned residential mortgage lending operations in the Mid-Atlantic region. MVB Mortgage’s combination with Intercoastal Mortgage Company to form ICM served as further validation of the Company’s strategic initiatives to protect earnings in a down-rate environment. After the combination, management at ICM continues to execute on favorable market conditions while generating cost savings through synergies gained in the combination. During the third quarter, MVB recognized $13.6 million in equity method investment income. This income amount is directly proportional to MVB’s ownership interest in ICM. In addition, MVB recognized a gain for the fair value recognition of the equity investment in ICM of $3.3 million during the third quarter of 2020.
“I’m very pleased with MVB’s strong third quarter performance results. Team MVB has executed during an extraordinary year with noninterest-bearing deposits up 134% and, most importantly, with tangible book value up 25% from the third quarter of 2019, enhancing shareholder value,” said Larry F. Mazza, President and CEO, MVB Financial Corp. “The already strong mortgage companies integrated quickly and have been successfully seeking synergies. Our long-held belief that investment in our mortgage company is a protection against down side risk in the cyclical mortgage industry has been validated. As the industry moves into its next phase, the company will be well prepared with cost saves and efficiencies.”
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Also during the third quarter of 2020, the Company acquired the assets of Invest Forward, Inc., doing business as Grand. Grand is a mobile app that incentivizes savings through digital banking.
“Our strategy continues to differentiate MVB among our peers. In addition to completing the MVB Mortgage combination with Intercoastal Mortgage Company this quarter, MVB also acquired technology through Invest Forward, Inc., which will strengthen our expanding fintech vertical. We signed sponsorship agreements with the top two processors in the U.S., and we provided banking services for Credit Karma to launch debit card issuance,” Mazza said.
LOANS
Loans, excluding PPP loans of $87.9 million, totaled $1.34 billion as of September 30, 2020, a decrease of $64.2 million, or 4.6%, from June 30, 2020, and a decrease of $41.7 million, or 3.0%, from September 30, 2019. The decrease in loans was driven by mortgage construction loans contributed to ICM totaling $54.0 million and expected runoff in commercial loans. The tax-equivalent yield on loans, including PPP loans, was 4.51% for the quarter ended September 30, 2020, a decrease of 23 basis points from the quarter ended June 30, 2020, and a decrease of 66 basis points from the quarter ended September 30, 2019.
Loans held for sale totaled $2.3 million as of September 30, 2020, a decrease of $239.8 million, or 99.1%, from June 30, 2020, and a decrease of $157.7 million, or 98.6%, from September 30, 2019. Loans held for sale decreased as a result of the MVB Mortgage combination to form ICM.
DEPOSITS
Deposits totaled $1.90 billion of September 30, 2020, an increase of $35.0 million, or 1.9%, from June 30, 2020, and an increase of $442.6 million, or 30.4%, from September 30, 2019.
Driven by increased mortgage activity as a result of the historically low rates late in the first three quarters of 2020, deposits related to title businesses totaled $175.6 million as of September 30, 2020, up from $155.3 million as of June 30, 2020, and up from $60.3 million as of September 30, 2019.
During the first half of 2020, the Company used the influx of noninterest-bearing deposits to pay down FHLB and other borrowings. As a result of the increases in noninterest-bearing deposits continuing throughout the third quarter of 2020, the Company was able to further decrease reliance on higher-cost funding sources by reducing the balance of brokered deposits by $110.3 million from June 30, 2020.
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NET INTEREST INCOME
Net interest income for the quarter ended September 30, 2020, was $16.0 million, a decrease of $2.4 million, or 13.3%, from the quarter ended June 30, 2020, and an increase of $1.0 million, or 6.5%, from the quarter ended September 30, 2019. Net interest margin, on a fully tax-equivalent basis, for the quarter ended September 30, 2020, was 3.35%, a decrease of 43 basis points versus the quarter ended June 30, 2020, and a decrease of 13 basis points versus the quarter ended September 30, 2019. Net interest margin was primarily impacted by three items: excess liquidity, PPP loans originated during the second quarter of 2020, and a prepayment penalty for paying off long-term borrowings. For the quarter ended September 30, 2020, the excess liquidity from increased cash balances accounted for 26 basis points of the decrease, the PPP loans originated during the second quarter accounted for 15 basis points of the decrease, and a $500 thousand prepayment penalty for paying off long-term borrowings accounted for 10 basis points of the decrease. The tax-equivalent adjustments are added to net interest income and are $301 thousand for the quarter ended September 30, 2020, $284 thousand for the quarter ended June 30, 2020, and $260 thousand for the quarter ended September 30, 2019. Excluding the impact from the FDIC-assisted acquisition of First State, the fully-tax equivalent net interest margin for the quarter ended September 30, 2020 would have decreased 21 basis points.
Interest income decreased 14.5% during the quarter ended September 30, 2020, compared to the quarter ended June 30, 2020, and decreased 11.5% compared to the quarter ended September 30, 2019. The 56-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended June 30, 2020, was the result of a 11-basis point decrease in the yield on commercial loans and a 95-basis point decrease in the yield on real estate loans. The 97-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended September 30, 2019, was the result of a 56-basis point decrease in the yield on commercial loans and a 134-basis point decrease in the yield on real estate loans.
Interest expense decreased 21.1% during the quarter ended September 30, 2020, compared to the quarter ended June 30, 2020, as a result of a decrease of 14 basis points in the cost of interest-bearing liabilities. Interest expense decreased 56.4% compared to the quarter ended September 30, 2019, due to a decrease of 95 basis points in the cost of interest-bearing liabilities. The decrease in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2020, was the result of a 22-basis point decrease in the cost of money market accounts, a 18-basis point decrease in the cost of CDs, and a 33-basis point decrease in the cost of NOW accounts The decrease in the cost of interest-bearing liabilities compared to the quarter ended September 30, 2019, was the result of a 134-basis point decrease in the cost of money market accounts, a 105-basis point decrease in the cost of CDs, and a 45-basis point decrease in the cost of NOW accounts.
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An increase in the Company's average noninterest-bearing balances of $88.0 million from the quarter ended June 30, 2020, helped to maintain a 26-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended September 30, 2020, compared to a 27-basis point favorable spread for the quarter ended June 30, 2020.
An increase in the Company’s average noninterest-bearing balances of $271.2 million from the quarter ended September 30, 2019, helped to maintain a 26-basis point favorable spread on the tax-equivalent net interest margin in 2020 compared to a 37-basis point favorable spread for the same period in 2019.
ASSET QUALITY
Provision for loan losses totaled $8.6 million for the quarter ended September 30, 2020, an increase of $2.0 million from the quarter ended June 30, 2020, and an increase of $8.0 million from the quarter ended September 30, 2019. The drastic increase in loan loss provision is mainly the result of changes to the qualitative adjustment factor framework within the allowance methodology, in addition to adjustments to the risk grading of significant loans within the portfolio, and changes in the outstanding balances of the loan portfolios. As a result of the increases in provision, allowance for loan losses as a percentage of total loans was 1.81% as of September 30, 2020, an increase of 62 basis points from June 30, 2020, and an increase of 95 basis points from September 30, 2019. The Company is continuing to evaluate the effects of COVID-19 as it relates to the asset quality of the loan portfolio and will continue to evaluate and assess the need for additional loan loss provision in the remainder of 2020 and beyond.
Nonperforming loans totaled $14.9 million, or 1.04%, of total loans as of September 30, 2020, compared to 0.94% of total loans as of June 30, 2020, and compared to 0.41% of total loans as of September 30, 2019. The increase in nonperforming loans from June 30, 2020 was primarily the result of the recognition of $3.0 million in nonperforming loans acquired from The First State Bank, which was partially offset by a $750 thousand curtailment of a nonperforming commercial loan and the foreclosure upon a $377 thousand commercial loan which was transitioned to other real estate owned. In addition, net charge-offs for the quarter ended September 30, 2020, increased $91 thousand compared to the quarter ended June 30, 2020, and increased $155 thousand compared to the quarter ended September 30, 2019. In the third quarter of 2020, commercial loans totaling $41.1 million and mortgage loans totaling $15.5 million were approved for modifications such as interest-only payments and payment deferrals. Of the $41.1 million of commercial loan modifications, $35.5 million were related to hotels. These modifications were not considered to be troubled debt restructurings.
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NONINTEREST INCOME
Noninterest income totaled $19.4 million for the quarter ended September 30, 2020, a decrease of $26.1 million, or 57.4%, from the quarter ended June 30, 2020, and an increase of $4.7 million, or 32.0%, from the quarter ended September 30, 2019.
The $26.1 million decrease in noninterest income from the quarter ended June 30, 2020, was due to a decrease of $20.9 million in the gain on derivatives and a decrease of $7.7 million in mortgage fee income due to the transition to the equity method investment accounting from the MVB Mortgage transaction. These decreases were partially offset by an increase of $13.6 million in equity method investments income related to the Company’s investment in ICM and an increase of $3.3 million in the gain on mortgage combination transaction. The decrease in noninterest income was also impacted by transactions closed and gains recognized in the second quarter of 2020, as follows: $9.6 million in the gain on sale of banking centers and $4.7 million in the bargain purchase gain from the acquisition of The First State Bank.
The $4.7 million increase in noninterest income from the quarter ended September 30, 2019, was due to an increase of $13.6 in equity method investments income related to the Company’s investment in ICM and an increase of $3.3 million in the gain on mortgage combination transaction. These increases were partially offset by a decrease of $8.6 million in the gain on derivatives and a decrease of $4.2 million in mortgage fee income. The decreases in both the gain on derivatives and mortgage fee income are directly related to the mortgage transaction that occurred on July 1, 2020.
NONINTEREST EXPENSE
Noninterest expense totaled $18.3 million for the quarter ended September 30, 2020, a decrease of $15.1 million, or 45.2%, from the quarter ended June 30, 2020, and a decrease of $5.1 million, or 21.9%, from the quarter ended September 30, 2019. The mortgage transaction that occurred on July 1, 2020 had the largest impact to the decreases noted in noninterest expense as a result of the transition to the equity method investment accounting.
The $15.1 million decrease in noninterest expense from the quarter ended June 30, 2020, was due to a decrease of $12.1 million in salaries and employee benefits, a decrease of $1.4 million in professional fees, and a decrease of $887 thousand in mortgage processing expense. Of the decrease in salaries and employee benefits expense, $13.5 million was primarily driven by the MVB Mortgage combination to form ICM.
The $5.1 million decrease in noninterest expense from the quarter ended September 30, 2019, was due to a
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decrease of $4.9 million in salaries and employee benefits and a decrease of $725 thousand in mortgage processing expense. Of the decrease in salaries and employee benefits expense, $8.2 million was primarily driven by the MVB Mortgage combination to form ICM.
STOCK REPURCHASE PROGRAM
As previously announced on August 19, 2020, the Board of Directors of the Company approved an extension of the current stock repurchase program, of which 49,100 shares were repurchased for $706 thousand. Under the extended program, the Company is authorized to repurchase up to an additional $5 million of its outstanding shares of common stock over the next 12 months or until the purchase is fully absorbed, whichever date comes first. During the third quarter of 2020, the Company repurchased 82,424 shares totaling $1.3 million. A total of 128,024 shares totaling $1.9 million have been repurchased in 2020.
DIVIDEND
As previously announced on August 21, 2020, MVB issued its third quarterly dividend for 2020, totaling a $0.27 per share payout year-to-date. The Company declared a quarterly cash dividend of $0.09 per share payable on September 15, 2020, to shareholders of record at the close of business on September 1, 2020.
About MVB Financial Corp.
MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, Inc., is publicly traded on The Nasdaq Capital Market® under the ticker “MVBF.” Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its subsidiary, MVB Bank, Inc., and the Bank’s subsidiaries, MVB Community Development Corporation, Chartwell Compliance, Paladin Fraud, and MVB Technology, the Company provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond. For more information about MVB, please visit http://ir.mvbbanking.com.
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Forward-looking Statements
MVB Financial Corp. (the “Company”) has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Earnings Release. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “may,” “plans,” “believes,” “expects,” “anticipates,” “continues,” “may” or similar expressions occur in this Earnings Release, the Company is making forward-looking statements. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include but are not limited to: credit risk; changes in market interest rates; inability to achieve anticipated synergies; ability to successfully integrate recent mergers and acquisitions, including First State and Summit; competition; length and severity of the recent COVID-19 (coronavirus) outbreak and its impact on the Company’s business and financial condition; economic downturn or recession; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.
Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.
Questions or comments concerning this Earnings Release should be directed to:
MVB Financial Corp.
Donald T. Robinson, Executive Vice President and CFO
(304) 598-3500
drobinson@mvbbanking.com
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MVB Financial Corp.
Financial Highlights
Consolidated Statements of Income
(Unaudited) (Dollars in thousands, except per share data)
| Quarterly | Year-to-Date | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| Third Quarter | Second Quarter | Third Quarter | ||||||||||||||||||||||||||||||
| Interest income | $ | 18,627 | $ | 21,774 | $ | 21,038 | $ | 61,100 | $ | 61,131 | ||||||||||||||||||||||
| Interest expense | 2,617 | 3,316 | 6,004 | 10,461 | 17,596 | |||||||||||||||||||||||||||
| Net interest income | 16,010 | 18,458 | 15,034 | 50,639 | 43,535 | |||||||||||||||||||||||||||
| Provision for loan losses | 8,631 | 6,596 | 657 | 16,365 | 1,557 | |||||||||||||||||||||||||||
| Net interest income after provision for loan losses | 7,379 | 11,862 | 14,377 | 34,274 | 41,978 | |||||||||||||||||||||||||||
| Noninterest income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 7,264 | 14,944 | 11,496 | 33,427 | 28,030 | |||||||||||||||||||||||||||
| Other income | 12,134 | 30,569 | 3,200 | 42,334 | 21,818 | |||||||||||||||||||||||||||
| Total noninterest income | 19,398 | 45,513 | 14,696 | 75,761 | 49,848 | |||||||||||||||||||||||||||
| Noninterest expense: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 10,519 | 22,659 | 15,438 | 49,360 | 40,452 | |||||||||||||||||||||||||||
| Other expense | 7,746 | 10,674 | 7,942 | 26,894 | 21,766 | |||||||||||||||||||||||||||
| Total noninterest expenses | 18,265 | 33,333 | 23,380 | 76,254 | 62,218 | |||||||||||||||||||||||||||
| Income from continuing operations, before income taxes | 8,512 | 24,042 | 5,693 | 33,781 | 29,608 | |||||||||||||||||||||||||||
| Income tax expense - continuing operations | 2,021 | 6,008 | 1,347 | 8,208 | 7,139 | |||||||||||||||||||||||||||
| Net income from continuing operations | 6,491 | 18,034 | 4,346 | 25,573 | 22,469 | |||||||||||||||||||||||||||
| Income (loss) from discontinued operations, before income taxes | — | — | (25) | — | 575 | |||||||||||||||||||||||||||
| Income tax expense (benefit) - discontinued operations | — | — | (6) | — | 148 | |||||||||||||||||||||||||||
| Net income from discontinued operations | — | — | (19) | — | 427 | |||||||||||||||||||||||||||
| Net income | $ | 6,491 | $ | 18,034 | $ | 4,327 | $ | 25,573 | $ | 22,896 | ||||||||||||||||||||||
| Preferred dividends | 116 | 115 | 121 | 345 | 364 | |||||||||||||||||||||||||||
| Net income available to common shareholders | $ | 6,375 | $ | 17,919 | $ | 4,206 | $ | 25,228 | $ | 22,532 | ||||||||||||||||||||||
| Earnings per share from continuing operations - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.89 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - basic | — | — | — | — | 0.04 | |||||||||||||||||||||||||||
| Earnings per share - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.93 | ||||||||||||||||||||||
| Earnings per share from continuing operations - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.84 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - diluted | — | — | — | — | 0.04 | |||||||||||||||||||||||||||
| Earnings per share - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.88 | ||||||||||||||||||||||
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Condensed Consolidated Balance Sheets
(Unaudited) (Dollars in thousands)
| September 30, 2020 | June 30, 2020 | December 31, 2019 | September 30, 2019 | |||||||||||||||||||||||
| Cash and cash equivalents | $ | 295,823 | $ | 78,854 | $ | 28,002 | $ | 36,568 | ||||||||||||||||||
| Certificates of deposit with other banks | 12,301 | 13,046 | 12,549 | 13,541 | ||||||||||||||||||||||
| Securities available-for-sale, at fair value | 297,964 | 220,699 | 235,821 | 226,064 | ||||||||||||||||||||||
| Equity securities | 24,164 | 19,464 | 18,514 | 18,414 | ||||||||||||||||||||||
| Loans held for sale | 2,271 | 242,089 | 109,788 | 159,961 | ||||||||||||||||||||||
| Loans | 1,428,593 | 1,494,672 | 1,374,541 | 1,382,375 | ||||||||||||||||||||||
| Less: Allowance for loan losses | (25,913) | (17,742) | (11,775) | (11,874) | ||||||||||||||||||||||
| Net Loans | 1,402,680 | 1,476,930 | 1,362,766 | 1,370,501 | ||||||||||||||||||||||
| Premises and equipment | 26,176 | 24,586 | 21,974 | 25,446 | ||||||||||||||||||||||
| Assets of branches held for sale | — | — | 46,554 | — | ||||||||||||||||||||||
| Goodwill | 2,350 | 19,232 | 19,630 | 19,630 | ||||||||||||||||||||||
| Other assets | 150,730 | 120,257 | 88,516 | 91,827 | ||||||||||||||||||||||
| Total assets | $ | 2,214,459 | $ | 2,215,157 | $ | 1,944,114 | $ | 1,961,952 | ||||||||||||||||||
| Noninterest-bearing deposits | $ | 642,835 | $ | 528,527 | $ | 278,547 | $ | 274,970 | ||||||||||||||||||
| Interest-bearing deposits | 1,256,122 | 1,335,436 | 986,495 | 1,181,434 | ||||||||||||||||||||||
| Deposits of branches held for sale | — | — | 188,270 | — | ||||||||||||||||||||||
| Borrowed funds | 25,800 | 36,610 | 222,885 | 241,641 | ||||||||||||||||||||||
| Other liabilities | 55,586 | 86,084 | 55,981 | 57,667 | ||||||||||||||||||||||
| Stockholders' equity | 234,116 | 228,500 | 211,936 | 206,240 | ||||||||||||||||||||||
| Total liabilities and stockholders' equity | $ | 2,214,459 | $ | 2,215,157 | $ | 1,944,114 | $ | 1,961,952 | ||||||||||||||||||
The breakdown of loans, premises and equipment, and deposits of branches held for sale is as follows:
| (Dollars in thousands) | September 30, 2020 | June 30, 2020 | December 31, 2019 | September 30, 2019 | ||||||||||||||||||||||
| Commercial and non-residential real estate loans | $ | — | $ | — | $ | 16,132 | $ | — | ||||||||||||||||||
| Residential real estate and home equity loans | — | — | 22,701 | — | ||||||||||||||||||||||
| Consumer and other loans | — | — | 4,083 | — | ||||||||||||||||||||||
| Total loans | — | — | 42,916 | — | ||||||||||||||||||||||
| Premises and equipment, net | — | — | 3,638 | — | ||||||||||||||||||||||
| Assets of branches held for sale | $ | — | $ | — | $ | 46,554 | $ | — | ||||||||||||||||||
| Noninterest-bearing deposits | $ | — | $ | — | $ | 19,251 | $ | — | ||||||||||||||||||
| Interest-bearing deposits | — | — | 169,019 | — | ||||||||||||||||||||||
| Deposits of branches held for sale | $ | — | $ | — | $ | 188,270 | $ | — | ||||||||||||||||||
11
Reportable Segments
(Unaudited)
| Three Months Ended September 30, 2020 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest income | $ | 18,737 | $ | 78 | $ | — | $ | (188) | $ | 18,627 | ||||||||||||||||||||||
| Interest expense | 2,553 | 232 | 20 | (188) | 2,617 | |||||||||||||||||||||||||||
| Net interest income (loss) | 16,184 | (154) | (20) | — | 16,010 | |||||||||||||||||||||||||||
| Provision for loan losses | 8,631 | — | — | — | 8,631 | |||||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 7,553 | (154) | (20) | — | 7,379 | |||||||||||||||||||||||||||
| Noninterest Income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 26 | 7,238 | — | — | 7,264 | |||||||||||||||||||||||||||
| Other income | 3,080 | 9,555 | 1,481 | (1,982) | 12,134 | |||||||||||||||||||||||||||
| Total noninterest income | 3,106 | 16,793 | 1,481 | (1,982) | 19,398 | |||||||||||||||||||||||||||
| Noninterest Expenses: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 7,526 | 82 | 2,911 | — | 10,519 | |||||||||||||||||||||||||||
| Other expense | 8,389 | 68 | 1,271 | (1,982) | 7,746 | |||||||||||||||||||||||||||
| Total noninterest expenses | 15,915 | 150 | 4,182 | (1,982) | 18,265 | |||||||||||||||||||||||||||
| Income (loss) before income taxes | (5,256) | 16,489 | (2,721) | — | 8,512 | |||||||||||||||||||||||||||
| Income tax expense (benefit) | (1,556) | 4,245 | (668) | — | 2,021 | |||||||||||||||||||||||||||
| Net income (loss) | $ | (3,700) | $ | 12,244 | $ | (2,053) | $ | — | $ | 6,491 | ||||||||||||||||||||||
| Preferred stock dividends | — | — | 116 | — | 116 | |||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | (3,700) | $ | 12,244 | $ | (2,169) | $ | — | $ | 6,375 | ||||||||||||||||||||||
| Three Months Ended June 30, 2020 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest income | $ | 19,182 | $ | 3,538 | $ | 1 | $ | (947) | $ | 21,774 | ||||||||||||||||||||||
| Interest expense | 3,027 | 1,517 | 23 | (1,251) | 3,316 | |||||||||||||||||||||||||||
| Net interest income (loss) | 16,155 | 2,021 | (22) | 304 | 18,458 | |||||||||||||||||||||||||||
| Provision for loan losses | 6,598 | (2) | — | — | 6,596 | |||||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 9,557 | 2,023 | (22) | 304 | 11,862 | |||||||||||||||||||||||||||
| Noninterest Income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 40 | 15,208 | — | (304) | 14,944 | |||||||||||||||||||||||||||
| Other income | 17,792 | 13,354 | 1,679 | (2,256) | 30,569 | |||||||||||||||||||||||||||
| Total noninterest income | 17,832 | 28,562 | 1,679 | (2,560) | 45,513 | |||||||||||||||||||||||||||
| Noninterest Expenses: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 6,170 | 13,584 | 2,905 | — | 22,659 | |||||||||||||||||||||||||||
| Other expense | 9,124 | 2,315 | 1,491 | (2,256) | 10,674 | |||||||||||||||||||||||||||
| Total noninterest expenses | 15,294 | 15,899 | 4,396 | (2,256) | 33,333 | |||||||||||||||||||||||||||
| Income (loss) before income taxes | 12,095 | 14,686 | (2,739) | — | 24,042 | |||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,880 | 3,800 | (672) | — | 6,008 | |||||||||||||||||||||||||||
| Net income (loss) | $ | 9,215 | $ | 10,886 | $ | (2,067) | $ | — | $ | 18,034 | ||||||||||||||||||||||
| Preferred stock dividends | — | — | 115 | — | 115 | |||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 9,215 | $ | 10,886 | $ | (2,182) | $ | — | $ | 17,919 | ||||||||||||||||||||||
12
| Three Months Ended September 30, 2019 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest income | $ | 19,299 | $ | 2,288 | $ | 9 | $ | (558) | $ | 21,038 | ||||||||||||||||||||||
| Interest expense | 4,806 | 1,811 | 156 | (769) | 6,004 | |||||||||||||||||||||||||||
| Net interest income (loss) | 14,493 | 477 | (147) | 211 | 15,034 | |||||||||||||||||||||||||||
| Provision for loan losses | 625 | 32 | — | — | 657 | |||||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 13,868 | 445 | (147) | 211 | 14,377 | |||||||||||||||||||||||||||
| Noninterest Income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 121 | 11,587 | — | (212) | 11,496 | |||||||||||||||||||||||||||
| Other income | 2,138 | 1,112 | 1,516 | (1,566) | 3,200 | |||||||||||||||||||||||||||
| Total noninterest income | 2,259 | 12,699 | 1,516 | (1,778) | 14,696 | |||||||||||||||||||||||||||
| Noninterest Expenses: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 4,820 | 8,318 | 2,300 | — | 15,438 | |||||||||||||||||||||||||||
| Other expense | 6,113 | 2,142 | 1,254 | (1,567) | 7,942 | |||||||||||||||||||||||||||
| Total noninterest expenses | 10,933 | 10,460 | 3,554 | (1,567) | 23,380 | |||||||||||||||||||||||||||
| Income (loss) from continuing operations, before income taxes | 5,194 | 2,684 | (2,185) | — | 5,693 | |||||||||||||||||||||||||||
| Income tax expense (benefit) - continuing operations | 1,130 | 725 | (508) | — | 1,347 | |||||||||||||||||||||||||||
| Net income (loss) from continuing operations | $ | 4,064 | $ | 1,959 | $ | (1,677) | $ | — | $ | 4,346 | ||||||||||||||||||||||
| Income from discontinued operations, before income taxes | $ | — | $ | — | $ | (25) | $ | — | $ | (25) | ||||||||||||||||||||||
| Income tax expense - discontinued operations | $ | — | $ | — | $ | (6) | $ | — | $ | (6) | ||||||||||||||||||||||
| Net income from discontinued operations | $ | — | $ | — | $ | (19) | $ | — | $ | (19) | ||||||||||||||||||||||
| Net income (loss) | $ | 4,064 | $ | 1,959 | $ | (1,696) | $ | — | $ | 4,327 | ||||||||||||||||||||||
| Preferred stock dividends | — | — | 121 | — | 121 | |||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 4,064 | $ | 1,959 | $ | (1,817) | $ | — | $ | 4,206 | ||||||||||||||||||||||
13
| Nine Months Ended September 30, 2020 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest income | $ | 56,693 | $ | 6,034 | $ | 2 | $ | (1,629) | $ | 61,100 | ||||||||||||||||||||||
| Interest expense | 9,418 | 3,136 | 78 | (2,171) | 10,461 | |||||||||||||||||||||||||||
| Net interest income (loss) | 47,275 | 2,898 | (76) | 542 | 50,639 | |||||||||||||||||||||||||||
| Provision for loan losses | 16,361 | 4 | — | — | 16,365 | |||||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 30,914 | 2,894 | (76) | 542 | 34,274 | |||||||||||||||||||||||||||
| Noninterest Income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 176 | 33,793 | — | (542) | 33,427 | |||||||||||||||||||||||||||
| Other income | 24,218 | 19,347 | 4,664 | (5,895) | 42,334 | |||||||||||||||||||||||||||
| Total noninterest income | 24,394 | 53,140 | 4,664 | (6,437) | 75,761 | |||||||||||||||||||||||||||
| Noninterest Expenses: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 19,562 | 21,550 | 8,248 | — | 49,360 | |||||||||||||||||||||||||||
| Other expense | 24,172 | 4,780 | 3,837 | (5,895) | 26,894 | |||||||||||||||||||||||||||
| Total noninterest expenses | 43,734 | 26,330 | 12,085 | (5,895) | 76,254 | |||||||||||||||||||||||||||
| Income (loss) before income taxes | 11,574 | 29,704 | (7,497) | — | 33,781 | |||||||||||||||||||||||||||
| Income tax expense (benefit) | 2,336 | 7,696 | (1,824) | — | 8,208 | |||||||||||||||||||||||||||
| Net income (loss) | $ | 9,238 | $ | 22,008 | $ | (5,673) | $ | — | $ | 25,573 | ||||||||||||||||||||||
| Preferred stock dividends | — | — | 345 | — | 345 | |||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 9,238 | $ | 22,008 | $ | (6,018) | $ | — | $ | 25,228 | ||||||||||||||||||||||
14
| Nine Months Ended September 30, 2019 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||||||||||||||
| (Dollars in thousands) | ||||||||||||||||||||||||||||||||
| Interest income | $ | 56,446 | $ | 5,858 | $ | 12 | $ | (1,185) | $ | 61,131 | ||||||||||||||||||||||
| Interest expense | 14,303 | 4,303 | 728 | (1,738) | 17,596 | |||||||||||||||||||||||||||
| Net interest income (loss) | 42,143 | 1,555 | (716) | 553 | 43,535 | |||||||||||||||||||||||||||
| Provision for loan losses | 1,497 | 60 | — | — | 1,557 | |||||||||||||||||||||||||||
| Net interest income (loss) after provision for loan losses | 40,646 | 1,495 | (716) | 553 | 41,978 | |||||||||||||||||||||||||||
| Noninterest Income: | ||||||||||||||||||||||||||||||||
| Mortgage fee income | 507 | 28,076 | — | (553) | 28,030 | |||||||||||||||||||||||||||
| Other income | 19,168 | 2,723 | 4,790 | (4,863) | 21,818 | |||||||||||||||||||||||||||
| Total noninterest income | 19,675 | 30,799 | 4,790 | (5,416) | 49,848 | |||||||||||||||||||||||||||
| Noninterest Expenses: | ||||||||||||||||||||||||||||||||
| Salaries and employee benefits | 13,435 | 20,515 | 6,502 | — | 40,452 | |||||||||||||||||||||||||||
| Other expense | 16,958 | 6,009 | 3,662 | (4,863) | 21,766 | |||||||||||||||||||||||||||
| Total noninterest expenses | 30,393 | 26,524 | 10,164 | (4,863) | 62,218 | |||||||||||||||||||||||||||
| Income (loss) from continuing operations, before income taxes | 29,928 | 5,770 | (6,090) | — | 29,608 | |||||||||||||||||||||||||||
| Income tax expense (benefit) - continuing operations | 6,969 | 1,574 | (1,404) | — | 7,139 | |||||||||||||||||||||||||||
| Net income (loss) from continuing operations | 22,959 | 4,196 | (4,686) | — | 22,469 | |||||||||||||||||||||||||||
| Income from discontinued operations, before income taxes | — | — | 575 | — | 575 | |||||||||||||||||||||||||||
| Income tax expense - discontinued operations | — | — | 148 | — | 148 | |||||||||||||||||||||||||||
| Net income from discontinued operations | — | — | 427 | — | 427 | |||||||||||||||||||||||||||
| Net income (loss) | $ | 22,959 | $ | 4,196 | $ | (4,259) | $ | — | $ | 22,896 | ||||||||||||||||||||||
| Preferred stock dividends | — | — | 364 | — | 364 | |||||||||||||||||||||||||||
| Net income (loss) available to common shareholders | $ | 22,959 | $ | 4,196 | $ | (4,623) | $ | — | $ | 22,532 | ||||||||||||||||||||||
15
Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)
| Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| September 30, 2020 | June 30, 2020 | September 30, 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | ||||||||||||||||||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | 174,203 | $ | 45 | 0.10 | % | $ | 44,095 | $ | 16 | 0.15 | % | $ | 9,562 | $ | 61 | 2.53 | % | ||||||||||||||||||||||||||||||||||||||
| CDs with other banks | 12,641 | 61 | 1.91 | 12,811 | 64 | 2.00 | 14,143 | 71 | 1.99 | |||||||||||||||||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxable | 103,497 | 411 | 1.58 | 96,760 | 477 | 1.98 | 122,648 | 689 | 2.23 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax-exempt 2 | 142,301 | 1,344 | 3.75 | 123,806 | 1,248 | 4.04 | 109,324 | 1,113 | 4.04 | |||||||||||||||||||||||||||||||||||||||||||||||
Loans and loans held for sale: 1 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Commercial 3 | 1,160,214 | 14,108 | 4.82 | 1,165,649 | 14,319 | 4.93 | 1,002,595 | 13,599 | 5.38 | |||||||||||||||||||||||||||||||||||||||||||||||
Tax exempt 2 | 7,752 | 91 | 4.66 | 8,879 | 104 | 4.69 | 11,229 | 127 | 4.47 | |||||||||||||||||||||||||||||||||||||||||||||||
| Real estate | 325,992 | 2,749 | 3.35 | 532,386 | 5,701 | 4.30 | 464,769 | 5,490 | 4.69 | |||||||||||||||||||||||||||||||||||||||||||||||
| Consumer | 6,613 | 119 | 7.14 | 6,332 | 129 | 8.17 | 8,612 | 149 | 6.86 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total loans | 1,500,571 | 17,067 | 4.51 | 1,713,246 | 20,253 | 4.74 | 1,487,205 | 19,365 | 5.17 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total earning assets | 1,933,213 | 18,928 | 3.88 | 1,990,718 | 22,058 | 4.44 | 1,742,882 | 21,298 | 4.85 | |||||||||||||||||||||||||||||||||||||||||||||||
| Less: Allowance for loan losses | (18,906) | (14,253) | (11,232) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 28,299 | 34,449 | 18,366 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other assets | 205,038 | 179,806 | 134,871 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | $ | 2,147,644 | $ | 2,190,720 | $ | 1,884,887 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| NOW | $ | 381,375 | $ | 496 | 0.52 | % | $ | 367,448 | $ | 775 | 0.85 | % | $ | 384,977 | $ | 942 | 0.97 | % | ||||||||||||||||||||||||||||||||||||||
| Money market checking | 479,418 | 380 | 0.31 | 429,708 | 564 | 0.53 | 333,849 | 1,391 | 1.65 | |||||||||||||||||||||||||||||||||||||||||||||||
| Savings | 49,698 | 7 | 0.06 | 41,485 | 8 | 0.08 | 37,335 | 1 | 0.01 | |||||||||||||||||||||||||||||||||||||||||||||||
| IRAs | 12,389 | 44 | 1.41 | 12,408 | 47 | 1.52 | 17,342 | 84 | 1.92 | |||||||||||||||||||||||||||||||||||||||||||||||
| CDs | 334,828 | 967 | 1.15 | 495,519 | 1,642 | 1.33 | 366,749 | 2,035 | 2.20 | |||||||||||||||||||||||||||||||||||||||||||||||
| Repurchase agreements and federal funds sold | 10,145 | 4 | 0.16 | 9,682 | 5 | 0.21 | 9,493 | 12 | 0.50 | |||||||||||||||||||||||||||||||||||||||||||||||
| FHLB and other borrowings | 34,138 | 699 | 8.12 | 76,739 | 252 | 1.32 | 212,102 | 1,383 | 2.59 | |||||||||||||||||||||||||||||||||||||||||||||||
| Subordinated debt | 4,124 | 20 | 1.92 | 4,124 | 23 | 2.24 | 9,535 | 156 | 6.49 | |||||||||||||||||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,306,115 | 2,617 | 0.79 | 1,437,113 | 3,316 | 0.93 | 1,371,382 | 6,004 | 1.74 | |||||||||||||||||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 542,467 | 454,486 | 271,294 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other liabilities | 68,223 | 79,826 | 38,618 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 1,916,805 | 1,971,425 | 1,681,294 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Preferred stock | 7,334 | 7,334 | 7,644 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Common stock | 12,066 | 12,030 | 11,773 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Paid-in capital | 124,003 | 123,351 | 119,166 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Treasury stock | (2,022) | (1,437) | (1,084) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Retained earnings | 90,113 | 79,820 | 67,312 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive (loss) | (655) | (1,803) | (1,218) | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | 230,839 | 219,295 | 203,593 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,147,644 | $ | 2,190,720 | $ | 1,884,887 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread (tax-equivalent) | 3.09 | 3.51 | 3.11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Net interest income and margin (tax-equivalent) 2 | $ | 16,311 | 3.35 | % | $ | 18,742 | 3.78 | % | $ | 15,294 | 3.48 | % | ||||||||||||||||||||||||||||||||||||||||||||
| Less: Tax-equivalent adjustments | $ | (301) | $ | (284) | $ | (260) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest spread | 3.03 | % | 3.46 | % | 3.05 | % | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Net interest income and margin | $ | 16,010 | 3.29 | % | $ | 18,458 | 3.72 | % | $ | 15,034 | 3.42 | % | ||||||||||||||||||||||||||||||||||||||||||||
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.
2 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table.
3 The Company’s PPP loans totaling $89.8 million are included in this amount for the three months ended June 30, 2020.
16
Average Balances and Interest Rates
(Unaudited) (Dollars in thousands)
| Nine Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||||||||
| September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||||||||||||||
| Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | |||||||||||||||||||||||||||||||||
| Assets | ||||||||||||||||||||||||||||||||||||||
| Interest-bearing deposits in banks | $ | 77,667 | $ | 110 | 0.19 | % | $ | 8,904 | $ | 163 | 2.45 | % | ||||||||||||||||||||||||||
| CDs with other banks | 12,667 | 187 | 1.97 | 14,498 | 216 | 1.99 | ||||||||||||||||||||||||||||||||
| Investment securities: | ||||||||||||||||||||||||||||||||||||||
| Taxable | 104,450 | 1,554 | 1.98 | 127,631 | 2,336 | 2.45 | ||||||||||||||||||||||||||||||||
Tax-exempt 2 | 125,493 | 3,703 | 3.93 | 100,530 | 3,304 | 4.39 | ||||||||||||||||||||||||||||||||
Loans and loans held for sale: 1 | ||||||||||||||||||||||||||||||||||||||
Commercial 3 | 1,138,438 | 42,292 | 4.95 | 973,547 | 39,258 | 5.39 | ||||||||||||||||||||||||||||||||
Tax exempt 2 | 9,457 | 329 | 4.64 | 12,831 | 427 | 4.45 | ||||||||||||||||||||||||||||||||
| Real estate | 428,989 | 13,402 | 4.16 | 441,238 | 15,794 | 4.79 | ||||||||||||||||||||||||||||||||
| Consumer | 6,805 | 370 | 7.24 | 9,217 | 417 | 6.05 | ||||||||||||||||||||||||||||||||
| Total loans | 1,583,689 | 56,393 | 4.74 | 1,436,833 | 55,896 | 5.20 | ||||||||||||||||||||||||||||||||
| Total earning assets | 1,903,966 | 61,947 | 4.33 | 1,688,396 | 61,914 | 4.90 | ||||||||||||||||||||||||||||||||
| Less: Allowance for loan losses | (14,857) | (11,174) | ||||||||||||||||||||||||||||||||||||
| Cash and due from banks | 27,781 | 16,820 | ||||||||||||||||||||||||||||||||||||
| Other assets | 178,701 | 129,594 | ||||||||||||||||||||||||||||||||||||
| Total assets | $ | 2,095,591 | $ | 1,823,636 | ||||||||||||||||||||||||||||||||||
| Liabilities | ||||||||||||||||||||||||||||||||||||||
| Deposits: | ||||||||||||||||||||||||||||||||||||||
| NOW | $ | 385,413 | $ | 2,070 | 0.72 | % | $ | 368,709 | $ | 2,510 | 0.91 | % | ||||||||||||||||||||||||||
| Money market checking | 447,219 | 2,397 | 0.71 | 319,919 | 3,721 | 1.56 | ||||||||||||||||||||||||||||||||
| Savings | 43,606 | 16 | 0.05 | 39,066 | 3 | 0.01 | ||||||||||||||||||||||||||||||||
| IRAs | 13,785 | 169 | 1.63 | 17,627 | 250 | 1.90 | ||||||||||||||||||||||||||||||||
| CDs | 388,190 | 4,188 | 1.44 | 403,294 | 6,640 | 2.20 | ||||||||||||||||||||||||||||||||
| Repurchase agreements and federal funds sold | 9,784 | 19 | 0.26 | 11,764 | 37 | 0.42 | ||||||||||||||||||||||||||||||||
| FHLB and other borrowings | 75,451 | 1,524 | 2.69 | 180,552 | 3,707 | 2.75 | ||||||||||||||||||||||||||||||||
| Subordinated debt | 4,124 | 78 | 2.52 | 14,821 | 728 | 6.57 | ||||||||||||||||||||||||||||||||
| Total interest-bearing liabilities | 1,367,572 | 10,461 | 1.02 | 1,355,752 | 17,596 | 1.74 | ||||||||||||||||||||||||||||||||
| Noninterest bearing demand deposits | 442,378 | 245,705 | ||||||||||||||||||||||||||||||||||||
| Other liabilities | 63,853 | 31,305 | ||||||||||||||||||||||||||||||||||||
| Total liabilities | 1,873,803 | 1,632,762 | ||||||||||||||||||||||||||||||||||||
| Stockholders’ equity | ||||||||||||||||||||||||||||||||||||||
| Preferred stock | 7,334 | 7,770 | ||||||||||||||||||||||||||||||||||||
| Common stock | 12,031 | 11,709 | ||||||||||||||||||||||||||||||||||||
| Paid-in capital | 123,342 | 117,923 | ||||||||||||||||||||||||||||||||||||
| Treasury stock | (1,533) | (1,084) | ||||||||||||||||||||||||||||||||||||
| Retained earnings | 81,476 | 58,726 | ||||||||||||||||||||||||||||||||||||
| Accumulated other comprehensive (loss) | (862) | (4,170) | ||||||||||||||||||||||||||||||||||||
| Total stockholders’ equity | 221,788 | 190,874 | ||||||||||||||||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 2,095,591 | $ | 1,823,636 | ||||||||||||||||||||||||||||||||||
| Net interest spread (tax-equivalent) | 3.31 | 3.16 | ||||||||||||||||||||||||||||||||||||
Net interest income and margin (tax-equivalent) 2 | $ | 51,486 | 3.60 | % | $ | 44,318 | 3.51 | % | ||||||||||||||||||||||||||||||
| Less: Tax-equivalent adjustments | $ | (847) | $ | (783) | ||||||||||||||||||||||||||||||||||
| Net interest spread | 3.26 | % | 3.10 | % | ||||||||||||||||||||||||||||||||||
| Net interest income and margin | $ | 50,639 | 3.54 | % | $ | 43,535 | 3.45 | % | ||||||||||||||||||||||||||||||
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.
2 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table.
3 The Company’s PPP loans totaling $89.8 million are included in this amount for the six months ended June 30, 2020.
17
The following table reconciles, as of the dates set forth below, net interest margin on a fully tax-equivalent basis:
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||||||
| (Dollars in thousands) | September 30, 2020 | June 30, 2020 | September 30, 2019 | September 30, 2020 | September 30, 2019 | |||||||||||||||||||||||||||
| Net interest margin - U.S. GAAP basis | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 16,010 | $ | 16,171 | $ | 15,034 | $ | 50,639 | $ | 43,535 | ||||||||||||||||||||||
| Average interest-earning assets | 1,933,213 | 1,801,872 | 1,742,882 | 1,903,966 | 1,688,396 | |||||||||||||||||||||||||||
| Net interest margin | 3.29 | % | 3.60 | % | 3.42 | % | 3.54 | % | 3.45 | % | ||||||||||||||||||||||
| Net interest margin - non-U.S. GAAP basis | ||||||||||||||||||||||||||||||||
| Net interest income | $ | 16,010 | $ | 16,171 | $ | 15,034 | $ | 50,639 | $ | 43,535 | ||||||||||||||||||||||
| Plus: Impact of fully tax-equivalent adjustment | 301 | 261 | 260 | 847 | 783 | |||||||||||||||||||||||||||
| Net interest income on a fully tax-equivalent basis | 16,311 | 16,432 | 15,294 | 51,486 | 44,318 | |||||||||||||||||||||||||||
| Average interest-earning assets | 1,933,213 | 1,801,872 | 1,742,882 | 1,903,966 | 1,688,396 | |||||||||||||||||||||||||||
| Net interest margin on a fully tax-equivalent basis | 3.35 | % | 3.66 | % | 3.48 | % | 3.60 | % | 3.51 | % | ||||||||||||||||||||||
18
Selected Financial Data
(Unaudited) (Dollars in thousands, except per share data)
| Quarterly | Year-to-Date | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| Third Quarter | Second Quarter | Third Quarter | ||||||||||||||||||||||||||||||
| Earnings and Per Share Data: | ||||||||||||||||||||||||||||||||
| Net income from continuing operations | $ | 6,491 | $ | 18,034 | $ | 4,346 | $ | 25,573 | $ | 22,469 | ||||||||||||||||||||||
| Net income from discontinued operations | $ | — | $ | — | $ | (19) | $ | — | $ | 427 | ||||||||||||||||||||||
| Net income | $ | 6,491 | $ | 18,034 | $ | 4,327 | 25,573 | 22,896 | ||||||||||||||||||||||||
| Net income available to common shareholders | $ | 6,375 | $ | 17,919 | $ | 4,206 | 25,228 | 22,532 | ||||||||||||||||||||||||
| Earnings per share from continuing operations - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.89 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - basic | $ | — | $ | — | $ | — | $ | — | $ | 0.04 | ||||||||||||||||||||||
| Earnings per share - basic | $ | 0.53 | $ | 1.50 | $ | 0.36 | $ | 2.11 | $ | 1.93 | ||||||||||||||||||||||
| Earnings per share from continuing operations - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.84 | ||||||||||||||||||||||
| Earnings per share from discontinued operations - diluted | $ | — | $ | — | $ | — | $ | — | $ | 0.04 | ||||||||||||||||||||||
| Earnings per share - diluted | $ | 0.53 | $ | 1.49 | $ | 0.35 | $ | 2.07 | $ | 1.88 | ||||||||||||||||||||||
| Cash dividends paid per common share | $ | 0.090 | $ | 0.090 | $ | 0.050 | $ | 0.270 | $ | 0.125 | ||||||||||||||||||||||
| Book value per common share | $ | 19.07 | $ | 18.48 | $ | 16.84 | $ | 19.07 | $ | 16.84 | ||||||||||||||||||||||
| Tangible book value per common share | $ | 18.66 | $ | 16.65 | $ | 14.87 | $ | 18.66 | $ | 14.87 | ||||||||||||||||||||||
| Weighted average shares outstanding - basic | 11,948,989 | 11,954,813 | 11,731,774 | 11,948,857 | 11,661,581 | |||||||||||||||||||||||||||
| Weighted average shares outstanding - diluted | 12,116,418 | 12,011,845 | 12,098,335 | 12,185,137 | 11,957,385 | |||||||||||||||||||||||||||
| Performance Ratios: | ||||||||||||||||||||||||||||||||
Return on average assets - continuing operations 1 | 1.21 | % | 3.29 | % | 0.92 | % | 1.63 | % | 1.64 | % | ||||||||||||||||||||||
Return on average assets - discontinued operations 1 | — | % | — | % | — | % | — | % | 0.03 | % | ||||||||||||||||||||||
Return on average assets 1 | 1.21 | % | 3.29 | % | 0.92 | % | 1.63 | % | 1.67 | % | ||||||||||||||||||||||
Return on average equity - continuing operations 1 | 11.25 | % | 32.89 | % | 8.54 | % | 15.37 | % | 15.69 | % | ||||||||||||||||||||||
Return on average equity - discontinued operations 1 | — | % | — | % | (0.04) | % | — | % | 0.30 | % | ||||||||||||||||||||||
Return on average equity 1 | 11.25 | % | 32.89 | % | 8.50 | % | 15.37 | % | 15.99 | % | ||||||||||||||||||||||
Net interest margin 2 3 | 3.35 | % | 3.78 | % | 3.48 | % | 3.60 | % | 3.51 | % | ||||||||||||||||||||||
Efficiency ratio 4 | 51.58 | % | 52.11 | % | 78.64 | % | 60.33 | % | 66.63 | % | ||||||||||||||||||||||
Overhead ratio 1 5 | 3.40 | % | 6.09 | % | 4.96 | % | 4.85 | % | 4.55 | % | ||||||||||||||||||||||
| Equity to assets | 10.57 | % | 10.32 | % | 10.95 | % | 10.57 | % | 10.95 | % | ||||||||||||||||||||||
| Asset Quality Data and Ratios: | ||||||||||||||||||||||||||||||||
| Charge-offs | $ | 111 | $ | 23 | $ | — | $ | 1,890 | $ | 676 | ||||||||||||||||||||||
| Recoveries | $ | 5 | $ | 8 | $ | 49 | $ | 17 | $ | 54 | ||||||||||||||||||||||
Net loan charge-offs to total loans 1 6 | 0.03 | % | — | % | (0.01) | % | 0.17 | % | 0.06 | % | ||||||||||||||||||||||
| Allowance for loan losses | $ | 25,913 | $ | 17,742 | $ | 11,874 | $ | 25,913 | $ | 11,874 | ||||||||||||||||||||||
Allowance for loan losses to total loans 7 | 1.81 | % | 1.19 | % | 0.86 | % | 1.81 | % | 0.86 | % | ||||||||||||||||||||||
| Nonperforming loans | $ | 14,893 | $ | 14,061 | $ | 5,627 | $ | 14,893 | $ | 5,627 | ||||||||||||||||||||||
| Nonperforming loans to total loans | 1.04 | % | 0.94 | % | 0.41 | % | 1.04 | % | 0.41 | % | ||||||||||||||||||||||
| Mortgage Data: | ||||||||||||||||||||||||||||||||
| Locked pipeline | $ | — | $ | 486,093 | $ | 247,339 | $ | — | $ | 247,339 | ||||||||||||||||||||||
| Sold loan volume | $ | 318,583 | $ | 848,954 | $ | 465,581 | $ | 1,590,761 | $ | 1,114,741 | ||||||||||||||||||||||
| Sold loan refinance volume | $ | 134,025 | $ | 542,123 | $ | 192,868 | $ | 885,965 | $ | 380,820 | ||||||||||||||||||||||
1 annualized for the quarterly periods presented
2 net interest income as a percentage of average interest earning assets
3 presented on a fully tax-equivalent basis
4 noninterest expense as a percentage of net interest income and noninterest income
5 noninterest expense as a percentage of average assets
6 charge-offs less recoveries
7 excludes loans held for sale
19
Non-GAAP Reconciliation: Tangible Book Value per Common Share
(Unaudited) (Dollars in thousands)
| Quarterly | Year-to-Date | |||||||||||||||||||||||||||||||
| 2020 | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||
| Third Quarter | Second Quarter | Third Quarter | ||||||||||||||||||||||||||||||
| Goodwill | $ | 2,350 | $ | 19,232 | $ | 19,630 | $ | 2,350 | $ | 19,630 | ||||||||||||||||||||||
| Intangibles | 2,554 | 2,708 | 3,649 | 2,554 | 3,649 | |||||||||||||||||||||||||||
| Total intangibles | 4,904 | 21,940 | 23,279 | 4,904 | 23,279 | |||||||||||||||||||||||||||
| Total equity | 234,116 | 228,500 | 206,240 | 234,116 | 206,240 | |||||||||||||||||||||||||||
| Less: Preferred equity | (7,334) | (7,334) | (7,334) | (7,334) | (7,334) | |||||||||||||||||||||||||||
| Less: Total intangibles | (4,904) | (21,940) | (23,279) | (4,904) | (23,279) | |||||||||||||||||||||||||||
| Tangible common equity | 221,878 | 199,226 | 175,627 | 221,878 | 175,627 | |||||||||||||||||||||||||||
| Tangible common equity | 221,878 | 199,226 | 175,627 | 221,878 | 175,627 | |||||||||||||||||||||||||||
| Common shares outstanding (000s) | 11,889 | 11,968 | 11,814 | 11,889 | 11,814 | |||||||||||||||||||||||||||
| Tangible book value per common share | $ | 18.66 | $ | 16.65 | $ | 14.87 | $ | 18.66 | $ | 14.87 | ||||||||||||||||||||||
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