Net income for the three months ended
Robert R. Chapman III, CEO, commented: “With a keen focus on financial strength, liquidity, and exceptional asset quality, our Company generated positive, stable financial and operational results. Our year-to-date performance reflects many positives during a period when rising interest rates have, understandably, slowed loan growth but have also created opportunities for us to demonstrate the many benefits of being a
“Skilled service from our banking team and a wide range of reliable, secure electronic and Web-based banking products for commercial and retail customers are backed by an operating philosophy that emphasizes safety and financial strength. This has contributed to high levels of customer retention in commercial real estate and commercial and industrial banking. Our financial management capabilities extend beyond lending and continue to attract a growing base of commercial customers. The ability to provide residential mortgage solutions has allowed the Bank to capture additional market share even in a rising rate environment.
“Operationally, we have maintained the improvements to productivity made during the past year, reflected in returns on average equity and the efficiency ratio. Growing deposits have enhanced liquidity and enabled the Bank to avoid any borrowings outside of deposits. This has helped to control our cost of funds, which has enabled us to provide the best possible rates to customers while maintaining relatively stable margins.
“I cannot emphasize enough the importance of maintaining asset and credit quality for our Company and our customers. Diligent credit management and a proactive approach with customers have resulted, as of
“As we approach the close of a very eventful year, we continue to focus on risk management, serving our customers, and creating value for shareholders.”
Third Quarter, Nine Months of 2023 Highlights
- Total interest income of
$10.14 million in the third quarter and$28.82 million in the nine months of 2023 increased 21% and 26% compared with the respective periods of 2022. The year-over-year growth primarily reflected commercial loan interest rate adjustments to keep pace with the rising interest rate environment and a higher yield on Fed Funds sold. - Net interest income after recovery of credit losses was
$7.53 million in the third quarter of 2023 compared with$8.20 million a year earlier. For the nine months of 2023, net interest income after recovery of credit losses increased to$22.63 million from$22.31 million for the nine months of 2022. - Net interest margin and net interest spread improved in the first nine months of 2023 compared with the same period a year earlier, primarily reflecting year-over-year growth in returns on total earning assets and loans along with a slowing of margin compression.
- Total noninterest income was
$3.20 million in the third quarter of 2023 compared with$3.85 million a year earlier, and noninterest income for the nine months of 2023 was$9.69 million compared with$10.52 million for the nine months of 2022. Both periods were highlighted by solid income from commercial treasury services activity and continuing strong wealth management fee contributions from PWW. Gains on sale of residential mortgages slowed as increased interest rates made mortgage borrowing less attractive. - Loans, net of the allowance for credit losses, were
$599.60 million atSeptember 30, 2023 compared with$605.37 million atDecember 31, 2022 , primarily reflecting rate-driven slowing of demand and the Company’s focus on loan quality. - Asset quality remained strong, with a ratio of nonperforming loans to total loans of 0.10% at
September 30, 2023 and minimal levels of nonperforming loans and no OREO. - Total deposits grew to
$880.20 million atSeptember 30, 2023 compared with$848.14 million atDecember 31, 2022 . - On
October 17, 2023 the Company’s board of directors approved a quarterly dividend of$0.08 per share to stockholders of record as ofNovember 24, 2023 to be paid onDecember 8, 2023 . - Measures of shareholder value at
September 30, 2023 reflected increased book value per share to$11.03 from$10.85 atDecember 31, 2022 , stable total stockholders’ equity, and increased retained earnings. The Company’s most recent repurchase plan was completed in the second quarter of 2023. In conjunction with a previous repurchase plan, the Company has repurchased just under 4% of its outstanding common stock sinceAugust 2022 .
Third Quarter, Nine Months of 2023 Operational Review
Net interest income after a
Total interest income increased to
The interest rate adjustment related to variable rate loans along with an increase in the Fed Funds rate continued to have a positive impact on the yields earned on interest earning assets. Management noted that while margin compression continues to have an impact, it slowed moderately in the current quarter. The yield on interest-earning assets in the third quarter of 2023 was 4.43% compared with 3.64% a year earlier, while average loan yield increased to 5.13% from 4.37% in the prior year’s third quarter. The interest spread was 2.94% compared with 3.38% a year earlier. Net interest margin was 3.21% in the third quarter of 2023 compared with 3.42% in the third quarter of 2022.
For the nine months of 2023, the yield on interest-earning assets was 4.30% compared with 3.30% for the nine months of 2022. The interest spread was 3.12% compared with 3.04% for the nine months of 2023 and 2022, respectively. Net interest margin was 3.33% compared with 3.09% for the nine months of 2023 and 2022, respectively.
Total interest expense in the third quarter and nine months of 2023 increased compared with the 2022 periods, reflecting increased levels of interest-paying deposits and higher deposit rates commensurate with the prevailing interest rate environment. Total interest expense in the third quarter of 2023 was
Noninterest income in the third quarter of 2023 was
Noninterest expense in the third quarter of 2023 declined to
The Company continued to demonstrate stable productivity in the nine months of 2023, with return on average equity (ROAE) of 17.20% compared with 15.45% a year earlier and a return on average assets (ROAA) of 0.93% compared with 0.95% a year earlier, which primarily reflected asset growth in 2023. The efficiency ratio for the nine months of 2023 was 75.19% compared with 75.53% for the nine months of 2022.
Balance Sheet: Liquidity, Asset Quality
Total assets were
Loans, net of allowance for credit losses, declined to
Due to lower originations and payoffs, commercial real estate loans (owner-occupied and non-owner occupied and excluding construction loans) decreased to approximately
Commercial loans (primarily C&I loans) were
Residential mortgage and residential construction loans have grown significantly throughout the year, increasing to approximately
Some of the variances in the loan classifications above were due to the Bank’s reclassification of loan categories in connection with the adoption of the current expected credit loss (CECL) methodology on
Asset quality has remained strong and stable, with a ratio of nonperforming loans to total loans of 0.10% at
Total nonperforming loans were
Total deposits at
Maintaining strong liquidity continues to be a focus to ensure strong, secure operations. The Company added cash and cash equivalents in the third quarter of 2023, had approximately
The Company’s measures of shareholder value remained stable. Book value per share was
Some of these measures, including book value per share and stockholders’ equity, continue to be negatively impacted by market value changes in the Company’s available-for-sale securities portfolio, reflecting the impact of higher interest rates. These mark-to-market losses are excluded when calculating the Bank’s regulatory capital ratios. The available-for-sale securities portfolio is composed primarily of securities with implicit government guarantees, including
The Company’s positive financial performance supported its longstanding practice of paying a quarterly cash dividend to shareholders. As previously noted, the Company’s now-completed stock repurchase programs have contributed to earnings and generated shareholder value.
About the Company
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made.
CONTACT:
FINANCIAL RESULTS FOLLOW
Consolidated Balance Sheets (dollar amounts in thousands, except per share amounts) | |||||||
(unaudited) | |||||||
Assets | |||||||
Cash and due from banks | $ | 20,105 | $ | 30,025 | |||
Federal funds sold | 79,424 | 31,737 | |||||
Total cash and cash equivalents | 99,529 | 61,762 | |||||
Securities held-to-maturity, at amortized cost (fair value of | 3,626 | 3,639 | |||||
Securities available-for-sale, at fair value | 181,977 | 185,787 | |||||
Restricted stock, at cost | 1,541 | 1,387 | |||||
Loans, net of allowance for credit losses of | 599,585 | 605,366 | |||||
Loans held for sale | 3,325 | 2,423 | |||||
Premises and equipment, net | 18,371 | 17,974 | |||||
Interest receivable | 2,707 | 2,736 | |||||
Cash value - bank owned life insurance | 21,443 | 19,237 | |||||
Customer relationship Intangible, net | 7,425 | 7,845 | |||||
2,054 | 2,054 | ||||||
Other real estate owned | - | 566 | |||||
Deferred tax asset | 10,376 | 9,125 | |||||
Other assets | 8,928 | 8,670 | |||||
Total assets | $ | 960,887 | $ | 928,571 | |||
Liabilities and Stockholders’ Equity | |||||||
Deposits | |||||||
Noninterest bearing demand | $ | 154,628 | $ | 154,884 | |||
NOW, money market and savings | 524,721 | 560,479 | |||||
Time | 200,854 | 132,775 | |||||
Total deposits | 880,203 | 848,138 | |||||
Capital notes, net | 10,041 | 10,037 | |||||
Other borrowings | 10,030 | 10,457 | |||||
Interest payable | 381 | 89 | |||||
Other liabilities | 10,103 | 9,624 | |||||
Total liabilities | $ | 910,758 | $ | 878,345 | |||
Stockholders’ equity | |||||||
Common stock | 9,723 | 9,905 | |||||
Additional paid-in-capital | 35,253 | 36,068 | |||||
Accumulated other comprehensive (loss) | (29,778 | ) | (26,781 | ) | |||
Retained earnings | 34,931 | 31,034 | |||||
Total stockholders’ equity | $ | 50,129 | $ | 50,226 | |||
Total liabilities and stockholders’ equity | $ | 960,887 | $ | 928,571 |
Consolidated Statements of Income (dollar amounts in thousands, except per share amounts) (unaudited) | |||||||||||||||
For the Three Months | For the Nine Months | ||||||||||||||
Ended | Ended | ||||||||||||||
Interest Income | 2023 | 2022 | 2023 | 2022 | |||||||||||
Loans | $ | 7,990 | $ | 6,830 | $ | 23,251 | $ | 18,909 | |||||||
Securities | |||||||||||||||
321 | 331 | 962 | 911 | ||||||||||||
Mortgage backed securities | 435 | 437 | 1,255 | 1,196 | |||||||||||
Municipals | 304 | 289 | 908 | 867 | |||||||||||
Dividends | 8 | 5 | 49 | 36 | |||||||||||
Other (Corporates) | 139 | 144 | 423 | 395 | |||||||||||
Interest bearing deposits | 134 | 101 | 375 | 135 | |||||||||||
Federal Funds sold | 812 | 262 | 1,601 | 463 | |||||||||||
Total interest income | 10,143 | 8,399 | 28,824 | 22,912 | |||||||||||
Interest Expense | |||||||||||||||
Deposits | |||||||||||||||
NOW, money market savings | 894 | 133 | 1,916 | 374 | |||||||||||
Time Deposits | 1,683 | 143 | 3,918 | 467 | |||||||||||
FHLB borrowings | - | - | 31 | - | |||||||||||
Finance leases | 22 | 24 | 66 | 73 | |||||||||||
Other borrowings | 98 | 117 | 297 | 339 | |||||||||||
Capital notes | 82 | 82 | 245 | 245 | |||||||||||
Total interest expense | 2,779 | 499 | 6,473 | 1,498 | |||||||||||
Net interest income | 7,364 | 7,900 | 22,351 | 21,414 | |||||||||||
Recovery of credit losses | (164 | ) | (300 | ) | (278 | ) | (900 | ) | |||||||
Net interest income after recovery of credit losses | 7,528 | 8,200 | 22,629 | 22,314 | |||||||||||
Noninterest income | |||||||||||||||
Gains on sale of loans held for sale | 989 | 1,472 | 3,065 | 4,675 | |||||||||||
Service charges, fees and commissions | 1,004 | 1,313 | 2,942 | 2,563 | |||||||||||
Wealth management fees | 1,050 | 959 | 3,098 | 2,935 | |||||||||||
Life insurance income | 139 | 113 | 405 | 338 | |||||||||||
Other | 19 | (3 | ) | 179 | 8 | ||||||||||
Total noninterest income | 3,201 | 3,854 | 9,689 | 10,519 | |||||||||||
Noninterest expenses | |||||||||||||||
Salaries and employee benefits | 4,683 | 4,529 | 13,296 | 13,051 | |||||||||||
Occupancy | 458 | 445 | 1,389 | 1,348 | |||||||||||
Equipment | 501 | 647 | 1,813 | 1,870 | |||||||||||
Supplies | 118 | 116 | 399 | 380 | |||||||||||
Professional, data processing, and other outside expense | 1,371 | 1,619 | 4,154 | 3,544 | |||||||||||
Marketing | 204 | 222 | 683 | 661 | |||||||||||
Credit expense | 218 | 244 | 623 | 765 | |||||||||||
Other real estate expenses, net | 3 | 195 | 36 | 207 | |||||||||||
126 | 121 | 321 | 382 | ||||||||||||
Amortization of intangibles | 46 | 140 | 420 | 420 | |||||||||||
Other | 412 | 601 | 957 | 1,491 | |||||||||||
Total noninterest expenses | 8,140 | 8,879 | 24,091 | 24,119 | |||||||||||
Income before income taxes | 2,589 | 3,175 | 8,227 | 8,714 | |||||||||||
Income tax expense | 511 | 601 | 1,631 | 1,709 | |||||||||||
Net Income | $ | 2,078 | $ | 2,574 | $ | 6,596 | $ | 7,005 | |||||||
Weighted average shares outstanding - basic and diluted | 4,543,338 | 4,683,581 | 4,568,789 | 4,721,423 | |||||||||||
Net income per common share - basic and diluted | $ | 0.46 | $ | 0.55 | $ | 1.44 | $ | 1.48 |
Dollar amounts in thousands, except per share data Unaudited | ||||||||||||||||||
Selected Data: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||||
Interest income | $ | 10,143 | $ | 8,399 | 20.76 | % | $ | 28,824 | $ | 22,912 | 25.80 | % | ||||||
Interest expense | 2,779 | 499 | 456.91 | % | 6,473 | 1,498 | 332.11 | % | ||||||||||
Net interest income | 7,364 | 7,900 | -6.78 | % | 22,351 | 21,414 | 4.38 | % | ||||||||||
Recovery of credit losses | (164 | ) | (300 | ) | -45.33 | % | (278 | ) | (900 | ) | -69.11 | % | ||||||
Noninterest income | 3,201 | 3,854 | -16.94 | % | 9,689 | 10,519 | -7.89 | % | ||||||||||
Noninterest expense | 8,140 | 8,879 | -8.32 | % | 24,091 | 24,119 | -0.12 | % | ||||||||||
Income taxes | 511 | 601 | -14.98 | % | 1,631 | 1,709 | -4.56 | % | ||||||||||
Net income | 2,078 | 2,574 | -19.27 | % | 6,596 | 7,005 | -5.84 | % | ||||||||||
Weighted average shares outstanding - basic and diluted | 4,543,338 | 4,683,581 | (140,243 | ) | 4,568,789 | 4,721,423 | (152,634 | ) | ||||||||||
Basic and diluted net income per share | $(0.09 | ) | $(0.04 | ) |
Balance Sheet at period end: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||||
Loans, net | -0.95 | % | 6.53 | % | ||||||||||
Loans held for sale | 3,325 | 2,423 | 37.23 | % | 3,239 | 1,628 | 98.96 | % | ||||||
Total securities | 185,603 | 189,426 | -2.02 | % | 194,774 | 164,922 | 18.10 | % | ||||||
Total deposits | 880,203 | 848,138 | 3.78 | % | 883,069 | 887,056 | -0.45 | % | ||||||
Stockholders’ equity | 50,129 | 50,226 | -0.19 | % | 48,339 | 69,429 | -30.38 | % | ||||||
Total assets | 960,887 | 928,571 | 3.48 | % | 962,570 | 987,634 | -2.54 | % | ||||||
Shares outstanding | 4,543,338 | 4,628,657 | (85,319 | ) | 4,628,657 | 4,740,657 | (112,000 | ) | ||||||
Book value per share | $(4.21 | ) |
Daily averages: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||
Loans | -0.52 | % | 2.98 | % | ||||||||
Loans held for sale | 4,421 | 4,217 | 4.84 | % | 3,548 | 3,978 | -10.81 | % | ||||
Total securities (book value) | 222,969 | 230,986 | -3.47 | % | 223,391 | 220,863 | 1.14 | % | ||||
Total deposits | 869,655 | 885,602 | -1.80 | % | 862,212 | 895,274 | -3.69 | % | ||||
Stockholders’ equity | 52,564 | 52,451 | 0.22 | % | 51,274 | 60,603 | -15.39 | % | ||||
Interest earning assets | 909,774 | 916,798 | -0.77 | % | 897,364 | 927,482 | -3.25 | % | ||||
Interest bearing liabilities | 740,516 | 752,909 | -1.65 | % | 732,522 | 749,545 | -2.27 | % | ||||
Total assets | 953,546 | 968,985 | -1.59 | % | 944,568 | 986,867 | -4.29 | % |
Financial Ratios: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||
Return on average assets | 0.86 | % | 1.05 | % | (0.19 | ) | 0.93 | % | 0.95 | % | (0.02 | ) |
Return on average equity | 15.68 | % | 19.47 | % | (3.79 | ) | 17.20 | % | 15.45 | % | 1.75 | |
Net interest margin | 3.21 | % | 3.43 | % | (0.22 | ) | 3.33 | % | 3.09 | % | 0.24 | |
Efficiency ratio | 77.05 | % | 75.54 | % | 1.51 | 75.19 | % | 75.53 | % | (0.34 | ) | |
Average equity to average assets | 5.51 | % | 5.41 | % | 0.10 | 5.43 | % | 6.14 | % | (0.71 | ) |
Allowance for credit losses on loans: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||
Beginning balance | 14.66 | % | -9.49 | % | ||||||||||||
Retained earnings adjustment related to impact of adoption of ASU 2016-13 | - | - | N/A | 1,245 | - | N/A | ||||||||||
Recovery of credit losses | (130 | ) | (300 | ) | -56.67 | % | (188 | ) | (900 | ) | -79.11 | % | ||||
Charge-offs | (144 | ) | (1 | ) | 14300.00 | % | (196 | ) | (10 | ) | 1860.00 | % | ||||
Recoveries | 8 | 79 | -89.87 | % | 200 | 389 | -48.59 | % | ||||||||
Ending balance | 7,320 | 6,394 | 14.48 | % | 7,320 | 6,394 | 14.48 | % |
Nonperforming assets: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||
Total nonperforming loans | -7.58 | % | -17.40 | % | ||||||||
Other real estate owned | - | 566 | -100.00 | % | 566 | 761 | -25.62 | % | ||||
Total nonperforming assets | 585 | 1,199 | -51.21 | % | 1,354 | 1,715 | -21.05 | % |
Asset quality ratios: | 2023 | 2022 | Change | 2022 | 2021 | Change | |||||
Nonperforming loans to total loans | 0.10 | % | 0.10 | % | - | 0.13 | % | 0.16 | % | (0.03 | ) |
Allowance for credit losses to total loans | 1.21 | % | 1.02 | % | 0.19 | 1.03 | % | 1.19 | % | (0.16 | ) |
Allowance for credit losses to nonperforming loans | 1251.28 | % | 989.42 | % | 261.86 | 811.42 | % | 724.84 | % | 86.58 |
Source:
2023 GlobeNewswire, Inc., source