Net income was
The Company reported full year 2023 net income of
Fourth Quarter and Full Year 2023 Key Results:
- Total deposits were
$5.21 billion atDecember 31, 2023 , down$103.1 million , or 1.9%, fromSeptember 30, 2023 , and up$283.5 million , or 5.8%, from the prior year end. The linked quarter decline is reflective of seasonal public deposit outflows, while the improvement over the prior year was driven by nonpublic deposit growth. - Total loans were
$4.46 billion atDecember 31, 2023 , reflecting an increase of$31.0 million , or 0.7%, fromSeptember 30, 2023 and an increase of$411.7 million , or 10.2%, fromDecember 31, 2022 , with both quarterly and annual growth led by commercial lending. - As previously disclosed, the Company repositioned a portion of its investment securities portfolio, selling approximately
$54 million in available-for-sale agency mortgage-backed securities early in the fourth quarter at an after-tax loss of$2.8 million , reinvesting the proceeds into higher yielding bonds. The after-tax interest income benefit of$1.4 million annually translates to an earn-back of two years. - Net interest income of
$39.9 million in the fourth quarter of 2023 decreased$1.8 million , or 4.3%, and$3.3 million , or 7.6%, from the linked and year-ago quarters, respectively. Full year net interest income of$165.7 million was down$1.7 million , or 1.0%, from 2022. Net interest income in 2023 has been impacted by the current higher interest rate environment that has driven funding costs higher. - Noninterest income was
$15.4 million in the fourth quarter of 2023, up$4.9 million , or 46.6%, from the third quarter of 2023 and up$4.4 million , or 40.5%, from the fourth quarter of 2022, while full year noninterest income totaled$48.2 million , reflecting an increase of$2.0 million , or 4.3%, from 2022. - Contributing to fourth quarter 2023 noninterest income was
$9.1 million of company owned life insurance (“COLI”) revenue, approximately$8 million of which was generated by the surrender and redeploy of$53.9 million in cash surrender value of COLI during the quarter. The revenue from the transaction, which was partially offset by$5.4 million of related incremental income taxes, was based upon the crediting rate of the premium allocation to separate account investments, as supported by the performance of the underlying investment divisions. The cash surrender value of the separate account COLI and corresponding revenue is expected to stabilize in future periods. - Noninterest expense of
$35.0 million for the current quarter was up$312 thousand , or 0.9%, from the third quarter of 2023 and up$1.5 million , or 4.6% from the fourth quarter of 2022, while full year noninterest expense of$137.2 million reflects an increase of$7.9 million , or 6.1%, over the prior year. - The Company continues to report strong credit quality metrics, including annual net charge-offs to total loans of 0.20% and non-performing assets to total assets of 0.44% as of
December 31, 2023 .
"Amid unprecedented pressures on the banking industry throughout 2023, our Company responded by defending and growing deposits, strengthening liquidity and capital while deepening relationships with our customers and welcoming new ones to our diversified financial services company," said President and Chief Executive Officer
"Loans grew 10.2% in 2023, driven by strong commercial loan growth in the first half of the year. Credit quality remains sound and we bolstered our reserves in the fourth quarter, increasing our allowance for credit losses on loans to total loans by two basis points to 1.14%. Credit-disciplined loan growth has been and continues to be a key focus. Our relationship-based approach gives us confidence in our ability to work with borrowers dealing with the challenges of higher rates."
Chief Financial Officer and Treasurer W. Jack Plants II added, "During the fourth quarter, we took proactive measures to enhance our earnings generation potential amid the challenging operating environment that has created continued funding cost pressures for our industry. We repositioned a segment of our investment securities portfolio supporting near-term and future earnings generation in what we believe is a prudent use of capital. Heading into 2024, we have over
Leadership and Organizational Update
On
Net Interest Income and Net Interest Margin
Net interest income was
Average interest-earning assets for the current quarter were
Average interest-bearing liabilities for the current quarter were
Net interest margin was 2.78% in the current quarter as compared to 2.91% in the third quarter of 2023 and 3.23% in the fourth quarter of 2022, primarily as a result of higher funding costs amid the current higher interest rate environment, as well as seasonality and repricing within the public deposit portfolio, partially offset by an increase in the average yield on interest-earning assets.
Net interest income was
Noninterest Income
Noninterest income was
- Investment advisory income of
$2.7 million was$125 thousand higher than the third quarter of 2023 and$155 thousand lower than the fourth quarter of 2022. The linked quarter increase was due to the positive impact of new and increased client accounts in addition to market-driven increases in assets under management, while the year-over-year decline was primarily due to lower transaction-based fees on retail accounts in the most recent period. - Insurance income of
$1.6 million was$63 thousand lower than the third quarter of 2023 and$153 thousand higher than the fourth quarter of 2022, with the increase from the prior year period driven by higher premium renewal rates reflecting market conditions. - Income from company owned life insurance of
$9.1 million was$8.1 million higher than the third quarter of 2023 and$8.3 million higher than the fourth quarter of 2022, due to the higher crediting rate and associated impact to cash surrender value related to the previously mentioned surrender and redeploy strategy executed in the fourth quarter of 2023. - Income from investments in limited partnerships of
$672 thousand was$281 thousand higher than the third quarter of 2023 and$481 thousand higher than the fourth quarter of 2022. The Company has made several investments in limited partnerships, primarily small business investment companies, and accounts for these investments under the equity method. Income from these investments fluctuates based on the maturity and performance of the underlying investments. - Income (loss) from derivative instruments, net was a loss of
$68 thousand in the current quarter,$287 thousand lower than the third quarter of 2023 and$724 thousand lower than in the fourth quarter of 2022. Income from derivative instruments, net is based on the number and value of interest rate swap transactions executed during the quarter combined with the impact of changes in the fair value of borrower-facing trades. - A net loss on investment securities of
$3.6 million was recognized in the current quarter, due to the previously disclosed securities portfolio restructuring. No such losses were recorded in the linked or year-ago periods.
Noninterest income was
- Income from company owned life insurance of
$12.1 million was$6.6 million higher than in 2022 due to income associated with the previously mentioned surrender and redeploy strategy executed in the fourth quarter of 2023. - Service charges on deposits of
$4.6 million in 2023 were down$1.3 million from 2022, due to a reduction in nonsufficient funds fees as a result ofJanuary 2023 changes in the Bank’s consumer overdraft program that align with trends in community banking. - A net loss on investment securities of
$3.6 million was recognized in 2023, compared to a net loss of$15 thousand in 2022, due to the previously disclosed fourth quarter 2023 securities portfolio restructuring.
Noninterest Expense
Noninterest expense was
- Salaries and employee benefits expense of
$17.8 million was$318 thousand lower than the third quarter of 2023 and$259 thousand lower than the fourth quarter of 2022. The decrease from the linked quarter was due to a variety of factors, including lower stock-based compensation expense in the fourth quarter this year driven by forfeitures, lower executive bonuses and incentive compensation reflecting adjustments for full year performance, coupled with lower benefits expenses due in part to the timing of medical and dental claim activity. These decreases were partially offset by higher severance expense associated with the Company's recent leadership and organizational changes and higher other bonuses reflecting earnout associated with SDN's 2021 acquisition ofThe Landmark Group . The decrease from the prior year quarter was primarily due to lower stock-based compensation expense and lower executive bonuses and incentive compensation in the current quarter. - Professional services expenses of
$1.4 million were$339 thousand higher than the third quarter of 2023 and relatively flat with the fourth quarter of 2022. The linked quarter increase was due in part to the timing of accounting and audit fees that are typically incurred in the fourth quarter. - Computer and data processing expense of
$5.6 million was$455 thousand higher than the third quarter of 2023 and$883 thousand higher than the fourth quarter of 2022 due in part to the Company's investments in data efficiency and marketing technology. FDIC assessments expense of$1.3 million was$84 thousand higher than the linked quarter and$661 thousand higher than the year-ago quarter, with the year-over-year increase due in part to the impact of an increase in base deposit insurance assessment rate schedules by two basis points.- Advertising and promotions expense of
$370 thousand was$374 thousand lower than the third quarter of 2023, during which the Company ran an advertising campaign related to its money market offering, and$206 thousand lower than the fourth quarter of 2022, when it refreshed elements of its visual brand. - The Company recognized restructuring charges totaling
$188 thousand and$350 thousand in the fourth quarters of 2023 and 2022, respectively, in connection with several branch locations that were closed in the second half of 2020. The charges related to the write-down of real estate assets to market value based upon current market conditions.
Noninterest expense was
- Salaries and employee benefits expense of
$71.9 million increased$2.3 million from the prior year, primarily due to annual merit increases, higher pension expenses and increased medical and dental claim activity, partially offset by lower stock-based compensation, executive bonuses and incentive compensation. - Computer and data processing expense of
$20.1 million was$2.5 million higher than 2022, as a result of the previously mentioned investments in data efficiency and marketing technology. FDIC assessments expense of$4.9 million was up$2.5 million from the prior year, due in part to the impact of the previously mentioned increase in base deposit insurance assessment rate schedules.- Restructuring charges related to the 2020 closing of several branches totaled
$114 thousand in 2023 as compared to$1.6 million in 2022 due to the previously described write-down of real estate assets.
Income Taxes
Income tax expense was
The effective tax rate was 34.5% for the fourth quarter of 2023, 14.8% for the third quarter of 2023, and 16.4% for the fourth quarter of 2022. The effective tax rate fluctuates on a quarterly basis primarily due to the level of pre-tax earnings and may differ from statutory rates because of interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments. The effective tax rate for full year 2023 and 2022 was 20.3%.
Balance Sheet and Capital Management
Total assets were
Investment securities were
Total loans were
- Commercial business loans totaled
$735.7 million , up$24.2 million , or 3.4%, fromSeptember 30, 2023 , and up$71.5 million , or 10.8%, fromDecember 31, 2022 . - Commercial mortgage loans totaled
$2.01 billion , up$20.0 million , or 1.0%, fromSeptember 30, 2023 , and up$325.5 million , or 19.4%, fromDecember 31, 2022 . - Residential real estate loans totaled
$649.8 million , up$14.6 million , or 2.3%, fromSeptember 30, 2023 , and up$59.9 million , or 10.1%, fromDecember 31, 2022 . - Consumer indirect loans totaled
$948.8 million , down$33.3 million , or 3.4%, fromSeptember 30, 2023 , and down$74.8 million , or 7.3%, fromDecember 31, 2022 .
Total deposits were
Short-term borrowings were
Shareholders' equity was
Common book value per share was
During the fourth quarter of 2023, the Company declared a common stock dividend of
The Company's regulatory capital ratios at
- Leverage Ratio was 8.18% compared to 8.20% and 8.33% at
September 30, 2023 , andDecember 31, 2022 , respectively. - Common Equity Tier 1 Capital Ratio was 9.34% compared to 9.26% and 9.42% at
September 30, 2023 , andDecember 31, 2022 , respectively. - Tier 1 Capital Ratio was 9.67% compared to 9.58% and 9.78% at
September 30, 2023 , andDecember 31, 2022 , respectively. - Total Risk-Based Capital Ratio was 12.02% compared to 11.91% and 12.13% at
September 30, 2023 , andDecember 31, 2022 , respectively.
Credit Quality
Non-performing loans were
At
Provision for credit losses was
The Company has remained strategically focused on the importance of credit discipline, allocating resources to credit and risk management functions as the loan portfolio has grown. The ratio of allowance for credit losses on loans to non-performing loans was 192% at
Subsequent Events
The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the year ended
Conference Call
The Company will host an earnings conference call and audio webcast on
About
Non-GAAP Financial Information
In addition to results presented in accordance with
The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies' non-GAAP financial measures having the same or similar names.
Safe Harbor Statement
This press release may contain forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as "believe," "continue," "estimate," "expect," "forecast," "intend," "plan," "preliminary," "should," or "will." Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: changes in interest rates; inflation; changes in deposit flows and the cost and availability of funds; the Company’s ability to implement its strategic plan, including by expanding its commercial lending footprint and integrating its acquisitions; whether the Company experiences greater credit losses than expected; whether the Company experiences breaches of its, or third party, information systems; the attitudes and preferences of the Company’s customers; legal and regulatory proceedings and related matters, including any action described in our reports filed with the
(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
For additional information contact:
Director of Investor and External Relations
(716) 817-5159
klcroft@five-starbank.com
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2023 | 2022 | |||||||||||||||||||
SELECTED BALANCE SHEET DATA: | ||||||||||||||||||||
Cash and cash equivalents | $ | 124,442 | $ | 192,111 | $ | 180,248 | $ | 139,974 | $ | 130,466 | ||||||||||
Investment securities: | ||||||||||||||||||||
Available for sale | 887,730 | 854,215 | 912,122 | 945,442 | 954,371 | |||||||||||||||
Held-to-maturity, net | 148,156 | 154,204 | 159,893 | 180,052 | 188,975 | |||||||||||||||
Total investment securities | 1,035,886 | 1,008,419 | 1,072,015 | 1,125,494 | 1,143,346 | |||||||||||||||
Loans held for sale | 1,370 | 1,873 | 805 | 682 | 550 | |||||||||||||||
Loans: | ||||||||||||||||||||
Commercial business | 735,700 | 711,538 | 720,372 | 695,110 | 664,249 | |||||||||||||||
Commercial mortgage | 2,005,319 | 1,985,279 | 1,961,220 | 1,841,481 | 1,679,840 | |||||||||||||||
Residential real estate loans | 649,822 | 635,209 | 611,199 | 591,846 | 589,960 | |||||||||||||||
Residential real estate lines | 77,367 | 76,722 | 75,971 | 76,086 | 77,670 | |||||||||||||||
Consumer indirect | 948,831 | 982,137 | 1,000,982 | 1,022,202 | 1,023,620 | |||||||||||||||
Other consumer | 45,100 | 40,281 | 28,065 | 16,607 | 15,110 | |||||||||||||||
Total loans | 4,462,139 | 4,431,166 | 4,397,809 | 4,243,332 | 4,050,449 | |||||||||||||||
Allowance for credit losses – loans | 51,082 | 49,630 | 49,836 | 47,528 | 45,413 | |||||||||||||||
Total loans, net | 4,411,057 | 4,381,536 | 4,347,973 | 4,195,804 | 4,005,036 | |||||||||||||||
Total interest-earning assets | 5,702,904 | 5,747,191 | 5,749,015 | 5,600,786 | 5,428,533 | |||||||||||||||
72,504 | 72,725 | 72,950 | 73,180 | 73,414 | ||||||||||||||||
Total assets | 6,160,881 | 6,140,149 | 6,141,298 | 5,966,992 | 5,797,272 | |||||||||||||||
Deposits: | ||||||||||||||||||||
Noninterest-bearing demand | 1,010,614 | 1,035,350 | 1,022,788 | 1,067,011 | 1,139,214 | |||||||||||||||
Interest-bearing demand | 713,158 | 827,842 | 823,983 | 901,251 | 863,822 | |||||||||||||||
Savings and money market | 2,084,444 | 1,943,794 | 1,641,014 | 1,701,663 | 1,643,516 | |||||||||||||||
Time deposits | 1,404,696 | 1,508,987 | 1,547,076 | 1,471,382 | 1,282,872 | |||||||||||||||
Total deposits | 5,212,912 | 5,315,973 | 5,034,861 | 5,141,307 | 4,929,424 | |||||||||||||||
Short-term borrowings | 185,000 | 70,000 | 374,000 | 116,000 | 205,000 | |||||||||||||||
Long-term borrowings, net | 124,532 | 124,454 | 124,377 | 124,299 | 74,222 | |||||||||||||||
Total interest-bearing liabilities | 4,511,830 | 4,475,077 | 4,510,450 | 4,314,595 | 4,069,432 | |||||||||||||||
Shareholders’ equity | 454,796 | 408,716 | 425,873 | 422,823 | 405,605 | |||||||||||||||
Common shareholders’ equity | 437,504 | 391,424 | 408,581 | 405,531 | 388,313 | |||||||||||||||
Tangible common equity (1) | 365,000 | 318,699 | 335,631 | 332,351 | 314,899 | |||||||||||||||
Accumulated other comprehensive loss | $ | (119,941 | ) | $ | (161,389 | ) | $ | (134,472 | ) | $ | (127,372 | ) | $ | (137,487 | ) | |||||
Common shares outstanding | 15,407 | 15,402 | 15,402 | 15,375 | 15,340 | |||||||||||||||
692 | 698 | 698 | 724 | 760 | ||||||||||||||||
CAPITAL RATIOS AND PER SHARE DATA: | ||||||||||||||||||||
Leverage ratio | 8.18 | % | 8.20 | % | 8.08 | % | 8.19 | % | 8.33 | % | ||||||||||
Common equity Tier 1 capital ratio | 9.34 | % | 9.26 | % | 9.10 | % | 9.21 | % | 9.42 | % | ||||||||||
Tier 1 capital ratio | 9.67 | % | 9.58 | % | 9.43 | % | 9.55 | % | 9.78 | % | ||||||||||
Total risk-based capital ratio | 12.02 | % | 11.91 | % | 11.77 | % | 11.93 | % | 12.13 | % | ||||||||||
Common equity to assets | 7.10 | % | 6.37 | % | 6.65 | % | 6.80 | % | 6.70 | % | ||||||||||
Tangible common equity to tangible assets (1) | 6.00 | % | 5.25 | % | 5.53 | % | 5.64 | % | 5.50 | % | ||||||||||
Common book value per share | $ | 28.40 | $ | 25.41 | $ | 26.53 | $ | 26.38 | $ | 25.31 | ||||||||||
Tangible common book value per share (1) | $ | 23.69 | $ | 20.69 | $ | 21.79 | $ | 21.62 | $ | 20.53 |
(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
Twelve Months Ended | 2023 | 2022 | ||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||||||||||
SELECTED INCOME STATEMENT DATA: | 2023 | 2022 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
Interest income | $ | 286,133 | $ | 196,107 | $ | 76,547 | $ | 74,700 | $ | 71,115 | $ | 63,771 | $ | 57,805 | ||||||||||||||
Interest expense | 120,418 | 28,735 | 36,661 | 33,023 | 28,778 | 21,956 | 14,656 | |||||||||||||||||||||
Net interest income | 165,715 | 167,372 | 39,886 | 41,677 | 42,337 | 41,815 | 43,149 | |||||||||||||||||||||
Provision for credit losses | 13,681 | 13,311 | 5,271 | 966 | 3,230 | 4,214 | 6,115 | |||||||||||||||||||||
Net interest income after provision for credit losses | 152,034 | 154,061 | 34,615 | 40,711 | 39,107 | 37,601 | 37,034 | |||||||||||||||||||||
Noninterest income: | ||||||||||||||||||||||||||||
Service charges on deposits | 4,625 | 5,889 | 1,168 | 1,207 | 1,223 | 1,027 | 1,486 | |||||||||||||||||||||
Insurance income | 6,708 | 6,364 | 1,615 | 1,678 | 1,328 | 2,087 | 1,462 | |||||||||||||||||||||
Card interchange income | 8,220 | 8,205 | 2,080 | 2,094 | 2,107 | 1,939 | 2,074 | |||||||||||||||||||||
Investment advisory | 10,955 | 11,493 | 2,669 | 2,544 | 2,819 | 2,923 | 2,824 | |||||||||||||||||||||
Company owned life insurance | 12,106 | 5,542 | 9,132 | 1,027 | 953 | 994 | 875 | |||||||||||||||||||||
Investments in limited partnerships | 1,783 | 1,293 | 672 | 391 | 469 | 251 | 191 | |||||||||||||||||||||
Loan servicing | 479 | 507 | 84 | 135 | 114 | 146 | 124 | |||||||||||||||||||||
Income (loss) from derivative instruments, net | 1,350 | 1,919 | (68 | ) | 219 | 703 | 496 | 656 | ||||||||||||||||||||
Net gain on sale of loans held for sale | 566 | 1,227 | 217 | 115 | 122 | 112 | 182 | |||||||||||||||||||||
Net loss on investment securities | (3,576 | ) | (15 | ) | (3,576 | ) | - | - | - | - | ||||||||||||||||||
Net (loss) gain on other assets | (6 | ) | (16 | ) | (37 | ) | (1 | ) | (7 | ) | 39 | (1 | ) | |||||||||||||||
Net (loss) gain on tax credit investments | (252 | ) | (815 | ) | (207 | ) | (333 | ) | 489 | (201 | ) | (111 | ) | |||||||||||||||
Other | 5,286 | 4,678 | 1,619 | 1,410 | 1,146 | 1,111 | 1,175 | |||||||||||||||||||||
Total noninterest income | 48,244 | 46,271 | 15,368 | 10,486 | 11,466 | 10,924 | 10,937 | |||||||||||||||||||||
Noninterest expense: | ||||||||||||||||||||||||||||
Salaries and employee benefits | 71,889 | 69,633 | 17,842 | 18,160 | 17,754 | 18,133 | 18,101 | |||||||||||||||||||||
Occupancy and equipment | 14,798 | 15,103 | 3,739 | 3,791 | 3,538 | 3,730 | 3,539 | |||||||||||||||||||||
Professional services | 5,259 | 5,592 | 1,415 | 1,076 | 1,273 | 1,495 | 1,420 | |||||||||||||||||||||
Computer and data processing | 20,110 | 17,638 | 5,562 | 5,107 | 4,750 | 4,691 | 4,679 | |||||||||||||||||||||
Supplies and postage | 1,873 | 1,943 | 455 | 455 | 473 | 490 | 493 | |||||||||||||||||||||
4,902 | 2,440 | 1,316 | 1,232 | 1,239 | 1,115 | 655 | ||||||||||||||||||||||
Advertising and promotions | 1,926 | 2,013 | 370 | 744 | 498 | 314 | 576 | |||||||||||||||||||||
Amortization of intangibles | 910 | 986 | 221 | 225 | 230 | 234 | 239 | |||||||||||||||||||||
Restructuring charges (recoveries) | 114 | 1,619 | 188 | (55 | ) | (19 | ) | - | 350 | |||||||||||||||||||
Other | 15,444 | 12,395 | 3,939 | 4,000 | 4,046 | 3,459 | 3,461 | |||||||||||||||||||||
Total noninterest expense | 137,225 | 129,362 | 35,047 | 34,735 | 33,782 | 33,661 | 33,513 | |||||||||||||||||||||
Income before income taxes | 63,053 | 70,970 | 14,936 | 16,462 | 16,791 | 14,864 | 14,458 | |||||||||||||||||||||
Income tax expense | 12,789 | 14,397 | 5,156 | 2,440 | 2,418 | 2,775 | 2,370 | |||||||||||||||||||||
Net income | 50,264 | 56,573 | 9,780 | 14,022 | 14,373 | 12,089 | 12,088 | |||||||||||||||||||||
Preferred stock dividends | 1,459 | 1,459 | 365 | 365 | 364 | 365 | 364 | |||||||||||||||||||||
Net income available to common shareholders | $ | 48,805 | $ | 55,114 | $ | 9,415 | $ | 13,657 | $ | 14,009 | $ | 11,724 | $ | 11,724 | ||||||||||||||
FINANCIAL RATIOS: | ||||||||||||||||||||||||||||
Earnings per share – basic | $ | 3.17 | $ | 3.58 | $ | 0.61 | $ | 0.89 | $ | 0.91 | $ | 0.76 | $ | 0.76 | ||||||||||||||
Earnings per share – diluted | $ | 3.15 | $ | 3.56 | $ | 0.61 | $ | 0.88 | $ | 0.91 | $ | 0.76 | $ | 0.76 | ||||||||||||||
Cash dividends declared on common stock | $ | 1.20 | $ | 1.16 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.29 | ||||||||||||||
Common dividend payout ratio | 37.85 | % | 32.40 | % | 49.18 | % | 33.71 | % | 32.97 | % | 39.47 | % | 38.16 | % | ||||||||||||||
Dividend yield (annualized) | 5.63 | % | 4.76 | % | 5.59 | % | 7.07 | % | 7.64 | % | 6.31 | % | 4.72 | % | ||||||||||||||
Return on average assets (annualized) | 0.83 | % | 1.01 | % | 0.63 | % | 0.92 | % | 0.95 | % | 0.84 | % | 0.85 | % | ||||||||||||||
Return on average equity (annualized) | 11.86 | % | 12.81 | % | 9.28 | % | 12.96 | % | 13.43 | % | 11.73 | % | 11.92 | % | ||||||||||||||
Return on average common equity (annualized) | 12.01 | % | 12.99 | % | 9.31 | % | 13.15 | % | 13.64 | % | 11.87 | % | 12.08 | % | ||||||||||||||
Return on average tangible common equity (annualized) (1) | 14.64 | % | 15.72 | % | 11.37 | % | 15.98 | % | 16.58 | % | 14.53 | % | 14.94 | % | ||||||||||||||
Efficiency ratio (2) | 62.96 | % | 60.39 | % | 59.48 | % | 66.47 | % | 62.66 | % | 63.68 | % | 61.82 | % | ||||||||||||||
Effective tax rate | 20.3 | % | 20.3 | % | 34.5 | % | 14.8 | % | 14.4 | % | 18.7 | % | 16.4 | % |
(1) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
(2) The efficiency ratio is calculated by dividing noninterest expense by net revenue, i.e., the sum of net interest income (fully taxable equivalent) and noninterest income before net gains on investment securities. This is a banking industry measure not required by GAAP.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Twelve Months Ended | 2023 | 2022 | ||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||||||||||
SELECTED AVERAGE BALANCES: | 2023 | 2022 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
Federal funds sold and interest-earning deposits | $ | 80,415 | $ | 49,055 | $ | 102,487 | $ | 62,673 | $ | 92,954 | $ | 63,311 | $ | 49,073 | ||||||||||||||
Investment securities (1) | 1,249,928 | 1,384,208 | 1,199,766 | 1,230,590 | 1,269,181 | 1,301,506 | 1,332,776 | |||||||||||||||||||||
Loans: | ||||||||||||||||||||||||||||
Commercial business | 698,861 | 628,729 | 702,222 | 712,224 | 710,145 | 670,354 | 636,470 | |||||||||||||||||||||
Commercial mortgage | 1,908,355 | 1,502,904 | 1,995,233 | 1,977,978 | 1,911,729 | 1,744,963 | 1,633,298 | |||||||||||||||||||||
Residential real estate loans | 612,767 | 579,362 | 640,955 | 621,074 | 598,638 | 589,747 | 582,352 | |||||||||||||||||||||
Residential real estate lines | 76,350 | 77,132 | 76,741 | 75,847 | 76,191 | 76,627 | 77,342 | |||||||||||||||||||||
Consumer indirect | 997,538 | 1,008,026 | 965,571 | 989,614 | 1,011,338 | 1,024,362 | 1,003,728 | |||||||||||||||||||||
Other consumer | 28,741 | 14,636 | 43,664 | 34,086 | 21,686 | 15,156 | 15,175 | |||||||||||||||||||||
Total loans | 4,322,612 | 3,810,789 | 4,424,386 | 4,410,823 | 4,329,727 | 4,121,209 | 3,948,365 | |||||||||||||||||||||
Total interest-earning assets | 5,652,955 | 5,244,052 | 5,726,639 | 5,704,086 | 5,691,862 | 5,486,026 | 5,330,214 | |||||||||||||||||||||
73,055 | 73,913 | 72,628 | 72,851 | 73,079 | 73,312 | 73,547 | ||||||||||||||||||||||
Total assets | 6,025,378 | 5,606,733 | 6,127,171 | 6,073,653 | 6,053,258 | 5,843,786 | 5,667,331 | |||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||
Interest-bearing demand | 818,541 | 909,799 | 780,546 | 766,636 | 848,552 | 880,093 | 923,374 | |||||||||||||||||||||
Savings and money market | 1,781,776 | 1,852,571 | 2,048,822 | 1,749,202 | 1,660,148 | 1,665,075 | 1,764,230 | |||||||||||||||||||||
Time deposits | 1,477,596 | 1,008,092 | 1,455,867 | 1,564,035 | 1,506,592 | 1,382,131 | 1,116,135 | |||||||||||||||||||||
Short-term borrowings | 186,910 | 86,139 | 84,587 | 222,871 | 294,923 | 145,533 | 87,783 | |||||||||||||||||||||
Long-term borrowings, net | 121,903 | 74,059 | 124,484 | 124,407 | 124,329 | 114,251 | 74,175 | |||||||||||||||||||||
Total interest-bearing liabilities | 4,386,726 | 3,930,660 | 4,494,306 | 4,427,151 | 4,434,544 | 4,187,083 | 3,965,697 | |||||||||||||||||||||
Noninterest-bearing demand deposits | 1,030,648 | 1,105,281 | 1,006,465 | 1,022,423 | 1,029,681 | 1,064,754 | 1,123,223 | |||||||||||||||||||||
Total deposits | 5,108,561 | 4,875,743 | 5,291,700 | 5,102,296 | 5,044,973 | 4,992,053 | 4,926,962 | |||||||||||||||||||||
Total liabilities | 5,601,692 | 5,165,020 | 5,708,842 | 5,644,488 | 5,624,006 | 5,425,851 | 5,265,134 | |||||||||||||||||||||
Shareholders’ equity | 423,686 | 441,713 | 418,329 | 429,165 | 429,252 | 417,935 | 402,197 | |||||||||||||||||||||
Common equity | 406,394 | 424,421 | 401,037 | 411,873 | 411,960 | 400,643 | 384,905 | |||||||||||||||||||||
Tangible common equity (2) | 333,339 | 350,508 | 328,409 | 339,022 | 338,881 | 327,331 | 311,358 | |||||||||||||||||||||
Common shares outstanding: | ||||||||||||||||||||||||||||
Basic | 15,376 | 15,384 | 15,393 | 15,391 | 15,372 | 15,348 | 15,330 | |||||||||||||||||||||
Diluted | 15,475 | 15,471 | 15,511 | 15,462 | 15,413 | 15,435 | 15,413 | |||||||||||||||||||||
SELECTED AVERAGE YIELDS: (Tax equivalent basis) | ||||||||||||||||||||||||||||
Investment securities | 1.92 | % | 1.81 | % | 2.03 | % | 1.88 | % | 1.89 | % | 1.90 | % | 1.88 | % | ||||||||||||||
Loans | 5.98 | % | 4.48 | % | 6.21 | % | 6.15 | % | 5.93 | % | 5.61 | % | 5.15 | % | ||||||||||||||
Total interest-earning assets | 5.07 | % | 3.75 | % | 5.32 | % | 5.21 | % | 5.02 | % | 4.71 | % | 4.32 | % | ||||||||||||||
Interest-bearing demand | 0.87 | % | 0.24 | % | 1.26 | % | 0.83 | % | 0.77 | % | 0.64 | % | 0.52 | % | ||||||||||||||
Savings and money market | 2.32 | % | 0.53 | % | 3.01 | % | 2.51 | % | 2.00 | % | 1.60 | % | 1.20 | % | ||||||||||||||
Time deposits | 3.98 | % | 1.09 | % | 4.57 | % | 4.20 | % | 3.76 | % | 3.33 | % | 2.31 | % | ||||||||||||||
Short-term borrowings | 3.69 | % | 1.74 | % | 1.38 | % | 3.98 | % | 4.30 | % | 3.35 | % | 2.48 | % | ||||||||||||||
Long-term borrowings, net | 5.06 | % | 5.73 | % | 5.05 | % | 5.05 | % | 5.04 | % | 5.11 | % | 5.72 | % | ||||||||||||||
Total interest-bearing liabilities | 2.75 | % | 0.73 | % | 3.24 | % | 2.96 | % | 2.60 | % | 2.12 | % | 1.47 | % | ||||||||||||||
Net interest rate spread | 2.32 | % | 3.02 | % | 2.08 | % | 2.25 | % | 2.42 | % | 2.59 | % | 2.85 | % | ||||||||||||||
Net interest margin | 2.94 | % | 3.20 | % | 2.78 | % | 2.91 | % | 2.99 | % | 3.09 | % | 3.23 | % |
(1) Includes investment securities at adjusted amortized cost.
(2) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP financial measure.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Twelve Months Ended | 2023 | 2022 | ||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||||||||||
ASSET QUALITY DATA: | 2023 | 2022 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
Allowance for Credit Losses – Loans | ||||||||||||||||||||||||||||
Beginning balance | $ | 45,413 | $ | 39,676 | $ | 49,630 | $ | 49,836 | $ | 47,528 | $ | 45,413 | $ | 44,106 | ||||||||||||||
Net loan charge-offs (recoveries): | ||||||||||||||||||||||||||||
Commercial business | (109 | ) | (64 | ) | (50 | ) | 32 | 33 | (124 | ) | (21 | ) | ||||||||||||||||
Commercial mortgage | 35 | (853 | ) | 993 | (972 | ) | 16 | (2 | ) | 1,167 | ||||||||||||||||||
Residential real estate loans | 89 | 279 | 22 | (4 | ) | 13 | 58 | 242 | ||||||||||||||||||||
Residential real estate lines | 41 | (1 | ) | - | - | 25 | 16 | (19 | ) | |||||||||||||||||||
Consumer indirect | 7,595 | 4,538 | 3,174 | 2,283 | 300 | 1,838 | 1,451 | |||||||||||||||||||||
Other consumer | 893 | 1,339 | 82 | 259 | 249 | 303 | 518 | |||||||||||||||||||||
Total net charge-offs (recoveries) | 8,544 | 5,238 | 4,221 | 1,598 | 636 | 2,089 | 3,338 | |||||||||||||||||||||
Provision for credit losses – loans | 14,213 | 10,975 | 5,673 | 1,392 | 2,944 | 4,204 | 4,645 | |||||||||||||||||||||
Ending balance | $ | 51,082 | $ | 45,413 | $ | 51,082 | $ | 49,630 | $ | 49,836 | $ | 47,528 | $ | 45,413 | ||||||||||||||
Net charge-offs (recoveries) to average loans (annualized): | ||||||||||||||||||||||||||||
Commercial business | -0.02 | % | -0.01 | % | -0.03 | % | 0.02 | % | 0.02 | % | -0.08 | % | -0.01 | % | ||||||||||||||
Commercial mortgage | 0.00 | % | -0.06 | % | 0.20 | % | -0.19 | % | 0.00 | % | 0.00 | % | 0.28 | % | ||||||||||||||
Residential real estate loans | 0.01 | % | 0.05 | % | 0.01 | % | 0.00 | % | 0.01 | % | 0.04 | % | 0.16 | % | ||||||||||||||
Residential real estate lines | 0.05 | % | 0.00 | % | 0.00 | % | 0.00 | % | 0.13 | % | 0.09 | % | -0.10 | % | ||||||||||||||
Consumer indirect | 0.76 | % | 0.45 | % | 1.30 | % | 0.92 | % | 0.12 | % | 0.73 | % | 0.57 | % | ||||||||||||||
Other consumer | 3.11 | % | 9.15 | % | 0.75 | % | 3.00 | % | 4.62 | % | 8.10 | % | 13.57 | % | ||||||||||||||
Total loans | 0.20 | % | 0.14 | % | 0.38 | % | 0.14 | % | 0.06 | % | 0.21 | % | 0.34 | % | ||||||||||||||
Supplemental information (1) | ||||||||||||||||||||||||||||
Non-performing loans: | ||||||||||||||||||||||||||||
Commercial business | $ | 5,664 | $ | 340 | $ | 5,664 | $ | 254 | $ | 415 | $ | 334 | $ | 340 | ||||||||||||||
Commercial mortgage | 10,563 | 2,564 | 10,563 | 686 | 2,477 | 2,550 | 2,564 | |||||||||||||||||||||
Residential real estate loans | 6,364 | 4,071 | 6,364 | 4,992 | 3,820 | 3,267 | 4,071 | |||||||||||||||||||||
Residential real estate lines | 221 | 142 | 221 | 201 | 208 | 159 | 142 | |||||||||||||||||||||
Consumer indirect | 3,814 | 3,079 | 3,814 | 3,382 | 2,982 | 2,487 | 3,079 | |||||||||||||||||||||
Other consumer | 34 | 2 | 34 | 6 | 5 | 4 | 2 | |||||||||||||||||||||
Total non-performing loans | 26,660 | 10,198 | 26,660 | 9,521 | 9,907 | 8,801 | 10,198 | |||||||||||||||||||||
Foreclosed assets | 142 | 19 | 142 | 162 | 163 | 101 | 19 | |||||||||||||||||||||
Total non-performing assets | $ | 26,802 | $ | 10,217 | $ | 26,802 | $ | 9,683 | $ | 10,070 | $ | 8,902 | $ | 10,217 | ||||||||||||||
Total non-performing loans to total loans | 0.60 | % | 0.25 | % | 0.60 | % | 0.21 | % | 0.23 | % | 0.21 | % | 0.25 | % | ||||||||||||||
Total non-performing assets to total assets | 0.44 | % | 0.18 | % | 0.44 | % | 0.16 | % | 0.16 | % | 0.15 | % | 0.18 | % | ||||||||||||||
Allowance for credit losses – loans to total loans | 1.14 | % | 1.12 | % | 1.14 | % | 1.12 | % | 1.13 | % | 1.12 | % | 1.12 | % | ||||||||||||||
Allowance for credit losses – loans to non-performing loans | 192 | % | 445 | % | 192 | % | 521 | % | 503 | % | 540 | % | 445 | % |
(1) At period end.
Appendix A — Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
Twelve Months Ended | 2023 | 2022 | ||||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | ||||||||||||||||||||||||
2023 | 2022 | Quarter | Quarter | Quarter | Quarter | Quarter | ||||||||||||||||||||||
Ending tangible assets: | ||||||||||||||||||||||||||||
Total assets | $ | 6,160,881 | $ | 6,140,149 | $ | 6,141,298 | $ | 5,966,992 | $ | 5,797,272 | ||||||||||||||||||
Less: | 72,504 | 72,725 | 72,950 | 73,180 | 73,414 | |||||||||||||||||||||||
Tangible assets | $ | 6,088,377 | $ | 6,067,424 | $ | 6,068,348 | $ | 5,893,812 | $ | 5,723,858 | ||||||||||||||||||
Ending tangible common equity: | ||||||||||||||||||||||||||||
Common shareholders’ equity | $ | 437,504 | $ | 391,424 | $ | 408,581 | $ | 405,531 | $ | 388,313 | ||||||||||||||||||
Less: | 72,504 | 72,725 | 72,950 | 73,180 | 73,414 | |||||||||||||||||||||||
Tangible common equity | $ | 365,000 | $ | 318,699 | $ | 335,631 | $ | 332,351 | $ | 314,899 | ||||||||||||||||||
Tangible common equity to tangible assets (1) | 6.00 | % | 5.25 | % | 5.53 | % | 5.64 | % | 5.50 | % | ||||||||||||||||||
Common shares outstanding | 15,407 | 15,402 | 15,402 | 15,375 | 15,340 | |||||||||||||||||||||||
Tangible common book value per share (2) | $ | 23.69 | $ | 20.69 | $ | 21.79 | $ | 21.62 | $ | 20.53 | ||||||||||||||||||
Average tangible assets: | ||||||||||||||||||||||||||||
Average assets | $ | 6,025,378 | $ | 5,606,733 | $ | 6,127,171 | $ | 6,073,653 | $ | 6,053,258 | $ | 5,843,786 | $ | 5,667,331 | ||||||||||||||
Less: Average goodwill and other intangible assets, net | 73,055 | 73,913 | 72,628 | 72,851 | 73,079 | 73,312 | 73,547 | |||||||||||||||||||||
Average tangible assets | $ | 5,952,323 | $ | 5,532,820 | $ | 6,054,543 | $ | 6,000,802 | $ | 5,980,179 | $ | 5,770,474 | $ | 5,593,784 | ||||||||||||||
Average tangible common equity: | ||||||||||||||||||||||||||||
Average common equity | $ | 406,394 | $ | 424,421 | $ | 401,037 | $ | 411,873 | $ | 411,960 | $ | 400,643 | $ | 384,905 | ||||||||||||||
Less: Average goodwill and other intangible assets, net | 73,055 | 73,913 | 72,628 | 72,851 | 73,079 | 73,312 | 73,547 | |||||||||||||||||||||
Average tangible common equity | $ | 333,339 | $ | 350,508 | $ | 328,409 | $ | 339,022 | $ | 338,881 | $ | 327,331 | $ | 311,358 | ||||||||||||||
Net income available to common shareholders | $ | 48,805 | $ | 55,114 | $ | 9,415 | $ | 13,657 | $ | 14,009 | $ | 11,724 | $ | 11,724 | ||||||||||||||
Return on average tangible common equity (3) | 14.64 | % | 15.72 | % | 11.37 | % | 15.98 | % | 16.58 | % | 14.53 | % | 14.94 | % | ||||||||||||||
Pre-tax pre-provision income: | ||||||||||||||||||||||||||||
Net income | $ | 50,264 | $ | 56,573 | $ | 9,780 | $ | 14,022 | $ | 14,373 | $ | 12,089 | $ | 12,088 | ||||||||||||||
Add: Income tax expense | 12,789 | 14,397 | 5,156 | 2,440 | 2,418 | 2,775 | 2,370 | |||||||||||||||||||||
Add: Provision for credit losses | 13,681 | 13,311 | 5,271 | 966 | 3,230 | 4,214 | 6,115 | |||||||||||||||||||||
Pre-tax pre-provision income | $ | 76,734 | $ | 84,281 | $ | 20,207 | $ | 17,428 | $ | 20,021 | $ | 19,078 | $ | 20,573 |
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by common shares outstanding.
(3) Net income available to common shareholders (annualized) divided by average tangible common equity.
Source:
2024 GlobeNewswire, Inc., source