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Financial report summary
?Risks
- The reverse stock split may decrease the liquidity of the shares of our common stock and have other impacts on our common stock, our business and our prospects.
- If we terminate our SEC reporting obligations, there will be less information regarding the Company and its financial results available, and we will no longer be subject to certain obligations applicable to SEC registrants, which could impact an investment in our common stock.
Management Discussion
- The Bank earns income from two primary sources. The first is net interest income, which is interest income generated by earning assets less a provision for loan losses and interest expense on interest-bearing liabilities. The second is non-interest income, which primarily consists of service charges and fees, income from merchants for processing credit and debit card transactions, non-interest income from holders of the Bank’s credit cards, trustee fees and net investment securities gains. The majority of the Company’s non-interest expenses are operating costs that relate to providing a full range of banking services to our customers.
- The Distribution, Rate and Yield table above sets forth the dollar amounts in interest earned and paid for each major category of interest earning assets and interest-bearing liabilities for the noted periods, as well as their respective yields and costs, and the resulting interest rate spreads and net interest margins.
- The Bank’s net interest margin, expressed as a percentage of average earning assets, was 3.02% for 2021, down 85 basis points from 3.87% for 2020, even as average earning assets increased by 25.2% during the year, from $2.13 billion in 2020 to $2.67 billion in 2021. The reason for the decrease in the net interest margin was that our average earning assets interest income decreased by $2.3 million, from $84.8 million in 2020 to $82.5 million in 2021, partially offset by the decrease in funding costs of 15.8%, from $2.3 million in 2020 to $1.9 million in 2021. Our average loan balances increased by $9.7 million, or 0.71%, and the average yield on the entire loan portfolio decreased by 44 basis points to 5.17% resulting in a decrease of interest earnings on loans by $5.5 million, or 0.44%. Yields on our investment securities portfolio increased by 7 basis points and the yield on short term investments went down by 9 basis points. Average total interest-bearing liabilities increased by 14.9% during 2021, to $1.53 billion from $1.33 billion the previous year, primarily due to the growth in consumer savings and demand accounts, commercial demand, checking and savings accounts, and government demand, other interest bearing deposit and checking accounts as a result of the funds received by depositors from the CARES Act.