For Immediate Release
Level One Bancorp, Inc. reports third quarter 2018 net income of $3.3 million, representing $0.41 of earnings per diluted share
Loan growth of 13.69% in the last twelve months and the size of the mortgage team doubled
Farmington Hills, MI – October 30, 2018 – Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported net income of $3.3 million, or $0.41 per diluted share, in the third quarter of 2018. This compares with net income of $4.0 million, or $0.53 per diluted share, in the preceding quarter and $2.8 million, or $0.43 per diluted share, in the third quarter of 2017.
Patrick J. Fehring, President and Chief Executive Officer, commented, "Our total loans increased 13.69% in the past twelve months. In addition, our noninterest income increased 32.51% over the second quarter as a result of the previously announced expansion of our mortgage banking activities. However, as a result of this expansion, our noninterest expense increased due to the increase in salaries and benefits expense from the expansion. We remain committed to providing shareholder returns with a strategy of quality growth."
Third Quarter 2018 Financial Highlights
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| • | Net income was $3.3 million, or $0.41 per diluted share, for the third quarter of 2018 |
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| • | Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.97%, compared to 3.99% in the preceding quarter and 4.07% in the third quarter of 2017 |
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| • | Annualized return on average assets was 0.95%, compared to 0.94% in the third quarter of 2017 |
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| • | Annualized return on average equity was 8.95%, compared to 10.58% in the third quarter of 2017 |
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| • | Total assets increased 14.16% to $1.45 billion at September 30, 2018, compared to $1.27 billion at September 30, 2017 |
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| • | Total loans increased 13.69% to $1.11 billion at September 30, 2018, compared to $980.7 million at September 30, 2017 |
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| • | Total deposits increased 5.65% to $1.13 billion at September 30, 2018, compared to $1.07 billion at September 30, 2017 |
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| • | Book value per share increased 12.13% to $18.77 per share compared to $16.74 per share at September 30, 2017 |
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| • | Tangible book value per share increased 15.44% to $17.50 per share compared to $15.16 per share at September 30, 2017 |
Balance Sheet Review
Level One's total assets were $1.45 billion at September 30, 2018, an increase of $123.4 million, or 9.32%, from $1.32 billion at June 30, 2018, and up $179.4 million, or 14.16%, from $1.27 billion at September 30, 2017.
The investment securities portfolio was $199.1 million at September 30, 2018, an increase of $3.1 million, or 1.53%, from $196.0 million at June 30, 2018, and up $57.4 million, or 40.47%, from $141.7 million at September 30, 2017.
Total loans were $1.11 billion at September 30, 2018, an increase of $69.2 million, or 6.62%, from $1.05 billion at June 30, 2018, and up $134.3 million, or 13.69%, from $980.7 million at September 30, 2017. The growth in total loans compared to September 30, 2017 was primarily due to growth in our commercial real estate and residential real estate loan portfolios.
Total deposits were $1.13 billion at September 30, 2018, an increase of $65.1 million, or 6.11%, from $1.07 billion at June 30, 2018, and up $60.4 million, or 5.65%, from $1.07 billion at September 30, 2017. Total deposit composition at September 30, 2018 consisted of 38.10% of demand deposit accounts, 21.09% of savings and money market accounts and 40.81% of time deposits.
Operating Results
Level One's net interest income increased $654 thousand, or 5.27%, to $13.1 million in the third quarter of 2018, compared to $12.4 million in the preceding quarter, and increased $1.4 million, or 11.91%, compared to $11.7 million in the third quarter of 2017, primarily as a result of increased income on originated loans, partially offset by increased expense on deposits.
Level One’s net interest margin, on a FTE basis, was 3.97% in the third quarter of 2018, compared to 3.99% in the preceding quarter and 4.07% in the third quarter of 2017, primarily as a result of higher cost of funds.
Level One's noninterest income increased $472 thousand, or 32.51%, to $1.9 million in the third quarter of 2018, compared to $1.5 million in the preceding quarter, and decreased $17 thousand, or 0.88%, compared to $1.9 million in the third quarter of 2017. The change in noninterest income compared to the preceding quarter was primarily due to an increase in mortgage banking activities as a result of the expansion of the mortgage team.
Level One’s noninterest expenses increased $749 thousand, or 7.72%, to $10.5 million in the third quarter of 2018, compared to $9.7 million in the preceding quarter, and increased $1.1 million, or 12.04%, compared to $9.3 million in the third quarter of 2017, predominantly as a result of increased salary and employee benefits. This increase is due to doubling the size of the mortgage division during the third quarter. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the third quarter of 2018 was 69.73%, compared to 69.99% for the preceding quarter and 68.51% in the third quarter of 2017.
Level One's income tax provision was $665 thousand, or 16.96% of pretax income, in the third quarter of 2018, as compared to $860 thousand, or 17.65% of pretax income, in the preceding quarter and $1.3 million, or 30.75% of pretax income, in the third quarter of 2017. The decrease in tax expense during the three months ended September 30, 2018, as compared to the third quarter of 2017, is primarily a result of the change in federal corporate income tax rates from 35% to 21% due to the enactment of the Tax Cuts and Jobs Act in December 2017.
Asset Quality
Level One's asset quality remained solid during the third quarter of 2018. Total nonperforming loans were $12.9 million, or 1.15% of total loans, at September 30, 2018, an increase of $1.6 million from nonperforming loans of $11.3 million, or 1.08% of total loans, at June 30, 2018, and a decrease of $2.8 million from nonperforming loans of $15.6 million, or 1.59% of total loans, at September 30, 2017. Level One had no other real estate owned assets at September 30, 2018 or June 30, 2018, compared to $384 thousand at September 30, 2017. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 0.89% at September 30, 2018, compared to 0.85% at June 30, 2018, and 1.26% at September 30, 2017.
In addition, we had $354 thousand in loans 90 days or more past due and still accruing at September 30, 2018, compared to $259 thousand at June 30, 2018 and $486 thousand at September 30, 2017.
Performing troubled debt restructured loans that were not included in nonaccrual loans at September 30, 2018 were $2.5 million, compared to $2.5 million in the preceding quarter and $2.3 million at September 30, 2017. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans.
Net chargeoffs in the third quarter of 2018 were $194 thousand, or 0.07% of average loans on an annualized basis, compared to $669 thousand of net recoveries, or 0.26% of average loans on an annualized basis, for the preceding quarter and $32 thousand of net recoveries, or 0.01% of average loans on an annualized basis, for the quarter ended September 30, 2017.
Level One's third quarter provision for loan losses was a provision expense of $619 thousand, compared to a provision benefit of $710 thousand in the preceding quarter and a provision expense of $194 thousand in the third quarter of 2017. The change in provision for loan losses was primarily due to a large recovery in the second quarter of 2018. The allowance for loan losses was $11.9 million, or 1.07% of total loans, at September 30, 2018, compared to $11.5 million, or 1.10% of total loans, at June 30, 2018, and $11.6 million, or 1.19% of total loans, at September 30, 2017. As of September 30, 2018, the allowance for loan losses as a percentage of nonperforming loans was 92.36%, compared to 101.67% at June 30, 2018, and 74.38% at September 30, 2017.
Capital
Total shareholders’ equity was $145.5 million at September 30, 2018, an increase of $2.0 million, or 1.40%, compared with $143.4 million at June 30, 2018 and an increase of $38.5 million, or 35.96%, from $107.0 million at September 30, 2017, primarily as the result of our initial public offering of 1,150,765 shares of common stock in April 2018.
Recent Developments
Third Quarter Dividend: On September 20, 2018, Level One’s Board of Directors declared a quarterly cash dividend of $0.03 per share. This dividend was paid out on October 15, 2018, to stockholders of record at the close of business on September 30, 2018.
About Level One Bancorp, Inc.
Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $1.45 billion as of September 30, 2018. It operates eleven banking centers throughout southeast Michigan and west Michigan. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year" and "Export Finance Lender of the Year" and one of S&P Global's Top 10 "Best-Performing Community Banks" in the nation. Level One's commercial division provides a menu of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, and a full suite of treasury management and private banking services. The consumer division offers personal savings and checking accounts and a complete array of consumer loan products including residential mortgages, home equity, auto, and credit card services. Level One Bank offers a variety of online banking services and a robust mobile banking application for individuals and businesses. Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com.
Forward-Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.
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| Media Contact: | Investor Relations Contact: |
| Nicole Ransom | Peter Root |
| (248) 538-2183 | (248) 538-2186 |
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| Summary Consolidated Financial Information | | | | |
| (Unaudited) | As of or for the quarter ended, |
| (Dollars in thousands, except per share data) | September 30, 2018 | | June 30, 2018 | | March 31, 2018 | | December 31, 2017 | | September 30, 2017 |
| Earnings Summary | | | | | | | | | |
| Interest income | $ | 16,629 |
| | $ | 15,380 |
| | $ | 14,774 |
| | $ | 14,378 |
| | $ | 13,752 |
|
| Interest expense | 3,560 |
| | 2,965 |
| | 2,647 |
| | 2,374 |
| | 2,074 |
|
| Net interest income | 13,069 |
| | 12,415 |
| | 12,127 |
| | 12,004 |
| | 11,678 |
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| Provision for loan losses | 619 |
| | (710 | ) | | 554 |
| | 956 |
| | 194 |
|
| Noninterest income | 1,924 |
| | 1,452 |
| | 1,372 |
| | 1,395 |
| | 1,941 |
|
| Noninterest expense | 10,454 |
| | 9,705 |
| | 9,135 |
| | 9,193 |
| | 9,331 |
|
| Income before income taxes | 3,920 |
| | 4,872 |
| | 3,810 |
| | 3,250 |
| | 4,094 |
|
| Income tax provision | 665 |
| | 860 |
| | 642 |
| | 2,317 |
| | 1,259 |
|
| Net income | 3,255 |
| | $ | 4,012 |
| | $ | 3,168 |
| | $ | 933 |
| | $ | 2,835 |
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| Per Share Data | | |
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| | | | | | |
| Basic earnings per common share | $ | 0.42 |
| | $ | 0.54 |
| | $ | 0.48 |
| | $ | 0.15 |
| | $ | 0.44 |
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| Diluted earnings per common share | 0.41 |
| | 0.53 |
| | 0.47 |
| | 0.14 |
| | 0.43 |
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| Book value per common share | 18.77 |
| | 18.51 |
| | 16.78 |
| | 16.78 |
| | 16.74 |
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Tangible book value per share (1) | 17.50 |
| | 17.23 |
| | 15.27 |
| | 15.21 |
| | 15.16 |
|
| Shares outstanding (in thousands) | 7,749 |
| | 7,749 |
| | 6,585 |
| | 6,435 |
| | 6,392 |
|
| Average basic common shares (in thousands) | 7,749 |
| | 7,456 |
| | 6,539 |
| | 6,403 |
| | 6,392 |
|
| Average diluted common shares (in thousands) | 7,901 |
| | 7,613 |
| | 6,699 |
| | 6,630 |
| | 6,610 |
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| Selected Period End Balances | | | | | | | | | |
| Total assets | 1,446,269 |
| | $ | 1,322,913 |
| | $ | 1,300,629 |
| | $ | 1,301,291 |
| | $ | 1,266,919 |
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| Securities available-for-sale | 199,051 |
| | 196,047 |
| | 160,349 |
| | 150,969 |
| | 141,700 |
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| Total loans | 1,114,999 |
| | 1,045,789 |
| | 1,051,354 |
| | 1,034,923 |
| | 980,721 |
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| Total deposits | 1,130,311 |
| | 1,065,216 |
| | 1,112,644 |
| | 1,120,382 |
| | 1,069,874 |
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| Total liabilities | 1,300,810 |
| | 1,179,468 |
| | 1,190,106 |
| | 1,193,331 |
| | 1,159,934 |
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| Total shareholders' equity | 145,459 |
| | 143,445 |
| | 110,523 |
| | 107,960 |
| | 106,985 |
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Tangible shareholders' equity (1) | 135,570 |
| | 133,501 |
| | 100,524 |
| | 97,906 |
| | 96,872 |
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| Performance and Capital Ratios | | | | | | | | | |
| Return on average assets (annualized) | 0.95 | % | | 1.23 | % | | 1.00 | % | | 0.29 | % | | 0.94 | % |
| Return on average equity (annualized) | 8.95 |
| | 11.97 |
| | 11.64 |
| | 3.40 |
| | 10.58 |
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Net interest margin (fully taxable equivalent) (2) | 3.97 |
| | 3.99 |
| | 4.03 |
| | 4.01 |
| | 4.07 |
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| Efficiency ratio (noninterest expense/net interest income plus noninterest income) | 69.73 |
| | 69.99 |
| | 67.67 |
| | 68.61 |
| | 68.51 |
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| Total shareholders' equity to total assets | 10.06 |
| | 10.84 |
| | 8.50 |
| | 8.30 |
| | 8.44 |
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Tangible equity to tangible assets (1) | 9.44 |
| | 10.17 |
| | 7.79 |
| | 7.58 |
| | 7.71 |
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| Common equity tier 1 capital | 11.75 |
| | 12.11 |
| | 9.47 |
| | 9.10 |
| | 9.33 |
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| Tier 1 leverage ratio | 10.31 |
| | 10.60 |
| | 8.15 |
| | 7.92 |
| | 8.14 |
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| Tier 1 risk-based capital | 11.75 |
| | 12.11 |
| | 9.47 |
| | 9.10 |
| | 9.33 |
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| Total risk-based capital | 14.00 |
| | 14.44 |
| | 11.87 |
| | 11.55 |
| | 11.86 |
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| Asset Quality Ratios: | | | | | | | | | |
| Net charge-offs (recoveries) to average loans | 0.07 | % | | (0.26 | )% | | 0.29 | % | | 0.35 | % | | (0.01 | )% |
| Nonperforming assets as a percentage of total assets | 0.89 |
| | 0.85 |
| | 1.00 |
| | 1.13 |
| | 1.26 |
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| Nonperforming loans as a percent of total loans | 1.15 |
| | 1.08 |
| | 1.23 |
| | 1.36 |
| | 1.59 |
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| Allowance for loan losses as a percentage of period-end loans | 1.07 |
| | 1.10 |
| | 1.09 |
| | 1.13 |
| | 1.19 |
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| Allowance for loan losses as a percentage of nonperforming loans | 92.36 |
| | 101.67 |
| | 88.67 |
| | 83.38 |
| | 74.38 |
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| Allowance for loan losses as a percentage of nonperforming loans, excluding allowance allocated to loans accounted for under ASC 310-30 | 84.72 |
| | 92.93 |
| | 80.36 |
| | 75.68 |
| | 66.62 |
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(1) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.
(2) Presented on a tax equivalent basis using a 35% tax rate for 2017 time periods and 21% tax rate for 2018 time periods.
GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures
Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share, and the ratio of tangible shareholders' equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe financial analysts and others frequently use these measures, and other similar measures, to evaluate capital adequacy. We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles and goodwill; (ii) tangible book value per share as tangible shareholders' equity divided by shares of common stock outstanding; and (iii) tangible assets as total assets, less core deposit intangibles and goodwill.
The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:
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| Reconciliation of Non-GAAP Financial Measures | | | | |
| (Unaudited) | As of |
| (Dollars in thousands, except per share data) | September 30, 2018 | | June 30, 2018 | | March 31,
2018 | | December 31,
2017 | | September 30, 2017 |
| | | | | |
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| |
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| | |
| Total shareholders' equity | $ | 145,459 |
| | $ | 143,445 |
| | $ | 110,523 |
| | $ | 107,960 |
| | $ | 106,985 |
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| Less: | | | | | | | | | |
| Goodwill | 9,387 |
| | 9,387 |
| | 9,387 |
| | 9,387 |
| | 9,387 |
|
| Core deposit intangibles | 502 |
| | 557 |
| | 612 |
| | 667 |
| | 726 |
|
| Tangible shareholders' equity | $ | 135,570 |
| | $ | 133,501 |
| | $ | 100,524 |
| | $ | 97,906 |
| | $ | 96,872 |
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| | | | | | | | | | |
| Shares outstanding (in thousands) | 7,749 |
| | 7,749 |
| | 6,585 |
| | 6,435 |
| | 6,392 |
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| Tangible book value per share | $ | 17.50 |
| | $ | 17.23 |
| | $ | 15.27 |
| | $ | 15.21 |
| | $ | 15.16 |
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| Total assets | $ | 1,446,269 |
| | $ | 1,322,913 |
| | $ | 1,300,629 |
| | $ | 1,301,291 |
| | $ | 1,266,919 |
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| Less: | | | | | | | | | |
| Goodwill | 9,387 |
| | 9,387 |
| | 9,387 |
| | 9,387 |
| | 9,387 |
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| Core deposit intangibles | 502 |
| | 557 |
| | 612 |
| | 667 |
| | 726 |
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| Tangible assets | $ | 1,436,380 |
| | $ | 1,312,969 |
| | $ | 1,290,630 |
| | $ | 1,291,237 |
| | $ | 1,256,806 |
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| | | | | | | | | | |
| Tangible equity to tangible assets | 9.44 | % | | 10.17 | % | | 7.79 | % | | 7.58 | % | | 7.71 | % |
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| Consolidated Balance Sheets | | | | | | | |
| (Unaudited) | As of |
| | September 30, | | June 30, | | December 31, | | September 30, |
| (Dollars in thousands, except share data) | 2018 | | 2018 | | 2017 | | 2017 |
| Assets | | | | | | | |
| Cash and cash equivalents | $ | 77,837 |
| | $ | 34,767 |
| | $ | 63,661 |
| | $ | 92,750 |
|
| Securities available-for-sale | 199,051 |
| | 196,047 |
| | 150,969 |
| | 141,700 |
|
| Federal Home Loan Bank stock | 8,325 |
| | 8,303 |
| | 8,303 |
| | 8,303 |
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| Mortgage loans held for sale, at fair value | 9,392 |
| | 3,991 |
| | 4,548 |
| | 4,459 |
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| Loans: | | | | | | | |
| Originated loans | 1,022,119 |
| | 946,724 |
| | 920,895 |
| | 857,104 |
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| Acquired loans | 92,880 |
| | 99,065 |
| | 114,028 |
| | 123,617 |
|
| Total loans | 1,114,999 |
| | 1,045,789 |
| | 1,034,923 |
| | 980,721 |
|
| Less: Allowance for loan losses | (11,890) |
| | (11,465) |
| | (11,713) |
| | (11,630) |
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| Net loans | 1,103,109 |
| | 1,034,324 |
| | 1,023,210 |
| | 969,091 |
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| Premises and equipment, net | 13,506 |
| | 13,144 |
| | 13,435 |
| | 13,758 |
|
| Goodwill | 9,387 |
| | 9,387 |
| | 9,387 |
| | 9,387 |
|
| Other intangible assets, net | 502 |
| | 557 |
| | 667 |
| | 726 |
|
| Bank-owned life insurance | 11,785 |
| | 11,703 |
| | 11,542 |
| | 11,460 |
|
| Income tax benefit | 3,201 |
| | 2,510 |
| | 3,102 |
| | 3,780 |
|
| Other assets | 10,174 |
| | 8,180 |
| | 12,467 |
| | 11,505 |
|
| Total assets | $ | 1,446,269 |
| | $ | 1,322,913 |
| | $ | 1,301,291 |
| | $ | 1,266,919 |
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| Liabilities | | | |
| | | | |
| Deposits: | | | |
| | | | |
| Noninterest-bearing demand deposits | $ | 380,369 |
| | $ | 320,213 |
| | $ | 324,923 |
| | $ | 318,610 |
|
| Interest-bearing demand deposits | 50,226 |
| | 57,060 |
| | 62,644 |
| | 57,798 |
|
| Money market and savings deposits | 238,351 |
| | 247,542 |
| | 289,363 |
| | 267,075 |
|
| Time deposits | 461,365 |
| | 440,401 |
| | 443,452 |
| | 426,391 |
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| Total deposits | 1,130,311 |
| | 1,065,216 |
| | 1,120,382 |
| | 1,069,874 |
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| Borrowings | 146,483 |
| | 86,594 |
| | 47,833 |
| | 62,896 |
|
| Subordinated notes | 14,882 |
| | 14,867 |
| | 14,844 |
| | 14,830 |
|
| Other liabilities | 9,134 |
| | 12,791 |
| | 10,272 |
| | 12,334 |
|
| Total liabilities | 1,300,810 |
| | 1,179,468 |
| | 1,193,331 |
| | 1,159,934 |
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| Shareholders' equity | | | |
| | | | |
| Common stock: | | | |
| | | | |
| Authorized - 20,000,000 shares | | | |
| | | | |
| Issued and outstanding - 7,749,216 shares at 9/30/2018, 7,748,641 shares at 6/30/2018, 6,435,461 shares at 12/31/2017 and 6,392,041 shares at 9/30/2017 | 90,411 |
| | 90,201 |
| | 59,511 |
| | 58,922 |
|
| Retained earnings | 59,173 |
| | 56,383 |
| | 49,232 |
| | 48,299 |
|
| Accumulated other comprehensive loss, net of tax | (4,125) |
| | (3,139) |
| | (783) |
| | (236) |
|
| Total shareholders' equity | 145,459 |
| | 143,445 |
| | 107,960 |
| | 106,985 |
|
| Total liabilities and shareholders' equity | $ | 1,446,269 |
| | $ | 1,322,913 |
| | $ | 1,301,291 |
| | $ | 1,266,919 |
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| Consolidated Statements of Income | | | | | | | | | |
| (Unaudited) | | | | | | | | | |
| | Three months ended | | Nine months ended |
| | September 30, | | June 30, | | September 30, | | September 30, | | September 30, |
| (In thousands, except per share data) | 2018 | | 2018 | | 2017 | | 2018 | | 2017 |
| Interest income | | | | | | | | | |
| Originated loans, including fees | $ | 12,653 |
| | $ | 11,833 |
| | $ | 10,172 |
| | $ | 35,664 |
| | $ | 29,265 |
|
| Acquired loans, including fees | 2,454 |
| | 2,293 |
| | 2,610 |
| | 7,173 |
| | 9,441 |
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| Securities: |
|
| | | |
|
|
|
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| |
|
|
| Taxable | 816 |
| | 667 |
| | 422 |
| | 2,057 |
| | 1,238 |
|
| Tax-exempt | 450 |
| | 380 |
| | 260 |
| | 1,181 |
| | 641 |
|
| Federal funds sold and other | 256 |
| | 207 |
| | 288 |
| | 708 |
| | 648 |
|
| Total interest income | 16,629 |
| | 15,380 |
| | 13,752 |
| | 46,783 |
| | 41,233 |
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| Interest Expense | |
| | |
| | |
| | |
| | |
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| Deposits | 2,802 |
| | 2,487 |
| | 1,604 |
| | 7,467 |
| | 4,332 |
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| Borrowed funds | 502 |
| | 225 |
| | 214 |
| | 946 |
| | 614 |
|
| Subordinated notes | 256 |
| | 253 |
| | 256 |
| | 759 |
| | 759 |
|
| Total interest expense | 3,560 |
| | 2,965 |
| | 2,074 |
| | 9,172 |
| | 5,705 |
|
| Net interest income | 13,069 |
| | 12,415 |
| | 11,678 |
| | 37,611 |
| | 35,528 |
|
| Provision expense (benefit) for loan losses | 619 |
| | (710 | ) | | 194 |
| | 463 |
| | 460 |
|
| Net interest income after provision for loan losses | 12,450 |
| | 13,125 |
| | 11,484 |
| | 37,148 |
| | 35,068 |
|
| Noninterest income | |
| | |
| | |
| | |
| | |
|
| Service charges on deposits | 655 |
| | 618 |
| | 607 |
| | 1,915 |
| | 1,905 |
|
| Net gain on sale of securities | — |
| | — |
| | 118 |
| | — |
| | 176 |
|
| Mortgage banking activities | 754 |
| | 404 |
| | 548 |
| | 1,394 |
| | 1,260 |
|
| Net gain on sale of commercial loans | — |
| | 11 |
| | — |
| | 11 |
| | 146 |
|
| Other charges and fees | 515 |
| | 419 |
| | 668 |
| | 1,428 |
| | 1,618 |
|
| Total noninterest income | 1,924 |
| | 1,452 |
| | 1,941 |
| | 4,748 |
| | 5,105 |
|
| Noninterest expense | |
| | |
| | |
| | |
| | |
|
| Salary and employee benefits | 6,888 |
| | 6,169 |
| | 5,413 |
| | 19,013 |
| | 16,003 |
|
| Occupancy and equipment expense | 1,173 |
| | 1,074 |
| | 1,106 |
| | 3,293 |
| | 3,130 |
|
| Professional service fees | 494 |
| | 471 |
| | 603 |
| | 1,231 |
| | 1,683 |
|
| Marketing expense | 264 |
| | 291 |
| | 289 |
| | 697 |
| | 768 |
|
| Printing and supplies expense | 127 |
| | 112 |
| | 137 |
| | 343 |
| | 371 |
|
| Data processing expense | 565 |
| | 511 |
| | 492 |
| | 1,512 |
| | 1,384 |
|
| Other expense | 943 |
| | 1,077 |
| | 1,291 |
| | 3,205 |
| | 3,520 |
|
| Total noninterest expense | 10,454 |
| | 9,705 |
| | 9,331 |
| | 29,294 |
| | 26,859 |
|
| Income before income taxes | 3,920 |
| | 4,872 |
| | 4,094 |
| | 12,602 |
| | 13,314 |
|
| Income tax provision | 665 |
| | 860 |
| | 1,259 |
| | 2,167 |
| | 4,406 |
|
| Net income | $ | 3,255 |
| | $ | 4,012 |
| | $ | 2,835 |
| | $ | 10,435 |
| | $ | 8,908 |
|
| Earnings per common share: | |
| | | | |
| | |
| | |
|
| Basic | $ | 0.42 |
| | $ | 0.54 |
| | $ | 0.44 |
| | $ | 1.44 |
| | $ | 1.40 |
|
| Diluted | $ | 0.41 |
| | $ | 0.53 |
| | $ | 0.43 |
| | $ | 1.41 |
| | $ | 1.35 |
|
| Average common shares outstanding - basic | 7,749 |
| | 7,456 |
| | 6,392 |
| | 7,264 |
| | 6,383 |
|
| Average common shares outstanding - diluted | 7,901 |
| | 7,613 |
| | 6,610 |
| | 7,414 |
| | 6,602 |
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Net Interest Income and Net Interest Margin | | | | | | | | | |
| (Unaudited) | For the three months ended, |
| | September 30, 2018 | | June 30, 2018 | | September 30, 2017 |
| (Dollars in thousands) | Average Balance | Interest (1) | Average Rate (2) | | Average Balance | Interest (1) | Average Rate (2) | | Average Balance | Interest (1) | Average Rate (2) |
| Interest-earning assets: | | | | | | | | | | | |
| Gross loans (3) | $ | 1,075,642 |
| $ | 15,107 |
| 5.57 | % | | $ | 1,045,715 |
| $ | 14,126 |
| 5.42 | % | | $ | 965,149 |
| $ | 12,782 |
| 5.25 | % |
| Investment securities (4): |
|
|
| | | | | | | | |
| Taxable | 134,619 |
| 817 |
| 2.41 |
| | 114,957 |
| 667 |
| 2.33 |
| | 83,402 |
| 424 |
| 2.01 |
|
| Tax-exempt | 67,599 |
| 449 |
| 3.13 |
| | 58,976 |
| 380 |
| 3.10 |
| | 42,300 |
| 260 |
| 3.60 |
|
| Interest earning cash balances | 28,685 |
| 157 |
| 2.17 |
| | 25,828 |
| 119 |
| 1.85 |
| | 50,213 |
| 160 |
| 1.27 |
|
| Federal Home Loan Bank Stock | 8,303 |
| 99 |
| 4.73 |
| | 8,303 |
| 88 |
| 4.25 |
| | 8,303 |
| 126 |
| 6.02 |
|
| Total interest-earning assets | $ | 1,314,848 |
| $ | 16,629 |
| 5.04 | % | | $ | 1,253,779 |
| $ | 15,380 |
| 4.94 | % | | $ | 1,149,367 |
| $ | 13,752 |
| 4.79 | % |
| Non-earning assets: | | | | | | | | | | | |
| Cash and due from banks | 22,358 |
| | | | 17,800 |
| | | | 18,905 |
| | |
| Premises and equipment | 13,465 |
| | | | 12,621 |
| | | | 13,846 |
| | |
| Goodwill | 9,387 |
| | | | 9,387 |
| | | | 9,387 |
| | |
| Other intangible assets, net | 533 |
| | | | 589 |
| | | | 761 |
| | |
| Bank-owned life insurance | 11,732 |
| | | | 11,650 |
| | | | 11,406 |
| | |
| Allowance for loan losses | (11,591 | ) | | | | (11,473 | ) | | | | (11,594 | ) | | |
| Other non-earning assets | 7,414 |
| | | | 7,839 |
| | | | 14,039 |
| | |
| Total assets | $ | 1,368,146 |
| | | | $ | 1,302,192 |
| | | | $ | 1,206,117 |
| | |
| Interest-bearing liabilities: | | | | | | | | | | | |
| Interest-bearing demand deposits | $ | 60,022 |
| $ | 52 |
| 0.34 | % | | $ | 64,394 |
| $ | 48 |
| 0.30 | % | | $ | 59,684 |
| $ | 41 |
| 0.27 | % |
| Money market and savings deposits | 249,595 |
| 625 |
| 0.99 |
| | 276,496 |
| 678 |
| 0.98 |
| | 241,819 |
| 405 |
| 0.66 |
|
| Time deposits | 463,373 |
| 2,125 |
| 1.82 |
| | 445,894 |
| 1,761 |
| 1.58 |
| | 375,839 |
| 1,158 |
| 1.22 |
|
| Borrowings | 95,371 |
| 502 |
| 2.09 |
| | 48,604 |
| 225 |
| 1.86 |
| | 74,892 |
| 214 |
| 1.13 |
|
| Subordinated notes | 14,874 |
| 256 |
| 6.83 |
| | 14,859 |
| 253 |
| 6.83 |
| | 14,821 |
| 256 |
| 6.85 |
|
| Total interest-bearing liabilities | $ | 883,235 |
| $ | 3,560 |
| 1.60 | % | | $ | 850,247 |
| $ | 2,965 |
| 1.40 | % | | $ | 767,055 |
| $ | 2,074 |
| 1.07 | % |
| Noninterest-bearing liabilities and shareholders' equity: | | | | | | | | | | | |
| Noninterest bearing demand deposits | 329,459 |
| | | | 306,547 |
| | | | 319,822 |
| | |
| Other liabilities | 9,956 |
| | | | 10,923 |
| | | | 12,939 |
| | |
| Shareholders' equity | 145,496 |
| | | | 134,475 |
| | | | 106,301 |
| | |
| Total liabilities and shareholders' equity | $ | 1,368,146 |
| | | | $ | 1,302,192 |
| | | | $ | 1,206,117 |
| | |
| Net interest income | | $ | 13,069 |
| | | | $ | 12,415 |
| | | | $ | 11,678 |
| |
| Interest spread | | | 3.44 | % | | | | 3.54 | % | | | | 3.72 | % |
| Net interest margin (5) | | | 3.94 |
| | | | 3.97 |
| | | | 4.03 |
|
| Tax equivalent effect | | | 0.03 |
| | | | 0.02 |
| | | | 0.04 |
|
| Net interest margin on a fully tax equivalent basis | | | 3.97 |
| | | | 3.99 |
| | | | 4.07 |
|
(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $84 thousand, $76 thousand and $124 thousand on tax-exempt securities for the three months ended September 30, 2018, June 30, 2018 and September 30, 2017, respectively, using a federal income tax rate of 21% for the 2018 periods and 35% for the 2017 period.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
|
| | | | | | | | | | | | | | | | | |
| | For the nine months ended, |
| | September 30, 2018 | | September 30, 2017 |
| (Dollars in thousands) | Average Balance | Interest (1) | Average Rate (2) | | Average Balance | Interest (1) | Average Rate (2) |
| Interest-earning assets: | | | | | | | |
| Gross loans (3) | $ | 1,052,942 |
| $ | 42,837 |
| 5.44 | % | | $ | 960,445 |
| $ | 38,706 |
| 5.39 | % |
| Investment securities (4): |
|
|
| | | | |
| Taxable | 117,356 |
| 2,057 |
| 2.34 |
| | 80,470 |
| 1,239 |
| 2.06 |
|
| Tax-exempt | 60,570 |
| 1,181 |
| 3.13 |
| | 35,015 |
| 641 |
| 3.61 |
|
| Interest earning cash balances | 27,207 |
| 382 |
| 1.88 |
| | 45,760 |
| 381 |
| 1.11 |
|
| Federal Home Loan Bank Stock | 8,303 |
| 326 |
| 5.25 |
| | 8,116 |
| 266 |
| 4.38 |
|
| Total interest-earning assets | $ | 1,266,378 |
| $ | 46,783 |
| 4.96 | % | | $ | 1,129,806 |
| $ | 41,233 |
| 4.92 | % |
| Non-earning assets: | | | | | | | |
| Cash and due from banks | 19,577 |
| | | | 18,828 |
| | |
| Premises and equipment | 13,150 |
| | | | 14,897 |
| | |
| Goodwill | 9,387 |
| | | | 9,387 |
| | |
| Other intangible assets, net | 588 |
| | | | 819 |
| | |
| Company-owned life insurance | 11,651 |
| | | | 11,324 |
| | |
| Allowance for loan losses | (11,628 | ) | | | | (11,429 | ) | | |
| Other non-earning assets | 9,132 |
| | | | 11,681 |
| | |
| Total assets | $ | 1,318,235 |
| | | | $ | 1,185,313 |
| | |
| Interest-bearing liabilities: | | | | | | | |
| Deposits: | | | | | | | |
| Interest-bearing demand deposits | $ | 62,626 |
| $ | 151 |
| 0.32 | % | | $ | 58,418 |
| $ | 119 |
| 0.27 | % |
| Money market and savings deposits | 266,508 |
| 1,851 |
| 0.93 |
| | 264,389 |
| 1,184 |
| 0.60 |
|
| Time deposits | 455,299 |
| 5,465 |
| 1.60 |
| | 351,073 |
| 3,029 |
| 1.15 |
|
| Borrowings | 67,073 |
| 946 |
| 1.89 |
| | 88,280 |
| 614 |
| 0.93 |
|
| Subordinated notes | 14,859 |
| 759 |
| 6.83 |
| | 14,806 |
| 759 |
| 6.85 |
|
| Total interest-bearing liabilities | $ | 866,365 |
| $ | 9,172 |
| 1.42 | % | | $ | 776,966 |
| $ | 5,705 |
| 0.98 | % |
| Noninterest-bearing liabilities and shareholders' equity: | | | | | | | |
| Noninterest bearing demand deposits | 311,675 |
| | | | 295,413 |
| | |
| Other liabilities | 9,941 |
| | | | 10,396 |
| | |
| Shareholders' equity | 130,254 |
| | | | 102,538 |
| | |
| Total liabilities and shareholders' equity | $ | 1,318,235 |
| | | | $ | 1,185,313 |
| | |
| Net interest income | | $ | 37,611 |
| | | | $ | 35,528 |
| |
| Interest spread | | | 3.54 | % | | | | 3.94 | % |
| Net interest margin (5) | | | 3.97 |
| | | | 4.20 |
|
| Tax equivalent effect | | | 0.02 |
| | | | 0.04 |
|
| Net interest margin on a fully tax equivalent basis | | | 3.99 |
| | | | 4.24 |
|
(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $235 thousand and $306 thousand on tax-exempt securities for the nine months ended September 30, 2018 and September 30, 2017, respectively, using a federal income tax rate of 21% for the 2018 period and 35% for the 2017 period.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.
|
| | | | | | | | | | | | | | | | | | | |
Loan Composition (Unaudited) | As of |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| (Dollars in thousands) | 2018 | | 2018 | | 2018 | | 2017 | | 2017 |
| Commercial real estate | | | | | | | | | |
| Non-owner occupied | $ | 362,450 |
| | $ | 361,341 |
| | $ | 360,014 |
| | $ | 343,420 |
| | $ | 312,644 |
|
| Owner-occupied | 190,131 |
| | 172,615 |
| | 172,608 |
| | 168,342 |
| | 156,690 |
|
| Total commercial real estate | 552,581 |
| | 533,956 |
| | 532,622 |
| | 511,762 |
| | 469,334 |
|
| Commercial and industrial | 397,060 |
| | 363,239 |
| | 371,464 |
| | 377,686 |
| | 380,512 |
|
| Residential real estate | 164,356 |
| | 147,763 |
| | 146,436 |
| | 144,439 |
| | 130,117 |
|
| Consumer | 1,002 |
| | 831 |
| | 832 |
| | 1,036 |
| | 758 |
|
| Total loans | $ | 1,114,999 |
| | $ | 1,045,789 |
| | $ | 1,051,354 |
| | $ | 1,034,923 |
| | $ | 980,721 |
|
|
| | | | | | | | | | | | | | | | | | | |
Impaired Assets (Unaudited) | As of |
| | September 30, | | June 30, | | March 31, | | December 31, | | September 30, |
| (Dollars in thousands) | 2018 | | 2018 | | 2018 | | 2017 | | 2017 |
| Nonaccrual loans | | | | | | | | | |
| Commercial real estate | $ | 4,559 |
| | $ | 2,557 |
| | $ | 1,946 |
| | $ | 2,257 |
| | $ | 1,998 |
|
| Commercial and industrial | 5,763 |
| | 5,983 |
| | 8,192 |
| | 9,024 |
| | 11,911 |
|
| Residential real estate | 2,546 |
| | 2,737 |
| | 2,838 |
| | 2,767 |
| | 1,727 |
|
| Consumer | 5 |
| | — |
| | — |
| | — |
| | — |
|
| Total nonperforming loans | 12,873 |
| | 11,277 |
| | 12,976 |
| | 14,048 |
| | 15,636 |
|
| Other real estate owned | — |
| | — |
| | — |
| | 652 |
| | 384 |
|
| Total nonperforming assets | 12,873 |
| | 11,277 |
| | 12,976 |
| | 14,700 |
| | 16,020 |
|
| Performing troubled debt restructurings |
| | | | | | | | |
| Commercial real estate | 1,511 |
| | 1,517 |
| | 1,525 |
| | — |
| | 287 |
|
| Commercial and industrial | 574 |
| | 578 |
| | 582 |
| | 961 |
| | 975 |
|
| Residential real estate | 365 |
| | 364 |
| | 258 |
| | 261 |
| | 1,049 |
|
| Total performing troubled debt restructurings | 2,450 |
| | 2,459 |
| | 2,365 |
| | 1,222 |
| | 2,311 |
|
| Total impaired assets | $ | 15,323 |
| | $ | 13,736 |
| | $ | 15,341 |
| | $ | 15,922 |
| | $ | 18,331 |
|
| | | | | | | | | | |
| Loans 90 days or more past due and still accruing | $ | 354 |
| | $ | 259 |
| | $ | 263 |
| | $ | 440 |
| | $ | 486 |
|
