HELENA, Mont., April 25, 2023 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the "Company," "Eagle"), the holding company of Opportunity Bank of Montana (the "Bank"), today reported net income of $3.2 million, or $0.42 per diluted share, in the first quarter of 2023, compared to $3.6 million, or $0.47 per diluted share, in the preceding quarter, and $2.2 million, or $0.34 per diluted share, in the first quarter a year ago.
Eagle's board of directors declared a quarterly cash dividend of $0.1375 per share on April 20, 2023. The dividend will be payable June 2, 2023 to shareholders of record May 12, 2023. The current dividend represents an annualized yield of 3.97% based on recent market prices.
"We delivered strong first quarter 2023 earnings, despite the current challenges facing the banking industry," said Laura F. Clark, President and CEO. "First quarter loan growth totaled $23.7 million and was well diversified across our loan categories. Additionally, our acquisition of First Community Bank ("First Community"), which was completed during the second quarter of 2022, is contributing positively to operating results. The transaction was valued at approximately $38.6 million and added approximately $370 million in assets, $321 million in deposits and $191 million in loans. While our outlook for the remainder of 2023 remains cautious, and we anticipate a leaner loan pipeline as recessionary concerns continue and deposit pricing pressures persist, we are well positioned for stable growth in the year ahead."
On January 1, 2023, Eagle implemented the Current Expected Credit Losses ("CECL") standard, which resulted in a $700,000 increase to the allowance for credit losses and was offset in shareholders' equity and deferred tax assets.
First Quarter 2023 Highlights (at or for the three-month period ended March 31, 2023, except where noted):
- Net income was $3.2 million, or $0.42 per diluted share, in the first quarter of 2023, compared to $3.6 million, or $0.47 per diluted share, in the preceding quarter, and $2.2 million, or $0.34 per diluted share, in the first quarter a year ago.
- Net interest margin ("NIM") was 3.86% in the first quarter of 2023, compared to 4.10% in the preceding quarter, and 3.64% in the first quarter a year ago.
- Revenues (net interest income before the provision for credit losses, plus noninterest income) decreased 7.9% to $21.1 million in the first quarter of 2023, compared to $22.9 million in the preceding quarter and increased 8.5% compared to $19.5 million in the first quarter a year ago.
- The Company recorded a discount on loans acquired from First Community of $5.4 million at April 30, 2022 of which $3.8 million remained as of March 31, 2023.
- The remaining discount on loans from acquisitions prior to 2022 totaled $671,000 as of March 31, 2023.
- The accretion of the loan purchase discount into loan interest income from acquisitions, was $354,000 in the first quarter of 2023, compared to accretion on purchased loans from acquisitions of $267,000 in the preceding quarter.
- The allowance for credit losses represented 1.09% of portfolio loans and 134.5% of nonperforming loans at March 31, 2023. The allowance for loan losses represented 1.32% and 202.9% of nonperforming loans at March 31, 2022.
- Total loans increased 43.7% to $1.38 billion, at March 31, 2023, compared to $958.7 million a year earlier, and increased 1.8% compared to $1.35 billion at December 31, 2022.
- Total deposits increased 26.5% to $1.61 billion at March 31, 2023, from $1.27 billion a year ago, and decreased 1.7% compared to $1.64 billion at December 31, 2022.
- Available borrowing capacity was approximately $367.1 million:
| March 31, 2023 | ||||||||||
| (Dollars in thousands) | Borrowings Outstanding | Remaining Borrowing Capacity | ||||||||
| Federal Home Loan Bank advances | $ | 122,530 | $ | 249,100 | ||||||
| Federal Reserve Bank discount window | - | 33,000 | ||||||||
| Correspondent bank lines of credit | - | 85,000 | ||||||||
| Total | $ | 122,530 | $ | 367,100 | ||||||
- The Company paid a quarterly cash dividend in the first quarter of $0.1375 per share on March 3, 2023 to shareholders of record February 10, 2023.
Balance Sheet Results
Eagle's total assets increased 32.9% to $1.98 billion at March 31, 2023, compared to $1.49 billion a year ago, and increased 1.7% from $1.95 billion three months earlier. The year over year increase was impacted by the First Community acquisition that closed during the second quarter of 2022.
The investment securities portfolio totaled $349.4 million at March 31, 2023, compared to $264.6 million a year ago, and $349.5 million at December 31, 2022.
Eagle originated $69.6 million in new residential mortgages during the quarter and sold $62.4 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.53%. This production compares to residential mortgage originations of $95.3 million in the preceding quarter with sales of $107.1 million and an average gross margin on sale of mortgage loans of approximately 2.77%.
Total loans increased $418.7 million or 43.7% compared to a year ago, and $23.7 million or 1.8% from three months earlier. Commercial real estate loans increased 26.0% to $545.6 million at March 31, 2023, compared to $433.0 million a year earlier. Agricultural and farmland loans increased 110.3% to $231.8 million at March 31, 2023, compared to $110.2 million a year earlier. Commercial construction and development loans increased 57.4% to $166.5 million, compared to $105.8 million a year ago. Residential mortgage loans increased 36.8% to $135.7 million, compared to $99.2 million a year earlier. Commercial loans increased 33.2% to $131.2 million, compared to $98.5 million a year ago. Home equity loans increased 45.3% to $78.2 million, residential construction loans increased 49.7% to $61.3 million, and consumer loans increased 53.0% to $28.8 million, compared to a year ago.
Total deposits increased 26.5% to $1.61 billion at March 31, 2023, compared to $1.27 billion at March 31, 2022, and decreased slightly by 1.7% from $1.64 billion at December 31, 2022. Noninterest-bearing checking accounts represented 28.6%, interest-bearing checking accounts represented 14.8%, savings accounts represented 16.1%, money market accounts comprised 20.8% and time certificates of deposit made up 19.7% of the total deposit portfolio at March 31, 2023. The average cost of deposits was 0.62% in the first quarter of 2023, compared to 0.40% in the preceding quarter and 0.10% in the first quarter of 2022.
Shareholders' equity was $164.1 million at March 31, 2023, compared to $143.5 million a year earlier and $158.4 million three months earlier. Book value per share was $20.50 at March 31, 2023, compared to $21.44 a year earlier and $19.79 three months earlier. Tangible book value per share, a non-GAAP financial measure calculated by dividing shareholders' equity, less goodwill and core deposit intangible, by common shares outstanding, was $15.28 at March 31, 2023, compared to $18.08 a year earlier and $14.52 three months earlier.
Operating Results
"NIM expanded 22 basis points during the first quarter of 2023, compared to the first quarter a year ago, as we benefitted from interest rate increases enacted by the Federal Reserve which resulted in higher loan yields. However, higher funding costs led to a 24 basis point reduction in first quarter NIM compared to the preceding quarter," said Clark.
Eagle's NIM was 3.86% in the first quarter of 2023, compared to 4.10% in the preceding quarter, and 3.64% in the first quarter a year ago. The interest accretion on acquired loans totaled $354,000 and resulted in a eight basis-point increase in the NIM during the first quarter of 2023, compared to $267,000 and a six basis-point increase in the NIM during the preceding quarter. Average yields on interest earning assets for the first quarter increased to 4.87% from 4.72% in the fourth quarter of 2022 and 3.92% in the first quarter a year ago.
Eagle's first quarter revenues decreased 7.9% to $21.1 million, compared to $22.9 million in the preceding quarter and increased 8.5% compared to $19.5 million in the first quarter a year ago.
Net interest income, before the provision for credit losses, decreased 6.7% to $16.4 million in the first quarter, compared to $17.6 million in the fourth quarter of 2022, and increased 38.7% compared to $11.8 million in the first quarter of 2022.
Eagle's total noninterest income decreased 11.9% to $4.7 million in the first quarter of 2023, compared to $5.3 million in the preceding quarter, and decreased 38.6% compared to $7.6 million in the first quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $3.1 million in the first quarter of 2023, compared to $3.3 million in the preceding quarter and $6.2 million in the first quarter a year ago.
First quarter noninterest expense decreased 8.9% to $16.5 million, compared to $18.2 million in the preceding quarter and increased 1.7% compared to $16.3 million in the first quarter a year ago.
For the first quarter of 2023, the income tax provision totaled $1.0 million, for an effective tax rate of 24.4%, compared to $787,000 for an effective tax rate of 17.8% in the preceding quarter, and $695,000, for an effective tax rate of 23.9% in the first quarter of 2022.
Credit Quality
Beginning January 1, 2023, the Company adopted Accounting Standards Update No. 2016-13, Financial Instruments - Credit Losses (Topic 326), which replaced the former "incurred loss" model for recognizing credit losses with an "expected loss" model referred to as the CECL model. Utilizing CECL may have an impact on our allowance for credit losses going forward and may result in a lack of comparability between 2023 and 2022 quarterly periods.
The provision for credit losses was $279,000 in the first quarter of 2023, compared to $347,000 in the preceding quarter and $279,000 in the first quarter a year ago. The allowance for credit losses represented 134.5% of nonperforming loans at March 31, 2023, compared to 180.0% three months earlier and 202.9% a year earlier. Nonperforming loans were $11.2 million at March 31, 2023, $7.8 million at December 31, 2022, and $6.3 million a year earlier.
Eagle had no other real estate owned and other repossessed assets on its books at March 31, 2023, or at December 31, 2022. This compared to $346,000 at March 31, 2022.
Net loan recoveries totaled $21,000 in the first quarter of 2023, compared to net loan charge-offs of $197,000 in the preceding quarter and net loan charge-offs of $79,000 in the first quarter a year ago. The allowance for credit losses was $15.0 million, or 1.09% of total loans, at March 31, 2023, compared to $14.0 million, or 1.03% of total loans, at December 31, 2022, and $12.7 million, or 1.32% of total loans, a year ago.
Capital Management
The ratio of tangible common shareholders' equity (shareholders' equity, less goodwill and core deposit intangible) to tangible assets (total assets, less goodwill and core deposit intangible) decreased to 6.30% at March 31, 2023 from 8.24% a year ago and increased from 6.10% three months earlier. Shareholders' equity has been impacted by an accumulated other comprehensive loss related to securities available-for-sale. These unrealized losses are primarily a result of rapid increases in interest rates. As of March 31, 2023, the Bank's regulatory capital was in excess of all applicable regulatory requirements and is deemed well capitalized. The Bank's Tier 1 capital to adjusted total average assets was 9.93% as of March 31, 2023.
Stock Repurchase Authority
Eagle announced that its Board of Directors has authorized the repurchase of up to 400,000 shares of its common stock beginning May 1, 2023, representing approximately 5.0% of outstanding shares. Under the plan, shares may be purchased by the company on the open market or in privately negotiated transactions. The extent to which the Company repurchases its shares and the timing of such repurchase will depend upon market conditions and other corporate considerations. The plan is expected to be in place for approximately 12 months, but may be suspended, terminated or modified by the Company's Board of Directors at any time. The plan does not obligate the Company to purchase any particular number of shares.
About the Company
Eagle Bancorp Montana, Inc. is a bank holding company headquartered in Helena, Montana, and is the holding company of Opportunity Bank of Montana, a community bank established in 1922 that serves consumers and small businesses in Montana through 32 banking offices. Additional information is available on the Bank's website at www.opportunitybank.com. The shares of Eagle Bancorp Montana, Inc. are traded on the NASDAQ Global Market under the symbol "EBMT."
Forward Looking Statements
This release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and may be identified by the use of such words as "believe," "will" "expect," "anticipate," "should," "planned," "estimated," and "potential." These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business plans, prospects, mergers, growth and operating strategies; statements regarding the current global COVID-19 pandemic, statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These factors include, but are not limited to, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; general economic conditions and political events, either nationally or in our market areas, that are worse than expected; the duration and impact of the COVID-19 pandemic, including but not limited to vaccine efficacy and immunization rates, new variants, steps taken by governmental and other authorities to contain, mitigate and combat the pandemic, adverse effects on our employees, customers and third-party service providers, the increase in cyberattacks in the current work-from-home environment, the ultimate extent of the impacts on our business, financial position, results of operations, liquidity and prospects, continued deterioration in general business and economic conditions could adversely affect our revenues and the values of our assets and liabilities, lead to a tightening of credit and increase stock price volatility, and potential impairment charges; the impact of adverse developments affecting the U.S. banking industry, including bank failures and liquidity concerns, which could cause continued or worsening economic and market volatility, and regulatory responses thereto; the possibility that future credit losses may be higher than currently expected due to changes in economic assumptions, customer behavior, adverse developments with respect to U.S. economic conditions and other uncertainties, including the impact of supply chain disruptions, inflationary pressures and labor shortages on economic conditions and our business; an inability to access capital markets or maintain deposits or borrowing costs; competition among depository and other financial institutions; loan demand or residential and commercial real estate values in Montana; the concentration of our business in Montana; our ability to continue to increase and manage our commercial real estate, commercial business and agricultural loans; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, bank operations, consumer or employee litigation); inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets that lead to impairment in the value of our investment securities and goodwill; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; our ability to implement new technologies and maintain secure and reliable technology systems; cyber incidents, or theft or loss of Company or customer data or money; our ability to appropriately address social, environmental, and sustainability concerns that may arise from our business activities; the effect of our recent acquisitions, including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations, the outcome of any legal proceedings and the diversion of management time on issues related to the integration.
Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. All information set forth in this press release is current as of the date of this release and the company undertakes no duty or obligation to update this information.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States, or GAAP, the Financial Ratios and Other Data contains non-GAAP financial measures. Non-GAAP disclosures include: 1) core efficiency ratio, 2) tangible book value per share, 3) tangible common equity to tangible assets, 4) earnings per diluted share, excluding acquisition costs and related taxes and 5) return on average assets, excluding acquisition costs and related taxes. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company's operational performance and performance trends, and to enhance investors' overall understanding of such financial performance. In particular, the use of tangible book value per share and tangible common equity to tangible assets is prevalent among banking regulators, investors and analysts.
The numerator for the core efficiency ratio is calculated by subtracting acquisition costs and intangible asset amortization from noninterest expense. Tangible assets and tangible common shareholders' equity are calculated by excluding intangible assets from assets and shareholders' equity, respectively. For these financial measures, our intangible assets consist of goodwill and core deposit intangible. Tangible book value per share is calculated by dividing tangible common shareholders' equity by the number of common shares outstanding. We believe that this measure is consistent with the capital treatment by our bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios and present this measure to facilitate the comparison of the quality and composition of our capital over time and in comparison, to our competitors.
Non-GAAP financial measures have inherent limitations, are not required to be 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. Further, the non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders' equity determined in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Reconciliation of the GAAP and non-GAAP financial measures are presented below.
| Balance Sheet | ||||||||||||
| (Dollars in thousands, except per share data) | (Unaudited) | |||||||||||
| March 31, | December 31, | March, 31 | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| Assets: | ||||||||||||
| Cash and due from banks | $ | 18,087 | $ | 19,321 | $ | 17,516 | ||||||
| Interest bearing deposits in banks | 1,348 | 2,490 | 62,697 | |||||||||
| Federal funds sold | - | - | 14,889 | |||||||||
| Total cash and cash equivalents | 19,435 | 21,811 | 95,102 | |||||||||
| Securities available-for-sale | 349,423 | 349,495 | 264,635 | |||||||||
| Federal Home Loan Bank ("FHLB") stock | 7,360 | 5,089 | 1,723 | |||||||||
| Federal Reserve Bank ("FRB") stock | 4,131 | 4,131 | 2,974 | |||||||||
| Mortgage loans held-for-sale, at fair value | 9,927 | 8,250 | 22,295 | |||||||||
| Loans: | ||||||||||||
| Real estate loans: | ||||||||||||
| Residential 1-4 family | 135,714 | 135,947 | 99,242 | |||||||||
| Residential 1-4 family construction | 61,333 | 59,756 | 40,968 | |||||||||
| Commercial real estate | 545,631 | 539,070 | 432,976 | |||||||||
| Commercial construction and development | 166,461 | 151,145 | 105,754 | |||||||||
| Farmland | 139,283 | 136,334 | 60,363 | |||||||||
| Other loans: | ||||||||||||
| Home equity | 78,209 | 74,271 | 53,828 | |||||||||
| Consumer | 28,812 | 27,609 | 18,834 | |||||||||
| Commercial | 131,179 | 127,255 | 98,471 | |||||||||
| Agricultural | 92,471 | 104,036 | 49,836 | |||||||||
| Unearned loan fees | (1,670 | ) | (1,745 | ) | (1,591 | ) | ||||||
| Total loans | 1,377,423 | 1,353,678 | 958,681 | |||||||||
| Allowance for credit losses (1) | (15,000 | ) | (14,000 | ) | (12,700 | ) | ||||||
| Net loans | 1,362,423 | 1,339,678 | 945,981 | |||||||||
| Accrued interest and dividends receivable | 10,427 | 11,284 | 5,750 | |||||||||
| Mortgage servicing rights, net | 15,875 | 15,412 | 14,288 | |||||||||
| Assets held-for-sale, at fair value | 1,305 | 1,305 | - | |||||||||
| Premises and equipment, net | 86,614 | 84,323 | 69,536 | |||||||||
| Cash surrender value of life insurance, net | 47,985 | 47,724 | 36,681 | |||||||||
| Goodwill | 34,740 | 34,740 | 20,798 | |||||||||
| Core deposit intangible, net | 7,043 | 7,459 | 1,660 | |||||||||
| Other assets | 25,648 | 17,683 | 10,630 | |||||||||
| Total assets | $ | 1,982,336 | $ | 1,948,384 | $ | 1,492,053 | ||||||
| Liabilities: | ||||||||||||
| Deposit accounts: | ||||||||||||
| Noninterest bearing | 460,195 | 468,955 | 371,818 | |||||||||
| Interest bearing | 1,147,343 | 1,166,317 | 898,758 | |||||||||
| Total deposits | 1,607,538 | 1,635,272 | 1,270,576 | |||||||||
| Accrued expenses and other liabilities | 29,265 | 26,458 | 18,968 | |||||||||
| FHLB advances and other borrowings | 122,530 | 69,394 | - | |||||||||
| Other long-term debt, net | 58,887 | 58,844 | 58,986 | |||||||||
| Total liabilities | 1,818,220 | 1,789,968 | 1,348,530 | |||||||||
| Shareholders' Equity: | ||||||||||||
| Preferred stock (par value $0.01 per share; 1,000,000 shares | ||||||||||||
| authorized; no shares issued or outstanding) | - | - | - | |||||||||
| Common stock (par value $0.01; 20,000,000 shares authorized; | ||||||||||||
| 8,507,429, 8,507,429 and 7,110,833 shares issued; 8,006,033, | ||||||||||||
| 8,006,033 and 6,694,811 shares outstanding at March 31, 2023, | ||||||||||||
| December 31, 2022 and March 31, 2022, respectively | 85 | 85 | 71 | |||||||||
| Additional paid-in capital | 109,265 | 109,164 | 80,960 | |||||||||
| Unallocated common stock held by Employee Stock Ownership Plan | (5,013 | ) | (5,156 | ) | (5,586 | ) | ||||||
| Treasury stock, at cost (501,396, 501,396 and 416,022 shares at | ||||||||||||
| March 31, 2023, December 31, 2022 and March 31, 2022, respectively) | (11,343 | ) | (11,343 | ) | (9,592 | ) | ||||||
| Retained earnings | 93,647 | 92,023 | 86,750 | |||||||||
| Accumulated other comprehensive loss, net of tax | (22,525 | ) | (26,357 | ) | (9,080 | ) | ||||||
| Total shareholders' equity | 164,116 | 158,416 | 143,523 | |||||||||
| Total liabilities and shareholders' equity | $ | 1,982,336 | $ | 1,948,384 | $ | 1,492,053 | ||||||
| (1) Allowance for credit losses on loans at March 31, 2023; allowance for loan losses for prior periods. | ||||||||||||
| Income Statement | (Unaudited) | |||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | |||||||||||
| March 31, | December 31, | March 31, | ||||||||||
| 2023 | 2022 | 2022 | ||||||||||
| Interest and dividend income: | ||||||||||||
| Interest and fees on loans | $ | 17,737 | $ | 17,420 | $ | 11,373 | ||||||
| Securities available-for-sale | 2,843 | 2,716 | 1,297 | |||||||||
| FRB and FHLB dividends | 107 | 142 | 59 | |||||||||
| Other interest income | 21 | 22 | 39 | |||||||||
| Total interest and dividend income | 20,708 | 20,300 | 12,768 | |||||||||
| Interest expense: | ||||||||||||
| Interest expense on deposits | 2,460 | 1,673 | 312 | |||||||||
| FHLB advances and other borrowings | 1,142 | 357 | 6 | |||||||||
| Other long-term debt | 678 | 657 | 605 | |||||||||
| Total interest expense | 4,280 | 2,687 | 923 | |||||||||
| Net interest income | 16,428 | 17,613 | 11,845 | |||||||||
| Provision for credit losses (1) | 279 | 347 | 279 | |||||||||
| Net interest income after provision for credit losses | 16,149 | 17,266 | 11,566 | |||||||||
| Noninterest income: | ||||||||||||
| Service charges on deposit accounts | 339 | 445 | 331 | |||||||||
| Mortgage banking, net | 3,050 | 3,306 | 6,245 | |||||||||
| Interchange and ATM fees | 577 | 707 | 453 | |||||||||
| Appreciation in cash surrender value of life insurance | 280 | 287 | 207 | |||||||||
| Net loss on sale of available-for-sale securities | (224 | ) | - | - | ||||||||
| Other noninterest income | 649 | 555 | 372 | |||||||||
| Total noninterest income | 4,671 | 5,300 | 7,608 | |||||||||
| Noninterest expense: | ||||||||||||
| Salaries and employee benefits | 9,693 | 11,010 | 10,381 | |||||||||
| Occupancy and equipment expense | 2,073 | 2,160 | 1,678 | |||||||||
| Data processing | 1,212 | 1,367 | 1,251 | |||||||||
| Advertising | 281 | 367 | 285 | |||||||||
| Amortization | 418 | 439 | 122 | |||||||||
| Loan costs | 445 | 412 | 546 | |||||||||
| FDIC insurance premiums | 168 | 229 | 93 | |||||||||
| Professional and examination fees | 484 | 371 | 322 | |||||||||
| Acquisition costs | - | - | 317 | |||||||||
| Other noninterest expense | 1,759 | 1,802 | 1,268 | |||||||||
| Total noninterest expense | 16,533 | 18,157 | 16,263 | |||||||||
| Income before provision for income taxes | 4,287 | 4,409 | 2,911 | |||||||||
| Provision for income taxes | 1,045 | 787 | 695 | |||||||||
| Net income | $ | 3,242 | $ | 3,622 | $ | 2,216 | ||||||
| Basic earnings per share | $ | 0.42 | $ | 0.47 | $ | 0.34 | ||||||
| Diluted earnings per share | $ | 0.42 | $ | 0.47 | $ | 0.34 | ||||||
| Basic weighted average shares outstanding | 7,790,188 | 7,776,145 | 6,506,133 | |||||||||
| Diluted weighted average shares outstanding | 7,792,467 | 7,777,552 | 6,518,847 | |||||||||
| (1) Provision for credit losses on loans for the quarter ended March 31, 2023; provision for loan losses for prior periods. | ||||||||||||
| ADDITIONAL FINANCIAL INFORMATION | (Unaudited) | ||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | ||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| Mortgage Banking Activity (For the quarter): | |||||||||||
| Net gain on sale of mortgage loans | $ | 2,203 | $ | 2,965 | $ | 6,233 | |||||
| Net change in fair value of loans held-for-sale and derivatives | (19 | ) | (509 | ) | (535 | ) | |||||
| Mortgage servicing income, net | 866 | 850 | 547 | ||||||||
| Mortgage banking, net | $ | 3,050 | $ | 3,306 | $ | 6,245 | |||||
| Performance Ratios (For the quarter): | |||||||||||
| Return on average assets | 0.67 | % | 0.75 | % | 0.60 | % | |||||
| Return on average equity | 7.99 | % | 9.38 | % | 5.79 | % | |||||
| Yield on average interest earning assets | 4.87 | % | 4.72 | % | 3.92 | % | |||||
| Cost of funds | 1.33 | % | 0.85 | % | 0.40 | % | |||||
| Net interest margin | 3.86 | % | 4.10 | % | 3.64 | % | |||||
| Core efficiency ratio* | 76.38 | % | 77.33 | % | 81.34 | % | |||||
| * The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of acquisition | |||||||||||
| costs and intangible asset amortization, by the sum of net interest income and non-interest income. | |||||||||||
| ADDITIONAL FINANCIAL INFORMATION | |||||||||||
| (Dollars in thousands, except per share data) | |||||||||||
| (Unaudited) | |||||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | ||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| Nonaccrual loans | $ | 4,865 | $ | 2,200 | $ | 3,379 | |||||
| Loans 90 days past due and still accruing | 1,247 | 1,076 | 270 | ||||||||
| Restructured loans, net | 5,041 | 4,502 | 2,611 | ||||||||
| Total nonperforming loans | 11,153 | 7,778 | 6,260 | ||||||||
| Other real estate owned and other repossessed assets | - | - | 346 | ||||||||
| Total nonperforming assets | $ | 11,153 | $ | 7,778 | $ | 6,606 | |||||
| Nonperforming loans / portfolio loans | 0.81 | % | 0.57 | % | 0.65 | % | |||||
| Nonperforming assets / assets | 0.56 | % | 0.40 | % | 0.44 | % | |||||
| Allowance for credit losses / portfolio loans | 1.09 | % | 1.03 | % | 1.32 | % | |||||
| Allowance for credit losses/ nonperforming loans | 134.49 | % | 179.99 | % | 202.88 | % | |||||
| Gross loan charge-offs for the quarter | $ | 1 | $ | 216 | $ | 92 | |||||
| Gross loan recoveries for the quarter | $ | 22 | $ | 19 | $ | 13 | |||||
| Net loan (recoveries) charge-offs for the quarter | $ | (21 | ) | $ | 197 | $ | 79 | ||||
| March 31, | December 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| Capital Data (At quarter end): | |||||||||||
| Common shareholders' equity (book value) per share | $ | 20.50 | $ | 19.79 | $ | 21.44 | |||||
| Tangible book value per share** | $ | 15.28 | $ | 14.52 | $ | 18.08 | |||||
| Shares outstanding | 8,006,033 | 8,006,033 | 6,694,811 | ||||||||
| Tangible common equity to tangible assets*** | 6.30 | % | 6.10 | % | 8.24 | % | |||||
| Other Information: | |||||||||||
| Average investment securities for the quarter | $ | 345,033 | $ | 348,267 | $ | 273,004 | |||||
| Average investment securities year-to-date | $ | 345,033 | $ | 336,779 | $ | 273,004 | |||||
| Average loans for the quarter **** | $ | 1,366,766 | $ | 1,345,776 | $ | 974,177 | |||||
| Average loans year-to-date **** | $ | 1,366,766 | $ | 1,194,788 | $ | 974,177 | |||||
| Average earning assets for the quarter | $ | 1,724,802 | $ | 1,705,349 | $ | 1,319,999 | |||||
| Average earning assets year-to-date | $ | 1,724,802 | $ | 1,572,106 | $ | 1,319,999 | |||||
| Average total assets for the quarter | $ | 1,947,086 | $ | 1,934,002 | $ | 1,475,049 | |||||
| Average total assets year-to-date | $ | 1,947,086 | $ | 1,768,919 | $ | 1,475,049 | |||||
| Average deposits for the quarter | $ | 1,605,566 | $ | 1,655,298 | $ | 1,237,341 | |||||
| Average deposits year-to-date | $ | 1,605,566 | $ | 1,514,158 | $ | 1,237,341 | |||||
| Average equity for the quarter | $ | 162,290 | $ | 154,409 | $ | 153,203 | |||||
| Average equity year-to-date | $ | 162,290 | $ | 155,655 | $ | 153,203 | |||||
| ** The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, | |||||||||||
| less goodwill and core deposit intangible, by common shares outstanding. | |||||||||||
| *** The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' | |||||||||||
| equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible. | |||||||||||
| **** Includes loans held for sale | |||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||
| Core Efficiency Ratio | (Unaudited) | ||||||||||||
| (Dollars in thousands) | Three Months Ended | ||||||||||||
| March 31, | December 31, | March 31, | |||||||||||
| 2023 | 2022 | 2022 | |||||||||||
| Calculation of Core Efficiency Ratio: | |||||||||||||
| Noninterest expense | $ | 16,533 | $ | 18,157 | $ | 16,263 | |||||||
| Acquisition costs | - | - | (317 | ) | |||||||||
| Intangible asset amortization | (418 | ) | (439 | ) | (122 | ) | |||||||
| Core efficiency ratio numerator | 16,115 | 17,718 | 15,824 | ||||||||||
| Net interest income | 16,428 | 17,613 | 11,845 | ||||||||||
| Noninterest income | 4,671 | 5,300 | 7,608 | ||||||||||
| Core efficiency ratio denominator | 21,099 | 22,913 | 19,453 | ||||||||||
| Core efficiency ratio (non-GAAP) | 76.38 | % | 77.33 | % | 81.34 | % | |||||||
| Tangible Book Value and Tangible Assets | (Unaudited) | |||||||||||
| (Dollars in thousands, except per share data) | March 31, | December 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | ||||||||||
| Tangible Book Value: | ||||||||||||
| Shareholders' equity | $ | 164,116 | $ | 158,416 | $ | 143,523 | ||||||
| Goodwill and core deposit intangible, net | (41,783 | ) | (42,199 | ) | (22,458 | ) | ||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 122,333 | $ | 116,217 | $ | 121,065 | ||||||
| Common shares outstanding at end of period | 8,006,033 | 8,006,033 | 6,694,811 | |||||||||
| Common shareholders' equity (book value) per share (GAAP) | $ | 20.50 | $ | 19.79 | $ | 21.44 | ||||||
| Tangible common shareholders' equity (tangible book value) | ||||||||||||
| per share (non-GAAP) | $ | 15.28 | $ | 14.52 | $ | 18.08 | ||||||
| Tangible Assets: | ||||||||||||
| Total assets | $ | 1,982,336 | $ | 1,948,384 | $ | 1,492,053 | ||||||
| Goodwill and core deposit intangible, net | (41,783 | ) | (42,199 | ) | (22,458 | ) | ||||||
| Tangible assets (non-GAAP) | $ | 1,940,553 | $ | 1,906,185 | $ | 1,469,595 | ||||||
| Tangible common shareholders' equity to tangible assets | ||||||||||||
| (non-GAAP) | 6.30 | % | 6.10 | % | 8.24 | % | ||||||
| Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes | (Unaudited) | ||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | ||||||||||
| March 31, | December 31, | March 31, | |||||||||
| 2023 | 2022 | 2022 | |||||||||
| Net interest income after provision for credit losses | $ | 16,149 | $ | 17,266 | $ | 11,566 | |||||
| Noninterest income | 4,671 | 5,300 | 7,608 | ||||||||
| Noninterest expense | 16,533 | 18,157 | 16,263 | ||||||||
| Acquisition costs | - | - | (317 | ) | |||||||
| Noninterest expense, excluding acquisition costs (non-GAAP) | 16,533 | 18,157 | 15,946 | ||||||||
| Income before income taxes, excluding acquisition costs | 4,287 | 4,409 | 3,228 | ||||||||
| Provision for income taxes, excluding acquisition costs | |||||||||||
| related taxes (non-GAAP) | 1,045 | 787 | 771 | ||||||||
| Net Income, excluding acquisition costs and related taxes (non-GAAP) | $ | 3,242 | $ | 3,622 | $ | 2,457 | |||||
| Diluted earnings per share (GAAP) | $ | 0.42 | $ | 0.47 | $ | 0.34 | |||||
| Diluted earnings per share, excluding acquisition costs and related | |||||||||||
| taxes (non-GAAP) | $ | 0.42 | $ | 0.47 | $ | 0.38 | |||||
| Return on Average Assets, Excluding Acquisition Costs and Related Taxes | (Unaudited) | ||||||||||
| (Dollars in thousands) | March 31, | December 31, | March 31, | ||||||||
| 2023 | 2022 | 2022 | |||||||||
| For the quarter: | |||||||||||
| Net income, excluding acquisition costs and related taxes (non-GAAP)* | $ | 3,242 | $ | 3,622 | $ | 2,457 | |||||
| Average total assets quarter-to-date | $ | 1,947,086 | $ | 1,934,002 | $ | 1,475,049 | |||||
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.67 | % | 0.75 | % | 0.67 | % | |||||
| Year-to-date: | |||||||||||
| Net income, excluding acquisition costs and related taxes (non-GAAP)* | $ | 3,242 | $ | 12,475 | $ | 2,457 | |||||
| Average total assets year-to-date | $ | 1,947,086 | $ | 1,768,919 | $ | 1,475,049 | |||||
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.67 | % | 0.71 | % | 0.67 | % | |||||
| * See Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes table for GAAP to non-GAAP reconciliation. | |||||||||||
Contacts:
Laura F. Clark, President and CEO
(406) 457-4007
Miranda J. Spaulding, SVP and CFO
(406) 441-5010
