HELENA, Mont., Oct. 24, 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 $2.6 million, or $0.34 per diluted share, in the third quarter of 2023, compared to $2.0 million, or $0.26 per diluted share, in the preceding quarter, and $3.1 million, or $0.40 per diluted share, in the third quarter of 2022. In the first nine months of 2023, net income increased 11.5% to $7.9 million, or $1.01 per diluted share, compared to $7.1 million, or $0.98 per diluted share, in the first nine months of 2022.
Eagle's board of directors declared a quarterly cash dividend to $0.14 per share on October 19, 2023. The dividend will be payable December 1, 2023 to shareholders of record November 10, 2023. The current dividend represents an annualized yield of 4.81% based on recent market prices.
"We delivered solid third quarter earnings, fueled by net interest income generation and higher loan production," said Laura F. Clark, President and CEO. "Total loans increased $163.6 million, or 12.5%, over the last 12 months, while growing $54.3 million, or 3.8%, on the linked quarter. We were encouraged by loan demand during the third quarter, and remain positive about the opportunities in our markets, as loan pipelines and overall business activity remain solid. While the high interest rate environment continues to impact funding costs and our net interest margin, we are well positioned with a strong balance sheet to weather the remainder of this economic cycle."
Third Quarter 2023 Highlights (at or for the three-month period ended September 30, 2023, except where noted):
- Net income was $2.6 million, or $0.34 per diluted share, in the third quarter of 2023, compared to $2.0 million, or $0.26 per diluted share, in the preceding quarter, and $3.1 million, or $0.40 per diluted share, in the third quarter a year ago.
- Net interest margin ("NIM") was 3.41% in the third quarter of 2023, compared to 3.47% in the preceding quarter, and 4.18% in the third quarter a year ago.
- Revenues (net interest income before the provision for credit losses, plus noninterest income) were $21.6 million in the third quarter of 2023, compared to $21.5 million in the preceding quarter and $25.3 million in the third quarter a year ago.
- The accretion of the loan purchase discount into loan interest income from acquisitions, was $175,000 in the third quarter of 2023, compared to accretion on purchased loans from acquisitions of $309,000 in the preceding quarter.
- The allowance for credit losses represented 1.10% of portfolio loans and 209.3% of nonperforming loans at September 30, 2023. The allowance for loan losses represented 1.06% of portfolio loans and 306.4% of nonperforming loans at September 30, 2022.
- Total loans increased 12.5% to $1.48 billion, at September 30, 2023, compared to $1.31 billion a year earlier, and increased 3.8% compared to $1.42 billion at June 30, 2023.
- Total deposits decreased 3.5% to $1.62 billion at September 30, 2023, from $1.67 billion a year ago, and increased 2.4% compared to $1.58 billion at June 30, 2023.
- Available borrowing capacity was approximately $333.4 million:
| September 30, 2023 | |||||||
| (Dollars in thousands) | Borrowings Outstanding | Remaining Borrowing Capacity | |||||
| Federal Home Loan Bank advances | $ | 199,757 | $ | 216,430 | |||
| Federal Reserve Bank discount window | - | 32,000 | |||||
| Correspondent bank lines of credit | - | 85,000 | |||||
| Total | $ | 199,757 | $ | 333,430 | |||
- The Company paid a quarterly cash dividend in the third quarter of $0.14 per share on September 1, 2023 to shareholders of record August 11, 2023.
Balance Sheet Results
Eagle's total assets increased 7.2% to $2.06 billion at September 30, 2023, compared to $1.92 billion a year ago, and increased 2.0% from $2.02 billion three months earlier. The investment securities portfolio totaled $308.8 million at September 30, 2023, compared to $351.9 million a year ago, and $326.0 million at June 30, 2023.
Eagle originated $114.1 million in new residential mortgages during the quarter and sold $109.0 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.29%. This production compares to residential mortgage originations of $101.9 million in the preceding quarter with sales of $84.8 million and an average gross margin on sale of mortgage loans of approximately 3.25%.
Total loans increased $163.6 million, or 12.5%, compared to a year ago, and $54.3 million, or 3.8%, from three months earlier. Commercial real estate loans increased 20.8% to $612.0 million at September 30, 2023, compared to $506.7 million a year earlier. Agricultural and farmland loans increased 14.0% to $274.1 million at September 30, 2023, compared to $240.5 million a year earlier. Commercial construction and development loans increased 4.3% to $151.6 million, compared to $145.3 million a year ago. Residential mortgage loans increased 6.6% to $146.9 million, compared to $137.8 million a year earlier. Commercial loans decreased slightly to $130.0 million, compared to $131.0 million a year ago. Home equity loans increased 23.5% to $83.2 million, residential construction loans decreased 16.2% to $48.1 million, and consumer loans increased 7.7% to $29.8 million, compared to a year ago.
Total deposits decreased 3.5% to $1.62 billion at September 30, 2023, compared to $1.67 billion at September 30, 2022, and increased by 2.4% from $1.58 billion at June 30, 2023. Noninterest-bearing checking accounts represented 27.0%, interest-bearing checking accounts represented 14.0%, savings accounts represented 14.4%, money market accounts comprised 20.2% and time certificates of deposit made up 24.4% of the total deposit portfolio at September 30, 2023. The average cost of deposits was 1.28% in the third quarter of 2023, compared to 1.05% in the preceding quarter and 0.17% in the third quarter of 2022. The estimated amount of uninsured deposits at September 30, 2023 was $283.3 million, or 17% of total deposits, compared to $289.1 million, or 18% of total deposits, at June 30, 2023.
"We are encouraged by the stabilization of our deposit base. While competition in our markets remains fierce, and deposit pricing pressures continue to impact the overall cost of funds, we anticipate deposit rates to increase modestly and start to stabilize over the next few quarters," said Miranda Spaulding, CFO.
Shareholders' equity was $157.3 million at September 30, 2023, compared to $151.3 million a year earlier and $162.7 million three months earlier. Book value per share was $19.69 at September 30, 2023, compared to $18.94 a year earlier and $20.37 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 $14.55 at September 30, 2023, compared to $13.60 a year earlier and $15.19 three months earlier.
Operating Results
"As anticipated, higher funding costs outpaced asset yields during the quarter, resulting in a six basis-point reduction in NIM during the third quarter, compared to the preceding quarter," said Clark. "However, NIM contraction has begun to slow down, and we anticipate funding costs will continue to stabilize over the next few quarters."
Eagle's NIM was 3.41% in the third quarter of 2023, compared to 3.47% in the preceding quarter, and 4.18% in the third quarter a year ago. The interest accretion on acquired loans totaled $175,000 and resulted in a four basis-point increase in the NIM during the third quarter of 2023, compared to $309,000 and a seven basis-point increase in the NIM during the preceding quarter. Funding costs for the third quarter increased to 2.37% compared to 2.06% in the second quarter of 2023 and 0.47% in the third quarter of 2022. Average yields on interest earning assets for the third quarter increased to 5.27% from 5.06% in the second quarter of 2023 and 4.52% in the third quarter a year ago. For the first nine months of 2023, the NIM was 3.57% compared to 4.00% for the first nine months of 2022.
Third quarter revenues increased 0.7% to $21.6 million, compared to $21.5 million in the preceding quarter and decreased 14.6% compared to $25.3 million in the third quarter a year ago. In the first nine months of 2023, revenues were $64.2 million, compared to $68.8 million in the first nine months of 2022. The decrease compared to the first nine months a year ago was largely due to lower volumes in mortgage banking activity.
Eagle's net interest income, before the provision for credit losses, increased 2.1% to $15.6 million in the third quarter of 2023, compared to $15.3 million in the second quarter of 2023, and decreased 12.9% compared to $17.9 million in the third quarter of 2022. Year-to-date, net interest income increased 3.5% to $47.3 million, compared to $45.7 million in the same period one year earlier.
Total noninterest income decreased 2.7% to $6.0 million in the third quarter of 2023, compared to $6.2 million in the preceding quarter, and decreased 18.6% compared to $7.4 million in the third quarter a year ago. Net mortgage banking, the largest component of noninterest income, totaled $4.3 million in the third quarter of 2023, compared to $3.9 million in the preceding quarter and $4.4 million in the third quarter a year ago. In the first nine months of 2023, noninterest income decreased 26.6% to $16.9 million, compared to $23.1 million in the first nine months of 2022. Net mortgage banking revenue decreased 30.5% to $11.3 million in the first nine months of 2023, compared to $16.2 million in the first nine months of 2022. These decreases were largely driven by a decline in net gain on sale of mortgage loans. This was impacted by lower loan volumes and margin compression.
Third quarter noninterest expense decreased 4.9% to $17.9 million, compared to $18.8 million in the preceding quarter and decreased 13.5% compared to $20.7 million in the third quarter a year ago. In the first nine months of 2023, noninterest expense decreased 7.7% to $53.2 million, compared to $57.7 million in the first nine months of 2022. The decrease year-over-year was largely due to acquisition costs in the first nine months of 2022.
For the third quarter of 2023, the income tax provision totaled $524,000, for an effective tax rate of 16.6%, compared to $344,000 for an effective tax rate of 14.6% in the preceding quarter, and $1.0 million, for an effective tax rate of 25.0% in the third quarter of 2022. The year-to-date effective tax rate was 19.5% for 2023 compared to 25.0% for the same period in 2022. The anticipated effective tax rate for 2023 is lower due to the increase in proportion of tax exempt income compared to the pretax earnings.
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. The adoption resulted in a $700,000 increase to the allowance for credit losses, a $1.5 million increase to the allowance for unfunded loan commitments, and a net-of-tax cumulative effect adjustment of $1.6 million which decreased the beginning balance of retained earnings.
The provision for credit losses was $588,000 in the third quarter of 2023, compared to $319,000 in the preceding quarter and $517,000 in the third quarter a year ago. The allowance for credit losses represented 209.3% of nonperforming loans at September 30, 2023, compared to 156.7% three months earlier and 306.4% a year earlier. Nonperforming loans were $7.8 million at September 30, 2023, $9.9 million at June 30, 2023, and $4.5 million a year earlier.
Eagle had no other real estate owned and other repossessed assets on its books at September 30, 2023, June 30, 2023 or September 30, 2022.
Net loan charge-offs totaled $108,000 in the third quarter of 2023, compared to net loan recoveries of $151,000 in the preceding quarter and net loan recoveries of $8,000 in the third quarter a year ago. The allowance for credit losses was $16.2 million, or 1.10% of total loans, at September 30, 2023, compared to $15.6 million, or 1.09% of total loans, at June 30, 2023, and $13.9 million, or 1.06% 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 5.75% at September 30, 2023 from 5.77% a year ago and 6.12% 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 September 30, 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 9.68% as of September 30, 2023.
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 31 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 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 emergence or continuation of widespread health emergencies or pandemics including the magnitude and duration 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 financial measures 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) | ||||||||||||||
| September 30, | June 30, | September 30, | |||||||||||||
| 2023 | 2023 | 2022 | |||||||||||||
| Assets: | |||||||||||||||
| Cash and due from banks | $ | 19,743 | $ | 21,878 | $ | 22,154 | |||||||||
| Interest bearing deposits in banks | 1,040 | 1,116 | 3,043 | ||||||||||||
| Total cash and cash equivalents | 20,783 | 22,994 | 25,197 | ||||||||||||
| Securities available-for-sale | 308,786 | 325,964 | 351,949 | ||||||||||||
| Federal Home Loan Bank ("FHLB") stock | 10,438 | 10,099 | 2,939 | ||||||||||||
| Federal Reserve Bank ("FRB") stock | 4,131 | 4,131 | 4,206 | ||||||||||||
| Mortgage loans held-for-sale, at fair value | 17,880 | 22,381 | 24,408 | ||||||||||||
| Loans: | |||||||||||||||
| Real estate loans: | |||||||||||||||
| Residential 1-4 family | 146,938 | 133,437 | 137,798 | ||||||||||||
| Residential 1-4 family construction | 48,135 | 49,516 | 57,467 | ||||||||||||
| Commercial real estate | 611,963 | 577,736 | 506,716 | ||||||||||||
| Commercial construction and development | 151,614 | 158,519 | 145,300 | ||||||||||||
| Farmland | 143,789 | 139,290 | 129,827 | ||||||||||||
| Other loans: | |||||||||||||||
| Home equity | 83,221 | 80,333 | 67,409 | ||||||||||||
| Consumer | 29,832 | 30,065 | 27,703 | ||||||||||||
| Commercial | 129,952 | 129,084 | 130,975 | ||||||||||||
| Agricultural | 130,329 | 123,503 | 110,633 | ||||||||||||
| Unearned loan fees (1) | - | - | (1,674 | ) | |||||||||||
| Total loans | 1,475,773 | 1,421,483 | 1,312,154 | ||||||||||||
| Allowance for credit losses (2) | (16,230 | ) | (15,560 | ) | (13,850 | ) | |||||||||
| Net loans | 1,459,543 | 1,405,923 | 1,298,304 | ||||||||||||
| Accrued interest and dividends receivable | 13,657 | 11,194 | 10,778 | ||||||||||||
| Mortgage servicing rights, net | 15,738 | 15,501 | 15,141 | ||||||||||||
| Assets held-for-sale, at fair value | - | 323 | 2,041 | ||||||||||||
| Premises and equipment, net | 92,979 | 88,760 | 79,374 | ||||||||||||
| Cash surrender value of life insurance, net | 47,647 | 47,520 | 45,845 | ||||||||||||
| Goodwill | 34,740 | 34,740 | 34,740 | ||||||||||||
| Core deposit intangible, net | 6,264 | 6,648 | 7,895 | ||||||||||||
| Other assets | 30,478 | 27,101 | 21,103 | ||||||||||||
| Total assets | $ | 2,063,064 | $ | 2,023,279 | $ | 1,923,920 | |||||||||
| Liabilities: | |||||||||||||||
| Deposit accounts: | |||||||||||||||
| Noninterest bearing | 435,655 | 432,463 | 507,034 | ||||||||||||
| Interest bearing | 1,179,823 | 1,145,904 | 1,167,216 | ||||||||||||
| Total deposits | 1,615,478 | 1,578,367 | 1,674,250 | ||||||||||||
| Accrued expenses and other liabilities | 31,597 | 32,002 | 23,748 | ||||||||||||
| FHLB advances and other borrowings | 199,757 | 191,260 | 15,600 | ||||||||||||
| Other long-term debt, net | 58,962 | 58,925 | 59,048 | ||||||||||||
| Total liabilities | 1,905,794 | 1,860,554 | 1,772,646 | ||||||||||||
| 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 shares issued; 7,988,132, 7,988,132 and 7,986,890 | |||||||||||||||
| shares outstanding at September, 30, 2023, June 30, 2023, and | |||||||||||||||
| September 30, 2022, respectively | 85 | 85 | 85 | ||||||||||||
| Additional paid-in capital | 109,422 | 109,345 | 109,488 | ||||||||||||
| Unallocated common stock held by Employee Stock Ownership Plan | (4,727 | ) | (4,870 | ) | (5,300 | ) | |||||||||
| Treasury stock, at cost (519,297, 519,297 and 520,539 shares at | |||||||||||||||
| September 30, 2023, June 30, 2023 and September 30, 2022, respectively) | (11,574 | ) | (11,574 | ) | (11,627 | ) | |||||||||
| Retained earnings | 94,979 | 93,462 | 89,502 | ||||||||||||
| Accumulated other comprehensive loss, net of tax | (30,915 | ) | (23,723 | ) | (30,874 | ) | |||||||||
| Total shareholders' equity | 157,270 | 162,725 | 151,274 | ||||||||||||
| Total liabilities and shareholders' equity | $ | 2,063,064 | $ | 2,023,279 | $ | 1,923,920 | |||||||||
| (1) Unearned loan fees are included in individual loan categories for September 30, 2023 and June 30, 2023. | |||||||||||||||
| (2) Allowance for credit losses on loans at September 30, 2023 and June 30, 2023; allowance for loan losses for prior periods. | |||||||||||||||
| Income Statement | (Unaudited) | (Unaudited) | |||||||||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||
| Interest and dividend income: | |||||||||||||||||||
| Interest and fees on loans | $ | 21,068 | $ | 19,137 | $ | 16,665 | $ | 57,942 | $ | 42,933 | |||||||||
| Securities available-for-sale | 2,794 | 2,949 | 2,555 | 8,586 | 5,863 | ||||||||||||||
| FRB and FHLB dividends | 212 | 161 | 63 | 480 | 160 | ||||||||||||||
| Other interest income | 20 | 25 | 59 | 66 | 206 | ||||||||||||||
| Total interest and dividend income | 24,094 | 22,272 | 19,342 | 67,074 | 49,162 | ||||||||||||||
| Interest expense: | |||||||||||||||||||
| Interest expense on deposits | 5,152 | 4,155 | 717 | 11,767 | 1,451 | ||||||||||||||
| FHLB advances and other borrowings | 2,672 | 2,179 | 136 | 5,993 | 157 | ||||||||||||||
| Other long-term debt | 683 | 674 | 602 | 2,035 | 1,855 | ||||||||||||||
| Total interest expense | 8,507 | 7,008 | 1,455 | 19,795 | 3,463 | ||||||||||||||
| Net interest income | 15,587 | 15,264 | 17,887 | 47,279 | 45,699 | ||||||||||||||
| Provision for credit losses (1) | 588 | 319 | 517 | 1,186 | 1,654 | ||||||||||||||
| Net interest income after provision for credit losses | 14,999 | 14,945 | 17,370 | 46,093 | 44,045 | ||||||||||||||
| Noninterest income: | |||||||||||||||||||
| Service charges on deposit accounts | 447 | 527 | 498 | 1,313 | 1,223 | ||||||||||||||
| Mortgage banking, net | 4,338 | 3,864 | 4,447 | 11,252 | 16,183 | ||||||||||||||
| Interchange and ATM fees | 643 | 641 | 594 | 1,861 | 1,668 | ||||||||||||||
| Appreciation in cash surrender value of life insurance | 382 | 503 | 291 | 1,165 | 748 | ||||||||||||||
| Net gain (loss) on sale of available-for-sale securities | - | 2 | - | (222 | ) | (6 | ) | ||||||||||||
| Net gain on sale/disposal of premises and equipment | - | 70 | - | 83 | - | ||||||||||||||
| Other noninterest income | 225 | 597 | 1,587 | 1,458 | 1,104 | ||||||||||||||
| Total noninterest income | 6,035 | 6,204 | 7,417 | 16,910 | 20,920 | ||||||||||||||
| Noninterest expense: | |||||||||||||||||||
| Salaries and employee benefits | 10,837 | 11,084 | 11,699 | 31,614 | 33,511 | ||||||||||||||
| Occupancy and equipment expense | 1,956 | 2,071 | 1,946 | 6,100 | 5,441 | ||||||||||||||
| Data processing | 1,486 | 1,572 | 1,964 | 4,270 | 4,628 | ||||||||||||||
| Advertising | 340 | 309 | 464 | 930 | 1,052 | ||||||||||||||
| Amortization | 386 | 397 | 333 | 1,201 | 895 | ||||||||||||||
| Loan costs | 517 | 464 | 491 | 1,426 | 1,624 | ||||||||||||||
| FDIC insurance premiums | 301 | 393 | 93 | 862 | 330 | ||||||||||||||
| Professional and examination fees | 408 | 592 | 420 | 1,484 | 1,098 | ||||||||||||||
| Acquisition costs | - | - | 103 | - | 2,296 | ||||||||||||||
| Other noninterest expense | 1,644 | 1,908 | 3,151 | 5,311 | 4,651 | ||||||||||||||
| Total noninterest expense | 17,875 | 18,790 | 20,664 | 53,198 | 55,526 | ||||||||||||||
| Income before provision for income taxes | 3,159 | 2,359 | 4,123 | 9,805 | 9,439 | ||||||||||||||
| Provision for income taxes | 524 | 344 | 1,031 | 1,913 | 2,360 | ||||||||||||||
| Net income | $ | 2,635 | $ | 2,015 | $ | 3,092 | $ | 7,892 | $ | 7,079 | |||||||||
| Basic earnings per share | $ | 0.34 | $ | 0.26 | $ | 0.40 | $ | 1.01 | $ | 0.98 | |||||||||
| Diluted earnings per share | $ | 0.34 | $ | 0.26 | $ | 0.40 | $ | 1.01 | $ | 0.98 | |||||||||
| Basic weighted average shares outstanding | 7,784,279 | 7,789,559 | 7,793,485 | 7,787,987 | 7,241,520 | ||||||||||||||
| Diluted weighted average shares outstanding | 7,791,966 | 7,793,410 | 7,808,050 | 7,792,593 | 7,254,242 | ||||||||||||||
| (1) Provision for credit losses on loans for the quarter ended September 30, 2023 and June 30, 2023; provision for loan losses for prior periods. | |||||||||||||||||||
| ADDITIONAL FINANCIAL INFORMATION | (Unaudited) | ||||||||||||
| (Dollars in thousands, except per share data) | Three or Nine Months Ended | ||||||||||||
| September 30, | June 30, | September 30, | |||||||||||
| 2023 | 2023 | 2022 | |||||||||||
| Mortgage Banking Activity (For the quarter): | |||||||||||||
| Net gain on sale of mortgage loans | $ | 3,591 | $ | 2,757 | $ | 4,192 | |||||||
| Net change in fair value of loans held-for-sale and derivatives | (71 | ) | 324 | (378 | ) | ||||||||
| Mortgage servicing income, net | 818 | 783 | 633 | ||||||||||
| Mortgage banking, net | $ | 4,338 | $ | 3,864 | $ | 4,447 | |||||||
| Mortgage Banking Activity (Year-to-date): | |||||||||||||
| Net gain on sale of mortgage loans | $ | 8,551 | $ | 15,645 | |||||||||
| Net change in fair value of loans held-for-sale and derivatives | 234 | (1,333 | ) | ||||||||||
| Mortgage servicing income, net | 2,467 | 1,871 | |||||||||||
| Mortgage banking, net | $ | 11,252 | $ | 16,183 | |||||||||
| Performance Ratios (For the quarter): | |||||||||||||
| Return on average assets | 0.51 | % | 0.40 | % | 0.65 | % | |||||||
| Return on average equity | 6.63 | % | 4.99 | % | 7.51 | % | |||||||
| Yield on average interest earning assets | 5.27 | % | 5.06 | % | 4.52 | % | |||||||
| Cost of funds | 2.37 | % | 2.06 | % | 0.47 | % | |||||||
| Net interest margin | 3.41 | % | 3.47 | % | 4.18 | % | |||||||
| Core efficiency ratio* | 80.89 | % | 85.68 | % | 79.94 | % | |||||||
| Performance Ratios (Year-to-date): | |||||||||||||
| Return on average assets | 0.53 | % | 0.55 | % | |||||||||
| Return on average equity | 6.54 | % | 6.05 | % | |||||||||
| Yield on average interest earning assets | 5.07 | % | 4.30 | % | |||||||||
| Cost of funds | 1.94 | % | 0.42 | % | |||||||||
| Net interest margin | 3.57 | % | 4.00 | % | |||||||||
| Core efficiency ratio* | 81.01 | % | 79.22 | % | |||||||||
| * 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) | |||||||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | ||||||||||||
| September 30, | June 30, | September 30, | |||||||||||
| 2023 | 2023 | 2022 | |||||||||||
| Nonaccrual loans | $ | 7,753 | $ | 9,561 | $ | 2,534 | |||||||
| Loans 90 days past due and still accruing | - | 369 | 874 | ||||||||||
| Restructured loans, net | - | - | 1,112 | ||||||||||
| Total nonperforming loans | 7,753 | 9,930 | 4,520 | ||||||||||
| Other real estate owned and other repossessed assets | - | - | - | ||||||||||
| Total nonperforming assets | $ | 7,753 | $ | 9,930 | $ | 4,520 | |||||||
| Nonperforming loans / portfolio loans | 0.53 | % | 0.70 | % | 0.34 | % | |||||||
| Nonperforming assets / assets | 0.38 | % | 0.49 | % | 0.23 | % | |||||||
| Allowance for credit losses / portfolio loans | 1.10 | % | 1.09 | % | 1.06 | % | |||||||
| Allowance for credit losses/ nonperforming loans | 209.34 | % | 156.70 | % | 306.42 | % | |||||||
| Gross loan charge-offs for the quarter | $ | 122 | $ | 55 | $ | 6 | |||||||
| Gross loan recoveries for the quarter | $ | 14 | $ | 206 | $ | 14 | |||||||
| Net loan charge-offs (recoveries) for the quarter | $ | 108 | $ | (151 | ) | $ | (8 | ) | |||||
| September 30, | June 30, | September 30, | |||||||||||
| 2023 | 2023 | 2022 | |||||||||||
| Capital Data (At quarter end): | |||||||||||||
| Common shareholders' equity (book value) per share | $ | 19.69 | $ | 20.37 | $ | 18.94 | |||||||
| Tangible book value per share** | $ | 14.55 | $ | 15.19 | $ | 13.60 | |||||||
| Shares outstanding | 7,988,132 | 7,988,132 | 7,986,890 | ||||||||||
| Tangible common equity to tangible assets*** | 5.75 | % | 6.12 | % | 5.77 | % | |||||||
| Other Information: | |||||||||||||
| Average investment securities for the quarter | $ | 319,308 | $ | 343,634 | $ | 378,680 | |||||||
| Average investment securities year-to-date | $ | 335,898 | $ | 344,330 | $ | 332,950 | |||||||
| Average loans for the quarter **** | $ | 1,476,584 | $ | 1,407,316 | $ | 1,301,358 | |||||||
| Average loans year-to-date **** | $ | 1,417,291 | $ | 1,387,153 | $ | 1,144,459 | |||||||
| Average earning assets for the quarter | $ | 1,812,610 | $ | 1,766,706 | $ | 1,699,027 | |||||||
| Average earning assets year-to-date | $ | 1,768,361 | $ | 1,745,870 | $ | 1,527,692 | |||||||
| Average total assets for the quarter | $ | 2,052,443 | $ | 1,998,957 | $ | 1,913,710 | |||||||
| Average total assets year-to-date | $ | 1,999,864 | $ | 1,973,167 | $ | 1,713,892 | |||||||
| Average deposits for the quarter | $ | 1,602,770 | $ | 1,580,343 | $ | 1,656,228 | |||||||
| Average deposits year-to-date | $ | 1,596,201 | $ | 1,592,879 | $ | 1,467,111 | |||||||
| Average equity for the quarter | $ | 158,933 | $ | 161,534 | $ | 164,592 | |||||||
| Average equity year-to-date | $ | 160,917 | $ | 161,910 | $ | 156,071 | |||||||
| ** 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) | (Unaudited) | ||||||||||||||||||
| (Dollars in thousands) | Three Months Ended | Nine Months Ended | ||||||||||||||||||
| September 30, | June 30, | September 30, | September 30, | |||||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | ||||||||||||||||
| Calculation of Core Efficiency Ratio: | ||||||||||||||||||||
| Noninterest expense | $ | 17,875 | $ | 18,790 | $ | 20,664 | $ | 53,198 | $ | 55,526 | ||||||||||
| Acquisition costs | - | - | (103 | ) | - | (2,296 | ) | |||||||||||||
| Intangible asset amortization | (386 | ) | (397 | ) | (333 | ) | (1,201 | ) | (895 | ) | ||||||||||
| Core efficiency ratio numerator | 17,489 | 18,393 | 20,228 | 51,997 | 52,335 | |||||||||||||||
| Net interest income | 15,587 | 15,264 | 17,887 | 47,279 | 45,699 | |||||||||||||||
| Noninterest income | 6,035 | 6,204 | 7,417 | 16,910 | 20,920 | |||||||||||||||
| Core efficiency ratio denominator | 21,622 | 21,468 | 25,304 | 64,189 | 66,619 | |||||||||||||||
| Core efficiency ratio (non-GAAP) | 80.89 | % | 85.68 | % | 79.94 | % | 81.01 | % | 78.56 | % | ||||||||||
| Tangible Book Value and Tangible Assets | (Unaudited) | |||||||||||||
| (Dollars in thousands, except per share data) | September 30, | June 30, | September 30, | |||||||||||
| 2023 | 2023 | 2022 | ||||||||||||
| Tangible Book Value: | ||||||||||||||
| Shareholders' equity | $ | 157,270 | $ | 162,725 | $ | 151,274 | ||||||||
| Goodwill and core deposit intangible, net | (41,004 | ) | (41,388 | ) | (42,635 | ) | ||||||||
| Tangible common shareholders' equity (non-GAAP) | $ | 116,266 | $ | 121,337 | $ | 108,639 | ||||||||
| Common shares outstanding at end of period | 7,988,132 | 7,988,132 | 7,986,890 | |||||||||||
| Common shareholders' equity (book value) per share (GAAP) | $ | 19.69 | $ | 20.37 | $ | 18.94 | ||||||||
| Tangible common shareholders' equity (tangible book value) | ||||||||||||||
| per share (non-GAAP) | $ | 14.55 | $ | 15.19 | $ | 13.60 | ||||||||
| Tangible Assets: | ||||||||||||||
| Total assets | $ | 2,063,064 | $ | 2,023,279 | $ | 1,923,920 | ||||||||
| Goodwill and core deposit intangible, net | (41,004 | ) | (41,388 | ) | (42,635 | ) | ||||||||
| Tangible assets (non-GAAP) | $ | 2,022,060 | $ | 1,981,891 | $ | 1,881,285 | ||||||||
| Tangible common shareholders' equity to tangible assets | ||||||||||||||
| (non-GAAP) | 5.75 | % | 6.12 | % | 5.77 | % | ||||||||
| Earnings Per Diluted Share, Excluding Acquisition Costs and Related Taxes | (Unaudited) | (Unaudited) | |||||||||||||||
| (Dollars in thousands, except per share data) | Three Months Ended | Nine Months Ended | |||||||||||||||
| September 30, | June 30, | September 30, | September 30, | ||||||||||||||
| 2023 | 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net interest income after provision for credit losses | $ | 14,999 | $ | 14,945 | $ | 17,370 | $ | 46,093 | $ | 44,045 | |||||||
| Noninterest income | 6,035 | 6,204 | 7,417 | 16,910 | 20,920 | ||||||||||||
| Noninterest expense | 17,875 | 18,790 | 20,664 | 53,198 | 55,526 | ||||||||||||
| Acquisition costs | - | - | (103 | ) | - | (2,296 | ) | ||||||||||
| Noninterest expense, excluding acquisition costs (non-GAAP) | 17,875 | 18,790 | 20,561 | 53,198 | 53,230 | ||||||||||||
| Income before income taxes, excluding acquisition costs | 3,159 | 2,359 | 4,226 | 9,805 | 11,735 | ||||||||||||
| Provision for income taxes, excluding acquisition costs related taxes (non-GAAP) | 524 | 344 | 1,057 | 1,913 | 2,934 | ||||||||||||
| Net Income, excluding acquisition costs and related taxes (non-GAAP) | $ | 2,635 | $ | 2,015 | $ | 3,169 | $ | 7,892 | $ | 8,801 | |||||||
| Diluted earnings per share (GAAP) | $ | 0.34 | $ | 0.26 | $ | 0.40 | $ | 1.01 | $ | 0.98 | |||||||
| Diluted earnings per share, excluding acquisition costs and related taxes (non-GAAP) | $ | 0.34 | $ | 0.26 | $ | 0.41 | $ | 1.01 | $ | 1.21 | |||||||
| Return on Average Assets, Excluding Acquisition Costs and Related Taxes | (Unaudited) | ||||||||||||
| (Dollars in thousands) | September 30, | June 30, | September 30, | ||||||||||
| 2023 | 2023 | 2022 | |||||||||||
| For the quarter: | |||||||||||||
| Net income, excluding acquisition costs and related taxes (non-GAAP)* | $ | 2,635 | $ | 2,015 | $ | 3,169 | |||||||
| Average total assets quarter-to-date | $ | 2,052,443 | $ | 1,998,957 | $ | 1,913,710 | |||||||
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.51 | % | 0.40 | % | 0.66 | % | |||||||
| Year-to-date: | |||||||||||||
| Net income, excluding acquisition costs and related taxes (non-GAAP)* | $ | 7,892 | $ | 5,257 | $ | 8,801 | |||||||
| Average total assets year-to-date | $ | 1,999,864 | $ | 1,973,167 | $ | 1,713,892 | |||||||
| Return on average assets, excluding acquisition costs and related taxes (non-GAAP) | 0.53 | % | 0.53 | % | 0.68 | % | |||||||
| * 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 |
