YORK, Pa., Oct. 27, 2023 /PRNewswire/ -- Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $1.4 million for the third quarter ended September 30, 2023, compared to $1.3 million in the linked quarter and $1.6 million for the third quarter of 2022. The company reported earnings per share (diluted) of 51 cents for the third quarter ended September 30, 2023, compared to 47 cents in the linked quarter and 58 cents for the third quarter of 2022. Unrealized investment portfolio losses, flowing through Accumulated Other Comprehensive Loss, have increased to $14.3 million at quarter end compared to $12.3 million in the linked quarter. Book value per common share was $22.00 on September 30, 2023, versus $22.29 in the linked quarter and $19.61 for the third quarter of 2022.
"The entire banking industry continues to face formidable headwinds with interest rates remaining higher for longer," stated Eugene J. Draganosky, Chief Executive Officer. "Traditions Bancorp earnings are under pressure due to rapidly rising cost of funds and depressed mortgage banking activity. As a result, we have recently undertaken a strategic realignment to position the company for the current environment. This includes our decision to reduce $3.0 million in 2024 non-interest expenses to ensure we achieve our strategic goals and continue to build long-term shareholder value."
Quarterly Highlights - Third Quarter 2023 versus Third Quarter 2022
- Loans grew by $89.4 million, or 15%, over 3Q22. Much of the growth culminated early in the current quarter, and demand has since moderated in step with deposit funding.
- Over the previous 12 months, deposits increased by $43.2 million, or 7%, over 3Q22. Much of this deposit growth was concentrated in higher cost time deposits, including brokered certificates of deposit.
- The cost of deposits has increased to 2.14% for 3Q23, up from 1.87% for 2Q23 and 0.28% for 3Q22.
- Net interest margin contracted to 3.29% in 3Q23 compared to 3.66% in 3Q22, driven by an increase in the total cost of funds, including borrowings, from 0.39% in 3Q22 to 2.43% in 3Q23.
- Gains on the sale of mortgages were $0.8 million for 3Q23, declining from $0.9 million in 3Q22.
- The mortgage pipeline increased to $17.2 million from $15.6 million in the linked quarter, but is down from $19.5 million on September 30, 2022 . Residential mortgage loans sold in 3Q23 were $51.8 million compared to $41.3 million in the linked quarter and $58.5 million for 3Q22. Elevated market rates and limited home inventories continue to impact mortgage banking revenue.
- A third-quarter cash dividend of eight cents per common share was declared on October 19, 2023, and is payable on November 13, 2023, to shareholders of record at the close of business on November 3, 2023 .
- Net interest income decreased $0.1 million, or 1%, driven by escalating funding costs almost entirely offset by commercial and residential mortgage loan growth and the Federal Reserve Bank's short-term interest rate increases.
- As a result of prudent expense management, other expense decreased by 2%, from $6.2 million in 3Q22 to $6.1 million in 3Q23.
- The 3Q23 loan loss provision was $238 thousand .
YTD Highlights - Nine Months Ended September 30, 2023, versus Nine Months Ended September 30, 2022
- Driven by measured commercial and residential mortgage loan growth and the Federal Reserve Bank's short-term interest rate increases, net interest income increased $1.1 million, or 6%, despite rising funding costs.
- Gains on sale of mortgages decreased by $1.5 million, or 35%, as a result of increased market rates and limited home inventories within the bank's footprint.
- Other expense remained flat from 3Q22 to 3Q23.
Credit Quality and Capital Insights:
- Nonaccrual loans decreased from $3.9 million in 2Q23 to $3.8 million in the current quarter. This is comprised of $2.5 million in residential mortgage and consumer loans, and $1.3 million in commercial loans.
- The bank reported a net recovery of $134 thousand through the first nine months of 2023. With the decrease in nonaccrual loans, non-performing assets to total assets decreased from 0.48% in the linked quarter to 0.44% in the current quarter. There was no foreclosed other real estate.
- Delinquencies greater than 30 days were 0.88% of total loans as of September 30, 2023, up from 0.80% as of June 30, 2023, and 0.49% as of March 31, 2023 .
- The bank's ACL ratio was 0.54% as of September 30, 2023, compared to 0.53% as of June 30, 2023, and 0.52% as of March 31, 2023 .
- The bank remains well capitalized.
FINANCIAL HIGHLIGHTS (unaudited): | ||||||||
Selected Financial Data | Sep 30, 2023 | Dec 31, 2022 | Sep 30, 2022 | |||||
Investment securities | $ | 109,957 | $ | 126,972 | $ | 126,917 | ||
Loans, net of unearned income | 673,252 | 597,950 | 583,859 | |||||
Allowance for credit losses | 3,656 | 7,155 | 7,156 | |||||
Total assets | 850,486 | 776,833 | 773,241 | |||||
Deposits | 704,716 | 672,294 | 661,548 | |||||
Borrowings | 71,965 | 36,249 | 45,529 | |||||
Shareholders' equity | 60,096 | 56,983 | 54,645 | |||||
Common book value per common share | $ | 22.00 | $ | 20.44 | $ | 19.61 | ||
Tier 1 book value per common share | $ | 27.22 | $ | 24.69 | $ | 24.39 | ||
Allowance/loans | 0.54 % | 1.20 % | 1.23 % | |||||
Non-performing assets/total assets | 0.44 % | 0.30 % | 0.14 % | |||||
Tier 1 capital/average assets | 8.68 % | 8.74 % | 8.71 % | |||||
Tier 1 capital/risk-weighted assets | 11.17 % | 11.27 % | 11.42 % | |||||
Total capital/risk-weighted assets | 11.75 % | 12.45 % | 12.62 % | |||||
Common shares outstanding | 2,732 | 2,788 | 2,786 | |||||
Three months ended Sep 30, | Nine months ended Sep 30, | |||||||
Selected Operations Data | 2023 | 2022 | 2023 | 2022 | ||||
Interest income | $ | 10,640 | $ | 7,367 | $ | 29,326 | $ | 19,591 |
Interest expense | (3,886) | (542) | (9,542) | (953) | ||||
Net interest income | 6,754 | 6,825 | 19,784 | 18,638 | ||||
Provision for credit losses | (238) | - | (230) | - | ||||
Investment securities gains (losses) | - | - | - | - | ||||
Gains on sale of mortgages | 798 | 856 | 2,781 | 4,283 | ||||
Other income | 515 | 527 | 1,685 | 1,501 | ||||
Other expense | (6,080) | (6,232) | (18,747) | (18,663) | ||||
Income before income taxes | 1,749 | 1,976 | 5,273 | 5,759 | ||||
Income taxes | (332) | (336) | (1,000) | (1,086) | ||||
Net income | $ | 1,417 | $ | 1,640 | $ | 4,273 | $ | 4,673 |
Earnings per common share (basic) | $ | 0.51 | $ | 0.58 | $ | 1.54 | $ | 1.65 |
Earnings per common share (diluted) | $ | 0.51 | $ | 0.58 | $ | 1.53 | $ | 1.63 |
Return on average assets | 0.67 % | 0.85 % | 0.70 % | 0.83 % | ||||
Return on average equity | 9.18 % | 11.07 % | 9.33 % | 10.28 % | ||||
Net interest margin | 3.29 % | 3.66 % | 3.35 % | 3.47 % | ||||
Efficiency ratio | 75.37 % | 75.93 % | 77.31 % | 76.42 % | ||||
Net charge-offs(recoveries)/average loans | 0.00 % | 0.00 % | -0.03 % | 0.00 % | ||||
Average common shares | 2,752 | 2,811 | 2,776 | 2,834 | ||||
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:
This release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate" or similar terminology. Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about future performance, operations, products and services of Traditions Bancorp.
Traditions Bancorp cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to materially differ from those expressed in the forward-looking statements, including, but not limited to: ineffectiveness of the organization's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.
Forward-looking statements in this release speak only as of the date of this release and Traditions Bancorp makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.
SOURCE Traditions Bancorp, Inc.
