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CB Financial Services, Inc. Announces First Quarter 2022 Financial Results and Declares Quarterly Cash Dividend

CB Financial Services, Inc. (“CB” or the “Company”) (NASDAQGM: CBFV), the holding company of Community Bank (the “Bank”) and Exchange Underwriters, Inc. (“EU”), a wholly-owned insurance subsidiary of the Bank, today announced its first quarter 2022 financial results.

 

Three Months Ended

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands, except per share data) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (GAAP)

$

3,047

$

6,965

 

$

1,983

 

$

(223

)

$

2,845

 

Non-Recurring Items (Non-GAAP) (1)

 

12

 

(4,122

)

 

(17

)

 

3,440

 

 

(353

)

Adjusted Net Income (Non-GAAP) (1)

$

3,059

$

2,843

 

$

1,966

 

$

3,217

 

$

2,492

 

 

 

 

 

 

 

Earnings (Loss) per Common Share - Diluted (GAAP)

$

0.58

$

1.31

 

$

0.37

 

$

(0.04

)

$

0.52

 

Adjusted Earnings per Common Share - Diluted (Non-GAAP) (1)

$

0.59

$

0.53

 

$

0.36

 

$

0.59

 

$

0.46

 

(1) Refer to Explanation of Use of Non-GAAP Financial Measures and reconciliation of net income (loss) and adjusted earnings per common share - diluted in this Press Release.

2022 First Quarter Financial Highlights

(Comparisons to three months ended March 31, 2021 unless otherwise noted)

  • Net income was $3.0 million, compared to $2.8 million, largely due to the completion of the Company’s optimization program in 2021, which resulted in a reduction of noninterest expense.
    • Adjusted net income (non-GAAP) was $3.1 million, compared to $2.5 million.
  • Earnings per diluted common share (EPS) increased to $0.58 from $0.52.
    • Adjusted earnings per common share - diluted (non-GAAP) was $0.59, compared to $0.46.
  • Return on average assets (annualized) of 0.87%, compared to 0.81%.
    • Adjusted return on average assets (annualized) (non-GAAP) of 0.87%, compared to 0.71%.
  • Return on average equity (annualized) of 9.50%, compared to 8.54%.
    • Adjusted return on average equity (annualized) (non-GAAP) of 9.54%, compared to 7.48%.
  • Net interest margin (NIM) improved quarter over quarter to 3.08% from 2.95% for the three months ended December 31, 2021. NIM was 3.04% for the prior year period.
  • Net interest and dividend income was $9.9 million, compared to $10.0 million.
  • Noninterest income decreased to $2.6 million, compared to $3.2 million. The most significant changes in noninterest income were a $454,000 reduction in securities gains offset by an increase of $203,000 in insurance commissions. The increase in insurance commissions was primarily driven by contingency income which resulted from the higher than lock-in amounts received, partially offset by a decrease in commercial and personal insurance commissions.

(Amounts at March 31, 2022; comparisons to December 31, 2021, unless otherwise noted)

  • Total loans, including Payroll Protection Program (“PPP”) loans, were $1.02 billion, a decrease of $154,000.
    • Total loans held for investment, excluding PPP loans, increased $16.1 million, or 6.5% annualized, to $1.01 billion compared to $996.3 million at December 31, 2021 and included 69.7% and 3.6% annualized growth in consumer and commercial real estate loans, respectively.
  • Nonperforming loans to total loans was 0.72%, a increase of 1 bps, compared to 0.71%.
  • Total deposits were $1.25 billion, an increase of $23.7 million, compared to $1.23 billion.
  • Total assets increased to $1.44 billion, compared to $1.43 billion.
  • Book value per share was $23.69, compared to $24.62 at March 31, 2021 and $25.31 at December 31, 2021.
    • Tangible book value per share (Non-GAAP) decreased to $20.86, compared to $21.38 at March 31, 2021 and $22.45 at December 31, 2021.

Management Commentary

President and CEO John H. Montgomery stated, “Our first quarter benefited from the combination of modest loan growth and improved efficiency levels which resulted in solid bottom-line income growth. We were pleased to see our loans, excluding PPP loans, grow 1.64% in the current quarter, or 6.5% annualized, led by commercial real estate and indirect auto. Our indirect auto loan business was fueled by the investments we have made in process efficiencies, which led directly to improved pull-through rates. We coupled that growth with an improved Efficiency Ratio, which declined 420 basis points from last year’s first quarter to 68.6% and is the result of the optimization program we largely completed last year. This improvement in our Efficiency Ratio is an important foundation supporting our goal of becoming a high performing bank.”

Mr. Montgomery continued, “We furthered our commitment to CB shareholders as we completed a $7.5 million share repurchase program in February and have announced a new $10.0 million program, in addition to our regular quarterly dividend. We remain well-capitalized with the ability to support growth along with these shareholder-friendly actions. During the quarter, the Bank invested in sales leadership to accelerate growth. We recently hired Bruce Sharp as our Chief Commercial Banking Officer and Alan Bicker as Chief Consumer Banking Officer. In addition, Benjamin Brown was recently hired as Director of Client Experience and Innovation. All three of these gentlemen possess a wealth of experience and know our markets well. I am excited to have Bruce, Alan and Ben on board as we look to accelerated growth and leverage our work in efficiency and process optimization. Our regional economic activity remains strong and is bolstered by a number of top educational and medical institutions in addition to a strong technology presence, providing an excellent counter-balance to regular economic cycles. In addition, our region is a major supplier of natural gas and we are seeing some benefit from the recent surge in commodity prices.”

Dividend Information

The Company’s Board of Directors has declared a $0.24 quarterly cash dividend per outstanding share of common stock, payable on or about May 31, 2022, to stockholders of record as of the close of business on May 20, 2022.

Stock Repurchase Program

On June 10, 2021, CB authorized a program to repurchase up to $7.5 million of the Company’s outstanding common stock. The program was effective as of June 14, 2021 and is authorized through June 13, 2022. On February 15, 2022, the Company completed the program, under which a total of 308,996 shares were repurchased at an average price of $24.27 per share for a total of approximately $7.5 million.

On April 21, 2022, CB announced a program to repurchase up to $10.0 million of the Company’s outstanding shares of common stock. Based on the Company’s closing stock price on April 19, 2022, the repurchase program, if fully completed, would encompass 433,643 shares, or approximately 8.4% the shares currently outstanding.

2022 First Quarter Financial Review

Net Interest and Dividend Income

Net interest and dividend income decreased $84,000, or 0.8%, to $9.9 million for the three months ended March 31, 2022 compared to $10.0 million for the three months ended March 31, 2021.

  • Net interest margin (FTE) (Non-GAAP) increased 5 basis points (“bps”) to 3.10% for the three months ended March 31, 2022 compared to 3.05% for the three months ended March 31, 2021. Net interest margin (GAAP) increased to 3.08% for the three months ended March 31, 2022 compared to 3.04% for the three months ended March 31, 2021. CB has controlled its deposit cost structure as deposit balances increased and benefited from non-renewal or repricing of higher-cost time deposits.
  • Interest and dividend income decreased $372,000, or 3.4%, to $10.6 million for the three months ended March 31, 2022 compared to $11.0 million for the three months ended March 31, 2021.
    • Interest income on loans decreased $595,000, or 5.9%, to $9.6 million for the three months ended March 31, 2022 compared to $10.1 million for the three months ended March 31, 2021. The average balance of loans decreased $22.6 million and the average yield decreased 15 bps to 3.85% compared to the three months ended March 31, 2021. Interest and fee income on PPP loans was $445,000 for the three months ended March 31, 2022 and contributed 13 bps to loan yield, compared to $676,000 for the three months ended March 31, 2021, which contributed 5 bps to loan yield. The impact of the accretion of the credit mark on acquired loan portfolios was $56,000 for the three months ended March 31, 2022 compared to $138,000 for the three months ended March 31, 2021, or 2 bps in the current period compared to 6 bps in the prior period.
    • Interest income on taxable investment securities increased $259,000, or 40.1%, to $905,000 for the three months ended March 31, 2022 compared to $646,000 for the three months ended March 31, 2021 driven by a $93.0 million increase in average balance partially offset by a 42 bps decrease in average yield.
  • Interest expense decreased $288,000, or 28.5%, to $723,000 for the three months ended March 31, 2022 compared to $1.0 million for the three months ended March 31, 2021.
    • Interest expense on deposits decreased $417,000, or 44.0%, to $530,000 for the three months ended March 31, 2022 compared to $947,000 for the three months ended March 31, 2021. While average interest-earning deposit balances decreased $38.6 million compared to the three months ended March 31, 2021, controlling the deposit cost structure as deposit balances increased combined with non-renewal or repricing of higher-cost time deposit resulted in a 18 bp, or 41.4%, decrease in average cost compared to the three months ended March 31, 2021. The average balance of time deposits and the related average cost decreased $55.1 million and 30 bps, respectively.

Provision for Loan Losses

There was no provision for loan losses for either the three months ended March 31, 2022 or the three months ended March 31, 2021. The provision for loan losses remaining constant was primarily due to consistent loan balances between the periods and no significant changes in qualitative factors.

Noninterest income

Noninterest income decreased $561,000, or 17.7%, to $2.6 million for the three months ended March 31, 2022, compared to $3.2 million for the three months ended March 31, 2021. The decrease was largely due to a $454,000 reduction in securities gains, partially offset by a $203,000 improvement in insurance commissions. The increase in insurance commissions was primarily driven by contingency income of $114,000 which resulted from the higher than lock-in amounts received and commercial insurance commissions, partially offset by a decrease in personal insurance commissions. In addition, net gain on sale of loans decreased $86,000 as there were no loans sold for the three months ended March 31, 2022.

Noninterest Expense

Noninterest expense decreased $739,000, or 7.9%, to $8.7 million for the three months ended March 31, 2022 compared to $9.4 million for the three months ended March 31, 2021, primarily due to the implementation of branch optimization initiatives begun in 2020 and completed during 2021 which established a lower expense base. Offsetting the lower base in the first quarter were investment in executive leadership tasked with driving growth initiatives. Contracted services decreased $100,000 to $587,000 for the three months ended March 31, 2022 compared to $687,000 for the three months ended March 31, 2021. This was a result of the previously mentioned branch optimization initiatives completed in the prior year.

Statement of Financial Condition Review

Assets

Total assets increased $13.2 million, or 0.9%, to $1.44 billion at March 31, 2022, compared to $1.43 billion at December 31, 2021.

  • Cash and due from banks increased $3.9 million, or 3.3%, to $123.6 million at March 31, 2022, compared to $119.7 million at December 31, 2021. The change is primarily due to an increase in deposits as further described below in the Liabilities section. The increase was partially offset by purchases of securities detailed in the below Securities section.
  • Securities increased $6.1 million, or 2.7%, to $231.1 million at March 31, 2022, compared to $225.0 million at December 31, 2021. Current period activity included $26.8 million of purchases, and $8.3 million of paydowns. The purchases were made to earn a higher yield on excess cash. In addition, there was a $12.4 million decrease in the market value of the debt securities portfolio, primarily due to the increase in market interest rates and a $7,000 gain in market value in the equity securities portfolio, which is primarily comprised of bank stocks.

Payroll Protection Program (“PPP”) Update

  • PPP loans decreased $16.3 million to $8.2 million at March 31, 2022 compared to $24.5 million at December 31, 2021
  • $274,000 of net PPP loan origination fees were unearned at March 31, 2022 compared to $678,000 at December 31, 2021. $404,000 of net PPP loan origination fees were earned for the three months ended March 31, 2022 compared to $321,000 for the three months ended December 31, 2021.

Loans and Credit Quality

  • Total loans held for investment decreased $154,000, or 0.02%, to $1.02 billion at March 31, 2022 compared to $1.02 billion at December 31, 2021. Excluding the net decline of $16.3 million in PPP loans in the current period, loans increased $16.1 million. Average loans for the three months ended March 31, 2022 increased $4.4 million compared to the three months ended December 31, 2021. An increase in consumer and commercial real estate loans was the primary driver in the average balance increase, offset by quicker payoffs in residential, and commercial and industrial loans.
  • The allowance for loan losses was $11.6 million at both March 31, 2022 and December 31, 2021. As a result, the allowance for loan losses to total loans was 1.14% at March 31, 2022 compared to 1.13% at December 31, 2021. The allowance for loan losses to total loans, excluding PPP loans, was 1.15% at March 31, 2022 compared to 1.16% at December 31, 2021. The lack of change in the allowance for loan losses was primarily due to consistent loan balances between the periods and no significant changes in qualitative factors.
  • Net recoveries for the three months ended March 31, 2022 were $13,000, or 0.01% of average loans on an annualized basis. Net charge-offs for the three months ended March 31, 2021 were $46,000, or 0.02% of average loans on an annualized basis.
  • Nonperforming loans, which includes nonaccrual loans, accruing loans past due 90 days or more, and accruing loans that are considered troubled debt restructurings, were $7.3 million at both March 31, 2022 and December 31, 2021. Nonperforming loans to total loans ratio was 0.72% at March 31, 2022 compared to 0.71% at December 31, 2021.
  • There was one loan in forbearance at March 31, 2022 totaling $128,000, compared to no loans in forbearance at December 31, 2021.

Other

  • Intangible Assets decreased $445,000, or 7.6%, to $4.9 million at March 31, 2022 compared to $5.3 million at December 31, 2021 primarily due to amortization expense recognized during the period
  • Accrued Interest Receivable and Other Assets increased $3.7 million, or 28.8% to $16.5 million at March 31, 2022, compared to $12.9 million at December 31, 2021. This change is primarily driven by deferred taxes as a result of the increase in market interest rates conditions and the decrease in the market value of the securities portfolio.

Liabilities

Total liabilities increased $24.2 million, or 1.9%, to $1.32 billion at March 31, 2022 compared to $1.29 billion at December 31, 2021.

Deposits

  • Total deposits increased $23.7 million to $1.25 billion as of March 31, 2022 compared to $1.23 billion at December 31, 2021. Noninterest bearing demand deposits, NOW accounts and savings accounts increased $14.3 million, $7.9 million and $8.1 million, respectively, partially offset by a decrease of $7.5 million in time deposits. Annualized deposit growth rate was 7.7%. Average total deposits decreased $54.6 million, primarily in time deposits, for the three months ended March 31, 2022 compared to the three months ended December 31, 2021.

Borrowed Funds

  • Short-term borrowings decreased $47,000 , or 0.1%, to $39.2 million at March 31, 2022, compared to $39.3 million at December 31, 2021. At March 31, 2022 and December 31, 2021, short-term borrowings were comprised entirely of securities sold under agreements to repurchase, which are related to business deposit customers whose funds, above designated target balances, are transferred into an overnight interest-earning investment account by purchasing securities from the Bank’s investment portfolio under an agreement to repurchase.

Stockholders’ Equity

Stockholders’ equity decreased $11.0 million, or 8.3%, to $122.2 million at March 31, 2022, compared to $133.1 million at December 31, 2021. The Company paid $1.2 million in dividends and repurchased $3.4 million of its common stock as part of its stock repurchase program that was completed on February 15, 2022. In addition, accumulated other comprehensive income decreased $9.7 million primarily due to the effect of rising market interest rates on the Bank’s debt securities. This was partially offset by $3.0 million of net income.

Book value per share

Book value per common share was $23.69 at March 31, 2022 compared to $25.31 at December 31, 2021, a decrease of $1.62.

Tangible book value per common share (Non-GAAP) was $20.86 at March 31, 2022, compared to $22.45 at December 31, 2021, a decrease of $1.59.

Refer to “Explanation of Use of Non-GAAP Financial Measures” at the end of this Press Release.

About CB Financial Services, Inc.

CB Financial Services, Inc. is the bank holding company for Community Bank, a Pennsylvania-chartered commercial bank. Community Bank operates its branch network in southwestern Pennsylvania and West Virginia. Community Bank offers a broad array of retail and commercial lending and deposit services and provides commercial and personal insurance brokerage services through Exchange Underwriters, Inc., its wholly owned subsidiary.

For more information about CB Financial Services, Inc. and Community Bank, visit our website at www.communitybank.tv.

Statement About Forward-Looking Statements

Statements contained in this press release that are not historical facts may constitute forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995 and such forward-looking statements are subject to significant risks and uncertainties. The Company intends such forward-looking statements to be covered by the safe harbor provisions contained in the Act. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to, general and local economic conditions, the scope and duration of economic contraction as a result of the COVID-19 pandemic and its effects on the Company’s business and that of the Company’s customers, changes in market interest rates, deposit flows, demand for loans, real estate values and competition, competitive products and pricing, the ability of our customers to make scheduled loan payments, loan delinquency rates and trends, our ability to manage the risks involved in our business, our ability to control costs and expenses, inflation, market and monetary fluctuations, changes in federal and state legislation and regulation applicable to our business, actions by our competitors, and other factors that may be disclosed in the Company’s periodic reports as filed with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. The Company assumes no obligation to update any forward-looking statements except as may be required by applicable law or regulation.

CB FINANCIAL SERVICES, INC.

SELECTED CONSOLIDATED FINANCIAL INFORMATION

(Dollars in thousands, except share and per share data) (Unaudited)

 

 

 

 

 

 

 

 

 

 

Selected Financial Condition Data

3/31/22

 

12/31/21

 

9/30/21

 

6/30/21

 

3/31/21

ASSETS

 

 

 

 

 

 

 

 

 

Cash and Due From Banks

$

123,588

 

 

$

119,674

 

 

$

173,523

 

 

$

172,010

 

 

$

230,000

 

Securities

 

231,097

 

 

 

224,974

 

 

 

221,351

 

 

 

208,472

 

 

 

142,156

 

Loans Held for Sale

 

 

 

 

 

 

 

17,407

 

 

 

11,409

 

 

 

 

Loans

 

 

 

 

 

 

 

 

 

Real Estate:

 

 

 

 

 

 

 

 

 

Residential

 

317,254

 

 

 

320,798

 

 

 

317,373

 

 

 

322,480

 

 

 

339,596

 

Commercial

 

427,227

 

 

 

392,124

 

 

 

379,621

 

 

 

360,518

 

 

 

370,118

 

Construction

 

54,227

 

 

 

85,028

 

 

 

78,075

 

 

 

85,187

 

 

 

77,714

 

Commercial and Industrial

 

 

 

 

 

 

 

 

 

Commercial and Industrial

 

59,601

 

 

 

64,487

 

 

 

69,657

 

 

 

70,666

 

 

 

68,551

 

PPP

 

8,242

 

 

 

24,523

 

 

 

32,703

 

 

 

49,525

 

 

 

60,380

 

Consumer

 

143,422

 

 

 

122,152

 

 

 

112,087

 

 

 

106,404

 

 

 

111,650

 

Other

 

10,669

 

 

 

11,684

 

 

 

12,083

 

 

 

12,666

 

 

 

13,688

 

Total Loans

 

1,020,642

 

 

 

1,020,796

 

 

 

1,001,599

 

 

 

1,007,446

 

 

 

1,041,697

 

Allowance for Loan Losses

 

(11,595

)

 

 

(11,582

)

 

 

(11,581

)

 

 

(11,544

)

 

 

(12,725

)

Loans, Net

 

1,009,047

 

 

 

1,009,214

 

 

 

990,018

 

 

 

995,902

 

 

 

1,028,972

 

Premises and Equipment Held for Sale

 

 

 

 

 

 

 

795

 

 

 

795

 

 

 

 

Premises and Equipment, Net

 

18,349

 

 

 

18,399

 

 

 

18,502

 

 

 

18,682

 

 

 

20,240

 

Bank-Owned Life Insurance

 

25,468

 

 

 

25,332

 

 

 

25,190

 

 

 

25,052

 

 

 

24,916

 

Goodwill

 

9,732

 

 

 

9,732

 

 

 

9,732

 

 

 

9,732

 

 

 

9,732

 

Intangible Assets, Net

 

4,850

 

 

 

5,295

 

 

 

5,740

 

 

 

6,186

 

 

 

7,867

 

Accrued Interest and Other Assets

 

16,539

 

 

 

12,859

 

 

 

12,560

 

 

 

13,373

 

 

 

12,938

 

Total Assets

$

1,438,670

 

 

$

1,425,479

 

 

$

1,474,818

 

 

$

1,461,613

 

 

$

1,476,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES

 

 

 

 

 

 

 

 

 

Deposits Held for Sale

$

 

 

$

 

 

$

102,647

 

 

$

102,557

 

 

$

 

Deposits

 

 

 

 

 

 

 

 

 

Non-Interest Bearing Demand Deposits

 

400,105

 

 

 

385,775

 

 

 

373,320

 

 

 

368,452

 

 

 

377,137

 

Interest Bearing Demand Accounts

 

280,455

 

 

 

272,518

 

 

 

244,004

 

 

 

246,920

 

 

 

280,929

 

Money Market Accounts

 

192,929

 

 

 

192,125

 

 

 

190,426

 

 

 

176,824

 

 

 

198,975

 

Savings Accounts

 

247,589

 

 

 

239,482

 

 

 

232,679

 

 

 

226,639

 

 

 

246,725

 

Time Deposits

 

129,235

 

 

 

136,713

 

 

 

144,727

 

 

 

154,718

 

 

 

180,697

 

Total Deposits

 

1,250,313

 

 

 

1,226,613

 

 

 

1,185,156

 

 

 

1,173,553

 

 

 

1,284,463

 

 

 

 

 

 

 

 

 

 

 

Short-Term Borrowings

 

39,219

 

 

 

39,266

 

 

 

42,623

 

 

 

39,054

 

 

 

45,352

 

Other Borrowings

 

17,607

 

 

 

17,601

 

 

 

6,000

 

 

 

6,000

 

 

 

6,000

 

Accrued Interest Payable and Other Liabilities

 

9,375

 

 

 

8,875

 

 

 

7,405

 

 

 

7,913

 

 

 

7,230

 

Total Liabilities

 

1,316,514

 

 

 

1,292,355

 

 

 

1,343,831

 

 

 

1,329,077

 

 

 

1,343,045

 

 

 

 

 

 

 

 

 

 

 

STOCKHOLDERS’ EQUITY

$

122,156

 

 

$

133,124

 

 

$

130,987

 

 

$

132,536

 

 

$

133,776

 

 

Three Months Ended

Selected Operating Data

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Interest and Dividend Income

 

 

 

 

 

Loans, Including Fees

$

9,551

 

$

9,904

 

$

9,718

 

$

9,936

 

$

10,146

 

Securities:

 

 

 

 

 

Taxable

 

905

 

 

866

 

 

843

 

 

635

 

 

646

 

Tax-Exempt

 

66

 

 

66

 

 

71

 

 

74

 

 

78

 

Dividends

 

22

 

 

21

 

 

19

 

 

24

 

 

20

 

Other Interest and Dividend Income

 

72

 

 

106

 

 

135

 

 

151

 

 

98

 

Total Interest and Dividend Income

 

10,616

 

 

10,963

 

 

10,786

 

 

10,820

 

 

10,988

 

Interest Expense

 

 

 

 

 

Deposits

 

530

 

 

636

 

 

715

 

 

827

 

 

947

 

Short-Term Borrowings

 

19

 

 

26

 

 

25

 

 

24

 

 

23

 

Other Borrowings

 

174

 

 

70

 

 

36

 

 

35

 

 

41

 

Total Interest Expense

 

723

 

 

732

 

 

776

 

 

886

 

 

1,011

 

Net Interest and Dividend Income

 

9,893

 

 

10,231

 

 

10,010

 

 

9,934

 

 

9,977

 

Provision (Recovery) for Loan Losses

 

 

 

75

 

 

 

 

(1,200

)

 

 

Net Interest and Dividend Income After Provision (Recovery) for Loan Losses

 

9,893

 

 

10,156

 

 

10,010

 

 

11,134

 

 

9,977

 

Noninterest Income:

 

 

 

 

 

Service Fees

 

526

 

 

569

 

 

602

 

 

614

 

 

546

 

Insurance Commissions

 

1,798

 

 

1,618

 

 

1,194

 

 

1,209

 

 

1,595

 

Other Commissions

 

89

 

 

90

 

 

93

 

 

173

 

 

165

 

Net Gain on Sales of Loans

 

 

 

977

 

 

49

 

 

31

 

 

86

 

Net (Loss) Gain on Securities

 

(7

)

 

44

 

 

24

 

 

11

 

 

447

 

Net Gain on Purchased Tax Credits

 

14

 

 

17

 

 

18

 

 

17

 

 

18

 

Gain on Sale of Branches

 

 

 

5,203

 

 

 

 

 

 

 

Net Loss on Disposal of Fixed Assets

 

(8

)

 

 

 

 

 

(3

)

 

 

Income from Bank-Owned Life Insurance

 

136

 

 

142

 

 

138

 

 

136

 

 

137

 

Other Income

 

65

 

 

29

 

 

80

 

 

31

 

 

180

 

Total Noninterest Income

 

2,613

 

 

8,689

 

 

2,198

 

 

2,219

 

 

3,174

 

Noninterest Expense:

 

 

 

 

 

Salaries and Employee Benefits

 

4,565

 

 

5,181

 

 

4,787

 

 

5,076

 

 

4,894

 

Occupancy

 

686

 

 

619

 

 

615

 

 

1,024

 

 

710

 

Equipment

 

210

 

 

252

 

 

205

 

 

311

 

 

266

 

Data Processing

 

485

 

 

488

 

 

541

 

 

607

 

 

518

 

FDIC Assessment

 

209

 

 

222

 

 

293

 

 

249

 

 

250

 

PA Shares Tax

 

240

 

 

173

 

 

224

 

 

225

 

 

265

 

Contracted Services

 

587

 

 

1,133

 

 

1,441

 

 

750

 

 

687

 

Legal and Professional Fees

 

152

 

 

206

 

 

180

 

 

419

 

 

189

 

Advertising

 

116

 

 

191

 

 

225

 

 

193

 

 

140

 

Other Real Estate Owned (Income)

 

(38

)

 

(30

)

 

(89

)

 

(26

)

 

(38

)

Amortization of Intangible Assets

 

445

 

 

445

 

 

446

 

 

503

 

 

532

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

1,178

 

 

 

Writedown of Fixed Assets

 

 

 

23

 

 

2

 

 

2,268

 

 

 

Other

 

999

 

 

1,069

 

 

903

 

 

945

 

 

982

 

Total Noninterest Expense

 

8,656

 

 

9,972

 

 

9,773

 

 

13,722

 

 

9,395

 

Income (Loss) Before Income Tax Expense (Benefit)

 

3,850

 

 

8,873

 

 

2,435

 

 

(369

)

 

3,756

 

Income Tax Expense (Benefit)

 

803

 

 

1,908

 

 

452

 

 

(146

)

 

911

 

Net Income (Loss)

$

3,047

 

$

6,965

 

$

1,983

 

$

(223

)

$

2,845

 

 

Three Months Ended

Per Common Share Data

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Dividends Per Common Share

$

0.24

$

0.24

$

0.24

$

0.24

 

$

0.24

Earnings (Loss) Per Common Share - Basic

 

0.59

 

1.32

 

0.37

 

(0.04

)

 

0.52

Earnings (Loss) Per Common Share - Diluted

 

0.58

 

1.31

 

0.37

 

(0.04

)

 

0.52

Adjusted Earnings Per Common Share - Diluted (Non-GAAP) (1)

 

0.59

 

0.53

 

0.36

 

0.59

 

 

0.46

 

 

 

 

 

 

Weighted Average Common Shares Outstanding - Basic

 

5,198,194

 

5,291,795

 

5,373,032

 

5,432,234

 

 

5,434,374

Weighted Average Common Shares Outstanding - Diluted

 

5,220,887

 

5,314,537

 

5,390,128

 

5,432,234

 

 

5,436,881

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Common Shares Outstanding

 

5,156,897

 

 

5,260,672

 

 

5,330,401

 

 

5,409,077

 

 

5,434,374

 

Book Value Per Common Share

$

23.69

 

$

25.31

 

$

24.57

 

$

24.50

 

$

24.62

 

Tangible Book Value per Common Share (1)

 

20.86

 

 

22.45

 

 

21.67

 

 

21.56

 

 

21.38

 

Stockholders’ Equity to Assets

 

8.5

%

 

9.3

%

 

8.9

%

 

9.1

%

 

9.1

%

Tangible Common Equity to Tangible Assets (1)

 

7.6

 

 

8.4

 

 

7.9

 

 

8.1

 

 

8.0

 

 

Three Months Ended

Selected Financial Ratios (2)

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Return on Average Assets

0.87

%

1.87

%

0.54

%

(0.06

) %

0.81

%

Adjusted Return on Average Assets (1)

0.87

 

0.76

 

0.53

 

0.87

 

0.71

 

Return on Average Equity

9.50

 

20.95

 

5.93

 

(0.66

)

8.54

 

Adjusted Return on Average Equity (1)

9.54

 

8.55

 

5.88

 

9.57

 

7.48

 

Average Interest-Earning Assets to Average Interest-Bearing Liabilities

144.48

 

145.09

 

146.78

 

146.82

 

142.98

 

Average Equity to Average Assets

9.14

 

8.93

 

9.03

 

9.08

 

9.48

 

Net Interest Rate Spread

2.98

 

2.85

 

2.77

 

2.72

 

2.91

 

Net Interest Rate Spread (FTE) (1)

2.99

 

2.86

 

2.78

 

2.74

 

2.92

 

Net Interest Margin

3.08

 

2.95

 

2.88

 

2.84

 

3.04

 

Net Interest Margin (FTE) (1)

3.10

 

2.96

 

2.89

 

2.85

 

3.05

 

Net (Recoveries) Charge-offs to Average Loans

(0.01

)

0.03

 

(0.01

)

(0.01

)

0.02

 

Efficiency Ratio

69.21

 

52.71

 

80.05

 

112.91

 

71.44

 

Adjusted Efficiency Ratio (1)

65.88

 

69.73

 

77.27

 

80.68

 

70.06

 

Asset Quality Ratios

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Allowance for Loan Losses to Total Loans

1.14

%

1.13

%

1.16

%

1.15

%

1.22

%

Allowance for Loan Losses to Total Loans, Excluding PPP Loans (Non-GAAP) (1)

1.15

 

1.16

 

1.20

 

1.21

 

1.30

 

Allowance for Loan Losses to Nonperforming Loans (3)

158.88

 

159.40

 

106.18

 

74.92

 

89.29

 

Allowance for Loan Losses to Noncurrent Loans (4)

218.28

 

233.37

 

135.37

 

90.83

 

118.08

 

Delinquent and Nonaccrual Loans to Total Loans (4) (5)

0.79

 

0.78

 

0.97

 

1.37

 

1.18

 

Nonperforming Loans to Total Loans (3)

0.72

 

0.71

 

1.09

 

1.53

 

1.37

 

Noncurrent Loans to Total Loans (4)

0.52

 

0.49

 

0.85

 

1.26

 

1.03

 

Nonperforming Assets to Total Assets (6)

0.51

 

0.51

 

0.74

 

1.07

 

0.98

 

Capital Ratios (7)

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

Common Equity Tier 1 Capital (to Risk Weighted Assets)

11.99

%

11.95

%

11.53

%

11.67

%

11.85

%

Tier 1 Capital (to Risk Weighted Assets)

11.99

 

11.95

 

11.53

 

11.67

 

11.85

 

Total Capital (to Risk Weighted Assets)

13.20

 

13.18

 

12.77

 

12.92

 

13.10

 

Tier 1 Leverage (to Adjusted Total Assets)

8.19

 

7.76

 

7.38

 

7.23

 

7.87

 

(1) Refer to Explanation of Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(2) Interim period ratios are calculated on an annualized basis.

(3) Nonperforming loans consist of nonaccrual loans, accruing loans that are 90 days or more past due, and troubled debt restructured loans.

(4) Noncurrent loans consist of nonaccrual loans and accruing loans that are 90 days or more past due.

(5) Delinquent loans consist of accruing loans that are 30 days or more past due.

(6) Nonperforming assets consist of nonperforming loans and other real estate owned.

(7) Capital ratios are for Community Bank only.

Certain items previously reported may have been reclassified to conform with the current reporting period’s format.

AVERAGE BALANCES AND YIELDS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

March 31, 2022

 

December 31, 2021

 

September 30, 2021

 

June 30, 2021

 

March 31, 2021

 

Average Balance

Interest and Dividends

Yield / Cost (1)

 

Average Balance

Interest and Dividends

Yield / Cost (1)

 

Average Balance

Interest and Dividends

Yield / Cost (1)

 

Average Balance

Interest and Dividends

Yield / Cost (1)

 

Average Balance

Interest and Dividends

Yield / Cost (1)

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Earning Assets:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans, Net (2)

$

1,009,210

$

9,573

3.85

%

 

$

1,004,827

$

9,927

3.92

%

 

$

1,004,474

$

9,740

3.85

%

 

$

1,016,868

$

9,959

3.93

%

 

$

1,031,853

$

10,168

4.00

%

Debt Securities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

215,906

 

905

1.68

 

 

 

205,328

 

866

1.69

 

 

 

197,763

 

843

1.71

 

 

 

124,685

 

635

2.04

 

 

 

122,883

 

646

2.10

 

Exempt From Federal Tax

 

10,195

 

84

3.30

 

 

 

10,477

 

84

3.21

 

 

 

11,647

 

90

3.09

 

 

 

12,276

 

94

3.06

 

 

 

12,943

 

96

2.97

 

Equity Securities

 

2,693

 

22

3.27

 

 

 

2,693

 

21

3.12

 

 

 

2,655

 

19

2.86

 

 

 

2,649

 

24

3.62

 

 

 

2,632

 

20

3.04

 

Interest Bearing Deposits at Banks

 

59,296

 

22

0.15

 

 

 

150,102

 

19

0.05

 

 

 

160,935

 

74

0.18

 

 

 

242,348

 

89

0.15

 

 

 

157,962

 

36

0.09

 

Other Interest-Earning Assets

 

3,483

 

50

5.82

 

 

 

3,475

 

87

9.93

 

 

 

3,512

 

61

6.89

 

 

 

4,044

 

62

6.15

 

 

 

3,909

 

62

6.43

 

Total Interest-Earning Assets

 

1,300,783

 

10,656

3.32

 

 

 

1,376,902

 

11,004

3.17

 

 

 

1,380,986

 

10,827

3.11

 

 

 

1,402,870

 

10,863

3.11

 

 

 

1,332,182

 

11,028

3.36

 

Noninterest-Earning Assets

 

122,288

 

 

 

 

100,607

 

 

 

 

88,291

 

 

 

 

82,794

 

 

 

 

92,550

 

 

Total Assets

$

1,423,071

 

 

 

$

1,477,509

 

 

 

$

1,469,277

 

 

 

$

1,485,664

 

 

 

$

1,424,732

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-Bearing Demand Deposits (3)

$

276,603

 

48

0.07

%

 

$

278,546

 

51

0.07

%

 

$

275,411

 

48

0.07

 

 

$

275,752

 

55

0.08

 

 

$

259,065

 

77

0.12

%

Savings (3)

 

243,786

 

19

0.03

 

 

 

252,387

 

20

0.03

 

 

 

251,801

 

21

0.03

 

 

 

247,238

 

25

0.04

 

 

 

239,850

 

32

0.05

 

Money Market (3)

 

192,425

 

41

0.09

 

 

 

209,572

 

57

0.11

 

 

 

198,167

 

55

0.11

 

 

 

199,652

 

71

0.14

 

 

 

197,395

 

98

0.20

 

Time Deposits (3)

 

132,015

 

422

1.30

 

 

 

154,342

 

508

1.31

 

 

 

168,654

 

591

1.39

 

 

 

177,506

 

676

1.53

 

 

 

187,114

 

740

1.60

 

Total Interest-Bearing Deposits (3)

 

844,829

 

530

0.25

 

 

 

894,847

 

636

0.28

 

 

 

894,033

 

715

0.32

 

 

 

900,148

 

827

0.37

 

 

 

883,424

 

947

0.43

 

Short-Term Borrowings

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Securities Sold Under Agreements to Repurchase

 

37,884

 

19

0.20

 

 

 

44,709

 

26

0.23

 

 

 

40,818

 

25

0.24

 

 

 

49,325

 

24

0.20

 

 

 

41,094

 

23

0.23

 

Other Borrowings

 

17,604

 

174

4.01

 

 

 

9,474

 

70

2.93

 

 

 

6,000

 

36

2.38

 

 

 

6,000

 

35

2.34

 

 

 

7,200

 

41

2.31

 

Total Interest-Bearing Liabilities

 

900,317

 

723

0.33

 

 

 

949,030

 

732

0.31

 

 

 

940,851

 

776

0.33

 

 

 

955,473

 

886

0.37

 

 

 

931,718

 

1,011

0.44

 

Noninterest-Bearing Demand Deposits

 

384,188

 

 

 

 

388,787

 

 

 

 

387,746

 

 

 

 

387,317

 

 

 

 

349,108

 

 

Other Liabilities

 

8,554

 

 

 

 

7,800

 

 

 

 

8,019

 

 

 

 

7,999

 

 

 

 

8,869

 

 

Total Liabilities

 

1,293,059

 

 

 

 

1,345,617

 

 

 

 

1,336,616

 

 

 

 

1,350,789

 

 

 

 

1,289,695

 

 

Stockholders' Equity

 

130,012

 

 

 

 

131,892

 

 

 

 

132,661

 

 

 

 

134,875

 

 

 

 

135,037

 

 

Total Liabilities and Stockholders' Equity

$

1,423,071

 

 

 

$

1,477,509

 

 

 

$

1,469,277

 

 

 

$

1,485,664

 

 

 

$

1,424,732

 

 

Net Interest Income (FTE)

(Non-GAAP) (4)

 

 

9,933

 

 

 

 

10,272

 

 

 

 

10,051

 

 

 

 

9,977

 

 

 

 

10,017

 

Net Interest-Earning Assets (5)

 

400,466

 

 

 

 

427,872

 

 

 

 

440,135

 

 

 

 

447,397

 

 

 

 

400,464

 

 

Net Interest Rate Spread (FTE)

(Non-GAAP) (4) (6)

 

 

2.99

%

 

 

 

2.86

%

 

 

 

2.78

 

 

 

 

2.74

 

 

 

 

2.92

%

Net Interest Margin (FTE)

(Non-GAAP) (4)(7)

 

 

3.10

 

 

 

 

2.96

 

 

 

 

2.89

 

 

 

 

2.85

 

 

 

 

3.05

 

PPP Loans

 

14,673

 

445

12.30

 

 

 

29,067

 

391

5.34

 

 

 

40,313

 

484

4.76

 

 

 

57,661

 

636

4.42

 

 

 

56,945

 

676

4.81

 

(1) Annualized based on three months ended results.

(2) Net of the allowance for loan losses and includes nonaccrual loans with a zero yield and Loans Held for Sale.

(3) Includes Deposits Held for Sale that were sold in December 2021.

(4) Refer to Explanation and Use of Non-GAAP Financial Measures in this Press Release for the calculation of the measure and reconciliation to the most comparable GAAP measure.

(5) Net interest-earning assets represent total interest-earning assets less total interest-bearing liabilities.

(6) Net interest rate spread represents the difference between the weighted average yield on interest-earning assets and the weighted average cost of interest-bearing liabilities.

(7) Net interest margin represents annualized net interest income divided by average total interest-earning assets.

Explanation of Use of Non-GAAP Financial Measures

In addition to financial measures presented in accordance with generally accepted accounting principles (“GAAP”), we use, and this Press Release contains or references, certain non-GAAP financial measures. We believe these non-GAAP financial measures provide useful information in understanding our underlying results of operations or financial position and our business and performance trends as they facilitate comparisons with the performance of other companies in the financial services industry. Non-GAAP adjusted items impacting the Company's financial performance are identified to assist investors in providing a complete understanding of factors and trends affecting the Company’s business and in analyzing the Company’s operating results on the same basis as that applied by management. Although we believe that these non-GAAP financial measures enhance the understanding of our business and performance, they should not be considered an alternative to GAAP or considered to be more important than financial results determined in accordance with GAAP, nor are they necessarily comparable with non-GAAP measures which may be presented by other companies. Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found herein.

 

Three Months Ended

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands, except share and per share data) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (GAAP)

$

3,047

 

$

6,965

 

$

1,983

 

$

(223

)

$

2,845

 

 

 

 

 

 

 

Adjustments

 

 

 

 

 

Loss (Gain) on Securities

 

7

 

 

(44

)

 

(24

)

 

(11

)

 

(447

)

Gain on Sale of Branches

 

 

 

(5,203

)

 

 

 

 

 

 

Loss on Disposal of Fixed Assets

 

8

 

 

 

 

 

 

3

 

 

 

Tax effect

 

(3

)

 

1,102

 

 

5

 

 

2

 

 

94

 

 

 

 

 

 

 

Non-Cash Charges:

 

 

 

 

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

1,178

 

 

 

Writedown on Fixed Assets

 

 

 

23

 

 

2

 

 

2,268

 

 

 

Tax Effect

 

 

 

 

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP)

$

3,059

 

$

2,843

 

$

1,966

 

$

3,217

 

$

2,492

 

 

 

 

 

 

 

Weighted-Average Diluted Common Shares and Common Stock Equivalents Outstanding

 

5,220,887

 

 

5,314,537

 

 

5,390,128

 

 

5,432,234

 

 

5,436,881

 

 

 

 

 

 

 

Earnings (Loss) per Common Share - Diluted (GAAP)

$

0.58

 

$

1.31

 

$

0.37

 

$

(0.04

)

$

0.52

 

 

 

 

 

 

 

Adjusted Earnings per Common Share - Diluted (Non-GAAP)

$

0.59

 

$

0.53

 

$

0.36

 

$

0.59

 

$

0.46

 

 

 

 

 

 

 

Net Income (Loss) (GAAP) (Numerator)

$

3,047

 

$

6,965

 

$

1,983

 

$

(223

)

$

2,845

 

 

 

 

 

 

 

Annualization Factor

 

4.06

 

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

 

 

 

 

 

Average Assets (Denominator)

 

1,423,071

 

 

1,477,509

 

 

1,469,277

 

 

1,485,664

 

 

1,424,732

 

 

 

 

 

 

 

Return on Average Assets (GAAP)

 

0.87

%

 

1.87

%

 

0.54

%

 

(0.06

) %

 

0.81

%

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP) (Numerator)

$

3,059

 

$

2,843

 

$

1,966

 

$

3,217

 

$

2,492

 

 

 

 

 

 

 

Annualization Factor

 

4.06

 

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

 

 

 

 

 

Average Assets (Denominator)

 

1,423,071

 

 

1,477,509

 

 

1,469,277

 

 

1,485,664

 

 

1,424,732

 

 

 

 

 

 

 

Adjusted Return on Average Assets (Non-GAAP)

 

0.87

%

 

0.76

%

 

0.53

%

 

0.87

%

 

0.71

%

 

Three Months Ended

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Net Income (Loss) (GAAP) (Numerator)

$

3,047

 

$

6,965

 

$

1,983

 

$

(223

)

$

2,845

 

 

 

 

 

 

 

Annualization Factor

 

4.06

 

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

 

 

 

 

 

Average Equity (Denominator) (GAAP)

 

130,012

 

 

131,892

 

 

132,661

 

 

134,875

 

 

135,037

 

 

 

 

 

 

 

Return on Average Equity (GAAP)

 

9.50

%

 

20.95

%

 

5.93

%

 

(0.66

) %

 

8.54

%

 

 

 

 

 

 

Adjusted Net Income (Non-GAAP) (Numerator)

$

3,059

 

$

2,843

 

$

1,966

 

$

3,217

 

$

2,492

 

 

 

 

 

 

 

Annualization Factor

 

4.06

 

 

3.97

 

 

3.97

 

 

4.01

 

 

4.06

 

 

 

 

 

 

 

Average Equity (Denominator) (GAAP)

 

130,012

 

 

131,892

 

 

132,661

 

 

134,875

 

 

135,037

 

 

 

 

 

 

 

Adjusted Return on Average Equity (Non-GAAP)

 

9.54

%

 

8.55

%

 

5.88

%

 

9.57

%

 

7.48

%

Tangible book value per common share is a non-GAAP measure and is calculated based on tangible common equity divided by period-end common shares outstanding. Tangible common equity to tangible assets is a non-GAAP measure and is calculated based on tangible common equity divided by tangible assets. We believe these non-GAAP measures serve as useful tools to help evaluate the strength and discipline of the Company's capital management strategies and as an additional, conservative measure of the Company’s total value.

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands, except share and per share data) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Assets (GAAP)

$

1,438,670

 

$

1,425,479

 

$

1,474,818

 

$

1,461,613

 

$

1,476,821

 

Goodwill and Intangible Assets, Net

 

(14,582

)

 

(15,027

)

 

(15,472

)

 

(15,918

)

 

(17,599

)

Tangible Assets (Non-GAAP) (Numerator)

$

1,424,088

 

$

1,410,452

 

$

1,459,346

 

$

1,445,695

 

$

1,459,222

 

 

 

 

 

 

 

Stockholders' Equity (GAAP)

$

122,156

 

$

133,124

 

$

130,987

 

$

132,536

 

$

133,776

 

Goodwill and Intangible Assets, Net

 

(14,582

)

 

(15,027

)

 

(15,472

)

 

(15,918

)

 

(17,599

)

Tangible Common Equity or Tangible Book Value (Non-GAAP) (Denominator)

$

107,574

 

$

118,097

 

$

115,515

 

$

116,618

 

$

116,177

 

 

 

 

 

 

 

Stockholders’ Equity to Assets (GAAP)

 

8.5

%

 

9.3

%

 

8.9

%

 

9.1

%

 

9.1

%

Tangible Common Equity to Tangible Assets (Non-GAAP)

 

7.6

%

 

8.4

%

 

7.9

%

 

8.1

%

 

8.0

%

 

 

 

 

 

 

Common Shares Outstanding (Denominator)

 

5,156,897

 

 

5,260,672

 

 

5,330,401

 

 

5,409,077

 

 

5,434,374

 

 

 

 

 

 

 

Book Value per Common Share (GAAP)

$

23.69

 

$

25.31

 

$

24.57

 

$

24.50

 

$

24.62

 

Tangible Book Value per Common Share (Non-GAAP)

$

20.86

 

$

22.45

 

$

21.67

 

$

21.56

 

$

21.38

 

Interest income on interest-earning assets, net interest rate spread and net interest margin are presented on a fully tax-equivalent (“FTE”) basis. The FTE basis adjusts for the tax benefit of income on certain tax-exempt loans and securities using the federal statutory income tax rate of 21 percent. We believe the presentation of net interest income on a FTE basis ensures comparability of net interest income arising from both taxable and tax-exempt sources and is consistent with industry practice. The following table reconciles net interest income, net interest spread and net interest margin on a FTE basis for the periods indicated:

 

Three Months Ended

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Interest Income (GAAP)

$

10,616

 

$

10,963

 

$

10,786

 

$

10,820

 

$

10,988

 

Adjustment to FTE Basis

 

40

 

 

41

 

 

41

 

 

43

 

 

40

 

Interest Income (FTE) (Non-GAAP)

 

10,656

 

 

11,004

 

 

10,827

 

 

10,863

 

 

11,028

 

Interest Expense (GAAP)

 

723

 

 

732

 

 

776

 

 

886

 

 

1,011

 

Net Interest Income (FTE) (Non-GAAP)

$

9,933

 

$

10,272

 

$

10,051

 

$

9,977

 

$

10,017

 

 

 

 

 

 

 

Net Interest Rate Spread (GAAP)

 

2.98

%

 

2.85

%

 

2.77

%

 

2.72

%

 

2.91

%

Adjustment to FTE Basis

 

0.01

 

 

0.01

 

 

0.01

 

 

0.02

 

 

0.01

 

Net Interest Rate Spread (FTE) (Non-GAAP)

 

2.99

 

 

2.86

 

 

2.78

 

 

2.74

 

 

2.92

 

 

 

 

 

 

 

Net Interest Margin (GAAP)

 

3.08

%

 

2.95

%

 

2.88

%

 

2.84

%

 

3.04

%

Adjustment to FTE Basis

 

0.02

 

 

0.01

 

 

0.01

 

 

0.01

 

 

0.01

 

Net Interest Margin (FTE) (Non-GAAP)

 

3.10

 

 

2.96

 

 

2.89

 

 

2.85

 

 

3.05

 

Adjusted efficiency ratio excludes the effect of certain non-recurring or non-cash items and represents adjusted noninterest expense divided by adjusted operating revenue. The Company evaluates its operational efficiency based on its adjusted efficiency ratio and believes it provides additional perspective on its ongoing performance as well as peer comparability.

 

Three Months Ended

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expense (GAAP)

$

8,656

 

$

9,972

 

$

9,773

 

$

13,722

 

$

9,395

 

 

 

 

 

 

 

Net Interest and Dividend Income (GAAP)

 

9,893

 

 

10,231

 

 

10,010

 

 

9,934

 

 

9,977

 

 

 

 

 

 

 

Noninterest Income (GAAP)

 

2,613

 

 

8,689

 

 

2,198

 

 

2,219

 

 

3,174

 

Operating Revenue (GAAP)

 

12,506

 

 

18,920

 

 

12,208

 

 

12,153

 

 

13,151

 

Efficiency Ratio (GAAP)

 

69.21

%

 

52.71

%

 

80.05

%

 

112.91

%

 

71.44

%

 

 

 

 

 

 

Noninterest Expense (GAAP)

$

8,656

 

$

9,972

 

$

9,773

 

$

13,722

 

$

9,395

 

Less:

 

 

 

 

 

Other Real Estate Owned (Income)

 

(38

)

 

(30

)

 

(89

)

 

(26

)

 

(38

)

Amortization of Intangible Assets

 

445

 

 

445

 

 

446

 

 

503

 

 

532

 

Intangible Assets and Goodwill Impairment

 

 

 

 

 

 

 

1,178

 

 

 

Writedown on Fixed Assets

 

 

 

23

 

 

2

 

 

2,268

 

 

 

Adjusted Noninterest Expense (Non-GAAP)

$

8,249

 

$

9,534

 

$

9,414

 

$

9,799

 

$

8,901

 

 

 

 

 

 

 

Net Interest and Dividend Income (GAAP)

 

9,893

 

 

10,231

 

 

10,010

 

 

9,934

 

 

9,977

 

Noninterest Income (GAAP)

 

2,613

 

 

8,689

 

 

2,198

 

 

2,219

 

 

3,174

 

Less:

 

 

 

 

 

Net Gain on Securities

 

(7

)

 

44

 

 

24

 

 

11

 

 

447

 

Gain on Sale of Branches

 

 

 

5,203

 

 

 

 

 

 

 

Net Loss on Disposal of Fixed Assets

 

(8

)

 

 

 

 

 

(3

)

 

 

Adjusted Noninterest Income (Non-GAAP)

 

2,628

 

 

3,442

 

 

2,174

 

 

2,211

 

 

2,727

 

Adjusted Operating Revenue (Non-GAAP)

 

12,521

 

 

13,673

 

 

12,184

 

 

12,145

 

 

12,704

 

Adjusted Efficiency Ratio (Non-GAAP)

 

65.88

%

 

69.73

%

 

77.27

%

 

80.68

%

 

70.06

%

Allowance for loan losses to total loans, excluding PPP loans, is a non-GAAP measure that serves as a useful measurement to evaluate the allowance for loan losses without the impact of SBA guaranteed loans.

 

3/31/22

12/31/21

9/30/21

6/30/21

3/31/21

(Dollars in thousands) (Unaudited)

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan Losses

$

11,595

 

$

11,582

 

$

11,581

 

$

11,544

 

$

12,725

 

 

 

 

 

 

 

Total Loans

 

1,020,642

 

$

1,020,796

 

 

1,001,599

 

$

1,007,446

 

$

1,041,697

 

PPP Loans

 

(8,242

)

 

(24,523

)

 

(32,703

)

 

(49,525

)

 

(60,380

)

Total Loans, Excluding PPP Loans (Non-GAAP)

$

1,012,400

 

$

996,273

 

$

968,896

 

$

957,921

 

$

981,317

 

 

 

 

 

 

 

Allowance for Loan Losses to Total Loans, Excluding

PPP Loans (Non-GAAP)

 

1.15

%

 

1.16

%

 

1.20

%

 

1.21

%

 

1.30

%

 

Contacts

Company Contact:

John H. Montgomery

President and Chief Executive Officer

Phone: (724) 225-2400

Investor Relations:

Jeremy Hellman, Vice President

The Equity Group Inc.

Phone: (212) 836-9626

Email: jhellman@equityny.com

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