Press release

MVB Financial Corp. Reports Strong and Active Second Quarter 2020 Results with a 17% Increase in Net Income and a 95% Increase in Noninterest-Bearing Deposits from Previous Year

0
Sponsored by Businesswire

MVB Financial Corp. (NASDAQ: MVBF) (“MVB Financial,” “MVB,” or the “Company”) today reported net income of $18.0 million, or $1.50 basic and $1.49 diluted earnings per share for the three months ended June 30, 2020.

 

 

Quarterly

 

Year-to-Date

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Net income from continuing operations

 

$

18,034

 

 

$

1,048

 

 

$

14,931

 

 

$

19,082

 

 

$

18,123

 

Net income from discontinued operations

 

 

 

 

 

446

 

 

 

 

446

 

Net income

 

$

18,034

 

 

$

1,048

 

 

$

15,377

 

 

$

19,082

 

 

$

18,569

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.27

 

 

$

1.58

 

 

$

1.54

 

Earnings per share from discontinued operations – basic

 

 

 

 

 

0.04

 

 

 

 

0.04

 

Earnings per share – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.31

 

 

$

1.58

 

 

$

1.58

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.15

 

 

$

1.55

 

 

$

1.41

 

Earnings per share from discontinued operations – diluted

 

 

 

 

 

0.03

 

 

 

 

0.03

 

Earnings per share – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.18

 

 

$

1.55

 

 

$

1.44

 

SECOND QUARTER 2020 HIGHLIGHTS

  • The Company had a very active second quarter of 2020 and completed three strategic transactions: the FDIC-assisted acquisition of The First State Bank, the acquisition of Paladin, LLC (“Paladin”), and the sale of four banking centers in the Eastern Panhandle region of WV
  • Tangible book value per share was $16.65 as of June 30, 2020, an increase of $1.49 from March 31, 2020, and an increase of $1.81 from June 30, 2019.
  • Allowance for loan losses to total loans was 1.19% as of June 30, 2020, an increase of 39 basis points from March 31, 2020, and an increase of 35 basis points from June 30, 2019.
  • Net interest income was $18.5 million for the quarter ended June 30, 2020, an increase of $2.3 million, or 14.1%, from the quarter ended March 31, 2020, and an increase of $3.9 million, or 27.0%, from the quarter ended June 30, 2019.
  • Net interest margin, on a fully tax-equivalent basis, continued to grow and was 3.78% for the quarter ended June 30, 2020, an increase of 12 basis points versus the quarter ended March 31, 2020, and an increase of 25 basis points versus the quarter ended June 30, 2019.
  • Mortgage fee income was $14.9 million for the quarter ended June 30, 2020, an increase of $3.7 million, or 33.2%, from the quarter ended March 31, 2020, and an increase of $5.1 million, or 51.5%, from the quarter ended June 30, 2019.
  • Deposits were $1.9 billion as of June 30, 2020, an increase of $77.9 million, or 4.4%, from March 31, 2020, and an increase of $486.2 million, or 35.3%, from June 30, 2019.
  • Noninterest-bearing deposits were $528.5 million as of June 30, 2020, an increase of $119.0 million, or 29.1%, from March 31, 2020, and an increase of $257.9 million, or 95.3%, from June 30, 2019. As of June 30, 2020, total noninterest-bearing deposits were 28.4% of total deposits, compared to 22.9% as of March 31, 2020, and 19.6% as of June 30, 2019.

Please note: All references to loans or deposits as of March 31, 2020 and December 31, 2019 include the loans or deposits of branches held for sale, as detailed in the breakdown of loans, premises and equipment, and deposits of branches held for sale table in the “Financial Highlights” section of this release.

MANAGEMENT OVERVIEW

During the second quarter of 2020, the Company introduced the theme of “protect the core and stimulate growth.” In this, the Company refers to the lending and deposit functions of MVB Bank as its core and stimulates growth from strategic opportunities that include the FDIC-assisted acquisition of The First State Bank completed on April 3, 2020, the acquisition of Paladin completed on April 17, 2020, the sale of the Eastern Panhandle, WV branches completed on April 24, 2020, and MVB Mortgage’s combination with Intercoastal Mortgage, LLC completed on July 1, 2020. The continued growth and execution on deposit acquisition strategies by the Fintech vertical, in addition to these transactions, serve to highlight and exemplify the Company’s purpose of “Trusted partners on the financial frontier—committed to your success!”

During the COVID-19 pandemic, the Company further validated its purpose by continuing to execute on all fronts, including prioritizing the safety of Team Members, including a majority of the Team working remotely, and working with Clients on Paycheck Protection Program (“PPP”) loans, deferrals, and modifications. The Company also continued to support the Community by partnering with non-profit entities and local businesses and was able to return value to Shareholders through meaningful growth in earnings and tangible book value. In addition to the growth in earnings and tangible book value, the Company materially increased the allowance for loan losses.

Due to ongoing concerns within the industry resulting from the continued COVID-19 pandemic, management concentrated efforts on maintaining greater liquidity in anticipation of loan deferrals and other potential cash flow disruptions. The Company remained an active participant in the Paycheck Protection Program during the second quarter of 2020 and is committed to evaluating other programs as they become available to further assist our clients, as well as continuing to provide consumer deferrals consistent with government-sponsored enterprise (“GSE”) guidelines.

During the second quarter of 2020, the Company and management kept their focus on strengthening capital and maintaining strong asset quality, all while generating record earnings of $18.0 million. With the earnings generated from the strategic transactions completed in the second quarter, the Company increased equity by 8.2% from the three months ended March 31, 2020, while increasing allowance for loan losses. Allowance for loan losses as a percentage of total loans was 1.19% as of June 30, 2020, an increase of 39 basis points from March 31, 2020, and an increase of 35 basis points from June 30, 2019.

In addition, the Company further strengthened its liquidity position by increasing total deposits by $77.9 million from March 31, 2020, which helped to grow the Company’s net interest margin by 12 basis points as a result of the replacement of brokered CDs and higher-cost deposits with noninterest-bearing deposits. Total noninterest-bearing deposits increased $119.0 million, or 29.1%, from March 31, 2020, and increased $257.9 million, or 95.3%, from June 30, 2019, to a balance of $528.5 million as of June 30, 2020. The growth in noninterest-bearing deposits was primarily driven by MVB’s continued execution of strategic initiatives in Fintech and specialty deposits. As of June 30, 2020, total noninterest-bearing deposits were 28.4% of total deposits, compared to 22.9% as of March 31, 2020, and 19.6% as of June 30, 2019.

MVB Mortgage experienced a strong resurgence in the second quarter, an improvement from the market turmoil late in the first quarter of 2020. MVB Mortgage has historically been one of the Company’s strategic initiatives to protect earnings in a down-rate environment and second quarter was further validation of this strategy. MVB Mortgage generated net income of $10.9 million for the three months ended June 30, 2020. Mortgage closed loan production volume increased $365.2 million, or 67.7%, from the quarter ended March 31, 2020, and increased $439.9 million, or 94.8%, from the quarter ended June 30, 2019. As a result of these volume increases, the volume of mortgage loans sold increased $425.7 million, or 100.6%, from the quarter ended March 31, 2020, and increased $451.4 million, or 113.5%, from the quarter ended June 30, 2019. As a result of the increases in production and sold loan volume, mortgage fee income increased $3.7 million, or 33.2%, from the quarter ended March 31, 2020, and increased $5.1 million, or 51.5%, from the quarter ended June 30, 2019. MVB Mortgage has been able to implement efficiencies so that even with these increases in volume, mortgage processing expense remained relatively flat and increased $39 thousand, or 4.6%, from the quarter ended March 31, 2020, and increased $174 thousand, or 24.3%, from the quarter ended June 30, 2019.

“In the second quarter of 2020, MVB produced record earnings, all while increasing our loan loss reserve, which positions us very well for the future. We also increased our tangible book value and reached a record 28.4% in noninterest-bearing (NIB) deposits as a percentage of total deposits, which sets us apart in our peer group,” said Larry F. Mazza, President and CEO, MVB Financial Corp.

“Just as important to me during the past quarter — Team MVB has truly lived our purpose and values while executing on these strong performance results” Mazza said. “We put our values into action, showing our commitment to our Teammates, shareholders, clients, and communities.”

LOANS

Loans, excluding PPP loans of $89.8 million, totaled $1.4 billion as of June 30, 2020, a decrease of $26.9 million, or 1.9%, from March 31, 2020, and an increase of $78.2 million, or 5.9%, from June 30, 2019. The decrease in loans was driven by reduced line utilization by clients of $35.0 million, compared to the balance and amounts outstanding as of March 31, 2020. In addition, the Bank originated 455 PPP loans with a current balance of $89.8 million during the second quarter of 2020. The tax-equivalent yield on loans, including PPP loans, was 4.74% for the quarter ended June 30, 2020, a decrease of 23 basis points from the quarter ended March 31, 2020, and a decrease of 49 basis points from the quarter ended June 30, 2019.

Loans held for sale totaled $242.1 million as of June 30, 2020, an increase of $56.0 million, or 30.1%, from March 31, 2020, and an increase of $122.2 million, or 101.9%, from June 30, 2019. Loans held for sale increased as a result of increases in the locked mortgage loan pipeline and increased demand as a result of U.S. Treasury and mortgage rates falling late in the first quarter of 2020 and remaining at historically low rates throughout the second quarter of 2020.

DEPOSITS

The Company continues to execute on its deposit growth strategy, including strategic initiatives in Fintech and specialty deposits. Deposits totaled $1.9 billion of June 30, 2020, an increase of $77.9 million, or 4.4%, from March 31, 2020, and an increase of $486.2 million, or 35.3%, from June 30, 2019.

Noninterest-bearing deposits totaled $528.5 million as of June 30, 2020, or 28.4%, of the total deposit base, an increase of $119.0 million, or 29.1%, from March 31, 2020, and an increase of $257.9 million, or 95.3%, from June 30, 2019. As of June 30, 2020, total noninterest-bearing deposits were 28.4% of total deposits, compared to 22.9% as of March 31, 2020, and 19.6% as of June 30, 2019.

Driven by increased mortgage activity as a result of the historically low rates late in the first quarter and throughout the second quarter of 2020, deposits related to title businesses totaled $155.3 million as of June 30, 2020, up from $116.5 million as of March 31, 2020, and up from $51.9 million as of June 30, 2019.

During the first quarter of 2020, the Company used the influx of noninterest-bearing deposits to pay down FHLB and other borrowings. As a result of the increases in noninterest-bearing deposits continuing throughout the second quarter of 2020, the Company was able to further decrease reliance on higher-cost funding sources by reducing the balance of brokered deposits by $55.7 million from March 31, 2020.

NET INTEREST INCOME

Net interest income for the quarter ended June 30, 2020, was $18.5 million, an increase of $2.3 million, or 14.1%, from the quarter ended March 31, 2020, and an increase of $3.9 million, or 27.0%, from the quarter ended June 30, 2019. Net interest margin, on a fully tax-equivalent basis, for the quarter ended June 30, 2020, was 3.78%, an increase of 12 basis points versus the quarter ended March 31, 2020, and an increase of 25 basis points versus the quarter ended June 30, 2019. Excluding the impact from the FDIC-assisted acquisition of The First State Bank, the fully-tax equivalent net interest margin for the quarter ended June 30, 2020 would have been 3.67%. The tax-equivalent adjustments are added to net interest income and are $284 thousand for the quarter ended June 30, 2020, $261 thousand for the quarter ended March 31, 2020, and $268 thousand for the quarter ended June 30, 2019.

Interest income increased 5.2% during the quarter ended June 30, 2020, compared to the quarter ended March 31, 2020, and increased 6.4% compared to the quarter ended June 30, 2019. The 23-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended March 31, 2020, was the result of a 18-basis point decrease in the yield on commercial loans and a 32-basis point decrease in the yield on real estate loans. The 50-basis point decrease in the tax-equivalent yield on earning assets compared to the quarter ended June 30, 2019, was the result of a 50-basis point decrease in the yield on commercial loans and a 51-basis point decrease in the yield on real estate loans.

Interest expense decreased 26.8% during the quarter ended June 30, 2020, compared to the quarter ended March 31, 2020, as a result of a decrease of 41 basis points in the cost of interest-bearing liabilities. Interest expense decreased 44.2% compared to the quarter ended June 30, 2019, due to a decrease of 84 basis points in the cost of interest-bearing liabilities. The decrease in the cost of interest-bearing liabilities compared to the quarter ended March 31, 2020, was the result of a 82-basis point decrease in the cost of money market checking accounts, a 57-basis point decrease in the cost of CDs, and a 66-basis point decrease in the cost of FHLB and other borrowings. The decrease in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2019, was the result of a 104-basis point decrease in the cost of money market checking accounts, a 93-basis point decrease in the cost of CDs, and a 153-basis point decrease in the cost of FHLB and other borrowings.

An increase in the Company’s average noninterest-bearing balances of $122.5 million from the quarter ended March 31, 2020, helped to maintain a 27-basis point favorable spread on the tax-equivalent net interest margin for the quarter ended June 30, 2020, compared to a 33-basis point favorable spread for the quarter ended March 31, 2020.

An increase in the Company’s average noninterest-bearing balances of $203.8 million from the quarter ended June 30, 2019, helped to maintain a 27-basis point favorable spread on the tax-equivalent net interest margin in 2020 compared to a 36-basis point favorable spread for the same period in 2019.

ASSET QUALITY

Provision for loan losses totaled $6.6 million for the quarter ended June 30, 2020, an increase of $5.5 million, or 479.6%, from the quarter ended March 31, 2020, and an increase of $6.0 million, or 999.3%, from the quarter ended June 30, 2019. The increase in provision in the second quarter of 2020 is primarily the result of the recognition of increased risk within the loan portfolio as a result of the COVID-19 pandemic, which is reflected through analysis of the qualitative adjustment factors. Additionally, changes in the total outstanding balances of the loan portfolios, changes in the level of recognized charge-offs, and resulting changes in the historical loss rates are drivers of the total provision. The increase in provision in comparison to the quarter ended June 30, 2019 is also impacted by adjustments to the loan portfolio segmentation used within the allowance for loan loss calculation. As a result of the increases in provision, allowance for loan losses as a percentage of total loans was 1.19% as of June 30, 2020, an increase of 39 basis points from March 31, 2020, and an increase of 35 basis points from June 30, 2019. The Company is continuing to evaluate the effects of COVID-19 as it relates to the asset quality of the loan portfolio and will continue to evaluate and assess the need for additional loan loss provision in the third quarter of 2020 and beyond.

Nonperforming loans totaled $14.1 million, or 0.94%, of total loans as of June 30, 2020, compared to 0.42% of total loans as of March 31, 2020, and compared to 0.51% of total loans as of June 30, 2019. The increase in nonperforming loans was primarily the result of the classification of commercial loans totaling $6.1 million to a single borrower. An additional $1.1 million in residential mortgage loans were classified as nonperforming in the second quarter of 2020. In addition, net charge-offs for the quarter ended June 30, 2020, decreased $1.7 million compared to the quarter ended March 31, 2020, and decreased $660 thousand compared to the quarter ended June 30, 2019. During the first quarter of 2020, there was a charge-off of a $1.8 million government lease financing loan stemming from the non-renewal of the underlying government contract that was unrelated to the COVID-19 pandemic. During the second quarter of 2020, commercial loans totaling $223.9 million and mortgage loans totaling $17.5 million were approved for modifications such as interest-only payments and payment deferrals. These modifications were not considered to be troubled debt restructurings.

NONINTEREST INCOME

Noninterest income totaled $45.5 million for the quarter ended June 30, 2020, an increase of $34.7 million, or 319.5%, from the quarter ended March 31, 2020, and an increase of $19.1 million, or 72.5%, from the quarter ended June 30, 2019.

The $34.7 million increase in noninterest income from the quarter ended March 31, 2020, was due to an increase of $17.0 million in the gain on derivatives, an increase of $9.6 million in the gain on sale of banking centers, an increase of $4.7 million in the bargain purchase gain from the acquisition of The First State Bank, and an increase of $3.7 million in mortgage fee income.

The $19.1 million increase in noninterest income from the quarter ended June 30, 2019, was due to an increase of $12.3 million in the gain on derivatives, an increase of $9.6 million in the gain on sale of banking centers, an increase of $5.1 million in mortgage fee income, and an increase of $4.7 million in the bargain purchase gain from the acquisition of The First State Bank. These increases were partially offset by a decrease of $13.6 million in the holding gain on equity securities. As previously reported, the Company recognized a $13.6 million holding gain on an equity investment in its Fintech portfolio during the second quarter of 2019.

NONINTEREST EXPENSE

Noninterest expense totaled $33.3 million for the quarter ended June 30, 2020, an increase of $8.7 million, or 35.2%, from the quarter ended March 31, 2020, and an increase of $12.9 million, or 63.5%, from the quarter ended June 30, 2019.

The $8.7 million increase in noninterest expense from the quarter ended March 31, 2020, was due to an increase of $6.5 million in salaries and employee benefits, an increase of $1.7 million in professional fees, and an increase of $570 thousand in data processing and communications expense. Of the increase in salaries and employee benefits expense, $5.7 million was primarily driven by a $365.2 million, or 67.7%, increase in mortgage closed production volume. Of the increases in professional fees and data processing and communications expense, $1.2 million and $499 thousand, respectively, were deal costs related to The First State Bank acquisition, the Paladin acquisition, the sale of the Eastern Panhandle banking centers, and the MVB Mortgage transaction.

The $12.9 million increase in noninterest expense from the quarter ended June 30, 2019, was due to an increase of $9.4 million in salaries and employee benefits, an increase of $2.1 million in professional fees and an increase of $764 in data processing and communications expense. Of the increase in salaries and employee benefits expense, $6.5 million was primarily driven by a $439.9 million, or 94.8%, increase in mortgage closed production volume. Of the increases in professional fees and data processing and communications expense, $1.2 million and $499 thousand, respectively, were deal costs related to The First State Bank acquisition, the Paladin acquisition, the sale of the Eastern Panhandle banking centers, and the MVB Mortgage transaction.

STRATEGIC TRANSACTIONS

As previously announced, the Company completed three strategic transactions during the second quarter of 2020.

On April 3, 2020, the Bank entered into a Purchase and Assumption Agreement with the Federal Deposit Insurance Corporation (the “FDIC”), as receiver for The First State Bank (“First State”), Barboursville, W.Va., providing for the assumption by the Bank of certain liabilities and the purchase of certain assets of First State. This transaction closed on April 3, 2020 and the Company recognized a preliminary bargain purchase gain of $4.7 million, which is subject to change as the day 1 fair values of the acquired assets and liabilities are finalized. Since the closing of this transaction, the Company has reduced the OREO acquired of $22.6 million to $7.7 million, which frees up capital and reduces carrying costs.

On April 17, 2020, Paladin Fraud, LLC (“Paladin Fraud”), an indirect wholly owned subsidiary of the Company, entered into an Asset Purchase Agreement by and among Paladin Fraud, Paladin, James Houlihan, and Jamon Whitehead. Paladin Fraud acquired substantially all of the assets and certain liabilities of Paladin. The purchase price of this transaction consisted of 19,278 unregistered shares of the Company’s common stock and an undisclosed amount of cash.

On November 21, 2019, the Company entered into a Purchase and Assumption Agreement with Summit Community Bank, Inc., a subsidiary of Summit Financial Group, Inc., pursuant to which Summit purchased certain assets and assumed certain liabilities of three MVB Bank branches in Berkeley County, W.Va. and one MVB Bank branch in Jefferson County, W.Va. Summit assumed certain deposit liabilities and acquired certain loans, as well as cash, real property, personal property, and other fixed assets associated with the branches. This transaction closed on April 24, 2020 and the Company recognized a gain on sale of banking centers of $9.6 million.

SUBSEQUENT EVENTS

As previously announced on July 1, 2020, the Company announced the completion of MVB Mortgage’s combination with Intercoastal Mortgage Company, to become one of the largest independently-owned residential mortgage lending operations in the Mid-Atlantic region: Intercoastal Mortgage, LLC (“ICM”). Per the terms of the agreement, MVB Mortgage contributed substantially all of its assets and in exchange received common units representing 47% of the common interest of ICM, as well as $7.5 million in preferred units. The Company will recognize its ownership as an equity method investment, initially recorded at fair value. Management is in the process of finalizing the fair value accounting on this transaction, but the Company expects to recognize a gain in the range of approximately $1.0 million to $3.0 million.

STOCK REPURCHASE PROGRAM

As previously announced on August 12, 2019, the Board of Directors of the Company approved a stock repurchase program. Under this program, the Company is authorized to repurchase up to $5 million of its outstanding shares of common stock over the next 12 months or until the purchase is fully absorbed, whichever date comes first. During the second quarter of 2020, the Company repurchased 29,300 shares, in addition to the 16,300 shares that were repurchased during the first quarter of 2020, for a total of 45,600 shares repurchased in 2020.

DIVIDEND

As previously announced on May 19, 2020, MVB issued its second quarterly dividend for 2020, totaling an $0.18 per share payout year-to-date. The Company declared a quarterly cash dividend of $0.09 per share payable on June 15, 2020, to shareholders of record at the close of business on June 1, 2020.

About MVB Financial Corp.

MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, Inc., is publicly traded on The Nasdaq Capital Market® under the ticker “MVBF.” Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services. Through its subsidiary, MVB Bank, Inc., and the Bank’s subsidiaries, MVB Community Development Corporation, Chartwell Compliance and Paladin Fraud, the Company provides financial services to individuals and corporate clients in the Mid-Atlantic region and beyond. Chartwell Compliance is one of the world’s leading specialist firms in state and federal compliance and market entry facilitation for firms entering into or expanding in North America, serving many of the most high-profile providers of the Fintech industry. For more information about MVB, please visit http://ir.mvbbanking.com.

Forward-looking Statements

MVB Financial Corp. (the “Company”) has made forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in this Earnings Release. These forward-looking statements are based on current expectations about the future and subject to risks and uncertainties. Forward-looking statements include, without limitation, information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “may,” “plans,” “believes,” “expects,” “anticipates,” “continues,” “may” or similar expressions occur in this Earnings Release, the Company is making forward-looking statements. Note that many factors could affect the future financial results of the Company and its subsidiaries, both individually and collectively, and could cause those results to differ materially from those expressed in the forward-looking statements contained in this Earnings Release. Those factors include but are not limited to: credit risk; changes in market interest rates; inability to achieve anticipated synergies; ability to successfully integrate recent mergers and acquisitions, including First State and Summit; competition; length and severity of the recent COVID-19 (coronavirus) outbreak and its impact on the Company’s business and financial condition; economic downturn or recession; and government regulation and supervision. Additional factors that may cause actual results to differ materially from those described in the forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as well as its other filings with the SEC, which are available on the SEC website at www.sec.gov. Except as required by law, the Company undertakes no obligation to update or revise any forward-looking statements.

Accounting standards require the consideration of subsequent events occurring after the balance sheet date for matters that require adjustment to, or disclosure in, the consolidated financial statements. The review period for subsequent events extends up to and including the filing date of a public company’s financial statements when filed with the Securities and Exchange Commission. Accordingly, the consolidated financial information in this announcement is subject to change.

 

 

MVB Financial Corp.

Financial Highlights

Consolidated Statements of Income

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

 

 

 

Quarterly

 

Year-to-Date

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Interest income

 

$

21,774

 

 

$

20,699

 

 

$

20,470

 

 

$

42,473

 

 

$

40,093

 

Interest expense

 

3,316

 

 

4,528

 

 

5,941

 

 

7,844

 

 

11,592

 

Net interest income

 

18,458

 

 

16,171

 

 

14,529

 

 

34,629

 

 

28,501

 

Provision for loan losses

 

6,596

 

 

1,138

 

 

600

 

 

7,734

 

 

900

 

Net interest income after provision for loan losses

 

11,862

 

 

15,033

 

 

13,929

 

 

26,895

 

 

27,601

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

14,944

 

 

11,219

 

 

9,864

 

 

26,163

 

 

16,534

 

Other income

 

30,569

 

 

(369)

 

 

16,523

 

 

30,200

 

 

18,618

 

Total noninterest income

 

45,513

 

 

10,850

 

 

26,387

 

 

56,363

 

 

35,152

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

22,659

 

 

16,182

 

 

13,280

 

 

38,841

 

 

25,014

 

Other expense

 

10,674

 

 

8,474

 

 

7,110

 

 

19,148

 

 

13,824

 

Total noninterest expenses

 

33,333

 

 

24,656

 

 

20,390

 

 

57,989

 

 

38,838

 

 

 

 

 

 

 

 

 

 

 

 

Income from continuing operations, before income taxes

 

24,042

 

 

1,227

 

 

19,926

 

 

25,269

 

 

23,915

 

Income tax expense – continuing operations

 

6,008

 

 

179

 

 

4,995

 

 

6,187

 

 

5,792

 

Net income from continuing operations

 

18,034

 

 

1,048

 

 

14,931

 

 

19,082

 

 

18,123

 

 

 

 

 

 

 

 

 

 

 

 

Income from discontinued operations, before income taxes

 

 

 

 

 

600

 

 

 

 

600

 

Income tax expense – discontinued operations

 

 

 

 

 

154

 

 

 

 

154

 

Net income from discontinued operations

 

 

 

 

 

446

 

 

 

 

446

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

18,034

 

 

$

1,048

 

 

$

15,377

 

 

$

19,082

 

 

$

18,569

 

Preferred dividends

 

115

 

 

114

 

 

122

 

 

229

 

 

243

 

Net income available to common shareholders

 

$

17,919

 

 

$

934

 

 

$

15,255

 

 

$

18,853

 

 

$

18,326

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.27

 

 

$

1.58

 

 

$

1.54

 

Earnings per share from discontinued operations – basic

 

 

 

 

 

0.04

 

 

 

 

0.04

 

Earnings per share – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.31

 

 

$

1.58

 

 

$

1.58

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share from continuing operations – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.15

 

 

$

1.55

 

 

$

1.41

 

Earnings per share from discontinued operations – diluted

 

 

 

 

 

0.03

 

 

 

 

0.03

 

Earnings per share – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.18

 

 

$

1.55

 

 

$

1.44

 

 

Condensed Consolidated Balance Sheets

(Unaudited) (Dollars in thousands)

 

 

June 30, 2020

 

March 31, 2020

 

December 31, 2019

 

June 30, 2019

Cash and cash equivalents

 

$

78,854

 

 

$

88,874

 

 

$

28,002

 

 

$

21,209

 

Certificates of deposit with other banks

 

13,046

 

 

12,549

 

 

12,549

 

 

14,530

 

Securities available-for-sale, at fair value

 

220,699

 

 

223,101

 

 

235,821

 

 

215,587

 

Equity securities

 

19,464

 

 

19,026

 

 

18,514

 

 

18,364

 

Loans held for sale

 

242,089

 

 

186,128

 

 

109,788

 

 

119,906

 

Loans

 

1,494,672

 

 

1,396,578

 

 

1,374,541

 

 

1,326,682

 

Less: Allowance for loan losses

 

(17,742)

 

 

(11,161)

 

 

(11,775)

 

 

(11,168)

 

Net Loans

 

1,476,930

 

 

1,385,417

 

 

1,362,766

 

 

1,315,514

 

Premises and equipment

 

24,586

 

 

22,329

 

 

21,974

 

 

25,691

 

Assets of branches held for sale

 

 

 

39,137

 

 

46,554

 

 

 

Goodwill

 

19,232

 

 

19,630

 

 

19,630

 

 

18,480

 

Other assets

 

120,257

 

 

103,489

 

 

88,516

 

 

83,737

 

Total assets

 

$

2,215,157

 

 

$

2,099,680

 

 

$

1,944,114

 

 

$

1,833,018

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

528,527

 

 

$

387,536

 

 

$

278,547

 

 

$

270,592

 

Interest-bearing deposits

 

1,335,436

 

 

1,210,703

 

 

986,495

 

 

1,107,145

 

Deposits of branches held for sale

 

 

 

187,807

 

 

188,270

 

 

 

Borrowed funds

 

36,610

 

 

30,815

 

 

222,885

 

 

186,900

 

Other liabilities

 

86,084

 

 

71,666

 

 

55,981

 

 

67,705

 

Stockholders’ equity

 

228,500

 

 

211,153

 

 

211,936

 

 

200,676

 

Total liabilities and stockholders’ equity

 

$

2,215,157

 

 

$

2,099,680

 

 

$

1,944,114

 

 

$

1,833,018

 

The breakdown of loans, premises and equipment, and deposits of branches held for sale is as follows:

(Dollars in thousands)

 

June 30, 2020

 

March 31, 2020

 

December 31, 2019

 

June 30, 2019

Commercial and non-residential real estate loans

 

$

 

 

$

11,262

 

 

$

16,132

 

 

$

 

Residential real estate and home equity loans

 

 

 

20,806

 

 

22,701

 

 

 

Consumer and other loans

 

 

 

3,138

 

 

4,083

 

 

 

Total loans

 

 

 

35,206

 

 

42,916

 

 

 

Premises and equipment, net

 

 

 

3,931

 

 

3,638

 

 

 

Assets of branches held for sale

 

$

 

 

$

39,137

 

 

$

46,554

 

 

$

 

 

 

 

 

 

 

 

 

 

Noninterest-bearing deposits

 

$

 

 

$

21,991

 

 

$

19,251

 

 

$

 

Interest-bearing deposits

 

 

 

165,816

 

 

169,019

 

 

 

Deposits of branches held for sale

 

$

 

 

$

187,807

 

 

$

188,270

 

 

$

 

 

Reportable Segments

(Unaudited)

 

Three Months Ended June 30, 2020

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

19,182

 

 

$

3,538

 

 

$

1

 

 

$

(947)

 

 

$

21,774

 

Interest expense

 

3,027

 

 

1,517

 

 

23

 

 

(1,251)

 

 

3,316

 

Net interest income (loss)

 

16,155

 

 

2,021

 

 

(22)

 

 

304

 

 

18,458

 

Provision for loan losses

 

6,598

 

 

(2)

 

 

 

 

 

 

6,596

 

Net interest income (loss) after provision for loan losses

 

9,557

 

 

2,023

 

 

(22)

 

 

304

 

 

11,862

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

40

 

 

15,208

 

 

 

 

(304)

 

 

14,944

 

Other income

 

17,792

 

 

13,354

 

 

1,679

 

 

(2,256)

 

 

30,569

 

Total noninterest income

 

17,832

 

 

28,562

 

 

1,679

 

 

(2,560)

 

 

45,513

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

6,170

 

 

13,584

 

 

2,905

 

 

 

 

22,659

 

Other expense

 

9,124

 

 

2,315

 

 

1,491

 

 

(2,256)

 

 

10,674

 

Total noninterest expenses

 

15,294

 

 

15,899

 

 

4,396

 

 

(2,256)

 

 

33,333

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

12,095

 

 

14,686

 

 

(2,739)

 

 

 

 

24,042

 

Income tax expense (benefit)

 

2,880

 

 

3,800

 

 

(672)

 

 

 

 

6,008

 

Net income (loss)

 

$

9,215

 

 

$

10,886

 

 

$

(2,067)

 

 

$

 

 

$

18,034

 

Preferred stock dividends

 

 

 

 

 

115

 

 

 

 

115

 

Net income (loss) available to common shareholders

 

$

9,215

 

 

$

10,886

 

 

$

(2,182)

 

 

$

 

 

$

17,919

 

 

Three Months Ended March 31, 2020

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,774

 

 

$

2,418

 

 

$

1

 

 

$

(494)

 

 

$

20,699

 

Interest expense

 

3,838

 

 

1,387

 

 

35

 

 

(732)

 

 

4,528

 

Net interest income (loss)

 

14,936

 

 

1,031

 

 

(34)

 

 

238

 

 

16,171

 

Provision for loan losses

 

1,132

 

 

6

 

 

 

 

 

 

1,138

 

Net interest income (loss) after provision for loan losses

 

13,804

 

 

1,025

 

 

(34)

 

 

238

 

 

15,033

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

110

 

 

11,347

 

 

 

 

(238)

 

 

11,219

 

Other income

 

3,346

 

 

(3,562)

 

 

1,504

 

 

(1,657)

 

 

(369)

 

Total noninterest income

 

3,456

 

 

7,785

 

 

1,504

 

 

(1,895)

 

 

10,850

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

5,866

 

 

7,884

 

 

2,432

 

 

 

 

16,182

 

Other expense

 

6,659

 

 

2,397

 

 

1,075

 

 

(1,657)

 

 

8,474

 

Total noninterest expenses

 

12,525

 

 

10,281

 

 

3,507

 

 

(1,657)

 

 

24,656

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

4,735

 

 

(1,471)

 

 

(2,037)

 

 

 

 

1,227

 

Income tax expense (benefit)

 

1,012

 

 

(349)

 

 

(484)

 

 

 

 

179

 

Net income (loss)

 

$

3,723

 

 

$

(1,122)

 

 

$

(1,553)

 

 

$

 

 

$

1,048

 

Preferred stock dividends

 

 

 

 

 

114

 

 

 

 

114

 

Net income (loss) available to common shareholders

 

$

3,723

 

 

$

(1,122)

 

 

$

(1,667)

 

 

$

 

 

$

934

 

 

Three Months Ended June 30, 2019

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

18,820

 

 

$

2,032

 

 

$

1

 

 

$

(383)

 

 

$

20,470

 

Interest expense

 

4,743

 

 

1,499

 

 

287

 

 

(588)

 

 

5,941

 

Net interest income (loss)

 

14,077

 

 

533

 

 

(286)

 

 

205

 

 

14,529

 

Provision for loan losses

 

625

 

 

(25)

 

 

 

 

 

 

600

 

Net interest income (loss) after provision for loan losses

 

13,452

 

 

558

 

 

(286)

 

 

205

 

 

13,929

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

277

 

 

9,792

 

 

 

 

(205)

 

 

9,864

 

Other income

 

15,464

 

 

1,135

 

 

1,495

 

 

(1,571)

 

 

16,523

 

Total noninterest income

 

15,741

 

 

10,927

 

 

1,495

 

 

(1,776)

 

 

26,387

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

4,220

 

 

7,038

 

 

2,022

 

 

 

 

13,280

 

Other expense

 

5,493

 

 

1,842

 

 

1,346

 

 

(1,571)

 

 

7,110

 

Total noninterest expenses

 

9,713

 

 

8,880

 

 

3,368

 

 

(1,571)

 

 

20,390

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

19,480

 

 

2,605

 

 

(2,159)

 

 

 

 

19,926

 

Income tax expense (benefit) – continuing operations

 

4,785

 

 

703

 

 

(493)

 

 

 

 

4,995

 

Net income (loss) from continuing operations

 

$

14,695

 

 

$

1,902

 

 

$

(1,666)

 

 

$

 

 

$

14,931

 

Income from discontinued operations, before income taxes

 

$

 

 

$

 

 

$

600

 

 

$

 

 

$

600

 

Income tax expense – discontinued operations

 

$

 

 

$

 

 

$

154

 

 

$

 

 

$

154

 

Net income from discontinued operations

 

$

 

 

$

 

 

$

446

 

 

$

 

 

$

446

 

Net income (loss)

 

$

14,695

 

 

$

1,902

 

 

$

(1,220)

 

 

$

 

 

$

15,377

 

Preferred stock dividends

 

 

 

 

 

122

 

 

 

 

122

 

Net income (loss) available to common shareholders

 

$

14,695

 

 

$

1,902

 

 

$

(1,342)

 

 

$

 

 

$

15,255

 

 

Six Months Ended June 30, 2020

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

37,956

 

 

$

5,956

 

 

$

2

 

 

$

(1,441)

 

 

$

42,473

 

Interest expense

 

6,865

 

 

2,904

 

 

58

 

 

(1,983)

 

 

7,844

 

Net interest income (loss)

 

31,091

 

 

3,052

 

 

(56)

 

 

542

 

 

34,629

 

Provision for loan losses

 

7,730

 

 

4

 

 

 

 

 

 

7,734

 

Net interest income (loss) after provision for loan losses

 

23,361

 

 

3,048

 

 

(56)

 

 

542

 

 

26,895

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

150

 

 

26,555

 

 

 

 

(542)

 

 

26,163

 

Other income

 

21,138

 

 

9,792

 

 

3,183

 

 

(3,913)

 

 

30,200

 

Total noninterest income

 

21,288

 

 

36,347

 

 

3,183

 

 

(4,455)

 

 

56,363

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

12,036

 

 

21,468

 

 

5,337

 

 

 

 

38,841

 

Other expense

 

15,783

 

 

4,712

 

 

2,566

 

 

(3,913)

 

 

19,148

 

Total noninterest expenses

 

27,819

 

 

26,180

 

 

7,903

 

 

(3,913)

 

 

57,989

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) before income taxes

 

16,830

 

 

13,215

 

 

(4,776)

 

 

 

 

25,269

 

Income tax expense (benefit)

 

3,892

 

 

3,451

 

 

(1,156)

 

 

 

 

6,187

 

Net income (loss)

 

$

12,938

 

 

$

9,764

 

 

$

(3,620)

 

 

$

 

 

$

19,082

 

Preferred stock dividends

 

 

 

 

 

229

 

 

 

 

229

 

Net income (loss) available to common shareholders

 

$

12,938

 

 

$

9,764

 

 

$

(3,849)

 

 

$

 

 

$

18,853

 

 

Six Months Ended June 30, 2019

 

Commercial &

Retail Banking

 

Mortgage

Banking

 

Financial

Holding

Company

 

Intercompany

Eliminations

 

Consolidated

(Dollars in thousands)

 

 

 

 

 

Interest income

 

$

37,147

 

 

$

3,570

 

 

$

3

 

 

$

(627)

 

 

$

40,093

 

Interest expense

 

9,497

 

 

2,492

 

 

572

 

 

(969)

 

 

11,592

 

Net interest income (loss)

 

27,650

 

 

1,078

 

 

(569)

 

 

342

 

 

28,501

 

Provision for loan losses

 

872

 

 

28

 

 

 

 

 

 

900

 

Net interest income (loss) after provision for loan losses

 

26,778

 

 

1,050

 

 

(569)

 

 

342

 

 

27,601

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Income:

 

 

 

 

 

 

 

 

 

 

Mortgage fee income

 

386

 

 

16,489

 

 

 

 

(341)

 

 

16,534

 

Other income

 

17,030

 

 

1,611

 

 

3,274

 

 

(3,297)

 

 

18,618

 

Total noninterest income

 

17,416

 

 

18,100

 

 

3,274

 

 

(3,638)

 

 

35,152

 

 

 

 

 

 

 

 

 

 

 

 

Noninterest Expenses:

 

 

 

 

 

 

 

 

 

 

Salaries and employee benefits

 

8,615

 

 

12,197

 

 

4,202

 

 

 

 

25,014

 

Other expense

 

10,845

 

 

3,867

 

 

2,408

 

 

(3,296)

 

 

13,824

 

Total noninterest expenses

 

19,460

 

 

16,064

 

 

6,610

 

 

(3,296)

 

 

38,838

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from continuing operations, before income taxes

 

24,734

 

 

3,086

 

 

(3,905)

 

 

 

 

23,915

 

Income tax expense (benefit) – continuing operations

 

5,839

 

 

849

 

 

(896)

 

 

 

 

5,792

 

Net income (loss) from continuing operations

 

18,895

 

 

2,237

 

 

(3,009)

 

 

 

 

18,123

 

Income from discontinued operations, before income taxes

 

 

 

 

 

600

 

 

 

 

600

 

Income tax expense – discontinued operations

 

 

 

 

 

154

 

 

 

 

154

 

Net income from discontinued operations

 

 

 

 

 

446

 

 

 

 

446

 

Net income (loss)

 

$

18,895

 

 

$

2,237

 

 

$

(2,563)

 

 

$

 

 

$

18,569

 

Preferred stock dividends

 

 

 

 

 

243

 

 

 

 

243

 

Net income (loss) available to common shareholders

 

$

18,895

 

 

$

2,237

 

 

$

(2,806)

 

 

$

 

 

$

18,326

 

 

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

 

Three Months Ended

 

Three Months Ended

 

Three Months Ended

 

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits in banks

 

$

44,095

 

 

$

16

 

 

0.15

%

 

$

13,643

 

 

$

49

 

 

1.44

%

 

$

9,582

 

 

$

52

 

 

2.18

%

CDs with other banks

 

12,811

 

 

64

 

 

2.00

 

 

12,549

 

 

62

 

 

1.98

 

 

14,579

 

 

73

 

 

2.01

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

96,760

 

 

477

 

 

1.98

 

 

127,327

 

 

666

 

 

2.10

 

 

123,803

 

 

768

 

 

2.49

 

Tax-exempt 2

 

123,806

 

 

1,248

 

 

4.04

 

 

110,188

 

 

1,110

 

 

4.04

 

 

99,664

 

 

1,132

 

 

4.55

 

Loans and loans held for sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial 3

 

1,165,649

 

 

14,319

 

 

4.93

 

 

1,089,212

 

 

13,863

 

 

5.11

 

 

965,652

 

 

13,065

 

 

5.43

 

Tax exempt 2

 

8,879

 

 

104

 

 

4.69

 

 

11,760

 

 

134

 

 

4.58

 

 

13,047

 

 

144

 

 

4.44

 

Real estate

 

532,386

 

 

5,701

 

 

4.30

 

 

429,720

 

 

4,953

 

 

4.62

 

 

446,825

 

 

5,363

 

 

4.81

 

Consumer

 

6,332

 

 

129

 

 

8.17

 

 

7,473

 

 

123

 

 

6.60

 

 

9,396

 

 

141

 

 

6.02

 

Total loans

 

1,713,246

 

 

20,253

 

 

4.74

 

 

1,538,165

 

 

19,073

 

 

4.97

 

 

1,434,920

 

 

18,713

 

 

5.23

 

Total earning assets

 

1,990,718

 

 

22,058

 

 

4.44

 

 

1,801,872

 

 

20,960

 

 

4.67

 

 

1,682,548

 

 

20,738

 

 

4.94

 

Less: Allowance for loan losses

 

(14,253)

 

 

 

 

 

 

(11,366)

 

 

 

 

 

 

(11,216)

 

 

 

 

 

Cash and due from banks

 

34,449

 

 

 

 

 

 

20,766

 

 

 

 

 

 

15,982

 

 

 

 

 

Other assets

 

179,806

 

 

 

 

 

 

136,744

 

 

 

 

 

 

138,299

 

 

 

 

 

Total assets

 

$

2,190,720

 

 

 

 

 

 

$

1,948,016

 

 

 

 

 

 

$

1,825,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

367,448

 

 

$

775

 

 

0.85

%

 

$

407,462

 

 

$

798

 

 

0.79

 

 

$

363,837

 

 

$

839

 

 

0.92

%

Money market checking

 

429,708

 

 

564

 

 

0.53

 

 

432,175

 

 

1,451

 

 

1.35

 

 

327,904

 

 

1,287

 

 

1.57

 

Savings

 

41,485

 

 

8

 

 

0.08

 

 

36,867

 

 

1

 

 

0.01

 

 

39,661

 

 

1

 

 

0.01

 

IRAs

 

12,408

 

 

47

 

 

1.52

 

 

16,573

 

 

78

 

 

1.89

 

 

17,718

 

 

83

 

 

1.88

 

CDs

 

495,519

 

 

1,642

 

 

1.33

 

 

334,810

 

 

1,582

 

 

1.90

 

 

415,201

 

 

2,338

 

 

2.26

 

Repurchase agreements and federal funds sold

 

9,682

 

 

5

 

 

0.21

 

 

9,520

 

 

10

 

 

0.42

 

 

11,644

 

 

11

 

 

0.38

 

FHLB and other borrowings

 

76,739

 

 

252

 

 

1.32

 

 

115,930

 

 

573

 

 

1.98

 

 

153,926

 

 

1,095

 

 

2.85

 

Subordinated debt

 

4,124

 

 

23

 

 

2.24

 

 

4,124

 

 

35

 

 

3.40

 

 

17,491

 

 

287

 

 

6.58

 

Total interest-bearing liabilities

 

1,437,113

 

 

3,316

 

 

0.93

 

 

1,357,461

 

 

4,528

 

 

1.34

 

 

1,347,382

 

 

5,941

 

 

1.77

 

Noninterest bearing demand deposits

 

454,486

 

 

 

 

 

 

331,962

 

 

 

 

 

 

250,658

 

 

 

 

 

Other liabilities

 

79,826

 

 

 

 

 

 

43,463

 

 

 

 

 

 

36,729

 

 

 

 

 

Total liabilities

 

1,971,425

 

 

 

 

 

 

1,732,886

 

 

 

 

 

 

1,634,769

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

7,334

 

 

 

 

 

 

7,334

 

 

 

 

 

 

7,834

 

 

 

 

 

Common stock

 

12,030

 

 

 

 

 

 

11,997

 

 

 

 

 

 

11,695

 

 

 

 

 

Paid-in capital

 

123,351

 

 

 

 

 

 

122,663

 

 

 

 

 

 

117,648

 

 

 

 

 

Treasury stock

 

(1,437)

 

 

 

 

 

 

(1,135)

 

 

 

 

 

 

(1,084)

 

 

 

 

 

Retained earnings

 

79,820

 

 

 

 

 

 

74,401

 

 

 

 

 

 

59,512

 

 

 

 

 

Accumulated other comprehensive (loss)

 

(1,803)

 

 

 

 

 

 

(130)

 

 

 

 

 

 

(4,761)

 

 

 

 

 

Total stockholders’ equity

 

219,295

 

 

 

 

 

 

215,130

 

 

 

 

 

 

190,844

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,190,720

 

 

 

 

 

 

$

1,948,016

 

 

 

 

 

 

$

1,825,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (tax-equivalent)

 

 

 

 

 

3.51

 

 

 

 

 

 

3.33

 

 

 

 

 

 

3.17

 

Net interest income and margin (tax-equivalent) 2

 

$

18,742

 

 

3.78

%

 

 

 

$

16,432

 

 

3.66

%

 

 

 

$

14,797

 

 

3.53

%

Less: Tax-equivalent adjustments

 

 

 

$

(284)

 

 

 

 

 

 

$

(261)

 

 

 

 

 

 

$

(268)

 

 

 

Net interest spread

 

 

 

 

 

3.46

%

 

 

 

 

 

3.27

%

 

 

 

 

 

3.11

%

Net interest income and margin

 

 

 

$

18,458

 

 

3.72

%

 

 

 

$

16,171

 

 

3.60

%

 

 

 

$

14,529

 

 

3.46

%

1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

2 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table.

3 The Company’s PPP loans totaling $89.8 million are included in this amount for the three months ended June 30, 2020.

 

Average Balances and Interest Rates

(Unaudited) (Dollars in thousands)

 

 

 

Six Months Ended

 

Six Months Ended

 

 

June 30, 2020

 

June 30, 2019

 

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

 

Average

Balance

 

Interest

Income/

Expense

 

Yield/

Cost

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Interest-bearing deposits in banks

 

$

28,869

 

 

$

65

 

 

0.45

%

 

$

8,570

 

 

$

102

 

 

2.40

%

CDs with other banks

 

12,680

 

 

126

 

 

1.99

 

 

14,678

 

 

145

 

 

1.99

 

Investment securities:

 

 

 

 

 

 

 

 

 

 

 

 

Taxable

 

104,932

 

 

1,143

 

 

2.18

 

 

130,164

 

 

1,647

 

 

2.55

 

Tax-exempt 2

 

116,997

 

 

2,358

 

 

4.04

 

 

96,060

 

 

2,191

 

 

4.60

 

Loans and loans held for sale: 1

 

 

 

 

 

 

 

 

 

 

 

 

Commercial 3

 

1,127,430

 

 

28,182

 

 

5.01

 

 

958,782

 

 

25,659

 

 

5.40

 

Tax exempt 2

 

10,319

 

 

238

 

 

4.63

 

 

13,646

 

 

300

 

 

4.43

 

Real estate

 

481,053

 

 

10,655

 

 

4.44

 

 

429,278

 

 

10,304

 

 

4.84

 

Consumer

 

6,903

 

 

251

 

 

7.29

 

 

9,524

 

 

268

 

 

5.67

 

Total loans

 

1,625,705

 

 

39,326

 

 

4.85

 

 

1,411,230

 

 

36,531

 

 

5.22

 

Total earning assets

 

1,889,183

 

 

43,018

 

 

4.57

 

 

1,660,702

 

 

40,616

 

 

4.93

 

Less: Allowance for loan losses

 

(12,809)

 

 

 

 

 

 

(11,144)

 

 

 

 

 

Cash and due from banks

 

27,608

 

 

 

 

 

 

16,034

 

 

 

 

 

Other assets

 

165,387

 

 

 

 

 

 

126,913

 

 

 

 

 

Total assets

 

$

2,069,369

 

 

 

 

 

 

$

1,792,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Deposits:

 

 

 

 

 

 

 

 

 

 

 

 

NOW

 

$

387,455

 

 

$

1,573

 

 

0.81

%

 

$

360,440

 

 

$

1,568

 

 

0.88

%

Money market checking

 

430,942

 

 

2,017

 

 

0.94

 

 

312,839

 

 

2,330

 

 

1.50

 

Savings

 

40,527

 

 

9

 

 

0.04

 

 

39,946

 

 

2

 

 

0.01

 

IRAs

 

14,490

 

 

125

 

 

1.73

 

 

17,771

 

 

163

 

 

1.85

 

CDs

 

415,165

 

 

3,222

 

 

1.56

 

 

421,869

 

 

4,608

 

 

2.20

 

Repurchase agreements and federal funds sold

 

9,601

 

 

15

 

 

0.31

 

 

12,918

 

 

25

 

 

0.39

 

FHLB and other borrowings

 

96,335

 

 

825

 

 

1.72

 

 

164,515

 

 

2,324

 

 

2.85

 

Subordinated debt

 

4,124

 

 

58

 

 

2.82

 

 

17,507

 

 

572

 

 

6.59

 

Total interest-bearing liabilities

 

1,398,639

 

 

7,844

 

 

1.12

 

 

1,347,805

 

 

11,592

 

 

1.73

 

Noninterest bearing demand deposits

 

391,872

 

 

 

 

 

 

232,699

 

 

 

 

 

Other liabilities

 

61,644

 

 

 

 

 

 

27,590

 

 

 

 

 

Total liabilities

 

1,852,155

 

 

 

 

 

 

1,608,094

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

 

 

 

 

 

Preferred stock

 

7,334

 

 

 

 

 

 

7,834

 

 

 

 

 

Common stock

 

12,014

 

 

 

 

 

 

11,677

 

 

 

 

 

Paid-in capital

 

123,007

 

 

 

 

 

 

117,292

 

 

 

 

 

Treasury stock

 

(1,286)

 

 

 

 

 

 

(1,084)

 

 

 

 

 

Retained earnings

 

77,111

 

 

 

 

 

 

54,362

 

 

 

 

 

Accumulated other comprehensive (loss)

 

(966)

 

 

 

 

 

 

(5,670)

 

 

 

 

 

Total stockholders’ equity

 

217,214

 

 

 

 

 

 

184,411

 

 

 

 

 

Total liabilities and stockholders’ equity

 

$

2,069,369

 

 

 

 

 

 

$

1,792,505

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net interest spread (tax-equivalent)

 

 

 

 

 

3.45

 

 

 

 

 

 

3.20

 

Net interest income and margin (tax-equivalent) 2

 

 

 

$

35,174

 

 

3.73

%

 

 

 

$

29,024

 

 

3.52

%

Less: Tax-equivalent adjustments

 

 

 

$

(545)

 

 

 

 

 

 

$

(523)

 

 

 

Net interest spread

 

 

 

 

 

3.38

%

 

 

 

 

 

3.13

%

Net interest income and margin

 

 

 

$

34,629

 

 

3.68

%

 

 

 

$

28,501

 

 

3.46

%

1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.

2 In order to make pre-tax income and resultant yields on tax-exempt loans and investment securities comparable to those on taxable loans and investment securities, a tax-equivalent adjustment has been computed using a Federal tax rate of 21% for the periods presented, which is a non-GAAP financial measure. See the reconciliation of this non-GAAP financial measure to its most directly comparable GAAP financial measure following this table.

3 The Company’s PPP loans totaling $89.8 million are included in this amount for the six months ended June 30, 2020.

The following table reconciles, as of the dates set forth below, net interest margin on a fully tax-equivalent basis:

 

 

Three Months Ended

 

Six Months Ended

(Dollars in thousands)

 

June 30, 2020

 

March 31, 2020

 

June 30, 2019

 

June 30, 2020

 

June 30, 2019

Net interest margin – GAAP basis

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

18,458

 

 

$

16,171

 

 

$

14,529

 

 

$

34,629

 

 

$

28,501

 

Average interest-earning assets

 

1,990,718

 

 

1,801,872

 

 

1,682,548

 

 

1,889,183

 

 

1,660,702

 

Net interest margin

 

3.72

%

 

3.60

%

 

3.46

%

 

3.68

%

 

3.46

%

 

 

 

 

 

 

 

 

 

 

 

Net interest margin – non-GAAP basis

 

 

 

 

 

 

 

 

 

 

Net interest income

 

$

18,458

 

 

$

16,171

 

 

$

14,529

 

 

$

34,629

 

 

$

28,501

 

Plus: Impact of fully tax-equivalent adjustment

 

284

 

 

261

 

 

268

 

 

545

 

 

523

 

Net interest income on a fully tax-equivalent basis

 

18,742

 

 

16,432

 

 

14,797

 

 

35,174

 

 

29,024

 

Average interest-earning assets

 

1,990,718

 

 

1,801,872

 

 

1,682,548

 

 

1,889,183

 

 

1,660,702

 

Net interest margin on a fully tax-equivalent basis

 

3.78

%

 

3.66

%

 

3.53

%

 

3.73

%

 

3.52

%

 

Selected Financial Data

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

 

 

 

Quarterly

 

Year-to-Date

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Earnings and Per Share Data:

 

 

 

 

 

 

 

 

 

 

Net income from continuing operations

 

$

18,034

 

 

$

1,048

 

 

$

14,931

 

 

$

19,082

 

 

$

18,123

 

Net income from discontinued operations

 

$

 

 

$

 

 

$

446

 

 

$

 

 

$

446

 

Net income

 

$

18,034

 

 

$

1,048

 

 

$

15,377

 

 

19,082

 

 

18,569

 

Net income available to common shareholders

 

$

17,919

 

 

$

934

 

 

$

15,255

 

 

18,853

 

 

18,326

 

Earnings per share from continuing operations – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.27

 

 

$

1.58

 

 

$

1.54

 

Earnings per share from discontinued operations – basic

 

$

 

 

$

 

 

$

0.04

 

 

$

 

 

$

0.04

 

Earnings per share – basic

 

$

1.50

 

 

$

0.08

 

 

$

1.31

 

 

$

1.58

 

 

$

1.58

 

Earnings per share from continuing operations – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.15

 

 

$

1.55

 

 

$

1.41

 

Earnings per share from discontinued operations – diluted

 

$

 

 

$

 

 

$

0.03

 

 

$

 

 

$

0.03

 

Earnings per share – diluted

 

$

1.49

 

 

$

0.08

 

 

$

1.18

 

 

$

1.55

 

 

$

1.44

 

Cash dividends paid per common share

 

$

0.090

 

 

$

0.090

 

 

$

0.040

 

 

$

0.180

 

 

$

0.075

 

Book value per common share

 

$

18.48

 

 

$

17.08

 

 

$

16.46

 

 

$

18.48

 

 

$

16.46

 

Tangible book value per common share

 

$

16.65

 

 

$

15.16

 

 

$

14.84

 

 

$

16.65

 

 

$

14.84

 

Weighted average shares outstanding – basic

 

11,954,813

 

 

11,942,767

 

 

11,644,061

 

 

11,948,790

 

 

11,625,903

 

Weighted average shares outstanding – diluted

 

12,011,845

 

 

12,298,092

 

 

13,155,302

 

 

12,156,214

 

 

13,139,612

 

 

 

 

 

 

 

 

 

 

 

 

Performance Ratios:

 

 

 

 

 

 

 

 

 

 

Return on average assets – continuing operations 1

 

3.29

%

 

0.22

%

 

3.27

%

 

1.84

%

 

2.02

%

Return on average assets – discontinued operations 1

 

%

 

%

 

0.10

%

 

%

 

0.05

%

Return on average assets 1

 

3.29

%

 

0.22

%

 

3.37

%

 

1.84

%

 

2.07

%

Return on average equity – continuing operations 1

 

32.89

%

 

1.95

%

 

31.30

%

 

17.57

%

 

19.66

%

Return on average equity – discontinued operations 1

 

%

 

%

 

0.93

%

 

%

 

0.48

%

Return on average equity 1

 

32.89

%

 

1.95

%

 

32.23

%

 

17.57

%

 

20.14

%

Net interest margin 2 3

 

3.78

%

 

3.66

%

 

3.53

%

 

3.73

%

 

3.52

%

Efficiency ratio 4

 

52.11

%

 

91.25

%

 

49.83

%

 

63.73

%

 

61.02

%

Overhead ratio 1 5

 

6.09

%

 

5.06

%

 

4.47

%

 

5.60

%

 

4.33

%

Equity to assets

 

10.32

%

 

10.06

%

 

10.95

%

 

10.32

%

 

10.95

%

 

 

 

 

 

 

 

 

 

 

 

Asset Quality Data and Ratios:

 

 

 

 

 

 

 

 

 

 

Charge-offs

 

$

23

 

 

$

1,756

 

 

$

676

 

 

$

1,779

 

 

$

676

 

Recoveries

 

$

8

 

 

$

4

 

 

$

2

 

 

$

12

 

 

$

5

 

Net loan charge-offs to total loans 1 6

 

%

 

0.50

%

 

0.20

%

 

0.24

%

 

0.10

%

Allowance for loan losses

 

$

17,742

 

 

$

11,161

 

 

$

11,168

 

 

$

17,742

 

 

$

11,168

 

Allowance for loan losses to total loans 7

 

1.19

%

 

0.80

%

 

0.84

%

 

1.19

%

 

0.84

%

Nonperforming loans

 

$

14,061

 

 

$

5,909

 

 

$

6,768

 

 

$

14,061

 

 

$

6,768

 

Nonperforming loans to total loans

 

0.94

%

 

0.42

%

 

0.51

%

 

0.94

%

 

0.51

%

 

 

 

 

 

 

 

 

 

 

 

Mortgage Data:

 

 

 

 

 

 

 

 

 

 

Locked pipeline

 

$

486,093

 

 

$

494,110

 

 

$

243,884

 

 

$

486,093

 

 

$

243,884

 

Sold loan volume

 

$

848,954

 

 

$

423,224

 

 

$

397,597

 

 

$

1,272,178

 

 

$

649,160

 

Sold loan refinance volume

 

$

542,123

 

 

$

209,817

 

 

$

106,292

 

 

$

751,940

 

 

$

187,953

 

1 annualized for the quarterly periods presented

2 net interest income as a percentage of average interest earning assets

3 presented on a fully tax-equivalent basis

4 noninterest expense as a percentage of net interest income and noninterest income

5 noninterest expense as a percentage of average assets

6 charge-offs less recoveries

7 excludes loans held for sale

 

Non-GAAP Reconciliation: Tangible Book Value per Common Share

(Unaudited) (Dollars in thousands)

 

 

 

Quarterly

 

Year-to-Date

 

 

2020

 

2020

 

2019

 

2020

 

2019

 

 

Second Quarter

 

First Quarter

 

Second Quarter

 

 

Goodwill

 

$

19,232

 

 

$

19,630

 

 

$

18,480

 

 

$

19,232

 

 

$

18,480

 

Intangibles

 

2,708

 

 

3,288

 

 

504

 

 

2,708

 

 

504

 

Total intangibles

 

21,940

 

 

22,918

 

 

18,984

 

 

21,940

 

 

18,984

 

 

 

 

 

 

 

 

 

 

 

 

Total equity

 

228,500

 

 

211,153

 

 

200,677

 

 

228,500

 

 

200,677

 

Less: Preferred equity

 

(7,334)

 

 

(7,334)

 

 

(7,834)

 

 

(7,334)

 

 

(7,834)

 

Less: Total intangibles

 

(21,940)

 

 

(22,918)

 

 

(18,984)

 

 

(21,940)

 

 

(18,984)

 

Tangible common equity

 

199,226

 

 

180,901

 

 

173,859

 

 

199,226

 

 

173,859

 

 

 

 

 

 

 

 

 

 

 

 

Tangible common equity

 

199,226

 

 

180,901

 

 

173,859

 

 

199,226

 

 

173,859

 

Common shares outstanding (000s)

 

11,968

 

11,930

 

11,713

 

11,968

 

11,713

Tangible book value per common share

 

$

16.65

 

 

$

15.16

 

 

$

14.84

 

 

$

16.65

 

 

$

14.84

 

###