Attached files
| file | filename |
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| 8-K/A - 8-K/A - SB ONE BANCORP | tv499506_8ka.htm |
Exhibit 99.1
100 Enterprise Dr.
Rockaway, NJ 07866
SB ONE BANCORP REPORTS SECOND QUARTER 2018 RESULTS AND DECLARES A CASH DIVIDEND
ROCKAWAY, NEW JERSEY – July 26, 2018 – SB One Bancorp (the “Company”) (Nasdaq: SBBX), the holding company for SB One Bank (the “Bank”), today reported net income of $3.0 million, or $0.38 per basic and diluted share, for the quarter ended June 30, 2018, as compared to $1.2 million, or $0.25 per basic and diluted share, for the same period last year. The increase in net income was mainly attributable to the merger with Community Bank of Bergen County (“Community Bank”), continued double digit loan growth and a 233% increase in SB One Insurance pretax profit.
During the second quarter of 2018, the Company, along with its’ subsidiaries, changed the name of each company and introduced them through various rebranding initiatives and campaigns. In addition, the Company was also added to the Russell 2000® Index and Russell 3000® Index on June 25, 2018.
The Company’s net income, adjusted for tax effected merger-related expenses of $321 thousand and non-recurring rebranding expenses of $152 thousand, increased $1.9 million, or 117.4%, to $3.5 million, or $0.44 per diluted share, for the quarter ended June 30, 2018, as compared to the same period last year. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses, for the quarter ended June 30, 2018, was 0.99%, an increase from 0.71% for the quarter ended June 30, 2017. The Company also announced net income, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses of $2.7 million and $152 thousand, increased $3.5 million, or 98.1%, to $7.1 million, or $0.91 per diluted share, for the six months ended June 30, 2018, as compared to the same period last year. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses, for the six months ended June 30, 2018, was 1.04%, an increase from 0.82% for the six months ended June 30, 2017.
On June 20, 2018, the Company announced the signing of a definitive agreement and plan of merger pursuant to which the Company will acquire Enterprise Bank N.J. (“Enterprise Bank”) in an all-stock transaction valued at $48.2 million (the “Merger”). Enterprise Bank will merge with and into SB One Bank and each outstanding share of Enterprise Bank common stock will be exchanged for 0.4538 shares of the Company’s common stock. Based on financials as of March 31, 2018, the combined company will have approximately $1.6 billion in assets, $1.3 billion in gross loans, and $1.2 billion in deposits upon completion of the Merger. The Merger is expected to be completed in the fourth quarter of 2018. The consummation of the Merger is subject to receipt of the requisite approval ofEnterprise Bank’s shareholders, receipt of all required regulatory approvals, and other customary closing conditions.
“These are exciting times for our Company, employees, customers and shareholders as the second quarter reflected a number of great successes for our Company, including the rebranding of our Company as SB One, the first quarter of being fully operationally integrated with Community Bank, the inclusion into the Russell 2000® Index and Russell 3000® Index and the announcement of a merger with Enterprise Bank,” said Anthony Labozzetta, President and Chief Executive Officer of SB One Bancorp.
Mr. Labozzetta also stated, “Our second quarter results reflect continued strong loan growth, some non-recurring merger and operational costs and another strong quarter of financial performance by our insurance agency driving core ROA above 1% for the first six months of 2018.”
Declaration of Quarterly Dividend
On July 25th, The Company’s Board of Directors declared a quarterly cash dividend of $0.075 per share, which is payable on August 23, 2018 to common shareholders of record as of the close of business on August 9, 2018.
Financial Performance
Net Income. For the quarter ended June 30, 2018, the Company reported net income of $3.0 million, or $0.38 per basic and diluted share, as compared to net income of $1.2 million, or $0.25 per basic and diluted share, for the same period last year. The increase in net income for the quarter ended June 30, 2018 was driven by a $4.1 million, or 59.3%, increase in net interest income resulting from loan and deposit growth and a $1.1 million increase in non-interest income driven by insurance commissions and fees. The aforementioned increases were partially offset by a $3.1 million, or 46.8%, increase in non-interest expenses and a $293 thousand increase in income tax expense. The changes were largely attributed to the growth in the Company resulting from the merger with Community Bank, double digit loan growth, and a 233% increase in SB One’s Insurance pretax income, partially offset by costs resulting from the rebranding of the Company and its subsidiaries and additional staffing to support growth.
The Company’s net income, adjusted for tax effected merger-related expenses of $321 thousand and non-recurring rebranding expenses of $152 thousand, respectively, increased $1.9 million, or 117.4%, to $3.5 million, or $0.44 per diluted share, for the quarter ended June 30, 2018, as compared to the same period last year.
For the six months ended June 30, 2018, the Company reported net income of $4.3 million, or $0.55 per basic and diluted share, or a 33.7% increase, as compared to net income of $3.2 million, or $0.68 per basic and $0.67 per diluted share, for the same period last year. The changes in net income were largely attributed to the growth in the Company resulting from the merger with Community Bank, double digit loan growth, and a 51% increase in SB One’s Insurance pretax income, partially offset by rebranding of the Company and its subsidiaries and additional staffing to support growth. The increase in net income for the six months ended June 30, 2018 was largely due to increases in net interest income of $8.1 million and non-interest income of $1.4 million, which were partially offset by an increase in non-interest expenses of $8.7 million. The increase in non-interest expenses were largely due to the merger with Community Bank. Merger related expenses and salaries and employee benefits increased $3.3 million and $3.2 million, respectively.
The Company’s net income, adjusted for tax effected merger-related expenses of $2.7 million and non-recurring rebranding expenses of $152 thousand, respectively, increased $3.5 million, or 98.1%, to $7.1 million, or $0.91 per diluted share, for the six months ended June 30, 2018, as compared to the same period last year.
Net Interest Income. Net interest income on a fully tax equivalent basis increased $4.2 million, or 58.9%, to $11.2 million for the second quarter of 2018, as compared to $7.1 million for the same period in 2017. The increase in net interest income was largely due to a $452.6 million, or 52.7%, increase in average interest earning assets, principally loans receivable, which increased $372.6 million, or 50.4%. The net interest margin increased by 14 basis points to 3.43% for the second quarter of 2018, as compared to the same period in 2017. These increases were largely attributable to the merger with Community Bank.
Net interest income on a fully tax equivalent basis increased $8.2 million, or 58.8%, to $22.2 million for the first six months of 2018 as compared to $14.0 million for the same period in 2017. The increase in net interest income was largely due to a $440.1 million, or 52.3%, increase in average interest earning assets, principally loans receivable, which increased $367.3 million, or 50.9%. The net interest margin increased by 15 basis points to 3.49% for the first six months of 2018, as compared to the same period in 2017. These increases were largely attributable to the merger with Community Bank.
Provision for Loan Losses. Provision for loan losses increased $18 thousand, or 4.7%, to $398 thousand for the second quarter of 2018, as compared to $380 thousand for the same period in 2017.
Provision for loan losses increased $119 thousand, or 15.1%, to $906 thousand for the first six months of 2018, as compared to $787 thousand for the same period in 2017.
Non-interest Income. Non-interest income increased $1.1 million, or 58.5%, to $2.9 million for the second quarter of 2018, as compared to the same period last year. The increase was principally due to growth of $696 thousand in insurance commissions and fees relating to SB One Insurance Agency.
The Company’s non-interest income increased $1.4 million, or 33.6%, to $5.7 million for the first six months of 2018 as compared to the same period last year. The increase was principally due to growth of $844 thousand in insurance commissions and fees related to SB One Insurance Agency, an increase of $248 thousand in other income and an increase of $139 thousand in bank owned life insurance.
Non-interest Expense. The Company’s non-interest expenses increased $3.1 million, or 46.8%, to $9.6 million for the second quarter of 2018, as compared to the same period last year. The increase was largely attributed to the growth in the Company resulting from the merger with Community Bank and additional staffing to support growth. The increase in non-interest expenses occurred largely in salaries and employee benefits of $1.7 million, data processing of $418 thousand, occupancy of $271 thousand, advertising and promotion of $196 thousand, other expenses of $105 thousand and professional fees of $92 thousand. During the second quarter of 2018, the Company incurred costs not expected to reoccur related to a name change, rebranding and additional advertising of approximately $212 thousand, operating costs associated with the merger and non-recurring operating costs of approximately $255 thousand and a $180 thousand increase in SB One Insurance Agency salary and employee benefits principally associated with higher insurance commissions and fee income.
The Company’s non-interest expenses increased $8.7 million, or 69.4%, to $21.2 million for the first six months of 2018 as compared to the same period last year. The increase was largely attributed to the growth in the Company resulting from the merger with Community Bank and additional staffing to support growth. The increase in non-interest expenses occurred largely in merger related expenses of $3.3 million, salaries and employee benefits of $3.2 million, data processing of $652 thousand, occupancy of $373 thousand, advertising and promotion of $146 thousand and professional fees of $144 thousand.
Income Tax Expense. The Company’s income tax expenses increased $293 thousand, or 48.6% to $896 thousand for the second quarter of 2018, as compared to the same period last year. The Company’s effective tax rate for the second quarter of 2018 was 23.1% , as compared to 33.4% for the second quarter of 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018.
The Company’s income tax expenses decreased $323 thousand, or 22.5%, to $1.1 million for the first six months of 2018, as compared to the same period last year. The Company’s effective tax rate for the first six months of 2018 was 20.5%, as compared to 30.9% for six months ended June 30, 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018.
Financial Condition
At June 30, 2018, the Company’s total assets were $1.4 billion, an increase of $457.9 million, or 46.8%, as compared to total assets of $979.4 million at December 31, 2017. The increase was largely attributable to the merger with Community Bank.
Total loans receivable, net of unearned income, increased $315.8 million, or 38.5%, to $1.1 billion at June 30, 2018, as compared to $820.7 million at December 31, 2017. The merger with Community Bank resulted in an increase in total loans of $236.1 million. During the six months ended June 30, 2018, the Company also had $66.8 million of commercial loan production, which was partly offset by $26.4 million in commercial loan payoffs.
The Company’s total deposits increased $299.1 million, or 39.2%, to $1.1 billion at June 30, 2018, from $762.5 million at December 31, 2017. The merger with Community Bank resulted in an increase in total deposits of $300.2 million. The growth in deposits was mostly due to an increase in interest bearing deposits of $212.4 million, or 34.5%, and non-interest bearing deposits of $86.7 million, or 59.3%, at June 30, 2018, as compared to December 31, 2017, respectively.
At June 30, 2018, the Company’s total stockholders’ equity was $148.8 million, an increase of $54.6 million when compared to December 31, 2017, largely due to the merger with Community Bank. The Company completed the merger on January 4, 2018 which was the primary driver in an increase in book value per common share of 20.4% from $15.59 at December 31, 2017 to $18.77 at June 30, 2018. At June 30, 2018, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 10.62%, 12.87%, 13.60% and 12.87%, respectively, all in excess of the ratios required to be deemed “well-capitalized.”
Asset and Credit Quality
The ratio of non-performing assets (“NPAs”), which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets increased to 1.65% at June 30, 2018 from 0.94% at December 31, 2017. NPAs exclude $5.2 million of Purchased Credit-Impaired (“PCI”) loans acquired through the merger with Community Bank. NPAs increased $14.6 million to $23.8 million at June 30, 2018, as compared to $9.2 million at December 31, 2017. Non-accrual loans, excluding $5.2 million of PCI loans, increased $13.6 million, or 225.2%, to $19.6 million at June 30, 2018, as compared to $6.0 million at December 31, 2017. The increase in non-accrual loans was largely attributed to two commercial real estate loans totaling $9.0 million, $1.5 million in loans acquired from Community Bank not classified as PCI, and 7 consumer loans totaling $2.1 million. Loans past due 30 to 89 days totaled $2.9 million at June 30, 2018, representing a decrease of $3.6 million, or 55.8%, as compared to $6.5 million at December 31, 2017.
The Company continues to actively market its foreclosed real estate properties, the value of which increased $1.1 million to $3.4 million at June 30, 2018 as compared to $2.3 million at December 31, 2017. At June 30, 2018, the Company’s foreclosed real estate properties had an average carrying value of approximately $263 thousand per property.
The allowance for loan losses increased $929 thousand, or 12.7%, to $8.3 million, or 0.73% of total loans, at June 30, 2018, compared to $7.3 million, or 0.89% of total loans, at December 31, 2017. The decline in allowance coverage was primarily driven by the addition of Community Bank acquired loans with no allowance for loan losses; such loans were recorded at fair value at the acquisition date. The Company recorded $906 thousand in provision for loan losses for the six months ended June 30, 2018 as compared to $787 thousand for the six months ended June 30, 2017. Additionally, the Company recorded net recoveries of $23 thousand for the six months ended June 30, 2018, as compared to $318 thousand in net charge-offs for the six months ended June 30, 2017. The allowance for loan losses as a percentage of non-accrual loans decreased to 42.2% at June 30, 2018 from 121.8% at December 31, 2017.
About SB One Bancorp
SB One Bancorp (Nasdaq: SBBX), is the holding company for SB One Bank, a full-service, commercial bank that operates regionally with 13 branch locations in New Jersey and New York. Established in 1975, SB One Bank's strength is in its ability to build strong personal relationships with its customers and to serve the communities in which it operates. In addition to its branches and loan production offices, SB One Bank offers a full-service insurance agency, SB One Insurance Agency, Inc. and wealth management services through Sussex Investment Services. SB One Bank reinforces its commitment to the communities in which it lives and serves through the SB One Foundation, Inc. which supports various local charitable organizations.
SB One Bancorp was recently added to the Russell 2000® Index and Russell 3000® Index. In 2017, it was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O’Neill Sm-All Stars Class of 2017. SB One Bancorp is one of the 50 Fastest Growing Companies in New Jersey as ranked by NJBIZ Magazine. SB One Bancorp President and Chief Executive Officer, Anthony Labozzetta, was named one of America’s Business Leaders in Banking by Forbes magazine and American Banker’s Community Banker of the Year in 2016.
For more details on SB One Bank, visit: www.SBOne.bank
Forward-Looking Statements
This press release contains statements that are forward looking and are made pursuant to the “safe-harbor” provisions
of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i)
statements about the benefits of the merger between SB One Bancorp and Community Bank, including future financial and operating
results, cost savings and accretion to reported earnings that may be realized from the merger; and (ii) statements that may be
identified by the use of words such as "expect," "estimate," “assume,” "believe," "anticipate,"
"will," "forecast," "plan," "project" or similar words. Such statements are based on SB
One Bancorp’s current expectations and are subject to certain risks and uncertainties that could cause actual results to
differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such
forward-looking statements include, among others, (1) difficulties and delays in integrating the business or fully realizing cost
savings and other benefits; (2) operating costs, customer loss and business disruption following the merger, including adverse
effects on relationships with employees, may be greater than expected; (3) changes to interest rates; (4) the ability to control
costs and expenses; (5) general economic conditions; (6) the success of SB One Bancorp’s efforts to diversify its revenue
base by developing additional sources of non-interest income while continuing to manage its existing fee-based business; and (7)
risks associated with the quality of SB One Bancorp’s assets and the ability of its borrowers to comply with repayment terms.
Further information about these and other relevant risks and uncertainties may be found in SB One Bancorp’s Annual Report
on Form 10-K for the fiscal year ended December 31, 2017 and in subsequent filings with the Securities and Exchange Commission.
SB One Bancorp undertakes no obligation to publicly release the results of any revisions to those forward looking statements that
may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.
SB ONE BANCORP
Anthony Labozzetta, President/CEO
Steve Fusco, CFO
(p) 844-256-7328
SB ONE BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
| 6/30/2018 VS. | ||||||||||||||||||||
| 6/30/2018 | 12/31/2017 | 6/30/2017 | 6/30/2017 | 12/31/2017 | ||||||||||||||||
| BALANCE SHEET HIGHLIGHTS - Period End Balances | ||||||||||||||||||||
| Total securities | $ | 179,943 | $ | 104,034 | $ | 106,721 | 68.6 | % | 73.0 | % | ||||||||||
| Total loans | 1,136,546 | 820,700 | 772,279 | 47.2 | % | 38.5 | % | |||||||||||||
| Allowance for loan losses | (8,264 | ) | (7,335 | ) | (7,165 | ) | 15.3 | % | 12.7 | % | ||||||||||
| Total assets | 1,437,302 | 979,383 | 928,827 | 54.7 | % | 46.8 | % | |||||||||||||
| Total deposits | 1,061,599 | 762,491 | 710,487 | 49.4 | % | 39.2 | % | |||||||||||||
| Total borrowings and junior subordinated debt | 215,793 | 118,198 | 121,993 | 76.9 | % | 82.6 | % | |||||||||||||
| Total shareholders' equity | 148,823 | 94,193 | 92,267 | 61.3 | % | 58.0 | % | |||||||||||||
| FINANCIAL DATA - QUARTER ENDED: | ||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 11,214 | $ | 8,038 | $ | 7,056 | 58.9 | % | 39.5 | % | ||||||||||
| Provision for loan losses | 398 | 459 | 380 | 4.7 | % | (13.3 | )% | |||||||||||||
| Total other income | 2,881 | 1,961 | 1,818 | 58.5 | % | 46.9 | % | |||||||||||||
| Total other expenses | 9,580 | 6,820 | 6,526 | 46.8 | % | 40.5 | % | |||||||||||||
| Income before provision for income taxes (tax equivalent) | 4,117 | 2,720 | 1,968 | 109.2 | % | 51.4 | % | |||||||||||||
| Provision for income taxes | 896 | 2,039 | 603 | 48.6 | % | (56.1 | )% | |||||||||||||
| Taxable equivalent adjustment (a) | 229 | 168 | 161 | 42.2 | % | 36.3 | % | |||||||||||||
| Net income | $ | 2,992 | $ | 513 | $ | 1,204 | 148.5 | % | 483.2 | % | ||||||||||
| Net income per common share - Basic | $ | 0.38 | $ | 0.09 | $ | 0.25 | 52.3 | % | 322.9 | % | ||||||||||
| Net income per common share - Diluted | $ | 0.38 | $ | 0.09 | $ | 0.25 | 52.5 | % | 323.6 | % | ||||||||||
| Return on average assets | 0.85 | % | 0.21 | % | 0.54 | % | 59.3 | % | 301.2 | % | ||||||||||
| Return on average equity | 8.10 | % | 2.16 | % | 7.23 | % | 12.1 | % | 275.6 | % | ||||||||||
| Efficiency ratio (b) | 69.09 | % | 69.37 | % | 74.90 | % | (7.8 | )% | (0.4 | )% | ||||||||||
| Net interest margin (tax equivalent) | 3.43 | % | 3.46 | % | 3.29 | % | 4.3 | % | (0.9 | )% | ||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.28 | 1.29 | 1.25 | 2.0 | % | (0.9 | )% | |||||||||||||
| FINANCIAL DATA - YEAR TO DATE: | ||||||||||||||||||||
| Net interest income (tax equivalent) (a) | $ | 22,176 | $ | 13,962 | 58.8 | % | ||||||||||||||
| Provision for loan losses | 906 | 787 | 15.1 | % | ||||||||||||||||
| Total other income | 5,738 | 4,295 | 33.6 | % | ||||||||||||||||
| Total other expenses | 21,174 | 12,503 | 69.4 | % | ||||||||||||||||
| Income before provision for income taxes (tax equivalent) | 5,834 | 4,967 | 17.5 | % | ||||||||||||||||
| Provision for income taxes | 1,111 | 1,434 | (22.5 | )% | ||||||||||||||||
| Taxable equivalent adjustment (a) | 423 | 318 | 33.0 | % | ||||||||||||||||
| Net income | $ | 4,300 | $ | 3,215 | 33.7 | % | ||||||||||||||
| Net income per common share - Basic | $ | 0.55 | $ | 0.68 | (19.1 | )% | ||||||||||||||
| Net income per common share - Diluted | $ | 0.55 | $ | 0.67 | (17.9 | )% | ||||||||||||||
| Return on average assets | 0.63 | % | 0.73 | % | (14.3 | )% | ||||||||||||||
| Return on average equity | 5.90 | % | 10.03 | % | (41.2 | )% | ||||||||||||||
| Efficiency ratio (b) | 77.02 | % | 69.70 | % | 10.5 | % | ||||||||||||||
| Net interest margin (tax equivalent) | 3.49 | % | 3.34 | % | 4.5 | % | ||||||||||||||
| Avg. interest earning assets/Avg. interest bearing liabilities | 1.28 | % | 1.24 | % | 2.7 | % | ||||||||||||||
| SHARE INFORMATION: | ||||||||||||||||||||
| Book value per common share | $ | 18.77 | $ | 15.59 | $ | 15.27 | 22.9 | % | 20.4 | % | ||||||||||
| Tangible book value per common share | 15.48 | 15.13 | 14.81 | 4.6 | % | 2.4 | % | |||||||||||||
| Outstanding shares - period ending | 7,929,706 | 6,040,564 | 6,041,002 | 31.3 | % | 31.3 | % | |||||||||||||
| Average diluted shares outstanding (year to date) | 7,848,468 | 5,404,381 | 4,794,669 | 63.7 | % | 45.2 | % | |||||||||||||
| CAPITAL RATIOS: | ||||||||||||||||||||
| Total equity to total assets | 10.35 | % | 9.62 | % | 9.93 | % | 4.2 | % | 7.7 | % | ||||||||||
| Leverage ratio (c) | 10.62 | % | 11.86 | % | 12.64 | % | (16.0 | )% | (10.5 | )% | ||||||||||
| Tier 1 risk-based capital ratio (c) | 12.87 | % | 14.26 | % | 14.59 | % | (11.8 | )% | (9.7 | )% | ||||||||||
| Total risk-based capital ratio (c) | 13.60 | % | 15.17 | % | 15.51 | % | (12.3 | )% | (10.3 | )% | ||||||||||
| Common equity Tier 1 capital ratio (c) | 12.87 | % | 14.26 | % | 14.59 | % | (11.8 | )% | (9.7 | )% | ||||||||||
| ASSET QUALITY: | ||||||||||||||||||||
| Non-accrual loans (e) | $ | 19,575 | $ | 6,020 | $ | 5,623 | 248.1 | % | 225.2 | % | ||||||||||
| Loans 90 days past due and still accruing | - | - | 2,229 | - | % | - | % | |||||||||||||
| Troubled debt restructured loans ("TDRs") (d) | 797 | 932 | 943 | (15.5 | )% | (14.5 | )% | |||||||||||||
| Foreclosed real estate | 3,414 | 2,275 | 1,846 | 84.9 | % | 50.1 | % | |||||||||||||
| Non-performing assets ("NPAs") | $ | 23,786 | $ | 9,227 | $ | 10,641 | 123.5 | % | 157.8 | % | ||||||||||
| Foreclosed real estate, criticized and classified assets (e) | $ | 23,503 | $ | 18,992 | $ | 20,144 | 16.7 | % | 23.8 | % | ||||||||||
| Loans past due 30 to 89 days | $ | 2,869 | $ | 6,497 | $ | 521 | 450.7 | % | (55.8 | )% | ||||||||||
| Charge-offs (Recoveries), net (quarterly) | $ | (38 | ) | $ | 626 | $ | 12 | (416.7 | )% | (106.1 | )% | |||||||||
| Charge-offs (Recoveries), net as a % of average loans (annualized) | (0.01 | )% | 0.31 | % | 0.01 | % | (310.6 | )% | (104.4 | )% | ||||||||||
| Non-accrual loans to total loans | 1.72 | % | 0.73 | % | 0.73 | % | 136.5 | % | 134.8 | % | ||||||||||
| NPAs to total assets | 1.65 | % | 0.94 | % | 1.15 | % | 44.5 | % | 75.7 | % | ||||||||||
| NPAs excluding TDR loans (d) to total assets | 1.60 | % | 0.85 | % | 1.04 | % | 53.2 | % | 88.8 | % | ||||||||||
| Non-accrual loans to total assets | 1.36 | % | 0.61 | % | 0.61 | % | 125.0 | % | 121.6 | % | ||||||||||
| Allowance for loan losses as a % of non-accrual loans | 42.22 | % | 121.84 | % | 127.42 | % | (66.9 | )% | (65.4 | )% | ||||||||||
| Allowance for loan losses to total loans | 0.73 | % | 0.89 | % | 0.93 | % | (21.6 | )% | (18.6 | )% | ||||||||||
| (a) | Full taxable equivalent basis, using a 21% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance |
| (b) | Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income |
| (c) | SB One Bank capital ratios |
| (d) | Troubled debt restructured loans currently performing in accordance with renegotiated terms |
| (e) | PCI loans acquired through merger with Community Bank excluded from non-accrual loans and criticized and classified assets totaled $3.7 million |
SB ONE BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
| ASSETS | June 30, 2018 | December 31, 2017 | ||||||
| Cash and due from banks | $ | 6,651 | $ | 3,270 | ||||
| Interest-bearing deposits with other banks | 12,245 | 8,376 | ||||||
| Cash and cash equivalents | 18,896 | 11,646 | ||||||
| Interest bearing time deposits with other banks | 200 | 100 | ||||||
| Securities available for sale, at fair value | 174,525 | 98,730 | ||||||
| Securities held to maturity | 5,418 | 5,304 | ||||||
| Other Bank Stock, at cost | 10,066 | 4,925 | ||||||
| Loans receivable, net of unearned income | 1,136,546 | 820,700 | ||||||
| Less: allowance for loan losses | 8,264 | 7,335 | ||||||
| Net loans receivable | 1,128,282 | 813,365 | ||||||
| Foreclosed real estate | 3,414 | 2,275 | ||||||
| Premises and equipment, net | 18,734 | 8,389 | ||||||
| Accrued interest receivable | 3,906 | 2,472 | ||||||
| Goodwill and intangibles | 26,048 | 2,820 | ||||||
| Bank-owned life insurance | 30,390 | 22,054 | ||||||
| Other assets | 17,423 | 7,303 | ||||||
| Total Assets | $ | 1,437,302 | $ | 979,383 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Liabilities: | ||||||||
| Deposits: | ||||||||
| Non-interest bearing | $ | 232,862 | $ | 146,167 | ||||
| Interest bearing | 828,737 | 616,324 | ||||||
| Total Deposits | 1,061,599 | 762,491 | ||||||
| Borrowings | 187,940 | 90,350 | ||||||
| Accrued interest payable and other liabilities | 11,087 | 4,501 | ||||||
| Subordinated debentures | 27,853 | 27,848 | ||||||
| Total Liabilities | 1,288,479 | 885,190 | ||||||
| Total Stockholders' Equity | 148,823 | 94,193 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 1,437,302 | $ | 979,383 | ||||
SB ONE BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||||
| INTEREST INCOME | ||||||||||||||||
| Loans receivable, including fees | $ | 12,562 | $ | 7,876 | $ | 24,462 | $ | 15,474 | ||||||||
| Securities: | ||||||||||||||||
| Taxable | 804 | 344 | 1,540 | 685 | ||||||||||||
| Tax-exempt | 449 | 316 | 830 | 629 | ||||||||||||
| Interest bearing deposits | 16 | 6 | 46 | 22 | ||||||||||||
| Total Interest Income | 13,831 | 8,542 | 26,878 | 16,810 | ||||||||||||
| INTEREST EXPENSE | ||||||||||||||||
| Deposits | 1,659 | 852 | 3,117 | 1,569 | ||||||||||||
| Borrowings | 874 | 479 | 1,380 | 960 | ||||||||||||
| Junior subordinated debentures | 313 | 316 | 628 | 637 | ||||||||||||
| Total Interest Expense | 2,846 | 1,647 | 5,125 | 3,166 | ||||||||||||
| Net Interest Income | 10,985 | 6,895 | 21,753 | 13,644 | ||||||||||||
| PROVISION FOR LOAN LOSSES | 398 | 380 | 906 | 787 | ||||||||||||
| Net Interest Income after Provision for Loan Losses | 10,587 | 6,515 | 20,847 | 12,857 | ||||||||||||
| OTHER INCOME | ||||||||||||||||
| Service fees on deposit accounts | 311 | 285 | 639 | 538 | ||||||||||||
| ATM and debit card fees | 250 | 200 | 463 | 380 | ||||||||||||
| Bank owned life insurance | 188 | 128 | 373 | 234 | ||||||||||||
| Insurance commissions and fees | 1,839 | 1,143 | 3,734 | 2,890 | ||||||||||||
| Investment brokerage fees | 41 | - | 63 | 3 | ||||||||||||
| (Loss) gain on securities transactions | 36 | (30 | ) | 36 | 77 | |||||||||||
| Gain (loss) on disposal of fixed assets | 9 | - | 9 | - | ||||||||||||
| Other | 207 | 92 | 421 | 173 | ||||||||||||
| Total Other Income | 2,881 | 1,818 | 5,738 | 4,295 | ||||||||||||
| OTHER EXPENSES | ||||||||||||||||
| Salaries and employee benefits | 5,411 | 3,677 | 10,469 | 7,235 | ||||||||||||
| Occupancy, net | 727 | 456 | 1,329 | 956 | ||||||||||||
| Data processing | 939 | 521 | 1,730 | 1,078 | ||||||||||||
| Furniture and equipment | 326 | 234 | 607 | 474 | ||||||||||||
| Advertising and promotion | 285 | 89 | 341 | 195 | ||||||||||||
| Professional fees | 290 | 198 | 619 | 475 | ||||||||||||
| Director fees | 142 | 89 | 289 | 196 | ||||||||||||
| FDIC assessment | 100 | 93 | 210 | 144 | ||||||||||||
| Insurance | 52 | 66 | 147 | 132 | ||||||||||||
| Stationary and supplies | 89 | 44 | 146 | 76 | ||||||||||||
| Merger-related expenses | 446 | 481 | 3,739 | 481 | ||||||||||||
| Loan collection costs | 89 | 28 | 150 | 52 | ||||||||||||
| Expenses and write-downs related to foreclosed real estate | 1 | 32 | 208 | 77 | ||||||||||||
| Amortization of intangible assets | 60 | - | 121 | - | ||||||||||||
| Other | 623 | 518 | 1,069 | 932 | ||||||||||||
| Total Other Expenses | 9,580 | 6,526 | 21,174 | 12,503 | ||||||||||||
| Income before Income Taxes | 3,888 | 1,807 | 5,411 | 4,649 | ||||||||||||
| INCOME TAX EXPENSE | 896 | 603 | 1,111 | 1,434 | ||||||||||||
| Net Income | $ | 2,992 | $ | 1,204 | $ | 4,300 | $ | 3,215 | ||||||||
| OTHER COMPREHENSIVE INCOME (LOSS): | ||||||||||||||||
| Unrealized (loss) gains on available for sale securities arising during the period | $ | (353 | ) | $ | 1,144 | (2,520 | ) | $ | 1,820 | |||||||
| Fair value adjustments on derivatives | 328 | (455 | ) | 1,435 | (415 | ) | ||||||||||
| Reclassification adjustment for net loss (gain) on securities transactions included in net income | (36 | ) | 30 | (36 | ) | (77 | ) | |||||||||
| Income tax related to items of other comprehensive income (loss) | 17 | (287 | ) | 294 | (531 | ) | ||||||||||
| Other comprehensive (loss) income, net of income taxes | (44 | ) | 432 | (827 | ) | 797 | ||||||||||
| Comprehensive income | $ | 2,948 | $ | 1,636 | 3,473 | $ | 4,012 | |||||||||
| EARNINGS PER SHARE | ||||||||||||||||
| Basic | $ | 0.38 | $ | 0.25 | $ | 0.55 | $ | 0.68 | ||||||||
| Diluted | $ | 0.38 | $ | 0.25 | $ | 0.55 | $ | 0.67 | ||||||||
SB ONE BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
| Three Months Ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | |||||||||||||||||||
| Earning Assets: | ||||||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||
| Tax exempt (3) | $ | 64,726 | $ | 678 | 4.20 | % | $ | 45,892 | $ | 477 | 4.17 | % | ||||||||||||
| Taxable | 126,462 | 804 | 2.55 | % | 66,467 | 344 | 2.08 | % | ||||||||||||||||
| Total securities | 191,188 | 1,482 | 3.11 | % | 112,359 | 821 | 2.93 | % | ||||||||||||||||
| Total loans receivable (1) (4) | 1,112,480 | 12,562 | 4.53 | % | 739,837 | 7,876 | 4.27 | % | ||||||||||||||||
| Other interest-earning assets | 8,246 | 16 | 0.78 | % | 7,110 | 6 | 0.34 | % | ||||||||||||||||
| Total earning assets | 1,311,914 | 14,060 | 4.30 | % | 859,306 | 8,703 | 4.06 | % | ||||||||||||||||
| Non-interest earning assets | 96,979 | 45,352 | ||||||||||||||||||||||
| Allowance for loan losses | (8,077 | ) | (6,956 | ) | ||||||||||||||||||||
| Total Assets | $ | 1,400,816 | $ | 897,702 | ||||||||||||||||||||
| Sources of Funds: | ||||||||||||||||||||||||
| Interest bearing deposits: | ||||||||||||||||||||||||
| NOW | $ | 250,143 | $ | 347 | 0.56 | % | $ | 182,345 | $ | 130 | 0.29 | % | ||||||||||||
| Money market | 91,597 | 287 | 1.26 | % | 101,079 | 226 | 0.90 | % | ||||||||||||||||
| Savings | 220,075 | 191 | 0.35 | % | 138,403 | 72 | 0.21 | % | ||||||||||||||||
| Time | 263,248 | 834 | 1.27 | % | 157,283 | 424 | 1.08 | % | ||||||||||||||||
| Total interest bearing deposits | 825,063 | 1,659 | 0.81 | % | 579,110 | 852 | 0.59 | % | ||||||||||||||||
| Borrowed funds | 173,841 | 874 | 2.02 | % | 79,260 | 479 | 2.42 | % | ||||||||||||||||
| Subordinated debentures | 27,852 | 313 | 4.51 | % | 27,842 | 316 | 4.55 | % | ||||||||||||||||
| Total interest bearing liabilities | 1,026,756 | 2,846 | 1.11 | % | 686,212 | 1,647 | 0.96 | % | ||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 222,558 | 140,493 | ||||||||||||||||||||||
| Other liabilities | 3,736 | 4,364 | ||||||||||||||||||||||
| Total non-interest bearing liabilities | 226,294 | 144,857 | ||||||||||||||||||||||
| Stockholders' equity | 147,766 | 66,633 | ||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,400,816 | $ | 897,702 | ||||||||||||||||||||
| Net Interest Income and Margin (5) | 11,214 | 3.43 | % | 7,056 | 3.29 | % | ||||||||||||||||||
| Tax-equivalent basis adjustment | (229 | ) | (161 | ) | ||||||||||||||||||||
| Net Interest Income | $ | 10,985 | $ | 6,895 | ||||||||||||||||||||
| (1) | Includes loan fee income |
| (2) | Average rates on securities are calculated on amortized costs |
| (3) | Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance |
| (4) | Loans outstanding include non-accrual loans |
| (5) | Represents the difference between interest earned and interest paid, divided by average total interest-earning assets |
SB ONE BANCORP
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES
(Dollars In Thousands)
(Unaudited)
| Six Months Ended June 30, | ||||||||||||||||||||||||
| 2018 | 2017 | |||||||||||||||||||||||
| Average | Average | Average | Average | |||||||||||||||||||||
| Balance | Interest | Rate (2) | Balance | Interest | Rate (2) | |||||||||||||||||||
| Earning Assets: | ||||||||||||||||||||||||
| Securities: | ||||||||||||||||||||||||
| Tax exempt (3) | $ | 59,883 | $ | 1,253 | 4.22 | % | $ | 46,663 | $ | 947 | 4.09 | % | ||||||||||||
| Taxable | 123,635 | 1,540 | 2.51 | % | 64,628 | 685 | 2.14 | % | ||||||||||||||||
| Total securities | 183,518 | 2,793 | 3.07 | % | 111,291 | 1,632 | 2.96 | % | ||||||||||||||||
| Total loans receivable (1) (4) | 1,088,238 | 24,462 | 4.53 | % | 720,954 | 15,474 | 4.33 | % | ||||||||||||||||
| Other interest-earning assets | 10,576 | 46 | 0.88 | % | 10,009 | 22 | 0.44 | % | ||||||||||||||||
| Total earning assets | 1,282,332 | 27,301 | 4.29 | % | 842,254 | 17,128 | 4.10 | % | ||||||||||||||||
| Non-interest earning assets | 96,349 | 43,218 | ||||||||||||||||||||||
| Allowance for loan losses | (7,792 | ) | (6,840 | ) | ||||||||||||||||||||
| Total Assets | $ | 1,370,889 | $ | 878,632 | ||||||||||||||||||||
| Sources of Funds: | ||||||||||||||||||||||||
| Interest bearing deposits: | ||||||||||||||||||||||||
| NOW | $ | 254,884 | $ | 745 | 0.59 | % | $ | 179,741 | $ | 249 | 0.28 | % | ||||||||||||
| Money market | 94,016 | 535 | 1.15 | % | 87,582 | 350 | 0.81 | % | ||||||||||||||||
| Savings | 221,005 | 268 | 0.24 | % | 138,074 | 143 | 0.21 | % | ||||||||||||||||
| Time | 264,189 | 1,569 | 1.20 | % | 161,951 | 827 | 1.03 | % | ||||||||||||||||
| Total interest bearing deposits | 834,094 | 3,117 | 0.75 | % | 567,348 | 1,569 | 0.56 | % | ||||||||||||||||
| Borrowed funds | 143,034 | 1,380 | 1.95 | % | 82,571 | 960 | 2.34 | % | ||||||||||||||||
| Subordinated debentures | 27,851 | 628 | 4.55 | % | 27,841 | 637 | 4.61 | % | ||||||||||||||||
| Total interest bearing liabilities | 1,004,979 | 5,125 | 1.03 | % | 677,760 | 3,166 | 0.94 | % | ||||||||||||||||
| Non-interest bearing liabilities: | ||||||||||||||||||||||||
| Demand deposits | 215,665 | 132,785 | ||||||||||||||||||||||
| Other liabilities | 4,418 | 3,978 | ||||||||||||||||||||||
| Total non-interest bearing liabilities | 220,083 | 136,763 | ||||||||||||||||||||||
| Stockholders' equity | 145,827 | 64,109 | ||||||||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 1,370,889 | $ | 878,632 | ||||||||||||||||||||
| Net Interest Income and Margin (5) | 22,176 | 3.49 | % | 13,962 | 3.34 | % | ||||||||||||||||||
| Tax-equivalent basis adjustment | (423 | ) | (318 | ) | ||||||||||||||||||||
| Net Interest Income | $ | 21,753 | $ | 13,644 | ||||||||||||||||||||
| (1) | Includes loan fee income |
| (2) | Average rates on securities are calculated on amortized costs |
| (3) | Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance |
| (4) | Loans outstanding include non-accrual loans |
| (5) | Represents the difference between interest earned and interest paid, divided by average total interest-earning assets |
SB ONE BANCORP
Segment Reporting
(Dollars In Thousands)
(Unaudited)
| Three Months Ended and as of June 30, 2018 | Three Months Ended and as of June 30, 2017 | |||||||||||||||||||||||
| Banking and | Banking and | |||||||||||||||||||||||
| Financial | Insurance | Financial | Insurance | |||||||||||||||||||||
| Services | Services | Total | Services | Services | Total | |||||||||||||||||||
| Net interest income from external sources | $ | 10,985 | $ | - | $ | 10,985 | $ | 6,895 | $ | - | $ | 6,895 | ||||||||||||
| Other income from external sources | 1,009 | 1,872 | 2,881 | 675 | 1,143 | 1,818 | ||||||||||||||||||
| Depreciation and amortization | 447 | 6 | 453 | 258 | 7 | 265 | ||||||||||||||||||
| Income before income taxes | 3,288 | 600 | 3,888 | 1,627 | 180 | 1,807 | ||||||||||||||||||
| Income tax expense (1) | 656 | 240 | 896 | 531 | 72 | 603 | ||||||||||||||||||
| Total assets | 1,425,250 | 12,052 | 1,437,302 | 922,510 | 6,317 | 928,827 | ||||||||||||||||||
| Six Months Ended and as of June 30, 2018 | Six Months Ended ans as of June 30, 2017 | |||||||||||||||||||||||
| Banking and | Banking and | |||||||||||||||||||||||
| Financial | Insurance | Financial | Insurance | |||||||||||||||||||||
| Services | Services | Total | Services | Services | Total | |||||||||||||||||||
| Net interest income from external sources | $ | 21,753 | $ | - | $ | 21,753 | $ | 13,644 | $ | - | $ | 13,644 | ||||||||||||
| Other income from external sources | 1,934 | 3,804 | 5,738 | 1,405 | 2,890 | 4,295 | ||||||||||||||||||
| Depreciation and amortization | 895 | 12 | 907 | 525 | 13 | 538 | ||||||||||||||||||
| Income before income taxes | 3,902 | 1,509 | 5,411 | 3,649 | 1,000 | 4,649 | ||||||||||||||||||
| Income tax expense (1) | 507 | 604 | 1,111 | 1,034 | 400 | 1,434 | ||||||||||||||||||
| Total assets | 1,425,250 | 12,052 | 1,437,302 | 922,510 | 6,317 | 928,827 | ||||||||||||||||||
(1) Calculated at statutory tax rate of 28.1% in 2018 and 39.9% in 2017 for the insurance services segment.
SB ONE BANCORP
Non-GAAP Reporting
(Dollars In Thousands)
(Unaudited)
| Three Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Net income (GAAP) | $ | 2,992 | $ | 1,204 | ||||
| Merger related expenses net of tax (1) | 321 | 345 | ||||||
| Non-recurring rebrand expenses net of tax (2) | 152 | - | ||||||
| S-3 Registration filing expenses net of tax (1) | - | 45 | ||||||
| Net income, as adjusted | $ | 3,465 | $ | 1,594 | ||||
| Average diluted shares outstanding (GAAP) | 7,906,600 | 4,868,534 | ||||||
| Diluted EPS, as adjusted | $ | 0.44 | $ | 0.33 | ||||
| Return on average assets, as adjusted | 0.99 | % | 0.71 | % | ||||
| Return on average equity, as adjusted | 9.38 | % | 9.57 | % | ||||
(1) Merger related expense net of tax expense of $125 thousand QTD 2018, $136 thousand QTD 2017; S-3 Registration filing net of tax expense of $30 thousand QTD 2017.
(2) Non-recurring rebrand expenses net of tax expense of $54 thousand
| Six Months Ended June 30, | ||||||||
| 2018 | 2017 | |||||||
| Net income (GAAP) | $ | 4,300 | $ | 3,215 | ||||
| Merger related expenses net of tax (1) | 2,688 | 345 | ||||||
| Non-recurring rebrand expenses net of tax (2) | 152 | - | ||||||
| S-3 Registration filing expenses net of tax (1) | - | 45 | ||||||
| Net income, as adjusted | $ | 7,140 | $ | 3,605 | ||||
| Average diluted shares outstanding (GAAP) | 7,848,468 | 4,794,669 | ||||||
| Diluted EPS, as adjusted | $ | 0.91 | $ | 0.75 | ||||
| Return on average assets, as adjusted | 1.04 | % | 0.82 | % | ||||
| Return on average equity, as adjusted | 9.79 | % | 11.25 | % | ||||
(1) Merger related expenses net of tax expenses $1.1 million YTD 2018 and $136 thousand YTD 2017; S-3 registration filing net of tax expenses of $30 thousand in 2017.
(2) Non-recurring rebrand expenses net of tax expense of $54 thousand