Attached files
| file | filename |
|---|---|
| 8-K - 8-K - Q2 2018 EARNINGS RELEASE - MVB FINANCIAL CORP | form8k-q22018earningsrelea.htm |
Exhibit 99.1
 | |
MEDIA CONTACT | |
N E W S R E L E A S E | Amy Baker |
VP, Corporate Communications | |
abaker@mvbbanking.com | |
844-682-2265 | |
MVB Financial Corp. Reports Second Quarter 2018 Earnings
Highlighted by 25.3% Increase in Net Income
FAIRMONT, W.Va., July 30, 2018 – MVB Financial Corp. (the “Company”) (NASDAQ: MVBF) reported net income of $2.8 million, or $0.25 basic and diluted earnings per share for the three months ended June 30, 2018, an increase of 25.3% compared to $2.3 million, or $0.21 basic and $0.20 diluted earnings per share, for the same period in 2017.
For the three months ended June 30, 2018, loans increased $57.9 million, or 5.0%, to $1.2 billion, from March 31, 2018, which represents an annualized increase of 20.0%. The increase in loans has been driven by strong growth in MVB's West Virginia markets, expansion in Northern Virginia, as well as the strategic addition of commercial lenders throughout its markets. In addition to the increase in loan volume during the quarter, loan yields increased 20 basis points. The Company continues to take advantage of industry consolidation while capitalizing on disruptions in the market to expand both the lending and deposit teams. These teams have extensive experience and relationships in MVB’s selected markets.
MANAGEMENT OVERVIEW
“When you look at the five phases of the banking industry’s most important measures, MVB is firing on all cylinders,” said Larry F. Mazza, CEO and President, MVB Financial. “A wise banker once told me, ‘The trend is your friend.’ The five trends from June 2017 to June 2018 are loan growth of 10%; NIB deposit growth of 35%; service charge income growth is 32%; capital is up 13%; and asset quality is excellent. When you look at all five phases, we expect the positive trend for MVB to continue throughout 2018.”
Mazza continued, “For the first half of the year, we saw an increase in borrowing to fund loan growth. In the second half of year, we are targeting deposit growth driven by our fintech and specialty deposit strategies.
“In the fintech world we see four ways to compete. One is client facing; we provide convenience through technology for our clients. The second is the efficiency vertical where we improve our clients’ banking
Exhibit 99.1
experience in areas such as loan processing or check processing, all in a more efficient way developed by financial technology. The third is to invest in fintech. An example is our investment in BillGO, a payment processor based in Fort Collins, Colo. Because of our BillGO partnership, MVB was recently a runner up in Bank Director’s 2018 Best of FinXTech Awards. Partnerships such as this also provide an important source of new business referrals. Fourth and probably most important to us is being ‘The Bank of Fintech.’ We want to be a ‘one-stop payment shop’ building out our technical expertise in the payment stack.”
SECOND QUARTER 2018 HIGHLIGHTS
• | Loans of $1.2 billion as of June 30, 2018, increased $57.9 million, or 5.0%, from March 31, 2018, and increased $112.7 million, or 10.2%, from June 30, 2017. |
• | Assets of $1.7 billion as of June 30, 2018, increased $103.9 million, or 6.6%, from March 31, 2018, and increased $178.4 million, or 11.8%, from June 30, 2017. |
• | Deposits of $1.2 billion as of June 30, 2018, increased $42.0 million, or 3.6%, from March 31, 2018, and increased $96.3 million, or 8.8% from June 30, 2017. Noninterest-bearing deposits of $164.0 million increased $21.2 million, or 14.8%, from March 31, 2018, and increased $42.6 million, or 35.1%, from June 30, 2017. |
• | MVB reported improvements in return on average assets, return on average equity, net interest margin, and efficiency ratio. |
• | Net interest income of $12.7 million for the quarter ended June 30, 2018, increased $1.2 million, or 10.4%, from the quarter ended March 31, 2018, and increased $1.8 million, or 16.2% from the quarter ended June 30, 2017. |
• | Noninterest income of $10.8 million for the quarter ended June 30, 2018, increased $1.8 million, or 19.4%, from the quarter ended March 31, 2018, and decreased $772 thousand, or 6.7%, from the quarter ended June 30, 2017. |
• | $12.7 million of subordinated debt converted to common stock, which caused the issuance of 795,500 new shares and will provide an annual interest expense savings of $905 thousand. |
LOANS
Loans totaled $1.2 billion as of June 30, 2018, an increase of $57.9 million, or 5.0%, from March 31, 2018, and an increase of $112.7 million, or 10.2%, from June 30, 2017. The growth in loans is primarily attributable to organic growth and the addition of commercial lenders within the Company’s primary lending areas. The yield on loans was 4.88% as of the quarter ended June 30, 2018, an increase of 20 basis points from the quarter ended March 31, 2018, and an increase of 38 basis points from the quarter ended June 30, 2017. The increase in yields is driven both by Fed rate increases and a commercial focus on increasing loan yields.
Exhibit 99.1
In connection with the Company’s core conversion in 2017, the Company implemented a CRM system that has provided better insight on loan pricing.
DEPOSITS
Deposits totaled $1.2 billion as of June 30, 2018, and increased $42.0 million, or 3.6%, from March 31, 2018, while increasing $96.3 million, or 8.8%, from June 30, 2017. Noninterest-bearing deposits totaled $164.0 million as of June 30, 2018, or 13.7%, of the total deposit base, an increase of $21.2 million, or 14.8%, from March 31, 2018, and an increase of $42.6 million, or 35.1%, from June 30, 2017. Noninterest-bearing deposits remain a core funding source for the Company. Management will continue to concentrate on balancing deposit growth with adequate net interest margin to meet strategic goals.
NET INTEREST INCOME
Net interest income for the quarter ended June 30, 2018, was $12.7 million, an increase of $1.2 million, or 10.4%, from the quarter ended March 31, 2018, and an increase of $1.8 million, or 16.2% from the quarter ended June 30, 2017. Net interest margin for the quarter ended June 30, 2018 was 3.38%, an increase of 9 basis points versus the quarter ended March 31, 2018, and an increase of 7 basis points versus the quarter ended June 30, 2017.
Interest expense increased 19.5% during the quarter ended June 30, 2018, compared to the quarter ended March 31, 2018, due to an increase of 14 basis points in the cost of interest-bearing liabilities, and increased 46.9% compared to the quarter ended June 30, 2017, due to an increase of 31 basis points in the cost of interest-bearing liabilities. The increase in the cost of interest-bearing liabilities compared to the quarter ended June 30, 2017, was the result of an $85.3 million increase in the average balances of FHLB and other borrowings, as well as a $1.2 million increase in the related interest expense.
In June 2018, subordinated debt in the amount of $12.7 million was converted into 795,500 shares of common stock. As a result of the conversions, the Company will save $905 thousand annually in interest expense.
ASSET QUALITY
Provision for loan loss was $605 thousand for the quarter ended June 30, 2018, an $82 thousand increase from the quarter ended June 30, 2017, due to a 10.2% increase in loans. The increase in loan loss provision is attributable to increased loan volume for the quarter ended June 30, 2018, compared to the quarter ended June 30, 2017, as well as lower historical loss rates for the period used to determine the allowance.
Exhibit 99.1
Nonperforming loans increased $4.3 million, to 0.78%, of total loans as of June 30, 2018, compared to 0.79% of total loans as of March 31, 2018, and compared to 0.46% of total loans as of June 30, 2017. In addition, net charge-offs for the quarter ended June 30, 2018, decreased $126 thousand compared to the quarter ended June 30, 2017, resulting in an annualized net loan charge-offs to total loans ratio of 0.01% as of June 30, 2018.
NONINTEREST INCOME
Noninterest income totaled $10.8 million for the quarter ended June 30, 2018, an increase of $1.8 million, or 19.4%, from the quarter ended March 31, 2018, and a decrease of $772 thousand, or 6.7%, from the quarter ended June 30, 2017.
The $1.8 million increase in noninterest income from the quarter ended March 31, 2018, was due to an increase of $2.5 million in mortgage fee income. The increase was partially offset by a decrease of $413 thousand in commercial swap fee income, a decrease of $326 thousand in gain on sale of securities and a decrease of $212 thousand in gain on sale of portfolio loans. The increase in mortgage fee income was primarily the result of a $98.2 million increase in sold loan volume.
The $772 thousand decrease in noninterest income from the quarter ended June 30, 2017, was primarily due to a $384 thousand decrease in gain on derivatives, along with decreases of $270 thousand in commercial swap fees, $203 thousand in gain on sale of portfolio loans and $167 thousand in gain on sale of securities, all of which were partially offset by an increase of $111 thousand in mortgage fee income and an increase of $116 thousand in service charges on deposit accounts. The decrease in gain on derivatives was primarily the result of a decrease of $1.4 million in the valuation of open trades used to hedge the derivative asset.
NONINTEREST EXPENSE
Noninterest expense totaled $19.2 million for the quarter ended June 30, 2018, an increase of $2.5 million, or 15.0%, from the quarter ended March 31, 2018, and an increase of $746 thousand, or 4.0%, from the quarter ended June 30, 2017.
The $2.5 million increase in noninterest expense from the quarter ended March 31, 2018, was primarily due to an increase of $2.0 million in salaries and employee benefits expense, a $127 thousand increase in data processing and communications and a $100 thousand increase in mortgage processing expense. The increase in salaries and employee benefits expense was largely driven by the addition of senior management,
Exhibit 99.1
lenders, a treasury team and the opening of two new branches in 2017. The $746 thousand increase in noninterest expense from the quarter ended June 30, 2017, was primarily due to an increase of $696 thousand in salaries and employee benefits expense.
DIVIDEND
As previously announced on May 16, 2018, the Company declared a quarterly cash dividend of $0.025 per share to shareholders of record at the close of business on June 1, 2018, payable June 15, 2018. This was the second quarterly dividend for 2018 and was equal to the March 2018 payout of $0.025 per share.
About MVB Financial Corp.
MVB Financial Corp. (“MVB Financial” or “MVB”), the holding company of MVB Bank, is publicly traded on The Nasdaq Capital Market® under the ticker “MVBF.”
MVB is a financial holding company headquartered in Fairmont, W.Va. Through its subsidiary, MVB Bank, Inc., and the bank’s subsidiary, MVB Mortgage, the company provides financial services to individuals and corporate clients in the Mid-Atlantic region.
Nasdaq is a leading global provider of trading, clearing, exchange technology, listing, information and public company services.
For more information about MVB, please visit ir.mvbbanking.com.
Exhibit 99.1
Forward-looking Statements
MVB Financial Corp. 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 information concerning possible or assumed future results of operations of the Company and its subsidiaries. When words such as “believes,” “expects,” “anticipates,” “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 merger-related synergies, competition, economic downturn or recession and government regulation and supervision. Additional factors that may cause our actual results to differ materially from those described in our forward-looking statements can be found in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, 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.
Questions or comments concerning this Earnings Release should be directed to:
MVB Financial Corp.
Donald T. Robinson, Executive Vice President and CFO
(304) 598-3500
drobinson@mvbbanking.com
Exhibit 99.1
MVB Financial Corp.
Financial Highlights
Condensed Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
Quarterly | Year-to-Date | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | ||||||||||||||||||||||
Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | ||||||||||||||||||||||||
Interest income | $ | 16,944 | $ | 15,054 | $ | 15,086 | $ | 14,630 | $ | 13,814 | $ | 31,998 | $ | 26,882 | ||||||||||||||
Interest expense | 4,289 | 3,589 | 3,403 | 3,216 | 2,920 | 7,878 | 5,682 | |||||||||||||||||||||
Net interest income | 12,655 | 11,465 | 11,683 | 11,414 | 10,894 | 24,120 | 21,200 | |||||||||||||||||||||
Provision for loan losses | 605 | 474 | 1,036 | 96 | 523 | 1,079 | 1,041 | |||||||||||||||||||||
Noninterest income | 10,795 | 9,039 | 10,157 | 10,158 | 11,567 | 19,834 | 20,391 | |||||||||||||||||||||
Noninterest expense | 19,249 | 16,739 | 17,714 | 17,966 | 18,503 | 35,988 | 34,820 | |||||||||||||||||||||
Income before income taxes | 3,596 | 3,291 | 3,090 | 3,510 | 3,435 | 6,887 | 5,730 | |||||||||||||||||||||
Income tax expense | 765 | 697 | 1,667 | 1,192 | 1,175 | 1,462 | 1,896 | |||||||||||||||||||||
Net income | $ | 2,831 | $ | 2,594 | $ | 1,423 | $ | 2,318 | $ | 2,260 | $ | 5,425 | $ | 3,834 | ||||||||||||||
Preferred dividends | 122 | 121 | 124 | 123 | 122 | 243 | 251 | |||||||||||||||||||||
Net income available to common shareholders | $ | 2,709 | $ | 2,473 | $ | 1,299 | $ | 2,195 | $ | 2,138 | $ | 5,182 | $ | 3,583 | ||||||||||||||
Earnings per share - basic | $ | 0.25 | $ | 0.24 | $ | 0.12 | $ | 0.21 | $ | 0.21 | $ | 0.49 | $ | 0.35 | ||||||||||||||
Earnings per share - diluted | $ | 0.25 | $ | 0.23 | $ | 0.12 | $ | 0.21 | $ | 0.20 | $ | 0.47 | $ | 0.35 | ||||||||||||||
Condensed Consolidated Balance Sheets (Unaudited) (Dollars in thousands) | ||||||||||||||||
June 30, 2018 | March 31, 2018 | December 31, 2017 | June 30, 2017 | |||||||||||||
Cash and cash equivalents | $ | 23,950 | $ | 23,630 | $ | 20,305 | $ | 17,805 | ||||||||
Certificates of deposit with other banks | 14,778 | 14,778 | 14,778 | 14,527 | ||||||||||||
Investment securities | 229,054 | 233,483 | 231,507 | 175,110 | ||||||||||||
Loans held for sale | 98,799 | 51,280 | 66,794 | 107,825 | ||||||||||||
Loans | 1,215,072 | 1,157,173 | 1,105,941 | 1,102,378 | ||||||||||||
Allowance for loan losses | (10,651 | ) | (10,067 | ) | (9,878 | ) | (9,748 | ) | ||||||||
Net loans | 1,204,421 | 1,147,106 | 1,096,063 | 1,092,630 | ||||||||||||
Premises and equipment | 26,418 | 26,477 | 26,686 | 27,462 | ||||||||||||
Goodwill | 18,480 | 18,480 | 18,480 | 18,480 | ||||||||||||
Other assets | 69,519 | 66,284 | 59,689 | 53,214 | ||||||||||||
Total assets | $ | 1,685,419 | $ | 1,581,518 | $ | 1,534,302 | $ | 1,507,053 | ||||||||
Deposits | $ | 1,195,868 | $ | 1,153,907 | $ | 1,159,580 | $ | 1,099,608 | ||||||||
Borrowed funds | 266,830 | 207,370 | 152,169 | 189,384 | ||||||||||||
Other liabilities | 56,926 | 69,820 | 72,361 | 71,227 | ||||||||||||
Shareholders' equity | 165,795 | 150,421 | 150,192 | 146,834 | ||||||||||||
Total liabilities and shareholders' equity | $ | 1,685,419 | $ | 1,581,518 | $ | 1,534,302 | $ | 1,507,053 | ||||||||
Exhibit 99.1
Reportable Segments (Unaudited) | ||||||||||||||||||||
Three Months Ended June 30, 2018 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Interest income | $ | 15,426 | $ | 1,772 | $ | 1 | $ | (255 | ) | $ | 16,944 | |||||||||
Mortgage fee income | 154 | 9,152 | — | (243 | ) | 9,063 | ||||||||||||||
Other income | 1,068 | 706 | 1,489 | (1,531 | ) | 1,732 | ||||||||||||||
Total operating income | 16,648 | 11,630 | 1,490 | (2,029 | ) | 27,739 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 3,164 | 1,081 | 542 | (498 | ) | 4,289 | ||||||||||||||
Salaries and employee benefits | 3,884 | 6,826 | 1,784 | — | 12,494 | |||||||||||||||
Provision for loan losses | 625 | (20 | ) | — | — | 605 | ||||||||||||||
Other expense | 4,968 | 2,296 | 1,022 | (1,531 | ) | 6,755 | ||||||||||||||
Total operating expenses | 12,641 | 10,183 | 3,348 | (2,029 | ) | 24,143 | ||||||||||||||
Income (loss) before income taxes | 4,007 | 1,447 | (1,858 | ) | — | 3,596 | ||||||||||||||
Income tax expense (benefit) | 832 | 373 | (440 | ) | — | 765 | ||||||||||||||
Net income (loss) | $ | 3,175 | $ | 1,074 | $ | (1,418 | ) | $ | — | $ | 2,831 | |||||||||
Preferred stock dividends | — | — | 122 | — | 122 | |||||||||||||||
Net income (loss) available to common shareholders | $ | 3,175 | $ | 1,074 | $ | (1,540 | ) | $ | — | $ | 2,709 | |||||||||
Three Months Ended March 31, 2018 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Interest income | $ | 13,838 | $ | 1,335 | $ | 1 | $ | (120 | ) | $ | 15,054 | |||||||||
Mortgage fee income | 140 | 6,673 | — | (250 | ) | 6,563 | ||||||||||||||
Other income | 1,780 | 517 | 1,553 | (1,374 | ) | 2,476 | ||||||||||||||
Total operating income | 15,758 | 8,525 | 1,554 | (1,744 | ) | 24,093 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 2,674 | 727 | 558 | (370 | ) | 3,589 | ||||||||||||||
Salaries and employee benefits | 3,569 | 5,416 | 1,488 | — | 10,473 | |||||||||||||||
Provision for loan losses | 417 | 57 | — | — | 474 | |||||||||||||||
Other expense | 4,559 | 2,122 | 959 | (1,374 | ) | 6,266 | ||||||||||||||
Total operating expenses | 11,219 | 8,322 | 3,005 | (1,744 | ) | 20,802 | ||||||||||||||
Income (loss) before income taxes | 4,539 | 203 | (1,451 | ) | — | 3,291 | ||||||||||||||
Income tax expense (benefit) | 978 | 53 | (334 | ) | — | 697 | ||||||||||||||
Net income (loss) | $ | 3,561 | $ | 150 | $ | (1,117 | ) | $ | — | $ | 2,594 | |||||||||
Preferred stock dividends | — | — | 121 | — | 121 | |||||||||||||||
Net income (loss) available to common shareholders | $ | 3,561 | $ | 150 | $ | (1,238 | ) | $ | — | $ | 2,473 | |||||||||
Exhibit 99.1
Three Months Ended June 30, 2017 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Interest income | $ | 12,907 | $ | 1,073 | $ | 1 | $ | (167 | ) | $ | 13,814 | |||||||||
Mortgage fee income | 188 | 8,937 | — | (173 | ) | 8,952 | ||||||||||||||
Other income | 1,529 | 1,137 | 1,307 | (1,358 | ) | 2,615 | ||||||||||||||
Total operating income | 14,624 | 11,147 | 1,308 | (1,698 | ) | 25,381 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 2,168 | 534 | 558 | (340 | ) | 2,920 | ||||||||||||||
Salaries and employee benefits | 3,267 | 7,147 | 1,384 | — | 11,798 | |||||||||||||||
Provision for loan losses | 467 | 56 | — | — | 523 | |||||||||||||||
Other expense | 5,065 | 2,044 | 954 | (1,358 | ) | 6,705 | ||||||||||||||
Total operating expenses | 10,967 | 9,781 | 2,896 | (1,698 | ) | 21,946 | ||||||||||||||
Income (loss) before income taxes | 3,657 | 1,366 | (1,588 | ) | — | 3,435 | ||||||||||||||
Income tax expense (benefit) | 1,165 | 540 | (530 | ) | — | 1,175 | ||||||||||||||
Net income (loss) | $ | 2,492 | $ | 826 | $ | (1,058 | ) | $ | — | $ | 2,260 | |||||||||
Preferred stock dividends | — | — | 122 | — | 122 | |||||||||||||||
Net income (loss) available to common shareholders | $ | 2,492 | $ | 826 | $ | (1,180 | ) | $ | — | $ | 2,138 | |||||||||
Six Months Ended June 30, 2018 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Interest income | $ | 29,265 | $ | 3,107 | $ | 2 | $ | (376 | ) | $ | 31,998 | |||||||||
Mortgage fee income | 292 | 15,825 | — | (491 | ) | 15,626 | ||||||||||||||
Other income | 2,848 | 1,223 | 3,043 | (2,906 | ) | 4,208 | ||||||||||||||
Total operating income | 32,405 | 20,155 | 3,045 | (3,773 | ) | 51,832 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 5,838 | 1,808 | 1,100 | (868 | ) | 7,878 | ||||||||||||||
Salaries and employee benefits | 7,453 | 12,242 | 3,272 | — | 22,967 | |||||||||||||||
Provision for loan losses | 1,042 | 37 | — | — | 1,079 | |||||||||||||||
Other expense | 9,527 | 4,418 | 1,981 | (2,905 | ) | 13,021 | ||||||||||||||
Total operating expenses | 23,860 | 18,505 | 6,353 | (3,773 | ) | 44,945 | ||||||||||||||
Income (loss) before income taxes | 8,545 | 1,650 | (3,308 | ) | — | 6,887 | ||||||||||||||
Income tax expense (benefit) | 1,810 | 426 | (774 | ) | — | 1,462 | ||||||||||||||
Net income (loss) | $ | 6,735 | $ | 1,224 | $ | (2,534 | ) | $ | — | $ | 5,425 | |||||||||
Preferred stock dividends | — | — | 243 | — | 243 | |||||||||||||||
Net income (loss) available to common shareholders | $ | 6,735 | $ | 1,224 | $ | (2,777 | ) | $ | — | $ | 5,182 | |||||||||
Exhibit 99.1
Six Months Ended June 30, 2017 | Commercial & Retail Banking | Mortgage Banking | Financial Holding Company | Intercompany Eliminations | Consolidated | |||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||
Revenues: | ||||||||||||||||||||
Interest income | $ | 25,218 | $ | 1,854 | $ | 2 | $ | (192 | ) | $ | 26,882 | |||||||||
Mortgage fee income | 373 | 18,574 | — | (361 | ) | 18,586 | ||||||||||||||
Other income | 2,609 | (694 | ) | 2,518 | (2,628 | ) | 1,805 | |||||||||||||
Total operating income | 28,200 | 19,734 | 2,520 | (3,181 | ) | 47,273 | ||||||||||||||
Expenses: | ||||||||||||||||||||
Interest expense | 4,288 | 838 | 1,109 | (553 | ) | 5,682 | ||||||||||||||
Salaries and employee benefits | 5,924 | 13,101 | 2,735 | — | 21,760 | |||||||||||||||
Provision for loan losses | 967 | 74 | — | — | 1,041 | |||||||||||||||
Other expense | 9,716 | 4,143 | 1,829 | (2,628 | ) | 13,060 | ||||||||||||||
Total operating expenses | 20,895 | 18,156 | 5,673 | (3,181 | ) | 41,543 | ||||||||||||||
Income (loss) before income taxes | 7,305 | 1,578 | (3,153 | ) | — | 5,730 | ||||||||||||||
Income tax expense (benefit) | 2,326 | 636 | (1,066 | ) | — | 1,896 | ||||||||||||||
Net income (loss) | $ | 4,979 | $ | 942 | $ | (2,087 | ) | $ | — | $ | 3,834 | |||||||||
Preferred stock dividends | — | — | 251 | — | 251 | |||||||||||||||
Net income (loss) available to common shareholders | $ | 4,979 | $ | 942 | $ | (2,338 | ) | $ | — | $ | 3,583 | |||||||||
Exhibit 99.1
Average Balances and Interest Rates (Unaudited) (Dollars in thousands) | |||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 | Three Months Ended March 31, 2018 | Three Months Ended June 30, 2017 | |||||||||||||||||||||||||||||||
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 | $ | 3,473 | $ | 17 | 1.96 | % | $ | 3,883 | $ | 18 | 1.83 | % | $ | 3,277 | $ | 12 | 1.47 | % | |||||||||||||||
CDs with other banks | 14,778 | 74 | 2.02 | 14,778 | 72 | 1.97 | 14,456 | 70 | 1.94 | ||||||||||||||||||||||||
Investment securities: | |||||||||||||||||||||||||||||||||
Taxable | 151,224 | 891 | 2.36 | 154,430 | 895 | 2.35 | 119,553 | 645 | 2.16 | ||||||||||||||||||||||||
Tax-exempt | 81,164 | 717 | 3.54 | 75,556 | 655 | 3.51 | 53,733 | 418 | 3.12 | ||||||||||||||||||||||||
Loans and loans held for sale: 1 | |||||||||||||||||||||||||||||||||
Commercial | 831,118 | 10,318 | 4.98 | 775,764 | 8,943 | 4.68 | 725,707 | 8,170 | 4.52 | ||||||||||||||||||||||||
Tax exempt | 14,260 | 123 | 3.46 | 14,464 | 123 | 3.46 | 15,263 | 131 | 3.44 | ||||||||||||||||||||||||
Real estate | 394,814 | 4,656 | 4.73 | 360,744 | 4,190 | 4.71 | 373,353 | 4,201 | 4.51 | ||||||||||||||||||||||||
Consumer | 11,850 | 148 | 5.00 | 12,517 | 158 | 5.11 | 13,817 | 167 | 4.85 | ||||||||||||||||||||||||
Total loans | 1,252,042 | 15,245 | 4.88 | 1,163,489 | 13,414 | 4.68 | 1,128,140 | 12,669 | 4.50 | ||||||||||||||||||||||||
Total earning assets | 1,502,681 | 16,944 | 4.52 | 1,412,136 | 15,054 | 4.32 | 1,319,159 | 13,814 | 4.20 | ||||||||||||||||||||||||
Less: Allowance for loan losses | (10,132 | ) | (9,987 | ) | (9,734 | ) | |||||||||||||||||||||||||||
Cash and due from banks | 16,792 | 15,966 | 15,407 | ||||||||||||||||||||||||||||||
Other assets | 107,421 | 102,645 | 100,205 | ||||||||||||||||||||||||||||||
Total assets | $ | 1,616,762 | $ | 1,520,760 | $ | 1,425,037 | |||||||||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||||||
Deposits: | |||||||||||||||||||||||||||||||||
NOW | $ | 459,784 | $ | 846 | 0.74 | $ | 443,784 | $ | 762 | 0.70 | $ | 432,729 | $ | 603 | 0.56 | ||||||||||||||||||
Money market checking | 229,763 | 484 | 0.85 | 241,472 | 443 | 0.74 | 237,173 | 432 | 0.73 | ||||||||||||||||||||||||
Savings | 46,478 | 7 | 0.06 | 46,544 | 20 | 0.17 | 48,590 | 20 | 0.17 | ||||||||||||||||||||||||
IRAs | 17,997 | 69 | 1.54 | 17,691 | 62 | 1.43 | 16,282 | 53 | 1.31 | ||||||||||||||||||||||||
CDs | 275,004 | 1,124 | 1.64 | 269,286 | 1,011 | 1.52 | 256,887 | 855 | 1.33 | ||||||||||||||||||||||||
Repurchase agreements and federal funds sold | 20,118 | 20 | 0.39 | 20,605 | 19 | 0.37 | 21,268 | 19 | 0.36 | ||||||||||||||||||||||||
FHLB and other borrowings | 226,487 | 1,197 | 2.12 | 160,205 | 714 | 1.81 | 112,385 | 380 | 1.36 | ||||||||||||||||||||||||
Subordinated debt | 32,015 | 542 | 6.79 | 33,524 | 558 | 6.75 | 33,524 | 558 | 6.68 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 1,307,646 | 4,289 | 1.32 | 1,233,111 | 3,589 | 1.18 | 1,158,838 | 2,920 | 1.01 | ||||||||||||||||||||||||
Noninterest bearing demand deposits | 146,135 | 129,385 | 114,974 | ||||||||||||||||||||||||||||||
Other liabilities | 9,890 | 8,673 | 7,698 | ||||||||||||||||||||||||||||||
Total liabilities | 1,463,671 | 1,371,169 | 1,281,510 | ||||||||||||||||||||||||||||||
Stockholders’ equity | |||||||||||||||||||||||||||||||||
Preferred stock | 7,834 | 7,834 | 7,834 | ||||||||||||||||||||||||||||||
Common stock | 10,686 | 10,525 | 10,375 | ||||||||||||||||||||||||||||||
Paid-in capital | 101,577 | 99,110 | 96,986 | ||||||||||||||||||||||||||||||
Treasury stock | (1,084 | ) | (1,084 | ) | (1,084 | ) | |||||||||||||||||||||||||||
Retained earnings | 41,277 | 38,004 | 32,764 | ||||||||||||||||||||||||||||||
Accumulated other comprehensive income | (7,199 | ) | (4,798 | ) | (3,348 | ) | |||||||||||||||||||||||||||
Total stockholders’ equity | 153,091 | 149,591 | 143,527 | ||||||||||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,616,762 | $ | 1,520,760 | $ | 1,425,037 | |||||||||||||||||||||||||||
Net interest spread | 3.20 | 3.14 | 3.19 | ||||||||||||||||||||||||||||||
Net interest income-margin | $ | 12,655 | 3.38 | % | $ | 11,465 | 3.29 | % | $ | 10,894 | 3.31 | % | |||||||||||||||||||||
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.
Exhibit 99.1
Average Balances and Interest Rates (Unaudited) (Dollars in thousands) | ||||||||||||||||||||||
Six Months Ended June 30, 2018 | Six Months Ended June 30, 2017 | |||||||||||||||||||||
Average Balance | Interest Income/ Expense | Yield/ Cost | Average Balance | Interest Income/ Expense | Yield/ Cost | |||||||||||||||||
Assets | ||||||||||||||||||||||
Interest-bearing deposits in banks | $ | 3,677 | $ | 35 | 1.94 | % | $ | 3,007 | $ | 21 | 1.41 | % | ||||||||||
CDs with other banks | 14,778 | 146 | 1.99 | 14,491 | 140 | 1.95 | ||||||||||||||||
Investment securities: | ||||||||||||||||||||||
Taxable | 152,818 | 1,786 | 2.36 | 114,237 | 1,191 | 2.10 | ||||||||||||||||
Tax-exempt | 78,375 | 1,372 | 3.53 | 54,999 | 848 | 3.11 | ||||||||||||||||
Loans and loans held for sale: 1 | ||||||||||||||||||||||
Commercial | 803,593 | 19,261 | 4.83 | 735,979 | 16,113 | 4.41 | ||||||||||||||||
Tax exempt | 14,362 | 246 | 3.46 | 15,296 | 262 | 3.45 | ||||||||||||||||
Real estate | 378,095 | 8,846 | 4.72 | 362,807 | 7,965 | 4.43 | ||||||||||||||||
Consumer | 12,182 | 306 | 5.07 | 14,092 | 342 | 4.89 | ||||||||||||||||
Total loans | 1,208,232 | 28,659 | 4.78 | 1,128,174 | 24,682 | 4.41 | ||||||||||||||||
Total earning assets | 1,457,880 | 31,998 | 4.43 | 1,314,908 | 26,882 | 4.12 | ||||||||||||||||
Less: Allowance for loan losses | (10,059 | ) | (9,581 | ) | ||||||||||||||||||
Cash and due from banks | 16,381 | 15,327 | ||||||||||||||||||||
Other assets | 104,401 | 93,248 | ||||||||||||||||||||
Total assets | $ | 1,568,603 | $ | 1,413,902 | ||||||||||||||||||
Liabilities | ||||||||||||||||||||||
Deposits: | ||||||||||||||||||||||
NOW | $ | 451,828 | $ | 1,608 | 0.72 | $ | 424,225 | $ | 1,126 | 0.54 | ||||||||||||
Money market checking | 235,586 | 927 | 0.79 | 237,010 | 891 | 0.76 | ||||||||||||||||
Savings | 46,511 | 27 | 0.12 | 48,342 | 40 | 0.17 | ||||||||||||||||
IRAs | 17,845 | 131 | 1.48 | 16,426 | 103 | 1.26 | ||||||||||||||||
CDs | 272,160 | 2,135 | 1.58 | 260,735 | 1,709 | 1.32 | ||||||||||||||||
Repurchase agreements and federal funds sold | 20,360 | 39 | 0.38 | 22,186 | 36 | 0.33 | ||||||||||||||||
FHLB and other borrowings | 193,529 | 1,911 | 1.99 | 108,210 | 668 | 1.24 | ||||||||||||||||
Subordinated debt | 32,766 | 1,100 | 6.77 | 33,524 | 1,109 | 6.67 | ||||||||||||||||
Total interest-bearing liabilities | 1,270,585 | 7,878 | 1.25 | 1,150,658 | 5,682 | 1.00 | ||||||||||||||||
Noninterest bearing demand deposits | 137,383 | 114,003 | ||||||||||||||||||||
Other liabilities | 9,284 | 8,459 | ||||||||||||||||||||
Total liabilities | 1,417,252 | 1,273,120 | ||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||
Preferred stock | 7,834 | 8,022 | ||||||||||||||||||||
Common stock | 10,606 | 10,212 | ||||||||||||||||||||
Paid-in capital | 100,350 | 95,240 | ||||||||||||||||||||
Treasury stock | (1,084 | ) | (1,084 | ) | ||||||||||||||||||
Retained earnings | 39,650 | 32,211 | ||||||||||||||||||||
Accumulated other comprehensive income | (6,005 | ) | (3,819 | ) | ||||||||||||||||||
Total stockholders’ equity | 151,351 | 140,782 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,568,603 | $ | 1,413,902 | ||||||||||||||||||
Net interest spread | 3.18 | 3.13 | ||||||||||||||||||||
Net interest income-margin | $ | 24,120 | 3.34 | % | $ | 21,200 | 3.25 | % | ||||||||||||||
1 Non-accrual loans are included in total loan balances, lowering the effective yield for the portfolio in the aggregate.
Exhibit 99.1
Selected Financial Data (Unaudited) (Dollars in thousands, except per share data) | ||||||||||||||||||||||||||||
Quarterly | Year-to-Date | |||||||||||||||||||||||||||
2018 | 2018 | 2017 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
Second Quarter | First Quarter | Fourth Quarter | Third Quarter | Second Quarter | ||||||||||||||||||||||||
Earnings and Per Share Data: | ||||||||||||||||||||||||||||
Net income | $ | 2,831 | $ | 2,594 | $ | 1,423 | $ | 2,318 | $ | 2,260 | $ | 5,425 | $ | 3,834 | ||||||||||||||
Net income available to common shareholders | 2,709 | 2,473 | 1,299 | 2,195 | 2,138 | 5,182 | 3,583 | |||||||||||||||||||||
Earnings per share - basic | 0.25 | 0.24 | 0.12 | 0.21 | 0.21 | 0.49 | 0.35 | |||||||||||||||||||||
Earnings per share - diluted | 0.25 | 0.23 | 0.12 | 0.21 | 0.20 | 0.47 | 0.35 | |||||||||||||||||||||
Cash dividends paid per common share | 0.025 | 0.025 | 0.025 | 0.025 | 0.025 | 0.05 | 0.05 | |||||||||||||||||||||
Book value per common share | 13.93 | 13.53 | 13.63 | 13.51 | 13.31 | 13.93 | 13.31 | |||||||||||||||||||||
Weighted average shares outstanding - basic | 10,634,805 | 10,474,138 | 10,444,627 | 10,443,443 | 10,343,933 | 10,554,916 | 10,171,198 | |||||||||||||||||||||
Weighted average shares outstanding - diluted | 11,502,148 | 12,714,353 | 10,823,994 | 12,410,070 | 12,181,433 | 10,941,671 | 10,172,254 | |||||||||||||||||||||
Performance Ratios: | ||||||||||||||||||||||||||||
Return on average assets 1 | 0.70 | % | 0.68 | % | 0.38 | % | 0.63 | % | 0.63 | % | 0.69 | % | 0.54 | % | ||||||||||||||
Return on average equity 1 | 7.40 | % | 6.94 | % | 3.79 | % | 6.28 | % | 6.30 | % | 7.17 | % | 5.45 | % | ||||||||||||||
Net interest margin 2 | 3.38 | % | 3.29 | % | 3.29 | % | 3.37 | % | 3.31 | % | 3.34 | % | 3.25 | % | ||||||||||||||
Efficiency ratio 3 | 82.09 | % | 81.64 | % | 81.11 | % | 83.28 | % | 82.38 | % | 81.88 | % | 83.72 | % | ||||||||||||||
Overhead ratio 1 4 | 4.76 | % | 4.40 | % | 4.69 | % | 4.87 | % | 5.19 | % | 4.59 | % | 4.93 | % | ||||||||||||||
Asset Quality Data and Ratios: | ||||||||||||||||||||||||||||
Charge-offs | $ | 29 | $ | 356 | $ | 572 | $ | 472 | $ | 163 | $ | 385 | $ | 453 | ||||||||||||||
Recoveries | 8 | 71 | 18 | 24 | 16 | 79 | 59 | |||||||||||||||||||||
Net loan charge-offs to total loans 1 5 | 0.01 | % | 0.10 | % | 0.20 | % | 0.16 | % | 0.05 | % | 0.05 | % | 0.07 | % | ||||||||||||||
Allowance for loan losses | 10,651 | 10,067 | 9,878 | 9,396 | 9,748 | 10,651 | 9,748 | |||||||||||||||||||||
Allowance for loan losses to total loans 6 | 0.88 | % | 0.87 | % | 0.89 | % | 0.86 | % | 0.88 | % | 0.88 | % | 0.88 | % | ||||||||||||||
Nonperforming loans | 9,419 | 9,102 | 9,699 | 6,559 | 5,103 | 9,419 | 5,103 | |||||||||||||||||||||
Nonperforming loans to total loans | 0.78 | % | 0.79 | % | 0.88 | % | 0.60 | % | 0.46 | % | 0.78 | % | 0.46 | % | ||||||||||||||
Capital Ratios: | ||||||||||||||||||||||||||||
Equity to assets | 9.84 | % | 9.51 | % | 9.79 | % | 10.12 | % | 9.74 | % | 9.84 | % | 9.74 | % | ||||||||||||||
Leverage ratio | 9.90 | % | 9.50 | % | 9.27 | % | 9.41 | % | 9.59 | % | 9.90 | % | 9.59 | % | ||||||||||||||
Common equity Tier 1 capital ratio | 11.28 | % | 10.60 | % | 10.55 | % | 10.76 | % | 10.32 | % | 11.28 | % | 10.32 | % | ||||||||||||||
Tier 1 risk-based capital ratio | 12.20 | % | 11.57 | % | 11.54 | % | 11.79 | % | 11.33 | % | 12.20 | % | 11.33 | % | ||||||||||||||
Total risk-based capital ratio | 14.34 | % | 14.80 | % | 14.87 | % | 15.18 | % | 14.66 | % | 14.34 | % | 14.66 | % | ||||||||||||||
1 annualized for the quarterly periods presented
2 net interest income as a percentage of average interest earning assets
3 noninterest expense as a percentage of net interest income and noninterest income
4 noninterest expense as a percentage of average assets
5 charge-offs less recoveries
6 excludes loans held for sale