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8-K - 8-K - SB ONE BANCORPtv512222_8k.htm

 

Exhibit 99.1

 

 

 

100 Enterprise Dr.

Rockaway, NJ 07866

 

 

SB ONE BANCORP REPORTS A 30% GROWTH IN CORE EPS FOR 2018 AND DECLARES A CASH DIVIDEND

 

ROCKAWAY, NEW JERSEY – February 1, 2019 – SB One Bancorp (the “Company”) (Nasdaq: SBBX), the holding company for SB One Bank (the “Bank”), today reported net income of $9.9 million, or $1.26 per basic and $1.25 per diluted share, for the year ended December 31, 2018, an increase of 74.4%, as compared to $5.7 million, or $1.06 per basic share and $1.05 per diluted share, for the year ended December 31, 2017.

 

The Company closed on two acquisitions during 2018, completing the acquisition of Community Bank of Bergen County (“Community Bank”) with total assets of $365.6 million on January 4, 2018 and the acquisition of Enterprise Bank, NJ (“Enterprise”) with total assets of $279.8 million on December 21, 2018, and engaged in the rebranding of the Company, the Bank and its insurance subsidiary to SB One. The mergers and the double digit organic growth in commercial loans and deposits, drove an 83.5% growth in total assets to $1.8 billion at December 31, 2018 from $979.4 million at December 31, 2017. This growth drove higher core net income, which when adjusted for tax effected merger-related expenses and non-recurring expenses, increased 91.1%. In addition, diluted earnings per share (“diluted EPS”), as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% for the year ended December 31, 2018 as compared to the year ended December 31, 2017.

 

The Company’s net income, when adjusted for tax effected merger-related expenses and non-recurring expenses of $4.5 million and $271 thousand, respectively, increased $7.0 million, or 91.1%, to $14.7 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. Diluted EPS, as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% to $1.86 for the year ended December 31, 2018 as compared to $1.42 for the year ended December 31, 2017. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring expenses, for the year ended December 31, 2018, was 1.03%, an increase from 0.84% for the year ended December 31, 2017.

 

For the quarter ended December 31, 2018, the Company reported net income of $2.4 million, or $0.29 per basic and diluted share, an increase of 358.7%, as compared to $513 thousand, or $0.09 per basic and diluted share, for the same period in 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $1.3 million and $119 thousand, respectively, increased $1.6 million, or 77.1%, to $3.8 million, or $0.47 per diluted share, for the quarter ended December 31, 2018, as compared to the same period in 2017. The Company’s return on average assets, adjusted for tax effected merger-related expenses and non-recurring expenses, for the quarter ended December 31, 2018, was 0.99%, an increase from 0.88% from the quarter ended December 31, 2017.

 

The increase in net income for the three and twelve months ended December 31, 2018 was mainly attributable to continued double digit organic commercial loan and deposit growth, the merger with Community Bank, the positive impact from the Tax Cut and Jobs Act, and an increase in SB One Insurance Agency twelve month pretax profit of over 40%.

 

“2018 was a very successful year for our Company as we nearly doubled our core earnings and total assets.  We accomplished this by growing our business lines organically by double digits and completing two mergers,” said Anthony Labozzetta, President and Chief Executive Officer of SB One Bancorp and SB One Bank. Mr. Labozzetta went on to say, “These are very exciting times for our shareholders, customers, and employees and although there may be headwinds ahead of us resulting from the flattening of the yield curve, we continue to be very optimistic that there will be as many opportunities for us to continue our disciplined growth and strong performance over the short and long run.  We continue to maintain strong pipelines for loans and deposits, which will help us build our earnings into the foreseeable future.”

 

 

 

 

Declaration of Quarterly Dividend

On January 23, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.075 per share, which is payable on March 6, 2019 to common shareholders of record as of the close of business on February 20, 2019.

 

Financial Performance

Net Income. For the quarter ended December 31, 2018, the Company reported net income of $2.4 million, or $0.29 per basic and diluted share, as compared to net income of $513 thousand, or $0.09 per basic and diluted share, for the same period in 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $1.3 million and $119 thousand, respectively, increased $1.6 million, or 77.1%, to $3.8 million, or $0.47 per diluted share, for the quarter ended December 31, 2018, as compared to the same period in 2017.

 

The increase in net income for the quarter ended December 31, 2018 was driven by a $3.5 million, or 44.0%, increase in net interest income resulting from strong loan and deposit growth and a $532 thousand increase in non-interest income driven by insurance commissions and fees, which were partially offset by a $3.5 million increase in non-interest expenses. The changes were largely attributed to double digit organic commercial loan and deposit growth, the growth of the Company resulting from the merger with Community Bank, net of non-interest expense savings, and the positive impacts from the Tax Cut and Jobs Act.

 

For the year ended December 31, 2018, the Company reported net income of $9.9 million, or $1.26 per basic and $1.25 per diluted share, or a 74.4% increase, as compared to net income of $5.7 million, or $1.06 per basic share and $1.05 per diluted share, for the year ended December 31, 2017. The Company’s net income, adjusted for tax effected merger-related expenses and non-recurring expenses of $4.5 million and $271 thousand, respectively, increased $7.0 million, or 91.1%, to $14.7 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. Diluted EPS, as adjusted for tax effected merger-related expenses and non-recurring expenses, increased 30.4% to $1.86 for the year ended December 31, 2018 as compared to $1.42 for the year ended December 31, 2017. The changes were largely attributed to the growth of the Company resulting from the merger with Community Bank, net of non-interest expense savings, double digit organic commercial loan and deposit growth, and the positive impacts from the Tax Cut and Jobs Act, and a 41% increase in SB One Insurance pretax income.

 

Net Interest Income. Net interest income on a fully tax equivalent basis increased $3.6 million, or 44.0%, to $11.6 million for the fourth quarter of 2018, as compared to $8.0 million for the same period in 2017. The increase in net interest income was largely due to a $507.1 million, or 54.9%, increase in average interest earning assets, principally loans receivable, which increased $420.7 million, or 52.3%. The aforementioned was partly offset by a decrease in the net interest margin of 25 basis points to 3.21% for the fourth quarter of 2018, as compared to the same period in 2017. The decrease was primarily driven by the effects of higher market rates on interest bearing liabilities costs, which increased 46 basis points, and was partially offset by an increase in earning asset yields, which grew 13 basis points during the comparison period. The increase in interest bearing liabilities was partly impacted by an increase in wholesale funding to support strong loan growth. The increase in interest earning asset yields was partially attributed to purchase accounting accretion of $311.7 thousand ($233.4 thousand from the Community Bank merger and $78.3 thousand from the Enterprise merger) for the fourth quarter of 2018 as compared to the same period in 2017.

 

Net interest income on a fully tax equivalent basis increased $15.2 million, or 51.2%, to $45.0 million for the year ended December 31, 2018 as compared to $29.7 million for the same period in 2017. The increase in net interest income was largely due to a $461.1 million, or 52.6%, increase in average interest earning assets, principally loans receivable, which increased $382.4 million, or 50.5%. The aforementioned was partly offset by a decrease in the net interest margin of 3 basis points to 3.36% for the year ended December 31, 2018, as compared to the same period in 2017. The decrease was primarily driven by the effects of higher market rates on interest bearing liabilities costs, which increased 25 basis points, and were partially offset by an increase in earning asset yields, which grew 16 basis points during the comparison period. The increase in interest earning asset yields was partially attributed to purchase accounting accretion of $1.2 million ($1.1 million from the Community Bank merger and $78.3 thousand from the Enterprise merger) for the fiscal year of 2018 as compared to the same period for 2017.

 

 

 

 

Provision for Loan Losses. Provision for loan losses decreased $249 thousand, or 54.2%, to $210 thousand for the fourth quarter of 2018, as compared to $459 thousand for the same period in 2017.

 

Provision for loan losses decreased $149 thousand, or 9.4%, to $1.4 million for the year ended December 31, 2018, as compared to $1.6 million for the year ended December 31, 2017.

 

Non-interest Income. Non-interest income increased $532 thousand, or 27.1%, to $2.5 million for the fourth quarter of 2018, as compared to the same period in 2017. The increase was largely due to an increase of $206 thousand, or 17.6%, in insurance commissions and fees relating to SB One Insurance Agency. In addition, other income, ATM and debit card fees, and bank owned life insurance, increased $132 thousand, $67 thousand, and $54 thousand, respectively, largely due to the completion of the merger with Community Bank.

 

The Company’s non-interest income increased $2.5 million, or 29.7%, to $10.7 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increase was largely due to growth of $1.3 million in insurance commissions and fees related to SB One Insurance Agency. In addition, other income, bank owned life insurance, ATM and debit card fees and service fees on deposit accounts, increased $411 thousand, $239 thousand, $206 thousand, and $167 thousand, respectively, largely due to the completion of the merger with Community Bank.

 

Non-interest Expense. The Company’s non-interest expenses increased $3.5 million to $10.3 million for the fourth quarter of 2018, as compared to the same period in 2017. Merger-related expenses increase $755 thousand to $1.5 million in the fourth quarter of 2018 as compared to $705 thousand in the comparable 2017 quarter. The increase was largely attributable to Enterprise merger, which was consummated in December. Non-interest expenses, adjusted to remove the aforementioned merger-related expenses along with other non-recurring expenses of $170 thousand in the fourth quarter of 2018, increased $2.5 million to $8.6 million for the fourth quarter of 2018 as compared to the same period in 2017. In addition, approximately $55 thousand of operating expenses for the period in 2018 that Enterprise was included in the Company’s results. The increase in non-interest expenses occurred largely in salaries and employee benefits of $1.4 million, data processing of $381 thousand, other expenses of $252 thousand, and occupancy of $228 thousand. The growth in operating expenses was largely due to the merger with Community Bank, net of expense savings, and an increase in expenses to support the Company’s growth.

 

The Company’s non-interest expenses increased $14.8 million to $40.4 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. Non-interest expenses, adjusted to remove merger related expenses and other non-recurring expenses of $5.8 million and $376 thousand, respectively, in 2018, and $1.2 million and $75 thousand, respectively, in 2017, increased $9.8 million to $34.2 million for the year ended December 31, 2018 as compared to the year ended December 31, 2017. The increase in non-interest expenses occurred largely in salaries and employee benefits of $5.9 million, data processing of $1.2 million, occupancy of $896 thousand, other expenses of $485 thousand, advertising and promotion of $279 thousand, furniture and equipment of $256 thousand and amortization of intangible assets of $247 thousand. The growth in operating expenses was largely due to the merger with Community Bank, net of expense savings, and an increase in expenses to support the Company’s growth.

 

Income Tax Expense. The Company’s income tax expenses decreased $1.0 million, or 51.4% to $991 thousand for the fourth quarter of 2018, as compared to the same period last year. The Company’s effective tax rate for the fourth quarter of 2018 was 29.6%, as compared to 79.9% for the fourth quarter of 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018. The Company’s re-measurement of its net deferred tax asset resulted in additional income tax expense of $942 thousand in the quarter ended December 31, 2017.

 

The Company’s income tax expenses decreased $1.4 million, or 31.7%, to $3.1 million for the year ended December 31, 2018, as compared to the year ended December 31, 2017. The Company’s effective tax rate for the year ended December 31, 2018 was 23.6%, as compared to 44.0% for the year ended December 31, 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018 and the newly enacted New Jersey tax legislation in 2018. The Company’s re-measurement of its net deferred tax asset resulted in additional income tax expense of $942 thousand in year ended December 31, 2017.

 

 

 

 

Financial Condition

At December 31, 2018, the Company’s total assets were $1.8 billion, an increase of $817.4 million, or 83.5%, as compared to total assets of $979.4 million at December 31, 2017. The increase was largely attributable to the mergers with Community Bank and Enterprise, of $365.6 million and $279.8 million, respectively, of total assets at the closing date of each of the merger transactions.

 

Total loans receivable, net of unearned income, increased $654.1 million, or 79.7%, to $1.5 billion at December 31, 2018, as compared to $820.7 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in total loans of $236.1 million and $258.8 million, respectively. During the twelve months ended December 31, 2018, the Company also had $220.1 million of commercial loan production, which was partly offset by $52.8 million in commercial loan payoffs.

 

The Company’s total deposits increased $591.4 million, or 77.6%, to $1.4 billion at December 31, 2018, from $762.5 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in total deposits of $300.2 million and $196.2 million, respectively. The growth in deposits was mostly due to an increase in interest bearing deposits of $477.7 million, or 77.5%, and non-interest bearing deposits of $113.6 million, or 77.7%, at December 31, 2018, as compared to December 31, 2017, respectively.

 

At December 31, 2018, the Company’s total stockholders’ equity was $185.4 million, an increase of $91.2 million when compared to December 31, 2017, largely due to the merger with Community Bank and Enterprise. The Company completed the Community Bank merger on January 4, 2018 which was the primary driver in an increase in book value per common share of 24.8% from $15.59 at December 31, 2017 to $19.45 at December 31, 2018. At December 31, 2018, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 12.06%, 12.34%, 12.94% and 12.34%, 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 1.40% at December 31, 2018 from 0.94% at December 31, 2017. NPAs exclude $3.3 million of Purchased Credit-Impaired (“PCI”) loans acquired through the merger with Community Bank. NPAs increased $16.0 million to $25.2 million at December 31, 2018, as compared to $9.2 million at December 31, 2017. Non-accrual loans, excluding $3.3 million of PCI loans, increased $14.2 million, or 235.1%, to $20.2 million at December 31, 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 $8.9 million, $2.5 million in loans acquired from Community Bank not classified as PCI, and consumer loans totaling $3.1 million. Loans past due 30 to 89 days totaled $3.8 million at December 31, 2018, representing a decrease of $2.7 million, or 41.7%, 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 $1.9 million to $4.1 million at December 31, 2018 as compared to $2.3 million at December 31, 2017. The mergers with Community Bank and Enterprise resulted in an increase in foreclosed real estate properties of $1.1 million and $1.3 million, respectively. At December 31, 2018, the Company’s foreclosed real estate properties had an average carrying value of approximately $319 thousand per property.

 

The allowance for loan losses increased $1.4 million, or 19.6%, to $8.8 million, or 0.60% of total loans, at December 31, 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 and Enterprise acquired loans with no allowance for loan losses; such loans were recorded at fair value at their acquisition dates. The Company’s outstanding credit mark recorded on the legacy Community Bank portfolio of $203.6 million totaled $5.2 million at December 31, 2018. The Company’s outstanding credit mark recorded on the legacy Enterprise portfolio of $261.6 million totaled $3.8 million at December 31, 2018. The Company’s combined coverage of allowance for loan loss and credit mark on the legacy Community Bank and Enterprise portfolios totaled $17.8 million, or 1.20% of the overall loan portfolio, at December 31, 2018. The Company recorded $1.4 million in provision for loan losses for the twelve months ended December 31, 2018 as compared to $1.6 million for the twelve months ended December 31, 2017. Additionally, the Company recorded net recoveries of $3 thousand for the twelve months ended December 31, 2018, as compared to $947 thousand in net charge-offs for the twelve months ended December 31, 2017. The allowance for loan losses as a percentage of non-accrual loans decreased to 43.5% at December 31, 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 18 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 services through SB One Wealth. 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 mergers with Community Bank and Enterprise, 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. 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)

 

 

               12/31/2018 VS. 
    12/31/2018    9/30/2018    12/31/2017    9/30/2018    12/31/2017 
BALANCE SHEET HIGHLIGHTS - Period End Balances                         
Total securities  $186,217   $177,547   $104,034    4.9%   79.0%
Total loans   1,474,775    1,171,738    820,700    25.9%   79.7%
Allowance for loan losses   (8,775)   (8,594)   (7,335)   2.1%   19.6%
Total assets   1,796,827    1,459,642    979,383    23.1%   83.5%
Total deposits   1,353,939    1,114,646    762,491    21.5%   77.6%
Total borrowings and junior subordinated debt   247,765    187,756    118,198    32.0%   109.6%
Total shareholders' equity   185,383    151,222    94,193    22.6%   96.8%
                          
FINANCIAL DATA - QUARTER ENDED:                         
Net interest income (tax equivalent) (a)  $11,575   $11,217   $8,038    3.2%   44.0%
Provision for loan losses   210    321    459    (34.6)%   (54.2)%
Total other income   2,493    2,518    1,961    (1.0)%   27.1%
Total other expenses   10,273    8,963    6,820    14.6%   50.6%
Income before provision for income taxes (tax equivalent)   3,585    4,451    2,720    (19.5)%   31.8%
Provision for income taxes   991    957    2,039    3.6%   (51.4)%
Taxable equivalent adjustment (a)   241    224    168    7.6%   43.5%
Net income  $2,353   $3,270   $513    (28.0)%   358.7%
                          
Net income per common share - Basic  $0.29   $0.42   $0.09    225.5%   225.5%
Net income per common share - Diluted  $0.29   $0.41   $0.09    223.5%   223.5%
Return on average assets   0.62%   0.91%   0.21%   (31.7)%   190.8%
Return on average equity   6.00%   8.67%   2.16%   (30.8)%   178.1%
Efficiency ratio (b)   74.30%   66.34%   69.37%   12.0%   7.1%
Net interest margin (tax equivalent)   3.21%   3.29%   3.46%   (2.4)%   (7.2)%
Avg. interest earning assets/Avg. interest bearing liabilities   1.27    1.28    1.29    (0.5)%   (1.2)%
                          
FINANCIAL DATA - YEAR TO DATE:                         
Net interest income (tax equivalent) (a)  $44,968        $29,732         51.2%
Provision for loan losses   1,437         1,586         (9.4)%
Total other income   10,749         8,285         29.7%
Total other expenses   40,410         25,617         57.7%
Income before provision for income taxes (tax equivalent)   13,870         10,814         28.3%
Provision for income taxes   3,059         4,479         (31.7)%
Taxable equivalent adjustment (a)   888         644         37.9%
Net income  $9,923        $5,691         74.4%
                          
Net income per common share - Basic  $1.26        $1.06         18.9%
Net income per common share - Diluted  $1.25        $1.05         19.0%
                          
Return on average assets   0.70%        0.62%        11.8%
Return on average equity   6.62%        7.17%        (7.7)%
Efficiency ratio (b)   73.70%        68.54%        7.5%
Net interest margin (tax equivalent)   3.36%        3.39%        (0.9)%
Avg. interest earning assets/Avg. interest bearing liabilities   1.28         1.27         0.8%
                          
SHARE INFORMATION:                         
Book value per common share  $19.45   $19.07   $15.59    2.4%   24.7%
Tangible book value per common share   16.36    15.79    11.29    (12.3)%   44.9%
Outstanding shares- period ending   9,532,943    7,929,613    6,040,564    19.8%   57.8%
Average diluted shares outstanding (year to date)   7,921,269    7,868,280    5,404,381    0.7%   46.6%
                          
CAPITAL RATIOS:                         
Total equity to total assets   10.32%   10.36%   9.62%   (0.4)%   7.3%
Leverage ratio (c)   12.06%   10.51%   11.86%   14.7%   1.7%
Tier 1 risk-based capital ratio (c)   12.34%   12.74%   14.26%   (3.1)%   (13.5)%
Total risk-based capital ratio (c)   12.94%   13.48%   15.17%   (4.0)%   (14.7)%
Common equity Tier 1 capital ratio (c)   12.34%   12.74%   14.26%   (3.1)%   (13.5)%
                          
ASSET QUALITY:                         
Non-accrual loans (e)  $20,170   $19,758   $6,020    2.1%   235.0%
Loans 90 days past due and still accruing   -    -    -    -%   -%
Troubled debt restructured loans ("TDRs") (d)   905    1,986    932    (54.4)%   (2.9)%
Foreclosed real estate   4,149    2,657    2,275    56.2%   82.4%
Non-performing assets ("NPAs")  $25,224   $24,401   $9,227    3.4%   173.4%
                          
Foreclosed real estate, criticized and classified assets (e)  $24,006   $22,945   $18,992    4.6%   26.4%
Loans past due 30 to 89 days  $3,787   $3,339   $6,497    13.4%   (41.7)%
Charge-offs (Recoveries) , net (quarterly)  $30   $(9)  $626    (433.3)%   (95.2)%
Charge-offs (Recoveries) , net as a % of average loans (annualized)   0.01%   (0.00)%   0.31%   (413.4)%   (96.9)%
Non-accrual loans to total loans   1.37%   1.69%   0.73%   (18.9)%   86.5%
NPAs to total assets   1.40%   1.67%   0.94%   (16.0)%   49.0%
NPAs excluding TDR loans (d) to total assets   1.35%   1.54%   0.85%   (11.9)%   59.8%
Non-accrual loans to total assets   1.12%   1.35%   0.61%   (17.1)%   82.6%
Allowance for loan losses as a % of non-accrual loans   43.51%   43.50%   121.84%   0.0%   (64.3)%
Allowance for loan losses to total loans   0.60%   0.73%   0.89%   (18.9)%   (33.4)%

 

(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 $3.3 million

 

 

 

 

 

SB ONE BANCORP

CONSOLIDATED BALANCE SHEETS

(Dollars In Thousands)

 

   December 31, 2018   December 31, 2017 
         
ASSETS          
Cash and due from banks  $11,768   $3,270 
Interest-bearing deposits with other banks   14,910    8,376 
Cash and cash equivalents   26,678    11,646 
           
Interest bearing time deposits with other banks   200    100 
Securities available for sale, at fair value   182,139    98,730 
Securities held to maturity   4,078    5,304 
Other Bank Stock, at cost   11,764    4,925 
           
Loans receivable, net of unearned income   1,474,775    820,700 
Less:  allowance for loan losses   8,775    7,335 
Net loans receivable   1,466,000    813,365 
           
Foreclosed real estate   4,149    2,275 
Premises and equipment, net   19,215    8,389 
Accrued interest receivable   6,546    2,472 
Goodwill and intangibles   29,446    2,820 
Bank-owned life insurance   35,778    22,054 
Other assets   10,834    7,303 
           
Total Assets  $1,796,827   $979,383 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Liabilities:          
Deposits:          
Non-interest bearing  $259,807   $146,167 
Interest bearing   1,094,132    616,324 
Total Deposits   1,353,939    762,491 
           
Borrowings   219,906    90,350 
Accrued interest payable and other liabilities   9,740    4,501 
Subordinated debentures   27,859    27,848 
           
Total Liabilities   1,611,444    885,190 
           
Total Stockholders' Equity   185,383    94,193 
           
Total Liabilities and Stockholders' Equity  $1,796,827   $979,383 

 

 

 

 

SB ONE BANCORP

CONSOLIDATED STATEMENTS OF INCOME

(Dollars In Thousands Except Per Share Data)

(Unaudited)

 

   Three Months Ended December 31,   Year Ended December 31, 
   2018   2017   2018   2017 
INTEREST INCOME                    
                     
Loans receivable, including fees  $13,888   $8,923   $51,359   $32,953 
Securities:                    
Taxable   1,031    373    3,507    1,437 
Tax-exempt   472    331    1,744    1,274 
Interest bearing deposits   30    7    99    35 
Total Interest Income   15,421    9,634    56,709    35,699 
                     
INTEREST EXPENSE                    
Deposits   2,805    1,052    8,078    3,584 
Borrowings   965    391    3,288    1,749 
Junior subordinated debentures   317    321    1,263    1,278 
Total Interest Expense   4,087    1,764    12,629    6,611 
                     
Net Interest Income   11,334    7,870    44,080    29,088 
PROVISION FOR LOAN LOSSES   210    459    1,437    1,586 
Net Interest Income after Provision for Loan Losses   11,124    7,411    42,643    27,502 
                     
OTHER INCOME                    
Service fees on deposit accounts   331    311    1,290    1,123 
ATM and debit card fees   266    199    983    777 
Bank owned life insurance   198    144    761    522 
Insurance commissions and fees   1,379    1,173    6,640    5,326 
Investment brokerage fees   12    12    104    24 
(Loss) gain on securities transactions   -    (60)   36    (9)
Gain (loss) on disposal of fixed assets   -    7    9    7 
Other   307    175    926    515 
Total Other Income   2,493    1,961    10,749    8,285 
                     
OTHER EXPENSES                    
Salaries and employee benefits   5,208    3,783    20,710    14,773 
Occupancy, net   690    462    2,776    1,880 
Data processing   911    530    3,351    2,173 
Furniture and equipment   301    233    1,194    938 
Advertising and promotion   99    49    587    308 
Professional fees   410    395    1,412    1,173 
Director fees   140    109    550    399 
FDIC assessment   136    70    529    263 
Insurance   28    77    210    279 
Stationary and supplies   80    30    285    148 
Merger-related expenses   1,460    705    5,804    1,187 
Loan collection costs   52    47    255    122 
Expenses and write-downs related to foreclosed real estate   96    (15)   324    283 
Amortization of intangible assets   65    -    247    - 
Other   597    345    2,176    1,691 
Total Other Expenses   10,273    6,820    40,410    25,617 
                     
Income before Income Taxes   3,344    2,552    12,982    10,170 
INCOME TAX EXPENSE   991    2,039    3,059    4,479 
Net Income  $2,353   $513   $9,923   $5,691 
                     
EARNINGS PER SHARE                    
                     
Basic  $0.29   $0.09   $1.26   $1.06 
Diluted  $0.29   $0.09   $1.25   $1.05 

 

 

 

 

 

SB ONE BANCORP

COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES

(Dollars In Thousands)

(Unaudited)

 

   Three Months Ended December 31, 
   2018   2017 
   Average       Average   Average       Average 
   Balance   Interest   Rate (2)   Balance   Interest   Rate (2) 
Earning Assets:                              
Securities:                              
Tax exempt (3)  $63,114   $713    4.48%  $47,223   $499    4.19%
Taxable   130,105    1,031    3.14%   63,055    373    2.35%
Total securities   193,219    1,744    3.58%   110,278    872    3.14%
Total loans receivable (1) (4)   1,225,917    13,888    4.49%   805,179    8,923    4.40%
Other interest-earning assets   10,973    30    1.08%   7,527    7    0.37%
Total earning assets   1,430,109    15,662    4.34%   922,984    9,802    4.21%
                               
Non-interest earning assets   98,408              48,143           
Allowance for loan losses   (8,753)             (7,528)          
Total Assets  $1,519,764             $963,599           
                               
Sources of Funds:                              
Interest bearing deposits:                              
NOW  $261,737   $417    0.63%  $192,595   $185    0.38%
Money market   185,419    879    1.88%   99,115    250    1.00%
Savings   210,092    284    0.54%   134,803    70    0.21%
Time   292,389    1,225    1.66%   186,896    547    1.16%
Total interest bearing deposits   949,637    2,805    1.17%   613,409    1,052    0.68%
Borrowed funds   144,703    965    2.65%   74,255    391    2.09%
Subordinated debentures   27,857    317    4.51%   27,847    321    4.57%
Total interest bearing liabilities   1,122,197    4,087    1.44%   715,511    1,764    0.98%
                               
Non-interest bearing liabilities:                              
Demand deposits   235,342              148,420           
Other liabilities   5,304              4,515           
Total non-interest bearing liabilities   240,646              152,935           
Stockholders' equity   156,921              95,153           
Total Liabilities and Stockholders' Equity  $1,519,764             $963,599           
                               
Net Interest Income and Margin (5)        11,575    3.21%        8,038    3.46%
Tax-equivalent basis adjustment        (241)             (168)     
Net Interest Income       $11,334             $7,870      

 

(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)

 

 

   Three Months Ended December 31, 2018   Three Months Ended September 30, 2018 
   Average       Average   Average       Average 
   Balance   Interest   Rate (2)   Balance   Interest   Rate (2) 
Earning Assets:                              
Securities:                              
Tax exempt (3)  $63,114   $713    4.48%  $63,752   $666    4.14%
Taxable   130,105    1,031    3.14%   126,961    936    2.92%
Total securities   193,219    1,744    3.58%   190,713    1,602    3.33%
Total loans receivable (1) (4)   1,225,917    13,888    4.49%   1,152,741    13,009    4.48%
Other interest-earning assets   10,973    30    1.08%   10,219    23    0.89%
Total earning assets   1,430,109    15,662    4.34%   1,353,673    14,634    4.29%
                               
Non-interest earning assets   98,408              97,181           
Allowance for loan losses   (8,753)             (8,388)          
Total Assets  $1,519,764             $1,442,466           
                               
Sources of Funds:                              
Interest bearing deposits:                              
NOW  $261,737   $417    0.63%  $257,671   $365    0.56%
Money market   185,419    879    1.88%   125,430    538    1.70%
Savings   210,092    284    0.54%   213,152    266    0.50%
Time   292,389    1,225    1.66%   262,244    987    1.49%
Total interest bearing deposits   949,637    2,805    1.17%   858,497    2,156    1.00%
Borrowed funds   144,703    965    2.65%   170,168    943    2.20%
Subordinated debentures   27,857    317    4.51%   27,854    318    4.53%
Total interest bearing liabilities   1,122,197    4,087    1.44%   1,056,519    3,417    1.28%
                               
Non-interest bearing liabilities:                              
Demand deposits   235,342              228,993           
Other liabilities   5,304              6,081           
Total non-interest bearing liabilities   240,646              235,074           
Stockholders' equity   156,921              150,873           
Total Liabilities and Stockholders' Equity  $1,519,764             $1,442,466           
                               
Net Interest Income and Margin (5)        11,575    3.21%        11,217    3.29%
Tax-equivalent basis adjustment        (241)             (224)     
Net Interest Income       $11,334             $10,993      

 

(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 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)

 

   Year Ended December 31, 
   2018   2017 
   Average       Average   Average       Average 
   Balance   Interest   Rate (2)   Balance   Interest   Rate (2) 
Earning Assets:                              
Securities:                              
Tax exempt (3)  $61,673   $2,632    4.27%  $46,449   $1,918    4.13%
Taxable   126,104    3,507    2.78%   64,636    1,437    2.22%
Total securities   187,777    6,139    3.27%   111,085    3,355    3.02%
Total loans receivable (1) (4)   1,139,199    51,359    4.51%   756,766    32,953    4.35%
Other interest-earning assets   10,586    99    0.94%   8,611    35    0.41%
Total earning assets   1,337,562    57,597    4.31%   876,462    36,343    4.15%
                               
Non-interest earning assets   97,078              45,398           
Allowance for loan losses   (8,185)             (7,113)          
Total Assets  $1,426,455             $914,747           
                               
Sources of Funds:                              
Interest bearing deposits:                              
NOW  $257,314   $1,527    0.59%  $183,457   $584    0.32%
Money market   124,973    1,952    1.56%   93,505    843    0.90%
Savings   216,275    818    0.38%   137,120    285    0.21%
Time   270,807    3,781    1.40%   171,163    1,872    1.09%
Total interest bearing deposits   869,369    8,078    0.93%   585,245    3,584    0.61%
Borrowed funds   150,294    3,288    2.19%   78,551    1,749    2.23%
Subordinated debentures   27,853    1,263    4.53%   27,844    1,278    4.59%
Total interest bearing liabilities   1,047,516    12,629    1.21%   691,640    6,611    0.96%
                               
Non-interest bearing liabilities:                              
Demand deposits   223,984              139,611           
Other liabilities   5,060              4,167           
Total non-interest bearing liabilities   229,044              143,778           
Stockholders' equity   149,895              79,329           
Total Liabilities and Stockholders' Equity  $1,426,455             $914,747           
                               
Net Interest Income and Margin (5)        44,968    3.36%        29,732    3.39%
Tax-equivalent basis adjustment        (888)             (644)     
Net Interest Income       $44,080             $29,088      

 

(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 December 31, 2018   Three Months Ended December 31, 2017 
   Banking and           Banking and         
   Financial   Insurance       Financial   Insurance     
   Services   Services   Total   Services   Services   Total 
Net interest income from external sources  $11,334   $-   $11,334   $7,870   $-   $7,870 
Other income from external sources   1,074    1,419    2,493    723    1,238    1,961 
Depreciation and amortization   376    8    384    257    5    262 
Income before income taxes   3,178    166    3,344    2,333    219    2,552 
Income tax expense (1)   925    66    991    1,952    87    2,039 
Total assets   1,791,975    4,852    1,796,827    975,123    4,260    979,383 

 

 

   Three Months Ended December 31, 2018   Three Months Ended September 30, 2018 
   Banking and           Banking and         
   Financial   Insurance       Financial   Insurance     
   Services   Services   Total   Services   Services   Total 
Net interest income from external sources  $11,334   $-   $11,334   $10,993   $-   $10,993 
Other income from external sources   1,074    1,419    2,493    967    1,551    2,518 
Depreciation and amortization   376    8    384    455    7    462 
Income before income taxes   3,178    166    3,344    3,907    320    4,227 
Income tax expense (1)   925    66    991    829    128    957 
Total assets   1,791,975    4,852    1,796,827    1,453,536    6,106    1,459,642 

 

   Year Ended December 31, 2018   Year Ended December 31, 2017 
   Banking and           Banking and         
   Financial   Insurance       Financial   Insurance     
   Services   Services   Total   Services   Services   Total 
Net interest income from external sources  $44,080   $-   $44,080   $29,088   $-   $29,088 
Other income from external sources   3,975    6,774    10,749    2,864    5,421    8,285 
Depreciation and amortization   1,723    27    1,750    1,037    24    1,061 
Income before income taxes   10,987    1,995    12,982    8,757    1,413    10,170 
Income tax expense (1)   2,261    798    3,059    3,914    565    4,479 
Total assets   1,791,975    4,852    1,796,827    975,123    4,260    979,383 

 

(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 December 31, 
   2018   2017 
Net income (GAAP)  $2,353   $513 
Merger related expenses net of tax (1)   1,301    676 
Tax Cut and Jobs Act adjusted (2)   -    942 
Non-recurring expenses net of tax (3)   119    - 
Net income, as adjusted  $3,773   $2,131 
           
Average diluted shares outstanding (GAAP)   8,082,270    6,011,574 
Average diluted shares outstanding, as adjusted   8,082,270    6,011,574 
Diluted EPS, as adjusted  $0.47   $0.35 
Return on average assets, as adjusted   0.99%   0.88%
Return on average equity, as adjusted   9.62%   8.96%

 

(1) Merger related expense net of tax expense of $160 thousand QTD 2018 and $30 thousand in 2017.

(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cut and Jobs Act

(3) Non-recurring expenses net of tax expense of $51 thousand QTD 2018

 

   Three Months Ended 
   December 31, 2018   September 30, 2018 
Net income (GAAP)  $2,353   $3,270 
Merger related expenses net of tax (1)   1,301    538 
Non-recurring expenses net of tax (2)   119    - 
Net income, as adjusted  $3,773   $3,808 
           
Average diluted shares outstanding (GAAP)   8,082,270    7,910,449 
Average diluted shares from capital raise (2)   -    - 
Average diluted shares outstanding, as adjusted   8,082,270    7,910,449 
Diluted EPS, as adjusted  $0.47   $0.48 
Return on average assets, as adjusted   0.99%   1.06%
Return on average equity, as adjusted   9.62%   10.10%

 

(1) Merger related expense net of tax expense of $160 thousand QTD December 2018, $67 thousand QTD September 2018.

(2) Non-recurring expenses net of tax expense of $51 thousand QTD 2018

 

   Year Ended December 31, 
   2018   2017 
Net income (GAAP)  $9,923   $5,691 
Merger related expenses net of tax (1)   4,521    1,021 
Non-recurring expenses inclusive of rebrand net of tax (3)   271    - 
S-3 Registration filing expenses net of tax (1)   -    45 
Tax Cut and Jobs Act adjusted (2)   -    942 
Net income, as adjusted  $14,715   $7,699 
Average diluted shares outstanding (GAAP)   7,921,269    5,404,381 
Average diluted shares outstanding, as adjusted   7,921,269    5,404,381 
Diluted EPS, as adjusted  $1.86   $1.42 
Return on average assets, as adjusted   1.03%   0.84%
Return on average equity, as adjusted   9.82%   9.71%

 

(1) Merger related expenses net of tax expenses $1.3 million YTD 2018 and $137 thousand YTD 2017; S-3 registration filing net of tax expenses of $30 thousand in 2017.

(2) Represents acceleration of $942 thousand of deferred tax assets into expense due to recent enactment of the Tax Cut and Jobs Act

(3) Non-recurring rebrand expenses net of tax expense of $54 thousand and non-recurring expenses of $51 thousand

(4) Calculation is based on 1,249,999 common stock shares issued and outstanding as part of the capital raise completed on June 21, 2017 divided by the number of days in the period.