Loan Type

Loan Count

Principal Balance

% of Loan Type

Mortgage loans on real estate:

Residential first mortgages

138

$

29,004

10

%

Commercial mortgages (non-owner occupied)

44

61,564

22

%

Construction, land and land development

17

26,206

20

%

Commercial mortgages (owner occupied)

52

21,484

29

%

Residential revolving and junior mortgages

10

1,552

5

%

Commercial and industrial

119

22,702

12

%

Consumer

7

144

2

%

     Total

387

$

162,656

•

Loss before income taxes for the second quarter of 2020 was $8.4 million compared to a loss before income taxes of $72 thousand for the first quarter of 2020. The loss before income taxes for the second quarter of 2020 included a $10.4 million goodwill impairment charge, as noted previously.

•

Interest income for the three months ended June 30, 2020 was $12.0 million, on average interest-earning assets of $1.16 billion, compared to $12.2 million, on average interest-earning assets of $1.08 billion, for the three months ended March 31, 2020. Interest income in the second quarter of 2020 included accretion of acquired loan discounts of $93 thousand, while interest income in the first quarter of 2020 included $189 thousand of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.17% and 4.56% for the second and first quarters of 2020, respectively. Yields on average interest-earning assets in the second quarter of 2020 were negatively affected by lower yields on loans originated, the repricing of variable rate loans due to the decline in index rates, the addition of lower yielding PPP loans, which had a negative 3 basis point effect on yield, and lower accretion of acquired loan discounts, which had a negative 3 basis point effect. Partially offsetting the decline in yield was higher average balances of gross loans in the second quarter of 2020 of $86.6 million.

•

Interest expense was $3.0 million and $3.6 million for the three months ended June 30, 2020 and March 31, 2020, respectively, and cost of funds was 1.12% and 1.44% for the sequential quarter periods. Average interest-bearing liabilities were $914.8 million and $871.6 million for the second and first quarters of 2020, respectively. Cost of deposits was 0.97% for the second quarter of 2020, down 27 basis points from 1.24% for the first quarter of 2020, reflective of the company’s efforts to reduce deposit rates since mid-2019, which was accelerated in the second quarter of 2020 as the federal funds rate was decreased 150 basis points in the first quarter of 2020, and an increase of average noninterest-bearing demand deposit accounts of $42.8 million on a sequential quarter basis. The company accessed the Federal Reserve Bank’s PPP Liquidity Facility, which provides funding for PPP loans at a fixed rate of 35 basis points over the term the funded PPP loan is outstanding. PPP loans securing the PPP Liquidity Facility are afforded preferential regulatory capital treatment. As of June 30, 2020, outstanding advances under the PPP Liquidity Facility totaled $33.2 million.

•

Net interest margin (“NIM”) was 3.11% for the second quarter of 2020 compared to 3.22% for the first quarter of 2020. The 11 basis point decrease in NIM was primarily attributable to lower yields on loans originated in the second quarter of 2020, including PPP loans, and the repricing of variable rate loans, partially offset by lower cost of funds.

•

Provision for loan losses was $2.0 million for the second quarter of 2020 compared to $2.8 million for the first quarter of 2020. Of the second quarter of 2020 amount, approximately $1.4 million was attributable to qualitative loss factors to provide for losses estimated to have been incurred as of June 30, 2020, as a result of challenges certain borrowers are facing due to the pandemic, evidenced, in part, by loan deferrals and modifications granted to these borrowers. The remaining provision for loan losses in the second quarter of 2020 was due to gross loan growth of $27.0 million, excluding PPP loans, higher specific reserves, and charge-offs. No provision for loan losses was recorded on PPP loans as these loans are subject to a full U.S. government guarantee.

•

Noninterest income for the three months ended June 30, 2020 and March 31, 2020 was $2.2 million and $1.4 million, respectively, an increase of $803 thousand. Of the increase, $529 thousand was attributable to higher secondary market sales and servicing income in the second quarter of 2020, driven by an increase in the demand for purchase money and refinance mortgages. Also contributing to the increase on a sequential quarter basis was a $114 thousand unrealized gain in the second quarter of 2020 on assets held in a rabbi trust for the benefit of participants in the company’s deferred compensation plan compared to an unrealized loss of $263 thousand in the first quarter of 2020.

•

Noninterest expenses for the three months ended June 30, 2020 and March 31, 2020 were $17.5 million and $7.3 million, respectively. Excluding the goodwill impairment charge of $10.4 million, noninterest expenses decreased $229 thousand on a sequential quarter basis. The company’s efficiency ratio was 156.7% and 73.0% for the second and first quarters of 2020, respectively. The company’s efficiency ratio excluding the goodwill impairment charge was 63.6%¹ and 73.0%¹ for the second and first quarters of 2020, respectively.

•

Income tax benefit for the second quarter of 2020 was $217 thousand, reflective of a 2.6% effective income tax rate, while income tax benefit for the first quarter of 2020 was $58 thousand, reflective of an 80.6% effective income tax rate. Income tax benefit in the second quarter of 2020 was a result of income tax expense before the goodwill impairment charge, offset by an income tax benefit (reversal of a deferred tax liability) of $590 thousand related to a portion of the goodwill. The effective income tax rate of 80.6% in the first quarter of 2020 was primarily due to the amount of tax-exempt income relative to the company’s pre-tax net loss for the quarter.

•

Loss before income taxes for the first half of 2020 was $8.4 million compared to income before income taxes of $3.9 million for the first half of 2019. The loss before income taxes for the first half of 2020 included a $10.4 million goodwill impairment charge recorded in the second quarter of 2020, as noted previously.

•

Interest income for the six months ended June 30, 2020 was $24.2 million, on average interest-earning assets of $1.19 billion, compared to $24.7 million for the six months ended June 30, 2019, on average interest-earning assets of $1.03 billion. Interest income in the first half of 2020 included accretion of acquired loan discounts of $282 thousand, while interest income in the first half of 2019 included $636 thousand of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.36% and 4.83% for the first halves of 2020 and 2019, respectively. The lower yield on average interest-earning assets in the 2020 period was primarily due to lower yields on loans originated in the period, the repricing of variable rate loans, the addition of lower yielding PPP loans, which had a negative 2 basis point effect on yield, and lower accretion of acquired loan discounts, which had a negative 6 basis point effect. Partially offsetting these negative effects were higher average balances of gross loans in the 2020 period of $69.4 million.

•

Interest expense was $6.6 million and $7.5 million for the six months ended June 30, 2020 and 2019, respectively, and cost of funds was of 1.27% and 1.56% for the respective periods. Lower cost of funds in the first half of 2020 was primarily reflective of the company’s efforts to reduce deposit rates since mid-2019, lower borrowing costs, particularly Federal Home Loan Bank of Atlanta advances, and higher average balances of noninterest-bearing demand accounts of $42.2 million in the 2020 period. Average interest-bearing liabilities were $893.2 million and $855.5 million for the first half of 2020 and 2019, respectively.

•

NIM was 3.17% for the first half of 2020 compared to 3.37% for the first half of 2019. Lower NIM in the 2020 period was primarily due to lower yields on average interest earning assets, primarily loans, and lower accretion of acquired loan discounts, partially offset by lower cost of funds.

•

Provision for loan losses was $4.8 million for the first half of 2020 compared to $376 thousand for the first half of 2019.  Provision for the first half of 2020 was primarily attributable to qualitative loss factors for increases in state unemployment rates, including Virginia, and for losses estimated to have been incurred as of June 30, 2020 due to the COVID-19 pandemic, as noted above, gross loan growth of approximately $72.9 million, excluding PPP loans, higher specific reserves, and charge-offs. As previously noted, the company recorded no provision for loan losses for PPP loans.

•

Noninterest income for the six months ended June 30, 2020 and 2019 was $3.6 million and $2.4 million, respectively. The 2020 period included approximately $966 thousand of fee income for referring loan customers to a third-party financial institution to execute interest rate swaps, while the 2019 period included no income from such activities. Additionally, the 2020 period included higher secondary market sales and servicing income of approximately $594 thousand. Partially offsetting these increases was a $150 net unrealized loss on rabbi trust assets in the 2020 period compared to a $130 net unrealized gain in the 2019 period.

•

Noninterest expenses for the six months ended June 30, 2020 and 2019 were $24.5 million and $15.2 million, respectively. Excluding the goodwill impairment charge of $10.4 million, noninterest expenses decreased $836 thousand on a comparative period basis. Lower noninterest expenses in the 2020 period were primarily attributable to reduced headcount and occupancy costs, resulting from temporary and permanent branch closures, and overall general expense control.

•

Income tax benefit for the first half of 2020 was $276 thousand, reflective of an 3.3% effective income tax rate, while income tax expense for the first half of 2019 was $732 thousand, reflective of an 18.6% effective income tax rate. Income tax benefit in the first half of 2020 was a result of income tax expense before the goodwill impairment charge, offset by the related deferred tax benefit.

•

Loss before income taxes for the second quarter of 2020 was $8.4 million compared to income before income taxes of $2.1 million for the second quarter of 2019. The loss before income taxes for the second quarter of 2020 included a $10.4 million goodwill impairment charge, as noted previously.

•

Interest income for the three months ended June 30, 2020 was $12.0 million, on average interest-earning assets of $1.16 billion, compared to $12.3 million, on average interest-earning assets of $1.04 billion, for the three months ended June 30, 2019. Interest income in the second quarter of 2020 included accretion of acquired loan discounts of $93 thousand, while interest income in the second quarter of 2019 included $197 thousand of accretion of acquired loan discounts. Yields on average interest-earning assets were 4.17% and 4.77% for the second quarters of 2020 and 2019, respectively. Yields on average interest-earning assets in the second quarter of 2020 were negatively affected by lower yields on loans originated in the quarter, including PPP loans, the repricing of variable rate loans, and lower accretion of acquired loan discounts.

•

Interest expense was $3.0 million and $3.8 million for the three months ended June 30, 2020 and 2019, respectively, and cost of funds was 1.12% and 1.58% for the respective periods. Average interest-bearing liabilities were $914.8 million and $857.4 million for the second quarters of 2020 and 2019, respectively. Cost of deposits was 0.97% for the second quarter of 2020, down 45 basis points from 1.42% for the second quarter of 2019, reflective of the company’s efforts to reduce deposit rates and $60.3 million of higher average balances noninterest-bearing demand deposit accounts in the 2020 period.

•

NIM was 3.11% for the second quarter of 2020 compared to 3.29% for the second quarter of 2019. The 18 basis point decrease in NIM was primarily attributable to lower yields on loans originated in the second quarter of 2020, including PPP loans, and the repricing of variable rate loans, partially offset by lower cost of funds.

•

Provision for loan losses was $2.0 million in the second quarter of 2020 compared to $62 thousand in the second quarter of 2019. Higher provision for loan losses in the 2020 quarter was primarily attributable to estimated reserve needs related to the COVID-19 pandemic, gross loan growth, excluding PPP loans, and higher specific reserves.

•

Noninterest income for the three months ended June 30, 2020 and 2019 was $2.2 million and $1.3 million, respectively. Higher noninterest income in the 2020 period was primarily due to higher secondary market sales and servicing income of $464 thousand and $496 thousand of fee income for referring loan customers to a third-party financial institution to execute interest rate swaps, while the 2019 quarter included no referral fee income.

•

Noninterest expense for the three months ended June 30, 2020 and 2019 was $17.5 million and $7.6 million, respectively. Excluding, the $10.4 million goodwill impairment charge recorded in the 2020 period, noninterest expenses decreased $513 thousand on a comparative period basis. The company’s efficiency ratio was 156.7% and 77.7% for the second quarters of 2020 and 2019, respectively. The company’s efficiency ratio, excluding the goodwill impairment charge, was 63.6%¹ and 77.7%¹ for the second quarters of 2020 and 2019, respectively.

•

Income tax benefit for the second quarter of 2020 was $217 thousand, reflective of a 2.6% effective income tax rate, as noted above. Income tax expense for the first quarter of 2019 was $395 thousand, reflective of an 18.6% effective income tax rate.

•

Total assets were $1.24 billion and $1.13 billion at June 30, 2020 and December 31, 2019, respectively.

•

Loans, net of allowance for loan losses, were $1.04 billion at June 30, 2020 compared to $916.6 million at December 31, 2019, a $124.2 million increase, including $55.5 million of PPP loans originated in 2020. Excluding PPP loans, net loan growth for the first half of 2020 was $68.7 million, an annualized rate of approximately 15%.

•

Deposits were $1.01 billion at June 30, 2020 compared to $910.4 million at December 31, 2019, a $96.5 million increase, including an increase of $47.3 million of noninterest-bearing demand account balances. Higher noninterest-bearing accounts were partially attributable to PPP loans, which were funded in these accounts. Noninterest-bearing demand accounts comprised 18.4% of total deposits at June 30, 2020, an increase from 15.2% and 13.3% at December 31, 2019 and June 30, 2019, respectively.

•

Shareholders’ equity was $119.7 million and $126.2 million at June 30, 2020 and December 31, 2019, respectively, a decrease of $6.5 million. The decrease in shareholders’ equity in the 2020 period was primarily attributable to a net loss of $8.2 million, partially offset by net unrealized gains of approximately $1.1 million on the company’s available-for-sale securities portfolio. Tangible book value, calculated as shareholders’ equity less goodwill and core deposit intangible assets, net of the associated deferred tax liability, divided by common shares outstanding, was $8.90¹ and $8.64¹ at June 30, 2020 and December 31, 2019, respectively.

•

The company made no repurchases of its common stock outstanding in the first or second quarters of 2020, pursuant to a share repurchase program authorized by its board of directors in the fourth quarter of 2019.

•

Capital ratios for Virginia Commonwealth Bank were above regulatory minimum guidelines for well-capitalized banks as of June 30, 2020 and December 31, 2019.

•

Annualized return (loss) on average assets for the quarters ended June 30, 2020, March 31, 2020, and June 30, 2019 was (2.64)%, 0.00%, and 0.62%, respectively, while annualized return (loss) on average shareholders’ equity for the same periods was (25.40)%, (0.04)%, and 5.72%, respectively. Excluding the goodwill impairment charge in the second quarter 2020, annualized return on average assets and annualized return on average shareholders’ equity for the three months ended June 30, 2020 were 0.54%¹ and 5.18%¹, respectively.  

•

Loans in industry segments highly affected by the COVID-19 pandemic were subject to risk rating downgrades as of March 31, 2020. During the second quarter of 2020, risk ratings for certain loans in these segments were adjusted as additional

information became available. The following table presents industry segments the company believes may be negatively affected by the pandemic and the balances of loans and numbers in each segment. Loans to borrowers in these segments totaled approximately $148.2 million, or 14.1% of the company’s gross loans as of June 30, 2020. Dollar amounts are presented in thousands.

Industry Segment

Loan Count

Principal Balance

Hotels and motels

22

$

61,770

Restaurants and related services

53

20,557

Retail and retail services

98

56,213

Churches, assisted living, and other

25

9,645

198

$

148,185

•

Nonperforming assets were $9.9 million, or 0.80% of total assets, as of June 30, 2020, compared to $6.4 million, or 0.56% of total assets, as of December 31, 2019, and $7.7 million, or 0.71% of total assets, as of June 30, 2019. The increase in nonperforming assets from December 31, 2019 to June 30, 2020 was primarily attributable to $3.5 million of higher nonaccrual loan balances, mainly commercial and industrial loans to borrowers adversely affected by the COVID-19 pandemic.

•

The ratio of allowance for loan losses to total gross loans was 1.14%, 0.82%, and 0.82% at June 30, 2020, December 31, 2019, and June 30, 2019, respectively. The 32 basis point increase in the ratio of allowance for loan losses to total gross loans for the first half of 2020 was primarily due to qualitative loss factors applied to the majority of the company’s loan portfolio for higher state unemployment rates, particularly in Virginia, and for estimated losses incurred as of June 30, 2020, as a result of challenges facing certain borrowers due to the COVID-19 pandemic, evidenced, in part, by loan deferrals and modifications granted to these borrowers. Due to the full U.S. government guarantee on PPP loans, the company has recorded no allowance for loan losses for the $55.5 million of PPP loans outstanding as of June 30, 2020. Excluding PPP loans from the denominator of the ratio of allowance for loan losses to total gross results in a ratio of 1.20%¹ as of June 30, 2020. Further, the company’s allowance for loan losses does not include discounts recorded on loans acquired in the company’s 2017 merger with Virginia BanCorp, Inc., which were $1.6 million, $1.9 million, and $3.3 million as of June 30, 2020, December 31, 2019, and June 30 2019, respectively.

(unaudited)

(Dollars in thousands, except share data)

June 30, 2020

December 31, 2019 (1)

ASSETS

Cash and due from banks

$

10,778

$

6,096

Interest-earning deposits

28,667

34,358

Federal funds sold

467

1,359

Certificates of deposit

2,506

2,754

Available-for-sale securities, at fair value

92,560

99,454

Restricted securities

5,327

5,706

Loans receivable, net of allowance for loan losses of $12,007 and

   $7,562, respectively

1,040,848

916,628

Loans held for sale

2,521

1,231

Premises and equipment, net

18,330

20,141

Accrued interest receivable

4,128

3,035

Other real estate owned, net

1,903

1,916

Bank owned life insurance

19,985

19,752

Goodwill

—

10,374

Mortgage servicing rights

687

935

Core deposit intangible

1,228

1,518

Other assets

8,291

6,666

Total assets

$

1,238,226

$

1,131,923

LIABILITIES

Noninterest-bearing demand deposits

$

185,201

$

137,933

Savings and interest-bearing demand deposits

413,025

382,607

Time deposits

408,672

389,900

Total deposits

1,006,898

910,440

Securities sold under repurchase agreements

1,035

6,525

Federal Home Loan Bank advances

35,000

45,000

Federal Reserve Bank advances

33,160

—

Subordinated notes, net of unamortized issuance costs

31,056

31,001

Other liabilities

11,387

12,772

Total liabilities

1,118,536

1,005,738

SHAREHOLDERS' EQUITY

Common stock ($5 par value; authorized - 30,000,000 shares;

   outstanding - 13,334,049 and 13,261,801 shares, respectively) (2)

66,670

66,309

Additional paid-in capital

36,729

36,658

Unearned employee stock ownership plan shares

(1,394

)

(1,525

)

Retained earnings

16,519

24,660

Accumulated other comprehensive income, net

1,166

83

Total shareholders' equity

119,690

126,185

Total liabilities and shareholders' equity

$

1,238,226

$

1,131,923

For the Three Months Ended

(Dollars in thousands, except per share data)

June 30, 2020

March 31, 2020

June 30, 2019

INTEREST INCOME

Loans, including fees

$

11,290

$

11,352

$

11,458

Securities:

Taxable

573

652

577

Tax-exempt

89

94

97

Federal funds sold

—

2

18

Interest-earning deposit accounts

8

104

152

Certificates of deposit

14

14

19

Total interest income

11,974

12,218

12,321

INTEREST EXPENSE

Deposits

2,411

2,848

3,088

Securities sold under repurchase agreements

1

2

4

Subordinated notes and other borrowings

510

512

138

Federal Home Loan Bank advances

90

234

614

Federal Reserve Bank advances

20

—

—

Total interest expense

3,032

3,596

3,844

Net interest income

8,942

8,622

8,477

Provision for loan losses

2,027

2,777

62

Net interest income after provision for loan losses

6,915

5,845

8,415

NONINTEREST INCOME

Trust management

203

193

206

Service charges and fees on deposit accounts

137

236

246

Wealth management

228

247

262

Interchange fees, net

130

98

121

Other service charges and fees

28

33

27

Secondary market sales and servicing

731

202

267

Increase in cash surrender value of bank owned life insurance

116

118

121

Net gains (losses) on sales and calls of available-for-sale securities

3

26

(2

)

Net gains (losses) on disposition of other assets

1

(7

)

(1

)

Net gains (losses) on rabbi trust assets

114

(263

)

40

Referral fees

496

471

—

Other

7

37

8

Total noninterest income

2,194

1,391

1,295

NONINTEREST EXPENSE

Salaries and employee benefits

3,839

3,628

3,892

Occupancy

705

751

837

Data processing

498

537

609

Bank franchise tax

257

256

230

Telecommunications and other technology

371

358

262

FDIC assessments

147

148

162

Foreclosed property

28

7

19

Consulting

70

71

147

Advertising and marketing

26

67

109

Directors' fees

188

192

213

Audit and accounting

170

140

189

Legal

154

191

27

Core deposit intangible amortization

142

149

173

Net other real estate owned losses

81

—

72

Goodwill impairment

10,374

—

—

Other

403

813

651

Total noninterest expense

17,453

7,308

7,592

(Loss) income before income taxes

(8,344

)

(72

)

2,118

Income tax (benefit) expense

(217

)

(58

)

395

Net (loss) income

$

(8,127

)

$

(14

)

$

1,723

Basic and diluted (loss) earnings per share

$

(0.62

)

$

—

$

0.13

For the Six Months Ended

(Dollars in thousands, except per share data)

June 30, 2020

June 30, 2019

INTEREST INCOME

Loans, including fees

$

22,642

$

22,919

Securities:

Taxable

1,225

1,172

Tax-exempt

183

214

Federal funds sold

2

25

Interest-earning deposit accounts

112

287

Certificates of deposit

28

39

Total interest income

24,192

24,656

INTEREST EXPENSE

Deposits

5,260

5,896

Securities sold under repurchase agreements

3

7

Subordinated notes and other borrowings

1,021

275

Federal Home Loan Bank advances

324

1,319

Federal Reserve Bank advances

20

—

Total interest expense

6,628

7,497

Net interest income

17,564

17,159

Provision for loan losses

4,804

376

Net interest income after provision for loan losses

12,760

16,783

NONINTEREST INCOME

Trust management

396

420

Service charges and fees on deposit accounts

373

484

Wealth management

475

469

Interchange fees, net

228

222

Other service charges and fees

61

56

Secondary market sales and servicing

933

339

Increase in cash surrender value of bank owned life insurance

233

240

Net gains (losses) on sales and calls of available-for-sale securities

29

(2

)

Net losses on disposition of other assets

(7

)

(1

)

Net (losses) gains on rabbi trust assets

(150

)

130

Referral fees

966

—

Other

46

28

Total noninterest income

3,583

2,385

NONINTEREST EXPENSE

Salaries and employee benefits

7,466

7,893

Occupancy

1,456

1,705

Data processing

1,035

1,197

Bank franchise tax

514

446

Telecommunications and other technology

780

469

FDIC assessments

295

378

Foreclosed property

35

62

Consulting

141

262

Advertising and marketing

93

176

Directors' fees

381

377

Audit and accounting

310

393

Legal

346

110

Core deposit intangible amortization

291

353

Net other real estate owned losses

80

66

Goodwill impairment

10,374

—

Other

1,163

1,335

Total noninterest expense

24,760

15,222

(Loss) income before income taxes

(8,417

)

3,946

Income tax (benefit) expense

(276

)

732

Net (loss) income

$

(8,141

)

$

3,214

Basic and diluted (loss) earnings per share

$

(0.62

)

$

0.25

As of and for the

As of and for the Three Months Ended

Year Ended

June 30,

March 31,

December 31,

September 30,

June 30,

December 31,

(Dollars in thousands, except per share amounts)

2020

2020

2019

2019

2019

2019

Select Consolidated Balance Sheet Data

Total assets

$

1,238,226

$

1,183,553

$

1,131,923

$

1,112,219

$

1,094,260

Cash, interest-earning deposits and federal funds sold

39,912

56,006

41,813

31,405

24,604

Available-for-sale securities, at fair value

92,560

94,618

99,454

80,748

81,169

Loans:

Mortgage loans on real estate

798,109

762,404

730,788

731,280

713,247

Commercial and industrial

193,740

198,278

181,730

186,281

187,531

Paycheck Protection Program

55,496

—

—

—

—

Consumer

7,855

9,846

11,985

14,471

16,889

Loans receivable

1,055,200

970,528

924,503

932,032

917,667

Unamortized net deferred loan fees

(2,345

)

(333

)

(313

)

(269

)

(275

)

Allowance for loan losses (ALL)

(12,007

)

(10,172

)

(7,562

)

(7,495

)

(7,479

)

Net loans

1,040,848

960,023

916,628

924,268

909,913

Loans held for sale

2,521

747

1,231

268

593

Other real estate owned, net

1,903

1,679

1,916

2,178

3,168

Total liabilities

$

1,118,536

$

1,056,151

$

1,005,738

$

987,362

$

971,643

Deposits:

Noninterest-bearing demand deposits

185,201

136,437

137,933

124,670

116,229

Savings and interest-bearing demand deposits

413,025

394,637

382,607

372,404

374,175

Time deposits

408,672

433,393

389,900

396,614

385,218

Total deposits

1,006,898

964,467

910,440

893,688

875,622

Securities sold under repurchase agreements

1,035

3,284

6,525

6,323

6,983

Federal Home Loan Bank advances

35,000

45,000

45,000

68,000

70,000

Federal Reserve Bank advances

33,160

—

—

—

—

Subordinated notes, net of unamortized issuance costs

31,056

31,029

31,001

6,906

6,902

Shareholders' equity

119,690

127,402

126,185

124,857

122,617

Interest income

$

11,974

$

12,218

$

12,997

$

12,765

$

12,321

$

50,418

Interest expense

3,032

3,596

3,854

3,734

3,844

15,085

Net interest income

8,942

8,622

9,143

9,031

8,477

35,333

Provision for loan losses

2,027

2,777

311

495

62

1,182

Noninterest income

2,194

1,391

1,373

1,200

1,295

4,958

Noninterest expense

17,453

7,308

7,734

7,447

7,592

30,402

(Loss) income before income taxes

(8,344

)

(72

)

2,471

2,289

2,118

8,707

Income tax (benefit) expense

(217

)

(58

)

469

448

395

1,649

Net (loss) income

$

(8,127

)

$

(14

)

$

2,002

$

1,841

$

1,723

$

7,058

As of and for the

As of and for the Three Months Ended

Year Ended

June 30,

March 31,

December 31,

September 30,

June 30,

December 31,

(Dollars in thousands, except per share amounts)

2020

2020

2019

2019

2019

2019

Basic (loss) earnings per share

$

(0.62

)

$

—

$

0.15

$

0.14

$

0.13

$

0.54

Diluted (loss) earnings per share

(0.62

)

—

0.15

0.14

0.13

0.54

Book value per share

8.98

9.55

9.51

9.36

9.20

Tangible book value per share (1)

8.90

8.69

8.64

8.49

8.31

Shares outstanding at end of period

13,334,049

13,346,789

13,261,801

13,334,302

13,332,484

Weighted average shares outstanding, basic

13,080,689

13,056,576

13,071,708

13,077,600

13,059,824

13,053,080

Weighted average shares outstanding, diluted

13,080,689

13,056,576

13,145,522

13,132,459

13,104,943

13,111,853

Performance Measures and Other Metrics (tax-equivalent basis):

Yield on average interest-earning assets

4.17

%

4.56

%

4.87

%

4.87

%

4.77

%

4.85

%

Accretion of discounts on acquired loans

$

93

$

189

$

929

$

357

$

197

$

1,922

Cost of funds

1.12

%

1.44

%

1.54

%

1.52

%

1.58

%

1.55

%

Cost of deposits

0.97

%

1.24

%

1.34

%

1.40

%

1.42

%

1.37

%

Net interest spread

2.83

%

2.90

%

3.09

%

3.13

%

2.97

%

3.09

%

Net interest margin (NIM)

3.11

%

3.22

%

3.43

%

3.45

%

3.29

%

3.40

%

Average interest-earnings assets to total average assets

94.1

%

94.4

%

94.2

%

94.0

%

93.9

%

94.0

%

Return (loss) on average assets (annualized)

-2.64

%

0.00

%

0.71

%

0.66

%

0.62

%

0.64

%

Operating return on average assets (annualized) (1)

0.54

%

0.00

%

0.71

%

0.66

%

0.62

%

0.64

%

Return (loss) on average equity (annualized)

-25.40

%

-0.04

%

6.39

%

5.97

%

5.72

%

5.79

%

Operating return (loss) on average equity (annualized) (1)

5.18

%

-0.04

%

6.39

%

5.97

%

5.72

%

5.79

%

Efficiency ratio

156.7

%

73.0

%

73.5

%

72.8

%

77.7

%

75.5

%

Operating efficiency ratio (1)

63.6

%

73.0

%

73.5

%

72.8

%

77.7

%

75.5

%

Average assets

$

1,230,249

$

1,143,879

$

1,126,663

$

1,109,986

$

1,105,411

$

1,107,670

Average interest-earning assets

1,158,248

1,079,351

1,061,227

1,043,243

1,037,527

1,041,622

Average interest-bearing liabilities

914,832

871,597

860,421

851,392

857,355

855,703

Average shareholders' equity

127,960

126,955

125,285

123,399

120,559

121,859

Shareholders' equity to total assets ratio

9.7

%

10.8

%

11.1

%

11.2

%

11.2

%