The Community Financial Corporation (NASDAQ: TCFC) (the “Company”),
the holding company for Community Bank of the Chesapeake (the
“Bank”), today reported its results of operations for the three and
nine months ended September 30, 2021. Net income for the three
months ended September 30, 2021 was $6.4 million, or $1.12 per
diluted common share compared with net income of $6.4 million, or
$1.10 per diluted common share for the second quarter of 2021, and
net income of $3.8 million or $0.64 per diluted common share for
the quarter ended September 30, 2020. The Company reported net
income for the nine months ended September 30, 2021 of $19.1
million or diluted earnings per share of $3.29 compared to net
income for the comparable period of 2020 of $10.0 million or
diluted earnings per share of $1.70. Comparable period financial
results for the nine months ended September 30, 2020 were
impacted by a COVID-19 related increase in the provision for loan
losses ("PLL") to $10.1 million compared to $0.6 million for the
nine months ended September 30, 2021.
Management Commentary
“We are pleased to achieve our fourth
consecutive quarter of record earnings per share in the third
quarter of 2021. Our growth, profitability and improvements in
asset quality are the result of changes we have made over the past
two years,” stated William J. Pasenelli, Chief Executive Officer.
“Being named to the Piper Sandler Bank & Thrift SM-ALL Stars
Class of 2021 is a welcome recognition of the successful execution
of our strategy by a talented, focused and committed team. In the
first nine months of 2021, the Company has added two new product
lines, optimized our branch operations, improved asset quality and
continued to drive operating efficiency by controlling
expenses.”
“We are very pleased that our loan pipeline
increased to $190 million at the end of September 2021 and are
optimistic we will fund between $90-$100 million in new loans
during the fourth quarter of 2021. Our goal is to return to between
8% and 10% net loan growth in 2022," stated James M. Burke,
President. “I am pleased that in a very competitive market,
portfolio loans held steady in the third quarter. Our business
development teams were able to offset large unanticipated loan
payoffs of $36.1 million by funding $92.8 million in new loans
during the third quarter.”
Management estimates that without U.S. Small
Business Administration Paycheck Protection Program ("U.S. SBA
PPP") income, ROAA would be lower by approximately 10 basis points.
The Company is positioned with a healthy balance sheet and a
foundation for sustainable profitable operations that should
enhance long-term shareholder value beyond the non-recurring income
streams from the U.S. SBA PPP.
During the second quarter of 2021, the Bank
introduced a new residential mortgage program and retail and
commercial credit card program that merge the technology and
expertise of two proven FinTech firms with our business development
team's demonstrated capabilities. The Company expects these
programs to improve non-interest income and interest income
beginning in 2022-2023. The Bank's credit card program balances
increased from approximately $50,000 at June 30, 2021 to just under
$800,000 at September 30, 2021.
The Bank’s expansion into Virginia significantly
contributed to our growth over the last five years. Fredericksburg,
Spotsylvania and surrounding areas provide significant
opportunities for continued organic growth supported by our
efficient operating model and ability to leverage technology. At
September 30, 2021, loans in the greater Fredericksburg,
Virginia area accounted for approximately 45% of the Bank's
outstanding portfolio loans. Portfolio loans include all loan
portfolios except the U.S. SBA PPP loan portfolio. In addition,
Fredericksburg branch deposits were $93.6 million with an
average cost of deposits of four basis points. On April 21, 2021,
the Bank purchased its second location in Virginia at 5831 Plank
Road, Spotsylvania. The full-service branch is expected to open in
late 2021 and will provide banking, lending and wealth management
services with a focus on digital banking.
Effective March 31, 2021, the Bank consolidated
its St. Patrick's Drive branch in Waldorf, Maryland into the Bank's
nearby main office branch. This realignment of our branches will
enable the Company to serve a wider customer base. The net
financial impact of the new Spotsylvania branch and the closing of
the St. Patrick's Drive branch is expected to be neutral to the
Company's expense run rate.
During the recent quarter, the Company completed
its repurchase of $7.0 million of shares of the Company’s
common stock. Pursuant to the repurchase plan announced on October
20, 2020 (the “2020 Repurchase Plan”), the Company was authorized
by the Board of Directors to use up to $7.0 million of the
proceeds raised in its October 2020 $20.0 million subordinated
debt offering to repurchase up to 300,000 outstanding shares of
common stock Between November 2020 and August 2021, 200,550 shares
were repurchased at a total cost of approximately
$6.98 million or an average of $34.83 per share. In the
future, the Company expects to evaluate the use of additional
capital management strategies designed to enhance overall
stockholder value, including repurchasing some or all of the 99,450
shares remaining under the 2020 Repurchase Plan. The implementation
of any such strategy will be publicly announced.
Results of Operations
| |
|
(UNAUDITED) |
|
|
|
|
| |
|
Three Months Ended September 30, |
|
|
|
|
|
(dollars in thousands) |
|
2021 |
|
2020 |
|
$ Change |
|
% Change |
|
Interest and dividend income |
|
$ |
17,659 |
|
|
$ |
17,483 |
|
|
$ |
176 |
|
|
|
1.0 |
|
% |
| Interest expense |
|
1,050 |
|
|
2,115 |
|
|
(1,065 |
) |
|
|
(50.4 |
) |
% |
| Net interest income |
|
16,609 |
|
|
15,368 |
|
|
1,241 |
|
|
|
8.1 |
|
% |
| Provision for loan losses |
|
— |
|
|
2,500 |
|
|
(2,500 |
) |
|
|
(100.0 |
) |
% |
| Noninterest income |
|
1,400 |
|
|
1,666 |
|
|
(266 |
) |
|
|
(16.0 |
) |
% |
| Noninterest expense |
|
9,447 |
|
|
9,451 |
|
|
(4 |
) |
|
|
0.0 |
|
% |
| Income before income
taxes |
|
8,562 |
|
|
5,083 |
|
|
3,479 |
|
|
|
68.4 |
|
% |
| Income tax expense |
|
2,158 |
|
|
1,284 |
|
|
874 |
|
|
|
68.1 |
|
% |
| Net income |
|
$ |
6,404 |
|
|
$ |
3,799 |
|
|
$ |
2,605 |
|
|
|
68.6 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
(UNAUDITED) |
|
|
|
|
| |
|
Nine Months Ended September 30, |
|
|
|
|
|
(dollars in thousands) |
|
2020 |
|
2019 |
|
$ Change |
|
% Change |
|
Interest and dividend income |
|
$ |
52,781 |
|
|
$ |
53,160 |
|
|
$ |
(379 |
) |
|
|
(0.7 |
) |
% |
| Interest expense |
|
3,228 |
|
|
8,215 |
|
|
(4,987 |
) |
|
|
(60.7 |
) |
% |
| Net interest income |
|
49,553 |
|
|
44,945 |
|
|
4,608 |
|
|
|
10.3 |
|
% |
| Provision for loan losses |
|
586 |
|
|
10,100 |
|
|
(9,514 |
) |
|
|
(94.2 |
) |
% |
| Noninterest income |
|
5,616 |
|
|
6,046 |
|
|
(430 |
) |
|
|
(7.1 |
) |
% |
| Noninterest expense |
|
28,973 |
|
|
28,531 |
|
|
442 |
|
|
|
1.5 |
|
% |
| Income before income
taxes |
|
25,610 |
|
|
12,360 |
|
|
13,250 |
|
|
|
107.2 |
|
% |
| Income tax expense |
|
6,475 |
|
|
2,363 |
|
|
4,112 |
|
|
|
174.0 |
|
% |
| Net income |
|
$ |
19,135 |
|
|
$ |
9,997 |
|
|
$ |
9,138 |
|
|
|
91.4 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Interest Income
Net interest income increased for the three
months ended September 30, 2021 compared to the three months
ended September 30, 2020. Net interest margin of 3.28% for the
three months ended September 30, 2021 increased one basis
point from 3.27% for the comparable period. The increase in net
interest income resulted primarily from decreases in interest
expense from lower funding costs and increased interest income from
larger loan and investment average balances exceeding the impacts
of lower interest-earning asset repricing.
Net interest income increased for the
nine months ended September 30, 2021 compared to the
nine months ended September 30, 2020. Net interest margin
of 3.38% for the nine months ended September 30, 2021 was four
basis points higher than the 3.34% for the nine months ended
September 30, 2020. The increase in net interest income
resulted primarily from decreases in interest expense from lower
funding costs and increased interest income from larger loan and
investment average balances exceeding the impacts of lower
interest-earning asset repricing. Interest earning asset yields
decreased 35 basis points from 3.95% for the nine months ended
September 30, 2020 to 3.60% for the nine months ended
September 30, 2021. The Company’s cost of funds decreased 40
basis points from 0.63% for the nine months ended
September 30, 2020 to 0.23% for the nine months ended
September 30, 2021.
Excluding the acceleration of deferred fees into
interest income with U.S. SBA PPP loan forgiveness, compression of
our net interest margin is likely to continue in the fourth quarter
of 2021 as interest-earning assets reprice faster than
interest-bearing liabilities and the Bank continues to invest
excess liquidity into securities. Average investments and
interest-bearing cash accounts have increased $196.8 million
from $256.7 million for the three months ended December 31,
2020 to $453.5 million for the three months ended
September 30, 2021. We expect U.S. SBA PPP loan forgiveness to
positively impact margins and net interest income in the fourth
quarter of 2021 with the recognition of remaining net deferred
fees.
For the third quarter of 2021, interest income
increased from larger average loan and investment balances and
accelerated loan fee recognition following the forgiveness of U.S.
SBA PPP loans exceeding lower asset yields. For the first nine
months of 2021, interest income decreased from significantly lower
asset yields partially offset by increased interest income from
larger average balances and U.S. SBA PPP loan interest income.
Interest income from the Company's participation in the U.S. SBA
PPP program was $1.2 million and $4.4 million for the three and
nine months ended September 30, 2021 compared to $0.9 million
and $1.4 million for the three and nine months ended
September 30, 2020. For the three and nine months ended
September 30, 2021, net interest margin increased 13 and 14
basis points as a result of net U.S. SBA PPP loan interest income
and accelerated loan fee recognition compared to a decrease of five
basis points and six basis points for the comparable periods in
2020. For the three months ended June 30, 2021, net interest
margin of 3.37% increased 10 basis points as result of net U.S. SBA
PPP loan interest income and accelerated loan fee recognition.
The Company's net interest margin was stable in
2020 after adjusting for U.S. SBA PPP loan and funding activity.
The sharp decline in interest rates in 2020 and 2021 not only
reduced interest income on floating-rate loans, liquid
interest-earning assets and investments, but has also reduced
competitive pressures and depositor expectations concerning deposit
interest rates. The repricing of time deposits, the increase in
noninterest-bearing accounts as a percentage of total deposits and
lower costs for transaction deposit accounts all contributed to
lowering the Bank's cost of funds in 2020 and 2021. Cost of funds
decreased from 0.46% for the three months ended September 30,
2020 to 0.21% for the three months ended September 30, 2021.
During the third quarter of 2021, there was no change in the
Company's cost of funds from 0.21% for the three months ended
June 30, 2021.
Noninterest Income
Noninterest income decreased for the three
months ended September 30, 2021 compared to the three months
ended September 30, 2020. The decrease for the comparable
periods was primarily due to lower interest rate protection
referral fee income and gains on the sale of investment securities
in the third quarter of 2020, partially offset by increased service
charge income. Noninterest income as a percentage of average assets
was 0.26% and 0.32%, respectively, for the three months ended
September 30, 2021 and 2020.
Noninterest income decreased for the
nine months ended September 30, 2021 compared to the
nine months ended September 30, 2020. The decrease was
primarily due to decreased interest rate protection referral fee
income, unrealized losses on equity securities, and a loss on the
sale of impaired loans partially offset by increased service charge
income and miscellaneous fees. During the quarter ended March 31,
2021, the Bank sold non-accrual and classified commercial real
estate and residential mortgage loans with an amortized cost, net
of charge-offs, of $9.1 million and recognized a loss on the
sale of $191,000. Noninterest income as a percentage of assets was
0.35% and 0.41%, respectively, for the nine months ended
September 30, 2021 and 2020.
Noninterest Expense
Noninterest expense for the three months ended
September 30, 2021, was flat compared to the three months
ended September 30, 2020 as increased compensation and
benefits and other expenses were offset by decreased OREO expenses,
data processing costs and FDIC insurance. Compensation and benefits
increased for the comparable periods primarily due to increased
health insurance claims as well as larger incentive compensation
accruals resulting from improvements in profitability and asset
quality. In addition, no costs were deferred for the origination of
PPP loans in the third quarter of 2021 compared with the deferral
of $0.1 million in the third quarter of 2020. FDIC insurance
has decreased due to improved balance sheet credit trends.
During the first quarter of 2021, the Company
reported an expense of $1.3 million related to an isolated
wire transfer fraud incident. Our investigation has found no
evidence that information systems of the Bank were compromised or
that employee fraud was involved. In the second quarter of 2021,
the Company recovered $0.1 million of the funds transferred
and submitted an insurance claim which could result in a recovery
of a portion of the expense. Any recovery of insurance proceeds
would be recognized in the quarter received.
The Company’s efficiency ratio was 52.46% for
the three months ended September 30, 2021 compared to 55.48%
for the three months ended September 30, 2020. The Company’s
net operating expense ratio was 1.47% for the three months ended
September 30, 2021 compared to 1.50% for the three months
ended September 30, 2020. The efficiency and net operating
expense ratios have improved (decreased) as the Company has been
able to generate more net interest income and noninterest income
while controlling expense growth.
Including the wire transfer fraud expense, the
Company quarterly expense run rate for the nine months ended
September 30, 2021 averaged $9.7 million. The Company's
quarterly expense run rate, excluding the wire transfer fraud
expense, for the nine months ended September 30, 2021 averaged
$9.3 million. Management's projected quarterly expense run
rate for the fourth quarter of 2021 is estimated between $9.4 and
$9.6 million with the increase over the average attributable
to year end incentive compensation and employee benefit costs.
Noninterest expense increased $0.4 million
or 1.5% for the nine months ended September 30, 2021 compared
to the nine months ended September 30, 2020. The increase in
noninterest expense for the comparable periods was primarily due to
the $1.3 million wire fraud reported in the first quarter,
increases in professional fees and compensation and benefits due to
fewer deferred costs allocated for PPP loans as well as increased
health insurance claims and larger incentive compensation accruals
resulting from improvements in profitability and asset quality.
Compensation and benefits for the nine months ended
September 30, 2021 and 2020 were reduced $0.28 million
and $0.48 million, respectively, for the allocation of
deferred costs for U.S. SBA PPP loans originated. The increase in
noninterest expense was primarily offset by a reduction in OREO
expenses. OREO expenses have moderated as the Bank has reduced
foreclosed assets over the last 12 months from $4.0 million at
September 30, 2020 to $1.5 million at September 30,
2021.
The Company’s efficiency ratio was 52.52% for
the nine months ended September 30, 2021 compared to 55.95%
for the nine months ended September 30, 2020. The
Company’s net operating expense ratio was 1.47%
at September 30, 2021 compared to 1.53%
at September 30, 2020. The efficiency and net operating
expense ratios have improved (decreased) as the Company has been
able to generate more net interest income and noninterest income
while controlling expense growth.
Income Tax Expense
For the three and nine months ended
September 30, 2021 the effective tax rate was 25.2% and 25.3%.
The Company’s consolidated effective tax rate was 25.3% and 19.1%
for the three and nine months ended September 30, 2020. The
Company's new state apportionment approach was implemented during
the first quarter of 2020 and included the impact of amended income
tax filings of the Company and the Bank. Management evaluated the
tax position and determined the change in tax position qualified as
a change in estimate under FASB ASC Section 250. The following
table shows a breakdown of income tax expense for the
nine months ended September 30, 2020 split between the
apportionment adjustment and a normalized 2020 income tax
provision:
| |
|
(UNAUDITED) |
| |
|
Nine Months Ended September 30, 2020 |
|
(dollars in thousands) |
|
Tax Provision |
|
Effective Tax Rate |
|
Income tax apportionment adjustment |
|
$ |
(743 |
) |
|
|
(6.0 |
) |
% |
| Income taxes before
apportionment adjustment |
|
3,106 |
|
|
|
25.1 |
|
% |
| Income tax expense as
reported |
|
$ |
2,363 |
|
|
|
19.1 |
|
% |
| |
|
|
|
|
| Income before income
taxes |
|
$ |
12,360 |
|
|
|
|
| |
|
|
|
|
|
|
|
Balance Sheet
Assets
Total assets increased $252.3 million, or 12.4%,
to $2.28 billion at September 30, 2021 compared to total
assets of $2.03 billion at December 31, 2020 primarily due to
increased cash of $70.2 million and investments of $209.2 million.
The increase in cash and investments was principally driven by the
cash received from the SBA from the forgiveness of U.S. SBA PPP
loans, as well as an increase to our customer deposits accounts. In
addition, net loans decreased $24.4 million. The
Company’s loan pipeline was $192.0 million
at September 30, 2021.
During the third quarter of 2021, total net
loans, which include portfolio loans and U.S. SBA PPP loans,
decreased $32.7 million to $1,569.6 million at September 30,
2021. Gross portfolio loans decreased 0.2% annualized or $0.8
million from $1,533.9 million at June 30, 2021 to
$1,533.1 million at September 30, 2021. Portfolio loans
include all loan portfolios except the U.S. SBA PPP loan portfolio.
During the three months ended September 30, 2021, the Company
completed an internal review of collateral types for both
regulatory and lendable collateral reporting. The review resulted
in a small reclassification of $33.2 million from the
commercial real estate portfolio to the residential rental
portfolio ($31.7 million) and other commercial portfolios
($1.5 million). The reclassification did not have an impact on
the allowance for loan loss calculation.
Non-owner occupied commercial real estate as a
percentage of risk-based capital at September 30, 2021 and
December 31, 2020 were $776 million or 325% and $696 million
or 316%, respectively. Construction loans as a percentage of
risk-based capital at September 30, 2021 and December 31,
2020 were $124 million or 52% and $139 million or 63%,
respectively.
Funding
The Bank uses retail deposits and wholesale
funding. Retail deposits continue to be the most significant source
of funds totaling $1,996.6 million or 99.0% of funding at
September 30, 2021 compared to $1,737.6 million or 98.0% of
funding at December 31, 2020. Wholesale funding, which
consisted of FHLB advances and brokered deposits, were $20.3
million or 1.0% of funding at September 30, 2021 compared to
$35.3 million or 2.0% of funding at December 31, 2020.
Total deposits increased $259.0 million
or 14.8% (19.8% annualized) at September 30, 2021
compared to December 31, 2020. The increase reflected a $273.2
million increase to transaction deposits offsetting a $14.2 million
decrease to time deposits. Non-interest-bearing demand deposits
increased $70.5 million or 19.5% at September 30, 2021,
representing 21.6% of deposits, compared to 20.7% of
deposits at December 31, 2020. Customer deposit balances
have increased during the last 18 months due to customer
acquisition as well as lower levels of consumer and business
spending related to the COVID-19 pandemic.
Stockholders' Equity and Regulatory
Capital
During the nine months ended September 30,
2021, total stockholders’ equity increased $6.1 million due in part
to net income of $19.1 million and $0.6 million in
connection with stock-based compensation and ESOP activity. These
increases to equity were partially offset by common stock
repurchases of $6.7 million, common dividends paid of
$2.4 million and an increase in accumulated other
comprehensive loss of $4.5 million due to a reduction in
unrealized gains in the investment portfolio.
The Company's common equity to assets ratio
decreased to 8.96% at September 30,
2021 from 9.77% at December 31, 2020.
The Company’s ratio of tangible common equity ("TCE") to
tangible assets decreased to 8.48% at September 30,
2021 from 9.22% at December 31, 2020 (see
Non-GAAP reconciliation schedules). The decrease in the TCE ratio
is due primarily to significant increases in cash, investments and
loans.
In April 2020, banking regulators issued an
interim final rule that excluded U.S. SBA PPP loans pledged under
the Paycheck Protection Program Liquidity Facility ("PPPLF") from
the calculation of the leverage ratio. The Bank did not have any
PPPLF advances at September 30, 2021 and
December 31, 2020. In addition, the interim final rule
excluded U.S. SBA PPP loans from the calculation of risk-based
capital ratios by assigning a zero percent risk weight. The Company
remains well capitalized at September 30, 2021 with
a Tier 1 capital to average assets ("leverage ratio")
of 9.41% at September 30, 2021 compared to
9.56% at December 31, 2020.
Asset Quality
Allowance for loan losses ("ALLL") and
provision for loan losses ("PLL") and Non-Performing
Assets
The Company's allowance methodology considers
quantitative historical loss factors and qualitative factors to
determine the estimated level of incurred losses in the Company's
loan portfolios. The ALLL increased in 2020 primarily due to the
economic effects of the COVID-19 pandemic and continues to provide
for economic uncertainty. ALLL levels decreased to 1.21% of
portfolio loans at September 30, 2021 compared to 1.29% at
December 31, 2020. At September 30, 2021, the Company's
ALLL decreased $0.8 million or 4.4% to $18.6 million at
September 30, 2021 from $19.4 million at December 31,
2020.
The Company recorded $0.6 million of PLL for the
nine months ended September 30, 2021 compared to $10.1 million
for the nine months ended months ended September 30, 2020. Net
charge-offs also decreased for the comparable periods from $2.2
million in the first nine months of 2020 to $1.4 million for the
nine months ended September 30, 2021. During the three months
ended September 30, 2021, net recoveries of $0.1 million
included recoveries of $0.6 million partially offset by
charge-offs of $0.5 million on two non-accrual relationships
totaling $7.8 million that were resolved in the third quarter
through a loan sale and a payoff.
The Company's general allowance increased from
$18.1 million at December 31, 2020 to $18.2 million at
September 30, 2021. The stability in the general allowance was
primarily due to improvements in some qualitative factors partially
offset by 2021 growth in the higher risk commercial real estate
portfolio. During the first quarter of 2021, the Bank sold
non-accrual and classified commercial real estate and residential
mortgage loans with an amortized cost of $9.1 million, net of
charge-offs of $1.4 million, and recognized a loss on the sale
of $191,000. In the third quarter of 2021, the Bank resolved
$7.8 million of non-accrual loans through $0.5 million in
charge-offs that resulted in a loan sale and a payoff. The
Company's resolution of these impaired loans decreased the specific
reserve, improved asset quality and improved several ALLL
qualitative factors.
Management believes that loans included in the
COVID-19 deferral program in 2020 and 2021 are more likely to
default in the future and that the identification and resolution of
problem credits could be delayed. In our evaluation of current and
previously deferred loans, we considered the length of the deferral
period, the type and amount of collateral and customer industries.
Consistent with regulatory guidance, if new information during the
deferral period indicates that there is evidence of default, the
Bank may change the classification rating (e.g., change from
passing credit to substandard) and accrual status (e.g., change
from accrual to non-accrual status) as deemed appropriate. As of
September 30, 2021, $3.4 million or 0.2% of gross portfolio
loans had deferral agreements, a decrease of $32.0 million
from the $35.4 million or 2.4% of gross portfolio loans at
December 31, 2020. As of September 30, 2021, and
December 31, 2020, there were $1.0 million and
$3.4 million of COVID-19 deferred loans deemed to be
non-accrual and substandard based on reviews.
Gross U.S. SBA PPP loans at September 30,
2021 totaled $56.4 million and 345 loans, a decrease of $53.9
million compared to December 31, 2020. No credit issues are
anticipated with U.S. SBA PPP loans as they are guaranteed by the
SBA and the Bank's allowance for loan loss does not include an
allowance for U.S. SBA PPP loans.
Management believes that the allowance is
adequate at September 30, 2021.
During 2020, classified assets decreased
$12.3 million. Asset quality has continued to improve in 2021
with the resolution of $16.9 million in non-accrual and
impaired loans through loan sales and negotiated payoffs.
Management remains committed to expeditiously resolve
non-performing or substandard credits that are not likely to become
performing or passing credits in a reasonable timeframe.
Classified assets decreased $15.7 million from
$22.4 million at December 31, 2020 to $6.7 million
at September 30, 2021. Management considers
classified assets to be an important measure of asset quality. The
Company's risk rating process for classified loans is an important
input into the Company's allowance methodology. Risk ratings are
expected to be an important indicator in assessing ongoing credit
risks of COVID-19 deferred loans.
Non-accrual loans and OREO to total gross
portfolio loans and OREO decreased 98 basis points from
1.42% at December 31, 2020 to 0.44%
at September 30, 2021. Non-accrual loans, OREO and TDRs
to total assets decreased 77 basis points from
1.08% at December 31, 2020 to 0.31%
at September 30, 2021.
Non-accrual loans decreased $13.1 million from
$18.2 million at December 31, 2020 to $5.2 million at
September 30, 2021. Non-accrual loans of $3.8 million (73%)
were current with all payments of principal and interest with
specific reserves of $42,000 at September 30, 2021. Delinquent
non-accrual loans were $1.4 million (27%) with specific reserves of
$0.3 million at September 30, 2021. The OREO balance decreased
$1.6 million from $3.1 million at December 31, 2020 to
$1.5 million at September 30, 2021.
The Company is planning for adoption of the
current expected credit loss (“CECL”) model or ASU 2016-13
"Financial Instruments - Credit Losses (Topic 326) -
Measurement of Credit Losses on Financial Instruments". Our CECL
model has been substantially developed and our third party model
validation is substantially complete. We are conducting parallel
runs of the loss estimation models throughout 2021. We are refining
the qualitative components and forecasting components of our model.
ASU 2016-13 will also require the establishment of an allowance for
expected credit losses for certain debt securities and other
financial assets.
The Company is required to adopt ASU No. 2016-13
for fiscal years beginning after December 15, 2022. Early
adoption is permitted, and the Company expects to adopt ASU No.
2016-13 in the first quarter of 2022. Management expects to
recognize a one-time cumulative effect adjustment to the allowance
for credit losses as of the January 1, 2022. At this time, we
expect our implementation of CECL to increase our reserve for
credit losses, but cannot reasonably estimate a range of the impact
of adoption. Our fourth quarter 2021 refinement of our CECL
qualitative framework may impact the cumulative effect
adjustment.
About The Community Financial
Corporation - Headquartered in Waldorf, MD, The Community
Financial Corporation is the bank holding company for Community
Bank of the Chesapeake, a full-service commercial bank with assets
of approximately $2.3 billion. Through its branch offices and
commercial lending centers, Community Bank of the Chesapeake offers
a broad range of financial products and services to individuals and
businesses. The Company’s branches are located at its main office
in Waldorf, Maryland, and branch offices in Bryans Road, Dunkirk,
Leonardtown, La Plata, Charlotte Hall, Prince Frederick, Lusby and
California, Maryland; and downtown Fredericksburg, Virginia. More
information about Community Bank of the Chesapeake can be found at
www.cbtc.com.
Use of non-GAAP Financial
Measures - Statements included in this press release
include non-GAAP financial measures and should be read along with
the accompanying tables, which provide a reconciliation of non-GAAP
financial measures to GAAP financial measures. The Company’s
management uses these non-GAAP financial measures, and believes
that non-GAAP financial measures provide additional useful
information that allows readers to evaluate the ongoing performance
of the Company. Non-GAAP financial measures should not be
considered as an alternative to any measure of performance or
financial condition as promulgated under GAAP, and investors should
consider the Company’s performance and financial condition as
reported under GAAP and all other relevant information when
assessing the performance or financial condition of the Company.
Non-GAAP financial measures have limitations as analytical tools,
and investors should not consider them in isolation or as a
substitute for analysis of the results or financial condition as
reported under GAAP.
Forward-looking Statements -
This news release contains forward-looking statements within the
meaning of the federal securities laws. Forward-looking statements
can generally be identified by the fact that they do not relate
strictly to historical or current facts. They often include words
like “believe,” “expect,” “anticipate,” “estimate” and “intend” or
future or conditional verbs such as “will,” “would,” “should,”
“could” or “may.” Statements in this release that are not strictly
historical are forward-looking and are based upon current
expectations that may differ materially from actual results. These
forward-looking statements include, without limitation, those
relating to the Company’s and the Bank’s future growth and
management’s outlook or expectations for revenue, assets, asset
quality, profitability, business prospects, net interest margin,
non-interest revenue, allowance for loan losses, the level of
credit losses from lending, liquidity levels, capital levels, or
other future financial or business performance strategies or
expectations, and any statements of the plans and objectives of
management for future operations products or services, including
the expected benefits from, and/or the execution of integration
plans relating to any acquisition we have undertaking or that we
undertake in the future; plans and cost savings regarding branch
closings or consolidation; projections related to certain financial
metrics; expected benefits of programs we introduce, including
residential mortgage programs and retail and commercial credit card
programs; and any statement of expectation or belief, and any
assumptions underlying the foregoing. These forward-looking
statements express management’s current expectations or forecasts
of future events, results and conditions, and by their nature are
subject to and involve risks and uncertainties that could cause
actual results to differ materially from those anticipated by the
statements made herein. Factors that might cause actual results to
differ materially from those made in such statements include, but
are not limited to: risks, uncertainties and other factors relating
to the COVID-19 pandemic (including the length of time that the
pandemic continues, the ability of states and local governments to
successfully implement the lifting of restrictions on movement and
the potential imposition of further restrictions on movement and
travel in the future, the effect of the pandemic on the general
economy and on the businesses of our borrowers and their ability to
make payments on their obligations; the remedial actions and
stimulus measures adopted by federal, state and local governments,
and the inability of employees to work due to illness, quarantine,
or government mandates); the synergies and other expected financial
benefits from any acquisition that we have undertaken or may
undertake in the future; may or may not be realized within the
expected time frames; changes in the Company's or the Bank's
strategy, costs or difficulties related to integration matters
might be greater than expected; availability of and costs
associated with obtaining adequate and timely sources of liquidity;
the ability to maintain credit quality; general economic trends;
changes in interest rates; loss of deposits and loan demand to
other financial institutions; substantial changes in financial
markets; changes in real estate value and the real estate market;
regulatory changes; the impact of government shutdowns or
sequestration; the possibility of unforeseen events affecting the
industry generally; the uncertainties associated with newly
developed or acquired operations; the outcome of pending or
threatened litigation, or of matters before regulatory agencies,
whether currently existing or commencing in the future; market
disruptions and other effects of terrorist activities; and the
matters described in “Item 1A Risk Factors” in the Company’s Annual
Report on Form 10-K for the Year Ended December 31, 2020, and
in its other Reports filed with the Securities and Exchange
Commission (the “SEC”). The Company’s forward-looking statements
may also be subject to other risks and uncertainties, including
those that it may discuss elsewhere in this news release or in its
filings with the SEC, accessible on the SEC’s Web site at
www.sec.gov. The Company undertakes no obligation to update these
forward-looking statements to reflect events or circumstances after
the date hereof or to reflect the occurrence of unforeseen events,
except as required under the rules and regulations of the SEC.
Data is unaudited as of September 30, 2021.
This selected information should be read in conjunction with the
financial statements and notes included in the Company's Annual
Report on Form 10-K for the year ended December 31, 2020.
CONTACTS:William J. Pasenelli,
Chief Executive OfficerTodd L. Capitani, Chief Financial
Officer888.745.2265
SUPPLEMENTAL QUARTERLY FINANCIAL
DATA CONSOLIDATED INCOME STATEMENT
(UNAUDITED)
| |
|
Three Months Ended |
|
(dollars in thousands) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
Interest and Dividend Income |
|
|
|
|
|
|
|
|
|
|
|
Loans, including fees |
|
$ |
16,342 |
|
|
|
$ |
16,320 |
|
|
$ |
16,592 |
|
|
|
$ |
16,776 |
|
|
|
$ |
16,176 |
|
|
Interest and dividends on securities |
|
1,296 |
|
|
|
1,101 |
|
|
1,064 |
|
|
|
1,091 |
|
|
|
1,269 |
|
|
Interest on deposits with banks |
|
21 |
|
|
|
23 |
|
|
22 |
|
|
|
46 |
|
|
|
38 |
|
| Total Interest and
Dividend Income |
|
17,659 |
|
|
|
17,444 |
|
|
17,678 |
|
|
|
17,913 |
|
|
|
17,483 |
|
| Interest
Expense |
|
|
|
|
|
|
|
|
|
|
|
Deposits |
|
594 |
|
|
|
640 |
|
|
802 |
|
|
|
1,166 |
|
|
|
1,534 |
|
|
Short-term borrowings |
|
— |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
14 |
|
|
Long-term debt |
|
456 |
|
|
|
369 |
|
|
367 |
|
|
|
775 |
|
|
|
567 |
|
| Total Interest
Expense |
|
1,050 |
|
|
|
1,009 |
|
|
1,169 |
|
|
|
1,941 |
|
|
|
2,115 |
|
| Net Interest Income
("NII") |
|
16,609 |
|
|
|
16,435 |
|
|
16,509 |
|
|
|
15,972 |
|
|
|
15,368 |
|
|
Provision for loan losses |
|
— |
|
|
|
291 |
|
|
295 |
|
|
|
600 |
|
|
|
2,500 |
|
| NII After Provision
For Loan Losses |
|
16,609 |
|
|
|
16,144 |
|
|
16,214 |
|
|
|
15,372 |
|
|
|
12,868 |
|
| Noninterest
Income |
|
|
|
|
|
|
|
|
|
|
|
Loan appraisal, credit, and misc. charges |
|
29 |
|
|
|
44 |
|
|
198 |
|
|
|
76 |
|
|
|
49 |
|
|
Gain on sale or disposition of assets |
|
— |
|
|
|
68 |
|
|
— |
|
|
|
— |
|
|
|
6 |
|
|
Net gains on sale of investment securities |
|
— |
|
|
|
— |
|
|
586 |
|
|
|
714 |
|
|
|
229 |
|
|
Unrealized gain (losses) on equity securities |
|
(22 |
) |
|
|
13 |
|
|
(85 |
) |
|
|
(14 |
) |
|
|
— |
|
|
Provision for loss on premises and equipment held for sale |
|
(20 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Income from bank owned life insurance |
|
220 |
|
|
|
218 |
|
|
214 |
|
|
|
220 |
|
|
|
222 |
|
|
Service charges |
|
987 |
|
|
|
892 |
|
|
1,187 |
|
|
|
960 |
|
|
|
839 |
|
|
Referral fee income |
|
176 |
|
|
|
621 |
|
|
451 |
|
|
|
414 |
|
|
|
321 |
|
|
Net gain on sale of loans held for sale |
|
30 |
|
|
|
— |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
Loss on sale of loans |
|
— |
|
|
|
— |
|
|
(191 |
) |
|
|
— |
|
|
|
— |
|
| Total Noninterest
Income |
|
1,400 |
|
|
|
1,856 |
|
|
2,360 |
|
|
|
2,370 |
|
|
|
1,666 |
|
| Noninterest
Expense |
|
|
|
|
|
|
|
|
|
|
|
Compensation and benefits |
|
5,650 |
|
|
|
5,332 |
|
|
4,788 |
|
|
|
4,552 |
|
|
|
5,099 |
|
|
OREO valuation allowance and expenses |
|
20 |
|
|
|
488 |
|
|
181 |
|
|
|
897 |
|
|
|
421 |
|
| Sub
Total |
|
5,670 |
|
|
|
5,820 |
|
|
4,969 |
|
|
|
5,449 |
|
|
|
5,520 |
|
| Operating
Expenses |
|
|
|
|
|
|
|
|
|
|
|
Occupancy expense |
|
731 |
|
|
|
688 |
|
|
761 |
|
|
|
806 |
|
|
|
734 |
|
|
Advertising |
|
145 |
|
|
|
148 |
|
|
79 |
|
|
|
145 |
|
|
|
129 |
|
|
Data processing expense |
|
840 |
|
|
|
990 |
|
|
936 |
|
|
|
829 |
|
|
|
990 |
|
|
Professional fees |
|
676 |
|
|
|
604 |
|
|
640 |
|
|
|
658 |
|
|
|
652 |
|
|
Depreciation of premises and equipment |
|
137 |
|
|
|
135 |
|
|
147 |
|
|
|
154 |
|
|
|
142 |
|
|
FDIC Insurance |
|
120 |
|
|
|
140 |
|
|
252 |
|
|
|
260 |
|
|
|
249 |
|
|
Core deposit intangible amortization |
|
121 |
|
|
|
126 |
|
|
133 |
|
|
|
139 |
|
|
|
144 |
|
|
Other |
|
1,007 |
|
|
|
727 |
|
|
2,231 |
|
|
|
1,032 |
|
|
|
891 |
|
| Total Operating
Expenses |
|
3,777 |
|
|
|
3,558 |
|
|
5,179 |
|
|
|
4,023 |
|
|
|
3,931 |
|
| Total Noninterest
Expense |
|
9,447 |
|
|
|
9,378 |
|
|
10,148 |
|
|
|
9,472 |
|
|
|
9,451 |
|
|
Income before income taxes |
|
8,562 |
|
|
|
8,622 |
|
|
8,426 |
|
|
|
8,270 |
|
|
|
5,083 |
|
|
Income tax expense |
|
2,158 |
|
|
|
2,190 |
|
|
2,127 |
|
|
|
2,131 |
|
|
|
1,284 |
|
| Net
Income |
|
$ |
6,404 |
|
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
|
$ |
6,139 |
|
|
|
$ |
3,799 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA -
Continued CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
|
(dollars in thousands, except per share amounts) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
Cash and due from banks |
|
$ |
112,314 |
|
|
|
$ |
40,881 |
|
|
|
$ |
126,834 |
|
|
|
$ |
56,887 |
|
|
|
$ |
93,130 |
|
|
| Federal funds sold |
|
— |
|
|
|
79,404 |
|
|
|
43,614 |
|
|
|
— |
|
|
|
69,431 |
|
|
| Interest-bearing deposits with
banks |
|
34,929 |
|
|
|
18,626 |
|
|
|
17,390 |
|
|
|
20,178 |
|
|
|
25,132 |
|
|
| Securities available for sale
("AFS"), at fair value |
|
456,664 |
|
|
|
347,678 |
|
|
|
253,348 |
|
|
|
246,105 |
|
|
|
229,620 |
|
|
| Equity securities carried at
fair value through income |
|
4,805 |
|
|
|
4,814 |
|
|
|
4,787 |
|
|
|
4,855 |
|
|
|
4,851 |
|
|
| Non-marketable equity
securities held in other financial institutions |
|
207 |
|
|
|
207 |
|
|
|
207 |
|
|
|
207 |
|
|
|
209 |
|
|
| Federal Home Loan Bank
("FHLB") stock - at cost |
|
1,472 |
|
|
|
2,036 |
|
|
|
2,036 |
|
|
|
2,777 |
|
|
|
3,415 |
|
|
| Net U.S. Small Business
Administration ("SBA") Paycheck Protection ("PPP") Loans |
|
54,807 |
|
|
|
86,482 |
|
|
|
112,485 |
|
|
|
107,960 |
|
|
|
127,811 |
|
|
| Portfolio Loans Receivable net
of allowance for loan losses of $18,579, $18,516, $18,256, $19,424,
and $18,829 |
|
1,514,837 |
|
|
|
1,515,893 |
|
|
|
1,489,806 |
|
|
|
1,486,115 |
|
|
|
1,479,313 |
|
|
| Net Loans |
|
1,569,644 |
|
|
|
1,602,375 |
|
|
|
1,602,291 |
|
|
|
1,594,075 |
|
|
|
1,607,124 |
|
|
| Goodwill |
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
|
10,835 |
|
|
| Premises and equipment,
net |
|
21,795 |
|
|
|
21,630 |
|
|
|
20,540 |
|
|
|
20,271 |
|
|
|
20,671 |
|
|
| Premises and equipment held
for sale |
|
— |
|
|
|
— |
|
|
|
430 |
|
|
|
430 |
|
|
|
430 |
|
|
| Other real estate owned
("OREO") |
|
1,536 |
|
|
|
1,536 |
|
|
|
2,329 |
|
|
|
3,109 |
|
|
|
3,998 |
|
|
| Accrued interest
receivable |
|
6,045 |
|
|
|
6,590 |
|
|
|
7,337 |
|
|
|
8,717 |
|
|
|
8,975 |
|
|
| Investment in bank owned life
insurance |
|
38,713 |
|
|
|
38,493 |
|
|
|
38,275 |
|
|
|
38,061 |
|
|
|
37,841 |
|
|
| Core deposit intangible |
|
1,147 |
|
|
|
1,267 |
|
|
|
1,394 |
|
|
|
1,527 |
|
|
|
1,666 |
|
|
| Net deferred tax assets |
|
8,790 |
|
|
|
8,139 |
|
|
|
8,671 |
|
|
|
7,909 |
|
|
|
7,307 |
|
|
| Right of use assets -
operating leases |
|
6,215 |
|
|
|
6,305 |
|
|
|
6,391 |
|
|
|
7,831 |
|
|
|
8,005 |
|
|
| Other assets |
|
3,581 |
|
|
|
4,243 |
|
|
|
2,822 |
|
|
|
2,665 |
|
|
|
4,797 |
|
|
| Total
Assets |
|
$ |
2,278,692 |
|
|
|
$ |
2,195,059 |
|
|
|
$ |
2,149,531 |
|
|
|
$ |
2,026,439 |
|
|
|
$ |
2,137,437 |
|
|
| Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
Liabilities |
|
|
|
|
|
|
|
|
|
|
| Deposits |
|
|
|
|
|
|
|
|
|
|
| Non-interest-bearing
deposits |
|
$ |
432,606 |
|
|
|
$ |
423,165 |
|
|
|
$ |
406,319 |
|
|
|
$ |
362,079 |
|
|
|
$ |
360,839 |
|
|
| Interest-bearing deposits |
|
1,572,001 |
|
|
|
1,484,973 |
|
|
|
1,461,577 |
|
|
|
1,383,523 |
|
|
|
1,418,767 |
|
|
| Total deposits |
|
2,004,607 |
|
|
|
1,908,138 |
|
|
|
1,867,896 |
|
|
|
1,745,602 |
|
|
|
1,779,606 |
|
|
| Long-term debt |
|
12,249 |
|
|
|
27,267 |
|
|
|
27,285 |
|
|
|
27,302 |
|
|
|
42,319 |
|
|
| Paycheck Protection Program
Liquidity Facility ("PPPLF") Advance |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
85,893 |
|
|
| Guaranteed preferred
beneficial interest in junior subordinated debentures
("TRUPs") |
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
|
12,000 |
|
|
| Subordinated notes -
4.75% |
|
19,496 |
|
|
|
19,482 |
|
|
|
19,468 |
|
|
|
19,526 |
|
|
|
— |
|
|
| Lease liabilities - operating
leases |
|
6,418 |
|
|
|
6,512 |
|
|
|
6,614 |
|
|
|
8,088 |
|
|
|
8,193 |
|
|
| Accrued expenses and other
liabilities |
|
19,794 |
|
|
|
17,698 |
|
|
|
15,509 |
|
|
|
15,908 |
|
|
|
16,576 |
|
|
| Total
Liabilities |
|
2,074,564 |
|
|
|
1,991,097 |
|
|
|
1,948,772 |
|
|
|
1,828,426 |
|
|
|
1,944,587 |
|
|
| Stockholders'
Equity |
|
|
|
|
|
|
|
|
|
|
| Common stock |
|
57 |
|
|
|
58 |
|
|
|
59 |
|
|
|
59 |
|
|
|
59 |
|
|
| Additional paid in
capital |
|
96,649 |
|
|
|
96,411 |
|
|
|
96,181 |
|
|
|
95,965 |
|
|
|
95,799 |
|
|
| Retained earnings |
|
107,890 |
|
|
|
104,889 |
|
|
|
103,294 |
|
|
|
97,944 |
|
|
|
92,814 |
|
|
| Accumulated other
comprehensive (loss) income |
|
(9 |
) |
|
|
3,063 |
|
|
|
1,684 |
|
|
|
4,504 |
|
|
|
4,780 |
|
|
| Unearned ESOP shares |
|
(459 |
) |
|
|
(459 |
) |
|
|
(459 |
) |
|
|
(459 |
) |
|
|
(602 |
) |
|
| Total Stockholders'
Equity |
|
204,128 |
|
|
|
203,962 |
|
|
|
200,759 |
|
|
|
198,013 |
|
|
|
192,850 |
|
|
| Total Liabilities and
Stockholders' Equity |
|
$ |
2,278,692 |
|
|
|
$ |
2,195,059 |
|
|
|
$ |
2,149,531 |
|
|
|
$ |
2,026,439 |
|
|
|
$ |
2,137,437 |
|
|
| Common shares issued and
outstanding |
|
5,724,011 |
|
|
|
5,786,928 |
|
|
|
5,897,685 |
|
|
|
5,903,613 |
|
|
|
5,911,940 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL QUARTERLY FINANCIAL DATA -
Continued SELECTED FINANCIAL INFORMATION AND
RATIOS (UNAUDITED)
| |
|
Three Months Ended |
|
(dollars in thousands, except per share amounts) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
KEY OPERATING RATIOS |
|
|
|
|
|
|
|
|
|
|
| Return on average assets
("ROAA") |
|
1.17 |
|
% |
|
1.22 |
% |
|
1.22 |
% |
|
1.18 |
% |
|
0.73 |
% |
| Pre-tax pre-provision
ROAA** |
|
1.57 |
|
% |
|
1.68 |
% |
|
1.68 |
% |
|
1.71 |
% |
|
1.46 |
% |
| Return on average common
equity ("ROACE") |
|
12.45 |
|
% |
|
12.62 |
% |
|
12.53 |
% |
|
12.51 |
% |
|
7.86 |
% |
| Pre-tax pre-provision
ROACE** |
|
16.65 |
|
% |
|
17.49 |
% |
|
17.34 |
% |
|
18.08 |
% |
|
15.69 |
% |
| Return on average tangible
common equity ("ROATCE")** |
|
13.41 |
|
% |
|
13.62 |
% |
|
13.56 |
% |
|
13.58 |
% |
|
8.65 |
% |
| Average total equity to
average total assets |
|
9.40 |
|
% |
|
9.63 |
% |
|
9.71 |
% |
|
9.46 |
% |
|
9.33 |
% |
| Interest rate spread |
|
3.22 |
|
% |
|
3.30 |
% |
|
3.43 |
% |
|
3.29 |
% |
|
3.15 |
% |
| Net interest margin |
|
3.28 |
|
% |
|
3.37 |
% |
|
3.50 |
% |
|
3.40 |
% |
|
3.27 |
% |
| Cost of funds |
|
0.21 |
|
% |
|
0.21 |
% |
|
0.25 |
% |
|
0.42 |
% |
|
0.46 |
% |
| Cost of deposits |
|
0.12 |
|
% |
|
0.14 |
% |
|
0.18 |
% |
|
0.26 |
% |
|
0.37 |
% |
| Cost of debt |
|
3.19 |
|
% |
|
2.51 |
% |
|
2.50 |
% |
|
3.45 |
% |
|
1.16 |
% |
| Efficiency ratio |
|
52.46 |
|
% |
|
51.27 |
% |
|
53.78 |
% |
|
51.64 |
% |
|
55.48 |
% |
| Non-interest expense to
average assets |
|
1.73 |
|
% |
|
1.77 |
% |
|
1.96 |
% |
|
1.83 |
% |
|
1.82 |
% |
| Net operating expense to
average assets |
|
1.47 |
|
% |
|
1.42 |
% |
|
1.50 |
% |
|
1.37 |
% |
|
1.50 |
% |
| Average interest-earning
assets to average interest-bearing liabilities |
|
132.54 |
|
% |
|
131.36 |
% |
|
128.84 |
% |
|
126.18 |
% |
|
125.40 |
% |
| Net charge-offs to average
portfolio loans |
|
(0.02 |
) |
% |
|
0.01 |
% |
|
0.40 |
% |
|
0.00 |
% |
|
0.00 |
% |
| COMMON SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
|
Basic net income per common share |
|
$ |
1.12 |
|
|
|
$ |
1.10 |
|
|
$ |
1.07 |
|
|
$ |
1.04 |
|
|
$ |
0.64 |
|
| Diluted net income per common
share |
|
$ |
1.12 |
|
|
|
$ |
1.10 |
|
|
$ |
1.07 |
|
|
$ |
1.04 |
|
|
$ |
0.64 |
|
| Cash dividends paid per common
share |
|
$ |
0.150 |
|
|
|
$ |
0.150 |
|
|
$ |
0.125 |
|
|
$ |
0.125 |
|
|
$ |
0.125 |
|
| Basic - weighted average
common shares outstanding |
|
5,709,814 |
|
|
|
5,845,009 |
|
|
5,888,250 |
|
|
5,892,751 |
|
|
5,895,074 |
|
| Diluted - weighted average
common shares outstanding |
|
5,720,001 |
|
|
|
5,856,954 |
|
|
5,897,698 |
|
|
5,894,494 |
|
|
5,895,074 |
|
| ASSET
QUALITY |
|
|
|
|
|
|
|
|
|
|
| Total assets |
|
$ |
2,278,692 |
|
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
|
$ |
2,137,437 |
|
| Gross portfolio loans (1) |
|
1,533,051 |
|
|
|
1,533,876 |
|
|
1,507,183 |
|
|
1,504,275 |
|
|
1,496,532 |
|
| Classified assets |
|
6,663 |
|
|
|
14,918 |
|
|
16,145 |
|
|
22,358 |
|
|
24,600 |
|
| Allowance for loan losses |
|
18,579 |
|
|
|
18,516 |
|
|
18,256 |
|
|
19,424 |
|
|
18,829 |
|
| Past due loans - 31 to 89
days |
|
189 |
|
|
|
101 |
|
|
1,373 |
|
|
179 |
|
|
838 |
|
| Past due loans >=90
days |
|
1,400 |
|
|
|
5,836 |
|
|
5,453 |
|
|
11,965 |
|
|
17,230 |
|
| Total past due loans (2)
(3) |
|
1,589 |
|
|
|
5,937 |
|
|
6,826 |
|
|
12,144 |
|
|
18,068 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Non-accrual loans (4) |
|
5,160 |
|
|
|
13,802 |
|
|
13,623 |
|
|
18,222 |
|
|
20,148 |
|
| Accruing troubled debt
restructures ("TDRs") |
|
455 |
|
|
|
503 |
|
|
504 |
|
|
572 |
|
|
573 |
|
| Other real estate owned
("OREO") |
|
1,536 |
|
|
|
1,536 |
|
|
2,329 |
|
|
3,109 |
|
|
3,998 |
|
|
Non-accrual loans, OREO and TDRs |
|
$ |
7,151 |
|
|
|
$ |
15,841 |
|
|
$ |
16,456 |
|
|
$ |
21,903 |
|
|
$ |
24,719 |
|
| ** Non-GAAP financial measure. See reconciliation
of GAAP and NON-GAAP measures. |
| ____________________________________ |
|
(1) |
Portfolio loans include all loan portfolios except the U.S. SBA PPP
loan portfolio. Asset quality ratios for loans exclude U.S. SBA PPP
loans. |
|
|
|
|
(2) |
Delinquency excludes Purchase Credit Impaired ("PCI") loans. |
|
|
|
|
(3) |
There were no COVID-19 deferred loans in process as of
October 25, 2021 that were reported as delinquent as of
September 30, 2021. |
|
|
|
|
(4) |
Non-accrual loans include all loans that are 90 days or more
delinquent and loans that are non-accrual due to the operating
results or cash flows of a customer. Non-accrual loans can include
loans that are current with all loan payments. At
September 30, 2021 and December 31, 2020, the Company had
current non-accrual loans of $3.8 million and $6.3 million,
respectively. |
SUPPLEMENTAL QUARTERLY FINANCIAL DATA -
Continued SELECTED FINANCIAL INFORMATION AND
RATIOS (UNAUDITED)
| |
|
Three Months Ended |
|
(dollars in thousands, except per share amounts) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
ASSET QUALITY RATIOS (1) |
|
|
|
|
|
|
|
|
|
|
| Classified assets to total
assets |
|
0.29 |
% |
|
0.68 |
% |
|
0.75 |
% |
|
1.10 |
% |
|
1.15 |
% |
| Classified assets to
risk-based capital |
|
2.75 |
% |
|
6.24 |
% |
|
6.81 |
% |
|
9.61 |
% |
|
11.89 |
% |
| Allowance for loan losses to
total loans |
|
1.21 |
% |
|
1.21 |
% |
|
1.21 |
% |
|
1.29 |
% |
|
1.26 |
% |
| Allowance for loan losses to
non-accrual loans |
|
360.06 |
% |
|
134.15 |
% |
|
134.01 |
% |
|
106.60 |
% |
|
93.45 |
% |
| Past due loans - 31 to 89 days
to total loans |
|
0.01 |
% |
|
0.01 |
% |
|
0.09 |
% |
|
0.01 |
% |
|
0.06 |
% |
| Past due loans >=90 days to
total loans |
|
0.09 |
% |
|
0.38 |
% |
|
0.36 |
% |
|
0.80 |
% |
|
1.15 |
% |
| Total past due (delinquency)
to total loans |
|
0.10 |
% |
|
0.39 |
% |
|
0.45 |
% |
|
0.81 |
% |
|
1.21 |
% |
| Non-accrual loans to total
loans |
|
0.34 |
% |
|
0.90 |
% |
|
0.90 |
% |
|
1.21 |
% |
|
1.35 |
% |
| Non-accrual loans and TDRs to
total loans |
|
0.37 |
% |
|
0.93 |
% |
|
0.94 |
% |
|
1.25 |
% |
|
1.38 |
% |
| Non-accrual loans and OREO to
total assets |
|
0.29 |
% |
|
0.70 |
% |
|
0.74 |
% |
|
1.05 |
% |
|
1.13 |
% |
| Non-accrual loans and OREO to
total loans and OREO |
|
0.44 |
% |
|
1.00 |
% |
|
1.06 |
% |
|
1.42 |
% |
|
1.61 |
% |
| Non-accrual loans, OREO and
TDRs to total assets |
|
0.31 |
% |
|
0.72 |
% |
|
0.77 |
% |
|
1.08 |
% |
|
1.16 |
% |
| COMMON SHARE
DATA |
|
|
|
|
|
|
|
|
|
|
|
Book value per common share |
|
$ |
35.66 |
|
|
$ |
35.25 |
|
|
$ |
34.04 |
|
|
$ |
33.54 |
|
|
$ |
32.62 |
|
| Tangible book value per common
share** |
|
$ |
33.57 |
|
|
$ |
33.15 |
|
|
$ |
31.97 |
|
|
$ |
31.45 |
|
|
$ |
30.51 |
|
| Common shares outstanding at
end of period |
|
5,724,011 |
|
|
5,786,928 |
|
|
5,897,685 |
|
|
5,903,613 |
|
|
5,911,940 |
|
| OTHER
DATA |
|
|
|
|
|
|
|
|
|
|
| Full-time equivalent
employees |
|
196 |
|
189 |
|
192 |
|
189 |
|
189 |
| Branches |
|
11 |
|
11 |
|
11 |
|
12 |
|
12 |
| Loan Production Offices |
|
4 |
|
4 |
|
4 |
|
4 |
|
4 |
| CAPITAL
RATIOS |
|
|
|
|
|
|
|
|
|
|
| Tier 1 capital to average
assets |
|
9.41 |
% |
|
9.57 |
% |
|
9.70 |
% |
|
9.56 |
% |
|
9.73 |
% |
| Tier 1 common capital to
risk-weighted assets |
|
11.89 |
% |
|
11.56 |
% |
|
11.72 |
% |
|
11.47 |
% |
|
11.11 |
% |
| Tier 1 capital to
risk-weighted assets |
|
12.64 |
% |
|
12.30 |
% |
|
12.47 |
% |
|
12.23 |
% |
|
11.87 |
% |
| Total risk-based capital to
risk-weighted assets |
|
14.99 |
% |
|
14.62 |
% |
|
14.83 |
% |
|
14.69 |
% |
|
13.06 |
% |
| Common equity to assets |
|
8.96 |
% |
|
9.29 |
% |
|
9.34 |
% |
|
9.77 |
% |
|
9.02 |
% |
| Tangible common equity to
tangible assets ** |
|
8.48 |
% |
|
8.79 |
% |
|
8.82 |
% |
|
9.22 |
% |
|
8.49 |
% |
** Non-GAAP financial measure. See
reconciliation of GAAP and NON-GAAP measures.
|
____________________________________ |
|
(1) |
Asset quality ratios are calculated using total portfolio loans.
Portfolio loans include all loan portfolios except the U.S. SBA PPP
loan portfolio. |
SUPPLEMENTAL YEAR TO DATE FINANCIAL
DATACONSOLIDATED INCOME STATEMENT
(UNAUDITED)
| |
|
Nine Months Ended September 30, |
|
(dollars in thousands) |
|
2021 |
|
2020 |
|
Interest and Dividend Income |
|
|
|
|
|
Loans, including fees |
|
$ |
49,254 |
|
|
|
$ |
48,955 |
|
|
Interest and dividends on securities |
|
3,461 |
|
|
|
4,079 |
|
|
Interest on deposits with banks |
|
66 |
|
|
|
126 |
|
| Total Interest and
Dividend Income |
|
52,781 |
|
|
|
53,160 |
|
| Interest
Expense |
|
|
|
|
|
Deposits |
|
2,036 |
|
|
|
6,515 |
|
|
Short-term borrowings |
|
— |
|
|
|
111 |
|
|
Long-term debt |
|
1,192 |
|
|
|
1,589 |
|
| Total Interest
Expense |
|
3,228 |
|
|
|
8,215 |
|
| Net Interest Income
("NII") |
|
49,553 |
|
|
|
44,945 |
|
|
Provision for loan losses |
|
586 |
|
|
|
10,100 |
|
| NII After Provision
For Loan Losses |
|
48,967 |
|
|
|
34,845 |
|
| Noninterest
Income |
|
|
|
|
|
Loan appraisal, credit, and misc. charges |
|
271 |
|
|
|
98 |
|
|
Gain on sale or disposition of assets |
|
68 |
|
|
|
6 |
|
|
Net gains on sale of investment securities |
|
586 |
|
|
|
670 |
|
|
Unrealized (loss) gain on equity securities |
|
(94 |
) |
|
|
115 |
|
|
Provision for loss on premises and equipment held for sale |
|
(20 |
) |
|
|
— |
|
|
Income from bank owned life insurance |
|
652 |
|
|
|
661 |
|
|
Service charges |
|
3,066 |
|
|
|
2,530 |
|
|
Referral fee income |
|
1,248 |
|
|
|
1,966 |
|
|
Net gain on sale of loans held for sale |
|
30 |
|
|
|
— |
|
|
Loss on sale of loans |
|
(191 |
) |
|
|
— |
|
| Total Noninterest
Income |
|
5,616 |
|
|
|
6,046 |
|
| Noninterest
Expense |
|
|
|
|
|
Compensation and benefits |
|
15,770 |
|
|
|
15,001 |
|
|
OREO valuation allowance and expenses |
|
689 |
|
|
|
2,303 |
|
|
Sub-total |
|
16,459 |
|
|
|
17,304 |
|
| Operating
Expense |
|
|
|
|
|
Occupancy expense |
|
2,180 |
|
|
|
2,204 |
|
|
Advertising |
|
372 |
|
|
|
380 |
|
|
Data processing expense |
|
2,766 |
|
|
|
2,842 |
|
|
Professional fees |
|
1,920 |
|
|
|
1,755 |
|
|
Depreciation of premises and equipment |
|
419 |
|
|
|
451 |
|
|
FDIC Insurance |
|
512 |
|
|
|
679 |
|
|
Core deposit intangible amortization |
|
380 |
|
|
|
452 |
|
|
Other |
|
3,965 |
|
|
|
2,464 |
|
| Total Operating
Expense |
|
12,514 |
|
|
|
11,227 |
|
| Total Noninterest
Expense |
|
28,973 |
|
|
|
28,531 |
|
| Income before income
taxes |
|
25,610 |
|
|
|
12,360 |
|
| Income tax expense |
|
6,475 |
|
|
|
2,363 |
|
| Net
Income |
|
$ |
19,135 |
|
|
|
$ |
9,997 |
|
| |
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL YEAR TO DATE FINANCIAL DATA
(UNAUDITED)
| |
|
Nine Months Ended September 30, |
|
|
|
2021 |
|
2020 |
|
KEY OPERATING RATIOS |
|
|
|
|
| Return on average assets
("ROAA") |
|
1.20 |
% |
|
0.68 |
% |
| Pre-tax pre-provision
ROAA** |
|
1.64 |
% |
|
1.53 |
% |
| Return on average common
equity ("ROACE") |
|
12.53 |
% |
|
7.06 |
% |
| Pre-tax pre-provision
ROACE** |
|
17.16 |
% |
|
15.86 |
% |
| Return on average tangible
common equity ("ROATCE")** |
|
13.53 |
% |
|
7.85 |
% |
| Average total equity to
average total assets |
|
9.58 |
% |
|
9.66 |
% |
| Interest rate spread |
|
3.31 |
% |
|
3.19 |
% |
| Net interest margin |
|
3.38 |
% |
|
3.34 |
% |
| Cost of funds |
|
0.23 |
% |
|
0.63 |
% |
| Cost of deposits |
|
0.15 |
% |
|
0.55 |
% |
| Cost of debt |
|
2.73 |
% |
|
1.42 |
% |
| Efficiency ratio |
|
52.52 |
% |
|
55.95 |
% |
| Non-interest expense to
average assets |
|
1.82 |
% |
|
1.95 |
% |
| Net operating expense to
average assets |
|
1.47 |
% |
|
1.53 |
% |
| Average interest-earning
assets to average interest-bearing liabilities |
|
130.95 |
% |
|
125.14 |
% |
| Net charge-offs to average
portfolio loans |
|
0.13 |
% |
|
0.20 |
% |
| COMMON SHARE
DATA |
|
|
|
|
|
Basic net income per common share |
|
$ |
3.29 |
|
|
$ |
1.70 |
|
| Diluted net income per common
share |
|
$ |
3.29 |
|
|
$ |
1.70 |
|
| Cash dividends paid per common
share |
|
$ |
0.425 |
|
|
$ |
0.375 |
|
| Weighted average
common shares outstanding: |
|
|
|
|
|
Basic |
|
5,813,704 |
|
|
5,892,107 |
|
|
Diluted |
|
5,823,218 |
|
|
5,892,107 |
|
____________________________________** Non-GAAP
financial measure. See reconciliation of GAAP and NON-GAAP
measures.
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Reconciliation of US GAAP total assets,
common equity, common equity to assets and book value to Non-GAAP
tangible assets, tangible common equity, tangible common equity to
tangible assets and tangible book value.
This press release, including the accompanying
financial statement tables, contains financial information
determined by methods other than in accordance with generally
accepted accounting principles, or GAAP. This financial information
includes certain performance measures, which exclude intangible
assets. These non-GAAP measures are included because the Company
believes they may provide useful supplemental information for
evaluating the underlying performance trends of the Company.
|
(dollars in thousands, except per share amounts) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
Total assets |
|
$ |
2,278,692 |
|
|
$ |
2,195,059 |
|
|
$ |
2,149,531 |
|
|
$ |
2,026,439 |
|
|
$ |
2,137,437 |
|
| Less: intangible assets |
|
|
|
|
|
|
|
|
|
|
|
Goodwill |
|
10,835 |
|
|
10,835 |
|
|
10,835 |
|
|
10,835 |
|
|
10,835 |
|
|
Core deposit intangible |
|
1,147 |
|
|
1,267 |
|
|
1,394 |
|
|
1,527 |
|
|
1,666 |
|
| Total intangible assets |
|
11,982 |
|
|
12,102 |
|
|
12,229 |
|
|
12,362 |
|
|
12,501 |
|
| Tangible assets |
|
$ |
2,266,710 |
|
|
$ |
2,182,957 |
|
|
$ |
2,137,302 |
|
|
$ |
2,014,077 |
|
|
$ |
2,124,936 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Total common equity |
|
$ |
204,128 |
|
|
$ |
203,962 |
|
|
$ |
200,759 |
|
|
$ |
198,013 |
|
|
$ |
192,850 |
|
| Less: intangible assets |
|
11,982 |
|
|
12,102 |
|
|
12,229 |
|
|
12,362 |
|
|
12,501 |
|
| Tangible common equity |
|
$ |
192,146 |
|
|
$ |
191,860 |
|
|
$ |
188,530 |
|
|
$ |
185,651 |
|
|
$ |
180,349 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Common shares outstanding at
end of period |
|
5,724,011 |
|
|
5,786,928 |
|
|
5,897,685 |
|
|
5,903,613 |
|
|
5,911,940 |
|
| |
|
|
|
|
|
|
|
|
|
|
| Common equity to assets |
|
8.96 |
% |
|
9.29 |
% |
|
9.34 |
% |
|
9.77 |
% |
|
9.02 |
% |
| Tangible common equity to
tangible assets |
|
8.48 |
% |
|
8.79 |
% |
|
8.82 |
% |
|
9.22 |
% |
|
8.49 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Common book value per
share |
|
$ |
35.66 |
|
|
$ |
35.25 |
|
|
$ |
34.04 |
|
|
$ |
33.54 |
|
|
$ |
32.62 |
|
| Tangible common book value per
share |
|
$ |
33.57 |
|
|
$ |
33.15 |
|
|
$ |
31.97 |
|
|
$ |
31.45 |
|
|
$ |
30.51 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RECONCILIATION OF NON-GAAP MEASURES
(UNAUDITED)
Pre-Tax Pre-Provision ("PTPP") Income,
PTPP Return on Average Assets ("ROAA"), PTPP Return on Average
Common Equity ("ROACE"), and Return on Average Tangible Common
Equity ("ROATCE")
Management believes that PTPP income, which
reflects the Company's profitability before income taxes and loan
loss provisions, allows investors to better assess the Company's
operating income and expenses in relation to the Company's core
operating revenue by removing the volatility that is associated
with credit provisions and different state income tax rates for
comparable institutions. ROATCE is computed by dividing net
earnings applicable to common shareholders by average tangible
common shareholders' equity. Management believes that ROATCE is
meaningful because it measures the performance of a business
consistently, whether acquired or internally developed. ROATCE is a
non-GAAP measure and may not be comparable to similar non-GAAP
measures used by other companies. Management also believes that
during a crisis such as the COVID-19 pandemic, this information is
useful as the impact of the pandemic on the loan loss provisions of
various institutions will likely vary based on the geography of the
communities served by a particular institution.
| |
|
Three Months Ended |
|
Nine Months Ended |
|
(dollars in thousands) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
September 30, 2021 |
|
September 30, 2020 |
|
Net income (as reported) |
|
$ |
6,404 |
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
$ |
6,139 |
|
|
$ |
3,799 |
|
|
$ |
19,135 |
|
|
$ |
9,997 |
|
| Provision for loan losses |
|
— |
|
|
291 |
|
|
295 |
|
|
600 |
|
|
2,500 |
|
|
586 |
|
|
10,100 |
|
| Income tax expenses |
|
2,158 |
|
|
2,190 |
|
|
2,127 |
|
|
2,131 |
|
|
1,284 |
|
|
6,475 |
|
|
2,363 |
|
| Non-GAAP PTPP income |
|
$ |
8,562 |
|
|
$ |
8,913 |
|
|
$ |
8,721 |
|
|
$ |
8,870 |
|
|
$ |
7,583 |
|
|
$ |
26,196 |
|
|
$ |
22,460 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROAA |
|
1.17 |
% |
|
1.22 |
% |
|
1.22 |
% |
|
1.18 |
% |
|
0.73 |
% |
|
1.20 |
% |
|
0.68 |
% |
| Pre-tax pre-provision
ROAA |
|
1.57 |
% |
|
1.68 |
% |
|
1.68 |
% |
|
1.71 |
% |
|
1.46 |
% |
|
1.64 |
% |
|
1.53 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROACE |
|
12.45 |
% |
|
12.62 |
% |
|
12.53 |
% |
|
12.51 |
% |
|
7.86 |
% |
|
12.53 |
% |
|
7.06 |
% |
| Pre-tax pre-provision
ROACE |
|
16.65 |
% |
|
17.49 |
% |
|
17.34 |
% |
|
18.08 |
% |
|
15.69 |
% |
|
17.16 |
% |
|
15.86 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average assets |
|
$ |
2,187,986 |
|
|
$ |
2,116,939 |
|
|
$ |
2,070,575 |
|
|
$ |
2,074,707 |
|
|
$ |
2,071,487 |
|
|
$ |
2,125,596 |
|
|
$ |
1,955,247 |
|
| Average equity |
|
$ |
205,723 |
|
|
$ |
203,893 |
|
|
$ |
201,124 |
|
|
$ |
196,279 |
|
|
$ |
193,351 |
|
|
$ |
203,597 |
|
|
$ |
188,853 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
|
Three Months Ended |
|
Nine Months Ended |
|
(dollars in thousands) |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
September 30, 2021 |
|
September 30, 2020 |
|
Net income (as reported) |
|
$ |
6,404 |
|
|
$ |
6,432 |
|
|
$ |
6,299 |
|
|
$ |
6,139 |
|
|
$ |
3,799 |
|
|
$ |
19,135 |
|
|
$ |
9,997 |
|
| Core deposit intangible
amortization (net of tax) |
|
91 |
|
|
94 |
|
|
99 |
|
|
103 |
|
|
108 |
|
|
284 |
|
|
366 |
|
| Net earnings applicable to
common shareholders |
|
$ |
6,495 |
|
|
$ |
6,526 |
|
|
$ |
6,398 |
|
|
$ |
6,242 |
|
|
$ |
3,907 |
|
|
$ |
19,419 |
|
|
$ |
10,363 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ROATCE |
|
13.41 |
% |
|
13.62 |
% |
|
13.56 |
% |
|
13.58 |
% |
|
8.65 |
% |
|
13.53 |
% |
|
7.85 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Average tangible common
equity |
|
$ |
193,662 |
|
|
$ |
191,708 |
|
|
$ |
188,808 |
|
|
$ |
183,827 |
|
|
$ |
180,755 |
|
|
$ |
191,411 |
|
|
$ |
176,108 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AVERAGE CONSOLIDATED BALANCE SHEETS AND
NET INTEREST INCOME (UNAUDITED)
| |
|
For the Three Months Ended September 30, |
|
For the Three Months Ended |
| |
|
2021 |
|
2020 |
|
September 30, 2021 |
|
June 30, 2021 |
|
(dollars in thousands) |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
1,094,089 |
|
|
|
$ |
10,977 |
|
|
4.01 |
% |
|
$ |
1,006,436 |
|
|
|
$ |
10,627 |
|
|
4.22 |
% |
|
$ |
1,094,089 |
|
|
|
$ |
10,977 |
|
|
4.01 |
% |
|
$ |
1,089,781 |
|
|
|
$ |
10,953 |
|
|
4.02 |
% |
|
Residential first mortgages |
|
100,195 |
|
|
|
742 |
|
|
2.96 |
% |
|
157,039 |
|
|
|
1,188 |
|
|
3.03 |
% |
|
100,195 |
|
|
|
742 |
|
|
2.96 |
% |
|
109,296 |
|
|
|
838 |
|
|
3.07 |
% |
|
Residential rentals |
|
154,481 |
|
|
|
1,565 |
|
|
4.05 |
% |
|
132,572 |
|
|
|
1,499 |
|
|
4.52 |
% |
|
154,481 |
|
|
|
1,565 |
|
|
4.05 |
% |
|
139,080 |
|
|
|
1,410 |
|
|
4.06 |
% |
|
Construction and land development |
|
34,810 |
|
|
|
399 |
|
|
4.58 |
% |
|
38,861 |
|
|
|
448 |
|
|
4.61 |
% |
|
34,810 |
|
|
|
399 |
|
|
4.58 |
% |
|
38,315 |
|
|
|
425 |
|
|
4.44 |
% |
|
Home equity and second mortgages |
|
27,751 |
|
|
|
246 |
|
|
3.55 |
% |
|
32,670 |
|
|
|
295 |
|
|
3.61 |
% |
|
27,751 |
|
|
|
246 |
|
|
3.55 |
% |
|
29,061 |
|
|
|
251 |
|
|
3.45 |
% |
|
Commercial and equipment loans |
|
104,845 |
|
|
|
1,161 |
|
|
4.43 |
% |
|
116,472 |
|
|
|
1,205 |
|
|
4.14 |
% |
|
104,845 |
|
|
|
1,161 |
|
|
4.43 |
% |
|
104,117 |
|
|
|
1,108 |
|
|
4.26 |
% |
|
U.S. SBA PPP loans |
|
71,751 |
|
|
|
1,236 |
|
|
6.89 |
% |
|
127,092 |
|
|
|
902 |
|
|
2.84 |
% |
|
71,751 |
|
|
|
1,236 |
|
|
6.89 |
% |
|
104,426 |
|
|
|
1,318 |
|
|
5.05 |
% |
|
Consumer loans |
|
1,742 |
|
|
|
16 |
|
|
3.67 |
% |
|
1,102 |
|
|
|
12 |
|
|
4.36 |
% |
|
1,742 |
|
|
|
16 |
|
|
3.67 |
% |
|
1,425 |
|
|
|
17 |
|
|
4.77 |
% |
|
Allowance for loan losses |
|
(18,852 |
) |
|
|
— |
|
|
0.00 |
% |
|
(16,738 |
) |
|
|
— |
|
|
0.00 |
% |
|
(18,852 |
) |
|
|
— |
|
|
0.00 |
% |
|
(18,265 |
) |
|
|
— |
|
|
0.00 |
% |
| Loan portfolio (1) |
|
$ |
1,570,812 |
|
|
|
$ |
16,342 |
|
|
4.16 |
% |
|
$ |
1,595,506 |
|
|
|
$ |
16,176 |
|
|
4.06 |
% |
|
$ |
1,570,812 |
|
|
|
$ |
16,342 |
|
|
4.16 |
% |
|
$ |
1,597,236 |
|
|
|
$ |
16,320 |
|
|
4.09 |
% |
| Taxable investment
securities |
|
370,498 |
|
|
|
1,212 |
|
|
1.31 |
% |
|
218,305 |
|
|
|
1,143 |
|
|
2.09 |
% |
|
370,498 |
|
|
|
1,212 |
|
|
1.31 |
% |
|
276,019 |
|
|
|
1,020 |
|
|
1.48 |
% |
| Nontaxable investment
securities |
|
16,204 |
|
|
|
84 |
|
|
2.07 |
% |
|
23,633 |
|
|
|
126 |
|
|
2.13 |
% |
|
16,204 |
|
|
|
84 |
|
|
2.07 |
% |
|
15,559 |
|
|
|
81 |
|
|
2.08 |
% |
| Interest-bearing deposits in
other banks |
|
36,516 |
|
|
|
16 |
|
|
0.18 |
% |
|
24,713 |
|
|
|
25 |
|
|
0.40 |
% |
|
36,516 |
|
|
|
16 |
|
|
0.18 |
% |
|
28,844 |
|
|
|
13 |
|
|
0.18 |
% |
| Federal funds sold |
|
30,266 |
|
|
|
5 |
|
|
0.07 |
% |
|
20,561 |
|
|
|
13 |
|
|
0.25 |
% |
|
30,266 |
|
|
|
5 |
|
|
0.07 |
% |
|
34,778 |
|
|
|
10 |
|
|
0.12 |
% |
| Total interest-earning
assets |
|
2,024,296 |
|
|
|
17,659 |
|
|
3.49 |
% |
|
1,882,718 |
|
|
|
17,483 |
|
|
3.71 |
% |
|
2,024,296 |
|
|
|
17,659 |
|
|
3.49 |
% |
|
1,952,436 |
|
|
|
17,444 |
|
|
3.57 |
% |
| Cash and cash equivalents |
|
66,292 |
|
|
|
|
|
|
|
87,895 |
|
|
|
|
|
|
|
66,292 |
|
|
|
|
|
|
|
65,897 |
|
|
|
|
|
|
| Goodwill |
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
| Core deposit intangible |
|
1,226 |
|
|
|
|
|
|
|
1,761 |
|
|
|
|
|
|
|
1,226 |
|
|
|
|
|
|
|
1,350 |
|
|
|
|
|
|
| Other assets |
|
85,340 |
|
|
|
|
|
|
|
88,278 |
|
|
|
|
|
|
|
85,340 |
|
|
|
|
|
|
|
86,421 |
|
|
|
|
|
|
| Total
Assets |
|
$ |
2,187,989 |
|
|
|
|
|
|
|
$ |
2,071,487 |
|
|
|
|
|
|
|
$ |
2,187,989 |
|
|
|
|
|
|
|
$ |
2,116,939 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest-bearing demand
deposits |
|
$ |
434,316 |
|
|
|
$ |
— |
|
|
0.00 |
% |
|
$ |
351,951 |
|
|
|
$ |
— |
|
|
0.00 |
% |
|
$ |
434,316 |
|
|
|
$ |
— |
|
|
0.00 |
% |
|
$ |
406,166 |
|
|
|
$ |
— |
|
|
0.00 |
% |
| Interest-bearing deposits |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
110,873 |
|
|
|
14 |
|
|
0.05 |
% |
|
89,036 |
|
|
|
20 |
|
|
0.09 |
% |
|
110,873 |
|
|
|
14 |
|
|
0.05 |
% |
|
105,814 |
|
|
|
13 |
|
|
0.05 |
% |
|
Interest-bearing demand and money market accounts |
|
1,017,642 |
|
|
|
175 |
|
|
0.07 |
% |
|
848,981 |
|
|
|
313 |
|
|
0.15 |
% |
|
1,017,642 |
|
|
|
175 |
|
|
0.07 |
% |
|
977,201 |
|
|
|
185 |
|
|
0.08 |
% |
|
Certificates of deposit |
|
341,672 |
|
|
|
405 |
|
|
0.47 |
% |
|
363,296 |
|
|
|
1,201 |
|
|
1.32 |
% |
|
341,672 |
|
|
|
405 |
|
|
0.47 |
% |
|
344,533 |
|
|
|
442 |
|
|
0.51 |
% |
| Total interest-bearing
deposits |
|
1,470,187 |
|
|
|
594 |
|
|
0.16 |
% |
|
1,301,313 |
|
|
|
1,534 |
|
|
0.47 |
% |
|
1,470,187 |
|
|
|
594 |
|
|
0.16 |
% |
|
1,427,548 |
|
|
|
640 |
|
|
0.18 |
% |
| Total deposits |
|
1,904,503 |
|
|
|
594 |
|
|
0.12 |
% |
|
1,653,264 |
|
|
|
1,534 |
|
|
0.37 |
% |
|
1,904,503 |
|
|
|
594 |
|
|
0.12 |
% |
|
1,833,714 |
|
|
|
640 |
|
|
0.14 |
% |
| Long-term debt |
|
25,625 |
|
|
|
131 |
|
|
2.04 |
% |
|
63,847 |
|
|
|
380 |
|
|
2.38 |
% |
|
25,625 |
|
|
|
131 |
|
|
2.04 |
% |
|
27,273 |
|
|
|
43 |
|
|
0.63 |
% |
| Short-term debt |
|
— |
|
|
|
— |
|
|
0.00 |
% |
|
3,159 |
|
|
|
14 |
|
|
1.77 |
% |
|
— |
|
|
|
— |
|
|
0.00 |
% |
|
— |
|
|
|
— |
|
|
0.00 |
% |
| PPPLF advance |
|
— |
|
|
|
— |
|
|
0.00 |
% |
|
121,070 |
|
|
|
107 |
|
|
0.35 |
% |
|
— |
|
|
|
— |
|
|
0.00 |
% |
|
— |
|
|
|
— |
|
|
0.00 |
% |
| Subordinated notes |
|
19,487 |
|
|
|
251 |
|
|
5.15 |
% |
|
— |
|
|
|
— |
|
|
0.00 |
% |
|
19,487 |
|
|
|
251 |
|
|
5.15 |
% |
|
19,473 |
|
|
|
251 |
|
|
5.16 |
% |
| Guaranteed preferred
beneficial interest in junior subordinated debentures |
|
12,000 |
|
|
|
74 |
|
|
2.47 |
% |
|
12,000 |
|
|
|
80 |
|
|
2.67 |
% |
|
12,000 |
|
|
|
74 |
|
|
2.47 |
% |
|
12,000 |
|
|
|
75 |
|
|
2.50 |
% |
| Total debt |
|
57,112 |
|
|
|
456 |
|
|
3.19 |
% |
|
200,076 |
|
|
|
581 |
|
|
1.16 |
% |
|
57,112 |
|
|
|
456 |
|
|
3.19 |
% |
|
58,746 |
|
|
|
369 |
|
|
2.51 |
% |
| Interest-bearing
liabilities |
|
1,527,299 |
|
|
|
1,050 |
|
|
0.27 |
% |
|
1,501,389 |
|
|
|
2,115 |
|
|
0.56 |
% |
|
1,527,299 |
|
|
|
1,050 |
|
|
0.27 |
% |
|
1,486,294 |
|
|
|
1,009 |
|
|
0.27 |
% |
| Total funds |
|
1,961,615 |
|
|
|
1,050 |
|
|
0.21 |
% |
|
1,853,340 |
|
|
|
2,115 |
|
|
0.46 |
% |
|
1,961,615 |
|
|
|
1,050 |
|
|
0.21 |
% |
|
1,892,460 |
|
|
|
1,009 |
|
|
0.21 |
% |
| Other liabilities |
|
20,648 |
|
|
|
|
|
|
|
24,796 |
|
|
|
|
|
|
|
20,648 |
|
|
|
|
|
|
|
20,586 |
|
|
|
|
|
|
| Stockholders' equity |
|
205,723 |
|
|
|
|
|
|
|
193,351 |
|
|
|
|
|
|
|
205,723 |
|
|
|
|
|
|
|
203,893 |
|
|
|
|
|
|
| Total Liabilities and
Stockholders' Equity |
|
$ |
2,187,986 |
|
|
|
|
|
|
|
$ |
2,071,487 |
|
|
|
|
|
|
|
$ |
2,187,986 |
|
|
|
|
|
|
|
$ |
2,116,939 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
|
$ |
16,609 |
|
|
|
|
|
|
$ |
15,368 |
|
|
|
|
|
|
$ |
16,609 |
|
|
|
|
|
|
$ |
16,435 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate spread |
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.15 |
% |
|
|
|
|
|
3.22 |
% |
|
|
|
|
|
3.30 |
% |
| Net yield on interest-earning
assets |
|
|
|
|
|
3.28 |
% |
|
|
|
|
|
3.27 |
% |
|
|
|
|
|
3.28 |
% |
|
|
|
|
|
3.37 |
% |
| Average interest-earning
assets to average interest-bearing liabilities |
|
|
|
|
|
132.54 |
% |
|
|
|
|
|
125.40 |
% |
|
|
|
|
|
132.54 |
% |
|
|
|
|
|
131.36 |
% |
| Average loans to average
deposits |
|
|
|
|
|
82.48 |
% |
|
|
|
|
|
96.51 |
% |
|
|
|
|
|
82.48 |
% |
|
|
|
|
|
87.10 |
% |
| Average transaction deposits
to total average deposits ** |
|
|
|
|
|
82.06 |
% |
|
|
|
|
|
78.03 |
% |
|
|
|
|
|
82.06 |
% |
|
|
|
|
|
81.21 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of funds |
|
|
|
|
|
0.21 |
% |
|
|
|
|
|
0.46 |
% |
|
|
|
|
|
0.21 |
% |
|
|
|
|
|
0.21 |
% |
| Cost of deposits |
|
|
|
|
|
0.12 |
% |
|
|
|
|
|
0.37 |
% |
|
|
|
|
|
0.12 |
% |
|
|
|
|
|
0.14 |
% |
| Cost of debt |
|
|
|
|
|
3.19 |
% |
|
|
|
|
|
1.16 |
% |
|
|
|
|
|
3.19 |
% |
|
|
|
|
|
2.51 |
% |
|
(1) |
Loan average balance includes non-accrual loans. There are no tax
equivalency adjustments. There was $91,000, $111,000 and $75,000 of
accretion interest for the three months ended September 30,
2021 and 2020, and June 30, 2021, respectively. |
|
____________________________________ |
|
** |
Transaction deposits exclude time deposits. |
| |
|
AVERAGE CONSOLIDATED BALANCE SHEETS AND
NET INTEREST INCOME (UNAUDITED)
| |
|
For the Nine Months Ended September 30, |
| |
|
2021 |
|
2020 |
|
(dollars in thousands) |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Average Balance |
|
Interest |
|
Average Yield/Cost |
|
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest-earning assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
1,081,350 |
|
|
|
$ |
32,625 |
|
|
4.02 |
% |
|
$ |
981,944 |
|
|
|
$ |
32,406 |
|
|
4.40 |
% |
|
Residential first mortgages |
|
111,401 |
|
|
|
2,494 |
|
|
2.99 |
% |
|
165,632 |
|
|
|
4,098 |
|
|
3.30 |
% |
|
Residential rentals |
|
144,316 |
|
|
|
4,421 |
|
|
4.08 |
% |
|
131,839 |
|
|
|
4,373 |
|
|
4.42 |
% |
|
Construction and land development |
|
36,401 |
|
|
|
1,226 |
|
|
4.49 |
% |
|
38,608 |
|
|
|
1,360 |
|
|
4.70 |
% |
|
Home equity and second mortgages |
|
28,689 |
|
|
|
745 |
|
|
3.46 |
% |
|
34,604 |
|
|
|
1,066 |
|
|
4.11 |
% |
|
Commercial and equipment loans |
|
104,747 |
|
|
|
3,339 |
|
|
4.25 |
% |
|
119,927 |
|
|
|
4,219 |
|
|
4.69 |
% |
|
U.S. SBA PPP loans |
|
97,231 |
|
|
|
4,356 |
|
|
5.97 |
% |
|
76,418 |
|
|
|
1,395 |
|
|
2.43 |
% |
|
Consumer loans |
|
1,497 |
|
|
|
48 |
|
|
4.28 |
% |
|
1,113 |
|
|
|
38 |
|
|
4.55 |
% |
|
Allowance for loan losses |
|
(18,908 |
) |
|
|
— |
|
|
— |
% |
|
(14,521 |
) |
|
|
— |
|
|
— |
% |
| Loan portfolio (1) |
|
$ |
1,586,724 |
|
|
|
$ |
49,254 |
|
|
4.14 |
% |
|
$ |
1,535,564 |
|
|
|
$ |
48,955 |
|
|
4.25 |
% |
| Taxable investment
securities |
|
292,625 |
|
|
|
3,182 |
|
|
1.45 |
% |
|
215,223 |
|
|
|
3,854 |
|
|
2.39 |
% |
| Nontaxable investment
securities |
|
17,517 |
|
|
|
279 |
|
|
2.12 |
% |
|
12,144 |
|
|
|
225 |
|
|
2.47 |
% |
| Interest-bearing deposits in
other banks |
|
30,183 |
|
|
|
44 |
|
|
0.19 |
% |
|
16,246 |
|
|
|
87 |
|
|
0.71 |
% |
| Federal funds sold |
|
27,964 |
|
|
|
22 |
|
|
0.10 |
% |
|
13,520 |
|
|
|
39 |
|
|
0.38 |
% |
| Total Interest-Earning
Assets |
|
1,955,013 |
|
|
|
52,781 |
|
|
3.60 |
% |
|
1,792,697 |
|
|
|
53,160 |
|
|
3.95 |
% |
| Cash and cash equivalents |
|
71,559 |
|
|
|
|
|
|
|
61,832 |
|
|
|
|
|
|
| Goodwill |
|
10,835 |
|
|
|
|
|
|
|
10,835 |
|
|
|
|
|
|
| Core deposit intangible |
|
1,351 |
|
|
|
|
|
|
|
1,910 |
|
|
|
|
|
|
| Other assets |
|
86,838 |
|
|
|
|
|
|
|
87,973 |
|
|
|
|
|
|
| Total
Assets |
|
$ |
2,125,596 |
|
|
|
|
|
|
|
$ |
1,955,247 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
| Noninterest-bearing demand
deposits |
|
$ |
407,375 |
|
|
|
$ |
— |
|
|
— |
% |
|
$ |
310,451 |
|
|
|
$ |
— |
|
|
— |
% |
| Interest-bearing
liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Savings |
|
106,190 |
|
|
|
40 |
|
|
0.05 |
% |
|
80,412 |
|
|
|
$ |
68 |
|
|
0.11 |
% |
|
Interest-bearing demand and money market accounts |
|
982,704 |
|
|
|
555 |
|
|
0.08 |
% |
|
816,975 |
|
|
|
2,118 |
|
|
0.35 |
% |
|
Certificates of deposit |
|
345,821 |
|
|
|
1,441 |
|
|
0.56 |
% |
|
375,606 |
|
|
|
4,329 |
|
|
1.54 |
% |
| Total Interest-bearing
deposits |
|
1,434,715 |
|
|
|
2,036 |
|
|
0.19 |
% |
|
1,272,993 |
|
|
|
6,515 |
|
|
0.68 |
% |
| Total deposits |
|
1,842,090 |
|
|
|
2,036 |
|
|
0.15 |
% |
|
1,583,444 |
|
|
|
6,515 |
|
|
0.55 |
% |
| Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term debt |
|
26,723 |
|
|
|
213 |
|
|
1.06 |
% |
|
62,101 |
|
|
|
916 |
|
|
1.97 |
% |
|
Short-term borrowings |
|
— |
|
|
|
— |
|
|
— |
% |
|
10,895 |
|
|
|
111 |
|
|
1.36 |
% |
|
PPPLF advances |
|
— |
|
|
|
— |
|
|
— |
% |
|
69,656 |
|
|
|
182 |
|
|
0.35 |
% |
|
Subordinated notes |
|
19,483 |
|
|
|
754 |
|
|
5.16 |
% |
|
4,953 |
|
|
|
184 |
|
|
4.95 |
% |
|
Guaranteed preferred beneficial interest in junior subordinated
debentures |
|
12,000 |
|
|
|
225 |
|
|
2.50 |
% |
|
12,000 |
|
|
|
307 |
|
|
3.41 |
% |
| Total debt |
|
58,206 |
|
|
|
1,192 |
|
|
2.73 |
% |
|
159,605 |
|
|
|
1,700 |
|
|
1.42 |
% |
| Total interest-bearing
liabilities |
|
1,492,921 |
|
|
|
3,228 |
|
|
0.29 |
% |
|
1,432,598 |
|
|
|
8,215 |
|
|
0.76 |
% |
| Total funds |
|
1,900,296 |
|
|
|
3,228 |
|
|
0.23 |
% |
|
1,743,049 |
|
|
|
8,215 |
|
|
0.63 |
% |
| Other liabilities |
|
21,703 |
|
|
|
|
|
|
|
23,345 |
|
|
|
|
|
|
| Stockholders' equity |
|
203,597 |
|
|
|
|
|
|
|
188,853 |
|
|
|
|
|
|
| Total Liabilities and
Stockholders' Equity |
|
$ |
2,125,596 |
|
|
|
|
|
|
|
$ |
1,955,247 |
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Net interest income |
|
|
|
$ |
49,553 |
|
|
|
|
|
|
$ |
44,945 |
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Interest rate spread |
|
|
|
|
|
3.31 |
% |
|
|
|
|
|
3.19 |
% |
| Net yield on interest-earning
assets |
|
|
|
|
|
3.38 |
% |
|
|
|
|
|
3.34 |
% |
| Average interest-earning
assets to average interest-bearing liabilities |
|
|
|
|
|
130.95 |
% |
|
|
|
|
|
125.14 |
% |
| Average loans to average
deposits |
|
|
|
|
|
86.14 |
% |
|
|
|
|
|
96.98 |
% |
| Average transaction deposits
to total average deposits ** |
|
|
|
|
|
81.23 |
% |
|
|
|
|
|
76.28 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
| Cost of funds |
|
|
|
|
|
0.23 |
% |
|
|
|
|
|
0.63 |
% |
| Cost of deposits |
|
|
|
|
|
0.15 |
% |
|
|
|
|
|
0.55 |
% |
| Cost of debt |
|
|
|
|
|
2.73 |
% |
|
|
|
|
|
1.42 |
% |
|
(1) |
Loan average balance includes non-accrual loans. There are no tax
equivalency adjustments. There was $256,000 and $514,000 of
accretion interest during the nine months ended September 30,
2021 and 2020, respectively. |
|
____________________________________ |
|
** |
Transaction deposits exclude time deposits. |
| |
|
SUMMARY OF LOAN PORTFOLIO
(UNAUDITED)(dollars in thousands)
|
BY LOAN TYPE |
|
September 30, 2021 |
|
% |
|
June 30, 2021 |
|
% |
|
March 31, 2021 |
|
% |
|
December 31, 2020 |
|
% |
|
September 30, 2020 |
|
% |
|
Portfolio Type: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial real estate |
|
$ |
1,088,636 |
|
|
|
71.02 |
|
% |
|
$ |
1,111,613 |
|
|
|
72.47 |
|
% |
|
$ |
1,081,111 |
|
|
|
71.74 |
|
% |
|
$ |
1,049,147 |
|
|
|
69.75 |
|
% |
|
$ |
1,021,987 |
|
|
|
68.29 |
|
% |
|
Residential first mortgages |
|
96,835 |
|
|
|
6.32 |
|
% |
|
105,482 |
|
|
|
6.88 |
|
% |
|
115,803 |
|
|
|
7.68 |
|
% |
|
133,779 |
|
|
|
8.89 |
|
% |
|
147,756 |
|
|
|
9.87 |
|
% |
|
Residential rentals |
|
172,082 |
|
|
|
11.22 |
|
% |
|
142,210 |
|
|
|
9.27 |
|
% |
|
137,522 |
|
|
|
9.12 |
|
% |
|
139,059 |
|
|
|
9.24 |
|
% |
|
137,950 |
|
|
|
9.22 |
|
% |
|
Construction and land development |
|
37,139 |
|
|
|
2.42 |
|
% |
|
36,918 |
|
|
|
2.41 |
|
% |
|
38,446 |
|
|
|
2.55 |
|
% |
|
37,520 |
|
|
|
2.49 |
|
% |
|
36,061 |
|
|
|
2.41 |
|
% |
|
Home equity and second mortgages |
|
26,518 |
|
|
|
1.73 |
|
% |
|
28,726 |
|
|
|
1.87 |
|
% |
|
29,363 |
|
|
|
1.95 |
|
% |
|
29,129 |
|
|
|
1.94 |
|
% |
|
31,427 |
|
|
|
2.10 |
|
% |
|
Commercial loans |
|
48,327 |
|
|
|
3.15 |
|
% |
|
47,567 |
|
|
|
3.10 |
|
% |
|
42,689 |
|
|
|
2.83 |
|
% |
|
52,921 |
|
|
|
3.52 |
|
% |
|
58,894 |
|
|
|
3.94 |
|
% |
|
Consumer loans |
|
2,168 |
|
|
|
0.14 |
|
% |
|
1,442 |
|
|
|
0.09 |
|
% |
|
1,415 |
|
|
|
0.09 |
|
% |
|
1,027 |
|
|
|
0.07 |
|
% |
|
1,081 |
|
|
|
0.07 |
|
% |
|
Commercial equipment |
|
61,346 |
|
|
|
4.00 |
|
% |
|
59,918 |
|
|
|
3.91 |
|
% |
|
60,834 |
|
|
|
4.04 |
|
% |
|
61,693 |
|
|
|
4.10 |
|
% |
|
61,376 |
|
|
|
4.10 |
|
% |
| Gross portfolio loans |
|
$ |
1,533,051 |
|
|
|
100.00 |
|
% |
|
$ |
1,533,876 |
|
|
|
100.00 |
|
% |
|
$ |
1,507,183 |
|
|
|
100.00 |
|
% |
|
$ |
1,504,275 |
|
|
|
100.00 |
|
% |
|
$ |
1,496,532 |
|
|
|
100.00 |
|
% |
| Net deferred costs |
|
365 |
|
|
|
0.02 |
|
% |
|
533 |
|
|
|
0.03 |
|
% |
|
879 |
|
|
|
0.06 |
|
% |
|
1,264 |
|
|
|
0.08 |
|
% |
|
1,610 |
|
|
|
0.11 |
|
% |
| Allowance for loan losses |
|
(18,579 |
) |
|
|
(1.21 |
) |
% |
|
(18,516 |
) |
|
|
(1.21 |
) |
% |
|
(18,256 |
) |
|
|
(1.21 |
) |
% |
|
(19,424 |
) |
|
|
(1.29 |
) |
% |
|
(18,829 |
) |
|
|
(1.26 |
) |
% |
| |
|
(18,214 |
) |
|
|
|
|
(17,983 |
) |
|
|
|
|
(17,377 |
) |
|
|
|
|
(18,160 |
) |
|
|
|
|
(17,219 |
) |
|
|
|
| Net portfolio loans |
|
$ |
1,514,837 |
|
|
|
|
|
$ |
1,515,893 |
|
|
|
|
|
$ |
1,489,806 |
|
|
|
|
|
$ |
1,486,115 |
|
|
|
|
|
$ |
1,479,313 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| U.S. SBA PPP loans |
|
$ |
56,424 |
|
|
|
|
|
$ |
89,129 |
|
|
|
|
|
$ |
115,700 |
|
|
|
|
|
$ |
110,320 |
|
|
|
|
|
$ |
131,088 |
|
|
|
|
| Net deferred fees |
|
(1,617 |
) |
|
|
|
|
(2,647 |
) |
|
|
|
|
(3,215 |
) |
|
|
|
|
(2,360 |
) |
|
|
|
|
(3,277 |
) |
|
|
|
| Net U.S. SBA PPP loans |
|
$ |
54,807 |
|
|
|
|
|
$ |
86,482 |
|
|
|
|
|
$ |
112,485 |
|
|
|
|
|
$ |
107,960 |
|
|
|
|
|
$ |
127,811 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total net loans |
|
$ |
1,569,644 |
|
|
|
|
|
$ |
1,602,375 |
|
|
|
|
|
$ |
1,602,291 |
|
|
|
|
|
$ |
1,594,075 |
|
|
|
|
|
$ |
1,607,124 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Gross loans |
|
$ |
1,589,475 |
|
|
|
|
|
$ |
1,623,005 |
|
|
|
|
|
$ |
1,622,883 |
|
|
|
|
|
$ |
1,614,595 |
|
|
|
|
|
$ |
1,627,620 |
|
|
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
END OF PERIOD CONTRACTUAL RATES
(UNAUDITED)
The following table is based on contractual
interest rates and does not include the amortization of deferred
costs and fees or assumptions regarding non-accrual
interest:
| |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
(dollars in thousands) |
|
EOP Contractual Interest rate |
|
EOP Contractual Interest rate |
|
EOP Contractual Interest rate |
|
EOP Contractual Interest rate |
|
EOP Contractual Interest rate |
|
Commercial real estate |
|
3.91 |
% |
|
3.96 |
% |
|
4.02 |
% |
|
4.11 |
% |
|
4.20 |
% |
| Residential first
mortgages |
|
3.84 |
% |
|
3.87 |
% |
|
3.87 |
% |
|
3.93 |
% |
|
3.93 |
% |
| Residential rentals |
|
3.97 |
% |
|
4.11 |
% |
|
4.20 |
% |
|
4.26 |
% |
|
4.30 |
% |
| Construction and land
development |
|
4.32 |
% |
|
4.31 |
% |
|
4.32 |
% |
|
4.28 |
% |
|
4.40 |
% |
| Home equity and second
mortgages |
|
3.51 |
% |
|
3.50 |
% |
|
3.52 |
% |
|
3.54 |
% |
|
3.56 |
% |
| Commercial loans |
|
4.48 |
% |
|
4.44 |
% |
|
4.63 |
% |
|
4.56 |
% |
|
4.51 |
% |
| Consumer loans |
|
5.26 |
% |
|
5.65 |
% |
|
5.75 |
% |
|
5.99 |
% |
|
5.94 |
% |
| Commercial equipment |
|
4.39 |
% |
|
4.42 |
% |
|
4.40 |
% |
|
4.42 |
% |
|
4.42 |
% |
| U.S. SBA PPP loans |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
|
1.00 |
% |
| Total
loans |
|
3.85 |
% |
|
3.84 |
% |
|
3.84 |
% |
|
3.92 |
% |
|
3.94 |
% |
| |
|
|
|
|
|
|
|
|
|
|
| Yields without U.S.
SBA PPP loans |
|
3.95 |
% |
|
4.00 |
% |
|
4.06 |
% |
|
4.13 |
% |
|
4.20 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALLOWANCE FOR LOAN LOSSES
(UNAUDITED)
|
(dollars in thousands) |
|
For the Three Months Ended |
| |
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
Beginning of period |
|
$ |
18,516 |
|
|
|
$ |
18,256 |
|
|
|
$ |
19,424 |
|
|
|
$ |
18,829 |
|
|
|
$ |
16,319 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Charge-offs |
|
(491 |
) |
|
|
(61 |
) |
|
|
(1,485 |
) |
|
|
(30 |
) |
|
|
(65 |
) |
|
| Recoveries |
|
554 |
|
|
|
30 |
|
|
|
22 |
|
|
|
25 |
|
|
|
75 |
|
|
| Net charge-offs |
|
63 |
|
|
|
(31 |
) |
|
|
(1,463 |
) |
|
|
(5 |
) |
|
|
10 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Provision for loan losses |
|
— |
|
|
|
291 |
|
|
|
295 |
|
|
|
600 |
|
|
|
2,500 |
|
|
| End of period |
|
$ |
18,579 |
|
|
|
$ |
18,516 |
|
|
|
$ |
18,256 |
|
|
|
$ |
19,424 |
|
|
|
$ |
18,829 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| Net charge-offs to average
portfolio loans (annualized)(1) |
|
0.02 |
|
% |
|
(0.01 |
) |
% |
|
(0.40 |
) |
% |
|
— |
|
% |
|
— |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
| Breakdown
of general and specific allowance as a percentage of gross
portfolio loans(1) |
|
|
|
|
|
|
|
|
| General allowance |
|
$ |
18,204 |
|
|
|
$ |
17,686 |
|
|
|
$ |
17,365 |
|
|
|
$ |
18,068 |
|
|
|
$ |
18,319 |
|
|
| Specific allowance |
|
323 |
|
|
|
778 |
|
|
|
891 |
|
|
|
1,356 |
|
|
|
510 |
|
|
| Total allowance to
non-acquired loans |
|
$ |
18,527 |
|
|
|
$ |
18,464 |
|
|
|
$ |
18,256 |
|
|
|
$ |
19,424 |
|
|
|
$ |
18,829 |
|
|
| PCI loans |
|
52 |
|
|
|
52 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
| Total allowance to gross
portfolio loans with PCI loans |
|
$ |
18,579 |
|
|
|
$ |
18,516 |
|
|
|
$ |
18,256 |
|
|
|
$ |
19,424 |
|
|
|
$ |
18,829 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
| General allowance |
|
1.19 |
|
% |
|
1.15 |
|
% |
|
1.15 |
|
% |
|
1.20 |
|
% |
|
1.22 |
|
% |
| Specific allowance |
|
0.02 |
|
% |
|
0.05 |
|
% |
|
0.06 |
|
% |
|
0.09 |
|
% |
|
0.03 |
|
% |
| Total allowance to gross
portfolio loans(1) |
|
1.21 |
|
% |
|
1.20 |
|
% |
|
1.21 |
|
% |
|
1.29 |
|
% |
|
1.26 |
|
% |
| Total allowance to gross
portfolio loans with PCI loans(2) |
|
1.21 |
|
% |
|
1.21 |
|
% |
|
— |
|
% |
|
— |
|
% |
|
— |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
| Allowance to non-acquired
gross loans(3) |
|
1.25 |
|
% |
|
1.25 |
|
% |
|
1.26 |
|
% |
|
1.35 |
|
% |
|
1.31 |
|
% |
| |
|
|
|
|
|
|
|
|
|
|
| Allowance+ Non-PCI FV
Mark |
|
$ |
19,070 |
|
|
|
$ |
19,090 |
|
|
|
$ |
18,939 |
|
|
|
$ |
20,174 |
|
|
|
$ |
19,643 |
|
|
| Allowance+ Non-PCI FV Mark to
gross portfolio loans |
|
1.24 |
|
% |
|
1.24 |
|
% |
|
1.26 |
|
% |
|
1.34 |
|
% |
|
1.31 |
|
% |
|
____________________________________ |
|
(1) |
Portfolio loans include all loan portfolios except the U.S. SBA PPP
loan portfolio |
|
(2) |
There were no allowance for loan loss on the PCI portfolios prior
to the three months ended June 30, 2021. |
|
(3) |
Non-acquired loans include loans transferred from acquired pools
following release of acquisition accounting FMV adjustments.
Non-acquired loans exclude U.S. SBA PPP loans. |
|
|
|
Below are several schedules that provide
information on the COVID-19 deferred loans. The schedules summarize
the COVID-19 loan modifications by loan portfolio, maturity or next
payment due dates and the Banks's industry classification using the
North American Industry Classification System ("NAICS"). The NAICS
is the standard used by Federal statistical agencies in classifying
business establishments for the purpose of collecting, analyzing,
and publishing statistical data related to the U.S. business
economy.
| |
|
(UNAUDITED) |
|
COVID-19 Deferred Loans |
|
September 30, 2021 |
|
Accrual Loans |
|
Non-Accrual Loans |
|
(dollars in thousands) |
|
Loan Balances |
|
% of Deferred Loans |
|
% of Gross Portfolio Loans |
|
Loan Balances |
|
Number of Loans |
|
Loan Balances |
|
Number of Loans |
|
Commercial real estate |
|
$ |
3,422 |
|
|
100.00 |
% |
|
0.22 |
% |
|
$ |
2,469 |
|
|
2 |
|
|
$ |
954 |
|
|
1 |
|
| Total |
|
$ |
3,422 |
|
|
100.00 |
% |
|
0.22 |
% |
|
$ |
2,469 |
|
|
2 |
|
|
$ |
954 |
|
|
1 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COVID-19 Deferred Loans - Scheduled Month off
Deferral |
|
(UNAUDITED) |
|
(dollars in thousands) |
|
Loan Balances |
|
% |
|
Number of Loans |
|
December-21 |
|
3,422 |
|
|
100.00 |
% |
|
3 |
|
Total |
|
$ |
3,422 |
|
|
100.00 |
% |
|
3 |
| |
|
|
|
|
|
|
|
|
|
|
COVID-19 Deferred Loans by NAICS Industry |
|
(UNAUDITED) |
|
(dollars in thousands) |
|
September 30, 2021 |
|
Number of Loans |
|
Arts, Entertainment, and Recreation |
|
3,422 |
|
|
3 |
|
Total |
|
$ |
3,422 |
|
|
3 |
| |
|
|
|
|
|
|
CLASSIFIED AND SPECIAL MENTION ASSETS
(UNAUDITED)
The following is a breakdown of the Company’s classified and
special mention assets at September 30, 2021
and December 31, 2020, 2019, 2018, and 2017,
respectively:
| |
|
As of |
|
(dollars in thousands) |
|
9/30/2021 |
|
6/30/2021 |
|
3/31/2021 |
|
12/31/2020 |
|
12/31/2019 |
|
12/31/2018 |
|
12/31/2017 |
|
Classified loans |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Substandard |
|
$ |
5,127 |
|
|
$ |
13,382 |
|
|
$ |
13,816 |
|
|
$ |
19,249 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,306 |
|
|
Doubtful |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Total classified loans |
|
5,127 |
|
|
13,382 |
|
|
13,816 |
|
|
19,249 |
|
|
26,863 |
|
|
32,226 |
|
|
40,306 |
|
| Special mention loans |
|
780 |
|
|
4,524 |
|
|
7,769 |
|
|
7,672 |
|
|
— |
|
|
— |
|
|
96 |
|
| Total classified and special
mention loans |
|
$ |
5,907 |
|
|
$ |
17,906 |
|
|
$ |
21,585 |
|
|
$ |
26,921 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,402 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Classified loans |
|
$ |
5,127 |
|
|
$ |
13,382 |
|
|
$ |
13,816 |
|
|
$ |
19,249 |
|
|
$ |
26,863 |
|
|
$ |
32,226 |
|
|
$ |
40,306 |
|
| Classified securities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
482 |
|
|
651 |
|
| Other real estate owned |
|
1,536 |
|
|
1,536 |
|
|
2,329 |
|
|
3,109 |
|
|
7,773 |
|
|
8,111 |
|
|
9,341 |
|
| Total classified assets |
|
$ |
6,663 |
|
|
$ |
14,918 |
|
|
$ |
16,145 |
|
|
$ |
22,358 |
|
|
$ |
34,636 |
|
|
$ |
40,819 |
|
|
$ |
50,298 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total classified
assets as a percentage of total assets |
|
0.29 |
% |
|
0.68 |
% |
|
0.75 |
% |
|
1.10 |
% |
|
1.93 |
% |
|
2.42 |
% |
|
3.58 |
% |
| Total classified
assets as a percentage of Risk Based Capital |
|
2.75 |
% |
|
6.24 |
% |
|
6.81 |
% |
|
9.61 |
% |
|
16.21 |
% |
|
21.54 |
% |
|
32.10 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUMMARY OF DEPOSITS
(UNAUDITED)
| |
|
September 30, 2021 |
|
June 30, 2021 |
|
March 31, 2021 |
|
December 31, 2020 |
|
September 30, 2020 |
|
(dollars in thousands) |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
|
Balance |
|
% |
|
Noninterest-bearing demand |
|
$ |
432,606 |
|
|
21.58 |
% |
|
$ |
423,165 |
|
|
22.18 |
% |
|
$ |
406,319 |
|
|
21.75 |
% |
|
$ |
362,079 |
|
|
20.74 |
% |
|
$ |
360,839 |
|
|
20.28 |
% |
| Interest-bearing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Demand |
|
764,482 |
|
|
38.14 |
% |
|
685,023 |
|
|
35.90 |
% |
|
651,639 |
|
|
34.89 |
% |
|
590,159 |
|
|
33.81 |
% |
|
635,176 |
|
|
35.69 |
% |
|
Money market deposits |
|
355,582 |
|
|
17.74 |
% |
|
351,262 |
|
|
18.41 |
% |
|
355,680 |
|
|
19.04 |
% |
|
340,725 |
|
|
19.52 |
% |
|
329,617 |
|
|
18.52 |
% |
|
Savings |
|
112,282 |
|
|
5.60 |
% |
|
107,288 |
|
|
5.62 |
% |
|
105,590 |
|
|
5.65 |
% |
|
98,783 |
|
|
5.66 |
% |
|
90,514 |
|
|
5.09 |
% |
|
Certificates of deposit |
|
339,655 |
|
|
16.94 |
% |
|
341,400 |
|
|
17.89 |
% |
|
348,668 |
|
|
18.67 |
% |
|
353,856 |
|
|
20.27 |
% |
|
363,460 |
|
|
20.42 |
% |
| Total interest-bearing |
|
1,572,001 |
|
|
78.42 |
% |
|
1,484,973 |
|
|
77.82 |
% |
|
1,461,577 |
|
|
78.25 |
% |
|
1,383,523 |
|
|
79.26 |
% |
|
1,418,767 |
|
|
79.72 |
% |
| Total deposits |
|
$ |
2,004,607 |
|
|
100.00 |
% |
|
$ |
1,908,138 |
|
|
100.00 |
% |
|
$ |
1,867,896 |
|
|
100.00 |
% |
|
$ |
1,745,602 |
|
|
100.00 |
% |
|
$ |
1,779,606 |
|
|
100.00 |
% |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Transaction
accounts |
|
$ |
1,664,952 |
|
|
83.06 |
% |
|
$ |
1,566,738 |
|
|
82.11 |
% |
|
$ |
1,519,228 |
|
|
81.33 |
% |
|
$ |
1,391,746 |
|
|
79.73 |
% |
|
$ |
1,416,146 |
|
|
79.58 |
% |
Community Financial (NASDAQ:TCFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Community Financial (NASDAQ:TCFC)
Historical Stock Chart
From Apr 2023 to Apr 2024
