Partners Bancorp (NASDAQ: PTRS) (the “Company”), the parent company
of The Bank of Delmarva (“Delmarva”), Seaford, Delaware, and
Virginia Partners Bank (“Virginia Partners”), Fredericksburg,
Virginia, reported net income attributable to the Company of $3.8
million, or $0.21 per diluted share, for the three months ended
June 30, 2023, a $585 thousand or 18.4% increase when compared to
net income attributable to the Company of $3.2 million, or $0.18
per diluted share, for the same period in 2022. For the six months
ended June 30, 2023, the Company reported net income attributable
to the Company of $7.1 million, or $0.39 per diluted share, a $1.8
million or 34.1% increase when compared to net income attributable
to the Company of $5.3 million, or $0.29 per diluted share, for the
same period in 2022.
As previously disclosed, on February 22, 2023,
the Company and LINKBANCORP, Inc. (“LINK”) (NASDAQ: LNKB), parent
company of LINKBANK, announced that they have entered into a
definitive agreement and plan of merger pursuant to which the
Company will merge into LINK, with LINK surviving, and following
which Delmarva and Virginia Partners will each successively merge
with and into LINKBANK, with LINKBANK surviving. Upon completion of
the transaction, the Company’s shareholders will own approximately
56% and LINK shareholders, inclusive of shares issued in a
concurrent private placement of common stock by LINK, will own
approximately 44% of the combined company. The mergers remain
subject to receipt of all required regulatory approvals and
fulfillment of other customary closing conditions.
John W. Breda, the Company’s President and Chief
Executive Officer, commented, “Despite the impact of significant
merger related expenses related to the pending merger with LINK, I
am pleased with our operating results for the first six months of
2023. During the first half of 2023, the Company generated loan
growth of 3.6%, and finished the period maintaining strong asset
quality. While the Company’s net interest margin for the
second quarter of 2023 improved by 0.84% compared to the same
period of 2022, we experienced a decline of 0.11% when compared to
the first quarter of 2023. The Company’s total deposits decreased
by 1.6% as compared to December 31, 2022, representing minimal
deposit outflow in the first half of 2023. As expected, given the
continued impact of rising market interest rates, competition for
deposits, increased borrowing costs, and negative banking industry
developments during the first six months of 2023, the Company
experienced an increase in its overall cost of funds during the
second quarter of 2023 by 0.68% when compared to the same period of
2022, and by 0.31% when compared to the first quarter of 2023.
Despite these negative factors and banking industry developments,
the Company remains well capitalized and its liquidity position and
balance sheet remain strong.”
Breda continued, “As previously disclosed,
during the second quarter of 2023 we announced the receipt of the
requisite approval of each of the Company’s and LINK’s stockholders
related to our pending merger with LINK. With this milestone, we
are one step closer to creating a partnership that will benefit all
stakeholders, including the communities we serve. We are excited
about what the future holds for the combined company.”
Also as previously disclosed, on July 26, 2023,
the Company’s board of directors declared a cash dividend of $0.04
per share, which is payable on August 17, 2023, to holders of
record of its common stock as of the close of business on August
10, 2023.
Effective January 1, 2023, the Company adopted
Accounting Standards Update (“ASU”) 2016-13 “ASU 2016-13 Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments,” which replaced the prior incurred
loss methodology with an expected loss methodology that is referred
to as the current expected credit loss (or the “CECL
Standard”).
The Company’s results for reporting periods
beginning after January 1, 2023 are presented under the CECL
Standard while prior period amounts continue to be reported in
accordance with previously applicable accounting guidance.
The Company’s results of operations for the
three months ended June 30, 2023 were directly impacted by the
following:
Positive Impacts:
- An increase in net interest income due primarily to increases
in average loan and investment securities balances and higher
yields earned on each, an increase in the yields earned on average
cash and cash equivalents balances, and a decrease in average
interest-bearing deposit balances, which were partially offset by a
decrease in average cash and cash equivalents balances, higher
rates paid on average interest-bearing deposit balances, an
increase in average borrowings balances and higher rates paid, and
lower net loan fees earned related to the forgiveness of loans
originated and funded under the Paycheck Protection Program (“PPP”)
of the Small Business Administration;
- A higher net interest margin (tax equivalent basis);
- Recording a lower provision for credit losses due to changes in
the assessment of economic factors, and for June 30, 2023, more
favorable views on the downside risks to the economic forecast
compared to March 31, 2023, and lower net charge-offs, which were
partially offset by organic loan growth and a higher required
reserve on unfunded credit commitments; and
- Recording no impairment loss on restricted stock during the
three months ended June 30, 2023.
Negative Impacts:
- Reduced operating results from Virginia Partners’ majority
owned subsidiary Johnson Mortgage Company, LLC and lower mortgage
division fees at Delmarva;
- Recording no gains or operating expenses on other real estate
owned, net during the three months ended June 30, 2023; and
- Incurring $428 thousand in merger related expenses during the
three months ended June 30, 2023 in connection with the Company’s
pending merger with LINK, as compared to $157 thousand during the
same period of 2022 in connection with the Company’s terminated
merger with OceanFirst Financial Corp. (“OceanFirst”).
The Company’s results of operations for the six
months ended June 30, 2023 were directly impacted by the
following:
Positive Impacts:
- An increase in net interest income due primarily to increases
in average loan and investment securities balances and higher
yields earned on each, an increase in the yields earned on average
cash and cash equivalents balances, and a decrease in average
interest-bearing deposit balances, which were partially offset by a
decrease in average cash and cash equivalents balances, higher
rates paid on average interest-bearing deposit balances, an
increase in average borrowings balances and higher rates paid, and
lower net loan fees earned related to the forgiveness of loans
originated and funded under the PPP of the Small Business
Administration;
- A higher net interest margin (tax equivalent basis); and
- Recording no impairment loss on restricted stock during the six
months ended June 30, 2023.
Negative Impacts:
- Recording a higher provision for credit losses due to changes
in the assessment of economic factors, and for June 30, 2023, less
favorable views on the downside risks to the economic forecast
compared to January 1, 2023, and organic loan growth, which were
partially offset by lower net charge-offs and a lower required
reserve on unfunded credit commitments;
- Reduced operating results from Virginia Partners’ majority
owned subsidiary Johnson Mortgage Company, LLC and lower mortgage
division fees at Delmarva;
- Recording no gains or operating expenses on other real estate
owned, net during the six months ended June 30, 2023; and
- Incurring $1.5 million in merger related expenses during the
six months ended June 30, 2023 in connection with the Company’s
pending merger with LINK, as compared to $553 thousand during the
same period of 2022 in connection with the Company’s terminated
merger with OceanFirst.
For the three months ended June 30, 2023, the
Company’s annualized return on average assets, annualized return on
average equity and efficiency ratio were 0.98%, 10.71% and 68.22%,
respectively, as compared to 0.76%, 9.51% and 68.89%, respectively,
for the same period in 2022.
For the six months ended June 30, 2023, the
Company’s annualized return on average assets, annualized return on
average equity and efficiency ratio were 0.93%, 10.20% and 69.43%,
respectively, as compared to 0.64%, 7.82% and 73.45%, respectively,
for the same period in 2022.
The increase in net income attributable to the
Company for the three months ended June 30, 2023, as compared to
the same period in 2022, was driven by an increase in net interest
income and a lower provision for credit losses, which were
partially offset by a decrease in other income, an increase in
other expenses, and higher federal and state income taxes.
The increase in net income attributable to the
Company for the six months ended June 30, 2023, as compared to the
same period in 2022, was driven by an increase in net interest
income, which was partially offset by a higher provision for credit
losses, a decrease in other income, an increase in other expenses,
and higher federal and state income taxes.
Interest Income and Expense – Three
Months Ended June 30, 2023 and 2022
Net interest income and net interest margin
Net interest income in the second quarter of
2023 increased by $2.0 million, or 15.1%, when compared to the
second quarter of 2022. The Company’s net interest margin (tax
equivalent basis) increased to 4.03%, representing an increase of
84 basis points for the three months ended June 30, 2023 as
compared to the same period in 2022. The increase in the net
interest margin (tax equivalent basis) was primarily due to higher
average balances of and yields earned on loans and investment
securities, higher yields earned on average interest-bearing
deposits in other financial institutions and federal funds sold,
and lower average balances of interest-bearing liabilities, which
were partially offset by lower average balances of interest-bearing
deposits in other financial institutions and federal funds sold,
and higher rates paid on average interest-bearing liabilities.
Total interest income increased by $4.3 million, or 29.6%, for the
three months ended June 30, 2023, while total interest expense
increased by $2.4 million, or 143.9%, both as compared to the same
period in 2022.
The most significant factors impacting net
interest income during the three month period ended June 30, 2023
were as follows:
Positive Impacts:
- Increases in average loan balances, primarily due to organic
loan growth, and higher loan yields, primarily due to repricing of
variable rate loans, higher average yields on new loan
originations, and pay-offs of lower yielding fixed rate loans,
which were partially offset by lower net loan fees earned related
to the forgiveness of loans originated and funded under the
PPP;
- Increases in average investment securities balances and higher
investment securities yields, primarily due to management of the
investment securities portfolio in light of the Company’s liquidity
needs and higher interest rates over the comparable periods;
and
- Higher yields earned on average interest-bearing deposits in
other financial institutions and federal funds sold, primarily due
to higher interest rates over the comparable periods.
Negative Impacts:
- Decrease in average interest-bearing deposits in other
financial institutions and federal funds sold, primarily due to
loan growth outpacing deposit growth, deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023, and
higher investment securities balances;
- Decrease in average interest-bearing deposit balances and
higher rates paid, primarily due to scheduled maturities of time
deposits that were not replaced and deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023,
which were partially offset by organic deposit growth; and
- Increase in average borrowings balances and higher rates paid,
primarily due to an increase in the average balance of short-term
Federal Home Loan Bank advances due to the aforementioned decrease
in average interest-bearing deposit balances. The increase in the
average balance of short-term Federal Home Loan Bank advances was
partially offset by a decrease in the average balance of long-term
Federal Home Loan Bank advances resulting from maturities and
payoffs of borrowings that were not replaced and scheduled
principal curtailments.
Loans
Average loan balances increased by $108.0
million, or 9.3%, and average yields earned increased by 0.84% to
5.43% for the three months ended June 30, 2023, as compared to the
same period in 2022. The increase in average loan balances was
primarily due to organic loan growth, including growth in average
loan balances of approximately $50.8 million related to Virginia
Partners’ expansion into the Greater Washington market, which was
partially offset by the forgiveness of loans originated and funded
under the PPP. The increase in average yields earned was primarily
due to repricing of variable rate loans, higher average yields on
new loan originations, and pay-offs of lower yielding fixed rate
loans, which were partially offset by lower net loan fees earned
related to the forgiveness of loans originated and funded under the
PPP. Total average loans were 85.3% of total average
interest-earning assets for the three months ended June 30, 2023,
compared to 71.0% for the three months ended June 30, 2022.
Investment securities
Average total investment securities balances
increased by $6.9 million, or 4.7%, and average yields earned
increased by 0.44% to 2.64% for the three months ended June 30,
2023, as compared to the same period in 2022. The increases in
average total investment securities balances and average yields
earned was primarily due to management of the investment securities
portfolio in light of the Company’s liquidity needs and higher
interest rates over the comparable periods. Total
average investment securities were 10.4% of total average
interest-earning assets for the three months ended June 30, 2023,
compared to 9.0% for the three months ended June 30, 2022.
Interest-bearing deposits
Average total interest-bearing deposit balances
decreased by $115.8 million, or 12.6%, and average rates paid
increased by 1.08% to 1.57% for the three months ended June 30,
2023, as compared to the same period in 2022, primarily due to
scheduled maturities of time deposits that were not replaced and
deposit outflows due to competitive pressures in the higher
interest rate environment and the negative banking industry
developments associated with multiple high-profile bank failures
during the first six months of 2023, partially offset by organic
deposit growth, including average growth of approximately $17.2
million in interest-bearing deposits related to Virginia Partners’
expansion into the Greater Washington market.
Borrowings
Average total borrowings increased by $22.9
million, or 46.6%, and average rates paid increased by 0.47% to
4.49% for the three months ended June 30, 2023, as compared to the
same period in 2022. The increase in average total borrowings
balances and rates paid was primarily due to an increase in the
average balance of short-term Federal Home Loan Bank advances due
to the aforementioned decrease in average interest-bearing deposit
balances, which was partially offset by a decrease in the average
balance of long-term Federal Home Loan Bank advances resulting from
maturities and payoffs of borrowings that were not replaced and
scheduled principal curtailments.
Interest Income and Expense – Six Months
Ended June 30, 2023 and 2022
Net interest income and net interest margin
Net interest income during the first six months
of 2023 increased by $5.2 million, or 21.0%, when compared to the
first six months of 2022. The Company’s net interest margin (tax
equivalent basis) increased to 4.09%, representing an increase of
98 basis points for the six months ended June 30, 2023 as compared
to the same period in 2022. The increase in the net interest margin
(tax equivalent basis) was primarily due to higher average balances
of and yields earned on loans and investment securities, higher
yields earned on average interest-bearing deposits in other
financial institutions and federal funds sold, and lower average
balances of interest-bearing liabilities, which were partially
offset by lower average balances of interest-bearing deposits in
other financial institutions and federal funds sold, and higher
rates paid on average interest-bearing liabilities. Total interest
income increased by $8.6 million, or 30.7%, for the six months
ended June 30, 2023, while total interest expense increased by $3.4
million, or 101.3%, both as compared to the same period in
2022.
The most significant factors impacting net
interest income during the six months ended June 30, 2023 were as
follows:
Positive Impacts:
- Increases in average loan balances, primarily due to organic
loan growth, and higher loan yields, primarily due to repricing of
variable rate loans, higher average yields on new loan
originations, and pay-offs of lower yielding fixed rate loans,
which were partially offset by lower net loan fees earned related
to the forgiveness of loans originated and funded under the
PPP;
- Increases in average investment securities balances and higher
investment securities yields, primarily due to management of the
investment securities portfolio in light of the Company’s liquidity
needs and higher interest rates over the comparable periods;
and
- Higher yields earned on average interest-bearing deposits in
other financial institutions and federal funds sold, primarily due
to higher interest rates over the comparable periods.
Negative Impacts:
- Decrease in average interest-bearing deposits in other
financial institutions and federal funds sold, primarily due to
loan growth outpacing deposit growth, deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023, and
higher investment securities balances;
- Decrease in average interest-bearing deposit balances and
higher rates paid, primarily due to scheduled maturities of time
deposits that were not replaced and deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023,
which were partially offset by organic deposit growth; and
- Increase in average borrowings balances and higher rates paid,
primarily due to an increase in the average balance of short-term
Federal Home Loan Bank advances due to the aforementioned decrease
in average interest-bearing deposit balances. The increase in the
average balance of short-term Federal Home Loan Bank advances was
partially offset by a decrease in the average balance of long-term
Federal Home Loan Bank advances resulting from maturities and
payoffs of borrowings that were not replaced and scheduled
principal curtailments.
Loans
Average loan balances increased by $110.3
million, or 9.6%, and average yields earned increased by 0.74% to
5.34% for the six months ended June 30, 2023, as compared to the
same period in 2022. The increase in average loan balances was
primarily due to organic loan growth, including growth in average
loan balances of approximately $57.0 million related to Virginia
Partners’ expansion into the Greater Washington market, which was
partially offset by the forgiveness of loans originated and funded
under the PPP. The increase in average yields earned was primarily
due to repricing of variable rate loans, higher average yields on
new loan originations, and pay-offs of lower yielding fixed rate
loans, which were partially offset by lower net loan fees earned
related to the forgiveness of loans originated and funded under the
PPP. Total average loans were 84.5% of total average
interest-earning assets for the six months ended June 30, 2023,
compared to 71.0% for the six months ended June 30, 2022.
Investment securities
Average total investment securities balances
increased by $13.4 million, or 9.5%, and average yields earned
increased by 0.49% to 2.63% for the six months ended June 30, 2023,
as compared to the same period in 2022. The increases in average
total investment securities balances and average yields earned was
primarily due to management of the investment securities portfolio
in light of the Company’s liquidity needs and higher interest rates
over the comparable periods. Total average investment securities
were 10.4% of total average interest-earning assets for the six
months ended June 30, 2023, compared to 8.7% for the six months
ended June 30, 2022.
Interest-bearing deposits
Average total interest-bearing deposit balances
decreased by $128.0 million, or 13.8%, and average rates paid
increased by 0.78% to 1.29% for the six months ended June 30, 2023,
as compared to the same period in 2022, primarily due to scheduled
maturities of time deposits that were not replaced and deposit
outflows due to competitive pressures in the higher interest rate
environment and the negative banking industry developments
associated with multiple high-profile bank failures during the
first six months of 2023, partially offset by organic deposit
growth, including average growth of approximately $11.6 million in
interest-bearing deposits related to Virginia Partners’ expansion
into the Greater Washington market.
Borrowings
Average total borrowings increased by $25.4
million, or 51.7%, and average rates paid increased by 0.44% to
4.47% for the six months ended June 30, 2023, as compared to the
same period in 2022. The increase in average total borrowings
balances and rates paid was primarily due to an increase in the
average balance of short-term Federal Home Loan Bank advances due
to the aforementioned decrease in average interest-bearing deposit
balances, which was partially offset by a decrease in the average
balance of long-term Federal Home Loan Bank advances resulting from
maturities and payoffs of borrowings that were not replaced and
scheduled principal curtailments.
Provision for Credit Losses
The provision for credit losses in the second
quarter of 2023 was $93 thousand, a decrease of $226 thousand, or
70.8%, when compared to the provision for credit losses of $319
thousand in the second quarter of 2022. The decrease in the
provision for credit losses during the three months ended June 30,
2023, as compared to the same period of 2022, was primarily due to
changes in the assessment of economic factors, and for June 30,
2023, more favorable views on the downside risks to the economic
forecast compared to March 31, 2023, and lower net charge-offs,
which were partially offset by organic loan growth and a higher
required reserve on unfunded credit commitments. The provision for
credit losses during the first six months of 2023 was $394
thousand, an increase of $10 thousand, or 2.5%, when compared to
the provision for credit losses of $384 thousand during the first
six months of 2022. The increase in the provision for credit losses
during the six months ended June 30, 2023, as compared to the same
period of 2022, was primarily due to changes in the assessment of
economic factors, and for June 30, 2023, less favorable views on
the downside risks to the economic forecast compared to January 1,
2023, and organic loan growth, which were partially offset by lower
net charge-offs and a lower required reserve on unfunded credit
commitments.
The provision for credit losses during the three
and six months ended June 30, 2023, as well as the allowance for
credit losses as of June 30, 2023, represents management’s best
estimate of the impact of current economic trends, forecasts of a
potential recession in the U.S. and recent negative banking
industry developments associated with multiple high-profile bank
failures, on the ability of the Company’s borrowers to repay their
loans. Management continues to carefully assess the exposure of the
Company’s loan portfolio to economic trends, such as forecasts of a
potential recession and the aforementioned recent banking industry
developments, and their potential effects on asset quality. As of
June 30, 2023, the Company’s delinquencies and nonperforming assets
had not been materially impacted by any of the aforementioned
factors, trends, forecasts or developments.
Other Income
Other income in the second quarter of 2023
decreased by $378 thousand, or 26.0%, when compared to the second
quarter of 2022. Key changes in the components of other income for
the three months ended June 30, 2023, as compared to the same
period in 2022, are as follows:
- Service charges on deposit accounts increased by $13 thousand,
or 5.1%, due primarily to increases in overdraft fees and savings
account service charges;
- Impairment loss on restricted stock decreased by $1 thousand,
or 100.0%, due primarily to Virginia Partners recording the final
write-down of its investment in Maryland Financial Bank, which had
been going through an orderly liquidation, during the second
quarter of 2022. There was no impairment loss on restricted stock
for the same period of 2023;
- Mortgage banking income decreased by $323 thousand, or 75.7%,
due primarily to Virginia Partners’ majority owned subsidiary
Johnson Mortgage Company, LLC having a lower volume of loan
closings as compared to the same period in 2022; and
- Other income decreased by $69 thousand, or 8.8%, due primarily
to decreases in safe deposit box rentals, debit card income and
other noninterest income, and lower mortgage division fees at
Delmarva, which were partially offset by increases in bank owned
life insurance.
Other income for the six months ended June 30,
2023 decreased by $445 thousand, or 16.2%, when compared to the six
months ended June 30, 2022. Key changes in the components of other
income for the six months ended June 30, 2023, as compared to the
same period in 2022, are as follows:
- Service charges on deposit accounts increased by $37 thousand,
or 7.9%, due primarily to increases in overdraft fees and savings
account service charges;
- Impairment loss on restricted stock decreased by $1 thousand,
or 100.0%, due primarily to Virginia Partners recording the final
write-down of its investment in Maryland Financial Bank, which had
been going through an orderly liquidation, during the second
quarter of 2022. There was no impairment loss on restricted stock
for the same period of 2023;
- Mortgage banking income decreased by $362 thousand, or 50.5%,
due primarily to Virginia Partners’ majority owned subsidiary
Johnson Mortgage Company, LLC having a lower volume of loan
closings as compared to the same period in 2022; and
- Other income decreased by $120 thousand, or 7.7%, due primarily
to decreases in safe deposit box rentals, debit card income and
other noninterest income, and lower mortgage division fees at
Delmarva, which were partially offset by increases in bank owned
life insurance.
Other Expenses
Other expenses in the second quarter of 2023
increased by $978 thousand, or 9.9%, when compared to the second
quarter of 2022. Key changes in the components of other expenses
for the three months ended June 30, 2023, as compared to the same
period in 2022, are as follows:
- Salaries and employee benefits increased by $345 thousand, or
6.3%, primarily due to increases related to staffing changes and
merit increases, higher expenses related to benefit costs, payroll
taxes and bonus accruals, and a lower impact from deferred loan
origination costs, which were partially offset by a decrease in
commissions expense paid due to the decrease in mortgage banking
income from Virginia Partners’ majority owned subsidiary Johnson
Mortgage Company, LLC and lower mortgage division fees at
Delmarva;
- Premises and equipment decreased by $26 thousand, or 1.8%,
primarily due to lower expenses related to depreciation, leases and
repairs and maintenance, which were partially offset by higher
expenses related to software amortization, real estate taxes,
maintenance contracts and utilities;
- Amortization of core deposit intangible decreased by $13
thousand, or 10.0%, primarily due to lower amortization related to
the $2.7 million and $1.5 million, respectively, in core deposit
intangibles recognized in the Virginia Partners and Liberty Bell
Bank acquisitions;
- (Gains) and operating expenses on other real estate owned, net
decreased by $2 thousand, or 100.0%, primarily due to no gains on
sales or expenses being recorded during the second quarter of 2023,
as compared to gains on sales and expenses being recorded during
the second quarter of 2022;
- Merger related expenses increased by $271 thousand, or 173.0%,
primarily due to higher legal fees and other costs associated with
the pending merger with LINK during the second quarter of 2023, as
compared to the legal fees and other costs in the second quarter of
2022 associated with the merger with OceanFirst, that was
subsequently terminated in the fourth quarter of 2022; and
- Other expenses increased by $398 thousand, or 14.6%, primarily
due to higher expenses related to professional services, ATMs,
legal fees, audit and related professional fees, and other.
Other expenses for the six months ended June 30,
2023 increased by $2.2 million, or 10.8%, when compared to the six
months ended June 30, 2022. Key changes in the components of other
expenses for the six months ended June 30, 2023, as compared to the
same period in 2022, are as follows:
- Salaries and employee benefits increased by $774 thousand, or
7.0%, primarily due to increases related to staffing changes and
merit increases, higher expenses related to benefit costs, payroll
taxes and bonus accruals, and a lower impact from deferred loan
origination costs, which were partially offset by a decrease in
commissions expense paid due to the decrease in mortgage banking
income from Virginia Partners’ majority owned subsidiary Johnson
Mortgage Company, LLC and lower mortgage division fees at
Delmarva;
- Premises and equipment decreased by $104 thousand, or 3.6%,
primarily due to lower expenses related to depreciation, leases,
repairs and maintenance and purchased equipment and furniture, the
cost of which did not qualify for capitalization, which were
partially offset by higher expenses related to software
amortization, real estate taxes, maintenance contracts and
utilities;
- Amortization of core deposit intangible decreased by $26
thousand, or 9.9%, primarily due to lower amortization related to
the $2.7 million and $1.5 million, respectively, in core deposit
intangibles recognized in the Virginia Partners and Liberty Bell
Bank acquisitions;
- (Gains) and operating expenses on other real estate owned, net
decreased by $10 thousand, or 100.0%, primarily due to no gains on
sales or expenses being recorded during the first six months of
2023, as compared to gains on sales and expenses being recorded
during the first six months of 2022;
- Merger related expenses increased by $907 thousand, or 164.2%,
primarily due to higher legal fees and other costs associated with
the pending merger with LINK during the first six months of 2023,
as compared to the legal fees and other costs in the first six
months of 2022 associated with the merger with OceanFirst, that was
subsequently terminated in the fourth quarter of 2022; and
- Other expenses increased by $641 thousand, or 11.6%, primarily
due to higher expenses related to professional services, ATMs,
legal fees, and audit and related professional fees, which were
partially offset by lower expenses related to FDIC insurance
assessments.
Federal and State Income
Taxes
Federal and state income taxes for the three
months ended June 30, 2023 increased by $325 thousand, or 35.1%,
when compared to the three months ended June 30, 2022. This
increase was due primarily to higher consolidated income before
taxes and higher merger related expenses, which are typically
non-deductible. For the three months ended June 30, 2023, the
Company’s effective tax rate was approximately 24.9% as compared to
22.5% for the same period in 2022.
Federal and state income taxes for the six
months ended June 30, 2023 increased by $815 thousand, or 50.2%,
when compared to the six months ended June 30, 2022. This increase
was due primarily to higher consolidated income before taxes and
higher merger related expenses, which are typically non-deductible.
For the six months ended June 30, 2023, the Company’s effective tax
rate was approximately 25.6% as compared to 23.5% for the same
period in 2022.
Virginia Partners is not subject to Virginia
state income tax, but instead pays Virginia franchise tax. The
Virginia franchise tax paid by Virginia Partners is recorded in the
“Other expenses” line item on the Consolidated Statements of Income
for the three and six months ended June 30, 2023 and 2022.
Balance Sheet
Changes in key balance sheet components as of
June 30, 2023 compared to December 31, 2022 were as follows:
- Total assets as of June 30, 2023 were $1.55 billion, a decrease
of $26.2 million, or 1.7%, from December 31, 2022. Key drivers of
this change were decreases in cash and cash equivalents and
investment securities available for sale, at fair value, which were
partially offset by an increase in total loans held for
investment;
- Interest-bearing deposits in other financial institutions as of
June 30, 2023 were $43.1 million, a decrease of $60.8 million, or
58.5%, from December 31, 2022. Key drivers of this change were loan
growth outpacing deposit growth, deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023, and
a decrease in short-term borrowings with the Federal Home Loan
Bank;
- Federal funds sold as of June 30, 2023 were $17.5 million, a
decrease of $5.5 million, or 24.0%, from December 31, 2022. Key
drivers of this change were the aforementioned items noted in the
analysis of interest-bearing deposits in other financial
institutions;
- Investment securities available for sale, at fair value as of
June 30, 2023 were $129.3 million, a decrease of $4.4 million, or
3.3%, from December 31, 2022. Key drivers of this change were
scheduled payments of principal and an increase in unrealized
losses on the investment securities available for sale portfolio as
a result of increases in market interest rates;
- Loans, net of unamortized discounts on acquired loans of $1.4
million as of June 30, 2023 were $1.28 billion, an increase of
$44.9 million, or 3.6%, from December 31, 2022. The key driver of
this change was an increase in organic growth, including growth of
approximately $11.5 million in loans related to Virginia Partners’
expansion into the Greater Washington market;
- Total deposits as of June 30, 2023 were $1.32 billion, a
decrease of $21.1 million, or 1.6%, from December 31, 2022. Key
drivers of this change were deposit outflows due to competitive
pressures in the higher interest rate environment and the negative
banking industry developments associated with multiple high-profile
bank failures during the first six months of 2023, partially offset
by organic growth in time deposits;
- Total borrowings as of June 30, 2023 were $73.7 million, a
decrease of $10.9 million, or 12.9%, from December 31, 2022. The
key driver of this change was a decrease in short-term borrowings
with the Federal Home Loan Bank; and
- Total stockholders’ equity as of June 30, 2023 was $143.3
million, an increase of $4.0 million, or 2.9%, from December 31,
2022. Key drivers of this change were the net income attributable
to the Company for the six months ended June 30, 2023, the proceeds
from stock option exercises, and stock-based compensation expense
related to restricted stock awards, which were partially offset by
a decrease to retained earnings, net of tax, related to the
adoption of the CECL Standard, an increase in accumulated other
comprehensive (loss), net of tax, and cash dividends paid to
shareholders.
Changes in key balance sheet components as of
June 30, 2023 compared to June 30, 2022 were as follows:
- Total assets as of June 30, 2023 were $1.55 billion, a decrease
of $141.8 million, or 8.4%, from June 30, 2022. Key drivers of this
change were decreases in cash and cash equivalents and investment
securities available for sale, at fair value, which were partially
offset by an increase in total loans held for investment;
- Interest-bearing deposits in other financial institutions as of
June 30, 2023 were $43.1 million, a decrease of $232.4 million, or
84.3%, from June 30, 2022. Key drivers of this change were loan
growth outpacing deposit growth, deposit outflows due to
competitive pressures in the higher interest rate environment and
the negative banking industry developments associated with multiple
high-profile bank failures during the first six months of 2023, and
a decrease in long-term borrowings with the Federal Home Loan Bank,
which were partially offset by a decrease in investment securities
available for sale, at fair value, and an increase in short-term
borrowings with the Federal Home Loan Bank;
- Federal funds sold as of June 30, 2023 were $17.5 million, a
decrease of $7.3 million, or 29.3%, from June 30, 2022. Key drivers
of this change were the aforementioned items noted in the analysis
of interest-bearing deposits in other financial institutions;
- Investment securities available for sale, at fair value as of
June 30, 2023 were $129.3 million, a decrease of $6.2 million, or
4.5%, from June 30, 2022. Key drivers of this change were scheduled
payments of principal and an increase in unrealized losses on the
investment securities available for sale portfolio as a result of
increases in market interest rates;
- Loans, net of unamortized discounts on acquired loans of $1.4
million as of June 30, 2023 were $1.28 billion, an increase of
$108.3 million, or 9.3%, from June 30, 2022. The key driver of this
change was an increase in organic growth, including growth of
approximately $49.9 million in loans related to Virginia Partners’
expansion into the Greater Washington market, which was partially
offset by forgiveness payments received of approximately $247
thousand under round two of the PPP. As of June 30, 2023, there
were no loans under the PPP that were still outstanding;
- Total deposits as of June 30, 2023 were $1.32 billion, a
decrease of $176.9 million, or 11.8%, from June 30, 2022. Key
drivers of this change were scheduled maturities of time deposits
that were not replaced, deposit outflows due to competitive
pressures in the higher interest rate environment and the negative
banking industry developments associated with multiple high-profile
bank failures during the first six months of 2023, partially offset
by organic growth as a result of our continued focus on total
relationship banking and Virginia Partners’ expansion into the
Greater Washington market;
- Total borrowings as of June 30, 2023 were $73.7 million, an
increase of $24.6 million, or 50.0%, from June 30, 2022. The key
driver of this change was an increase in short-term borrowings with
the Federal Home Loan Bank due to the aforementioned items noted in
the analysis of total deposits, which was partially offset by a
decrease in long-term borrowings with the Federal Home Loan Bank
resulting from maturities and payoffs of borrowings that were not
replaced and scheduled principal curtailments, and a decrease in
Virginia Partners’ majority owned subsidiary Johnson Mortgage
Company, LLC’s warehouse line of credit with another financial
institution; and
- Total stockholders’ equity as of June 30, 2023 was $143.3
million, an increase of $8.5 million, or 6.3%, from June 30, 2022.
Key drivers of this change were the net income attributable to the
Company for the period July 1, 2022 through June 30, 2023, the
proceeds from stock option exercises, and stock-based compensation
expense related to restricted stock awards, which were partially
offset by an increase in accumulated other comprehensive (loss),
net of tax, a decrease to retained earnings, net of tax, related to
the adoption of the CECL Standard, and cash dividends paid to
shareholders.
As of June 30, 2023, all of the capital ratios
of Delmarva and Virginia Partners continue to exceed regulatory
requirements, with total risk-based capital substantially above
well-capitalized regulatory requirements.
Asset Quality
The asset quality measures depicted below
continue to reflect the Company’s efforts to prudently charge-off
loans as losses are identified and maintain an appropriate
allowance for credit losses.
The following table depicts the net (recovery)
charge-off activity for the three and six months ended June 30,
2023 and 2022:
| Net (Recovery)
Charge-off Activity |
|
Three Months Ended |
|
Six Months Ended |
|
|
|
June 30, |
|
June 30, |
|
Dollars in Thousands |
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
Net (recoveries) charge-offs |
|
$ |
(39 |
) |
|
$ |
826 |
|
|
$ |
(63 |
) |
|
$ |
981 |
|
| Net (recoveries) charge-offs
/Average loans* |
|
|
-0.01 |
% |
|
|
0.29 |
% |
|
|
-0.01 |
% |
|
|
0.17 |
% |
| * Annualized for
the three and six months ended June 30, 2023 and 2022,
respectively. |
|
|
|
|
| |
|
|
|
|
|
|
|
|
The following table depicts the level of the
allowance for credit losses as of June 30, 2023, December 31, 2022
and June 30, 2022:
| Allowance for Credit
Losses |
|
|
|
|
| |
|
|
|
|
|
|
| Dollars
in Thousands |
|
June 30, 2023 |
|
December 31, 2022 |
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
Allowance for credit losses |
|
$ |
16,217 |
|
|
$ |
14,315 |
|
|
$ |
14,059 |
|
| Allowance for credit
losses/Period end loans |
|
|
1.27 |
% |
|
|
1.16 |
% |
|
|
1.20 |
% |
| Allowance for credit
losses/Nonaccrual loans |
|
|
651.29 |
% |
|
|
664.58 |
% |
|
|
307.37 |
% |
| Allowance for credit
losses/Nonperforming loans |
|
|
591.43 |
% |
|
|
650.98 |
% |
|
|
307.37 |
% |
|
|
|
|
|
|
|
|
The following table depicts the unamortized
discounts on acquired loans related to the acquisitions of Liberty
Bell Bank and Virginia Partners:
| Unamortized Discounts
on Acquired Loans |
|
|
|
|
| |
|
|
|
|
|
|
| Dollars
in Thousands |
|
June 30, 2023 |
|
December 31, 2022 |
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
Unamortized discounts on acquired loans |
|
$ |
1,439 |
|
$ |
1,728 |
|
$ |
1,909 |
| |
|
|
|
|
|
|
The following table depicts the level of
nonperforming assets as of June 30, 2023, December 31, 2022 and
June 30, 2022:
| Nonperforming
Assets |
|
|
|
|
| |
|
|
|
|
|
|
| Dollars
in Thousands |
|
June 30, 2023 |
|
December 31, 2022 |
|
June 30, 2022 |
|
|
|
|
|
|
|
|
|
Nonaccrual loans |
|
$ |
2,490 |
|
|
$ |
2,154 |
|
|
$ |
4,574 |
|
| Loans past due 90 days and
accruing interest |
|
$ |
252 |
|
|
$ |
45 |
|
|
$ |
- |
|
| Total nonperforming loans |
|
$ |
2,742 |
|
|
$ |
2,199 |
|
|
$ |
4,574 |
|
| Other real estate owned,
net |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
| Total nonperforming
assets |
|
$ |
2,742 |
|
|
$ |
2,199 |
|
|
$ |
4,574 |
|
| Nonperforming assets/Total
assets |
|
|
0.18 |
% |
|
|
0.14 |
% |
|
|
0.27 |
% |
| Nonperforming assets/Total
loans and other real estate owned, net |
|
|
0.21 |
% |
|
|
0.18 |
% |
|
|
0.39 |
% |
|
|
|
|
|
|
|
|
About Partners Bancorp
Partners Bancorp is the holding company for The
Bank of Delmarva and Virginia Partners Bank. The Bank of Delmarva
commenced operations in 1896. The Bank of Delmarva’s main office is
in Seaford, Delaware and it conducts full service commercial
banking through eleven branch locations in Maryland and Delaware,
and three branches, operating under the name Liberty Bell Bank, in
the South Jersey/Philadelphia metro market. The Bank of Delmarva
focuses on serving its local communities, knowing its customers and
providing superior customer service. Virginia Partners Bank,
headquartered in Fredericksburg, Virginia, was founded in 2008 and
has three branches in Fredericksburg, Virginia and operates a full
service branch and commercial banking office in Reston, Virginia.
In Maryland, Virginia Partners Bank trades under the name Maryland
Partners Bank (a division of Virginia Partners Bank), and operates
a full service branch and commercial banking office in La Plata,
Maryland and a Loan Production Office in Annapolis, Maryland.
Virginia Partners Bank also owns a controlling stake in Johnson
Mortgage Company, LLC, which is a residential mortgage company
headquartered in Newport News, Virginia, with a branch office in
Fredericksburg, Virginia. For more information, visit
www.partnersbancorp.com, www.bankofdelmarvahb.com and
www.vapartnersbank.com.
For further information, please contact John W.
Breda, President and Chief Executive Officer, at 410-548-1100
x10233, Lloyd B. Harrison, III, Senior Executive Vice President, at
540-899-2234, J. Adam Sothen, Chief Financial Officer, at
540-322-5521, or Betsy Eicher, Chief Accounting Officer, at
667-253-2904.
Forward-Looking Statements
Certain statements in this press release may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that include, without limitation,
projections, predictions, expectations, or beliefs about future
events or results that are not statements of historical fact.
Statements in this press release which express “belief,”
“intention,” “expectation,” “potential” and similar expressions, or
which use the words “believe,” “expect,” “anticipate,” “estimate,”
“plan,” “may,” “will,” “intend,” “should,” “could,” or similar
expressions, identify forward-looking statements. These
forward-looking statements are based on the beliefs of the
Company’s management, as well as assumptions made by, and
information currently available to, the Company’s management. These
statements are inherently uncertain, and there can be no assurance
that the underlying assumptions will prove to be accurate. Actual
results could differ materially from those anticipated or implied
by such statements. Forward-looking statements in this release may
include, without limitation, statements related to the completion
and benefits of the merger with LINK, statements in Mr. Breda’s
quote regarding expected future financial performance, strategic
business initiatives including growth in the Greater Washington
market and the anticipated effects thereof, margin expansion or
compression, technology initiatives, asset quality, adequacy of
allowances for credit losses and the level of future charge-offs,
capital levels, the effect of future market and industry trends and
the effects of future interest rate fluctuations. Factors that
could have a material adverse effect on the operations and future
prospects of the Company include, but are not limited to:
- the occurrence of any event, change
or other circumstances that could give rise to the right of one or
both of the parties to terminate the merger agreement between the
Company and LINK;
- the outcome of any legal
proceedings that may be instituted against the Company or
LINK;
- the possibility that the proposed
transaction will not close when expected or at all because required
regulatory or other approvals are not received or other conditions
to the closing are not satisfied on a timely basis or at all, or
are obtained subject to conditions that are not anticipated (and
the risk that required regulatory approvals may result in the
imposition of conditions that could adversely affect the combined
company or the expected benefits of the proposed transaction);
- the ability of the Company and LINK
to meet expectations regarding the timing, completion and
accounting and tax treatments of the proposed transaction;
- the risk that any announcements
relating to the proposed transaction could have adverse effects on
the market price of the common stock of either or both parties to
the proposed transaction;
- the possibility that the
anticipated benefits of the proposed transaction will not be
realized when expected or at all, including as a result of the
impact of, or problems arising from, the integration of the two
companies or as a result of the strength of the economy and
competitive factors in the areas where the Company and LINK do
business;
- certain restrictions during the
pendency of the proposed transaction that may impact the parties’
ability to pursue certain business opportunities or strategic
transactions;
- the possibility that the
transaction may be more expensive to complete than anticipated,
including as a result of unexpected factors or events;
- diversion of management’s attention
from ongoing business operations and opportunities;
- the possibility that the parties
may be unable to achieve expected synergies and operating
efficiencies in the merger within the expected timeframes or at all
and to successfully integrate the Company’s operations and those of
LINK, which may be more difficult, time-consuming or costly than
expected;
- revenues following the proposed
transaction may be lower than expected;
- the Company’s and LINK’s success in
executing their respective business plans and strategies and
managing the risks involved in the foregoing;
- the dilution caused by LINK’s
issuance of additional shares of its capital stock in connection
with the proposed transaction;
- effects of the announcement,
pendency or completion of the proposed transaction on the ability
of the Company and LINK to retain customers and retain and hire key
personnel and maintain relationships with their suppliers, and on
their operating results and businesses generally;
- changes in interest rates, such as
volatility in yields on U.S. Treasury bonds and increases or
volatility in mortgage rates, and the impacts on macroeconomic
conditions, customer and client spending and saving behaviors, the
Company’s funding costs and the Company’s loan and investment
securities portfolios;
- monetary and fiscal policies of the
U.S. Government, including policies of the U.S. Treasury and the
Federal Reserve, and the effect of these policies on interest rates
and business in our markets;
- general business conditions, as
well as conditions within the financial markets, including the
impact thereon of unusual and infrequently occurring events, such
as the recent bank closures and related negative impact on the
banking industry, weather-related disasters, terrorist acts,
geopolitical conflicts (such as the military conflict between
Russia and Ukraine) or public health events (such as the COVID-19
pandemic), and of governmental and societal responses thereto;
- general economic conditions, in the
United States generally and particularly in the markets in which
the Company operates and which its loans are concentrated,
including the effects of declines in real estate values, increases
in unemployment levels and inflation, recession and slowdowns in
economic growth;
- changes in the value of securities
held in the Company’s investment portfolios;
- changes in the quality or
composition of the loan portfolios and the value of the collateral
securing those loans;
- changes in the level of net
charge-offs on loans and the adequacy of our allowance for credit
losses;
- demand for loan products;
- deposit flows;
- the strength of the Company’s
counterparties;
- competition from both banks and
non-banks;
- demand for financial services in
the Company’s market areas;
- reliance on third parties for key
services;
- changes in the commercial and
residential real estate markets;
- cyber threats, attacks or
events;
- expansion of Delmarva’s and
Virginia Partners’ product offerings;
- changes in accounting principles,
standards, rules and interpretations, and elections by the Company
thereunder, and the related impact on the Company’s financial
statements;
- potential claims, damages, and
fines related to litigation or government actions;
- legislative or regulatory changes
and requirements;
- the discontinuation of London
Interbank Offered Rate (“LIBOR”) and its impact on the financial
markets, and the Company’s ability to manage operational, legal and
compliance risks related to the discontinuation of LIBOR and
implementation of one or more alternative reference rates; and
- other factors, many of which are
beyond the control of the Company.
These risks and uncertainties should be
considered in evaluating the forward-looking statements contained
herein, and readers are cautioned not to place undue reliance on
any forward-looking statements, which speak only as of the date of
this release. For additional information on risk factors that could
affect the forward-looking statements contained herein, see the
Company’s most recent Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, and other reports filed with the Securities and
Exchange Commission (“SEC”).
|
|
|
PARTNERS BANCORP |
|
CONSOLIDATED BALANCE SHEETS |
| |
|
|
|
|
| |
|
June 30, |
June 30, |
December 31, |
|
|
|
|
2023 |
|
|
2022 |
|
|
2022 |
|
|
|
(Unaudited) |
(Unaudited) |
* |
|
|
|
|
|
|
|
ASSETS |
|
|
|
|
Cash and due from banks |
$ |
16,011,211 |
|
$ |
16,127,076 |
|
$ |
14,677,774 |
|
|
Interest bearing deposits in other financial institutions |
|
43,127,984 |
|
|
275,550,942 |
|
|
103,921,732 |
|
|
Federal funds sold |
|
17,477,989 |
|
|
24,738,347 |
|
|
22,989,879 |
|
|
|
Cash and cash equivalents |
|
76,617,184 |
|
|
316,416,365 |
|
|
141,589,385 |
|
|
Investment securities available for sale, at fair value |
|
129,259,350 |
|
|
135,420,461 |
|
|
133,656,642 |
|
|
Loans held for sale |
|
518,518 |
|
|
3,055,943 |
|
|
1,314,125 |
|
|
Loans, less allowance for credit losses of $16,217,444 at June 30,
2023, |
|
|
|
|
$14,058,774 at June 30, 2022 and $14,314,631 at December 31,
2022 |
|
1,261,546,478 |
|
|
1,155,407,145 |
|
|
1,218,551,209 |
|
|
Accrued interest receivable |
|
4,439,784 |
|
|
4,085,922 |
|
|
4,566,487 |
|
|
Premises and equipment, less accumulated depreciation |
|
14,441,345 |
|
|
15,647,167 |
|
|
14,857,298 |
|
|
Restricted stock |
|
6,163,350 |
|
|
4,932,200 |
|
|
6,512,350 |
|
|
Operating lease right-of-use assets |
|
4,825,911 |
|
|
5,530,706 |
|
|
5,064,866 |
|
|
Finance lease right-of-use assets |
|
1,481,705 |
|
|
1,618,607 |
|
|
1,550,156 |
|
|
Other investments |
|
5,363,665 |
|
|
4,929,294 |
|
|
4,888,118 |
|
|
Bank owned life insurance |
|
18,940,290 |
|
|
18,478,530 |
|
|
18,706,260 |
|
|
Core deposit intangible, net |
|
1,300,136 |
|
|
1,793,880 |
|
|
1,540,438 |
|
|
Goodwill |
|
9,581,668 |
|
|
9,581,668 |
|
|
9,581,668 |
|
|
Other assets |
|
13,982,912 |
|
|
13,332,170 |
|
|
12,233,494 |
|
|
|
Total assets |
$ |
1,548,462,296 |
|
$ |
1,690,230,058 |
|
$ |
1,574,612,496 |
|
|
|
|
|
|
|
|
LIABILITIES |
|
|
|
|
Deposits: |
|
|
|
|
Non-interest bearing demand |
$ |
500,499,898 |
|
$ |
561,428,067 |
|
$ |
528,769,800 |
|
|
Interest bearing demand |
|
118,841,802 |
|
|
153,086,286 |
|
|
121,786,774 |
|
|
Savings and money market |
|
387,596,255 |
|
|
453,915,954 |
|
|
431,538,080 |
|
|
Time |
|
311,544,292 |
|
|
326,917,618 |
|
|
257,510,218 |
|
|
|
|
|
1,318,482,247 |
|
|
1,495,347,925 |
|
|
1,339,604,872 |
|
|
Accrued interest payable on deposits |
|
907,074 |
|
|
217,363 |
|
|
267,205 |
|
|
Short-term borrowings with the Federal Home Loan Bank |
|
31,100,000 |
|
|
- |
|
|
42,000,000 |
|
|
Long-term borrowings with the Federal Home Loan Bank |
|
19,800,000 |
|
|
25,983,929 |
|
|
19,800,000 |
|
|
Subordinated notes payable, net |
|
22,237,796 |
|
|
22,191,469 |
|
|
22,214,632 |
|
|
Other borrowings |
|
601,974 |
|
|
994,613 |
|
|
613,423 |
|
|
Operating lease liabilities |
|
5,230,264 |
|
|
5,928,016 |
|
|
5,464,727 |
|
|
Finance lease liabilities |
|
1,941,438 |
|
|
2,065,938 |
|
|
2,005,685 |
|
|
Other liabilities |
|
4,854,501 |
|
|
2,713,150 |
|
|
3,312,977 |
|
|
|
Total liabilities |
|
1,405,155,294 |
|
|
1,555,442,403 |
|
|
1,435,283,521 |
|
|
|
|
|
|
|
|
COMMITMENTS & CONTINGENCIES |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’ EQUITY |
|
|
|
|
Common stock, par value $.01, authorized 40,000,000 shares, issued
and outstanding 17,985,577 |
|
|
|
as of June 30, 2023, 17,961,699 as of June 30, 2022 and 17,973,724
as of December 31, 2022, |
|
|
|
including 9,338 nonvested shares as of June 30, 2023 and 18,669
nonvested shares as of June 30, |
|
|
|
2022 and December 31, 2022, respectively |
|
179,762 |
|
|
179,430 |
|
|
179,551 |
|
|
Surplus |
|
88,785,423 |
|
|
88,552,151 |
|
|
88,669,334 |
|
|
Retained earnings |
|
67,096,773 |
|
|
55,695,309 |
|
|
62,854,235 |
|
|
Noncontrolling interest in consolidated subsidiaries |
|
591,889 |
|
|
1,122,411 |
|
|
707,138 |
|
|
Accumulated other comprehensive (loss), net of tax |
|
(13,346,845 |
) |
|
(10,761,646 |
) |
|
(13,081,283 |
) |
|
|
Total stockholders’ equity |
|
143,307,002 |
|
|
134,787,655 |
|
|
139,328,975 |
|
|
|
Total liabilities and stockholders’ equity |
$ |
1,548,462,296 |
|
$ |
1,690,230,058 |
|
$ |
1,574,612,496 |
|
|
|
|
|
|
|
|
* Derived from audited consolidated financial statements. |
|
|
|
|
The amounts presented in the Consolidated Balance Sheets as of June
30, 2023 and 2022 are unaudited but include all adjustments |
|
which, in management’s opinion, are necessary for fair
presentation. |
|
|
|
|
|
|
|
PARTNERS BANCORP |
|
CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
|
|
|
June 30, |
|
|
|
|
2023 |
2022 |
| |
|
|
|
|
|
INTEREST INCOME ON: |
|
|
| |
Loans, including fees |
$ |
17,117,881 |
$ |
13,208,816 |
|
| |
Investment securities: |
|
|
|
|
|
Taxable |
|
675,795 |
|
516,065 |
|
| |
|
Tax-exempt |
|
187,248 |
|
180,747 |
|
| |
Federal funds sold |
|
306,370 |
|
63,248 |
|
| |
Other interest income |
|
536,470 |
|
554,188 |
|
|
|
|
|
|
18,823,764 |
|
14,523,064 |
|
| |
|
|
|
|
|
INTEREST EXPENSE ON: |
|
|
| |
Deposits |
|
3,163,289 |
|
1,125,996 |
|
|
|
Borrowings |
|
820,829 |
|
507,565 |
|
|
|
|
|
|
3,984,118 |
|
1,633,561 |
|
| |
|
|
|
|
|
NET INTEREST INCOME |
|
14,839,646 |
|
12,889,503 |
|
|
|
Provision for credit losses |
|
93,100 |
|
319,000 |
|
| |
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
FOR CREDIT LOSSES |
|
14,746,546 |
|
12,570,503 |
|
| |
|
|
|
|
|
OTHER INCOME: |
|
|
|
|
Service charges on deposit accounts |
|
261,707 |
|
248,927 |
|
|
|
Impairment loss on restricted stock |
|
- |
|
(1,182 |
) |
|
|
Mortgage banking income |
|
103,771 |
|
426,711 |
|
|
|
Other income |
|
709,622 |
|
778,213 |
|
|
|
|
|
|
1,075,100 |
|
1,452,669 |
|
| |
|
|
|
|
|
OTHER EXPENSES: |
|
|
| |
Salaries and employee benefits |
|
5,849,299 |
|
5,504,330 |
|
| |
Premises and equipment |
|
1,374,584 |
|
1,400,337 |
|
| |
Amortization of core deposit intangible |
|
118,508 |
|
131,649 |
|
|
|
(Gains) and operating expenses on other real estate owned, net |
|
- |
|
(2,190 |
) |
|
|
Merger related expenses |
|
427,985 |
|
156,769 |
|
|
|
Other expenses |
|
3,121,028 |
|
2,722,927 |
|
|
|
|
|
|
10,891,404 |
|
9,913,822 |
|
| |
|
|
|
|
|
INCOME BEFORE TAXES ON INCOME |
|
4,930,242 |
|
4,109,350 |
|
| |
|
|
|
|
|
Federal and state income taxes |
|
1,250,286 |
|
925,600 |
|
| |
|
|
|
|
|
NET INCOME |
$ |
3,679,956 |
$ |
3,183,750 |
|
|
Net loss (income) attributable to noncontrolling
interest |
$ |
84,539 |
$ |
(3,954 |
) |
|
Net income attributable to Partners Bancorp |
$ |
3,764,495 |
$ |
3,179,796 |
|
| |
|
|
|
|
|
Earnings per common share: |
|
|
|
|
Basic |
$ |
0.209 |
$ |
0.177 |
|
|
|
Diluted |
$ |
0.209 |
$ |
0.177 |
|
| |
|
|
|
|
|
The amounts presented in these Consolidated Statements of Income
for the three months ended June 30, 2023 and 2022 are
unaudited |
|
but include all adjustments which, in management’s opinion, are
necessary for fair presentation. |
|
|
|
|
|
|
|
PARTNERS BANCORP |
|
CONSOLIDATED STATEMENTS OF INCOME |
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
Six Months Ended |
|
|
|
|
June 30, |
|
|
|
|
2023 |
2022 |
| |
|
|
|
|
|
INTEREST INCOME ON: |
|
|
| |
Loans, including fees |
$ |
33,268,834 |
$ |
26,103,285 |
|
| |
Investment securities: |
|
|
|
|
|
Taxable |
|
1,363,676 |
|
912,204 |
|
| |
|
Tax-exempt |
|
372,495 |
|
364,531 |
|
| |
Federal funds sold |
|
570,470 |
|
80,321 |
|
| |
Other interest income |
|
1,240,412 |
|
716,380 |
|
|
|
|
|
|
36,815,887 |
|
28,176,721 |
|
| |
|
|
|
|
|
INTEREST EXPENSE ON: |
|
|
| |
Deposits |
|
5,127,997 |
|
2,369,225 |
|
|
|
Borrowings |
|
1,679,219 |
|
1,013,119 |
|
|
|
|
|
|
6,807,216 |
|
3,382,344 |
|
| |
|
|
|
|
|
NET INTEREST INCOME |
|
30,008,671 |
|
24,794,377 |
|
|
|
Provision for credit losses |
|
393,500 |
|
384,000 |
|
| |
|
|
|
|
|
NET INTEREST INCOME AFTER PROVISION |
|
|
|
|
FOR CREDIT LOSSES |
|
29,615,171 |
|
24,410,377 |
|
| |
|
|
|
|
|
OTHER INCOME: |
|
|
|
|
Service charges on deposit accounts |
|
509,431 |
|
472,020 |
|
|
|
Impairment loss on restricted stock |
|
- |
|
(1,182 |
) |
|
|
Mortgage banking income |
|
355,785 |
|
717,968 |
|
|
|
Other income |
|
1,435,804 |
|
1,556,129 |
|
|
|
|
|
|
2,301,020 |
|
2,744,935 |
|
| |
|
|
|
|
|
OTHER EXPENSES: |
|
|
| |
Salaries and employee benefits |
|
11,853,534 |
|
11,079,587 |
|
| |
Premises and equipment |
|
2,776,395 |
|
2,880,875 |
|
| |
Amortization of core deposit intangible |
|
240,302 |
|
266,583 |
|
|
|
(Gains) and operating expenses on other real estate owned, net |
|
- |
|
(9,515 |
) |
|
|
Merger related expenses |
|
1,460,089 |
|
552,664 |
|
|
|
Other expenses |
|
6,170,883 |
|
5,530,154 |
|
|
|
|
|
|
22,501,203 |
|
20,300,348 |
|
| |
|
|
|
|
|
INCOME BEFORE TAXES ON INCOME |
|
9,414,988 |
|
6,854,964 |
|
| |
|
|
|
|
|
Federal and state income taxes |
|
2,436,791 |
|
1,621,934 |
|
| |
|
|
|
|
|
NET INCOME |
$ |
6,978,197 |
$ |
5,233,030 |
|
|
Net loss attributable to noncontrolling
interest |
$ |
115,850 |
$ |
55,527 |
|
|
Net income attributable to Partners Bancorp |
$ |
7,094,047 |
$ |
5,288,557 |
|
| |
|
|
|
|
|
Earnings per common share: |
|
|
|
|
Basic |
$ |
0.394 |
$ |
0.294 |
|
|
|
Diluted |
$ |
0.394 |
$ |
0.293 |
|
| |
|
|
|
|
|
The amounts presented in these Consolidated Statements of Income
for the six months ended June 30, 2023 and 2022 are unaudited |
|
but include all adjustments which, in management’s opinion, are
necessary for fair presentation. |
|
|
|
|
|
|
Partners Bancorp (NASDAQ:PTRS)
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From Mar 2024 to Apr 2024
Partners Bancorp (NASDAQ:PTRS)
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From Apr 2023 to Apr 2024
