Net income for the three months ended
Robert R. Chapman III, CEO, commented: “Our Company’s proactive response to the numerous economic and market changes that occurred throughout 2023 contributed to strong earnings and positive financial and operating results. Operational efficiency, diligent expense management and a focus on asset quality ensured a financial performance that drove value for shareholders and assured product and service excellence for customers.
“Higher interest rates caused fundamental and rapid changes in the banking landscape. Slowing loan demand, rising interest expense, and market and regulatory concerns about banks’ liquidity created challenges that were quickly and effectively addressed by the Company and our experienced team of banking professionals.
“Our longstanding emphasis on security, liquidity, capital strength, asset quality and superior customer service, which makes for strong relationships, proved critical in 2023. By maintaining exceptional asset quality, we maximized the value of revenues generated. We required minimal provisioning for credit losses, experienced nominal loan charge-offs, and maintained low levels of non-performing and watch-list loans. We concluded 2023 with no foreclosed real estate (other real estate owned or “OREO”) on our books. This speaks to the financial health and strength of our customers, and to our credit management practices.
“Customers benefitted from the skilled service provided by our banking team and the wide range of reliable, secure electronic and web-based banking products for commercial and retail customers. Our capabilities contributed to high levels of commercial and retail customer retention. An emphasis on the value of relationship banking enabled us to retain deposits. The quality of our residential mortgage processing and service earned us new customers even in a slower homebuying market.
“Our accomplishments in 2023 were significant, and we feel our Company is well-positioned for the coming year. The communities we serve are, overall, demonstrating financial and economic health. While interest rates will continue to present challenges to growth, we anticipate our focus on productivity and quality will support our goal of financial strength and shareholder value.”
Fourth Quarter, 12 Months of 2023 Highlights
- Total interest income of
$10.49 million in the fourth quarter and$39.36 million in the 12 months of 2023 increased 17% and 24% compared with the respective periods of 2022. The year-over-year growth primarily reflected commercial loan interest rate adjustments to keep pace with the rising interest rate environment and a higher yield on Fed Funds sold. - Net interest income before recovery of credit losses was
$29.74 million in the 12 months of 2023 compared with$29.70 million a year earlier as interest income expansion balanced significantly higher interest expense in a higher rate environment. - Net interest margin was 3.29% in 2023 compared with 3.23% in 2022 despite ongoing pressure on margins. Interest spread in 2023 of 3.06% was comparable to a year earlier. Fourth quarter 2023 net interest margin and interest spread declined moderately compared to the comparable period in 2022.
- Total noninterest income for the 12 months of 2023 was
$12.87 million compared with$13.24 million for the 12 months of 2022, and included solid revenue from commercial treasury services and a$0.31 per share earnings contribution from PWW. - Loans, net of the allowance for credit losses, were
$601.92 million atDecember 31, 2023 compared with$605.37 million atDecember 31, 2022 , primarily reflecting rate-driven slowing of demand and the Company’s focus on loan quality. - Asset quality remained strong, with a ratio of nonperforming loans to total loans of 0.06% at
December 31, 2023 , minimal levels of nonperforming loans, and zero OREO. - Total deposits grew to
$878.46 million atDecember 31, 2023 compared with$848.14 million atDecember 31, 2022 , highlighted by growth in shorter-term time deposits and a core deposit to total deposit ratio of 77%. - Shareholder value measures included meaningful year-over-year growth in total stockholders’ equity and retained earnings. Total book value rose to
$13.21 atDecember 31, 2023 from$10.85 atDecember 31, 2022 . - The Company in 2023 repurchased 85,319 shares of its outstanding common stock. Combined with share buybacks in 2022, the Company has repurchased approximately 4% of its common stock in the past two years.
- On
January 16, 2024 , the Company’s board of directors approved a quarterly dividend of$0.10 per common share, an increase of$0.02 per share per quarter, or 25%, to stockholders of record as ofMarch 1, 2024 , to be paid onMarch 15, 2024 .
Fourth Quarter, 12 Months of 2023 Operational Review
Net interest income after provision for credit losses for the quarter ended
Total interest income increased to
Interest rate adjustments related to variable rate loans along with an increase in the Fed Funds rate had a positive impact on the yields earned on interest earning assets. Management noted that margin compression continues to have an impact on profitability.
The yield on interest-earning assets in 2023 was 4.36% compared with 3.46% a year earlier, while the average loan yield increased to 5.05% from 4.30% a year earlier, reflecting the Company’s loan rate adjustments. The rate on interest-bearing deposits increased to 1.23% in 2023 from 0.18% a year earlier, and the cost of total interest-bearing liabilities in 2023 rose to 1.30% from 0.29% a year earlier.
The interest spread in 2023 remained relatively stable at 3.06% compared with 3.18% in 2022. Net interest margin in 2023 was 3.29% compared with 3.23% in 2022.
Total interest expense in the fourth quarter and 12 months of 2023 rose compared with the 2022 periods, reflecting increased levels of interest-bearing deposits and higher deposit rates commensurate with the prevailing interest rate environment. Total interest expense in the fourth quarter of 2023 was
Noninterest income in the fourth quarter of 2023 was
Noninterest expense in the fourth quarter of 2023 declined to
In the fourth quarter the Company utilized a tax benefit for
The Company demonstrated stable productivity in 2023, with return on average equity (ROAE) of 17.07% compared with 15.59% a year earlier and a return on average assets (ROAA) of 0.92% compared with 0.91% a year earlier. The efficiency ratio for the 12 months of 2023 was 76.29% compared with 76.23% for the 12 months of 2022.
Balance Sheet: Loan Activity, Asset Quality, Shareholder Value
Total assets were
Loans, net of allowance for credit losses, were
Due to lower originations and payoffs, commercial real estate loans (owner-occupied and non-owner occupied and excluding construction loans) decreased to approximately
Commercial loans (primarily C&I loans) were
Residential mortgage and residential construction loans grew significantly throughout the year, increasing to a total of
Residential construction loans were
Some of the variances in the loan classifications above were due to the Bank’s reclassification of loan categories in connection with the adoption of the current expected credit loss (CECL) methodology on
Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.06% at
Total nonperforming loans declined to
Total deposits at
The Company had strong liquidity in 2023, adding cash and cash equivalents and maintaining access to several off-balance sheet funding options. Entering 2024 with more than sufficient liquidity and funding capabilities, the Company intends to maintain current levels of liquidity.
Key measures of shareholder value demonstrated positive trends in 2023. Book value per share increased sharply to
Although some balance sheet measures, including book value per share and stockholders’ equity, increased this quarter because of declining treasury rates, these measures continue to be negatively impacted by a decreased market value in the Company’s available-for-sale securities portfolio, reflecting the impact of higher interest rates beginning in 2022. These mark-to-market losses are excluded when calculating the Bank’s regulatory capital ratios. The available-for-sale securities portfolio is composed primarily of securities with implicit government guarantees, including
The Company’s positive financial performance supported its longstanding practice of paying a quarterly cash dividend to shareholders. The Company increased the dividend by 25% from the dividend paid in the fourth quarter of 2023. As previously noted, the Company’s now-completed stock repurchase programs have contributed to earnings and generated shareholder value.
About the Company
Cautionary Statement Regarding Forward-Looking Statements
This press release contains statements that constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “estimate,” “expect,” “intend,” “anticipate,” “plan” and similar expressions and variations thereof identify certain of such forward-looking statements which speak only as of the dates on which they were made.
CONTACT:
FINANCIAL RESULTS FOLLOW
Consolidated Balance Sheets
(dollar amounts in thousands, except per share amounts)
(unaudited)
Assets | 2023 | 2022 | |||||
Cash and due from banks | $ | 25,613 | $ | 30,025 | |||
Federal funds sold | 49,225 | 31,737 | |||||
Total cash and cash equivalents | 74,838 | 61,762 | |||||
Securities held-to-maturity, at amortized cost (fair value of | 3,622 | 3,639 | |||||
Securities available-for-sale, at fair value | 216,510 | 185,787 | |||||
Restricted stock, at cost | 1,541 | 1,387 | |||||
Loans, net of allowance for loan losses of | 601,921 | 605,366 | |||||
Loans held for sale | 1,258 | 2,423 | |||||
Premises and equipment, net | 18,141 | 17,974 | |||||
Interest receivable | 2,835 | 2,736 | |||||
Cash value - bank owned life insurance | 21,586 | 19,237 | |||||
Other real estate owned | - | 566 | |||||
Customer relationship intangibles | 7,285 | 7,845 | |||||
2,054 | 2,054 | ||||||
Other assets | 17,780 | 17,795 | |||||
Total assets | $ | 969,371 | $ | 928,571 | |||
Liabilities and Stockholders' Equity | |||||||
Deposits | |||||||
Noninterest bearing demand | 134,275 | 154,884 | |||||
NOW, money market and savings | 538,229 | 560,479 | |||||
Time deposits | 205,955 | 132,775 | |||||
Total deposits | 878,459 | 848,138 | |||||
Capital notes | 10,042 | 10,037 | |||||
Other borrowings | 9,890 | 10,457 | |||||
Interest payable | 480 | 89 | |||||
Other liabilities | 10,461 | 9,624 | |||||
Total liabilities | $ | 909,332 | $ | 878,345 | |||
Commitments and Contingencies | |||||||
Stockholders' equity | |||||||
Preferred stock; authorized 1,000,000 shares; none issued and outstanding | $ | - | $ | - | |||
Common stock | 9,723 | 9,905 | |||||
Additional paid-in-capital | 35,253 | 36,068 | |||||
Retained earnings | 36,678 | 31,034 | |||||
Accumulated other comprehensive loss | (21,615 | ) | (26,781 | ) | |||
Total stockholders' equity | $ | 60,039 | $ | 50,226 | |||
Total liabilities and stockholders' equity | $ | 969,371 | $ | 928,571 | |||
Consolidated Statements of Operation
(dollar amounts in thousands, except per share amounts)
(unaudited)
For the Year Ended | ||||||||
Interest Income | 2023 | 2022 | ||||||
Loans | $ | 31,378 | $ | 26,175 | ||||
Securities | ||||||||
1,273 | 1,235 | |||||||
Mortgage backed securities | 1,899 | 1,656 | ||||||
Municipals - taxable | 1,139 | 1,079 | ||||||
Municipals - tax exempt | 73 | 73 | ||||||
Dividends | 82 | 66 | ||||||
Corporates | 560 | 566 | ||||||
Interest bearing deposits | 496 | 282 | ||||||
Federal Funds sold | 2,462 | 721 | ||||||
Total interest income | $ | 39,362 | $ | 31,853 | ||||
Interest Expense | ||||||||
Deposits | ||||||||
NOW, money market savings | 2,984 | 555 | ||||||
Time Deposits | 5,796 | 732 | ||||||
Federal Funds purchased | - | - | ||||||
FHLB borrowings | 31 | - | ||||||
Finance leases | 86 | 96 | ||||||
Capital notes | 327 | 327 | ||||||
Other borrowings | 398 | 440 | ||||||
Total interest expense | 9,622 | 2,150 | ||||||
Net interest income | 29,740 | 29,703 | ||||||
Recovery of loan losses | (179 | ) | (900 | ) | ||||
Net interest income after recovery of loan losses | 29,919 | 30,603 | ||||||
Noninterest income | ||||||||
Gain on sales of loans held for sale | 3,938 | 5,256 | ||||||
Service charges, fees and commissions | 3,901 | 3,591 | ||||||
Wealth management fees | 4,197 | 3,932 | ||||||
Life insurance income | 548 | 452 | ||||||
Other | 283 | 16 | ||||||
Loss on sales and calls of securities, net | - | (3 | ) | |||||
Total noninterest income | 12,867 | 13,244 | ||||||
Noninterest expenses | ||||||||
Salaries and employee benefits | 18,311 | 17,682 | ||||||
Occupancy | 1,819 | 1,814 | ||||||
Equipment | 2,416 | 2,553 | ||||||
Supplies | 530 | 521 | ||||||
Professional and other outside expenses | 2,513 | 2,589 | ||||||
Data processing | 2,783 | 2,467 | ||||||
Marketing | 919 | 920 | ||||||
Credit expense | 805 | 923 | ||||||
Other real estate expenses, net | 40 | 214 | ||||||
419 | 500 | |||||||
Amortization of intangibles | 560 | 560 | ||||||
Other | 1,392 | 1,994 | ||||||
Amortization of tax credit investment | - | - | ||||||
Total noninterest expenses | 32,507 | 32,737 | ||||||
Income before income taxes | 10,279 | 11,110 | ||||||
Income tax expense | 1,575 | 2,151 | ||||||
Net Income | $ | 8,704 | $ | 8,959 | ||||
Weighted average shares outstanding - basic and diluted | 4,562,374 | 4,698,041 | ||||||
Earnings per common share - basic and diluted | $ | 1.91 | $ | 1.91 | ||||
(Dollar amounts in thousands, except per share data)
(unaudited)
Selected Data: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||||
Interest income | $ | 10,489 | $ | 8,945 | 17.26 | % | $ | 39,362 | $ | 31,853 | 23.57 | % | ||||||
Interest expense | 3,149 | 652 | 382.98 | % | 9,622 | 2,150 | 347.53 | % | ||||||||||
Net interest income | 7,340 | 8,293 | -11.49 | % | 29,740 | 29,703 | 0.12 | % | ||||||||||
Provision for (recovery of) credit losses | 99 | - | n/a | (179 | ) | (900 | ) | -80.11 | % | |||||||||
Noninterest income | 3,178 | 2,725 | 16.62 | % | 12,867 | 13,244 | -2.85 | % | ||||||||||
Noninterest expense | 8,416 | 8,618 | -2.34 | % | 32,507 | 32,737 | -0.70 | % | ||||||||||
Income taxes (benefit) expense | (56 | ) | 442 | -112.67 | % | 1,575 | 2,151 | -26.78 | % | |||||||||
Net income | 2,059 | 1,958 | 5.16 | % | 8,704 | 8,959 | -2.85 | % | ||||||||||
Weighted average shares outstanding - basic and diluted | 4,543,338 | 4,628,657 | (85,319 | ) | 4,562,374 | 4,698,041 | (135,667 | ) | ||||||||||
Basic and diluted net income per share | $ | 0.45 | $ | 0.42 | $ | 0.03 | $ | 1.91 | $ | 1.91 | $ | - |
Balance Sheet at period end: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||||||||
Loans, net | $ | 601,921 | $ | 605,366 | -0.57 | % | $ | 605,366 | $ | 576,469 | 5.01 | % | ||||||
Loans held for sale | 1,258 | 2,423 | -48.08 | % | 2,423 | 1,628 | 48.83 | % | ||||||||||
Total securities | 220,132 | 189,426 | 16.21 | % | 189,426 | 164,922 | 14.86 | % | ||||||||||
Total deposits | 878,459 | 848,138 | 3.58 | % | 848,138 | 887,056 | -4.39 | % | ||||||||||
Stockholders' equity | 60,039 | 50,226 | 19.54 | % | 50,226 | 69,429 | -27.66 | % | ||||||||||
Total assets | 969,371 | 928,571 | 4.39 | % | 928,571 | 987,634 | -5.98 | % | ||||||||||
Shares outstanding | 4,543,338 | 4,628,657 | (85,319 | ) | 4,628,657 | 4,740,657 | (112,000 | ) | ||||||||||
Book value per share | $ | 13.21 | $ | 10.85 | $ | 2.36 | $ | 10.85 | $ | 14.65 | $ | (3.80 | ) |
Daily averages: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||||
Loans | $ | 609,800 | $ | 618,948 | -1.48 | % | $ | 616,047 | $ | 604,990 | 1.83 | % | ||||||
Loans held for sale | 3,406 | 3,722 | -8.49 | % | 3,512 | 3,913 | -10.25 | % | ||||||||||
Total securities (amortized cost) | 236,267 | 229,884 | 2.78 | % | 226,637 | 223,137 | 1.57 | % | ||||||||||
Total deposits | 882,277 | 867,569 | 1.70 | % | 867,269 | 888,292 | -2.37 | % | ||||||||||
Stockholders' equity | 50,097 | 48,207 | 3.92 | % | 50,977 | 57,478 | -11.31 | % | ||||||||||
Interest earning assets | 921,665 | 897,711 | 2.67 | % | 903,491 | 919,992 | -1.79 | % | ||||||||||
Interest bearing liabilities | 753,144 | 737,375 | 2.14 | % | 738,335 | 746,479 | -1.09 | % | ||||||||||
Total assets | 963,511 | 950,558 | 1.36 | % | 950,276 | 980,507 | -3.08 | % |
Financial Ratios: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year to date 2022 | Change | ||||||||||||
Return on average assets | 0.85 | % | 0.82 | % | 0.03 | 0.92 | % | 0.91 | % | 0.01 | ||||||||
Return on average equity | 16.31 | % | 16.11 | % | 0.20 | 17.07 | % | 15.59 | % | 1.48 | ||||||||
Net interest margin | 3.18 | % | 3.67 | % | (0.49 | ) | 3.29 | % | 3.23 | % | 0.06 | |||||||
Efficiency ratio | 80.02 | % | 78.22 | % | 1.80 | 76.29 | % | 76.23 | % | 0.06 | ||||||||
Average equity to average assets | 5.20 | % | 5.07 | % | 0.13 | 5.36 | % | 5.86 | % | (0.50 | ) |
Allowance for credit losses: | Three months ending 2023 | Three months ending 2022 | Change | Year to date 2023 | Year To date 2022 | Change | ||||||||||||
Beginning balance | $ | 7,320 | $ | 6,394 | 14.48 | % | $ | 6,259 | $ | 6,915 | -9.49 | % | ||||||
Retained earnings adjustment related to impact of adoption of ASU 2016-13 | - | - | n/a | 1,245 | - | n/a | ||||||||||||
Provision for (recovery of) credit losses | 123 | - | n/a | (65 | ) | (900 | ) | -92.78 | % | |||||||||
Charge-offs | (40 | ) | (152 | ) | -73.68 | % | (236 | ) | (162 | ) | 45.68 | % | ||||||
Recoveries | 9 | 17 | -47.06 | % | 209 | 406 | -48.52 | % | ||||||||||
Ending balance | 7,412 | 6,259 | 18.42 | % | 7,412 | 6,259 | 18.42 | % |
Nonperforming assets: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||||||||
Total nonperforming loans | $ | 391 | $ | 633 | -38.23 | % | $ | 633 | $ | 954 | -33.65 | % | ||||||
Other real estate owned | - | 566 | -100.00 | % | 566 | 761 | -25.62 | % | ||||||||||
Total nonperforming assets | 391 | 1,199 | -67.39 | % | 1,199 | 1,715 | -30.09 | % |
Asset quality ratios: | 2023 | 2022 | Change | 2022 | 2021 | Change | ||||||||||||
Nonperforming loans to total loans | 0.06 | % | 0.10 | % | (0.04 | ) | 0.10 | % | 0.16 | % | (0.06 | ) | ||||||
Allowance for credit losses to total loans | 1.22 | % | 1.02 | % | 0.19 | 1.02 | % | 1.19 | % | (0.16 | ) | |||||||
Allowance for credit losses to nonperforming loans | 1895.65 | % | 988.78 | % | 906.87 | 988.78 | % | 724.84 | % | 263.94 |
Source:
2024 GlobeNewswire, Inc., source