Results for the Fourth Quarter of 2022
- Net income was
$12.1 million compared to$19.6 million in 2021. After preferred dividends, net income available to common shareholders was$11.7 million , or$0.76 per diluted share, compared to$19.2 million , or$1.21 per diluted share, in 2021.
- Net income reflects the impact of a
$6.1 million provision for credit losses as compared to a benefit of$1.2 million in 2021. Loan loss provision returned to a more normalized level in 2022, and increased in the fourth quarter, as a result of a higher national unemployment forecast and qualitative factors reflecting economic uncertainty associated with higher interest rates, inflation, and global political unrest. Provision also increased due to the impact of strong loan growth and higher unfunded loan commitments. - Net interest income of
$43.1 million was$2.3 million higher than the fourth quarter of 2021 as a result of loan growth and net interest margin expansion, partially offset by a$2.7 million decrease in interest and fee income accretion in connection with Paycheck Protection Program (“PPP”) loans (“revenue related to PPP loans”). - Salaries and employee benefits expense included
$440 thousand of non-recurring severance expense in the current quarter related to a restructuring that eliminated approximately 20 positions throughout the organization. - Non-recurring restructuring charges of
$350 thousand were recognized in the current quarter related to the 2020 closure of five locations. The charges related to the write-down of real estate assets to fair market value based upon current market conditions. - Pre-tax pre-provision income(1) was
$20.6 million , down$2.1 million , or 9.1%, from the fourth quarter of 2021. Excluding restructuring charges and revenue related to PPP loans from both periods of comparison, pre-PPP adjusted pre-tax pre-provision income(1) increased by$865 thousand , or 4.3%, from the fourth quarter of 2021. - Total loans were
$4.05 billion atDecember 31, 2022 , an increase of$183.6 million , or 4.7%, fromSeptember 30, 2022 . - The Company continues to report strong credit quality metrics, including non-performing loans to total loans of 0.25% and non-performing assets to total assets of 0.18% as of
December 31, 2022 .
Results for the Full Year 2022
- Net income was
$56.6 million compared to$77.7 million in 2021. After preferred dividends, net income available to common shareholders was$55.1 million , or$3.56 per diluted share, compared to$76.2 million , or$4.78 per diluted share, in 2021.
- 2022 net income reflects the impact of a
$13.3 million provision for credit losses as compared to a benefit of$8.3 million in 2021. - Net interest income of
$167.4 million was$12.6 million higher than 2021 as a result of loan growth and net interest margin expansion, partially offset by a$7.6 million decrease in revenue related to PPP loans. - Non-recurring restructuring charges related to the 2020 closure of five locations totaled
$1.6 million in 2022 compared to$111 thousand in 2021. - Pre-tax pre-provision income(1) was
$84.3 million , down$4.6 million , or 5.2%, from 2021. Excluding a third quarter 2022 non-recurring$2.0 million enhancement from the surrender and redeployment of$25.5 million in cash surrender value of company owned life insurance, as well as restructuring charges and revenue related to PPP loans from both periods of comparison, pre-PPP adjusted pre-tax pre-provision income(1) increased by$2.5 million , or 3.2% from 2021. - Total loan growth was
$371.0 million , or 10.1%, fromDecember 31, 2021 .
“Our total loan portfolio grew a robust 4.7% in the fourth quarter and 10.1% year-over-year,” said President and Chief Executive Officer
“Our long-term track record of credit-disciplined loan growth and well-defined strategic and risk frameworks has resulted in a high-quality loan portfolio that is well-positioned for success in a challenging economy. This is exemplified by strong year-end metrics including fourth quarter net charge-offs of 34 basis points, non-performing loans to total loans of 25 basis points, and zero delinquencies in our large commercial loan portfolios.”
Chief Financial Officer and Treasurer W. Jack Plants II added, “Net interest margin decreased by five basis points from the linked quarter, primarily as a result of repricing and seasonality within our public deposit portfolio. Managing an appropriate balance between net interest margin and net interest income remains a key consideration for the Company. We are modeling cash flow of approximately
Net Interest Income and Net Interest Margin
Net interest income was
Average interest-earning assets for the current quarter were
Net interest margin was 3.23% in the current quarter as compared to 3.28% in the third quarter of 2022 and 3.15% in the fourth quarter of 2021. Excluding the impact of PPP loans and revenue related to PPP loans, net interest margin was 3.22% in the fourth quarter of 2022, 3.26% in the third quarter of 2022 and 2.98% in the fourth quarter of 2021. Our net interest margin improved from the fourth quarter of 2021 primarily due to the impact of 2022 interest rate increases. Net interest margin decreased from the third quarter of 2022 as we experienced repricing in our public deposit portfolio, coupled with a shift in mix from lower cost transaction deposit accounts to higher cost time deposits.
Net interest income was
Noninterest Income
Noninterest income was
- Company owned life insurance income of
$875 thousand was$2.1 million lower than the third quarter of 2022 and$54 thousand higher than the fourth quarter of 2021. The decline from the linked period reflects a non-recurring$2.0 million third quarter 2022 enhancement related to the surrender and redeployment of$25.5 million in cash surrender value of company owned life insurance. - Income from derivative instruments, net was
$656 thousand in the current quarter,$557 thousand higher than the third quarter of 2022 and$379 thousand lower than the fourth quarter of 2021. Income from derivative instruments, net is based on the number and value of interest rate swap transactions executed during the quarter combined with the impact of changes in the fair market value of borrower-facing trades. - A net loss of
$111 thousand on tax credit investments was recognized in the fourth quarter of 2022 as compared to a$385 thousand loss in the third quarter of 2022 and a$493 thousand loss in the fourth quarter of 2021. Net loss on tax credit investments represents the amortization of tax credit investments, partially offset byNew York investment tax credits that are refundable and recorded in noninterest income.
Noninterest income was
- Insurance income of
$6.4 million was$614 thousand higher than 2021, driven by new business growth within the Company’s markets. - Investment advisory income was
$11.5 million as compared to$11.7 million in 2021. The positive impact of new and increased client accounts was offset by the impact of the 2022 global stock market decline on the value of assets under management. - Company owned life insurance income of
$5.5 million was$2.6 million higher than 2021, primarily as a result of the third quarter 2022 transaction previously described. - Income from investments in limited partnerships of
$1.3 million was$788 thousand lower than 2021. The Company has made several investments in limited partnerships, primarily small business investment companies, and accounts for these investments under the equity method. Income from these investments fluctuates based on the maturity and performance of the underlying investments as they mature. - Income from derivative instruments, net of
$1.9 million was$776 thousand lower than 2021 as a result of the number and value of interest rate swap transactions combined with the impact of changes in the fair market value of borrower-facing trades. - Net gain on sale of loans held for sale was
$1.2 million as compared to$3.0 million in 2021. Sales volumes and margins for residential loans moderated significantly in 2022 primarily as a result of inflation, higher interest rates, and tight housing inventory.
Noninterest Expense
Noninterest expense was
- Salaries and employee benefits expense of
$18.1 million was$151 thousand higher than the third quarter of 2022 and$2.0 million higher than the fourth quarter of 2021. The increase from the linked quarter was primarily the result of$440 thousand of non-recurring severance expense in the current quarter, partially offset by lower medical claim activity. The increase from the prior year quarter was primarily due to investments in personnel and hourly wage pressures driven by the current competitive labor market. - Computer and data processing expense of
$4.7 million was$272 thousand higher than the third quarter of 2022 and$727 thousand higher than the fourth quarter of 2021 due to timing of the Company’s strategic investments in technology, including digital banking initiatives, a customer relationship management solution implemented across all lines of business, and Banking-as-a-Service, or BaaS, initiatives. - The Company recognized restructuring charges in the fourth quarter of 2022 totaling
$350 thousand in connection with five locations that were closed in the second half of 2020. The charges related to the write-down of real estate assets to fair market value based upon current market conditions. - Other expense of
$3.5 million was relatively unchanged from the third quarter of 2022 and$863 thousand higher than the fourth quarter of 2021. The year-over-year increase was the result of a combination of factors including interest charges related to collateral held for derivative transactions, higher travel and entertainment expense as we exited pandemic business practices, higher insurance costs and the impact of inflationary pressures.
Noninterest expense was
- Salaries and employee benefits expense of
$69.6 million was$8.7 million higher than 2021. The increase is primarily the result of investments in personnel and wage pressures driven by the current competitive labor market. - Professional services expense of
$5.6 million was$943 thousand lower than 2021 primarily as a result of higher expense incurred in the prior year for enterprise standardization expense and miscellaneous consulting fees. - Computer and data processing expense of
$17.6 million was$3.5 million higher than 2021 as a result of the Company’s strategic investments in technology, primarily driven by a new customer relationship management system implemented in the latter part of 2021 and other initiatives. - Restructuring charges related to the 2020 closing of five branches totaled
$1.6 million in 2022 as compared to$111 thousand in 2021 due to the previously described write-down of real estate assets. - Other expense of
$12.4 million was$2.8 million higher than 2021, primarily due to interest charges related to collateral held for derivative transactions, higher travel and entertainment expense, higher insurance costs and the impact of inflationary pressures.
Income Taxes
Income tax expense was
The Company recognized federal and state tax benefits related to tax credit investments placed in service and/or amortized during the fourth quarter of 2022, third quarter of 2022, and fourth quarter of 2021, resulting in income tax expense reductions of approximately
The effective tax rate was 16.4% for the fourth quarter of 2022, 25.4% for the third quarter of 2022 and 17.7% for the fourth quarter of 2021. The effective tax rate fluctuates on a quarterly basis primarily due to the level of pre-tax earnings and, in the third quarter of 2022, was impacted by the company owned life insurance transaction. The Company’s effective tax rates differ from statutory rates because of interest income from tax-exempt securities, earnings on company owned life insurance and the impact of tax credit investments.
Balance Sheet and Capital Management
Total assets were
Investment securities were
Total loans were
- Commercial business loans totaled
$664.2 million , up$30.4 million , or 4.8%, fromSeptember 30, 2022 , and up$26.0 million , or 4.1%, fromDecember 31, 2021 . PPP loans net of deferred fees are included in commercial business loans and were$1.2 million atDecember 31, 2022 ,$2.8 million atSeptember 30, 2022 , and$55.3 million atDecember 31, 2021 . Accordingly, commercial business loans excluding the impact of PPP loans increased 5.1% fromSeptember 30, 2022 , and increased 13.7% fromDecember 31, 2021 . - Commercial mortgage loans totaled
$1.68 billion , up$115.3 million , or 7.4%, fromSeptember 30, 2022 , and up$267.1 million , or 18.9%, fromDecember 31, 2021 . - Residential real estate loans totaled
$590.0 million , up$12.1 million , or 2.1%, fromSeptember 30, 2022 , and up$12.7 million , or 2.2%, fromDecember 31, 2021 . - Consumer indirect loans totaled
$1.02 billion , up$26.2 million , or 2.6%, fromSeptember 30, 2022 , and up$65.6 million , or 6.8%, fromDecember 31, 2021 .
Total deposits were
Short-term borrowings were
Shareholders’ equity was
Common book value per share was
During the fourth quarter of 2022, the Company declared a common stock dividend of
The Company’s regulatory capital ratios at
- Leverage Ratio was 8.33% compared to 8.35% and 8.23% at
September 30, 2022 , andDecember 31, 2021 , respectively. - Common Equity Tier 1 Capital Ratio was 9.42% compared to 9.75% and 10.28% at
September 30, 2022 , andDecember 31, 2021 , respectively. - Tier 1 Capital Ratio was 9.78% compared to 10.12% and 10.68% at
September 30, 2022 , andDecember 31, 2021 , respectively. - Total Risk-Based Capital Ratio was 12.13% compared to 12.53% and 13.12% at
September 30, 2022 , andDecember 31, 2021 , respectively.
Credit Quality
Non-performing loans were
At
Provision for credit losses on loans was
Provision for credit losses was
The Company has remained strategically focused on the importance of credit discipline, allocating what it believes are the necessary resources to credit and risk management functions as the loan portfolio has grown. The ratio of allowance for credit losses on loans to non-performing loans was 445% at
Subsequent Events
The Company is required, under generally accepted accounting principles, to evaluate subsequent events through the filing of its consolidated financial statements for the year ended
Conference Call
The Company will host an earnings conference call and audio webcast on
About
Non-GAAP Financial Information
In addition to results presented in accordance with
The Company believes that providing certain non-GAAP financial measures provides investors with information useful in understanding our financial performance, performance trends and financial position. Our management uses these measures for internal planning and forecasting purposes and we believe that our presentation and discussion, together with the accompanying reconciliations, allows investors, security analysts and other interested parties to view our performance and the factors and trends affecting our business in a manner similar to management. These non-GAAP measures should not be considered a substitute for GAAP measures, and we strongly encourage investors to review our consolidated financial statements in their entirety and not to rely on any single financial measure to evaluate the Company. Non-GAAP financial measures have inherent limitations, are not uniformly applied and are not audited. Because non-GAAP financial measures are not standardized, it may not be possible to compare these financial measures with other companies’ non-GAAP financial measures having the same or similar names.
Safe Harbor Statement
This press release may contain forward-looking statements as defined by Section 21E of the Securities Exchange Act of 1934, as amended, that involve significant risks and uncertainties. In this context, forward-looking statements often address our expected future business and financial performance and financial condition, and often contain words such as “believe,” "continue," “estimate,” “expect,” “forecast,” “intend,” “plan,” “preliminary,” “should,” or “will.” Statements herein are based on certain assumptions and analyses by the Company and factors it believes are appropriate in the circumstances. Actual results could differ materially from those contained in or implied by such statements for a variety of reasons including, but not limited to: the macroeconomic volatility related to the impact of the COVID-19 pandemic and global political unrest; changes in interest rates; inflation; the Company’s ability to implement its strategic plan, including by expanding its commercial lending footprint and integrating its acquisitions; whether the Company experiences greater credit losses than expected; whether the Company experiences breaches of its, or third party, information systems; the attitudes and preferences of the Company’s customers; legal and regulatory proceedings and related matters, such as the action described in our reports filed with the
(1)See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
For additional information contact:
W. Jack Plants II
Chief Financial Officer and Treasurer
(585) 498-2919
wjplants@five-starbank.com
Investor Relations Analyst
(585) 584-1549
pakennard@five-starbank.com
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
2022 | 2021 | ||||||||||||||||||
SELECTED BALANCE SHEET DATA: | |||||||||||||||||||
Cash and cash equivalents | $ | 130,466 | $ | 118,581 | $ | 109,705 | $ | 170,404 | $ | 79,112 | |||||||||
Investment securities: | |||||||||||||||||||
Available for sale | 954,371 | 965,531 | 1,057,018 | 1,119,362 | 1,178,515 | ||||||||||||||
Held-to-maturity, net | 188,975 | 197,538 | 204,933 | 211,173 | 205,581 | ||||||||||||||
Total investment securities | 1,143,346 | 1,163,069 | 1,261,951 | 1,330,535 | 1,384,096 | ||||||||||||||
Loans held for sale | 550 | 2,074 | 4,265 | 5,544 | 6,202 | ||||||||||||||
Loans: | |||||||||||||||||||
Commercial business | 664,249 | 633,894 | 611,102 | 625,141 | 638,293 | ||||||||||||||
Commercial mortgage | 1,679,840 | 1,564,545 | 1,448,152 | 1,434,759 | 1,412,788 | ||||||||||||||
Residential real estate loans | 589,960 | 577,821 | 574,784 | 574,895 | 577,299 | ||||||||||||||
Residential real estate lines | 77,670 | 77,336 | 76,108 | 76,860 | 78,531 | ||||||||||||||
Consumer indirect | 1,023,620 | 997,423 | 1,039,251 | 1,007,404 | 958,048 | ||||||||||||||
Other consumer | 15,110 | 15,832 | 14,621 | 14,589 | 14,477 | ||||||||||||||
Total loans | 4,050,449 | 3,866,851 | 3,764,018 | 3,733,648 | 3,679,436 | ||||||||||||||
Allowance for credit losses - loans | 45,413 | 44,106 | 42,452 | 40,966 | 39,676 | ||||||||||||||
Total loans, net | 4,005,036 | 3,822,745 | 3,721,566 | 3,692,682 | 3,639,760 | ||||||||||||||
Total interest-earning assets | 5,428,533 | 5,073,983 | 5,206,795 | 5,266,351 | 5,105,608 | ||||||||||||||
73,414 | 73,653 | 73,897 | 74,146 | 74,400 | |||||||||||||||
Total assets | 5,797,272 | 5,624,482 | 5,568,198 | 5,630,498 | 5,520,779 | ||||||||||||||
Deposits: | |||||||||||||||||||
Noninterest-bearing demand | 1,139,214 | 1,135,125 | 1,114,460 | 1,079,949 | 1,107,561 | ||||||||||||||
Interest-bearing demand | 863,822 | 946,431 | 877,661 | 990,404 | 864,528 | ||||||||||||||
Savings and money market | 1,643,516 | 1,800,321 | 1,845,186 | 2,015,384 | 1,933,047 | ||||||||||||||
Time deposits | 1,282,872 | 1,023,277 | 983,209 | 917,195 | 921,954 | ||||||||||||||
Total deposits | 4,929,424 | 4,905,154 | 4,820,516 | 5,002,932 | 4,827,090 | ||||||||||||||
Short-term borrowings | 205,000 | 69,000 | 109,000 | - | 30,000 | ||||||||||||||
Long-term borrowings, net | 74,222 | 74,144 | 74,067 | 73,989 | 73,911 | ||||||||||||||
Total interest-bearing liabilities | 4,069,432 | 3,913,173 | 3,889,123 | 3,996,972 | 3,823,440 | ||||||||||||||
Shareholders’ equity | 405,605 | 394,048 | 425,801 | 446,846 | 505,142 | ||||||||||||||
Common shareholders’ equity | 388,313 | 376,756 | 408,509 | 429,554 | 487,850 | ||||||||||||||
Tangible common equity (1) | 314,899 | 303,103 | 334,612 | 355,408 | 413,450 | ||||||||||||||
Accumulated other comprehensive loss | $ | (137,487 | ) | $ | (141,183 | ) | $ | (99,724 | ) | $ | (67,094 | ) | $ | (13,207 | ) | ||||
Common shares outstanding | 15,340 | 15,334 | 15,334 | 15,299 | 15,745 | ||||||||||||||
760 | 765 | 765 | 800 | 354 | |||||||||||||||
CAPITAL RATIOS AND PER SHARE DATA: | |||||||||||||||||||
Leverage ratio | 8.33 | % | 8.35 | % | 8.20 | % | 8.13 | % | 8.23 | % | |||||||||
Common equity Tier 1 capital ratio | 9.42 | % | 9.75 | % | 9.91 | % | 9.85 | % | 10.28 | % | |||||||||
Tier 1 capital ratio | 9.78 | % | 10.12 | % | 10.29 | % | 10.24 | % | 10.68 | % | |||||||||
Total risk-based capital ratio | 12.13 | % | 12.53 | % | 12.75 | % | 12.72 | % | 13.12 | % | |||||||||
Common equity to assets | 6.70 | % | 6.70 | % | 7.34 | % | 7.63 | % | 8.84 | % | |||||||||
Tangible common equity to tangible assets (1) | 5.50 | % | 5.46 | % | 6.09 | % | 6.40 | % | 7.59 | % | |||||||||
Common book value per share | $ | 25.31 | $ | 24.57 | $ | 26.64 | $ | 28.08 | $ | 30.98 | |||||||||
Tangible common book value per share (1) | $ | 20.53 | $ | 19.77 | $ | 21.82 | $ | 23.23 | $ | 26.26 |
(1) See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
Selected Financial Information (Unaudited)
(Amounts in thousands, except per share amounts)
Twelve Months Ended | 2022 | 2021 | |||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2022 | 2021 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
SELECTED INCOME STATEMENT | |||||||||||||||||||||||||||
DATA: | |||||||||||||||||||||||||||
Interest income | $ | 196,107 | $ | 167,205 | $ | 57,805 | $ | 50,675 | $ | 45,276 | $ | 42,351 | $ | 43,753 | |||||||||||||
Interest expense | 28,735 | 12,475 | 14,656 | 7,607 | 3,679 | 2,793 | 2,885 | ||||||||||||||||||||
Net interest income | 167,372 | 154,730 | 43,149 | 43,068 | 41,597 | 39,558 | 40,868 | ||||||||||||||||||||
Provision (benefit) for credit losses | 13,311 | (8,336 | ) | 6,115 | 4,314 | 563 | 2,319 | (1,192 | ) | ||||||||||||||||||
Net interest income after provision (benefit) for credit losses | 154,061 | 163,066 | 37,034 | 38,754 | 41,034 | 37,239 | 42,060 | ||||||||||||||||||||
Noninterest income: | |||||||||||||||||||||||||||
Service charges on deposits | 5,889 | 5,571 | 1,486 | 1,597 | 1,437 | 1,369 | 1,490 | ||||||||||||||||||||
Insurance income | 6,364 | 5,750 | 1,462 | 1,571 | 1,234 | 2,097 | 1,343 | ||||||||||||||||||||
Card interchange income | 8,205 | 8,498 | 2,074 | 2,076 | 2,103 | 1,952 | 2,228 | ||||||||||||||||||||
Investment advisory | 11,493 | 11,672 | 2,824 | 2,722 | 2,906 | 3,041 | 3,045 | ||||||||||||||||||||
Company owned life insurance | 5,542 | 2,947 | 875 | 2,965 | 869 | 833 | 821 | ||||||||||||||||||||
Investments in limited partnerships | 1,293 | 2,081 | 191 | 65 | 242 | 795 | 294 | ||||||||||||||||||||
Loan servicing | 507 | 415 | 124 | 139 | 135 | 109 | 122 | ||||||||||||||||||||
Income from derivative instruments, net | 1,919 | 2,695 | 656 | 99 | 645 | 519 | 1,035 | ||||||||||||||||||||
Net gain (loss) on sale of loans held for sale | 1,227 | 2,950 | 182 | 308 | 828 | (91 | ) | 482 | |||||||||||||||||||
Net (loss) gain on investment securities | (15 | ) | 71 | - | - | (15 | ) | - | - | ||||||||||||||||||
Net (loss) gain on other assets | (16 | ) | 441 | (1 | ) | (22 | ) | 7 | - | 155 | |||||||||||||||||
Net loss on tax credit investments | (815 | ) | (431 | ) | (111 | ) | (385 | ) | (92 | ) | (227 | ) | (493 | ) | |||||||||||||
Other | 4,678 | 4,246 | 1,175 | 1,517 | 1,061 | 925 | 1,152 | ||||||||||||||||||||
Total noninterest income | 46,271 | 46,906 | 10,937 | 12,652 | 11,360 | 11,322 | 11,674 | ||||||||||||||||||||
Noninterest expense: | |||||||||||||||||||||||||||
Salaries and employee benefits | 69,633 | 60,893 | 18,101 | 17,950 | 16,966 | 16,616 | 16,111 | ||||||||||||||||||||
Occupancy and equipment | 15,103 | 14,371 | 3,539 | 3,793 | 4,015 | 3,756 | 3,869 | ||||||||||||||||||||
Professional services | 5,592 | 6,535 | 1,420 | 1,247 | 1,269 | 1,656 | 1,437 | ||||||||||||||||||||
Computer and data processing | 17,638 | 14,112 | 4,679 | 4,407 | 4,573 | 3,979 | 3,952 | ||||||||||||||||||||
Supplies and postage | 1,943 | 1,769 | 493 | 440 | 469 | 541 | 408 | ||||||||||||||||||||
2,440 | 2,624 | 655 | 651 | 621 | 513 | 682 | |||||||||||||||||||||
Advertising and promotions | 2,013 | 1,704 | 576 | 651 | 406 | 380 | 470 | ||||||||||||||||||||
Amortization of intangibles | 986 | 1,060 | 239 | 244 | 249 | 254 | 259 | ||||||||||||||||||||
Restructuring charges | 1,619 | 111 | 350 | - | 1,269 | - | 111 | ||||||||||||||||||||
Other | 12,395 | 9,571 | 3,461 | 3,444 | 3,050 | 2,440 | 2,598 | ||||||||||||||||||||
Total noninterest expense | 129,362 | 112,750 | 33,513 | 32,827 | 32,887 | 30,135 | 29,897 | ||||||||||||||||||||
Income before income taxes | 70,970 | 97,222 | 14,458 | 18,579 | 19,507 | 18,426 | 23,837 | ||||||||||||||||||||
Income tax expense | 14,397 | 19,525 | 2,370 | 4,725 | 3,859 | 3,443 | 4,225 | ||||||||||||||||||||
Net income | 56,573 | 77,697 | 12,088 | 13,854 | 15,648 | 14,983 | 19,612 | ||||||||||||||||||||
Preferred stock dividends | 1,459 | 1,460 | 364 | 365 | 365 | 365 | 365 | ||||||||||||||||||||
Net income available to common | |||||||||||||||||||||||||||
shareholders | $ | 55,114 | $ | 76,237 | $ | 11,724 | $ | 13,489 | $ | 15,283 | $ | 14,618 | $ | 19,247 | |||||||||||||
FINANCIAL RATIOS: | |||||||||||||||||||||||||||
Earnings per share – basic | $ | 3.58 | $ | 4.81 | $ | 0.76 | $ | 0.88 | $ | 1.00 | $ | 0.94 | $ | 1.22 | |||||||||||||
Earnings per share – diluted | $ | 3.56 | $ | 4.78 | $ | 0.76 | $ | 0.88 | $ | 0.99 | $ | 0.93 | $ | 1.21 | |||||||||||||
Cash dividends declared on common stock | $ | 1.16 | $ | 1.08 | $ | 0.29 | $ | 0.29 | $ | 0.29 | $ | 0.29 | $ | 0.27 | |||||||||||||
Common dividend payout ratio | 32.40 | % | 22.45 | % | 38.16 | % | 32.95 | % | 29.00 | % | 30.85 | % | 22.13 | % | |||||||||||||
Dividend yield (annualized) | 4.76 | % | 3.40 | % | 4.72 | % | 4.78 | % | 4.47 | % | 3.90 | % | 3.37 | % | |||||||||||||
Return on average assets (annualized) | 1.01 | % | 1.46 | % | 0.85 | % | 0.98 | % | 1.12 | % | 1.09 | % | 1.39 | % | |||||||||||||
Return on average equity (annualized) | 12.81 | % | 16.01 | % | 11.92 | % | 12.55 | % | 14.40 | % | 12.35 | % | 15.55 | % | |||||||||||||
Return on average common equity (annualized) | 12.99 | % | 16.29 | % | 12.08 | % | 12.72 | % | 14.64 | % | 12.49 | % | 15.81 | % | |||||||||||||
Return on average tangible common | |||||||||||||||||||||||||||
equity (annualized) (1) | 15.72 | % | 19.37 | % | 14.94 | % | 15.43 | % | 17.79 | % | 14.81 | % | 18.69 | % | |||||||||||||
Efficiency ratio (2) | 60.39 | % | 55.76 | % | 61.82 | % | 58.78 | % | 61.91 | % | 59.06 | % | 56.76 | % | |||||||||||||
Effective tax rate | 20.3 | % | 20.1 | % | 16.4 | % | 25.4 | % | 19.8 | % | 18.7 | % | 17.7 | % |
(1) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
(2) The efficiency ratio is calculated by dividing noninterest expense by net revenue, i.e., the sum of net interest income (fully taxable equivalent) and noninterest income before net gains on investment securities. This is a banking industry measure not required by GAAP.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Twelve Months Ended | 2022 | 2021 | |||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2022 | 2021 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
SELECTED AVERAGE BALANCES: | |||||||||||||||||||||||||||
Federal funds sold and interest- earning deposits | $ | 49,055 | $ | 169,504 | $ | 49,073 | $ | 42,183 | $ | 60,429 | $ | 44,559 | $ | 148,293 | |||||||||||||
Investment securities (1) | 1,384,208 | 1,129,012 | 1,332,776 | 1,369,166 | 1,416,065 | 1,419,947 | 1,361,898 | ||||||||||||||||||||
Loans: | |||||||||||||||||||||||||||
Commercial business | 628,729 | 734,748 | 636,470 | 623,916 | 626,574 | 627,915 | 649,926 | ||||||||||||||||||||
Commercial mortgage | 1,502,904 | 1,327,772 | 1,633,298 | 1,514,138 | 1,429,910 | 1,431,933 | 1,392,375 | ||||||||||||||||||||
Residential real estate loans | 579,362 | 593,375 | 582,352 | 577,094 | 576,990 | 581,021 | 586,358 | ||||||||||||||||||||
Residential real estate lines | 77,132 | 82,210 | 77,342 | 76,853 | 76,730 | 77,610 | 78,594 | ||||||||||||||||||||
Consumer indirect | 1,008,026 | 896,769 | 1,003,728 | 1,012,787 | 1,045,720 | 969,441 | 946,551 | ||||||||||||||||||||
Other consumer | 14,636 | 15,305 | 15,175 | 14,648 | 14,183 | 14,531 | 14,997 | ||||||||||||||||||||
Total loans | 3,810,789 | 3,650,179 | 3,948,365 | 3,819,436 | 3,770,107 | 3,702,451 | 3,668,801 | ||||||||||||||||||||
Total interest-earning assets | 5,244,052 | 4,948,695 | 5,330,214 | 5,230,785 | 5,246,601 | 5,166,957 | 5,178,992 | ||||||||||||||||||||
assets, net | 73,913 | 74,411 | 73,547 | 73,791 | 74,037 | 74,287 | 74,544 | ||||||||||||||||||||
Total assets | 5,606,733 | 5,335,808 | 5,667,331 | 5,599,964 | 5,598,217 | 5,560,316 | 5,582,987 | ||||||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||||||||||
Interest-bearing demand | 909,799 | 827,891 | 923,374 | 854,015 | 938,995 | 923,425 | 880,723 | ||||||||||||||||||||
Savings and money market | 1,852,571 | 1,864,567 | 1,764,230 | 1,817,413 | 1,882,998 | 1,948,050 | 1,997,508 | ||||||||||||||||||||
Time deposits | 1,008,092 | 907,973 | 1,116,135 | 1,031,162 | 954,862 | 927,886 | 923,080 | ||||||||||||||||||||
Short-term borrowings | 86,139 | 538 | 87,783 | 136,610 | 94,242 | 24,672 | 982 | ||||||||||||||||||||
Long-term borrowings, net | 74,059 | 73,749 | 74,175 | 74,096 | 74,019 | 73,942 | 73,864 | ||||||||||||||||||||
Total interest-bearing liabilities | 3,930,660 | 3,674,718 | 3,965,697 | 3,913,296 | 3,945,116 | 3,897,975 | 3,876,157 | ||||||||||||||||||||
Noninterest-bearing demand deposits | 1,105,281 | 1,105,227 | 1,123,223 | 1,115,759 | 1,098,084 | 1,083,506 | 1,134,100 | ||||||||||||||||||||
Total deposits | 4,875,743 | 4,705,658 | 4,926,962 | 4,818,349 | 4,874,939 | 4,882,867 | 4,935,411 | ||||||||||||||||||||
Total liabilities | 5,165,020 | 4,850,417 | 5,265,134 | 5,162,057 | 5,162,293 | 5,068,464 | 5,082,583 | ||||||||||||||||||||
Shareholders’ equity | 441,713 | 485,391 | 402,197 | 437,907 | 435,924 | 491,852 | 500,404 | ||||||||||||||||||||
Common equity | 424,421 | 468,085 | 384,905 | 420,615 | 418,632 | 474,560 | 483,112 | ||||||||||||||||||||
Tangible common equity (2) | $ | 350,508 | $ | 393,674 | $ | 311,358 | $ | 346,824 | $ | 344,595 | $ | 400,273 | $ | 408,568 | |||||||||||||
Common shares outstanding: | |||||||||||||||||||||||||||
Basic | 15,384 | 15,841 | 15,330 | 15,329 | 15,306 | 15,577 | 15,815 | ||||||||||||||||||||
Diluted | 15,471 | 15,937 | 15,413 | 15,393 | 15,385 | 15,699 | 15,928 | ||||||||||||||||||||
SELECTED AVERAGE YIELDS: (Tax equivalent basis) | |||||||||||||||||||||||||||
Investment securities | 1.81 | % | 1.75 | % | 1.88 | % | 1.81 | % | 1.82 | % | 1.74 | % | 1.65 | % | |||||||||||||
Loans | 4.48 | % | 4.05 | % | 5.15 | % | 4.62 | % | 4.13 | % | 3.97 | % | 4.14 | % | |||||||||||||
Total interest-earning assets | 3.75 | % | 3.39 | % | 4.32 | % | 3.86 | % | 3.47 | % | 3.32 | % | 3.37 | % | |||||||||||||
Interest-bearing demand | 0.24 | % | 0.14 | % | 0.52 | % | 0.18 | % | 0.12 | % | 0.12 | % | 0.14 | % | |||||||||||||
Savings and money market | 0.53 | % | 0.18 | % | 1.20 | % | 0.56 | % | 0.23 | % | 0.16 | % | 0.16 | % | |||||||||||||
Time deposits | 1.09 | % | 0.40 | % | 2.31 | % | 1.12 | % | 0.41 | % | 0.28 | % | 0.30 | % | |||||||||||||
Short-term borrowings | 1.74 | % | 22.33 | % | 2.48 | % | 1.95 | % | 1.07 | % | 0.45 | % | 0.35 | % | |||||||||||||
Long-term borrowings, net | 5.73 | % | 5.75 | % | 5.72 | % | 5.72 | % | 5.73 | % | 5.74 | % | 5.74 | % | |||||||||||||
Total interest-bearing liabilities | 0.73 | % | 0.34 | % | 1.47 | % | 0.77 | % | 0.37 | % | 0.29 | % | 0.30 | % | |||||||||||||
Net interest rate spread | 3.02 | % | 3.05 | % | 2.85 | % | 3.09 | % | 3.10 | % | 3.03 | % | 3.07 | % | |||||||||||||
Net interest margin | 3.20 | % | 3.14 | % | 3.23 | % | 3.28 | % | 3.19 | % | 3.11 | % | 3.15 | % |
(1) Includes investment securities at adjusted amortized cost.
(2) See Appendix A – Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
Selected Financial Information (Unaudited)
(Amounts in thousands)
Twelve Months Ended | 2022 | 2021 | |||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2022 | 2021 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
ASSET QUALITY DATA: | |||||||||||||||||||||||||||
Allowance for Credit Losses - Loans | |||||||||||||||||||||||||||
Beginning balance | $ | 39,676 | $ | 52,420 | $ | 44,106 | $ | 42,452 | $ | 40,966 | $ | 39,676 | $ | 45,444 | |||||||||||||
Net loan charge-offs (recoveries): | |||||||||||||||||||||||||||
Commercial business | (64 | ) | (212 | ) | (21 | ) | (96 | ) | 90 | (37 | ) | 177 | |||||||||||||||
Commercial mortgage | (853 | ) | 3,814 | 1,167 | (1 | ) | (2,018 | ) | (1 | ) | 3,618 | ||||||||||||||||
Residential real estate loans | 279 | 56 | 242 | (4 | ) | 46 | (5 | ) | 32 | ||||||||||||||||||
Residential real estate lines | (1 | ) | 141 | (19 | ) | 35 | (12 | ) | (5 | ) | 11 | ||||||||||||||||
Consumer indirect | 4,538 | 1,256 | 1,451 | 1,890 | 647 | 550 | 674 | ||||||||||||||||||||
Other consumer | 1,339 | 705 | 518 | 329 | 207 | 285 | 168 | ||||||||||||||||||||
Total net (recoveries) charge-offs | 5,238 | 5,760 | 3,338 | 2,153 | (1,040 | ) | 787 | 4,680 | |||||||||||||||||||
Provision (benefit) for credit losses - loans | 10,975 | (6,984 | ) | 4,645 | 3,807 | 446 | 2,077 | (1,088 | ) | ||||||||||||||||||
Ending balance | $ | 45,413 | $ | 39,676 | $ | 45,413 | $ | 44,106 | $ | 42,452 | $ | 40,966 | $ | 39,676 | |||||||||||||
Net charge-offs (recoveries) to average loans (annualized): | |||||||||||||||||||||||||||
Commercial business | -0.01 | % | -0.03 | % | -0.01 | % | -0.06 | % | 0.06 | % | -0.02 | % | 0.11 | % | |||||||||||||
Commercial mortgage | -0.06 | % | 0.29 | % | 0.28 | % | 0.00 | % | -0.57 | % | 0.00 | % | 1.03 | % | |||||||||||||
Residential real estate loans | 0.05 | % | 0.01 | % | 0.16 | % | 0.00 | % | 0.03 | % | 0.00 | % | 0.02 | % | |||||||||||||
Residential real estate lines | 0.00 | % | 0.17 | % | -0.10 | % | 0.18 | % | -0.06 | % | -0.03 | % | 0.05 | % | |||||||||||||
Consumer indirect | 0.45 | % | 0.14 | % | 0.57 | % | 0.74 | % | 0.25 | % | 0.23 | % | 0.28 | % | |||||||||||||
Other consumer | 9.15 | % | 4.61 | % | 13.57 | % | 8.90 | % | 5.86 | % | 7.95 | % | 4.43 | % | |||||||||||||
Total loans | 0.14 | % | 0.16 | % | 0.34 | % | 0.22 | % | -0.11 | % | 0.09 | % | 0.51 | % | |||||||||||||
Supplemental information (1) | |||||||||||||||||||||||||||
Non-performing loans: | |||||||||||||||||||||||||||
Commercial business | $ | 340 | $ | 1,399 | $ | 340 | $ | 1,358 | $ | 422 | $ | 990 | $ | 1,399 | |||||||||||||
Commercial mortgage | 2,564 | 6,414 | 2,564 | 843 | 836 | 3,838 | 6,414 | ||||||||||||||||||||
Residential real estate loans | 4,071 | 2,373 | 4,071 | 3,550 | 2,738 | 2,878 | 2,373 | ||||||||||||||||||||
Residential real estate lines | 142 | 200 | 142 | 119 | 160 | 128 | 200 | ||||||||||||||||||||
Consumer indirect | 3,079 | 1,780 | 3,079 | 2,666 | 2,389 | 1,771 | 1,780 | ||||||||||||||||||||
Other consumer | 2 | - | 2 | - | 3 | 12 | - | ||||||||||||||||||||
Total non-performing loans | 10,198 | 12,166 | 10,198 | 8,536 | 6,548 | 9,617 | 12,166 | ||||||||||||||||||||
Foreclosed assets | 19 | - | 19 | - | - | - | - | ||||||||||||||||||||
Total non-performing assets | $ | 10,217 | $ | 12,166 | $ | 10,217 | $ | 8,536 | $ | 6,548 | $ | 9,617 | $ | 12,166 | |||||||||||||
Total non-performing loans to total loans | 0.25 | % | 0.33 | % | 0.25 | % | 0.22 | % | 0.17 | % | 0.26 | % | 0.33 | % | |||||||||||||
Total non-performing assets to total assets | 0.18 | % | 0.22 | % | 0.18 | % | 0.15 | % | 0.12 | % | 0.17 | % | 0.22 | % | |||||||||||||
Allowance for credit losses - loans to total loans | 1.12 | % | 1.08 | % | 1.12 | % | 1.14 | % | 1.13 | % | 1.10 | % | 1.08 | % | |||||||||||||
Allowance for credit losses - loans to non-performing loans | 445 | % | 326 | % | 445 | % | 517 | % | 648 | % | 426 | % | 326 | % |
(1) At period end.
Appendix A — Reconciliation to Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
Twelve Months Ended | 2022 | 2021 | |||||||||||||||||||||||||
Fourth | Third | Second | First | Fourth | |||||||||||||||||||||||
2022 | 2021 | Quarter | Quarter | Quarter | Quarter | Quarter | |||||||||||||||||||||
Ending tangible assets: | |||||||||||||||||||||||||||
Total assets | $ | 5,797,272 | $ | 5,624,482 | $ | 5,568,198 | $ | 5,630,498 | $ | 5,520,779 | |||||||||||||||||
Less: assets, net | 73,414 | 73,653 | 73,897 | 74,146 | 74,400 | ||||||||||||||||||||||
Tangible assets | $ | 5,723,858 | $ | 5,550,829 | $ | 5,494,301 | $ | 5,556,352 | $ | 5,446,379 | |||||||||||||||||
Ending tangible common equity: | |||||||||||||||||||||||||||
Common shareholders’ equity | $ | 388,313 | $ | 376,756 | $ | 408,509 | $ | 429,554 | $ | 487,850 | |||||||||||||||||
Less: assets, net | 73,414 | 73,653 | 73,897 | 74,146 | 74,400 | ||||||||||||||||||||||
Tangible common equity | $ | 314,899 | $ | 303,103 | $ | 334,612 | $ | 355,408 | $ | 413,450 | |||||||||||||||||
Tangible common equity to tangible assets (1) | 5.50 | % | 5.46 | % | 6.09 | % | 6.40 | % | 7.59 | % | |||||||||||||||||
Common shares outstanding | 15,340 | 15,334 | 15,334 | 15,299 | 15,745 | ||||||||||||||||||||||
Tangible common book value per share (2) | $ | 20.53 | $ | 19.77 | $ | 21.82 | $ | 23.23 | $ | 26.26 | |||||||||||||||||
Average tangible assets: | |||||||||||||||||||||||||||
Average assets | $ | 5,606,733 | $ | 5,335,808 | $ | 5,667,331 | $ | 5,599,964 | $ | 5,598,217 | $ | 5,560,316 | $ | 5,582,987 | |||||||||||||
Less: Average goodwill and other intangible assets, net | 73,913 | 74,411 | 73,547 | 73,791 | 74,037 | 74,287 | 74,544 | ||||||||||||||||||||
Average tangible assets | $ | 5,532,820 | $ | 5,261,397 | $ | 5,593,784 | $ | 5,526,173 | $ | 5,524,180 | $ | 5,486,029 | $ | 5,508,443 | |||||||||||||
Average tangible common equity: | |||||||||||||||||||||||||||
Average common equity | $ | 424,421 | $ | 468,085 | $ | 384,905 | $ | 420,615 | $ | 418,632 | $ | 474,560 | $ | 483,112 | |||||||||||||
Less: Average goodwill and other intangible assets, net | 73,913 | 74,411 | 73,547 | 73,791 | 74,037 | 74,287 | 74,544 | ||||||||||||||||||||
Average tangible common equity | $ | 350,508 | $ | 393,674 | $ | 311,358 | $ | 346,824 | $ | 344,595 | $ | 400,273 | $ | 408,568 | |||||||||||||
Net income available to common shareholders | $ | 55,114 | $ | 76,237 | $ | 11,724 | $ | 13,489 | $ | 15,283 | $ | 14,618 | $ | 19,247 | |||||||||||||
Return on average tangible common equity (3) | 15.72 | % | 19.37 | % | 14.94 | % | 15.43 | % | 17.79 | % | 14.81 | % | 18.69 | % | |||||||||||||
Pre-tax pre-provision income: | |||||||||||||||||||||||||||
Net income | $ | 56,573 | $ | 77,697 | $ | 12,088 | $ | 13,854 | $ | 15,648 | $ | 14,983 | $ | 19,612 | |||||||||||||
Add: Income tax expense | 14,397 | 19,525 | 2,370 | 4,725 | 3,859 | 3,443 | 4,225 | ||||||||||||||||||||
Add: Provision (benefit) for credit losses | 13,311 | (8,336 | ) | 6,115 | 4,314 | 563 | 2,319 | (1,192 | ) | ||||||||||||||||||
Pre-tax pre-provision income | $ | 84,281 | $ | 88,886 | $ | 20,573 | $ | 22,893 | $ | 20,070 | $ | 20,745 | $ | 22,645 | |||||||||||||
Adjustments: | |||||||||||||||||||||||||||
Restructuring charges | 1,619 | 111 | 350 | - | 1,269 | - | 111 | ||||||||||||||||||||
Enhancement from COLI surrender and redeployment | (1,997 | ) | - | - | (1,997 | ) | - | - | - | ||||||||||||||||||
Adjusted pre-tax pre-provision income | $ | 83,903 | $ | 88,997 | $ | 20,923 | $ | 20,896 | $ | 21,339 | $ | 20,745 | $ | 22,756 | |||||||||||||
Less: PPP accretion interest income and fees | (2,271 | ) | (9,863 | ) | (78 | ) | (312 | ) | (809 | ) | (1,072 | ) | (2,776 | ) | |||||||||||||
Pre-PPP adjusted pre-tax pre-provision income | $ | 81,632 | $ | 79,134 | $ | 20,845 | $ | 20,584 | $ | 20,530 | $ | 19,673 | $ | 19,980 | |||||||||||||
Total loans excluding PPP loans: | |||||||||||||||||||||||||||
Total loans | $ | 4,050,449 | $ | 3,866,851 | $ | 3,764,018 | $ | 3,733,648 | $ | 3,679,436 | |||||||||||||||||
Less: Total PPP loans | 1,161 | 2,783 | 8,910 | 31,399 | 55,344 | ||||||||||||||||||||||
Total loans excluding PPP loans | $ | 4,049,288 | $ | 3,864,068 | $ | 3,755,108 | $ | 3,702,249 | $ | 3,624,092 | |||||||||||||||||
Allowance for credit losses - loans | $ | 45,413 | $ | 44,106 | $ | 42,452 | $ | 40,966 | $ | 39,676 | |||||||||||||||||
Allowance for credit losses - loans to total loans excluding PPP loans (4) | 1.12 | % | 1.14 | % | 1.13 | % | 1.11 | % | 1.09 | % |
(1) Tangible common equity divided by tangible assets.
(2) Tangible common equity divided by common shares outstanding.
(3) Net income available to common shareholders (annualized) divided by average tangible common equity.
(4) Allowance for credit losses – loans divided by total loans excluding PPP loans.
Source:
2023 GlobeNewswire, Inc., source