8-K
Eagle Bancorp Montana, Inc. (EBMT)
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _____________________
Form 8-K _____________________
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event Reported): January 28, 2020
EAGLE BANCORP MONTANA, INC. (Exact Name of Registrant as Specified in Charter)
| Delaware | 1-34682 | 27-1449820 |
|---|---|---|
| (State or Other Jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification Number) |
| 1400 Prospect Ave., Helena, Montana 59601 | ||
| --- | ||
| (Address of Principal Executive Offices) (Zip Code) |
(406) 442-3080 (Registrant's telephone number, including area code)
Not Applicable (Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: | ||
|---|---|---|
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock par value $0.01 per share | EBMT | The Nasdaq Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Item 2.02. Results of Operations and Financial Condition.
On January 28, 2020, Eagle Bancorp Montana, Inc. announced its results of operations for the quarter ended December 31, 2019. A copy of the press release announcing Eagle’s results for the quarter ended December 31, 2019, and dated January 28, 2020 is attached as Exhibit 99.1 and incorporated herein by reference.
The information in Item 2.02, as well as Exhibit 99.1, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits
| Exhibit No. | Description |
|---|---|
| 99.1 | Eagle Bancorp press release issued January 28, 2020. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| EAGLE BANCORP MONTANA, INC. | ||
|---|---|---|
| Date: January 28, 2020 | By: | /s/ Laura F. Clark |
| Laura F. Clark | ||
| Executive Vice President & CFO |
EdgarFiling
EXHIBIT 99.1
Eagle Bancorp Montana Earns $2.3 Million, or $0.36 per Diluted Share, in 4Q19 and Record $10.9 Million, or $1.69 Per Diluted Share, for the Year; Declares Regular Quarterly Cash Dividend of $0.095 per Share
HELENA, Mont., Jan. 28, 2020 (GLOBE NEWSWIRE) -- Eagle Bancorp Montana, Inc. (NASDAQ: EBMT), (the “Company,” “Eagle”), the holding company of Opportunity Bank of Montana, today reported net income increased 61.8% to $2.3 million, or $0.36 per diluted share, in the fourth quarter of 2019, compared to $1.4 million, or $0.26 per diluted share, in the fourth quarter of 2018. In the preceding quarter, net income was a record $4.1 million, or $0.63 per diluted share, reflecting the high level of contribution from mortgage banking and gains from sale of loans. Growth from the two acquisitions completed in the past two years also contributed to record revenues and profits this year. There were $505,000 in acquisition-related expenses in the fourth quarter of 2019, compared to $517,000 in the preceding quarter and $582,000 in the fourth quarter a year ago.
For the year 2019, net income more than doubled to $10.9 million, or $1.69 per diluted share, compared to $5.0 million, or $0.91 per diluted share, in 2018. There were $2.2 million in acquisition-related expenses for the year, compared to $1.2 million in acquisition-related expenses in 2018.
Eagle’s board of directors declared a quarterly cash dividend of $0.095 per share on January 23, 2020. The dividend will be payable March 6, 2020 to shareholders of record February 14, 2020. The current annualized dividend yield is 1.75% based on recent market prices.
“We delivered record earnings for 2019, fueled by balance sheet expansion, strong top-line revenue growth, and the successful integration of the two acquisitions completed in the last two years,” said Peter J. Johnson, President and CEO. “Additionally, we completed our acquisition of Western Holding Company of Wolf Point earlier this month. These transactions further solidify our position as the fourth-largest, Montana-based bank and provides us a unique opportunity to expand our market presence and lending activities. While costs associated with the acquisition integration will be higher than normal over the next few quarters, we expect expenses to return to more normalized levels in the latter part of 2020. As with the past two acquisitions, we expect the Western Holding Company of Wolf Point merger will be immediately accretive to earnings per share.”
On January 1, 2020, Eagle completed its acquisition of Western Holding Company of Wolf Point, and its wholly owned subsidiary, Western Bank of Wolf Point, in a transaction valued at approximately $15.0 million. In the transaction, Eagle acquired one retail bank branch and approximately $100 million in assets, $77 million in deposits and $41 million in gross loans, based on Western Holding Company of Wolf Point’s September 30, 2019 financial statements.
On January 1, 2019, Eagle completed its acquisition of Big Muddy Bancorp, Inc. and its wholly owned subsidiary, The State Bank of Townsend, located in Townsend, Montana, which added approximately $108 million in assets, $92 million in deposits and $92 million in gross loans.
On January 31, 2018, Eagle completed its acquisition of TwinCo Inc., which added approximately $96 million in assets, $82 million in deposits and $55 million in gross loans.
Fourth Quarter 2019 Highlights (at or for the three-month period ended December 31, 2019, except where noted)
- Net income increased 61.8% to $2.3 million, or $0.36 per diluted share, compared to $1.4 million, or $0.26 per diluted share, in the fourth quarter of 2018, and decreased compared to record net income of $4.1 million, or $0.63 per diluted share in the preceding quarter.
- Annualized return on average assets was 0.89%.
- Annualized return on average equity was 7.64%.
- Net interest margin (“NIM”) improved 7-basis points to 4.22% in the fourth quarter of 2019, compared to 4.15% in the preceding quarter, and improved 27-basis points compared to 3.95% in the fourth quarter a year ago.
- Revenues (net interest income before the provision for loan losses, plus non-interest income) increased 48.6% to $16.5 million, compared to $11.1 million in the fourth quarter a year ago.
- Purchase discount on loans from the Big Muddy Bancorp, Inc. portfolio was $2.8 million at January 1, 2019, (the “acquisition date”) of which $1.3 million remains as of December 31, 2019.
- Purchase discount on loans from the Twin Co, Inc. portfolio was $1.8 million at January 31, 2018, (the “acquisition date”) of which $836,000 remains as of December 31, 2019.
- The accretion of the loan purchase discount into loan interest income from both the Big Muddy Bancorp, Inc. and the TwinCo, Inc. transactions was $536,000 in the fourth quarter, compared to $286,000 in the preceding quarter.
- Total loans increased 26.3% to $779.2 million at December 31, 2019, compared to $616.9 million a year ago.
- Total deposits increased 29.1% to $809.0 million at December 31, 2019, compared to $626.6 million a year ago.
- Capital ratios remain well capitalized with a tangible common shareholders’ equity ratio of 9.95% at December 31, 2019.
- Declared a quarterly cash dividend of $0.095 per share.
Balance Sheet Results
“Our recent acquisitions continue to deliver outstanding balance sheet growth and provide opportunities for further expansion of our bottom-line. Total loans increased 3.4% during the quarter and 26.3% year-over-year, reflecting both acquired loans and strong organic loan production. Additionally, agricultural and farmland loans are up substantially compared to a year ago, resulting from our recent acquisition of Big Muddy Bancorp, Inc.,” said Johnson. Total loans were $779.2 million at December 31, 2019, compared to $616.9 million a year earlier and $753.6 million three months earlier.
Eagle originated $164.9 million in new residential mortgages during the quarter, excluding construction loans, and sold $151.0 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.46%. This production compares to residential mortgage originations of $161.8 million in the preceding quarter with sales of $155.4 million. For the full year, Eagle originated $524.6 million in new residential mortgages, excluding construction loans, and sold $480.0 million in residential mortgages, with an average gross margin on sale of mortgage loans of approximately 3.47%.
Commercial real estate loans increased 28.9% to $331.1 million at December 31, 2019, compared to $256.8 million a year earlier. Residential mortgage loans increased 2.0% to $119.3 million, compared to $116.9 million a year earlier. Agricultural and farmland loans increased 90.7% to $90.8 million at December 31, 2019, compared to $47.6 million a year earlier. Commercial loans increased 23.3% to $72.8 million, home equity loans increased 8.2% to $56.4 million, commercial construction and development loans increased 26.2% to $52.7 million, residential construction loans increased 42.1% to $38.6 million, and consumer loans increased 14.0% to $18.9 million, compared to a year ago.
Total deposits were $809.0 million at December 31, 2019, a 29.1% increase compared to $626.6 million at December 31, 2018, and a 2.5% increase compared to $789.5 million at September 30, 2019. Noninterest checking accounts account for 24.7%, interest bearing checking accounts represent 14.4%, savings accounts represent 15.7%, money market accounts comprise 16.4% and time certificates of deposit make up 28.8% of the total deposit portfolio at December 31, 2019.
Total assets increased 23.5% to $1.05 billion at December 31, 2019, compared to $853.9 million a year ago, in large part due to the Big Muddy Bancorp acquisition. At September 30, 2019, total assets were $1.02 billion. Shareholders’ equity increased 28.3% to $121.7 million at December 31, 2019, compared to $94.8 million a year earlier and increased 1.0% compared to $120.5 million three months earlier. Tangible book value increased to $16.04 per share at December 31, 2019, compared to $14.82 per share a year earlier and $15.89 per share three months earlier.
Operating Results
Eagle’s NIM improved 7-basis points to 4.22% in the fourth quarter of 2019, compared to 4.15% in the preceding quarter, and improved 27-basis points compared to 3.95% in the fourth quarter a year ago. “Our NIM expanded during the quarter, primarily due to interest accretion on purchased loans and a lower cost of funds, in part reflecting the three interest rate reductions enacted by the Federal Reserve in 2019,” said Johnson.
The interest accretion on purchased loans totaled $536,000 and resulted in a 23-basis point increase in the NIM during the fourth quarter, compared to $286,000 and a 12-basis point increase in the NIM during the preceding quarter. For the year, Eagle’s NIM improved 29 basis-points to 4.25%, from 3.96% in 2018.
The investment securities portfolio decreased to $126.9 million at December 31, 2019, compared to $136.4 million at September 30, 2019, and $142.2 million at December 31, 2018. Average yields on earning assets for the fourth quarter increased to 5.05% from 4.71% a year ago due to deploying funds into higher yielding loans.
Eagle’s fourth quarter revenues were $16.5 million, compared to $18.1 million in the preceding quarter and increased 48.6% when compared to $11.1 million in the fourth quarter a year ago. For the year, revenues increased 50.2% to $62.9 million from $41.9 million in 2018, as a result of increased mortgage banking income and gain on sale of mortgages and growth from the Big Muddy Bancorp, Inc. acquisition.
Net interest income, before the provision for loan loss, increased 3.3% to $10.0 million for the fourth quarter, compared to $9.7 million for the third quarter of 2019 and increased 31.7% compared to $7.6 million in the fourth quarter a year ago. For 2019, net interest income, before the provision for loan loss, increased 30.4% to $38.8 million, compared to $29.7 million in 2018.
Noninterest income declined to $6.5 million in the fourth quarter of 2019, compared to $8.4 million in the preceding quarter, and increased 85.3% compared to $3.5 million in the fourth quarter a year ago. Reflecting increased activity due to the recent interest rate cuts, the net gain on sales of mortgage loans totaled $5.2 million in the fourth quarter of 2019 and $5.5 million in the preceding quarter along with mortgage banking derivative fluctuations. This compares to $2.3 million in the fourth quarter a year ago. For the year, noninterest income grew 98.9% to $24.1 million, compared to $12.1 million in 2018.
Eagle’s fourth quarter noninterest expenses were $12.6 million compared to $12.2 million in the preceding quarter and $9.3 million in the fourth quarter a year ago. Acquisition costs totaled $505,000 for the current quarter, compared to $517,000 in the preceding quarter and $582,000 in the fourth quarter one year ago. For the year, noninterest expenses totaled $46.3 million, compared to $35.0 million in 2018, with acquisition costs of $2.2 million for the year, compared to $1.2 million in 2018.
For the fourth quarter of 2019, the income tax provision totaled $959,000, for an effective tax rate of 29.1%, compared to $1.1 million in the preceding quarter and $134,000 in the fourth quarter of 2018.
Credit Quality
“We continue to build reserves based on growth from both organic and acquired loans,” Johnson noted. The fourth quarter provision for loan losses was $632,000, compared to $694,000 in the preceding quarter and $260,000 in the fourth quarter a year ago. For the year, Eagle’s provision for loan losses totaled $2.6 million, compared to $980,000 in 2018. The allowance for loan losses represented 157.8% of nonaccrual loans at December 31, 2019, compared to 221.0% three months earlier and 175.2% a year earlier.
Nonperforming loans (“NPLs”) were $5.5 million at December 31, 2019, compared to $3.7 million at September 30, 2019, and $3.8 million a year earlier. The increase year-over-year in nonperforming loans was impacted by acquired loans which make up approximately half of the balance at December 31, 2019.
Eagle’s total other real estate owned (“OREO”) and other repossessed assets declined during the quarter to $26,000 at December 31, 2019, compared to $91,000 at September 30, 2019 and $107,000 at December 31, 2018. Nonperforming assets (“NPAs”), consisting of nonaccrual loans, OREO and other repossessed assets, loans delinquent 90 days or more, and restructured loans, increased to $5.5 million at December 31, 2019, or 0.52% of total assets, compared to $3.8 million, or 0.37% of total assets three months earlier and $3.9 million, or 0.45% of total assets a year earlier.
Net loan charge-offs totaled $233,000 in the fourth quarter of 2019, compared to $244,000 in the third quarter of 2019 and $11,000 in the fourth quarter a year ago. The allowance for loan losses was $8.6 million, or 1.10% of total loans, at December 31, 2019, compared to $8.2 million, or 1.09% of total loans, at September 30, 2019, and $6.6 million, or 1.07% of total loans, a year ago.
Capital Management
Eagle Bancorp Montana, Inc. continues to be well capitalized with the ratio of tangible common shareholders’ equity to tangible assets of 9.95% as of December 31, 2019. (Shareholders’ equity, less goodwill and core deposit intangible to tangible assets).
About the Company
Eagle Bancorp Montana, Inc. is a bank holding company headquartered in Helena, Montana and is the holding company of Opportunity Bank of Montana, a community bank established in 1922 that serves consumers and small businesses in Montana through 23 banking offices. Additional information is available on the bank’s website at www.opportunitybank.com. The shares of Eagle Bancorp Montana, Inc. are traded on the NASDAQ Global Market under the symbol “EBMT.”
Forward Looking Statements
This release may contain certain "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and may be identified by the use of such words as "believe," “will”’ "expect," "anticipate," "should," "planned," "estimated," and "potential." These forward-looking statements include, but are not limited to statements of our goals, intentions and expectations; statements regarding our business plans, prospects, mergers with Ruby Valley Bank and The State Bank of Townsend, growth and operating strategies; statements regarding the asset quality of our loan and investment portfolios; and estimates of our risks and future costs and benefits. These forward-looking statements are based on current beliefs and expectations of our management and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. These factors include, but are not limited to, changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements; general economic conditions and political events, either nationally or in our market areas, that are worse than expected; competition among depository and other financial institutions; loan demand or residential and commercial real estate values in Montana; our ability to continue to increase and manage our commercial real estate, commercial business and agricultural loans; the costs and effects of legal, compliance and regulatory actions, changes and developments, including the initiation and resolution of legal proceedings (including any securities, bank operations, consumer or employee litigation and any litigation which we inherited from our January 2019 merger with The State Bank of Townsend); inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments; adverse changes in the securities markets; other economic, governmental, competitive, regulatory and technological factors that may affect our operations; cyber incidents, or theft or loss of Company or customer data or money; the effect of our acquisitions of Ruby Valley Bank and The State Bank of Townsend, including the failure to achieve expected revenue growth and/or expense savings, the failure to effectively integrate their operations and the diversion of management time on issues related to the integration. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements. All information set forth in this press release is current as of the date of this release and the company undertakes no duty or obligation to update this information.
Use of Non-GAAP Financial Measures
In addition to results presented in accordance with generally accepted accounting principles utilized in the United States, or GAAP, the Financial Ratios and Other Data contains non-GAAP financial measures. Non-GAAP disclosures include: 1) core efficiency ratio, 2) tangible book value per share, 3) tangible common equity to tangible assets, 4) earnings per diluted share, excluding acquisition costs and 5) return on average assets, excluding acquisition costs. The Company uses these non-GAAP financial measures to provide meaningful supplemental information regarding the Company’s operational performance and to enhance investors’ overall understanding of such financial performance. In particular, the use of tangible book value per share and tangible common equity to tangible assets is prevalent among banking regulators, investors and analysts.
The numerator for the core efficiency ratio is calculated by subtracting acquisition costs and intangible asset amortization from noninterest expense. Tangible assets and tangible common shareholders’ equity are calculated by excluding intangible assets from assets and shareholders’ equity, respectively. For these financial measures, our intangible assets consist of goodwill and core deposit intangible. Tangible book value per share is calculated by dividing tangible common shareholders’ equity by the number of common shares outstanding. We believe that this measure is consistent with the capital treatment by our bank regulatory agencies, which exclude intangible assets from the calculation of risk-based capital ratios, and present this measure to facilitate the comparison of the quality and composition of our capital over time and in comparison to our competitors.
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Further, the non-GAAP financial measure of tangible book value per share should not be considered in isolation or as a substitute for book value per share or total shareholders’ equity determined in accordance with GAAP, and may not be comparable to a similarly titled measure reported by other companies. Reconciliation of the GAAP and non-GAAP financial measures are presented below.
| Balance Sheet | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| December 31, | September 30, | December 31, | ||||||||
| 2019 | 2019 | 2018 | ||||||||
| Assets: | ||||||||||
| Cash and due from banks | $ | 18,094 | $ | 9,697 | $ | 10,144 | ||||
| Interest bearing deposits in banks | 4,284 | 3,589 | 1,057 | |||||||
| Federal funds sold | 2,540 | - | - | |||||||
| 24,918 | 13,286 | 11,201 | ||||||||
| Securities available-for-sale, at fair value | 126,875 | 136,383 | 142,165 | |||||||
| FHLB stock | 4,683 | 4,167 | 5,011 | |||||||
| FRB stock | 2,526 | 2,526 | 2,033 | |||||||
| Loans held-for-sale, at fair value | 25,612 | 24,913 | 7,318 | |||||||
| Loans: | ||||||||||
| Real estate loans: | ||||||||||
| Residential 1-4 family | 119,296 | 110,291 | 116,939 | |||||||
| Residential 1-4 family construction | 38,602 | 32,776 | 27,168 | |||||||
| Commercial real estate | 331,062 | 317,829 | 256,784 | |||||||
| Commercial construction and development | 52,670 | 51,647 | 41,739 | |||||||
| Farmland | 50,293 | 46,681 | 29,915 | |||||||
| Other loans: | ||||||||||
| Home equity | 56,414 | 56,537 | 52,159 | |||||||
| Consumer | 18,882 | 19,012 | 16,565 | |||||||
| Commercial | 72,797 | 73,059 | 59,053 | |||||||
| Agricultural | 40,522 | 46,893 | 17,709 | |||||||
| Unearned loan fees | (1,303 | ) | (1,156 | ) | (1,098 | ) | ||||
| 779,235 | 753,569 | 616,933 | ||||||||
| Allowance for loan losses | (8,600 | ) | (8,200 | ) | (6,600 | ) | ||||
| 770,635 | 745,369 | 610,333 | ||||||||
| Accrued interest and dividends receivable | 4,577 | 5,318 | 3,479 | |||||||
| Mortgage servicing rights, net | 8,739 | 8,218 | 7,100 | |||||||
| Premises and equipment, net | 40,082 | 38,628 | 29,343 | |||||||
| Cash surrender value of life insurance, net | 23,608 | 23,460 | 20,545 | |||||||
| Goodwill | 15,836 | 15,710 | 12,124 | |||||||
| Core deposit intangible, net | 2,786 | 2,961 | 1,498 | |||||||
| Deferred tax asset, net | - | - | 1,190 | |||||||
| Other assets | 3,383 | 1,282 | 563 | |||||||
| $ | 1,054,260 | $ | 1,022,221 | $ | 853,903 | |||||
| Liabilities: | ||||||||||
| Deposit accounts: | ||||||||||
| Noninterest bearing | 200,035 | 199,086 | 142,788 | |||||||
| Interest bearing | 608,958 | 590,375 | 483,823 | |||||||
| 808,993 | 789,461 | 626,611 | ||||||||
| Accrued expense and other liabilities | 9,825 | 10,266 | 5,388 | |||||||
| Deferred tax liability, net | 492 | 420 | - | |||||||
| FHLB advances and other borrowings | 88,350 | 76,699 | 102,222 | |||||||
| Other long-term debt, net | 24,941 | 24,925 | 24,876 | |||||||
| 932,601 | 901,771 | 759,097 | ||||||||
| Shareholders' Equity: | ||||||||||
| Preferred stock (par value 0.01 per share; 1,000,000 shares | ||||||||||
| authorized; no shares issued or outstanding) | - | - | - | |||||||
| Common stock (par value 0.01; 20,000,000 shares authorized; | ||||||||||
| 6,714,983, 6,714,983 and 5,718,942 shares issued; 6,423,033, | ||||||||||
| 6,403,693 and 5,477,652 shares outstanding at December 31, 2019, | ||||||||||
| September 30, 2019 and December 31, 2018, respectively) | 67 | 67 | 57 | |||||||
| Additional paid-in capital | 68,826 | 68,894 | 52,051 | |||||||
| Unallocated common stock held by Employee Stock Ownership Plan | (311 | ) | (352 | ) | (477 | ) | ||||
| Treasury stock, at cost (291,950, 311,290 and 241,290 shares at December | ||||||||||
| 31, 2019, September 30, 2019 and December 31, 2018, respectively) | (3,643 | ) | (3,850 | ) | (2,640 | ) | ||||
| Retained earnings | 55,391 | 53,664 | 46,926 | |||||||
| Accumulated other comprehensive income (loss), net of tax | 1,329 | 2,027 | (1,111 | ) | ||||||
| 121,659 | 120,450 | 94,806 | ||||||||
| $ | 1,054,260 | $ | 1,022,221 | $ | 853,903 |
All values are in US Dollars.
| Income Statement | (Unaudited) | (Unaudited) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (Dollars in thousands, except per share data) | Three Months Ended | Years Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Interest and dividend income: | |||||||||||||||||
| Interest and fees on loans | $ | 10,966 | $ | 10,731 | $ | 7,965 | $ | 42,344 | $ | 30,400 | |||||||
| Securities available-for-sale | 870 | 916 | 1,022 | 3,672 | 4,068 | ||||||||||||
| FRB and FHLB dividends | 111 | 107 | 89 | 408 | 322 | ||||||||||||
| Other interest income | 32 | 19 | 3 | 87 | 47 | ||||||||||||
| Total interest and dividend income | 11,979 | 11,773 | 9,079 | 46,511 | 34,837 | ||||||||||||
| Interest expense: | |||||||||||||||||
| Interest expense on deposits | 1,160 | 1,022 | 602 | 3,893 | 2,056 | ||||||||||||
| FHLB advances and other borrowings | 445 | 692 | 509 | 2,387 | 1,614 | ||||||||||||
| Other long-term debt | 357 | 360 | 361 | 1,446 | 1,426 | ||||||||||||
| Total interest expense | 1,962 | 2,074 | 1,472 | 7,726 | 5,096 | ||||||||||||
| Net interest income | 10,017 | 9,699 | 7,607 | 38,785 | 29,741 | ||||||||||||
| Loan loss provision | 632 | 694 | 260 | 2,627 | 980 | ||||||||||||
| Net interest income after loan loss provision | 9,385 | 9,005 | 7,347 | 36,158 | 28,761 | ||||||||||||
| Noninterest income: | |||||||||||||||||
| Service charges on deposit accounts | 337 | 329 | 262 | 1,219 | 943 | ||||||||||||
| Net gain on sale of loans | 5,224 | 5,492 | 2,294 | 16,675 | 7,743 | ||||||||||||
| Mortgage banking | (156 | ) | 1,390 | 300 | 2,321 | 1,092 | |||||||||||
| Wealth management income | - | 11 | 127 | 258 | 536 | ||||||||||||
| Interchange and ATM fees | 350 | 364 | 276 | 1,327 | 1,042 | ||||||||||||
| Appreciation in cash surrender value of life insurance | 148 | 254 | 173 | 719 | 609 | ||||||||||||
| Net gain (loss) on sale of available-for-sale securities | 20 | - | (74 | ) | 69 | (187 | ) | ||||||||||
| Net gain on sale/disposal of premises and equipment | 48 | 438 | - | 486 | 9 | ||||||||||||
| Other noninterest income | 522 | 142 | 146 | 1,036 | 335 | ||||||||||||
| Total noninterest income | 6,493 | 8,420 | 3,504 | 24,110 | 12,122 | ||||||||||||
| Noninterest expense: | |||||||||||||||||
| Salaries and employee benefits | 7,576 | 7,555 | 5,406 | 27,633 | 20,899 | ||||||||||||
| Occupancy and equipment expense | 1,193 | 1,152 | 812 | 4,422 | 3,355 | ||||||||||||
| Data processing | 1,007 | 933 | 666 | 3,722 | 2,842 | ||||||||||||
| Advertising | 228 | 320 | 287 | 1,028 | 1,158 | ||||||||||||
| Amortization of core deposit intangible and tax credits | 320 | 254 | 181 | 1,081 | 700 | ||||||||||||
| Loan costs | 251 | 242 | 163 | 805 | 632 | ||||||||||||
| Federal insurance premiums | 2 | (36 | ) | 43 | 81 | 246 | |||||||||||
| Postage | 52 | 90 | 56 | 289 | 248 | ||||||||||||
| Professional and examination fees | 285 | 182 | 255 | 1,052 | 767 | ||||||||||||
| Acquisition costs | 505 | 517 | 582 | 2,198 | 1,169 | ||||||||||||
| Other noninterest expense | 1,163 | 1,015 | 822 | 3,989 | 2,971 | ||||||||||||
| Total noninterest expense | 12,582 | 12,224 | 9,273 | 46,300 | 34,987 | ||||||||||||
| Income before provision for income taxes | 3,296 | 5,201 | 1,578 | 13,968 | 5,896 | ||||||||||||
| Income tax provision | 959 | 1,096 | 134 | 3,096 | 914 | ||||||||||||
| Net income | $ | 2,337 | $ | 4,105 | $ | 1,444 | $ | 10,872 | $ | 4,982 | |||||||
| Basic earnings per share | $ | 0.36 | $ | 0.64 | $ | 0.27 | $ | 1.69 | $ | 0.92 | |||||||
| Diluted earnings per share | $ | 0.36 | $ | 0.63 | $ | 0.26 | $ | 1.69 | $ | 0.91 | |||||||
| Basic weighted average shares outstanding | 6,416,516 | 6,403,693 | 5,471,856 | 6,419,654 | 5,426,605 | ||||||||||||
| Diluted weighted average shares outstanding | 6,430,454 | 6,425,380 | 5,533,465 | 6,437,604 | 5,490,347 | ||||||||||||
| ADDITIONAL FINANCIAL INFORMATION | (Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (Dollars in thousands, except per share data) | Three Months Ended | ||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||
| 2019 | 2019 | 2018 | |||||||||||||||
| Performance Ratios (For the quarter): | |||||||||||||||||
| Return on average assets | 0.89 | % | 1.60 | % | 0.68 | % | |||||||||||
| Return on average equity | 7.64 | % | 13.86 | % | 6.19 | % | |||||||||||
| Net interest margin | 4.22 | % | 4.15 | % | 3.95 | % | |||||||||||
| Core efficiency ratio* | 71.21 | % | 63.21 | % | 76.59 | % | |||||||||||
| Performance Ratios (Year-to-date): | |||||||||||||||||
| Return on average assets | 1.08 | % | 1.14 | % | 0.60 | % | |||||||||||
| Return on average equity | 9.39 | % | 10.02 | % | 5.44 | % | |||||||||||
| Net interest margin | 4.25 | % | 4.26 | % | 3.96 | % | |||||||||||
| Core efficiency ratio* | 68.40 | % | 67.40 | % | 79.11 | % | |||||||||||
| Asset Quality Ratios and Data: | As of or for the Three Months Ended | ||||||||||||||||
| December 31, | September 30, | December 31, | |||||||||||||||
| 2019 | 2019 | 2018 | |||||||||||||||
| Nonaccrual loans | $ | 3,395 | $ | 3,691 | $ | 2,268 | |||||||||||
| Loans 90 days past due and still accruing | 1,809 | - | 1,477 | ||||||||||||||
| Restructured loans, net | 246 | 20 | 22 | ||||||||||||||
| Total nonperforming loans | 5,450 | 3,711 | 3,767 | ||||||||||||||
| Other real estate owned and other repossessed assets | 26 | 91 | 107 | ||||||||||||||
| Total nonperforming assets | $ | 5,476 | $ | 3,802 | $ | 3,874 | |||||||||||
| Nonperforming loans / portfolio loans | 0.70 | % | 0.49 | % | 0.61 | % | |||||||||||
| Nonperforming assets / assets | 0.52 | % | 0.37 | % | 0.45 | % | |||||||||||
| Allowance for loan losses / portfolio loans | 1.10 | % | 1.09 | % | 1.07 | % | |||||||||||
| Allowance / nonperforming loans | 157.80 | % | 220.96 | % | 175.21 | % | |||||||||||
| Gross loan charge-offs for the quarter | $ | 271 | $ | 252 | $ | 22 | |||||||||||
| Gross loan recoveries for the quarter | $ | 38 | $ | 8 | $ | 11 | |||||||||||
| Net loan charge-offs (recoveries) for the quarter | $ | 233 | $ | 244 | $ | 11 | |||||||||||
| Capital Data (At quarter end): | |||||||||||||||||
| Tangible book value per share** | $ | 16.04 | $ | 15.89 | $ | 14.82 | |||||||||||
| Shares outstanding | 6,423,033 | 6,403,693 | 5,477,652 | ||||||||||||||
| Tangible common equity to tangible assets*** | 9.95 | % | 10.14 | % | 9.66 | % | |||||||||||
| Other Information: | |||||||||||||||||
| Average total assets for the quarter | $ | 1,044,642 | $ | 1,027,898 | $ | 845,267 | |||||||||||
| Average total assets year to date | $ | 1,010,017 | $ | 998,475 | $ | 829,186 | |||||||||||
| Average earning assets for the quarter | $ | 941,568 | $ | 926,987 | $ | 764,095 | |||||||||||
| Average earning assets year to date | $ | 912,372 | $ | 902,640 | $ | 750,127 | |||||||||||
| Average loans for the quarter **** | $ | 795,678 | $ | 779,770 | $ | 610,412 | |||||||||||
| Average loans year to date **** | $ | 764,075 | $ | 753,541 | $ | 590,059 | |||||||||||
| Average equity for the quarter | $ | 122,334 | $ | 118,512 | $ | 93,290 | |||||||||||
| Average equity year to date | $ | 115,794 | $ | 113,614 | $ | 91,527 | |||||||||||
| Average deposits for the quarter | $ | 807,539 | $ | 757,327 | $ | 624,327 | |||||||||||
| Average deposits year to date | $ | 757,907 | $ | 741,363 | $ | 617,182 | |||||||||||
| * The core efficiency ratio is a non-GAAP ratio that is calculated by dividing non-interest expense, exclusive of | |||||||||||||||||
| acquisition costs and intangible asset amortization, by the sum of net interest income and non-interest income. | |||||||||||||||||
| ** The tangible book value per share is a non-GAAP ratio that is calculated by dividing shareholders' equity, | |||||||||||||||||
| less goodwill and core deposit intangible, by common shares outstanding. | |||||||||||||||||
| *** The tangible common equity to tangible assets is a non-GAAP ratio that is calculated by dividing shareholders' | |||||||||||||||||
| equity, less goodwill and core deposit intangible, by total assets, less goodwill and core deposit intangible. | |||||||||||||||||
| **** Includes loans held for sale | |||||||||||||||||
| Core Efficiency Ratio | (Unaudited) | (Unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (Dollars in thousands) | Three Months Ended | Years Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Calculation of Core Efficiency Ratio: | |||||||||||||||||
| Noninterest expense | $ | 12,582 | $ | 12,224 | $ | 9,273 | $ | 46,300 | $ | 34,987 | |||||||
| Acquisition costs | (505 | ) | (517 | ) | (582 | ) | (2,198 | ) | (1,169 | ) | |||||||
| Intangible asset amortization | (320 | ) | (254 | ) | (181 | ) | (1,081 | ) | (700 | ) | |||||||
| Core efficiency ratio numerator | 11,757 | 11,453 | 8,510 | 43,021 | 33,118 | ||||||||||||
| Net interest income | 10,017 | 9,699 | 7,607 | 38,785 | 29,741 | ||||||||||||
| Noninterest income | 6,493 | 8,420 | 3,504 | 24,110 | 12,122 | ||||||||||||
| Core efficiency ratio denominator | 16,510 | 18,119 | 11,111 | 62,895 | 41,863 | ||||||||||||
| Core efficiency ratio | 71.21 | % | 63.21 | % | 76.59 | % | 68.40 | % | 79.11 | % | |||||||
| Tangible Book Value and Tangible Assets | (Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||
| (Dollars in thousands, except per share data) | December 31, | September 30, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | |||||||||||||||
| Tangible Book Value: | |||||||||||||||||
| Shareholders' equity | $ | 121,659 | $ | 120,450 | $ | 94,806 | |||||||||||
| Goodwill and core deposit intangible, net | (18,622 | ) | (18,671 | ) | (13,622 | ) | |||||||||||
| Tangible common shareholders' equity | $ | 103,037 | $ | 101,779 | $ | 81,184 | |||||||||||
| Common shares outstanding at end of period | 6,423,033 | 6,403,693 | 5,477,652 | ||||||||||||||
| Common shareholders' equity (book value) per share (GAAP) | $ | 18.94 | $ | 18.81 | $ | 17.31 | |||||||||||
| Tangible common shareholders' equity (tangible book value) | |||||||||||||||||
| per share (non-GAAP) | $ | 16.04 | $ | 15.89 | $ | 14.82 | |||||||||||
| Tangible Assets: | |||||||||||||||||
| Total assets | $ | 1,054,260 | $ | 1,022,221 | $ | 853,903 | |||||||||||
| Goodwill and core deposit intangible, net | (18,622 | ) | (18,671 | ) | (13,622 | ) | |||||||||||
| Tangible assets (non-GAAP) | $ | 1,035,638 | $ | 1,003,550 | $ | 840,281 | |||||||||||
| Tangible common shareholders' equity to tangible assets | |||||||||||||||||
| (non-GAAP) | 9.95 | % | 10.14 | % | 9.66 | % | |||||||||||
| Earnings Per Diluted Share, Excluding Acquisition Costs | (Unaudited) | (Unaudited) | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (Dollars in thousands, except per share data) | Three Months Ended | Years Ended | |||||||||||||||
| December 31, | September 30, | December 31, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Net interest income after loan loss provision | $ | 9,385 | $ | 9,005 | $ | 7,347 | $ | 36,158 | $ | 28,761 | |||||||
| Noninterest income | 6,493 | 8,420 | 3,504 | 24,110 | 12,122 | ||||||||||||
| Noninterest expense | 12,582 | 12,224 | 9,273 | 46,300 | 34,987 | ||||||||||||
| Acquisition costs | (505 | ) | (517 | ) | (582 | ) | (2,198 | ) | (1,169 | ) | |||||||
| Noninterest expense, excluding acquisition costs | 12,077 | 11,707 | 8,691 | 44,102 | 33,818 | ||||||||||||
| Income before income taxes | 3,801 | 5,718 | 2,160 | 16,166 | 7,065 | ||||||||||||
| Income tax expense, excluding acquisition costs | |||||||||||||||||
| related taxes | 1,106 | 1,205 | 183 | 3,583 | 1,095 | ||||||||||||
| Net Income, excluding acquisition costs | $ | 2,695 | $ | 4,513 | $ | 1,977 | $ | 12,583 | $ | 5,970 | |||||||
| Diluted earnings per share (GAAP) | $ | 0.36 | $ | 0.63 | $ | 0.26 | $ | 1.69 | $ | 0.91 | |||||||
| Diluted earnings per share, excluding acquisition | |||||||||||||||||
| costs (non-GAAP) | $ | 0.42 | $ | 0.70 | $ | 0.36 | $ | 1.95 | $ | 1.09 | |||||||
| Return on Average Assets, Excluding Acquisition Costs | (Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||
| (Dollars in thousands) | December 31, | September 30, | December 31, | ||||||||||||||
| 2019 | 2019 | 2018 | |||||||||||||||
| For the quarter: | |||||||||||||||||
| Net income, excluding acquisition costs (non-GAAP)* | $ | 2,695 | $ | 4,513 | $ | 1,977 | |||||||||||
| Average total assets quarter to date | $ | 1,044,642 | $ | 1,027,898 | $ | 845,267 | |||||||||||
| Return on average assets, excluding acquisition costs (non-GAAP) | 1.03 | % | 1.76 | % | 0.94 | % | |||||||||||
| Year-to-date: | |||||||||||||||||
| Net income, excluding acquisition costs (non-GAAP)* | $ | 12,583 | $ | 9,889 | $ | 5,970 | |||||||||||
| Average total assets year to date | $ | 1,010,017 | $ | 998,475 | $ | 829,186 | |||||||||||
| Return on average assets, excluding acquisition costs (non-GAAP) | 1.25 | % | 1.32 | % | 0.72 | % | |||||||||||
| * See Earnings Per Diluted Share, Excluding Acquisition Costs table for GAAP to non-GAAP reconciliation. |
Contacts: Peter J. Johnson, President and CEO (406) 457-4006 Laura F. Clark, EVP and CFO (406) 457-4007