Net income for the full year of 2022 decreased 18% to
Dividends per share in the fourth quarter of 2022 remained consistent with the third quarter of 2022 at
“2022 demonstrated the strength of our bank as our high-quality deposit franchise funded solid loan and net interest income growth,” said
Fourth Quarter 2022 Highlights:
- Net interest income in the fourth quarter of 2022 increased 4% to
$27.3 million compared to$26.3 million in the third quarter of 2022 and increased 26% compared to$21.7 million in the fourth quarter of 2021. - Net interest margin on a tax equivalent basis (“NIMTE”)* was 4.36% for the fourth quarter of 2022, a 9-basis point increase from the third quarter of 2022 and an 82-basis point increase compared to the fourth quarter of 2021.
- The weighted average interest rate for new loans booked in the fourth quarter of 2022 was 6.25% compared to 5.76% in the third quarter of 2022 and 4.16% in the fourth quarter a year ago.
- Return on average assets (“ROAA”) was 1.26% and return on average equity ("ROAE") was 15.7% for the fourth quarter of 2022.
- Portfolio loans were
$1.50 billion atDecember 31, 2022 , up 7% from the preceding quarter and up 6% from a year ago. Core portfolio loans (excluding PPP loans) were$1.49 billion atDecember 31, 2022 , up 7% from the preceding quarter and up 15% from a year ago. 18% of earnings assets are subject to rate increases immediately when prime or other rate indices increase. - Total deposits were
$2.39 billion atDecember 31, 2022 , down 2% from the preceding quarter, and down 1% from$2.42 billion a year ago. Noninterest bearing demand deposits represented 34% of total deposits atDecember 31, 2022 . - Average interest-bearing deposits were
$1.58 billion for the fourth quarter of 2022, up 4% from the preceding quarter, and up 8% from the fourth quarter a year ago. - The average cost of interest-bearing deposits was 0.56% in the fourth quarter of 2022, up from 0.28% in the third quarter of 2022 and 0.16% in the fourth quarter a year ago.
- Total shareholders' equity was
$218 .6 million as ofDecember 31, 2022 , up 4% from the preceding quarter, and down 8% from$237 .8 million a year ago. Shareholders' equity was impacted by the fair value of the available for sales securities portfolio which decreased$27.4 million in 2022 and, to a lesser extent the share repurchases totaling$14.2 million . - In 2020 and 2021, Northrim funded approximately 5,800 PPP loans totaling approximately
$612.6 million to both existing and new customers. Management estimates that Northrim funded approximately 24% of the number and 32% of the value of all Alaska PPP second round loans. - As of
December 31, 2022 , Northrim's PPP efforts have resulted in approximately 2,300 new customers totaling$135.9 million in new deposit balances and contributed to the growth in core portfolio loans. - The Company implemented assistance to help its customers experiencing financial challenges as a result of COVID-19. The total outstanding principal balance of loan modifications due to the impacts of COVID-19 as of
December 31, 2022 was$1.0 million , down from$8.4 million as ofSeptember 30, 2022 and$49.2 million as ofDecember 31, 2021 . The$1.0 million of remaining COVID-19 loan accommodations are scheduled to return to normal principal and interest payments in the first quarter of 2023. - Nonperforming assets net of government guarantees decreased to
$6 .4 million atDecember 31, 2022 , down from$10 .8 million atSeptember 30, 2022 and from$15 .0 million a year ago primarily due to the sale of OREO property and from payoffs and partial paydowns on nonaccrual loans. Nonperforming assets net of government guarantees were 0.25% of total assets atDecember 31, 2022 compared to 0.42% atSeptember 30, 2022 and 0.60% atDecember 31, 2021 .
Financial Highlights | Three Months Ended | ||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||
Total assets | |||||||||||||||
Total portfolio loans | |||||||||||||||
Total core portfolio loans (excluding PPP loans) | |||||||||||||||
Total deposits | |||||||||||||||
Total shareholders' equity | |||||||||||||||
Net income | |||||||||||||||
Diluted earnings per share | |||||||||||||||
Return on average assets | 1.26 | % | 1.52 | % | 0.74 | % | 1.12 | % | 1.23 | % | |||||
Return on average shareholders' equity | 15.71 | % | 18.18 | % | 8.58 | % | 12.36 | % | 13.14 | % | |||||
NIM | 4.31 | % | 4.22 | % | 3.67 | % | 3.18 | % | 3.52 | % | |||||
NIMTE* | 4.36 | % | 4.27 | % | 3.70 | % | 3.20 | % | 3.54 | % | |||||
Efficiency ratio | 65.23 | % | 63.69 | % | 77.39 | % | 70.02 | % | 73.48 | % | |||||
Total shareholders' equity/total assets | 8.18 | % | 7.75 | % | 8.24 | % | 8.60 | % | 8.73 | % | |||||
Tangible common equity/tangible assets* | 7.63 | % | 7.21 | % | 7.68 | % | 8.04 | % | 8.19 | % | |||||
Book value per share | |||||||||||||||
Tangible book value per share* | |||||||||||||||
Dividends per share | |||||||||||||||
Common shares outstanding | 5,700,728 | 5,681,089 | 5,681,089 | 5,881,708 | 6,014,813 |
* References to NIMTE, tangible book value per share, and tangible common equity to tangible assets (all of which exclude intangible assets) represent non-GAAP financial measures. Management has presented these non-GAAP measurements in this earnings release, because it believes these measures are useful to investors. See the end of this release for reconciliations of these non-GAAP financial measures to GAAP financial measures.
Alaska Economic Update
(Note: sources for information included in this section are included below.)
During 2022, the
According to the DOL, the Oil and Gas sector showed the largest year over year increase of 7.5%.
The DOL also reported Alaska’s seasonally adjusted unemployment rate for November of 2022 was 4.5% compared to 3.7% for the
Alaska’s Gross State Product (“GSP”) in the third quarter of 2022, was estimated to be
The BEA also calculated Alaska’s seasonally adjusted personal income at
The price of Alaska North Slope (“ANS”) crude oil averaged
According to the
According to the Alaska Multiple Listing Services, the average sales price of a single family home in
The number of housing units sold in
Review of Income Statement
Consolidated Income Statement
In the fourth quarter of 2022, Northrim generated a ROAA of 1.26% and a ROAE of 15.71%, compared to 1.52% and 18.18%, respectively, in the third quarter of 2022 and 1.23% and 13.14%, respectively, in the fourth quarter a year ago.
Net Interest Income/Net Interest Margin
Net interest income increased 4% to
NIMTE* was 4.36% in the fourth quarter of 2022 compared to 4.27% in the preceding quarter and 3.54% in the fourth quarter a year ago. NIMTE* increased 9 basis points in the fourth quarter of 2022 compared to the prior quarter and 82 basis points compared to the fourth quarter of 2021 primarily due to higher yields on portfolio loans, investments, and interest bearing deposits in other banks. The weighted average interest rate for new loans booked in the fourth quarter of 2022 was 6.25% compared to 5.76% in the third quarter of 2022 and 4.16% in the fourth quarter a year ago. Additionally, the Company purchased long-term investments in the fourth quarter of 2022 with a weighted average yield of 5.64% compared to 4.01% in the third quarter of 2022 and 1.22% in the fourth quarter a year ago. The impact of SBA PPP loan fees and interest on net interest income, increased our NIMTE* by 3 basis points during the fourth quarter of this year compared to what our NIMTE* would have been if we had not made any SBA PPP loans. “We expect our net interest margin to continue to improve with expected increases in interest rates during 2023, as nearly 72% of our loan portfolio has adjusting rates and our large cash position will reprice immediately upon any rate increases,” said
Provision for Credit Losses
Northrim recorded a provision for credit losses of
Nonperforming loans, net of government guarantees, decreased during the quarter to
The allowance for credit losses was 215% of nonperforming loans, net of government guarantees, at the end of the fourth quarter of 2022, compared to 185% three months earlier and 110% a year ago.
Other Operating Income
In addition to home mortgage lending, Northrim has interests in other businesses that complement its core community banking activities, including purchased receivables financing and wealth management. Other operating income contributed
1As of
increase in commercial servicing revenue primarily resulting from an increase in the fair value of commercial servicing rights.
Other Operating Expenses
Operating expenses were
Income Tax Provision
In the fourth quarter of 2022, Northrim recorded
Community Banking
Northrim opened its eighteenth branch in
Net interest income in the Community Banking segment totaled
In the recent deposit market share data from the
The following table provides highlights of the Community Banking segment of Northrim:
Three Months Ended | |||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||
Net interest income | |||||||||||||
Provision (benefit) for credit losses | 1,886 | (353 | ) | 463 | (150 | ) | (1,078 | ) | |||||
Other operating income | 3,819 | 2,938 | 1,907 | 3,841 | 2,308 | ||||||||
Other operating expense | 16,678 | 15,977 | 16,415 | 14,831 | 15,583 | ||||||||
Income before provision for income taxes | 11,996 | 12,982 | 6,632 | 8,069 | 8,953 | ||||||||
Provision for income taxes | 1,884 | 2,911 | 1,605 | 1,641 | 1,211 | ||||||||
Net income Community Banking segment | |||||||||||||
Weighted average shares outstanding, diluted | 5,769,415 | 5,740,494 | 5,805,870 | 5,977,351 | 6,177,766 | ||||||||
Diluted earnings per share |
Year Ended | |||||
(Dollars in thousands, except per share data) | |||||
Net interest income | |||||
Provision (benefit) for credit losses | 1,846 | (4,099 | ) | ||
Other operating income | 12,505 | 10,119 | |||
Other operating expense | 63,901 | 58,647 | |||
Income before provision for income taxes | 39,679 | 33,651 | |||
Provision for income taxes | 8,041 | 6,468 | |||
Net income Community Banking segment | |||||
Weighted average shares outstanding, diluted | 5,829,412 | 6,249,313 | |||
Diluted earnings per share |
Home Mortgage Lending
During the fourth quarter of 2022, mortgage loan volume sold decreased to
In addition to the
The net change in fair value of mortgage servicing rights decreased mortgage banking income by
As of
The Company’s wholly owned subsidiary,
The following table provides highlights of the Home Mortgage Lending segment of Northrim:
Three Months Ended | |||||||||||||||
(Dollars in thousands, except per share data) | |||||||||||||||
Mortgage loan commitments | |||||||||||||||
Mortgage loans funded for sale | |||||||||||||||
Mortgage loan refinances to total fundings | 11 | % | 7 | % | 10 | % | 24 | % | 30 | % | |||||
Mortgage loans serviced for others | |||||||||||||||
Net realized gains on mortgage loans sold | |||||||||||||||
Change in fair value of mortgage loan commitments, net | (446 | ) | (395 | ) | (603 | ) | 409 | (1,687 | ) | ||||||
Total production revenue | 1,121 | 3,341 | 4,046 | 4,330 | 5,527 | ||||||||||
Mortgage servicing revenue | 2,120 | 2,121 | 1,932 | 1,771 | 1,975 | ||||||||||
Change in fair value of mortgage servicing rights: | |||||||||||||||
Due to changes in model inputs of assumptions1 | 93 | 555 | (225 | ) | 1,192 | (89 | ) | ||||||||
Other2 | (411 | ) | (410 | ) | (25 | ) | (481 | ) | (460 | ) | |||||
Total mortgage servicing revenue, net | 1,802 | 2,266 | 1,682 | 2,482 | 1,426 | ||||||||||
Other mortgage banking revenue | 33 | 127 | 172 | 170 | 316 | ||||||||||
Total mortgage banking income | |||||||||||||||
Net interest income | |||||||||||||||
Mortgage banking income | 2,956 | 5,734 | 5,900 | 6,982 | 7,269 | ||||||||||
Other operating expense | 5,548 | 6,309 | 6,823 | 6,270 | 7,416 | ||||||||||
Income before provision for income taxes | (2,046 | ) | 68 | (314 | ) | 1,107 | 413 | ||||||||
Provision for income taxes | (529 | ) | 14 | (82 | ) | 309 | 41 | ||||||||
Net (loss) income Home Mortgage Lending segment | ( | ) | ( | ) | |||||||||||
Weighted average shares outstanding, diluted | 5,769,415 | 5,740,494 | 5,805,870 | 5,977,351 | 6,177,766 | ||||||||||
Diluted (loss) earnings per share | ( | ) | ( | ) |
1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2Represents changes due to collection/realization of expected cash flows over time.
Year Ended | ||||||
(Dollars in thousands, except per share data) | ||||||
Mortgage loans funded for sale | ||||||
Mortgage loan refinances to total fundings | 12 | % | 37 | % | ||
Net realized gains on mortgage loans sold | ||||||
Change in fair value of mortgage loan commitments, net | (1,035 | ) | (1,483 | ) | ||
Total production revenue | 12,838 | 34,953 | ||||
Mortgage servicing revenue | 7,944 | 9,028 | ||||
Change in fair value of mortgage servicing rights: | ||||||
Due to changes in model inputs of assumptions1 | 1,615 | (1,181 | ) | |||
Other2 | (1,327 | ) | (2,402 | ) | ||
Total mortgage servicing revenue, net | 8,232 | 5,445 | ||||
Other mortgage banking revenue | 502 | 1,746 | ||||
Total mortgage banking income | ||||||
Net interest income | ||||||
Mortgage banking income | 21,572 | 42,144 | ||||
Other operating expense | 24,950 | 30,549 | ||||
Income before provision for income taxes | (1,185 | ) | 14,342 | |||
Provision for income taxes | (288 | ) | 4,008 | |||
Net (loss) income Home Mortgage Lending segment | ( | ) | ||||
Weighted average shares outstanding, diluted | 5,829,412 | 6,249,313 | ||||
Diluted (loss) earnings per share | ( | ) |
1Principally reflects changes in discount rates and prepayment speed assumptions, which are primarily affected by changes in interest rates.
2Represents changes due to collection/realization of expected cash flows over time.
Balance Sheet Review
Northrim’s total assets were
Liquidity levels remain high with interest bearing deposits in other banks at
Average interest-earning assets were
Average investment securities increased to
“Core loans, excluding PPP loans, increased
As of
Alaskans continue to account for substantially all of Northrim’s deposit base, which is primarily made up of low-cost transaction accounts. Total deposits were
Shareholders’ equity was
Asset Quality
Nonperforming assets (“NPAs”) net of government guarantees were
Nonaccrual loans net of guarantees decreased to
Net adversely classified loans were
Performing restructured loans that were not included in nonaccrual loans at
Excluding SBA PPP loans, Northrim had
Northrim estimates that
About
www.northrim.com
Forward-Looking Statement
This release may contain “forward-looking statements” as that term is defined for purposes of Section 21E of the Securities Exchange Act of 1934, as amended. These statements are, in effect, management’s attempt to predict future events, and thus are subject to various risks and uncertainties. Readers should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. All statements, other than statements of historical fact, regarding our financial position, business strategy, management’s plans and objectives for future operations are forward-looking statements. When used in this report, the words “anticipate,” “believe,” “estimate,” “expect,” and “intend” and words or phrases of similar meaning, as they relate to Northrim and its management are intended to help identify forward-looking statements. Although we believe that management’s expectations as reflected in forward-looking statements are reasonable, we cannot assure readers that those expectations will prove to be correct. Forward-looking statements, are subject to various risks and uncertainties that may cause our actual results to differ materially and adversely from our expectations as indicated in the forward-looking statements. These risks and uncertainties include: the effect of COVID-19 and other infectious illness outbreaks that may arise in the future and the resulting governmental and societal responses; the impact of the results of government initiatives on the regulatory landscape, natural resource extraction industries, and capital markets; current and future economic conditions, including the effects of declines in the real estate market, high unemployment rates, inflationary pressures, and slowdowns in economic growth; financial stress on borrowers (consumers and business) as a result of higher interest rates or an uncertain economic environment; the impact of inflationary pressure, supply-chain constraints, trade policies and tensions, including tariffs, and potential geopolitical instability, including the war in
References:
www.sba.gov/ak
https://www.bea.gov/
http://almis.labor.state.ak.us/
http://www.tax.alaska.gov/programs/oil/prevailing/ans.aspx
http://www.tax.state.ak.us/
www.mba.org
https://www.alaskarealestate.com/MLSMember/RealEstateStatistics.aspx
https://www.sba.gov/document/report-paycheck-protection-program-weekly-reports-2021
https://www.capitaliq.spglobal.com/web/client?auth=inherit&overridecdc=1markets/indexFinancials
Income Statement | |||||||||||||||
(Dollars in thousands, except per share data) | Three Months Ended | Year-to-date | |||||||||||||
(Unaudited) | |||||||||||||||
2022 | 2022 | 2021 | 2022 | 2021 | |||||||||||
Interest Income: | |||||||||||||||
Interest and fees on loans | |||||||||||||||
Interest on investments | 4,380 | 3,530 | 1,322 | 11,878 | 4,918 | ||||||||||
Interest on deposits in banks | 2,758 | 1,899 | 199 | 5,665 | 447 | ||||||||||
Total interest income | 29,718 | 27,559 | 22,475 | 100,328 | 84,606 | ||||||||||
Interest Expense: | |||||||||||||||
Interest expense on deposits | 2,247 | 1,064 | 582 | 4,485 | 3,077 | ||||||||||
Interest expense on borrowings | 184 | 184 | 183 | 728 | 702 | ||||||||||
Total interest expense | 2,431 | 1,248 | 765 | 5,213 | 3,779 | ||||||||||
Net interest income | 27,287 | 26,311 | 21,710 | 95,115 | 80,827 | ||||||||||
Provision (benefit) for credit losses | 1,886 | (353 | ) | (1,078 | ) | 1,846 | (4,099 | ) | |||||||
Net interest income after provision (benefit) for | |||||||||||||||
loan losses | 25,401 | 26,664 | 22,788 | 93,269 | 84,926 | ||||||||||
Other Operating Income: | |||||||||||||||
Mortgage banking income | 2,956 | 5,734 | 7,269 | 21,572 | 42,144 | ||||||||||
Commercial servicing revenue | 1,186 | 197 | (71 | ) | 1,628 | 306 | |||||||||
Bankcard fees | 974 | 992 | 892 | 3,697 | 3,389 | ||||||||||
Purchased receivable income | 473 | 561 | 622 | 2,002 | 2,259 | ||||||||||
Service charges on deposit accounts | 403 | 432 | 354 | 1,611 | 1,297 | ||||||||||
Unrealized gain (loss) on marketable equity securities | 81 | 33 | (128 | ) | (1,119 | ) | (101 | ) | |||||||
Keyman insurance proceeds | — | — | — | 2,002 | — | ||||||||||
Gain on sale of securities | — | — | — | — | 67 | ||||||||||
Other income | 702 | 723 | 568 | 2,684 | 3,208 | ||||||||||
Total other operating income | 6,775 | 8,672 | 9,577 | 34,077 | 52,263 | ||||||||||
Other Operating Expense: | |||||||||||||||
Salaries and other personnel expense | 14,155 | 14,510 | 15,011 | 58,172 | 60,412 | ||||||||||
Data processing expense | 2,309 | 2,315 | 2,128 | 8,926 | 8,567 | ||||||||||
Occupancy expense | 1,731 | 1,710 | 1,842 | 6,915 | 7,078 | ||||||||||
Marketing expense | 984 | 524 | 1,132 | 2,747 | 2,741 | ||||||||||
Professional and outside services | 669 | 894 | 832 | 2,993 | 2,801 | ||||||||||
Insurance expense | 427 | 545 | 628 | 2,054 | 1,593 | ||||||||||
OREO expense, net rental income and gains on sale | 384 | 109 | (65 | ) | 500 | (432 | ) | ||||||||
Intangible asset amortization expense | 6 | 7 | 10 | 25 | 37 | ||||||||||
Other operating expense | 1,561 | 1,672 | 1,481 | 6,520 | 6,399 | ||||||||||
Total other operating expense | 22,226 | 22,286 | 22,999 | 88,852 | 89,196 | ||||||||||
Income before provision for income taxes | 9,950 | 13,050 | 9,366 | 38,494 | 47,993 | ||||||||||
Provision for income taxes | 1,355 | 2,925 | 1,252 | 7,753 | 10,476 | ||||||||||
Net income | |||||||||||||||
Basic EPS | |||||||||||||||
Diluted EPS | |||||||||||||||
Weighted average shares outstanding, basic | 5,690,354 | 5,681,089 | 6,100,160 | 5,765,088 | 6,180,801 | ||||||||||
Weighted average shares outstanding, diluted | 5,769,415 | 5,740,494 | 6,177,766 | 5,829,412 | 6,249,313 |
Balance Sheet | |||||||||
(Dollars in thousands) | |||||||||
(Unaudited) | |||||||||
2022 | 2022 | 2021 | |||||||
Assets: | |||||||||
Cash and due from banks | |||||||||
Interest bearing deposits in other banks | 231,603 | 386,587 | 625,022 | ||||||
Investment securities available for sale, at fair value | 677,029 | 651,921 | 426,684 | ||||||
Investment securities held to maturity | 36,750 | 36,750 | 20,000 | ||||||
Marketable equity securities, at fair value | 10,740 | 11,149 | 8,420 | ||||||
Investment in | 3,816 | 3,820 | 3,107 | ||||||
Loans held for sale | 27,538 | 49,356 | 73,650 | ||||||
Portfolio loans | 1,501,785 | 1,407,266 | 1,413,886 | ||||||
Allowance for credit losses, loans | (13,838 | ) | (11,982 | ) | (11,739 | ) | |||
Net portfolio loans | 1,487,947 | 1,395,284 | 1,402,147 | ||||||
Purchased receivables, net | 17,717 | 4,785 | 6,987 | ||||||
Mortgage servicing rights, at fair value | 18,635 | 17,709 | 13,724 | ||||||
Other real estate owned, net | — | 5,638 | 5,638 | ||||||
Premises and equipment, net | 37,821 | 36,931 | 37,164 | ||||||
Operating lease right-of-use assets | 9,868 | 10,434 | 11,001 | ||||||
15,984 | 15,990 | 16,009 | |||||||
Other assets | 68,846 | 70,826 | 54,361 | ||||||
Total assets | |||||||||
Liabilities: | |||||||||
Demand deposits | |||||||||
Interest-bearing demand | 767,686 | 757,422 | 692,683 | ||||||
Savings deposits | 320,917 | 344,975 | 348,164 | ||||||
Money market deposits | 308,317 | 309,690 | 314,996 | ||||||
Time deposits | 192,857 | 165,870 | 177,964 | ||||||
Total deposits | 2,387,211 | 2,439,335 | 2,421,631 | ||||||
Other borrowings | 14,095 | 14,199 | 14,508 | ||||||
Junior subordinated debentures | 10,310 | 10,310 | 10,310 | ||||||
Operating lease liabilities | 9,865 | 10,430 | 10,965 | ||||||
Other liabilities | 31,931 | 32,541 | 29,488 | ||||||
Total liabilities | 2,453,412 | 2,506,815 | 2,486,902 | ||||||
Shareholders' Equity: | |||||||||
Total shareholders' equity | 218,629 | 210,699 | 237,817 | ||||||
Total liabilities and shareholders' equity | |||||||||
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Composition of Portfolio Loans | |||||||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | ||||||||||||||||||||
Commercial loans | 41 | % | 41 | % | 39 | % | 37 | % | 37 | % | |||||||||||||||||||
SBA Paycheck Protection Program loans | 7,331 | — | % | 11,724 | 1 | % | 32,948 | 2 | % | 66,680 | 5 | % | 122,729 | 9 | % | ||||||||||||||
CRE owner occupied loans | 255,470 | 17 | % | 231,404 | 16 | % | 241,575 | 17 | % | 230,350 | 17 | % | 220,367 | 15 | % | ||||||||||||||
CRE nonowner occupied loans | 438,680 | 29 | % | 418,845 | 30 | % | 416,285 | 30 | % | 397,212 | 29 | % | 402,879 | 28 | % | ||||||||||||||
Construction loans | 125,739 | 8 | % | 118,452 | 8 | % | 131,850 | 9 | % | 126,679 | 9 | % | 121,104 | 8 | % | ||||||||||||||
Consumer loans | 82,883 | 5 | % | 50,281 | 4 | % | 43,852 | 3 | % | 36,516 | 3 | % | 36,565 | 3 | % | ||||||||||||||
Subtotal | 1,510,395 | 1,415,239 | 1,414,005 | 1,386,768 | 1,425,429 | ||||||||||||||||||||||||
Unearned loan fees, net | (8,610 | ) | (7,973 | ) | (8,296 | ) | (9,381 | ) | (11,543 | ) | |||||||||||||||||||
Total portfolio loans | |||||||||||||||||||||||||||||
Composition of Deposits | ||||||||||||||||||||||||
Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | Balance | % of total | |||||||||||||||
Demand deposits | 34 | % | 35 | % | 35 | % | 35 | % | 37 | % | ||||||||||||||
Interest-bearing demand | 767,686 | 32 | % | 757,422 | 31 | % | 666,283 | 29 | % | 674,393 | 29 | % | 692,683 | 29 | % | |||||||||
Savings deposits | 320,917 | 13 | % | 344,975 | 14 | % | 349,208 | 15 | % | 351,681 | 15 | % | 348,164 | 14 | % | |||||||||
Money market deposits | 308,317 | 13 | % | 309,690 | 13 | % | 319,843 | 14 | % | 329,261 | 14 | % | 314,996 | 13 | % | |||||||||
Time deposits | 192,857 | 8 | % | 165,870 | 7 | % | 169,900 | 7 | % | 175,186 | 7 | % | 177,964 | 7 | % | |||||||||
Total deposits |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Asset Quality | ||||||||||||
2022 | 2022 | 2021 | ||||||||||
Nonaccrual loans | ||||||||||||
Loans 90 days past due and accruing | — | — | — | |||||||||
Total nonperforming loans | 7,076 | 7,092 | 11,650 | |||||||||
Nonperforming loans guaranteed by government | (646 | ) | (619 | ) | (978 | ) | ||||||
Net nonperforming loans | 6,430 | 6,473 | 10,672 | |||||||||
Other real estate owned | — | 5,638 | 5,638 | |||||||||
Repossessed assets | — | — | — | |||||||||
Other real estate owned guaranteed by government | — | (1,279 | ) | (1,279 | ) | |||||||
Net nonperforming assets | ||||||||||||
Nonperforming loans, net of government guarantees / portfolio loans | 0.43 | % | 0.46 | % | 0.75 | % | ||||||
Nonperforming loans, net of government guarantees / portfolio loans, | ||||||||||||
net of government guarantees | 0.46 | % | 0.50 | % | 0.88 | % | ||||||
Nonperforming assets, net of government guarantees / total assets | 0.24 | % | 0.40 | % | 0.55 | % | ||||||
Nonperforming assets, net of government guarantees / total assets | ||||||||||||
net of government guarantees | 0.25 | % | 0.42 | % | 0.60 | % | ||||||
Performing restructured loans | ||||||||||||
Performing restructured loans guaranteed by government | — | (2,459 | ) | (2,518 | ) | |||||||
Net performing restructured loans | ||||||||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees | ||||||||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees / portfolio loans | 0.45 | % | 0.50 | % | 0.81 | % | ||||||
Nonperforming loans plus performing restructured loans, net of government | ||||||||||||
guarantees / portfolio loans, net of government guarantees | 0.48 | % | 0.55 | % | 0.94 | % | ||||||
Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
guarantees / total assets | 0.25 | % | 0.42 | % | 0.58 | % | ||||||
Nonperforming assets plus performing restructured loans, net of government | ||||||||||||
guarantees / total assets, net of government guarantees | 0.26 | % | 0.44 | % | 0.63 | % | ||||||
Adversely classified loans, net of government guarantees | ||||||||||||
Special mention loans, net of government guarantees | ||||||||||||
Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
portfolio loans | 0.01 | % | 0.29 | % | — | % | ||||||
Loans 30-89 days past due and accruing, net of government guarantees / | ||||||||||||
portfolio loans, net of government guarantees | 0.01 | % | 0.31 | % | — | % | ||||||
Allowance for credit losses / portfolio loans | 0.92 | % | 0.85 | % | 0.83 | % | ||||||
Allowance for credit losses / portfolio loans, net of government guarantees | 0.99 | % | 0.93 | % | 0.97 | % | ||||||
Allowance for credit losses / nonperforming loans, net of government | ||||||||||||
guarantees | 215 | % | 185 | % | 110 | % | ||||||
Gross loan charge-offs for the quarter | $ | — | ||||||||||
Gross loan recoveries for the quarter | ( | ) | ( | ) | ( | ) | ||||||
Net loan (recoveries) charge-offs for the quarter | ( | ) | ( | ) | ||||||||
Net loan (recoveries) charge-offs year-to-date | ( | ) | ( | ) | ||||||||
Net loan (recoveries) charge-offs for the quarter / average loans, for the quarter | (0.01 | ) | % | (0.10 | ) | % | 0.08 | % | ||||
Net loan (recoveries) charge-offs year-to-date / average loans, | ||||||||||||
year-to-date annualized | (0.08 | ) | % | (0.10 | ) | % | 0.07 | % |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Nonperforming Assets Rollforward | |||||||||||||||||||||
Writedowns | Transfers to | Transfers to | |||||||||||||||||||
Balance at September 30, 2022 | Additions this quarter | Payments this quarter | /Charge- offs this quarter | OREO/ REPO | Performing Status this quarter | Sales this quarter | Balance at 2022 | ||||||||||||||
Commercial loans | ( | ) | $— | $— | $— | $— | |||||||||||||||
Commercial real estate | 2,473 | — | (60 | ) | — | — | — | — | 2,413 | ||||||||||||
Construction loans | 109 | — | — | — | — | — | — | 109 | |||||||||||||
Consumer loans | 204 | 7 | (6 | ) | — | — | — | — | 205 | ||||||||||||
Non-performing loans guaranteed by government | (619 | ) | (49 | ) | 22 | — | — | — | — | (646 | ) | ||||||||||
Total non-performing loans | 6,473 | 411 | (454 | ) | — | — | — | — | 6,430 | ||||||||||||
Other real estate owned | 5,638 | — | — | — | — | — | (5,638 | ) | — | ||||||||||||
Other real estate owned guaranteed | |||||||||||||||||||||
by government | (1,279 | ) | — | — | — | — | — | 1,279 | — | ||||||||||||
Total non-performing assets, | |||||||||||||||||||||
net of government guarantees | ( | ) | $— | $— | $— | ( | ) |
The following table details loan charge-offs, by industry:
Loan Charge-offs by Industry | ||||||||||
Three Months Ended | ||||||||||
Charge-offs: | ||||||||||
Architectural services | $— | $— | $— | $— | ||||||
Land subdivision | — | — | 166 | — | — | |||||
Assisted living facility | — | — | — | 19 | — | |||||
Restaurants | — | 25 | — | — | — | |||||
Consumer | — | 3 | — | — | — | |||||
Aircraft parts and auxiliary equipment manufacturing | — | — | — | — | 185 | |||||
Amusement and recreational activities | — | — | — | — | 9 | |||||
Scenic and sightseeing transportation | — | — | — | — | 416 | |||||
Site preparation contractors | — | — | — | 276 | 224 | |||||
Specialized freight trucking, long-distance | — | — | — | — | 345 | |||||
Total charge-offs | $— |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Average Balances, Yields, and Rates | |||||||||||||||||
Three Months Ended | |||||||||||||||||
Average | Average | Average | |||||||||||||||
Average | Tax Equivalent | Average | Tax Equivalent | Average | Tax Equivalent | ||||||||||||
Balance | Yield/Rate | Balance | Yield/Rate | Balance | Yield/Rate | ||||||||||||
Assets | |||||||||||||||||
Interest bearing deposits in other banks | 3.67 | % | 2.29 | % | 0.15 | % | |||||||||||
Portfolio investments | 712,842 | 2.30 | % | 678,609 | 1.98 | % | 432,330 | 1.17 | % | ||||||||
Loans held for sale | 40,186 | 5.52 | % | 53,769 | 4.88 | % | 81,859 | 2.82 | % | ||||||||
Portfolio loans | 1,466,567 | 5.98 | % | 1,414,982 | 6.05 | % | 1,410,597 | 5.75 | % | ||||||||
Total interest-earning assets | 2,513,862 | 4.74 | % | 2,471,640 | 4.47 | % | 2,446,716 | 3.67 | % | ||||||||
Nonearning assets | 182,884 | 174,182 | 173,149 | ||||||||||||||
Total assets | |||||||||||||||||
Liabilities and Shareholders' Equity | |||||||||||||||||
Interest-bearing deposits | 0.56 | % | 0.28 | % | 0.16 | % | |||||||||||
Borrowings | 24,470 | 2.92 | % | 24,573 | 2.92 | % | 24,879 | 2.90 | % | ||||||||
Total interest-bearing liabilities | 1,604,315 | 0.60 | % | 1,541,606 | 0.32 | % | 1,482,081 | 0.20 | % | ||||||||
Noninterest-bearing demand deposits | 831,841 | 846,764 | 852,405 | ||||||||||||||
Other liabilities | 43,500 | 36,446 | 40,459 | ||||||||||||||
Shareholders' equity | 217,090 | 221,006 | 244,920 | ||||||||||||||
Total liabilities and shareholders' equity | |||||||||||||||||
Net spread | 4.14 | % | 4.15 | % | 3.47 | % | |||||||||||
NIM | 4.31 | % | 4.22 | % | 3.52 | % | |||||||||||
NIMTE* | 4.36 | % | 4.27 | % | 3.54 | % | |||||||||||
Cost of funds | 0.40 | % | 0.21 | % | 0.13 | % | |||||||||||
Average portfolio loans to average | |||||||||||||||||
interest-earning assets | 58.34 | % | 57.25 | % | 57.65 | % | |||||||||||
Average portfolio loans to average total deposits | 60.81 | % | 59.86 | % | 61.08 | % | |||||||||||
Average non-interest deposits to average | |||||||||||||||||
total deposits | 34.49 | % | 35.82 | % | 36.91 | % | |||||||||||
Average interest-earning assets to average | |||||||||||||||||
interest-bearing liabilities | 156.69 | % | 160.33 | % | 165.09 | % |
The components of the change in NIMTE* are detailed in the table below:
4Q22 vs. 3Q22 | 4Q22 vs. 4Q21 | |
Nonaccrual interest adjustments | (0.16)% | (0.10)% |
Impact of SBA Paycheck Protection Program loans | (0.07)% | (0.43)% |
Interest rates and loan fees | 0.28 % | 1.23 % |
Volume and mix of interest-earning assets and liabilities | 0.04 % | 0.12 % |
Change in NIMTE* | 0.09 % | 0.82 % |
Additional Financial Information
(Dollars in thousands)
(Unaudited)
Average Balances, Yields, and Rates | |||||||||||
Year-to-date | |||||||||||
Average | Average | ||||||||||
Average | Tax Equivalent | Average | Tax Equivalent | ||||||||
Balance | Yield/Rate | Balance | Yield/Rate | ||||||||
Assets | |||||||||||
Interest bearing deposits in other banks | $ | 383,939 | 1.46 | % | $ | 311,536 | 0.14 | % | |||
Portfolio investments | 618,782 | 1.84 | % | 369,172 | 1.27 | % | |||||
Loans held for sale | 51,537 | 4.34 | % | 101,752 | 2.80 | % | |||||
Portfolio loans | 1,415,125 | 5.71 | % | 1,478,318 | 5.18 | % | |||||
Total interest-earning assets | 2,469,383 | 4.10 | % | 2,260,778 | 3.76 | % | |||||
Nonearning assets | 171,625 | 171,821 | |||||||||
Total assets | $ | 2,641,008 | $ | 2,432,599 | |||||||
Liabilities and Shareholders' Equity | |||||||||||
Interest-bearing deposits | $ | 1,534,334 | 0.29 | % | $ | 1,340,988 | 0.23 | % | |||
Borrowings | 24,623 | 2.92 | % | 24,993 | 2.79 | % | |||||
Total interest-bearing liabilities | 1,558,957 | 0.33 | % | 1,365,981 | 0.28 | % | |||||
Noninterest-bearing demand deposits | 820,547 | 784,092 | |||||||||
Other liabilities | 36,731 | 43,312 | |||||||||
Shareholders' equity | 224,773 | 239,214 | |||||||||
Total liabilities and shareholders' equity | $ | 2,641,008 | $ | 2,432,599 | |||||||
Net spread | 3.77 | % | 3.48 | % | |||||||
NIM | 3.85 | % | 3.58 | % | |||||||
NIMTE* | 3.89 | % | 3.60 | % | |||||||
Cost of funds | 0.22 | % | 0.18 | % | |||||||
Average portfolio loans to average interest-earning assets | 57.31 | % | 65.39 | % | |||||||
Average portfolio loans to average total deposits | 60.09 | % | 69.57 | % | |||||||
Average non-interest deposits to average total deposits | 34.84 | % | 36.90 | % | |||||||
Average interest-earning assets to average interest-bearing liabilities | 158.40 | % | 165.51 | % |
The components of the change in NIMTE* are detailed in the table below:
YTD22 vs.YTD21 | |
Nonaccrual interest adjustments | 0.03 % |
Impact of SBA Paycheck Protection Program loans | (0.13)% |
Interest rates and loan fees | 0.43 % |
Volume and mix of interest-earning assets and liabilities | (0.04)% |
Change in NIMTE* | 0.29 % |
Additional Financial Information
(Dollars in thousands, except per share data)
(Unaudited)
Capital Data (At quarter end) | ||||||||||||
Book value per share | ||||||||||||
Tangible book value per share* | ||||||||||||
Total shareholders' equity/Total assets | 8.18 | % | 7.75 | % | 8.73 | % | ||||||
Tangible common equity/Tangible assets* | 7.63 | % | 7.21 | % | 8.19 | % | ||||||
Tier 1 capital / Risk adjusted assets | 12.81 | % | 12.98 | % | 14.08 | % | ||||||
Total capital / Risk adjusted assets | 13.64 | % | 13.75 | % | 14.79 | % | ||||||
Tier 1 capital / Average assets | 9.01 | % | 8.97 | % | 9.03 | % | ||||||
Shares outstanding | 5,700,728 | 5,681,089 | 6,014,813 | |||||||||
Unrealized gain on AFS debt securities, net of income taxes | ( | ) | ( | ) | ( | ) | ||||||
Unrealized (loss) on derivatives and hedging activities, net of income taxes | ( | ) |
Profitability Ratios | ||||||||||
For the quarter: | ||||||||||
NIM | 4.31 | % | 4.22 | % | 3.67 | % | 3.18 | % | 3.52 | % |
NIMTE* | 4.36 | % | 4.27 | % | 3.70 | % | 3.20 | % | 3.54 | % |
Efficiency ratio | 65.23 | % | 63.69 | % | 77.39 | % | 70.02 | % | 73.48 | % |
Return on average assets | 1.26 | % | 1.52 | % | 0.74 | % | 1.12 | % | 1.23 | % |
Return on average equity | 15.71 | % | 18.18 | % | 8.58 | % | 12.36 | % | 13.14 | % |
Year-to-date: | ||||
NIM | 3.85 | % | 3.58 | % |
NIMTE* | 3.89 | % | 3.60 | % |
Efficiency ratio | 68.76 | % | 66.99 | % |
Return on average assets | 1.16 | % | 1.54 | % |
Return on average equity | 13.68 | % | 15.68 | % |
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Non-GAAP financial measures have inherent limitations, are not required to be uniformly applied, and are not audited. Although we believe these non-GAAP financial measures are frequently used by stakeholders in the evaluation of the Company, they have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of results as reported under GAAP.
Net interest margin on a tax equivalent basis
Net interest margin on a tax equivalent basis ("NIMTE") is a non-GAAP performance measurement in which interest income on non-taxable investments and loans is presented on a tax equivalent basis using a combined federal and state statutory rate of 28.43% in both 2021 and 2020. The most comparable GAAP measure is net interest margin and the following table sets forth the reconciliation of NIMTE to net interest margin.
Three Months Ended | |||||||||||||||||||
Net interest income | |||||||||||||||||||
Divided by average interest-bearing assets | 2,513,862 | 2,471,640 | 2,429,394 | 2,462,046 | 2,446,716 | ||||||||||||||
Net interest margin ("NIM")2 | 4.31 | % | 4.22 | % | 3.67 | % | 3.18 | % | 3.52 | % | |||||||||
Net interest income | |||||||||||||||||||
Plus: reduction in tax expense related to | |||||||||||||||||||
tax-exempt interest income | 325 | 284 | 193 | 137 | 131 | ||||||||||||||
Divided by average interest-bearing assets | 2,513,862 | 2,471,640 | 2,429,394 | 2,462,046 | 2,446,716 | ||||||||||||||
NIMTE2 | 4.36 | % | 4.27 | % | 3.70 | % | 3.20 | % | 3.54 | % |
Year-to-date | |||||||
Net interest income | |||||||
Divided by average interest-bearing assets | 2,469,383 | 2,260,778 | |||||
Net interest margin ("NIM")3 | 3.85 | % | 3.58 | % | |||
Net interest income | |||||||
Plus: reduction in tax expense related to | |||||||
tax-exempt interest income | 939 | 489 | |||||
Divided by average interest-bearing assets | 2,469,383 | 2,260,778 | |||||
NIMTE3 | 3.89 | % | 3.60 | % |
2Calculated using actual days in the quarter divided by 365 for the quarter ended in 2022 and 2021.
3Calculated using actual days in the year divided by 365 for year-to-date period in 2022 and 2021.
*Non-GAAP Financial Measures
(Dollars and shares in thousands, except per share data)
(Unaudited)
Tangible Book Value
Tangible book value is a non-GAAP measure defined as shareholders' equity, less intangible assets, divided by common shares outstanding. The most comparable GAAP measure is book value per share and the following table sets forth the reconciliation of tangible book value per share and book value per share.
Total shareholders' equity | ||||||||||||||
Divided by common shares outstanding | 5,701 | 5,681 | 5,681 | 5,882 | 6,015 | |||||||||
Book value per share |
Total shareholders' equity | ||||||||||||||
Less: goodwill and intangible assets | 15,984 | 15,990 | 15,997 | 16,003 | 16,009 | |||||||||
Divided by common shares outstanding | 5,701 | 5,681 | 5,681 | 5,882 | 6,015 | |||||||||
Tangible book value per share |
Tangible Common Equity to Tangible Assets
Tangible common equity to tangible assets is a non-GAAP ratio that represents total equity less goodwill and intangible assets divided by total assets less goodwill and intangible assets. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.
Total shareholders' equity | |||||||||||||||||||
Total assets | 2,672,041 | 2,717,514 | 2,611,154 | 2,626,160 | 2,724,719 | ||||||||||||||
Total shareholders' equity to total assets | 8.18 | % | 7.75 | % | 8.24 | % | 8.60 | % | 8.73 | % |
Total shareholders' equity | |||||||||||||||||||
Less: goodwill and other intangible assets, net | 15,984 | 15,990 | 15,997 | 16,003 | 16,009 | ||||||||||||||
Tangible common shareholders' equity | |||||||||||||||||||
Total assets | |||||||||||||||||||
Less: goodwill and other intangible assets, net | 15,984 | 15,990 | 15,997 | 16,003 | 16,009 | ||||||||||||||
Tangible assets | |||||||||||||||||||
Tangible common equity ratio | 7.63 | % | 7.21 | % | 7.68 | % | 8.04 | % | 8.19 | % |
Tangible Common Equity to Tangible Assets, excluding the fair value of the available for sales securities portfolio
Tangible common equity to tangible assets, excluding the fair value of the available for sales securities portfolio, is a non-GAAP ratio that represents total equity less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes divided by total assets less goodwill and intangible assets and the unrealized gain (loss) on available for sale securities, net of income taxes. The most comparable GAAP measure of shareholders' equity to total assets is calculated by dividing total shareholders' equity by total assets and the following table sets forth the reconciliation of tangible common equity to tangible assets and shareholders' equity to total assets.
2022 | |||
Total shareholders' equity | |||
Total assets | 2,672,041 | ||
Total shareholders' equity to total assets | 8.18 | % |
2022 | |||
Total shareholders' equity | |||
Less: goodwill and other intangible assets, net | 15,984 | ||
Less: unrealized gain (loss) on available for sale securities, net income taxes | (30,121 | ) | |
Tangible common shareholders' equity, excluding the fair value of the available for sale securities portfolio | |||
Total assets | |||
Less: goodwill and other intangible assets, net | 15,984 | ||
Less: unrealized gain (loss) on available for sale securities, net income taxes | (30,121 | ) | |
Tangible assets, excluding the fair value of the available for sale securities portfolio | |||
Tangible common equity ratio, excluding the fair value of the available for sale securities portfolio | 8.67 | % |
Note Transmitted on GlobeNewswire on
Contact: | |
(907) 261-3308 | |
(907) 261-3539 |
Source:
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