YORK, Pa., Jan. 27, 2023 /PRNewswire/ — Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $1.1 million for the fourth quarter ended December 31, 2022, compared to $1.6 million in the linked quarter and $1.7 million for the fourth quarter of 2021. This decrease was primarily driven by a $1.5 million decline in mortgage banking gains on the sale of loans due to continued inflationary pressure on the mortgage market. The decline in mortgage gains was partially offset by a $2.3 million increase in interest income, driven by loan growth and rising variable rate loan yields, which contributed to a 15% improvement in net interest income compared to the fourth quarter of 2021. The company reported earnings per share (diluted) of 38 cents for the fourth quarter ended December 31, 2022, compared to 58 cents in the linked quarter and 57 cents for the fourth quarter of 2021. Unrealized investment portfolio losses, flowing through Accumulated Other Comprehensive Loss, have decreased to $11.9 million at quarter end compared to $13.3 million in the linked quarter. This resulted in a book value per common share of $20.44 on December 31, 2022, versus $19.61 in the linked quarter and $22.94 for the fourth quarter of 2021. Regulatory Tier 1 book value per share stood at $24.69 on December 31, 2022.
“Traditions Bancorp’s 2022 performance was driven by proactive balance sheet management and a prudent approach to pricing loans and deposits under extraordinarily challenging circumstances,” stated Eugene J. Draganosky, Chief Executive Officer. “We grew our balance sheet earning assets significantly through the generation of commercial loans and adjustable-rate mortgages, both at favorable spreads, which are driving improved interest income and are helping to offset the impact of the extended precipitous slide in home sales. Other factors contributing to our performance include our steadfast approach to risk management, strong credit quality, and expense control measures taken in 2022. The bank’s leadership has been proactive in developing strategies to address future opportunities and threats as economic conditions change in our country.”
Quarterly Highlights – Fourth Quarter 2022 versus Fourth Quarter 2021
- Loans grew by $78.6 million, or 15%, over 4Q21, despite being tempered by Paycheck Protection Program (PPP) loan forgiveness. Without the impact of PPP forgiveness, loans grew by $86.9 million, or 17%.
- As of December 31, 2022, PPP loan balances outstanding were $1.3 million.
- Deposits decreased by $5.0 million, or 1%, over the last 12 months.
- Net interest margin expanded to 3.44% in 4Q22 compared to 3.21% in 4Q21, driven by growth in commercial and adjustable rate residential mortgage loans, the positive impact of short-term interest rate increases on the loan portfolio’s yield, and a 1.21% cost of funds for the quarter.
- Gains on the sale of mortgages were $0.4 million for 4Q22, declining from $1.9 million in 4Q21.
- The mortgage pipeline decreased to $16.8 million from $19.5 million in the linked quarter and $40.9 million on December 31, 2021. Residential mortgage loans sold in 4Q22 were $41.3 million compared to $58.5 million in the linked quarter and $81.9 million for 4Q21. Mortgage gains have fallen amid a turbulent decline in regional home sales stemming from the rapid increase in mortgage rates and shrinking inventories.
- On April 19, 2022, the company announced regular cash dividends and paid eight cents per common share quarterly on May 13, August 15, and November 14, 2022. A fourth-quarter cash dividend of eight cents per common share was declared on January 19, 2023, and is payable on February 13, 2023, to shareholders of record at the close of business on February 3, 2023.
- As part of its Share Repurchase Plan announced on March 24, 2022, the company repurchased 2,500 shares during the fourth quarter. The total number of shares repurchased since the program’s inception was 74,517 at a cost of $1.7 million or $22.19 per share.
YTD Highlights – Twelve Months Ended December 31, 2022, versus Twelve Months Ended December 31, 2021
- Net interest income increased $3.6 million, or 17%, driven by growth in commercial and residential mortgage loans, the Federal Reserve Bank’s short-term interest rate increases, and a relatively low cost of funds.
- On a YTD basis through December, net fee revenue from PPP loans totaled $262 thousand versus $1.4 million in the prior year. $29 thousand in gross fees have yet to be recognized.
- Other expense has increased 4% from $23.8 million in 4Q21 to $24.7 million in 4Q22, driven by the company’s geographic expansion, inflation, and other rising costs.
- Provision for loan losses decreased by $100 thousand, or 100%, from the prior year.
Credit Quality and Capital Insights:
- Nonaccrual loans increased in 4Q22, from $1.1 million in 3Q22 to $2.3 million in the current quarter.
- There was no foreclosed other real estate owned, or net charge-offs, through the end of the fourth quarter. The company reported a net recovery of $4 thousand in 2022.
- Non-performing assets to total assets increased from 0.14% in the linked quarter to 0.30% in the current quarter.
- Delinquencies greater than 30 days were 0.65% of total loans as of December 31, 2022, up from 0.25% as of September 30, 2022.
- The loan loss reserve ratio on December 31, 2022, excluding the PPP portfolio, was 1.20%, and reserves were over three times greater than non-performing assets. The company is prepared to adopt CECL in the first quarter of 2023.
- The bank remains well capitalized.
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FINANCIAL HIGHLIGHTS (unaudited): |
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|
Selected Financial Data |
Dec 31, 2022 |
Dec 31, 2021 |
||||||
|
Investment securities |
$ |
126,972 |
$ |
140,188 |
||||
|
Loans, net of unearned income |
597,950 |
519,305 |
||||||
|
Allowance for loan loss |
7,155 |
7,151 |
||||||
|
Total assets |
776,833 |
749,094 |
||||||
|
Deposits |
672,294 |
677,299 |
||||||
|
Borrowings |
36,249 |
– |
||||||
|
Shareholders’ equity |
56,983 |
65,148 |
||||||
|
Common book value per common share |
$ |
20.44 |
$ |
22.94 |
||||
|
Tier 1 book value per common share |
$ |
24.69 |
$ |
22.87 |
||||
|
Allowance/loans |
1.20 % |
1.38 % |
||||||
|
Non-performing assets/total assets |
0.30 % |
0.39 % |
||||||
|
Tier 1 capital/average assets |
8.74 % |
8.87 % |
||||||
|
Tier 1 capital/risk-weighted assets |
11.94 % |
12.67 % |
||||||
|
Total capital/risk-weighted assets |
13.18 % |
14.07 % |
||||||
|
Common shares outstanding |
2,788 |
2,840 |
||||||
|
Three months ended Dec 31, |
Twelve months ended Dec 31, |
|||||||
|
Selected Operations Data |
2022 |
2021 |
2022 |
2021 |
||||
|
Interest income |
$ |
8,178 |
$ |
5,913 |
$ |
27,769 |
$ |
22,954 |
|
Interest expense |
(1,716) |
(270) |
(2,669) |
(1,503) |
||||
|
Net interest income |
6,462 |
5,643 |
25,100 |
21,451 |
||||
|
Provision for loan losses |
– |
– |
– |
(100) |
||||
|
Investment securities gains(losses) |
– |
– |
– |
1 |
||||
|
Gains on sale of mortgages |
402 |
1,941 |
4,686 |
10,754 |
||||
|
Other income |
485 |
539 |
1,985 |
1,977 |
||||
|
Other expense |
(6,067) |
(6,074) |
(24,731) |
(23,835) |
||||
|
Income before income taxes |
1,282 |
2,049 |
7,040 |
10,248 |
||||
|
Income taxes |
(208) |
(399) |
(1,294) |
(2,037) |
||||
|
Net income |
$ |
1,074 |
$ |
1,650 |
$ |
5,746 |
$ |
8,211 |
|
Earnings per common share (basic) |
$ |
0.38 |
$ |
0.57 |
$ |
2.03 |
$ |
2.68 |
|
Earnings per common share (diluted) |
$ |
0.38 |
$ |
0.57 |
$ |
2.01 |
$ |
2.67 |
|
Return on average assets |
0.55 % |
0.89 % |
0.76 % |
1.18 % |
||||
|
Return on average equity |
7.77 % |
10.05 % |
9.69 % |
12.18 % |
||||
|
Net interest margin |
3.44 % |
3.21 % |
3.46 % |
3.24 % |
||||
|
Efficiency ratio |
82.56 % |
74.78 % |
77.84 % |
69.73 % |
||||
|
Net charge-offs(recoveries)/average loans |
0.00 % |
0.00 % |
0.00 % |
0.00 % |
||||
|
Average common shares |
2,811 |
2,873 |
2,828 |
3,059 |
||||
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:
This release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts. These statements can be identified by the use of forward-looking terminology such as “believe,” “expect,” “may,” “will,” “should,” “project,” “plan,” “seek,” “intend,” “anticipate” or similar terminology. Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about future performance, operations, products and services of Traditions Bancorp.
Traditions Bancorp cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to materially differ from those expressed in the forward-looking statements, including, but not limited to: ineffectiveness of the organization’s business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.
Forward-looking statements in this release speak only as of the date of this release and Traditions Bancorp makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.
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SOURCE Traditions Bancorp, Inc.
