Loading, Please Wait...

CST: 15/12/2019 15:56:04   

Level One Bancorp, Inc. Reports Double Digit Loan and Deposit Growth Year Over Year, Coupled With a 21% Reduction in Nonaccrual Loans in 2019

138 Days ago

FARMINGTON HILLS, Mich., July 30, 2019 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported financial results for the second quarter of 2019, which included net income of $3.6 million, or $0.45 per diluted share. This compares to net income of $3.5 million, or $0.44 per diluted share, in the preceding quarter and $4.0 million, or $0.53 per diluted share, in the second quarter of 2018.

Patrick J. Fehring, President and Chief Executive Officer of Level One, commented "We are pleased to announce a solid second quarter with earnings of $3.6 million, or fully diluted earnings per share of $0.45.  Our earnings were driven by quarter over quarter increases of 3.9% in loans and 6.8% in deposits, and year over year increases of 11.5% in loans and 15.4% in deposits. In addition, our noninterest income increased by $2.0 million, or 139%, from the second quarter of 2018, primarily due to the doubling of our mortgage originators in the third quarter of 2018.  Finally, our asset quality improved as nonaccrual loans declined by $2.1 million during the quarter."

He added, "Offsetting these improvements, there was a $310 thousand increase in the provision for unfunded commitments (rolling up to other noninterest expense) due to a change in assumptions within the calculation. We continue to focus on our strategic priorities to ensure a strong organization for our shareholders, team members, and clients."

Second Quarter 2019 Financial Highlights

  • Net income was $3.6 million, or $0.45 per diluted share, for the second quarter of 2019
  • Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.50%, compared to 3.76% in the preceding quarter and 3.99% in the second quarter of 2018
  • Noninterest income increased 139.46% to $3.5 million in the second quarter of 2019, compared to $1.5 million in the second quarter of 2018, primarily due to higher mortgage banking activities income
  • Total assets increased 13.79% to $1.51 billion at June 30, 2019, compared to $1.32 billion at June 30, 2018
  • Total loans increased 11.54% to $1.17 billion at June 30, 2019, compared to $1.05 billion at June 30, 2018
  • Total deposits increased 15.42% to $1.23 billion at June 30, 2019, compared to $1.07 billion at June 30, 2018
  • Book value per share increased 13.83% to $21.07 per share at June 30, 2019, compared to $18.51 per share at June 30, 2018
  • Tangible book value per share increased 14.97% to $19.81 per share at June 30, 2019, compared to $17.23 per share at June 30, 2018

Balance Sheet Review

Level One's total assets were $1.51 billion at June 30, 2019, an increase of $89.2 million, or 6.30%, from $1.42 billion at December 31, 2018, and up $182.5 million, or 13.79%, from $1.32 billion at June 30, 2018. The increase in total assets from December 31, 2018 was primarily due to an increase in originated loans, mortgage loans held for sale, securities available for sale, and cash and cash equivalents.

The investment securities portfolio was $218.1 million at June 30, 2019, an increase of $13.8 million, or 6.80%, from $204.3 million at December 31, 2018, and up $22.1 million, or 11.27%, from $196.0 million at June 30, 2018. The increase in the investment securities portfolio year to date and during the twelve months ended June 30, 2019 reflects our plan to increase the investment securities portfolio in line with total assets.

Total loans were $1.17 billion at June 30, 2019, an increase of $39.9 million, or 3.54%, from $1.13 billion at December 31, 2018, and up $120.7 million, or 11.54%, from $1.05 billion at June 30, 2018. The growth in total loans compared to December 31, 2018 and June 30, 2018 was primarily due to growth in our commercial loan portfolio and residential real estate loan portfolio.

Total deposits were $1.23 billion at June 30, 2019, an increase of $94.8 million, or 8.36%, from $1.13 billion at December 31, 2018, and up $164.2 million, or 15.42%, from $1.07 billion at June 30, 2018.  The increase in deposits compared to December 31, 2018 and June 30, 2018 was primarily due to growth in our money market, savings and time deposits. Total deposit composition at June 30, 2019 consisted of 29.96% of demand deposit accounts, 25.66% of savings and money market accounts and 44.38% of time deposits.

Operating Results

Level One's net interest income decreased $277 thousand, or 2.18%, to $12.4 million in the second quarter of 2019, compared to $12.7 million in the preceding quarter, primarily as a result of higher costs of funds, partially offset by interest income on the higher balances of originated loans.  Net interest income remained relatively flat as compared to the second quarter of 2018.

Level One’s net interest margin, on a FTE basis, was 3.50% in the second quarter of 2019, compared to 3.76% in the preceding quarter and 3.99% in the second quarter of 2018. This decrease in the net interest margin compared to the preceding quarter was primarily as a result of higher cost of funds and lower average loan yield quarter over quarter. The decrease in net interest margin year over year was primarily due to higher cost of funds as the federal funds rate rose 50 basis points.

Level One's noninterest income increased $1.2 million, or 52.10%, to $3.5 million in the second quarter of 2019, compared to $2.3 million in the preceding quarter, and increased $2.0 million, or 139.46%, compared to $1.5 million in the second quarter of 2018. The increase in noninterest income compared to the preceding quarter was primarily due to an increase in mortgage banking activity income as a result of increased volume of mortgage loans sold as well as an increase in volume of loans held for sale. The increase in noninterest income year over year was attributable to the same factors mentioned in the quarter to quarter analysis above, as well as an increase in the volume of our mortgage banking derivatives which is included in mortgage banking activities income. The increase in the mortgage banking activities income year over year was predominantly as a result of the doubling of our mortgage team in third quarter 2018.

Level One's noninterest expense increased $799 thousand, or 7.71%, to $11.2 million in the second quarter of 2019, compared to $10.4 million in the preceding quarter, and increased $1.5 million, or 15.06%, compared to $9.7 million in the second quarter of 2018.  The increase in noninterest expenses quarter over quarter as well as year over year was primarily a result of increased salary and employee benefits due to the overall growth in team member headcount and a $310 thousand increase in the provision for unfunded commitment due to a change in the assumptions within the calculation, which resulted in a better representation of our line of credit utilization. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the second quarter of 2019 was 70.15%, compared to 69.10% for the preceding quarter and 69.99% in the second quarter of 2018.

Level One's income tax provision was $767 thousand, or 17.75% of pretax income, in the second quarter of 2019, as compared to $747 thousand, or 17.73% of pretax income, in the preceding quarter and $860 thousand, or 17.65% of pretax income, in the second quarter of 2018.

Asset Quality

Nonaccrual loans were $14.5 million, or 1.25% of total loans, at June 30, 2019, a decrease of $3.9 million from nonaccrual loans of $18.4 million, or 1.64% of total loans, at December 31, 2018, and an increase of $3.2 million from nonaccrual loans of $11.3 million, or 1.08% of total loans, at June 30, 2018. The decrease in nonaccrual loans compared to December 31, 2018 is primarily due to the pay-off of a large loan relationship on nonaccrual status during the first quarter 2019. The increase in nonaccrual loans compared to second quarter 2018 was primarily due to four commercial loan relationships totaling $9.0 million moving to nonaccrual status, partially offset by pay-offs of three commercial loan relationships totaling $5.7 million.

Level One had $373 thousand of other real estate owned assets at June 30, 2019, compared to no other real estate owned assets at December 31, 2018 and June 30, 2018. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 0.99% at June 30, 2019, compared to 1.30% at December 31, 2018, and 0.85% at June 30, 2018.

In addition, we had $331 thousand of loans 90 days or more past due and still accruing at June 30, 2019, compared to $243 thousand at December 31, 2018 and $259 thousand at June 30, 2018, all of which consisted of purchase credit impaired loans.

Performing troubled debt restructured loans that were not included in nonaccrual loans at June 30, 2019 were $921 thousand, compared to $931 thousand at December 31, 2018 and $2.5 million at June 30, 2018. The decrease in performing trouble debt restructurings year over year was due to one commercial loan relationship totaling $1.5 million moving to nonaccrual. Borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans.

Net chargeoffs in the second quarter of 2019 were $36 thousand, or 0.01% of average loans on an annualized basis, compared to $28 thousand of net chargeoffs, or 0.01% of average loans on an annualized basis, for the preceding quarter and $669 thousand of net recoveries, or 0.26% of average loans on an annualized basis, for the quarter ended June 30, 2018.

Level One's second quarter of 2019 provision for loan losses was a provision expense of $429 thousand, compared to a provision expense of $422 thousand in the preceding quarter and a provision benefit of $710 thousand in the second quarter of 2018. The increase in the provision expense year over year was primarily due to a $700 thousand recovery in the second quarter of 2018. The allowance for loan losses was $12.4 million, or 1.06% of total loans, at June 30, 2019, compared to $11.6 million, or 1.03% of total loans, at December 31, 2018, and $11.5 million, or 1.10% of total loans, at June 30, 2018. As of June 30, 2019, the allowance for loan losses as a percentage of nonaccrual loans was 84.94%, compared to 62.70% at December 31, 2018, and 101.67% at June 30, 2018.

Capital

Total shareholders’ equity was $162.9 million at June 30, 2019, an increase of $11.1 million, or 7.32%, compared with $151.8 million at December 31, 2018, primarily as a result of increased retained earnings and accumulated other comprehensive income.  Total shareholders' equity increased $19.4 million, or 13.54%, from $143.4 million at June 30, 2018 as a result of the same factors previously mentioned.

Recent Developments

Second Quarter Dividend: On June 20, 2019, Level One’s Board of Directors declared a quarterly cash dividend of $0.04 per share. This dividend was paid out on July 15, 2019, to stockholders of record at the close of business on June 30, 2019.

About Level One Bancorp, Inc.

Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $1.51 billion as of June 30, 2019. It operates twelve banking centers throughout southeast Michigan and west Michigan. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year" and "Export Finance Lender of the Year" and one of S&P Global's Top 10 "Best-Performing Community Banks" in the nation. Level One's commercial division provides a menu of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, and a full suite of treasury management and private banking services. The consumer division offers personal savings and checking accounts and a complete array of consumer loan products including residential mortgages, home equity loans, auto loans, and credit card services. Level One Bank offers a variety of online banking services and a robust mobile banking application for individuals and businesses.  Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Summary Consolidated Financial Information                                      
(Unaudited) As of or for the three months ended
  June 30,
  March 31,
  December 31,
  September 30,
  June 30,
(Dollars in thousands, except per share data) 2019
  2019
  2018
  2018
  2018
Earnings Summary                                      
Interest income $ 17,657     $ 17,442     $ 17,041     $ 16,629     $ 15,380  
Interest expense 5,216     4,724     4,228     3,560     2,965  
Net interest income 12,441     12,718     12,813     13,069     12,415  
Provision (benefit) for loan losses 429     422     (51 )   619     (710 )
Noninterest income 3,477     2,286     2,307     1,924     1,452  
Noninterest expense 11,167     10,368     10,384     10,454     9,705  
Income before income taxes 4,322     4,214     4,787     3,920     4,872  
Income tax provision 767     747     836     665     860  
Net income $ 3,555     $ 3,467     $ 3,951     $ 3,255     $ 4,012  
Per Share Data                  
Basic earnings per common share $ 0.46     $ 0.45     $ 0.51     $ 0.42     $ 0.54  
Diluted earnings per common share 0.45     0.44     0.50     0.41     0.53  
Book value per common share 21.07     20.15     19.58     18.77     18.51  
Tangible book value per share (1) 19.81     18.88     18.31     17.50     17.23  
Shares outstanding (in thousands) 7,728     7,749     7,750     7,749     7,749  
Average basic common shares (in thousands) 7,741     7,752     7,750     7,749     7,456  
Average diluted common shares (in thousands) 7,856     7,869     7,893     7,901     7,613  
Selected Period End Balances                  
Total assets $ 1,505,376     $ 1,456,552     $ 1,416,215     $ 1,446,269     $ 1,322,913  
Securities available-for-sale 218,145     226,874     204,258     199,051     196,047  
Total loans 1,166,501     1,131,097     1,126,565     1,114,999     1,045,789  
Total deposits 1,229,445     1,151,463     1,134,635     1,130,311     1,065,216  
Total liabilities 1,342,509     1,300,433     1,264,455     1,300,810     1,179,468  
Total shareholders' equity 162,867     156,119     151,760     145,459     143,445  
Tangible shareholders' equity (1) 153,121     146,337     141,926     135,570     133,501  
Performance and Capital Ratios                  
Return on average assets (annualized) 0.95 %   0.96 %   1.11 %   0.95 %   1.23 %
Return on average equity (annualized) 8.92     8.99     10.69     8.95     11.97  
Net interest margin (fully taxable equivalent)(2) 3.50     3.76     3.73     3.97     3.99  
Efficiency ratio (noninterest expense/net interest income plus noninterest income) 70.15     69.10     68.68     69.73     69.99  
Dividend payout ratio 8.69     6.72     5.87     7.13     5.78  
Total shareholders' equity to total assets 10.82     10.72     10.72     10.06     10.84  
Tangible equity to tangible assets (1) 10.24     10.11     10.09     9.44     10.17  
Common equity tier 1 to risk-weighted assets 11.64     11.78     11.82     11.75     12.11  
Tier 1 capital to risk-weighted assets 11.64     11.78     11.82     11.75     12.11  
Total capital to risk-weighted assets 13.79     13.95     14.00     13.99     14.44  
Tier 1 capital to average assets (leverage ratio) 10.01     10.19     10.21     10.31     10.60  
Asset Quality Ratios:                  
Net charge-offs (recoveries) to average loans 0.01 %   0.01 %   0.10 %   0.07 %   (0.26 )%
Nonperforming assets as a percentage of total assets 0.99     1.17     1.30     0.89     0.85  
Nonaccrual loans as a percent of total loans 1.25     1.47     1.64     1.15     1.08  
Allowance for loan losses as a percentage of period-end loans 1.06     1.06     1.03     1.07     1.10  
Allowance for loan losses as a percentage of nonaccrual loans 84.94     71.85     62.70     92.36     101.67  
Allowance for loan losses as a percentage of nonaccrual loans, excluding allowance allocated to loans accounted for under ASC 310-30 79.41     66.33     57.71     84.72     92.93  
(1) See section entitled "GAAP Reconciliation of Non-GAAP Financial Measures" below.                            
(2) Presented on a tax equivalent basis using a 21% tax rate.                            

GAAP Reconciliation of Non-GAAP Financial Measures

Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share, and the ratio of tangible shareholders' equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe financial analysts and others frequently use these measures, and other similar measures, to evaluate capital adequacy. We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles and goodwill; (ii) tangible book value per share as tangible shareholders' equity divided by shares of common stock outstanding; and (iii) tangible assets as total assets, less core deposit intangibles and goodwill.

The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:

                                       
  As of
(Dollars in thousands, except per share data)
June 30,
2019

  March 31,
2019
  December 31,
2019
  September 30,
2018
   
June 30,
2018
 
 
  (Unaudited)   (Unaudited)       (Unaudited)   (Unaudited)
Total shareholders' equity $ 162,867     $ 156,119     $ 151,760     $ 145,459     $ 143,445  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 359     395     447     502     557  
Tangible shareholders' equity $ 153,121     $ 146,337     $ 141,926     $ 135,570     $ 133,501  
                   
Shares outstanding (in thousands) 7,728     7,749     7,750     7,749     7,749  
Tangible book value per share $ 19.81     $ 18.88     $ 18.31     $ 17.5     $ 17.23  
                   
Total assets $ 1,505,376     $ 1,456,552     $ 1,416,215     $ 1,446,269     $ 1,322,913  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 359     395     447     502     557  
Tangible assets $ 1,495,630     $ 1,446,770     $ 1,406,381     $ 1,436,380     $ 1,312,969  
                   
Tangible equity to tangible assets 10.24 %   10.11 %   10.09 %   9.44 %   10.17 %


Consolidated Balance Sheets            
  As of  
  June 30,   December 31,   June 30,  
(Dollars in thousands) 2019   2018   2018  
Assets (Unaudited)       (Unaudited)
Cash and cash equivalents $ 50,120   $ 33,296   $ 34,767  
Securities available-for-sale   218,145     204,258     196,047  
Federal Home Loan Bank stock   8,325     8,325     8,303  
Mortgage loans held for sale, at fair value   22,822     5,595     3,991  
Loans:            
Originated loans   1,088,395     1,041,898     946,724  
Acquired loans   78,106     84,667     99,065  
Total loans   1,166,501     1,126,565     1,045,789  
Less: Allowance for loan losses   (12,353 )
  (11,566   (11,465
Net loans   1,154,148     1,114,999     1,034,324  
Premises and equipment, net   13,188     13,242     13,144  
Goodwill   9,387     9,387     9,387  
Other intangible assets, net   359     447     557  
Bank-owned life insurance   11,992     11,866     11,703  
Income tax benefit   791     2,467     2,510  
Other assets   16,099     12,333     8,180  
Total assets $ 1,505,376   $ 1,416,215   $ 1,322,913  
Liabilities            
Deposits:            
Noninterest-bearing demand deposits $ 317,747   $ 309,384   $ 320,213  
Interest-bearing demand deposits   50,605     52,804     57,060  
Money market and savings deposits   315,477     287,575     247,542  
Time deposits   545,616     484,872     440,401  
Total deposits   1,229,445     1,134,635     1,065,216  
Borrowings   76,934     99,574     86,594  
Subordinated notes   14,920     14,891     14,867  
Other liabilities   21,210     15,355     12,791  
Total liabilities   1,342,509     1,264,455     1,179,468  
Shareholders' equity            
Common stock, no par value per share:            
Authorized - 20,000,000 shares            
Issued and outstanding - 7,728,280 shares at June 30, 2019, 7,750,216 shares at December 31, 2018, and 7,748,641 shares at June 30, 2018   89,442     90,621     90,201  
Retained earnings   69,295     62,891     56,383  
Accumulated other comprehensive income (loss), net of tax   4,130     (1,752   (3,139
Total shareholders' equity   162,867     151,760     143,445  
Total liabilities and shareholders' equity $ 1,505,376   $ 1,416,215   $ 1,322,913  


Consolidated Statements of Income                  
(Unaudited) Three months ended
  Six months ended
  June 30,   March 31,    June 30,   June 30,    June 30,
(In thousands, except per share data) 2019   2019   2018   2019   2018
Interest income                  
Originated loans, including fees $ 14,125     $ 13,894     $ 11,833   $ 28,019   $ 23,011  
Acquired loans, including fees 1,637     1,757     2,293   3,394   4,719  
Securities:                  
Taxable 980     936     667   1,916   1,241  
Tax-exempt 595     545     380   1,140   731  
Federal funds sold and other 320     310     207   630   452  
Total interest income 17,657     17,442     15,380   35,099   30,154  
Interest Expense                  
Deposits 4,617     4,121     2,487   8,738   4,665  
Borrowed funds 346     353     225   699   444  
Subordinated notes 253     250     253   503   503  
Total interest expense 5,216     4,724     2,965   9,940   5,612  
Net interest income 12,441     12,718     12,415   25,159   24,542  
Provision expense (benefit) for loan losses 429     422     (710)   851   (156 )
Net interest income after provision for loan losses 12,012     12,296     13,125   24,308   24,698  
Noninterest income                  
Service charges on deposits 662     625     618   1,287   1,260  
Net gain (loss) on sales of securities 7     (7 )        
Mortgage banking activities 2,316     1,120     404   3,436   640  
Net gain on sale of commercial loans         11     11  
Other charges and fees 492     548     419   1,040   913  
Total noninterest income 3,477     2,286     1,452   5,763   2,824  
Noninterest expense                  
Salary and employee benefits 7,193     6,913     6,169   14,106   12,125  
Occupancy and equipment expense 1,168     1,204     1,074   2,372   2,120  
Professional service fees 385     362     471   747   737  
Marketing expense 288     176     291   464   433  
Printing and supplies expense 104     68     112   172   216  
Data processing expense 606     595     511   1201   947  
Other expense 1,423     1,050     1,077   2,473   2,262  
Total noninterest expense 11,167     10,368     9,705   21,535   18,840  
Income before income taxes 4,322     4,214     4,872   8,536   8,682  
Income tax provision 767     747     860   1,514   1,502  
Net income $ 3,555     $ 3,467     $ 4,012   $ 7,022     $ 7,180  
Earnings per common share:                  
Basic earnings per common share $ 0.46     $ 0.45     $ 0.54   $ 0.91     $ 1.02  
Diluted earnings per common share $ 0.45     $ 0.44     $ 0.53   $ 0.89     $ 1.00  
Cash dividends declared per common share $ 0.04     $ 0.04     $ 0.03   $ 0.08   $ 0.06  
Weighted average common shares outstanding—basic   7,741       7,752       7,456     7,746     7,050  
Weighted average common shares outstanding—diluted    7,856       7,869       7,613     7,862     7,211  

  

Net Interest Income and Net Interest Margin                      
(Unaudited) For the three months ended 
  June 30, 2019
  March 31, 2019
  June 30, 2018
(Dollars in thousands) Average Balance Interest (1) Average
Rate (2)
  Average Balance Interest (1) Average
Rate (2)
  Average Balance Interest (1) Average
Rate (2)
Interest-earning assets:                      
Gross loans (3) $ 1,164,871   $ 15,762   5.43 %   $ 1,125,213   $ 15,651   5.64 %   $ 1,045,715   $ 14,126   5.42 %
Investment securities (4):                      
Taxable 143,841   980   2.73     141,282   936   2.69     114,957   667   2.33  
Tax-exempt 87,287   595   3.26     80,760   545   3.17     58,976   380   3.10  
Interest earning cash balances 32,606   206   2.53     28,076   176   2.54     25,828   119   1.85  
Federal Home Loan Bank Stock 8,325   114   5.49     8,325   134   6.53     8,303   88   4.25  
Total interest-earning assets $ 1,436,930   $ 17,657   4.96 %   $ 1,383,656   $ 17,442   5.14 %   $ 1,253,779   $ 15,380   4.94 %
Non-earning assets:                      
  Cash and due from banks 24,347         24,794         17,800      
  Premises and equipment 13,239         13,289         12,621      
  Goodwill 9,387         9,387         9,387      
  Other intangible assets, net 376         425         589      
  Bank-owned life insurance 11,948         11,893         11,650      
  Allowance for loan losses (12,039 )       (11,563 )       (11,473 )    
  Other non-earning assets 16,804         11,841         7,839      
   Total assets $ 1,500,992         $ 1,443,722         $ 1,302,192      
Interest-bearing liabilities:                      
  Interest-bearing demand deposits $ 56,434   $ 69   0.49 %   $ 53,299   $ 48   0.37 %   $ 64,394   $ 48   0.30 %
  Money market and savings deposits 295,371   1,125   1.53     306,496   1,094   1.45     276,496   678   0.98  
  Time deposits 582,874   3,423   2.36     544,130   2,979   2.22     445,894   1,761   1.58  
  Borrowings 59,272   346   2.33     55,814   353   2.57     48,604   225   1.86  
  Subordinated notes 14,910   253   6.78     14,896   250   6.81     14,859   253   6.83  
  Total interest-bearing liabilities $ 1,008,861   $ 5,216   2.07 %   $ 974,635   $ 4,724   1.97 %   $ 850,247   $ 2,965   1.40 %
Noninterest-bearing liabilities and shareholders' equity:                      
  Noninterest bearing demand deposits 315,530         300,680         306,547      
  Other liabilities 17,144         14,136         10,923      
  Shareholders' equity 159,457         154,271         134,475      
  Total liabilities and shareholders' equity $ 1,500,992         $ 1,443,722         $ 1,302,192      
Net interest income   $ 12,441         $ 12,718         $ 12,415    
Interest spread     2.89 %       3.17 %       3.54 %
Net interest margin (5)     3.47         3.73         3.97  
Tax equivalent effect     0.03         0.03         0.02  
Net interest margin on a fully tax equivalent basis     3.50 %       3.76 %       3.99 %

(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $115 thousand, $83 thousand, and $76 thousand on tax-exempt securities for the three months ended June 30, 2019, March 31, 2019, and June 30, 2018, respectively, using a federal income tax rate of 21%.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

  For the six months ended
  June 30, 2019
  June 30, 2018
(Dollars in thousands)  Average Balance     Interest (1)   Average Rate (2)      Average Balance     Interest (1)   Average Rate (2)  
Interest-earning assets:                                  
Gross loans (3) $ 1,145,151   $ 31,413   5.53 %   $ 1,041,404   $ 27,730   5.37 %
Investment securities (4):              
Taxable 142,569   1,916   2.71     108,581   1,241   2.31  
Tax-exempt 84,041   1,140   3.28     56,997   731   3.12  
Interest earning cash balances 30,353   382   2.54     26,455   225   1.71  
Federal Home Loan Bank Stock 8,325   248   6.01     8,303   227   5.51  
Total interest-earning assets $ 1,410,439   $ 35,099   5.05 %   $ 1,241,740   $ 30,154   4.92 %
Non-earning assets:              
  Cash and due from banks 24,570         18,163      
  Premises and equipment 13,264         12,990      
  Goodwill 9,387         9,387      
  Other intangible assets, net 401         616      
  Bank-owned life insurance 11,921         11,610      
  Allowance for loan losses (11,802 )       (11,646 )    
  Other non-earning assets 14,335         10,006      
   Total assets $ 1,472,515         $ 1,292,866      
Interest-bearing liabilities:              
  Interest-bearing demand deposits $ 54,875   $ 117   0.43 %   $ 63,950   $ 99   0.31 %
  Money market and savings deposits 300,903   2,219   1.49     275,105   1,226   0.90  
  Time deposits 563,609   6,402   2.29     451,195   3,340   1.49  
  Borrowings 57,553   699   2.45     52,689   444   1.70  
  Subordinated notes 14,903   503   6.79     14,852   503   6.83  
  Total interest-bearing liabilities $ 991,843   $ 9,940   2.02 %   $ 857,791   $ 5,612   1.32 %
Noninterest-bearing liabilities and shareholders' equity:              
  Noninterest bearing demand deposits 308,146         302,635      
  Other liabilities 15,648         9,933      
  Shareholders' equity 156,878         122,507      
   Total liabilities and shareholders' equity $ 1,472,515         $ 1,292,866      
Net interest income   $ 25,159         $ 24,542    
Interest spread     3.03 %       3.60 %
Net interest margin (5)     3.60         3.99  
Tax equivalent effect     0.03         0.02  
Net interest margin on a fully tax equivalent basis     3.63 %       4.01 %

(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $226 thousand and $150
thousand on tax-exempt securities for the six months ended June 30, 2019 and June 30, 2018, respectively, using the statutory tax rate of 21%.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for
amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Loan Composition                              
(Unaudited) As of
  June 30,   March 31,   December 31,   September 30,   June 30,  
(Dollars in thousands) 2019   2019   2018   2018   2018  
Commercial real estate:                              
Non-owner occupied $ 364,504   $ 361,066   $ 367,671   $ 362,450   $ 361,341  
Owner-occupied   193,500     187,001     194,422     190,131     172,615  
Total commercial real estate   558,004     548,067     562,093     552,581     533,956  
Commercial and industrial   420,812     401,588     383,455     397,060     363,239  
Residential real estate   186,737     180,386     180,018     164,356     147,763  
Consumer   948     1,056     999     1,002     831  
Total loans $ 1,166,501   $ 1,131,097   $ 1,126,565   $ 1,114,999   $ 1,045,789  

 

Impaired Assets                            
(Unaudited) As of
  June 30,
 
March 31,
 
December 31,
 
September 30,
 
June 30,
(Dollars in thousands) 2019
  2019
  2018   2018
  2018
Nonaccrual loans                            
Commercial real estate $ 2,979   $ 2,694   $ 5,927   $ 4,559   $ 2,557
Commercial and industrial 9,559   10,495   9,605   5,763   5,983
Residential real estate 2,006   3,456   2,915   2,546   2,737
Consumer       5  
Total nonaccrual loans 14,544   16,645   18,447   12,873   11,277
Other real estate owned 373   373      
Total nonperforming assets 14,917   17,018   18,447   12,873   11,277
Performing troubled debt restructurings                  
Commercial real estate       1,511   1,517
Commercial and industrial 558   562   568   574   578
Residential real estate 363   363   363   365   364
Total performing troubled debt restructurings 921   925   931   2,450   2,459
Total impaired assets $ 15,838   $ 17,943   $ 19,378   $ 15,323   $ 13,736
                   
Loans 90 days or more past due and still accruing $ 331   $ 453   $ 243   $ 354   $ 259

 

Media Contact:
Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

Is your business listed correctly on America’s largest city directory network of 1,000 portals?