LINKBANCORP, Inc. Announces First Quarter 2022 Financial Results

Rhea-AI Summary

LINKBANCORP, Inc. (OTC Pink: LNKB) reported a net income of $1.524 million or $0.15 per diluted share for Q1 2022. The company exceeded $1 billion in total assets, with $29 million in organic loan growth, and a net interest margin of 3.40%. Deposits rose by $90.5 million primarily from brokered deposits. Non-performing assets were low at 0.12% of total assets. There was a decrease in shareholders' equity due to unrealized losses from securities. A private placement of $20 million in notes was completed to strengthen capital.

Positive

• Net income increased to $1.524 million, or $0.15 per diluted share.
• Total assets reached $1.036 billion, a significant increase.
• Organic loan growth of $29 million, excluding PPP loans.
• Net interest margin improved to 3.40%.
• Deposits increased by $90.5 million, driven by brokered and noninterest bearing deposits.

Negative

• Shareholders' equity decreased to $106.3 million due to unrealized losses on securities.

HARRISBURG, Pa., May 2, 2022 /PRNewswire/ -- LINKBANCORP, Inc. (OTC Pink:  LNKB) (the "Company"), the parent company of The Gratz Bank, including its LINKBANK division (the "Bank") reported net income of $1.524 million, or $0.15 per diluted share, for the quarter ended March 31, 2022.

First Quarter Highlights

• The Company crossed $1 billion in total assets
• First quarter organic loan growth of $29 million, exclusive of PPP loans
• Noninterest bearing deposits grew $36 million since December 31, 2021
• Net interest margin expands to 3.40%

Andrew Samuel, Chief Executive Officer, commented, "We are very pleased by the results of our first quarter free of merger-related charges related to the combination with GNB Financial Services, Inc., crossing over the $1 billion threshold and demonstrating growing earnings potential as we begin to recognize economies of scale and increasing operating leverage." He continued, "Key additions within areas experiencing varying levels of market disruption, including the York and Delaware Valley markets, are expected to help fuel further loan and earnings growth and complement the strong performance of our core Capital, Lancaster and Gratz Regions."

Total assets were $1.036 billion at March 31, 2022 compared to $932.8 million at December 31, 2021 and $443.8 million at March 31, 2021.¹  Deposits and net loans as of March 31, 2022 totaled $862.2 million and $727.6 million, respectively, compared to deposits and net loans of  $771.7 million and $711.7 million, respectively, at December 31, 2021 and $388.8 million and $233.1 million, respectively, at March 31, 2021.  The $15.8 million increase in net loans from December 31, 2021 includes $29 million in primarily commercial organic loan growth including the impact of forgiven loans under the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP), which declined $13.2 million to $10.6 million at March 31, 2022.  The $90.5 million increase in deposits from December 31, 2021 was driven largely by a $20 million increase in brokered deposits and $35.9 million increase in noninterest bearing demand accounts.  Technology enhancements, such as digital account opening, continue to provide increased opportunities for the Bank to acquire new client relationships that service clients in a more efficient and cost effective manner.

As of March 31, 2022, the Company's non-performing assets were $1.2 million, representing 0.12% of total assets. Non-performing assets at March 31, 2022 excluded purchased credit impaired loans with a balance of $5.6 million, inclusive of $4.1 million in loans held for sale.  The allowance for loan losses measured 0.47% of total loans, or approximately 0.91% of the non-purchased portfolio, at March 31, 2022. The total reserve when including the allowance for loan losses and the credit fair value adjustment made to loans acquired in the merger totaled $10.1 million or approximately 1.38% of the combined portfolio at March 31, 2022.

Net interest income for the first quarter of 2022 increased to $7.5 million compared to $7.1 million in the fourth quarter of 2021 primarily as a result of average asset growth.  Net interest income does not include recognition of any fees from SBA PPP loans, which were included in purchase accounting adjustments in connection with the GNB Financial merger.  Net interest margin increased to 3.40% in the first quarter of 2022 from 3.30% in the fourth quarter of 2021.  The increase in net interest margin was primarily a result of an increase in yield on loans.  Non-interest income increased from $581 thousand in the fourth quarter of 2021 to $711 thousand in the first quarter of 2022, driven largely by a gain on the sale of an SBA loan.

Noninterest expense for the first quarter of 2022 totaled $6.1 million, compared to $6.8 million for the three months ended December 31, 2021, primarily due to the absence of merger related expenses.   Salaries and employee benefits expense remained relatively steady quarter over quarter, with a slight increase to $3.7 million for the first quarter of 2022 compared to $3.6 million for the prior quarter.  This increase reflected compensation costs related to the Bank's expansion in the Delaware Valley and York markets in addition to certain strategic hires to support continued growth.

Shareholders' equity decreased from $109.6 million at December 31, 2021 to $106.3 million at March 31, 2022 due to a $4.1 million decrease in accumulated other comprehensive income (loss) as a result of unrealized losses on available-for-sale securities due to the increase in interest rates.  The unrealized loss was partially offset by net income less dividends declared. 

On April 8, 2022, the Company completed a $20.0 million private placement of Fixed-to-Floating Rate Subordinated Notes due 2032, structured to qualify as Tier 2 capital for regulatory capital purposes.  The Company subsequently contributed $15 million of the proceeds to the Bank as additional capital. 

ABOUT LINKBANCORP, Inc.

LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, The Gratz Bank, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Central and Southeastern Pennsylvania through 10 client solutions centers of The Gratz Bank and LINKBANK, a division of The Gratz Bank.  LINKBANCORP, Inc. common stock is traded over the counter (OTC Pink) under the symbol "LNKB". For further company information, visit ir.linkbancorp.com.

Forward Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; changes in general economic trends, including inflation and changes in interest rates; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the effects of the COVID-19 pandemic and actions taken by governments, businesses and individuals in response. The Company does not undertake, and specifically disclaims, any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, you should not place undue reliance on forward-looking statements. 

1 Due to the merger of LINKBANCORP, Inc. and GNB Financial Services, Inc. effective September 18, 2021, all periods prior to such date represent the results of GNB Financial Services, Inc. as the accounting acquirer in the merger.

 

Contact:
Nicole Ulmer
Corporate and Investor Relations Officer
717.803.8895
IR@linkbancorp.com

 

LINKBANCORP, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
		March 31,   2022		December 31, 2021		March 31, 2021
(In Thousands, except share and per share data)
ASSETS
Noninterest-bearing cash equivalents		$                   6,425		$                   8,620		$                 11,067
Interest-bearing deposits with other institutions		102,704		13,970		31,227
Cash and cash equivalents		109,129		22,590		42,294
Certificates of deposit with other banks		12,828		12,828		15,566
Securities available for sale, at fair value		93,202		103,783		132,429
Securities held to maturity		5,000		—		—
Loans held for sale		4,074		3,860		—
Loans receivable, net of allowance for loan losses of $3,443 at March 31, 2022, $3,152 at December 31, 2021, and $2,787 at March 31, 2021		727,618		711,664		233,101
Investments in restricted bank stock		3,612		2,685		2,452
Premises and equipment, net		5,253		5,289		3,373
Right-of-Use Asset – Premises		4,605		4,680		—
Bank-owned life insurance		18,898		18,787		8,882
Goodwill and other intangible assets		37,085		37,152		2,770
Deferred tax asset		5,092		4,038		251
Accrued interest receivable and other assets		9,281		5,407		2,635
TOTAL ASSETS		$         1,035,676		$             932,763		$             443,753
LIABILITIES
Deposits:
Demand, noninterest bearing		$               165,228		$               129,243		$                 77,637
Interest bearing		696,942		642,422		311,123
Total deposits		862,170		771,665		388,760
Other Borrowings		36,117		19,814		703
Subordinated Debt		20,653		20,696		—
Operating Lease Liabilities		4,606		4,680		—
Accrued interest payable and other liabilities		5,790		6,285		3,540
TOTAL LIABILITIES		929,336		823,140		393,003
SHAREHOLDERS' EQUITY
Preferred stock		—		—		—
Common stock		99		99		3,912
Surplus		82,930		82,910		17,749
Retained earnings		25,623		24,836		26,892
Accumulated other comprehensive income		(2,312)		1,778		2,385
Treasury stock		—		—		(188)
TOTAL SHAREHOLDERS' EQUITY		106,340		109,623		50,750
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$         1,035,676		$             932,763		$             443,753

 

LINKBANCORP, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
		Three Months Ended
		3/31/2022		12/31/2021		3/31/2021
(In Thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees		$              7,763		$              7,286		$              2,676
Other		619		651		648
Total interest and dividend income		8,382		7,937		3,324
INTEREST EXPENSE
Deposits		665		621		504
Other Borrowings		33		25		7
Subordinated Debt		207		212		—
Total interest expense		905		858		511
NET INTEREST INCOME BEFORE PROVISION FOR    LOAN LOSSES		7,477		7,079		2,813
Provision for loan losses		280		100		47
NET INTEREST INCOME AFTER PROVISION FOR    LOAN LOSSES		7,197		6,979		2,766
NONINTEREST INCOME
Service charges on deposit accounts		210		216		194
Bank-owned life insurance		110		77		45
Net realized gains on the sales of debt securities, available for sale		13		74		—
Gain on sale of secondary market mortgage loans		180		—		287
Other		198		214		44
Total noninterest income		711		581		570
NONINTEREST EXPENSE
Salaries and employee benefits		3,656		3,602		1,103
Occupancy		281		406		162
Equipment and data processing		597		537		238
Professional fees		228		421		223
FDIC insurance		204		81		30
Bank Shares Tax		183		174		87
Merger Related Expenses		—		616		—
Other		949		957		195
Total noninterest expense		6,098		6,794		2,038
Income before income tax expense		1,810		766		1,298
Income tax (benefit) expense		286		(22)		173
NET INCOME		$             1,524		$                788		$             1,125
EARNINGS (LOSS) PER SHARE, BASIC		$               0.16		$               0.08		$               0.20
EARNINGS (LOSS) PER SHARE, DILUTED		$               0.15		$               0.08		$               0.20
WEIGHTED-AVERAGE COMMON SHARES    OUTSTANDING,
BASIC		9,826,435		9,822,273		5,691,686
DILUTED		10,053,684		10,178,487		5,691,686

 

LINKBANCORP, Inc. and Subsidiaries
Financial Highlights (Unaudited)
		As Of or For the Three Months Ended
('Dollars In Thousands)		3/31/2022		12/31/2021
Operating Highlights
Net Income		$                  1,524		$                     788
Net Interest Income		7,477		7,079
Provision for Loan Losses		280		100
Non-Interest Income		711		581
Non-Interest Expense		6,098		6,794
Financial Condition Data
Total Assets		$           1,035,676		$              932,763
Loans Held for Investment, Net		727,618		711,664
Noninterest-bearing Deposits		165,228		129,243
Interst-bearing Deposits		696,942		642,422
Total Deposits		862,170		771,665
Selected Ratios
Net Interest Margin		3.40%		3.30%
Annualized Return on Assets		0.62%		0.33%
Annualized Return on Equity		5.64%		2.87%
Capital Ratios (Bank-Level)
Total Capital Ratio		11.14%		11.50%
Tier 1 Capital Ratio		10.67%		11.02%
Common Equity Tier 1 Capital Ratio		10.67%		11.02%
Leverage Ratio		8.71%		8.85%
Asset Quality Data
Non-performing Assets		$                  1,246		$                  1,410
Non-performing Assets to Total Assets		0.12%		0.15%
Non-performing Loans to Total Loans		0.17%		0.20%
Allowance for Loan Losses ("AFLL")		$                  3,443		$                  3,106
AFLL to Total Loans		0.47%		0.43%

 

 

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SOURCE LINKBANCORP, INC.

FAQ

What was LINKBANCORP's net income for Q1 2022?

LINKBANCORP reported a net income of $1.524 million, or $0.15 per diluted share, for Q1 2022.

How much did LINKBANCORP's total assets grow by?

Total assets grew to $1.036 billion, up from $932.8 million at the end of 2021.

What was the net interest margin for LINKBANCORP in Q1 2022?

The net interest margin for Q1 2022 was 3.40%, an increase from 3.30% in the previous quarter.

What caused the decrease in LINKBANCORP's shareholders' equity?

Shareholders' equity decreased due to unrealized losses on available-for-sale securities from rising interest rates.

How much did LINKBANCORP raise through its private placement?

LINKBANCORP completed a $20 million private placement of Fixed-to-Floating Rate Subordinated Notes.