LINKBANCORP, Inc. Announces First Quarter 2023 Financial Results

HARRISBURG, Pa., May 1, 2023 /PRNewswire/ -- LINKBANCORP, Inc. (NASDAQ: LNKB) (the "Company"), the parent company of LINKBANK (the "Bank") reported a net loss of $1.55 million, or $0.10 per diluted share, for the quarter ended March 31, 2023. Excluding merger related expenses and a net loss on sale of securities, adjusted earnings were $783 thousand¹, or $0.05¹ per diluted share for the first quarter of 2023.

First Quarter 2023 Highlights

• Stable and Growing Deposit Portfolio. Total deposits grew $37.7 million, or 16% annualized over the prior quarter end, including an increase in noninterest bearing deposits of $11.7 million, or 25% annualized, and $26.0 million in interest bearing deposits, or 14% annualized. Estimated uninsured deposits, excluding collateralized public funds and affiliate company accounts, totaled $387.8 million, or 39.4% of total deposits as of March 31, 2023.
• Strong Liquidity Position. The Company enhanced its on-balance sheet liquidity, with cash and cash equivalents as of March 31, 2023 of $51.7 million, up from $30.0 million at December 31, 2022. Total liquidity, including all available borrowing capacity and brokered deposit availability, together with cash and cash equivalents and unpledged investment securities, totaled $511.0 million as of March 31, 2023.
• Solid Commercial Loan Growth. Total loans grew $17.5 million during the first quarter, representing a 7.7% annualized growth rate, driven primarily by commercial loan activity.
• Funding Costs Drive Decline in Net Interest Income. Net interest income for the first quarter of 2023 was $8.0 million, compared to $9.0 million in the fourth quarter of 2022 and $7.5 million in the prior year first quarter. Net interest margin was 2.95% for the first quarter of 2023 compared to 3.36% for the fourth quarter of 2022. The linked quarter decrease was primarily due to higher interest expense on deposits outpacing the increase in interest income from loans.
• Loss on Securities. The Company recognized a $2.37 million loss on the sale of subordinated notes issued by Signature Bank, which was closed by its regulator in March 2023.
• Transformational Merger. On February 22, 2023, the Company entered into a definitive agreement with Partners Bancorp ("Partners"), the parent company of The Bank of Delmarva and Virginia Partners Bank, under which the companies will combine in an all-stock combination, valued at approximately $169.1 million, based on the Company's 10-day volume weighted average price of $8.08 as of February 21, 2023, the day prior to the merger announcement. When the transaction is completed, the combined organization will be a leading Mid-Atlantic community banking franchise with nearly $3 billion in assets. In connection with the transaction, the Company enhanced its strong capital position, completing a private placement common stock offering resulting in $10 million in gross proceeds, and contributing $5 million of such proceeds to the Bank as additional capital.
• CECL Adoption. On January 1, 2023, the Company adopted ASU 2016-13, which replaced the former "incurred loss" model for recognizing credit losses with an "expected loss" model (commonly referred to as "CECL"). The impact of the adoption included increases to the allowance for credit losses of $5.7 million related to loans, $900 thousand related to unfunded commitments and $600 thousand related to held-to-maturity securities, resulting in a decrease in retained earnings, net of tax effect, of approximately $5.4 million. For purposes of regulatory capital calculations, an election was made to phase-in the day one impact on retained earnings over three years.

___________________________

1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.

"We are pleased that in the midst of this unprecedented interest rate environment and industry disruption, we continue to grow both quality loans and core deposits, even as our results for the quarter clearly reflect the unique challenges of this period," said Andrew Samuel, Chief Executive Officer. "With our liquidity and capital positions, as well as continued strength in credit quality, we are very well positioned to successfully navigate this period, focused on growing lower cost deposits to counteract funding expense and continuing to grow loans and positively impact our communities."    

Income Statement

Net interest income before the provision for credit losses for the first quarter of 2023 decreased to $8.0 million compared to $9.0 million in the fourth quarter of 2022. Net interest margin was 2.95% for the first quarter of 2023 compared to 3.36% for the fourth quarter of 2022.  The decrease in net interest margin for the current quarter was due to the higher rate paid on interest-bearing liabilities, which outpaced the increase in the yield on interest earning assets. The overall rate and yield increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months, coupled with competition for deposits in the market. During the first quarter, the cost of funds increased 72 basis points as compared to the linked quarter which was partially offset by a 25 basis points increase in the average yield on interest-earning assets. The increase in the average yield on interest-earning assets was primarily due to the increase of the average yield on loans of 19 basis points to 5.09% during the first quarter of 2023. 

During the first quarter, the Company was able to introduce the improved functionality of its new core technology platform, including enhanced cash management features.  The Company has begun to see the fruits of these investments, as well as an increased internal focus and strategy on core deposit generation.  For example, during the first quarter, 547 new checking accounts were opened for a total of $34 million in new deposits.  Additionally, initiatives focused on professional services firms such as title companies, law firms, and property management companies, resulted in 96 new accounts being opened during the quarter, which are anticipated to fund over the course of the second quarter.  Given these recent positive trends in acquiring lower cost core deposits, the Company anticipates its net interest margin will begin to stabilize as higher cost brokered deposits are allowed to mature and roll off, replaced by core accounts. 

Noninterest income decreased from $508 thousand in the fourth quarter of 2022 to a loss of $1.9 million in the first quarter of 2023, primarily related to a recognized loss upon the sale of subordinated notes.  Excluding the securities loss, noninterest income was relatively flat compared to the linked quarter. 

Noninterest expense for the first quarter of 2023 decreased to $7.7 million compared to $8.4 million for the fourth quarter of 2022. This included a decrease in merger and system conversion related expenses from $973 thousand in the fourth quarter of 2022 to $587 thousand in the first quarter of 2023. In addition, salaries and employee benefits decreased from $4.6 million in the fourth quarter of 2022 to $4.1 million in the first quarter of 2023, largely attributable to performance-based bonuses recognized during the fourth quarter of 2022.

Balance Sheet

Total assets were $1.214 billion at March 31, 2023 compared to $1.164 billion at December 31, 2022 and $1.036 billion at March 31, 2022. Deposits and net loans as of March 31, 2023 totaled $984.5 million and $934.8 million, respectively, compared to deposits and net loans of $946.8 million and $923.2 million, respectively, at December 31, 2022 and $862.2 million and $727.6 million, respectively, at March 31, 2022.

Total loans increased $17.5 million from December 31, 2022 to March 31, 2023, or 7.7% annualized, with the average commercial loan size during the first quarter of 2023 totaling approximately $830,000.

In response to industry disruption, the Company proactively took steps during the quarter to enhance its on-balance sheet liquidity. Cash and cash equivalents increased to $51.7 million at March 31, 2023 from $30.0 million at December 31, 2022, representing a 72.4% increase.  In addition to growth in core deposits, this position was supported by an additional $10 million in fixed-rate FHLB advances.   

Deposits at March 31, 2023 totaled $984.5 million, representing a 16.2% annualized increase from December 31, 2022 which was driven by growth in interest and noninterest bearing deposits over the quarter. Noninterest bearing deposits increased from $192.8 million at December 31, 2022 to $204.5 million at March 31, 2023, representing a 24.7% annualized increase.

Shareholders' equity increased from $138.6 million at December 31, 2022 to $141.6 million at March 31, 2023.  The increase included the impact of $10 million in proceeds from the February 2023 private placement, offset by a decrease in retained earnings due to the first quarter net loss, dividends paid of $1.2 million and the cumulative-effect adjustment from the adoption of CECL that decreased retained earnings by $5.4 million.  Other comprehensive loss decreased by $1.2 million as a result of decreased unrealized losses on available-for-sale securities due to changes in the interest rate environment.

Asset Quality

In the first quarter of 2023, the Company recorded a provision for credit losses, calculated under the CECL model, of $293 thousand, compared to $100 thousand for the fourth quarter of 2022 under the incurred loss model.  The provision expense was primarily due to loan growth and changes to the macroeconomic outlook.   

Asset quality metrics remain strong. As of March 31, 2023, the Company's non-performing assets were $2.4 million, representing 0.20% of total assets. Non-performing assets at March 31, 2023 excluded purchased with credit deterioration ("PCD") loans with a balance of $2.5 million. 

The allowance for credit losses was $10.5 million, or 1.11% of total loans at March 31, 2023, compared to the allowance for loan losses of 0.50% of total loans at December 31, 2022.  The allowance for credit losses to nonperforming assets was 438.95% at March 31, 2023, compared to 186.64% at December 31, 2022.     

Capital

The Bank's regulatory capital ratios are well in excess of regulatory minimums to be considered "well capitalized" as of March 31, 2023. The Bank's Total Capital Ratio and Tier 1 Capital Ratio increased to 13.53% and 12.32%, respectively, at March 31, 2023 from 12.89% and 12.41%, respectively, at December 31, 2022. The Company's ratio of Tangible Common Equity to Tangible Assets was 8.90%² at March 31, 2023.

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2 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.

ABOUT LINKBANCORP, Inc.

LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, LINKBANK, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Central and Southeastern Pennsylvania through 10 client solutions centers and www.linkbank.com.   LINKBANCORP, Inc. common stock is traded on the Nasdaq Capital Market 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; risks related to the proposed merger with Partners; 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. 

LB-E
LB-D

 

LINKBANCORP, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
(In Thousands, except share and per share data)
ASSETS
Noninterest-bearing cash equivalents		$                   4,545		$                      4,209		$                   8,711		$                 7,563		$                   6,425
Interest-bearing deposits with other institutions		47,190		25,802		66,085		55,433		102,704
Cash and cash equivalents		$                 51,735		$                    30,011		$                 74,796		$               62,996		$               109,129
Certificates of deposit with other banks		745		5,623		8,358		11,088		12,828
Securities available for sale, at fair value		86,804		78,813		78,698		85,756		93,202
Securities held to maturity, net of allowance for credit losses		38,986		31,822		32,571		28,816		5,000
Loans held for sale		—		—		—		—		4,074
Loans receivable, gross		945,371		927,871		863,969		790,406		731,061
Allowance for credit losses - loans		(10,526)		(4,666)		(4,569)		(3,890)		(3,443)
Loans receivable, net		934,845		923,205		859,400		786,516		727,618
Investments in restricted bank stock		4,134		3,377		3,327		2,567		3,612
Premises and equipment, net		6,497		6,743		9,087		7,915		5,253
Right-of-Use Asset – Premises		10,058		10,219		8,920		4,513		4,605
Bank-owned life insurance		24,384		19,244		19,127		19,012		18,898
Goodwill and other intangible assets		36,833		36,894		36,955		37,020		37,085
Deferred tax asset		6,749		5,619		6,378		5,777		5,092
Accrued interest receivable and other assets		12,188		12,084		7,256		7,909		9,280
TOTAL ASSETS		$         1,213,958		$            1,163,654		$         1,144,873		$        1,059,885		$         1,035,676
LIABILITIES
Deposits:
Demand, noninterest bearing		$               204,495		$                  192,773		$               184,857		$             184,345		$               165,228
Interest bearing		780,003		753,999		766,853		718,028		696,942
Total deposits		984,498		946,772		951,710		902,373		862,170
Other Borrowings		31,250		20,938		—		1,639		36,117
Subordinated Debt		40,441		40,484		40,526		40,585		20,653
Operating Lease Liabilities		10,058		10,219		8,921		4,513		4,606
Accrued interest payable and other liabilities		6,130		6,688		6,774		6,004		5,790
TOTAL LIABILITIES		1,072,377		1,025,101		1,007,931		955,114		929,336
SHAREHOLDERS' EQUITY
Preferred stock		—		—		—		—		—
Common stock		250		149		149		99		99
Surplus		127,659		117,709		117,698		83,070		82,930
Retained earnings		18,911		27,100		27,525		26,491		25,623
Accumulated other comprehensive (loss) income		(5,239)		(6,405)		(8,430)		(4,889)		(2,312)
TOTAL SHAREHOLDERS' EQUITY		141,581		138,553		136,942		104,771		106,340
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$         1,213,958		$            1,163,654		$         1,144,873		$        1,059,885		$         1,035,676
Common shares outstanding		16,221,692		14,939,640		14,939,640		9,838,435		9,826,435

 

LINKBANCORP, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
		Three Months Ended
		3/31/2023		12/31/2022		3/31/2022
(In Thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees		$            11,762		$            11,109		$              7,763
Other		1,228		1,097		619
Total interest and dividend income		12,990		12,206		8,382
INTEREST EXPENSE
Deposits		4,517		2,465		665
Other Borrowings		87		335		33
Subordinated Debt		432		421		207
Total interest expense		5,036		3,221		905
NET INTEREST INCOME BEFORE PROVISION FOR    CREDIT LOSSES		7,954		8,985		7,477
Provision for credit losses		293		100		280
NET INTEREST INCOME AFTER PROVISION FOR    CREDIT LOSSES		7,661		8,885		7,197
NONINTEREST INCOME
Service charges on deposit accounts		199		188		210
Bank-owned life insurance		140		116		110
Net realized (losses) gains on the sale of debt securities		(2,370)		—		13
Gain on sale of loans		—		—		180
Other		178		204		198
Total noninterest income		(1,853)		508		711
NONINTEREST EXPENSE
Salaries and employee benefits		4,120		4,612		3,656
Occupancy		707		616		281
Equipment and data processing		693		857		698
Professional fees		381		371		228
FDIC insurance		159		157		204
Bank Shares Tax		278		201		183
Merger & system conversion related expenses		587		973		—
Other		812		658		848
Total noninterest expense		7,737		8,445		6,098
(Loss) income before income tax (benefit) expense		(1,929)		948		1,810
Income tax (benefit) expense		(376)		252		286
NET (LOSS) INCOME		$           (1,553)		$                696		$             1,524
(LOSS) EARNINGS PER SHARE, BASIC		$             (0.10)		$               0.05		$               0.16
(LOSS) EARNINGS PER SHARE, DILUTED		$             (0.10)		$               0.05		$               0.15
WEIGHTED-AVERAGE COMMON SHARES    OUTSTANDING,
BASIC		15,480,951		14,939,640		9,826,435
DILUTED		15,480,951		14,939,640		10,053,684

 

LINKBANCORP, Inc. and Subsidiaries
Financial Highlights (Unaudited)
	For the Three Months Ended
('Dollars In Thousands)	3/31/2023		12/31/2022		3/31/2022
Operating Highlights
Net Income	$                (1,553)		$                     696		$              1,524
Net Interest Income	7,954		8,985		7,477
Provision for Credit Losses	293		100		280
Non-Interest Income	(1,853)		508		711
Non-Interest Expense	7,737		8,445		6,098
Earnings per Share, Basic	(0.10)		0.05		0.16
Adjusted Earnings per Share, Basic (2)	0.05		0.10		0.15
Earnings per Share, Diluted	(0.10)		0.05		0.15
Adjusted Earnings per Share, Diluted (2)	0.05		0.10		0.15
Selected Operating Ratios
Net Interest Margin	2.95 %		3.36 %		3.40 %
Annualized Return on Assets ("ROA")	-0.52 %		0.24 %		0.63 %
Adjusted ROA2	0.27 %		0.50 %		0.63 %
Annualized Return on Equity ("ROE")	-4.56 %		2.02 %		5.72 %
Adjusted ROE2	2.30 %		4.24 %		5.69 %
Efficiency Ratio	126.82 %		88.96 %		74.47 %
Adjusted Efficiency Ratio3	84.41 %		78.71 %		74.59 %
Noninterest Income to Avg. Assets	-0.63 %		0.17 %		0.30 %
Noninterest Expense to Avg. Assets	2.65 %		2.90 %		2.53 %
	3/31/2023		12/31/2022		9/30/2022		6/30/2022		3/31/2022
Financial Condition Data
Total Assets	$           1,213,958		$           1,163,654		$       1,144,873		$          1,059,885		$        1,035,676
Loans Receivable, Net	934,845		923,205		859,400		786,516		727,618
Noninterest-bearing Deposits	204,495		192,773		184,857		184,345		165,228
Interst-bearing Deposits	780,003		753,999		766,853		718,028		696,942
Total Deposits	984,498		946,772		951,710		902,373		862,170
Selected Balance Sheet Ratios
Total Capital Ratio1	13.53 %		12.89 %		11.55 %		12.42 %		11.14 %
Tier 1 Capital Ratio1	12.32 %		12.41 %		11.04 %		11.94 %		10.67 %
Common Equity Tier 1 Capital Ratio1	12.32 %		12.41 %		11.04 %		11.94 %		10.67 %
Leverage Ratio1	10.78 %		10.93 %		9.74 %		10.10 %		8.71 %
Tangible Common Equity to Tangible Assets4	8.90 %		9.02 %		9.02 %		6.62 %		6.94 %
Tangible Book Value per Share5	$                    6.46		$                    6.80		$                6.69		$                   6.89		$                 7.05
Asset Quality Data
Non-performing Assets	$                  2,398		$                  2,500		$              1,979		$                 1,494		$               1,246
Non-performing Assets to Total Assets	0.20 %		0.21 %		0.17 %		0.14 %		0.12 %
Non-performing Loans to Total Loans	0.25 %		0.27 %		0.23 %		0.19 %		0.17 %
Allowance for Credit Losses ("ACL")	$                10,526		$                  4,666		$              4,569		$                 3,890		$               3,443
ACL to Total Loans	1.11 %		0.50 %		0.53 %		0.49 %		0.47 %
ACL to Nonperforming Assets	438.95 %		186.64 %		230.87 %		260.37 %		276.32 %
(1) - These capital ratios have been calculated using bank-level capital
(2) - This is a non-GAAP financial measure.  See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(3) - The efficiency ratio, as adjusted represents noninterst expense divided by the sum of net interest income and noninterest income, excluding gains or losses from securities sales and merger related expenses.  This is a non-GAAP financial measure.  See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(4) - We calculate tangible common equity as total shareholders' equity less goodwill and other intangibles, and we calculate tangible assets as total assets less goodwill and other intangibles.  This is a non-GAAP financial measure.  See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(5) - We calculate tangible book value per common share as total shareholders' equity less goodwill and other intangibles, divided by the outstanding number of shares of our common stock at the end of the relevant period.  Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share.  See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.

 

LINKBANCORP, Inc. and Subsidiaries
Net Interst Margin - Quarter-To-Date (Unaudited)
		For the Three Months Ended March 31,
		2023						2022
(Dollars in thousands)		Avg Bal		Interest (2)		Yield/Rate		Avg Bal		Interest (2)		Yield/Rate
Int. Earn. Cash		$                    36,470		$                         275		3.06 %		$                    59,735		$                           53		0.36 %
Securities
Taxable (1)		81,899		653		3.23 %		67,681		258		1.55 %
Tax-Exempt		38,368		377		3.98 %		45,030		390		3.51 %
Total Securities		120,267		1,030		3.47 %		112,711		648		2.33 %
Total Cash Equiv. and Investments		156,737		1,305		3.38 %		172,446		701		1.65 %
Total Loans (3)		936,510		11,762		5.09 %		718,987		7,763		4.38 %
Total Earning Assets		1,093,247		13,067		4.85 %		891,433		8,464		3.85 %
Other Assets		90,938						85,852
Total Assets		$            1,184,185						$                977,285
Interest bearing demand		$                  251,103		$                      1,188		1.92 %		$                  258,140		$                         245		0.38 %
Money market demand		245,563		1,350		2.23 %		215,410		139		0.26 %
Time deposits		290,605		1,979		2.76 %		194,897		281		0.58 %
Total Borrowings		49,246		519		4.27 %		57,965		240		1.68 %
Total Interest-Bearing Liabilities		836,517		5,036		2.44 %		726,412		905		0.51 %
Non Int Bearing Deposits		192,135						131,841
Total Cost of Funds		$            1,028,652		$                    5,036		1.99 %		$                858,253		$                        905		0.43 %
Other Liabilities		17,508						11,035
Total Liabilities		$            1,046,160						$                869,288
Shareholders' Equity		$                138,025						$                107,997
Total Liabilities & Shareholders' Equity		$            1,184,185						$                977,285
Net Interest Income/Spread (FTE)				8,031		2.41 %				7,559		3.34 %
Tax-Equivalent Basis  Adjustment				(77)						(82)
Net Interest Income				$                    7,954						$                    7,477
Net Interest Margin						2.95 %						3.40 %
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table
(3) Includes the balances of nonaccrual loans

 

LINKBANCORP, Inc. and Subsidiaries
Net Interst Margin - Linked Quarter-To-Date (Unaudited)
		For the Three Months Ended
		March 31, 2023						December 31, 2022
(Dollars in thousands)		Avg Bal		Interest (2)		Yield/Rate		Avg Bal		Interest (2)		Yield/Rate
Int. Earn. Cash		$                     36,470		$                 275		3.06 %		$              42,925		$                 227		2.10 %
Securities
Taxable (1)		81,899		653		3.23 %		80,842		567		2.78 %
Tax-Exempt		38,368		377		3.98 %		37,169		384		4.10 %
Total Securities		120,267		1,030		3.47 %		118,011		951		3.20 %
Total Cash Equiv. and Investments		156,737		1,305		3.38 %		160,936		1,178		2.90 %
Total Loans (3)		936,510		11,762		5.09 %		899,028		11,109		4.90 %
Total Earning Assets		1,093,247		13,067		4.85 %		1,059,964		12,287		4.60 %
Other Assets		90,938						94,628
Total Assets		$             1,184,185						$      1,154,592
Interest bearing demand		$                   251,103		$              1,188		1.92 %		$            278,816		$                 808		1.15 %
Money market demand		245,563		1,350		2.23 %		245,154		966		1.56 %
Time deposits		290,605		1,979		2.76 %		211,090		691		1.30 %
Total Borrowings		49,246		519		4.27 %		68,160		756		4.40 %
Total Interest-Bearing Liabilities		836,517		5,036		2.44 %		803,220		3,221		1.59 %
Non Int Bearing Deposits		192,135						199,556
Total Cost of Funds		$             1,028,652		$            5,036		1.99 %		$      1,002,776		$            3,221		1.27 %
Other Liabilities		17,508						14,864
Total Liabilities		$             1,046,160						$      1,017,640
Shareholders' Equity		$                138,025						$          136,952
Total Liabilities & Shareholders' Equity		$             1,184,185						$      1,154,592
Net Interest Income/Spread (FTE)				8,031		2.41 %				9,066		3.01 %
Tax-Equivalent Basis  Adjustment				(77)						(81)
Net Interest Income				$            7,954						$            8,985
Net Interest Margin						2.95 %						3.36 %
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table
(3) Includes the balances of nonaccrual loans

 

LINKBANCORP, Inc. and Subsidiaries
Loans Receivable Detail (Unaudited)
(In Thousands)		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Agriculture loans		$            16,274		$           15,591		$           13,977		$           7,710		$             8,111
Commercial loans		98,544		103,874		97,542		88,452		94,114
Paycheck Protection Program ("PPP") loans		811		881		933		2,527		10,586
Commercial real estate loans		569,972		540,914		482,367		435,588		353,559
Residential real estate loans		244,694		250,832		251,832		241,401		252,158
Consumer and other loans		10,472		10,057		11,929		8,689		6,359
Municipal loans		4,292		5,466		5,404		5,814		6,193
		945,059		927,615		863,984		790,181		731,080
Deferred costs (fees)		312		256		(15)		225		(19)
Total loans receivable		$        945,371		$       927,871		$       863,969		$     790,406		$      731,061

 

LINKBANCORP, Inc. and Subsidiaries
Investments in Securities Detail (Unaudited)
		March 31, 2023
(In Thousands)		Amortized Cost		Net Unrealized Losses		Fair Value
Available for Sale:
U.S. government agency securities		$            2,000		$                        4		$            2,004
Small Business Administration loan pools		783		(15)		768
Obligations of state and political subdivisions		45,691		(3,236)		42,455
Mortgage-backed securities in government-sponsored entities		44,960		(3,383)		41,577
		$        93,434		$              (6,630)		$        86,804
		Amortized Cost		Net Unrealized Losses		Fair Value
Held to Maturity:
Corporate debentures		$          15,000		$                (1,031)		$          13,969
Structured mortgage-backed securities		24,519		(637)		23,882
		$        39,519		$              (1,668)		$        37,851
		December 31, 2022
(In Thousands)		Amortized Cost		Net Unrealized Losses		Fair Value
Available for Sale:
Small Business Administration loan pools		$               858		$                     (15)		$               843
Obligations of state and political subdivisions		44,189		(4,020)		40,169
Mortgage-backed securities in government-sponsored entities		41,873		(4,072)		37,801
		$        86,920		$              (8,107)		$        78,813
Held to Maturity:
Corporate debentures		$          14,993		$                   (994)		$          13,999
Structured mortgage-backed securities		16,829		(748)		16,081
		$        31,822		$              (1,742)		$        30,080

 

LINKBANCORP, Inc. and Subsidiaries
Deposits Detail (Unaudited)
(In Thousands)		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Demand, noninterest-bearing		$    204,495		$       192,773		$       184,857		$    184,345		$     165,228
Demand, interest-bearing		250,944		254,478		305,934		269,493		269,222
Money market and savings		241,858		228,048		266,743		235,411		224,673
Time deposits, $250 and over		51,855		46,116		39,123		55,507		55,514
Time deposits, other		235,346		225,357		155,053		157,617		147,533
		$  984,498		$     946,772		$    951,710		$  902,373		$  862,170
Average Deposits Detail, for the Three Months Ended (Unaudited)
(In Thousands)		March 31, 2023		December 31, 2022		September 30, 2022		June 30, 2022		March 31, 2022
Demand, noninterest-bearing		$    192,135		$       199,556		$       170,863		$    152,691		$     131,841
Demand, interest-bearing		251,103		278,816		278,637		270,844		258,140
Money market and savings		245,563		245,154		244,107		224,483		215,410
Time deposits		290,605		211,090		205,792		211,033		194,897
		$  979,406		$     934,616		$    899,399		$  859,051		$  800,288

Appendix A – Reconciliation to Non-GAAP Financial Measures

This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management uses these non-GAAP measures in its analysis of the Company's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of non-GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company's financial condition and results. Non-GAAP measures are not formally defined under GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to GAAP financial measures, our management believes these non-GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-GAAP measures. See the tables below for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.

Adjusted Return on Average Assets
	For the Three Months Ended
(Dollars in thousands)	3/31/2023		12/31/2022		3/31/2022
Net (loss) income	$             (1,553)		$                 696		$              1,524
Average assets	1,184,185		1,154,592		977,285
Return on average assets (annualized)	-0.53 %		0.24 %		0.63 %
Net (loss) income	(1,553)		696		1,524
Net losses (gains) on sale of securities	2,370		-		(13)
Tax effect at 21%	(498)		-		3
Merger & system conversion related expenses	587		973		-
Tax effect at 21%	(123)		(204)		-
Adjusted Net Income (Non-GAAP)	783		1,465		1,514
Average assets	1,184,185		1,154,592		977,285
Adjusted return on average assets (annualized) (Non-GAAP)	0.27 %		0.50 %		0.63 %

 

Adjusted Return on Average Shareholders' Equity
	For the Three Months Ended
(Dollars in thousands)	3/31/2023		12/31/2022		3/31/2022
Net (loss) income	$          (1,553)		$            696		$         1,524
Average shareholders' equity	138,025		136,952		107,997
Return on average shareholders' equity (annualized)	-4.56 %		2.02 %		5.72 %
Net (loss) income	(1,553)		696		1,524
Net losses (gains) on sale of securities	2,370		-		(13)
Tax effect at 21%	(498)				3
Merger & system conversion related expenses	587		973		-
Tax effect at 21%	(123)		(204)		-
Adjusted Net Income (Non-GAAP)	783		1,465		1,514
Average shareholders' equity	138,025		136,952		107,997
Adjusted return on average shareholders' equity (annualized) (Non-GAAP)	2.30 %		4.24 %		5.69 %

 

Adjusted Efficiency Ratio
	For the Three Months Ended
(Dollars in thousands)	3/31/2023		12/31/2022		3/31/2022
GAAP-based efficiency ratio	126.82 %		88.96 %		74.47 %
Net interest income	$         7,954		$         8,985		$            7,477
Noninterest income	(1,853)		508		711
Less: net (losses) gains on sales of securities	(2,370)		-		13
Adjusted revenue (Non-GAAP)	8,471		9,493		8,175
Total noninterest expense	7,737		8,445		6,098
Less: Merger & system conversion related expenses	587		973		-
Adjusted non-interest expense	7,150		7,472		6,098
Efficiency ratio, as adjusted (Non-GAAP)	84.41 %		78.71 %		74.59 %

 

Adjusted Earnings Per Share
	For the Three Months Ended
(Dollars in thousands, except per share data)	3/31/2023		12/31/2022		3/31/2022
GAAP-Based (Loss) Earnings Per Share, Basic	$             (0.10)		$         0.05		$             0.16
GAAP-Based (Loss) Earnings Per Share, Diluted	$             (0.10)		$         0.05		$             0.15
Net (Loss) Income	$            (1,553)		$            696		$            1,524
Net losses (gains) on sale of securities	2,370		-		(13)
Tax effect at 21%	(498)		-		3
Merger & system conversion related expenses	587		973		-
Tax effect at 21%	(123)		(204)		-
Adjusted Net Income (Non-GAAP)	783		1,465		1,514
Adjusted Earnings per Share, Basic (Non-GAAP)	$              0.05		$         0.10		$             0.15
Adjusted Earnings per Share, Diluted (Non-GAAP)	$              0.05		$         0.10		$             0.15

 

Tangible Common Equity and Tangible Book Value
		3/31/2023		12/31/2022		9/30/2022		6/30/2022		3/31/2022
Tangible Common Equity		(Dollars in thousands, except for share data)
Total shareholders' equity		$          141,581		$        138,553		$        136,942		$        104,771		$        106,340
Adjustments:
Goodwill		(35,842)		(35,842)		(35,842)		(35,842)		(35,842)
Other intangible assets		(991)		(1,052)		(1,113)		(1,178)		(1,243)
Tangible common equity (Non-GAAP)		$          104,748		$        101,659		$          99,987		$          67,751		$          69,255
Common shares outstanding		16,221,692		14,939,640		14,939,640		9,838,435		9,826,435
Book value per common share		$               8.73		$             9.27		$             9.17		$          10.65		$          10.82
Tangible book value per common share (Non-GAAP)		$               6.46		$             6.80		$             6.69		$             6.89		$             7.05
Tangible Assets
Total assets		$       1,213,958		$     1,163,654		$     1,144,873		$     1,059,885		$     1,035,676
Adjustments:
Goodwill		(35,842)		(35,842)		(35,842)		(35,842)		(35,842)
Other intangible assets		(991)		(1,052)		(1,113)		(1,178)		(1,243)
Tangible assets (Non-GAAP)		$       1,177,125		$     1,126,760		$     1,107,918		$     1,022,865		$        998,591
Tangible common equity to tangible assets (Non-GAAP)		8.90 %		9.02 %		9.02 %		6.62 %		6.94 %

 

Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)
	For the Three Months Ended
(Dollars in thousands, except per share data)	3/31/2023		12/31/2022		3/31/2022
Net (Loss) Income - GAAP	$            (1,553)		$            696		$            1,524
Net losses (gains) on sale of securities	2,370		-		(13)
Tax effect at 21%	(498)		-		3
Merger & system conversion related expenses	587		973		-
Tax effect at 21%	(123)		(204)		-
Adjusted Net Income (Non-GAAP)	783		1,465		1,514
Income tax (benefit) expense	(376)		252		286
Provision for credit losses - loans	293		100		280
Tax effect included in Adjusted Net Income	621		204		(3)
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)	$              1,321		$         2,021		$            2,077

 

Contact:
Nicole Ulmer
Corporate and Investor Relations Officer
717.803.8895
IR@LINKBANCORP.COM

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