LINKBANCORP, Inc. Announces Second Quarter 2022 Financial Results

Rhea-AI Summary

LINKBANCORP (OTC Pink: LNKB) reported a net income of $1.606 million for Q2 2022, equating to $0.16 per diluted share. Net loans grew by $61.5 million (34% annualized), while noninterest bearing deposits increased by $19.1 million (46% annualized). Total assets rose to $1.060 billion. Net interest income came to $7.85 million, a rise of $376 thousand from the previous quarter. The company maintained a steady net interest margin of 3.38%. Shareholders' equity declined to $104.8 million primarily due to unrealized losses on securities.

Positive

• Net loans increased by $61.5 million (34% annualized growth).
• Noninterest bearing deposits rose by $19.1 million (46% annualized growth).
• Net interest income increased to $7.85 million, reflecting a $376 thousand rise from the previous quarter.
• Total assets reached $1.060 billion, up from $1.036 billion.
• Regulatory capital ratios strengthened due to a $15 million capital contribution following the company's $20 million private placement.

Negative

• Shareholders' equity decreased from $106.3 million to $104.8 million due to unrealized losses on securities.

HARRISBURG, Pa., Aug. 1, 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 $1.606 million, or $0.16 per diluted share, for the quarter ended June 30, 2022.

Second Quarter Highlights

• Net loans, exclusive of SBA PPP loans, grew $61.5 million during the second quarter,  representing a 34% annualized growth rate
• Noninterest bearing deposits grew $19.1 million since March 31, 2022 or 46% annualized
• Net interest income increased to $7.85 million, an increase of $376 thousand over the linked quarter, including the impact of additional interest expense for subordinated notes issued April 8, 2022

Andrew Samuel, Chief Executive Officer, commented, "Every region of the Bank contributed to the tremendous growth in both quality commercial loans and low-cost deposits this quarter, including our new team members in the Delaware Valley Region. This is an incredible accomplishment by our teams and confirms the quality of talent we have been able to attract."  He continued, "With this momentum, we look forward to a strong second half of 2022 as we continue to welcome new clients and expand our impact in the communities we serve."

Total assets were $1.060 billion at June 30, 2022 compared to $1.036 billion at March 31, 2022 and $932.8 million at December 31, 2021.  Deposits and net loans as of June 30, 2022 totaled $902.4 million and $786.5 million, respectively, compared to deposits and net loans of  $862.2 million and $727.6 million, respectively, at March 31, 2022 and $771.7 million and $711.7 million, respectively, at December 31, 2021.  The loan growth from March 31, 2022 includes $61.5 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 $8.1 million to $2.5 million at June 30, 2022.  The $40.2 million increase in deposits from March 31, 2022 included a $19.1 million increase in noninterest bearing demand accounts, reflecting a continuing focus on growing low-cost transaction accounts. 

As of June 30, 2022, the Company's non-performing assets were $1.5 million, representing 0.14% of total assets. Non-performing assets at June 30, 2022 excluded purchased credit impaired loans with a balance of $6.5 million.  The allowance for loan losses measured 0.49% of total loans, or approximately 0.89% of the non-purchased portfolio, at June 30, 2022. The total reserve when including the allowance for loan losses and the credit fair value adjustment made to loans acquired in the GNB Financial merger totaled $10.0 million or approximately 1.26% of the combined portfolio at June 30, 2022.

Net interest income before the provision for loan losses for the second quarter of 2022 increased to $7.9 million compared to $7.5 million in the first quarter of 2022 primarily as a result of average loan growth and the impact of recent interest rate increases, offset by the additional interest expense of subordinated notes issued early in the quarter.  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 remained relatively steady at 3.38% for the second quarter of 2022 as compared to 3.40% for the first quarter of 2022 and is anticipated to experience modest expansion in the current rising interest rate environment given the Company's asset-sensitive balance sheet.  

Noninterest income experienced a slight decrease from $711 thousand in the first quarter of 2022 to $696 thousand in the second quarter of 2022, and noninterest expense for the second quarter of 2022 was generally stable at $6.2 million, compared to $6.1 million for the first quarter of 2022. 

Shareholders' equity decreased from $106.3 million at March 31, 2022 to $104.8 million at June 30, 2022 due to a $2.6 million increase in accumulated other comprehensive (loss) income as a result of an increased unrealized losses on available-for-sale securities due to the increase in market interest rates.  The unrealized loss was partially offset by net income less dividends declared. 

The Bank's regulatory capital ratios were further strengthened during the quarter, reflecting the additional $15 million in capital contributed to the Bank following completion of the Company's $20.0 million private placement of Fixed-to-Floating Rate Subordinated Notes due 2032 on April 8, 2022.

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. 

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

 

LINKBANCORP, Inc. and Subsidiary
Consolidated Balance Sheet (Unaudited)
		June 30, 2022		March 31, 2022		December 31, 2021		June 30, 2021
(In Thousands, except share and per share data)
ASSETS
Noninterest-bearing cash equivalents		$                 7,563		$                 6,425		$                          8,620		$                 6,079
Interest-bearing deposits with other institutions		55,433		102,704		13,970		18,913
Cash and cash equivalents		62,996		109,129		22,590		24,992
Certificates of deposit with other banks		11,088		12,828		12,828		14,570
Securities available for sale, at fair value		85,756		93,202		103,783		126,410
Securities held to maturity		28,816		5,000		—		—
Loans held for sale		—		4,074		3,860		—
Loans receivable, net of allowance for loan losses of $3,890 at June 30, 2022, $3,443 at March 31, 2022, $3,152 at December 31, 2021, and $2,878 at June 30, 2021		786,516		727,618		711,664		246,185
Investments in restricted bank stock		2,567		3,612		2,685		2,569
Premises and equipment, net		7,915		5,253		5,289		3,212
Right-of-Use Asset – Premises		4,513		4,605		4,680		342
Bank-owned life insurance		19,012		18,898		18,787		8,846
Goodwill and other intangible assets		37,020		37,085		37,152		2,482
Deferred tax asset		5,777		5,092		4,038		160
Accrued interest receivable and other assets		7,909		9,280		5,407		2,402
TOTAL ASSETS		$        1,059,885		$          1,035,676		$                      932,763		$             432,170
LIABILITIES
Deposits:
Demand, noninterest bearing		$             184,345		$             165,228		$                      129,243		$               74,664
Interest bearing		718,028		696,942		642,422		301,636
Total deposits		902,373		862,170		771,665		376,300
Other Borrowings		1,639		36,117		19,814		282
Subordinated Debt		40,585		20,653		20,696		—
Operating Lease Liabilities		4,513		4,606		4,680		342
Accrued interest payable and other liabilities		6,004		5,790		6,285		3,170
TOTAL LIABILITIES		955,114		929,336		823,140		380,094
SHAREHOLDERS' EQUITY
Preferred stock		—		—		—		—
Common stock		101		99		99		57
Surplus		83,068		82,930		82,910		21,604
Retained earnings		26,491		25,623		24,836		27,823
Accumulated other comprehensive (loss) income		(4,889)		(2,312)		1,778		2,780
Treasury stock		—		—		—		(188)
TOTAL SHAREHOLDERS' EQUITY		104,771		106,340		109,623		52,076
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$          1,059,885		$          1,035,676		$                      932,763		$             432,170

 

LINKBANCORP, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
		Three Months Ended						Six Months Ended
		6/30/2022		3/31/2022		6/30/2021			6/30/2022		6/30/2021
(In Thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees		$             8,114		$             7,763		$             2,695			$           15,877		$             5,371
Other		981		619		638			1,600		1,286
Total interest and dividend income		9,095		8,382		3,333			17,477		6,657
INTEREST EXPENSE
Deposits		818		665		462			1,483		966
Other Borrowings		2		33		4			35		11
Subordinated Debt		422		207		—			629		—
Total interest expense		1,242		905		466			2,147		977
NET INTEREST INCOME BEFORE PROVISION FOR    LOAN LOSSES		7,853		7,477		2,867			15,330		5,680
Provision for loan losses		395		280		44			675		91
NET INTEREST INCOME AFTER PROVISION FOR    LOAN LOSSES		7,458		7,197		2,823			14,655		5,589
NONINTEREST INCOME
Service charges on deposit accounts		218		210		147			428		341
Bank-owned life insurance		114		110		50			224		95
Net realized gains on the sales of debt securities, available for sale		0		13		—			13		—
Gain on sale of loans		153		180		81			333		271
Other		211		198		366			409		507
Total noninterest income		696		711		644			1,407		1,214
NONINTEREST EXPENSE
Salaries and employee benefits		3,722		3,656		1,143			7,378		2,246
Occupancy		433		473		113			906		275
Equipment and data processing		595		597		230			1,192		468
Professional fees		307		228		(21)			535		250
FDIC insurance		138		204		29			342		59
Bank Shares Tax		201		183		86			384		173
Other		846		757		512			1,603		659
Total noninterest expense		6,242		6,098		2,092			12,340		4,130
Income (Loss) before income tax (benefit) expense		1,912		1,810		1,375			3,722		2,673
Income tax (benefit) expense		306		286		202			592		375
NET INCOME (LOSS)		$             1,606		$             1,524		$             1,173			$             3,130		$             2,298
EARNINGS (LOSS) PER SHARE, BASIC		$               0.16		$               0.16		$               0.21			$               0.32		$               0.40
EARNINGS (LOSS) PER SHARE, DILUTED		$               0.16		$               0.15		$               0.21			$               0.31		$               0.40
WEIGHTED-AVERAGE COMMON SHARES    OUTSTANDING,
BASIC		9,836,984		9,826,435		5,691,686			9,831,739		5,691,686
DILUTED		9,913,477		10,053,684		5,691,686			9,983,742		5,691,686

 

LINKBANCORP, Inc. and Subsidiary
Financial Highlights (Unaudited)
		For the Three Months Ended				For the Six Months Ended
('Dollars In Thousands)		6/30/2022		3/31/2022		6/30/2022
Operating Highlights
Net Income (Loss)		$                1,606		$                1,524		$                3,130
Net Interest Income		7,853		7,477		15,330
Provision for Loan Losses		395		280		675
Non-Interest Income		696		711		1,407
Non-Interest Expense		6,242		6,098		12,340
Selected Ratios
Net Interest Margin		3.38 %		3.40 %		3.39 %
Annualized Return on Assets		0.63 %		0.63 %		0.63 %
Annualized Return on Equity		6.13 %		5.72 %		5.91 %
		6/30/2022		3/31/2022		12/31/2021
Financial Condition Data
Total Assets		$         1,059,885		$         1,035,676		$            932,763
Loans Held for Investment, Net		786,516		727,618		711,664
Noninterest-bearing Deposits		184,345		165,228		129,243
Interst-bearing Deposits		718,028		696,942		642,422
Total Deposits		902,373		862,170		771,665
Capital Ratios (Bank-Level)
Total Capital Ratio		12.42 %		11.14 %		11.50 %
Tier 1 Capital Ratio		11.94 %		10.67 %		11.02 %
Common Equity Tier 1 Capital Ratio		11.94 %		10.67 %		11.02 %
Leverage Ratio		10.10 %		8.71 %		8.85 %
Asset Quality Data
Non-performing Assets		$                1,494		$                1,246		$                1,410
Non-performing Assets to Total Assets		0.14 %		0.12 %		0.15 %
Non-performing Loans to Total Loans		0.19 %		0.17 %		0.20 %
Allowance for Loan Losses ("AFLL")		$                3,890		$                3,443		$                3,152
AFLL to Total Loans		0.49 %		0.47 %		0.44 %
AFLL to Nonperforming Assets		260.37 %		276.32 %		223.55 %
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.

 

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SOURCE LINKBANCORP, INC.

FAQ

What were LINKBANCORP's earnings for Q2 2022?

LINKBANCORP reported a net income of $1.606 million or $0.16 per diluted share for Q2 2022.

How much did net loans grow in Q2 2022 for LINKBANCORP?

Net loans grew by $61.5 million during the second quarter of 2022.

What was the status of LINKBANCORP's total assets as of June 30, 2022?

Total assets for LINKBANCORP reached $1.060 billion on June 30, 2022.

How did noninterest income perform in Q2 2022 for LINKBANCORP?

Noninterest income decreased slightly from $711 thousand in Q1 2022 to $696 thousand in Q2 2022.

What is the outlook for LINKBANCORP's net interest margin?

The net interest margin remained steady at 3.38% and is anticipated to experience modest expansion in the current rising interest rate environment.