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LINKBANCORP, Inc. Announces Second Quarter 2023 Financial Results

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LINKBANCORP reports Q2 2023 net income of $1.35 million. Total deposits grew 20.5% annualized. On-balance sheet liquidity increased to $123.2 million. Total loans grew 10.3% annualized. Net interest income was $8.1 million. Negative provision for credit losses of $493 thousand. Merger with Partners Bancorp approved.
Positive
  • Total deposits grew 20.5% annualized during Q2 2023. On-balance sheet liquidity increased to $123.2 million. Total loans grew 10.3% annualized. Net interest income was $8.1 million. Negative provision for credit losses of $493 thousand. Merger with Partners Bancorp approved.
Negative
  • None.

HARRISBURG, Pa., July 31, 2023 /PRNewswire/ -- LINKBANCORP, Inc. (NASDAQ: LNKB) (the "Company"), the parent company of LINKBANK (the "Bank") reported net income of $1.35 million, or $0.08 per diluted share, for the quarter ended June 30, 2023. Excluding merger related expenses, adjusted earnings were $1.60 million1, or $0.101 per diluted share for the second quarter of 2023.

Second Quarter 2023 Highlights

  • Total deposits grew $50.3 million, or 20.5% annualized during the second quarter over the prior quarter end, including an increase in noninterest bearing deposits of $36.2 million, and $14.1 million in interest bearing deposits. Estimated uninsured deposits, excluding collateralized public funds and affiliate company accounts, totaled $378.7 million, or 36.7% of total deposits as of June 30, 2023, compared with $387.8 million, or 39.4% of total deposits as of March 31, 2023.
  • The Company enhanced its on-balance sheet liquidity, with cash and cash equivalents as of June 30, 2023 of $123.2 million, up from $51.7 million at March 31, 2023 and $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 approximately $507.4 million as of June 30, 2023.
  • Total loans grew $24.2 million during the second quarter, representing a 10.3% annualized growth rate, driven primarily by commercial and industrial and commercial real estate loan activity.
  • Net interest income for the second quarter of 2023 was $8.1 million, compared to $8.0 million for the first quarter of 2023. Net interest margin was 2.81% for the second quarter of 2023, compared to 2.95% for the first quarter of 2023. The linked quarter decrease was primarily due to higher interest expense on deposits continuing to outpace the increase in interest income from loans.
  • The Company recorded a $493 thousand negative provision for credit losses for the second quarter of 2023, resulting in an allowance for credit losses of $10.2 million, or 1.05% of total loans at June 30, 2023. The negative provision for credit losses was primarily driven by refinement of the population of loans individually assessed for impairment under the current expected credit losses ("CECL") accounting standard, improvements in internal credit metrics and external forecast indexes, as well as $97 thousand in net recoveries, offset by loan growth in the period.
  • On June 22, 2023, shareholders of the Company and Partners Bancorp ("Partners"), each approved the merger of Partners with and into the Company, with the Company as the surviving corporation pursuant to the Agreement and Plan of Merger, dated as of February 22, 2023. The merger is expected to close in the third or fourth quarter of 2023, subject to regulatory approvals and certain other customary closing conditions.












1

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

"We are pleased to report results that evidence continued balance sheet strength, including increased on-balance sheet liquidity, a growing core deposit base, and excellent credit quality." said Andrew Samuel, Chief Executive Officer. "Although significant uncertainty remains in the external environment, we are optimistic that the pace of margin compression will continue to stabilize.  Our teams are highly focused on providing superior service to meet our clients' needs and we believe the Company is well positioned to successfully navigate through this climate."    

Income Statement

Net interest income before the provision for credit losses for the second quarter of 2023 increased to $8.1 million compared to $8.0 million in the first quarter of 2023. Net interest margin was 2.81% for the second quarter of 2023 compared to 2.95% for the first quarter of 2023.  The decrease in net interest margin for the current quarter was due to the higher average rate paid on interest-bearing liabilities, which outpaced the increase in the average 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. The rate of increase in the cost of funds moderated to 30 basis points in the second quarter of 2023, primarily resulting from strong growth in the average balance of non-interest bearing deposits, which increased approximately $17.0 million to $209.1 million, compared to $192.1 million for the first quarter.  The 30 basis points increase in the cost of funds to 2.29% during the second quarter of 2023 was partially offset by a 15 basis point increase in the average yield on interest-earning assets to 5.00%.  The increase in the average yield on interest-earning assets was primarily due to the increase in the average yield on loans of 11 basis points to 5.20% during the second quarter of 2023. 

During the second quarter, the Company continued to recognize results from its increased internal focus and strategy on core deposit generation, including 123 net new checking accounts opened for a total of $38 million in new deposits.  Additionally, further momentum in executing the Company's strategies to service the needs of professional services firms  resulted in 58 new accounts opened during the quarter, which are expected to fund over the course of the third quarter.  As a result of these positive trends, the Company expects to allow higher cost brokered deposits to mature, replaced by core accounts at a lower cost, contributing to further stabilization in net interest margin. 

Noninterest income (expense) improved from a $1.9 million expense in the first quarter of 2023, driven by recognition of a loss upon the sale of debt securities of $2.37 million, to $886 thousand in income in the second quarter of 2023.   Excluding the first quarter loss on the sale of debt securities, adjusted noninterest income for the second quarter of 2023 increased $369 thousand to $886 thousand, primarily due to gains on the sale of Small Business Administration ("SBA") loans of $296 thousand and $57 thousand in commercial loan-related interest rate swap fees. 

Noninterest expense for the second quarter of 2023 increased to $7.8 million compared to $7.7 million for the first quarter of 2023. Excluding one time charges relating to the pending merger with Partners Bancorp of $587 thousand in the first quarter of 2023 and $315 thousand in the second quarter of 2023, adjusted noninterest expense increased by $351 thousand in the second quarter, impacted by increased equipment and data processing expense as the Company continues to enhance its technology platform, as well as elevated accrual of fraud and operating losses. 

Balance Sheet

Total assets were $1.31 billion at June 30, 2023 compared to $1.21 billion at March 31, 2023 and $1.06 billion at June 30, 2022.  Deposits and net loans as of June 30, 2023 totaled $1.03 billion and $959.3 million, respectively, compared to deposits and net loans of $984.5 million and $934.8 million, respectively, at March 31, 2023 and $902.4 million and $786.5 million, respectively, at June 30, 2022.

Total loans increased $24.2 million from March 31, 2023 to June 30, 2023, or 10.25% annualized, with the average commercial loan commitment originated during the second quarter of 2023 totaling approximately $500,000.

The Company has proactively taken additional steps during the quarter to enhance its on-balance sheet liquidity. Cash and cash equivalents increased to $123.2 million at June 30, 2023 compared to  $51.7 million at March 31, 2023 and $30.0 million at December 31, 2022.  In addition to growth in core deposits, this position was supported by an additional $43.7 million in borrowings related to $75.0 million in wholesale funding in connection with the execution of a pay-fixed/receive-floating interest rate swap.  The interest rate swap has a fixed rate of 3.28%, a maturity of five years and is designated against either a mix of one-month FHLB advances or brokered certificates of deposits.  Classified as a cash flow hedge, the market fluctuations will not impact future earnings, but will impact accumulated other comprehensive loss.     

Deposits at June 30, 2023 totaled $1.03 billion, an increase of $50.3 million compared to $984.5 million at March 31, 2023.  Average deposits increased by $17.0 million during the quarter, or 6.9% annualized, driven by a 35.3% increase in average noninterest bearing deposits from $192.1 million for the first quarter of 2023 to $209.1 million for the second quarter of 2023.

Shareholders' equity increased from $141.6 million at March 31, 2023 to $142.5 million at June 30, 2023.  The increase included an increase in retained earnings due to net income for the current quarter, and a decrease in other comprehensive loss resulting from changes in the interest rate environment, offset by dividends paid of $1.2 million

Asset Quality

In the second quarter of 2023, the Company recorded a negative provision for credit losses, calculated under the CECL model, of $493 thousand, compared to a provision for credit losses of $293 thousand in the first quarter.  The negative provision for credit losses included the impact of reductions in the allowance for credit losses due to refinement of the population of loans individually assessed for impairment under CECL, improvements in internal credit metrics and external forecast indexes, as well as $97 thousand in net recoveries, offset by loan growth in the period.     

Asset quality metrics remain strong. As of June 30, 2023, the Company's non-performing assets were $2.9 million, representing 0.22% of total assets. Non-performing assets at June 30, 2023 excluded purchased with credit deterioration ("PCD") loans with a balance of $2.1 million.  Loans 30-89 days past due at June 30, 2023 were $1.8 million, representing 0.18% of total loans. 

The allowance for credit losses-loans was $10.2 million, or 1.05% of total loans at June 30, 2023, compared to the allowance for credit losses-loans of $10.5 million, or 1.11% of total loans, at March 31, 2023.  The allowance for credit losses-loans to nonperforming assets was 358.12% at June 30, 2023, compared to 438.95% at March 31, 2023.   

The Company's risk management function incorporates extensive diversification, monitoring and hold limits with respect to the commercial real estate loan portfolio and management closely monitors concentration reports and related analyses.  The commercial real estate loan portfolio is well-diversified, with limited exposure to higher risk segments such as hotels and retail.   Management believes that the office space portfolio, which includes medical and mixed-use space, and does not involve properties in major metropolitan business districts, is stable and does not pose excessive risk.  Specifically, at June 30, 2023, the Company had 68 loans related to office space, with an average loan size of $1.8 million and total current outstanding balances of $103.0 million.  The largest exposure relating to office space is $8.8 million for a construction loan that will constitute owner-occupied real estate upon completion.   Eighty-four percent (84%) of office space loans are guaranteed by high-quality principals and no office loans are past due 30 days or greater. 

Capital

The Bank's regulatory capital ratios are well in excess of regulatory minimums to be considered "well capitalized" as of June 30, 2023. The Bank's Total Capital Ratio and Tier 1 Capital Ratio was 13.55% and 12.94% , respectively, at June 30, 2023, compared to 13.53% and 12.32%, respectively, at March 31, 2023 and 12.89% and 12.41%, respectively, at December 31, 2022. The Company's ratio of Tangible Common Equity to Tangible Assets was 8.31%2 at June 30, 2023.

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. 















2

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

LB-E
LB-D

 

LINKBANCORP, Inc. and Subsidiaries

Consolidated Balance Sheet (Unaudited)

























June 30, 2023


March 31, 2023


December 31,
2022


September 30,
2022


June 30, 2022

(In Thousands, except share and per share data)











ASSETS











Noninterest-bearing cash equivalents


$                   4,736


$                      4,545


$                   4,209


$                 8,711


$                   7,563

Interest-bearing deposits with other institutions


118,438


47,190


25,802


66,085


55,433

Cash and cash equivalents


$               123,174


$                    51,735


$                 30,011


$               74,796


$                 62,996

Certificates of deposit with other banks


498


745


5,623


8,358


11,088

Securities available for sale, at fair value


83,620


86,804


78,813


78,698


85,756

Securities held to maturity, net of allowance for credit losses


38,220


38,986


31,822


32,571


28,816

Loans receivable, gross


969,533


945,371


927,871


863,969


790,406

Allowance for credit losses - loans


(10,228)


(10,526)


(4,666)


(4,569)


(3,890)

Loans receivable, net


959,305


934,845


923,205


859,400


786,516

Investments in restricted bank stock


5,544


4,134


3,377


3,327


2,567

Premises and equipment, net


6,292


6,497


6,743


9,087


7,915

Right-of-Use Asset – Premises


9,896


10,058


10,219


8,920


4,513

Bank-owned life insurance


24,554


24,384


19,244


19,127


19,012

Goodwill and other intangible assets


36,774


36,833


36,894


36,955


37,020

Deferred tax asset


6,571


6,749


5,619


6,378


5,777

Accrued interest receivable and other assets


14,024


12,188


12,084


7,256


7,909

TOTAL ASSETS


$         1,308,472


$            1,213,958


$         1,163,654


$        1,144,873


$         1,059,885

LIABILITIES











Deposits:











Demand, noninterest bearing


$               240,729


$                  204,495


$               192,773


$             184,857


$               184,345

Interest bearing


794,113


780,003


753,999


766,853


718,028

Total deposits


1,034,842


984,498


946,772


951,710


902,373

Other Borrowings


74,899


31,250


20,938



1,639

Subordinated Debt


40,398


40,441


40,484


40,526


40,585

Operating Lease Liabilities


9,896


10,058


10,219


8,921


4,513

Accrued interest payable and other liabilities


5,985


6,130


6,688


6,774


6,004

TOTAL LIABILITIES


1,166,020


1,072,377


1,025,101


1,007,931


955,114

SHAREHOLDERS' EQUITY











Preferred stock






Common stock


162


250


149


149


99

Surplus


127,818


127,659


117,709


117,698


83,070

Retained earnings


19,039


18,911


27,100


27,525


26,491

Accumulated other comprehensive (loss) income


(4,567)


(5,239)


(6,405)


(8,430)


(4,889)

TOTAL SHAREHOLDERS' EQUITY


142,452


141,581


138,553


136,942


104,771

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$         1,308,472


$            1,213,958


$         1,163,654


$        1,144,873


$         1,059,885

Common shares outstanding


16,228,440


16,221,692


14,939,640


14,939,640


9,838,435

 

LINKBANCORP, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)





























Three Months Ended



Six Months Ended



6/30/2023


3/31/2023


6/30/2022




6/30/2023


6/30/2022

(In Thousands, except share and per share data)













INTEREST AND DIVIDEND INCOME













Loans receivable, including fees


$            12,499


$            11,762


$              8,114




$            24,261


$            15,877

Other


1,827


1,228


981




3,055


1,600

Total interest and dividend income


14,326


12,990


9,095




27,316


17,477

INTEREST EXPENSE













Deposits


5,242


4,517


818




9,759


1,483

Other Borrowings


558


87


2




645


35

Subordinated Debt


437


432


422




869


629

Total interest expense


6,237


5,036


1,242




11,273


2,147

NET INTEREST INCOME BEFORE (CREDIT TO)
   PROVISION FOR CREDIT LOSSES


8,089


7,954


7,853




16,043


15,330

(Recovery of) provision for credit losses


(493)


293


395




(200)


675

NET INTEREST INCOME AFTER (CREDIT TO)
   PROVISION FOR CREDIT LOSSES


8,582


7,661


7,458




16,243


14,655

NONINTEREST INCOME













Service charges on deposit accounts


197


199


218




396


428

Bank-owned life insurance


170


140


114




310


224

Net realized (losses) gains on the sale of debt securities



(2,370)





(2,370)


13

Gain on sale of loans


296



153




296


333

Other


223


178


211




401


409

Total noninterest income


886


(1,853)


696




(967)


1,407

NONINTEREST EXPENSE













Salaries and employee benefits


4,037


4,120


3,722




8,157


7,378

Occupancy


696


707


433




1,403


906

Equipment and data processing


893


693


595




1,586


1,192

Professional fees


418


381


307




799


535

FDIC insurance


184


159


138




343


342

Bank Shares Tax


278


278


201




556


384

Merger & system conversion related expenses


315


587





902


Other


995


812


846




1,807


1,603

Total noninterest expense


7,816


7,737


6,242




15,553


12,340

Income (loss) before income tax expense (benefit)


1,652


(1,929)


1,912




(277)


3,722

Income tax expense (benefit)


305


(376)


306




(70)


592

NET  INCOME (LOSS)


$             1,347


$           (1,553)


$             1,606




$              (207)


$             3,130














EARNINGS (LOSS) PER SHARE, BASIC


$               0.08


$             (0.10)


$               0.16




$             (0.01)


$               0.32

 EARNINGS (LOSS) PER SHARE, DILUTED


$               0.08


$             (0.10)


$               0.16




$             (0.01)


$               0.31

WEIGHTED-AVERAGE COMMON SHARES
   OUTSTANDING,













BASIC


16,228,069


15,480,951


9,836,984




15,856,574


9,831,739

DILUTED


16,228,069


15,480,951


9,913,477




15,856,574


9,983,742

 

LINKBANCORP, Inc. and Subsidiaries

Financial Highlights (Unaudited)












For the Three Months Ended


For the Six Months Ended

('Dollars In Thousands)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

Operating Highlights










Net Income (loss)

$                  1,347


$                (1,553)


$              1,606


$                  (207)


$               3,130

Net Interest Income

8,089


7,954


7,853


16,043


15,330

Provision for (credit to) Credit Losses

(493)


293


395


(200)


675

Non-Interest Income

886


(1,853)


696


(967)


1,407

Non-Interest Expense

7,816


7,737


6,242


15,553


12,340

Earnings (loss) per Share, Basic

0.08


(0.10)


0.16


(0.01)


0.32

Adjusted Earnings per Share, Basic (2)

0.10


0.05


0.16


0.15


0.32

Earnings (loss) per Share, Diluted

0.08


(0.10)


0.16


(0.01)


0.31

Adjusted Earnings per Share, Diluted (2)

0.10


0.05


0.16


0.15


0.31











Selected Operating Ratios










Net Interest Margin

2.81 %


2.95 %


3.38 %


2.86 %


3.39 %

Annualized Return on Assets ("ROA")

0.43 %


-0.53 %


0.63 %


-0.03 %


0.63 %

Adjusted ROA2

0.51 %


0.27 %


0.63 %


0.39 %


0.63 %

Annualized Return on Equity ("ROE")

3.81 %


-4.56 %


6.13 %


-0.30 %


12.31 %

Adjusted ROE2

4.51 %


2.30 %


6.13 %


3.42 %


12.27 %

Efficiency Ratio

87.09 %


126.82 %


73.01 %


103.16 %


73.73 %

Adjusted Efficiency Ratio3

83.58 %


84.41 %


73.01 %


83.98 %


73.79 %

Noninterest Income to Avg. Assets

0.28 %


-0.59 %


0.27 %


-0.16 %


0.28 %

Noninterest Expense to Avg. Assets

2.51 %


2.59 %


2.45 %


2.56 %


2.49 %






















6/30/2023


3/31/2023


12/31/2022


9/30/2022


6/30/2022

Financial Condition Data










Total Assets

$           1,308,472


$           1,213,958


$       1,163,654


$          1,144,873


$        1,059,885

Loans Receivable, Net

959,305


934,845


923,205


859,400


786,516











     Noninterest-bearing Deposits

240,729


204,495


192,773


184,857


184,345

     Interest-bearing Deposits

794,113


780,003


753,999


766,853


718,028

Total Deposits

1,034,842


984,498


946,772


951,710


902,373











Selected Balance Sheet Ratios










Total Capital Ratio1

13.55 %


13.53 %


12.89 %


11.55 %


12.42 %

Tier 1 Capital Ratio1

12.94 %


12.32 %


12.41 %


11.04 %


11.94 %

Common Equity Tier 1 Capital Ratio1

12.94 %


12.32 %


12.41 %


11.04 %


11.94 %

Leverage Ratio1

10.41 %


10.78 %


10.93 %


9.74 %


10.10 %

Tangible Common Equity to Tangible Assets4

8.31 %


8.90 %


9.02 %


9.02 %


6.62 %

Tangible Book Value per Share5

$                    6.51


$                    6.46


$                6.80


$                   6.69


$                 6.89











Asset Quality Data










Non-performing Assets

$                  2,856


$                  2,398


$              2,500


$                 1,979


$               1,494

Non-performing Assets to Total Assets

0.22 %


0.20 %


0.21 %


0.17 %


0.14 %

Non-performing Loans to Total Loans

0.29 %


0.25 %


0.27 %


0.23 %


0.19 %

Allowance for Credit Losses - Loans ("ACLL")

$                10,228


$                10,526


$              4,666


$                 4,569


$               3,890

ACLL to Total Loans

1.05 %


1.11 %


0.50 %


0.53 %


0.49 %

ACLL to Nonperforming Assets

358.12 %


438.95 %


186.64 %


230.87 %


260.37 %

Net chargeoffs (recoveries)

$                     (97)


$                       (2)


$                 (60)


$                  (164)


$                  (52)











(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 noninterest 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 Interest Margin - Quarter-To-Date (Unaudited)
















For the Three Months Ended June 30,



2023


2022

(Dollars in thousands)


Avg Bal


Interest (2)


Yield/Rate


Avg Bal


Interest (2)


Yield/Rate

Int. Earn. Cash


$                    66,149


$                         708


4.29 %


$                    60,718


$                           97


0.64 %

Securities













Taxable (1)


86,366


822


3.82 %


74,105


587


3.18 %

Tax-Exempt


39,139


378


3.87 %


45,030


377


3.36 %

Total Securities


125,505


1,200


3.84 %


119,135


964


3.25 %

Total Cash Equiv. and Investments


191,654


1,908


3.99 %


179,853


1,061


2.37 %

Total Loans (3)


963,824


12,499


5.20 %


751,347


8,114


4.33 %

Total Earning Assets


1,155,478


14,407


5.00 %


931,200


9,175


3.95 %

Other Assets


95,531






90,361





Total Assets


$            1,251,009






$            1,021,561





Interest bearing demand


$                  243,539


$                      1,261


2.08 %


$                  270,844


$                         260


0.39 %

Money market demand


244,355


1,589


2.61 %


224,483


238


0.43 %

Time deposits


299,398


2,392


3.20 %


211,033


320


0.61 %

Total Borrowings


95,792


995


4.17 %


46,961


424


3.62 %

Total Interest-Bearing Liabilities


883,084


6,237


2.83 %


753,321


1,242


0.66 %

Non Int Bearing Deposits


209,072






152,691





Total Cost of Funds


$            1,092,156


$                    6,237


2.29 %


$                906,012


$                    1,242


0.55 %

Other Liabilities


17,073






10,489





Total Liabilities


$            1,109,229






$                916,501





Shareholders' Equity


$                141,780






$                105,060





Total Liabilities & Shareholders' Equity


$            1,251,009






$            1,021,561





Net Interest Income/Spread (FTE)




8,170


2.17 %




7,933


3.29 %

Tax-Equivalent Basis Adjustment




(81)






(80)



Net Interest Income




$                    8,089






$                    7,853



Net Interest Margin






2.81 %






3.38 %

(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 Interest Margin - Linked Quarter-To-Date (Unaudited)
















For the Three Months Ended



June 30, 2023


March 31, 2023

(Dollars in thousands)


Avg Bal


Interest (2)


Yield/Rate


Avg Bal


Interest (2)


Yield/Rate

Int. Earn. Cash


$                     66,149


$                 708


4.29 %


$              36,470


$                 275


3.06 %

Securities













Taxable (1)


86,366


822


3.82 %


81,899


653


3.23 %

Tax-Exempt


39,139


378


3.87 %


38,368


377


3.98 %

Total Securities


125,505


1,200


3.84 %


120,267


1,030


3.47 %

Total Cash Equiv. and Investments


191,654


1,908


3.99 %


156,737


1,305


3.38 %

Total Loans (3)


963,824


12,499


5.20 %


936,510


11,762


5.09 %

Total Earning Assets


1,155,478


14,407


5.00 %


1,093,247


13,067


4.85 %

Other Assets


95,531






90,938





Total Assets


$             1,251,009






$      1,184,185





Interest bearing demand


$                   243,539


$              1,261


2.08 %


$            251,103


$              1,188


1.92 %

Money market demand


244,355


1,589


2.61 %


245,563


1,350


2.23 %

Time deposits


299,398


2,392


3.20 %


290,605


1,979


2.76 %

Total Borrowings


95,792


995


4.17 %


49,246


519


4.27 %

Total Interest-Bearing Liabilities


883,084


6,237


2.83 %


836,517


5,036


2.44 %

Non Int Bearing Deposits


209,072






192,135





Total Cost of Funds


$             1,092,156


$            6,237


2.29 %


$      1,028,652


$            5,036


1.99 %

Other Liabilities


17,073






17,508





Total Liabilities


$             1,109,229






$      1,046,160





Shareholders' Equity


$                141,780






$          138,025





Total Liabilities & Shareholders' Equity


$             1,251,009






$      1,184,185





Net Interest Income/Spread (FTE)




8,170


2.17 %




8,031


2.41 %

Tax-Equivalent Basis Adjustment




(81)






(77)



Net Interest Income




$            8,089






$            7,954



Net Interest Margin






2.81 %






2.95 %

(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 Interest Margin - Year-To-Date (Unaudited)
















For the Six Months Ended June 30,



2023


2022

(Dollars in thousands)


Avg Bal


Interest (2)


Yield/Rate


Avg Bal


Interest (2)


Yield/Rate

Int. Earn. Cash


$                    55,618


$                         983


3.56 %


$                    60,229


$                         149


0.50 %

Securities













Taxable (1)


84,101


1,475


3.54 %


70,674


863


2.46 %

Tax-Exempt


38,774


756


3.93 %


45,030


746


3.34 %

Total Securities


122,875


2,231


3.66 %


115,704


1,609


2.80 %

Total Cash Equiv. and Investments


178,493


3,214


3.63 %


175,933


1,758


2.02 %

Total Loans (3)


952,142


24,261


5.14 %


735,256


15,877


4.35 %

Total Earning Assets


1,130,635


27,475


4.90 %


911,189


17,635


3.90 %

Other Assets


93,481






88,189





Total Assets


$            1,224,116






$                999,378





Interest bearing demand


$                  246,235


$                      2,449


2.01 %


$                  264,527


$                         505


0.38 %

Money market demand


245,747


2,939


2.41 %


219,972


377


0.35 %

Time deposits


295,440


4,371


2.98 %


203,009


601


0.60 %

Total Borrowings


76,820


1,514


3.97 %


52,433


665


2.56 %

Total Interest-Bearing Liabilities


864,242


11,273


2.63 %


739,941


2,148


0.59 %

Non Int Bearing Deposits


202,610






142,323





Total Cost of Funds


$            1,066,852


$                  11,273


2.13 %


$                882,264


$                    2,148


0.49 %

Other Liabilities


16,905






10,347





Total Liabilities


$            1,083,757






$                892,611





Shareholders' Equity


$                140,359






$                106,767





Total Liabilities & Shareholders' Equity


$            1,224,116






$                999,378





Net Interest Income/Spread (FTE)




16,202


2.27 %




15,487


3.31 %

Tax-Equivalent Basis  Adjustment




(159)






(157)



Net Interest Income




$                  16,043






$                  15,330



Net Interest Margin






2.86 %






3.39 %

(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)


June 30,
2023


March 31,
2023


December 31,
2022


September 30,
2022


June 30,
2022

 Agriculture and farmland loans


$        50,552


$           53,301


$           55,746


$            53,570


$      45,424

 Construction loans


75,628


67,934


57,713


49,311


36,135

 Commercial & industrial loans


104,869


99,356


104,755


98,475


90,979

 Commercial real estate loans











      Multifamily


113,254


111,461


105,390


95,537


78,082

      Owner occupied


154,520


151,407


139,554


114,863


164,937

      Non-owner occupied


254,691


249,638


245,274


233,887


165,893

 Residential real estate loans











      First liens


170,271


166,478


168,084


166,388


158,774

      Second liens and lines of credit


30,148


30,720


35,576


34,620


35,454

 Consumer and other loans


11,308


10,472


10,057


11,929


8,689

 Municipal loans


3,929


4,292


5,466


5,404


5,814



969,170


945,059


927,615


863,984


790,181

Deferred costs (fees)


363


312


256


(15)


225

Total loans receivable


$    969,533


$       945,371


$       927,871


$       863,969


$ 790,406

 

LINKBANCORP, Inc. and Subsidiaries



Investments in Securities Detail (Unaudited)














June 30, 2023



(In Thousands)


Amortized
Cost


Net
Unrealized
Losses


Fair
Value



Available for Sale:









U.S. government agency securities


$            2,000


$                     (19)


$            1,981



Small Business Administration loan pools


726


(15)


711



Obligations of state and political subdivisions


45,651


(3,721)


41,930



Mortgage-backed securities in government-sponsored entities


42,946


(3,948)


38,998





$        91,323


$              (7,703)


$        83,620














 Amortized
Cost


 Net
Unrealized
Losses


 Fair Value


 Allowance for
Credit Losses

Held to Maturity:









Corporate debentures


$          15,000


$                (1,782)


$          13,218


$                586

Structured mortgage-backed securities


23,806


(966)


22,840


-



$        38,806


$              (2,748)


$        36,058


$              586












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)


June 30, 2023


March 31,
2023


December 31,
2022


September
30, 2022


June 30,
2022

Demand, noninterest-bearing

$       240,729


$       204,495


$       192,773


$    184,857


$     184,345

Demand, interest-bearing


237,114


250,944


254,478


305,934


269,493

Money market and savings


254,632


241,858


228,048


266,743


235,411

Time deposits, $250 and over

57,194


51,855


46,116


39,123


55,507

Time deposits, other


245,173


235,346


225,357


155,053


157,617



$  1,034,842


$     984,498


$    946,772


$  951,710


$  902,373























Average Deposits Detail, for the Three Months Ended (Unaudited)












(In Thousands)


June 30, 2023


March 31,
2023


December 31,
2022


September
30, 2022


June 30,
2022

Demand, noninterest-bearing

$       209,072


$       192,135


$       199,556


$    170,863


$     152,691

Demand, interest-bearing


243,539


251,103


278,816


278,637


270,844

Money market and savings


244,355


245,563


245,154


244,107


224,483

Time deposits


299,398


290,605


211,090


205,792


211,033



$     996,364


$     979,406


$    934,616


$  899,399


$  859,051

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


For the Six Months Ended

(Dollars in thousands)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

Net income (loss)

$              1,347


$             (1,553)


$              1,606


$                (207)


$           3,130

Average assets

1,251,009


1,184,185


1,021,561


1,224,116


999,378

Return on average assets (annualized)

0.43 %


-0.53 %


0.63 %


-0.03 %


0.63 %

Net income (loss)

1,347


(1,553)


1,606


(207)


3,130

Net losses (gains) on sale of securities

-


2,370


-


2,370


(13)

Tax effect at 21%

-


(498)


-


(498)


3

Merger & system conversion related expenses

315


587


-


902


-

Tax effect at 21%

(66)


(123)


-


(189)


-

Adjusted Net Income (Non-GAAP)

1,596


783


1,606


2,378


3,120

Average assets

1,251,009


1,184,185


1,021,561


1,224,116


999,378

Adjusted return on average assets (annualized)
(Non-GAAP)

0.51 %


0.27 %


0.63 %


0.39 %


0.63 %

 

Adjusted Return on Average Shareholders' Equity


For the Three Months Ended


For the Six Months Ended

(Dollars in thousands)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

Net income (loss)

$           1,347


$       (1,553)


$         1,606


$           (207)


$         3,130

Average shareholders' equity

141,780


138,025


105,060


140,359


51,257

Return on average shareholders' equity (annualized)

3.81 %


-4.56 %


6.13 %


-0.30 %


12.31 %

Net  income (loss)

1,347


(1,553)


1,606


(207)


3,130

Net losses (gains) on sale of securities

-


2,370


-


2,370


(13)

Tax effect at 21%

-


(498)


-


(498)


3

Merger & system conversion related expenses

315


587


-


902


-

Tax effect at 21%

(66)


(123)


-


(189)


-

Adjusted Net Income (Non-GAAP)

1,596


783


1,606


2,378


3,120

Average shareholders' equity

141,780


138,025


105,060


140,359


51,257

Adjusted return on average shareholders' equity (annualized)
(Non-GAAP)

4.51 %


2.30 %


6.13 %


3.42 %


12.27 %

 

Adjusted Efficiency Ratio


For the Three Months Ended


For the Six Months Ended

(Dollars in thousands)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

GAAP-based efficiency ratio

87.09 %


126.82 %


73.01 %


103.16 %


73.73 %

Net interest income

$         8,089


$         7,954


$            7,853


$                16,043


$       15,330

Noninterest income

886


(1,853)


696


(967)


1,407

Less: net  gains (losses) on sales of securities

-


(2,370)


-


(2,370)


13

Adjusted revenue (Non-GAAP)

8,975


8,471


8,549


17,446


16,724

Total noninterest expense

7,816


7,737


6,242


15,553


12,340

Less: Merger & system conversion related expenses

315


587


-


902


-

Adjusted non-interest expense

7,501


7,150


6,242


14,651


12,340

Efficiency ratio, as adjusted (Non-GAAP)

83.58 %


84.41 %


73.01 %


83.98 %


73.79 %

 

Tangible Common Equity and Tangible Book Value



6/30/2023


3/31/2023


12/31/2022


9/30/2022


6/30/2022

Tangible Common Equity


(Dollars in thousands, except for share data)

Total shareholders' equity


$          142,452


$        141,581


$        138,553


$        136,942


$        104,771

Adjustments:











Goodwill


(35,842)


(35,842)


(35,842)


(35,842)


(35,842)

Other intangible assets


(932)


(991)


(1,052)


(1,113)


(1,178)

Tangible common equity (Non-GAAP)


$          105,678


$        104,748


$        101,659


$          99,987


$          67,751

Common shares outstanding


16,228,440


16,221,692


14,939,640


14,939,640


9,838,435

Book value per common share


$               8.78


$             8.73


$             9.27


$             9.17


$          10.65

Tangible book value per common share
(Non-GAAP)


$               6.51


$             6.46


$             6.80


$             6.69


$             6.89

Tangible Assets











Total assets


$       1,308,472


$     1,213,958


$     1,163,654


$     1,144,873


$     1,059,885

Adjustments:











Goodwill


(35,842)


(35,842)


(35,842)


(35,842)


(35,842)

Other intangible assets


(932)


(991)


(1,052)


(1,113)


(1,178)

Tangible assets (Non-GAAP)


$       1,271,698


$     1,177,125


$     1,126,760


$     1,107,918


$     1,022,865

Tangible common equity to tangible assets (Non-GAAP)


8.31 %


8.90 %


9.02 %


9.02 %


6.62 %

 

Adjusted Earnings Per Share


For the Three Months Ended


For the Six Months Ended

(Dollars in thousands, except per share data)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

GAAP-Based Earnings  (Loss) Per Share, Basic

$              0.08


$        (0.10)


$             0.16


$                 (0.01)


$          0.32

GAAP-Based  Earnings (Loss) Per Share, Diluted

$              0.08


$        (0.10)


$             0.16


$                 (0.01)


$          0.31

Net  Income (Loss)

$              1,347


$       (1,553)


$            1,606


$                   (207)


$         3,130

Net losses (gains) on sale of securities

-


2,370


-


2,370


(13)

Tax effect at 21%

-


(498)


-


(498)


3

Merger & system conversion related expenses

315


587


-


902


-

 Tax effect at 21%

(66)


(123)


-


(189)


-

Adjusted Net Income (Non-GAAP)

1,596


783


1,606


2,378


3,120

Adjusted Earnings per Share, Basic (Non-GAAP)

$              0.10


$         0.05


$             0.16


$                   0.15


$          0.32

Adjusted Earnings per Share, Diluted (Non-GAAP)

$              0.10


$         0.05


$             0.16


$                   0.15


$          0.31

 

Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)


For the Three Months Ended


For the Six Months Ended

(Dollars in thousands, except per share data)

6/30/2023


3/31/2023


6/30/2022


6/30/2023


6/30/2022

Net Income (Loss) - GAAP

$              1,347


$       (1,553)


$            1,606


$                   (207)


$         3,130

Net losses (gains) on sale of securities

-


2,370


-


2,370


(13)

Tax effect at 21%

-


(498)


-


(498)


3

Merger & system conversion related expenses

315


587


-


902


-

 Tax effect at 21%

(66)


(123)


-


(189)


-

Adjusted Net Income (Non-GAAP)

1,596


783


1,606


2,378


3,120

Income tax  expense (benefit)

305


(376)


306


(70)


592

 Provision for (credit to) credit losses

(493)


293


395


(200)


675

Tax effect included in Adjusted Net Income

66


621


-


687


(3)

Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)

$              1,474


$         1,321


$            2,307


$                  2,795


$         4,384

 

 

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

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SOURCE LINKBANCORP, Inc.

FAQ

What is the net income for Q2 2023?

The net income for Q2 2023 is $1.35 million.

What is the growth rate of total deposits during Q2 2023?

Total deposits grew 20.5% annualized during Q2 2023.

What is the on-balance sheet liquidity as of June 30, 2023?

The on-balance sheet liquidity is $123.2 million as of June 30, 2023.

What is the growth rate of total loans during Q2 2023?

Total loans grew 10.3% annualized during Q2 2023.

What is the net interest income for Q2 2023?

The net interest income for Q2 2023 is $8.1 million.

What is the provision for credit losses for Q2 2023?

The provision for credit losses for Q2 2023 is negative $493 thousand.

Has the merger with Partners Bancorp been approved?

Yes, the merger with Partners Bancorp has been approved.

LINKBANCORP, Inc.

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