Traditions Bancorp, Inc. Reports First Quarter 2022 Earnings

Rhea-AI Summary

Traditions Bancorp (TRBK) reported a net income of $1.5 million for Q1 2022, down 35% from Q1 2021's $2.3 million. The decrease was mainly due to a $1.4 million dip in mortgage banking gains attributed to seasonal declines. Despite a 13% increase in net interest income, earnings per share decreased to 52 cents from 73 cents year-over-year. The company announced an 8 cents quarterly dividend and initiated a $3 million stock repurchase plan. As of March 31, 2022, total assets were $747.6 million.

Positive

• Net interest income increased $640 thousand, or 13%, over the previous year.
• Loans grew by $50.8 million, or 11%, from Q1 2021.
• The bank remains well capitalized with a loan loss reserve ratio of 1.37%.

Negative

• Net income decreased by $821 thousand or 35% compared to Q1 2021.
• Gains on the sale of mortgages fell 44% to $1.8 million from Q1 2021.

YORK, Pa., April 27, 2022 /PRNewswire/ -- Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $1.5 million for the first quarter ended March 31, 2022, compared to $1.7 million in the linked quarter and $2.3 million for the first quarter of 2021. This $821 thousand, or 35%, decrease from the first quarter of 2021 is attributable to a $1.4 million decrease in mortgage banking gains on the sale of loans caused by seasonal declines in purchase volumes in the region, home inventory supply imbalances, and a sharp reduction in refinancing activity. Robust commercial lending activity and prudent control of loan funding costs, together drove a 13% increase in net interest income compared to the first quarter of 2021, partially offsetting the swing in earnings. On a per share basis, the company reported 52 cents earnings per share (diluted) for the first quarter ended March 31, 2022, compared to 57 cents per share in the linked quarter and 73 cents per share for the first quarter of 2021. The book value per common share was $23.39 on March 31, 2022 versus $22.87 in the linked quarter and $21.06 for the first quarter of 2021.

"Traditions Bancorp generated solid results for the first quarter of 2022, building upon the positive momentum gained at the end of 2021 through increased brand recognition, a successful expansion into Lancaster and the Capital Region, and strong commercial loan production," stated Eugene J. Draganosky, President and Chief Executive Officer. "In addition, our prudent capital management has permitted the company to implement a stock repurchase plan and approve the payout of our first regular quarterly dividend of 8 cents per share. We have begun executing on the recently announced $3 million common stock repurchase plan. The stock buyback will maximize earnings per share and further enhance long-term shareholder value. While the headwinds of economic uncertainty and the pandemic remain, we are prepared to tackle these challenges head-on and remain optimistic for the future. We are systematically deploying excess cash into business loans and investments to optimize earnings. At the same time, we are taking advantage of economic conditions to recruit seasoned mortgage and commercial relationship sales professionals who will drive continued growth over the longer term."

Quarterly Highlights – First Quarter 2022 versus First Quarter 2021

• Loans grew by $50.8 million, or 11%, over 1Q21, despite being tempered by Paycheck Protection Program (PPP) loan forgiveness. Without the impact of PPP forgiveness, loans grew by $81.0 million, or 18%.
• As of March 31, 2022, PPP loan balances outstanding were $7.1 million. This included $1.4 million of remaining balances for first-round loans and $5.7 million of remaining balances for the second round.
• Deposits increased $76.2 million, or 13%, during the last 12 months.
• Net interest margin expanded to 3.33% in 1Q22 compared to 3.30% in 1Q21, driven by the effective deployment of on-balance sheet liquidity, coupled with a reduction in the cost of funds from 0.45% to 0.17% over the same time horizon.
• Excess cash continues to be deployed to purchase additional investment securities when it is prudent to do so, with balances growing 55% to $139.7 million in 1Q22 versus $90.1 million in 1Q21.
• Gains on the sale of mortgages were $1.8 million for 1Q22, declining 44% from near-record levels of $3.2 million for 1Q21. Refinancing activity continues to be muted, and construction and purchase money mortgage volumes have begun to wane as market interest rates rose on inflation concerns.
• Residential mortgage loans sold in 1Q22 were $55.2 million compared to $81.9 million in the linked quarter and $121.1 million for 1Q21.
• The mortgage pipeline increased to $56.8 million from $40.9 million in the linked quarter, but decreased from $70.5 million on March 31, 2021.

YTD Highlights – Three Months Ended March 31, 2022 versus Three Months Ended March 31, 2021

• Net interest income increased $640 thousand, or 13%, driven by growth in loans and investment securities and a lower cost of funds.
• On a YTD basis through March, net fee revenue from PPP loans totaled $96 thousand versus $338 thousand in the first quarter of 2021. $197 thousand in gross fees have yet to be recognized.
• Growth in other expenses has moderated in 1Q22, remaining stable at $6.1 million from 4Q21. This was driven, in part, by timing differences and will be monitored closely in the remainder of 2022 to ensure that these expenses track in alignment with our annual budget.
• Provision for loan losses decreased $100 thousand, or 100%, from the prior year.

Credit Quality and Capital Insights:

• Nonaccrual loans decreased 58% in 1Q22, from $2.9 million in the linked quarter to $1.2 million in the current quarter.
• The company had no net charge-offs for the first calendar quarter.
• Nonperforming assets to total assets contracted to 0.17% from 0.39% in the linked quarter.
• Delinquencies greater than 30 days were 0.36% of total loans as of March 31, 2022, down from 0.57% as of year-end 2021.
• The loan loss reserve ratio at March 31, 2022, excluding the PPP portfolio, was 1.37%, and reserves were nearly 4.5x greater than non-performing assets.
• The bank remains well capitalized.

 

FINANCIAL HIGHLIGHTS (unaudited): (Dollars in thousands, except per share data)
Selected Financial Data		Mar 31, 2022		Dec 31, 2021		Mar 31, 2021
Investment securities	$	139,745	$	140,188	$	90,142
Loans, net of unearned income		530,360		519,305		479,587
Allowance for loan loss		7,153		7,151		7,147
Total assets		747,616		749,094		676,116
Deposits		677,900		677,299		601,687
Borrowings		-		-		-
Shareholders' equity		60,865		65,148		66,983
Book value per common share	$	23.39	$	22.87	$	21.06
Allowance/loans		1.35%		1.38%		1.49%
Nonperforming assets/total assets		0.17%		0.39%		0.53%
Tier 1 capital/average assets		9.09%		8.87%		10.12%
Tier 1 capital/risk-weighted assets		12.58%		12.67%		14.49%
Total capital/risk-weighted assets		13.94%		14.07%		15.74%
	Three months ended Mar 31,
Selected Operations Data		2022		2021
Interest income	$	5,909	$	5,587
Interest expense		(211)		(529)
Net interest income		5,698		5,058
Provision for loan losses		-		(100)
Investment securities gains (losses)		-		1
Gains on sale of mortgages		1,813		3,237
Other income		471		449
Other expense		(6,110)		(5,747)
Income before income taxes		1,872		2,898
Income taxes		(374)		(579)
Net income	$	1,498	$	2,319
Earnings per common share (basic)	$	0.52	$	0.74
Earnings per common share (diluted)	$	0.52	$	0.73
Return on average assets		0.83%		1.44%
Return on average equity		9.21%		14.22%
Net interest margin		3.33%		3.30%
Efficiency ratio		76.55%		65.72%
Net charge-offs(recoveries)/average loans		0.00%		0.00%
Average common shares		2,875		3,152

 

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:

This release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995.  Forward-looking statements are not historical facts.  These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate" or similar terminology.  Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about future performance, operations, products and services of Traditions Bancorp.

Traditions Bancorp cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to materially differ from those expressed in the forward-looking statements, including, but not limited to:  ineffectiveness of the organization's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.

Forward-looking statements in this release speak only as of the date of this release and Traditions Bancorp makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.

 

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SOURCE Traditions Bancorp, Inc.

FAQ

What were Traditions Bancorp's earnings for Q1 2022?

Traditions Bancorp (TRBK) reported net income of $1.5 million for Q1 2022.

How did Traditions Bancorp perform compared to Q1 2021?

In Q1 2022, Traditions Bancorp's net income decreased by 35% compared to Q1 2021.

What is the current book value per share for TRBK?

As of March 31, 2022, the book value per common share was $23.39.

What stock repurchase plan did Traditions Bancorp announce?

Traditions Bancorp announced a $3 million common stock repurchase plan.

What is the earnings per share for Q1 2022?

Earnings per share for Q1 2022 were 52 cents.