Traditions Bancorp, Inc. Reports Fourth Quarter Earnings and Results for 2021

Rhea-AI Summary

Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $1.7 million for Q4 2021, a 27% decline from Q4 2020's $2.3 million, while total annual net income for 2021 was $8.2 million. The decline reflects a normalization in mortgage banking activities post-refinancing boom and increased expenses from regional expansion. Loans increased by 12% year-over-year to $519.3 million, and deposits rose 19% to $677.3 million. The book value per share improved from $20.72 to $22.87.

Positive

• Loans grew by $53.8 million, or 12%, over Q4 2020.
• Deposits increased by $110.2 million, or 19%, over the last 12 months.
• Net interest income rose by $1.5 million, or 7%, for the year.
• Provision for loan losses decreased $4.2 million, or 98%.

Negative

• Net income decreased by $608 thousand, or 27%, compared to Q4 2020.
• Net interest margin contracted to 3.21% from 3.65% year-over-year.
• Gains on the sale of mortgages fell to $1.9 million in Q4 2021, down from $3.2 million in Q4 2020.

YORK, Pa., Jan. 27, 2022 /PRNewswire/ -- Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $1.7 million for the fourth quarter ended December 31, 2021, compared to $2.3 million for the fourth quarter of 2020. While this represents a $608 thousand, or 27%, decrease from the fourth quarter of 2020, the results reflect a normalization of mortgage banking activities following the unprecedented prior year refinancing boom. Expenditures associated with the company's regional expansion beyond York County have temporarily contributed to the decline in net income, but these investments are beginning to yield favorable results. Net income for 2021 was $8.2 million compared to $8.4 million the prior year. On a per share basis, the corporation reported $2.68 earnings per share (diluted) in 2021 compared to $2.66 per share in 2020. The book value per common share was $22.87 on December 31, 2021 versus $20.72 as of December 31, 2020.

"2021 was a pivotal year for Traditions Bancorp with the accomplishment of several significant milestones, including the evolution of the organization's brand, the formation of a bank holding company, and a successful regional expansion into the Lancaster market. Other notable events included the $7.1 million repurchase of the corporation's common stock, which has already started to have a positive impact on our financial metrics, and the payment of the special cash dividend in March to reward our shareholders for entrusting Traditions Bancorp with their investment," stated Eugene J. Draganosky, President and Chief Executive Officer. "Despite the headwinds of an uncertain economic environment and the ongoing pandemic, our associates' determination to deliver strong performance is a continuing testament to our organization's culture and solidifies our commitment to the communities we serve. Following impressive fourth quarter 2021 commercial lending production, we remain confident that we will enter 2022 from a position of strength due to the increased demand for business loans across our footprint, supplemented by new opportunities created through our geographic expansion. Our balance sheet is also well positioned to respond to any future upward change in interest rates."

Quarterly Highlights – 4^th Quarter 2021 versus 4^th Quarter 2020

• Loans grew by $53.8 million, or 12%, over 4Q20. The growth was tempered due to Paycheck Protection Program (PPP) loan forgiveness, combined with late-year payoffs as several commercial borrowers opportunistically sold both owner and non-owner occupied commercial real estate. Without the impact of PPP forgiveness, loans grew by $75.5 million, or 17%.
• As of December 31, 2021, PPP loan balances outstanding were $9.5 million. The balance included just under $2.0 million of remaining balances for first-round loans and nearly $7.6 million of remaining balances for the second round.
• Deposits increased $110.2 million, or 19%, during the last 12 months.
• Net interest margin contracted to 3.21% in 4Q21 compared to 3.65% in 4Q20, driven by excess on-balance sheet liquidity and declining asset yields, which were partially offset by a reduction in the cost of funds from 0.58% to 0.21% over the same period.
• Excess cash continues to be deployed to purchase additional investment securities, with balances growing 77% to $140.2 million in 4Q21 versus $79.4 million in 4Q20.
• Gains on the sale of mortgages were $1.9 million for 4Q21, declining from near-record levels of $3.2 million for 4Q20. While refinancing activity has been muted, construction and purchase money mortgage volumes remain satisfactory with enthusiastic regional demand for homeownership.
• Residential mortgage loans sold in 4Q21 were $81.9 million compared to $129.6 million for 4Q20.
• The mortgage pipeline decreased to $40.9 million compared to $71.2 million on December 31, 2020.
• Significant expenses incurred during the quarter were $105 thousand for advertising and marketing initiatives including residual rebranding costs, and $284 thousand for the Lancaster market initiative. The latter represents ongoing costs.

YTD Highlights – Twelve Months Ended December 31, 2021 versus Twelve Months Ended December 31, 2020

• Net interest income increased $1.5 million, or 7%, driven by PPP fee income recognition, loan growth, and a lower cost of funds.
• For the year, net fee revenue from PPP loans totaled $1.4 million, matching 2020 results. Nearly $294 thousand in gross fees have yet to be recognized.
• Provision for loan losses decreased $4.2 million, or 98%, which remains consistent with broader industry trends.
• Gains on the sale of mortgages decreased $1.8 million, or 14%, as a result of the stabilization of the mortgage market within the bank's footprint.
• Considerable and noteworthy expenses incurred during the year include $853 thousand related to rebranding and expanded marketing initiatives, nearly $1.1 million for the Lancaster market, and $129 thousand of one-time costs for the holding company formation.
• In less than a year, the Lancaster team has already originated and funded $19.0 million in commercial loans, generated $28.4 million in residential mortgages, and ended the year at $12.3 million in total deposits.

Credit Quality and Capital Insights:

• As of December 31, 2021, the bank's credit exposure to industries most impacted by the pandemic (i.e., restaurants/ bars, entertainment venues, lodging) was $33.9 million, or 6.5%, of the total loan portfolio versus $30.6 million, or 6.1%, of the total loan portfolio as of September 30, 2021.
• Excluding nonaccrual, no loans were modified for temporary payment relief at the end of 4Q21, which was also the case in the linked quarter.
• Nonaccrual loans decreased 7.6% in 4Q21, from $3.2 million in the linked quarter to $2.9 million in the current quarter. This included $102 thousand in temporary payment relief loans.
• Nonperforming assets to total assets contracted to 0.39% from 0.44% in the linked quarter.
• Delinquencies greater than 30 days ended at 0.57%, the lowest level of the year.
• The loan loss reserve ratio in 4Q21 fell to 1.40% from 1.49% in the linked quarter, excluding the PPP portfolio.
• The bank remains well capitalized.

FINANCIAL HIGHLIGHTS (unaudited): (Dollars in thousands, except per share data)
Selected Financial Data		Dec 31, 2021		Dec 31, 2020
Investment securities	$	140,188	$	79,357
Loans, net of unearned income		519,305		465,513
Allowance for loan loss		7,151		7,046
Total assets		749,094		640,562
Deposits		677,299		567,075
Borrowings		-		42
Shareholders' equity		65,148		66,628
Book value per common share	$	22.87	$	20.72
Allowance/loans		1.38%		1.51%
Non-performing assets/total assets		0.39%		0.55%
Tier 1 capital/average assets		8.87%		10.13%
Tier 1 capital/risk-weighted assets		12.67%		14.38%
Total capital/risk-weighted assets		14.07%		15.63%
	Three months ended Dec 31,				Twelve months ended Dec 31,
Selected Operations Data		2021		2020		2021		2020
Interest income	$	5,913	$	6,291	$	22,954	$	23,678
Interest expense		(270)		(682)		(1,503)		(3,693)
Net interest income		5,643		5,609		21,451		19,985
Provision for loan losses		-		(700)		(100)		(4,338)
Investment securities gains(losses)		-		-		1		181
Gains on sale of mortgages		1,941		3,245		10,754		12,543
Other income		539		445		1,977		2,009
Other expense		(6,074)		(5,794)		(23,835)		(19,947)
Income before income taxes		2,049		2,805		10,248		10,433
Income taxes		(399)		(547)		(2,037)		(2,065)
Net income	$	1,650	$	2,258	$	8,211	$	8,368
Earnings per common share (basic)	$	0.58	$	0.72	$	2.70	$	2.67
Earnings per common share (diluted)	$	0.57	$	0.72	$	2.68	$	2.66
Return on average assets		0.89%		1.40%		1.18%		1.38%
Return on average equity		10.11%		13.95%		12.40%		13.84%
Net interest margin		3.21%		3.65%		3.24%		3.48%
Efficiency ratio		74.78%		62.31%		69.73%		57.45%
Net charge-offs(recoveries)/average loans		0.00%		0.01%		0.00%		0.26%
Average common shares		2,864		3,142		3,046		3,133

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 Q4 2021?

Traditions Bancorp reported a net income of $1.7 million for Q4 2021.

How did Traditions Bancorp's annual net income compare for 2021?

In 2021, Traditions Bancorp's net income was $8.2 million, down from $8.4 million in 2020.

What was the earnings per share for Traditions Bancorp in 2021?

Earnings per share (diluted) for Traditions Bancorp in 2021 was $2.68.

What are Traditions Bancorp’s loan growth figures for Q4 2021?

Loans grew by $53.8 million, or 12%, in Q4 2021 compared to the same quarter in 2020.

What is the book value per share for Traditions Bancorp?

The book value per share for Traditions Bancorp increased to $22.87 as of December 31, 2021.