York Traditions Bank Reports First Quarter 2021 Earnings Under New Name

Rhea-AI Summary

Traditions Bank (OTC Pink: YRKB) reported a net income of $2.3 million for Q1 2021, matching the previous quarter and significantly up from $1.2 million in Q1 2020, reflecting a 98% year-over-year increase. Earnings per share were 73 cents, a rise from 37 cents a year earlier. The Bank's deposits grew by 26% year-over-year to $601.7 million, driven by the Paycheck Protection Program. However, the net interest margin contracted to 3.30%, down from 3.41% year-over-year. The Bank remains cautiously optimistic about credit quality amidst ongoing pandemic challenges.

Positive

• Net income increased by 98% year-over-year to $2.3 million.
• Deposits rose by $124.6 million, or 26%, compared to Q1 2020.
• Book value per common share increased to $21.06 from $18.38 year-over-year.

Negative

• Net interest margin contracted to 3.30% from 3.41% year-over-year.
• Credit exposure to pandemic-impacted industries remains at $34.2 million, 7.1% of total loans.

YORK, Pa., April 28, 2021 /PRNewswire/ -- York Traditions Bank (OTC Pink: YRKB), now doing business as Traditions Bank, reported net income of $2.3 million for the first quarter ended March 31, 2021, compared to $2.3 million in the linked quarter and $1.2 million for the first quarter of 2020. This represents a $1.1 million, or 98%, increase over the first quarter of 2020. On a per share basis, the Bank reported 73 cents per share (diluted) for the first quarter ended March 31, 2021, compared to 72 cents per share in the linked quarter and 37 cents per share for the first quarter of 2020. After paying a first quarter special cash dividend of $0.40 per share, book value per common share stood at $21.06 on March 31, 2021, versus $20.72 in the linked quarter and $18.38 for the first quarter of 2020.

"Despite ongoing COVID-19 challenges, we are pleased to report another quarter of satisfactory results and a solid start to 2021," stated Eugene J. Draganosky, President and Chief Executive Officer. "Pre-tax/pre-provision income for the quarter was $4.7 million versus $3.9 million in the linked quarter and $1.6 million for the first quarter ended March 31, 2020. Residential mortgage production, measured balance sheet growth, and our commitment to prudent risk management continue to drive our performance.

"Gains on the sale of mortgages remained strong at $3.2 million for the quarter versus $3.2 million in the linked quarter and $1.4 million for the first quarter ended March 31, 2020. Residential mortgage loans sold in the first quarter of 2021 were $121.1 million compared to $129.6 million for the linked quarter and $48.0 million for the first quarter of 2020. The mortgage pipeline experienced a slight seasonal decline to $70.5 million on March 31, 2021, compared to $71.2 million on December 31, 2020, $107.2 million on September 30, 2020, and $65.0 million on March 31, 2020. While mortgage demand in our market footprint is expected to slow from the record levels seen in 2020, a protracted low interest rate scenario could alter the timing of the anticipated decline in mortgage activity.

"Loans grew by $14.1 million, or 3%, over the linked quarter and grew by $67.3 million, or 16%, over the first quarter of 2020. The SBA Paycheck Protection Program (PPP) was a significant driver of the loan growth when comparing the first quarter of 2021 to the first quarter of 2020. As of March 31, 2021, PPP loan balances outstanding were $37.3 million, which included the forgiveness of 61% of first round loans and $16.4 million of new production for the second round. PPP loans increased $6.0 million in the first quarter of 2021 after netting first-round loan forgiveness with second-round loan originations. Net fees realized from PPP loans totaled $338 thousand through the end of the first quarter of 2021, with an additional $1.2 million to be recognized in the future. As expected, PPP volume this year has been significantly reduced despite the fact that the SBA has extended the program through May 31, 2021.

"Deposits expanded by $34.6 million, or 6%, over the linked quarter and are up an astounding $124.6 million, or 26%, over the first quarter of last year. The Bank's cost of funds continued to decline and ended the first quarter of 2021 at 0.45%, down from 0.58% in the linked quarter. The net interest margin continued its contraction, falling to 3.30% in the first quarter of 2021 compared to 3.65% in the linked quarter and 3.41% in the first quarter of the previous year. This contraction was driven by the timing of PPP fee recognition, the steady build-up of excess liquidity in the form of short-term investments, and the Federal Reserve's decision in early 2020 to aggressively lower short-term rates, all of which continue to put downward pressure on the Bank's asset yields.

"Although we are encouraged by the economic recovery that has started to gain traction as a result of the additional government stimulus programs and ongoing nationwide vaccination initiatives, we remain cautiously optimistic about the potential for improved credit quality within the context of COVID-19. As of March 31, 2021, the Bank's credit exposure to industries most impacted by the pandemic was $34.2 million or 7.1% of the total loan portfolio. These industries include restaurants/bars, entertainment venues, and lodging. At the end of the first quarter of 2021, loans modified for temporary payment relief, excluding nonaccrual loans, totaled $3.9 million or 0.8% of the total loan portfolio versus $11.8 million or 2.5% of the total loan portfolio in the linked quarter. Nonaccrual loans remained flat from the linked quarter at $3.5 million and include $2.4 million in temporary payment relief loans. Nonperforming assets to total assets contracted to 0.53% from 0.55% in the linked quarter. We continue to monitor and adjust our provisions for future loan losses within the context of the ongoing pandemic, with the loan loss reserve ratio in the first quarter of 2021 remaining flat from the linked quarter at 1.62%, excluding the PPP portfolio. The Bank remains well capitalized.

"After an extensive study of our brand throughout 2020, we recently announced our new name as Traditions Bank. A strategic brand evolution, coupled with sustained performance, positions the Bank for future growth built upon the foundation of our core values and organizational culture."

The formation of the proposed Traditions Bancorp holding company received the required regulatory and shareholder approval as of April 19, 2021. In addition, the Bank's first Lancaster branch office, located at 1687 Oregon Pike, had a successful soft opening on April 19, 2021.

FINANCIAL HIGHLIGHTS (unaudited): (Dollars in thousands, except per share data)
Selected Financial Data		Mar 31, 2021		Dec 31, 2020		Mar 31, 2020
Investment securities	$	90,142	$	79,357	$	84,293
Loans, net of unearned income		479,587		465,513		412,266
Allowance for loan loss		7,147		7,046		3,667
Total assets		676,116		640,562		557,969
Deposits		601,687		567,075		477,105
Borrowings		-		42		14,208
Shareholders' equity		66,983		66,628		59,218
Book value per common share	$	21.06	$	20.72	$	18.38
Allowance/loans		1.49%		1.51%		0.89%
Nonperforming assets/total assets		0.53%		0.55%		0.28%
Tier 1 capital/average assets		10.12%		10.13%		10.38%
Tier 1 capital/risk-weighted assets		14.49%		14.38%		13.68%
Total capital/risk-weighted assets		15.74%		15.63%		14.55%
	Three months ended Mar 31,
Selected Operations Data		2021		2020
Interest income	$	5,587	$	5,683
Interest expense		(529)		(1,241)
Net interest income		5,058		4,442
Provision for loan losses		(100)		(393)
Investment securities gains (losses)		1		116
Gains on sale of mortgages		3,237		1,375
Other income		449		454
Other expense		(5,747)		(4,556)
Income before income taxes		2,898		1,438
Income taxes		(579)		(266)
Net income	$	2,319	$	1,172
Earnings per common share (basic)	$	0.74	$	0.37
Earnings per common share (diluted)	$	0.73	$	0.37
Pre-tax/pre-provision income	$	4,656	$	1,616
Return on average assets		1.44%		0.85%
Return on average equity		14.22%		8.27%
Net interest margin		3.30%		3.41%
Efficiency ratio		65.72%		71.33%
Net charge-offs(recoveries)/average loans		0.00%		0.60%

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:

This release contains forward-looking statements about York Traditions Bank 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 York Traditions Bank.

York Traditions Bank 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 bank'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 York Traditions Bank 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 York Traditions Bank

FAQ

What were Traditions Bank's Q1 2021 earnings results?

Traditions Bank reported a net income of $2.3 million for Q1 2021, matching Q4 2020.

How did the deposit levels change for Traditions Bank in Q1 2021?

Deposits increased by $124.6 million, or 26%, year-over-year to $601.7 million.

What is the current book value per share for YRKB?

As of March 31, 2021, the book value per common share stood at $21.06.

What is the outlook on Traditions Bank's credit exposure amid COVID-19?

As of Q1 2021, credit exposure to sectors severely impacted by COVID-19 was $34.2 million.

How did Traditions Bank’s earnings per share change in Q1 2021?

Earnings per share increased to 73 cents in Q1 2021, up from 37 cents in Q1 2020.