Two River Bancorp Reports 2016 First Quarter Financial Results

Company Release - 4/26/2016 8:00 AM ET

TINTON FALLS, N.J., April 26, 2016 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq:TRCB) (the "Company"), the parent company of Two River Community Bank ("the Bank"), today reported financial results for the first quarter ended March 31, 2016, highlighted by higher net income and earnings per diluted share, strong loan growth, and continued asset quality improvements.

Operating and Financial Highlights

  • First Quarter 2016 net income available to common shareholders increased 18.6% to $1.69 million, or $0.21 per diluted share, up from $1.43 million, or $0.18 per diluted share, in the corresponding prior year’s quarter.
  • Non-performing assets to total assets decreased to 0.22% at March 31, 2016, from 0.42% at December 31, 2015 and 0.75% at March 31, 2015.  During the first quarter of 2016, non-performing assets were reduced by $1.6 million, or 44.8%, from December 31, 2015.
  • Return on average assets (ROAA) was 0.78% for the first quarter of 2016, compared to 0.81% for the previous quarter and 0.74% for the first quarter of 2015.  Return on average equity (ROAE) was 7.25% for the three months ended March 31, 2016, compared to 7.14% for the previous quarter and 6.20% for the first quarter of 2015.
  • Tangible book value per share was $9.63 at March 31, 2016, compared to $9.44 at December 31, 2015, and $8.96 at March 31, 2015.
  • Total loans as of March 31, 2016, net of unearned fees, increased $11.3 million, or 6.5% annualized, from December 31, 2015 to $704.4 million, predominantly due to growth in both the commercial real estate and residential sectors.
  • During the quarter, the Company re-opened a Loan Production Office in Summit, New Jersey, at a new location to expand its presence in this community.

Management Commentary

William D. Moss, President and CEO, stated, “The Company’s positive earnings momentum in the first quarter of 2016 was driven by continued strong growth in loan activity and core deposits, along with significant improvements in asset quality.  Over the past twelve months, total non-performing assets have decreased by 67.3% and currently total $2.0 million.  Our strong commercial loan pipeline will provide for future top line revenue growth as the year progresses.  In addition, we have been very pleased with the continued execution of our mortgage banking business, as non-interest income fees generated from loans sold grew by 50% year over year."

Dividend Information
On April 20, 2016, the Company's Board of Directors declared a quarterly cash dividend of $0.035 per share, payable May 30, 2016 to shareholders of record as of May 13, 2016, which marks the 13th consecutive quarterly cash dividend paid by the Company to its shareholders. 

Key Quarterly Performance Metrics

 1st Qtr.
2016
 4th Qtr.
2015

 3rd Qtr.
2015

 2nd Qtr.
2015

 1st Qtr.
2015
Net Income (in thousands)$1,693  $1,751  $  1,692  $1,461  $1,443 
Income Available to Common Shareholders (in thousands)$1,693  $1,739  $  1,677  $1,446  $1,428 
Earnings per Common Share – Diluted$0.21  $0.21  $  0.21  $0.18  $0.18 
Return on Average Assets 0.78%  0.81%    0.79%  0.71%  0.74%
Return on Average Tangible Assets (1) 0.80%  0.83%    0.80%  0.73%  0.76%
Return on Average Equity 7.25%  7.14%    6.95%  6.15%  6.20%
Return on Average Tangible Equity (1) 8.98%  8.78%    8.55%  7.59%  7.67%
Net Interest Margin 3.57%  3.65%    3.65%  3.65%  3.77%
Non-Performing Assets to Total Assets 0.22%  0.42%    0.50%  0.75%  0.75%
Allowance as a % of Loans 1.27%  1.26%    1.25%  1.23%  1.26%
 
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Loan Composition

The components of the Company’s loan portfolio at March 31, 2016 and December 31, 2015 are as follows:  

  (In Thousands)
  March 31,
2016
  December 31,
2015
Commercial and industrial $  96,427  $  100,154 
Real estate – construction                                                              104,375   104,231 
Real estate – commercial  432,929   422,665 
Real estate – residential  44,142   39,524 
Consumer  27,042   27,136 
Unearned fees  (514)  (560)
   704,401   693,150 
Allowance for loan losses  (8,963)  (8,713)
Net Loans $  695,438  $  684,437 

Deposit Composition

The components of the Company’s deposits at March 31, 2016 and December 31, 2015 are as follows:  

  (In Thousands)
  March 31,
2016
  December 31,
 2015
 
Non-interest bearing $  150,408   $  144,627  
NOW accounts  146,010    148,373  
Savings deposits  227,679    222,091  
Money market deposits                                                                74,269    75,323  
Listed service CD’s  39,953    33,261  
Time deposits / IRA  51,433    46,902  
Wholesale deposits  37,352    37,859  
Total Deposits  727,104    708,436  

2016 First Quarter Financial Review

Net Income

Net income available to common shareholders for the three months ended March 31, 2016 was $1.69 million, or $0.21 per diluted common share, as compared to $1.43 million, or $0.18 per diluted common share, for the same period last year, an increase of 18.6%.  The increase was due primarily to higher net interest income and non-interest income along with a lower loan loss provision, partially offset by higher non-interest expenses.

Net Interest Income
Net interest income for the quarter ended March 31, 2016 was $7.13 million, an increase of 5.3% compared to $6.77 million in the corresponding prior year period.  This increase was largely due to an increase of $75.1 million, or 10.3%, in average interest earning assets, primarily resulting from growth in the Company’s loan portfolio. 

Net Interest Margin
The Company reported a net interest margin of 3.57% for the first quarter of 2016, compared to the 3.65% reported in the fourth quarter of 2015, and 3.77% reported for the first quarter of 2015.  Net interest margin declined by approximately 8 basis points from the fourth quarter of 2015 as a result of the interest expense associated with the Company’s $10 million subordinated debenture placement, which funded in December 2015. The subordinated debentures have a maturity date of December 31, 2025 and currently bear an annual interest rate of 6.25%.

Non-Interest Income
Non-interest income for the quarter ended March 31, 2016 totaled $893,000, an increase of $117,000, or 15.1%, compared to the same period in 2015. This was largely a result of a 49.7% increase in residential mortgage banking revenue of $71,000, coupled with higher other loan fees and securities gains.  These increases were partially offset by lower gains on the sale of SBA loans during the quarter due to the timing of loan closings.

Non-Interest Expense
Non-interest expense for the quarter ended March 31, 2016 totaled $5.4 million, an increase of $236,000, or 4.6%, compared to the same period in 2015, largely due to higher salaries and benefits resulting from both annual merit increases and commissions paid for higher mortgage banking volume generated during the quarter.  Additionally, professional fees were higher due to increased legal and consulting fees.

Provision / Allowance for Loan Losses
During the quarter, the Company reported no provision for loan losses, compared to $90,000 in the prior year period.  The Company had net loan recoveries of $250,000 during the quarter, which helped fund the increase in the allowance for loan losses resulting from the strong loan growth during the period.

As of March 31, 2016, the Company's allowance for loan losses was $9.0 million, as compared to $8.7 million as of December 31, 2015. The loss allowance as a percentage of total loans was 1.27% at March 31, 2016 compared to 1.26% at December 31, 2015.

Financial Condition / Balance Sheet
At March 31, 2016, the Company maintained capital ratios that were in excess of regulatory standards for well-capitalized institutions. The Company's Tier 1 capital to average assets ratio was 9.02%, common equity Tier 1 to risk-weighted assets ratio was 10.12%, Tier 1 capital to risk-weighted assets ratio was 10.12%, and total capital to risk-weighted assets ratio was 12.61%.

Total assets as of March 31, 2016 were $881.9 million, compared to $863.7 million as of December 31, 2015.

Total loans as of March 31, 2016 were $704.4 million, compared to $693.2 million reported at December 31, 2015.

Total deposits as of March 31, 2016 were $727.1 million, compared to $708.4 million as of December 31, 2015.  Core checking deposits at March 31, 2016 increased to $296.4 million, up $3.4 million, or 1.2%, from year-end, primarily due to an increase in commercial checking account balances.  The Company continues to focus on building core funded non-interest bearing deposit relationships.

Asset Quality
The Company's non-performing assets at March 31, 2016 decreased to $2.0 million as compared to $3.6 million at December 31, 2015 and $6.1 million at March 31, 2015.  Non-performing assets to total assets at March 31, 2016 declined to 0.22%, compared to 0.42% at December 31, 2015, and 0.75% at March 31, 2015.

Non-accrual loans decreased to $1.7 million at March 31, 2016, compared to $3.2 million at December 31, 2015 and $4.5 million at March 31, 2015.  OREO was $259,000 at March 31, 2016, compared to $411,000 at December 31, 2015 and $1.6 million at March 31, 2015. 

Troubled debt restructured loan balances amounted to $9.1 million at March 31, 2016, with all but $161,000 performing.  This compared to $10.8 million at December 31, 2015 and $17.7 million at March 31, 2015.

About the Company
Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 15 branches and two Loan Production Offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiverbank.com.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continue," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2015. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31, 2016 and 2015
(in thousands, except per share data)
 
  Three Months Ended
March 31,
 
   2016    2015  
INTEREST INCOME:      
Loans, including fees $  7,913   $   7,346  
Securities:      
Taxable  192      217  
Tax-exempt  200      98  
Interest bearing deposits  33      15  
Total Interest Income  8,338    7,676  
INTEREST EXPENSE:      
Deposits  883    735  
Securities sold under agreements to repurchase  14    16  
Long-term debt  148    153  
Subordinated debt  165    -  
Total Interest Expense  1,210    904  
Net Interest Income  7,128    6,772  
PROVISION FOR LOAN LOSSES  -    90  
Net Interest Income after Provision for Loan Losses  7,128    6,682  
NON-INTEREST INCOME:      
Service fees on deposit accounts  136    148  
Mortgage banking  214    143  
Other loan fees  81    41  
Earnings from investment in bank-owned life insurance  109    111  
Gain on sale of SBA loans  94    176  
Net gain on sale of securities  72    15  
Other income  187    142  
Total Non-Interest Income  893      776  
NON-INTEREST EXPENSES:      
Salaries and employee benefits  3,105    3,018  
Occupancy and equipment  995    977  
Professional  335    214  
Insurance  47      94  
FDIC insurance and assessments  105    91  
Advertising  110     100  
Data processing  135     118  
Outside services fees  123     123  
Amortization of identifiable intangibles  10     19  
OREO and repossessed asset expenses, impairment and sales, net    19    (2) 
Loan workout expenses  80    86  
Other operating  333    323  
Total Non-Interest Expenses  5,397     5,161  
Income before Income Taxes  2,624     2,297  
INCOME TAX EXPENSE  931     854  
Net Income  1,693     1,443  
Preferred stock dividend  -    (15) 
Net Income Available to Common Shareholders $  1,693   $  1,428  
EARNINGS PER COMMON SHARE:      
Basic $  0.21   $  0.18  
Diluted $  0.21   $  0.18  
Weighted average common shares outstanding:      
Basic  7,918    7,937  
Diluted  8,089    8,137  
       

 

TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
      
 March 31,
 December 31, 
 2016
 2015 
ASSETS        
Cash and due from banks$25,129  $21,566 
Interest bearing deposits in bank  29,011   25,161 
Cash and cash equivalents  54,140   46,727 
         
Securities available for sale  34,497   33,530 
Securities held to maturity  45,122   43,167 
Restricted investments, at cost  3,757   3,596 
Loans held for sale -   3,050 
Loans  704,401   693,150 
Allowance for loan losses  (8,963)  (8,713)
Net loans  695,438   684,437 
         
OREO and repossessed assets  259   411 
Bank-owned life insurance  17,403   17,294 
Premises and equipment, net  4,900   5,083 
Accrued interest receivable  1,881   1,912 
Goodwill  18,109   18,109 
Other intangible assets  -   9 
Other assets  6,351   6,371 
         
TOTAL ASSETS$881,857  $863,696 
        
LIABILITIES        
Deposits:        
Non-interest bearing$150,408  $144,627 
Interest bearing  576,696   563,809 
Total Deposits  727,104   708,436 
         
Securities sold under agreements to repurchase  20,132   19,545 
Accrued interest payable  85   118 
Long-term debt  23,800   26,500 
Subordinated debt 9,831   9,824 
Other liabilities  6,292   6,271 
         
Total Liabilities  787,244   770,694 
         
SHAREHOLDERS' EQUITY        
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding  -   - 
Common stock, no par value; 25,000,000 shares authorized; Issued – 8,228,178 and 8,213,196 at March 31, 2016 and December 31, 2015, respectively       
Outstanding – 7,943,446 and 7,929,196 at March 31, 2016 and December 31, 2015, respectively 72,997   72,890 
Retained earnings  24,174   22,759 
Treasury stock, at cost; 284,732 shares and 284,000 shares at March 31, 2016 and December 31, 2015, respectively (2,254)  (2,248)
Accumulated other comprehensive loss  (304)  (399)
Total Shareholders' Equity  94,613   93,002 
         
TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY$881,857  $863,696 

 

 
TWO RIVER BANCORP
Selected Consolidated Financial Data
 
Selected Consolidated Earnings Data
(In thousands, except per share data)
 
  Three Months Ended
 March 31, Dec. 31, March 31,
Selected Consolidated Earnings Data: 2016   2015   2015
            
Total Interest Income$  8,338  $  8,306  $  7,676 
Total Interest Expense 1,210   1,019   904 
Net Interest Income 7,128   7,287   6,772 
Provision for Loan Losses -   90   90 
Net Interest Income after Provision for Loan Losses 7,128   7,197   6,682 
Total Non-Interest Income 893   984   776 
Total Non-Interest Expenses 5,397   5,509   5,161 
Income before Income Taxes 2,624   2,672   2,297 
Income Tax Expense 931   921   854 
Net Income 1,693   1,751   1,443 
Preferred Stock Dividend -   (12)  (15)
Net Income Available to Common Shareholders$  1,693  $  1,739  $  1,428 
      
Per Common Share Data:     
Basic Earnings$  0.21  $  0.22  $  0.18 
Diluted Earnings$  0.21  $  0.21  $  0.18 
Book Value$  11.91  $  11.73  $  11.25 
Tangible Book Value (1)$  9.63  $  9.44  $  8.96 
Weighted Average Common Shares Outstanding  (in thousands):     
Basic 7,918   7,903   7,937 
Diluted 8,089   8,100   8,137 
            
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
 


Selected Period End Balances  
(In thousands)  
  March 31, Dec. 31, March 31, 
   2016   2015   2015  
Total Assets $  881,857  $ 863,696  $ 804,349  
Investment Securities and Restricted Stock    83,376      80,293     72,997  
Total Loans    704,401      693,150     640,172  
Allowance for Loan Losses    (8,963)    (8,713    (8,082) 
Goodwill and Other Intangible Assets    18,109      18,118     18,147  
Total Deposits    727,104      708,436     655,325  
Repurchase Agreements    20,132      19,545     20,770  
Long-Term Debt    23,800      26,500     28,000  
Subordinated Debt  9,831   9,824   -  
Shareholders' Equity    94,613      93,002     95,179  


Asset Quality Data (by Quarter)
(Dollars in thousands)
          
 March 31, Dec. 31, Sept. 30, June 30, March 31,
  2016   2015   2015   2015   2015 
Nonaccrual loans$  1,723  $  3,178  $  3,680  $  4,930  $  4,450 
Loans past due over 90 days and still accruing -   -   -   -   - 
OREO 259   411   495   1,411   1,603 
Total Non-Performing Assets 1,982   3,589   4,175   6,341   6,053 
          
Troubled Debt Restructured Loans:         
Performing 8,920   9,289   11,290   17,239   15,383 
Non-Performing 161   1,552   1,578   2,287   2,314 
          
Non-Performing Loans to Total Loans 0.24  0.46  0.54  0.73  0.70%
Non-Performing Assets to Total Assets 0.22  0.42  0.50  0.75  0.75%
Allowance as a % of Loans 1.27  1.26  1.25  1.23  1.26%


Capital Ratios    
     
 March 31, 2016  December 31, 2015
 CET 1
Capital

to Risk
Weighted

Assets
Ratio
 
Tier 1
Capital
to
Average
Assets
Ratio

  
Tier 1
Capital
to Risk
Weighted
Assets
Ratio

 
Total
Capital
to Risk
Weighted

Assets
Ratio
  CET 1
Capital

to Risk
Weighted

Assets
Ratio

  
Tier 1
Capital
to 
Average
Assets
Ratio

 Tier 1
Capital
to Risk
Weighted
Assets
Radio
      
 Total
Capital
to 
Risk
Weighted

Assets
Ratio

         
         
Two River Bancorp10.12 % 9.02%  10.12%  12.61 10.13% 8.97% 10.13% 12.65% 
Two River Community Bank11.35% 10.12%  11.35%  12.53% 11.39% 10.09% 11.39% 12.56% 
"Well capitalized" institution (under prompt correction action regulations)*6.50% 5.00%  8.00%  10.00% 6.50% 5.00% 8.00% 10.00% 
*Applies to Bank only                 

 

Reconciliation of Non-GAAP Financial Measures 
  
The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors. 
  
(In thousands, except per share data) 
 As of and for the Three Months Ended 
 March 31,
2016
 Dec. 31,
2015
 Sept. 30,
2015
 June 30,
2015
 March 31,
2015
 
Total shareholders' equity$94,613  $93,002  $97,640  $96,255  $95,179  
Less: preferred stock -   -    (6,000)   (6,000)  (6,000 
Common shareholders' equity$94,613  $93,002  $91,640  $90,255  $89,179  
Less: goodwill and other intangibles  (18,109)    (18,118   (18,128)   (18,138)  (18,147 
Tangible common shareholders’ equity$  76,504  $  74,884  $   73,512  $  72,117  $  71,032  
           
Common shares outstanding   7,943      7,929     7,918   7,935   7,925  
Book value per common share$11.91  $11.73  $11.57  $11.37  $11.25  
           
Book value per common share$11.91  $11.73  $11.57  $11.37  $11.25  
Effect of intangible assets   (2.28)    (2.29    (2.29)    (2.28  (2.29 
Tangible book value per common share$9.63  $9.44  $9.28  $9.09  $8.96  
           
Return on average assets 0.78%  0.81%  0.79%  0.71%  0.74% 
Effect of intangible assets 0.02%  0.02%  0.01%  0.02%  0.02% 
Return on average tangible assets 0.80%  0.83%  0.80%  0.73%  0.76% 
           
Return on average equity 7.25%  7.14%  6.95%  6.15%  6.20% 
Effect of intangible assets 1.73%  1.64%  1.60%  1.44%  1.47% 
Return on average tangible equity 8.98%  8.78%  8.55%  7.59%  7.67% 



Investor Contact:
Adam Prior, Senior Vice President
The Equity Group Inc.
Phone: (212) 836-9606
E-mail: aprior@equityny.com

Media Contact:
Adam Cadmus, Marketing Director
Phone: (732) 982-2167
Email: acadmus@tworiverbank.com

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Source: Two River Bancorp

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