Two River Bancorp Reports 2018 Third Quarter Financial Results Highlighted by a 26.7% Increase in Net Income to $2.8 Million, or $0.33 Per Share

Company Release - 10/23/2018 8:00 AM ET

TINTON FALLS, N.J., Oct. 23, 2018 (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 third quarter and nine months ended September 30, 2018, highlighted by higher net income and strong loan and deposit growth.

2018 Third Quarter Financial Highlights

(comparisons to respective prior year’s period)

  • Net income increased 26.7% to $2.8 million, or $0.33 per diluted share
  • Return on average assets of 1.04%, up from 0.89%
  • Return on average equity of 9.98%, up from 8.39%
  • Net interest income increased 8.2% to $9.1 million
  • Net interest margin remained strong at 3.55%
  • Efficiency ratio(1) improved to 61.8% compared to 62.6%

(1)  Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.

(Totals at September 30, 2018; comparisons to December 31, 2017)

  • Total loans were $900.9 million, an increase of $50.0 million, or 7.8% annualized
  • Total deposits were $905.7 million, an increase of $44.2 million, or 6.8% annualized
  • Total assets increased to a record $1.086 billion, compared to $1.040 billion, or 6.0% annualized
  • Tangible book value per share(1) increased to $11.16, compared to $10.44 

(1)   Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Management Commentary 

William D. Moss, Chairman, President and CEO, stated, “Our earnings performance was driven by a sustained trend of solid loan and deposit growth, which resulted in an 8.2% increase in net interest income and a 26.7% increase in net income. We reported annualized loan growth of 7.8%, predominantly in the commercial real estate,  construction and residential sectors, without altering our underwriting standards or engaging in pricing activities which we do not believe are sustainable. Although our loan growth was partially offset by unusually high prepayment activity during the quarter, originations were strong and we are encouraged with the quality of our pipeline, which will help support our loan growth in future quarters. Our annualized deposit growth remained solid at 6.8%, despite an increasingly competitive environment.”

Mr. Moss continued, “During the quarter, we improved our efficiency ratio while also implementing significant improvements to our banking platform, including state-of-the-art online and mobile banking systems, which can be found at our new website www.tworiver.bank. Our upgrades include new functionality for our website, real time alerts, and upcoming compatibility within additional digital wallet payment platforms. We believe that these ongoing improvements to the Bank’s technology infrastructure and business processes will enhance our customer experience and support the growth of our client relationships. The Company expects to leverage the use of technology while taking a measured approach in its branch management. Later this year, we expect to close our New Brunswick office as it has not met our long-term expectations, and will continue to focus on markets where we can optimize our branch network.”

Dividend Information
On October 17, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.055 per share, payable on November 28, 2018 to shareholders of record as of the close of business on November 7, 2018. This marks the Company’s 23rd consecutive quarterly cash dividend payment.

Key Quarterly Performance Metrics

 3rd Qtr.2nd Qtr.1st Qtr.4th Qtr.3rd Qtr.9 Mo. Ended 9 Mo. Ended
 2018
20182018201720179/30/2018
9/30/2017
Net Income (in thousands)$2,834 $2,650 $2,676 $335 $2,237 $8,160 $6,167 
Earnings per Common Share – Diluted$0.33 $0.30 $0.31 $0.04 $0.26 $0.94 $0.71 
Return on Average Assets1.04%1.00%1.04%0.13%0.89%1.03%0.84%
Return on Average Tangible Assets(1)1.06%1.02%1.06%0.13%0.91%1.04%0.86%
Return on Average Equity9.98%9.67%10.08%1.24%8.39%9.91%7.96%
Return on Average Tangible Equity(1)11.90%11.57%12.12%1.49%10.13%11.86%9.64%
Net Interest Margin3.55%3.59%3.63%3.56%3.62%3.59%3.52%
Efficiency Ratio(2)61.78%62.59%61.59%59.96%62.57%61.99%64.09%
Non-Performing Assets to Total Assets0.18%0.18%0.19%0.20%0.23%0.18%0.23%
Allowance as a % of Loans1.26%1.26%1.26%1.25%1.25%1.26%1.25%
 
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
(2) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
 

Loan Composition
The components of the Company’s loan portfolio at September 30, 2018 and December 31, 2017 are as follows:  

      
  (in thousands)  
  September 30,
2018
  December 31,
2017
 %
Change
  
Commercial and industrial $104,118  $101,371 2.7 %
Real estate – construction  141,881   118,094 20.1 %
Real estate – commercial  548,763   537,733 2.1 %
Real estate – residential  75,973   64,238 18.3 %
Consumer  30,895   30,203 2.3 %
Unearned fees  (735)  (765)(3.9)%
   900,895   850,874 5.9 %
Allowance for loan losses  (11,390)  (10,668)6.8 %
Net Loans $889,505  $840,206 5.9 %
            

Deposit Composition
The components of the Company’s deposits at September 30, 2018 and December 31, 2017 are as follows:  


 
     
  (in thousands)   
  September 30,
2018
  December 31,
 2017
 %
Change
  
Non-interest-bearing $173,906   $167,297 4.0 %
NOW accounts  195,240   232,673 (16.1)%
Savings deposits  265,410   242,448 9.5 %
Money market deposits  47,050   59,818 (21.3)%
Listed service CD’s  45,521   44,436 2.4 %
Time deposits / IRA  108,217   74,183 45.9 %
Wholesale deposits  70,401   40,702 73.0 %
Total Deposits $905,745   $861,557 5.1 %
            

2018 Third Quarter Financial Review

Net Income
Net income for the three months ended September 30, 2018 increased 26.7% to $2.8 million, or $0.33 per diluted common share, compared to $2.2 million, or $0.26 per diluted common share, for the same period last year. The increase was largely due to higher net interest income and a lower loan loss provision coupled with a lower Federal corporate income tax rate.

On a linked quarter basis, third quarter 2018 net income increased 6.9% compared to the second quarter of 2018, primarily due to higher net interest income, a lower loan loss provision and lower non-interest expenses.

Net income for the nine months ended September 30, 2018 increased 32.3% to $8.2 million, or $0.94 per diluted share, compared to $6.2 million, or $0.71 per diluted share, in the same prior year period. For the first nine months of 2018, the Company recorded a $168,000 tax benefit related to the accounting treatment of equity-based compensation, as compared to a benefit of $177,000 for the same period last year.

Net Interest Income
Net interest income for the quarter ended September 30, 2018 was $9.1 million, an increase of 8.2% compared to $8.4 million in the corresponding prior year period. This was largely due to an increase of $95.0 million, or 10.3%, in average interest-earning assets, primarily attributable to growth in the loan portfolio. On a linked quarter basis, net interest income increased $133,000, or 1.5%, from $9.0 million.

For the nine months ended September 30, 2018, net interest income increased 12.0% to $26.9 million from $24.0 million in the prior year period.

Net Interest Margin
The Company reported a net interest margin of 3.55% for the third quarter of 2018, compared to 3.59% in the second quarter of 2018 and 3.62% reported for the third quarter of 2017. The slight decline from the second quarter of 2018 was largely due to higher cost of funds.

The net interest margin for the nine months ended September 30, 2018 was 3.59%, compared to 3.52% in the prior year period, primarily due to higher yielding interest-earning assets, partially offset by a higher cost of funds.

Non-Interest Income
Non-interest income for the quarter ended September 30, 2018 declined slightly to $1.4 million, compared to $1.5 million in the corresponding prior year period. This was largely due to lower residential mortgage banking revenues and gains on the sale of SBA loans, which was partially offset by higher other loan fees, primarily due to loan prepayment fees.

On a linked quarter basis, non-interest income decreased by $141,000, or 9.4%, from the second quarter of 2018, mainly due to lower gains on the sale of SBA loans and residential mortgage banking revenues.

The slowdown in residential lending activity was mainly due to the change in the mix of mortgage originations to more portfolio adjustable rate product versus saleable fixed rate mortgages, coupled with higher interest rates and tighter competition.

For the nine months ended September 30, 2018, non-interest income increased $45,000, or 1.1%, to $4.2 million from the same period in 2017.

Non-Interest Expense
Non-interest expense for the quarter ended September 30, 2018 totaled $6.5 million, an increase of $286,000, or 4.6%, from the $6.2 million reported in same period in 2017. This was primarily due to salary increases, new hires within the lending and deposit teams, and higher data processing expenses. The Company’s efficiency ratio was 61.8% for the quarter, compared to 62.6% for the same period in 2017.

On a linked quarter basis, non-interest expense decreased by $90,000, or 1.4%, largely due to lower professional expenses.

For the nine months ended September 30, 2018, non-interest expense increased $1.2 million, or 6.7%, to $19.2 million compared to the same prior year period. Efficiency ratio for the nine months ended September 30, 2018 improved to 62.0% from 64.1% compared to the same prior year period.

Provision for Loan Losses
During the quarter, a provision for loan losses of $150,000 was expensed, compared to $255,000 in the same prior year period. The majority of the third quarter 2018 provision was to support the Company’s continued loan growth. The Company also had $39,000 in net loan recoveries during the quarter, compared to $15,000 in net loan recoveries during the same period last year.

For the nine months ended September 30, 2018, a provision of $775,000 was expensed, compared to $855,000 for the same prior year period. The Company had $53,000 of net loan charge-offs for the nine months ended September 30, 2018, compared to $197,000 in net loan charge-offs for the same prior year period.

As of September 30, 2018, the Company's allowance for loan losses was $11.4 million, compared to $10.7 million as of December 31, 2017. The loss allowance as a percentage of total loans was 1.26% at September 30, 2018 compared to 1.25% at December 31, 2017. 

Financial Condition / Balance Sheet

At September 30, 2018, 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 9.06%, its common equity Tier 1 to risk weighted assets ratio was 9.99%, its Tier 1 capital to risk weighted assets ratio was 9.99%, and its total capital to risk weighted assets ratio was 12.21%.

Total assets as of September 30, 2018 were $1.086 billion, compared to $1.040 billion at December 31, 2017 and $1.000 billion as of September 30, 2017.

Total loans as of September 30, 2018 were $900.9 million, compared to $850.9 million at December 31, 2017 and $816.1 million as of September 30, 2017.

Total deposits as of September 30, 2018 were $905.7 million, compared to $861.6 million as of December 31, 2017 and $821.9 million as of September 30, 2017. Core checking deposits at September 30, 2018 were $369.1 million, compared to $400.0 million at December 31, 2017 and $372.0 million at September 30, 2017. The Company continues to focus on building core checking account deposit relationships, which can vary from quarter to quarter due to seasonality in its municipal relationships.

Asset Quality
The Company's non-performing assets at September 30, 2018 were $2.0 million as compared to $2.1 million at December 31, 2017 and $2.3 million at September 30, 2017.  Non-performing assets to total assets at September 30, 2018 were 0.18% compared to 0.20% at December 31, 2017 and 0.23% at September 30, 2017.

Non-accrual loans were $1.39 million at September 30, 2018, compared to $2.07 million at December 31, 2017 and $2.35 million at September 30, 2017. OREO was $585,000 at September 30, 2018, compared to no OREO at December 31, 2017 and September 30, 2017.  During the third quarter, two non-accrual loans were transferred into OREO. 

Troubled debt restructured loan balances amounted to $6.6 million at September 30, 2018, with all but $877,000 performing. This compared to $7.1 million at December 31, 2017 and $8.1 million at September 30, 2017.

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 14 branches along with 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.tworiver.bank.

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, 2017. 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.

Investor Contact:Media Contact:
Adam Prior, Senior Vice PresidentAdam Cadmus, Marketing Director
The Equity Group Inc.Two River Community Bank
Phone: (212) 836-9606Phone: (732) 982-2167
Email: aprior@equityny.comEmail: acadmus@tworiverbank.com
  


 
TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Nine Months Ended September 30, 2018 and 2017
(in thousands, except per share data)
     
  Three Months Ended
September 30,
 Nine Months Ended
September 30,
  2018  2017 2018  2017
INTEREST INCOME:          
Loans, including fees $   10,656   $9,227 $  30,720  $26,363
Securities:          
Taxable  274    247   861   715
Tax-exempt  280    267   842   831
Interest-bearing deposits  132    83   293   257
Total Interest Income  11,342   9,824  32,716   28,166
INTEREST EXPENSE:          
Deposits  1,924   1,069  4,923   3,170
Securities sold under agreements to repurchase  14   18  43   50
Federal Home Loan Bank ("FHLB") and other borrowings  136   157  382   449
Subordinated debt  165   164  495   493
Total Interest Expense  2,239   1,408  5,843   4,162
Net Interest Income  9,103   8,416  26,873   24,004
PROVISION FOR LOAN LOSSES  150   255  775   855
Net Interest Income after Provision for Loan Losses  8,953   8,161  26,098   23,149
NON-INTEREST INCOME:          
Service fees on deposit accounts  236   224  713   535
Mortgage banking  239   358  986   1,258
Other loan fees  378   188  626   402
Earnings from investment in bank owned life insurance  133   137  395   411
Gain on sale of SBA loans  203   306  921   817
Other income  166   240  520   693
Total Non-Interest Income  1,355     1,453  4,161   4,116
NON-INTEREST EXPENSES:          
Salaries and employee benefits  4,024   3,641  11,919   10,554
Occupancy and equipment  966   1,112  3,099   3,215
Professional  432   366  1,260   1,102
Insurance  59     57  180   158
FDIC insurance and assessments  128   123  374   354
Advertising  90   110  280   345
Data processing  184    151  510   406
Outside services fees  89    120  250   347
OREO expenses, impairment and sales, net  7   25  (8)  44
Loan workout expenses  28   8  124   174
Other operating  454    462  1,251   1,324
Total Non-Interest Expenses  6,461    6,175  19,239   18,023
  Income before Income Taxes  3,847    3,439  11,020   9,242
Income Tax Expense  1,013    1,202  2,860   3,075
Net Income  $  2,834  $2,237 $  8,160  $6,167
Earnings Per Common Share:          
Basic $  0.33  $0.27 $  0.96  $0.74
Diluted $  0.33  $0.26 $  0.94  $0.71
Weighted average common shares outstanding:          
Basic  8,513   8,393  8,489   8,373
Diluted  8,700   8,656  8,695   8,647
               


 
TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
     
 September 30, December 31, 
 2018 2017 
ASSETS       
Cash and due from banks$17,880 $29,575 
Interest-bearing deposits in bank  29,733  18,644 
   Cash and cash equivalents  47,613  48,219 
        
Securities available for sale  25,281  28,684 
Securities held to maturity  57,606  58,002 
Equity securities  2,412  2,448 
Restricted investments, at cost  5,997  5,430 
Loans held for sale 1,461  2,581 
Loans  900,895  850,874 
Allowance for loan losses  (11,390) (10,668)
  Net loans  889,505  840,206 
        
OREO 585  - 
Bank owned life insurance  21,968  21,573 
Premises and equipment, net  6,011  6,239 
Accrued interest receivable  2,982  2,554 
Goodwill  18,109  18,109 
Other assets  6,769  5,753 
        
  TOTAL ASSETS$1,086,299 $1,039,798 
       
LIABILITIES       
Deposits:       
Non-interest-bearing$173,906 $167,297 
Interest-bearing  731,839  694,260 
   Total Deposits  905,745  861,557 
        
Securities sold under agreements to repurchase  22,153  27,120 
FHLB and other borrowings  24,500  25,800 
Subordinated debt 9,914  9,888 
Accrued interest payable  97  70 
Other liabilities  9,999  8,792 
        
  Total Liabilities  972,408  933,227 
        
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 –  8,896,273 and 8,782,124 at September 30, 2018 and December 31, 2017, respectively      
Outstanding –  8,584,179 and 8,470,030 at September 30, 2018 and December 31, 2017, respectively 80,294  79,678 
Retained earnings  36,535  29,593 
Treasury stock, at cost; 312,094 shares at September 30, 2018 and December 31, 2017 (2,396) (2,396)
Accumulated other comprehensive loss  (542) (304)
  Total Shareholders' Equity  113,891  106,571 
        
  TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY$1,086,299 $1,039,798 
       


 
TWO RIVER BANCORP
Selected Consolidated Financial Data (Unaudited)
 
Selected Consolidated Earnings Data
(in thousands, except per share data)
    
  Three Months Ended Nine Months Ended
 Sept. 30, June 30, Sept. 30, Sept. 30, Sept. 30,
Selected Consolidated Earnings Data:2018 2018 2017 2018 2017
Total Interest Income$11,342 $10,907 $9,824 $  32,716 $28,166
Total Interest Expense 2,239  1,937  1,408  5,843  4,162
Net Interest Income 9,103  8,970  8,416  26,873  24,004
Provision for Loan Losses 150  225  255  775  855
Net Interest Income after Provision for Loan Losses 8,953  8,745  8,161  26,098  23,149
Other Non-Interest Income 1,355  1,496  1,453  4,161  4,116
Other Non-Interest Expenses 6,461  6,551  6,175  19,239  18,023
Income before Income Taxes 3,847  3,690  3,439  11,020  9,242
Income Tax Expense 1,013  1,040  1,202  2,860  3,075
Net Income$  2,834 $2,650 $2,237 $  8,160 $6,617
          
Per Common Share Data:         
Basic Earnings$  0.33 $0.31 $0.27 $  0.96 $0.74
Diluted Earnings$  0.33 $0.30 $0.26 $  0.94 $0.71
Book Value$13.27 $13.02 $12.60 $  13.27 $12.60
Tangible Book Value(1)$11.16 $10.90 $10.46 $  11.16 $10.46
Average Common Shares Outstanding (in thousands):         
Basic 8,513  8,488  8,393  8,489  8,373
Diluted 8,700  8,690  8,656  8,695  8,647
               
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
 


 
Selected Period End Balances
(in thousands)
           
 Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 
 2018 2018 2018 2017 2017 
Total Assets$  1,086,299 $1,055,527 $1,042,277 $1,039,798 $1,000,245 
Investment Securities and Restricted Stock 91,296  94,449  96,251  94,564  92,641 
Total Loans 900,895  890,369  872,327  850,874  816,078 
Allowance for Loan Losses (11,390) (11,201) (10,962) (10,668) (10,223)
Goodwill and Other Intangible Assets 18,109  18,109  18,109  18,109  18,109 
Total Deposits 905,745  880,879  870,904  861,557  821,872 
Repurchase Agreements 22,153  19,878  18,472  27,120  22,576 
FHLB and Other Borrowings 24,500  24,500  24,500  25,800  30,300 
Subordinated Debt 9,914  9,905  9,896  9,888  9,879 
Shareholders' Equity 113,891  111,347  108,980  106,571  106,567 
                


 
Asset Quality Data (by Quarter)
(dollars in thousands)
           
 Sept. 30, June 30, March 31, Dec. 31, Sept. 30, 
 2018 2018 2018 2017 2017 
Nonaccrual Loans$1,390 $1,930 $1,972 $2,070 $2,345 
OREO 585  -  -  -  - 
Total Non-Performing Assets 1,975  1,930  1,972  2,070  2,345 
           
Troubled Debt Restructured Loans:          
Performing 5,678  5,831  5,965  6,053  6,925 
Non-Performing 877  877  878  994  1,129 
           
Non-Performing Loans to Total Loans 0.15% 0.22% 0.23% 0.24% 0.29%
Non-Performing Assets to Total Assets 0.18% 0.18% 0.19% 0.20% 0.23%
Allowance as a % of Loans 1.26% 1.26% 1.26% 1.25% 1.25%
                


 
Capital Ratios
     
 September 30, 2018 December 31, 2017 
 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
Ratio
 Total
Capital to Risk Weighted
Assets
Ratio
 
Two River Bancorp9.99%9.06%9.99%12.21% 9.68%8.85%9.68%11.93%
Two River Community Bank10.98%9.96%10.98%12.16% 10.66%9.76%10.66%11.82%
"Well capitalized" institution (under prompt corrective action regulations.)*6.50%5.00%8.00%10.00% 6.50%5.00%8.00%10.00%
                 
*Applies to Bank only.  For the Company to be “well capitalized,” the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%.
 


 
Net Loan Charge-offs
(dollars in thousands)
    
 Three Months Ended    Nine Months Ended  
 Sept. 30,  June 30,  March 31,  Dec. 31,  Sept. 30,  Sept. 30,  Sept. 30,  
 2018  2018  2018  2017  2017  2018  2017  
Net loan charge-offs (recoveries):                     
Charge-offs$  -  $(12) $(115) $(239) $-  $  (127) $(248) 
Recoveries 39   26   9   9   15   74   51  
Net loan (charge-offs) recoveries$  39  $14  $(106) $(230) $15  $  (53) $(197) 
Net loan (charge-offs) recoveries to average loans (annualized) 0.02 % 0.01 % (0.05)% (0.11)% 0.01 % (0.01)% (0.03)%
                             


 
Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
    
 Three Months Ended Three Months Ended
(dollars in thousands)September 30, 2018 September 30, 2017
  Interest /
Income
Expense
   Interest /
Income
Expense
 
ASSETS Average
Balance
  Average
Yield /
Rate
 Average
Balance
  Average
Yield /
Rate
Interest-Earning Assets:     
Interest-bearing due from banks$26,337 $132 1.99% $25,901 $83 1.27%
Investment securities93,341 554 2.37% 92,257 514 2.23%
Loans, net of unearned fees(1) (2)896,999 10,656 4.71% 803,553 9,227 4.56%
              
Total Interest-Earning Assets1,016,677 11,342 4.43% 921,711 9,824 4.23%
              
Non-Interest-Earning Assets:             
Allowance for loan losses(11,341)     (10,056)    
All other assets75,038      83,244     
              
Total Assets$1,080,374       $994,899      
              
LIABILITIES & SHAREHOLDERS' EQUITY             
Interest-Bearing Liabilities:             
NOW deposits$201,026 320 0.63% $200,298 239 0.47%
Savings deposits267,025 568 0.84% 260,919 340 0.52%
Money market deposits48,606 22 0.18% 63,557 27 0.17%
Time deposits213,872 1,014 1.88% 126,566 463 1.45%
Securities sold under agreements to repurchase18,389 14 0.30% 23,167 18 0.31%
FHLB and other borrowings27,870 136 1.94% 26,159 157 2.38%
Subordinated debt9,911 165 6.66% 9,876 164 6.64%
               
Total Interest-Bearing Liabilities786,699 2,239 1.13% 710,542 1,408 0.79%
               
Non-Interest-Bearing Liabilities:              
Demand deposits171,729      170,267     
Other liabilities9,314      8,351     
               
Total Non-Interest-Bearing Liabilities181,043      178,618     
               
Stockholders’ Equity112,632      105,739     
               
Total Liabilities and Shareholders’ Equity$1,080,374       $994,889      
              
NET INTEREST INCOME  $9,103      $8,416   
              
NET INTEREST SPREAD(3)    3.30%     3.44%
              
NET INTEREST MARGIN(4)    3.55%     3.62%
              
(1) Included in interest income on loans are net unearned loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.
 


 
Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
    
 Nine Months Ended Nine Months Ended
(dollars in thousands)September 30, 2018 September 30, 2017
  Interest /
Income
Expense
   Interest /
Income
Expense
 
ASSETS Average
Balance
  Average Yield /
Rate
 Average
Balance
  Average
Yield /
Rate
Interest-Earning Assets:     
Interest-bearing due from banks$21,923 $293 1.79% $34,824 $257 0.99%
Investment securities95,574 1,703 2.38% 94,120 1,546 2.19%
Loans, net of unearned fees(1) (2)883,436 30,720 4.65% 781,861 26,363 4.51%
              
Total Interest-Earning Assets1,000,933 32,716 4.37% 910,805 28,166 4.13%
              
Non-Interest-Earning Assets:             
Allowance for loan losses(11,097)     (9,801)    
All other assets74,168      79,867     
              
Total Assets$1,064,004       $980,871      
              
LIABILITIES & SHAREHOLDERS' EQUITY             
Interest-Bearing Liabilities:             
NOW deposits$219,242 937 0.57% $196,748 682 0.46%
Savings deposits259,365 1,415 0.73% 259,109 1,004 0.52%
Money market deposits53,413 70 0.18% 63,029 80 0.17%
Time deposits190,520 2,501 1.76% 131,380 1,404 1.43%
Securities sold under agreements to repurchase19,734 43 0.29% 22,054 50 0.30%
FHLB and other borrowings26,862 382 1.90% 24,976 449 2.40%
Subordinated debt9,902 495 6.67% 9,868 493 6.68%
               
Total Interest-Bearing Liabilities779,038 5,843 1.00% 707,164 4,162 0.79%
               
Non-Interest-Bearing Liabilities:              
Demand deposits165,778      162,279     
Other liabilities9,094      7,801     
               
Total Non-Interest-Bearing Liabilities174,872      170,080     
               
Shareholders’ Equity110,094      103,627     
               
Total Liabilities and Shareholders’ Equity$1,064,004       $980,871      
              
NET INTEREST INCOME  $26,873      $24,004   
              
NET INTEREST SPREAD(3)    3.37%     3.34%
              
NET INTEREST MARGIN(4)    3.59%     3.52%
              
(1) Included in interest income on loans are net unearned loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.
 

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 As of and for the
Nine Months Ended
 
 Sept. 30, June 30, March 31, Dec. 31, Sept. 30, Sept. 30, Sept. 30, 
 2018 2018 2018 2017 2017 2018 2017 
Total shareholders' equity$113,891 $111,347 $108,980 $106,571 $106,567 $113,891 $102,406 
Less: goodwill and other tangibles (18,109) (18,109) (18,109) (18,109) (18,109) (18,109) (18,109)
Tangible common shareholders’ equity$95,782 $93,238 $90,871 $88,462 $88,458 $95,782 $84,297 
                      
Common shares outstanding 8,584  8,555  8,525  8,470  8,454  8,584  8,454 
Book value per common share$13.27 $13.02 $12.78 $12.58 $12.60 $13.27 $12.60 
                      
Book value per common share$13.27 $13.02 $12.78 $12.58 $12.60 $13.27 $12.60 
Effect of intangible assets (2.11) (2.12) (2.12) (2.14) (2.14) (2.11) (2.14)
Tangible book value per common share$11.16 $10.90 $10.66 $10.44 $10.46 $11.16 $10.46 
               
Return on average assets1.04%1.00%1.04%0.13%0.89%1.03%0.84%
Effect of average intangible assets0.02%0.02%0.02%- 0.02%0.01%0.02%
Return on average tangible assets1.06%1.02%1.06%0.13%0.91%1.04%0.86%
               
Return on average equity9.98%9.67%10.08%1.24%8.39%9.91%7.96%
Effect of average intangible assets1.92%1.90%2.04%0.25%1.74%1.95%1.68%
Return on average tangible equity11.90%11.57%12.12%1.49%10.13%11.86%9.64%
               

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Source: Two River Bancorp

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