LINKBANCORP, Inc. Announces Third Quarter 2023 Financial Results
HARRISBURG, Pa., Oct. 30, 2023 /PRNewswire/ -- LINKBANCORP, Inc. (NASDAQ: LNKB) (the "Company"), the parent company of LINKBANK (the "Bank") reported net income of $1.24 million, or $0.08 per diluted share, for the quarter ended September 30, 2023. Excluding merger related expenses, adjusted earnings were $1.85 million1, or $0.111 per diluted share for the third quarter of 2023.
Third Quarter 2023 Highlights
- Total deposits grew $6.9 million, or 2.66% annualized during the third quarter of 2023. For the nine months ended September 30, 2023, total deposits grew $95.0 million, or 13.42% annualized, including $17.6 million in growth in noninterest-bearing deposit, representing 12.23% annualized. Estimated uninsured deposits, excluding collateralized public funds and affiliate company accounts, totaled $398.6 million, or 37.8% of total deposits as of September 30, 2023, compared with $378.7 million, or 36.7% of total deposits as of June 30, 2023.
- Total loans grew $9.4 million during the third quarter of 2023, representing a 3.84% annualized growth rate, driven primarily by commercial and industrial loan activity. For the nine months ended September 30, 2023, total loans grew $51.0 million or 7.35% annualized.
- Net interest income for the third quarter of 2023 was $8.4 million, compared to $8.1 million for the second quarter of 2023. Net interest margin expanded slightly from 2.81% for the second quarter of 2023 to 2.89% for the third quarter of 2023. The linked quarter increase was primarily due to an increase in average yield on loans outpacing the increase in cost of funds.
- The Company recorded a $349 thousand negative provision for credit losses for the third quarter of 2023, resulting in an allowance for credit losses of $10.0 million, or 1.02% of total loans at September 30, 2023, determined in accordance with the current expected credit losses ("CECL") accounting standard. The negative provision for credit losses was primarily driven by improvements in external forecast indexes, as well as $12 thousand in net recoveries, offset by loan growth in the period.
- On October 13, 2023, the Company and Partners Bancorp ("Partners") announced the receipt of FDIC and state regulatory approvals for the pending merger of equals, which is anticipated to close in the fourth quarter of 2023, subject to the approval of the Board of Governors of the Federal Reserve System and other customary closing conditions.
1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
"This quarter's core results demonstrate progress in our efforts to position the Company in response to the external environment for continued growth and performance, including stabilization in net interest margin and excellent credit quality," said Andrew Samuel, Chief Executive Officer. "With the anticipated closing of the merger with Partners Bancorp in the fourth quarter, we continue to place an emphasis on initiatives to support a strong balance sheet and core earnings as our teams seek to provide clients with the highest level of service to meet their needs."
Income Statement
Net interest income before the provision for credit losses for the third quarter of 2023 increased to $8.4 million compared to $8.1 million in the second quarter of 2023. Net interest margin was 2.89% for the third quarter of 2023 compared to 2.81% for the second quarter of 2023. The increase in net interest margin for the current quarter was primarily due to the higher average yield on interest earning assets, which outpaced the increase in the average rate paid on interest bearing liabilities. The overall yield and rate increases were driven by the multiple federal funds rate increases that occurred over the preceding twelve months, coupled with competition for deposits in the market. The average yield on interest-earning assets increased by 13 basis points over the prior quarter, primarily due to the increase in the average yield on loans of 13 basis points to 5.33% during the third quarter. The increase in the average yield on interest-earning assets was partially offset by a 6 basis points increase in the cost of funds to 2.35%.
The Company's core deposit generation strategies continue to yield positive results, including 88 net new checking accounts opened during the third quarter of 2023 for a total of $17.5 million in new deposits. Additionally, further momentum in executing the Company's strategies to service the needs of professional services firms resulted in 73 new accounts opened during the quarter, which are generally expected to fund over the course of the fourth quarter.
Noninterest income remained consistent quarter over quarter at $880 thousand for the third quarter of 2023 compared to $886 thousand in income for the second quarter of 2023, primarily due to a decline in gain on sale of loans, offset by a gain related to the settlement of a legal matter.
Noninterest expense for the third quarter of 2023 increased to $8.0 million compared to $7.8 million for the second quarter of 2023. Excluding one time charges relating to the pending merger with Partners of $777 thousand in the third quarter of 2023 and $315 thousand in the second quarter of 2023, adjusted noninterest expense decreased by $284 thousand to $7.2 million1 in the third quarter, impacted primarily by a decrease in recognized external fraud losses.
1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
Balance Sheet
Total assets were $1.26 billion at September 30, 2023 compared to $1.31 billion at June 30, 2023 and $1.16 billion at December 31, 2022. Deposits and net loans as of September 30, 2023 totaled $1.04 billion and $969.0 million, respectively, compared to deposits and net loans of $1.03 billion and $959.3 million, respectively, at June 30, 2023 and $946.8 million and $923.2 million, respectively, at December 31, 2022.
Total loans increased $9.4 million from June 30, 2023 to September 30, 2023, or 3.84% annualized, with the average commercial loan commitment originated during the third quarter of 2023 totaling approximately $565 thousand with an average outstanding balance of $306 thousand.
Cash and cash equivalents decreased to $68.0 million at September 30, 2023 compared to $123.2 million at June 30, 2023, while increasing compared to the $30.0 million balance at December 31, 2022. In addition to loan growth, this change was primarily a result of the Company decreasing alternative funding by approximately $45.0 million in the third quarter.
Deposits at September 30, 2023 totaled $1.042 billion, an increase of $6.9 million compared to $1.035 billion at June 30, 2023. Average deposits decreased by $12.2 million during the current quarter, driven by a $33.8 million decrease in average time deposits from $299.4 million for the second quarter of 2023 to $265.6 million for the third quarter of 2023, as the Company allowed certain higher cost deposits to mature. This decline was offset by increases in average interest-bearing demand and money market deposits as average noninterest-bearing deposits remained flat.
Shareholders' equity decreased slightly from $142.5 million at June 30, 2023 to $141.4 million at September 30, 2023. The decrease was primarily attributed to a $1.2 million increase in other comprehensive loss resulting from changes in the interest rate environment.
Asset Quality
In the third quarter of 2023, the Company recorded a negative provision for credit losses, calculated under the CECL model, of $349 thousand, compared to a negative provision for credit losses of $493 thousand in the second quarter. The negative provision for credit losses included the impact of improvements in external forecast indexes, as well as $12 thousand in net recoveries, offset by loan growth in the period.
Asset quality metrics remain strong. As of September 30, 2023, the Company's non-performing assets were $3.0 million, representing 0.24% of total assets. Non-performing assets at September 30, 2023 excluded purchased with credit deterioration ("PCD") loans with a balance of $2.1 million. Loans 30-89 days past due at September 30, 2023 were $1.8 million, representing 0.18% of total loans.
The allowance for credit losses-loans was $10.0 million, or 1.02% of total loans at September 30, 2023, compared to the allowance for credit losses-loans of $10.2 million, or 1.05% of total loans at June 30, 2023. The allowance for credit losses-loans to nonperforming assets was 336.85% at September 30, 2023, compared to 358.12% at June 30, 2023.
Capital
The Bank's regulatory capital ratios are well in excess of regulatory minimums to be considered "well capitalized" as of September 30, 2023. The Bank's Total Capital Ratio and Tier 1 Capital Ratio was 12.92% and 12.37%, respectively, at September 30, 2023, compared to 12.88% and 12.29%, respectively, at June 30, 2023 and 12.89% and 12.41%, respectively, at December 31, 2022. The Company's ratio of Tangible Common Equity to Tangible Assets was 8.58%1 at September 30, 2023.
1 See Appendix A — Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
ABOUT LINKBANCORP, Inc.
LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, LINKBANK, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Central and Southeastern Pennsylvania through 10 client solutions centers and www.linkbank.com. LINKBANCORP, Inc. common stock is traded on the Nasdaq Capital Market under the symbol "LNKB". For further company information, visit ir.linkbancorp.com.
Forward Looking Statements
This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; risks related to the proposed merger with Partners; changes in general economic trends, including inflation and changes in interest rates; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the effects of the COVID-19 pandemic and actions taken by governments, businesses and individuals in response. The Company does not undertake, and specifically disclaims, any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, you should not place undue reliance on forward-looking statements.
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LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Consolidated Balance Sheet (Unaudited) | ||||||||||
September 30, | June 30, | March 31, | December 31, | September 30, | ||||||
(In Thousands, except share and per share data) | ||||||||||
ASSETS | ||||||||||
Noninterest-bearing cash equivalents | $ 5,447 | $ 4,736 | $ 4,545 | $ 4,209 | $ 8,711 | |||||
Interest-bearing deposits with other institutions | 62,532 | 118,438 | 47,190 | 25,802 | 66,085 | |||||
Cash and cash equivalents | 67,979 | 123,174 | 51,735 | 30,011 | 74,796 | |||||
Certificates of deposit with other banks | 249 | 498 | 745 | 5,623 | 8,358 | |||||
Securities available for sale, at fair value | 78,779 | 83,620 | 86,804 | 78,813 | 78,698 | |||||
Securities held to maturity, net of allowance for credit | 37,266 | 38,220 | 38,986 | 31,822 | 32,571 | |||||
Loans receivable, gross | 978,912 | 969,533 | 945,371 | 927,871 | 863,969 | |||||
Allowance for credit losses - loans | (9,964) | (10,228) | (10,526) | (4,666) | (4,569) | |||||
Loans receivable, net | 968,948 | 959,305 | 934,845 | 923,205 | 859,400 | |||||
Investments in restricted bank stock | 3,107 | 5,544 | 4,134 | 3,377 | 3,327 | |||||
Premises and equipment, net | 6,414 | 6,292 | 6,497 | 6,743 | 9,087 | |||||
Right-of-use asset – premises | 9,727 | 9,896 | 10,058 | 10,219 | 8,920 | |||||
Bank-owned life insurance | 24,732 | 24,554 | 24,384 | 19,244 | 19,127 | |||||
Goodwill and other intangible assets | 36,715 | 36,774 | 36,833 | 36,894 | 36,955 | |||||
Deferred tax asset | 6,880 | 6,571 | 6,749 | 5,619 | 6,378 | |||||
Accrued interest receivable and other assets | 14,899 | 14,024 | 12,188 | 12,084 | 7,256 | |||||
TOTAL ASSETS | $ 1,255,695 | $ 1,308,472 | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | |||||
LIABILITIES | ||||||||||
Deposits: | ||||||||||
Demand, noninterest bearing | $ 210,404 | $ 240,729 | $ 204,495 | $ 192,773 | $ 184,857 | |||||
Interest bearing | 831,368 | 794,113 | 780,003 | 753,999 | 766,853 | |||||
Total deposits | 1,041,772 | 1,034,842 | 984,498 | 946,772 | 951,710 | |||||
Other Borrowings | 15,000 | 74,899 | 31,250 | 20,938 | — | |||||
Subordinated Debt | 40,354 | 40,398 | 40,441 | 40,484 | 40,526 | |||||
Operating Lease Liabilities | 9,728 | 9,896 | 10,058 | 10,219 | 8,921 | |||||
Accrued interest payable and other liabilities | 7,490 | 5,985 | 6,130 | 6,688 | 6,774 | |||||
TOTAL LIABILITIES | 1,114,344 | 1,166,020 | 1,072,377 | 1,025,101 | 1,007,931 | |||||
SHAREHOLDERS' EQUITY | ||||||||||
Preferred stock | — | — | — | — | — | |||||
Common stock | 162 | 162 | 250 | 149 | 149 | |||||
Surplus | 127,856 | 127,818 | 127,659 | 117,709 | 117,698 | |||||
Retained earnings | 19,062 | 19,039 | 18,911 | 27,100 | 27,525 | |||||
Accumulated other comprehensive loss | (5,729) | (4,567) | (5,239) | (6,405) | (8,430) | |||||
TOTAL SHAREHOLDERS' EQUITY | 141,351 | 142,452 | 141,581 | 138,553 | 136,942 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | $ 1,255,695 | $ 1,308,472 | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | |||||
Common shares outstanding | 16,235,871 | 16,228,440 | 16,221,692 | 14,939,640 | 14,939,640 | |||||
LINKBANCORP, Inc. and Subsidiaries | |||||||||||
Consolidated Statements of Operations (Unaudited) | |||||||||||
Three Months Ended | Nine Months Ended | ||||||||||
9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | |||||||
(In Thousands, except share and per share data) | |||||||||||
INTEREST AND DIVIDEND INCOME | |||||||||||
Loans receivable, including fees | $ 13,068 | $ 12,499 | $ 9,410 | $ 37,330 | $ 25,287 | ||||||
Other | 1,710 | 1,827 | 1,170 | 4,765 | 2,771 | ||||||
Total interest and dividend income | 14,778 | 14,326 | 10,580 | 42,095 | 28,058 | ||||||
INTEREST EXPENSE | |||||||||||
Deposits | 5,434 | 5,242 | 1,389 | 15,193 | 2,872 | ||||||
Other Borrowings | 550 | 558 | 82 | 1,196 | 106 | ||||||
Subordinated Debt | 442 | 437 | 439 | 1,311 | 1,080 | ||||||
Total interest expense | 6,426 | 6,237 | 1,910 | 17,700 | 4,058 | ||||||
NET INTEREST INCOME BEFORE (CREDIT TO) | 8,352 | 8,089 | 8,670 | 24,395 | 24,000 | ||||||
(Credit to) provision for credit losses | (349) | (493) | 515 | (549) | 1,190 | ||||||
NET INTEREST INCOME AFTER (CREDIT TO) | 8,701 | 8,582 | 8,155 | 24,944 | 22,810 | ||||||
NONINTEREST INCOME | |||||||||||
Service charges on deposit accounts | 198 | 197 | 216 | 593 | 644 | ||||||
Bank-owned life insurance | 177 | 170 | 156 | 488 | 381 | ||||||
Net realized (losses) gains on the sale of debt securities | — | — | — | (2,370) | 13 | ||||||
Gain on sale of loans | — | 296 | 420 | 296 | 753 | ||||||
Other | 505 | 223 | 249 | 905 | 658 | ||||||
Total noninterest income | 880 | 886 | 1,041 | (88) | 2,449 | ||||||
NONINTEREST EXPENSE | |||||||||||
Salaries and employee benefits | 4,193 | 4,037 | 4,234 | 12,350 | 11,612 | ||||||
Occupancy | 701 | 696 | 596 | 2,104 | 1,503 | ||||||
Equipment and data processing | 934 | 893 | 666 | 2,519 | 1,858 | ||||||
Professional fees | 363 | 418 | 330 | 1,162 | 865 | ||||||
FDIC insurance | 276 | 184 | 141 | 619 | 483 | ||||||
Bank Shares Tax | 278 | 278 | 201 | 834 | 585 | ||||||
Merger & system conversion related expenses | 777 | 315 | — | 1,679 | — | ||||||
Other | 472 | 995 | 877 | 2,280 | 2,481 | ||||||
Total noninterest expense | 7,994 | 7,816 | 7,045 | 23,547 | 19,387 | ||||||
Income before income tax expense | 1,587 | 1,652 | 2,151 | 1,309 | 5,872 | ||||||
Income tax expense | 347 | 305 | 379 | 276 | 970 | ||||||
NET INCOME | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | ||||||
EARNINGS PER SHARE, BASIC | $ 0.08 | $ 0.08 | $ 0.17 | $ 0.06 | $ 0.49 | ||||||
EARNINGS PER SHARE, DILUTED | $ 0.08 | $ 0.08 | $ 0.17 | $ 0.06 | $ 0.48 | ||||||
WEIGHTED-AVERAGE COMMON SHARES | |||||||||||
BASIC | 16,235,144 | 16,228,069 | 10,590,079 | 15,984,151 | 10,087,341 | ||||||
DILUTED | 16,235,144 | 16,228,069 | 10,590,079 | 15,984,151 | 10,136,457 | ||||||
LINKBANCORP, Inc. and Subsidiaries | |||||||||
Financial Highlights (Unaudited) | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
('Dollars In Thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||
Operating Highlights | |||||||||
Net Income | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | ||||
Net Interest Income | 8,352 | 8,089 | 8,670 | 24,395 | 24,000 | ||||
(Credit to) provision for Credit Losses | (349) | (493) | 515 | (549) | 1,190 | ||||
Non-Interest Income | 880 | 886 | 1,041 | (88) | 2,449 | ||||
Non-Interest Expense | 7,994 | 7,816 | 7,045 | 23,547 | 19,387 | ||||
Earnings per Share, Basic | 0.08 | 0.08 | 0.17 | 0.06 | 0.49 | ||||
Adjusted Earnings per Share, Basic (2) | 0.11 | 0.10 | 0.17 | 0.26 | 0.48 | ||||
Earnings per Share, Diluted | 0.08 | 0.08 | 0.17 | 0.06 | 0.48 | ||||
Adjusted Earnings per Share, Diluted (2) | 0.11 | 0.10 | 0.17 | 0.26 | 0.48 | ||||
Selected Operating Ratios | |||||||||
Net Interest Margin | 2.89 % | 2.81 % | 3.51 % | 2.88 % | 3.40 % | ||||
Annualized Return on Assets ("ROA") | 0.39 % | 0.43 % | 0.65 % | 0.11 % | 0.63 % | ||||
Adjusted ROA2 | 0.59 % | 0.51 % | 0.65 % | 0.46 % | 0.63 % | ||||
Annualized Return on Equity ("ROE") | 3.46 % | 3.81 % | 6.48 % | 0.98 % | 7.68 % | ||||
Adjusted ROE2 | 5.17 % | 4.51 % | 6.48 % | 4.00 % | 7.66 % | ||||
Efficiency Ratio | 86.59 % | 87.09 % | 72.55 % | 96.87 % | 73.30 % | ||||
Adjusted Efficiency Ratio3 | 78.17 % | 83.58 % | 72.55 % | 81.97 % | 73.34 % | ||||
Noninterest Income to Avg. Assets | 0.28 % | 0.29 % | 0.38 % | -0.01 % | 0.32 % | ||||
Noninterest Expense to Avg. Assets | 2.54 % | 2.52 % | 2.60 % | 2.56 % | 2.51 % | ||||
9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | |||||
Financial Condition Data | |||||||||
Total Assets | $ 1,255,695 | $ 1,308,472 | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | ||||
Loans Receivable, Net | 968,948 | 959,305 | 934,845 | 923,205 | 859,400 | ||||
Noninterest-bearing Deposits | 210,404 | 240,729 | 204,495 | 192,773 | 184,857 | ||||
Interest-bearing Deposits | 831,368 | 794,113 | 780,003 | 753,999 | 766,853 | ||||
Total Deposits | 1,041,772 | 1,034,842 | 984,498 | 946,772 | 951,710 | ||||
Selected Balance Sheet Ratios | |||||||||
Total Capital Ratio1 | 12.92 % | 12.88 % | 13.53 % | 12.89 % | 11.55 % | ||||
Tier 1 Capital Ratio1 | 12.37 % | 12.29 % | 12.32 % | 12.41 % | 11.04 % | ||||
Common Equity Tier 1 Capital Ratio1 | 12.37 % | 12.29 % | 12.32 % | 12.41 % | 11.04 % | ||||
Leverage Ratio1 | 10.71 % | 10.41 % | 10.78 % | 10.93 % | 9.74 % | ||||
Tangible Common Equity to Tangible Assets4 | 8.58 % | 8.31 % | 8.90 % | 9.02 % | 9.02 % | ||||
Tangible Book Value per Share5 | $ 6.44 | $ 6.51 | $ 6.46 | $ 6.80 | $ 6.69 | ||||
Asset Quality Data | |||||||||
Non-performing Assets | $ 2,958 | $ 2,856 | $ 2,398 | $ 2,500 | $ 1,979 | ||||
Non-performing Assets to Total Assets | 0.24 % | 0.22 % | 0.20 % | 0.21 % | 0.17 % | ||||
Non-performing Loans to Total Loans | 0.30 % | 0.29 % | 0.25 % | 0.27 % | 0.23 % | ||||
Allowance for Credit Losses - Loans ("ACLL") | $ 9,964 | $ 10,228 | $ 10,526 | $ 4,666 | $ 4,569 | ||||
ACLL to Total Loans | 1.02 % | 1.05 % | 1.11 % | 0.50 % | 0.53 % | ||||
ACLL to Nonperforming Assets | 336.85 % | 358.12 % | 438.95 % | 186.64 % | 230.87 % | ||||
Net chargeoffs (recoveries) | $ (12) | $ (97) | $ (2) | $ (60) | $ (164) | ||||
(1) - These capital ratios have been calculated using bank-level capital | |||||||||
(2) - This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release. | |||||||||
(3) - The efficiency ratio, as adjusted represents noninterest expense divided by the sum of net interest income and noninterest income, excluding gains or losses from securities sales and merger related expenses. This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release. | |||||||||
(4) - We calculate tangible common equity as total shareholders' equity less goodwill and other intangibles, and we calculate tangible assets as total assets less goodwill and other intangibles. This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release. | |||||||||
(5) - We calculate tangible book value per common share as total shareholders' equity less goodwill and other intangibles, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release. | |||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||||
Net Interest Margin - Quarter-To-Date (Unaudited) | ||||||||||||
For the Three Months Ended September 30, | ||||||||||||
2023 | 2022 | |||||||||||
(Dollars in thousands) | Avg Bal | Interest (2) | Yield/Rate | Avg Bal | Interest (2) | Yield/Rate | ||||||
Int. Earn. Cash | $ 55,514 | $ 577 | 4.12 % | $ 30,630 | $ 157 | 2.03 % | ||||||
Securities | ||||||||||||
Taxable (1) | 82,499 | 833 | 4.01 % | 86,330 | 745 | 3.42 % | ||||||
Tax-Exempt | 38,589 | 378 | 3.89 % | 39,258 | 339 | 3.43 % | ||||||
Total Securities | 121,088 | 1,211 | 3.97 % | 125,588 | 1,084 | 3.42 % | ||||||
Total Cash Equiv. and Investments | 176,602 | 1,788 | 4.02 % | 156,218 | 1,241 | 3.15 % | ||||||
Total Loans (3) | 971,877 | 13,068 | 5.33 % | 824,309 | 9,410 | 4.53 % | ||||||
Total Earning Assets | 1,148,479 | 14,856 | 5.13 % | 980,527 | 10,651 | 4.31 % | ||||||
Other Assets | 97,995 | 93,116 | ||||||||||
Total Assets | $ 1,246,474 | $ 1,073,643 | ||||||||||
Interest bearing demand | $ 254,725 | $ 1,490 | 2.32 % | $ 278,637 | $ 400 | 0.57 % | ||||||
Money market demand | 254,849 | 1,827 | 2.84 % | 244,107 | 568 | 0.92 % | ||||||
Time deposits | 265,573 | 2,117 | 3.16 % | 205,792 | 421 | 0.81 % | ||||||
Total Borrowings | 102,669 | 992 | 3.83 % | 52,562 | 521 | 3.93 % | ||||||
Total Interest-Bearing Liabilities | 877,816 | 6,426 | 2.90 % | 781,098 | 1,910 | 0.97 % | ||||||
Non Int. Bearing Deposits | 209,054 | 170,863 | ||||||||||
Total Cost of Funds | $ 1,086,870 | $ 6,426 | 2.35 % | $ 951,961 | $ 1,910 | 0.80 % | ||||||
Other Liabilities | 17,230 | 13,243 | ||||||||||
Total Liabilities | $ 1,104,100 | $ 965,204 | ||||||||||
Shareholders' Equity | $ 142,374 | $ 108,439 | ||||||||||
Total Liabilities & Shareholders' Equity | $ 1,246,474 | $ 1,073,643 | ||||||||||
Net Interest Income/Spread (FTE) | 8,430 | 2.23 % | 8,741 | 3.34 % | ||||||||
Tax-Equivalent Basis Adjustment | (78) | (71) | ||||||||||
Net Interest Income | $ 8,352 | $ 8,670 | ||||||||||
Net Interest Margin | 2.89 % | 3.51 % | ||||||||||
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks. | ||||||||||||
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table | ||||||||||||
(3) Includes the balances of nonaccrual loans | ||||||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||||
Net Interest Margin - Linked Quarter-To-Date (Unaudited) | ||||||||||||
For the Three Months Ended | ||||||||||||
September 30, 2023 | June 30, 2023 | |||||||||||
(Dollars in thousands) | Avg Bal | Interest (2) | Yield/Rate | Avg Bal | Interest (2) | Yield/Rate | ||||||
Int. Earn. Cash | $ 55,514 | $ 577 | 4.12 % | $ 66,149 | $ 708 | 4.29 % | ||||||
Securities | ||||||||||||
Taxable (1) | 82,499 | 833 | 4.01 % | 86,366 | 822 | 3.82 % | ||||||
Tax-Exempt | 38,589 | 378 | 3.89 % | 39,139 | 378 | 3.87 % | ||||||
Total Securities | 121,088 | 1,211 | 3.97 % | 125,505 | 1,200 | 3.84 % | ||||||
Total Cash Equiv. and Investments | 176,602 | 1,788 | 4.02 % | 191,654 | 1,908 | 3.99 % | ||||||
Total Loans (3) | 971,877 | 13,068 | 5.33 % | 963,824 | 12,499 | 5.20 % | ||||||
Total Earning Assets | 1,148,479 | 14,856 | 5.13 % | 1,155,478 | 14,407 | 5.00 % | ||||||
Other Assets | 97,995 | 95,531 | ||||||||||
Total Assets | $ 1,246,474 | $ 1,251,009 | ||||||||||
Interest bearing demand | $ 254,725 | $ 1,490 | 2.32 % | $ 243,539 | $ 1,261 | 2.08 % | ||||||
Money market demand | 254,849 | 1,827 | 2.84 % | 244,355 | 1,589 | 2.61 % | ||||||
Time deposits | 265,573 | 2,117 | 3.16 % | 299,398 | 2,392 | 3.20 % | ||||||
Total Borrowings | 102,669 | 992 | 3.83 % | 95,792 | 995 | 4.17 % | ||||||
Total Interest-Bearing Liabilities | 877,816 | 6,426 | 2.90 % | 883,084 | 6,237 | 2.83 % | ||||||
Non Int Bearing Deposits | 209,054 | 209,072 | ||||||||||
Total Cost of Funds | $ 1,086,870 | $ 6,426 | 2.35 % | $ 1,092,156 | $ 6,237 | 2.29 % | ||||||
Other Liabilities | 17,230 | 17,073 | ||||||||||
Total Liabilities | $ 1,104,100 | $ 1,109,229 | ||||||||||
Shareholders' Equity | $ 142,374 | $ 141,780 | ||||||||||
Total Liabilities & Shareholders' Equity | $ 1,246,474 | $ 1,251,009 | ||||||||||
Net Interest Income/Spread (FTE) | 8,430 | 2.23 % | 8,170 | 2.17 % | ||||||||
Tax-Equivalent Basis Adjustment | (78) | (81) | ||||||||||
Net Interest Income | $ 8,352 | $ 8,089 | ||||||||||
Net Interest Margin | 2.89 % | 2.81 % | ||||||||||
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks. | ||||||||||||
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table | ||||||||||||
(3) Includes the balances of nonaccrual loans | ||||||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||||
Net Interest Margin - Year-To-Date (Unaudited) | ||||||||||||
For the Nine Months Ended September 30, | ||||||||||||
2023 | 2022 | |||||||||||
(Dollars in thousands) | Avg Bal | Interest (2) | Yield/Rate | Avg Bal | Interest (2) | Yield/Rate | ||||||
Int. Earn. Cash | $ 51,547 | $ 1,561 | 4.05 % | $ 50,254 | $ 306 | 0.81 % | ||||||
Securities | ||||||||||||
Taxable (1) | 83,343 | 2,309 | 3.70 % | 86,590 | 1,608 | 2.48 % | ||||||
Tax-Exempt | 38,617 | 1,133 | 3.92 % | 41,438 | 1,085 | 3.50 % | ||||||
Total Securities | 121,960 | 3,442 | 3.77 % | 128,028 | 2,693 | 2.81 % | ||||||
Total Cash Equiv. and Investments | 173,507 | 5,003 | 3.86 % | 178,282 | 2,999 | 2.25 % | ||||||
Total Loans (3) | 958,839 | 37,330 | 5.21 % | 765,267 | 25,287 | 4.42 % | ||||||
Total Earning Assets | 1,132,346 | 42,333 | 5.00 % | 943,549 | 28,286 | 4.01 % | ||||||
Other Assets | 95,406 | 90,970 | ||||||||||
Total Assets | $ 1,227,752 | $ 1,034,519 | ||||||||||
Interest bearing demand | $ 251,058 | $ 3,938 | 2.10 % | $ 269,282 | $ 905 | 0.45 % | ||||||
Money market demand | 248,921 | 4,766 | 2.56 % | 228,105 | 945 | 0.55 % | ||||||
Time deposits | 283,851 | 6,489 | 3.06 % | 203,947 | 1,022 | 0.67 % | ||||||
Total Borrowings | 81,873 | 2,507 | 4.09 % | 84,382 | 1,186 | 1.88 % | ||||||
Total Interest-Bearing Liabilities | 865,703 | 17,700 | 2.73 % | 785,716 | 4,058 | 0.69 % | ||||||
Non Int Bearing Deposits | 203,415 | 151,941 | ||||||||||
Total Cost of Funds | $ 1,069,118 | $ 17,700 | 2.21 % | $ 937,657 | $ 4,058 | 0.58 % | ||||||
Other Liabilities | 17,033 | 11,517 | ||||||||||
Total Liabilities | $ 1,086,151 | $ 949,174 | ||||||||||
Shareholders' Equity | $ 141,601 | $ 85,345 | ||||||||||
Total Liabilities & Shareholders' Equity | $ 1,227,752 | $ 1,034,519 | ||||||||||
Net Interest Income/Spread (FTE) | 24,633 | 2.27 % | 24,228 | 3.32 % | ||||||||
Tax-Equivalent Basis Adjustment | (238) | (228) | ||||||||||
Net Interest Income | $ 24,395 | $ 24,000 | ||||||||||
Net Interest Margin | 2.88 % | 3.40 % | ||||||||||
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks. | ||||||||||||
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table | ||||||||||||
(3) Includes the balances of nonaccrual loans | ||||||||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Loans Receivable Detail (Unaudited) | ||||||||||
(In Thousands) | September 30, | June 30, | March 31, | December 31, | September 30, | |||||
Agriculture and farmland loans | $ 50,584 | $ 50,552 | $ 53,301 | $ 55,746 | $ 53,570 | |||||
Construction loans | 65,836 | 75,628 | 67,934 | 57,713 | 49,311 | |||||
Commercial & industrial loans | 115,572 | 104,869 | 99,356 | 104,755 | 98,475 | |||||
Commercial real estate loans | ||||||||||
Multifamily | 111,853 | 113,254 | 111,461 | 105,390 | 95,537 | |||||
Owner occupied | 161,751 | 154,520 | 151,407 | 139,554 | 114,863 | |||||
Non-owner occupied | 256,522 | 254,691 | 249,638 | 245,274 | 233,887 | |||||
Residential real estate loans | ||||||||||
First liens | 172,481 | 170,271 | 166,478 | 168,084 | 166,388 | |||||
Second liens and lines of credit | 27,870 | 30,148 | 30,720 | 35,576 | 34,620 | |||||
Consumer and other loans | 11,869 | 11,308 | 10,472 | 10,057 | 11,929 | |||||
Municipal loans | 4,137 | 3,929 | 4,292 | 5,466 | 5,404 | |||||
978,475 | 969,170 | 945,059 | 927,615 | 863,984 | ||||||
Deferred costs (fees) | 437 | 363 | 312 | 256 | (15) | |||||
Total loans receivable | $ 978,912 | $ 969,533 | $ 945,371 | $ 927,871 | $ 863,969 | |||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||
Investments in Securities Detail (Unaudited) | ||||||||
September 30, 2023 | ||||||||
(In Thousands) | Amortized | Net | Fair | |||||
Available for Sale: | ||||||||
U.S. government agency securities | $ 2,000 | $ (18) | $ 1,982 | |||||
Small Business Administration loan pools | 693 | (14) | 679 | |||||
Obligations of state and political subdivisions | 45,614 | (5,935) | 39,679 | |||||
Mortgage-backed securities in government-sponsored entities | 40,987 | (4,548) | 36,439 | |||||
$ 89,294 | $ (10,515) | $ 78,779 | ||||||
Amortized | Net | Fair | Allowance | |||||
Held to Maturity: | ||||||||
Corporate debentures | $ 15,000 | $ (1,963) | $ 13,037 | $ 512 | ||||
Structured mortgage-backed securities | 22,778 | (1,227) | 21,551 | - | ||||
$ 37,778 | $ (3,190) | $ 34,588 | $ 512 | |||||
December 31, 2022 | ||||||||
(In Thousands) | Amortized | Net | Fair | |||||
Available for Sale: | ||||||||
Small Business Administration loan pools | $ 858 | $ (15) | $ 843 | |||||
Obligations of state and political subdivisions | 44,189 | (4,020) | 40,169 | |||||
Mortgage-backed securities in government-sponsored entities | 41,873 | (4,072) | 37,801 | |||||
$ 86,920 | $ (8,107) | $ 78,813 | ||||||
Held to Maturity: | ||||||||
Corporate debentures | $ 14,993 | $ (994) | $ 13,999 | |||||
Structured mortgage-backed securities | 16,829 | (748) | 16,081 | |||||
$ 31,822 | $ (1,742) | $ 30,080 | ||||||
LINKBANCORP, Inc. and Subsidiaries | ||||||||||
Deposits Detail (Unaudited) | ||||||||||
(In Thousands) | September 30, | June 30, | March 31, | December 31, | September 30, | |||||
Demand, noninterest-bearing | $ 210,404 | $ 240,729 | $ 204,495 | $ 192,773 | $ 184,857 | |||||
Demand, interest-bearing | 273,673 | 237,114 | 250,944 | 254,478 | 305,934 | |||||
Money market and savings | 258,334 | 254,632 | 241,858 | 228,048 | 266,743 | |||||
Time deposits, $250 and over | 51,563 | 57,194 | 51,855 | 46,116 | 39,123 | |||||
Time deposits, other | 247,798 | 245,173 | 235,346 | 225,357 | 155,053 | |||||
$ 1,041,772 | $ 1,034,842 | $ 984,498 | $ 946,772 | $ 951,710 | ||||||
Average Deposits Detail, for the Three Months Ended (Unaudited) | ||||||||||
(In Thousands) | September 30, | June 30, | March 31, | December 31, | September 30, | |||||
Demand, noninterest-bearing | $ 209,054 | $ 209,072 | $ 192,135 | $ 199,556 | $ 170,863 | |||||
Demand, interest-bearing | 254,725 | 243,539 | 251,103 | 278,816 | 278,637 | |||||
Money market and savings | 254,849 | 244,355 | 245,563 | 245,154 | 244,107 | |||||
Time deposits | 265,573 | 299,398 | 290,605 | 211,090 | 205,792 | |||||
$ 984,201 | $ 996,364 | $ 979,406 | $ 934,616 | $ 899,399 | ||||||
Appendix A – Reconciliation to Non-GAAP Financial Measures
This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management uses these non-GAAP measures in its analysis of the Company's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of non-GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company's financial condition and results. Non-GAAP measures are not formally defined under GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to GAAP financial measures, our management believes these non-GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-GAAP measures. See the tables below for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.
Adjusted Return on Average Assets | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
(Dollars in thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||
Net income | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | ||||
Average assets | 1,246,474 | 1,251,009 | 1,073,643 | 1,227,752 | 1,034,519 | ||||
Return on average assets (annualized) | 0.39 % | 0.43 % | 0.65 % | 0.11 % | 0.63 % | ||||
Net income | 1,240 | 1,347 | 1,772 | 1,033 | 4,902 | ||||
Net losses (gains) on sale of securities | - | - | - | 2,370 | (13) | ||||
Tax effect at 21% | - | - | - | (498) | 3 | ||||
Merger & system conversion related expenses | 777 | 315 | - | 1,679 | - | ||||
Tax effect at 21% | (163) | (66) | - | (353) | - | ||||
Adjusted Net Income (Non-GAAP) | 1,854 | 1,596 | 1,772 | 4,231 | 4,892 | ||||
Average assets | 1,246,474 | 1,251,009 | 1,073,643 | 1,227,752 | 1,034,519 | ||||
Adjusted return on average assets (annualized) | 0.59 % | 0.51 % | 0.65 % | 0.46 % | 0.63 % | ||||
Adjusted Return on Average Shareholders' Equity | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
(Dollars in thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||
Net income | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | ||||
Average shareholders' equity | 142,374 | 141,780 | 108,439 | 141,601 | 85,345 | ||||
Return on average shareholders' equity (annualized) | 3.46 % | 3.81 % | 6.48 % | 0.98 % | 7.68 % | ||||
Net income | 1,240 | 1,347 | 1,772 | 1,033 | 4,902 | ||||
Net losses (gains) on sale of securities | - | - | - | 2,370 | (13) | ||||
Tax effect at 21% | - | - | - | (498) | 3 | ||||
Merger & system conversion related expenses | 777 | 315 | - | 1,679 | - | ||||
Tax effect at 21% | (163) | (66) | - | (353) | - | ||||
Adjusted Net Income (Non-GAAP) | 1,854 | 1,596 | 1,772 | 4,231 | 4,892 | ||||
Average shareholders' equity | 142,374 | 141,780 | 108,439 | 141,601 | 85,345 | ||||
Adjusted return on average shareholders' equity (annualized) | 5.17 % | 4.51 % | 6.48 % | 4.00 % | 7.66 % | ||||
Adjusted Efficiency Ratio | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
(Dollars in thousands) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||
GAAP-based efficiency ratio | 86.59 % | 87.09 % | 72.55 % | 96.87 % | 73.30 % | ||||
Net interest income | $ 8,352 | $ 8,089 | $ 8,670 | $ 24,395 | $ 24,000 | ||||
Noninterest income | 880 | 886 | 1,041 | (88) | 2,449 | ||||
Less: net gains (losses) on sales of securities | - | - | - | (2,370) | 13 | ||||
Adjusted revenue (Non-GAAP) | 9,232 | 8,975 | 9,711 | 26,677 | 26,436 | ||||
Total noninterest expense | 7,994 | 7,816 | 7,045 | 23,547 | 19,387 | ||||
Less: Merger & system conversion related expenses | 777 | 315 | - | 1,679 | - | ||||
Adjusted non-interest expense | 7,217 | 7,501 | 7,045 | 21,868 | 19,387 | ||||
Efficiency ratio, as adjusted (Non-GAAP) | 78.17 % | 83.58 % | 72.55 % | 81.97 % | 73.34 % | ||||
Adjusted Earnings Per Share | ||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||
(Dollars in thousands, except per share data) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | |||||
GAAP-Based Earnings Per Share, Basic | $ 0.08 | $ 0.08 | $ 0.17 | $ 0.06 | $ 0.49 | |||||
GAAP-Based Earnings Per Share, Diluted | $ 0.08 | $ 0.08 | $ 0.17 | $ 0.06 | $ 0.48 | |||||
Net Income | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | |||||
Net losses (gains) on sale of securities | - | - | - | 2,370 | (13) | |||||
Tax effect at 21% | - | - | - | (498) | 3 | |||||
Merger & system conversion related expenses | 777 | 315 | - | 1,679 | - | |||||
Tax effect at 21% | (163) | (66) | - | (353) | - | |||||
Adjusted Net Income (Non-GAAP) | 1,854 | 1,596 | 1,772 | 4,231 | 4,892 | |||||
Adjusted Earnings per Share, Basic (Non-GAAP) | $ 0.11 | $ 0.10 | $ 0.17 | $ 0.26 | $ 0.48 | |||||
Adjusted Earnings per Share, Diluted (Non-GAAP) | $ 0.11 | $ 0.10 | $ 0.17 | $ 0.26 | $ 0.48 | |||||
Tangible Common Equity and Tangible Book Value | ||||||||||
9/30/2023 | 6/30/2023 | 3/31/2023 | 12/31/2022 | 9/30/2022 | ||||||
Tangible Common Equity | (Dollars in thousands, except for share data) | |||||||||
Total shareholders' equity | $ 141,351 | $ 142,452 | $ 141,581 | $ 138,553 | $ 136,942 | |||||
Adjustments: | ||||||||||
Goodwill | (35,842) | (35,842) | (35,842) | (35,842) | (35,842) | |||||
Other intangible assets | (873) | (932) | (991) | (1,052) | (1,113) | |||||
Tangible common equity (Non-GAAP) | $ 104,636 | $ 105,678 | $ 104,748 | $ 101,659 | $ 99,987 | |||||
Common shares outstanding | 16,235,871 | 16,228,440 | 16,221,692 | 14,939,640 | 14,939,640 | |||||
Book value per common share | $ 8.71 | $ 8.78 | $ 8.73 | $ 9.27 | $ 9.17 | |||||
Tangible book value per common share | $ 6.44 | $ 6.51 | $ 6.46 | $ 6.80 | $ 6.69 | |||||
Tangible Assets | ||||||||||
Total assets | $ 1,255,695 | $ 1,308,472 | $ 1,213,958 | $ 1,163,654 | $ 1,144,873 | |||||
Adjustments: | ||||||||||
Goodwill | (35,842) | (35,842) | (35,842) | (35,842) | (35,842) | |||||
Other intangible assets | (873) | (932) | (991) | (1,052) | (1,113) | |||||
Tangible assets (Non-GAAP) | $ 1,218,980 | $ 1,271,698 | $ 1,177,125 | $ 1,126,760 | $ 1,107,918 | |||||
Tangible common equity to tangible | 8.58 % | 8.31 % | 8.90 % | 9.02 % | 9.02 % | |||||
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP) | |||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||
(Dollars in thousands, except per share data) | 9/30/2023 | 6/30/2023 | 9/30/2022 | 9/30/2023 | 9/30/2022 | ||||
Net Income (Loss) - GAAP | $ 1,240 | $ 1,347 | $ 1,772 | $ 1,033 | $ 4,902 | ||||
Net losses (gains) on sale of securities | - | - | - | 2,370 | (13) | ||||
Tax effect at 21% | - | - | - | (498) | 3 | ||||
Merger & system conversion related expenses | 777 | 315 | - | 1,679 | - | ||||
Tax effect at 21% | (163) | (66) | - | (353) | - | ||||
Adjusted Net Income (Non-GAAP) | 1,854 | 1,596 | 1,772 | 4,231 | 4,892 | ||||
Income tax expense | 347 | 305 | 379 | 276 | 970 | ||||
(Credit to) provision for credit losses | (349) | (493) | 515 | (549) | 1,190 | ||||
Tax effect included in Adjusted Net Income | 163 | 66 | - | 851 | (3) | ||||
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP) | $ 2,015 | $ 1,474 | $ 2,666 | $ 4,809 | $ 7,049 | ||||
Contact:
Nicole Davis
Corporate and Investor Relations Officer
717.803.8895
[email protected]
SOURCE LINKBANCORP, Inc.
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