Revere Bank Announces Third Quarter 2018 Record Earnings – Net Income of $7 Million Increased 37% Over the Third Quarter 2017

ROCKVILLE, Md., Nov. 09, 2018 (GLOBE NEWSWIRE) -- Revere Bank (the “Bank”) (OTCQX: REVB) today reported record quarterly net income of $7.01 million for the quarter ended September 30, 2018, a 36.8% increase compared to $5.12 million for the quarter ended September 30, 2017.  Net income per basic common share for the third quarter of 2018 was $0.68 compared to $0.53 for the same period in 2017, an increase of 28.3%.  Net income per diluted common share increased 30.0% to $0.65 for the third quarter of 2018 compared to $0.50 for the same period in 2017. 

For the nine months ended September 30, 2018, net income was $20.42 million, a 51.1% increase compared to $13.51 million for the nine months ended September 30, 2017.  Net income per basic common share for the nine months ended September 30, 2018, was $2.02 compared to $1.39 for the same period in 2017, an increase of 45.3%.  Net income per diluted common share increased 47.0% to $1.94 for the nine months ended September 30, 2018, compared to $1.32 for the same period in 2017. 

Quarterly Highlights

• Closed a common stock offering of 1.61 million shares with net proceeds of $44.1 million.
• Began trading on the OTCQX Best Market under the symbol “REVB”.
• Grew pretax net income by 5.4% compared to the second quarter of 2018.
• Period end loans grew 13.9%, or $243.9 million, compared to the third quarter of 2017, and grew 1.8%, or $36.2 million, compared to the second quarter of 2018.
• Period end deposits grew 10.9%, or $191.7 million, compared to the third quarter of 2017 and grew 2.2%, or $41.9 million, compared to the second quarter of 2018.  Core deposits grew 3.5%, or $63.9 million, compared to the second quarter of 2018 as we allowed $22.0 million in brokered deposits to run off during the quarter.

Ken Cook, Co-President and CEO, said, “We are pleased to report continued strong pretax and net income trends on both a year-over-year and linked-quarter basis.  Furthermore, we continue to grow loans and deposits and maintain very strong credit quality as we, and the industry, manage through rising short-term interest rates and a flattening yield curve. Our future is bright and our loan and deposit pipelines are strong.”

Drew Flott, Co-President and CEO, added, “The success of our $44.1 million capital raise has strengthened our capital position. This, combined with our continually increasing earnings power, positions us to maintain strong capital ratios as we continue to achieve solid growth into the future.  We are also excited with our listing on the OTCQX Best Market under the symbol REVB.  The OTCQX provides our shareholders and the investment community with increased liquidity and access to our stock.”

Earnings and Growth Highlights

Third quarter net income increased $1.88 million or 36.8% compared to the third quarter of 2017, and $156 thousand, or 2.3%, compared to the second quarter of 2018. Our third quarter diluted EPS remained unchanged compared to the second quarter of 2018, despite our increased net income, due to the increased shares outstanding from our recent successful capital raise and the exercise of stock options.  When compared to the third quarter of 2017, diluted EPS increased $0.15 per share, or 30.0%, as a result of increased pre-tax income of 16.9% and a decrease in tax expense related to the Tax Cuts and Jobs Act (“Tax Act”) effective January 1, 2018.

For the nine months ended September 30, 2018, net income increased $6.91 million, or 51.1%, compared to the same period of 2017.  During the period diluted EPS increased $0.62 per share, or 47.0%, as a result of increased pre-tax net income of 27.1% and a decrease in tax expense due to the Tax Act.

Income Statement Review

Net interest income

Our net interest income continues to grow and drive increased earnings. Our third quarter net interest income increased 12.1% compared to the same period last year and 2.2% compared to the prior quarter. Year to date net interest income is up 14.6% compared to the same period last year.

On a year-to-date basis our net interest margin increased by one basis point from last year to 3.77%. Our current quarter’s net interest margin decreased by 18 basis points from the prior quarter and nine basis points from the same period last year.  This decrease was primarily the result of an increase in the cost of funds due to an increase in short term market rates, the success of a third quarter CD campaign, and a change in our interest-earning asset mix.  Going forward we expect these factors to be mitigated as the excess liquid funds from the CD campaign and our equity raise are deployed into higher earning assets such as loans.  We continue to focus on improving the net interest margin and note that about one third of our loan portfolio will reprice over the next twelve months.

Non-interest income and Non-interest expense

Non-interest income was $433 thousand for the third quarter, a decrease of $62 thousand, or 12.5%, compared to the third quarter of 2017, and $171 thousand, or 28.3%, compared to the second quarter of 2018.  This decrease was primarily caused by a decrease in mortgage referral fees.  For the nine-month period ended September 30, 2018, total non-interest income increased slightly by 0.7% to $1.62 million, compared to $1.61 million for the nine-month period ended September 30, 2017.

Non-interest expense increased by $952 thousand, or 9.3%, in the third quarter compared to the same period last year and $292 thousand, or 2.7%, compared to the second quarter.  On a year-to-date basis non-interest expense increased $1.74 million, or 5.7%, to $32.4 million, compared to $30.7 million during the first nine months of 2017. These increases were driven primarily by an increase in the number of employees to manage our continued growth and a significant investment in a brand identity marketing campaign.  While we maintain strict control of our operating expenses, we also know the importance of investing in increased future earnings and growth.

For the third quarter our efficiency ratio improved to 52.55% compared to the same period last year and improved on a year- to-date basis to 52.03% from 56.26% for the first nine months of 2017.  The improvement primarily reflects continued economies of scale as we grow and to a lesser extent a reduction in merger and acquisition expense during the period.  Compared to the prior quarter our efficiency ratio increased to 52.55% from 51.84% primarily due to increased marketing costs.

Return on assets and equity increased 22 basis points and 192 basis points, respectively, during the quarter compared to the same period last year.  These increases for the third quarter over the prior year period were primarily driven by increased earnings and the impact of the Tax Act.  Return on assets and return on equity declined slightly by five basis points and 71 basis points, respectively, when compared to the prior quarter. These decreases were caused in part by an increase in short term liquidity from a successful CD campaign and from the capital raise and by investing in the above referenced brand identity campaign.

Balance Sheet Review

Asset growth from September 30, 2017, to September 30, 2018, was $247 million, or 11.9%, and was driven primarily by loan growth.  When compared to December 31, 2017, assets increased $219 million, or 10.4%, which was primarily the result of loan growth.  Assets increased $67 million compared to the prior quarter, or 3.0%, due to loan growth and an increase in cash equivalents from the recent capital raise.

Loans increased $244 million, or 13.9%, compared to September 30, 2017, and were driven primarily by an increase in commercial real estate loans and commercial loans.  During the nine month period ended September 30, 2018, loans increased $183 million, or 10.1%, primarily driven by an increase in commercial real estate loans as well as an increase in commercial loans. Compared to June 30, 2018, loans increased $36 million, or 1.8%, primarily due to commercial real estate loan growth.

Deposits increased $192 million, or 10.9%, compared to September 30, 2017, primarily due to increases in money market deposits.  During the nine-month period ended September 30, 2018, deposits increased $155 million, or 8.7%, primarily due to increases in money market deposits.  Compared to June 30, 2018, deposits increased $42 million, or 2.2%, primarily due to increases in CD and money market deposits.

Stockholders’ equity increased $70.4 million, or 37.9% compared to September 30, 2017, and $52.1 million, or 25.6%, compared to June 30, 2018.  The very strong equity growth in the third quarter was achieved through record quarterly earnings and a successful capital raise that yielded $44.1 million in net capital through the issuance of 1.61 million common shares.

The Bank’s capital ratios remain well above regulatory guidelines for well-capitalized banks. As of September 30, 2018, the Bank’s total risk-based capital ratio and tier 1 leverage ratio were 13.85% and 10.11%, respectively, compared to 11.40% and 7.78%, respectively, as of September 30, 2017. As of September 30, 2018, the Bank’s tangible equity to total tangible assets ratio was 9.85% compared to 7.56% as of September 30, 2017.

As of September 30, 2018, the Bank’s tangible book value per share was $19.09, up 21.3% compared to $15.74 as of September 30, 2017.  The increase in tangible book value per share was primarily due to an increase from strong earnings per share and approximately $1.41 accretion from the capital raise.

Asset Quality Review

Asset quality remains very strong.  As of September 30, 2018, non-performing assets as a percentage of total assets decreased to 0.08% from 0.12% at September 30, 2017. The decrease was driven by both a decline in non-performing assets as well as an increase in total assets.

Loans 30-89 days past due and still accruing interest decreased $1.9 million compared to the prior period and $62 thousand compared to the same period last year. The Bank had no net charge-offs in the third quarter of 2018, compared to $91 thousand of net charge-offs in the third quarter of 2017. For the nine months ended September 30, 2018, the Bank reported $57 thousand in net charge-offs compared to net charge-offs of $284 thousand during the same period in 2017.

The Bank is proactive in monitoring its loan portfolio for any indication of weakness and takes appropriate action to mitigate future risks across all lines of business.

Revere Bank is a Maryland, state-chartered bank that commenced operations in November 2007.  The Bank is headquartered in Rockville and has 11 branches located in the suburban Maryland counties of Anne Arundel, Baltimore, Frederick, Howard, Montgomery, and Prince George’s. The Bank is a community-based, full-service commercial bank that emphasizes the banking needs of community-based businesses, professional entities, and individuals.  Further information on Revere Bank can be obtained by visiting our website at www.reverebank.com.

Forward-Looking Statement
This press release contains forward-looking statements within the meaning of the Securities and Exchange Act of 1934, as amended, including statements of goals, intentions, and expectations as to future trends, plans, events or results of Bank operations and policies and regarding general economic conditions. In some cases, forward-looking statements can be identified by use of words such as “may,” “will,” “anticipates,” “believes,” “expects,” “plans,” “estimates,” “potential,” “continue,” “should,” and similar words or phrases. These statements are based upon current and anticipated economic conditions, nationally and in the Bank’s market, interest rates and interest rate policy, competitive factors, and other conditions which by their nature, are not susceptible to accurate forecast, and are subject to significant uncertainty. Because of these uncertainties and the assumptions on which this discussion and the forward-looking statements are based, actual future operations and results may differ materially from those indicated herein. Readers are cautioned against placing undue reliance on any such forward-looking statements. The Bank’s past results are not necessarily indicative of future performance.

Non-GAAP Financial Measures
Statements included in this press release include non-GAAP financial measures and should be read along with the Financial Highlights table, which provides a reconciliation of non-GAAP financial measures to GAAP financial measures. This press release and the accompanying tables discuss financial measures, such as tangible common equity, tangible assets and tangible book value per share, which are non-GAAP measures. We believe that such non-GAAP measures are useful because they enhance the ability of investors and management to evaluate and compare the Bank’s operating results from period to period in a meaningful manner. Non-GAAP measures should not be considered as an alternative to any measure of performance as promulgated under GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks. Investors should consider the Bank’s performance and financial condition as reported under GAAP and all other relevant information when assessing the performance or financial condition of the Bank. Non-GAAP measures have limitations as analytical tools, and investors should not consider them in isolation or as a substitute for analysis of the Bank’s results or financial condition as reported under GAAP.