TINTON FALLS, N.J., Oct. 22, 2019 (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, 2019.
2019 Third Quarter Financial Highlights
(comparisons to 2018 third quarter)
- Announced the signing of a definitive merger agreement with OceanFirst Financial Corp. (NASDAQ:OCFC) (“OceanFirst”), parent company of OceanFirst Bank N.A. (“OceanFirst Bank”).
- Net income was $2.1 million, or $0.24 per diluted share, as the Company incurred $828,000, or $662,000 after-tax, in expenses relating to the Company’s pending merger with OceanFirst and a $411,000, or $288,000 after-tax, write-down on an OREO property. These expenses impacted several metrics within the quarter and year-to-date.
- Excluding the aforementioned expenses, 2019 third quarter net income was $3.1 million, or $0.35 per diluted share.
- Return on average assets was 0.73%, compared to 1.04%
- Return on average equity was 6.84%, compared to 9.98%
- Net interest margin decreased 15 basis points to 3.40%
- Efficiency ratio(1) was 70.22%, compared to 61.78%
(Totals at September 30, 2019; comparisons to December 31, 2018)
- Total loans were $959.9 million, an increase of $38.6 million, or 5.6% annualized
- Total deposits were $963.3 million, an increase of $45.9 million, or 6.7% annualized
- Total assets were $1.147 billion, compared to $1.096 billion
- Tangible book value per share(2) increased to $12.08, compared to $11.43
(1) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
(2) 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, “We were pleased to report solid core profitability and book value growth despite higher expenses related to the Company’s pending merger and write-down on one of our OREO properties. Our loan growth of $6.8 million for the quarter was tempered by larger than expected payoffs, much of which is the result of the completion and ultimate sale of several construction loan projects.”
Dividend Information
On October 16, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share, payable on November 29, 2019 to shareholders of record as of the close of business on November 6, 2019. This marks the 27th consecutive quarterly cash dividend.
| Key Quarterly Performance Metrics | 9 Mo. | 9 Mo. | ||||||||||||||
| 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | 3rd Qtr. | Ended | Ended | ||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | 9/30/2019 | 9/30/2018 | ||||||||||
| Net Income (in thousands) | $2,115 | $3,048 | $2,783 | $3,046 | $2,834 | $7,946 | $8,160 | |||||||||
| Earnings per Common Share – Diluted | $0.24 | $0.35 | $0.32 | $0.35 | $0.33 | $0.91 | $0.94 | |||||||||
| Return on Average Assets | 0.73 | % | 1.07 | % | 1.01 | % | 1.10 | % | 1.04 | % | 0.93 | % | 1.03 | % | ||
| Return on Average Tangible Assets(1) | 0.74 | % | 1.08 | % | 1.02 | % | 1.11 | % | 1.06 | % | 0.95 | % | 1.04 | % | ||
| Return on Average Equity | 6.84 | % | 10.18 | % | 9.59 | % | 10.52 | % | 9.98 | % | 8.84 | % | 9.91 | % | ||
| Return on Average Tangible Equity(1) | 8.03 | % | 11.98 | % | 11.33 | % | 12.49 | % | 11.90 | % | 10.41 | % | 11.86 | % | ||
| Net Interest Margin | 3.40 | % | 3.54 | % | 3.60 | % | 3.56 | % | 3.55 | % | 3.51 | % | 3.59 | % | ||
| Efficiency Ratio(2) | 70.22 | % | 59.58 | % | 59.95 | % | 60.69 | % | 61.78 | % | 63.20 | % | 61.99 | % | ||
| Non-Performing Assets to Total Assets | 0.33 | % | 0.37 | % | 0.39 | % | 0.18 | % | 0.18 | % | 0.33 | % | 0.18 | % | ||
| Allowance as a % of Loans | 1.23 | % | 1.23 | % | 1.22 | % | 1.24 | % | 1.26 | % | 1.23 | % | 1.26 | % | ||
| (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, 2019 and December 31, 2018 are as follows:
| (in thousands) | ||||||||||||||
| September 30, 2019 | December 31, 2018 | % Change | ||||||||||||
| Commercial and industrial | $ | 107,944 | $ | 109,362 | (1.3 | )% | ||||||||
| Real estate – construction | 144,577 | 144,865 | (0.2 | )% | ||||||||||
| Real estate – commercial | 579,214 | 552,549 | 4.8 | % | ||||||||||
| Real estate – residential | 98,047 | 84,123 | 16.6 | % | ||||||||||
| Consumer | 30,791 | 31,144 | (1.1 | )% | ||||||||||
| Unearned fees | (709 | ) | (742 | ) | (4.5 | )% | ||||||||
| 959,864 | 921,301 | 4.2 | % | |||||||||||
| Allowance for loan losses | (11,811 | ) | (11,398 | ) | 3.6 | % | ||||||||
| Net Loans | $ | 948,053 | $ | 909,903 | 4.2 | % | ||||||||
Deposit Composition
The components of the Company’s deposits at September 30, 2019 and December 31, 2018 are as follows:
| (in thousands) | |||||||||||||
| September 30, 2019 | December 31, 2018 | % Change | |||||||||||
| Non-interest-bearing | $ | 179,610 | $ | 176,655 | 1.7 | % | |||||||
| NOW accounts | 201,924 | 193,347 | 4.4 | % | |||||||||
| Savings deposits | 251,217 | 258,666 | (2.9 | )% | |||||||||
| Money market deposits | 35,775 | 43,936 | (18.6 | )% | |||||||||
| Listed service CD’s | 44,016 | 39,807 | 10.6 | % | |||||||||
| Time deposits / IRA | 177,350 | 130,863 | 35.5 | % | |||||||||
| Wholesale deposits | 73,405 | 74,080 | (0.9 | )% | |||||||||
| Total Deposits | $ | 963,297 | $ | 917,354 | 5.0 | % | |||||||
2019 Third Quarter Financial Review
Net Income
Net income for the three months ended September 30, 2019 decreased 25.4% to $2.1 million, or $0.24 per diluted common share, compared to $2.8 million, or $0.33 per diluted common share, for the same period last year. The decrease was largely due to merger related expenses of $828,000 and a $411,000 write-down on an OREO property, which was partially offset by lower FDIC insurance expense.
On a linked quarter basis, third quarter 2019 net income decreased 30.6% compared to the second quarter of 2019.
Net Interest Income
Net interest income for the quarter ended September 30, 2019 was $9.2 million, an increase of 1.4% compared to $9.1 million in the corresponding prior year period. This was largely due to an increase of $58.9 million, or 5.8%, in average interest-earning assets, primarily attributable to growth in the loan portfolio.
Net Interest Margin
The Company reported a net interest margin of 3.40% for the third quarter of 2019, compared to 3.54% in the second quarter of 2019 and 3.55% reported for the third quarter of 2018. The decline from both prior periods was primarily due to higher cost of funds.
Non-Interest Income
Non-interest income for the quarter ended September 30, 2019 decreased to $1.1 million, compared to $1.4 million in the corresponding prior year period. This 17.0% decrease was largely the result of lower gains on the sale of SBA loans and lower other loan fees, primarily due to higher loan prepayment fees in the prior year. These decreases were partially offset by both higher mortgage banking revenues and other income.
On a linked quarter basis, non-interest income decreased 8.7%, from the second quarter of 2019, mainly due to lower gains on the sale of SBA loans.
Non-Interest Expense
Non-interest expense for the quarter ended September 30, 2019 totaled $7.3 million, an increase of $808,000, or 12.5%, from the $6.5 million reported in same period in 2018, primarily due to expenses relating to the Company’s pending merger with OceanFirst, and the aforementioned write-down of an OREO property. During the current quarter, no FDIC insurance expense was recorded, as compared to $128,000 in the same prior year period. The FDIC notified the Bank that it was eligible for small bank assessment credits since the Deposit Insurance Fund reserve ratio of 1.40% at June 30, 2019 exceeded the 1.38% level. As such, the total credit awarded to the Bank was $252,000, which more than covered the September 30, 2019 payment of $117,000. Accordingly, no expense was incurred during the third quarter. The Company’s efficiency ratio was 70.22% for the quarter, compared to 61.78% for the same period in 2018.
On a linked quarter basis, non-interest expense increased $915,000, or 14.4%, mainly due to the same reasons as noted above.
Income Tax Expense
The Company’s effective tax rate was 28.5% for the three months ended September 30, 2019, compared to 26.3% for the same period last year mainly due to the non-deductibility of certain merger related expenses. The Company recognized a $29,000 tax benefit related to the accounting treatment of equity-based compensation in the third quarter of 2019, compared to a $35,000 benefit in the same period last year.
At the present time, the Company is anticipating a 2019 effective tax rate of 28%.
Provision for Loan Losses
During the quarter, a provision for loan losses of $125,000 was expensed, compared to $150,000 in the same prior year period. The majority of the third quarter 2019 provision was to support loan growth. The Company had $2,000 and $39,000 in net loan recoveries during the third quarter of 2019 and 2018, respectively.
2019 Nine Month Financial Review
Net Income
Net income for the nine months ended September 30, 2019 was $7.9 million, or $0.91 per diluted share, compared to $8.2 million, or $0.94 per diluted share, in the same prior year period. This decrease was due to the same reasons noted earlier in the third quarter review.
Net Interest Income
For the first nine months of 2019, net interest income increased 4.2% to $28.0 million from $26.9 million in the prior year period. This was largely due to an increase of $64.2 million, or 6.4%, in average interest-earning assets, primarily attributable to growth in the loan portfolio.
Net Interest Margin
The net interest margin for the first nine months of 2019 was 3.51%, compared to 3.59% in the prior year period, primarily due to higher cost of funds.
Non-Interest Income
For the nine months ended September 30, 2019, non-interest income decreased $648,000, or 15.6%, to $3.5 million from the same period in 2018 mainly due to the same reasons noted earlier in the third quarter review.
Non-Interest Expense
For the nine months ended September 30, 2019, non-interest expense increased $679,000, or 3.5%, to $19.9 million, compared to $19.2 million the same period last year mainly due to the same reasons noted earlier in the third quarter review. The efficiency ratio for the nine months ended September 30, 2019 was 63.20% compared to 61.99% in the same prior year period.
Income Tax Expense
For the nine months ended September 30, 2019, the effective tax rate was 27.4%, compared to 26.0% for the same period last year. The Company recorded a $67,000 tax benefit related to the accounting treatment of equity-based compensation, as compared to $168,000 for the same period last year.
Provision for Loan Losses
For the first nine months of 2019, a provision of $650,000 was expensed, compared to $775,000 for the same prior year period. The Company had $237,000 and $53,000 in net loan charge-offs for the first nine months of 2019 and 2018, respectively.
Financial Condition / Balance Sheet
At September 30, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Bank’s Tier 1 capital to average assets ratio was 10.07%, its common equity Tier 1 capital to risk weighted assets ratio was 11.30%, its Tier 1 capital to risk weighted assets ratio was 11.30%, and its total capital to risk weighted assets ratio was 12.47%.
Total assets as of September 30, 2019 were $1.147 billion, compared to $1.096 billion at December 31, 2018 and $1.086 million as of September 30, 2018.
Total loans as of September 30, 2019 were $959.9 million, compared to $921.3 million at December 31, 2018 and $900.9 million as of September 30, 2018.
Total deposits as of September 30, 2019 were $963.3 million, compared to $917.4 million as of December 31, 2018 and $905.7 million as of September 30, 2018. Core checking deposits at September 30, 2019 were $381.5 million, compared to $370.0 million at December 31, 2018 and $369.1 million at September 30, 2018. The Company continues to focus on building core checking account deposit relationships, which can vary from quarter to quarter due to the seasonality in municipal and other relationships.
Allowance for Loan Losses
As of September 30, 2019, the Company's allowance for loan losses was $11.8 million, compared to $11.4 million as of December 31, 2018. The loss allowance as a percentage of total loans was 1.23% at September 30, 2019 compared to 1.24% at December 31, 2018.
Asset Quality
The Company's non-performing assets at September 30, 2019 were $3.8 million, as compared to $4.3 million at June 30, 2019 and $2.0 million at December 31, 2018. Non-performing assets to total assets at September 30, 2019 were 0.33%, compared to 0.37% at June 30, 2019 and 0.18% at December 31, 2018.
Non-accrual loans were $1.3 million at September 30, 2019, compared to $1.4 million at both December 31, 2018 and September 30, 2018. OREO was $2.5 million at September 30, 2019, compared to $585,000 at December 31, 2018 and September 30, 2018. As mentioned earlier, the Company recorded a $411,000 write-down on an OREO property during the quarter.
Troubled debt restructured loan balances amounted to $5.6 million at September 30, 2019, with all but $555,000 performing. This compared to $7.7 million at December 31, 2018 and $6.6 million at September 30, 2018.
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, Union, Essex, 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 "continuing," "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, the ability to obtain regulatory approvals and satisfy other closing conditions to the merger with OceanFirst, including approval by shareholders of Two River; the timing of closing the merger; that the merger may not be timely completed, if at all; that prior to the completion of the merger, the Company’s business may not perform as expected due to transaction-related uncertainty or other factors; reputational risks and the reaction of the Company’s stockholders, customers, employees and other constituents to the merger; litigation related to the merger, diversion of management time as a result of matters related to the merger; 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; unanticipated effects of our new banking platform; 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, 2018. 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 President | Adam Cadmus, Marketing Director |
| The Equity Group Inc. | Two River Community Bank |
| Phone: (212) 836-9606 | Phone: (732) 982-2167 |
| Email: aprior@equityny.com | Email: acadmus@tworiverbank.com |
| TWO RIVER BANCORP | |||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | |||||||||||||||
| For the Three Months and Nine Months Ended September 30, 2019 and 2018 | |||||||||||||||
| (in thousands, except per share data) | |||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | | |||||||||||||
| 2019 | 2018 | 2019 | 2018 | ||||||||||||
| INTEREST INCOME: | |||||||||||||||
| Loans, including fees | $ | 11,707 | $ | 10,656 | $ | 34,750 | $ | 30,720 | |||||||
| Securities: | |||||||||||||||
| Taxable | 293 | 274 | 922 | 861 | |||||||||||
| Tax-exempt | 224 | 280 | 697 | 842 | |||||||||||
| Interest-bearing deposits | 260 | 132 | 663 | 293 | |||||||||||
| Total Interest Income | 12,484 | 11,342 | 37,032 | 32,716 | |||||||||||
| INTEREST EXPENSE: | |||||||||||||||
| Deposits | 2,981 | 1,924 | 8,170 | 4,923 | |||||||||||
| Securities sold under agreements to repurchase | 10 | 14 | 30 | 43 | |||||||||||
| Federal Home Loan Bank ("FHLB") and other borrowings | 99 | 136 | 332 | 382 | |||||||||||
| Subordinated debt | 166 | 165 | 497 | 495 | |||||||||||
| Total Interest Expense | 3,256 | 2,239 | 9,029 | 5,843 | |||||||||||
| Net Interest Income | 9,228 | 9,103 | 28,003 | 26,873 | |||||||||||
| PROVISION FOR LOAN LOSSES | 125 | 150 | 650 | 775 | |||||||||||
| Net Interest Income after Provision for Loan Losses | 9,103 | 8,953 | 27,353 | 26,098 | |||||||||||
| NON-INTEREST INCOME: | |||||||||||||||
| Service fees on deposit accounts | 197 | 236 | 536 | 713 | |||||||||||
| Mortgage banking | 373 | 239 | 1,077 | 986 | |||||||||||
| Other loan fees | 155 | 378 | 453 | 626 | |||||||||||
| Earnings from investment in bank owned life insurance | 127 | 133 | 398 | 395 | |||||||||||
| Gain on sale of SBA loans | 42 | 203 | 378 | 921 | |||||||||||
| Net realized gain on sale of securities | - | - | 1 | - | |||||||||||
| Other income | 230 | 166 | 670 | 520 | |||||||||||
| Total Non-Interest Income | 1,124 | 1,355 | 3,513 | 4,161 | |||||||||||
| NON-INTEREST EXPENSES: | |||||||||||||||
| Salaries and employee benefits | 3,756 | 4,024 | 11,539 | 11,919 | |||||||||||
| Occupancy and equipment | 1,076 | 966 | 3,148 | 3,099 | |||||||||||
| Professional | 355 | 432 | 1,261 | 1,260 | |||||||||||
| Insurance | 70 | 59 | 201 | 180 | |||||||||||
| FDIC insurance and assessments | - | 128 | 238 | 374 | |||||||||||
| Advertising | 90 | 90 | 280 | 280 | |||||||||||
| Data processing | 209 | 184 | 571 | 510 | |||||||||||
| Outside services fees | 65 | 89 | 179 | 250 | |||||||||||
| OREO expenses, impairment and sales, net | 448 | 7 | 298 | (8 | ) | ||||||||||
| Loan workout expenses | 8 | 28 | 17 | 124 | |||||||||||
| Merger related expenses | 828 | - | 828 | - | |||||||||||
| Other operating | 364 | 454 | 1,358 | 1,251 | |||||||||||
| Total Non-Interest Expenses | 7,269 | 6,461 | 19,918 | 19,239 | |||||||||||
| Income before Income Taxes | 2,958 | 3,847 | 10,948 | 11,020 | |||||||||||
| Income Tax Expense | 843 | 1,013 | 3,002 | 2,860 | |||||||||||
| Net Income | $ | 2,115 | $ | 2,834 | $ | 7,946 | $ | 8,160 | |||||||
| Earnings Per Common Share: | |||||||||||||||
| Basic | $ | 0.25 | $ | 0.33 | $ | 0.92 | $ | 0.96 | |||||||
| Diluted | $ | 0.24 | $ | 0.33 | $ | 0.91 | $ | 0.94 | |||||||
| Weighted average common shares outstanding: | |||||||||||||||
| Basic | 8,619 | 8.513 | 8,605 | 8,489 | |||||||||||
| Diluted | 8,720 | 8,700 | 8,721 | 8,695 | |||||||||||
| TWO RIVER BANCORP | ||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||
| (in thousands, except share data) | ||||||
| September 30, | December 31, | |||||
| 2019 | 2018 | |||||
| ASSETS | ||||||
| Cash and due from banks | $ | 28,416 | $ | 24,067 | ||
| Interest-bearing deposits in bank | 35,004 | 24,059 | ||||
| Cash and cash equivalents | 63,420 | 48,126 | ||||
| Securities available for sale | 21,031 | 24,407 | ||||
| Securities held to maturity | 39,935 | 47,455 | ||||
| Equity securities | 2,582 | 2,451 | ||||
| Restricted investments, at cost | 6,772 | 6,082 | ||||
| Loans held for sale | 1,357 | 1,496 | ||||
| Loans | 959,864 | 921,301 | ||||
| Allowance for loan losses | (11,811 | ) | (11,398 | ) | ||
| Net loans | 948,053 | 909,903 | ||||
| OREO | 2,501 | 585 | ||||
| Bank owned life insurance | 22,315 | 22,098 | ||||
| Premises and equipment, net | 6,658 | 5,917 | ||||
| Operating right-of-use asset | 4,698 | - | ||||
| Accrued interest receivable | 2,560 | 2,583 | ||||
| Goodwill | 18,109 | 18,109 | ||||
| Other assets | 7,003 | 7,207 | ||||
| TOTAL ASSETS | $ | 1,146,994 | $ | 1,096,419 | ||
| LIABILITIES | ||||||
| Deposits: | ||||||
| Non-interest-bearing | $ | 179,610 | $ | 176,655 | ||
| Interest-bearing | 783,687 | 740,699 | ||||
| Total Deposits | 963,297 | 917,354 | ||||
| Securities sold under agreements to repurchase | 15,084 | 19,402 | ||||
| FHLB and other borrowings | 19,700 | 22,500 | ||||
| Subordinated debt | 9,951 | 9,923 | ||||
| Accrued interest payable | 81 | 119 | ||||
| Lease liability | 4,833 | - | ||||
| Other liabilities | 10,676 | 10,623 | ||||
| Total Liabilities | 1,023,622 | 979,921 | ||||
| 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 – 9,076,305 and 8,935,437 at September 30, 2019 and December 31, 2018, respectively | ||||||
| Outstanding – 8,715,338 and 8,606,992 at September 30, 2019 and December 31, 2018, respectively | 81,405 | 80,481 | ||||
| Retained earnings | 45,355 | 39,109 | ||||
| Treasury stock, at cost; 360,967 and 328,445 shares at September 30, 2019 and December 31, 2018 | (3,135 | ) | (2,647 | ) | ||
| Accumulated other comprehensive loss | (253 | ) | (445 | ) | ||
| Total Shareholders' Equity | 123,372 | 116,498 | ||||
| TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY | $ | 1,146,994 | $ | 1,096,419 | ||
| 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: | 2019 | 2019 | 2018 | 2019 | 2018 | |||||||||
| Total Interest Income | $ | 12,484 | $ | 12,479 | $ | 11,342 | $ | 37,032 | $ | 32,716 | ||||
| Total Interest Expense | 3,256 | 3,047 | 2,239 | 9,029 | 5,843 | |||||||||
| Net Interest Income | 9,228 | 9,432 | 9,103 | 28,003 | 26,873 | |||||||||
| Provision for Loan Losses | 125 | 100 | 150 | 650 | 775 | |||||||||
| Net Interest Income after Provision for Loan Losses | 9,103 | 9,332 | 8,953 | 27,353 | 26,098 | |||||||||
| Other Non-Interest Income | 1,124 | 1,232 | 1,355 | 3,513 | 4,161 | |||||||||
| Other Non-Interest Expenses | 7,269 | 6,354 | 6,461 | 19,918 | 19,239 | |||||||||
| Income before Income Taxes | 2,958 | 4,210 | 3,847 | 10,948 | 11,020 | |||||||||
| Income Tax Expense | 843 | 1,162 | 1,013 | 3,002 | 2,860 | |||||||||
| Net Income | $ | 2,115 | $ | 3,048 | $ | 2,834 | $ | 7,946 | $ | 8,160 | ||||
| Per Common Share Data: | ||||||||||||||
| Basic Earnings | $ | 0.25 | $ | 0.35 | $ | 0.33 | $ | 0.92 | $ | 0.96 | ||||
| Diluted Earnings | $ | 0.24 | $ | 0.35 | $ | 0.33 | $ | 0.91 | $ | 0.94 | ||||
| Book Value | $ | 14.16 | $ | 14.03 | $ | 13.27 | $ | 14.16 | $ | 13.27 | ||||
| Tangible Book Value(1) | $ | 12.08 | $ | 11.93 | $ | 11.16 | $ | 12.08 | $ | 11.16 | ||||
| Average Common Shares Outstanding (in thousands): | ||||||||||||||
| Basic | 8,619 | 8,596 | 8,513 | 8,605 | 8,489 | |||||||||
| Diluted | 8,720 | 8,709 | 8,700 | 8,721 | 8,695 | |||||||||
| (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, | |||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | |||||||||||
| Total Assets | $ | 1,146,994 | $ | 1,153,797 | $ | 1,140,521 | $ | 1,096,419 | $ | 1,086,299 | |||||
| Investment Securities and Restricted Stock | 70,320 | 76,373 | 77,904 | 80,395 | 91,296 | ||||||||||
| Total Loans | 959,864 | 953,080 | 948,493 | 921,301 | 900,895 | ||||||||||
| Allowance for Loan Losses | (11,811 | ) | (11,684 | ) | (11,582 | ) | (11,398 | ) | (11,390 | ) | |||||
| Goodwill and Other Intangible Assets | 18,109 | 18,109 | 18,109 | 18,109 | 18,109 | ||||||||||
| Total Deposits | 963,297 | 972,592 | 959,655 | 917,354 | 905,745 | ||||||||||
| Repurchase Agreements | 15,084 | 14,162 | 15,185 | 19,402 | 22,153 | ||||||||||
| FHLB and Other Borrowings | 19,700 | 20,700 | 20,700 | 22,500 | 24,500 | ||||||||||
| Subordinated Debt | 9,951 | 9,942 | 9,932 | 9,923 | 9,914 | ||||||||||
| Shareholders' Equity | 123,372 | 121,416 | 119,156 | 116,498 | 113,891 | ||||||||||
| Asset Quality Data (by Quarter) | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | |||||||||||
| Nonaccrual Loans | $ | 1,341 | $ | 1,346 | $ | 3,908 | $ | 1,390 | $ | 1,390 | |||||
| OREO | 2,501 | 2,912 | 585 | 585 | 585 | ||||||||||
| Total Non-Performing Assets | 3,842 | 4,258 | 4,493 | 1,975 | 1,975 | ||||||||||
| Troubled Debt Restructured Loans: | |||||||||||||||
| Performing | 5,025 | 4,969 | 6,726 | 6,842 | 5,678 | ||||||||||
| Non-Performing | 555 | 555 | 711 | 877 | 877 | ||||||||||
| Non-Performing Loans to Total Loans | 0.14 | % | 0.14 | % | 0.41 | % | 0.15 | % | 0.15 | % | |||||
| Non-Performing Assets to Total Assets | 0.33 | % | 0.37 | % | 0.39 | % | 0.18 | % | 0.18 | % | |||||
| Allowance as a % of Loans | 1.23 | % | 1.23 | % | 1.22 | % | 1.24 | % | 1.26 | % | |||||
| Capital Ratios | ||||||||||||||||||||
| September 30, 2019 | December 31, 2018 | |||||||||||||||||||
| 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 Bancorp | 10.41% | 9.27% | 10.41% | 12.56% | 10.14% | 9.10% | 10.14% | 12.34% | ||||||||||||
| Two River Community Bank | 11.30% | 10.07% | 11.30% | 12.47% | 11.09% | 9.95% | 11.09% | 12.26% | ||||||||||||
| "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” under the Federal Reserve definitions for bank holding companies, the Company is only required to have a Tier 1 Capital to Risk Weighted Assets ratio of at least 6.00% and a Total Capital to Risk Weighted Assets ratio of at least 10.00%. | ||||||||||||||||||||
| 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, | ||||||||||||||||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||
| Net loan (charge-offs) recoveries: | ||||||||||||||||||||||||||||||
| Charge-offs | $ | - | $ | - | $ | (247 | ) | $ | - | $ | - | $ | (247 | ) | $ | (127 | ) | |||||||||||||
| Recoveries | 2 | 2 | 6 | 8 | 39 | 10 | 74 | |||||||||||||||||||||||
| Net loan (charge-offs) recoveries | $ | 2 | $ | 2 | $ | (241 | ) | $ | 8 | $ | 39 | $ | (237 | ) | $ | (53 | ) | |||||||||||||
| Net loan (charge-offs) recoveries to average loans (annualized) | 0.00 | % | 0.00 | % | (0.10 | )% | 0.00 | % | 0.02 | % | (0.03 | )% | (0.01 | )% | ||||||||||||||||
| Consolidated Average Balance Sheets & Yields With Resultant Interest and Average Rates | ||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||
| (dollars in thousands) | September 30, 2019 | September 30, 2018 | ||||||||||||||||
| 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 | $ | 46,051 | $ | 260 | 2.24 | % | $ | 26,337 | $ | 132 | 1.99 | % | ||||||
| Investment securities | 74,158 | 517 | 2.79 | % | 93,341 | 554 | 2.37 | % | ||||||||||
| Loans, net of unearned fees(1) (2) | 955,354 | 11,707 | 4.86 | % | 896,999 | 10,656 | 4.71 | % | ||||||||||
| Total Interest-Earning Assets | 1,075,563 | 12,484 | 4.60 | % | 1,016,677 | 11,342 | 4.43 | % | ||||||||||
| Non-Interest-Earning Assets: | ||||||||||||||||||
| Allowance for loan losses | (11,735 | ) | (11,341 | ) | ||||||||||||||
| All other assets | 92,141 | 75,038 | ||||||||||||||||
| Total Assets | $ | 1,155,969 | $ | 1,080,374 | ||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| NOW deposits | $ | 206,541 | 461 | 0.89 | % | $ | 201,026 | 320 | 0.63 | % | ||||||||
| Savings deposits | 248,914 | 665 | 1.06 | % | 267,025 | 568 | 0.84 | % | ||||||||||
| Money market deposits | 36,851 | 21 | 0.23 | % | 48,606 | 22 | 0.18 | % | ||||||||||
| Time deposits | 304,869 | 1,834 | 2.39 | % | 213,872 | 1,014 | 1.88 | % | ||||||||||
| Securities sold under agreements to repurchase | 13,451 | 10 | 0.30 | % | 18,389 | 14 | 0.30 | % | ||||||||||
| FHLB and other borrowings | 19,763 | 99 | 1.99 | % | 27,870 | 136 | 1.94 | % | ||||||||||
| Subordinated debt | 9,948 | 166 | 6.67 | % | 9,911 | 165 | 6.66 | % | ||||||||||
| Total Interest-Bearing Liabilities | 840,337 | 3,256 | 1.54 | % | 786,699 | 2,239 | 1.13 | % | ||||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||||
| Demand deposits | 176,982 | 171,729 | ||||||||||||||||
| Other liabilities | 16,006 | 9,314 | ||||||||||||||||
| Total Non-Interest-Bearing Liabilities | 192,988 | 181,043 | ||||||||||||||||
| Stockholders’ Equity | 122,644 | 112,632 | ||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,155,969 | $ | 1,080,374 | ||||||||||||||
| NET INTEREST INCOME | $ | 9,228 | $ | 9,103 | ||||||||||||||
| NET INTEREST SPREAD(3) | 3.06 | % | 3.30 | % | ||||||||||||||
| NET INTEREST MARGIN(4) | 3.40 | % | 3.55 | % | ||||||||||||||
| (1) Included in interest income on loans are 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, 2019 | September 30, 2018 | ||||||||||||||||
| 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 | $ | 37,164 | $ | 663 | 2.39 | % | $ | 21,923 | $ | 293 | 1.79 | % | ||||||
| Investment securities | 76,925 | 1,619 | 2.81 | % | 95,574 | 1,703 | 2.38 | % | ||||||||||
| Loans, net of unearned fees(1) (2) | 951,073 | 34,750 | 4.89 | % | 883,436 | 30,720 | 4.65 | % | ||||||||||
| Total Interest-Earning Assets | 1,065,162 | 37,032 | 4.65 | % | 1,000,933 | 32,716 | 4.37 | % | ||||||||||
| Non-Interest-Earning Assets: | ||||||||||||||||||
| Allowance for loan losses | (11,625 | ) | (11,097 | ) | ||||||||||||||
| All other assets | 87,535 | 74,168 | ||||||||||||||||
| Total Assets | $ | 1,141,072 | $ | 1,064,004 | ||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| NOW deposits | $ | 208,155 | 1,296 | 0.83 | % | $ | 219,242 | 937 | 0.57 | % | ||||||||
| Savings deposits | 251,672 | 1,893 | 1.01 | % | 259,365 | 1,415 | 0.73 | % | ||||||||||
| Money market deposits | 39,020 | 64 | 0.22 | % | 53,413 | 70 | 0.18 | % | ||||||||||
| Time deposits | 285,112 | 4,917 | 2.31 | % | 190,520 | 2,501 | 1.76 | % | ||||||||||
| Securities sold under agreements to repurchase | 14,101 | 30 | 0.28 | % | 19,734 | 43 | 0.29 | % | ||||||||||
| FHLB and other borrowings | 22,040 | 332 | 2.01 | % | 26,862 | 382 | 1.90 | % | ||||||||||
| Subordinated debt | 9,939 | 497 | 6.67 | % | 9,902 | 495 | 6.67 | % | ||||||||||
| Total Interest-Bearing Liabilities | 830,039 | 9,029 | 1.45 | % | 779,038 | 5,843 | 1.00 | % | ||||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||||
| Demand deposits | 174,968 | 165,778 | ||||||||||||||||
| Other liabilities | 15,883 | 9,094 | ||||||||||||||||
| Total Non-Interest-Bearing Liabilities | 190,851 | 174,872 | ||||||||||||||||
| Shareholders’ Equity | 120,182 | 110,094 | ||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,141,072 | $ | 1,064,004 | ||||||||||||||
| NET INTEREST INCOME | $ | 28,003 | $ | 26,873 | ||||||||||||||
| NET INTEREST SPREAD(3) | 3.20 | % | 3.37 | % | ||||||||||||||
| NET INTEREST MARGIN(4) | 3.51 | % | 3.59 | % | ||||||||||||||
| (1) Included in interest income on loans are 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, | |||||||||||||||
| 2019 | 2019 | 2019 | 2018 | 2018 | 2019 | 2018 | |||||||||||||||
| Total shareholders' equity | $ | 123,372 | $ | 121,416 | $ | 119,156 | $ | 116,498 | $ | 113,891 | $ | 123,372 | $ | 113,891 | |||||||
| Less: goodwill and other tangibles | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | |||||||
| Tangible common shareholders’ equity | $ | 105,263 | $ | 103,307 | $ | 101,047 | $ | 98,389 | $ | 95,782 | $ | 105,263 | $ | 95,782 | |||||||
| Common shares outstanding | 8,715 | 8,657 | 8,668 | 8,607 | 8,584 | 8,715 | 8,584 | ||||||||||||||
| Book value per common share | $ | 14.16 | $ | 14.03 | $ | 13.75 | $ | 13.54 | $ | 13.27 | $ | 14.16 | $ | 13.27 | |||||||
| Book value per common share | $ | 14.16 | $ | 14.03 | $ | 13.75 | $ | 13.54 | $ | 13.27 | $ | 14.16 | $ | 13.27 | |||||||
| Effect of intangible assets | (2.08 | ) | (2.10 | ) | (2.09 | ) | (2.11 | ) | (2.11 | ) | (2.08 | ) | (2.11 | ) | |||||||
| Tangible book value per common share | $ | 12.08 | $ | 11.93 | $ | 11.66 | $ | 11.43 | $ | 11.16 | $ | 12.08 | $ | 11.16 | |||||||
| Return on average assets | 0.73 | % | 1.07 | % | 1.01 | % | 1.10 | % | 1.04 | % | 0.93 | % | 1.03 | % | |||||||
| Effect of average intangible assets | 0.01 | % | 0.01 | % | 0.01 | % | 0.01 | % | 0.02 | % | 0.02 | % | 0.01 | % | |||||||
| Return on average tangible assets | 0.74 | % | 1.08 | % | 1.02 | % | 1.11 | % | 1.06 | % | 0.95 | % | 1.04 | % | |||||||
| Return on average equity | 6.84 | % | 10.18 | % | 9.59 | % | 10.52 | % | 9.98 | % | 8.84 | % | 9.91 | % | |||||||
| Effect of average intangible assets | 1.19 | % | 1.80 | % | 1.74 | % | 1.97 | % | 1.92 | % | 1.57 | % | 1.95 | % | |||||||
| Return on average tangible equity | 8.03 | % | 11.98 | % | 11.33 | % | 12.49 | % | 11.90 | % | 10.41 | % | 11.86 | % | |||||||