Partners Bancorp (NASDAQ: PTRS) (the “Company”), the parent company
of The Bank of Delmarva (“Delmarva”), Seaford, Delaware, and
Virginia Partners Bank (“Virginia Partners”), Fredericksburg,
Virginia, reported net income attributable to the Company of $4.2
million, or $0.23 per diluted share, for the three months ended
December 31, 2022, a $2.8 million or 187.9% increase when compared
to net income attributable to the Company of $1.5 million, or $0.08
per diluted share, for the same period in 2021. For the twelve
months ended December 31, 2022, the Company reported net income
attributable to the Company of $13.6 million, or $0.76 per diluted
share, a $6.2 million or 83.7% increase when compared to net income
attributable to the Company of $7.4 million, or $0.42 per diluted
share, for the same period in 2021.
On February 22, 2023, the Company and
LINKBANCORP, Inc. (“LINK”), parent company of LINKBANK, announced
that they have entered into a definitive agreement and plan of
merger pursuant to which the Company will merge into LINK, with
LINK surviving, and following which Delmarva and Virginia Partners
will each successively merge with and into LINKBANK, with LINKBANK
surviving. Upon completion of the transaction, the Company’s
shareholders will own approximately 56% and LINK shareholders,
inclusive of shares issued in a concurrent private placement of
common stock by LINK, will own approximately 44% of the combined
company. The mergers are subject to receiving the requisite
approval of the Company’s and LINK’s stockholders, receipt of all
required regulatory approvals, and fulfillment of other customary
closing conditions.
As previously disclosed, on November 9, 2022,
the Company and OceanFirst Financial Corp. (“OceanFirst”) entered
into a Mutual Termination Agreement (the “Termination Agreement”)
pursuant to which, among other things, the parties mutually agreed
to terminate the Agreement and Plan of Merger (the “Merger
Agreement”) entered into on November 4, 2021 and transactions
completed thereby. Each party will bear its own costs and expenses
in connection with the terminated transaction, and neither party
will pay a termination fee in connection with the termination of
the Merger Agreement. The Termination Agreement also mutually
releases the parties from any claims of liability to one another
relating to the Merger Agreement and the terminated
transaction.
Also as previously disclosed, on January 24,
2023, the Company’s board of directors declared a cash dividend of
$0.04 per share, which was paid on February 15, 2023, to holders of
record of its common stock as of the close of business on February
8, 2023.
The Company’s results of operations for the
three months ended December 31, 2022 were directly impacted by the
following:
Positive Impacts:
- An increase in net interest income
due primarily to decreases in average interest-bearing deposit and
borrowings balances and lower rates paid on each, an increase in
average loan balances and yields earned, an increase in yields
earned on average cash and cash equivalents balances, and an
increase in average investment securities balances and yields
earned, which were partially offset by a decrease in average cash
and cash equivalents balances and lower net loan fees earned
related to the forgiveness of loans originated and funded under the
Paycheck Protection Program (“PPP”) of the Small Business
Administration;
- A higher net interest margin (tax equivalent basis); and
- Lower expenses
associated with the Company’s terminated merger with OceanFirst,
including recording no accelerated stock-based compensation expense
during the three months ended December 31, 2022 as compared to
recording $896 thousand in accelerated stock-based compensation
expense during the same period of 2021 related to the accelerated
vesting of restricted stock awards, which accelerated vesting was
subject to the prior approval of the Company and was not contingent
on the closing of the merger, and incurring $680 thousand in merger
related expenses during the three months ended December 31, 2022 as
compared to $979 thousand during the same period of 2021.
Negative Impacts:
- Recording a provision for credit
losses as compared to a (reversal of) credit losses for the same
period of 2021 due primarily to organic loan growth, which was
partially offset by the current economic environment and the milder
impact of the COVID-19 pandemic compared to December 31, 2021;
- Recording no gains on sales and
calls of investment securities during the three months ended
December 31, 2022;
- Recording losses on sales of other
assets during the three months ended December 31, 2022;
- Reduced operating results from
Virginia Partners’ majority owned subsidiary Johnson Mortgage
Company, LLC and lower mortgage division fees at Delmarva; and
- Recording no
gains or operating expenses on other real estate owned during the
three months ended December 31, 2022.
The Company’s results of operations for the
twelve months ended December 31, 2022 were directly impacted by the
following:
Positive Impacts:
- An increase in net interest income
due primarily to lower average balances of and rates paid on
interest-bearing deposits, a decrease in average borrowings
balances, an increase in average loan balances, an increase in
yields earned on average cash and cash equivalents balances, and an
increase in average investment securities balances and yields
earned, which were partially offset by lower average balances of
cash and cash equivalents, lower loan yields due to lower net loan
fees earned related to the forgiveness of loans originated and
funded under the PPP, and an increase in rates paid on average
borrowings balances;
- A higher net interest margin (tax
equivalent basis);
- A significantly lower provision for
credit losses due to the current economic environment and the
milder impact of the COVID-19 pandemic compared to December 31,
2021, which was partially offset by organic loan growth;
- Lower expenses associated with the
Company’s terminated merger with OceanFirst, including recording no
accelerated stock-based compensation expense during the twelve
months ended December 31, 2022 as compared to recording $896
thousand in accelerated stock-based compensation expense during the
same period of 2021 related to the accelerated vesting of
restricted stock awards, which accelerated vesting was subject to
the prior approval of the Company and was not contingent on the
closing of the merger, and incurring $1.4 million in merger related
expenses during the twelve months ended December 31, 2022 as
compared to $979 thousand during the same period of 2021; and
- Recording gains
on other real estate owned as compared to losses for the same
period of 2021.
Negative Impacts:
- Recording losses on sales and calls
of investment securities as compared to gains for the same period
of 2021;
- Reduced operating results from
Virginia Partners’ majority owned subsidiary Johnson Mortgage
Company, LLC and lower mortgage division fees at Delmarva;
- Recording losses on sales of other
assets as compared to gains for the same period of 2021; and
- Expenses associated with Virginia
Partners’ new key hires and expansion into the Greater Washington
market, including opening its new full-service branch and
commercial banking office in Reston, Virginia during the third
quarter of 2021, and Delmarva opening its new full-service branch
at 26th Street in Ocean City, Maryland during the second quarter of
2021.
For the three months ended December 31, 2022,
the Company’s annualized return on average assets, annualized
return on average equity and efficiency ratio were 1.03%, 12.52%
and 63.68%, respectively, as compared to 0.35%, 4.19% and 87.37%,
respectively, for the same period in 2021.
For the twelve months ended December 31, 2022,
the Company’s return on average assets, return on average equity
and efficiency ratio were 0.82%, 10.04% and 68.16%, respectively,
as compared to 0.46%, 5.44% and 76.95%, respectively, for the same
period in 2021.
The increase in net income attributable to the
Company for the three months ended December 31, 2022, as compared
to the same period in 2021, was driven by an increase in net
interest income and lower other expenses, and was partially offset
by a higher provision for credit losses, a decrease in other income
and higher federal and state income taxes.
The increase in net income attributable to the
Company for the twelve months ended December 31, 2022, as compared
to the same period in 2021, was driven by an increase in net
interest income, a lower provision for credit losses, and lower
other expenses, and was partially offset by a decrease in other
income and higher federal and state income taxes.
John W. Breda, the Company’s President and Chief
Executive Officer, commented, “As we announce a transformational
merger of equals, I am very pleased with our strong finish to 2022,
despite the impact of merger related expenses related to the
terminated merger with OceanFirst. During 2022, the Company
generated loan growth of 10.4%, and finished the year maintaining
strong asset quality. As a company, we have continued to
focus on expanding and attracting new relationships in our existing
and expansion markets and to improve our funding mix and
cost. As a result of these efforts, the Company generated
non-interest bearing demand deposit growth of 7.1% during the year
ended December 31, 2022, which now represents 39.5% of total
deposits at December 31, 2022 as compared to 34.2% of total
deposits at December 31, 2021. We continue to be pleased with the
Company’s expansion into the Greater Washington market, which as of
December 31, 2022, has added $119.1 million in net loans and $102.4
million in total deposits, including $70.4 million in non-interest
bearing demand deposits. During 2022, our net interest margin
improved by 0.46%, compared to 2021, and the net interest margin
for the fourth quarter of 2022 improved by 0.51% when compared to
the third quarter of 2022. The Company experienced
improvement in its overall cost of funds for the year ended
December 31, 2022 as compared to 2021, although we did have a
slight increase during the fourth quarter when compared to the
third quarter of 2022. Given the projected impact of rising
market interest rates, competition for deposits and increased
borrowing costs, the Company expects that it will see an increase
in its overall cost of funds during 2023.”
Interest Income and Expense – Three
Months Ended December 31, 2022 and 2021
Net interest income and net interest margin
Net interest income in the fourth quarter of
2022 increased by $4.5 million, or 37.8%, when compared to the
fourth quarter of 2021. The Company’s net interest margin (tax
equivalent basis) increased to 4.15%, representing an increase of
117 basis points for the three months ended December 31, 2022 as
compared to the same period in 2021. The increase in the net
interest margin (tax equivalent basis) was primarily due to higher
average balances of and yields earned on loans and investment
securities, higher yields earned on average interest bearing
deposits in other financial institutions and federal funds sold,
and lower average balances of and rates paid on interest-bearing
liabilities, which were partially offset by lower average balances
of interest bearing deposits in other financial institutions and
federal funds sold. Total interest income increased by $4.2
million, or 30.0%, for the three months ended December 31, 2022,
while total interest expense decreased by $321 thousand, or 15.9%,
both as compared to the same period in 2021.
The most significant factors impacting net
interest income during the three month period ended December 31,
2022 were as follows:
Positive Impacts:
- Increases in average loan balances,
primarily due to organic loan growth, and higher loan yields,
primarily due to repricing of variable rate loans and higher
average yields on new loan originations, which were partially
offset by lower net loan fees earned related to the forgiveness of
loans originated and funded under the PPP and pay-offs of higher
yielding fixed rate loans;
- Increases in average investment
securities balances and higher investment securities yields,
primarily due to management of the investment securities portfolio
in light of the Company’s liquidity needs, lower accelerated
pre-payments on mortgage-backed investment securities and higher
interest rates over the comparable periods, partially offset by
calls on higher yielding investment securities in the previously
low interest rate environment;
- Decrease in average interest
bearing deposits in other financial institutions and federal funds
sold, primarily due to loan growth outpacing deposit growth and
higher investment securities balances, and higher yields on each
due to higher interest rates over the comparable periods;
- Decrease in average
interest-bearing deposit balances and lower rates paid, primarily
due to scheduled maturities of time deposits that were not replaced
and competitive pressures in the higher interest rate environment,
partially offset by organic deposit growth in money market and
savings accounts, and lower rates paid on average time deposits;
and
- Decrease in
average borrowings balances and lower rates paid, primarily due to
a decrease in the average balance of Federal Home Loan Bank
advances resulting from maturities and payoffs of borrowings that
were not replaced and scheduled principal curtailments.
Loans
Average loan balances increased by $106.2
million, or 9.5%, and average yields earned increased by 0.31% to
4.99% for the three months ended December 31, 2022, as compared to
the same period in 2021. The increase in average loan balances was
primarily due to organic loan growth, including growth in average
loan balances of approximately $66.0 million related to Virginia
Partners’ recent expansion into the Greater Washington market,
which was partially offset by the forgiveness of loans originated
and funded under the PPP. The increase in average yields earned was
primarily due to repricing of variable rate loans and higher
average yields on new loan originations, which were partially
offset by lower net loan fees earned related to the forgiveness of
loans originated and funded under the PPP and pay-offs of higher
yielding fixed rate loans. Total average loans were 78.0% of total
average interest-earning assets for the three months ended December
31, 2022, compared to 70.3% for the three months ended December 31,
2021.
Investment securities
Average total investment securities balances
increased by $22.8 million, or 17.4%, and average yields earned
increased by 0.51% to 2.50% for the three months ended December 31,
2022, as compared to the same period in 2021. The increases in
average total investment securities balances and average yields
earned was primarily due to management of the investment securities
portfolio in light of the Company’s liquidity needs, lower
accelerated pre-payments on mortgage-backed investment securities
and higher interest rates over the comparable periods, partially
offset by calls on higher yielding investment securities in the
previously low interest rate environment. During the fourth quarter
of 2021, accelerated pre-payments on mortgage-backed investment
securities caused the premiums paid on these investment securities
to be amortized into expense on an accelerated basis thereby
reducing income and yield earned. Total average investment
securities were 9.8% of total average interest-earning assets for
the three months ended December 31, 2022, compared to 8.3% for the
three months ended December 31, 2021.
Interest-bearing deposits
Average total interest-bearing deposit balances
decreased by $82.0 million, or 8.8%, and average rates paid
decreased by 0.05% to 0.56% for the three months ended December 31,
2022, as compared to the same period in 2021, primarily due to
scheduled maturities of time deposits that were not replaced and
competitive pressures in the higher interest rate environment,
partially offset by organic deposit growth in money market and
savings accounts, including average growth of approximately $12.1
million in interest-bearing deposits related to Virginia Partners’
recent expansion into the Greater Washington market, and a decrease
in the average rate paid on time deposits.
Borrowings
Average total borrowings decreased by $3.6
million, or 7.3%, and average rates paid decreased by 0.45% to
4.10% for the three months ended December 31, 2022, as compared to
the same period in 2021. The decrease in average total borrowings
balances and rates paid was primarily due to a decrease in the
average balance of Federal Home Loan Bank advances resulting from
maturities and payoffs of borrowings that were not replaced and
scheduled principal curtailments.
Interest Income and Expense – Twelve
Months Ended December 31, 2022 and 2021
Net interest income and net interest margin
Net interest income during the twelve months
ended December 31, 2022 increased by $9.6 million, or 20.6%, when
compared to the twelve months ended December 31, 2021. The
Company’s net interest margin (tax equivalent basis) increased to
3.51%, representing an increase of 46 basis points for the twelve
months ended December 31, 2022 as compared to the same period in
2021. The increase in the net interest margin (tax equivalent
basis) was primarily due to higher average balances of loans,
higher average balances of and yields earned on investment
securities, higher yields earned on average interest bearing
deposits in other financial institutions and federal funds sold,
and lower average balances of and rates paid on average
interest-bearing liabilities, which were partially offset by a
decrease in the yields earned on average loans, and lower average
balances of interest bearing deposits in other financial
institutions and federal funds sold. Total interest income
increased by $7.3 million, or 13.2%, for the twelve months ended
December 31, 2022, while total interest expense decreased by $2.3
million, or 25.3%, both as compared to the same period in 2021.
The most significant factors impacting net
interest income during the twelve months ended December 31, 2022
were as follows:
Positive Impacts:
- Increases in average loan balances,
primarily due to organic loan growth, which was partially offset by
the forgiveness of loans originated and funded under the PPP;
- Increases in average investment
securities balances and higher investment securities yields,
primarily due to management of the investment securities portfolio
in light of the Company’s liquidity needs, lower accelerated
pre-payments on mortgage-backed investment securities and higher
interest rates over the comparable periods, partially offset by
calls on higher yielding investment securities in the previously
low interest rate environment;
- Decrease in average interest
bearing deposits in other financial institutions and federal funds
sold, primarily due to loan growth outpacing deposit growth and
higher investment securities balances, and higher yields on each
due to higher interest rates over the comparable periods;
- Decrease in average
interest-bearing deposit balances and lower rates paid, primarily
due to scheduled maturities of time deposits that were not replaced
and competitive pressures in the higher interest rate environment,
partially offset by organic deposit growth in interest bearing
demand, money market and savings accounts, and lower rates paid on
average interest bearing demand, money market, savings and time
deposits; and
- Decrease in
average borrowings balances, primarily due to a decrease in the
average balance of Federal Home Loan Bank advances resulting from
maturities and payoffs of borrowings that were not replaced and
scheduled principal curtailments, a decrease in average borrowings
at the Federal Reserve Bank Discount Window under the PPP Liquidity
Facility in which the loans under the PPP originated by the Company
were previously pledged as collateral, the early redemption of $2.0
million in subordinated notes payable, net, in early July 2021, and
offset by higher rates paid. The increase in average rates paid was
primarily due to the decreases in the average balances of Federal
Home Loan Bank advances and borrowings at the Federal Reserve Bank
Discount Window under the PPP Liquidity Facility, both of which
were lower cost interest-bearing liabilities, partially offset by
the early redemption of subordinated notes payable, which was a
higher cost interest-bearing liability.
Negative Impacts:
- Lower loan
yields, primarily due to lower net loan fees earned related to the
forgiveness of loans originated and funded under the PPP and
pay-offs of higher yielding fixed rate loans, which were partially
offset by repricing of variable rate loans and higher average
yields on new loan originations.
Loans
Average loan balances increased by $82.5
million, or 7.6%, and average yields earned decreased by 0.11% to
4.74% for the twelve months ended December 31, 2022, as compared to
the same period in 2021. The increase in average loan balances was
primarily due to organic loan growth, including growth in average
loan balances of approximately $57.0 million related to Virginia
Partners’ recent expansion into the Greater Washington market,
which was partially offset by the forgiveness of loans originated
and funded under the PPP. The decrease in average yields earned was
primarily due to lower net loan fees earned related to the
forgiveness of loans originated and funded under the PPP and
pay-offs of higher yielding fixed rate loans, which were partially
offset by the repricing of variable rate loans and higher average
yields on new loan originations. Total average loans were 73.2% of
total average interest-earning assets for the twelve months ended
December 31, 2022, compared to 71.2% for the twelve months ended
December 31, 2021.
Investment securities
Average total investment securities balances
increased by $17.7 million, or 13.6%, and average yields earned
increased by 0.39% to 2.28% for the twelve months ended December
31, 2022, as compared to the same period in 2021. The increases in
average total investment securities balances and average yields
earned was primarily due to management of the investment securities
portfolio in light of the Company’s liquidity needs, lower
accelerated pre-payments on mortgage-backed investment securities
and higher interest rates over the comparable periods, partially
offset by calls on higher yielding investment securities in the
previously low interest rate environment. During the twelve months
ended December 31, 2021, accelerated pre-payments on
mortgage-backed investment securities caused the premiums paid on
these investment securities to be amortized into expense on an
accelerated basis thereby reducing income and yield earned. Total
average investment securities were 9.2% of total average
interest-earning assets for the twelve months ended December 31,
2022, compared to 8.5% for the twelve months ended December 31,
2021.
Interest-bearing deposits
Average total interest-bearing deposit balances
decreased by $8.3 million, or 0.9%, and average rates paid
decreased by 0.21% to 0.52% for the twelve months ended December
31, 2022, as compared to the same period in 2021, primarily due to
scheduled maturities of time deposits that were not replaced and
competitive pressures in the higher interest rate environment,
partially offset by organic deposit growth, including average
growth of approximately $18.4 million in interest-bearing deposits
related to Virginia Partners’ recent expansion into the Greater
Washington market, and a decrease in the average rate paid on
interest bearing demand, money market, savings and time
deposits.
Borrowings
Average total borrowings decreased by $10.3
million, or 17.6%, and average rates paid increased by 0.31% to
4.04% for the twelve months ended December 31, 2022, as compared to
the same period in 2021. The decrease in average total borrowings
balances was primarily due to a decrease in the average balance of
Federal Home Loan Bank advances resulting from maturities and
payoffs of borrowings that were not replaced and scheduled
principal curtailments, a decrease in average borrowings at the
Federal Reserve Bank Discount Window under the PPP Liquidity
Facility in which the loans under the PPP originated by the Company
were previously pledged as collateral, and the early redemption of
$2.0 million in subordinated notes payable, net, in early July
2021. The increase in average rates paid was primarily due to the
decreases in the average balances of Federal Home Loan Bank
advances and borrowings at the Federal Reserve Bank Discount Window
under the PPP Liquidity Facility, which were lower cost
interest-bearing liabilities, partially offset by the early
redemption of subordinated notes payable, which was a higher cost
interest-bearing liability.
Provision for (Reversal of) Credit
Losses
The provision for credit losses in the fourth
quarter of 2022 was $545 thousand, an increase of $790 thousand, or
322.7%, when compared to the (reversal of) credit losses of $245
thousand in the fourth quarter of 2021. The increase in the
provision for credit losses during the three months ended December
31, 2022, as compared to the same period of 2021, was primarily due
to organic loan growth and loans acquired in the Virginia Partners
acquisition that have converted from acquired to originated status,
which were partially offset by a reduction of qualitative
adjustment factors that had previously been increased in the
allowance for credit losses related to the COVID-19 pandemic and
the uncertainty in the economic environment and lower net
charge-offs. The provision for credit losses during the twelve
months ended December 31, 2022 was $1.3 million, a decrease of $975
thousand, or 42.0%, when compared to the provision for credit
losses of $2.3 million during the twelve months ended December 31,
2021. The decrease in the provision for credit losses during the
twelve months ended December 31, 2022, as compared to the same
period of 2021, was primarily due to a reduction of qualitative
adjustment factors that had previously been increased in the
allowance for credit losses related to the COVID-19 pandemic and
the uncertainty in the economic environment, and the reversal of a
specific reserve on one loan relationship due to a large principal
curtailment and improved performance, which were partially offset
by higher net charge-offs, loans acquired in the Virginia Partners
acquisition that have converted from acquired to originated status,
and organic loan growth.
The provision for credit losses during the three
and twelve months ended December 31, 2022, as well as the allowance
for credit losses as of December 31, 2022, represents management’s
best estimate of the impact of current economic trends, including
the impact of the COVID-19 pandemic, on the ability of the
Company’s borrowers to repay their loans. Management continues to
carefully assess the exposure of the Company’s loan portfolio to
COVID-19 pandemic related factors, economic trends and their
potential effect on asset quality. As of December 31, 2022, the
Company’s delinquencies and nonperforming assets had not been
materially impacted by the COVID-19 pandemic. In addition, as of
December 31, 2022, all of the loan balances that were approved by
the Company, on a consolidated basis, for loan payment deferrals or
payments of interest only have either resumed regular payments or
have been paid off.
Other Income
Other income in the fourth quarter of 2022
decreased by $563 thousand, or 31.7%, when compared to the fourth
quarter of 2021. Key changes in the components of other income for
the three months ended December 31, 2022, as compared to the same
period in 2021, are as follows:
- Service charges on deposit accounts
increased by $27 thousand, or 11.4%, due primarily to increases in
overdraft fees as a result of the easing of restrictions and the
lifting of lockdowns in the Company’s markets of operation and
Virginia Partners no longer automatically waiving overdraft fees
which was previously done in an effort to provide all necessary
financial support and services to its customers and communities,
both as related to the ongoing COVID-19 pandemic as compared to the
same period of 2021;
- Gains on sales and calls of
investment securities decreased by $5 thousand, or 100.0%, due
primarily to Virginia Partners recording no gains on sales or calls
of investment securities during the fourth quarter of 2022, as
compared to recording $5 thousand in gains on sales or calls of
investment securities during the same period of 2021;
- (Losses) on sales of other assets
increased by $26 thousand, or 100.0%, due primarily to Delmarva
recording losses on the disposal of certain assets in connection
with the closing of its North Ocean City, Maryland branch;
- Mortgage banking income decreased
by $415 thousand, or 59.8%, due primarily to Virginia Partners’
majority owned subsidiary Johnson Mortgage Company, LLC having a
lower volume of loan closings as compared to the same period in
2021; and
- Other income decreased by $144
thousand, or 17.1%, due primarily to lower mortgage division fees
at Delmarva, Virginia Partners recording lower fees from its
participation in a loan hedging program with a correspondent bank,
and decreases in debit card income, which were partially offset by
increases in ATM fees.
Other income for the twelve months ended
December 31, 2022 decreased by $3.1 million, or 37.5%, when
compared to the twelve months ended December 31, 2021. Key changes
in the components of other income for the twelve months ended
December 31, 2022, as compared to the same period in 2021, are as
follows:
- Service charges on deposit accounts
increased by $178 thousand, or 22.0%, due primarily to increases in
overdraft fees as a result of the easing of restrictions and the
lifting of lockdowns in the Company’s markets of operation and
Virginia Partners no longer automatically waiving overdraft fees
which was previously done in an effort to provide all necessary
financial support and services to its customers and communities,
both as related to the ongoing COVID-19 pandemic as compared to the
same period of 2021;
- (Losses) gains on sales and calls
of investment securities decreased by $33 thousand, or 119.4%, due
primarily to Virginia Partners recording losses of $5 thousand on
sales or calls of investment securities during the twelve months
ended December 31, 2022, as compared to recording gains of $25
thousand on sales or calls of investment securities during the same
period of 2021. In addition, during the twelve months ended
December 31, 2021, Delmarva recorded gains of $3 thousand on sales
or calls of investment securities, as compared to recording no
gains on sales or calls of investment securities during the same
period of 2022;
- Impairment (loss) on restricted
stock increased from zero to $1 thousand, due primarily to Virginia
Partners recording the final write-down of its investment in
Maryland Financial Bank, which had been going through an orderly
liquidation;
- Mortgage banking income decreased
by $2.5 million, or 67.3%, due primarily to Virginia Partners’
majority owned subsidiary Johnson Mortgage Company, LLC having a
lower volume of loan closings as compared to the same period in
2021;
- (Losses) gains on sales of other
assets decreased by $27 thousand, or 1,944.1%, as a result of
Delmarva recording losses of $26 thousand on the disposal of
certain assets in connection with the closing of its North Ocean
City, Maryland branch during the fourth quarter of 2022, as
compared to Delmarva recording a gain of $1 thousand on the sale of
its VISA credit card portfolio during the first quarter of 2021;
and
- Other income decreased by $708
thousand, or 19.0%, due primarily to lower mortgage division fees
at Delmarva, Virginia Partners recording lower fees from its
participation in a loan hedging program with a correspondent bank,
and decreases in ATM fees and debit card income, which were
partially offset by Delmarva recording higher earnings on bank
owned life insurance policies due to additional purchases made in
2021.
Other Expenses
Other expenses in the fourth quarter of 2022
decreased by $745 thousand, or 6.2%, when compared to the fourth
quarter of 2021. Key changes in the components of other expenses
for the three months ended December 31, 2022, as compared to the
same period in 2021, are as follows:
- Salaries and employee benefits
decreased by $873 thousand, or 13.3%, primarily due to recording no
accelerated stock-based compensation expense during the three
months ended December 31, 2022 as compared to recording $896
thousand in accelerated stock-based compensation expense during the
same period of 2021 related to the accelerated vesting of
restricted stock awards, which accelerated vesting was subject to
the prior approval of the Company and was not contingent on the
closing of the merger with OceanFirst, decreases related to
staffing changes, a decrease in commissions expense paid due to the
decrease in mortgage banking income from Virginia Partners’
majority owned subsidiary Johnson Mortgage Company, LLC, and lower
payroll taxes, which were partially offset by merit increases and
higher expenses related to benefit costs and bonus accruals;
- Premises and equipment increased by
$64 thousand, or 4.7%, primarily due to higher expenses related to
repairs and maintenance, software amortization and maintenance
contracts, which were partially offset by lower expenses from
Virginia Partners’ majority owned subsidiary Johnson Mortgage
Company, LLC;
- Amortization of core deposit
intangible decreased by $20 thousand, or 13.7%, primarily due to
lower amortization related to the $2.7 million and $1.5 million,
respectively, in core deposit intangibles recognized in the
Virginia Partners and Liberty Bell Bank acquisitions;
- (Gains) and operating expenses on
other real estate owned, net decreased by $13 thousand, or 100.0%,
primarily due to no gains on sales or expenses being recorded
during the fourth quarter of 2022, as compared to a gain on the
sale of one property and expenses being recorded during the fourth
quarter of 2021;
- Merger related expenses decreased
by $299 thousand, or 30.5%, primarily due to lower legal fees and
other costs associated with the terminated merger with OceanFirst;
and
- Other expenses increased by
$370 thousand, or 12.6%, primarily due to higher expenses related
to legal, other professional fees, consulting, telephone and data
circuits, director fees, audit and accounting fees, other losses,
postage, loans, and debit/credit/merchant cards, which were
partially offset by lower expenses related to advertising, data and
item processing, printing and supplies, and travel and
entertainment.
Other expenses for the twelve months ended
December 31, 2022 decreased by $436 thousand, or 1.0%, when
compared to the twelve months ended December 31, 2021. Key changes
in the components of other expenses for the twelve months ended
December 31, 2022, as compared to the same period in 2021, are as
follows:
- Salaries and employee benefits
decreased by $889 thousand, or 3.8%, primarily due to recording no
accelerated stock-based compensation expense during the twelve
months ended December 31, 2022 as compared to recording $896
thousand in accelerated stock-based compensation expense during the
same period of 2021 related to the accelerated vesting of
restricted stock awards, which accelerated vesting was subject to
the prior approval of the Company and was not contingent on the
closing of the merger with OceanFirst, decreases related to
staffing changes and a decrease in commissions expense paid due to
the decrease in mortgage banking income from Virginia Partners’
majority owned subsidiary Johnson Mortgage Company, LLC, which were
partially offset by merit increases and higher expenses related to
payroll taxes, benefit costs, and bonus accruals. In addition,
salaries and employee benefits increased due to Virginia Partners’
new key hires and expansion into the Greater Washington market and
Delmarva opening its new full-service branch at 26th Street in
Ocean City, Maryland;
- Premises and equipment increased by
$568 thousand, or 11.1%, primarily due to increases related to
Delmarva opening its new full-service branch at 26th Street in
Ocean City, Maryland during the second quarter of 2021 and Virginia
Partners opening its new full-service branch and commercial banking
office in Reston, Virginia during the third quarter of 2021, and
higher expenses related to repairs and maintenance, software
amortization and maintenance contracts, which were partially offset
by lower expenses related to Virginia Partners’ majority owned
subsidiary Johnson Mortgage Company, LLC, building security and
purchased software, the cost of which did not qualify for
capitalization;
- Amortization of core deposit
intangible decreased by $80 thousand, or 13.3%, primarily due to
lower amortization related to the $2.7 million and $1.5 million,
respectively, in core deposit intangibles recognized in the
Virginia Partners and Liberty Bell Bank acquisitions;
- (Gains) losses and operating
expenses on other real estate owned, net increased by $179
thousand, or 105.6%, primarily due to valuation adjustments being
recorded on properties during the twelve months ended December 31,
2021 as compared to no valuation adjustments being recorded during
the same period of 2022, and lower expenses related to other real
estate owned;
- Merger related expenses increased
by $421 thousand, or 43.0%, primarily due to higher legal fees and
other costs associated with the terminated merger with OceanFirst;
and
- Other expenses decreased by $277
thousand, or 2.3%, primarily due to lower expenses related to
professional services, stationery, printing and supplies, director
fees, correspondent bank services, legal, and other, which were
partially offset by higher expenses related to postage and
delivery, FDIC insurance assessments, marketing, ATM, and audit and
related professional fees.
Federal and State Income
Taxes
Federal and state income taxes for the three
months ended December 31, 2022 increased by $1.2 million, or
298.6%, when compared to the three months ended December 31, 2021.
This increase was due primarily to higher consolidated income
before taxes, and lower earnings on tax-exempt income, primarily
tax-exempt investment securities, which were partially offset by
lower merger related expenses, which are typically non-deductible.
For the three months ended December 31, 2022, the Company’s
effective tax rate was approximately 27.5% as compared to 21.5% for
the same period in 2021.
Federal and state income taxes for the twelve
months ended December 31, 2022 increased by $2.3 million, or
100.8%, when compared to the twelve months ended December 31, 2021.
This increase was due primarily to higher consolidated income
before taxes, higher merger related expenses, which are typically
non-deductible, and lower earnings on tax-exempt income, primarily
tax-exempt investment securities. For the twelve months ended
December 31, 2022, the Company’s effective tax rate was
approximately 24.9% as compared to 23.3% for the same period in
2021.
Virginia Partners is not subject to Virginia
state income tax, but instead pays Virginia franchise tax. The
Virginia franchise tax paid by Virginia Partners is recorded in the
“Other expenses” line item on the Consolidated Statements of Income
for the three and twelve months ended December 31, 2022 and
2021.
Balance Sheet
Changes in key balance sheet components as of
December 31, 2022 compared to December 31, 2021 were as
follows:
- Total assets as of December 31,
2022 were $1.57 billion, a decrease of $70.4 million, or 4.3%, from
December 31, 2021. The key driver of this change was a decrease in
cash and cash equivalents, which was partially offset by increases
in investment securities available for sale, at fair value, and
total loans held for investment;
- Interest bearing deposits in other
financial institutions as of December 31, 2022 were $103.9 million,
a decrease of $194.0 million, or 65.1%, from December 31, 2021. Key
drivers of this change were an increase in investment securities
available for sale, at fair value, and total loan growth outpacing
total deposit growth;
- Federal funds sold as of December
31, 2022 were $23.0 million, a decrease of $5.0 million, or 18.0%,
from December 31, 2021. Key drivers of this change were the
aforementioned items noted in the analysis of interest bearing
deposits in other financial institutions;
- Investment securities available for
sale, at fair value as of December 31, 2022 were $133.7 million, an
increase of $11.6 million, or 9.5%, from December 31, 2021. Key
drivers of this change were management of the investment securities
portfolio in light of the Company’s liquidity needs, which was
partially offset by two higher yielding investment securities being
called, and an increase in unrealized losses on the investment
securities available for sale portfolio as a result of increases in
market interest rates;
- Loans, net of unamortized discounts
on acquired loans of $1.7 million as of December 31, 2022 were
$1.23 billion, an increase of $115.7 million, or 10.4%, from
December 31, 2021. The key driver of this change was an increase in
organic growth, including growth of approximately $68.9 million in
loans related to Virginia Partners’ recent expansion into the
Greater Washington market, which was partially offset by
forgiveness payments received of approximately $8.2 million under
round two of the PPP. As of December 31, 2022, there were no loans
under the PPP that were still outstanding;
- Total deposits as of December 31,
2022 were $1.34 billion, a decrease of $103.3 million, or 7.2%,
from December 31, 2021. Key drivers of this change were scheduled
maturities of time deposits that were not replaced and significant
outflows related to competitive pressures in the higher interest
rate environment, which were partially offset by organic growth as
a result of our continued focus on total relationship banking and
Virginia Partners’ recent expansion into the Greater Washington
market;
- Total borrowings as of December 31,
2022 were $84.6 million, an increase of $35.4 million, or 71.9%,
from December 31, 2021. The key driver of this change was an
increase in short-term borrowings with the Federal Home Loan Bank
due to the aforementioned items noted in the analysis of total
deposits, which was partially offset by a decrease in long-term
borrowings with the Federal Home Loan Bank resulting from
maturities and payoffs of borrowings that were not replaced and
scheduled principal curtailments, and a decrease in Virginia
Partners’ majority owned subsidiary Johnson Mortgage Company, LLC’s
warehouse line of credit with another financial institution;
and
- Total stockholders’ equity as of
December 31, 2022 was $139.3 million, a decrease of $2.0 million,
or 1.4%, from December 31, 2021. Key drivers of this change were an
increase in accumulated other comprehensive (loss), net of tax, and
cash dividends paid to shareholders, which were partially offset by
the net income attributable to the Company for the twelve months
ended December 31, 2022, the proceeds from stock option exercises,
and stock-based compensation expense related to restricted stock
awards.
As of December 31, 2022, all of the capital
ratios of Delmarva and Virginia Partners continue to exceed
regulatory requirements, with total risk-based capital
substantially above well-capitalized regulatory requirements.
Asset Quality
The asset quality measures depicted below
continue to reflect the Company’s efforts to prudently charge-off
loans as losses are identified and maintain an appropriate
allowance for credit losses.
The following table depicts the net charge-off
activity for the three and twelve months ended December 31, 2022
and 2021:
Net Charge-off
Activity |
|
Three Months Ended |
|
Twelve Months Ended |
|
|
December 31, |
|
December 31, |
Dollars in Thousands |
|
|
2022 |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
|
|
|
|
|
|
|
Net charge-offs |
|
$ |
49 |
|
|
$ |
131 |
|
|
$ |
1,689 |
|
|
$ |
870 |
|
Net charge-offs/Average loans* |
|
|
0.02 |
% |
|
|
0.05 |
% |
|
|
0.14 |
% |
|
|
0.08 |
% |
* Annualized for the three months ended December 31, 2022 and
2021, respectively. |
|
|
|
|
|
|
|
|
|
The following table depicts the level of the
allowance for credit losses as of December 31, 2022 and December
31, 2021:
Allowance for Credit
Losses |
|
|
|
|
|
|
|
Dollars
in Thousands |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
Allowance for credit losses |
|
$ |
14,315 |
|
|
$ |
14,656 |
|
Allowance for credit losses/Period end loans |
|
|
1.16 |
% |
|
|
1.31 |
% |
Allowance for credit
losses/Nonaccrual loans |
|
|
664.58 |
% |
|
|
163.55 |
% |
Allowance for credit
losses/Nonperforming loans |
|
|
650.98 |
% |
|
|
163.55 |
% |
|
|
|
|
|
|
|
|
|
The following table depicts the unamortized
discounts on acquired loans related to the acquisitions of Liberty
Bell Bank and Virginia Partners:
Unamortized Discounts
on Acquired Loans |
|
|
|
|
|
|
|
Dollars
in Thousands |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
Unamortized discounts on acquired loans |
|
$ |
1,728 |
|
|
$ |
2,329 |
|
|
|
|
|
|
|
|
|
|
The following table depicts the level of
nonperforming assets as of December 31, 2022 and December 31,
2021:
Nonperforming
Assets |
|
|
|
|
|
|
|
Dollars
in Thousands |
|
December 31, 2022 |
|
December 31, 2021 |
|
|
|
|
|
Nonaccrual loans |
|
$ |
2,154 |
|
|
$ |
8,961 |
|
Loans past due 90 days and accruing interest |
|
$ |
45 |
|
|
$ |
- |
|
Total nonperforming loans |
|
$ |
2,199 |
|
|
$ |
8,961 |
|
Other real estate owned,
net |
|
$ |
- |
|
|
$ |
837 |
|
Total nonperforming
assets |
|
$ |
2,199 |
|
|
$ |
9,798 |
|
Nonperforming assets/Total assets |
|
|
0.14 |
% |
|
|
0.60 |
% |
Nonperforming assets/Total loans and other real estate owned,
net |
|
|
0.18 |
% |
|
|
0.88 |
% |
|
|
|
|
|
About Partners Bancorp
Partners Bancorp is the holding company for The
Bank of Delmarva and Virginia Partners Bank. The Bank of Delmarva
commenced operations in 1896. The Bank of Delmarva’s main office is
in Seaford, Delaware and it conducts full service commercial
banking through eleven branch locations in Maryland and Delaware,
and three branches, operating under the name Liberty Bell Bank, in
the South Jersey/Philadelphia metro market. The Bank of Delmarva
focuses on serving its local communities, knowing its customers and
providing superior customer service. Virginia Partners Bank,
headquartered in Fredericksburg, Virginia, was founded in 2008 and
has three branches in Fredericksburg, Virginia and operates a full
service branch and commercial banking office in Reston, Virginia.
In Maryland, Virginia Partners Bank trades under the name Maryland
Partners Bank (a division of Virginia Partners Bank), and operates
a full service branch and commercial banking office in La Plata,
Maryland and a Loan Production Office in Annapolis, Maryland.
Virginia Partners Bank also owns a controlling stake in Johnson
Mortgage Company, LLC, which is a residential mortgage company
headquartered in Newport News, Virginia, with a branch office in
Fredericksburg, Virginia. For more information, visit
www.partnersbancorp.com, www.bankofdelmarvahb.com and
www.vapartnersbank.com.
For further information, please contact John W.
Breda, President and Chief Executive Officer, at 410-548-1100
x10233, Lloyd B. Harrison, III, Senior Executive Vice President, at
540-899-2234, J. Adam Sothen, Chief Financial Officer, at
540-322-5521, or Betsy Eicher, Chief Accounting Officer, at
667-253-2904.
Forward-Looking Statements
Certain statements in this press release may
constitute “forward-looking statements” within the meaning of the
Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements that include, without limitation,
projections, predictions, expectations, or beliefs about future
events or results that are not statements of historical fact.
Statements in this press release which express “belief,”
“intention,” “expectation,” “potential” and similar expressions, or
which use the words “believe,” “expect,” “anticipate,” “estimate,”
“plan,” “may,” “will,” “intend,” “should,” “could,” or similar
expressions, identify forward-looking statements. These
forward-looking statements are based on the beliefs of the
Company’s management, as well as assumptions made by, and
information currently available to, the Company’s management. These
statements are inherently uncertain, and there can be no assurance
that the underlying assumptions will prove to be accurate. Actual
results could differ materially from those anticipated or implied
by such statements. Forward-looking statements in this release may
include, without limitation, statements related to the completion
and benefits of the merger with LINK, statements related to the
termination of the merger with OceanFirst, Mr. Breda’s statements
regarding expected future financial performance, potential effects
of the COVID-19 pandemic, strategic business initiatives including
growth in the Greater Washington market and the anticipated effects
thereof, margin expansion or compression, technology initiatives,
asset quality, adequacy of allowances for credit losses and the
level of future charge-offs, capital levels, the effect of future
market and industry trends and the effects of future interest rate
fluctuations. Factors that could have a material adverse effect on
the operations and future prospects of the Company include, but are
not limited to: (1) the risk that the announced merger with LINK
will not be completed or that the anticipated benefits thereof will
not be realized, (2) potential adverse consequences related to the
termination of the Merger Agreement with OceanFirst, (3) changes in
interest rates, such as volatility in yields on U.S. Treasury bonds
and increases or volatility in mortgage rates, and the impacts on
macroeconomic conditions, customer and client behavior, the
Company’s funding costs and the Company’s loan and securities
portfolios, (4) monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal
Reserve Board, and the effect of these policies on interest rates
and business in our markets, (5) general business conditions, as
well as conditions within the financial markets, including the
impact thereon of unusual and infrequently occurring events, such
as weather-related disasters, terrorist acts, geopolitical
conflicts (such as the military conflict between Russia and
Ukraine) or public health events (such as COVID-19), and of
governmental and societal responses thereto, (6) general economic
conditions, in the United States generally and particularly in the
markets in which the Company operates and which its loans are
concentrated, including the effects of declines in real estate
values, increases in unemployment levels and inflation, recession
and slowdowns in economic growth, (7) changes in the value of
securities held in the Company’s investment portfolios, (8) changes
in the quality or composition of the loan portfolios and the value
of the collateral securing those loans, (9) changes in the level of
net charge-offs on loans and the adequacy of our allowance for
credit losses, (10) demand for loan products, (11) deposit flows,
(12) the strength of the Company’s counterparties, (13) competition
from both banks and non-banks, (14) demand for financial services
in the Company’s market areas, (15) reliance on third parties for
key services, (16) changes in the commercial and residential real
estate markets, (17) cyber threats, attacks or events, (18)
expansion of Delmarva’s and Virginia Partners’ product offerings,
(19) changes in accounting principles, standards, rules and
interpretations, and elections by the Company thereunder, and the
related impact on the Company’s financial statements, (20)
potential claims, damages, and fines related to litigation or
government actions, including litigation or actions arising from
the Company’s participation in and administration of programs
related to the COVID-19 pandemic, (21) the effect of steps the
Company takes in response to the COVID-19 pandemic, the severity
and duration of the pandemic, the uncertainty regarding new
variants of COVID-19 that may emerge, the distribution and efficacy
of vaccines, the impact of loosening or tightening of government
restrictions, the pace of recovery as the pandemic subsides and the
heightened impact it has on many of the risks described herein,
(22) legislative or regulatory changes and requirements, and (23)
the discontinuation of LIBOR and its impact on the financial
markets, and the Company’s ability to manage operational, legal and
compliance risks related to the discontinuation of LIBOR and
implementation of one or more alternative reference rates. These
risks and uncertainties should be considered in evaluating the
forward-looking statements contained herein, and readers are
cautioned not to place undue reliance on any forward-looking
statements, which speak only as of the date of this release. For
additional information on risk factors that could affect the
forward-looking statements contained herein, see the Company’s most
recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q,
and other reports filed with the Securities and Exchange Commission
(“SEC”).
|
|
PARTNERS
BANCORP |
|
CONSOLIDATED
BALANCE SHEETS |
|
|
|
|
|
|
December
31, |
December
31, |
|
|
2022 |
2021 |
|
|
(Unaudited) |
* |
|
|
|
|
|
ASSETS |
|
|
|
Cash and due from banks |
$ |
14,677,774 |
|
$ |
12,886,968 |
|
Interest bearing deposits in other financial institutions |
|
103,921,732 |
|
|
297,901,913 |
|
Federal funds sold |
|
22,989,879 |
|
|
28,039,854 |
|
Cash and cash equivalents |
|
141,589,385 |
|
|
338,828,735 |
|
Investment securities available for sale, at fair value |
|
133,656,642 |
|
|
122,020,826 |
|
Loans held for sale |
|
1,314,125 |
|
|
4,064,312 |
|
Loans, less
allowance for credit losses of $14,314,631 at December 31,
2022 and $14,655,654 at December 31, 2021 |
|
1,218,551,209 |
|
|
1,102,538,982 |
|
Accrued interest receivable |
|
4,566,487 |
|
|
4,313,207 |
|
Premises and equipment, less accumulated depreciation |
|
14,857,298 |
|
|
16,174,870 |
|
Restricted stock |
|
6,512,350 |
|
|
4,869,456 |
|
Operating lease right-of-use assets |
|
5,064,866 |
|
|
6,009,025 |
|
Finance lease right-of-use assets |
|
1,550,156 |
|
|
1,687,059 |
|
Other investments |
|
4,888,118 |
|
|
5,064,801 |
|
Deferred income taxes, net |
|
7,864,084 |
|
|
4,715,128 |
|
Bank owned life insurance |
|
18,706,260 |
|
|
18,254,339 |
|
Other real estate owned, net |
|
- |
|
|
837,000 |
|
Core deposit intangible, net |
|
1,540,438 |
|
|
2,060,463 |
|
Goodwill |
|
9,581,668 |
|
|
9,581,668 |
|
Other assets |
|
4,369,410 |
|
|
3,960,109 |
|
Total assets |
$ |
1,574,612,496 |
|
$ |
1,644,979,980 |
|
|
|
|
|
LIABILITIES |
|
|
|
Deposits: |
|
|
|
Non-interest bearing demand |
$ |
528,769,800 |
|
$ |
493,913,054 |
|
Interest bearing demand |
|
121,786,774 |
|
|
159,420,637 |
|
Savings and money market |
|
431,538,080 |
|
|
410,286,409 |
|
Time |
|
257,510,218 |
|
|
379,255,563 |
|
|
|
1,339,604,872 |
|
|
1,442,875,663 |
|
Accrued interest payable on deposits |
|
267,205 |
|
|
279,943 |
|
Short-term borrowings with the Federal Home Loan Bank |
|
42,000,000 |
|
|
- |
|
Long-term borrowings with the Federal Home Loan Bank |
|
19,800,000 |
|
|
26,313,214 |
|
Subordinated notes payable, net |
|
22,214,632 |
|
|
22,168,305 |
|
Other borrowings |
|
613,423 |
|
|
755,403 |
|
Operating lease liabilities |
|
5,464,727 |
|
|
6,372,332 |
|
Finance lease liabilities |
|
2,005,685 |
|
|
2,125,347 |
|
Other liabilities |
|
3,312,977 |
|
|
2,722,266 |
|
Total liabilities |
|
1,435,283,521 |
|
|
1,503,612,473 |
|
|
|
|
|
COMMITMENTS & CONTINGENCIES |
|
|
|
|
|
|
|
STOCKHOLDERS' EQUITY |
|
|
|
Common stock, par value $.01, authorized 40,000,000 shares, issued
and |
|
|
|
outstanding 17,973,724 as of December 31, 2022 and 17,941,604 as of
December 31, 2021, |
|
|
|
|
|
including 18,669 nonvested shares as of December 31, 2022 and
28,000 nonvested shares |
|
|
|
|
|
as of December 31, 2021 |
|
179,551 |
|
|
179,136 |
|
Surplus |
|
88,669,334 |
|
|
88,389,831 |
|
Retained earnings |
|
62,854,235 |
|
|
51,304,840 |
|
Noncontrolling interest in consolidated subsidiaries |
|
707,138 |
|
|
1,179,042 |
|
Accumulated other comprehensive (loss) income, net of tax |
|
(13,081,283 |
) |
|
314,658 |
|
Total stockholders' equity |
|
139,328,975 |
|
|
141,367,507 |
|
Total liabilities and stockholders' equity |
$ |
1,574,612,496 |
|
$ |
1,644,979,980 |
|
|
|
|
|
* Derived from audited consolidated financial statements. |
|
|
|
The amounts presented in the Consolidated Balance Sheets as of
December 31, 2022 are unaudited but include all adjustments |
|
which, in management's opinion, are necessary for fair
presentation. |
|
|
|
|
|
|
PARTNERS
BANCORP |
CONSOLIDATED
STATEMENTS OF INCOME |
(Unaudited) |
|
|
|
|
Three Months
Ended |
|
December 31, |
|
2022 |
2021 |
|
|
|
INTEREST INCOME ON: |
|
|
Loans, including fees |
$ |
15,348,317 |
|
$ |
13,140,457 |
|
Investment securities: |
|
|
Taxable |
|
670,527 |
|
|
343,517 |
|
Tax-exempt |
|
183,149 |
|
|
201,275 |
|
Federal funds sold |
|
359,774 |
|
|
14,436 |
|
Other interest income |
|
1,465,641 |
|
|
169,577 |
|
|
|
18,027,408 |
|
|
13,869,262 |
|
|
|
|
INTEREST EXPENSE ON: |
|
|
Deposits |
|
1,214,534 |
|
|
1,442,019 |
|
Borrowings |
|
486,150 |
|
|
579,926 |
|
|
|
1,700,684 |
|
|
2,021,945 |
|
|
|
|
NET INTEREST INCOME |
|
16,326,724 |
|
|
11,847,317 |
|
Provision for (reversal of) credit losses |
|
545,000 |
|
|
(244,676 |
) |
|
|
|
NET INTEREST INCOME AFTER PROVISION FOR (REVERSAL OF)
CREDIT LOSSES |
|
15,781,724 |
|
|
12,091,993 |
|
|
|
|
OTHER INCOME: |
|
|
Service charges on deposit accounts |
|
262,221 |
|
|
235,414 |
|
Gains on sales and calls of investment securities |
|
- |
|
|
5,052 |
|
(Losses) on sales of other assets |
|
(25,909 |
) |
|
- |
|
Mortgage banking income |
|
279,177 |
|
|
693,962 |
|
Other income |
|
699,815 |
|
|
844,092 |
|
|
|
1,215,304 |
|
|
1,778,520 |
|
|
|
|
OTHER EXPENSES: |
|
|
Salaries and employee benefits |
|
5,686,172 |
|
|
6,559,637 |
|
Premises and equipment |
|
1,411,533 |
|
|
1,347,773 |
|
Amortization of core deposit intangible |
|
125,079 |
|
|
144,968 |
|
(Gains) and operating expenses on other real estate owned, net |
|
- |
|
|
(13,410 |
) |
Merger related expenses |
|
679,971 |
|
|
978,827 |
|
Other expenses |
|
3,299,575 |
|
|
2,929,603 |
|
|
|
11,202,330 |
|
|
11,947,398 |
|
|
|
|
INCOME BEFORE TAXES ON INCOME |
|
5,794,698 |
|
|
1,923,115 |
|
|
|
|
Federal and state income taxes |
|
1,597,973 |
|
|
400,934 |
|
|
|
|
NET INCOME |
$ |
4,196,725 |
|
$ |
1,522,181 |
|
Net loss (income) attributable to noncontrolling
interest |
$ |
20,161 |
|
$ |
(57,560 |
) |
Net income attributable to Partners Bancorp |
$ |
4,216,886 |
|
$ |
1,464,621 |
|
|
|
|
Earnings per common share: |
|
|
Basic |
$ |
0.235 |
|
$ |
0.082 |
|
Diluted |
$ |
0.234 |
|
$ |
0.082 |
|
|
|
|
The amounts
presented in these Consolidated Statements of Income for the three
months ended December 31, 2022 and 2021 are unaudited |
but include all
adjustments which, in management's opinion, are necessary for fair
presentation. |
|
|
|
|
PARTNERS
BANCORP |
CONSOLIDATED
STATEMENTS OF INCOME |
|
|
|
|
|
Twelve
Months Ended |
|
December 31, |
|
2022 |
2021 |
|
(Unaudited) |
* |
INTEREST INCOME ON: |
|
|
Loans, including fees |
$ |
55,570,581 |
|
$ |
52,757,430 |
|
Investment securities: |
|
|
Taxable |
|
2,189,425 |
|
|
1,100,995 |
|
Tax-exempt |
|
727,938 |
|
|
862,643 |
|
Federal funds sold |
|
792,859 |
|
|
58,736 |
|
Other interest income |
|
3,379,828 |
|
|
573,153 |
|
|
|
62,660,631 |
|
|
55,352,957 |
|
|
|
|
INTEREST EXPENSE ON: |
|
|
Deposits |
|
4,654,299 |
|
|
6,675,664 |
|
Borrowings |
|
2,010,364 |
|
|
2,247,359 |
|
|
|
6,664,663 |
|
|
8,923,023 |
|
|
|
|
NET INTEREST INCOME |
|
55,995,968 |
|
|
46,429,934 |
|
Provision for credit losses |
|
1,348,000 |
|
|
2,323,324 |
|
|
|
|
NET INTEREST INCOME AFTER PROVISION FOR CREDIT
LOSSES |
|
54,647,968 |
|
|
44,106,610 |
|
|
|
|
OTHER INCOME: |
|
|
Service charges on deposit accounts |
|
988,885 |
|
|
810,780 |
|
(Losses) gains on sales and calls of investment securities |
|
(5,322 |
) |
|
27,378 |
|
Impairment (loss) on restricted stock |
|
(1,182 |
) |
|
- |
|
Mortgage banking income |
|
1,228,519 |
|
|
3,759,450 |
|
(Losses) gains on sales of other assets |
|
(25,909 |
) |
|
1,405 |
|
Other income |
|
3,016,390 |
|
|
3,724,058 |
|
|
|
5,201,381 |
|
|
8,323,071 |
|
|
|
|
OTHER EXPENSES: |
|
|
Salaries and employee benefits |
|
22,453,545 |
|
|
23,342,606 |
|
Premises and equipment |
|
5,703,818 |
|
|
5,136,279 |
|
Amortization of core deposit intangible |
|
520,025 |
|
|
599,582 |
|
(Gains) losses and operating expenses on other real estate owned,
net |
|
(9,515 |
) |
|
169,553 |
|
Merger related expenses |
|
1,400,052 |
|
|
978,827 |
|
Other expenses |
|
11,782,326 |
|
|
12,059,163 |
|
|
|
41,850,251 |
|
|
42,286,010 |
|
|
|
|
INCOME BEFORE TAXES ON INCOME |
|
17,999,098 |
|
|
10,143,671 |
|
|
|
|
Federal and state income taxes |
|
4,511,904 |
|
|
2,247,477 |
|
|
|
|
NET INCOME |
$ |
13,487,194 |
|
$ |
7,896,194 |
|
Net loss (income) attributable to noncontrolling
interest |
$ |
127,800 |
|
$ |
(483,857 |
) |
Net income attributable to Partners Bancorp |
$ |
13,614,994 |
|
$ |
7,412,337 |
|
|
|
|
Earnings per common share: |
|
|
Basic |
$ |
0.758 |
|
$ |
0.417 |
|
Diluted |
$ |
0.757 |
|
$ |
0.416 |
|
|
|
|
* Derived from audited consolidated financial statements. |
|
|
The amounts
presented in these Consolidated Statements of Income for the twelve
months ended December 31, 2022 are unaudited |
but include all
adjustments which, in management's opinion, are necessary for fair
presentation. |
Grafico Azioni Partners Bancorp (NASDAQ:PTRS)
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