Touchstone Bankshares, Inc. Reports Financial Results for the First Quarter 2024
The Company reported net income available to common shareholders of
The Company's results of operations for the three months ended
As previously disclosed, on
The boards of directors of the Company and
Subject to the terms and conditions of the Agreement, the Company's shareholders, including the holders of shares of both the common stock and preferred stock (on an as-converted, one-for-one basis, which shares of preferred stock convert automatically to common stock at the effective time of the Merger) (collectively, "Company Stock"), will receive 0.8122 shares of
Additionally, considering the proposed Merger, the Company has postponed the 2024 annual meeting of shareholders. Instead, the Company will hold a special meeting of shareholders in 2024 to consider and vote on the proposed Merger. The Company will only hold the 2024 annual meeting of shareholders if the closing of the Merger is delayed until 2025, which the Company does not expect.
Earnings Analysis
Three Months Ended
As noted above, net income available to common shareholders for the three months ended
Net interest income for the three months ended
The Company recorded no provision for credit losses for the three months ended
Noninterest income totaled
The following table is a comparison of the components of noninterest income for the three months ended
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For the Three Months Ended |
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2024 |
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2023 |
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Change $ |
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Change % |
(dollars in thousands) |
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Service charges on deposit accounts |
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$ 492 |
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$ 473 |
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$ 19 |
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4.0 % |
Secondary market origination fees |
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58 |
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- |
|
58 |
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100.0 % |
Bank-owned life insurance |
|
60 |
|
75 |
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(15) |
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-20.0 % |
Other operating income |
|
204 |
|
220 |
|
(16) |
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-7.3 % |
Total |
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$ 814 |
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$ 768 |
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$ 46 |
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6.0 % |
Notable variances for the noninterest income table above are as follows:
- The increase in service charges on deposit accounts was primarily due to an increase in ATM and debit card interchange fees, partially offset by small business and commercial accounts receiving higher earnings credit rates which offset previous fee opportunities.
- The increase in secondary market origination fees was primarily due to prior year investments in personnel and related products and services, partially offset by the continued slowing of home refinancing and purchases.
- The decrease in other operating income was primarily due to a decrease in merchant services fees, partially offset by increases in income from other investments.
Noninterest expense totaled
The following table is a comparison of the components of noninterest expense for the three months ended
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For the Three Months Ended |
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2024 |
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2023 |
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Change $ |
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Change % |
(dollars in thousands) |
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Salaries and employee benefits |
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$ 2,634 |
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$ 3,082 |
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$ (448) |
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-14.5 % |
Occupancy expense |
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336 |
|
313 |
|
23 |
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7.3 % |
Furniture and equipment expense |
|
281 |
|
277 |
|
4 |
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1.4 % |
Data processing |
|
365 |
|
307 |
|
58 |
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18.9 % |
Telecommunications |
|
146 |
|
149 |
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(3) |
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-2.0 % |
Legal and professional fees |
|
135 |
|
174 |
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(39) |
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-22.4 % |
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|
98 |
|
53 |
|
45 |
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84.9 % |
Merger related expenses |
|
543 |
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- |
|
543 |
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100.0 % |
Other noninterest expenses |
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945 |
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1,170 |
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(225) |
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-19.2 % |
Total |
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$ 5,483 |
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$ 5,525 |
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$ (42) |
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-0.8 % |
Notable variances for the noninterest expense table above are as follows:
- The decrease in salaries and employee benefits was primarily due to managements focused efforts to streamline operations and improve efficiencies after the core conversion was completed during the first quarter of 2023. These efforts lead to a reduction in the work force that was implemented during the third quarter of 2023, with full cost savings becoming accretive in the fourth quarter of 2023. In addition, this decrease was driven by lower expenses related to bonus accruals, payroll taxes, benefit costs including 401(k) contributions, and deferred incentive compensation, which were partially offset by merit increases, wage inflation, and a lower impact from deferred loan origination costs.
- The increase in occupancy expense was primarily due to higher expenses related to leases, repairs and maintenance, utilities, and property taxes, which were partially offset by lower expenses related to depreciation.
- The increase in data processing was primarily due to additional services, as well as volume based and other one-time charges.
- The decrease in legal and professional fees was primarily due to lower expenses related to professional fees, which was partially offset by higher expenses related to legal, audit and compliance.
- The increase in
FDIC insurance assessments was primarily due to growth in the Bank's assessment base and an increase to the initial base deposit insurance assessment rate schedules that began with the first quarterly assessment period of 2023. - The increase in merger related expenses was primarily due to legal and investment banker fees, as well as other costs associated with the pending merger with
First National that were incurred during the first quarter of 2024, as compared to no merger related expenses being incurred during the same period of 2023. - The decrease in other noninterest expenses was primarily due to lower expenses related to network management services, marketing and advertising, loans, meals and entertainment, other losses, miscellaneous other operating, and core deposit intangible amortization, which were partially offset by higher expenses related to internet banking, shareholder relations, customer service, and state franchise taxes.
Balance Sheet
At
Cash and cash equivalents as of
Investment securities available for sale, at fair value as of
Total loans as of
Total deposits as of
Total subordinated debt, net of issuance costs as of
Total shareholders' equity as of
Asset Quality
The allowance for credit losses as of
About Touchstone Bankshares, Inc.
Forward-Looking Statements
In addition to historical information, this press release may contain certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. For this purpose, any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, the completion and benefits of the Merger with
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Consolidated Financial Highlights |
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(unaudited) |
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For the Three Months Ended |
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(in thousands, except per share data) |
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Selected Operating Data: |
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2024 |
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2023 |
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2023 |
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2023 |
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2023 |
Net interest income |
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$ 5,094 |
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$ 5,229 |
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$ 5,078 |
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$ 5,108 |
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$ 5,434 |
(Recovery of) provision for credit losses |
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- |
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(206) |
|
75 |
|
100 |
|
1,009 |
Noninterest income |
|
814 |
|
876 |
|
930 |
|
956 |
|
768 |
Noninterest expense |
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5,483 |
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5,075 |
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5,321 |
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5,634 |
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5,525 |
Income (loss) before income tax |
|
425 |
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1,236 |
|
612 |
|
330 |
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(332) |
Income tax expense (benefit) |
|
98 |
|
170 |
|
159 |
|
45 |
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(136) |
Net income (loss) |
|
327 |
|
1,066 |
|
453 |
|
285 |
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(196) |
Less: Preferred dividends |
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- |
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9 |
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- |
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- |
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- |
Net income (loss) available to common shareholders |
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$ 327 |
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$ 1,057 |
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$ 453 |
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$ 285 |
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$ (196) |
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Income (loss) per share available to common shareholders: |
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Basic |
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$ 0.10 |
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$ 0.32 |
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$ 0.14 |
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$ 0.09 |
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$ (0.06) |
Diluted |
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$ 0.10 |
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$ 0.32 |
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$ 0.14 |
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$ 0.09 |
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$ (0.06) |
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Average common shares outstanding, basic |
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3,270,982 |
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3,273,588 |
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3,260,093 |
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3,258,230 |
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3,247,867 |
Average common shares outstanding, diluted |
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3,300,130 |
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3,302,736 |
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3,289,241 |
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3,287,378 |
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3,277,015 |
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Consolidated Financial Highlights (continued) |
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(unaudited) |
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(in thousands, except per share data) |
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March 31, |
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December 31, |
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September 30, |
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Balance Sheet Data: |
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2024 |
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2023 |
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2023 |
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2023 |
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2023 |
Total assets |
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$ 673,182 |
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$ 658,695 |
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$ 660,883 |
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$ 644,415 |
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$ 644,672 |
Total loans |
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506,028 |
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508,810 |
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512,478 |
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505,661 |
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496,820 |
Allowance for credit losses |
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(4,981) |
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(4,979) |
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(4,999) |
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(4,973) |
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(4,910) |
Core deposit intangible |
|
326 |
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369 |
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416 |
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464 |
|
516 |
Deposits |
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557,598 |
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542,239 |
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549,876 |
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529,752 |
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549,527 |
Borrowings |
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49,000 |
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49,000 |
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49,000 |
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51,000 |
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31,000 |
Subordinated debt, net of issuance costs |
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17,759 |
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17,731 |
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17,704 |
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17,676 |
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17,648 |
Preferred stock |
|
58 |
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58 |
|
58 |
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58 |
|
58 |
Other comprehensive (loss) |
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(9,982) |
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(9,568) |
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(13,111) |
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(11,605) |
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(9,714) |
Shareholders' equity |
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44,750 |
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44,809 |
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41,209 |
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42,208 |
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43,747 |
Book value per common share |
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$ 13.67 |
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$ 13.68 |
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$ 12.61 |
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$ 12.94 |
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$ 13.41 |
Tangible book value per common share |
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$ 13.57 |
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$ 13.57 |
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$ 12.48 |
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$ 12.79 |
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$ 13.25 |
Total common shares outstanding |
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3,270,141 |
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3,270,676 |
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3,263,794 |
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3,258,230 |
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3,258,230 |
Total preferred shares outstanding |
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29,148 |
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29,148 |
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29,148 |
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29,148 |
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29,148 |
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March 31, |
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December 31, |
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September 30, |
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2024 |
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2023 |
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2023 |
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2023 |
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2023 |
Performance Ratios : |
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(QTD annualized) |
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(QTD annualized) |
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(QTD annualized) |
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(QTD annualized) |
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(QTD annualized) |
Return on average assets |
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0.20 % |
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0.63 % |
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0.28 % |
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0.18 % |
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-0.13 % |
Return on average common equity |
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2.93 % |
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9.85 % |
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4.34 % |
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2.61 % |
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-1.89 % |
Net interest margin |
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3.46 % |
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3.47 % |
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3.45 % |
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3.44 % |
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3.78 % |
Overhead efficiency (non-GAAP) |
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93 % |
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83 % |
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89 % |
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93 % |
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88 % |
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March 31, |
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December 31, |
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September 30, |
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Asset Quality Data: |
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2024 |
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2023 |
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2023 |
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2023 |
|
2023 |
Allowance for credit losses |
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$ 4,981 |
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$ 4,979 |
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$ 4,999 |
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$ 4,973 |
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$ 4,910 |
Nonperforming loans (excluding PCD loans) |
|
141 |
|
326 |
|
314 |
|
332 |
|
356 |
Other real estate owned, net of allowance |
|
32 |
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- |
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- |
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- |
|
- |
Nonperforming assets |
|
173 |
|
326 |
|
314 |
|
332 |
|
356 |
Net (recoveries) charge-offs, QTD |
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(2) |
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20 |
|
50 |
|
36 |
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(29) |
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Asset Quality Ratios: |
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Allowance for credit losses to total loans |
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0.98 % |
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0.98 % |
|
0.98 % |
|
0.98 % |
|
0.99 % |
Nonperforming loans to total loans |
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0.03 % |
|
0.06 % |
|
0.06 % |
|
0.07 % |
|
0.07 % |
Nonperforming assets to total assets |
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0.03 % |
|
0.05 % |
|
0.05 % |
|
0.05 % |
|
0.06 % |
YTD net charge-offs (recoveries) to average loans, annualized |
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0.00 % |
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0.02 % |
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0.02 % |
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<0.01% |
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-0.03 % |
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Community Bank Leverage Ratio |
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9.89 % |
|
9.68 % |
|
9.71 % |
|
9.99 % |
|
9.59 % |
Tangible common equity/tangible assets ratio |
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6.59 % |
|
6.74 % |
|
6.17 % |
|
6.47 % |
|
6.70 % |
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Year to Date |
(in thousands, except per share data) |
|
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Reconciliation of non-GAAP Financial Measures (1): |
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2024 |
|
|
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Net income before one-time adjustments |
|
$ 327 |
Merger related expenses, net of tax effect |
|
429 |
Core earnings (1) |
|
$ 756 |
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Core earnings per share available to common shareholders: |
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Basic |
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$ 0.23 |
Diluted |
|
$ 0.23 |
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|
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Average common shares outstanding, basic |
|
3,270,982 |
Average common shares outstanding, diluted |
|
3,300,130 |
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|
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Performance Ratios: |
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Return on average assets (annualized) |
|
0.46 % |
Return on average common equity (annualized) |
|
6.76 % |
Overhead efficiency (non-GAAP) |
|
84 % |
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(1) Core earnings is determined by methods other than in accordance with |
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