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Citizens Community Bancorp, Inc. Earns $3.6 Million, or $0.32 Per Share in 4Q20; Record 2020 Annual Earnings Increase 34% from Prior Year Annual Earnings; Asset Quality Continues to Improve; 2021 Annual Cash Dividend Increases to $0.23 Per Share
ソース: Nasdaq GlobeNewswire / 28 1 2021 16:30:01 America/New_York
EAU CLAIRE, Wis., Jan. 28, 2021 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $3.6 million, or $0.32 per diluted share for the quarter ended December 31, 2020, compared to $3.5 million, or $0.31 per diluted share for the quarter ended September 30, 2020 and $3.2 million, or $0.28 per diluted share for the quarter ended December 31, 2019. Net income as adjusted (non-GAAP)1 of $3.7 million, or $0.33 per diluted share was reported for the quarter ended December 31, 2020, compared to $3.3 million, or $0.30 per diluted share for the quarter ended September 30, 2020. For the fiscal year ended December 31, 2020, the Company earned a record $12.7 million, or $1.14 per diluted share compared to earnings of $9.5 million, or $0.85 per diluted share for the fiscal year ended December 31, 2019.
The Company’s fourth quarter operating results reflected: (1) increased net interest income largely due to increased accretion related to both reductions of purchased credit impaired loans and the Small Business Administration’s Paycheck Protection Program (SBA PPP) debt forgiveness; (2) higher loan loss provisions, primarily due to the impact of loan growth and economic uncertainty; (3) a continued robust refinancing market which led to an all-time high on gains on sale of mortgage loans; and (4) a modest increase in non-interest expenses due to branch closure costs and modestly higher impairment of mortgage servicing right assets, offset by lower compensation and a seasonal reduction in advertising.
Book value per share was $14.52 at December 31, 2020 compared to $14.10 at September 30, 2020 and $13.36 at December 31, 2019. Tangible book value per share (non-GAAP)5 was $11.18 at December 31, 2020 compared to $10.75 at September 30, 2020 and $9.89 at December 31, 2019. Book value per share increased $1.16 in fiscal 2020, a 9% increase from December 31, 2019. Tangible book value per share increased $1.29 in fiscal 2020, a 13.0% increase from December 31, 2019. In addition to building tangible book value per share 13.0% over the past year, the Company paid an annual dividend of $0.21 per share in fiscal 2020. On January 28, 2021, the Board of Directors approved a 10% increase in the annual cash dividend to $0.23 per share. The dividend will be payable on February 25, 2021 to the shareholders of record on February 11, 2021.
Stephen Bianchi, Chairman, President and Chief Executive Officer, in expressing his appreciation of the Citizens team, said, “I am very proud of the focus and commitment by our colleagues to clients, to each other and to the communities we serve. Their dedication in the face of adversity helped the Bank deliver strong returns to stakeholders and positions us well for the future.”
“The continued execution of our strategic priorities resulted in the following highlights; (1) a 13% increase in tangible book value, or $1.29 per share, to $11.18; (2) continued asset quality improvement in the quarter with a $3.4 million, or 23%, decrease in nonperforming assets and a decrease for the year of $10.1 million, or 47%; (3) Criticized assets declined 39% from March 31, 2020 levels; (4) originated loans, net of SBA PPP loans, grew by $59 million or 8% on a linked quarter basis; and (5) efforts to build more efficient workflows using technology and lower staffing levels through attrition and three branch closures were partially reflected in the fourth quarter as non-interest expense declined. The full cost savings will be more fully reflected in the first quarter of 2021,” continued Stephen Bianchi.
“Fourth quarter commercial activity accelerated across our markets where unemployment through November was below 5% in all markets and under 4% in select markets. As expected, COVID-19 deferrals remain concentrated in the hospitality segment where occupancy rates generally have been tracking with, or slightly better than, national averages depending on the property. We have been working with our clients as the pandemic persists by requiring additional support from the borrower in exchange for further deferral periods and expect the second PPP draws will be beneficial to this segment,” continued Bianchi.
December 31, 2020 Highlights: (as of or for the 3-month period ended December 31, 2020 and year ended December 31, 2020, compared to September 30, 2020 and December 31, 2019.)
- Stockholders’ equity as a percent of total assets increased to 9.74% from 9.70% during the quarter ended December 31, 2020. Tangible common equity as a percent of tangible assets (non-GAAP)5, increased to 7.67% from 7.57% during the quarter ended December 31, 2020.
- Return on average assets increased to 0.80% from 0.68% during the year ended December 31, 2020. Return on average equity increased to 8.29% from 6.59% during the year ended December 31, 2020. Return on average tangible common equity5 (non-GAAP) increased to 11.04% from 8.98% during the year ended December 31, 2020.
- The Bank recorded provision for loan losses of $2.5 million for the quarter ended December 31, 2020, compared to $1.5 million for the quarter ended September 30, 2020. The increase was largely due to organic loan growth along with qualitative factor increases related to the potential adverse economic impact of COVID-19. The COVID-19 pandemic continued to result in reduced operating capacity and uncertainty regarding potential future revenue and cash flows for certain businesses, including bank borrowers. Economic conditions in our markets continued to improve during the last quarter of 2020. This has supported improving trends for businesses most impacted by the pandemic, but further improvements in their prospects will be dependent on the timing and efficacy of vaccinations, and related impact on consumer behavior and business activities.
- As of December 31, 2020, the Bank’s COVID-19 related modifications under Section 4013 of the CARES Act, totaled $61 million, or 5% of gross loans versus $126.7 million, or 10% of gross loans at September 30, 2020. At December 31, 2020, hotel industry sector loans represent $51.6 million of the approved deferrals. The Bank has approximately $2.4 million of total payment deferrals expiring in the first quarter of 2021.
- The sum of special mention and substandard loans decreased $5.5 million to $35.2 million at December 31, 2020 from $40.7 million at September 30, 2020, a decrease of 13%.
- The allowance for loan losses on originated loans, excluding PPP loans, increased to 1.77% at December 31, 2020 from 1.65% at September 30, 2020. Since PPP loans are guaranteed by the SBA, they are excluded from this reserve calculation. Additionally, loans resulting from Bank acquisitions were effectively marked to market value at the time of their acquisition and were also excluded from this reserve calculation. The allowance for loan losses of $17.0 million, is allocated $14.8 million to the originated loan portfolio and $2.2 million to the acquired loan portfolio.
- During the fourth quarter, the Bank closed three branch operations located at Minnesota Lake, Minnesota, Eau Claire, Wisconsin, and Eleva, Wisconsin. These branch operations were consolidated into nearby branch locations. These closures resulted in pretax net branch closure costs of $165 thousand as presented in the “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)” table.
- Nonperforming assets continued to decline during the quarter ended December 31, 2020 to $11.5 million from $14.9 million one quarter earlier.
- On November 30, 2020, the Board of Directors approved a stock repurchase program. Under this program the Company may repurchase up to 557,728 shares of its common stock, or approximately 5% of the current outstanding shares. Through December 31, 2020, the Company has repurchased approximately 98,000 shares under this new stock repurchase program.
Balance Sheet and Asset Quality
Total assets increased $26.5 million during the quarter to $1.65 billion at December 31, 2020, compared to $1.62 billion at September 30, 2020. This increase was approximately the same as the increase in deposits of $24.5 million.
Securities available for sale decreased $6.7 million during the quarter ended December 31, 2020 to $144.2 million from $150.9 million at September 30, 2020. Meanwhile, the Bank’s securities held to maturity increased $26.0 million in the quarter. With strong deposit levels and SBA PPP loan debt forgiveness expected to increase in 2021, the Bank purchased $29 million of agency mortgage-backed certificates during the fourth quarter, in the held to maturity category.
Loans receivable increased by $7.4 million to $1.24 billion at December 31, 2020. The originated loan portfolio before SBA PPP loans increased $59 million in the quarter. Approximately $5.5 million of the loan growth was represented by draws on lines of credit taken on December 31, 2020 with the proceeds deposited into the customer’s money market accounts at the Bank, and repaid on January 4, 2021. SBA’s PPP loans decreased $15 million in the quarter due to debt forgiveness. Acquired loans decreased by $38 million. The acquired loan portfolio asset quality improved with a reduction of $4 million in substandard loans, which included the prepayment of $3 million of nonaccrual loans and the payoff of hotel loans on deferral of $8 million.
The allowance for loan losses increased to $17.0 million at December 31, 2020 representing 1.38% of loans receivable at December 31, 2020, compared to $14.8 million at September 30, 2020 representing 1.21% of loans receivable at September 30, 2020. Excluding the PPP loans, which are guaranteed by the SBA, the allowance for loan losses was 1.53% at December 31, 2020 compared to 1.35% at September 30, 2020. Approximately 23% of the loan portfolio at December 31, 2020 consists of loans purchased through whole bank acquisitions resulting in these loans being recorded at fair market value at acquisition. The allowance for loan losses as a percent of originated loans excluding PPP loans was 1.77% at December 31, 2020 compared to 1.65% at September 30, 2020. For the quarter ended December 31, 2020, the Bank had net charge-offs of $293,000.
Allowance for Loan Losses Percentages (in thousands, except ratios) December 31, 2020 September 30, 2020 June 30, 2020 December 31, 2019 Originated loans, net of deferred fees and costs $ 835,769 $ 777,340 $ 789,075 $ 762,127 SBA PPP loans, net of deferred fees 120,711 135,177 132,800 — Acquired loans, net of unamortized discount 281,101 317,622 359,300 415,253 Loans, end of period $ 1,237,581 $ 1,230,139 $ 1,281,175 $ 1,177,380 SBA PPP loans, net of deferred fees (120,711 ) (135,177 ) (132,800 ) — Loans, net of SBA PPP loans and deferred fees $ 1,116,870 $ 1,094,962 $ 1,148,375 $ 1,177,380 Allowance for loan losses allocated to originated loans $ 14,819 $ 12,809 $ 12,109 $ 9,551 Allowance for loan losses allocated to other loans 2,224 2,027 1,264 769 Allowance for loan losses $ 17,043 $ 14,836 $ 13,373 $ 10,320 Non-accretable difference on purchased credit impaired loans $ 1,087 $ 1,661 $ 3,355 $ 6,290 ALL as a percentage of loans, end of period 1.38 % 1.21 % 1.04 % 0.88 % ALL as a percentage of loans, net of SBA PPP loans and deferred fees 1.53 % 1.35 % 1.16 % 0.88 % ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs 1.77 % 1.65 % 1.53 % 1.25 % Nonperforming assets decreased 22.7% to $11.5 million or 0.70% of total assets at December 31, 2020 compared to $14.9 million or 0.92% of total assets at September 30, 2020. Included in nonperforming assets at December 31, 2020 are $7.4 million of nonperforming assets acquired during recent whole-bank acquisitions. Originated nonperforming assets were only $4.2 million, or 0.25% of total assets for the most recent quarter. Over the past year, nonperforming assets declined 47% from $21.6 million at December 31, 2019 to $11.5 million at December 31, 2020.
Substandard and special mention loans declined $5.5 million, or 13%, during the quarter ended December 31, 2020. The table below shows the decreases in substandard loans by quarter during 2020. Over the past year, total criticized loans decreased 30.6% from $50.7 million at December 31, 2019 to $35.2 million at December 31, 2020.
(in thousands) December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Special mention loan balances $ 6,672 $ 7,777 $ 19,958 $ 19,387 $ 10,856 Substandard loan balances 28,541 32,922 35,911 38,393 39,892 Criticized loans, end of period $ 35,213 $ 40,699 $ 55,869 $ 57,780 $ 50,748 Deposits increased $24.5 million to $1.295 billion at December 31, 2020 compared to $1.271 billion at September 30, 2020. The increase was in non-maturity deposits which more than offset the modest decrease of $10 million in certificates of deposit. Deposit growth of $5.5 million represents line of credit draw proceeds deposited into customers’ money market accounts, which were subsequently withdrawn to repay the line of credits on January 4, 2021. The decrease in certificates of deposit was due to the Company choosing not to match higher rate local retail certificate competition.
Review of Operations
Net interest income was $13.4 million for the fourth quarter of 2020 compared to $11.9 million for the third quarter of
2020, and $11.8 million for the quarter ended December 31, 2019. The net interest margin increased to 3.51% for the fourth quarter of 2020 compared to 3.11% for the third quarter of 2020 and 3.41% for the fourth quarter ended December 31, 2019.Net interest income and net interest margin with and without loan purchase accounting:
(in thousands, except yields and rates)Three months ended December 31, 2020 September 30, 2020 June 30, 2020 March 31, 2020 December 31, 2019 Net
Interest IncomeNet
Interest MarginNet
Interest IncomeNet
Interest MarginNet
Interest IncomeNet
Interest MarginNet
Interest IncomeNet
Interest MarginNet
Interest IncomeNet
Interest MarginWith loan purchase accretion $ 13,372 3.51 % $ 11,909 3.11 % $ 12,303 3.34 % $ 12,671 3.64 % $ 11,775 3.41 % Less non-accretable difference realized as interest from payoff of purchased credit impaired loans (324 ) (0.08 )% (130 ) (0.03 )% (196 ) (0.05 )% (1,043 ) (0.30 )% (271 ) (0.08 )% Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences (872 ) (0.23 )% — — % (99 ) (0.03 )% — — % — — % Less scheduled accretion interest (252 ) (0.07 )% (276 ) (0.07 )% (247 ) (0.07 )% (233 ) (0.07 )% (233 ) (0.07 )% Without loan purchase accretion $ 11,924 3.13 % $ 11,503 3.01 % $ 11,761 3.19 % $ 11,395 3.27 % $ 11,271 3.26 % As noted above, the current quarter net interest margin was favorably impacted by reductions in purchased credit impaired loans and associated income realization. The Company realized $1.2 million, or 31 basis points, of such accelerated accretion in the quarter ended December 31, 2020. In addition, current quarter SBA PPP fee accretion of $0.98 million represented a $0.34 million, or 10 basis point, net interest margin increase over the prior quarter’s accretion of $0.64 million. The increase in SBA PPP fee accretion results from such loans qualifying for and receiving debt forgiveness. Deferred SBA PPP fees were approximately $3 million at December 31, 2020.
The Company continued to manage deposit interest rates. Various non-maturity deposit product yields were reduced and the Bank was able to lower the cost of certificate of deposit accounts as the interest rates on new and renewed certificates of deposit were lower than the previous quarter. Additionally, the Bank relied less on higher-costing certificates of deposit. These actions reduced the cost of deposits by 9 basis points in the quarter which more than offset the full quarter impact of the third quarter’s subordinated debt issuance. The Bank has $61 million of certificates of deposits maturing in the first quarter of 2021 with a blended interest cost of approximately 1.90% and an additional $124 million maturing in the remaining three quarters of 2021 at a blended interest cost of approximately 1.05%. The weighted average cost of new certificates in the fourth quarter of 2020 was approximately 0.50%.
Loan loss provisions were $2.5 million for the quarter ended December 31, 2020 compared to $1.50 million for the quarter ended September 30, 2020 and $1.4 million one year earlier. There was no provision on the $5.5 million lines of credit drawn in late December and repaid on January 4, 2021. The increase was largely due to organic growth, along with qualitative factor increases related to the potential adverse impact of COVID-19. We estimate the COVID-19/qualitative factor increase impact on the provisions for loan losses to be approximately $1.3 million and $4.8 million for the three and twelve months ended December 31, 2020. For the year ended December 31, 2020, provisions for loan losses were $7.750 million compared to $3.525 million for the year ended December 31, 2019.
Non-interest income decreased modestly in the quarter ended December 31, 2020 to $4.8 million from the previous quarter ended September 30, 2020 level of $5.1 million. The decrease in the fourth quarter was largely due to a recognized gain in the third quarter on the disposition of an acquired business line and the third quarter recognition of a higher annual incentive paid on debit card activity. For the year ended December 31, 2020, non-interest income increased by $3.5 million to $18.4 million with stronger gain on sale of loans and loan servicing income being partially offset by the sale of the Company’s only Michigan branch in the second quarter of 2019.
Total non-interest expense increased by $0.1 million to $10.8 million for the quarter ended December 31, 2020. This was due to modestly higher impairment on mortgage servicing rights (“MSR”) of $0.33 million and $0.17 million of costs related to the closure of 3 branches in mid-November. MSR impairment for the quarter ended December 31, 2020 totaled $0.33 million compared to $0.25 million for the quarter ended September 30, 2020. These increases were partially offset by lower compensation due to a smaller level of FTE and lower seasonal marketing costs. For the year ended December 31, 2020, total non-interest expense was $43.7 million compared to $42.7 million for the year ended December 21, 2019. The impact of the F&M acquisition on July 1, 2019 increased non-interest expense in 2020 in addition to the items discussed above.
Provisions for income taxes remained unchanged in the fourth quarter at $1.3 million compared to the preceding quarter. For the year ended December 31, 2020, provisions for income taxes were $4.6 million compared to $2.8 million for the year ended December 31, 2019, which included a $0.3 million reduction due to a favorable tax treatment of certain acquired bank-owned life insurance. The effective tax rate for the most recent quarter was 25.9% compared to 26.7% the prior quarter.
These financial results are preliminary until the Form 10-K is filed in March 2021.
About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 25
branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, Ag operators and consumers, including residential mortgage loans.Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include the conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; our ability to maintain our reputation; our ability to realize the benefits of net deferred tax assets; our ability to maintain or increase our market share; acts of terrorism and political or military actions by the United States or other governments; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; increases in FDIC insurance premiums or special assessments by the FDIC; disintermediation risk; our inability to obtain needed liquidity; risks related to the ongoing integration of F. & M. Bancorp. of Tomah, Inc. into the Company’s operations; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; our ability to raise capital needed to fund growth or meet regulatory requirements; the possibility that our internal controls and procedures could fail or be circumvented; our ability to attract and retain key personnel; our ability to keep pace with technological change; cybersecurity risks; changes in federal or state tax laws; changes in accounting principles, policies or guidelines and their impact on financial performance; restrictions on our ability to pay dividends; and the potential volatility of our stock price. Stockholders, potential investors and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended December 31, 2019 filed with the Securities and Exchange Commission (“SEC”) on March 10, 2020 and the Company’s subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as net income as adjusted, net income as adjusted per share, tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets, return on average tangible common equity and return on average tangible common equity as adjusted which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.Net income as adjusted and net income as adjusted per share are non-GAAP measures that eliminates the impact of certain expenses such as acquisition and branch closure costs and related data processing termination fees, legal costs, severance pay, accelerated depreciation expense and lease termination fees, the gain on sale of branch deposits and fixed assets and the net impact of the Tax Cuts and Jobs Act of 2017, which management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. Merger related charges represent expenses to either satisfy contractual obligations of acquired entities without any useful benefit to the Company or to convert and consolidate customer records onto the Company platforms. These costs are unique to each transaction based on the contracts in existence at the merger date. Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of preferred stock equity, goodwill and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.
Contact: Steve Bianchi, CEO
(715)-836-9994CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)December 31, 2020
(unaudited)September 30, 2020
(unaudited)December 31, 2019
(audited)Assets Cash and cash equivalents $ 119,440 $ 115,474 $ 55,840 Other interest-bearing deposits 3,752 3,752 4,744 Securities available for sale “AFS” 144,233 150,908 180,119 Securities held to maturity “HTM” 43,551 16,927 2,851 Equity securities with readily determinable fair value 200 187 246 Other investments 14,948 15,075 15,005 Loans receivable 1,237,581 1,230,139 1,177,380 Allowance for loan losses (17,043 ) (14,836 ) (10,320 ) Loans receivable, net 1,220,538 1,215,303 1,167,060 Loans held for sale 3,075 4,938 5,893 Mortgage servicing rights 3,252 3,498 4,282 Office properties and equipment, net 21,165 21,607 21,106 Accrued interest receivable 5,652 5,829 4,738 Intangible assets 5,494 5,893 7,587 Goodwill 31,498 31,498 31,498 Foreclosed and repossessed assets, net 197 812 1,460 Bank owned life insurance (“BOLI”) 23,684 23,514 23,063 Other assets 8,416 7,378 5,757 TOTAL ASSETS $ 1,649,095 $ 1,622,593 $ 1,531,249 Liabilities and Stockholders’ Equity Liabilities: Deposits $ 1,295,256 $ 1,270,778 $ 1,195,702 Federal Home Loan Bank (“FHLB”) and Federal Reserve Bank (“FRB”) advances 123,498 124,491 130,971 Other borrowings 58,328 58,297 43,560 Other liabilities 11,449 11,704 10,463 Total liabilities 1,488,531 1,465,270 1,380,696 Stockholders’ equity: Common stock— $0.01 par value,
authorized 30,000,000; 11,056,349;
11,154,645 and 11,266,954 shares issued
and outstanding, respectively111 112 113 Additional paid-in capital 126,704 127,778 128,856 Retained earnings 32,809 29,239 22,517 Unearned deferred compensation (550 ) (710 ) (462 ) Accumulated other comprehensive income (loss) 1,490 904 (471 ) Total stockholders’ equity 160,564 157,323 150,553 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,649,095 $ 1,622,593 $ 1,531,249 Note: Certain items previously reported were reclassified for consistency with the current presentation. CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)Three Months Ended Twelve Months Ended December 31,
2020
(unaudited)September 30,
2020
(unaudited)December 31,
2019
(unaudited)December 31,
2020
(unaudited)December 31,
2019
(audited)Interest and dividend income: Interest and fees on loans $ 15,463 $ 14,154 $ 14,611 $ 59,763 $ 54,647 Interest on investments 1,052 1,064 1,535 4,764 5,776 Total interest and dividend income 16,515 15,218 16,146 64,527 60,423 Interest expense: Interest on deposits 1,958 2,255 3,284 10,000 12,174 Interest on FHLB and FRB borrowed funds 428 430 508 1,814 2,721 Interest on other borrowed funds 757 624 579 2,458 2,015 Total interest expense 3,143 3,309 4,371 14,272 16,910 Net interest income before provision for loan losses 13,372 11,909 11,775 50,255 43,513 Provision for loan losses 2,500 1,500 1,400 7,750 3,525 Net interest income after provision for loan losses 10,872 10,409 10,375 42,505 39,988 Non-interest income: Service charges on deposit accounts 496 431 612 1,832 2,368 Interchange income 520 556 468 2,029 1,735 Loan servicing income 1,014 1,144 772 4,158 2,674 Gain on sale of loans 2,108 1,987 902 6,693 2,462 Loan fees and service charges 342 320 285 1,383 1,145 Insurance commission income — — 161 475 734 Net gains (losses) on investment securities 13 (1 ) 120 110 271 Net gain (loss) on sale of branch — — — 432 2,295 Net gain (loss) on sale of acquired business lines — 180 — — — Settlement proceeds — — — 131 — Other 277 445 464 1,205 1,291 Total non-interest income 4,770 5,062 3,784 18,448 14,975 Non-interest expense: Compensation and related benefits 5,440 5,538 5,720 22,321 20,325 Occupancy 1,017 993 972 3,915 3,697 Office 502 532 539 2,152 2,188 Data processing 1,210 1,145 985 4,375 3,938 Amortization of intangible assets 399 399 412 1,622 1,496 Mortgage servicing rights expense 720 603 286 3,050 1,108 Advertising, marketing and public relations 165 260 240 967 1,214 FDIC premium assessment 148 188 (60 ) 584 258 Professional services 438 434 496 1,829 2,457 Gains (losses) on repossessed assets, net (64 ) (105 ) 18 (259 ) (125 ) Other 851 737 820 3,117 6,130 Total non-interest expense 10,826 10,724 10,428 43,673 42,686 Income before provision for income taxes 4,816 4,747 3,731 17,280 12,277 Provision for income taxes 1,246 1,267 562 4,555 2,814 Net income attributable to common stockholders $ 3,570 $ 3,480 $ 3,169 $ 12,725 $ 9,463 Per share information: Basic earnings $ 0.32 $ 0.31 $ 0.28 $ 1.14 $ 0.85 Diluted earnings $ 0.32 $ 0.31 $ 0.28 $ 1.14 $ 0.85 Cash dividends paid $ — $ — $ — $ 0.21 $ 0.20 Book value per share at end of period $ 14.52 $ 14.10 $ 13.36 $ 14.52 $ 13.36 Tangible book value per share at end of period (non-GAAP) $ 11.18 $ 10.75 $ 9.89 $ 11.18 $ 9.89 Note: Certain items previously reported were reclassified for consistency with the current presentation. Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)Three Months Ended Twelve Months Ended December 31,
2020September 30,
2020December 31,
2019December 31,
2020December 31,
2019GAAP pretax income $ 4,816 $ 4,747 $ 3,731 $ 17,280 $ 12,277 Merger related costs — — 104 — 3,880 Branch closure costs (1) 165 — — 165 15 Audit and Financial Reporting (2) — — — — 358 Net gain on sale of branch (3) — — — — (2,295 ) Net gain on sale of acquired business lines (4) — (180 ) — (432 ) — Settlement proceeds (5) — — — (131 ) — Pretax income as adjusted (6) 4,981 4,567 3,835 16,882 14,235 Provision for income tax on net income as adjusted (7) 1,290 1,219 579 4,457 3,260 Tax impact of certain acquired BOLI policies (8) — — 300 — 300 Total Provision for income tax 1,290 1,219 879 4,457 3,560 Net income as adjusted after income taxes (non-GAAP) (6) $ 3,691 $ 3,348 $ 2,956 $ 12,425 $ 10,675 GAAP diluted earnings per share, net of tax $ 0.32 $ 0.31 $ 0.28 $ 1.14 $ 0.85 Merger related costs, net of tax — — 0.01 — 0.27 Branch closure costs, net of tax 0.01 — — 0.01 — Audit and Financial Reporting — — — — 0.02 Net gain on sale of branch — — — — (0.15 ) Tax impact of certain acquired BOLI policies — — (0.03 ) (0.03 ) Net gain on sale of acquired business lines — (0.01 ) — (0.03 ) — Settlement proceeds — — — (0.01 ) — Diluted earnings per share, as adjusted, net of tax (non-GAAP) $ 0.33 $ 0.30 $ 0.26 $ 1.11 $ 0.96 Average diluted shares outstanding 11,128,628 11,155,337 11,275,961 11,161,811 11,121,435 (1) Branch closure costs include severance pay recorded in compensation and benefits, accelerated depreciation expense and lease termination fees included in occupancy and other costs included in other non-interest expense in the consolidated statement of operations.
(2) Audit and financial reporting costs include additional audit and professional fees related to the change in our year end from September 30 to December 31, effective December 31, 2018.
(3) Gain on sale of branch resulted from the sale of our sole Michigan office in Rochester Hills.
(4) Gain on sale of acquired business lines resulted from (1) the sale of Wells Insurance Agency and (2) the termination and sale of the wealth management business line sales contract acquired in a former acquisition.
(5) Settlement proceeds includes litigation income from a JP Morgan Residential Mortgage Backed Security (RMBS) claim. This distribution represents a supplement to the proceeds received in March 2017 from a JP Morgan RMBS previously owned by the Bank and sold in 2011.
(6) Net income as adjusted is a non-GAAP measure that management believes enhances the market’s ability to assess the underlying business performance and trends related to core business activities.
(7) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.
(8) Tax impact of certain BOLI policies acquired from United Bank equal to $300 thousand.Loan Composition (in thousands) December 31,
2020September 30,
2020June 30,
2020December 31,
2019Originated Loans: Commercial/Agricultural real estate: Commercial real estate $ 351,113 $ 322,028 $ 314,390 $ 302,546 Agricultural real estate 31,741 32,530 35,138 34,026 Multi-family real estate 112,731 100,148 90,617 71,877 Construction and land development 91,241 80,992 94,856 71,467 C&I/Agricultural operating: Commercial and industrial 95,290 79,959 80,369 89,730 Agricultural operating 24,457 24,324 25,813 20,717 Residential mortgage: Residential mortgage 86,283 90,100 95,664 108,619 Purchased HELOC loans 6,260 6,547 6,861 8,407 Consumer installment: Originated indirect paper 25,851 28,535 32,031 39,585 Other consumer 12,056 13,221 14,175 15,546 Originated loans before SBA PPP loans 837,023 778,384 789,914 762,520 SBA PPP loans 123,702 139,166 137,330 — Total originated loans $ 960,725 $ 917,550 $ 927,244 $ 762,520 Acquired Loans: Commercial/Agricultural real estate: Commercial real estate $ 156,562 $ 178,645 $ 195,335 $ 211,913 Agricultural real estate 37,054 40,613 43,054 51,337 Multi-family real estate 9,421 9,520 13,022 15,131 Construction and land development 7,276 8,346 15,276 14,943 C&I/Agricultural operating: Commercial and industrial 21,263 24,413 29,477 44,004 Agricultural operating 8,328 9,634 12,124 17,063 Residential mortgage: Residential mortgage 45,103 51,754 56,760 67,713 Consumer installment: Other consumer 1,157 1,409 1,639 2,640 Total acquired loans $ 286,164 $ 324,334 $ 366,687 $ 424,744 Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 507,675 $ 500,673 $ 509,725 $ 514,459 Agricultural real estate 68,795 73,143 78,192 85,363 Multi-family real estate 122,152 109,668 103,639 87,008 Construction and land development 98,517 89,338 110,132 86,410 C&I/Agricultural operating: Commercial and industrial 116,553 104,372 109,846 133,734 Agricultural operating 32,785 33,958 37,937 37,780 Residential mortgage: Residential mortgage 131,386 141,854 152,424 176,332 Purchased HELOC loans 6,260 6,547 6,861 8,407 Consumer installment: Originated indirect paper 25,851 28,535 32,031 39,585 Other consumer 13,213 14,630 15,814 18,186 Gross loans before SBA PPP loans 1,123,187 1,102,718 1,156,601 1,187,264 SBA PPP loans 123,702 139,166 137,330 — Gross loans $ 1,246,889 $ 1,241,884 $ 1,293,931 $ 1,187,264 Unearned net deferred fees and costs and loans in process (4,245 ) (5,033 ) (5,369 ) (393 ) Unamortized discount on acquired loans (5,063 ) (6,712 ) (7,387 ) (9,491 ) Total loans receivable $ 1,237,581 $ 1,230,139 $ 1,281,175 $ 1,177,380 Nonperforming Originated and Acquired Assets
(in thousands, except ratios)December 31, 2020
and Three Months
EndedSeptember 30, 2020
and Three Months
EndedJune 30, 2020 and
Three Months
EndedDecember 31, 2019
and Three Months
EndedNonperforming assets: Originated nonperforming assets: Nonaccrual loans $ 3,649 $ 3,255 $ 3,951 $ 4,285 Accruing loans past due 90 days or more 415 698 1,455 946 Total originated nonperforming loans (“NPL”) 4,064 3,953 5,406 5,231 Other real estate owned (“OREO”) 63 352 270 441 Other collateral owned 41 56 42 28 Total originated nonperforming assets (“NPAs”) $ 4,168 $ 4,361 $ 5,718 $ 5,700 Acquired nonperforming assets: Nonaccrual loans $ 7,098 $ 9,899 $ 10,836 $ 14,771 Accruing loans past due 90 days or more 171 252 425 158 Total acquired nonperforming loans (“NPL”) 7,269 10,151 11,261 14,929 Other real estate owned (“OREO”) 93 404 422 988 Other collateral owned — — — 3 Total acquired nonperforming assets (“NPAs”) $ 7,362 $ 10,555 $ 11,683 $ 15,920 Total nonperforming assets (“NPAs”) $ 11,530 $ 14,916 $ 17,401 $ 21,620 Loans, end of period $ 1,237,581 $ 1,230,139 $ 1,281,175 $ 1,177,380 Total assets, end of period $ 1,649,095 $ 1,622,593 $ 1,607,514 $ 1,531,249 Ratios: Originated NPLs to total loans 0.33 % 0.32 % 0.42 % 0.44 % Acquired NPLs to total loans 0.59 % 0.83 % 0.88 % 1.27 % Originated NPAs to total assets 0.25 % 0.27 % 0.36 % 0.37 % Acquired NPAs to total assets 0.45 % 0.65 % 0.73 % 1.04 % Nonperforming Total Assets (in thousand, except ratios) December 31, 2020
and Three Months
EndedSeptember 30, 2020
and Three Months
EndedJune 30, 2020
and Three Months
EndedDecember 31, 2019
and Three Months
EndedNonperforming assets: Nonaccrual loans Commercial real estate $ 827 $ 2,762 $ 3,221 $ 5,705 Agricultural real estate 5,084 5,252 5,979 7,568 Commercial and industrial (“C&I”) 357 853 1,306 1,850 Agricultural operating 1,872 1,651 1,496 1,702 Residential mortgage 2,451 2,536 2,666 2,063 Consumer installment 156 100 119 168 Total nonaccrual loans $ 10,747 $ 13,154 $ 14,787 $ 19,056 Accruing loans past due 90 days or more 586 950 1,880 1,104 Total nonperforming loans (“NPLs”) 11,333 14,104 16,667 20,160 Foreclosed and repossessed assets, net 197 812 734 1,460 Total nonperforming assets (“NPAs”) $ 11,530 $ 14,916 $ 17,401 $ 21,620 Troubled Debt Restructurings (“TDRs”) $ 18,477 $ 19,778 $ 13,119 $ 12,594 Nonaccrual TDRs $ 6,735 $ 7,199 $ 6,992 $ 7,198 Loans, end of period $ 1,237,581 $ 1,230,139 $ 1,281,175 $ 1,177,380 Total assets, end of period $ 1,649,095 $ 1,622,593 $ 1,607,514 $ 1,531,249 Ratios: NPLs to total loans 0.92 % 1.15 % 1.30 % 1.71 % NPAs to total assets 0.70 % 0.92 % 1.08 % 1.41 % Deposit Composition
(in thousands)December 31,
2020September 30,
2020June 30,
2020December 31,
2019Non-interest bearing demand deposits $ 238,348 $ 229,217 $ 223,536 $ 168,157 Interest bearing demand deposits 301,764 279,648 270,116 223,102 Savings accounts 196,348 191,511 185,816 156,599 Money market accounts 245,549 246,651 242,536 246,430 Certificate accounts 313,247 323,751 350,193 401,414 Total deposits $ 1,295,256 $ 1,270,778 $ 1,272,197 $ 1,195,702 Average balances, Interest Yields and Rates
(in thousands, except yields and rates)Three months ended December 31,
2020Three months ended September 30,
2020Three months ended December 31,
2019Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average interest earning assets: Cash and cash equivalents $ 79,225 $ 21 0.11 % $ 77,774 $ 18 0.09 % $ 31,327 $ 122 1.55 % Loans receivable 1,240,895 15,463 4.96 % 1,258,224 14,154 4.48 % 1,136,330 14,611 5.10 % Interest bearing deposits 3,752 23 2.44 % 3,752 23 2.44 % 4,904 30 2.43 % Investment securities (1) 176,802 824 1.85 % 166,622 846 2.02 % 185,920 1,222 2.62 % Other investments 15,015 184 4.88 % 15,145 177 4.65 % 14,209 161 4.50 % Total interest earning assets (1) $ 1,515,689 $ 16,515 4.33 % $ 1,521,517 $ 15,218 3.98 % $ 1,372,690 $ 16,146 4.67 % Average interest bearing liabilities: Savings accounts $ 187,474 $ 87 0.18 % $ 183,381 $ 98 0.21 % $ 152,841 $ 172 0.45 % Demand deposits 285,001 200 0.28 % 285,993 231 0.32 % 216,021 389 0.71 % Money market accounts 243,631 206 0.34 % 255,160 280 0.44 % 210,398 565 1.07 % CD’s 284,728 1,304 1.82 % 297,691 1,469 1.96 % 367,278 1,951 2.11 % IRA’s 41,493 161 1.54 % 41,852 177 1.68 % 43,809 207 1.87 % Total deposits $ 1,042,327 $ 1,958 0.75 % $ 1,064,077 $ 2,255 0.84 % $ 990,347 $ 3,284 1.32 % FHLB advances and other borrowings 182,463 1,185 2.58 % 173,758 1,054 2.41 % 165,660 1,087 2.60 % Total interest bearing liabilities $ 1,224,790 $ 3,143 1.02 % $ 1,237,835 $ 3,309 1.06 % $ 1,156,007 $ 4,371 1.50 % Net interest income $ 13,372 $ 11,909 $ 11,775 Interest rate spread 3.31 % 2.92 % 3.17 % Net interest margin (1) 3.51 % 3.11 % 3.41 % Average interest earning assets to average interest bearing liabilities 1.24 1.23 1.19 (1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended December 31, 2020, September 30, 2020 and December 31, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $0, $0 and $8 thousand for the three months ended December 31, 2020, September 30, 2020 and December 31, 2019, respectively. Twelve months ended December 31, 2020 Twelve months ended December 31, 2019 Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average interest earning assets: Cash and cash equivalents $ 52,016 $ 162 0.31 % $ 29,948 $ 672 2.24 % Loans receivable 1,234,732 59,763 4.84 % 1,074,952 54,647 5.08 % Interest bearing deposits 3,914 96 2.45 % 5,841 137 2.35 % Investment securities (1) 174,396 3,789 2.17 % 171,747 4,332 2.60 % Other investments 15,081 717 4.75 % 12,442 635 5.10 % Total interest earning assets (1) $ 1,480,139 $ 64,527 4.36 % $ 1,294,930 $ 60,423 4.68 % Average interest bearing liabilities: Savings accounts $ 174,184 $ 435 0.25 % $ 155,848 $ 651 0.42 % Demand deposits 268,311 1,065 0.40 % 204,296 1,677 0.82 % Money market accounts 244,632 1,446 0.59 % 182,103 1,988 1.09 % CD’s 316,264 6,325 2.00 % 352,924 7,114 2.02 % IRA’s 42,039 729 1.73 % 42,134 744 1.77 % Total deposits $ 1,045,430 $ 10,000 0.96 % $ 937,305 $ 12,174 1.30 % FHLB advances and other borrowings 186,724 4,272 2.29 % 156,885 4,736 3.02 % Total interest bearing liabilities $ 1,232,154 $ 14,272 1.16 % $ 1,094,190 $ 16,910 1.55 % Net interest income $ 50,255 $ 43,513 Interest rate spread 3.20 % 3.13 % Net interest margin (1) 3.40 % 3.37 % Average interest earning assets to average interest bearing liabilities 1.20 1.18 (1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the twelve months ended December 31, 2020 and December 31, 2019. The FTE adjustment to net interest income included in the rate calculations totaled $1 thousand and $120 thousand for the twelve months ended December 31, 2020 and December 31, 2019, respectively. The following table reports key financial metric ratios based on a net income and net income as adjusted basis:
Three Months Ended Twelve Months Ended December 31, 2020 September 30,
2020December 31,
2019December 31, 2020 December 31, 2019 Ratios based on net income: Return on average assets (annualized) 0.87 % 0.85 % 0.84 % 0.80 % 0.68 % Return on average equity (annualized) 8.93 % 8.93 % 8.41 % 8.29 % 6.59 % Return on average tangible common equity5 (annualized) 11.67 % 11.79 % 11.45 % 11.04 % 8.98 % Efficiency ratio 60 % 63 % 67 % 64 % 73 % Net interest margin with loan purchase accretion 3.51 % 3.11 % 3.41 % 3.40 % 3.37 % Net interest margin without loan purchase accretion 3.13 % 3.01 % 3.26 % 3.15 % 3.26 % Ratios based on net income as adjusted (non-GAAP): Return on average assets as adjusted2 (annualized) 0.90 % 0.82 % 0.79 % 0.78 % 0.76 % Return on average equity as adjusted3 (annualized) 9.24 % 8.59 % 7.85 % 8.09 % 7.44 % Return on average tangible common equity as adjusted5 (annualized) 12.06 % 11.34 % 10.68 % 10.78 % 10.13 % Efficiency ratio4 as adjusted (non-GAAP) 59 % 64 % 66 % 64 % 68 % Reconciliation of Return on Average Assets as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019 GAAP earnings after income taxes $ 3,570 $ 3,480 $ 3,169 $ 12,725 $ 9,463 Net income as adjusted after income taxes (non-GAAP) (1) $ 3,691 $ 3,348 $ 2,956 $ 12,425 $ 10,675 Average assets $ 1,634,459 $ 1,627,497 $ 1,492,834 $ 1,594,053 $ 1,398,482 Return on average assets (annualized) 0.87 % 0.85 % 0.84 % 0.80 % 0.68 % Return on average assets as adjusted (non-GAAP) (annualized) 0.90 % 0.82 % 0.79 % 0.78 % 0.76 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP) Reconciliation of Return on Average Equity as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019 GAAP earnings after income taxes $ 3,570 $ 3,480 $ 3,169 $ 12,725 $ 9,463 Net income as adjusted after income taxes (non-GAAP) (1) $ 3,691 $ 3,348 $ 2,956 $ 12,425 $ 10,675 Average equity $ 158,968 $ 154,996 $ 149,437 $ 153,497 $ 143,523 Return on average equity (annualized) 8.93 % 8.93 % 8.41 % 8.29 % 6.59 % Return on average equity as adjusted (non-GAAP) (annualized) 9.24 % 8.59 % 7.85 % 8.09 % 7.44 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP) Reconciliation of Return on Average Tangible Common Equity and Reconciliation of Return on Average Tangible Common Equity, as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Total stockholders’ equity $ 160,564 $ 157,323 $ 150,553 $ 160,564 $ 150,553 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (5,494 ) (5,893 ) (7,587 ) (5,494 ) (7,587 ) Tangible common equity (non-GAAP) $ 123,572 $ 119,932 $ 111,468 $ 123,572 $ 111,468 Average tangible common equity (non-GAAP) $ 121,752 $ 117,466 $ 109,829 $ 115,313 $ 105,340 GAAP earnings after income taxes $ 3,570 $ 3,480 $ 3,169 $ 12,725 $ 9,463 Net income as adjusted after income taxes (non-GAAP) (1) $ 3,691 $ 3,348 $ 2,956 $ 12,425 $ 10,675 Return on average tangible common equity (annualized) 11.67 % 11.79 % 11.45 % 11.04 % 8.98 % Return on average tangible common equity as adjusted (non-GAAP) (annualized) 12.06 % 11.34 % 10.68 % 10.78 % 10.13 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP) Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Twelve Months Ended December 31, 2020 September 30, 2020 December 31, 2019 December 31, 2020 December 31, 2019 Non-interest expense (GAAP) $ 10,826 $ 10,724 $ 10,428 $ 43,673 $ 42,686 Merger related Costs (1) — — (104 ) — (3,880 ) Branch Closure Costs (1) (165 ) — — (165 ) (15 ) Audit and financial reporting (1) — — — — (358 ) Non-interest expense as adjusted (non-GAAP) 10,661 10,724 10,324 43,508 38,433 Non-interest income 4,770 5,062 3,784 18,448 14,975 Net interest margin 13,372 11,909 11,775 50,255 43,513 Efficiency ratio denominator (GAAP) $ 18,142 $ 16,971 $ 15,559 $ 68,703 $ 58,488 Net gain on sale of branch (1) — — — — (2,295 ) Net gain on acquired business lines (1) — (180 ) — (432 ) — Settlement proceeds (1) — — — (131 ) — Efficiency ratio denominator (non-GAAP) $ 18,142 $ 16,791 $ 15,559 $ 68,140 $ 56,193 Efficiency ratio (GAAP) 60 % 63 % 67 % 64 % 73 % Efficiency ratio as adjusted (non-GAAP) 59 % 64 % 66 % 64 % 68 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP) Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)Tangible book value per share at end of period December 31, 2020 September 30, 2020 December 31, 2019 Total stockholders’ equity $ 160,564 $ 157,323 $ 150,553 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (5,494 ) (5,893 ) (7,587 ) Tangible common equity (non-GAAP) $ 123,572 $ 119,932 $ 111,468 Ending common shares outstanding 11,056,349 11,154,645 11,266,954 Book value per share $ 14.52 $ 14.10 $ 13.36 Tangible book value per share (non-GAAP) $ 11.18 $ 10.75 $ 9.89 Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)Tangible common equity as a percent of tangible assets at end of period December 31, 2020 September 30, 2020 December 31, 2019 Total stockholders’ equity $ 160,564 $ 157,323 $ 150,553 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (5,494 ) (5,893 ) (7,587 ) Tangible common equity (non-GAAP) $ 123,572 $ 119,932 $ 111,468 Total Assets $ 1,649,095 $ 1,622,593 $ 1,531,249 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (5,494 ) (5,893 ) (7,587 ) Tangible Assets (non-GAAP) $ 1,612,103 $ 1,585,202 $ 1,492,164 Less SBA PPP Loans (123,702 ) (139,166 ) — Tangible Assets, excluding SBA PPP Loans (non-GAAP) $ 1,488,401 $ 1,446,036 $ 1,492,164 Total stockholders’ equity to total assets ratio 9.74 % 9.70 % 9.83 % Tangible common equity as a percent of tangible assets (non-GAAP) 7.67 % 7.57 % 7.47 % Tangible common equity as a percent of tangible assets, excluding SBA PPP Loans (non-GAAP) 8.30 % 8.29 % 7.47 % 1Net income as adjusted and net income as adjusted per share are non-GAAP financial measures that management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)”.
2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Assets as Adjusted (non-GAAP)”.
3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Equity as Adjusted (non-GAAP)”.
4The efficiency ratio as adjusted (non-GAAP) is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and the Company’s ability to use what it has to generate the most profit possible for shareholders relative to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Efficiency Ratio as Adjusted (non-GAAP)”.
5Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets, return on tangible common equity and return on tangible common equity as adjusted are non-GAAP measures that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity and Reconciliation of Return on Average Tangible Common Equity as Adjusted (non-GAAP)”.
- Stockholders’ equity as a percent of total assets increased to 9.74% from 9.70% during the quarter ended December 31, 2020. Tangible common equity as a percent of tangible assets (non-GAAP)5, increased to 7.67% from 7.57% during the quarter ended December 31, 2020.