Traditions Bancorp, Inc. Reports Third Quarter 2021 Results

YORK, Pennsylvania., October 27, 2021 / PRNewswire / – Traditions Bancorp, Inc. (OTC Pink: TRBK) reported net income of $ 2.3 million for the third quarter ended September 30, 2021, compared to $ 2.8 million for the third quarter of 2020. This represents a $ 544,000, or 19%, down from Q3 2020 and is a function of the stabilization of mortgage banking activities following the unprecedented refinancing boom of the previous year, with favorable trends in credit quality eliminating the current need for provisioning and higher spending as the bank invests in its regional expansion beyond York County. Net income for the nine months ended September 30, 2021 was $ 6.6 million, an augmentation of $ 451,000, or 7%, in the first nine months of last year. Per share, the bank said
74 cents per share (diluted) for the third quarter ended September 30, 2021 compared to 89 cents per share for the third quarter of 2020. For the nine months ended September 30, 2021, earnings per share was $ 2.10 versus $ 1.94 for the first nine months of 2020. The book value per common share was $ 22.27 to September 30, 2021 versus $ 20.00 for the third quarter of 2020.

“We continue to build on the strong financial performance achieved in the first half of 2021, recording one of the best quarters in our 19 year history,” said Eugene J. Draganosky, President and CEO. “Our core earnings engine remains strong, with a resumption in business loan growth in the current quarter despite a large SBA PPP loan forgiveness. We remain on track to meet our budgeted targets for 2021, despite persistent headwinds of a limited supply of available housing in our local market, less refinancing activity due to higher interest rates and pressures increased competitive pricing of loan agreements. Lancaster County, and the expansion of activities in the capital region. This will be supported by the measured deployment of the bank’s excess liquidity in investment securities and by our disciplined approach to deposit pricing to manage the overall cost of the bank’s funds. “

Quarterly Highlights – 3rd Quarter 2021 vs. 3rd Quarter 2020

  • Gains on mortgage sales remained strong at $ 2.6 million for 3Q21, despite the fall from record levels of $ 4.9 million for the 3Q20.
  • Residential mortgages sold in 3Q21 were $ 85.3 million compared to $ 117.9 million for the 3Q20.
  • The mortgage pipeline has shrunk to $ 50.5 million compared to $ 107.2 million to September 30, 2020.
  • Loans increased by $ 16.4 million, or 3%, on 3Q20. Loan growth was moderate due to the cancellation of PPP loans. Excluding the impact of PPP loans, loans increased by $ 50.7 million, or 12%.
  • From September 30, 2021, outstanding PPP loans were $ 17.8 million. The balance included the forgiveness of 94.5% of the loans from the first round and $ 14.9 million remaining balances for the second round.
  • Deposits increased $ 115.0 million, or 22%, in the past 12 months.
  • The net interest margin contracted to 3.23% in 3Q21 against 3.41% in 3Q20, due to excess liquidity on the balance sheet and the Federal Reserve’s interest rate cuts in early 2020, which were partially offset by a reduction in the cost of funds from 0.72% to 0.25% over the same period.
  • Excess cash continues to be used to purchase additional investment securities, with balances reaching $ 121.9 million in 3Q21 against $ 80.9 million in 3Q20.
  • Significant expenses incurred during the quarter were $ 138,000 for the rebranding, and $ 339,000 for the Lancaster market initiative. The rebranding is part of a 3-year plan with most of the spending in the first half of 2021. The Lancaster initiative represents ongoing costs.

Highlights of the Current Year – Nine Months Ended September 30, 2021 versus nine months ended September 30, 2020

  • Net interest income increased $ 1.4 million, or 10%, thanks to the recognition of PPP revenues, the fall in the cost of funds and the growth of loans.
  • For the year, net commission income from PPP loans amounted to $ 1.0 million. Almost $ 651,000 in gross costs have not yet been recorded. The net PPP costs realized to date for 2020 have been $ 684,000.
  • The allowance for loan losses decreased $ 3.5 million, or 97%, which is consistent with the general industry trend of lower than expected loan losses in 2021 to date.
  • Gains on mortgage sales declined $ 485,000, or 5%.
  • Significant expenses incurred during the year include $ 728,000 for rebranding, $ 800,000 for the Lancaster market initiative, and $ 146,000 one-off costs for the constitution of the holding company.

Credit quality and capital information:

  • From September 30, 2021, the bank’s credit exposure to the sectors most affected by the pandemic (i.e. restaurants / bars, entertainment venues, accommodation) was $ 30.6 million, or 6.1%, of the total loan portfolio against $ 32.7 million, or 6.7%, of the total loan portfolio in June 30, 2021.
  • Excluding non-accruals, there were no modified loans for temporary relief of payments at the end of 3Q21, against $ 2.6 million, or 0.5%, of the total loan portfolio in the related quarter.
  • Unrecognized loans decreased to $ 3.2 million in the current quarter of $ 3.6 million in the linked quarter. This included $ 102,000 into loans for temporary relief from payments.
  • Non-performing assets relative to total assets contracted to 0.44% from 0.50% in the related quarter.
  • The bad debt reserve ratio in 3Q2021 fell to 1.49% from 1.56% in the related quarter, excluding the PPP portfolio.
  • The bank remains well capitalized.

FINANCIAL HIGHLIGHTS (unaudited):
(dollars in thousands, except per share data)








Selected financial data


Sep 30

2021


Dec 31

2020


Sep 30

2020



Investment security

$

121 916

$

79,357

$

80 946



Loans, net of unearned income


497,273


465,513


480,903



Allowance for loan losses


7,150


7,046


6 363



Total assets


720 360


640,562


647,851



Deposits


649,921


567,075


543 886



Loans



42


40,456



Equity


64,297


66 628


64,434



Book value per common share

$

22.27

$

20.72

$

20.00



Allowance / loans


1.44%


1.51%


1.32%



Non-performing assets / total assets


0.44%


0.55%


0.18%



Tier 1 capital / average assets


8.93%


10.13%


10.07%



Tier 1 capital / risk-weighted assets


12.98%


14.38%


14.05%



Total capital / risk-weighted assets


14.45%


15.63%


15.30%













Three months ended Sept.

Nine months ended Sept.

Selected operating data


2021


2020


2021


2020

Interest income

$

5,805

$

5 882

$

17 041

$

17,386

Interest charges


(307)


(820)


(1,233)


(3,010)

Net interest income


5,498


5,062


15,808


14,376

Allowance for loan losses



(2,000)


(100)


(3,638)

Gains (losses) on investment securities




1


181

Gains from the sale of mortgages


2,644


4,894


8 813


9,298

Other income


492


521


1,438


1,564

Other expenses


(5,794)


(4,941)


(17 761)


(14,153)

Income before taxes


2,840


3,536


8,199


7 628

Income taxes


(568)


(720)


(1638)


(1,518)

Net revenue

$

2 272

$

2,816

$

6,561

$

6 110

Earnings per common share (basic)

$

0.75

$

0.90

$

2.11

$

1.95

Earnings per common share (diluted)

$

0.74

$

0.89

$

2.10

$

1.94

Return on average assets


1.27%


1.80%


1.28%


1.38%

Return on average equity


13.52%


18.15%


13.15%


13.80%

Net interest margin


3.23%


3.41%


3.25%


3.41%

Efficiency ratio


67.11%


47.16%


68.15%


55.68%

Net cancellations (collections) / average loans


0.00%


-0.03%


0.00%


0.35%

Average common stock


3 041


3 145


3 107


3 139

SPECIAL CAUTION REGARDING FORWARD-LOOKING STATEMENTS:

This press release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be safe harbor for forward-looking statements under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts. These statements can be identified by the use of forward-looking terms such as “believe”, “expect”, “could”, “will”, “should”, “plan”, “plan”, “seek”, “have”. intention, “” to anticipate “or similar terminology. These forward-looking statements include, without limitation, discussions about strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives , goals, expectations or consequences; and statements about the future performance, operations, products and services of Traditions Bancorp.

Traditions Bancorp cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to differ materially from those expressed in forward-looking statements, including but not limited to y limit: the ineffectiveness of the organization’s business strategy due to changes in current or future market conditions; the effects of competition and changes in competition laws and regulations, including industry consolidation and the development of competitive financial products and services; interest rate movements; difficulties in integrating separate business operations, including information technology challenges; the challenges of establishing and maintaining operations in new markets; volatility in securities markets; and deteriorating economic conditions.

The forward-looking statements in this press release speak only as of the date of this press release and Traditions Bancorp does not undertake to revise or update these statements to reflect changes that occur after the date on which the forward-looking statement was made. been made.

SOURCE Traditions Bancorp, Inc.

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