TINTON FALLS, N.J., Oct. 23, 2018 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq: TRCB) (the "Company"), the parent company of Two River Community Bank (the “Bank"), today reported financial results for the third quarter and nine months ended September 30, 2018, highlighted by higher net income and strong loan and deposit growth.
2018 Third Quarter Financial Highlights
(comparisons to respective prior year’s period)
- Net income increased 26.7% to $2.8 million, or $0.33 per diluted share
- Return on average assets of 1.04%, up from 0.89%
- Return on average equity of 9.98%, up from 8.39%
- Net interest income increased 8.2% to $9.1 million
- Net interest margin remained strong at 3.55%
- Efficiency ratio(1) improved to 61.8% compared to 62.6%
(1) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
(Totals at September 30, 2018; comparisons to December 31, 2017)
- Total loans were $900.9 million, an increase of $50.0 million, or 7.8% annualized
- Total deposits were $905.7 million, an increase of $44.2 million, or 6.8% annualized
- Total assets increased to a record $1.086 billion, compared to $1.040 billion, or 6.0% annualized
- Tangible book value per share(1) increased to $11.16, compared to $10.44
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.
Management Commentary
William D. Moss, Chairman, President and CEO, stated, “Our earnings performance was driven by a sustained trend of solid loan and deposit growth, which resulted in an 8.2% increase in net interest income and a 26.7% increase in net income. We reported annualized loan growth of 7.8%, predominantly in the commercial real estate, construction and residential sectors, without altering our underwriting standards or engaging in pricing activities which we do not believe are sustainable. Although our loan growth was partially offset by unusually high prepayment activity during the quarter, originations were strong and we are encouraged with the quality of our pipeline, which will help support our loan growth in future quarters. Our annualized deposit growth remained solid at 6.8%, despite an increasingly competitive environment.”
Mr. Moss continued, “During the quarter, we improved our efficiency ratio while also implementing significant improvements to our banking platform, including state-of-the-art online and mobile banking systems, which can be found at our new website www.tworiver.bank. Our upgrades include new functionality for our website, real time alerts, and upcoming compatibility within additional digital wallet payment platforms. We believe that these ongoing improvements to the Bank’s technology infrastructure and business processes will enhance our customer experience and support the growth of our client relationships. The Company expects to leverage the use of technology while taking a measured approach in its branch management. Later this year, we expect to close our New Brunswick office as it has not met our long-term expectations, and will continue to focus on markets where we can optimize our branch network.”
Dividend Information
On October 17, 2018, the Company’s Board of Directors declared a quarterly cash dividend of $0.055 per share, payable on November 28, 2018 to shareholders of record as of the close of business on November 7, 2018. This marks the Company’s 23rd consecutive quarterly cash dividend payment.
Key Quarterly Performance Metrics
| 3rd Qtr. | 2nd Qtr. | 1st Qtr. | 4th Qtr. | 3rd Qtr. | 9 Mo. Ended | 9 Mo. Ended | ||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | 9/30/2018 | 9/30/2017 | ||||||||
| Net Income (in thousands) | $2,834 | $2,650 | $2,676 | $335 | $2,237 | $8,160 | $6,167 | |||||||
| Earnings per Common Share – Diluted | $0.33 | $0.30 | $0.31 | $0.04 | $0.26 | $0.94 | $0.71 | |||||||
| Return on Average Assets | 1.04 | % | 1.00 | % | 1.04 | % | 0.13 | % | 0.89 | % | 1.03 | % | 0.84 | % |
| Return on Average Tangible Assets(1) | 1.06 | % | 1.02 | % | 1.06 | % | 0.13 | % | 0.91 | % | 1.04 | % | 0.86 | % |
| Return on Average Equity | 9.98 | % | 9.67 | % | 10.08 | % | 1.24 | % | 8.39 | % | 9.91 | % | 7.96 | % |
| Return on Average Tangible Equity(1) | 11.90 | % | 11.57 | % | 12.12 | % | 1.49 | % | 10.13 | % | 11.86 | % | 9.64 | % |
| Net Interest Margin | 3.55 | % | 3.59 | % | 3.63 | % | 3.56 | % | 3.62 | % | 3.59 | % | 3.52 | % |
| Efficiency Ratio(2) | 61.78 | % | 62.59 | % | 61.59 | % | 59.96 | % | 62.57 | % | 61.99 | % | 64.09 | % |
| Non-Performing Assets to Total Assets | 0.18 | % | 0.18 | % | 0.19 | % | 0.20 | % | 0.23 | % | 0.18 | % | 0.23 | % |
| Allowance as a % of Loans | 1.26 | % | 1.26 | % | 1.26 | % | 1.25 | % | 1.25 | % | 1.26 | % | 1.25 | % |
| (1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release. (2) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income. | ||||||||||||||
Loan Composition
The components of the Company’s loan portfolio at September 30, 2018 and December 31, 2017 are as follows:
| (in thousands) | ||||||||||||||
| September 30, 2018 | December 31, 2017 | % Change | ||||||||||||
| Commercial and industrial | $ | 104,118 | $ | 101,371 | 2.7 | % | ||||||||
| Real estate – construction | 141,881 | 118,094 | 20.1 | % | ||||||||||
| Real estate – commercial | 548,763 | 537,733 | 2.1 | % | ||||||||||
| Real estate – residential | 75,973 | 64,238 | 18.3 | % | ||||||||||
| Consumer | 30,895 | 30,203 | 2.3 | % | ||||||||||
| Unearned fees | (735 | ) | (765 | ) | (3.9 | ) | % | |||||||
| 900,895 | 850,874 | 5.9 | % | |||||||||||
| Allowance for loan losses | (11,390 | ) | (10,668 | ) | 6.8 | % | ||||||||
| Net Loans | $ | 889,505 | $ | 840,206 | 5.9 | % | ||||||||
Deposit Composition
The components of the Company’s deposits at September 30, 2018 and December 31, 2017 are as follows:
| (in thousands) | |||||||||||||||||
| September 30, 2018 | December 31, 2017 | % Change | |||||||||||||||
| Non-interest-bearing | $ | 173,906 | $ | 167,297 | 4.0 | % | |||||||||||
| NOW accounts | 195,240 | 232,673 | (16.1 | ) | % | ||||||||||||
| Savings deposits | 265,410 | 242,448 | 9.5 | % | |||||||||||||
| Money market deposits | 47,050 | 59,818 | (21.3 | ) | % | ||||||||||||
| Listed service CD’s | 45,521 | 44,436 | 2.4 | % | |||||||||||||
| Time deposits / IRA | 108,217 | 74,183 | 45.9 | % | |||||||||||||
| Wholesale deposits | 70,401 | 40,702 | 73.0 | % | |||||||||||||
| Total Deposits | $ | 905,745 | $ | 861,557 | 5.1 | % | |||||||||||
2018 Third Quarter Financial Review
Net Income
Net income for the three months ended September 30, 2018 increased 26.7% to $2.8 million, or $0.33 per diluted common share, compared to $2.2 million, or $0.26 per diluted common share, for the same period last year. The increase was largely due to higher net interest income and a lower loan loss provision coupled with a lower Federal corporate income tax rate.
On a linked quarter basis, third quarter 2018 net income increased 6.9% compared to the second quarter of 2018, primarily due to higher net interest income, a lower loan loss provision and lower non-interest expenses.
Net income for the nine months ended September 30, 2018 increased 32.3% to $8.2 million, or $0.94 per diluted share, compared to $6.2 million, or $0.71 per diluted share, in the same prior year period. For the first nine months of 2018, the Company recorded a $168,000 tax benefit related to the accounting treatment of equity-based compensation, as compared to a benefit of $177,000 for the same period last year.
Net Interest Income
Net interest income for the quarter ended September 30, 2018 was $9.1 million, an increase of 8.2% compared to $8.4 million in the corresponding prior year period. This was largely due to an increase of $95.0 million, or 10.3%, in average interest-earning assets, primarily attributable to growth in the loan portfolio. On a linked quarter basis, net interest income increased $133,000, or 1.5%, from $9.0 million.
For the nine months ended September 30, 2018, net interest income increased 12.0% to $26.9 million from $24.0 million in the prior year period.
Net Interest Margin
The Company reported a net interest margin of 3.55% for the third quarter of 2018, compared to 3.59% in the second quarter of 2018 and 3.62% reported for the third quarter of 2017. The slight decline from the second quarter of 2018 was largely due to higher cost of funds.
The net interest margin for the nine months ended September 30, 2018 was 3.59%, compared to 3.52% in the prior year period, primarily due to higher yielding interest-earning assets, partially offset by a higher cost of funds.
Non-Interest Income
Non-interest income for the quarter ended September 30, 2018 declined slightly to $1.4 million, compared to $1.5 million in the corresponding prior year period. This was largely due to lower residential mortgage banking revenues and gains on the sale of SBA loans, which was partially offset by higher other loan fees, primarily due to loan prepayment fees.
On a linked quarter basis, non-interest income decreased by $141,000, or 9.4%, from the second quarter of 2018, mainly due to lower gains on the sale of SBA loans and residential mortgage banking revenues.
The slowdown in residential lending activity was mainly due to the change in the mix of mortgage originations to more portfolio adjustable rate product versus saleable fixed rate mortgages, coupled with higher interest rates and tighter competition.
For the nine months ended September 30, 2018, non-interest income increased $45,000, or 1.1%, to $4.2 million from the same period in 2017.
Non-Interest Expense
Non-interest expense for the quarter ended September 30, 2018 totaled $6.5 million, an increase of $286,000, or 4.6%, from the $6.2 million reported in same period in 2017. This was primarily due to salary increases, new hires within the lending and deposit teams, and higher data processing expenses. The Company’s efficiency ratio was 61.8% for the quarter, compared to 62.6% for the same period in 2017.
On a linked quarter basis, non-interest expense decreased by $90,000, or 1.4%, largely due to lower professional expenses.
For the nine months ended September 30, 2018, non-interest expense increased $1.2 million, or 6.7%, to $19.2 million compared to the same prior year period. Efficiency ratio for the nine months ended September 30, 2018 improved to 62.0% from 64.1% compared to the same prior year period.
Provision for Loan Losses
During the quarter, a provision for loan losses of $150,000 was expensed, compared to $255,000 in the same prior year period. The majority of the third quarter 2018 provision was to support the Company’s continued loan growth. The Company also had $39,000 in net loan recoveries during the quarter, compared to $15,000 in net loan recoveries during the same period last year.
For the nine months ended September 30, 2018, a provision of $775,000 was expensed, compared to $855,000 for the same prior year period. The Company had $53,000 of net loan charge-offs for the nine months ended September 30, 2018, compared to $197,000 in net loan charge-offs for the same prior year period.
As of September 30, 2018, the Company's allowance for loan losses was $11.4 million, compared to $10.7 million as of December 31, 2017. The loss allowance as a percentage of total loans was 1.26% at September 30, 2018 compared to 1.25% at December 31, 2017.
Financial Condition / Balance Sheet
At September 30, 2018, the Company maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Company's Tier 1 capital to average assets ratio was 9.06%, its common equity Tier 1 to risk weighted assets ratio was 9.99%, its Tier 1 capital to risk weighted assets ratio was 9.99%, and its total capital to risk weighted assets ratio was 12.21%.
Total assets as of September 30, 2018 were $1.086 billion, compared to $1.040 billion at December 31, 2017 and $1.000 billion as of September 30, 2017.
Total loans as of September 30, 2018 were $900.9 million, compared to $850.9 million at December 31, 2017 and $816.1 million as of September 30, 2017.
Total deposits as of September 30, 2018 were $905.7 million, compared to $861.6 million as of December 31, 2017 and $821.9 million as of September 30, 2017. Core checking deposits at September 30, 2018 were $369.1 million, compared to $400.0 million at December 31, 2017 and $372.0 million at September 30, 2017. The Company continues to focus on building core checking account deposit relationships, which can vary from quarter to quarter due to seasonality in its municipal relationships.
Asset Quality
The Company's non-performing assets at September 30, 2018 were $2.0 million as compared to $2.1 million at December 31, 2017 and $2.3 million at September 30, 2017. Non-performing assets to total assets at September 30, 2018 were 0.18% compared to 0.20% at December 31, 2017 and 0.23% at September 30, 2017.
Non-accrual loans were $1.39 million at September 30, 2018, compared to $2.07 million at December 31, 2017 and $2.35 million at September 30, 2017. OREO was $585,000 at September 30, 2018, compared to no OREO at December 31, 2017 and September 30, 2017. During the third quarter, two non-accrual loans were transferred into OREO.
Troubled debt restructured loan balances amounted to $6.6 million at September 30, 2018, with all but $877,000 performing. This compared to $7.1 million at December 31, 2017 and $8.1 million at September 30, 2017.
About the Company
Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 14 branches along with two loan production offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiver.bank.
The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continue," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2017. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.
| Investor Contact: | Media Contact: |
| Adam Prior, Senior Vice President | Adam Cadmus, Marketing Director |
| The Equity Group Inc. | Two River Community Bank |
| Phone: (212) 836-9606 | Phone: (732) 982-2167 |
| Email: aprior@equityny.com | Email: acadmus@tworiverbank.com |
| TWO RIVER BANCORP | ||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) | ||||||||||||||
| For the Three Months and Nine Months Ended September 30, 2018 and 2017 | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
| 2018 | 2017 | 2018 | 2017 | |||||||||||
| INTEREST INCOME: | ||||||||||||||
| Loans, including fees | $ | 10,656 | $ | 9,227 | $ | 30,720 | $ | 26,363 | ||||||
| Securities: | ||||||||||||||
| Taxable | 274 | 247 | 861 | 715 | ||||||||||
| Tax-exempt | 280 | 267 | 842 | 831 | ||||||||||
| Interest-bearing deposits | 132 | 83 | 293 | 257 | ||||||||||
| Total Interest Income | 11,342 | 9,824 | 32,716 | 28,166 | ||||||||||
| INTEREST EXPENSE: | ||||||||||||||
| Deposits | 1,924 | 1,069 | 4,923 | 3,170 | ||||||||||
| Securities sold under agreements to repurchase | 14 | 18 | 43 | 50 | ||||||||||
| Federal Home Loan Bank ("FHLB") and other borrowings | 136 | 157 | 382 | 449 | ||||||||||
| Subordinated debt | 165 | 164 | 495 | 493 | ||||||||||
| Total Interest Expense | 2,239 | 1,408 | 5,843 | 4,162 | ||||||||||
| Net Interest Income | 9,103 | 8,416 | 26,873 | 24,004 | ||||||||||
| PROVISION FOR LOAN LOSSES | 150 | 255 | 775 | 855 | ||||||||||
| Net Interest Income after Provision for Loan Losses | 8,953 | 8,161 | 26,098 | 23,149 | ||||||||||
| NON-INTEREST INCOME: | ||||||||||||||
| Service fees on deposit accounts | 236 | 224 | 713 | 535 | ||||||||||
| Mortgage banking | 239 | 358 | 986 | 1,258 | ||||||||||
| Other loan fees | 378 | 188 | 626 | 402 | ||||||||||
| Earnings from investment in bank owned life insurance | 133 | 137 | 395 | 411 | ||||||||||
| Gain on sale of SBA loans | 203 | 306 | 921 | 817 | ||||||||||
| Other income | 166 | 240 | 520 | 693 | ||||||||||
| Total Non-Interest Income | 1,355 | 1,453 | 4,161 | 4,116 | ||||||||||
| NON-INTEREST EXPENSES: | ||||||||||||||
| Salaries and employee benefits | 4,024 | 3,641 | 11,919 | 10,554 | ||||||||||
| Occupancy and equipment | 966 | 1,112 | 3,099 | 3,215 | ||||||||||
| Professional | 432 | 366 | 1,260 | 1,102 | ||||||||||
| Insurance | 59 | 57 | 180 | 158 | ||||||||||
| FDIC insurance and assessments | 128 | 123 | 374 | 354 | ||||||||||
| Advertising | 90 | 110 | 280 | 345 | ||||||||||
| Data processing | 184 | 151 | 510 | 406 | ||||||||||
| Outside services fees | 89 | 120 | 250 | 347 | ||||||||||
| OREO expenses, impairment and sales, net | 7 | 25 | (8 | ) | 44 | |||||||||
| Loan workout expenses | 28 | 8 | 124 | 174 | ||||||||||
| Other operating | 454 | 462 | 1,251 | 1,324 | ||||||||||
| Total Non-Interest Expenses | 6,461 | 6,175 | 19,239 | 18,023 | ||||||||||
| Income before Income Taxes | 3,847 | 3,439 | 11,020 | 9,242 | ||||||||||
| Income Tax Expense | 1,013 | 1,202 | 2,860 | 3,075 | ||||||||||
| Net Income | $ | 2,834 | $ | 2,237 | $ | 8,160 | $ | 6,167 | ||||||
| Earnings Per Common Share: | ||||||||||||||
| Basic | $ | 0.33 | $ | 0.27 | $ | 0.96 | $ | 0.74 | ||||||
| Diluted | $ | 0.33 | $ | 0.26 | $ | 0.94 | $ | 0.71 | ||||||
| Weighted average common shares outstanding: | ||||||||||||||
| Basic | 8,513 | 8,393 | 8,489 | 8,373 | ||||||||||
| Diluted | 8,700 | 8,656 | 8,695 | 8,647 | ||||||||||
| TWO RIVER BANCORP | ||||||
| CONSOLIDATED BALANCE SHEETS (Unaudited) | ||||||
| (in thousands, except share data) | ||||||
| September 30, | December 31, | |||||
| 2018 | 2017 | |||||
| ASSETS | ||||||
| Cash and due from banks | $ | 17,880 | $ | 29,575 | ||
| Interest-bearing deposits in bank | 29,733 | 18,644 | ||||
| Cash and cash equivalents | 47,613 | 48,219 | ||||
| Securities available for sale | 25,281 | 28,684 | ||||
| Securities held to maturity | 57,606 | 58,002 | ||||
| Equity securities | 2,412 | 2,448 | ||||
| Restricted investments, at cost | 5,997 | 5,430 | ||||
| Loans held for sale | 1,461 | 2,581 | ||||
| Loans | 900,895 | 850,874 | ||||
| Allowance for loan losses | (11,390 | ) | (10,668 | ) | ||
| Net loans | 889,505 | 840,206 | ||||
| OREO | 585 | - | ||||
| Bank owned life insurance | 21,968 | 21,573 | ||||
| Premises and equipment, net | 6,011 | 6,239 | ||||
| Accrued interest receivable | 2,982 | 2,554 | ||||
| Goodwill | 18,109 | 18,109 | ||||
| Other assets | 6,769 | 5,753 | ||||
| TOTAL ASSETS | $ | 1,086,299 | $ | 1,039,798 | ||
| LIABILITIES | ||||||
| Deposits: | ||||||
| Non-interest-bearing | $ | 173,906 | $ | 167,297 | ||
| Interest-bearing | 731,839 | 694,260 | ||||
| Total Deposits | 905,745 | 861,557 | ||||
| Securities sold under agreements to repurchase | 22,153 | 27,120 | ||||
| FHLB and other borrowings | 24,500 | 25,800 | ||||
| Subordinated debt | 9,914 | 9,888 | ||||
| Accrued interest payable | 97 | 70 | ||||
| Other liabilities | 9,999 | 8,792 | ||||
| Total Liabilities | 972,408 | 933,227 | ||||
| SHAREHOLDERS' EQUITY | ||||||
| Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding | - | - | ||||
| Common stock, no par value; 25,000,000 shares authorized; | ||||||
| Issued – 8,896,273 and 8,782,124 at September 30, 2018 and December 31, 2017, respectively | ||||||
| Outstanding – 8,584,179 and 8,470,030 at September 30, 2018 and December 31, 2017, respectively | 80,294 | 79,678 | ||||
| Retained earnings | 36,535 | 29,593 | ||||
| Treasury stock, at cost; 312,094 shares at September 30, 2018 and December 31, 2017 | (2,396 | ) | (2,396 | ) | ||
| Accumulated other comprehensive loss | (542 | ) | (304 | ) | ||
| Total Shareholders' Equity | 113,891 | 106,571 | ||||
| TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY | $ | 1,086,299 | $ | 1,039,798 | ||
| TWO RIVER BANCORP | ||||||||||||||
| Selected Consolidated Financial Data (Unaudited) | ||||||||||||||
| Selected Consolidated Earnings Data | ||||||||||||||
| (in thousands, except per share data) | ||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||
| Sept. 30, | June 30, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||
| Selected Consolidated Earnings Data: | 2018 | 2018 | 2017 | 2018 | 2017 | |||||||||
| Total Interest Income | $ | 11,342 | $ | 10,907 | $ | 9,824 | $ | 32,716 | $ | 28,166 | ||||
| Total Interest Expense | 2,239 | 1,937 | 1,408 | 5,843 | 4,162 | |||||||||
| Net Interest Income | 9,103 | 8,970 | 8,416 | 26,873 | 24,004 | |||||||||
| Provision for Loan Losses | 150 | 225 | 255 | 775 | 855 | |||||||||
| Net Interest Income after Provision for Loan Losses | 8,953 | 8,745 | 8,161 | 26,098 | 23,149 | |||||||||
| Other Non-Interest Income | 1,355 | 1,496 | 1,453 | 4,161 | 4,116 | |||||||||
| Other Non-Interest Expenses | 6,461 | 6,551 | 6,175 | 19,239 | 18,023 | |||||||||
| Income before Income Taxes | 3,847 | 3,690 | 3,439 | 11,020 | 9,242 | |||||||||
| Income Tax Expense | 1,013 | 1,040 | 1,202 | 2,860 | 3,075 | |||||||||
| Net Income | $ | 2,834 | $ | 2,650 | $ | 2,237 | $ | 8,160 | $ | 6,617 | ||||
| Per Common Share Data: | ||||||||||||||
| Basic Earnings | $ | 0.33 | $ | 0.31 | $ | 0.27 | $ | 0.96 | $ | 0.74 | ||||
| Diluted Earnings | $ | 0.33 | $ | 0.30 | $ | 0.26 | $ | 0.94 | $ | 0.71 | ||||
| Book Value | $ | 13.27 | $ | 13.02 | $ | 12.60 | $ | 13.27 | $ | 12.60 | ||||
| Tangible Book Value(1) | $ | 11.16 | $ | 10.90 | $ | 10.46 | $ | 11.16 | $ | 10.46 | ||||
| Average Common Shares Outstanding (in thousands): | ||||||||||||||
| Basic | 8,513 | 8,488 | 8,393 | 8,489 | 8,373 | |||||||||
| Diluted | 8,700 | 8,690 | 8,656 | 8,695 | 8,647 | |||||||||
| (1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release. | ||||||||||||||
| Selected Period End Balances | |||||||||||||||
| (in thousands) | |||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||
| Total Assets | $ | 1,086,299 | $ | 1,055,527 | $ | 1,042,277 | $ | 1,039,798 | $ | 1,000,245 | |||||
| Investment Securities and Restricted Stock | 91,296 | 94,449 | 96,251 | 94,564 | 92,641 | ||||||||||
| Total Loans | 900,895 | 890,369 | 872,327 | 850,874 | 816,078 | ||||||||||
| Allowance for Loan Losses | (11,390 | ) | (11,201 | ) | (10,962 | ) | (10,668 | ) | (10,223 | ) | |||||
| Goodwill and Other Intangible Assets | 18,109 | 18,109 | 18,109 | 18,109 | 18,109 | ||||||||||
| Total Deposits | 905,745 | 880,879 | 870,904 | 861,557 | 821,872 | ||||||||||
| Repurchase Agreements | 22,153 | 19,878 | 18,472 | 27,120 | 22,576 | ||||||||||
| FHLB and Other Borrowings | 24,500 | 24,500 | 24,500 | 25,800 | 30,300 | ||||||||||
| Subordinated Debt | 9,914 | 9,905 | 9,896 | 9,888 | 9,879 | ||||||||||
| Shareholders' Equity | 113,891 | 111,347 | 108,980 | 106,571 | 106,567 | ||||||||||
| Asset Quality Data (by Quarter) | |||||||||||||||
| (dollars in thousands) | |||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | |||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | |||||||||||
| Nonaccrual Loans | $ | 1,390 | $ | 1,930 | $ | 1,972 | $ | 2,070 | $ | 2,345 | |||||
| OREO | 585 | - | - | - | - | ||||||||||
| Total Non-Performing Assets | 1,975 | 1,930 | 1,972 | 2,070 | 2,345 | ||||||||||
| Troubled Debt Restructured Loans: | |||||||||||||||
| Performing | 5,678 | 5,831 | 5,965 | 6,053 | 6,925 | ||||||||||
| Non-Performing | 877 | 877 | 878 | 994 | 1,129 | ||||||||||
| Non-Performing Loans to Total Loans | 0.15 | % | 0.22 | % | 0.23 | % | 0.24 | % | 0.29 | % | |||||
| Non-Performing Assets to Total Assets | 0.18 | % | 0.18 | % | 0.19 | % | 0.20 | % | 0.23 | % | |||||
| Allowance as a % of Loans | 1.26 | % | 1.26 | % | 1.26 | % | 1.25 | % | 1.25 | % | |||||
| Capital Ratios | |||||||||||||||||
| September 30, 2018 | December 31, 2017 | ||||||||||||||||
| CET 1 Capital to Risk Weighted Assets Ratio | Tier 1 Capital to Average Assets Ratio | Tier 1 Capital to Risk Weighted Assets Ratio | Total Capital to Risk Weighted Assets Ratio | CET 1 Capital to Risk Weighted Assets Ratio | Tier 1 Capital to Average Assets Ratio | Tier 1 Capital to Risk Weighted Assets Ratio | Total Capital to Risk Weighted Assets Ratio | ||||||||||
| Two River Bancorp | 9.99 | % | 9.06 | % | 9.99 | % | 12.21 | % | 9.68 | % | 8.85 | % | 9.68 | % | 11.93 | % | |
| Two River Community Bank | 10.98 | % | 9.96 | % | 10.98 | % | 12.16 | % | 10.66 | % | 9.76 | % | 10.66 | % | 11.82 | % | |
| "Well capitalized" institution (under prompt corrective action regulations.)* | 6.50 | % | 5.00 | % | 8.00 | % | 10.00 | % | 6.50 | % | 5.00 | % | 8.00 | % | 10.00 | % | |
| *Applies to Bank only. For the Company to be “well capitalized,” the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%. | |||||||||||||||||
| Net Loan Charge-offs | ||||||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||||
| Three Months Ended | Nine Months Ended | |||||||||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | ||||||||||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | ||||||||||||||||||||||
| Net loan charge-offs (recoveries): | ||||||||||||||||||||||||||||
| Charge-offs | $ | - | $ | (12 | ) | $ | (115 | ) | $ | (239 | ) | $ | - | $ | (127 | ) | $ | (248 | ) | |||||||||
| Recoveries | 39 | 26 | 9 | 9 | 15 | 74 | 51 | |||||||||||||||||||||
| Net loan (charge-offs) recoveries | $ | 39 | $ | 14 | $ | (106 | ) | $ | (230 | ) | $ | 15 | $ | (53 | ) | $ | (197 | ) | ||||||||||
| Net loan (charge-offs) recoveries to average loans (annualized) | 0.02 | % | 0.01 | % | (0.05 | ) | % | (0.11 | ) | % | 0.01 | % | (0.01 | ) | % | (0.03 | ) | % | ||||||||||
| Consolidated Average Balance Sheets & Yields | ||||||||||||||||||
| With Resultant Interest and Average Rates | ||||||||||||||||||
| Three Months Ended | Three Months Ended | |||||||||||||||||
| (dollars in thousands) | September 30, 2018 | September 30, 2017 | ||||||||||||||||
| Interest / Income Expense | Interest / Income Expense | |||||||||||||||||
| ASSETS | Average Balance | Average Yield / Rate | Average Balance | Average Yield / Rate | ||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||
| Interest-bearing due from banks | $ | 26,337 | $ | 132 | 1.99 | % | $ | 25,901 | $ | 83 | 1.27 | % | ||||||
| Investment securities | 93,341 | 554 | 2.37 | % | 92,257 | 514 | 2.23 | % | ||||||||||
| Loans, net of unearned fees(1) (2) | 896,999 | 10,656 | 4.71 | % | 803,553 | 9,227 | 4.56 | % | ||||||||||
| Total Interest-Earning Assets | 1,016,677 | 11,342 | 4.43 | % | 921,711 | 9,824 | 4.23 | % | ||||||||||
| Non-Interest-Earning Assets: | ||||||||||||||||||
| Allowance for loan losses | (11,341 | ) | (10,056 | ) | ||||||||||||||
| All other assets | 75,038 | 83,244 | ||||||||||||||||
| Total Assets | $ | 1,080,374 | $ | 994,899 | ||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| NOW deposits | $ | 201,026 | 320 | 0.63 | % | $ | 200,298 | 239 | 0.47 | % | ||||||||
| Savings deposits | 267,025 | 568 | 0.84 | % | 260,919 | 340 | 0.52 | % | ||||||||||
| Money market deposits | 48,606 | 22 | 0.18 | % | 63,557 | 27 | 0.17 | % | ||||||||||
| Time deposits | 213,872 | 1,014 | 1.88 | % | 126,566 | 463 | 1.45 | % | ||||||||||
| Securities sold under agreements to repurchase | 18,389 | 14 | 0.30 | % | 23,167 | 18 | 0.31 | % | ||||||||||
| FHLB and other borrowings | 27,870 | 136 | 1.94 | % | 26,159 | 157 | 2.38 | % | ||||||||||
| Subordinated debt | 9,911 | 165 | 6.66 | % | 9,876 | 164 | 6.64 | % | ||||||||||
| Total Interest-Bearing Liabilities | 786,699 | 2,239 | 1.13 | % | 710,542 | 1,408 | 0.79 | % | ||||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||||
| Demand deposits | 171,729 | 170,267 | ||||||||||||||||
| Other liabilities | 9,314 | 8,351 | ||||||||||||||||
| Total Non-Interest-Bearing Liabilities | 181,043 | 178,618 | ||||||||||||||||
| Stockholders’ Equity | 112,632 | 105,739 | ||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,080,374 | $ | 994,889 | ||||||||||||||
| NET INTEREST INCOME | $ | 9,103 | $ | 8,416 | ||||||||||||||
| NET INTEREST SPREAD(3) | 3.30 | % | 3.44 | % | ||||||||||||||
| NET INTEREST MARGIN(4) | 3.55 | % | 3.62 | % | ||||||||||||||
| (1) Included in interest income on loans are net unearned loan fees. | ||||||||||||||||||
| (2) Includes non-performing loans. | ||||||||||||||||||
| (3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities. | ||||||||||||||||||
| (4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets. | ||||||||||||||||||
| Consolidated Average Balance Sheets & Yields | ||||||||||||||||||
| With Resultant Interest and Average Rates | ||||||||||||||||||
| Nine Months Ended | Nine Months Ended | |||||||||||||||||
| (dollars in thousands) | September 30, 2018 | September 30, 2017 | ||||||||||||||||
| Interest / Income Expense | Interest / Income Expense | |||||||||||||||||
| ASSETS | Average Balance | Average Yield / Rate | Average Balance | Average Yield / Rate | ||||||||||||||
| Interest-Earning Assets: | ||||||||||||||||||
| Interest-bearing due from banks | $ | 21,923 | $ | 293 | 1.79 | % | $ | 34,824 | $ | 257 | 0.99 | % | ||||||
| Investment securities | 95,574 | 1,703 | 2.38 | % | 94,120 | 1,546 | 2.19 | % | ||||||||||
| Loans, net of unearned fees(1) (2) | 883,436 | 30,720 | 4.65 | % | 781,861 | 26,363 | 4.51 | % | ||||||||||
| Total Interest-Earning Assets | 1,000,933 | 32,716 | 4.37 | % | 910,805 | 28,166 | 4.13 | % | ||||||||||
| Non-Interest-Earning Assets: | ||||||||||||||||||
| Allowance for loan losses | (11,097 | ) | (9,801 | ) | ||||||||||||||
| All other assets | 74,168 | 79,867 | ||||||||||||||||
| Total Assets | $ | 1,064,004 | $ | 980,871 | ||||||||||||||
| LIABILITIES & SHAREHOLDERS' EQUITY | ||||||||||||||||||
| Interest-Bearing Liabilities: | ||||||||||||||||||
| NOW deposits | $ | 219,242 | 937 | 0.57 | % | $ | 196,748 | 682 | 0.46 | % | ||||||||
| Savings deposits | 259,365 | 1,415 | 0.73 | % | 259,109 | 1,004 | 0.52 | % | ||||||||||
| Money market deposits | 53,413 | 70 | 0.18 | % | 63,029 | 80 | 0.17 | % | ||||||||||
| Time deposits | 190,520 | 2,501 | 1.76 | % | 131,380 | 1,404 | 1.43 | % | ||||||||||
| Securities sold under agreements to repurchase | 19,734 | 43 | 0.29 | % | 22,054 | 50 | 0.30 | % | ||||||||||
| FHLB and other borrowings | 26,862 | 382 | 1.90 | % | 24,976 | 449 | 2.40 | % | ||||||||||
| Subordinated debt | 9,902 | 495 | 6.67 | % | 9,868 | 493 | 6.68 | % | ||||||||||
| Total Interest-Bearing Liabilities | 779,038 | 5,843 | 1.00 | % | 707,164 | 4,162 | 0.79 | % | ||||||||||
| Non-Interest-Bearing Liabilities: | ||||||||||||||||||
| Demand deposits | 165,778 | 162,279 | ||||||||||||||||
| Other liabilities | 9,094 | 7,801 | ||||||||||||||||
| Total Non-Interest-Bearing Liabilities | 174,872 | 170,080 | ||||||||||||||||
| Shareholders’ Equity | 110,094 | 103,627 | ||||||||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 1,064,004 | $ | 980,871 | ||||||||||||||
| NET INTEREST INCOME | $ | 26,873 | $ | 24,004 | ||||||||||||||
| NET INTEREST SPREAD(3) | 3.37 | % | 3.34 | % | ||||||||||||||
| NET INTEREST MARGIN(4) | 3.59 | % | 3.52 | % | ||||||||||||||
| (1) Included in interest income on loans are net unearned loan fees. | ||||||||||||||||||
| (2) Includes non-performing loans. | ||||||||||||||||||
| (3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities. | ||||||||||||||||||
| (4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets. | ||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures
The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.
| (in thousands, except per share data) | |||||||||||||||||||||
| As of and for the Three Months Ended | As of and for the Nine Months Ended | ||||||||||||||||||||
| Sept. 30, | June 30, | March 31, | Dec. 31, | Sept. 30, | Sept. 30, | Sept. 30, | |||||||||||||||
| 2018 | 2018 | 2018 | 2017 | 2017 | 2018 | 2017 | |||||||||||||||
| Total shareholders' equity | $ | 113,891 | $ | 111,347 | $ | 108,980 | $ | 106,571 | $ | 106,567 | $ | 113,891 | $ | 102,406 | |||||||
| Less: goodwill and other tangibles | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | (18,109 | ) | |||||||
| Tangible common shareholders’ equity | $ | 95,782 | $ | 93,238 | $ | 90,871 | $ | 88,462 | $ | 88,458 | $ | 95,782 | $ | 84,297 | |||||||
| Common shares outstanding | 8,584 | 8,555 | 8,525 | 8,470 | 8,454 | 8,584 | 8,454 | ||||||||||||||
| Book value per common share | $ | 13.27 | $ | 13.02 | $ | 12.78 | $ | 12.58 | $ | 12.60 | $ | 13.27 | $ | 12.60 | |||||||
| Book value per common share | $ | 13.27 | $ | 13.02 | $ | 12.78 | $ | 12.58 | $ | 12.60 | $ | 13.27 | $ | 12.60 | |||||||
| Effect of intangible assets | (2.11 | ) | (2.12 | ) | (2.12 | ) | (2.14 | ) | (2.14 | ) | (2.11 | ) | (2.14 | ) | |||||||
| Tangible book value per common share | $ | 11.16 | $ | 10.90 | $ | 10.66 | $ | 10.44 | $ | 10.46 | $ | 11.16 | $ | 10.46 | |||||||
| Return on average assets | 1.04 | % | 1.00 | % | 1.04 | % | 0.13 | % | 0.89 | % | 1.03 | % | 0.84 | % | |||||||
| Effect of average intangible assets | 0.02 | % | 0.02 | % | 0.02 | % | - | 0.02 | % | 0.01 | % | 0.02 | % | ||||||||
| Return on average tangible assets | 1.06 | % | 1.02 | % | 1.06 | % | 0.13 | % | 0.91 | % | 1.04 | % | 0.86 | % | |||||||
| Return on average equity | 9.98 | % | 9.67 | % | 10.08 | % | 1.24 | % | 8.39 | % | 9.91 | % | 7.96 | % | |||||||
| Effect of average intangible assets | 1.92 | % | 1.90 | % | 2.04 | % | 0.25 | % | 1.74 | % | 1.95 | % | 1.68 | % | |||||||
| Return on average tangible equity | 11.90 | % | 11.57 | % | 12.12 | % | 1.49 | % | 10.13 | % | 11.86 | % | 9.64 | % | |||||||