YORK, Pa., Oct. 25, 2024 /PRNewswire/ -- Traditions Bancorp, Inc. (OTC Pink: TRBK), the parent company of Traditions Bank, reported a net loss of $0.8 million for the third quarter ended September 30, 2024, compared to net income of $1.8 million in the linked quarter and $1.4 million for the third quarter of 2023. Net income for the current quarter was adversely impacted by $0.6 million in merger expenses and the company's decision to set aside $2.1 million in loan loss reserves. The company reported a loss per share (diluted) of 28 cents for the third quarter ended September 30, 2024, compared to earnings per share of 66 cents in the linked quarter and 51 cents for the third quarter of 2023. Unrealized investment portfolio losses, flowing through Accumulated Other Comprehensive Loss, have decreased to $8.3 million at quarter end compared to $11.1 million in the linked quarter. Book value per common share was $24.85 on September 30, 2024, versus $24.19 in the linked quarter and $23.31 for the third quarter of 2023.
"Traditions Bancorp reported a net loss for the third quarter because of merger expenses and the decision to reserve $1.6 million against the full exposure of a single substandard commercial loan in the interest of prudent risk management. The ultimate financial impact could be lower and will depend on the company's ability to recover the loan. An additional $0.5 million in reserves were added to cover loan growth and minor adjustments to our CECL model qualitative factors," stated Eugene J. Draganosky, Chair of the Board and Chief Executive Officer. "Quarterly mortgage banking income exceeded expectations, with gains on the sale of mortgages helping to offset the pressure of elevated funding costs on net interest income. We remain optimistic with the expected normalization of the yield curve and continue to manage expenses, conserve capital, and prudently grow our franchise as we approach the consummation of our merger with ACNB Corporation."
Quarterly Highlights - Third Quarter 2024 versus Third Quarter 2023
- Loans grew by $10.0 million, or 1.5%, over 3Q23.
- Over the previous 12 months, deposits increased by $35.3 million, or 5%. Most of this growth was concentrated in brokered deposits, higher-cost time deposits, and money market specials as depositors became more rate sensitive. Brokered CDs increased from $48.7 million in 3Q23 to $54.7 million at the end of 3Q24, representing 7% of total deposits.
- The cost of deposits increased to 3.19% for 3Q24, up from 3.08% for 2Q24 and 2.14% for 3Q23.
- Net interest margin contracted to 2.94% in 3Q24 compared to 3.29% in 3Q23. This was driven by an increase in the total cost of funds, including borrowings, from 2.43% in 3Q23 to 3.29% in 3Q24.
- Gains on the sale of mortgages were $1.1 million for 3Q24, compared to $0.8 million in 3Q23 and $1.5 million in 2Q24.
- Mortgage banking revenue remained solid in 3Q24 despite the ongoing challenges of higher-for-longer interest rates and the mortgage lock-in effect on home inventory levels. The mortgage pipeline decreased to $18.5 million from $25.8 million in the linked quarter and increased from $17.2 million on September 30, 2023.
- A cash dividend of eight cents per common share was declared on October 24, 2024, and is payable on November 18, 2024, to shareholders of record at the close of business on November 8, 2024.
- Net interest income in 3Q24 decreased $0.6 million, or 9%, from 3Q23 due to rising funding costs.
- Other expense increased by 9%, from $6.1 million in 3Q23 to $6.6 million in 3Q24, driven by $0.6 million in merger expenses related to the company's acquisition by ACNB Corporation.
- The 3Q24 credit loss provision was $2.1 million.
YTD Highlights - Nine Months Ended September 30, 2024, versus Nine Months Ended September 30, 2023
- Interest expense grew more rapidly than interest income due to the rising cost of funds, as net interest income decreased $1.6 million, or 8%, over the nine months ended September 30, 2023.
- Gains on sale of mortgages increased by $1.1 million, or 39%, despite a challenging rate environment and limited home inventories within the company's geographic footprint.
- Other expense remained relatively flat, decreasing by $0.1 million, or 0.6%, year over year.
- Net interest margin contracted 40 basis points, from 3.35% in 3Q23 to 2.95% in 3Q24, driven by an increased cost of funds.
Credit Quality and Capital Insights
- Nonaccrual loans increased by $1.5 million in 3Q24, from $4.4 million in 2Q24 to $5.9 million in the current quarter, driven by the transfer of a commercial loan to nonaccrual status. Consumer and residential mortgage loan nonaccruals fell by $0.1 million in the current quarter.
- The company reported a $6 thousand net recovery in 3Q24, with net charge-offs totaling $14 thousand for the current quarter after reporting $20 thousand in 2Q24.
- Non-performing assets to total assets increased to 0.68% in the current quarter compared to 0.51% in 2Q24 and 0.44% in 3Q23. The aforementioned $1.6 million commercial loan that migrated to nonaccrual status accounted for 19 basis points of the 68-basis point total as of September 30, 2024.
- Delinquencies greater than 30 days were 1.09% of total loans as of September 30, 2024, up from 1.05% as of June 30, 2024, and 0.88% as of September 30, 2023.
- The company's ACL ratio was 0.84% as of September 30, 2024, compared to 0.56% as of June 30, 2024, and 0.54% as of September 30, 2023. The reserve for the non-performing commercial loan drove the 3Q24 increase.
- Traditions Bancorp and Traditions Bank remain well-capitalized.
FINANCIAL HIGHLIGHTS (unaudited): | ||||||||
Selected Financial Data | Sep 30, 2024 | Dec 31, 2023 | Sep 30, 2023 | |||||
Investment securities | $ | 104,640 | $ | 111,817 | $ | 109,957 | ||
Loans, net of unearned income | 683,250 | 668,813 | 673,252 | |||||
Allowance for credit losses | 5,773 | 3,730 | 3,656 | |||||
Total assets | 859,963 | 840,073 | 850,486 | |||||
Deposits | 739,988 | 731,051 | 704,716 | |||||
Borrowings | 40,000 | 32,500 | 71,965 | |||||
Shareholders' equity | 68,446 | 63,786 | 60,096 | |||||
Common book value per common share | $ | 24.85 | $ | 23.31 | $ | 22.00 | ||
Tier 1 book value per common share | $ | 27.87 | $ | 27.35 | $ | 27.22 | ||
Allowance/loans | 0.84 % | 0.56 % | 0.54 % | |||||
Non-performing assets/total assets | 0.68 % | 0.47 % | 0.44 % | |||||
Tier 1 capital/average assets | 8.80 % | 8.70 % | 8.68 % | |||||
Tier 1 capital/risk-weighted assets | 11.36 % | 11.53 % | 11.17 % | |||||
Total capital/risk-weighted assets | 12.23 % | 12.12 % | 11.75 % | |||||
Common shares outstanding | 2,754 | 2,737 | 2,732 | |||||
Three months ended Sep 30, | Nine months ended Sep 30, | |||||||
Selected Operations Data | 2024 | 2023 | 2024 | 2023 | ||||
Interest income | $ | 11,625 | $ | 10,640 | $ | 33,796 | $ | 29,326 |
Interest expense | (5,471) | (3,886) | (15,643) | (9,542) | ||||
Net interest income | 6,154 | 6,754 | 18,153 | 19,784 | ||||
Provision for credit losses | (2,075) | (238) | (2,036) | (230) | ||||
Investment securities gains (losses) | - | - | - | - | ||||
Gains on sale of mortgages | 1,122 | 798 | 3,870 | 2,781 | ||||
Other income | 587 | 515 | 1,741 | 1,685 | ||||
Other expense | (6,629) | (6,080) | (18,641) | (18,747) | ||||
Income (loss) before income tax (provision) benefit | (841) | 1,749 | 3,087 | 5,273 | ||||
Income tax (provision) benefit | 60 | (332) | (686) | (1,000) | ||||
Net income (loss) | $ | (781) | $ | 1,417 | $ | 2,401 | $ | 4,273 |
Earnings (loss) per common share (basic) | $ | (0.28) | $ | 0.51 | $ | 0.87 | $ | 1.54 |
Earnings (loss) per common share (diluted) | $ | (0.28) | $ | 0.51 | $ | 0.87 | $ | 1.53 |
Return on average assets | (0.36) % | 0.67 % | 0.38 % | 0.70 % | ||||
Return on average equity | (4.57) % | 9.18 % | 4.87 % | 9.33 % | ||||
Net interest margin | 2.94 % | 3.29 % | 2.95 % | 3.35 % | ||||
Efficiency ratio | 84.31 % | 75.37 % | 78.44 % | 77.31 % | ||||
Net charge-offs(recoveries)/average loans | 0.00 % | 0.00 % | 0.00 % | (0.03) % | ||||
Average common shares | 2,765 | 2,752 | 2,751 | 2,776 | ||||
SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:
This release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be covered by the safe harbor for forward-looking statements provided by 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 terminology such as"" "believe""," ""expect"," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate" or similar terminology. Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about 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 materially differ from those expressed in the forward-looking statements, including, but not limited to: ineffectiveness of the organization's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.
Forward-looking statements in this release speak only as of the date of this release and Traditions Bancorp makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.
SOURCE Traditions Bancorp, Inc.
