10/22/2024 | Press release | Distributed by Public on 10/22/2024 11:25
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Net Income: $6.3 million for the three months ended September 30, 2024
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Total Assets: $2.9 billion at September 30, 2024, a new record high
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Net Loans: $1.5 billion at September 30, 2024, a new record high
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Total Deposits $2.5 billion at September 30, 2024, a new record high
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Return on Average Assets: 0.93% for the three months ended September 30, 2024
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Return on Average Equity: 11.86% for the three months ended September 30, 2024
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Net interest income decreased $303,000 to $13.1 million for the three months ended September 30, 2024 from $13.4 million for the three months ended September 30, 2023. The decrease in net interest income was due to an increase in the average balance of interest-bearing liabilities, which increased $64.1 million when comparing the three months ended September 30, 2024 and 2023, and increases in rates paid on interest-bearing liabilities, which increased 53 basis points when comparing the three months ended September 30, 2024 and 2023. The decrease in net interest income was partially offset by the increase in the average balance of interest-earning assets, which increased $54.7 million when comparing the three months ended September 30, 2024 and 2023, and increases in interest rates on interest-earning assets, which increased 40 basis points when comparing the three months ended September 30, 2024 and 2023.
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Net interest rate spread and margin both decreased when comparing the three months ended September 30, 2024 and 2023. Net interest rate spread decreased 13 basis points to 1.76% for the three months ended September 30, 2024 as compared to 1.89% for the three months ended September 30, 2023. Net interest margin decreased 9 basis points to 2.03%, for the three months ended September 30, 2024 as compared to 2.12% for the three months ended September 30, 2023. The decrease was due to the higher interest rate environment, which caused competitive pressure to increase rates paid on deposits, resulting in higher interest expense. This was partially offset by increases in interest income on securities and loans, as they reprice at higher yields and the interest rates earned on new balances were higher than the levels from the prior periods.
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Net interest income on a taxable-equivalent basis includes the additional amount of interest income that would have been earned if the Company's investment in tax-exempt securities and loans had been subject to federal and New York State income taxes yielding the same after-tax income. Tax equivalent net interest margin was 2.29% and 2.37% for the three months ended September 30, 2024 and 2023, respectively.
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Provision for credit losses on loans amounted to $634,000 for the three months ended September 30, 2024 compared to $457,000 for the three months ended September 30, 2023. The loan provision for the three months ended September 30, 2024, was primarily attributable to updated economic forecasts used in the quantitative modeling as of September 30, 2024. The allowance for credit losses on loans to total loans receivable was 1.32% at September 30, 2024 compared to 1.28% at June 30, 2024.
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Loans classified as substandard and special mention totaled $59.0 million at September 30, 2024 and $48.6 million at June 30, 2024, an increase of $10.4 million. The increase in loans classified was primarily due to downgrades of commercial real estate loans during the period ended September 30, 2024, that were considered to be performing and paying in accordance with the terms of their loan agreements. Of the loans classified as substandard or special mention, $55.3 million were performing at September 30, 2024. There were no loans classified as doubtful or loss at September 30, 2024 or June 30, 2024.
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Net charge-offs on loans amounted to $114,000 and $93,000 for the three months ended September 30, 2024 and 2023, respectively, an increase of $21,000. There were no material charge-offs in any loan segment during the three months ended September 30, 2024.
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Nonperforming loans amounted to $3.6 million at September 30, 2024 and $3.7 million at June 30, 2024. The activity in nonperforming loans during the period included $410,000 in loan repayments, $57,000 in charge-offs or transfers to foreclosure, $56,000 in loans returning to performing status, and $441,000 of loans placed into nonperforming status. Nonperforming assets were 0.13% of total assets at September 30, 2024 and June 30, 2024, respectively. Nonperforming loans were 0.25% of net loans at September 30, 2024 and June 30, 2024, respectively.
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Noninterest income increased $438,000, or 13.3%, to $3.7 million for the three months ended September 30, 2024 compared to $3.3 million for the three months ended September 30, 2023. The increase for the three-month period was primarily due to an increase in fee income earned on customer interest rate swap contracts, and income from bank owned life insurance ("BOLI"). During the quarter ended December 31, 2023, the Company restructured $23 million of BOLI contracts, by surrendering and simultaneously purchasing new higher-yielding policies.
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Noninterest expense increased $705,000, or 8.0%, to $9.6 million for the three months ended September 30, 2024 compared to $8.8 million for the three months ended September 30, 2023. The increase during the three months ended September 30, 2024 was primarily due to an increase of $387,000 in salaries and employee benefits, due to new positions created during the period to support the Company's continued growth, an increase of $176,000 in service and data processing fees due to vendor price negotiations in prior periods, and an increase of $285,000 in the reserve for credit losses on off-balance sheet unfunded commitments, due to the Company's increased contractual obligations to extend credit. This was partially offset by a decrease of $156,000 in computer software and support fees, as compared to the three months ended September 30, 2023.
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Provision for income taxes reflects the expected tax associated with the pre-tax income generated for the given period and certain regulatory requirements. The effective tax rate was 6.4% for the three months ended September 30, 2024 and 13.0% for the three months ended September 30, 2023. The statutory tax rate is impacted by the benefits derived from tax-exempt bond and loan income, the Company's real estate investment trust subsidiary income, and income received on the bank owned life insurance, to arrive at the effective tax rate. The decrease in the current quarter's effective tax rate primarily reflects a higher mix of tax-exempt income from municipal bonds, tax advantage loans and bank owned life insurance in proportion to pre-tax income.
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Total assets of the Company were $2.9 billion at September 30, 2024 and $2.8 billion at June 30, 2024, an increase of $48.8 million, or 1.7%.
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Total cash and cash equivalents for the Company were $213.5 million at September 30, 2024 and $190.4 million at June 30, 2024. The Company has continued to maintain strong capital and liquidity positions as of September 30, 2024.
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Securities available-for-sale and held-to-maturity increased $26.1 million, or 2.5%, to $1.1 billion at September 30, 2024 as compared to $1.0 billion at June 30, 2024. Securities purchases totaled $115.2 million during the three months ended September 30, 2024, and consisted primarily of $77.4 million of state and political subdivision securities, $24.7 million of U.S. Treasury securities, $9.2 million of collateralized mortgage obligations and $3.9 million of mortgage-backed securities. Principal pay-downs and maturities during the three months ended September 30, 2024 amounted to $97.0 million, primarily consisting of $66.5 million of state and political subdivision securities, $25.0 million of U.S. Treasury securities, $4.5 million of mortgage-backed securities, and $683,000 of collateralized mortgage obligations.
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Net loans receivable remained at $1.5 billion at September 30, 2024 and June 30, 2024. Loan growth experienced during the three months ended September 30, 2024, consisted primarily of $15.3 million in commercial real estate loans, partially offset by a decrease of $11.5 million in commercial loans.
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Deposits totaled $2.5 billion at September 30, 2024 and $2.4 billion at June 30, 2024, an increase of $96.7 million, or 4.1%. The Company had zero brokered deposits at September 30, 2024 and June 30, 2024, respectively. NOW deposits increased $87.9 million, or 5.0%, certificates of deposits increased $17.9 million, or 12.9%, and noninterest-bearing deposits increased $7.4 million, or 5.9% when comparing September 30, 2024 and June 30, 2024. Savings deposits decreased $7.9 million, or 3.2%, and money market deposits decreased $8.6 million, or 7.6%, when comparing September 30, 2024 and June 30, 2024.
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Borrowingsamounted to $142.5 million at September 30, 2024 compared to $199.1 million at June 30, 2024, a decrease of $56.6 million. At September 30, 2024, borrowings included $63.0 million of overnight borrowings with the Federal Home Loan Bank of New York ("FHLB"), $49.7 million of Fixed-to-Floating Rate Subordinated Notes, $25.0 million in the Bank Term Funding Program with the Federal Reserve Bank, and $4.8 million of long-term borrowings with the FHLB.
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Shareholders' equity increased to $216.3 million at September 30, 2024 compared to $206.0 million at June 30, 2024, resulting primarily from net income of $6.3 million and a decrease in accumulated other comprehensive loss of $5.6 million, partially offset by dividends declared and paid of $1.5 million.
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At or for the Three Months
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Ended September 30,
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(Dollars in thousands, except share and per share data)
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2024
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2023
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Interest income
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$
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27,769
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$
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24,672
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Interest expense
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14,633
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11,233
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Net interest income
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13,136
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13,439
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Provision for credit losses
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634
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457
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Noninterest income
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3,737
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3,299
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Noninterest expense
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9,550
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8,845
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Income before taxes
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6,689
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7,436
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Tax provision
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428
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967
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Net Income
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$
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6,261
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$
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6,469
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Basic and diluted EPS
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$
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0.37
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$
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0.38
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Weighted average shares outstanding
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17,026,828
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17,026,828
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Dividends declared per share(4)
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$
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0.09
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$
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0.08
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Selected Financial Ratios
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Return on average assets(1)
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0.93
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%
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0.99
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%
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Return on average equity(1)
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11.86
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%
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14.09
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%
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Net interest rate spread(1)
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1.76
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%
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1.89
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%
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Net interest margin(1)
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2.03
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%
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2.12
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%
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Fully taxable-equivalent net interest margin(2)
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2.29
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%
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2.37
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%
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Efficiency ratio(3)
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56.60
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%
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52.84
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%
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Non-performing assets to total assets
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0.13
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%
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0.22
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%
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Non-performing loans to net loans
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0.25
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%
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0.38
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%
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Allowance for credit losses on loans to non-performing loans
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542.39
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%
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369.10
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%
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Allowance for credit losses on loans to total loans
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1.32
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%
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1.40
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%
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Shareholders' equity to total assets
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7.52
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%
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6.85
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%
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Dividend payout ratio(4)
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24.32
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%
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21.05
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%
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Actual dividends paid to net income(5)
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24.48
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%
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21.05
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%
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Book value per share
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$
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12.70
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$
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10.82
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At
September 30, 2024
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At
June 30, 2024
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(Dollars In thousands, except share data)
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Assets
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Cash and due from banks
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$
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24,824
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$
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13,897
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Interest-bearing deposits
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188,645
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176,498
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Total cash and cash equivalents
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213,469
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190,395
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Long term certificate of deposit
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2,579
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2,831
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Securities available-for-sale, at fair value
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364,526
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350,001
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Securities held-to-maturity, at amortized cost, net of allowance for credit losses of $466 and $483 at September 30, 2024 and June 30, 2024
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701,919
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690,354
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Equity securities, at fair value
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339
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328
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Federal Home Loan Bank stock, at cost
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4,795
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7,296
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Loans receivable
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1,501,212
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1,499,473
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Less: Allowance for credit losses on loans
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(19,781
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)
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(19,244
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)
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Net loans receivable
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1,481,431
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1,480,229
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Premises and equipment, net
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15,498
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15,606
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Bank owned life insurance
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57,898
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57,249
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Accrued interest receivable
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14,909
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14,269
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Prepaid expenses and other assets
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17,258
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17,230
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Total assets
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$
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2,874,621
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$
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2,825,788
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Liabilities and shareholders' equity
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Noninterest bearing deposits
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$
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132,897
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$
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125,442
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Interest bearing deposits
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2,352,977
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2,263,780
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Total deposits
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2,485,874
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2,389,222
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Borrowings, short-term
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63,000
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115,300
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Borrowings, long-term
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29,781
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34,156
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Subordinated notes payable, net
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49,727
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49,681
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Accrued expenses and other liabilities
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29,941
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31,429
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Total liabilities
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2,658,323
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2,619,788
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Total shareholders' equity
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216,298
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206,000
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Total liabilities and shareholders' equity
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$
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2,874,621
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$
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2,825,788
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Common shares outstanding
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17,026,828
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17,026,828
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Treasury shares
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195,852
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195,852
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For the three months ended September 30,
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(Dollars in thousands)
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2024
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2023
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Net interest income (GAAP)
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$
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13,136
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$
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13,439
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Tax-equivalent adjustment(1)
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1,713
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1,563
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Net interest income-fully taxable-equivalent basis (non-GAAP)
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$
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14,849
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$
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15,002
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Average interest-earning assets (GAAP)
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$
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2,589,580
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$
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2,534,918
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Net interest margin-fully taxable-equivalent basis (non-GAAP)
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2.29
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%
|
2.37
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%
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For the three months ended
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(Dollars in thousands)
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September 30, 2024
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June 30, 2024
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September 30, 2023
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Net income (GAAP)
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$
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6,261
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$
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6,732
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$
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6,469
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Provision for credit losses on loans
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634
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(151
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)
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457
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Pre-provision net income (non-GAAP)
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$
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6,895
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$
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6,581
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$
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6,926
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