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Two River Bancorp Reports 2019 Third Quarter Financial Results

604 Days ago

TINTON FALLS, N.J., Oct. 22, 2019 (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, 2019.

2019 Third Quarter Financial Highlights
(comparisons to 2018 third quarter)

  • Announced the signing of a definitive merger agreement with OceanFirst Financial Corp. (NASDAQ:OCFC) (“OceanFirst”), parent company of OceanFirst Bank N.A. (“OceanFirst Bank”).
  • Net income was $2.1 million, or $0.24 per diluted share, as the Company incurred $828,000, or $662,000 after-tax, in expenses relating to the Company’s pending merger with OceanFirst and a $411,000, or $288,000 after-tax, write-down on an OREO property. These expenses impacted several metrics within the quarter and year-to-date.
  • Excluding the aforementioned expenses, 2019 third quarter net income was $3.1 million, or $0.35 per diluted share.
  • Return on average assets was 0.73%, compared to 1.04%
  • Return on average equity was 6.84%, compared to 9.98%
  • Net interest margin decreased 15 basis points to 3.40%
  • Efficiency ratio(1) was 70.22%, compared to 61.78%

(Totals at September 30, 2019; comparisons to December 31, 2018)

  • Total loans were $959.9 million, an increase of $38.6 million, or 5.6% annualized
  • Total deposits were $963.3 million, an increase of $45.9 million, or 6.7% annualized
  • Total assets were $1.147 billion, compared to $1.096 billion
  • Tangible book value per share(2) increased to $12.08, compared to $11.43

(1) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
(2) 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, “We were pleased to report solid core profitability and book value growth despite higher expenses related to the Company’s pending merger and write-down on one of our OREO properties. Our loan growth of $6.8 million for the quarter was tempered by larger than expected payoffs, much of which is the result of the completion and ultimate sale of several construction loan projects.”

Dividend Information
On October 16, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share, payable on November 29, 2019 to shareholders of record as of the close of business on November 6, 2019. This marks the 27th consecutive quarterly cash dividend.

               
Key Quarterly Performance Metrics            9 Mo.  9 Mo. 
  3rd Qtr.
2nd Qtr.
1st Qtr.
4th Qtr.
3rd Qtr.
Ended
Ended
2019
2019
2019
2018
2018
9/30/2019
9/30/2018
Net Income (in thousands) $2,115   $3,048   $2,783   $3,046   $2,834   $7,946   $8,160  
Earnings per Common Share – Diluted $0.24   $0.35   $0.32   $0.35   $0.33   $0.91   $0.94  
Return on Average Assets 0.73 % 1.07 % 1.01 % 1.10 % 1.04 % 0.93 % 1.03 %
Return on Average Tangible Assets(1) 0.74 % 1.08 % 1.02 % 1.11 % 1.06 % 0.95 % 1.04 %
Return on Average Equity 6.84 % 10.18 % 9.59 % 10.52 % 9.98 % 8.84 % 9.91 %
Return on Average Tangible Equity(1) 8.03 % 11.98 % 11.33 % 12.49 % 11.90 % 10.41 % 11.86 %
Net Interest Margin 3.40 % 3.54 % 3.60 % 3.56 % 3.55 % 3.51 % 3.59 %
Efficiency Ratio(2) 70.22 % 59.58 % 59.95 % 60.69 % 61.78 % 63.20 % 61.99 %
Non-Performing Assets to Total Assets 0.33 % 0.37 % 0.39 % 0.18 % 0.18 % 0.33 % 0.18 %
Allowance as a % of Loans 1.23 % 1.23 % 1.22 % 1.24 % 1.26 % 1.23 % 1.26 %
 
(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, 2019 and December 31, 2018 are as follows:

             
    (in thousands)
       
    September 30,
2019
    December 31,
2018
    %
Change
 
Commercial and industrial   $   107,944     $ 109,362     (1.3 )%
Real estate – construction     144,577       144,865     (0.2 )%
Real estate – commercial     579,214       552,549     4.8 %
Real estate – residential     98,047       84,123     16.6 %
Consumer     30,791       31,144     (1.1 )%
Unearned fees     (709 )     (742 )   (4.5 )%
      959,864       921,301     4.2 %
Allowance for loan losses     (11,811 )     (11,398 )   3.6 %
Net Loans   $   948,053     $ 909,903     4.2 %
                       

Deposit Composition
The components of the Company’s deposits at September 30, 2019 and December 31, 2018 are as follows:

           
    (in thousands)
     
    September 30,
2019
    December 31,
 2018
  %
Change
 
Non-interest-bearing   $      179,610     $ 176,655   1.7 %
NOW accounts     201,924       193,347   4.4 %
Savings deposits     251,217       258,666   (2.9 )%
Money market deposits     35,775       43,936   (18.6 )%
Listed service CD’s     44,016       39,807   10.6 %
Time deposits / IRA     177,350       130,863   35.5 %
Wholesale deposits     73,405       74,080   (0.9 )%
 Total Deposits   $    963,297     $ 917,354   5.0 %
                     

2019 Third Quarter Financial Review

Net Income
Net income for the three months ended September 30, 2019 decreased 25.4% to $2.1 million, or $0.24 per diluted common share, compared to $2.8 million, or $0.33 per diluted common share, for the same period last year. The decrease was largely due to merger related expenses of $828,000 and a $411,000 write-down on an OREO property, which was partially offset by lower FDIC insurance expense.

On a linked quarter basis, third quarter 2019 net income decreased 30.6% compared to the second quarter of 2019.

Net Interest Income
Net interest income for the quarter ended September 30, 2019 was $9.2 million, an increase of 1.4% compared to $9.1 million in the corresponding prior year period. This was largely due to an increase of $58.9 million, or 5.8%, in average interest-earning assets, primarily attributable to growth in the loan portfolio.

Net Interest Margin
The Company reported a net interest margin of 3.40% for the third quarter of 2019, compared to 3.54% in the second quarter of 2019 and 3.55% reported for the third quarter of 2018. The decline from both prior periods was primarily due to higher cost of funds.

Non-Interest Income
Non-interest income for the quarter ended September 30, 2019 decreased to $1.1 million, compared to $1.4 million in the corresponding prior year period. This 17.0% decrease was largely the result of lower gains on the sale of SBA loans and lower other loan fees, primarily due to higher loan prepayment fees in the prior year.  These decreases were partially offset by both higher mortgage banking revenues and other income.

On a linked quarter basis, non-interest income decreased 8.7%, from the second quarter of 2019, mainly due to lower gains on the sale of SBA loans.

Non-Interest Expense
Non-interest expense for the quarter ended September 30, 2019 totaled $7.3 million, an increase of $808,000, or 12.5%, from the $6.5 million reported in same period in 2018, primarily due to expenses relating to the Company’s pending merger with OceanFirst, and the aforementioned write-down of an OREO property. During the current quarter, no FDIC insurance expense was recorded, as compared to $128,000 in the same prior year period. The FDIC notified the Bank that it was eligible for small bank assessment credits since the Deposit Insurance Fund reserve ratio of 1.40% at June 30, 2019 exceeded the 1.38% level. As such, the total credit awarded to the Bank was $252,000, which more than covered the September 30, 2019 payment of $117,000. Accordingly, no expense was incurred during the third quarter. The Company’s efficiency ratio was 70.22% for the quarter, compared to 61.78% for the same period in 2018.

On a linked quarter basis, non-interest expense increased $915,000, or 14.4%, mainly due to the same reasons as noted above. 

Income Tax Expense
The Company’s effective tax rate was 28.5% for the three months ended September 30, 2019, compared to 26.3% for the same period last year mainly due to the non-deductibility of certain merger related expenses. The Company recognized a $29,000 tax benefit related to the accounting treatment of equity-based compensation in the third quarter of 2019, compared to a $35,000 benefit in the same period last year.

At the present time, the Company is anticipating a 2019 effective tax rate of 28%.

Provision for Loan Losses
During the quarter, a provision for loan losses of $125,000 was expensed, compared to $150,000 in the same prior year period. The majority of the third quarter 2019 provision was to support loan growth. The Company had $2,000 and $39,000 in net loan recoveries during the third quarter of 2019 and 2018, respectively.

2019 Nine Month Financial Review

Net Income
Net income for the nine months ended September 30, 2019 was $7.9 million, or $0.91 per diluted share, compared to $8.2 million, or $0.94 per diluted share, in the same prior year period. This decrease was due to the same reasons noted earlier in the third quarter review.

Net Interest Income
For the first nine months of 2019, net interest income increased 4.2% to $28.0 million from $26.9 million in the prior year period. This was largely due to an increase of $64.2 million, or 6.4%, in average interest-earning assets, primarily attributable to growth in the loan portfolio.

Net Interest Margin
The net interest margin for the first nine months of 2019 was 3.51%, compared to 3.59% in the prior year period, primarily due to higher cost of funds.

Non-Interest Income
For the nine months ended September 30, 2019, non-interest income decreased $648,000, or 15.6%, to $3.5 million from the same period in 2018 mainly due to the same reasons noted earlier in the third quarter review.

Non-Interest Expense
For the nine months ended September 30, 2019, non-interest expense increased $679,000, or 3.5%, to $19.9 million, compared to $19.2 million the same period last year mainly due to the same reasons noted earlier in the third quarter review. The efficiency ratio for the nine months ended September 30, 2019 was 63.20% compared to 61.99% in the same prior year period.

Income Tax Expense
For the nine months ended September 30, 2019, the effective tax rate was 27.4%, compared to 26.0% for the same period last year. The Company recorded a $67,000 tax benefit related to the accounting treatment of equity-based compensation, as compared to $168,000 for the same period last year.

Provision for Loan Losses
For the first nine months of 2019, a provision of $650,000 was expensed, compared to $775,000 for the same prior year period. The Company had $237,000 and $53,000 in net loan charge-offs for the first nine months of 2019 and 2018, respectively.

Financial Condition / Balance Sheet

At September 30, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Bank’s Tier 1 capital to average assets ratio was 10.07%, its common equity Tier 1 capital to risk weighted assets ratio was 11.30%, its Tier 1 capital to risk weighted assets ratio was 11.30%, and its total capital to risk weighted assets ratio was 12.47%.

Total assets as of September 30, 2019 were $1.147 billion, compared to $1.096 billion at December 31, 2018 and $1.086 million as of September 30, 2018.

Total loans as of September 30, 2019 were $959.9 million, compared to $921.3 million at December 31, 2018 and $900.9 million as of September 30, 2018.

Total deposits as of September 30, 2019 were $963.3 million, compared to $917.4 million as of December 31, 2018 and $905.7 million as of September 30, 2018. Core checking deposits at September 30, 2019 were $381.5 million, compared to $370.0 million at December 31, 2018 and $369.1 million at September 30, 2018. The Company continues to focus on building core checking account deposit relationships, which can vary from quarter to quarter due to the seasonality in municipal and other relationships.

Allowance for Loan Losses
As of September 30, 2019, the Company's allowance for loan losses was $11.8 million, compared to $11.4 million as of December 31, 2018. The loss allowance as a percentage of total loans was 1.23% at September 30, 2019 compared to 1.24% at December 31, 2018.

Asset Quality
The Company's non-performing assets at September 30, 2019 were $3.8 million, as compared to $4.3 million at June 30, 2019 and $2.0 million at December 31, 2018. Non-performing assets to total assets at September 30, 2019 were 0.33%, compared to 0.37% at June 30, 2019 and 0.18% at December 31, 2018.

Non-accrual loans were $1.3 million at September 30, 2019, compared to $1.4 million at both December 31, 2018 and September 30, 2018. OREO was $2.5 million at September 30, 2019, compared to $585,000 at December 31, 2018 and September 30, 2018. As mentioned earlier, the Company recorded a $411,000 write-down on an OREO property during the quarter.

Troubled debt restructured loan balances amounted to $5.6 million at September 30, 2019, with all but $555,000 performing. This compared to $7.7 million at December 31, 2018 and $6.6 million at September 30, 2018.

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, Union, Essex, 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 "continuing," "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, the ability to obtain regulatory approvals and satisfy other closing conditions to the merger with OceanFirst, including approval by shareholders of Two River; the timing of closing the merger; that the merger may not be timely completed, if at all; that prior to the completion of the merger, the Company’s business may not perform as expected due to transaction-related uncertainty or other factors; reputational risks and the reaction of the Company’s stockholders, customers, employees and other constituents to the merger; litigation related to the merger, diversion of management time as a result of matters related to the merger; 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; unanticipated effects of our new banking platform; 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, 2018. 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, 2019 and 2018
(in thousands, except per share data)
 
    Three Months Ended
September 30,
  Nine Months Ended
September 30,
 

 
    2019     2018   2019     2018  
INTEREST INCOME:                              
Loans, including fees   $    11,707     $ 10,656   $   34,750     $ 30,720  
Securities:                              
Taxable     293       274     922       861  
Tax-exempt     224       280     697       842  
Interest-bearing deposits     260       132     663       293  
Total Interest Income     12,484       11,342     37,032       32,716  
INTEREST EXPENSE:                              
Deposits     2,981       1,924     8,170       4,923  
Securities sold under agreements to repurchase     10       14     30       43  
Federal Home Loan Bank ("FHLB") and other borrowings     99       136     332       382  
Subordinated debt     166       165     497       495  
Total Interest Expense     3,256       2,239     9,029       5,843  
Net Interest Income     9,228       9,103     28,003       26,873  
PROVISION FOR LOAN LOSSES     125       150     650       775  
Net Interest Income after Provision for Loan Losses     9,103       8,953     27,353       26,098  
NON-INTEREST INCOME:                              
Service fees on deposit accounts     197       236     536       713  
Mortgage banking     373       239     1,077       986  
Other loan fees     155       378     453       626  
Earnings from investment in bank owned life insurance     127       133     398       395  
Gain on sale of SBA loans     42       203     378       921  
Net realized gain on sale of securities     -       -     1       -  
Other income     230       166     670       520  
Total Non-Interest Income     1,124       1,355     3,513       4,161  
NON-INTEREST EXPENSES:                              
Salaries and employee benefits      3,756       4,024      11,539       11,919  
Occupancy and equipment      1,076       966      3,148       3,099  
Professional      355       432      1,261       1,260  
Insurance      70       59      201       180  
FDIC insurance and assessments      -        128      238       374  
Advertising      90       90      280       280  
Data processing      209       184      571       510  
Outside services fees      65       89      179       250  
OREO expenses, impairment and sales, net      448       7      298       (8 )
Loan workout expenses      8       28      17       124  
Merger related expenses     828         -   828       -  
Other operating      364       454     1,358       1,251  
Total Non-Interest Expenses     7,269       6,461     19,918       19,239  
Income before Income Taxes     2,958       3,847     10,948       11,020  
Income Tax Expense     843       1,013     3,002       2,860  
Net Income   $   2,115     $ 2,834   $   7,946     $ 8,160  
Earnings Per Common Share:                              
Basic   $   0.25     $ 0.33   $   0.92     $ 0.96  
Diluted   $   0.24     $ 0.33   $   0.91     $ 0.94  
Weighted average common shares outstanding:                              
Basic     8,619       8.513     8,605       8,489  
Diluted     8,720       8,700     8,721       8,695  
                               


TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
 
  September 30,   December 31,  
  2019   2018  
ASSETS            
Cash and due from banks $ 28,416   $ 24,067  
Interest-bearing deposits in bank   35,004     24,059  
Cash and cash equivalents   63,420     48,126  
             
Securities available for sale    21,031     24,407  
Securities held to maturity    39,935     47,455  
Equity securities    2,582     2,451  
Restricted investments, at cost    6,772     6,082  
Loans held for sale    1,357     1,496  
Loans    959,864     921,301  
Allowance for loan losses    (11,811 )   (11,398 )
Net loans    948,053     909,903  
             
OREO    2,501     585  
Bank owned life insurance    22,315     22,098  
Premises and equipment, net    6,658     5,917  
Operating right-of-use asset    4,698     -  
Accrued interest receivable    2,560     2,583  
Goodwill    18,109     18,109  
Other assets    7,003     7,207  
             
TOTAL ASSETS $ 1,146,994   $ 1,096,419  
             
LIABILITIES            
Deposits:            
Non-interest-bearing $ 179,610   $ 176,655  
Interest-bearing   783,687     740,699  
 Total Deposits   963,297     917,354  
             
Securities sold under agreements to repurchase    15,084     19,402  
FHLB and other borrowings    19,700     22,500  
Subordinated debt    9,951     9,923  
Accrued interest payable    81     119  
Lease liability    4,833     -  
Other liabilities    10,676     10,623  
             
 Total Liabilities   1,023,622     979,921  
             
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 – 9,076,305 and 8,935,437 at September 30, 2019 and December 31, 2018, respectively            
Outstanding – 8,715,338 and 8,606,992 at September 30, 2019 and December 31, 2018, respectively   81,405     80,481  
Retained earnings   45,355     39,109  
Treasury stock, at cost; 360,967 and 328,445 shares at September 30, 2019 and December 31, 2018   (3,135 )   (2,647 )
Accumulated other comprehensive loss   (253 )   (445 )
Total Shareholders' Equity   123,372     116,498  
             
TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY $ 1,146,994   $ 1,096,419  
             

    

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: 2019   2019   2018   2019   2018
Total Interest Income $    12,484   $ 12,479   $ 11,342   $    37,032   $ 32,716
Total Interest Expense   3,256     3,047     2,239     9,029     5,843
Net Interest Income   9,228     9,432     9,103     28,003     26,873
Provision for Loan Losses   125     100     150     650     775
Net Interest Income after Provision for Loan Losses   9,103     9,332     8,953     27,353     26,098
Other Non-Interest Income   1,124     1,232     1,355     3,513     4,161
Other Non-Interest Expenses   7,269     6,354     6,461     19,918     19,239
Income before Income Taxes   2,958     4,210     3,847     10,948     11,020
Income Tax Expense   843     1,162     1,013     3,002     2,860
Net Income $    2,115   $ 3,048   $ 2,834   $    7,946   $ 8,160
                             
Per Common Share Data:                            
Basic Earnings $  0.25   $ 0.35   $ 0.33   $  0.92   $ 0.96
Diluted Earnings $  0.24   $ 0.35   $ 0.33   $  0.91   $ 0.94
Book Value $    14.16   $ 14.03   $ 13.27   $    14.16   $ 13.27
Tangible Book Value(1) $    12.08   $ 11.93   $ 11.16   $    12.08   $ 11.16
Average Common Shares Outstanding (in thousands):                  
Basic   8,619     8,596     8,513     8,605     8,489
Diluted   8,720     8,709     8,700     8,721     8,695
                             
(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,  
  2019   2019   2019   2018   2018  
Total Assets $ 1,146,994   $ 1,153,797   $ 1,140,521   $ 1,096,419   $ 1,086,299  
Investment Securities and Restricted Stock   70,320     76,373     77,904     80,395     91,296  
Total Loans   959,864     953,080     948,493     921,301     900,895  
Allowance for Loan Losses   (11,811 )   (11,684 )   (11,582 )   (11,398 )   (11,390 )
Goodwill and Other Intangible Assets   18,109     18,109     18,109     18,109     18,109  
Total Deposits   963,297     972,592     959,655     917,354     905,745  
Repurchase Agreements   15,084     14,162     15,185     19,402     22,153  
FHLB and Other Borrowings   19,700     20,700     20,700     22,500     24,500  
Subordinated Debt   9,951     9,942     9,932     9,923     9,914  
Shareholders' Equity   123,372     121,416     119,156     116,498     113,891  
                               


Asset Quality Data (by Quarter)                    
(dollars in thousands)                    
  Sept. 30,
  June 30,
  March 31,
  Dec. 31,
  Sept. 30,
 
  2019   2019   2019   2018   2018  
Nonaccrual Loans $   1,341   $ 1,346   $ 3,908   $ 1,390   $ 1,390  
OREO   2,501     2,912     585     585     585  
Total Non-Performing Assets   3,842     4,258     4,493     1,975     1,975  
                               
Troubled Debt Restructured Loans:                              
Performing   5,025     4,969     6,726     6,842     5,678  
Non-Performing   555     555     711     877     877  
                               
Non-Performing Loans to Total Loans   0.14 %   0.14 %   0.41 %   0.15 %   0.15 %
Non-Performing Assets to Total Assets   0.33 %   0.37 %   0.39 %   0.18 %   0.18 %
Allowance as a % of Loans   1.23 %   1.23 %   1.22 %   1.24 %   1.26 %
                               


Capital Ratios      
    September 30, 2019
  December 31, 2018
  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 10.41 %   9.27%   10.41%   12.56%   10.14%   9.10%   10.14%   12.34%
Two River Community Bank 11.30 %   10.07%   11.30%   12.47%   11.09%   9.95%   11.09%   12.26%
"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” under the Federal Reserve definitions for bank holding companies, the Company is only required to have a Tier 1 Capital to Risk Weighted Assets ratio of at least 6.00% and a Total Capital to Risk Weighted Assets ratio of at least 10.00%.
 


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,  
  2019     2019     2019     2018     2018
    2019     2018  
Net loan (charge-offs) recoveries:                                        
Charge-offs $     -     $ -     $ (247 )   $ -     $ -     $   (247 )   $ (127 )
Recoveries      2       2       6       8       39       10       74  
Net loan (charge-offs) recoveries $     2     $ 2     $ (241 )   $ 8     $ 39     $   ( 237 )   $ (53 )
Net loan (charge-offs) recoveries to average loans (annualized)   0.0 0 %     0.00 %     (0.10 )%     0.00 %     0.02 %     (0.03 )%     (0.01 )%
                                                       


Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
     
       
  Three Months Ended   Three Months Ended
(dollars in thousands) September 30, 2019   September 30, 2018
    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 $ 46,051   $ 260   2.24 %   $ 26,337   $ 132   1.99 %
Investment securities 74,158   517   2.79 %   93,341   554   2.37 %
Loans, net of unearned fees(1) (2) 955,354   11,707   4.86 %   896,999   10,656   4.71 %
                           
Total Interest-Earning Assets 1,075,563   12,484   4.60 %   1,016,677   11,342   4.43 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (11,735 )           (11,341 )        
All other assets 92,141             75,038          
                           
Total Assets $ 1,155,969               $ 1,080,374            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 206,541   461   0.89 %   $ 201,026   320   0.63 %
Savings deposits 248,914   665   1.06 %   267,025   568   0.84 %
Money market deposits 36,851   21   0.23 %   48,606   22   0.18 %
Time deposits 304,869   1,834   2.39 %   213,872   1,014   1.88 %
Securities sold under agreements to repurchase 13,451   10   0.30 %   18,389   14   0.30 %
FHLB and other borrowings 19,763   99   1.99 %   27,870   136   1.94 %
Subordinated debt 9,948   166   6.67 %   9,911   165   6.66 %
                           
Total Interest-Bearing Liabilities 840,337   3,256   1.54 %   786,699   2,239   1.13 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 176,982             171,729          
Other liabilities 16,006             9,314          
                           
Total Non-Interest-Bearing Liabilities 192,988             181,043          
                           
Stockholders’ Equity 122,644             112,632          
                           
Total Liabilities and Shareholders’ Equity $ 1,155,969               $ 1,080,374            
                           
NET INTEREST INCOME     $ 9,228             $ 9,103      
                           
NET INTEREST SPREAD(3)         3.06 %           3.30 %
                           
NET INTEREST MARGIN(4)         3.40 %           3.55 %
                           
(1)  Included in interest income on loans are 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, 2019   September 30, 2018
    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 $ 37,164   $ 663   2.39 %   $ 21,923   $ 293   1.79 %
Investment securities 76,925   1,619   2.81 %   95,574   1,703   2.38 %
Loans, net of unearned fees(1) (2) 951,073   34,750   4.89 %   883,436   30,720   4.65 %
                           
Total Interest-Earning Assets 1,065,162   37,032   4.65 %   1,000,933   32,716   4.37 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (11,625 )           (11,097 )        
All other assets 87,535             74,168          
                           
Total Assets $ 1,141,072               $ 1,064,004            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 208,155   1,296   0.83 %   $ 219,242   937   0.57 %
Savings deposits 251,672   1,893   1.01 %   259,365   1,415   0.73 %
Money market deposits 39,020   64   0.22 %   53,413   70   0.18 %
Time deposits 285,112   4,917   2.31 %   190,520   2,501   1.76 %
Securities sold under agreements to repurchase 14,101   30   0.28 %   19,734   43   0.29 %
FHLB and other borrowings 22,040   332   2.01 %   26,862   382   1.90 %
Subordinated debt 9,939   497   6.67 %   9,902   495   6.67 %
                           
Total Interest-Bearing Liabilities 830,039   9,029   1.45 %   779,038   5,843   1.00 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 174,968             165,778          
Other liabilities 15,883             9,094          
                           
Total Non-Interest-Bearing Liabilities 190,851             174,872          
                           
Shareholders’ Equity 120,182             110,094          
                           
Total Liabilities and Shareholders’ Equity $ 1,141,072               $ 1,064,004            
                           
NET INTEREST INCOME     $ 28,003             $ 26,873      
                           
NET INTEREST SPREAD(3)         3.20 %           3.37 %
                           
NET INTEREST MARGIN(4)         3.51 %           3.59 %
                           
(1) Included in interest income on loans are 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,  
  2019   2019   2019   2018   2018   2019   2018  
Total shareholders' equity $ 123,372   $ 121,416   $ 119,156   $ 116,498   $ 113,891   $ 123,372   $ 113,891  
Less: goodwill and other tangibles   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )   (18,109 )
Tangible common shareholders’ equity $ 105,263   $ 103,307   $ 101,047   $ 98,389   $ 95,782   $ 105,263   $ 95,782  
                                           
Common shares outstanding   8,715     8,657     8,668     8,607     8,584     8,715     8,584  
Book value per common share $ 14.16   $ 14.03   $ 13.75   $ 13.54   $ 13.27   $ 14.16   $ 13.27  
                                           
Book value per common share $ 14.16   $ 14.03   $ 13.75   $ 13.54   $ 13.27   $ 14.16   $ 13.27  
Effect of intangible assets   (2.08 )   (2.10 )   (2.09 )   (2.11 )   (2.11 )   (2.08 )   (2.11 )
Tangible book value per common share $ 12.08   $ 11.93   $ 11.66   $ 11.43   $ 11.16   $ 12.08   $ 11.16  
                             
Return on average assets 0.73 % 1.07 % 1.01 % 1.10 % 1.04 % 0.93 % 1.03 %
Effect of average intangible assets 0.01 % 0.01 % 0.01 % 0.01 % 0.02 % 0.02 % 0.01 %
Return on average tangible assets 0.74 % 1.08 % 1.02 % 1.11 % 1.06 % 0.95 % 1.04 %
                             
Return on average equity 6.84 % 10.18 % 9.59 % 10.52 % 9.98 % 8.84 % 9.91 %
Effect of average intangible assets 1.19 % 1.80 % 1.74 % 1.97 % 1.92 % 1.57 % 1.95 %
Return on average tangible equity 8.03 % 11.98 % 11.33 % 12.49 % 11.90 % 10.41 % 11.86 %

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