Financial Results Announcement Financial Highlights Net income declined significantly in Q3 and YTD 2024 due to funding costs and credit losses, despite some NIM improvement Q3 2024 vs. Q3 2023 Performance | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $6.2 million | $9.1 million | -32.3% | | Diluted EPS | $0.06 | $0.09 | -33.3% | Nine Months 2024 vs. Nine Months 2023 Performance | Metric | Nine Months 2024 | Nine Months 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income | $9.6 million | $29.5 million | -67.5% | | Diluted EPS | $0.09 | $0.29 | -69.0% | - CEO Thomas J. Kemly stated that Q3 earnings were challenged by pressure on funding costs, but expects improved earnings going forward due to a 9 basis point increase in net interest margin since Q1 2024 and effective expense management3 - The company successfully closed the merger and completed the system conversion of Freehold Bank into Columbia Bank in October 2024, marking its fourth completed merger in five years3 Results of Operations Operational results declined in 2024 due to net interest margin compression from rising funding costs and increased credit provisions For the Three Months Ended September 30, 2024 Q3 2024 net income decreased by $2.9 million due to lower net interest income and higher credit loss provisions Q3 2024 vs. Q3 2023 Income Statement Changes | Item | Change (YoY) | Reason | | :--- | :--- | :--- | | Net Interest Income | -$3.2 million | Interest expense increase ($20.7M) outpaced interest income increase ($17.5M) | | Provision for Credit Losses | +$1.7 million | Primarily due to $2.7M in net charge-offs and higher qualitative factors | | Non-Interest Income | +$0.4 million | Increase in demand deposit account fees | | Non-Interest Expense | -$0.1 million | Lower compensation (-$1.0M) offset by higher data processing and FDIC fees | | Net Income | -$2.9 million | Cumulative effect of the above changes | Q3 2024 Net Interest Margin Analysis | Metric | Q3 2024 | Q3 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Margin | 1.84% | 2.06% | -22 bps | | Avg. Yield on Interest-Earning Assets | 4.70% | 4.17% | +53 bps | | Avg. Cost of Interest-Bearing Liabilities | 3.52% | 2.70% | +82 bps | - The net interest margin showed a sequential improvement, increasing by 9 basis points from 1.75% in Q1 2024 to 1.84% in Q3 20247 For the Nine Months Ended September 30, 2024 Nine-month net income fell by $19.9 million due to lower net interest income and higher credit loss provisions Nine Months 2024 vs. 2023 Income Statement Changes | Item | Change (YoY) | Reason | | :--- | :--- | :--- | | Net Interest Income | -$29.0 million | Interest expense increase ($79.4M) was much larger than interest income increase ($50.4M) | | Provision for Credit Losses | +$7.9 million | Primarily due to $8.2M in net charge-offs and higher qualitative factors | | Non-Interest Income | +$9.5 million | A $9.6M decrease in the loss on securities transactions compared to 2023 | | Non-Interest Expense | +$0.3 million | A $9.5M decrease in compensation was offset by higher professional fees, FDIC premiums, and data processing costs | | Net Income | -$19.9 million | Cumulative effect of the above changes | Nine Months 2024 Net Interest Margin Analysis | Metric | Nine Months 2024 | Nine Months 2023 | Change | | :--- | :--- | :--- | :--- | | Net Interest Margin | 1.80% | 2.27% | -47 bps | | Avg. Yield on Interest-Earning Assets | 4.61% | 4.06% | +55 bps | | Avg. Cost of Interest-Bearing Liabilities | 3.47% | 2.29% | +118 bps | Balance Sheet Summary Total assets stable at $10.7 billion, with cash funding debt securities, deposit growth, and increased equity Balance Sheet Changes (Sep 30, 2024 vs. Dec 31, 2023) | Account | Balance at Sep 30, 2024 | Change from Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $10.7 billion | +$40.9 million | | Cash and cash equivalents | $283.5 million | -$139.7 million | | Debt securities available for sale | $1.3 billion | +$178.9 million | | Loans receivable, net | $7.8 billion | -$20.7 million | | Total Deposits | $8.0 billion | +$111.5 million | | Borrowings | $1.4 billion | -$108.1 million | | Total Stockholders' Equity | $1.1 billion | +$38.8 million | - The increase in total deposits was driven by a $195.7 million rise in certificates of deposit, as the bank priced these products competitively to attract customers23 - Stockholders' equity increased due to $9.6 million in net income, a $27.7 million positive change in other comprehensive income, and stock-based compensation, partially offset by $5.9 million in stock repurchases24 Asset Quality Asset quality deteriorated in 2024, with non-performing loans doubling to $28.0 million and increased net charge-offs Asset Quality Indicators | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Non-performing loans | $28.0 million | $12.6 million | | Non-performing loans to total gross loans | 0.36% | 0.16% | | Non-performing assets to total assets | 0.28% | 0.12% | | Allowance for credit losses on loans | $58.5 million | $55.1 million | - A single borrower, a healthcare facility, accounted for approximately 60% of the $15.4 million increase in non-performing loans25 Net Charge-Offs | Period | Net Charge-Offs | | :--- | :--- | | Q3 2024 | $2.7 million | | Q3 2023 | $1.7 million | | Nine Months 2024 | $8.2 million | | Nine Months 2023 | $2.3 million | Additional Liquidity, Loan, and Deposit Information Strong liquidity with $2.6 billion in funding, diverse deposits, and a healthy $3.7 billion commercial and multifamily real estate loan portfolio - The company has a diverse deposit base with approximately 215,000 accounts and an average balance of about $37,00029 - As of September 30, 2024, the company had immediate access to approximately $2.6 billion of funding and no outstanding borrowings from the Federal Reserve Discount Window30 Multifamily and Commercial Real Estate Loan Portfolio (at Sep 30, 2024) | Loan Category | Balance (in thousands) | % of Gross Loans | Avg. LTV | Avg. DSC | | :--- | :--- | :--- | :--- | :--- | | Multifamily Real Estate | $1,399,000 | 17.8% | 61.0% | 1.62x | | Owner Occupied CRE | $683,523 | 8.7% | 53.6% | 2.10x | | Investor Owned CRE | $1,629,236 | 20.7% | 54.3% | 1.72x | | Total | $3,711,759 | 47.2% | 56.7% | 1.75x | Financial Statements and Supplementary Data This section presents detailed unaudited consolidated financial statements, including balance sheets, income statements, and key financial data Consolidated Balance Sheets The Consolidated Balance Sheets detail the company's financial position, including assets, liabilities, and equity, as of September 30, 2024 Consolidated Balance Sheets (in thousands) | | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total Assets | $10,686,503 | $10,645,568 | | Total cash and cash equivalents | $283,501 | $423,249 | | Loans receivable, net | $7,798,695 | $7,819,441 | | Total Liabilities | $9,607,353 | $9,605,233 | | Deposits | $7,958,059 | $7,846,556 | | Borrowings | $1,420,640 | $1,528,695 | | Total Stockholders' Equity | $1,079,150 | $1,040,335 | Consolidated Statements of Income The Consolidated Statements of Income detail the company's revenues, expenses, net income, and EPS for the three and nine-month periods Consolidated Statements of Income (in thousands) | | Three Months Ended Sep 30 | Nine Months Ended Sep 30 | | :--- | :--- | :--- | | | 2024 | 2023 | 2024 | 2023 | | Net interest income | $45,275 | $48,522 | $131,555 | $160,537 | | Provision for credit losses | $4,103 | $2,379 | $11,575 | $3,632 | | Non-interest income | $8,978 | $8,602 | $25,610 | $16,130 | | Non-interest expense | $42,834 | $42,910 | $134,739 | $134,418 | | Net income | $6,185 | $9,130 | $9,570 | $29,517 | | Earnings per share-diluted | $0.06 | $0.09 | $0.09 | $0.29 | Average Balances/Yields This section details average asset and liability balances, yields, and costs, illustrating net interest margin compression drivers Q3 Average Balances and Rates | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Avg. Yield on Interest-Earning Assets | 4.70% | 4.17% | | Avg. Cost on Interest-Bearing Liabilities | 3.52% | 2.70% | | Interest Rate Spread | 1.18% | 1.47% | | Net Interest Margin | 1.84% | 2.06% | Nine Months Average Balances and Rates | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Avg. Yield on Interest-Earning Assets | 4.61% | 4.06% | | Avg. Cost on Interest-Bearing Liabilities | 3.47% | 2.29% | | Interest Rate Spread | 1.15% | 1.77% | | Net Interest Margin | 1.80% | 2.27% | Selected Financial Highlights & Asset Quality Data This section presents quarterly performance and asset quality ratios, highlighting trends in profitability, NIM, and non-performing loans Quarterly Performance Ratios | Ratio | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Return on average assets | 0.23% | 0.17% | (0.04)% | 0.25% | 0.36% | | Net interest margin | 1.84% | 1.81% | 1.75% | 1.85% | 2.06% | | Efficiency ratio | 78.95% | 86.83% | 91.96% | 84.82% | 75.12% | Quarterly Asset Quality Ratios | Ratio | Sep 30, 2024 | Jun 30, 2024 | Mar 31, 2024 | Dec 31, 2023 | Sep 30, 2023 | | :--- | :--- | :--- | :--- | :--- | :--- | | Non-performing loans to total gross loans | 0.36% | 0.33% | 0.30% | 0.16% | 0.19% | | ACL to gross loans | 0.75% | 0.73% | 0.71% | 0.70% | 0.69% | Loan and Capital Data This section details the quarterly loan portfolio breakdown and reports the company's and subsidiary banks' strong regulatory capital ratios Gross Loan Portfolio Breakdown (in thousands) | Loan Category | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | One-to-four family | $2,737,190 | $2,792,833 | | Commercial real estate | $2,312,759 | $2,377,077 | | Multifamily | $1,399,000 | $1,409,187 | | Commercial business loans | $586,447 | $533,041 | | Construction | $510,439 | $443,094 | | Total Gross Loans | $7,809,753 | $7,824,665 | Company Capital Ratios | Ratio | Sep 30, 2024 (Est.) | Dec 31, 2023 | | :--- | :--- | :--- | | Common equity tier 1 capital | 13.50% | 13.23% | | Tier 1 capital | 13.59% | 13.32% | | Total capital | 14.37% | 14.08% | Reconciliation of GAAP to Non-GAAP Financial Measures This section reconciles GAAP to non-GAAP financial measures, including core net income, profitability ratios, and tangible book value per share Book Value vs. Tangible Book Value Per Share | Metric | Sep 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Book value per share | $10.30 | $9.92 | | Tangible book value per share | $9.16 | $8.75 | Reconciliation of Net Income to Core Net Income (in thousands) | | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | Net Income (GAAP) | $6,185 | $9,570 | | Adjustments (net) | ($88) | $2,273 | | Core Net Income (Non-GAAP) | $6,097 | $11,843 | - Major adjustments for the nine-month period to arrive at Core Net Income included adding back a $1.1 million after-tax loss on securities transactions and $691,000 in after-tax merger-related expenses52 Efficiency Ratio vs. Core Efficiency Ratio | | Three Months Ended Sep 30, 2024 | Nine Months Ended Sep 30, 2024 | | :--- | :--- | :--- | | Efficiency Ratio (GAAP) | 78.95% | 85.73% | | Core Efficiency Ratio (Non-GAAP) | 79.14% | 84.26% |
umbia Financial(CLBK) - 2024 Q3 - Quarterly Results