Partners Bancorp(US:PTRS)2022-11-10 21:31Financial Performance - The Company reported its financial condition as of September 30, 2022, compared to December 31, 2021, and provided results for the three and nine months ended September 30, 2022, indicating ongoing operational assessments [210]. - Net income attributable to the Company for the three months ended September 30, 2022, was $4.1 million, a 52.5% increase from $2.7 million in the same period of 2021 [234]. - For the nine months ended September 30, 2022, net income attributable to the Company was $9.4 million, a 58.0% increase from $5.9 million in the same period of 2021 [234]. - The Company's annualized return on average assets for the three months ended September 30, 2022, was 0.98%, up from 0.66% in the same period of 2021 [241]. - Net income for the three months ended September 30, 2022, was $4,058 thousand, compared to $2,812 thousand for the same period in 2021, representing a 44.3% increase [260]. Income and Expenses - The Company derives the majority of its income from interest on loans and investment securities, with net interest income being a key measure of success [216]. - Net interest income for the three months ended September 30, 2022, increased by $3.0 million, or 25.0%, compared to the same period in 2021, reaching $14,875 thousand [262]. - Total interest income for the nine months ended September 30, 2022, increased by $3.1 million, or 7.6%, while total interest expense decreased by $2.0 million, or 28.6% [273]. - Noninterest income decreased by $834 thousand, or 40.2%, for the three months ended September 30, 2022, compared to the same period in 2021, and decreased by $2.6 million, or 39.1%, for the nine months ended September 30, 2022 [337]. - Noninterest expense for the three months ended September 30, 2022, decreased by $10 thousand, or 0.1%, while it increased by $365 thousand, or 1.2%, for the nine months ended September 30, 2022 [345]. Loans and Credit Quality - Loans, net of unamortized discounts, increased by $86.8 million, or 7.8%, to $1.20 billion as of September 30, 2022, driven by organic growth [253]. - The allowance for credit losses to total loans ratio was 1.15% at September 30, 2022, compared to 1.31% at December 31, 2021 [256]. - Nonperforming assets decreased to $4.3 million as of September 30, 2022, down from $9.8 million at December 31, 2021 [252]. - The provision for credit losses in Q3 2022 was $419 thousand, an increase of $449 thousand, or 1,496.7%, compared to a reversal of credit losses of $30 thousand in Q3 2021 [305]. - The Company experienced organic loan growth and loans acquired in the Virginia Partners acquisition that converted from acquired to originated status, contributing to the increase in the provision for credit losses [305]. Strategic Initiatives - Following the termination of the merger agreement with OCFC, the Company plans to review strategic alternatives to enhance shareholder returns, including potential internal initiatives and other strategic transactions [222]. - The Company expects to communicate an update regarding its strategic review in early 2023 [222]. - The ongoing COVID-19 pandemic and geopolitical conflicts, such as the war in Ukraine, are expected to impact the Company's financial results throughout the remainder of fiscal year 2022 and into 2023 [224]. - The Company has not recorded any impairment of goodwill for the nine months ended September 30, 2022, based on management's assessment [230]. - Management expects net interest income to rise in the future based on the current and projected interest rate environment [299]. Market and Economic Conditions - The financial performance of the Company is highly dependent on the business environment in its primary markets and the overall economic conditions in the United States [223]. - The Company has experienced disruptions in operations due to the COVID-19 pandemic, affecting production, demand, and employee productivity [224]. - The economic disruption from the COVID-19 pandemic and rising interest rates is expected to continue impacting the company's financial position throughout the remainder of fiscal year 2022 [313]. - The investment securities portfolio was negatively impacted by unrealized losses due to increases in market interest rates, which are expected to continue affecting the market value of the portfolio [360]. Assets and Deposits - Total assets as of September 30, 2022, were $1.65 billion, an increase of $5.7 million, or 0.3%, from December 31, 2021 [245]. - Total deposits as of September 30, 2022, were $1.46 billion, an increase of $13.1 million, or 0.9%, from December 31, 2021 [253]. - The loan-to-deposit ratio was 82.7% at September 30, 2022, compared to 77.4% at December 31, 2021, indicating a tighter funding environment [373]. - Non-interest bearing demand deposits increased to $568.1 million at September 30, 2022, a $74.2 million or 15.0% increase from $493.9 million at December 31, 2021 [371]. - Core deposits were $1.39 billion at September 30, 2022, an increase of $28.4 million or 2.1% from $1.36 billion at December 31, 2021 [373]. Capital Ratios - The Bank of Delmarva reported a Total Capital Ratio of 13.0% as of September 30, 2022, compared to 12.9% as of December 31, 2021 [386]. - Virginia Partners Bank's Total Capital Ratio was 11.4% as of September 30, 2022, up from 12.0% at the end of 2021 [386]. - The Tier 1 Capital Ratio for The Bank of Delmarva increased to 11.8% as of September 30, 2022, from 11.6% as of December 31, 2021 [386]. - The Tier 1 Leverage Ratio for The Bank of Delmarva was 8.7% as of September 30, 2022, compared to 8.1% as of December 31, 2021 [387]. - Virginia Partners Bank's Tier 1 Leverage Ratio stood at 8.6% as of September 30, 2022, up from 8.5% at the end of 2021 [387]. Liquidity Management - The Company has implemented internal policies to manage liquidity and limit reliance on non-core funding sources [390]. - Management actively reviews the liquidity position and has established guidelines for asset-based liquidity sources [390]. - The cash position at September 30, 2022, was $248.3 million, compared to $338.8 million at year-end 2021 [389]. - Advances available from the FHLB totaled approximately $422.0 million as of September 30, 2022, with $25.8 million drawn [390]. - The company anticipates that a stable base of deposits will be its primary source of funding for both short-term and long-term liquidity needs in the future [373].