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Real Estate : Equity Real Estate Investment Trusts (REITs) | Mid Cap Blend
Company profile

STAG Industrial, Inc. is a real estate investment trust (REIT). The Company is focused on the acquisition, ownership, and operation of single-tenant, industrial properties throughout the United States. The Company is structured as an umbrella partnership REIT (UPREIT), and owns all its assets and conducts its business through its operating partnership, STAG Industrial Operating Partnership, L.P. The Company's portfolio includes buildings in states with rentable, consisting of warehouse/distribution buildings, light manufacturing buildings, and flex/office buildings. It also owns both single- and multi-tenant properties. Its buildings in its portfolio are located in markets throughout the United States.

Closing Price
$43.59
Day's Change
-0.36 (-0.82%)
Bid
--
Ask
--
B/A Size
--
Day's High
43.92
Day's Low
42.93
Volume
(Average)
Volume:
1,106,690

10-day average volume:
1,028,209
1,106,690

Level One Bancorp, Inc. reports third quarter 2021 net income of $9.5 million, representing $1.16 diluted earnings per common share

8:15 am ET October 29, 2021 (Globe Newswire) Print

Level One Bancorp, Inc. ("Level One") (Nasdaq: LEVL) today reported its financial results for the third quarter of 2021, which included net income of $9.5 million, or $1.16 diluted earnings per common share. This compares to net income of $5.2 million, or $0.67 diluted earnings per common share, in the third quarter of 2020.

Patrick J. Fehring, Chief Executive Officer of Level One, commented, "The Level One team delivered solid operating results in the third quarter 2021 with net income of $9.5 million or $1.16 diluted earnings per common share. This represents a 38.10% increase over diluted earnings per common share of $0.84 for the prior quarter and an increase of 73.13% over the third quarter of 2020 diluted earnings per common share of $0.67. Our quarterly performance was driven by growth in total loans of $56.1 million (excluding Paycheck Protection Program ("PPP") loans), or 14.81% annualized for the period and an increase in fees from mortgage banking activities of $1.5 million or 55.51% over the prior quarter. As announced over the summer, Level One added talent to our mortgage origination team, and the impact was evident in our business results."

Mr. Fehring continued, "Level One also experienced improved credit quality with a decrease in our nonperforming assets as a percentage of total assets to 0.48% at the end of the third quarter compared to 0.55% at the end of the prior quarter. Our financial results also reflect an increase of the net interest margin to 3.47% in the third quarter compared to 3.30% in the prior quarter. The improvement in the net interest margin during the quarter was a result of decreased deposit cost, lower subordinated debt expense along with higher loan interest income including PPP revenue. We are pleased with these positive operating results for the quarter, and we appreciate the efforts of the Level One team."

Third Quarter 2021 Highlights

-- Total loans decreased 3.13% to $1.72 billion at September 30, 2021, compared to $1.78 billion at June 30, 2021

-- Total loans, excluding a decrease of $111.7 million of PPP loans, increased $56.1 million, or 14.81% annualized, during the third quarter of 2021

-- Total assets increased 1.49% to $2.54 billion at September 30, 2021, compared to $2.51 billion at June 30, 2021

-- Total deposits increased 1.73% to $2.07 billion at September 30, 2021, compared to $2.03 billion at June 30, 2021

-- Book value per common share increased 4.08% to $27.56 per common share at September 30, 2021, compared to $26.48 per common share at June 30, 2021

-- Tangible book value per common share increased 5.04% to $21.89 per common share at September 30, 2021, compared to $20.84 per common share at June 30, 2021

-- Net income of $9.5 million increased 35.62% from $7.0 million in the preceding quarter

-- Diluted earnings per common share of $1.16 increased 38.10% compared to $0.84 in the preceding quarter

-- Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.47%, compared to 3.30% in the preceding quarter and 2.80% in the third quarter of 2020

-- Noninterest income increased $1.7 million to $6.0 million in the third quarter of 2021, compared to $4.3 million in the preceding quarter

-- Noninterest expense increased $1.4 million to $16.0 million in the third quarter of 2021, compared to $14.6 million in the preceding quarter

-- Provision for loan loss decreased $1.7 million to a $1.2 million recovery of provision in the third quarter of 2021, compared to a $540 thousand provision expense in the preceding quarter

Net Interest Income and Net Interest Margin

Level One's net interest income increased $899 thousand, or 4.58%, to $20.5 million in the third quarter of 2021, compared to $19.6 million in the preceding quarter, and increased $3.9 million, or 23.61%, compared to $16.6 million in the third quarter of 2020. The increase in net interest income compared to the preceding quarter was primarily due to an increase of $500 thousand of interest income on loans and decreases of $126 thousand in interest expense on deposits and $181 thousand in interest expense on subordinated notes. The increase in net interest income compared to the third quarter of 2020 was primarily due to increases of $1.7 million of interest income on loans primarily as a result of the accelerated recognition of fees on PPP loans that were forgiven and $419 thousand of interest income on investment securities due to increased volumes of investment securities. In addition, between the third quarter of 2020 and the third quarter of 2021, interest expense on deposits decreased $1.4 million and interest expense on borrowed funds and subordinated notes decreased $483 thousand. The decrease in interest expense on deposits was primarily due to lower interest rates paid as a result of revised internal deposit rates and maturity of higher cost time deposits. The decrease in interest expense on borrowed funds and subordinated notes was primarily due to the redemption of $15.0 million of subordinated notes during the second quarter of 2021 and a decrease in Federal Reserve Bank borrowings.

Level One's net interest margin, on a FTE basis, was 3.47% in the third quarter of 2021, compared to 3.30% in the preceding quarter and 2.80% in the third quarter of 2020. The increase in the net interest margin year over year was primarily a result of an increase in loan yields of 62 basis points to 4.60% in the third quarter of 2021, compared to 3.98% in the third quarter of 2020 due primarily to the recognition of fees on PPP loans, as well as a decrease in the cost of interest-bearing liabilities, which declined 40 basis points to 0.48% in the third quarter of 2021, compared to 0.88% in the third quarter of 2020 primarily due to lower interest rates paid as a result of revised internal deposit rates and maturity of higher cost time deposits.

Noninterest Income

Level One's noninterest income increased $1.7 million, or 39.64%, to $6.0 million in the third quarter of 2021, compared to $4.3 million in the preceding quarter, and decreased $3.1 million, or 33.80%, compared to $9.1 million in the third quarter of 2020. The increase in noninterest income compared to the preceding quarter was primarily attributable to an increase of $1.5 million in mortgage banking activities and an increase of $151 thousand in other charges and fees. The increase in the mortgage banking activities income compared to the preceding quarter was primarily due to $26.2 million higher residential loan originations held for sale and $11.2 million higher residential loans sold primarily as a result of increased hiring efforts and efficiencies created within the mortgage department. The increase in other charges and fees was primarily due to tax credits as a result of legislation enacted in response to the COVID-19 pandemic recognized during the quarter.

The decrease in noninterest income in the third quarter of 2021 compared to the same period in 2020 was primarily due to decreases of $2.9 million in mortgage banking activities and $434 thousand in net gains on sales of investment securities. This was partially offset by an increase of $243 thousand in service charges on deposits. The decrease in mortgage banking activities compared to the third quarter of 2020 was primarily due to $84.2 million fewer residential loan originations held for sale and $54.5 million fewer residential loans sold. The higher volumes in the third quarter of 2020 were primarily as a result of the significant decrease in interest rates during the first half of 2020 while interest rates have remained relatively stable in 2021. The decrease in net gains on sales of investment securities was due to no securities sold in the third quarter of 2021. The increase in service charges on deposits was primarily due to higher transaction volumes and deposit balances.

Noninterest Expense

Level One's noninterest expense increased $1.4 million, or 9.60%, to $16.0 million in the third quarter of 2021, compared to $14.6 million in the preceding quarter, and increased $863 thousand, or 5.71%, compared to $15.1 million in the third quarter of 2020. The increase in noninterest expense compared to the preceding quarter was primarily attributable to increases of $1.2 million in salary and employee benefits and $147 thousand in marketing expense. The increase in salary and employee benefits compared to the second quarter of 2021 was primarily due to an increase of $902 thousand in mortgage commissions as well as an increase of 15 full-time equivalent employees. The increase in marketing expense between the periods was due to an increase in advertising efforts.

The increase in noninterest expense in the third quarter of 2021 compared to the same period in 2020 was mainly attributable to an increase of $689 thousand in salary and employee benefits and $171 thousand in marketing expense. The increase in salary and employee benefits between the periods was primarily due to an increase of 20 full-time equivalent employees as well as incentive compensation. The increase in marketing expense between the periods was due to an increase in advertising efforts.

The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, was 60.21% for the third quarter of 2021, compared to 60.93% for the preceding quarter and 58.81% in the third quarter of 2020.

Income Tax Expense

Level One's income tax provision was $2.3 million, or 19.49% of pretax income, in the third quarter of 2021, as compared to $1.8 million, or 20.82% of pretax income, in the preceding quarter and $1.1 million, or 17.66% of pretax income, in the third quarter of 2020.

Loan Portfolio

Total loans were $1.72 billion at September 30, 2021, a decrease of $55.5 million, or 3.13%, from $1.78 billion at June 30, 2021, and down $124.2 million, or 6.73%, from $1.84 billion at September 30, 2020. The decrease in total loans compared to June 30, 2021 was primarily due to $111.7 million of PPP loans forgiven by the SBA during the third quarter partially offset by a net increase of $56.1 million, or 14.81% annualized growth, in the remainder of the loan portfolio. The decrease in total loans compared to September 30, 2020, was primarily due to a $244.9 million net decrease in PPP loans (originated and forgiven) which was partially offset by a net increase of $120.7 million in the remainder of the loan portfolio.

Investment Securities

The investment securities portfolio grew $13.0 million, or 3.47%, to $389.5 million at September 30, 2021, from $376.5 million at June 30, 2021, and up $136.0 million, or 53.64%, from $253.5 million at September 30, 2020. The increase in the investment securities portfolio compared to June 30, 2021 was primarily due to the purchase of $19.6 million of investment securities using excess cash balances generated by payoffs of PPP loans, partially offset in part by $6.6 million of sales, calls, or maturity of investment securities and principal pay downs. The increase in investment securities compared to September 30, 2020, was primarily due to the purchase of $172.2 million of securities between the two dates using excess cash balances generated by the payoffs of PPP loans, partially offset by $36.2 million of sales, calls, or maturity of investment securities and principal pay downs.

Deposits

Total deposits were $2.07 billion at September 30, 2021, an increase of $35.2 million, or 1.73%, from $2.03 billion at June 30, 2021, and up $123.6 million, or 6.36%, from $1.94 billion at September 30, 2020. The growth in deposits compared to June 30, 2021 and September 30, 2020 was primarily due to organic deposit growth as a result of increased customer liquidity and new customers. Total deposit composition at September 30, 2021 consisted of 47.01% of demand deposit accounts, 30.55% of savings and money market accounts and 22.44% of time deposits.

Borrowings

Total debt outstanding was $211.7 million at September 30, 2021, a decrease of $564 thousand, or 0.27%, from $212.3 million at June 30, 2021, and down $49.6 million, or 18.99%, from $261.4 million at September 30, 2020. The decrease in total borrowings compared to September 30, 2020 was primarily due to a decrease of $34.1 million in Federal Reserve Bank borrowings under the Paycheck Protection Program Liquidity Facility as well as the redemption of $15.0 million of subordinated notes. The Company would have paid approximately $721 thousand per year in interest on the redeemed subordinated notes.

Asset Quality

Nonaccrual loans were $12.1 million, or 0.71% of total loans, at September 30, 2021, a decrease of $1.6 million from nonaccrual loans of $13.7 million, or 0.77% of total loans, at June 30, 2021, and a decrease of $7.1 million from nonaccrual loans of $19.3 million, or 1.04% of total loans, at September 30, 2020. The decrease in nonaccrual loans compared to the prior quarter-end was primarily due to a $2.9 million pay off of one commercial loan relationship partially offset by two commercial loan relationships moving to nonaccrual status totaling $1.9 million. The decrease in nonaccrual loans compared to September 30, 2020 was primarily due to pay offs of five commercial loan relationships totaling $5.9 million, paydowns on two commercial loan relationships totaling $3.3 million, and the transfer of a $1.8 million residential real estate loan relationship to other real estate owned. This was partially offset by three commercial loan relationships and one residential real estate loan moving to nonaccrual status totaling $3.0 million.

Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 0.48% at September 30, 2021, compared to 0.55% at June 30, 2021, and 0.79% at September 30, 2020.

Performing troubled debt restructured loans, which are not reported as nonaccrual loans but rather as part of impaired loans, were $762 thousand at September 30, 2021 compared to $765 thousand at June 30, 2021, and $1.1 million at September 30, 2020. Loans to borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans. In accordance with bank regulatory guidance, troubled debt restructurings do not include short-term modifications made on a good-faith basis in response to the COVID-19 pandemic to borrowers who were current prior to any relief. As of September 30, 2021, there were $1.1 million of loans that remained on a COVID-related deferral compared to $7.5 million as of June 30, 2021. As of September 30, 2021, there were no loans that had payments deferred greater than six months compared to $7.4 million as of June 30, 2021.

Net charge-offs in the third quarter of 2021 were $224 thousand, or 0.05% of average loans on an annualized basis, compared to $26 thousand of net recoveries, or 0.01% of average loans on an annualized basis for the preceding quarter and $78 thousand of net charge-offs, or 0.02% of average loans on an annualized basis, in the third quarter of 2020.

Level One's provision for loan losses in the third quarter of 2021 was a provision recovery of $1.2 million, compared to provision expense of $540 thousand in the preceding quarter and provision expense of $4.3 million in the third quarter of 2020. The decrease in the provision expense quarter over quarter was primarily due to a decrease of $2.0 million in general reserves as a result of a reduction in qualitative factors within the allowance for loan loss model as a result of improved credit quality, partially offset by an increase in specific reserves of $252 thousand. The decrease in the provision expense in the third quarter of 2021 compared to the same period in 2020 was primarily due to a decrease in general reserves of $5.1 million resulting from a decrease in qualitative factors and a decrease of $531 thousand in specific reserves. The Company will continue to evaluate the fluid situation in regard to the COVID-19 pandemic and will take further action to appropriately record additional provision for loan losses or decrease the level of the provision for loan losses should there be any indications of significant changes in the credit quality of our portfolio as a result of the COVID-19 pandemic.

The allowance for loan losses was $21.7 million, or 1.26% of total loans, at September 30, 2021, compared to $23.1 million, or 1.30% of total loans, at June 30, 2021, and $21.3 million, or 1.15% of total loans, at September 30, 2020. Excluding PPP loans of $147.6 million, $259.3 million, and $392.5 million as of these dates respectively, the allowance for loan losses as a percentage of total loans was 1.38% as of September 30, 2021, compared to 1.53% as of June 30, 2021 and 1.46% as of September 30, 2020 (see section entitled "GAAP Reconciliation of Non-GAAP Financial Measures" for further details). The allowance for loan losses as a percentage of total loans decreased compared to June 30, 2021 primarily due to a reduction in qualitative factors within the allowance for loan loss model as a result of improved credit quality. The allowance for loan losses as a percentage of total loans increased compared to September 30, 2020 as a result of the forgiveness of $244.9 million of PPP loans. As of September 30, 2021, the allowance for loan losses as a percentage of nonaccrual loans was 179.11%, compared to 168.64% at June 30, 2021, and 110.32% at September 30, 2020. The Company will continue to evaluate the appropriateness of the allowance for loan losses in future quarters as needed.

Capital

Total shareholders' equity was $233.9 million at September 30, 2021, an increase of $8.5 million, or 3.78%, compared with $225.4 million at June 30, 2021 primarily as a result of an increase in retained earnings. Total shareholders' equity increased $24.4 million, or 11.68%, from $209.5 million at September 30, 2020, primarily as a result of an increase in retained earnings.

Recent Developments

Third Quarter Common Stock Dividend: On September 15, 2021, Level One's Board of Directors declared a quarterly cash dividend of $0.06 per share. This dividend was paid on October 15, 2021, to stockholders of record at the close of business on September 30, 2021.

Third Quarter Preferred Stock Dividend: On October 20, 2021, Level One's Board of Directors declared a quarterly cash dividend of $46.88 per share on its 7.50% Non-Cumulative Perpetual Preferred Stock, Series B. Holders of depositary shares will receive $0.4688 per depositary share. The dividend is payable on November 15, 2021, to shareholders of record at the close of business on October 31, 2021.

Level One's Response to the COVID-19 Pandemic: Level One has taken comprehensive steps to help our customers, team members and communities during the current COVID-19 pandemic health crisis. For our customers, we have provided loan payment deferrals and offered fee waivers, among other actions. In addition, from January 18 through June 30, 2021, Level One funded 1,532 PPP loans for $234.3 million, of which 1,187 applications were for loans $150,000 or below.

We are continuing to enable the vast majority of our main office team members to work remotely each day. We have also taken significant actions to help ensure the safety of our team members whose roles require them to come into the office, which includes the development, implementation and communication of protocols necessary for those who return. As of March 31, 2021, we opened branches for walk in services. We will continue to evaluate this fluid situation and take additional actions as necessary.

About Level One Bancorp, Inc.

Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $2.54 billion as of September 30, 2021. It operates sixteen banking centers throughout Metro Detroit, Ann Arbor, Grand Rapids, and Jackson and provides a variety of commercial, small business, and consumer banking services. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year," one of American Banker Magazine's "Top 200 Community Banks in the Nation," one of Metro Detroit's "Best & Brightest Companies to Work For" and more. Level One Bank's business banking division provides a broad spectrum of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, MEDC loans, export-import financing, and a full suite of treasury management services. The consumer banking division offers a range of personal checking, savings and CD products and a complete array of consumer loan products including residential mortgages, new construction and renovation loans, home equity lines of credit, auto loans, and credit card services. Level One Bank offers a variety of digital banking services including online banking, robust mobile banking apps, online account opening and online loan applications for individuals and businesses. Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management's current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue," "annualized" or similar terminology. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the effects of the COVID-19 pandemic, including its effects on the economic environment, our customers and our operations, as well as any changes to federal, state or local government laws, regulations or orders in connection with the pandemic, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, changes in benchmark interest rates used to price loans and deposits including the expected elimination of LIBOR, and changes in tax laws, regulations and guidance, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Summary Consolidated Financial Information
(Unaudited)                                                                                                                           As of or for the three months ended,
(Dollars in thousands, except per share data)                                                                                         September           June 30,           March 31,           December 31,         September
                                                                                                                                      2021                2021               2021                2020                 30, 2020
Earnings Summary
Interest income                                                                                                                       $    22,322         $    21,737        $    21,551         $    22,181          $    20,245
Interest expense                                                                                                                      1,807               2,121              2,394               3,075                3,648
Net interest income                                                                                                                   20,515              19,616             19,157              19,106               16,597
Provision expense (recovery) for loan losses                                                                                          (1,189         )    540                265                 1,538                4,270
Noninterest income                                                                                                                    6,041               4,326              7,278               8,110                9,125
Noninterest expense                                                                                                                   15,989              14,588             15,139              15,461               15,126
Income before income taxes                                                                                                            11,756              8,814              11,031              10,217               6,326
Income tax provision                                                                                                                  2,291               1,835              2,072               1,844                1,117
Net income                                                                                                                            $    9,465          $    6,979         $    8,959          $    8,373           $    5,209
Preferred stock dividends                                                                                                             468                 469                469                 479                  --
Net income available to common shareholders                                                                                           8,997               6,510              8,490               7,894                5,209
Net income allocated to participating securities                                                                                      138                 92                 111                 65                   40
Net income attributable to common shareholders                                                                                        $    8,859          $    6,418         $    8,379          $    7,829           $    5,169
Per Share Data
Basic earnings per common share                                                                                                       $    1.19           $    0.85          $    1.11           $    1.02            $    0.68
Diluted earnings per common share                                                                                                     1.16                0.84               1.10                1.02                 0.67
Diluted earnings per common share, excluding acquisition and due diligence fees                                                       1.16                0.84               1.10                1.02                 0.67
Book value per common share                                                                                                           27.56               26.48              25.40               25.14                24.06
Tangible book value per common share                                                                                                  21.89               20.84              19.78               19.63                18.74
Preferred shares outstanding (in thousands)                                                                                           10                  10                 10                  10                   10
Common shares outstanding (in thousands)                                                                                              7,640               7,629              7,630               7,634                7,734
Average basic common shares (in thousands)                                                                                            7,519               7,520              7,528               7,642                7,675
Average diluted common shares (in thousands)                                                                                          7,638               7,633              7,612               7,695                7,712
Selected Period End Balances
Total assets                                                                                                                          $    2,543,883      $    2,506,523     $    2,572,726      $    2,442,982       $    2,446,447
Securities available-for-sale                                                                                                         389,528             376,453            346,266             302,732              253,527
Total loans                                                                                                                           1,719,717           1,775,243          1,861,691           1,723,537            1,843,888
Total deposits                                                                                                                        2,066,992           2,031,808          2,093,965           1,963,312            1,943,435
Total liabilities                                                                                                                     2,309,949           2,281,114          2,355,539           2,227,655            2,236,979
Total shareholders' equity                                                                                                            233,934             225,409            217,187             215,327              209,468
Total common shareholders' equity                                                                                                     210,562             202,037            193,815             191,955              186,098
Tangible common shareholders' equity                                                                                                  167,262             159,022            150,887             149,844              144,963
Performance and Capital Ratios
Return on average assets (annualized)                                                                                                 1.50           %    1.09           %   1.44           %    1.35           %     0.83           %
Return on average equity (annualized)                                                                                                 16.32               12.52              16.31               15.61                10.48
Net interest margin (fully taxable equivalent)                                                                                        3.47                3.30               3.33                3.27                 2.80
Efficiency ratio (noninterest expense/net interest income plus noninterest income)                                                    60.21               60.93              57.27               56.81                58.81
Dividend payout ratio                                                                                                                 5.08                7.02               4.50                4.90                 7.41
Total shareholders' equity to total assets                                                                                            9.20                8.99               8.44                8.81                 8.56
Tangible common equity to tangible assets                                                                                             6.69                6.46               5.96                6.24                 6.03
Common equity tier 1 to risk-weighted assets                                                                                          9.82                9.66               9.63                9.30                 8.83
Tier 1 capital to risk-weighted assets                                                                                                11.19               11.09              11.11               10.80                10.31
Total capital to risk-weighted assets                                                                                                 14.19               14.15              15.18               14.91                14.39
Tier 1 capital to average assets (leverage ratio)                                                                                     7.68                7.24               7.15                6.93                 7.17
Asset Quality Ratios:
Net charge-offs (recoveries) to average loans                                                                                         0.05           %    (0.01          )%  --             %    0.11           %     0.02           %
Nonperforming assets as a percentage of total assets                                                                                  0.48                0.55               0.60                0.77                 0.79
Nonaccrual loans as a percent of total loans                                                                                          0.71                0.77               0.83                1.09                 1.04
Allowance for loan losses as a percentage of total loans                                                                              1.26                1.30               1.21                1.29                 1.15
Allowance for loan losses as a percentage of nonaccrual loans                                                                         179.11              168.64             146.95              118.50               110.32
Allowance for loan losses as a percentage of nonaccrual loans, excluding allowance allocated to loans accounted for under ASC 310-30  173.58              163.76             142.62              114.95               105.46
Consolidated Balance Sheets
(Unaudited)                                                                                                                                                                                                                As of
(Dollars in thousands)                                                                                                                                                                                                     September 30,        June 30,           September 30,
                                                                                                                                                                                                                           2021                 2021               2020
Assets
Cash and cash equivalents                                                                                                                                                                                                  $    293,824         $    218,366       $    176,486
Securities available-for-sale                                                                                                                                                                                              389,528              376,453            253,527
Other investments                                                                                                                                                                                                          14,398               14,398             14,398
Mortgage loans held for sale, at fair value                                                                                                                                                                                15,351               9,305              60,635
Loans:
Originated loans                                                                                                                                                                                                           1,537,145            1,580,175          1,603,893
Acquired loans                                                                                                                                                                                                             182,572              195,068            239,995
Total loans                                                                                                                                                                                                                1,719,717            1,775,243          1,843,888
Less: Allowance for loan losses                                                                                                                                                                                            (21,731        )     (23,144        )   (21,254        )
Net loans                                                                                                                                                                                                                  1,697,986            1,752,099          1,822,634
Premises and equipment, net                                                                                                                                                                                                15,170               15,524             15,646
Goodwill                                                                                                                                                                                                                   35,554               35,554             35,554
Mortgage servicing rights, net                                                                                                                                                                                             5,051                4,599              2,194
Other intangible assets, net                                                                                                                                                                                               2,695                2,862              3,387
Bank-owned life insurance                                                                                                                                                                                                  29,774               29,576             18,083
Income tax benefit                                                                                                                                                                                                         4,041                5,491              3,791
Interest receivable and other assets                                                                                                                                                                                       40,511               42,296             40,112
Total assets                                                                                                                                                                                                               $    2,543,883       $    2,506,523     $    2,446,447
Liabilities
Deposits:
Noninterest-bearing demand deposits                                                                                                                                                                                        $    791,879         $    734,451       $    632,427
Interest-bearing demand deposits                                                                                                                                                                                           179,814              142,862            115,395
Money market and savings deposits                                                                                                                                                                                          631,551              629,378            595,471
Time deposits                                                                                                                                                                                                              463,748              525,117            600,142
Total deposits                                                                                                                                                                                                             2,066,992            2,031,808          1,943,435
Borrowings                                                                                                                                                                                                                 182,058              182,639            216,809
Subordinated notes                                                                                                                                                                                                         29,668               29,651             44,555
Other liabilities                                                                                                                                                                                                          31,231               37,016             32,180
Total liabilities                                                                                                                                                                                                          2,309,949            2,281,114          2,236,979
Shareholders' equity
Preferred stock, no par value per share; authorized-50,000 shares; issued and outstanding - 10,000 shares, with a liquidation preference of $2,500 per share, at September 30, 2021, June 30, 2021 and September 30, 2020  23,372               23,372             23,370
Common stock, no par value per share; authorized - 20,000,000 shares; issued and outstanding - 7,639,544 shares at September 30, 2021, 7,628,944 shares at June 30, 2021 and 7,734,322 shares at September 30, 2020        86,926               86,723             89,409
Retained earnings                                                                                                                                                                                                          118,781              110,243            88,646
Accumulated other comprehensive income, net of tax                                                                                                                                                                         4,855                5,071              8,043
Total shareholders' equity                                                                                                                                                                                                 233,934              225,409            209,468
Total liabilities and shareholders' equity                                                                                                                                                                                 $    2,543,883       $    2,506,523     $    2,446,447
Consolidated Statements of Income
(Unaudited)                                          Three months ended                        Nine months ended
(In thousands, except per share data)                September       June 30,     September    September       September
                                                     30, 2021        2021         30, 2020     30, 2021        30, 2020
Interest income
Originated loans, including fees                     $   17,796      $   17,167   $   15,274   $   51,785      $   44,630
Acquired loans, including fees                       2,651           2,780        3,456        8,532           11,187
Securities:
Taxable                                              1,054           991          652          2,895           1,930
Tax-exempt                                           630             627          613          1,880           1,894
Federal funds sold and other                         191             172          250          518             817
Total interest income                                22,322          21,737       20,245       65,610          60,458
Interest Expense
Deposits                                             965             1,091        2,323        3,443           9,039
Borrowed funds                                       468             475          693          1,409           1,866
Subordinated notes                                   374             555          632          1,470           1,903
Total interest expense                               1,807           2,121        3,648        6,322           12,808
Net interest income                                  20,515          19,616       16,597       59,288          47,650
Provision expense (recovery) for loan losses         (1,189     )    540          4,270        (384       )    10,334
Net interest income after provision for loan losses  21,704          19,076       12,327       59,672          37,316
Noninterest income
Service charges on deposits                          859             800          616          2,436           1,798
Net gain on sales of securities                      --              --           434          20              1,862
Mortgage banking activities                          4,216           2,711        7,108        12,738          15,380
Other charges and fees                               966             815          967          2,451           2,564
Total noninterest income                             6,041           4,326        9,125        17,645          21,604
Noninterest expense
Salary and employee benefits                         10,551          9,352        9,862        29,825          28,090
Occupancy and equipment expense                      1,680           1,583        1,678        4,971           4,773
Professional service fees                            847             774          808          2,264           2,141
Acquisition and due diligence fees                   --              --           17           --              1,664
FDIC premium expense                                 244             210          287          778                 722
Marketing expense                                    428             281          257          842             709
Loan processing expense                              231             193          262              755         690
Data processing expense                              928             1,057        844          3,209           2,601
Core deposit premium amortization                    167             166          192              501         576
Other expense                                        913             972          919              2,571       2,805
Total noninterest expense                            15,989          14,588       15,126           45,716      44,771
Income before income taxes                           11,756          8,814        6,326            31,601      14,149
Income tax provision                                 2,291           1,835        1,117        6,198           2,109
Net income                                           9,465           6,979        5,209        25,403          12,040
Preferred stock dividends                            468             469          --           1,406           --
Net income attributable to common shareholders       $   8,997       $   6,510    $   5,209    $   23,997      $   12,040
Earnings per common share:
Basic earnings per common share                      $   1.19        $   0.85     $   0.68     $   3.15        $   1.56
Diluted earnings per common share                    $   1.16        $   0.84     $   0.67     $   3.10        $   1.55
Cash dividends declared per common share             $   0.06        $   0.06     $   0.05     $   0.18        $   0.15
Weighted average common shares outstanding--basic    7,519           7,520        7,675        7,526           7,640
Weighted average common shares outstanding--diluted  7,638           7,633        7,712        7,631           7,701
Net Interest Income and Net Interest Margin
(Unaudited)                                          For the three months ended                                   For the nine months ended
(Dollars in thousands)                               September            June 30,             September          September          September
                                                     30, 2021             2021                 30, 2020           30, 2021           30, 2020
Average Balance Sheets:
Gross loans                                          $    1,763,214       $    1,853,438       $   1,871,164      $   1,823,888      $   1,696,073
Investment securities:
Taxable                                              265,885              248,739              139,237            243,377            124,169
Tax-exempt                                           104,063              103,184              94,526             103,158            97,104
Interest earning cash balances                       221,261              186,186              259,349            192,309            188,179
Other investments                                    14,398               14,398               12,419             14,398             12,401
Total interest-earning assets                        $    2,368,821       $    2,405,945       $   2,376,695      $   2,377,130      $   2,117,926
Non-earning assets                                   151,077              147,607              140,480            145,971            133,968
Total assets                                         $    2,519,898       $    2,553,552       $   2,517,175      $   2,523,101      $   2,251,894
Interest-bearing demand deposits                     156,977              143,290              116,285            144,449            112,579
Money market and savings deposits                    624,190              640,471              513,420            623,123            458,438
Time deposits                                        489,261              550,751              575,179            541,018            564,396
Borrowings                                           181,911              184,391              394,020            183,983            311,024
Subordinated notes                                   29,657               41,809               44,468             38,633             44,463
Total interest-bearing liabilities                   $    1,481,996       $    1,560,712       $   1,643,372      $   1,531,206      $   1,490,900
Noninterest bearing demand deposits                  774,926              737,038              640,095            735,162            546,066
Other liabilities                                    31,012               32,852               34,846             31,822             30,047
Shareholders' equity                                 231,964              222,950              198,862            224,911            184,881
Total liabilities and shareholders' equity           $    2,519,898       $    2,553,552       $   2,517,175      $   2,523,101      $   2,251,894
Yields:
Earning Assets
Gross loans                                          4.60           %     4.32           %     3.98          %    4.42          %    4.40          %
Investment securities:
Taxable                                              1.57           %     1.60           %     1.86          %    1.59          %    2.08          %
Tax-exempt                                           2.99           %     3.03           %     3.19          %    3.04          %    3.20          %
Interest earning cash balances                       0.15           %     0.11           %     0.12          %    0.12          %    0.28          %
Other investments                                    2.95           %     3.40           %     5.57          %    3.18          %    4.49          %
Total interest earning assets                        3.76           %     3.65           %     3.41          %    3.72          %    3.84          %
Interest-bearing liabilities
Interest-bearing demand deposits                     0.14           %     0.15           %     0.22          %    0.15          %    0.31          %
Money market and savings deposits                    0.17           %     0.18           %     0.43          %    0.20          %    0.65          %
Time deposits                                        0.53           %     0.54           %     1.18          %    0.58          %    1.55          %
Borrowings                                           1.02           %     1.03           %     0.70          %    1.02          %    0.80          %
Subordinated notes                                   5.00           %     5.32           %     5.65          %    5.09          %    5.72          %
Total interest-bearing liabilities                   0.48           %     0.55           %     0.88          %    0.55          %    1.15          %
Interest Spread                                      3.28           %     3.10           %     2.53          %    3.17          %    2.69          %
Net interest margin                                  3.44           %     3.27           %     2.78          %    3.33          %    3.01          %
Tax equivalent effect                                0.03           %     0.03           %     0.02          %    0.03          %    0.03          %
Net interest margin on a fully tax equivalent basis  3.47           %     3.30           %     2.80          %    3.36          %    3.04          %
Loan Composition
                              As of
(Dollars in thousands)        September       June 30,        March 31,       December        September
                              30, 2021        2021            2021            31, 2020        30, 2020
Commercial real estate:       (Unaudited)     (Unaudited)     (Unaudited)                     (Unaudited)
Non-owner occupied            $   479,633     $   477,715     $   449,690     $   445,810     $   460,708
Owner-occupied                295,228         301,615         300,175         275,022         269,481
Total commercial real estate  774,861         779,330         749,865         720,832         730,189
Commercial and industrial     540,546         642,606         794,096         685,504         807,923
Residential real estate       403,517         352,513         316,089         315,476         304,088
Consumer                      793             794             1,641           1,725           1,688
Total loans                   $   1,719,717   $   1,775,243   $   1,861,691   $   1,723,537   $   1,843,888
Impaired Assets
                                                   As of
(Dollars in thousands)                             September    June 30,     March 31,    December     September
                                                   30, 2021     2021         2021         31, 2020     30, 2020
Nonaccrual loans                                   (Unaudited)  (Unaudited)  (Unaudited)               (Unaudited)
Commercial real estate                             $   3,768    $   4,536    $   4,542    $   7,320    $   7,022
Commercial and industrial                          4,746        5,247        6,822        7,490        8,078
Residential real estate                            3,610        3,931        3,987        3,991        4,151
Consumer                                           9            10           13           15           15
Total nonaccrual loans                             12,133       13,724       15,364       18,816       19,266
Other real estate owned                            --           --           --           --           --
Total nonperforming assets                         12,133       13,724       15,364       18,816       19,266
Performing troubled debt restructurings
Commercial and industrial                          336          336          335          546          550
Residential real estate                            426          429          430          432          599
Total performing troubled debt restructurings      762          765          765          978          1,149
Total impaired assets                              $   12,895   $   14,489   $   16,129   $   19,794   $   20,415
Loans 90 days or more past due and still accruing  $   162      $   387      $   328      $   269      $   552

GAAP Reconciliation of Non-GAAP Financial Measures

Some of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible common shareholders' equity, tangible book value per common share, the ratio of tangible common equity to tangible assets, net income and diluted earnings per common share excluding acquisition and due diligence fees, and allowance for loan loss as a percentage of total loans, excluding PPP loans. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy, as well as better understand and evaluate the Company's core financial results for the periods in question.

The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:

Tangible Common Shareholders' Equity, Tangible Common Equity to Tangible Assets Ratio and Tangible Book Value Per Common Share
                                               As of
(Dollars in thousands, except per share data)  September           June 30,            March 31,           December 31,        September
                                               2021                2021                2021                2020                30, 2020
                                               (Unaudited)         (Unaudited)         (Unaudited)                             (Unaudited)
Total shareholders' equity                     $      233,934      $      225,409      $      217,187      $      215,327      $      209,468
Less:
Preferred stock                                23,372              23,372              23,372              23,372              23,370
Total common shareholders' equity              210,562             202,037             193,815             191,955             186,098
Less:
Goodwill                                       35,554              35,554              35,554              35,554              35,554
Mortgage servicing rights, net                 5,051               4,599               4,346               3,361               2,193
Other intangible assets, net                   2,695               2,862               3,028               3,196               3,388
Tangible common shareholders' equity           $      167,262      $      159,022      $      150,887      $      149,844      $      144,963
Common shares outstanding (in thousands)       7,640               7,629               7,630               7,634               7,734
Tangible book value per common share           $      21.89        $      20.84        $      19.78        $      19.63        $      18.74
Total assets                                   $      2,543,883    $      2,506,523    $      2,572,726    $      2,442,982    $      2,446,447
Less:
Goodwill                                       35,554              35,554              35,554              35,554              35,554
Mortgage servicing rights, net                 5,051               4,599               4,346               3,361               2,193
Other intangible assets, net                   2,695               2,862               3,028               3,196               3,388
Tangible assets                                $      2,500,583    $      2,463,508    $      2,529,798    $      2,400,871    $      2,405,312
Tangible common equity to tangible assets      6.69             %  6.46             %  5.96             %  6.24             %  6.03             %
Adjusted Income and Diluted Earnings Per Share
                                                                                 For the three months ended
(Dollars in thousands, except per share data)                                    September   June 30,    March 31,   December   September
                                                                                 2021        2021        2021        31, 2020   30, 2020
                                                                                 (Unaudited) (Unaudited) (Unaudited)            (Unaudited)
Net income, as reported                                                          $   9,465   $   6,979   $   8,959   $  8,373   $   5,209
Acquisition and due diligence fees                                               --          --          --          --         17
Income tax (benefit) expense                                                     --          --          --          2          (4        )
Net income, excluding acquisition and due diligence fees                         $   9,465   $   6,979   $   8,959   $  8,375   $   5,222
Diluted earnings per share, as reported                                          $   1.16    $   0.84    $   1.10    $  1.02    $   0.67
Effect of acquisition and due diligence fees, net of income tax benefit          --          --          --          --         --
Diluted earnings per common share, excluding acquisition and due diligence fees  $   1.16    $   0.84    $   1.10    $  1.02    $   0.67
Allowance for Loan Loss as a Percentage of Total Loans, Excluding PPP Loans
                                                                             As of
(Dollars in thousands, except per share data)                                September          June 30,           March 31,          December           September
                                                                             2021               2021               2021               31, 2020           30, 2020
                                                                             (Unaudited)        (Unaudited)        (Unaudited)                           (Unaudited)
Total loans                                                                  $   1,719,717      $   1,775,243      $   1,861,691      $   1,723,537      $   1,843,888
Less:
PPP loans                                                                    147,645            259,303            405,770            290,135            392,521
Total loans, excluding PPP loans                                             $   1,572,072      $   1,515,940      $   1,455,921      $   1,433,402      $   1,451,367
Allowance for loan loss                                                      $   21,731         $   23,144         $   22,578         $   22,297         $   21,254
Allowance for loan loss as a percentage of total loans                       1.26          %    1.30          %    1.21          %    1.29          %    1.15          %
Allowance for loan loss as a percentage of total loans, excluding PPP loans  1.38          %    1.53          %    1.55          %    1.56          %    1.46          %

Media Contact:
Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

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Media Contact:
Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

https://ml.globenewswire.com/media/acb2f4c8-a130-45a1-98c6-a64d64861c85/small/level-one-logo-png.png

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