Traditions Bancorp, Inc. Reports First Quarter 2024 Earnings

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Apr 25, 2024, 05:52 ET

YORK, Pa., April 25, 2024 /PRNewswire/ -- Traditions Bancorp, Inc. (OTC Pink: TRBK), parent company of Traditions Bank, reported net income of $1.4 million for the first quarter ended March 31, 2024, compared to $0.7 million in the linked quarter and $1.5 million for the first quarter of 2023. The company reported earnings per share (diluted) of 49 cents for the first quarter ended March 31, 2024, compared to 24 cents in the linked quarter and 55 cents for the first quarter of 2023. Unrealized investment portfolio losses, flowing through Accumulated Other Comprehensive Loss, have increased to $11.5 million at quarter end compared to $11.1 million in the linked quarter. Book value per common share was $23.56 on March 31, 2024, versus $23.31 in the linked quarter and $22.41 for the first quarter of 2023.

"Traditions Bancorp's quarterly net earnings are improved for 2024, despite the continuing challenges of higher-for-longer interest rates and persistent inflation," stated Eugene J. Draganosky, Chair of the Board and Chief Executive Officer. "Mortgage banking income has exceeded our forecast for the first quarter, with gains on the sale of mortgages helping to offset lower than expected net interest income due to escalating funding costs. We are cautiously optimistic for the remainder of the year, provided that our mortgage banking activity continues to outpace expectations and stubborn inflation abates. Meanwhile, our commercial loan pipeline is gradually building for the next few quarters of 2024."

Quarterly Highlights – First Quarter 2024 versus First Quarter 2023

Loans grew by $47.4 million, or 8%, over 1Q23. Loan growth was intentionally slowed in 4Q23 and 1Q24 to stem margin compression as funding costs continued to rise.
Over the previous 12 months, deposits increased by $22.1 million, or 3%, over 1Q23. Most of this growth was concentrated in brokered deposits, higher-cost time deposits, and money market specials as depositors became more rate sensitive. Brokered CDs shrank from $64.7 million at the end of 2023 to $54.7 million at the end of 1Q24, representing 7% of total deposits.
The cost of deposits increased to 3.04% for 1Q24, up from 2.84% for 4Q23 and 1.52% for 1Q23.
Net interest margin contracted to 2.91% in 1Q24 compared to 3.45% in 1Q23. This was driven by an increase in the total cost of funds, including borrowings, from 1.65% in 1Q23 to 3.13% in 1Q24.
Gains on the sale of mortgages were $1.2 million for 1Q24, increasing from $1.0 million in 1Q23 and $0.8 million in 4Q23.
Mortgage banking revenue continues to be adversely impacted by higher-for-longer interest rates and limited home inventories. The mortgage pipeline increased to $17.4 million from $9.2 million in the linked quarter and is up from $10.0 million on March 31, 2023.
A first-quarter cash dividend of eight cents per common share was declared on April 18, 2024, and is payable on May 13, 2024, to shareholders of record at the close of business on May 3, 2024.
Net interest income decreased $0.6 million in 1Q24 from 1Q23, or 9%, driven by rising funding costs.
Other expense decreased by 7%, from $6.3 million in 1Q23 to $5.8 million in 1Q24, primarily due to the expense reduction from the strategic realignment completed in 2023.
The 1Q24 credit loss provision was $132 thousand.

Credit Quality and Capital Insights:

Nonaccrual loans decreased from $4.0 million in 4Q23 to $3.8 million in the current quarter. The transfer of $0.6 million of nonaccrual loans into Other Real Estate Owned/repossessed assets in 1Q24 offset the addition of several small residential mortgage, consumer, and commercial loans into nonaccrual status during the quarter.
The company reported no net charge-offs in 1Q24.
Non-performing assets to total assets increased from 0.47% in the linked quarter to 0.53% in the current quarter.
Delinquencies greater than 30 days were 0.85% of total loans as of March 31, 2024, up from 0.70% as of December 31, 2023, and 0.49% as of March 31, 2023.
The company's ACL ratio was 0.57% as of March 31, 2024, compared to 0.56% as of December 31, 2023, and 0.52% as of March 31, 2023.
Traditions Bancorp and Traditions Bank remain well capitalized.

FINANCIAL HIGHLIGHTS (unaudited): (Dollars in thousands, except per share data)
Selected Financial Data		Mar 31, 2024		Dec 31, 2023	Mar 31, 2023
Investment securities	$	108,211	$	111,817	122,562
Loans, net of unearned income		672,360		668,813	624,957
Allowance for credit losses		3,844		3,730	3,262
Total assets		840,864		840,073	808,298
Deposits		730,092		731,051	707,971
Borrowings		32,500		32,500	26,657
Shareholders' equity		64,584		63,786	62,474
Common book value per common share	$	23.56	$	23.31	22.41
Tier 1 book value per common share	$	27.76	$	27.35	26.18
Allowance/loans		0.57 %		0.56 %	0.52 %
Non-performing assets/total assets		0.53 %		0.47 %	0.35 %
Tier 1 capital/average assets		8.93 %		8.70 %	9.10 %
Tier 1 capital/risk-weighted assets		11.62 %		11.53 %	11.64 %
Total capital/risk-weighted assets		12.24 %		12.12 %	12.20 %
Common shares outstanding		2,741		2,737	2,788
	Three months ended Mar 31,
Selected Operations Data		2024		2023
Interest income	$	10,881	$	8,831
Interest expense		(4,997)		(2,360)
Net interest income		5,884		6,471
Provision for credit losses		(132)		229
Investment securities gains (losses)		-		-
Gains on sale of mortgages		1,232		969
Other income		539		505
Other expense		(5,845)		(6,271)
Income before income taxes		1,678		1,903
Income taxes		(318)		(361)
Net income	$	1,360	$	1,542
Earnings per common share (basic)	$	0.49	$	0.55
Earnings per common share (diluted)	$	0.49	$	0.55
Return on average assets		0.65 %		0.79 %
Return on average equity		8.52 %		10.31 %
Net interest margin		2.91 %		3.45 %
Efficiency ratio		76.36 %		78.93 %
Net charge-offs(recoveries)/average loans		0.00 %		-0.10 %
Average common shares		2,760		2,807

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:

This release contains forward-looking statements about Traditions Bancorp, Inc. that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate" or similar terminology. Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about future performance, operations, products and services of Traditions Bancorp.

Traditions Bancorp cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to materially differ from those expressed in the forward-looking statements, including, but not limited to: ineffectiveness of the organization's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.

Forward-looking statements in this release speak only as of the date of this release and Traditions Bancorp makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.

SOURCE Traditions Bancorp, Inc.