York Traditions Bank Reports First Quarter 2020 Earnings

YORK, Pa., April 28, 2020 /PRNewswire/ -- York Traditions Bank (OTC Pink: YRKB) reported net income of $1,172,000, or 37 cents per share, for the first quarter ended March 31, 2020, compared to $1,088,000, or 35 cents per share, for the first quarter ended March 31, 2019, representing an $84,000 increase, or 8%, over the first quarter of 2019. Book value per common share stood at $18.38 on March 31, 2020.

"Despite the extraordinary historical events surrounding the COVID-19 virus, the impact of which is currently uncertain relative to our national and local economies, we continued to increase earnings and drive asset growth through the first quarter," stated Eugene J. Draganosky, President and Chief Executive Officer. "We started the year with a robust national economy evidenced by all-time stock market highs and low unemployment. We ended the first quarter with unprecedentedly low interest rates, record unemployment claims, and a rapidly shrinking GDP. While aggressive steps were taken by the Federal Reserve and Congress to support financial markets and stimulate the economy, these actions may only modestly help small businesses and consumers in our service area. The long-term impact on Central Pennsylvania is currently unclear. We have taken numerous steps to support our clients, associates, and communities, while our strategies to undertake proactive risk mitigation, enhance fee income, and create client acquisition opportunities will position our organization for a return to normalcy following this pandemic."

Net interest income for the quarter grew $313,000, or 8%, on higher loan and investment balances and reduced funding costs. Our net interest margin of 3.41% remained stable in comparison to the fourth quarter of 2019, but due to lower interest rates fell 26 bps from the previous year's first quarter. Low mortgage rates fueled vigorous refinancing and early season purchase activities, causing gains on the sale of mortgages to surge $605,000, or 79%. By monitoring market volatility and inefficiency, we also netted $116,000 in first-quarter investment securities gains.  

Our provision for loan losses increased $318,000 over the first quarter of 2019 in response to net loan charge-offs of $612,000. The increase included a single charge-off of $550,000 on an approximate $1.2 million business loan. The charge-off resulted from alleged fraudulent representations of the borrower who is now deceased. A third party is administering the creditors' collection efforts from the borrower's estate, and the future outcome of the proceedings is uncertain at this time. Due to the unusual nature of these circumstances, we believe this incident is an isolated occurrence and not indicative of the quality of our loan portfolio. Capital levels and credit quality metrics otherwise remain satisfactory with a 0.28% non-performing assets ratio and 10.38% tier 1 capital ratio.

In March 2020, five years from issuance, we retired our $5.0 million subordinated debenture that carried a fixed rate of 6.25%. The debt qualified as tier 2 risk-based capital, and we remain well-capitalized for regulatory purposes.

In April 2020, we participated in the SBA Paycheck Protection Program designed to help small businesses continue to fund payroll and other expenses during COVID-19. The loans are repayable over a maximum of two years, 100% guaranteed by the Small Business Administration, and include possible principal forgiveness if the borrower meets specific criteria. During the first two weeks of the Program, we approved nearly $52 million of loans for 310 customers, earning approximately $1.9 million in fees. It has not yet been determined whether to account for the fees immediately or recognize them over the two-year life of the loans.

SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:

This presentation contains forward-looking statements about York Traditions Bank 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 York Traditions Bank.

York Traditions Bank 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 bank'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 presentation speak only as of the date of this presentation and York Traditions Bank makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.

SOURCE York Traditions Bank

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