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Two River Bancorp Reports Higher Net Income and Earnings Per Share in 2017 First Quarter Financial Results

TINTON FALLS, N.J., April 25, 2017 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq:TRCB) (the "Company"), the parent company of Two River Community Bank ("the Bank"), today reported financial results for the first quarter ended March 31, 2017, highlighted by higher net income and earnings per diluted share along with solid loan and core deposit growth. All share and per share data for all referenced reporting periods have been adjusted for a 5% stock dividend paid on February 28, 2017.

Operating and Financial Highlights

  • First quarter 2017 net income increased 6.4% to $1.80 million, or $0.21 per diluted share, up from $1.69 million, or $0.20 per diluted share, in the corresponding prior year’s quarter.
  • Non-interest income for the quarter ended March 31, 2017 totaled $1.12 million, an increase of $232,000, or 26.0%, compared to the same period in 2016 as a result of higher mortgage banking revenue.
  • Total loans as of March 31, 2017, net of unearned fees, increased $9.6 million, or 5.1% annualized, from December 31, 2016 to $762.7 million, predominantly due to growth in the commercial real estate sector.
  • Total deposits as of March 31, 2017 were $799.7 million, an increase of $23.1 million from December 31, 2016, largely as a result of a new municipal relationship established in the first quarter of 2017.
  • Tangible book value per share was $10.05 at March 31, 2017, compared to $9.88 at December 31, 2016, and $9.17 at March 31, 2016.

Management Commentary
William D. Moss, President and CEO, stated, “I am pleased to report that our financial results continue to trend in a positive direction, coupled with the expansion of our loan pipeline. Total loans increased 5.1% on an annualized basis despite the sale of $4.6 million of seasoned portfolio residential adjustable rate mortgages. The performance of our mortgage banking business continues to be a highlight, with revenues increasing by 99.0%, which included a $91,000 gain on the sale of such mortgage loans. In addition, Two River continues to achieve exceptionally strong asset quality, with non-performing loans at the lowest level in over a decade.”

Dividend Information
On April 19, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.04 per share, payable May 30, 2017 to shareholders of record as of May 12, 2017, which marks the 17th consecutive quarterly cash dividend paid by the Company to its shareholders.

Key Quarterly Performance Metrics

1st Qtr.
2017
4th Qtr.
2016
3rd Qtr.
2016
2nd Qtr.
2016
1st Qtr.
2016
Net Income (in thousands)$1,802 $2,567 $2,644 $1,727 $1,693
Earnings per Common Share – Diluted$0.21 $0.30 $0.31 $0.20 $0.20
Return on Average Assets 0.76% 1.08% 1.16% 0.78% 0.78%
Return on Average Tangible Assets(1) 0.77% 1.10% 1.19% 0.80% 0.80%
Return on Average Equity 7.18% 10.25% 10.81% 7.28% 7.25%
Return on Average Tangible Equity(1) 8.74% 12.53% 13.29% 8.98% 8.98%
Net Interest Margin 3.45% 3.43% 3.55% 3.57% 3.57%
Non-Performing Assets to Total Assets 0.18% 0.19% 0.20% 0.22% 0.22%
Allowance as a % of Loans 1.25% 1.27% 1.25% 1.30% 1.27%
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Loan Composition

The components of the Company’s loan portfolio at March 31, 2017 and December 31, 2016 are as follows:

(In Thousands)
March 31,
2017
December 31,
2016
Commercial and industrial $ 94,757 $ 93,697
Real estate – construction 109,066 111,914
Real estate – commercial 471,259 460,685
Real estate – residential 58,987 59,065
Consumer 29,190 28,279
Unearned fees (572) (548)
762,687 753,092
Allowance for loan losses (9,567) (9,565)
Net Loans $ 753,120 $ 743,527

Deposit Composition

The components of the Company’s deposits at March 31, 2017 and December 31, 2016 are as follows:


(In Thousands)
March 31,
2017
December 31,
2016
Non-interest bearing $ 156,283 $ 160,104
NOW accounts 188,220 152,771
Savings deposits 258,327 261,438
Money market deposits 62,412 62,495
Listed service CD’s 44,674 47,648
Time deposits / IRA 56,893 56,489
Wholesale deposits 32,896 35,622
Total Deposits $ 799,705 $ 776,567

2017 First Quarter Financial Review

Net Income

Net income for the three months ended March 31, 2017 was $1.80 million, or $0.21 per diluted common share, as compared to $1.69 million, or $0.20 per diluted common share, for the same period last year, an increase of 6.4%. The increase was due primarily to higher net interest income and non-interest income, which was partially offset by a provision for loan losses compared to none in the prior year period along with higher non-interest expenses.

Net Interest Income

Net interest income for the quarter ended March 31, 2017 was $7.63 million, an increase of 7.0% compared to $7.13 million in the corresponding prior year period. This was largely due to an increase of $92.7 million, or 11.5%, in average interest earning assets, primarily driven from growth in the Company’s loan portfolio.

Net Interest Margin

The Company reported a net interest margin of 3.45% for the first quarter of 2017, compared to the 3.43% reported in the fourth quarter of 2016, and 3.57% reported for the first quarter of 2016. The net interest margin improvement of 2 basis points from the fourth quarter of 2016 was a result of slightly higher yielding interest-earning assets.

Non-Interest Income

Non-interest income for the quarter ended March 31, 2017 totaled $1.12 million, an increase of $232,000, or 26.0%, compared to the same period in 2016. This was largely the result of a $212,000, or 99.1%, increase in residential mortgage banking revenue, which included a $91,000 gain from the sale of $4.6 million of adjustable rate mortgages, coupled with higher earnings from bank owned life insurance and gains on the sale of SBA loans. These increases were partially offset by no net realized gain on sale of securities during the period compared to a gain of $72,000 in the prior year period.

Non-Interest Expense

Non-interest expense for the quarter ended March 31, 2017 totaled $5.78 million, an increase of $380,000, or 7.0%, compared to the same period in 2016, largely due to higher salaries and benefits resulting from both annual merit increases along with higher commission payouts on mortgage banking volume generated during the quarter. This was partially offset by lower loan workout expenses.

Provision / Allowance for Loan Losses

During the quarter, the Company reported a $225,000 provision for loan losses as a result of a partial charge-off representing 50% of a loan that was transferred to non-accrual status during the first quarter. This compared to no provision for loan losses in the prior year period. The Company had $223,000 in net loan charge-offs during the quarter, compared to $250,000 in net loan recoveries in the same period last year.

As of March 31, 2017, the Company's allowance for loan losses remained flat at $9.57 million compared to December 31, 2016. The loss allowance as a percentage of total loans was 1.25% at March 31, 2017 compared to 1.27% at December 31, 2016.

Financial Condition / Balance Sheet
At March 31, 2017, the Company maintained capital ratios that were in excess of regulatory standards for well-capitalized institutions. The Company's Tier 1 capital to average assets ratio was 8.96%, its common equity Tier 1 to risk weighted assets ratio was 10.31%, its Tier 1 capital to risk weighted assets ratio was 10.31%, and its total capital to risk weighted assets ratio was 12.70%.

Total assets as of March 31, 2017 were $967.1 million, compared to $940.2 million as of December 31, 2016.

Total loans as of March 31, 2017 were $762.7 million, compared to $753.1 million reported at December 31, 2016.

Total deposits as of March 31, 2017 were $799.7 million, compared to $776.6 million as of December 31, 2016. Core checking deposits at March 31, 2017 increased to $344.5 million, up $31.6 million, or 10.1%, from year-end, primarily due to a new municipal relationship. The Company continues to focus on building core checking account deposit relationships.

Asset Quality

The Company's non-performing assets at March 31, 2017 decreased to $1.77 million as compared to $1.81 million at December 31, 2016 and $1.98 million at March 31, 2016. Non-performing assets to total assets at March 31, 2017 declined to 0.18%, compared to 0.19% at December 31, 2016, and 0.22% at March 31, 2016.

Non-accrual loans decreased to $1.51 million at March 31, 2017, compared to $1.55 million at December 31, 2016 and $1.72 million at March 31, 2016. OREO was $259,000 at March 31, 2017, unchanged from December 31, 2016 and March 31, 2016.

Troubled debt restructured loan balances amounted to $8.16 million at March 31, 2017, with all but $405,000 performing. This compared to $8.23 million at December 31, 2016 and $9.08 million at March 31, 2016.

About the Company

Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 15 branches along with two Loan Production Offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiverbank.com.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continue," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy" or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2016. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months Ended March 31, 2017 and 2016
(in thousands, except per share data)
Three Months Ended
March 31,
2017 2016
INTEREST INCOME:
Loans, including fees $ 8,403 $7,913
Securities:
Taxable 233 192
Tax-exempt 285 200
Interest-bearing deposits 72 33
Total Interest Income 8,993 8,338
INTEREST EXPENSE:
Deposits 1,038 883
Securities sold under agreements to repurchase 15 14
Federal Home Loan Bank (“FHLB”) and other borrowings 145 148
Subordinated debt 165 165
Total Interest Expense 1,363 1,210
Net Interest Income 7,630 7,128
PROVISION FOR LOAN LOSSES 225 -
Net Interest Income after Provision for Loan Losses 7,405 7,128
NON-INTEREST INCOME:
Service fees on deposit accounts 150 136
Mortgage banking 426 214
Other loan fees 92 81
Earnings from investment in bank owned life insurance 136 109
Gain on sale of SBA loans 117 94
Net realized gain on sale of securities - 72
Other income 204 187
Total Non-Interest Income 1,125 893
NON-INTEREST EXPENSES:
Salaries and employee benefits 3,453 3,105
Occupancy and equipment 1,054 995
Professional 341 335
Insurance 48 47
FDIC insurance and assessments 123 105
Advertising 110 110
Data processing 130 135
Outside services fees 103 123
Amortization of identifiable intangibles - 10
OREO expenses, impairment and sales, net (3) 19
Loan workout expenses 27 80
Other operating 391 333
Total Non-Interest Expenses 5,777 5,397
Income before Income Taxes 2,753 2,624
INCOME TAX EXPENSE 951 931
Net Income 1,802 1,693
EARNINGS PER COMMON SHARE:
Basic $ 0.22 $0.20
Diluted $ 0.21 $0.20
Weighted average common shares outstanding:
Basic 8,341 8,314
Diluted 8,618 8,493

TWO RIVER BANCORP
CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
March 31, December 31,
2017 2016
ASSETS
Cash and due from banks$21,266 $19,844
Interest-bearing deposits in bank 40,395 22,233
Cash and cash equivalents 61,661 42,077
Securities available for sale 32,797 34,464
Securities held to maturity 57,067 57,843
Restricted investments, at cost 4,986 4,805
Loans held for sale 3,763 4,537
Loans 762,687 753,092
Allowance for loan losses (9,567) (9,565)
Net loans 753,120 743,527
OREO 259 259
Bank owned life insurance 21,165 21,029
Premises and equipment, net 5,327 4,662
Accrued interest receivable 2,090 2,234
Goodwill 18,109 18,109
Other assets 6,729 6,665
TOTAL ASSETS$967,073 $940,211
LIABILITIES
Deposits:
Non-interest bearing$156,284 $160,104
Interest-bearing 643,421 616,463
Total Deposits 799,705 776,567
Securities sold under agreements to repurchase 21,437 19,915
FHLB and other borrowings 24,300 25,300
Subordinated debt 9,863 9,855
Accrued interest payable 98 100
Other liabilities 9,264 7,758
Total Liabilities 864,667 839,495
SHAREHOLDERS' EQUITY
Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding - -
Common stock, no par value; 25,000,000 shares authorized;
Issued – 8,701,461 and 8,677,536 at March 31, 2017 and December 31, 2016, respectively
Outstanding – 8,389,367 and 8,365,442 at March 31, 2017 and December 31, 2016, respectively 79,194 79,056
Retained earnings 25,930 24,447
Treasury stock, at cost; 312,094 shares at March 31, 2017 and December 31, 2016 (2,396) (2,396)
Accumulated other comprehensive loss (322) (391)
Total Shareholders' Equity 102,406 100,716
TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY$967,073 $940,211

TWO RIVER BANCORP
Selected Consolidated Financial Data
Selected Consolidated Earnings Data
(in thousands, except per share data)
Three Months Ended
March 31, Dec. 31, March 31,
Selected Consolidated Earnings Data: 2017 2016 2016
Total Interest Income$ 8,993 $8,970 $8,338
Total Interest Expense 1,363 1,376 1,210
Net Interest Income 7,630 7,594 7,128
Provision for (Recovery of) Loan Losses 225 (345) -
Net Interest Income after Provision for (Recovery of) Loan Losses 7,405 7,939 7,128
Other Non-Interest Income 1,125 1,447 893
Other Non-Interest Expenses 5,777 5,360 5,397
Income before Income Taxes 2,753 4,026 2,624
Income Tax Expense 951 1,459 931
Net Income 1,802 2,567 1,693
Per Common Share Data:
Basic Earnings$ 0.22 $0.31 $0.20
Diluted Earnings$ 0.21 $0.30 $0.20
Book Value$ 12.21 $12.04 $11.34
Tangible Book Value(1)$ 10.05 $9.88 $9.17
Average Common Shares Outstanding (in thousands):
Basic 8,341 8,322 8,314
Diluted 8,618 8,565 8,493
(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Selected Period End Balances
(in thousands)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2017 2016 2016 2016 2016
Total Assets$ 967,073 $940,211 $909,170 $884,700 $881,857
Investment Securities and Restricted Stock 94,850 97,112 82,677 84,246 83,376
Total Loans 762,687 753,092 753,982 726,414 704,401
Allowance for Loan Losses (9,567) (9,565) (9,452) (9,418) (8,963)
Goodwill and Other Intangible Assets 18,109 18,109 18,109 18,109 18,109
Total Deposits 799,705 776,567 739,247 726,264 727,104
Repurchase Agreements 21,437 19,915 18,645 21,683 20,132
FHLB and Other Borrowings 24,300 25,300 35,300 23,800 23,800
Subordinated Debt 9,863 9,855 9,847 9,839 9,831
Shareholders' Equity 102,406 100,716 98,594 96,293 94,613

Asset Quality Data (by Quarter)
(dollars in thousands)
March 31, Dec. 31, Sept. 30, June 30, March 31,
2017 2016 2016 2016 2016
Nonaccrual Loans$ 1,511 $1,548 $1,587 $1,697 $1,723
OREO 259 259 259 259 259
Total Non-Performing Assets 1,770 1,807 1,846 1,956 1,982
Troubled Debt Restructured Loans:
Performing 7,754 8,075 8,366 8,492 8,920
Non-Performing 405 157 157 158 161
Non-Performing Loans to Total Loans 0.20% 0.21% 0.21% 0.23% 0.24%
Non-Performing Assets to Total Assets 0.18% 0.19% 0.20% 0.22% 0.22%
Allowance as a % of Loans 1.25% 1.27% 1.25% 1.30% 1.27%


Capital Ratios
March 31, 2017 December 31, 2016
CET 1
Capital

to Risk Weighted
Assets
Ratio
Tier 1
Capital
to
Average
Assets
Ratio
Tier 1
Capital
to Risk
Weighted
Assets Ratio
Total
Capital
to Risk Weighted
Assets
Ratio
CET 1
Capital

to Risk Weighted
Assets
Ratio
Tier 1
Capital
to
Average Assets
Ratio
Tier 1
Capital
to Risk Weighted
Assets
Ratio
Total
Capital to
Risk Weighted
Assets
Ratio
Two River Bancorp10.31%8.96%10.31%12.70%10.33%8.94%10.33%12.76%
Two River Community Bank11.44%9.94%11.44%12.61%11.49%9.95%11.49%12.68%
"Well capitalized" institution (under prompt corrective action regulations)*6.50%5.00%8.00%10.00%6.50%5.00%8.00%10.00%
*Applies to Bank only. For the Company to be “well-capitalized,” the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%.


Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
Three Months Ended Three Months Ended
(dollars in thousands)March 31, 2017 March 31, 2016
Interest /
Income
Expense
Interest /
Income
Expense
ASSETS Average
Balance
Average
Yield /
Rate
Average
Balance
Average
Yield /
Rate
Interest Earning Assets:
Interest-bearing due from banks$38,263 $72 0.76% $29,721 $33 0.45%
Investment securities96,030 518 2.16% 79,169 392 1.98%
Loans, net of unearned fees(1) (2) 762,150 8,403 4.47% 694,814 7,913 4.58%
Total Interest-Earning Assets896,443 8,993 4.07% 803,704 8,338 4.17%
Non-Interest-Earning Assets:
Allowance for loan losses(9,645) (8,795)
All other assets75,551 75,505
Total Assets$962,349 $870,414
LIABILITIES & SHAREHOLDERS' EQUITY
Interest-Bearing Liabilities:
NOW deposits$191,903 212 0.45% $150,629 151 0.40%
Savings deposits256,499 327 0.52% 225,197 274 0.49%
Money market deposits61,668 26 0.17% 73,860 30 0.16%
Time deposits136,474 473 1.41% 123,433 428 1.39%
Securities sold under agreements to repurchase19,376 15 0.31% 17,700 14 0.32%
FHLB and other borrowings24,447 145 2.41% 24,166 148 2.46%
Subordinated debt9,860 165 6.69% 9,827 165 6.72%
Total Interest-Bearing Liabilities700,227 1,363 0.79% 624,812 1,210 0.78%
Non-Interest-Bearing Liabilities:
Demand deposits153,185 144,420
Other liabilities7,185 7,209
Total Non-Interest-Bearing Liabilities160,370 151,629
Shareholders’ Equity101,752 93,973
Total Liabilities and Shareholders’ Equity$962,349 $870,414
NET INTEREST INCOME $7,630 $7,128
NET INTEREST SPREAD(3) 3.28% 3.39%
NET INTEREST MARGIN(4) 3.45% 3.57%
(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest earning and the weighted average cost of average interest bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.


Reconciliation of Non-GAAP Financial Measures
The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.
(In thousands, except per share data)


As of and for the Three Months Ended
March 31, Dec. 31, Sept. 30, June 30, March 31,
2017 2016 2016 2016 2016
Common shareholders' equity$102,406 $100,716 $98,594 $96,293 $94,613
Less: goodwill and other intangibles (18,109) (18,109) (18,109) (18,109) (18,109)
Tangible common shareholders’ equity$84,297 $82,607 $80,485 $78,184 $76,504
Common shares outstanding 8,389 8,365 8,358 8,366 8,341
Book value per common share$12.21 $12.04 $11.80 $11.51 $11.34
Book value per common share$12.21 $12.04 $11.80 $11.51 $11.34
Effect of intangible assets (2.16) (2.16) (2.17) (2.16) (2.17)
Tangible book value per common share$10.05 $9.88 $9.63 $9.35 $9.17
Return on average assets0.76%1.08%1.16%0.78%0.78%
Effect of average intangible assets0.01%0.02%0.03%0.02%0.02%
Return on average tangible assets0.77%1.10%1.19%0.80%0.80%
Return on average equity7.18%10.25%10.81%7.28%7.25%
Effect of average intangible assets1.56%2.28%2.48%1.70%1.73%
Return on average tangible equity8.74%12.53%13.29%8.98%8.98%


Investor Contact: Adam Prior, Senior Vice President The Equity Group Inc. Phone: (212) 836-9606 E-mail: aprior@equityny.com Media Contact: Adam Cadmus, Marketing Director Phone: (732) 982-2167 Email: acadmus@tworiverbank.com

Source: Two River Bancorp