FFB Bancorp Earns $8.08 million, or $2.54 per Diluted Share, for Second Quarter 2024

/EIN News/ -- FRESNO, Calif., July 17, 2024 (GLOBE NEWSWIRE) -- FFB Bancorp (the “Company”) (OTCQX: FFBB), the parent company of FFB Bank (the “Bank”), today reported net income of $8.08 million, or $2.54 per diluted share, for the second quarter of 2024, compared to $9.42 million, or $2.97 per diluted share, for the second quarter of 2023, and increased 4% from $7.79 million, or $2.45 per diluted share for the first quarter of 2024. For the six months ended June 30, 2024, net income decreased 7% to $15.87 million, or $5.00 per diluted share, compared to $17.12 million, or $5.40 per diluted share, for the same period in 2023. All results are unaudited.

Second Quarter 2024 Highlights: As of, or for the quarter ended June 30, 2024, compared to the quarter ended June 30, 2023:

• Pre-tax, pre-provision income decreased 17% to $11.44 million.
• Net income decreased 14% to $8.08 million.
• Return on average equity (“ROAE”) was 22.89%.
• Return on average assets (“ROAA”) was 2.31%.
• Net interest margin expanded 20 basis points to 5.31% from 5.10% a year earlier.
• Gross revenue (net interest income, before the provision for credit losses, plus non-interest income) increased 1% to $24.73 million.
• Total assets increased 11% to $1.44 billion.
• Total portfolio of loans increased 11% to $969.76 million.
• Total deposits increased 8% to $1.17 billion.
• Shareholder equity increased 36% to $148.64 million.
• Book value per common share increased 36% to $46.79.
• The Company’s tangible common equity ratio was 10.30%, while the Bank’s regulatory leverage capital ratio was 14.30% and total risk-based capital ratio was 20.74%, at June 30, 2024.

“Second quarter 2024 results reflect gross revenues up 5% from the linked quarter,” said Steve Miller, President & CEO. “Loan portfolio growth was strong during the second quarter, however, deposit balances decreased slightly while funding costs continued to rise due to a highly competitive market for deposits. Our core deposit franchise continues to give us flexibility in how we manage our balance sheet, and our strategic focus is to organically expand our customer deposit base leveraging our regional expansion and national payments franchise.”

“Although we saw an increase in nonperforming assets primarily related to the SBA portfolio during the quarter, overall credit quality within the portfolio remains strong and loan delinquencies decreased from the prior quarter,” said Miller. “We added $291,000 to our allowance for credit loss during the quarter as a result of loan portfolio growth.”

Results of Operations

Quarter ended June 30, 2024:

Operating revenue, consisting of net interest income before the provision for credit losses and non-interest income, increased 1% to $24.73 million for the second quarter of 2024, compared to $24.51 million for the second quarter a year ago, and increased 5% from $23.61 million from the first quarter of 2024.

Net interest income, before the provision for credit losses, increased 6% to $17.31 million for the second quarter of 2024, compared to $16.39 million for the same quarter a year ago, and increased 7% from $16.14 million for the preceding quarter. “The increase in net interest income during the second quarter was driven by loan and investment portfolio growth at higher yields, partially offset by continued pressure on deposit rates and higher funding costs,” said Bhavneet Gill, Chief Financial Officer.

The Company’s net interest margin (“NIM”) improved by 20 basis points to 5.31% for the second quarter of 2024, compared to 5.10% for the second quarter of 2023, and increased 16 basis points from 5.15% for the preceding quarter. “Our yield on earning assets expanded 26 basis points in the second quarter with new loan production and investment purchases at higher rates, however, that was partially offset by the 10 basis point increase in the cost of funds. Our interest-bearing deposit balances increased 12% quarter over quarter while the cost of interest-bearing deposits increased 18 basis points in the second quarter,” said Gill.

The yield on earning assets was 6.40% for the second quarter of 2024, compared to 5.72% for the second quarter a year ago, and 6.15% for the linked quarter. The cost of funds increased to 1.10% for the second quarter of 2024, as customers continue to seek higher deposit rates in the current higher rate environment. The cost of funds was 0.62% for the same quarter a year earlier, and 1.00% for the preceding quarter.

Total non-interest income was $7.42 million for the second quarter of 2024, compared to $8.12 million for the second quarter of 2023, and $7.47 million for the preceding quarter. The decrease in non-interest income from the second quarter of 2023 was driven by a reduction in merchant services revenue, partially offset by a reduction in loss on sale of investment securities and increase in gain on sale of loans.

Merchant services revenue decreased 20% to $6.07 million for the second quarter of 2024, compared to $7.56 million from the second quarter a year earlier, and remained flat compared to $6.07 million for the preceding quarter. The decrease in merchant services income from the prior year was primarily due to higher seasonal volume and revenue collected on one FFB Payments direct merchant.

“We continue to see revenue growth opportunities across our ISO partner sponsorships and from our own organic ISO, FFB Payments,” said Miller. “Our team continues to build a solid pipeline of payment related partners to support further revenue expansion for both ISO partner sponsorship, FFB Payments and new payment rail use cases. Our strategic initiatives for the second half of 2024 and beyond are focused on providing our ISO partners and customers access to all payment rails and growing our deposit franchise through the payment ecosystem. Late in the 2nd quarter we were able to launch a new Cross Border payment rail developed by Visa. In the past, all of cross border wires were processed through our correspondent bank partner, but the Bank did not receive a revenue share and the pricing for our customers was poor. Now we have a much more competitive product offering and a new revenue stream since we can now control our FX margin in this transaction. We will look to expand this revenue stream going forward.”

Merchant ISO Processing Volumes (in thousands)
Source	Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
ISO Partner Sponsorship	$	3,891,828	$	3,491,321	$	3,812,386	$	3,763,289	$	4,391,365
FFB Payments- Sub-ISO Merchants		13,665		12,382		20,992		19,370		24,414
FFB Payments - Direct Merchants		119,948		61,987		93,443		77,349		76,059
Total volume	$	4,025,441	$	3,565,690	$	3,926,821	$	3,860,008	$	4,491,838

Merchant ISO Processing Revenues (in thousands)
Source of Revenue	Q2 2023		Q3 2023		Q4 2023		Q1 2024		Q2 2024
Net Revenue*:
ISO Partner Sponsorship	$	2,116	$	2,169	$	1,916	$	2,183	$	2,156
Gross Revenue:
FFB Payments- Sub-ISO Merchants		496		466		539		672		795
FFB Payments - Direct Merchants		4,761		2,078		2,693		3,213		3,117
		5,257		2,544		3,232		3,885		3,912
Gross Expense:
FFB Payments- Sub-ISO Merchants		321		361		455		518		675
FFB Payments - Direct Merchants		2,468		1,428		1,720		1,842		1,989
		2,789		1,789		2,175		2,360		2,664
Net Revenue:
FFB Payments- Sub-ISO Merchants		175		105		84		154		120
FFB Payments - Direct Merchants		2,293		650		973		1,371		1,128
FFB Payments Net Revenue		2,468		755		1,057		1,525		1,248
Net Merchant Services Income:	$	4,584	$	2,924	$	2,973	$	3,708	$	3,404

*ISO Partnership Sponsorship is recognized net of expense in Merchant Services Income. FFB Payments revenues are recognized gross in Merchant Services Income and Merchant Services expenses are recognized in Non-Interest Expense.

Total deposit fee income increased 15% to $847,000 for the second quarter of 2024, compared to $738,000 for the second quarter of 2023, and increased 6% from $796,000 for the preceding quarter.

There was a $509,000 gain on sale of loans during the second quarter of 2024, compared to a gain on sale of loans of $133,000 during the second quarter 2023, and a gain on sale of loans of $451,000 in the linked quarter. There was a loss on sale of investments of $459,000 during the second quarter of 2024, compared to a loss of $708,000 million during the second quarter 2023, and $373,000 loss in the linked quarter. “We monitor the sale of loans and investment securities and manage concentrations accordingly. During the second quarter, we sold $2.00 million in bank subordinated debt securities to further reduce credit exposure in the investment portfolio. We sold $5.89 million in SBA loans during the quarter,” added Gill.

Non-interest expense increased 24% to $13.29 million for the second quarter of 2024, compared to $10.70 million for the second quarter 2023, and increased 5% from $12.70 million for the linked quarter.

“We made strategic investments in people and technology during the first half of 2024 to support our payment ecosystem, product development, and regional expansion initiatives. These investments included hiring a team of data engineers and individuals focused on treasury management and product development. We had the opportunity to onboard talent ahead of our original expectations, allowing us to accelerate several key foundational initiatives,” said Miller. Full-time employees increased to 157 at June 30, 2024, compared to 119 full-time employees a year earlier, and 147 full-time employees from the linked quarter. As a result of the increased headcount, salaries and employee benefits increased 39% to $6.72 million for the second quarter of 2024, compared to $4.83 million for the second quarter of 2023, and increased 2% from $6.58 million in the linked quarter.

Occupancy and equipment expenses increased 6% from a year ago, representing 3% of non-interest expense, and increased 14% from the preceding quarter. Other operating expense increased 39% to $3.46 million from a year earlier and increased 2% from the preceding quarter. Increases in data processing expense, software licenses and subscriptions, professional fees, and marketing expense were all primary drivers of the year-over-year increase. Merchant operating expense totaled $2.66 million for the second quarter of 2024, compared to $2.98 million for the second quarter of 2023 and $2.36 million for the preceding quarter. The change in merchant operating expense is attributed to fluctuations in volume and revenue for the FFB Payments lines of business. Merchant operating expenses include interchange fees, chargebacks, partnership fees, and other card brand fees.

The efficiency ratio was 52.74% for the second quarter of 2024, compared to 42.45% for the same quarter a year ago, and 52.96% for the preceding quarter. The efficiency ratio can fluctuate period over period based on changes in merchant services gross revenues and associated expenses. The Company also calculates an adjusted efficiency ratio where the merchant services gross expense, which is included in noninterest expense, is netted against merchant services revenue in noninterest income. The adjusted efficiency ratio was 47.15% for the second quarter of 2024, compared to 34.75% for the same quarter a year ago, and 47.82% for the linked quarter.

Six months ended June 30, 2024:

For the six months ended June 30, 2024, operating revenue increased 10% to $48.34 million, compared to $43.85 million for the same period in 2023. For the six months ended June 30, 2024, net interest income before the provision for credit losses increased 7% to $33.44 million, compared to $31.17 million for the same period in 2023. The increase in revenue is attributed to growth in the loan portfolio and higher asset yields, partially offset by an increase in interest bearing liabilities and cost of funds. For the six months ended June 30, 2024, the yield on earning assets was 6.27% compared to 5.65% for the same period in 2023, while the cost to fund earning assets was 1.05% six months ended June 30, 2024, compared to 0.60% for the same period in 2023.

For the six months ended June 30, 2024, non-interest income increased 18% to $14.90 million compared to $12.67 million for the same period in 2023. The year-over-year growth in non-interest income was largely due to the decrease in loss on sale of investments and an increase in merchant services revenue.

For the six months ended June 30, 2024, operating expenses increased by 34% to $25.99 million from $19.45 million for the same period in 2023. Salaries and employee benefits expense increased 39% to $13.31 million as a result of increases in FTE. Other operating expenses increased 39% to $6.84 million due to higher education, travel, marketing, professional fees, and technology related expenses.

For the six months ended June 30, 2024, the efficiency ratio was 52.85%, compared to 42.40% for the same period ended June 30, 2023. The adjusted efficiency ratio was 47.48%, compared to 36.57% for the same period ended June 30, 2023.

Balance Sheet Review

Total assets increased 11% to $1.44 billion at June 30, 2024, compared to $1.30 billion at June 30, 2023, and increased 3% from $1.40 billion at March 31, 2024.

The total portfolio of loans increased 11%, or $94.58 million, to $969.76 million, compared to $875.18 million at June 30, 2023, and increased $42.98 million, from $926.78 million on a linked quarter basis.

Commercial real estate loans increased 11% year-over-year to $562.55 million, representing 58% of total loans at June 30, 2024. The CRE portfolio includes approximately $239.11 million in multi-family loans originated by the Southern California team that the Company may consider selling at some point in the future for liquidity and concentration management. The multi-family portfolio includes $58.62 million in short-term bridge loans for transitional projects of multi-family properties. The short-term bridge loans are conservatively underwritten with minimum DSCR and liquidity requirements. Approximately 69.7% of the current bridge loan portfolio will come due during the second half of 2024 to roll off or get refinanced and sold. The bank continues to market our bridge loan product in a more measured approach keeping to our conservative underwriting standards. Real estate construction and land development loans increased 5% from a year ago to $79.13 million, representing 8% of total loans, while residential RE 1-4 family loans totaled $17.44 million, or 2% of loans, at June 30, 2024.

The commercial and industrial (C&I) portfolio increased 10% to $232.79 million, at June 30, 2024, compared to $212.19 million a year earlier, and increased 4% from $224.55 million at March 31, 2024. C&I loans represented 24% of total loans at June 30, 2024. Agriculture loans represented 8% of the loan portfolio at June 30, 2024. At June 30, 2024, the SBA, USDA, and other government agencies guaranteed loans totaled $59.34 million, or 6.1% of the loan portfolio.

The investment portfolio totaled $345.49 million at June 30, 2024, compared to $304.04 million a year earlier, and increased 5% compared to $328.91 million at March 31, 2024. The investment portfolio consists of mortgage-backed and municipal securities, both tax exempt and taxable, treasury securities as well as other domestic debt. The quarterly increase in the investment portfolio balance is attributed to purchases of $21.96 million in agency backed securities, partially offset by investment sales of $2.00 million and regular paydowns. At June 30, 2024, the Company had a net unrealized loss position on its investment securities portfolio of $26.58 million, compared to a net unrealized loss of $28.50 million at March 31, 2024. The Company’s investment securities portfolio had an effective duration of 5.39 years at June 30, 2024, compared to 5.36 years at March 31, 2024.

Total deposits increased 8%, or $89.92 million, to $1.17 billion at June 30, 2024, compared to $1.08 billion from a year earlier, and decreased 3% from $1.20 billion at March 31, 2024. The quarter over quarter decrease in deposit balances is primarily attributed to a decrease in wholesale deposits. Non-interest bearing demand deposits increased 1% to $731.03 million at June 30, 2024, compared to $723.01 million at June 30, 2023, and decreased 3% from $751.64 million at March 31, 2024. Non-interest bearing demand deposits represented 63% of total deposits at June 30, 2024. Included in non-interest bearing deposits are $87.4 million from ISO partners for merchant reserves, $133.8 million from ISO partners for settlement, and $6.9 million in ISO partner operating accounts. These deposits represent 31.2% of non-interest bearing deposits and 19.5% of total deposits.

There were $68.00 million short-term borrowings at June 30, 2024, compared to no borrowings at March 31, 2024, and $55.00 million at June 30, 2023. The Company primarily utilizes FHLB advances and the Federal Reserve discount window for short-term borrowings. The following table summarizes the Company's primary and secondary sources of liquidity which were available at June 30, 2024:

Liquidity Source (in thousands)	June 30, 2024		March 31, 2024
Cash and cash equivalents	$	73,319	$	90,916
Unpledged investment securities, fair value		114,090		91,634
FHLB advance capacity		235,906		290,202
Federal Reserve discount window capacity		171,065		178,255
Correspondent bank unsecured lines of credit		91,500		91,500
	$	685,880	$	742,507

The total primary and secondary liquidity of $685.88 million at June 30, 2024 represents a decrease of $56.6 million in primary and secondary liquidity quarter over quarter.

Shareholders’ equity increased 36% to $148.64 million at June 30, 2024, compared to $109.56 million from a year ago, and grew 7% from $138.72 million at March 31, 2024. Book value per common share increased 36% to $46.79, at June 30, 2024, compared to $34.48 at June 30, 2023, and increased 7% from $43.69 at March 31, 2024. The Company has a program to repurchase up to $7.5 million of its outstanding common stock. The timing of purchases will depend on certain factors including, but not limited to, performance of the Company's stock price, general market and economic conditions, applicable legal and regulatory requirements, availibility of funds and other relevant factors. The stock repurchase program may be carried out through open-market purchases or privately negotiated transactions. For the quarter ended June 30, 2024, no shares were repurchased.

“The tangible common equity ratio was 10.30% at June 30, 2024, compared to 8.40% a year earlier, and 9.94% at March 31, 2024,” stated Gill. “Our tangible common equity and book value increased during the quarter as a result of quarterly net income and a decrease in accumulated other comprehensive income (‘AOCI’) loss related to the investment portfolio.”

At the Bank level, unrealized losses and gains reflected in AOCI are not included in regulatory capital. As a result, Tier-1 capital at the Bank for regulatory purposes was $203.98 million at quarter end excluding the unrealized loss. The regulatory leverage capital ratio was 14.30% for the current quarter, while the total risk-based capital ratio was 20.74%, exceeding regulatory minimums to be considered well-capitalized.

Asset Quality

Nonperforming assets increased to $11.25 million, or 0.78% of total assets, at June 30, 2024, compared to $7.16 million, or 0.51% of total assets, from the preceding quarter. Of the $11.25 million nonperforming loans, $8.25 million are covered by SBA guarantees. Total delinquent loans decreased to $2.27 million at June 30, 2024, compared to $6.50 million at March 31, 2024. The increase in nonperforming assets was primarily attributed to the SBA loans originated by the Bank. Total delinquent loans as of June 30, 2024 include $1.94 million in purchased government guaranteed loans, which are guaranteed by the SBA for the full payment of the principal plus interest.

Past due loans 30-60 days were $1.05 million at June 30, 2024, compared to $3.22 million at March 31, 2024, and $2.85 million at June 30, 2023. There were $175,000 past due loans from 60-90 days at June 30, 2024, compared to $1.95 million at March 31, 2024 and $2.29 million past due loans from 60-90 days a year earlier. Past due loans 90+ days at quarter end totaled $1.05 million at June 30, 2024, compared to $1.38 million, at June 30, 2023. Of the $2.27 million in past due loans at June 30, 2024, $1.94 million were purchased government guaranteed loans with an unconditional guarantee.

Delinquent Loan Summary	Organic		Purchased Govt. Guaranteed		Total
(in thousands)
Delinquent accruing loans 30-59 days	$	330	$	716	$	1,046
Delinquent accruing loans 60-89 days		—		175		175
Delinquent accruing loans 90+ days		—		1,052		1,052
Total delinquent accruing loans	$	330	$	1,943	$	2,273
Non-Accrual Loan Summary	Organic		Purchased Govt. Guaranteed		Total
(in thousands)
Loans on non-accrual	$	11,250	$	—	$	11,250
Non-accrual loans with SBA guarantees		8,253		—		8,253
Net Bank exposure to non-accrual loans	$	2,997	$	—	$	2,997

There was a $291,000 provision for credit losses in the second quarter of 2024, compared to $612,000 provision for loan losses in the second quarter a year ago, and a $378,000 provision for credit losses booked in the first quarter of 2024.

"We continue to watch the SBA portfolio very closely since rates have increased so rapidly over the last two years, putting pressure on borrowers. A majority of the loans within the portfolio are floating rate loans and borrowers are unlikely to see any relief until interest rates fall significantly,” added Miller. “A portion of the portfolio consists of loans guaranteed by the U.S. Government. This group of loans consists of fully guaranteed loans the Company has purchased, as well as organic SBA and USDA loans the Bank has originated. When the effect of these guarantees is considered relative to the loan portfolio, the ratio of allowance for credit losses to the total, non-guaranteed, loan portfolio was 1.18%, as of June 30, 2024, and our total unguaranteed exposure on these SBA loans is $37.05 million spread over 203 loans.”

“We incurred net recoveries of $31,000 during the current quarter, compared to $129,000 net charge offs in the first quarter a year ago, and $4,000 in net recoveries in the preceding quarter,” said Miller. “Our loan portfolio increased 11% from a year ago with commercial real estate (“CRE”) loans representing 58% of the total loan portfolio. Within the CRE portfolio, there are $43.03 million in loans for CRE office as shown in the table below. Since the majority of our CRE office exposure is concentrated in the Central Valley, we feel the volatility that the city center markets are experiencing is not as prominent in the Central Valley. Our credit metrics remain strong as we continue to maintain conservative underwriting standards.”

(in thousands)	CRE Office Exposure of June 30, 2024
Region	Owner-Occupied		Non-Owner Occupied		Total
Central Valley	$	20,290	$	13,155	$	33,445
Southern California		2,299		356		2,655
Other California		2,306		4,085		6,391
Total California		24,895		17,596		42,491
Out of California		—		537		537
Total CRE Office	$	24,895	$	18,133	$	43,028

The ratio of allowance for credit losses to total loans was 1.11% at June 30, 2024, compared to 1.12% a year earlier and 1.12% at March 31, 2024.

About FFB Bancorp
FFB Bancorp, formerly Communities First Financial Corporation, a bank holding company established in 2014, is the parent company of FFB Bank, founded in 2005 in Fresno, California. As a leading SBA Lender in California’s Central Valley and one of the few direct acquiring banks in the United States, FFB Bank offers clients a range of personal and business checking accounts, payment processes, and loan programs. Among the Bank’s awards and accomplishments, it was ranked #1 on American Banker’s list of the Top 20 Publicly Traded Banks under $2 Billion in Assets for 2024. For 2022, the Bank was also ranked by S&P Global as the #18 best performing community bank under $3 billion in assets. The Company has also received recognition as part of the OTCQX Best 50 Companies for 2019, 2023, and 2024. For additional information, you can visit the Company’s website at www.ffb.bank or by contacting a representative at 559-439-0200.

Forward Looking Statements
This earnings release may contain forward-looking statements. Forward-looking statements provide current expectations or forecasts of future events and are not guarantees of future performance, nor should they be relied upon as representing management’s views as of any subsequent date. The forward-looking statements are based on managements’ expectations and are subject to a number of risks and uncertainties. Although management believes that the expectations reflected in such forward-looking statements are reasonable, actual results may differ materially from those expressed or implied in such statements. Risks and uncertainties that could cause actual results to differ materially include, without limitation, the Company’s ability to effectively execute its business plans; changes in general economic and financial market conditions; changes in interest rates; and, in particular, actions taken by the Federal Reserve to try and control inflation; changes in the competitive environment; continuing consolidation in the financial services industry; new litigation or changes in existing litigation; losses, customer bankruptcy, claims and assessments; changes in banking regulations or other regulatory or legislative requirements affecting the Company’s business; international developments; and changes in accounting policies or procedures as may be required by the Financial Accounting Standards Board or other regulatory agencies. The Company undertakes no obligation to release publicly the results of any revisions to the forward-looking statements included herein to reflect events or circumstances after today, or to reflect the occurrence of unanticipated events. The Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

Member FDIC

	For the Quarter Ended:			Year to Date as of:
Select Financial Information and Ratios	June 30, 2024	March 31, 2024	June 30, 2023	June 30, 2024	June 30, 2023
BALANCE SHEET- ENDING BALANCES:
Total assets	$1,443,723	$1,395,095	$1,303,909
Total portfolio loans	969,764	926,781	875,180
Investment securities	345,491	328,906	304,043
Total deposits	1,168,957	1,200,529	1,079,039
Shareholders equity, net	148,640	138,716	109,556
INCOME STATEMENT DATA
Gross revenue	24,729	23,610	24,509	48,340	43,846
Operating expense	13,285	12,701	10,704	25,986	19,452
Pre-tax, pre-provision income	11,444	10,909	13,805	22,354	24,394
Net income after tax	8,076	7,790	9,423	15,866	17,121
SHARE DATA
Basic earnings per share	$2.54	$2.46	$2.97	$5.00	$5.40
Fully diluted EPS	$2.54	$2.45	$2.97	$5.00	$5.40
Book value per common share	$46.79	$43.69	$34.48
Common shares outstanding	3,176,611	3,175,045	3,177,227
Fully diluted shares	3,177,935	3,176,800	3,177,575
FFBB - Stock price	$89.00	$82.99	$60.90
RATIOS
Return on average assets	2.31%	2.32%	2.78%	2.32%	2.63%
Return on average equity	22.89%	23.27%	36.31%	23.08%	33.83%
Efficiency ratio	52.74%	52.96%	42.45%	52.85%	42.40%
Adjusted efficiency ratio	47.15%	47.82%	34.75%	47.48%	36.57%
Yield on earning assets	6.40%	6.15%	5.72%	6.27%	5.65%
Yield on investment securities	4.60%	4.47%	4.35%	4.54%	4.28%
Yield on portfolio loans	6.89%	6.68%	6.28%	6.79%	6.19%
Cost to fund earning assets	1.10%	1.00%	0.62%	1.05%	0.60%
Cost of interest-bearing deposits	2.75%	2.57%	1.73%	2.73%	1.44%
Net Interest Margin	5.31%	5.15%	5.10%	5.22%	5.05%
Equity to assets	10.30%	9.94%	8.40%
Net loan to deposit ratio	82.96%	77.20%	81.11%
Full time equivalent employees	157	147	119
BALANCE SHEET- AVERAGES
Total assets	1,407,255	1,347,625	1,361,187	1,377,447	1,315,018
Total portfolio loans	954,871	925,561	885,649	940,216	865,735
Investment securities	334,416	315,820	325,002	325,117	330,302
Total deposits	1,199,124	1,149,117	1,194,313	1,164,121	1,141,775
Shareholders equity, net	141,881	134,621	104,083	138,251	102,071

Consolidated Balance Sheet (unaudited)
(in thousands)	June 30, 2024			March 31, 2024			June 30, 2023
ASSETS
Cash and due from banks	$	46,477		$	37,360		$	32,433
Interest bearing deposits in banks		26,842			53,556			43,895
CDs in other banks		1,683			1,693			2,873
Investment securities		345,491			328,906			304,043
Loans held for sale		—			—			—
Construction & land development		79,132			77,318			75,471
Residential RE 1-4 family		17,439			16,114			17,129
Commercial real estate		562,548			545,358			504,901
Agriculture		77,518			63,281			65,364
Commercial and industrial		232,786			224,551			212,186
Consumer and other		341			159			129
Portfolio loans		969,764			926,781			875,180
Deferred fees & discounts		(4,106	)		(4,181	)		(3,393	)
Allowance for credit losses		(10,749	)		(10,407	)		(9,767	)
Loans, net		954,909			912,193			862,020
Non-marketable equity investments		8,440			7,357			5,597
Cash value of life insurance		12,211			12,119			11,845
Accrued interest and other assets		47,670			41,911			41,203
Total assets	$	1,443,723		$	1,395,095		$	1,303,909
LIABILITIES AND EQUITY
Non-interest bearing deposits	$	731,030		$	751,636		$	723,007
Interest checking		75,907			54,659			38,603
Savings		51,052			52,090			54,718
Money market		184,495			220,559			162,630
Certificates of deposits		126,473			121,585			100,081
Total deposits		1,168,957			1,200,529			1,079,039
Short-term borrowings		68,000			—			55,000
Long-term debt		39,678			39,638			39,520
Other liabilities		18,448			16,212			20,794
Total liabilities		1,295,083			1,256,379			1,194,353
Common stock		37,430			36,910			35,452
Retained earnings		129,856			121,780			97,554
Accumulated other comprehensive loss		(18,646	)		(19,974	)		(23,450	)
Shareholders' equity		148,640			138,716			109,556
Total liabilities and shareholders' equity	$	1,443,723		$	1,395,095		$	1,303,909

Consolidated Income Statement (unaudited)	Quarter ended:									Year ended:
(in thousands)	June 30, 2024			March 31, 2024			June 30, 2023			June 30, 2024			June 30, 2023
INTEREST INCOME:
Loan interest income	$	16,354		$	15,372		$	13,861		$	31,726		$	26,590
Investment income		3,823			3,512			3,526			7,335			7,010
Int. on fed funds & CDs in other banks		316			255			981			572			1,209
Dividends from non-marketable equity		394			129			9			523			84
Total interest income		20,887			19,268			18,377			40,156			34,893
INTEREST EXPENSE:
Int. on deposits		3,008			2,518			1,471			5,526			2,428
Int. on short-term borrowings		109			149			50			258			363
Int. on long-term debt		464			464			464			929			928
Total interest expense		3,581			3,131			1,985			6,713			3,719
Net interest income		17,306			16,137			16,392			33,443			31,174
PROVISION FOR CREDIT LOSSES		291			378			612			670			829
Net interest income after provision		17,015			15,759			15,780			32,773			30,345
NON-INTEREST INCOME:
Total deposit fee income		847			796			738			1,643			1,393
Debit / credit card interchange income		186			167			152			353			293
Merchant services income		6,068			6,068			7,560			12,137			11,257
Gain on sale of loans		509			451			133			961			1,037
Loss on sale of investments		(459	)		(373	)		(708	)		(833	)		(2,028	)
Other operating income		272			364			242			636			720
Total non-interest income		7,423			7,473			8,117			14,897			12,672
NON-INTEREST EXPENSE:
Salaries & employee benefits		6,724			6,582			4,826			13,306			9,542
Occupancy expense		437			383			412			820			774
Merchant services operating expense		2,664			2,360			2,976			5,023			4,220
Other operating expense		3,460			3,376			2,490			6,837			4,916
Total non-interest expense		13,285			12,701			10,704			25,986			19,452
Income before provision for income tax		11,153			10,531			13,193			21,684			23,565
PROVISION FOR INCOME TAXES		3,077			2,741			3,770			5,818			6,444
Net income	$	8,076		$	7,790		$	9,423		$	15,866		$	17,121

        

ASSET QUALITY
(in thousands)	June 30, 2024			March 31, 2024			June 30, 2023
Delinquent accruing loans 30-60 days	$	1,046		$	3,220		$	2,846
Delinquent accruing loans 60-90 days		175			1,950			2,288
Delinquent accruing loans 90+ days		1,052			1,332			1,379
Total delinquent accruing loans	$	2,273		$	6,502		$	6,513
Loans on non-accrual	$	11,250		$	7,156		$	6,108
Other real estate owned		—			—			—
Nonperforming assets	$	11,250		$	7,156		$	6,108
Delinquent 30-60 / Total Loans		0.11	%		0.35	%		0.33	%
Delinquent 60-90 / Total Loans		0.02	%		0.21	%		0.26	%
Delinquent 90+ / Total Loans		0.11	%		0.14	%		0.16	%
Delinquent Loans / Total Loans		0.23	%		0.70	%		0.74	%
Non-accrual / Total Loans		1.16	%		0.77	%		0.70	%
Nonperforming assets to total assets		0.78	%		0.51	%		0.47	%
Year-to-date charge-off activity
Charge-offs	$	—		$	—		$	593
Recoveries		31			4			58
Net (recoveries) charge-offs	$	(31	)	$	(4	)	$	535
Annualized net loan losses to average loans	(0.01		)%		—	%		0.12	%
CREDIT LOSS RESERVE RATIOS:
Allowance for credit losses	$	10,749		$	10,407		$	9,767
Total loans	$	969,764		$	926,781		$	875,180
Purchased govt. guaranteed loans	$	18,141		$	19,642		$	24,222
Originated govt. guaranteed loans	$	41,201		$	38,228		$	33,951
ACL / Total loans		1.11	%		1.12	%		1.12	%
ACL / Loans less 100% govt. gte. loans (Purchased)		1.13	%		1.15	%		1.15	%
ACL / Loans less all govt. guaranteed loans		1.18	%		1.20	%		1.20	%
ACL / Total assets		0.74	%		0.75	%		0.75	%

	For the Quarter Ended:
SELECT FINANCIAL TREND INFORMATION	June 30, 2024			Mar. 31, 2024			Dec. 31, 2023			Sept. 30, 2023			June 30, 2023
BALANCE SHEET- PERIOD END
Total assets	$	1,443,723		$	1,395,095		$	1,364,326		$	1,308,866		$	1,303,909
Loans held for sale		—			—			—			—			—
Loans held for investment		969,764			926,781			928,344			897,746			875,180
Investment securities		345,491			328,906			326,006			290,011			304,043
Non-interest bearing deposits		731,030			751,636			775,507			737,366			723,007
Interest bearing deposits		437,927			448,893			369,663			394,679			356,032
Total deposits		1,168,957			1,200,529			1,145,170			1,132,045			1,079,039
Short-term borrowings		68,000			—			34,000			—			55,000
Long-term debt		39,678			39,638			39,599			39,560			39,520
Total equity		167,286			158,690			150,169			142,301			133,006
Accumulated other comprehensive income		(18,646	)		(19,974	)		(19,469	)		(29,409	)		(23,450	)
Shareholders' equity		148,640			138,716			130,700			112,892			109,556
QUARTERLY INCOME STATEMENT
Interest income	$	20,887		$	19,268		$	19,327		$	18,434		$	18,377
Interest expense		3,581			3,131			2,946			2,457			1,985
Net interest income		17,306			16,137			16,381			15,977			16,392
Non-interest income		7,423			7,473			5,924			6,449			8,117
Gross revenue		24,729			23,610			22,305			22,426			24,509
Provision for credit losses		291			378			769			152			612
Non-interest expense		13,285			12,701			11,047			10,107			10,704
Net income before tax		11,153			10,531			10,489			12,167			13,193
Tax provision		3,077			2,741			2,924			3,295			3,770
Net income after tax		8,076			7,790			7,565			8,872			9,423
BALANCE SHEET- AVERAGE BALANCE
Total assets	$	1,407,255		$	1,347,625		$	1,341,435		$	1,293,998		$	1,361,187
Loans held for sale		—			—			—			—			59
Loans held for investment		954,871			925,561			917,620			871,931			885,590
Investment securities		334,416			315,820			294,060			300,285			325,002
Non-interest bearing deposits		758,977			755,603			760,153			757,118			853,044
Interest bearing deposits		440,147			393,514			390,288			361,758			341,269
Total deposits		1,199,124			1,149,117			1,150,441			1,118,876			1,194,313
Short-term borrowings		10,053			9,562			9,805			1,571			4,231
Long-term debt		39,660			39,620			39,580			39,541			39,502
Shareholders' equity		141,881			134,621			116,545			111,530			104,083

Contact: Steve Miller - President & CEO
Bhavneet Gill – EVP & CFO
(559) 439-0200