LINKBANCORP, Inc. Announces Fourth Quarter 2023 and Full Year 2023 Financial Results
HARRISBURG, Pa., Jan. 29, 2024 /PRNewswire/ -- LINKBANCORP, Inc. (NASDAQ: LNKB) (the "Company"), the parent company of LINKBANK (the "Bank") reported financial results for the fourth quarter and year ended December 31, 2023 that were significantly impacted by one-time costs related to the merger with Partners Bancorp ("Partners") that was successfully completed on November 30, 2023 (the "Merger"). For the quarter ended December 31, 2023, the Company recognized a net loss of $13.2 million, or $0.57 per diluted share, and for the year ended December 31, 2023, the Company recognized a net loss of $12.2 million, or $0.68 per diluted share.
Fourth quarter 2023 results include the impact of the Partners Merger and include $19.2 million pre-tax ($15.2 million after tax) of primarily merger-related expenses and initial non-purchase credit deteriorated (non-PCD) provision. Excluding these expenses, earnings for the fourth quarter 2023 would have been $2.0 million1, or $0.091 per diluted share. Similarly, results for the year ended December 31, 2023 include $20.9 million pre-tax ($16.5 million after tax) of primarily merger related expenses and initial non-purchase credit deteriorated (non-PCD) provision. Excluding these and other non-recurring expenses, earnings for the year ended December 31, 2023 would have been $6.2 million1, or $0.351 per diluted share.
Reported results prior to the fourth quarter of 2023 reflect legacy LINKBANCORP results only.
Fourth Quarter 2023 Highlights
The Company successfully completed a transformational merger of equals with Partners Bancorp, the parent company of The Bank of Delmarva and Virginia Partners Bank, which closed on November 30, 2023. Both The Bank of Delmarva and Virginia Partners Bank were merged into LINKBANK. The conversion to LINKBANK's core operating system was successfully completed on December 4, 2023.
Total assets increased to $2.66 billion at December 31, 2023, compared to $1.26 billion at September 30, 2023 and $1.16 billion at December 31, 2022.
Total deposits increased to $2.30 billion at December 31, 2023 from $1.04 billion at September 30, 2023 and $946.8 million at December 31, 2022.
Total loans increased to $2.24 billion at December 31, 2023 compared to $978.9 million at September 30, 2023 and $927.9 million at December 31, 2022.
Net interest margin expanded from 2.89% for the third quarter of 2023 to 3.55% for the fourth quarter of 2023.
1
See Appendix A - Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
The fourth quarter results do not represent a full quarter of comparable combined earnings given the Merger with Partners was completed on November 30, 2023.
"2023 was a transformational year for LINKBANCORP. Our merger with Partners Bancorp established a premier Mid-Atlantic community banking franchise committed to positively impacting communities across the markets we serve," said Andrew Samuel, Chief Executive Officer of LINKBANCORP. "We believe our increased scale and presence in growing and diverse markets will drive profitable growth and shareholder value. Promptly after the closing of the merger, we successfully converted legacy Bank of Delmarva and Virginia Partners Bank accounts to LINKBANK's core system. Additionally, we have right-sized our pro forma organizational structure and commenced various cost-saving initiatives that we expect will ensure we achieve the projected benefits of the merger. While merger-related expenses and accounting adjustments negatively impacted fourth quarter and 2023 earnings, we are pleased with our core operating results. We are very grateful to each of our employees who have performed at a high level during this period, providing exceptional service to clients and their colleagues as together we navigated these critical transitions."
Merger with Partners Bancorp Partners Bancorp merged with and into LINKBANCORP and The Bank of Delmarva and Virginia Partners Bank each merged with and into LINKBANK, effective November 30, 2023. The acquisition method of accounting was used to account for the transaction with the Company as the acquirer. The Company recorded the assets and liabilities of Partners at their respective fair values as of November 30, 2023. The transaction was valued at approximately $135.8 million and expanded LINKBANK's footprint into Maryland, Delaware, Virginia and New Jersey.
As a result of the Merger, the Company added $1.50 billion in assets, $123.4 million in investment securities, $1.24 billion in loans, $1.30 billion in deposits, $54.7 million in FHLB advances and $21.1 million in subordinated debt. The excess of the merger consideration over the fair value of net Partners assets acquired resulted in goodwill of $21.0 million. Subsequent to the Merger but prior to year-end, the Company sold a substantial portion of the acquired available-for-sale securities portfolio for net proceeds of $87.4 million and used approximately $54.7 million of the proceeds to reduce FHLB borrowings assumed in the Merger. The Merger resulted in dilution in the Company's tangible book value per share which was $4.901 at December 31, 2023 compared to $6.441 at September 30, 2023. The principal cause of the dilution was net fair value discount adjustments of approximately $64.5 million to the acquired loan portfolio due to increasing interest rates in the last 12-24 months. The loan fair value adjustments will accrete back through income as the loans mature, which management anticipates will lead to earnings per share and capital accretion in future periods.
The Company's tangible common equity ratio at December 31, 2023 was 7.09%1. The Bank's Tier 1 and Total Risk-Based Capital Ratios at December 31, 2023 were 10.05% and 10.75%, respectively.
The Company incurred expenses of $19.2 million and $20.9 million for the three and twelve months ended December 31, 2023, respectively, related to Merger costs and an increased allowance for credit losses related to the acquisition of Partners loans.
The Company's financial results for any periods ended prior to November 30, 2023 reflect LINKBANCORP results only on a standalone basis. As a result of this factor and the Merger-related expenses incurred, the Company's financial results for the fourth quarter of 2023 may not be directly comparable to prior reported periods.
1
See Appendix A - Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
Income Statement Net interest income before the provision for credit losses for the fourth quarter of 2023 increased to $14.3 million compared to $8.4 million in the third quarter of 2023. Net interest margin was 3.55% for the fourth quarter of 2023 compared to 2.89% for the third quarter of 2023. The average yield on interest-earning assets increased by 61 basis points over the prior quarter, due to an increase in the average yield on loans of 70 basis points to 6.03%. Also contributing to expansion of net interest margin during the fourth quarter was a seven basis points decrease in the cost of funds to 2.28%. The increase in net interest income was primarily a result of the legacy Partners portfolio, which maintained a lower cost of deposits, coupled with the higher average yield on interest earning assets across the portfolio and the impact of purchase accounting accretion. In addition, proceeds from the sale of a substantial portion of the available-for-sale securities acquired in the Merger were used to pay off FHLB borrowings assumed in the Merger, contributing to further margin expansion.
Noninterest income increased quarter over quarter to $1.3 million for the fourth quarter of 2023 compared to $880 thousand for the third quarter of 2023. This increase was primarily related to a $187 thousand increase in service charges on deposit accounts related to the increased size of the customer base in connection with the Merger.
Noninterest expense for the fourth quarter of 2023 increased to $22.3 million compared to $8.0 million for the third quarter of 2023. Excluding one-time charges related to the Merger of $9.5 million in the fourth quarter of 2023 and $777 thousand in the third quarter of 2023, noninterest expense increased by $5.6 million to $12.8 million in the fourth quarter from $8.8 million in the third quarter. This increase was primarily due to the increased headcount and infrastructure resulting from the Merger, including additional branches, amortization of intangible assets, processing fees, and an increased incentive compensation accrual.
Balance Sheet Total assets were $2.66 billion at December 31, 2023 compared to $1.26 billion at September 30, 2023 and $1.16 billion at December 31, 2022. Deposits and net loans as of December 31, 2023 totaled $2.30 billion and $2.22 billion, respectively, compared to deposits and net loans of $1.04 billion and $968.9 million, respectively, at September 30, 2023 and $946.8 million and $923.2 million, respectively, at December 31, 2022.
Total loans increased $1.26 billion during the fourth quarter of 2023 to $2.24 billion at December 31, 2023 and included $1.24 billion of loans acquired through the Merger. Excluding the newly acquired loans, loans increased $18.3 million or 7.38% annualized led by originated commercial loan growth, with the average commercial loan commitment originated during the fourth quarter of 2023 totaling approximately $628 thousand.
Year-over-year, loans increased $1.31 billion and included $1.24 billion of loans acquired through the Merger. Excluding the newly acquired loans, loans increased $69.3 million, or 7.5% during 2023.
Cash and cash equivalents increased to $77.7 million at December 31, 2023 compared to $68.0 million at September 30, 2023, while increasing $47.7 million compared to the $30.0 million balance at December 31, 2022.
Deposits at December 31, 2023 totaled $2.30 billion, an increase of $1.26 billion compared to $1.04 billion at September 30, 2023. The Merger added $1.30 billion of total deposits, including $969.5 million of transaction deposits (defined as total deposits less time deposits) and $330.3 million of time deposits on November 30, 2023. Noninterest bearing deposits totaled $656.0 million at December 31, 2023, representing 28.5% of total deposits, compared to $210.4 million, representing 20.2% of total deposits at September 30, 2023.
Shareholders' equity increased from $141.4 million at September 30, 2023 to $265.6 million at December 31, 2023 primarily as a result of the completion of the Merger. The Merger resulted in dilution in the Company's tangible book value per share which was $4.901 at December 31, 2023 compared to $6.441 at September 30, 2023. The principal cause of the dilution was fair value discount adjustments of approximately $64.5 million to the acquired loan portfolio due to increasing interest rates in the last 12-24 months. The loan fair value adjustments will accrete back through income as the loans mature and are expected to result in earnings per share and capital accretion over future periods.
1
See Appendix A - Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
Asset Quality In the fourth quarter of 2023, the Company recorded a provision for credit losses, calculated under the CECL model, of $9.8 million, compared to a negative provision for credit losses of $349 thousand in the third quarter of 2023. The provision for the fourth quarter included $9.7 million associated with day one accounting provision required for non-purchase credit deteriorated loans acquired in the Merger.
Asset quality metrics remain strong. As of December 31, 2023, the Company's non-performing assets were $9.0 million, representing 0.34% of total assets. Loans 30-89 days past due at December 31, 2023 were $4.7 million, representing 0.21% of total loans.
The allowance for credit losses-loans was $23.8 million, or 1.06% of total loans at December 31, 2023, compared to the allowance for credit losses-loans of $10.0 million, or 1.02% of total loans, at September 30, 2023. The allowance for credit losses-loans to nonperforming assets was 263.55% at December 31, 2023, compared to 336.85% at September 30, 2023.
Capital The Bank's regulatory capital ratios were well in excess of regulatory minimums to be considered "well capitalized" as of December 31, 2023. The Bank's Total Capital Ratio and Tier 1 Capital Ratio was 10.75% and 10.05%, respectively, at December 31, 2023, compared to 12.92% and 12.37%, respectively, at September 30, 2023 and 12.89% and 12.41%, respectively, at December 31, 2022. The Company's ratio of Tangible Common Equity to Tangible Assets was 7.09%1 at December 31, 2023.
1
See Appendix A - Reconciliation to Non-GAAP Financial Measures for the computation of this non-GAAP measure.
ABOUT LINKBANCORP, Inc. LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, LINKBANK, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Pennsylvania, Maryland, Delaware, Virginia, and New Jersey through 29 client solutions centers and www.linkbank.com. LINKBANCORP, Inc. common stock is traded on the Nasdaq Capital Market under the symbol "LNKB". For further company information, visit ir.linkbancorp.com.
Forward Looking Statements This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; risks related to the integration of the merger with Partners; changes in general economic trends, including inflation and changes in interest rates; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the effects of any cybersecurity breaches. The Company does not undertake, and specifically disclaims, any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, you should not place undue reliance on forward-looking statements.
LB-E LB-D
LINKBANCORP, Inc. and Subsidiaries
Consolidated Balance Sheet (Unaudited)
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
(In Thousands, except share and per share data)
ASSETS
Noninterest-bearing cash equivalents
$ 11,663
$ 5,447
$ 4,736
$ 4,545
$ 4,209
Interest-bearing deposits with other institutions
66,000
62,532
118,438
47,190
25,802
Cash and cash equivalents
77,663
67,979
123,174
51,735
30,011
Certificates of deposit with other banks
-
249
498
745
5,623
Securities available for sale, at fair value
115,490
78,779
83,620
86,804
78,813
Securities held to maturity, net of allowance for credit losses
36,223
37,266
38,220
38,986
31,822
Loans receivable, gross
2,241,533
978,912
969,533
945,371
927,871
Allowance for credit losses - loans
(23,767)
(9,964)
(10,228)
(10,526)
(4,666)
Loans receivable, net
2,217,766
968,948
959,305
934,845
923,205
Investments in restricted bank stock
5,066
3,107
5,544
4,134
3,377
Premises and equipment, net
22,507
6,414
6,292
6,497
6,743
Right-of-use asset - premises
15,597
9,727
9,896
10,058
10,219
Bank-owned life insurance
48,847
24,732
24,554
24,384
19,244
Goodwill
56,838
35,842
35,842
35,842
35,842
Other intangible assets, net
25,733
873
932
991
1,052
Deferred tax asset
20,682
6,880
6,571
6,749
5,619
Accrued interest receivable and other assets
22,023
14,899
14,024
12,188
12,084
TOTAL ASSETS
$ 2,664,436
$ 1,255,695
$ 1,308,472
$ 1,213,958
$ 1,163,654
LIABILITIES
Deposits:
Demand, noninterest bearing
$ 655,953
$ 210,404
$ 240,729
$ 204,495
$ 192,773
Interest bearing
1,642,520
831,368
794,113
780,003
753,999
Total deposits
2,298,473
1,041,772
1,034,842
984,498
946,772
Other Borrowings
10,500
15,000
74,899
31,250
20,938
Subordinated Debt
61,444
40,354
40,398
40,441
40,484
Lease Liabilities
16,464
9,728
9,896
10,058
10,219
Accrued interest payable and other liabilities
11,952
7,490
5,985
6,130
6,688
TOTAL LIABILITIES
2,398,833
1,114,344
1,166,020
1,072,377
1,025,101
SHAREHOLDERS' EQUITY
Preferred stock
-
-
-
-
-
Common stock
373
162
162
250
149
Surplus
263,306
127,856
127,818
127,659
117,709
Retained earnings
4,650
19,062
19,039
18,911
27,100
Accumulated other comprehensive loss
(3,209)
(5,729)
(4,567)
(5,239)
(6,405)
Total equity attributable to parent
265,120
141,351
142,452
141,581
138,553
Noncontrolling interest in consolidated subsidiary
483
-
-
-
-
TOTAL SHAREHOLDERS' EQUITY
265,603
141,351
142,452
141,581
138,553
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY
$ 2,664,436
$ 1,255,695
$ 1,308,472
$ 1,213,958
$ 1,163,654
Common shares outstanding
37,340,700
16,235,871
16,228,440
16,221,692
14,939,640
LINKBANCORP, Inc. and Subsidiaries
Consolidated Statements of Operations (Unaudited)
Three Months Ended
Twelve Months Ended
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
(In Thousands, except share and per share data)
INTEREST AND DIVIDEND INCOME
Loans receivable, including fees
$ 21,461
$ 13,068
$ 11,109
$ 58,791
$ 36,396
Other
1,642
1,710
1,097
6,407
3,868
Total interest and dividend income
23,103
14,778
12,206
65,198
40,264
INTEREST EXPENSE
Deposits
7,445
5,434
2,465
22,638
5,337
Other Borrowings
727
550
335
1,923
441
Subordinated Debt
615
442
421
1,926
1,501
Total interest expense
8,787
6,426
3,221
26,487
7,279
NET INTEREST INCOME BEFORE PROVISION FOR (CREDIT TO) CREDIT LOSSES
14,316
8,352
8,985
38,711
32,985
Provision for (credit to) for credit losses
9,844
(349)
100
9,295
1,290
NET INTEREST INCOME AFTER PROVISION FOR (CREDIT TO) CREDIT LOSSES
4,472
8,701
8,885
29,416
31,695
NONINTEREST INCOME
Service charges on deposit accounts
385
198
188
978
832
Bank-owned life insurance
250
177
116
738
497
Net realized (losses) gains on the sale of debt securities
-
-
-
(2,370)
13
Gain on sale of loans
166
-
-
465
753
Other
374
505
204
1,276
862
Total noninterest income
1,175
880
508
1,087
2,957
NONINTEREST EXPENSE
Salaries and employee benefits
8,262
4,193
4,612
20,612
16,224
Occupancy
911
701
616
3,015
2,119
Equipment and data processing
1,201
934
751
3,720
2,609
Professional fees
536
363
371
1,698
1,236
FDIC insurance
198
276
157
817
640
Bank Shares Tax
323
278
201
1,158
786
Merger & system conversion related expenses
9,496
777
973
11,176
973
Other
1,358
472
764
3,636
3,245
Total noninterest expense
22,285
7,994
8,445
45,832
27,832
Income before income tax (benefit) expense
(16,638)
1,587
948
(15,329)
6,820
Income tax (benefit) expense
(3,448)
347
252
(3,168)
1,222
NET (LOSS) INCOME
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
(LOSS) EARNINGS PER SHARE, BASIC
$ (0.57)
$ 0.08
$ 0.05
$ (0.68)
$ 0.49
(LOSS) EARNINGS PER SHARE, DILUTED
$ (0.57)
$ 0.08
$ 0.05
$ (0.68)
$ 0.49
WEIGHTED-AVERAGE COMMON SHARES OUTSTANDING,
BASIC
23,063,202
16,235,144
14,939,640
17,753,914
11,310,386
DILUTED
23,063,202
16,235,144
14,939,640
17,753,914
11,310,386
LINKBANCORP, Inc. and Subsidiaries
Financial Highlights (Unaudited)
For the Three Months Ended
For the Twelve Months Ended
('Dollars In Thousands)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Operating Highlights
Net (Loss) Income
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
Net Interest Income
14,316
8,352
8,985
38,711
32,985
Provision for (Credit to) Credit Losses
9,844
(349)
100
9,295
1,290
Non-Interest Income
1,175
880
508
1,087
2,957
Non-Interest Expense
22,285
7,994
8,445
45,832
27,832
(Loss) Earnings per Share, Basic
(0.57)
0.08
0.05
(0.68)
0.49
Adjusted Earnings per Share, Basic (2)
0.09
0.11
0.10
0.35
0.56
(Loss) Earnings per Share, Diluted
(0.57)
0.08
0.05
(0.68)
0.49
Adjusted Earnings per Share, Diluted (2)
0.09
0.11
0.10
0.35
0.56
Selected Operating Ratios
Net Interest Margin
3.55 %
2.89 %
3.36 %
3.09 %
3.39 %
Annualized Return on Assets ("ROA")
-3.01 %
0.39 %
0.24 %
-0.90 %
0.53 %
Adjusted ROA2
0.45 %
0.59 %
0.50 %
0.46 %
0.60 %
Annualized Return on Equity ("ROE")
-28.66 %
3.46 %
2.02 %
-8.00 %
5.22 %
Adjusted ROE2
4.28 %
5.17 %
4.24 %
4.08 %
5.93 %
Efficiency Ratio
143.86 %
86.59 %
88.96 %
115.16 %
77.44 %
Adjusted Efficiency Ratio3
82.56 %
78.17 %
78.71 %
82.19 %
74.76 %
Noninterest Income to Avg. Assets
0.27 %
0.28 %
0.17 %
0.08 %
0.28 %
Noninterest Expense to Avg. Assets
5.08 %
2.54 %
2.90 %
3.38 %
2.63 %
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Financial Condition Data
Total Assets
$ 2,664,436
$ 1,255,695
$ 1,308,472
$ 1,213,958
$ 1,163,654
Loans Receivable, Net
2,217,766
968,948
959,305
934,845
923,205
Noninterest-bearing Deposits
655,953
210,404
240,729
204,495
192,773
Interest-bearing Deposits
1,642,520
831,368
794,113
780,003
753,999
Total Deposits
2,298,473
1,041,772
1,034,842
984,498
946,772
Selected Balance Sheet Ratios
Total Capital Ratio1
10.75 %
12.92 %
13.55 %
13.53 %
12.89 %
Tier 1 Capital Ratio1
10.05 %
12.37 %
12.94 %
12.32 %
12.41 %
Common Equity Tier 1 Capital Ratio1
10.05 %
12.37 %
12.94 %
12.32 %
12.41 %
Leverage Ratio1
14.26 %
10.71 %
10.41 %
10.78 %
10.93 %
Tangible Common Equity to Tangible Assets4
7.09 %
8.58 %
8.38 %
8.90 %
9.02 %
Tangible Book Value per Share5
$ 4.90
$ 6.44
$ 6.51
$ 6.46
$ 6.80
Asset Quality Data
Non-performing Assets
$ 9,018
$ 2,958
$ 2,856
$ 2,398
$ 2,500
Non-performing Assets to Total Assets
0.34 %
0.24 %
0.22 %
0.20 %
0.21 %
Non-performing Loans to Total Loans
0.40 %
0.30 %
0.29 %
0.25 %
0.27 %
Allowance for Credit Losses - Loans ("ACLL")
$ 23,767
$ 9,964
$ 10,228
$ 10,526
$ 4,666
ACLL to Total Loans
1.06 %
1.02 %
1.05 %
1.11 %
0.50 %
ACLL to Nonperforming Assets
263.55 %
336.85 %
358.12 %
438.95 %
186.64 %
Net chargeoffs (recoveries)
$ 195
$ (12)
$ (97)
$ (2)
$ (60)
(1) - These capital ratios have been calculated using bank-level capital
(2) - This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(3) - The efficiency ratio, as adjusted represents noninterest expense divided by the sum of net interest income and noninterest income, excluding gains or losses from securities sales and merger related expenses. This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(4) - We calculate tangible common equity as total shareholders' equity less goodwill and other intangibles, and we calculate tangible assets as total assets less goodwill and other intangibles. This is a non-GAAP financial measure. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
(5) - We calculate tangible book value per common share as total shareholders' equity less goodwill and other intangibles, divided by the outstanding number of shares of our common stock at the end of the relevant period. Tangible book value per common share is a non-GAAP financial measure, and, as we calculate tangible book value per common share, the most directly comparable GAAP financial measure is book value per common share. See our reconciliation of non-GAAP financial measures to their most directly comparable GAAP financial measures at the end of this release.
LINKBANCORP, Inc. and Subsidiaries
Net Interest Margin - Quarter-To-Date (Unaudited)
For the Three Months Ended December 31,
2023
2022
(Dollars in thousands)
Avg Bal
Interest (2)
Yield/Rate
Avg Bal
Interest (2)
Yield/Rate
Int. Earn. Cash
$ 63,572
$ 405
2.53 %
$ 42,925
$ 227
2.10 %
Securities
Taxable (1)
88,632
951
4.26 %
80,842
567
2.78 %
Tax-Exempt
38,269
362
3.75 %
37,169
384
4.10 %
Total Securities
126,901
1,313
4.10 %
118,011
951
3.20 %
Total Cash Equiv. and Investments
190,473
1,718
3.58 %
160,936
1,178
2.90 %
Total Loans (3)
1,411,129
21,461
6.03 %
899,028
11,109
4.90 %
Total Earning Assets
1,601,602
23,179
5.74 %
1,059,964
12,287
4.60 %
Other Assets
138,537
94,628
Total Assets
$ 1,740,139
$ 1,154,592
Interest bearing demand
$ 328,342
$ 1,746
2.11 %
$ 278,816
$ 808
1.15 %
Money market demand
367,821
2,287
2.47 %
245,154
966
1.56 %
Time deposits
348,580
3,412
3.88 %
211,090
691
1.30 %
Total Borrowings
113,492
1,342
4.69 %
68,160
756
4.40 %
Total Interest-Bearing Liabilities
1,158,235
8,787
3.01 %
803,220
3,221
1.59 %
Non Int. Bearing Deposits
371,051
199,556
Total Cost of Funds
$ 1,529,286
$ 8,787
2.28 %
$ 1,002,776
$ 3,221
1.27 %
Other Liabilities
28,244
14,864
Total Liabilities
$ 1,557,530
$ 1,017,640
Shareholders' Equity
$ 182,609
$ 136,952
Total Liabilities & Shareholders' Equity
$ 1,740,139
$ 1,154,592
Net Interest Income/Spread (FTE)
14,392
2.73 %
9,066
3.01 %
Tax-Equivalent Basis Adjustment
(76)
(81)
Net Interest Income
$ 14,316
$ 8,985
Net Interest Margin
3.55 %
3.36 %
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table
(3) Includes the balances of nonaccrual loans
LINKBANCORP, Inc. and Subsidiaries
Net Interest Margin - Linked Quarter-To-Date (Unaudited)
For the Three Months Ended
December 31, 2023
September 30, 2023
(Dollars in thousands)
Avg Bal
Interest (2)
Yield/Rate
Avg Bal
Interest (2)
Yield/Rate
Int. Earn. Cash
$ 63,572
$ 405
2.53 %
$ 55,514
$ 577
4.12 %
Securities
Taxable (1)
88,632
951
4.26 %
82,499
833
4.01 %
Tax-Exempt
38,269
362
3.75 %
38,589
378
3.89 %
Total Securities
126,901
1,313
4.10 %
121,088
1,211
3.97 %
Total Cash Equiv. and Investments
190,473
1,718
3.58 %
176,602
1,788
4.02 %
Total Loans (3)
1,411,129
21,461
6.03 %
971,877
13,068
5.33 %
Total Earning Assets
1,601,546
23,179
5.74 %
1,148,479
14,856
5.13 %
Other Assets
138,537
97,995
Total Assets
$ 1,740,139
$ 1,246,474
Interest bearing demand
$ 328,342
$ 1,746
2.11 %
$ 254,725
$ 1,490
2.32 %
Money market demand
367,821
2,287
2.47 %
254,849
1,827
2.84 %
Time deposits
348,580
3,412
3.88 %
265,573
2,117
3.16 %
Total Borrowings
113,492
1,342
4.69 %
102,669
992
3.83 %
Total Interest-Bearing Liabilities
1,158,235
8,787
3.01 %
877,816
6,426
2.90 %
Non Int Bearing Deposits
371,051
209,054
Total Cost of Funds
$ 1,529,286
$ 8,787
2.28 %
$ 1,086,870
$ 6,426
2.35 %
Other Liabilities
28,244
17,230
Total Liabilities
$ 1,557,530
$ 1,104,100
Shareholders' Equity
$ 182,609
$ 142,374
Total Liabilities & Shareholders' Equity
$ 1,740,139
$ 1,246,474
Net Interest Income/Spread (FTE)
14,392
2.73 %
8,430
2.23 %
Tax-Equivalent Basis Adjustment
(76)
(78)
Net Interest Income
$ 14,316
$ 8,352
Net Interest Margin
3.55 %
2.89 %
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table
(3) Includes the balances of nonaccrual loans
LINKBANCORP, Inc. and Subsidiaries
Net Interest Margin - Year-To-Date (Unaudited)
For the Year Ended December 31,
2023
2022
(Dollars in thousands)
Avg Bal
Interest (2)
Yield/Rate
Avg Bal
Interest (2)
Yield/Rate
Int. Earn. Cash
$ 55,501
$ 1,966
3.54 %
$ 56,783
$ 533
0.94 %
Securities
Taxable (1)
84,860
3,260
3.84 %
78,629
2,175
2.77 %
Tax-Exempt
38,591
1,495
3.87 %
40,388
1,468
3.63 %
Total Securities
123,451
4,755
3.85 %
119,017
3,643
3.06 %
Total Cash Equiv. and Investments
178,952
6,721
3.76 %
175,800
4,176
2.38 %
Total Loans (3)
1,071,864
58,791
5.48 %
795,908
36,396
4.57 %
Total Earning Assets
1,250,816
65,512
5.24 %
971,708
40,572
4.18 %
Other Assets
106,267
88,485
Total Assets
$ 1,357,083
$ 1,060,193
Interest bearing demand
$ 269,615
$ 5,684
2.11 %
$ 271,681
$ 1,713
0.63 %
Money market demand
278,418
7,053
2.53 %
229,979
1,911
0.83 %
Time deposits
301,101
9,901
3.29 %
205,636
1,713
0.83 %
Total Borrowings
90,468
3,849
4.25 %
55,980
1,942
3.47 %
Total Interest-Bearing Liabilities
939,602
26,487
2.82 %
763,276
7,279
0.95 %
Non Int Bearing Deposits
245,703
173,938
Total Cost of Funds
$ 1,185,305
$ 26,487
2.23 %
$ 937,214
$ 7,279
0.78 %
Other Liabilities
19,850
15,806
Total Liabilities
$ 1,205,155
$ 953,020
Shareholders' Equity
$ 151,927
$ 107,173
Total Liabilities & Shareholders' Equity
$ 1,357,083
$ 1,060,193
Net Interest Income/Spread (FTE)
39,025
2.42 %
33,293
3.22 %
Tax-Equivalent Basis Adjustment
(314)
(308)
Net Interest Income
$ 38,711
$ 32,985
Net Interest Margin
3.09 %
3.39 %
(1) Taxable income on securities includes income from available for sale securities and income from certificates of deposits with other banks.
(2) Income stated on a tax equivalent basis which is a non-GAAP measure and reconciled to GAAP at the bottom of the table
(3) Includes the balances of nonaccrual loans
LINKBANCORP, Inc. and Subsidiaries
Loans Receivable Detail (Unaudited)
(In Thousands)
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
Agriculture and farmland loans
$ 66,573
$ 50,584
$ 50,552
$ 53,301
$ 55,746
Construction loans
178,500
65,836
75,628
67,934
57,713
Commercial & industrial loans
238,258
115,572
104,869
99,356
104,755
Commercial real estate loans
Multifamily
180,535
111,853
113,254
111,461
105,390
Owner occupied
501,788
161,751
154,520
151,407
139,554
Non-owner occupied
568,714
256,522
254,691
249,638
245,274
Residential real estate loans
First liens
414,263
172,481
170,271
166,478
168,084
Second liens and lines of credit
70,724
27,870
30,148
30,720
35,576
Consumer and other loans
16,760
11,869
11,308
10,472
10,057
Municipal loans
5,244
4,137
3,929
4,292
5,466
2,241,359
978,475
969,170
945,059
927,615
Deferred costs (fees)
174
437
363
312
256
Total loans receivable
$ 2,241,533
$ 978,912
$ 969,533
$ 945,371
$ 927,871
LINKBANCORP, Inc. and Subsidiaries
Investments in Securities Detail (Unaudited)
December 31, 2023
(In Thousands)
Amortized Cost
Net Unrealized Gains (Losses)
Fair Value
Available for Sale:
U.S. government agency securities
$ 12,711
$ 274
$ 12,985
U.S. government treasury securities
4,925
17
4,942
Obligations of state and political subdivisions
49,640
(2,595)
47,045
Mortgage-backed securities in government-sponsored entities
50,795
(2,614)
48,181
Other securities
2,301
36
2,337
$ 120,372
$ (4,882)
$ 115,490
Amortized Cost
Net Unrealized Losses
Fair Value
Allowance for Credit Losses
Held to Maturity:
Corporate debentures
$ 15,000
$ (1,592)
$ 13,408
$ (512)
Structured mortgage-backed securities
21,735
(907)
20,828
-
$ 36,735
$ (2,499)
$ 34,236
$ (512)
December 31, 2022
(In Thousands)
Amortized Cost
Net Unrealized Losses
Fair Value
Available for Sale:
Small Business Administration loan pools
$ 858
$ (15)
$ 843
Obligations of state and political subdivisions
44,189
(4,020)
40,169
Mortgage-backed securities in government-sponsored entities
41,873
(4,072)
37,801
$ 86,920
$ (8,107)
$ 78,813
Held to Maturity:
Corporate debentures
$ 14,993
$ (994)
$ 13,999
Structured mortgage-backed securities
16,829
(748)
16,081
$ 31,822
$ (1,742)
$ 30,080
LINKBANCORP, Inc. and Subsidiaries
Deposits Detail (Unaudited)
(In Thousands)
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
Demand, noninterest-bearing
$ 655,953
$ 210,404
$ 240,729
$ 204,495
$ 192,773
Demand, interest-bearing
438,765
273,673
237,114
250,944
254,478
Money market and savings
577,448
258,334
254,632
241,858
228,048
Time deposits, $250 and over
135,050
51,563
57,194
51,855
46,116
Time deposits, other
491,257
247,798
245,173
235,346
225,357
$ 2,298,473
$ 1,041,772
$ 1,034,842
$ 984,498
$ 946,772
Average Deposits Detail, for the Three Months Ended (Unaudited)
(In Thousands)
December 31, 2023
September 30, 2023
June 30, 2023
March 31, 2023
December 31, 2022
Demand, noninterest-bearing
$ 371,051
$ 209,054
$ 209,072
$ 192,135
$ 199,556
Demand, interest-bearing
328,342
254,725
243,539
251,103
278,816
Money market and savings
367,821
254,849
244,355
245,563
245,154
Time deposits
348,580
265,573
299,398
290,605
211,090
$ 1,415,794
$ 984,201
$ 996,364
$ 979,406
$ 934,616
Merger with Partners Bancorp
The following table provides a summary of the assets acquired, liabilities assumed, and associated preliminary fair value adjustments by the Company as of the merger date. As provided for under Generally Accepted Accounting Principles, management has up to 12 months following the date of the merger to finalize the fair value adjustments.
(Unaudited)
(Dollars in thousands, except per share information)
Partners Bancorp
Fair Value Adjustment
As Recorded by LINKBANCORP, Inc.
Assets acquired
Cash and cash equivalents
$ 34,586
$ -
$ 34,586
Federal funds sold
7,159
-
7,159
Securities available for sale, at fair value
124,361
(921)
123,440
Loans held for sale
201
-
201
Loans
1,308,978
(64,460)
1,244,518
Allowance for credit losses - loans
(16,124)
11,821
(4,303)
Loans receivable, net
1,292,854
(52,639)
1,240,215
Restricted stock
10,536
-
10,536
Premises and equipment
12,458
4,191
16,649
Accrued interest receivable
4,787
-
4,787
Core deposit intangibles
-
25,344
25,344
Deferred tax asset
8,766
5,063
13,829
Right-of-use-asset -- premises
6,042
-
6,042
Other assets
22,986
(2,122)
20,864
Total assets acquired
$ 1,524,736
$ (21,084)
$ 1,503,652
Liabilities assumed
Deposits
$ 1,303,462
$ (3,595)
$ 1,299,867
Borrowings
55,292
-
55,292
Subordinated debt
22,257
(1,179)
21,078
Accrued interest payable
2,056
-
2,056
Operating lease liabilities
6,908
-
6,908
Other liabilities
1,643
2,025
3,668
Total liabilities assumed
$ 1,391,618
$ (2,749)
$ 1,388,869
Net assets acquired
$ 114,783
Consideration paid
Common stock consideration:
Common shares of Partners Bancorp
17,985,577
Exchange ratio
1.15
LINKBANCORP, Inc. common stock issued
20,683,185
LINKBANCORP, Inc. stock price on acquisition date
$ 6.47
Purchase price assigned to Partners Bancorp common shares
133,820
Restricted stock consideration
Partners Bancorp restricted stock shares
297,726
LINKBANCORP, Inc. stock price on acquisition date
$ 6.47
Total purchase price assigned to Partners Bancorp restricted shares
1,926
Cash paid in exchange for Partners Bancorp stock options
33
Total consideration
$ 135,779
Goodwill
$ 20,996
Appendix A - Reconciliation to Non-GAAP Financial Measures This document contains supplemental financial information determined by methods other than in accordance with accounting principles generally accepted in the United States of America ("GAAP"). Management uses these non-GAAP measures in its analysis of the Company's performance. These measures should not be considered a substitute for GAAP basis measures nor should they be viewed as a substitute for operating results determined in accordance with GAAP. Management believes the presentation of non-GAAP financial measures that exclude the impact of specified items provide useful supplemental information that is essential to a proper understanding of the Company's financial condition and results. Non-GAAP measures are not formally defined under GAAP, and other entities may use calculation methods that differ from those used by us. As a complement to GAAP financial measures, our management believes these non-GAAP financial measures assist investors in comparing the financial condition and results of operations of financial institutions due to the industry prevalence of such non-GAAP measures. See the tables below for a reconciliation of these non-GAAP measures to the most directly comparable GAAP financial measures.
Adjusted Return on Average Assets
For the Three Months Ended
For the Year Ended
(Dollars in thousands)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Net (loss) income
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
Average assets
1,740,139
1,246,474
1,154,592
1,357,083
1,060,193
Return on average assets (annualized)
-3.01 %
0.39 %
0.24 %
-0.90 %
0.53 %
Net (loss) income
(13,190)
1,240
696
(12,161)
5,598
Net losses (gains) on sale of securities
-
-
-
2,370
(13)
Tax effect at 21%
-
-
-
(498)
3
Merger & system conversion related expenses
9,496
777
973
11,176
973
Tax effect at 21%
(1,994)
(163)
(204)
(2,347)
(204)
Non-purchase credit deteriorated provision for credit losses
9,694
-
-
9,694
-
Tax effect at 21%
(2,036)
-
-
(2,036)
-
Adjusted Net Income (Non-GAAP)
1,970
1,854
1,465
6,198
6,357
Average assets
1,740,139
1,246,474
1,154,592
1,357,083
1,060,193
Adjusted return on average assets (annualized) (Non-GAAP)
0.45 %
0.59 %
0.50 %
0.46 %
0.60 %
Adjusted Return on Average Shareholders' Equity
For the Three Months Ended
For the Year Ended
(Dollars in thousands)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Net (loss) income
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
Average shareholders' equity
182,609
142,374
136,952
151,927
107,173
Return on average shareholders' equity (annualized)
-28.66 %
3.46 %
2.02 %
-8.00 %
5.22 %
Net (loss) income
(13,190)
1,240
696
(12,161)
5,598
Net losses (gains) on sale of securities
-
-
-
2,370
(13)
Tax effect at 21%
-
-
-
(498)
3
Merger & system conversion related expenses
9,496
777
973
11,176
973
Tax effect at 21%
(1,994)
(163)
(204)
(2,347)
(204)
Non-purchase credit deteriorated provision for credit losses
9,694
-
-
9,694
-
Tax effect at 21%
(2,036)
-
-
(2,036)
-
Adjusted Net Income (Non-GAAP)
1,970
1,854
1,465
6,198
6,357
Average shareholders' equity
182,609
142,374
136,952
151,927
107,173
Adjusted return on average shareholders' equity (annualized) (Non-GAAP)
4.28 %
5.17 %
4.24 %
4.08 %
5.93 %
Adjusted Efficiency Ratio
For the Three Months Ended
For the Year Ended
(Dollars in thousands)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
GAAP-based efficiency ratio
143.86 %
86.59 %
88.96 %
115.16 %
77.44 %
Net interest income
$ 14,316
$ 8,352
$ 8,985
$ 38,711
$ 32,985
Noninterest income
1,175
880
508
1,087
2,957
Less: net gains (losses) on sales of securities
-
-
-
(2,370)
13
Adjusted revenue (Non-GAAP)
15,491
9,232
9,493
42,168
35,929
Total noninterest expense
22,285
7,994
8,445
45,832
27,832
Less: Merger & system conversion related expenses
9,496
777
973
11,176
973
Adjusted non-interest expense
12,789
7,217
7,472
34,656
26,859
Efficiency ratio, as adjusted (Non-GAAP)
82.56 %
78.17 %
78.71 %
82.19 %
74.76 %
Adjusted Earnings Per Share
For the Three Months Ended
For the Year Ended
(Dollars in thousands, except per share data)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
GAAP-Based (Loss) Earnings Per Share, Basic
$ (0.57)
$ 0.08
$ 0.05
$ (0.68)
$ 0.49
GAAP-Based (Loss) Earnings Per Share, Diluted
$ (0.57)
$ 0.08
$ 0.05
$ (0.68)
$ 0.49
Net (Loss) Income
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
Net losses (gains) on sale of securities
-
-
-
2,370
(13)
Tax effect at 21%
-
-
-
(498)
3
Merger & system conversion related expenses
9,496
777
973
11,176
973
Tax effect at 21%
(1,994)
(163)
(204)
(2,347)
(204)
Non-purchase credit deteriorated provision for credit losses
9,694
-
-
9,694
-
Tax effect at 21%
(2,036)
-
-
(2,036)
-
Adjusted Net Income (Non-GAAP)
1,970
1,854
1,465
6,198
6,357
Adjusted Earnings per Share, Basic (Non-GAAP)
$ 0.09
$ 0.11
$ 0.10
$ 0.35
$ 0.56
Adjusted Earnings per Share, Diluted (Non-GAAP)
$ 0.09
$ 0.11
$ 0.10
$ 0.35
$ 0.56
Tangible Common Equity and Tangible Book Value
(Dollars in thousands, except for share data)
12/31/2023
9/30/2023
6/30/2023
3/31/2023
12/31/2022
Tangible Common Equity
Total shareholders' equity
$ 265,603
$ 141,351
$ 142,452
$ 141,581
$ 138,553
Adjustments:
Goodwill
(56,838)
(35,842)
(35,842)
(35,842)
(35,842)
Other intangible assets
(25,733)
(873)
(932)
(991)
(1,052)
Tangible common equity (Non-GAAP)
$ 183,032
$ 104,636
$ 105,678
$ 104,748
$ 101,659
Common shares outstanding
37,340,700
16,235,871
16,228,440
16,221,692
14,939,640
Book value per common share
$ 7.11
$ 8.71
$ 8.78
$ 8.73
$ 9.27
Tangible book value per common share (Non-GAAP)
$ 4.90
$ 6.44
$ 6.51
$ 6.46
$ 6.80
Tangible Assets
Total assets
$ 2,664,436
$ 1,255,695
$ 1,308,472
$ 1,213,958
$ 1,163,654
Adjustments:
Goodwill
(56,838)
(35,842)
(35,842)
(35,842)
(35,842)
Other intangible assets
(25,733)
(873)
(932)
(991)
(1,052)
Tangible assets (Non-GAAP)
$ 2,581,865
$ 1,218,980
$ 1,271,698
$ 1,177,125
$ 1,126,760
Tangible common equity to tangible assets (Non-GAAP)
7.09 %
8.58 %
8.31 %
8.90 %
9.02 %
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)
For the Three Months Ended
For the Year Ended
(Dollars in thousands, except per share data)
12/31/2023
9/30/2023
12/31/2022
12/31/2023
12/31/2022
Net (Loss) Income - GAAP
$ (13,190)
$ 1,240
$ 696
$ (12,161)
$ 5,598
Net losses (gains) on sale of securities
-
-
-
2,370
(13)
Tax effect at 21%
-
-
-
(498)
3
Merger & system conversion related expenses
9,496
777
973
11,176
973
Tax effect at 21%
(1,994)
(163)
(204)
(2,347)
(204)
Adjusted Net Income (Non-GAAP)
(5,688)
1,854
1,465
(1,460)
6,357
Income tax (benefit) expense
(3,448)
347
252
(3,168)
1,222
Provision for (credit to) credit losses
9,844
(349)
100
9,295
1,290
Tax effect included in Adjusted Net Income
1,994
163
204
2,845
201
Adjusted Pre-tax, Pre-provision Net Income (Non-GAAP)
$ 2,702
$ 2,015
$ 2,021
$ 7,512
$ 9,070
Contact: Nicole Davis Corporate and Investor Relations Officer 717.803.8895 IR@LINKBANCORP.COM