Record GAAP and Core EPS for 2021
John R. Buran, President and CEO Commentary
UNIONDALE, N.Y., Jan. 27, 2022 (GLOBE NEWSWIRE) -- The Company reported fourth quarter 2021 GAAP EPS of $0.58, up 427% YoY, ROAA of 0.89%, and ROAE of 10.77%. For the fourth quarter, Core EPS of $0.67 increased, 16% YoY with ROAA of 1.04% and ROAE of 12.49%. Record GAAP and Core EPS for 2021 of $2.59 and $2.81, respectively.
| “2021 was a record year for earnings but it was also a challenging year for employees dealing with the pandemic and a new working environment. Our people continued to tirelessly navigate these challenges, as they supported and served customers, and masterfully executed our strategic objectives. Our employees are our competitive advantage. As a reward for our record year of earnings and employee performance through the pandemic, the Company recorded a one-time increase in compensation and benefits of $4.3 million for all employees. We are looking forward to an exciting year in 2022.” |
| - John R. Buran, President and CEO |
Slight NIM Compression QoQ; Loan Growth Returns. Net interest income of $62.7 million increased 12.5% YoY, but declined 1.1% QoQ. NIM expanded 21 bps to 3.29% YoY, but declined 5 bps from 3Q21. Core NIM increased by 18 bps to 3.21% YoY and compressed 6 bps QoQ. The decline in the NIM QoQ was primarily due to an unfavorable shift in balance sheet mix with high levels of interest-earning deposits and federal funds sold, which was fully deployed by the end of the year. Loans, excluding SBA Paycheck Protection Program (“PPP”), increased 3.7% annualized in 4Q21 and loan closings were up 49% QoQ. Our loan pipeline, which grew 21% YoY, declined 19% QoQ from the record 3Q21 level of $530.7 million. With the yield curve steepening and the Federal Reserve expected to increase short-term rates, we expect refinance volumes will slow in 2022. Additionally, we continue to benefit from the merger disruption in our markets as we have hired 24 people (including 9 revenue producers) in 2021 from institutions involved with mergers. We are looking forward to additional expansion opportunities in 2022.
Returned 56% of Earnings in 4Q21; Capital Ratios Increase. The Company repurchased 150,976 shares of common stock at an average price of $23.75. Cash returned to shareholders through dividends and share repurchases was 56% of earnings in 4Q21. TCE/TA1 improved to 8.22% in 4Q21 from 8.04% in 3Q21 and 7.52% in 4Q20. Our capital priorities remain unchanged: 1) profitably grow the balance sheet, 2) return dividends to shareholders, and 3) opportunistically repurchase shares.
| Key Financial Metrics2 | ||||||||||||||||||
| 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | ||||||||||||||
| GAAP: | ||||||||||||||||||
| EPS | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | ||||||||
| ROAA (%) | 0.89 | 1.26 | 0.93 | 0.93 | 0.18 | |||||||||||||
| ROAE (%) | 10.77 | 15.42 | 11.95 | 12.29 | 2.27 | |||||||||||||
| NIM FTE3 (%) | 3.29 | 3.34 | 3.14 | 3.18 | 3.08 | |||||||||||||
| Core: | ||||||||||||||||||
| EPS | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 0.54 | $ | 0.58 | ||||||||
| ROAA (%) | 1.04 | 1.38 | 1.11 | 0.83 | 0.92 | |||||||||||||
| ROAE (%) | 12.49 | 16.88 | 14.27 | 10.96 | 11.67 | |||||||||||||
| Core NIM FTE (%) | 3.21 | 3.27 | 3.14 | 3.06 | 3.03 | |||||||||||||
| Efficiency Ratio (%) | 58.7 | 52.3 | 53.4 | 58.6 | 57.6 | |||||||||||||
| Credit Quality: | ||||||||||||||||||
| NPAs/Loans&REO (%) | 0.23 | 0.31 | 0.26 | 0.31 | 0.31 | |||||||||||||
| LLRs/Loans (%) | 0.56 | 0.55 | 0.64 | 0.67 | 0.67 | |||||||||||||
| LLRs/NPLs (%) | 248.66 | 179.86 | 242.55 | 212.87 | 214.27 | |||||||||||||
| NCOs/Avg Loans (%) | (0.00 | ) | (0.04 | ) | 0.05 | 0.17 | 0.04 | |||||||||||
| Balance Sheet: | ||||||||||||||||||
| Avg Loans ($B) | $ | 6.6 | $ | 6.6 | $ | 6.7 | $ | 6.7 | $ | 6.4 | ||||||||
| Avg Dep ($B) | $ | 6.5 | $ | 6.4 | $ | 6.5 | $ | 6.3 | $ | 5.5 | ||||||||
| Book Value/Share | $ | 22.26 | $ | 21.78 | $ | 21.16 | $ | 20.65 | $ | 20.11 | ||||||||
| Tangible BV/Share | $ | 21.61 | $ | 21.13 | $ | 20.51 | $ | 19.99 | $ | 19.45 | ||||||||
| TCE/TA (%) | 8.22 | 8.04 | 7.80 | 7.60 | 7.52 | |||||||||||||
1 Tangible Common Equity (“TCE”)/Total Assets (“TA”) 2See “Reconciliation of GAAP Earnings and Core Earnings” and “Reconciliation of GAAP Net Interest Margin to Core and Base Net Interest Income and Net Interest Margin.” 3 Net Interest Margin (“NIM”) Fully Taxable Equivalent (“FTE”)
| 4Q21 Highlights |
- Net interest income declined 1.1% QoQ (as asset yields decreased greater than funding costs), but increased 12.5% YoY to $62.7 million; core net interest income fell 1.6% QoQ and increased 11.7% YoY to $61.1 million
- Net interest margin FTE decreased 5 bps QoQ but increased 21 bps YoY to 3.29%, and core net interest margin FTE declined 6 bps QoQ, but expanded 18 bps YoY to 3.21%; Core NIM compression QoQ was primarily from lower loan yields and a less favorable earning asset mix, partially offset by lower funding costs
- Period end net loans excluding PPP, were up 0.9% QoQ and 0.2% YoY; loan closings were $362.7 million in 4Q21, up 48.7% QoQ and 14.8% YoY
- Average deposits increased 0.8% QoQ and 17.1% YoY to $6.5 billion, with core deposits 85.3% of total average deposits
- Loan pipeline increased 21.1% YoY to $429.3 million
- Provision for credit losses was $0.8 million due to current period loan originations and the increased risk from the COVID-19 Omicron variant
- NPAs decreased 26.1% QoQ and 29.3% YoY to $14.9 million; criticized and classified loans were down 16.3% QoQ to $57.7 million, representing 0.87% of loans
- Tangible Common Equity to Tangible Assets improved 18 bps to 8.22% from 8.04% in 3Q21
- Repurchased 150,976 shares at an average price of $23.75; dividends and share repurchases were 56% of net income in 4Q21
| Income Statement Highlights | |||||||||||||||||||||||||||||
| YoY | QoQ | ||||||||||||||||||||||||||||
| ($000s, except EPS) | 4Q21 | 3Q21 | 2Q21 | 1Q21 | 4Q20 | Change | Change | ||||||||||||||||||||||
| Net Interest Income | $ | 62,674 | $ | 63,364 | $ | 61,039 | $ | 60,892 | $ | 55,732 | 12.5 | % | (1.1 | ) | % | ||||||||||||||
| Provision (Benefit) for Credit Losses | 761 | (6,927 | ) | (1,598 | ) | 2,820 | 3,862 | (80.3 | ) | (111.0 | ) | ||||||||||||||||||
| Non-interest Income (Loss) | (280 | ) | 866 | (3,210 | ) | 6,311 | (1,181 | ) | (76.3 | ) | (132.3 | ) | |||||||||||||||||
| Non-interest Expense | 38,807 | 36,345 | 34,011 | 38,159 | 46,811 | (17.1 | ) | 6.8 | |||||||||||||||||||||
| Income Before Income Taxes | 22,826 | 34,812 | 25,416 | 26,224 | 3,878 | 488.6 | (34.4 | ) | |||||||||||||||||||||
| Provision for Income Taxes | 4,743 | 9,399 | 6,158 | 7,185 | 417 | 1,037.4 | (49.5 | ) | |||||||||||||||||||||
| Net Income | $ | 18,083 | $ | 25,413 | $ | 19,258 | $ | 19,039 | $ | 3,461 | 422.5 | (28.8 | ) | ||||||||||||||||
| Diluted EPS | $ | 0.58 | $ | 0.81 | $ | 0.61 | $ | 0.60 | $ | 0.11 | 427.3 | (28.4 | ) | ||||||||||||||||
| Avg. Diluted Shares (000s) | 31,353 | 31,567 | 31,677 | 31,604 | 30,603 | 2.5 | (0.7 | ) | |||||||||||||||||||||
| Core Net Income1 | $ | 20,968 | $ | 27,829 | $ | 22,994 | $ | 16,973 | $ | 17,784 | 17.9 | (24.7 | ) | ||||||||||||||||
| Core EPS1 | $ | 0.67 | $ | 0.88 | $ | 0.73 | $ | 0.54 | $ | 0.58 | 15.5 | (23.9 | ) | ||||||||||||||||
1 See Reconciliation of GAAP Earnings and Core Earnings
Net interest income totaled $62.7 million in 4Q21 (an increase of 12.5% YoY, but a decrease of 1.1% QoQ), compared to $63.4 million in 3Q21, $61.0 million in 2Q21, $60.9 million in 1Q21, and $55.7 million in 4Q20.
- Net interest margin, FTE (“NIM”) of 3.29% increased 21 bps YoY, but declined 5 bps QoQ; PPP loans caused a 3 bps and 2 bps positive impact on the NIM in 4Q21 and 3Q21, respectively, neutral impact in 2Q21, and a drag of 4 bps in 1Q21 and 3 bps in 4Q20
- Prepayment penalty income from loans and securities, net reversals and recoveries of interest from non-accrual loans, net gains and losses from fair value adjustments on qualifying hedges, and purchase accounting accretion totaled $3.1 million (16 bps to the NIM) in 4Q21 compared to $3.4 million (19 bps) in 3Q21, $1.9 million (10 bps) in 2Q21, $3.3 million (17 bps) in 1Q21, and $2.1 million (11 bps) in 4Q20
- Excluding the items in the previous bullet, net interest margin was 3.13% in 4Q21 compared to 3.15% in 3Q21, 3.04% in 2Q21, 3.01% in 1Q21, and 2.97% in 4Q20, or an increase of 16 bps YoY, but a decrease of 2 bps QoQ
- Net PPP loan fees were $1.2 million in 4Q21, $1.3 million in 3Q21, $1.2 million in 2Q21, $0.5 million in 1Q21, and $0.4 million in 4Q20
The Company recorded a provision for credit losses of $0.8 million in 4Q21, $2.8 million in 1Q21, and $3.9 million in 4Q20 compared to a benefit for credit losses of $6.9 million in 3Q21 and $1.6 million in 2Q21.
- 4Q21 provision for credit losses was driven by the current period originations and the increased risk from the COVID-19 Omicron variant
- Net charge-offs (recoveries) were $(29) thousand in 4Q21 (negligible as compared to average loans), $(0.6) million in 3Q21 ((4) bps), $0.9 million in 2Q21 (5 bps), $2.9 million in 1Q21 (17 bps), and $0.6 million in 4Q20 (4 bps)
Non-interest income (loss) was $(0.3) million in 4Q21, $0.9 million in 3Q21, $(3.2) million in 2Q21, $6.3 million in 1Q21, and $(1.2) million in 4Q20.
- Non-interest income included net gains (losses) from fair value adjustments of $(5.1) million in 4Q21 or $(0.13) per share, net of tax, $(2.3) million in 3Q21 or $(0.05) per share, net of tax, $(6.5) million or $(0.15) per share, net of tax in 2Q21, $1.0 million or $0.02 per share, net of tax in 1Q21, and $(4.1) million or $(0.11) per share, net of tax in 4Q20
- Absent all above items and other immaterial adjustments, core non-interest income was $4.9 million in 4Q21, up 36.6% YoY, and 53.6% QoQ
- Included in 4Q21 core non-interest income was a one-time $2.0 million ($0.05 per share, net of tax) dividend received on retirement plan investments
Non-interest expense totaled $38.8 million in 4Q21 (a decrease of 17.1% YoY, but an increase of 6.8% QoQ), compared to $36.3 million in 3Q21, $34.0 million in 2Q21, $38.2 million in 1Q21, and $46.8 million in 4Q20.
- 4Q21 non-interest expense includes pre-tax merger benefits of $17 thousand (