Glen Burnie Bancorp Announces Third Quarter 2019 Results | Financial Buzz

Glen Burnie Bancorp Announces Third Quarter 2019 Results

GLEN BURNIE, Md., Nov. 01, 2019 (GLOBE NEWSWIRE) — Glen Burnie Bancorp (“Bancorp”) (NASDAQ: GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $606,000, or $0.21 per basic and diluted common share for the three-month period ended September 30, 2019, as compared to net income of $439,000, or $0.16 per basic and diluted common share for the three-month period ended September 30, 2018.

Bancorp reported net income of $1,060,000, or $0.38 per basic and diluted common share for the nine-month period ended September 30, 2019, compared to $1,172,000, or $0.42 per basic and diluted common share for the same period in 2018.  At September 30, 2019, Bancorp had total assets of $383.4 million.  Bancorp, the oldest independent commercial bank in Anne Arundel County, will pay its 109th consecutive quarterly dividend on November 1, 2019.

“We are pleased with our performance during the third quarter and believe we are well positioned to take advantage of opportunities in our market area while serving our customer base despite the challenging economic and competitive environment,” stated John D. Long, President and CEO.  “We continue to invest in technology and infrastructure improvements that enable us to remain competitive in the rapidly changing technological environment.  Our strong fundamental performance was somewhat offset by the cost of these investments.  However, we maintained our relentless focus on expense reduction in other areas as we work to drive efficiencies through the Bank and improve our profitability while delivering the outstanding customer service that differentiates our Bank in our local markets.”

“Looking forward, we continue to seek opportunities to further reduce our cost structure as we work to achieve an efficiency ratio more in-line with our peers.  In addition, a favorable credit environment combined with our outstanding credit quality, disciplined loan pricing and a beneficial balance sheet structure, allowed us to reduce the provision for loan losses by $385,000 or 156.6%, for the three-month period ended September 30, 2019 as compared to the same period last year.  Headquartered in the dynamic Northern Anne Arundel County market, we believe our Bank is well positioned with excellent asset quality and capital levels, a stable net interest margin, and an experienced and seasoned executive team.  We remain deeply committed to serving the financial needs of the community through the development of new loan and deposit products.”

Highlights for the First Nine Months of 2019

Bancorp focused on organic growth opportunities in the first nine months of 2019, as average loan balances increased $11.0 million or 3.9%, as compared to the same period in 2018, and the pace of loan originations slowed.  Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Bank’s total regulatory capital to risk weighted assets of 13.18% at September 30, 2019, as compared to 12.86% for the same period of 2018.

Return on average assets for the three-month period ended September 30, 2019 was 0.63%, as compared to 0.43% for the three-month period ended September 30, 2018.  Return on average equity for the three-month period ended September 30, 2019 was 6.77%, as compared to 5.04% for the three-month period ended September 30, 2018.  Lower provision for loan losses offset by lower net interest income and higher income tax expense primarily drove higher returns for the three-month period ended September 30, 2019.

The book value per share of Bancorp’s common stock was $12.52 at September 30, 2019, as compared to $11.86 per share at September 30, 2018.

At September 30, 2019, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 12.36% at September 30, 2019, as compared to 11.98% at September 30, 2018.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Balance Sheet Review

Total assets were $383.4 million at September 30, 2019, a decrease of $28.0 million or 6.8%, from $411.4 million at September 30, 2018.  Investment securities were $64.8 million at September 30, 2019, a decrease of $19.2 million or 22.9%, from $84.0 million at September 30, 2018.  Proceeds from the Bank’s sale of investment securities in 2019 were used to offset the decrease in deposits and borrowings (see below), and fund the Bank’s increase in loan originations during 2018.  Loans, net of deferred fees and costs, were $283.9 million at September 30, 2019, a decrease of $11.1 million or 3.8%, from $295.0 million at September 30, 2018.

Net deferred tax assets decreased $1.9 million and accrued taxes receivable increased $1.0 million from September 30, 2018 to September 30, 2019 resulting from a reduction in tax accruals related to sequestration of the refundable portion of our alternative minimum tax (AMT) credit carryforward.  On January 14, 2019, the IRS clarified that refundable AMT credits under Section 53(e) of the Internal Revenue Code are not subject to sequestration for taxable years beginning after December 31, 2017.  Therefore, the full amount of the AMT credit carryover is expected to be refunded to the Company.

Other assets decreased $0.7 million due to the $0.7 million decrease in the fair value of swap derivative positions.

Total deposits were $325.3 million at September 30, 2019, a decrease of $11.5 million or 3.4%, from $336.8 million at September 30, 2018.  Interest-bearing deposits were $213.8 million at September 30, 2019, a decrease of $15.1 million or 6.6%, from $228.9 million at September 30, 2018.  Total borrowings were $20.0 million at September 30, 2019, a decrease of $20.0 million or 50.0%, from $40.0 million at September 30, 2018.

Stockholders’ equity was $35.37 million at September 30, 2019, an increase of $2.03 million or 6.1%, from $33.34 million at September 30, 2018.  The decrease in accumulated other comprehensive loss associated with net unrealized losses on the available for sale bond portfolio and increase in retained earnings and stock issuances under the dividend reinvestment program, offset by an increase in unrealized losses on interest rate swap contracts drove the overall increase in stockholders’ equity.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned (“OREO”), represented 1.34% of total assets at September 30, 2019, as compared to 0.75% for the same period of 2018.  The increase in nonaccrual loans drove the 0.59% increase in nonperforming assets as percentage of total assets from September 30, 2018 to September 30, 2019.

Review of Financial Results

For the three-month periods ended September 30, 2019 and 2018

Net income for the three-month period ended September 30, 2019 was $606,000, as compared to $439,000 for the three-month period ended September 30, 2018.

Net interest income for the three-month period ended September 30, 2019 totaled $3.1 million, as compared to $3.3 million for the three-month period ended September 30, 2018.  Average loan balances decreased $7.0 million or 2.38% to $286.9 million for the three-month period ended September 30, 2019, as compared to $293.9 million for the same period of 2018.  Average balances on interest-bearing deposits and investments decreased $21.2 million or 21.7%, to $76.6 million for the three-month period ended September 30, 2019, as compared to $97.8 million for the same period of 2018.

Net interest margin for the three-month period ended September 30, 2019 was 3.43%, as compared to 3.34% for the same period of 2018.  Lower average balances and interest rates on borrowed funds primarily drove year-over-year results.  The average balance on borrowed funds decreased $14.5 million while the yield decreased 0.09% from 2.28% to 2.19%, when comparing the three-month periods ending September 30, 2018 and 2019, respectively. 

The provision for loan losses for the three-month period ended September 30, 2019 was a negative provision of $139,000, as compared to a provision of $246,000 for the same period of 2018.  The decrease was driven primarily by $437,000 of lower net charge offs.  As a result, the allowance for loan losses was $2.31 million at September 30, 2019, representing 0.81% of total loans, as compared to $2.46 million, or 0.83% of total loans at September 30, 2018 and is consistent with the improved credit quality of our loan portfolio.

Noninterest income for the three-month period ended September 30, 2019 was $391,000, as compared to $331,000 for the three-month period ended September 30, 2018, an increase of $60,000 or 18.1%.  Higher ATM interchange fees associated with seasonal business drove the quarter-over-quarter increase.

For the three-month period ended September 30, 2019, noninterest expense was $2,856,000, as compared to $2,859,000 for the three-month period ended September 30, 2018, a decrease of $3,000 or 0.10%.  The primary contributors to the $3,000 decrease, when compared to the three-month period ended September 30, 2018 were decreases in salary and employee benefits cost, data processing and item processing services and FDIC insurance costs, offset by increases in occupancy and equipment expenses including investments in technology and infrastructure improvements and legal, accounting and other professional fees.

For the nine-month periods ended September 30, 2019 and 2018

Net income for the nine-month period ended September 30, 2019 was $1,060,000, as compared to net income of $1,172,000 for the nine-month period ended September 30, 2018.

Net interest income for the nine-month period ended September 30, 2019 totaled $9.41 million, as compared to $9.35 million for the nine-month period ended September 30, 2018.  Average loan balances increased $11.0 million or 3.9%, to $294.0 million for the nine-month period ended September 30, 2019, as compared to $283.0 million for the same period of 2018.  Average balances on interest-bearing deposits and investments decreased $22.1 million or 22.0%, to $78.1 million for the nine-month period ended September 30, 2019, as compared to $100.2 million for the same period of 2018.

Net interest margin for the nine-month period ended September 30, 2019 was 3.38%, as compared to 3.26% for the same period of 2018.  Higher yields on interest-earning assets offset by higher cost of funds were the primary drivers of year-over-year results, as the yield on interest-earning assets increased 0.12% from 3.79% to 3.91% and the cost of funds increased 0.01% from 0.55% to 0.56% for the nine-month periods ending September 30, 2018 and 2019, respectively.

The provision for loan losses for the nine-month period ended September 30, 2019 was $65,000, as compared to $601,000 for the same period of 2018.  The decrease for the nine-month period ended September 30, 2019 as compared to the same period in 2018 primarily reflects lower net charge offs. 

Noninterest income for the nine-month period ended September 30, 2019 was $955,000, as compared to $1,204,000 for the nine-month period ended September 30, 2018.  The results for the first nine-months of 2018 include gains on redemptions of BOLI policies of $308,000.

For the nine-month period ended September 30, 2019, noninterest expense was $8.9 million, as compared to $8.7 million for the nine-month period ended September 30, 2018.  The primary contributors to the $0.2 million increase, when compared to the nine-month period ended September 30, 2018 were increases in salary and employee benefits costs, occupancy and equipment expenses, legal, accounting and other professional fees, litigation settlement costs, and bank robbery and fraud losses, partially offset by decreases in data processing and item processing services, FDIC insurance costs and loan collection costs.

Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland.  Founded in 1949, The Bank of Glen Burnie® is a locally-owned community bank with 8 branch offices serving Anne Arundel County.  The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations.  The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans.  The Bank also originates automobile loans through arrangements with local automobile dealers.  Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

             
GLEN BURNIE BANCORP AND SUBSIDIARY            
CONSOLIDATED BALANCE SHEETS              
(dollars in thousands)              
               
  September 30,   June 30,   December 31,   September 30,
  2019   2019   2018   2018
  (unaudited)   (unaudited)   (audited)   (unaudited)
ASSETS              
Cash and due from banks $ 3,678     $ 2,373     $ 2,605     $ 5,282  
Interest bearing deposits with banks and federal funds sold   15,893       7,565       13,349       10,208  
Cash and Cash Equivalents   19,571       9,938       15,954       15,490  
               
Investment securities available for sale, at fair value   64,817       61,213       81,572       84,029  
Restricted equity securities, at cost   1,225       1,227       2,481       2,073  
               
Loans, net of deferred fees and costs   283,889       291,237       299,120       294,981  
Less: Allowance for loan losses   (2,307 )     (2,459 )     (2,541 )     (2,455 )
Loans, net   281,582       288,778       296,579       292,526  
               
Real estate acquired through foreclosure   705       705       705       705  
Premises and equipment, net   3,820       3,840       3,106       3,154  
Bank owned life insurance   7,982       7,940       7,860       7,818  
Deferred tax assets, net   1,013       1,059       1,392       2,863  
Accrued interest receivable   976       992       1,198       1,233  
Accrued taxes receivable   982       1,194       1,177        
Prepaid expenses   557       491       466       516  
Other assets   208       236       556       958  
Total Assets $ 383,438     $ 377,613     $ 413,046     $ 411,365  
               
LIABILITIES              
Noninterest-bearing deposits $ 111,453     $ 107,132     $ 101,369     $ 107,921  
Interest-bearing deposits   213,813       213,046       221,084       228,926  
Total Deposits   325,266       320,178       322,453       336,847  
               
Short-term borrowings   20,000       20,000       55,000       40,000  
Defined pension liability   311       304       285       323  
Accrued Taxes Payable                     102  
Accrued expenses and other liabilities   2,493       2,241       1,257       749  
Total Liabilities   348,070       342,723       378,995       378,021  
               
STOCKHOLDERS’ EQUITY              
Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,824,412, 2,821,230, 2,814,157, and 2,810,961 shares as of September 30, 2019, June 30, 2019, December 31, 2018, and September 30, 2018, respectively.   2,824       2,821       2,814       2,811  
Additional paid-in capital   10,495       10,464       10,401       10,368  
Retained earnings   22,280       21,957       22,066       21,936  
Accumulated other comprehensive loss   (231 )     (352 )     (1,230 )     (1,771 )
Total Stockholders’ Equity   35,368       34,890       34,051       33,344  
Total Liabilities and Stockholders’ Equity $ 383,438     $ 377,613     $ 413,046     $ 411,365  
               

 

       
GLEN BURNIE BANCORP AND SUBSIDIARY      
CONSOLIDATED STATEMENTS OF INCOME      
(dollars in thousands, except per share amounts)      
(unaudited)                  
                   
      Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
    2019   2018   2019   2018  
Interest income                  
Interest and fees on loans   $ 3,176     $ 3,269   $ 9,543   $ 9,100  
Interest and dividends on securities     326       526     1,061     1,585  
Interest on deposits with banks and federal funds sold     88       67     270     165  
Total Interest Income     3,590       3,862     10,874     10,850  
                   
Interest expense                  
Interest on deposits     336       362     1,001     997  
Interest on short-term borrowings     110       198     465     506  
Total Interest Expense     446       560     1,466     1,503  
                   
Net Interest Income     3,144       3,302     9,408     9,347  
Provision for loan losses     (139 )     246     65     601  
Net interest income after provision for loan losses     3,283       3,056     9,343     8,746  
                   
Noninterest income                  
Service charges on deposit accounts     62       59     187     187  
Other fees and commissions     287       216     643     564  
Gains on redemption of BOLI policies                   308  
Gain on securities sold               3      
Income on life insurance     42       41     122     130  
Gain on sale of OREO           15         15  
Total Noninterest Income     391       331     955     1,204  
                   
Noninterest expenses                  
Salary and employee benefits     1,685       1,710     5,140     5,080  
Occupancy and equipment expenses     340       272     1,040     850  
Legal, accounting and other professional fees     259       212     794     721  
Data processing and item processing services     109       168     328     454  
FDIC insurance costs           64     116     187  
Advertising and marketing related expenses     27       16     79     65  
Loan collection costs     22       32     62     153  
Telephone costs     62       56     183     181  
Other expenses     352       329     1,181     1,014  
Total Noninterest Expenses     2,856       2,859     8,923     8,705  
                   
Income before income taxes     818       528     1,375     1,245  
Income tax expense     212       89     315     73  
                   
Net income   $ 606     $ 439   $ 1,060   $ 1,172  
                   
Basic and diluted net income per share of common stock   $ 0.21     $ 0.16   $ 0.38   $ 0.42  
                   

           
GLEN BURNIE BANCORP AND SUBSIDIARY          
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
For the nine months ended September 30, 2019 and 2018 (unaudited)    
(dollars in thousands)                  
                Accumulated    
        Additional       Other   Total
    Common   Paid-in   Retained   Comprehensive   Stockholders’
    Stock   Capital   Earnings   (Loss)   Equity
Balance, December 31, 2017 $ 2,801   $ 10,267   $ 21,605     $ (631 )   $ 34,042  
                     
Net income           1,172             1,172  
Cash dividends, $0.30 per share           (841 )           (841 )
Dividends reinvested under dividend reinvestment plan   10     101                 111  
Other comprehensive loss                 (1,140 )     (1,140 )
Balance, September 30, 2018 $ 2,811   $ 10,368   $ 21,936     $ (1,771 )   $ 33,344  
                                     
                                     
                        Accumulated
       
        Additional       Other   Total
    Common   Paid-in   Retained   Comprehensive   Stockholders’
    Stock   Capital   Earnings   (Loss)/Income
  Equity
Balance, December 31, 2018 $ 2,814   $ 10,401   $ 22,066     $ (1,230 )   $ 34,051  
                         
Net income           1,060             1,060  
Cash dividends, $0.30 per share           (846 )           (846 )
Dividends reinvested under dividend reinvestment plan   10     94                 104  
Other comprehensive income                 999       999  
Balance, September 30, 2019 $ 2,824   $ 10,495   $ 22,280     $ (231 )   $ 35,368  
                                     

 

THE BANK OF GLEN BURNIE                
CAPITAL RATIOS                      
(dollars in thousands)                      
                       
                  To Be Well
                  Capitalized Under
          To Be Considered   Prompt Corrective
          Adequately Capitalized
  Action Provisions
  Amount Ratio   Amount Ratio   Amount Ratio
As of September 30, 2019:                    
(unaudited)                      
Common Equity Tier 1 Capital $ 35,216 12.36 %   $ 12,822 4.50 %   $ 18,520 6.50 %
Total Risk-Based Capital $ 37,561 13.18 %   $ 22,794 8.00 %   $ 28,493 10.00 %
Tier 1 Risk-Based Capital $ 35,216 12.36 %   $ 17,096 6.00 %   $ 22,794 8.00 %
Tier 1 Leverage $ 35,216 9.26 %   $ 15,215 4.00 %   $ 19,019 5.00 %
                       
As of June 30, 2019:                      
(unaudited)                      
Common Equity Tier 1 Capital $ 34,864 12.05 %   $ 13,015 4.50 %   $ 18,799 6.50 %
Total Risk-Based Capital $ 37,335 12.91 %   $ 23,137 8.00 %   $ 28,922 10.00 %
Tier 1 Risk-Based Capital $ 34,864 12.05 %   $ 17,353 6.00 %   $ 23,137 8.00 %
Tier 1 Leverage $ 34,864 9.12 %   $ 15,287 4.00 %   $ 19,109 5.00 %
                       
As of December 31, 2018:                      
(audited)                      
Common Equity Tier 1 Capital $ 34,778 12.27 %   $ 12,757 4.50 %   $ 18,427 6.50 %
Total Risk-Based Capital $ 37,354 13.18 %   $ 22,679 8.00 %   $ 28,349 10.00 %
Tier 1 Risk-Based Capital $ 34,778 12.27 %   $ 17,009 6.00 %   $ 22,679 8.00 %
Tier 1 Leverage $ 34,778 8.52 %   $ 16,330 4.00 %   $ 20,413 5.00 %
                       
As of September 30, 2018:                    
(unaudited)                      
Common Equity Tier 1 Capital $ 33,499 11.98 %   $ 12,583 4.50 %   $ 18,175 6.50 %
Total Risk-Based Capital $ 35,960 12.86 %   $ 22,370 8.00 %   $ 27,962 10.00 %
Tier 1 Risk-Based Capital $ 33,499 11.98 %   $ 16,777 6.00 %   $ 22,370 8.00 %
Tier 1 Leverage $ 33,474 8.25 %   $ 16,230 4.00 %   $ 20,287 5.00 %
                       

 

             
GLEN BURNIE BANCORP AND SUBSIDIARY            
SELECTED FINANCIAL DATA                    
(dollars in thousands, except per share amounts)            
                                               
  Three Months Ended
  Nine Months Ended
  Year Ended
  September 30,
  June 30,
September 30,
  September 30,
  September 30,
   December 31,
  2019   2019   2018   2019   2018   2018
  (unaudited)
  (unaudited)
  (unaudited)
  (unaudited)
  (unaudited)
  (audited)
                                               
Financial Data                                              
Assets $ 383,438     $ 377,613     $ 411,365     $ 383,438     $ 411,365     $ 413,046  
Investment securities   64,817       61,213       84,029       64,817       84,029       81,572  
Loans, (net of deferred fees & costs)   283,889       291,237       294,981       283,889       294,981       299,120  
Allowance for loan losses   2,307       2,459       2,455       2,307       2,455       2,541  
Deposits   325,266       320,178       336,847       325,266       336,847       322,453  
Borrowings   20,000       20,000       40,000       20,000       40,000       55,000  
Stockholders’ equity   35,368       34,890       33,344       35,368       33,344       34,051  
Net income   606       319       439       1,060       1,172       1,583  
                       
Average Balances                      
Assets $ 380,852     $ 382,659     $ 408,382     $ 387,886     $ 398,984     $ 401,494  
Investment securities   61,456       61,621       88,611       64,338       90,783       89,351  
Loans, (net of deferred fees & costs)   286,944       295,425       293,949       293,958       283,006       286,702  
Deposits   322,893       325,036       338,412       323,737       336,128       335,167  
Borrowings   20,000       20,789       34,487       27,323       27,878       31,595  
Stockholders’ equity   35,489       34,965       34,553       34,938       34,096       33,777  
                       
Performance Ratios                      
Annualized return on average assets   0.63 %     0.33 %     0.43 %     0.37 %     0.39 %     0.39 %
Annualized return on average equity   6.77 %     3.66 %     5.04 %     4.06 %     4.60 %     4.69 %
Net interest margin   3.43 %     3.41 %     3.34 %     3.38 %     3.26 %     3.26 %
Dividend payout ratio   47 %     88 %     64 %     80 %     72 %     71 %
Book value per share $ 12.52     $ 12.37     $ 11.86     $ 12.52     $ 11.86     $ 12.10  
Basic and diluted net income per share   0.21       0.11       0.16       0.38       0.42       0.56  
Cash dividends declared per share   0.10       0.10       0.10       0.30       0.30       0.40  
Basic and diluted weighted average shares outstanding   2,823,271       2,819,994       2,809,834       2,819,952       2,806,341       2,808,031  
                       
Asset Quality Ratios                      
Allowance for loan losses to loans   0.81 %     0.84 %     0.83 %     0.81 %     0.83 %     0.85 %
Nonperforming loans to avg. loans   1.55 %     1.60 %     0.82 %     1.51 %     0.85 %     0.76 %
Allowance for loan losses to nonaccrual & 90+ past due loans   54.3 %     54.0 %     112.1 %     54.3 %     112.1 %     128.7 %
Net charge-offs annualize to avg. loans   0.02 %     0.24 %     0.10 %     0.14 %     0.35 %     0.32 %
                       
Capital Ratios                      
Common Equity Tier 1 Capital   12.36 %     12.05 %     11.98 %     12.36 %     11.98 %     12.27 %
Tier 1 Risk-based Capital Ratio   12.36 %     12.05 %     11.98 %     12.36 %     11.98 %     12.27 %
Leverage Ratio   9.26 %     9.12 %     8.25 %     9.26 %     8.25 %     8.52 %
Total Risk-Based Capital Ratio   13.18 %     12.91 %     12.86 %     13.18 %     12.86 %     13.18 %
                       

 

For further information contact:

Jeffrey D. Harris, Chief Financial Officer
410-768-8883
jdharris@bogb.net
106 Padfield Blvd
Glen Burnie, MD 21061

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