YORK, Pa. , Jan. 28, 2021 /PRNewswire/ -- York Traditions Bank (OTC Pink: YRKB) reported net income of $2.3 million , or 72 cents per share (diluted), for the fourth quarter ended December 31, 2020 , compared to $1.2 million , or 37 cents per share, for the fourth quarter ended December 31, 2019 . This represents a $1.1 million , or 96%, increase over the fourth quarter of 2019. Net income for 2020 was $8.4 million , or $2.66 per share, an increase of $3.2 million , or 60%, over 2019. Book value per common share ended December 31, 2020 at $20.72 , up 15% for the year.
"Against the backdrop of the COVID-19 pandemic, we are extremely pleased to report another quarter of superior results, concluding a fifth consecutive year of record earnings," stated Eugene J. Draganosky , President and Chief Executive Officer. "Pre-tax/pre-provision 2020 income of $12.3 million is nearly 90% higher than the $6.5 million recognized in 2019. Such performance in the face of adversity is a compelling testament to our associates' efficacy and our organization's culture and values. Exceptional residential mortgage production, vigorous growth on both sides of our balance sheet, and disciplined interest rate risk management combined to drive performance.
"Energized by historically low interest rates and robust housing demand, gains on the sale of mortgages totaled $12.5 million for the year compared to $4.6 million in 2019. Residential mortgage loans sold in 2020 were $129.6 million for the fourth quarter and totaled $384.2 million for the year. This compares very favorably to 2019 production of $63.8 million for the fourth quarter and $174.9 million for the year. The mortgage loan pipeline declined on normal seasonality to $71.2 million on December 31, 2020 , compared to $107.2 million on September 30, 2020 , and $46.9 million on December 31, 2019 . While excessive mortgage demand in our region will undoubtedly wane, early indications are that low rates will continue to underpin 2021 volumes.
"Boosted by the SBA Paycheck Protection Program (PPP), loans grew by $56.1 million , or 14%, during 2020. PPP balances outstanding at year-end were $31.3 million . While the Bank is an eligible PPPLF participant with the Federal Reserve Bank, management elected not to borrow from the facility to fund the Bank's PPP loan holdings due to strong deposit growth and capital metrics. First-round PPP loans are in the forgiveness phase, with balances declining $20.9 million in the fourth quarter. Net fees realized from PPP loans totaled $1.4 million in 2020, with an additional $699 thousand yet to be recognized. The Bank began accepting second round PPP loan applications in January 2021 . Given added limitations on eligibility, PPP volume this year is anticipated to be significantly reduced.
"Deposits expanded by $107.7 million , or 23%, in 2020. This funded 2020 loan growth and the payoff of nearly all borrowings by year-end. The Bank's cost of funds was 0.83% in 2020, down 64 basis points from 2019. The Bank incurred a prepayment penalty of $278 thousand in the fourth quarter to retire $9.2 million in long-term debt. The prepayment penalty is included in other expense, and the majority of the penalty will be recovered in 2021 through a lower cost of funds. The 2020 net interest margin fell only 6 basis points to 3.48% despite the Federal Reserve Bank aggressively lowering short-term interest rates in March 2020 , putting downward pressure on asset yields.
"While we are optimistic that additional government stimulus programs and nationwide inoculation will positively influence the economy, we cannot reliably quantify the future impact on credit quality due to COVID-19. Our credit exposure to industries most impacted by the pandemic was $32.0 million at year-end. These industries include restaurants/bars, entertainment venues, and lodging. At the end of 2020, loans modified either the first or second time for temporary payment relief totaled $13.9 million or 3.0% of the total loan portfolio. Exposure to borrowers requesting a third modification was minor at $391 thousand . Nonaccrual loans were $3.5 million as of December 31, 2020 , compared to $1.1 million as of September 30, 2020 . This includes $2.2 million in temporary payment relief loans moved to nonaccrual during the fourth quarter. Non-performing assets to total assets grew to 0.55% as of December 31, 2020 , compared to 0.22% on December 31, 2019 . We continued to set aside significant provisions for future loan losses in the fourth quarter, ending the year with a 1.62% loan loss reserve ratio excluding the PPP portfolio. Despite the increase in nonaccrual loans, our loan loss reserve exceeds nonaccrual loans by 200%. The Bank remains well capitalized."
In late December, the Bank announced the formation of a bank holding company pending regulatory and shareholder approval. A virtual annual meeting is scheduled for Monday, April 19, 2021 . Shareholders will receive information via mail in early March. Renovations are in progress at 1687 Oregon Pike, the Bank's first Lancaster branch office, which is expected to open in April 2021 .
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FINANCIAL HIGHLIGHTS (unaudited):
(Dollars in thousands, except per share data)
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Selected Financial Data
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Dec 31,
2020
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Dec 31,
2019
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Investment securities
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$
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79,357
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$
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78,817
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Loans, net of unearned income
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465,513
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409,431
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Allowance for loan loss
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7,046
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3.886
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Total assets
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640,562
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542,394
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Deposits
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567,075
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459,343
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Borrowings
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42
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15,828
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Subordinated debt
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-
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5,000
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Shareholders' equity
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66,628
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56,942
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Book value per common share
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$
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20.72
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$
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18.00
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Allowance/loans
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1.51%
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0.95%
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Non-performing assets/total assets
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0.55%
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0.22%
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Tier 1 capital/average assets
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10.13%
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10.44%
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Tier 1 capital/risk-weighted assets
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14.38%
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13.46%
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Total capital/risk-weighted assets
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15.63%
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15.59%
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Three months ended Dec 31,
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Twelve months ended Dec 31,
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Selected Operations Data
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2020
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2019
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2020
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2019
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Interest income
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$
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6,291
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$
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5,760
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$
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23,678
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$
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22,815
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Interest expense
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(682)
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(1,384)
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(3,693)
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(5,683)
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Net interest income
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5,609
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4,376
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19,985
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17,132
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Provision for loan losses
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(700)
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-
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(4,338)
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(300)
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Investment securities gains (losses)
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-
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-
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181
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(5)
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Gains on sale of mortgages
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3,245
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1,087
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12,543
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4,557
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Other income
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|
445
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464
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2,009
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1,739
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Other expense
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(5,794)
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(4,502)
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(19,947)
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(16,725)
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Income before income taxes
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2,805
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1,425
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10,433
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6,398
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Income taxes
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(547)
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(271)
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(2,065)
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(1,181)
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Net income
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$
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2,258
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$
|
1,154
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$
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8,368
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$
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5,217
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Earnings per common share (basic)
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$
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0.72
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$
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0.37
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$
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2.67
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$
|
1.67
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Earnings per common share (diluted)
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$
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0.72
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$
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0.37
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$
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2.66
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$
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1.66
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Pre-tax/pre-provision income
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$
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3,921
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$
|
1,965
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$
|
12,254
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$
|
6,489
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Return on average assets
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1.40%
|
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0.85%
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1.38%
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1.02%
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Return on average equity
|
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13.95%
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8.19%
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13.84%
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9.74%
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Net interest margin
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3.65%
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3.41%
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3.48%
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3.54%
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Efficiency ratio
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62.31%
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75.96%
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57.45%
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71.40%
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Net charge-offs(recoveries)/average loans
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0.01%
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0.07%
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0.26%
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0.04%
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SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS:
This release contains forward-looking statements about York Traditions Bank that are intended to be covered by the safe harbor for forward-looking statements provided by the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not historical facts. These statements can be identified by the use of forward-looking terminology such as "believe," "expect," "may," "will," "should," "project," "plan," "seek," "intend," "anticipate" or similar terminology. Such forward-looking statements include, but are not limited to, discussions of strategy, financial projections and estimates and their underlying assumptions; statements regarding plans, objectives, goals, expectations or consequences; and statements about future performance, operations, products and services of York Traditions Bank.
York Traditions Bank cautions readers not to place undue reliance on forward-looking statements and to consider possible events or factors that could cause results or performance to materially differ from those expressed in the forward-looking statements, including, but not limited to: ineffectiveness of the bank's business strategy due to changes in current or future market conditions; the effects of competition, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products and services; interest rate movements; difficulties in integrating distinct business operations, including information technology difficulties; challenges in establishing and maintaining operations in new markets; volatilities in the securities markets; and deteriorating economic conditions.
Forward-looking statements in this release speak only as of the date of this release and York Traditions Bank makes no commitment to review or update such statements to reflect changes that occur after the date the forward-looking statement was made.
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SOURCE York Traditions Bank