Blue Ridge Bankshares, Inc. Announces 2024 Second Quarter Results
Completed capital raise of
Company on-track to exit its fintech depository operations
Bank capital levels meet enhanced regulatory minimum capital ratios
RICHMOND, Va.,
For the quarter ended
For the year-to-date period ended
A Message From
"We are now several quarters into an expansive initiative to address both the remediation requirements of our primary regulator and our goal to restore
"Many of the decisions we have made over the past few quarters have had a pronounced near-term impact, most notably on our balance sheet, expense levels, and certainly our bottom line. But these decisions are necessary to drive the meaningful and lasting change at
"That said, I believe we are entering a phase where we are seeing some of the fruits of our labor. As we look at our performance, particularly on a sequential basis, certain key metrics are beginning to reflect this progress. For example:
- "Concerning our regulatory remediation efforts, we have moved aggressively to wind down our fintech Banking-as-a-Service ("BaaS") operations. These plans are on track and are working. Consequently, we have seen steady sequential decreases in BaaS deposits over the past three quarters, and, as of
June 30, 2024 , BaaS deposits, the majority of our fintech-related deposits, were roughly 7 percent of total deposits – about one-third of what they were this time last year.
"Relatedly, we've seen meaningful sequential reductions in regulatory remediation-related expense levels for the past three quarters. In the second quarter of 2024, these levels were roughly one-third of what they were three quarters ago. - "Shrinking the balance sheet to meet liquidity needs and to improve the overall quality and risk profile of our lending portfolio have also been areas of intense focus. While these efforts are ongoing, we have seen a general improvement in our nonperforming loan and asset ratios. As of the end of the 2024 second quarter, the ratio of nonperforming assets to total assets is at its lowest in the past four quarters. As we move forward, we will continue to improve our credit culture and oversight, and to reduce our exposure to non-core loans, while continuing to meet the borrowing needs of our customers.
- "Lastly, amidst all this change, our core deposits and their costs have been relatively stable going back several quarters. As we continue our efforts to wind down BaaS operations, reducing the level of high-cost BaaS deposits, we anticipate that our overall cost of deposits will decline in the back half of 2024.
"Clearly, we have much more to do, but it is encouraging to see some early indications of progress against strategy, and I am buoyed by the talent and efforts of our leadership team and the culture we are building. As we move forward, we will increasingly be shifting our focus from the completion of remediation efforts to a deeper examination of our operations and identification of areas where we can improve. This is all toward the goal of creating a revitalized and refocused
"Finally, I am pleased to have the capital raise behind us, which positions the Bank to meet its regulatory capital requirements. With the capital raise, we welcomed three new directors,
Private Placement Stock Offering
On
The Company intends to use the capital from the Private Placements to propel its near-term strategic initiatives, which include repositioning business lines, supporting organic growth, and further enhancing the Bank's capital levels, including compliance with the minimum capital ratios set forth in the Bank's Consent Order with the
Q2 2024 Highlights
(Comparisons for Second Quarter 2024 are relative to First Quarter 2024 unless otherwise noted.)
Net Income:
- The net loss in the quarter was
$11.4 million , or$0.47 per diluted common share, compared to a net loss of$2.9 million , or$0.15 per diluted common share, for the prior quarter. Loss before income taxes of$12.1 million in the quarter included a$8.5 million , non-cash, fair value adjustment of an equity investment the Company holds in a fintech company and a provision for credit losses of$3.1 million , compared to a$1.0 million recovery of credit losses in the prior quarter. Excluding the fair value adjustment and the provision for/recovery of credit losses, the Company's pre-tax loss improved by$3.9 million from the prior quarter.
Asset Quality:
- As a result of an agreement the Company executed in the current quarter to sell a specialty finance loan to a third party, the Company reclassified this loan to loans held for sale in the second quarter at its estimated fair value and recorded a charge-off of substantially all of the reserve held on the loan, which was provisioned for in prior years.
- Nonperforming loans, which include nonaccrual loans and loans past due 90 days or more and accruing interest, improved to
$46.0 million , or 1.57% of total assets, at quarter end compared to$53.2 million , or 1.73% of total assets, at the prior quarter end. The decline in nonperforming loans primarily reflects payments received on and a charge-off of substantially all of the reserve related to the previously noted specialty finance loan.
The provision for credit losses was
- The allowance for credit losses ("ACL") as a percentage of total loans held for investment was 1.24% at quarter end compared to 1.46% at the prior quarter end. Specific reserves associated with the aforementioned specialty finance loan totaled
$0 and$9.6 million atJune 30, 2024 andMarch 31, 2024 , respectively.
Capital:
- The ratio of tangible common stockholders' equity to tangible total assets was 10.3%1, compared to 5.8%1 at the prior quarter end. Tangible book value per common share was
$4.10 1, compared to$9.04 1 at the prior quarter end. The changes in these measures from the prior quarter reflects the issuance of 53,922,000 shares of common stock pursuant to the Private Placements. - For the quarter ended
June 30, 2024 , the Bank's tier 1 leverage ratio, tier 1 risk-based capital ratio, common equity tier 1 capital ratio, and total risk-based capital ratio were 11.02%, 14.13%, 14.13%, and 15.11%, respectively, compared to 7.44%, 9.28%, 9.28%, and 10.51%, respectively, at the prior quarter end. The increase in these ratios primarily reflects a$110.0 million capital contribution to the Bank in the quarter. - As of
June 30, 2024 , the Bank's tier 1 leverage and total risk-based capital ratios exceeded the minimum capital ratios set forth in the Consent Order.
Net Interest Income / Net Interest Margin:
- Net interest income was
$20.1 million , a decline of$0.3 million from the prior quarter, primarily due to a decline in average balances of interest-earning assets, partially offset by lower average balances of and rates paid on fintech-related deposits and lower average balances of borrowings. Net interest margin improved in the quarter to 2.79% from 2.75% in the prior quarter.
Noninterest Income / Noninterest Expense:
- Noninterest income was
$0.3 million , including the$8.5 million previously noted negative fair value adjustment for an equity investment, compared to noninterest income of$7.8 million for the prior quarter. Excluding the fair value adjustment, higher noninterest income in the quarter was primarily due to positive fair value adjustments on mortgage servicing rights assets, which were$2.0 million , due to the change in future interest rate expectations. Lower other noninterest income was primarily due to lower income from fintech and other investments in the quarter. - Noninterest expense was
$29.3 million compared to$32.5 million for the prior quarter, a decrease of$3.1 million . The decrease was primarily due to lower salaries and employee benefits expense and lower regulatory remediation expenses. Salaries and employee benefits expense in the quarter reflected lower headcount, primarily in the Bank's government guaranteed lending and compliance areas. Lower regulatory remediation expenses reflect the reduction in the use of third-party resources in the Bank Secrecy Act/Anti-Money Laundering ("BSA/AML") area, as the Bank completes certain requirements under the Consent Order.
Income Tax:
- The effective income tax rate for the quarter was 5.1% compared to 12.3% for the prior quarter. The income tax benefit for the quarter includes
$2.0 million of provision expense recognized upon surrendering bank-owned life insurance policies, representing the tax effect of the life-to-date income earned on the policies. Taxes on such earnings were previously permanently deferred but became subject to tax upon the surrender of the policies.
Balance Sheet:
- Total assets decreased to
$2.93 billion from$3.08 billion at the prior quarter end, a decline of$143.1 million , as the Bank purposefully reduced assets to meet the liquidity needs of the fintech BaaS operations wind down and maturities of wholesale funding. Decreases were primarily in loans held for investment, which declined$134.8 million . Other declines included decreases in other equity investments, other investments, and bank-owned life insurance. In the second quarter, the Company reduced its carrying value of an equity investment in a fintech company, as previously noted, and sold certain of its interests inSmall Business Investment Company ("SBIC") investments. Additionally, the Company surrendered the majority of its bank-owned life insurance policies in the quarter and received a portion of the proceeds. These actions, along with the exit of fintech BaaS operations, support the repositioning of the Bank towards a more traditional community bank model. - Total deposit balances decreased to
$2.33 billion from$2.47 billion at the prior quarter end, a decrease of$139.9 million . This decrease reflects a$96.3 million reduction of fintech-related balances and a$49.4 million reduction in brokered deposits. Core deposit growth was$43.1 million in the quarter, which excludes the loss of a municipality deposit of approximately$37.3 million , which also resulted in the release of collateral held for this relationship. In the first half of 2024, core deposits, excluding the municipal deposit, increased$107.1 million . - Deposits related to fintech relationships were
$206.6 million atJune 30, 2024 , compared to$303.0 million at the prior quarter end, a decline of$96.3 million . Of the decline, BaaS deposits decreased$100.5 million , partially offset by an increase in fintech corporate deposits. Fintech-related deposits represented approximately 8.9% of total deposits atJune 30, 2024 compared to 12.3% of total deposits at the prior quarter end, and 27.1% atJune 30, 2023 . Excluding wholesale funding, deposits related to fintech relationships represented 11.1% and 15.5% of total deposits atJune 30, 2024 andMarch 31, 2024 , respectively. Estimated uninsured deposits as a percentage of total deposits were 17.9% at quarter end compared to 22.4% at the prior quarter end. - Loans held for investment were
$2.26 billion at quarter end, a decrease of$134.8 million from the prior quarter end, as the Company purposefully and selectively reduced balances of loans and reclassified a specialty finance loan to loans held for sale, as previously noted. The held for investment loan-to-deposit ratio measured 97.1% as of the end of both periods. - The
$65 million borrowing pursuant to theFederal Reserve Bank's Bank Term Funding Program was repaid at its maturity in the quarter. - Total stockholders' equity was
$325.6 million at quarter end, an increase of$144.7 million from the prior quarter end, primarily due to$152.5 million of net proceeds from the Private Placements.
Income Statement:
Net interest income was
Average balances of interest-earning assets decreased
Average balances of interest-bearing liabilities decreased
Cost of funds was 3.02% for the second quarter of 2024, compared to 3.03% for the first quarter of 2024, and 2.49% for the second quarter of 2023, while cost of deposits was 2.84%, 2.85%, and 2.21%, for the same respective periods. Higher deposit and overall funding costs in the 2024 periods reflect the impact of higher market interest rates and a shift in the mix of funding. Cost of deposits, excluding wholesale deposits, was 2.28% for the quarter compared to 2.20% in the prior quarter and the year-ago period.
Net interest margin was 2.79% for the second quarter of 2024 compared to 2.75% in the prior quarter and 3.12% in the year-ago period. The increase in net interest margin relative to the prior period reflects the impact of a slight decrease in funding costs.
The Company recorded a provision for credit losses of
Noninterest income was
Noninterest expense was
Balance Sheet:
Loans held for investment were
Total deposits were
The Company previously reported that it had submitted to the
Noninterest-bearing deposits represented 20.2%, 20.1%, and 22.0% of total deposits at
The held for investment loan to deposit ratio was 97.1% at both
Fintech Operations:
Interest and fee income related to fintech partnerships represented approximately
Non-GAAP Financial Measures:
The accounting and reporting policies of the Company conform to
Forward-Looking Statements:
This release of the Company contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements represent plans, estimates, objectives, goals, guidelines, expectations, intentions, projections, and statements of the Company's beliefs concerning future events, business plans, objectives, expected operating results and the assumptions upon which those statements are based. Forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance or achievements, and are typically identified with words such as "may," "could," "should," "will," "would," "believe," "anticipate," "estimate," "expect," "aim," "intend," "plan," or words or phases of similar meaning. The Company cautions that the forward-looking statements are based largely on its expectations and are subject to a number of known and unknown risks and uncertainties that are subject to change based on factors which are, in many instances, beyond the Company's control. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements.
The following factors, among others, could cause the Company's financial performance to differ materially from that expressed in such forward-looking statements:
- the strength of
the United States economy in general and the strength of the local economies in which the Company conducts operations; - the effects of, and changes in, the macroeconomic environment and financial market conditions, including monetary and fiscal policies, interest rates and inflation;
- the impact of, and the ability to comply with, the terms of the Consent Order with the OCC, including the heightened capital requirements and other restrictions therein, and other regulatory directives;
- the imposition of additional regulatory actions or restrictions for noncompliance with the Consent Order or otherwise;
- the Company's involvement in, and the outcome of, any litigation, legal proceedings or enforcement actions that may be instituted against the Company;
- reputational risk and potential adverse reactions of the Company's customers, suppliers, employees, or other business partners;
- the Company's ability to manage its fintech relationships, including implementing enhanced controls and procedures, complying with OCC directives and applicable laws and regulations, maintaining deposit levels and the quality of loans associated with these relationships and, in certain cases, winding down certain of these partnerships;
- the quality and composition of the Company's loan and investment portfolios, including changes in the level of the Company's nonperforming assets and charge-offs;
- the Company's management of risks inherent in its loan portfolio, the credit quality of its borrowers, and the risk of a prolonged downturn in the real estate market, which could impair the value of the Company's collateral and its ability to sell collateral upon any foreclosure;
- the ability to maintain adequate liquidity by retaining deposits and secondary funding sources, especially if the Company's or the banking industry's reputation becomes damaged;
- the ability to maintain capital levels adequate to support the Company's business and to comply with OCC directives;
- the timely development of competitive new products and services and the acceptance of these products and services by new and existing customers;
- changes in consumer spending and savings habits;
- the willingness of users to substitute competitors' products and services for the Company's products and services;
- deposit flows;
- changes in technological and social media;
- potential exposure to fraud, negligence, computer theft, and cyber-crime;
- adverse developments in the banking industry generally, such as recent bank failures, responsive measures to mitigate and manage such developments, related supervisory and regulatory actions and costs, and related impacts on customer and client behavior;
- changing bank regulatory conditions, policies or programs, whether arising as new legislation or regulatory initiatives, that could lead to restrictions on activities of banks generally, or
Blue Ridge Bank in particular, more restrictive regulatory capital requirements, increased costs, including deposit insurance premiums, regulation or prohibition of certain income producing activities or changes in the secondary market for loans and other products; - the impact of changes in financial services policies, laws, and regulations, including laws, regulations, and policies concerning taxes, banking, securities, real estate, and insurance, and the application thereof by regulatory bodies;
- the effect of changes in accounting standards, policies, and practices as may be adopted from time to time;
- estimates of the fair value and other accounting values, subject to impairment assessments, of certain of the Company's assets and liabilities;
- geopolitical conditions, including acts or threats of terrorism and/or military conflicts, or actions taken by
the United States or other governments in response to acts or threats of terrorism and/or military conflicts, which could impact business and economic conditions inthe United States and abroad; - the occurrence or continuation of widespread health emergencies or pandemics, significant natural disasters, severe weather conditions, floods and other catastrophic events; and
- other risks and factors identified in the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections and elsewhere in the Company's Annual Report on Form 10-K for the year ended
December 31, 2023 and in filings the Company makes from time to time with theU.S. Securities and Exchange Commission ("SEC ").
The foregoing factors should not be considered exhaustive and should be read together with other cautionary statements that are included in filings the Company makes from time to time with the
1 Non-GAAP financial measure. Further information can be found at the end of this press release.
|
|
|
|
|
Consolidated Balance Sheets |
|
|
|
|
(Dollars in thousands, except share data) |
|
(unaudited)
|
|
2023 (1) |
Assets |
|
|
|
|
Cash and due from banks |
|
$ 124,607 |
|
$ 110,491 |
Restricted cash |
|
5,924 |
|
10,660 |
Federal funds sold |
|
5,219 |
|
4,451 |
Securities available for sale, at fair value |
|
307,427 |
|
321,081 |
Restricted equity investments |
|
18,236 |
|
18,621 |
Other equity investments |
|
4,354 |
|
12,905 |
Other investments |
|
21,099 |
|
29,467 |
Loans held for sale |
|
54,377 |
|
46,337 |
Loans held for investment, net of deferred fees and costs |
|
2,259,279 |
|
2,430,947 |
Less: allowance for credit losses |
|
(28,036) |
|
(35,893) |
Loans held for investment, net |
|
2,231,243 |
|
2,395,054 |
Accrued interest receivable |
|
14,172 |
|
14,967 |
Premises and equipment, net |
|
21,746 |
|
22,348 |
Right-of-use asset |
|
8,208 |
|
8,738 |
Bank owned life insurance |
|
42,446 |
|
48,453 |
Other intangible assets |
|
4,548 |
|
5,382 |
Mortgage servicing rights, net |
|
29,862 |
|
27,114 |
Deferred tax asset, net |
|
21,051 |
|
21,556 |
Other assets |
|
18,553 |
|
19,929 |
Total assets |
|
$ 2,933,072 |
|
$ 3,117,554 |
Liabilities and Stockholders' Equity |
|
|
|
|
Deposits: |
|
|
|
|
Noninterest-bearing demand |
|
$ 470,128 |
|
$ 506,248 |
Interest-bearing demand and money market deposits |
|
769,870 |
|
1,049,536 |
Savings |
|
106,619 |
|
117,923 |
Time deposits |
|
979,222 |
|
892,325 |
Total deposits |
|
2,325,839 |
|
2,566,032 |
FHLB borrowings |
|
202,900 |
|
210,000 |
FRB borrowings |
|
— |
|
65,000 |
Subordinated notes, net |
|
39,822 |
|
39,855 |
Lease liability |
|
8,947 |
|
9,619 |
Other liabilities |
|
29,950 |
|
41,059 |
Total liabilities |
|
2,607,458 |
|
2,931,565 |
Commitments and contingencies |
|
|
|
|
Stockholders' Equity: |
|
|
|
|
Common stock, no par value; 150,000,000 and 50,000,000 shares authorized
at
19,198,379 shares issued and outstanding at 2023, respectively |
|
300,976 |
|
197,636 |
Preferred stock,
30, 2024 and
outstanding at |
|
137 |
|
— |
Additional paid-in capital |
|
50,155 |
|
252 |
Retained earnings |
|
18,829 |
|
33,157 |
Accumulated other comprehensive loss, net of tax |
|
(44,483) |
|
(45,056) |
Total stockholders' equity |
|
325,614 |
|
185,989 |
Total liabilities and stockholders' equity |
|
$ 2,933,072 |
|
$ 3,117,554 |
|
|
|
|
|
(1) Derived from audited |
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income (unaudited) |
|
|
|
|
|
|
|
|
For the Three Months Ended |
||||
|
|
|
|
|
|
As restated |
(Dollars in thousands, except per common share data) |
|
|
|
|
|
|
Interest income: |
|
|
|
|
|
|
Interest and fees on loans |
|
$ 36,196 |
|
$ 38,346 |
|
$ 38,326 |
Interest on taxable securities |
|
2,399 |
|
2,438 |
|
2,543 |
Interest on nontaxable securities |
|
62 |
|
60 |
|
94 |
Interest on deposit accounts and federal funds sold |
|
1,974 |
|
1,687 |
|
1,497 |
Total interest income |
|
40,631 |
|
42,531 |
|
42,460 |
Interest expense: |
|
|
|
|
|
|
Interest on deposits |
|
17,272 |
|
18,485 |
|
14,624 |
Interest on subordinated notes |
|
552 |
|
560 |
|
547 |
Interest on FHLB and FRB borrowings |
|
2,722 |
|
3,137 |
|
3,399 |
Total interest expense |
|
20,546 |
|
22,182 |
|
18,570 |
Net interest income |
|
20,085 |
|
20,349 |
|
23,890 |
Provision for credit losses - loans |
|
3,600 |
|
— |
|
10,613 |
Recovery of credit losses - unfunded commitments |
|
(500) |
|
(1,000) |
|
(600) |
Total provision for (recovery of) credit losses |
|
3,100 |
|
(1,000) |
|
10,013 |
Net interest income after provision for credit losses |
|
16,985 |
|
21,349 |
|
13,877 |
Noninterest income: |
|
|
|
|
|
|
Fair value adjustments of other equity investments |
|
(8,537) |
|
(7) |
|
(281) |
Residential mortgage banking income |
|
3,090 |
|
2,664 |
|
3,144 |
Mortgage servicing rights |
|
2,020 |
|
729 |
|
1,151 |
Gain on sale of government guaranteed loans |
|
11 |
|
110 |
|
2,384 |
Wealth and trust management |
|
623 |
|
520 |
|
462 |
Service charges on deposit accounts |
|
423 |
|
398 |
|
349 |
Increase in cash surrender value of BOLI |
|
333 |
|
337 |
|
292 |
Bank and purchase card, net |
|
513 |
|
242 |
|
560 |
Other |
|
1,832 |
|
2,832 |
|
1,675 |
Total noninterest income |
|
308 |
|
7,825 |
|
9,736 |
Noninterest expense: |
|
|
|
|
|
|
Salaries and employee benefits |
|
14,932 |
|
16,045 |
|
14,518 |
Occupancy and equipment |
|
1,303 |
|
1,524 |
|
1,913 |
Data processing |
|
896 |
|
1,106 |
|
1,131 |
Legal and regulatory filings |
|
363 |
|
447 |
|
2,753 |
Advertising and marketing |
|
183 |
|
297 |
|
337 |
Communications |
|
1,436 |
|
1,173 |
|
1,171 |
Audit and accounting fees |
|
295 |
|
1,155 |
|
503 |
|
|
1,817 |
|
1,377 |
|
1,246 |
Intangible amortization |
|
276 |
|
287 |
|
335 |
Other contractual services |
|
1,760 |
|
1,717 |
|
3,218 |
Other taxes and assessments |
|
588 |
|
943 |
|
803 |
Regulatory remediation |
|
1,397 |
|
2,644 |
|
2,388 |
Other |
|
4,098 |
|
3,759 |
|
3,736 |
Total noninterest expense |
|
29,344 |
|
32,474 |
|
34,052 |
Loss before income taxes |
|
(12,051) |
|
(3,300) |
|
(10,439) |
Income tax benefit |
|
(616) |
|
(407) |
|
(1,826) |
Net loss |
|
$ (11,435) |
|
$ (2,893) |
|
$ (8,613) |
Dividends on preferred stock |
|
150 |
|
— |
|
— |
Net loss attributable to common shareholders |
|
$ (11,585) |
|
$ (2,893) |
|
$ (8,613) |
Basic and diluted loss per common share |
|
$ (0.47) |
|
$ (0.15) |
|
$ (0.45) |
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Statements of Income (unaudited) |
|
|
|
|
|
|
For the Six Months Ended |
||
|
|
|
|
As restated |
(Dollars in thousands, except per common share data) |
|
|
|
|
Interest income: |
|
|
|
|
Interest and fees on loans |
|
$ 74,542 |
|
$ 75,457 |
Interest on taxable securities |
|
4,837 |
|
5,171 |
Interest on nontaxable securities |
|
122 |
|
186 |
Interest on deposit accounts and federal funds sold |
|
3,661 |
|
2,536 |
Total interest income |
|
83,162 |
|
83,350 |
Interest expense: |
|
|
|
|
Interest on deposits |
|
35,757 |
|
25,955 |
Interest on subordinated notes |
|
1,112 |
|
1,100 |
Interest on FHLB and FRB borrowings |
|
5,859 |
|
7,209 |
Total interest expense |
|
42,728 |
|
34,264 |
Net interest income |
|
40,434 |
|
49,086 |
Provision for credit losses - loans |
|
3,600 |
|
9,503 |
Recovery of credit losses - unfunded commitments |
|
(1,500) |
|
(1,000) |
Total provision for credit losses |
|
2,100 |
|
8,503 |
Net interest income after provision for credit losses |
|
38,334 |
|
40,583 |
Noninterest income: |
|
|
|
|
Fair value adjustments of other equity investments |
|
(8,544) |
|
(332) |
Residential mortgage banking income |
|
5,754 |
|
6,344 |
Mortgage servicing rights |
|
2,749 |
|
(746) |
Gain on sale of government guaranteed loans |
|
121 |
|
4,793 |
Wealth and trust management |
|
1,143 |
|
894 |
Service charges on deposit accounts |
|
821 |
|
692 |
Increase in cash surrender value of BOLI |
|
670 |
|
574 |
Bank and purchase card, net |
|
755 |
|
900 |
Other |
|
4,664 |
|
3,900 |
Total noninterest income |
|
8,133 |
|
17,019 |
Noninterest expense: |
|
|
|
|
Salaries and employee benefits |
|
30,977 |
|
29,807 |
Occupancy and equipment |
|
2,827 |
|
3,482 |
Data processing |
|
2,002 |
|
2,477 |
Legal and regulatory filings |
|
810 |
|
3,987 |
Advertising and marketing |
|
480 |
|
623 |
Communications |
|
2,609 |
|
2,302 |
Audit and accounting fees |
|
1,450 |
|
649 |
|
|
3,194 |
|
1,975 |
Intangible amortization |
|
563 |
|
690 |
Other contractual services |
|
3,477 |
|
4,157 |
Other taxes and assessments |
|
1,531 |
|
1,605 |
Regulatory remediation |
|
4,041 |
|
3,522 |
Other |
|
7,857 |
|
7,623 |
Total noninterest expense |
|
61,818 |
|
62,899 |
Loss before income taxes |
|
(15,351) |
|
(5,297) |
Income tax benefit |
|
(1,023) |
|
(654) |
Net loss |
|
$ (14,328) |
|
$ (4,643) |
Dividends on preferred stock |
|
150 |
|
— |
Net loss attributable to common shareholders |
|
$ (14,478) |
|
$ (4,643) |
Basic and diluted loss per common share |
|
$ (0.66) |
|
$ (0.25) |
|
|
|
|
|
|
|
|
|
|
Quarter Summary of Selected Financial Data (unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of and for the Three Months Ended |
||||||||
|
|
|
|
|
|
|
|
|
|
As restated |
(Dollars and shares in thousands, except per common share data) |
|
|
|
|
|
|
|
|
|
|
Income Statement Data: |
|
2024 |
|
2024 |
|
2023 |
|
2023 |
|
2023 |
Interest income |
|
$ 40,631 |
|
$ 42,531 |
|
$ 43,160 |
|
$ 42,485 |
|
$ 42,460 |
Interest expense |
|
20,546 |
|
22,182 |
|
21,397 |
|
20,293 |
|
18,570 |
Net interest income |
|
20,085 |
|
20,349 |
|
21,763 |
|
22,192 |
|
23,890 |
Provision for (recovery of) credit losses |
|
3,100 |
|
(1,000) |
|
2,770 |
|
11,050 |
|
10,013 |
Net interest income after provision for loan losses |
|
16,985 |
|
21,349 |
|
18,993 |
|
11,142 |
|
13,877 |
Noninterest income |
|
308 |
|
7,825 |
|
4,107 |
|
7,415 |
|
9,736 |
Noninterest expenses, excluding goodwill impairment |
|
29,344 |
|
32,474 |
|
30,583 |
|
37,795 |
|
34,052 |
|
|
— |
|
— |
|
— |
|
26,826 |
|
— |
Loss before income taxes |
|
(12,051) |
|
(3,300) |
|
(7,483) |
|
(46,064) |
|
(10,439) |
Income tax benefit |
|
(616) |
|
(407) |
|
(1,724) |
|
(4,693) |
|
(1,826) |
Net loss |
|
(11,435) |
|
(2,893) |
|
(5,759) |
|
(41,371) |
|
(8,613) |
Dividends on preferred stock |
|
150 |
|
— |
|
— |
|
— |
|
— |
Net loss attributable to common shareholders |
|
(11,585) |
|
(2,893) |
|
(5,759) |
|
(41,371) |
|
(8,613) |
Per Common Share Data: |
|
|
|
|
|
|
|
|
|
|
Loss per common share - basic and diluted |
|
$ (0.47) |
|
$ (0.15) |
|
$ (0.30) |
|
$ (2.18) |
|
$ (0.45) |
Book value per common share |
|
4.15 |
|
9.24 |
|
9.69 |
|
9.53 |
|
12.21 |
Tangible book value per common share - Non-GAAP |
|
4.10 |
|
9.04 |
|
9.47 |
|
9.30 |
|
10.55 |
Balance Sheet Data: |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ 2,933,072 |
|
$ 3,076,187 |
|
$ 3,117,554 |
|
$ 3,262,713 |
|
$ 3,214,424 |
Average assets |
|
3,085,137 |
|
3,164,932 |
|
3,165,886 |
|
3,249,112 |
|
3,277,283 |
Average interest-earning assets |
|
2,886,186 |
|
2,966,491 |
|
2,979,065 |
|
3,038,795 |
|
3,064,104 |
Loans held for investment |
|
2,259,279 |
|
2,394,089 |
|
2,430,947 |
|
2,446,370 |
|
2,454,431 |
Allowance for credit losses |
|
28,036 |
|
35,025 |
|
35,893 |
|
49,631 |
|
38,567 |
Purchase accounting adjustments (discounts) on acquired loans |
|
4,408 |
|
4,873 |
|
5,117 |
|
5,831 |
|
6,381 |
Loans held for sale |
|
54,377 |
|
34,902 |
|
46,337 |
|
69,640 |
|
64,102 |
Securities available for sale, at fair value |
|
307,427 |
|
314,394 |
|
321,081 |
|
313,930 |
|
340,617 |
Noninterest-bearing demand deposits |
|
470,128 |
|
496,375 |
|
506,248 |
|
572,969 |
|
575,989 |
Fintech Banking-as-a-Service ("BaaS") deposits |
|
172,456 |
|
272,973 |
|
370,968 |
|
493,009 |
|
468,719 |
Total deposits |
|
2,325,839 |
|
2,465,776 |
|
2,566,032 |
|
2,776,151 |
|
2,613,094 |
Subordinated notes, net |
|
39,822 |
|
39,838 |
|
39,855 |
|
39,871 |
|
39,888 |
FHLB and FRB advances |
|
202,900 |
|
345,000 |
|
275,000 |
|
215,000 |
|
284,100 |
Average interest-bearing liabilities |
|
2,228,071 |
|
2,411,683 |
|
2,362,774 |
|
2,354,360 |
|
2,346,722 |
Total stockholders' equity |
|
325,614 |
|
180,906 |
|
185,989 |
|
182,837 |
|
231,271 |
Average stockholders' equity |
|
318,042 |
|
183,901 |
|
223,840 |
|
238,530 |
|
257,117 |
Weighted average common shares outstanding - basic |
|
24,477 |
|
19,178 |
|
19,033 |
|
19,015 |
|
18,851 |
Weighted average common shares outstanding - diluted |
|
24,477 |
|
19,178 |
|
19,033 |
|
19,015 |
|
18,851 |
Financial Ratios: |
|
|
|
|
|
|
|
|
|
|
Return on average assets (1) |
|
-1.48 % |
|
-0.37 % |
|
-0.73 % |
|
-5.09 % |
|
-1.05 % |
Return on average equity (1) |
|
-14.38 % |
|
-6.29 % |
|
-10.29 % |
|
-69.38 % |
|
-13.40 % |
Total loan to deposit ratio |
|
99.5 % |
|
98.5 % |
|
96.5 % |
|
90.6 % |
|
96.4 % |
Held for investment loan-to-deposit ratio |
|
97.1 % |
|
97.1 % |
|
94.7 % |
|
88.1 % |
|
93.9 % |
Fintech BaaS deposits to total deposits ratio |
|
7.4 % |
|
11.1 % |
|
14.5 % |
|
17.8 % |
|
17.9 % |
Net interest margin (1) |
|
2.79 % |
|
2.75 % |
|
2.92 % |
|
2.92 % |
|
3.12 % |
Cost of deposits (1) |
|
2.84 % |
|
2.85 % |
|
2.73 % |
|
2.46 % |
|
2.21 % |
Cost of funds (1) |
|
3.02 % |
|
3.03 % |
|
2.91 % |
|
2.73 % |
|
2.49 % |
Efficiency ratio |
|
143.9 % |
|
115.3 % |
|
118.2 % |
|
127.7 % |
|
101.3 % |
Regulatory remediation expenses |
|
1,397 |
|
2,644 |
|
3,155 |
|
3,782 |
|
2,388 |
Capital and Asset Quality Ratios: |
|
|
|
|
|
|
|
|
|
|
Average stockholders' equity to average assets |
|
10.3 % |
|
5.8 % |
|
7.1 % |
|
7.3 % |
|
7.8 % |
Allowance for credit losses to loans held for investment |
|
1.24 % |
|
1.46 % |
|
1.48 % |
|
2.03 % |
|
1.57 % |
Ratio of net charge-offs to average loans outstanding (1) |
|
1.81 % |
|
0.14 % |
|
2.84 % |
|
0.09 % |
|
1.28 % |
Nonperforming loans to total assets |
|
1.57 % |
|
1.73 % |
|
2.02 % |
|
2.51 % |
|
2.54 % |
Nonperforming assets to total assets |
|
1.57 % |
|
1.73 % |
|
2.02 % |
|
2.51 % |
|
2.54 % |
Nonperforming loans to total loans |
|
1.99 % |
|
2.19 % |
|
2.55 % |
|
3.25 % |
|
3.41 % |
|
|
|
|
|
|
|
|
|
|
|
Reconciliation of Non-GAAP Financial Measures (unaudited): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity: |
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity |
|
$ 325,614 |
|
$ 180,906 |
|
$ 185,989 |
|
$ 182,837 |
|
$ 231,271 |
Less: preferred stock (including additional paid-in capital) |
|
(20,605) |
|
— |
|
— |
|
— |
|
— |
Common stockholders' equity |
|
$ 305,009 |
|
$ 180,906 |
|
$ 185,989 |
|
$ 182,837 |
|
$ 231,271 |
Less: |
|
(3,552) |
|
(3,913) |
|
(4,179) |
|
(4,286) |
|
(31,427) |
Tangible common equity (Non-GAAP) |
|
$ 301,456 |
|
$ 176,993 |
|
$ 181,810 |
|
$ 178,551 |
|
$ 199,844 |
Total common shares outstanding |
|
73,504 |
|
19,584 |
|
19,198 |
|
19,192 |
|
18,934 |
Book value per common share |
|
$ 4.15 |
|
$ 9.24 |
|
$ 9.69 |
|
$ 9.53 |
|
$ 12.21 |
Tangible book value per common share (Non-GAAP) |
|
4.10 |
|
9.04 |
|
9.47 |
|
9.30 |
|
10.55 |
|
|
|
|
|
|
|
|
|
|
|
Tangible Common Equity to Tangible Total Assets |
|
|
|
|
|
|
|
|
|
|
Total assets |
|
$ 2,933,072 |
|
$ 3,076,187 |
|
$ 3,117,554 |
|
$ 3,262,713 |
|
$ 3,214,424 |
Less: |
|
(3,552) |
|
(3,913) |
|
(4,179) |
|
(4,286) |
|
(31,427) |
Tangible total assets (Non-GAAP) |
|
$ 2,929,520 |
|
$ 3,072,274 |
|
$ 3,113,375 |
|
$ 3,258,427 |
|
$ 3,182,997 |
Tangible common equity (Non-GAAP) |
|
$ 301,456 |
|
$ 176,993 |
|
$ 181,810 |
|
$ 178,551 |
|
$ 199,844 |
Tangible common equity to tangible total assets (Non-GAAP) |
|
10.3 % |
|
5.8 % |
|
5.8 % |
|
5.5 % |
|
6.3 % |
|
|
|
|
|
|
|
|
|
|
|
(1) Annualized. |
|
|
|
|
|
|
|
|
|
|
(2) Excludes mortgage servicing rights. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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