TRCB - Two River Bancorp Reports 2019 Second Quarter Financial Results Highlighted by 15.0% Increase in Net Income

July, 23 2019 08:00 AM Two River Bancorp

TINTON FALLS, N.J., July 23, 2019 (GLOBE NEWSWIRE) -- Two River Bancorp (Nasdaq: TRCB) (the "Company"), the parent company of Two River Community Bank (the “Bank"), today reported financial results for the second quarter and six months ended June 30, 2019, highlighted by higher net interest income and lower non-interest expenses.

2019 Second Quarter Financial Highlights
(comparisons to 2018 second quarter)

Net income increased 15.0% to $3.0 million, or $0.35 per diluted share
Return on average assets of 1.07%, up from 1.00%
Return on average equity of 10.18%, up from 9.67%
Net interest margin decreased 5 basis points to 3.54%
Net interest income increased 5.2% to $9.4 million
Efficiency ratio⁽¹⁾ improved to 59.58%, compared to 62.59%

(Totals at June 30, 2019; comparisons to December 31, 2018)

Total loans were $953.1 million, an increase of $31.8 million, or 6.9% annualized
Total deposits were $972.6 million, an increase of $55.2 million, or 12.0% annualized
Total assets increased to a record $1.154 billion, compared to $1.096 billion
Tangible book value per share⁽²⁾ increased to $11.93, compared to $11.43

(1) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.
(2) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.

Management Commentary
William D. Moss, Chairman, President, and CEO, stated, “The Company’s net income increased 15.0% as a result of solid improvement in net interest income coupled with controlled expenses. During the quarter, we recognized a $188,000 gain on the sale of an OREO property recorded during the period, which partially contributed to a reduction in operating expenses. Loans grew $4.6 million during the quarter as originations were mostly offset by higher than expected payoffs, which included $3.2 million of adversely classified credits. On an annualized basis, loans grew 6.9%, predominantly in the commercial real estate and residential mortgage sectors. We expect that this growth, coupled with a strong loan pipeline and efficiencies from our new banking platform, will help drive profitability for the remainder of 2019.”

Mr. Moss continued, “Our non-interest income declined during the quarter, largely due to lower gains on the sale of SBA loans. Interest rates and loan quality in the SBA sector will remain headwinds in the near term. This decline was partially offset by higher residential mortgage banking revenues during the period.”

Dividend Information

On July 17, 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share, payable on August 30, 2019 to shareholders of record as of the close of business on August 9, 2019. This marks the 26^th consecutive quarterly cash dividend.

Key Quarterly Performance Metrics


2^nd Qtr.
1^st Qtr.
4^th Qtr.
3^rd Qtr.
2^nd Qtr.
6 Mo. Ended
6 Mo. Ended
2019
2019
2018
2018
2018
6/30/2019
6/30/2018
Net Income (in thousands)
$3,048

$2,783

$3,046

$2,834

$2,650


$5,831

$5,326

Earnings per Common Share – Diluted
$0.35

$0.32

$0.35

$0.33

$0.30


$0.67

$0.61

Return on Average Assets
1.07
%
1.01
%
1.10
%
1.04
%
1.00
%

1.04
%
1.02
%
Return on Average Tangible Assets⁽¹⁾
1.08
%
1.02
%
1.11
%
1.06
%
1.02
%

1.05
%
1.04
%
Return on Average Equity
10.18
%
9.59
%
10.52
%
9.98
%
9.67
%

9.89
%
9.87
%
Return on Average Tangible Equity⁽¹⁾
11.98
%
11.33
%
12.49
%
11.90
%
11.57
%

11.66
%
11.84
%
Net Interest Margin
3.54
%
3.60
%
3.56
%
3.55
%
3.59
%

3.57
%
3.61
%
Efficiency Ratio⁽²⁾
59.58
%
59.95
%
60.69
%
61.78
%
62.59
%

59.77
%
62.10
%
Non-Performing Assets to Total Assets
0.37
%
0.39
%
0.18
%
0.18
%
0.18
%

0.37
%
0.18
%
Allowance as a % of Loans
1.23
%
1.22
%
1.24
%
1.26
%
1.26
%

1.23
%
1.26
%

(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release. (2) Efficiency ratio represents the ratio of non-interest expense to the sum of net interest income and non-interest income.

Loan Composition
The components of the Company’s loan portfolio at June 30, 2019 and December 31, 2018 are as follows:


(in thousands)




June 30, 2019

December 31, 2018

% Change


Commercial and industrial
$
110,791

$
109,362

1.3

%
Real estate – construction

144,404


144,865

(0.3
)
%
Real estate – commercial

574,660


552,549

4.0

%
Real estate – residential

92,829


84,123

10.3

%
Consumer

31,185


31,144

0.1

%
Unearned fees

(789
)

(742
)
6.3

%


953,080


921,301

3.4

%
Allowance for loan losses

(11,684
)

(11,398
)
2.5

%
Net Loans
$
941,396

$
909,903

3.5

%

Deposit Composition
The components of the Company’s deposits at June 30, 2019 and December 31, 2018 are as follows:


(in thousands)




June 30, 2019

December 31, 2018

% Change


Non-interest-bearing
$
179,886

$
176,655

1.8

%
NOW accounts

200,044


193,347

3.5

%
Savings deposits

251,057


258,666

(2.9
)
%
Money market deposits

39,561


43,936

(10.0
)
%
Listed service CD’s

44,508


39,807

11.8

%
Time deposits / IRA

179,131


130,863

36.9

%
Wholesale deposits

78,405


74,080

5.8

%
Total Deposits
$
972,592

$
917,354

6.0

%

2019 Second Quarter Financial Review

Net Income
Net income for the three months ended June 30, 2019 increased 15.0% to $3.0 million, or $0.35 per diluted common share, compared to $2.7 million, or $0.30 per diluted common share, for the same period last year. The increase was largely due to higher net interest income, a lower loan loss provision and a decrease in non-interest expenses. In addition, the Company reported a $188,000 one-time gain on the sale of OREO, which reduced non-interest expense for the period.

On a linked quarter basis, second quarter 2019 net income increased 9.5% compared to the first quarter of 2019.

Net Interest Income
Net interest income for the quarter ended June 30, 2019 was $9.4 million, an increase of 5.2% compared to $9.0 million in the corresponding prior year period. This was largely due to an increase of $66.9 million, or 6.7%, in average interest-earning assets, primarily attributable to the growth in the loan portfolio. Additionally, $86,000 of late fees were received during the current quarter from one adversely classified loan payoff.

Net Interest Margin
The Company reported a net interest margin of 3.54% for the second quarter of 2019, compared to 3.60% in the first quarter of 2019 and 3.59% reported for the second quarter of 2018. The slight decline from both prior periods was primarily due to higher cost of funds.

Non-Interest Income
Non-interest income for the quarter ended June 30, 2019 decreased to $1.2 million, compared to $1.5 million in the corresponding prior year period. This decrease was largely the result of lower gains on the sale of SBA loans and service fees on deposit accounts, and was partially offset by higher mortgage banking revenues and higher other income.

On a linked quarter basis, non-interest income increased by $75,000, or 6.5%, from the first quarter of 2019, mainly due to higher residential mortgage banking revenues.

Non-Interest Expense
Non-interest expense for the quarter ended June 30, 2019 totaled $6.4 million, a decrease of $197,000, or 3.0%, from the $6.6 million reported in same period in 2018, primarily due to lower salary and employee benefit expenses and the aforementioned gain from the sale of an OREO property. The Company’s efficiency ratio improved to 59.58% for the quarter, compared to 62.59% for the same period in 2018.

On a linked quarter basis, non-interest expense increased $59,000, or 0.9%, primarily due to higher salary and employee benefit expenses and professional fees.

Income Tax Expense
The Company’s effective tax rate was 27.6% for the three months ended June 30, 2019, compared to 28.2% for the same period last year. The Company recognized no tax benefit related to the accounting treatment of equity-based compensation in the second quarter of 2019, compared to a $43,000 benefit in the same period last year.

At the present time, the Company is anticipating a 2019 effective tax rate of 28%.

Provision for Loan Losses
During the quarter, a provision for loan losses of $100,000 was expensed, compared to $225,000 in the same prior year period. The majority of the second quarter 2019 provision was to support the Company’s loan growth. The Company had $2,000 and $14,000 in net loan recoveries during the second quarter of 2019 and 2018, respectively.

2019 First Half Financial Review

Net Income
Net income for the six months ended June 30, 2019 increased 9.5% to $5.8 million, or $0.67 per diluted share, compared to $5.3 million, or $0.61 per diluted share, in the same prior year period. This increase was due to the same reasons noted earlier in the second quarter review.

Net Interest Income
For the first half of 2019, net interest income increased 5.7% to $18.8 million from $17.8 million in the prior year period. This was largely due to an increase of $66.7 million, or 6.7%, in average interest-earning assets, primarily attributable to the growth in the loan portfolio.

Net Interest Margin
The net interest margin for the first half of 2019 was 3.57% compared to 3.61% in the prior year period, primarily due to higher cost of funds.

Non-Interest Income

For the six months ended June 30, 2019, non-interest income decreased $417,000, or 14.9%, to $2.4 million from the same period in 2018 mainly due to the same reasons noted earlier in the second quarter review.

Non-Interest Expense
For the six months ended June 30, 2019, non-interest expense decreased $129,000, or 1.0%, to $12.6 million compared to $12.8 million the same period last year mainly due to the same reasons noted earlier in the second quarter review. Efficiency ratio for the six months ended June 30, 2019 improved to 59.77% from 62.10% compared to the same prior year period.

Income Tax Expense
For the six months ended June 30, 2019, the effective tax rate was 27.0% compared to 25.7% for the same period last year. The Company recorded a $38,000 tax benefit related to the accounting treatment of equity-based compensation, as compared to $133,000 for the same period last year.

Provision for Loan Losses
For the first half of 2019, a provision of $525,000 was expensed, compared to $625,000 for the same prior year period. The Company had $239,000 and $92,000 in net loan charge-offs for the first half of 2019 and 2018, respectively.

Financial Condition / Balance Sheet

At June 30, 2019, the Bank maintained capital ratios that were in excess of regulatory standards for well capitalized institutions. The Bank’s Tier 1 capital to average assets ratio was 9.99%, its common equity Tier 1 to risk weighted assets ratio was 11.16%, its Tier 1 capital to risk weighted assets ratio was 11.16%, and its total capital to risk weighted assets ratio was 12.31%.

Total assets as of June 30, 2019 were $1.154 billion, compared to $1.096 billion at December 31, 2018 and $1.056 million as of June 30, 2018.

Total loans as of June 30, 2019 were $953.1 million, compared to $921.3 million at December 31, 2018 and $890.4 million as of June 30, 2018. This loan growth was funded primarily from the increase in deposits.

Total deposits as of June 30, 2019 were $972.6 million, compared to $917.4 million as of December 31, 2018 and $880.9 million as of June 30, 2018. Core checking deposits at June 30, 2019 were $379.9 million, compared to $370.0 million at December 31, 2018 and $364.9 million at June 30, 2018. The Company continues to focus on building core checking account deposit relationships, which can vary from quarter to quarter due to the seasonality in municipal and other relationships.

Allowance for Loan Losses
As of June 30, 2019, the Company's allowance for loan losses was $11.7 million, compared to $11.4 million as of December 31, 2018. The loss allowance as a percentage of total loans was 1.23% at June 30, 2019 compared to 1.24% at December 31, 2018.

Asset Quality
The Company's non-performing assets at June 30, 2019 were $4.3 million as compared to $4.5 million at March 31, 2019 and $2.0 million at December 31, 2018. Non-performing assets to total assets at June 30, 2019 were 0.37%, compared to 0.39% at March 31, 2019 and 0.18% at December 31, 2018.

Non-accrual loans were $1.3 million at June 30, 2019, compared to $1.4 million at December 31, 2018, and $1.9 million at June 30, 2018. Non-accrual loans, which had increased by $2.5 million during the first quarter of 2019, declined by $2.6 million during the second quarter of 2019 as two loans totaling $2.8 million transferred into OREO while one loan totaling $278,000 was placed into non-accrual status. OREO increased by $2.3 million due to the aforementioned transfers, partially offset by the sale of an OREO property, which had a book balance of $490,000.

Troubled debt restructured loan balances amounted to $5.5 million at June 30, 2019, with all but $555,000 performing. This compared to $7.7 million at December 31, 2018 and $6.7 million at June 30, 2018.

About the Company
Two River Bancorp is the holding company for Two River Community Bank, which is headquartered in Tinton Falls, New Jersey. Two River Community Bank operates 14 branches along with two loan production offices throughout Monmouth, Union, Essex, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at www.tworiver.bank.

The foregoing contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are not historical facts and include expressions about management's confidence and strategies and management's current views and expectations about new and existing programs and products, relationships, opportunities, technology and market conditions. These statements may be identified by such forward-looking terminology as "continuing," "expect," "look," "believe," "anticipate," "may," "will," "should," "projects," "strategy," or similar statements. Actual results may differ materially from such forward-looking statements, and no reliance should be placed on any forward-looking statement. Factors that may cause results to differ materially from such forward-looking statements include, but are not limited to, unanticipated changes in the financial markets and the direction of interest rates; volatility in earnings due to certain financial assets and liabilities held at fair value; competition levels; loan and investment prepayments differing from our assumptions; insufficient allowance for credit losses; a higher level of loan charge-offs and delinquencies than anticipated; material adverse changes in our operations or earnings; a decline in the economy in our market areas; changes in relationships with major customers; changes in effective income tax rates; higher or lower cash flow levels than anticipated; inability to hire or retain qualified employees; a decline in the levels of deposits or loss of alternate funding sources; a decrease in loan origination volume or an inability to close loans currently in the pipeline; changes in laws and regulations; adoption, interpretation and implementation of accounting pronouncements; operational risks, including the risk of fraud by employees, customers or outsiders; unanticipated effects of our new banking platform; and the inability to successfully implement or expand new lines of business or new products and services. For a list of other factors which would affect our results, see the Company's filings with the Securities and Exchange Commission, including those risk factors identified in the "Risk Factor" section and elsewhere in our Annual Report on Form 10-K for the year ended December 31, 2018. The statements in this press release are made as of the date of this press release, even if subsequently made available by the Company on its website or otherwise. The Company assumes no obligation for updating any such forward-looking statements at any time, except as required by law.

Investor Contact:

Media Contact:

Adam Prior, Senior Vice President

Adam Cadmus, Marketing Director

The Equity Group Inc.

Two River Community Bank

Phone: (212) 836-9606

Phone: (732) 982-2167

Email: aprior@equityny.com

Email: acadmus@tworiverbank.com

TWO RIVER BANCORP
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
For the Three Months and Six Months Ended June 30, 2019 and 2018
(in thousands, except per share data)


Three Months Ended June 30,


Six Months Ended June 30,


2019


2018


2019


2018

INTEREST INCOME:











Loans, including fees
$
11,731


$
10,243


$
23,043


$
20,064

Securities:











Taxable

298



290



629



587

Tax-exempt

234



280



473



562

Interest-bearing deposits

216



94



403



161

Total Interest Income

12,479



10,907



24,548



21,374

INTEREST EXPENSE:











Deposits

2,771



1,641



5,189



2,999

Securities sold under agreements to repurchase

9



15



20



29

Federal Home Loan Bank ("FHLB") and other borrowings

101



116



233



246

Subordinated debt

166



165



331



330

Total Interest Expense

3,047



1,937



5,773



3,604

Net Interest Income

9,432



8,970



18,775



17,770

PROVISION FOR LOAN LOSSES

100



225



525



625

Net Interest Income after Provision for Loan Losses

9,332



8,745



18,250



17,145

NON-INTEREST INCOME:











Service fees on deposit accounts

173



239



339



477

Mortgage banking

424



409



704



747

Other loan fees

138



137



298



248

Earnings from investment in bank owned life insurance

128



132



271



262

Gain on sale of SBA loans

130



387



336



718

Net realized gain on sale of securities

1



-



1



-

Other income

238



192



440



354

Total Non-Interest Income

1,232



1,496



2,389



2,806

NON-INTEREST EXPENSES:











Salaries and employee benefits

3,942



4,010



7,783



7,895

Occupancy and equipment

1,030



1,043



2,072



2,133

Professional

472



488



906



828

Insurance

66



64



131



121

FDIC insurance and assessments

114



123



238



246

Advertising

120



130



190



190

Data processing

174



174



362



326

Outside services fees

60



80



114



161

OREO expenses, impairment and sales, net

(154
)


(14
)


(150
)


(15
)
Loan workout expenses

17



45



9



96

Other operating

513



408



994



797

Total Non-Interest Expenses

6,354



6,551



12,649



12,778

Income before Income Taxes

4,210



3,690



7,990



7,173

Income Tax Expense

1,162



1,040



2,159



1,847

Net Income
$
3,048


$
2,650


$
5,831


$
5,326

Earnings Per Common Share:











Basic
$
0.35


$
0.31


$
0.68


$
0.63

Diluted
$
0.35


$
0.30


$
0.67


$
0.61

Weighted average common shares outstanding:











Basic

8,596



8.488



8,594



8,480

Diluted

8,709



8,690



8,715



8,695

TWO RIVER BANCORP

CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except share data)

June 30,

December 31,

2019

2018

ASSETS

Cash and due from banks

19,798

24,067

Interest-bearing deposits in bank

50,242

24,059

Cash and cash equivalents

70,040

48,126

Securities available for sale

23,604

24,407

Securities held to maturity

43,774

47,455

Equity securities

2,548

2,451

Restricted investments, at cost

6,447

6,082

Loans held for sale

1,093

1,496

Loans

953,080

921,301

Allowance for loan losses

(11,684

)

(11,398

)

Net loans

941,396

909,903

OREO

2,912

585

Bank owned life insurance

22,188

22,098

Premises and equipment, net

6,505

5,917

Operating right-of-use asset

5,004

Accrued interest receivable

2,929

2,583

Goodwill

18,109

18,109

Other assets

7,248

7,207

TOTAL ASSETS

1,153,797

1,096,419

LIABILITIES

Deposits:

Non-interest-bearing

179,886

176,655

Interest-bearing

792,706

740,699

Total Deposits

972,592

917,354

Securities sold under agreements to repurchase

14,162

19,402

FHLB and other borrowings

20,700

22,500

Subordinated debt

9,942

9,923

Accrued interest payable

119

Lease liability

5,137

Other liabilities

9,754

10,623

Total Liabilities

1,032,381

979,921

SHAREHOLDERS' EQUITY

Preferred stock, no par value; 6,500,000 shares authorized, no shares issued and outstanding

Common stock, no par value; 25,000,000 shares authorized;

Issued – 9,017,520 and 8,935,437 at June 30, 2019 and December 31, 2018, respectively

Outstanding – 8,656,830 and 8,606,992 at June 30, 2019 and December 31, 2018, respectively

80,954

80,481

Retained earnings

43,857

39,109

Treasury stock, at cost; 360,690 and 328,445 shares at June 30, 2019 and December 31, 2018

(3,129

)

(2,647

)

Accumulated other comprehensive loss

(266

)

(445

)

Total Shareholders' Equity

121,416

116,498

TOTAL LIABILITIES and SHAREHOLDERS’ EQUITY

1,153,797

1,096,419

TWO RIVER BANCORP
Selected Consolidated Financial Data (Unaudited)

Selected Consolidated Earnings Data
(in thousands, except per share data


Three Months Ended

Six Months Ended

June 30,

March 31,

June 30,

June 30,

June 30,
Selected Consolidated Earnings Data:
2019

2019

2018

2019

2018
Total Interest Income
$
12,479

$
12,069

$
10,907

$
24,548

$
21,374
Total Interest Expense

3,047


2,726


1,937


5,773


3,604
Net Interest Income

9,432


9,343


8,970


18,775


17,770
Provision for Loan Losses

100


425


225


525


625
Net Interest Income after Provision for Loan Losses

9,332


8,918


8,745


18,250


17,145
Other Non-Interest Income

1,232


1,157


1,496


2,389


2,806
Other Non-Interest Expenses

6,354


6,295


6,551


12,649


12,778
Income before Income Taxes

4,210


3,780


3,690


7,990


7,173
Income Tax Expense

1,162


997


1,040


2,159


1,847
Net Income
$
3,048

$
2,783

$
2,650

$
5,831

$
5,326










Per Common Share Data:









Basic Earnings
$
0.35

$
0.32

$
0.31

$
0.68

$
0.63
Diluted Earnings
$
0.35

$
0.32

$
0.30

$
0.67

$
0.61
Book Value
$
14.03

$
13.75

$
13.02

$
14.03

$
13.02
Tangible Book Value⁽¹⁾
$
11.93

$
11.66

$
10.90

$
11.93

$
10.90
Average Common Shares Outstanding (in thousands):









Basic

8,596


8,583


8,488


8,594


8,480
Diluted

8,709


8,712


8,690


8,715


8,695

(1) Non-GAAP Financial Information. See “Reconciliation of Non-GAAP Financial Measures” at end of release.


Selected Period End Balances
(in thousands)


June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,


2019

2019

2018

2018

2018

Total Assets
$
1,153,797

$
1,140,521

$
1,096,419

$
1,086,299

$
1,055,527

Investment Securities and Restricted Stock

76,373


77,904


80,395


91,296


94,449

Total Loans

953,080


948,493


921,301


900,895


890,369

Allowance for Loan Losses

(11,684
)

(11,582
)

(11,398
)

(11,390
)

(11,201
)
Goodwill and Other Intangible Assets

18,109


18,109


18,109


18,109


18,109

Total Deposits

972,592


959,655


917,354


905,745


880,879

Repurchase Agreements

14,162


15,185


19,402


22,153


19,878

FHLB and Other Borrowings

20,700


20,700


22,500


24,500


24,500

Subordinated Debt

9,942


9,932


9,923


9,914


9,905

Shareholders' Equity

121,416


119,156


116,498


113,891


111,347

Asset Quality Data (by Quarter)
(dollars in thousands)



June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,


2019

2019

2018

2018

2018

Nonaccrual Loans
$
1,346

$
3,908

$
1,390

$
1,390

$
1,930

OREO

2,912


585


585


585


-

Total Non-Performing Assets

4,258


4,493


1,975


1,975


1,930












Troubled Debt Restructured Loans:










Performing

4,969


6,726


6,842


5,678


5,831

Non-Performing

555


711


877


877


877












Non-Performing Loans to Total Loans

0.14
%

0.41
%

0.15
%

0.15
%

0.22
%
Non-Performing Assets to Total Assets

0.37
%

0.39
%

0.18
%

0.18
%

0.18
%
Allowance as a % of Loans

1.23
%

1.22
%

1.24
%

1.26
%

1.26
%

Capital Ratios


June 30, 2019

December 31, 2018

CET 1 Capital to Risk Weighted Assets Ratio

Tier 1 Capital to Average Assets Ratio

Tier 1 Capital to Risk Weighted Assets Ratio

Total Capital to Risk Weighted Assets Ratio


CET 1 Capital to Risk Weighted Assets Ratio

Tier 1 Capital to Average Assets Ratio

Tier 1 Capital to Risk Weighted Assets Ratio

Total Capital to Risk Weighted Assets Ratio

Two River Bancorp
10.24
%
9.17
%
10.24
%
12.39
%

10.14
%
9.10
%
10.14
%
12.34
%
Two River Community Bank
11.16
%
9.99
%
11.16
%
12.31
%

11.09
%
9.95
%
11.09
%
12.26
%
"Well capitalized" institution (under prompt corrective action regulations.)*
6.50
%
5.00
%
8.00
%
10.00
%

6.50
%
5.00
%
8.00
%
10.00
%
*Applies to Bank only. For the Company to be “well capitalized” under the Federal Reserve definitions for bank holding companies, the Company is only required to have a Tier 1 Capital to Risk Weighted Assets ratio of at least 6.00% and a Total Capital to Risk Weighted Assets ratio of at least 10.00%.

Net Loan Charge-offs
(dollars in thousands)


Three Months Ended


Six Months Ended

June 30,


March 31,


Dec. 31,

Sept. 30,

June 30,


June 30,


June 30,



2019


2019


2018

2018

2018


2019


2018


Net loan (charge-offs) recoveries:





















Charge-offs
$
-


$
(247
)

$
-

$
-

$
(13
)

$
(247
)

$
(128
)

Recoveries

2



6



8


39


27



8



36


Net loan (charge-offs) recoveries
$
2


$
(241
)

$
8

$
39

$
14


$
(239
)

$
(92
)

Net loan (charge-offs) recoveries to average loans (annualized)

0.00
%


(0.10
)
%

0.00
%

0.02
%

0.01

%

(0.05
)
%

(0.02
)
%

Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates


Three Months Ended

Three Months Ended
(dollars in thousands)
June 30, 2019

June 30, 2018


Interest / Income Expense



Interest / Income Expense

ASSETS
Average Balance


Average Yield / Rate

Average Balance


Average Yield / Rate
Interest-Earning Assets:





Interest-bearing due from banks
$
34,679

$
216

2.50
%

$
21,206

$
94

1.78
%
Investment securities
77,409

532

2.75
%

95,801

570

2.38
%
Loans, net of unearned fees^{(1) (2)}
956,225

11,731

4.92
%

884,450

10,243

4.64
%














Total Interest-Earning Assets
1,068,313

12,479

4.69
%

1,001,457

10,907

4.37
%














Non-Interest-Earning Assets:













Allowance for loan losses
(11,703
)





(11,108
)




All other assets
90,796






74,616



















Total Assets
$
1,147,406







$
1,064,965




















LIABILITIES & SHAREHOLDERS' EQUITY













Interest-Bearing Liabilities:













NOW deposits
$
212,267

422

0.80
%

$
220,421

306

0.56
%
Savings deposits
250,489

636

1.02
%

262,379

494

0.76
%
Money market deposits
38,682

20

0.21
%

53,393

23

0.17
%
Time deposits
293,333

1,693

2.32
%

188,862

818

1.74
%
Securities sold under agreements to repurchase
13,325

9

0.27
%

21,190

15

0.28
%
FHLB and other borrowings
20,713

101

1.96
%

24,503

116

1.90
%
Subordinated debt
9,939

166

6.68
%

9,902

165

6.67
%














Total Interest-Bearing Liabilities
838,748

3,047

1.46
%

780,650

1,937

1.00
%














Non-Interest-Bearing Liabilities:













Demand deposits
172,962






165,416





Other liabilities
15,566






8,925



















Total Non-Interest-Bearing Liabilities
188,528






174,341



















Stockholders’ Equity
120,130






109,974



















Total Liabilities and Shareholders’ Equity
$
1,147,406







$
1,064,965




















NET INTEREST INCOME


$
9,432






$
8,970

















NET INTEREST SPREAD⁽³⁾




3.23
%





3.37
%














NET INTEREST MARGIN⁽⁴⁾




3.54
%





3.59
%

(1) Included in interest income on loans are loan fees.
(2) Includes non-performing loans.
(3) The interest rate spread is the difference between the weighted average yield on average interest-earning and the weighted average cost of average interest-bearing liabilities.
(4) The interest rate margin is calculated by dividing annualized net interest income by average interest earning assets.


Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates


Six Months Ended

Six Months Ended
(dollars in thousands)
June 30, 2019

June 30, 2018


Interest / Income Expense



Interest / Income Expense

ASSETS
Average Balance


Average Yield / Rate

Average Balance


Average Yield / Rate
Interest-Earning Assets:





Interest-bearing due from banks
$
32,368

$
403

2.51
%

$
19,679

$
161

1.65
%
Investment securities
78,316

1,102

2.81
%

96,708

1,149

2.38
%
Loans, net of unearned fees^{(1) (2)}
948,897

23,043

4.90
%

876,541

20,064

4.62
%














Total Interest-Earning Assets
1,059,581

24,548

4.67
%

992,928

21,374

4.34
%














Non-Interest-Earning Assets:













Allowance for loan losses
(11,570
)





(10,974
)




All other assets
85,502






73,756



















Total Assets
$
1,133,513







$
1,055,710




















LIABILITIES & SHAREHOLDERS' EQUITY













Interest-Bearing Liabilities:













NOW deposits
$
208,976

835

0.81
%

$
228,502

616

0.54
%
Savings deposits
253,074

1,228

0.98
%

255,471

848

0.67
%
Money market deposits
40,123

43

0.22
%

55,857

48

0.17
%
Time deposits
275,070

3,083

2.26
%

178,651

1,487

1.68
%
Securities sold under agreements to repurchase
14,431

20

0.28
%

20,417

29

0.29
%
FHLB and other borrowings
23,198

233

2.02
%

26,349

246

1.88
%
Subordinated debt
9,934

331

6.66
%

9,898

330

6.67
%














Total Interest-Bearing Liabilities
824,806

5,773

1.41
%

775,145

3,604

0.94
%














Non-Interest-Bearing Liabilities:













Demand deposits
173,950






162,753





Other liabilities
15,820






8,981



















Total Non-Interest-Bearing Liabilities
189,770






171,734



















Shareholders’ Equity
118,937






108,831



















Total Liabilities and Shareholders’ Equity
$
1,133,513







$
1,055,710




















NET INTEREST INCOME


$
18,775






$
17,770

















NET INTEREST SPREAD⁽³⁾




3.26
%





3.40
%














NET INTEREST MARGIN⁽⁴⁾




3.57
%





3.61
%

Reconciliation of Non-GAAP Financial Measures

The press release contains certain financial information determined by methods other than in accordance with generally accepted accounting policies in the United States (GAAP). These non-GAAP financial measures are "book value per common share," "tangible book value per common share," "return on average tangible assets," and "return on average tangible equity." This non-GAAP disclosure has limitations as an analytical tool and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP, nor is it necessarily comparable to non-GAAP performance measures that may be presented by other companies. Our management uses these non-GAAP measures in its analysis of our performance because it believes these measures are material and will be used as a measure of our performance by investors.

(in thousands, except per share data)





As of and for the Three Months Ended

As of and for the Six Months Ended


June 30,

March 31,

Dec. 31,

Sept. 30,

June 30,

June 30,

June 30,


2019

2019

2018

2018

2018

2019

2018

Total shareholders' equity
$
121,416

$
119,156

$
116,498

$
113,891

$
111,347

$
121,416

$
111,347

Less: goodwill and other tangibles

(18,109
)

(18,109
)

(18,109
)

(18,109
)

(18,109
)

(18,109
)

(18,109
)
Tangible common shareholders’ equity
$
103,307

$
101,047

$
98,389

$
95,782

$
93,238

$
103,307

$
93,238























Common shares outstanding

8,657


8,668


8,607


8,584


8,555


8,657


8,555

Book value per common share
$
14.03

$
13.75

$
13.54

$
13.27

$
13.02

$
14.03

$
13.02























Book value per common share
$
14.03

$
13.75

$
13.54

$
13.27

$
13.02

$
14.03

$
13.02

Effect of intangible assets

(2.10
)

(2.09
)

(2.11
)

(2.11
)

(2.12
)

(2.10
)

(2.12
)
Tangible book value per common share
$
11.93

$
11.66

$
11.43

$
11.16

$
10.90

$
11.93

$
10.90
















Return on average assets
1.07
%
1.01
%
1.10
%
1.04
%
1.00
%
1.04
%
1.02
%
Effect of average intangible assets
0.01
%
0.01
%
0.01
%
0.02
%
0.02
%
0.01
%
0.02
%
Return on average tangible assets
1.08
%
1.02
%
1.11
%
1.06
%
1.02
%
1.05
%
1.04
%















Return on average equity
10.18
%
9.59
%
10.52
%
9.98
%
9.67
%
9.89
%
9.87
%
Effect of average intangible assets
1.80
%
1.74
%
1.97
%
1.92
%
1.90
%
1.77
%
1.97
%
Return on average tangible equity
11.98
%
11.33
%
12.49
%
11.90
%
11.57
%
11.66
%
11.84
%

Company Name:	Two River Bancorp
Stock Symbol:	TRCB
Market:	NASDAQ

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