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LINKBANCORP, Inc. Announces First Quarter 2022 Financial Results

05/02/2022

HARRISBURG, Pa., May 2, 2022 /PRNewswire/ -- LINKBANCORP, Inc. (OTC Pink:  LNKB) (the "Company"), the parent company of The Gratz Bank, including its LINKBANK division (the "Bank") reported net income of $1.524 million, or $0.15 per diluted share, for the quarter ended March 31, 2022.

First Quarter Highlights

  • The Company crossed $1 billion in total assets
  • First quarter organic loan growth of $29 million, exclusive of PPP loans
  • Noninterest bearing deposits grew $36 million since December 31, 2021
  • Net interest margin expands to 3.40%

Andrew Samuel, Chief Executive Officer, commented, "We are very pleased by the results of our first quarter free of merger-related charges related to the combination with GNB Financial Services, Inc., crossing over the $1 billion threshold and demonstrating growing earnings potential as we begin to recognize economies of scale and increasing operating leverage." He continued, "Key additions within areas experiencing varying levels of market disruption, including the York and Delaware Valley markets, are expected to help fuel further loan and earnings growth and complement the strong performance of our core Capital, Lancaster and Gratz Regions."

Total assets were $1.036 billion at March 31, 2022 compared to $932.8 million at December 31, 2021 and $443.8 million at March 31, 2021.Deposits and net loans as of March 31, 2022 totaled $862.2 million and $727.6 million, respectively, compared to deposits and net loans of  $771.7 million and $711.7 million, respectively, at December 31, 2021 and $388.8 million and $233.1 million, respectively, at March 31, 2021.  The $15.8 million increase in net loans from December 31, 2021 includes $29 million in primarily commercial organic loan growth including the impact of forgiven loans under the U.S. Small Business Administration (SBA) Paycheck Protection Program (PPP), which declined $13.2 million to $10.6 million at March 31, 2022.  The $90.5 million increase in deposits from December 31, 2021 was driven largely by a $20 million increase in brokered deposits and $35.9 million increase in noninterest bearing demand accounts.  Technology enhancements, such as digital account opening, continue to provide increased opportunities for the Bank to acquire new client relationships that service clients in a more efficient and cost effective manner.

As of March 31, 2022, the Company's non-performing assets were $1.2 million, representing 0.12% of total assets. Non-performing assets at March 31, 2022 excluded purchased credit impaired loans with a balance of $5.6 million, inclusive of $4.1 million in loans held for sale.  The allowance for loan losses measured 0.47% of total loans, or approximately 0.91% of the non-purchased portfolio, at March 31, 2022. The total reserve when including the allowance for loan losses and the credit fair value adjustment made to loans acquired in the merger totaled $10.1 million or approximately 1.38% of the combined portfolio at March 31, 2022.

Net interest income for the first quarter of 2022 increased to $7.5 million compared to $7.1 million in the fourth quarter of 2021 primarily as a result of average asset growth.  Net interest income does not include recognition of any fees from SBA PPP loans, which were included in purchase accounting adjustments in connection with the GNB Financial merger.  Net interest margin increased to 3.40% in the first quarter of 2022 from 3.30% in the fourth quarter of 2021.  The increase in net interest margin was primarily a result of an increase in yield on loans.  Non-interest income increased from $581 thousand in the fourth quarter of 2021 to $711 thousand in the first quarter of 2022, driven largely by a gain on the sale of an SBA loan.

Noninterest expense for the first quarter of 2022 totaled $6.1 million, compared to $6.8 million for the three months ended December 31, 2021, primarily due to the absence of merger related expenses.   Salaries and employee benefits expense remained relatively steady quarter over quarter, with a slight increase to $3.7 million for the first quarter of 2022 compared to $3.6 million for the prior quarter.  This increase reflected compensation costs related to the Bank's expansion in the Delaware Valley and York markets in addition to certain strategic hires to support continued growth.

Shareholders' equity decreased from $109.6 million at December 31, 2021 to $106.3 million at March 31, 2022 due to a $4.1 million decrease in accumulated other comprehensive income (loss) as a result of unrealized losses on available-for-sale securities due to the increase in interest rates.  The unrealized loss was partially offset by net income less dividends declared. 

On April 8, 2022, the Company completed a $20.0 million private placement of Fixed-to-Floating Rate Subordinated Notes due 2032, structured to qualify as Tier 2 capital for regulatory capital purposes.  The Company subsequently contributed $15 million of the proceeds to the Bank as additional capital. 

ABOUT LINKBANCORP, Inc.

LINKBANCORP, Inc. was formed in 2018 with a mission to positively impact lives through community banking. Its subsidiary bank, The Gratz Bank, is a Pennsylvania state-chartered bank serving individuals, families, nonprofits and business clients throughout Central and Southeastern Pennsylvania through 10 client solutions centers of The Gratz Bank and LINKBANK, a division of The Gratz Bank.  LINKBANCORP, Inc. common stock is traded over the counter (OTC Pink) under the symbol "LNKB". For further company information, visit ir.linkbancorp.com.

Forward Looking Statements

This press release contains forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of current or historical fact and involve substantial risks and uncertainties. Words such as "anticipates," "believes," "estimates," "expects," "forecasts," "intends," "plans," "projects," "may," "will," "should," and other similar expressions can be used to identify forward-looking statements. Such statements are subject to factors that could cause actual results to differ materially from anticipated results. Among the risks and uncertainties that could cause actual results to differ from those described in the forward-looking statements include, but are not limited to the following: costs or difficulties associated with newly developed or acquired operations; changes in general economic trends, including inflation and changes in interest rates; increased competition; changes in consumer demand for financial services; our ability to control costs and expenses; adverse developments in borrower industries and, in particular, declines in real estate values; changes in and compliance with federal and state laws that regulate our business and capital levels; our ability to raise capital as needed; and the effects of the COVID-19 pandemic and actions taken by governments, businesses and individuals in response. The Company does not undertake, and specifically disclaims, any obligation to publicly revise any forward-looking statements to reflect the occurrence of anticipated or unanticipated events or circumstances after the date of such statements, except as required by law. Accordingly, you should not place undue reliance on forward-looking statements. 

1 Due to the merger of LINKBANCORP, Inc. and GNB Financial Services, Inc. effective September 18, 2021, all periods prior to such date represent the results of GNB Financial Services, Inc. as the accounting acquirer in the merger.

 

Contact:
Nicole Ulmer
Corporate and Investor Relations Officer
717.803.8895
IR@linkbancorp.com

 

LINKBANCORP, Inc. and Subsidiaries

Consolidated Balance Sheet (Unaudited)

















March 31,  
2022


December 31,
2021


March 31,
2021

(In Thousands, except share and per share data)







ASSETS







Noninterest-bearing cash equivalents


$                   6,425


$                   8,620


$                 11,067

Interest-bearing deposits with other institutions


102,704


13,970


31,227

Cash and cash equivalents


109,129


22,590


42,294

Certificates of deposit with other banks


12,828


12,828


15,566

Securities available for sale, at fair value


93,202


103,783


132,429

Securities held to maturity


5,000



Loans held for sale


4,074


3,860


Loans receivable, net of allowance for loan losses of $3,443 at March 31,
2022, $3,152 at December 31, 2021, and $2,787 at March 31, 2021


727,618


711,664


233,101

Investments in restricted bank stock


3,612


2,685


2,452

Premises and equipment, net


5,253


5,289


3,373

Right-of-Use Asset – Premises


4,605


4,680


Bank-owned life insurance


18,898


18,787


8,882

Goodwill and other intangible assets


37,085


37,152


2,770

Deferred tax asset


5,092


4,038


251

Accrued interest receivable and other assets


9,281


5,407


2,635

TOTAL ASSETS


$         1,035,676


$             932,763


$             443,753

LIABILITIES







Deposits:







Demand, noninterest bearing


$               165,228


$               129,243


$                 77,637

Interest bearing


696,942


642,422


311,123

Total deposits


862,170


771,665


388,760

Other Borrowings


36,117


19,814


703

Subordinated Debt


20,653


20,696


Operating Lease Liabilities


4,606


4,680


Accrued interest payable and other liabilities


5,790


6,285


3,540

TOTAL LIABILITIES


929,336


823,140


393,003

SHAREHOLDERS' EQUITY







Preferred stock




Common stock


99


99


3,912

Surplus


82,930


82,910


17,749

Retained earnings


25,623


24,836


26,892

Accumulated other comprehensive income


(2,312)


1,778


2,385

Treasury stock




(188)

TOTAL SHAREHOLDERS' EQUITY


106,340


109,623


50,750

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY


$         1,035,676


$             932,763


$             443,753

 

LINKBANCORP, Inc. and Subsidiaries

Consolidated Statements of Operations (Unaudited)



















Three Months Ended




3/31/2022


12/31/2021


3/31/2021


(In Thousands, except share and per share data)








INTEREST AND DIVIDEND INCOME








Loans receivable, including fees


$              7,763


$              7,286


$              2,676


Other


619


651


648


Total interest and dividend income


8,382


7,937


3,324


INTEREST EXPENSE








Deposits


665


621


504


Other Borrowings


33


25


7


Subordinated Debt


207


212



Total interest expense


905


858


511


NET INTEREST INCOME BEFORE PROVISION FOR
   LOAN LOSSES


7,477


7,079


2,813


Provision for loan losses


280


100


47


NET INTEREST INCOME AFTER PROVISION FOR
   LOAN LOSSES


7,197


6,979


2,766


NONINTEREST INCOME








Service charges on deposit accounts


210


216


194


Bank-owned life insurance


110


77


45


Net realized gains on the sales of debt securities, available for sale


13


74



Gain on sale of secondary market mortgage loans


180



287


Other


198


214


44


Total noninterest income


711


581


570


NONINTEREST EXPENSE








Salaries and employee benefits


3,656


3,602


1,103


Occupancy


281


406


162


Equipment and data processing


597


537


238


Professional fees


228


421


223


FDIC insurance


204


81


30


Bank Shares Tax


183


174


87


Merger Related Expenses



616



Other


949


957


195


Total noninterest expense


6,098


6,794


2,038


Income before income tax expense


1,810


766


1,298


Income tax (benefit) expense


286


(22)


173


NET INCOME


$             1,524


$                788


$             1,125










EARNINGS (LOSS) PER SHARE, BASIC


$               0.16


$               0.08


$               0.20


EARNINGS (LOSS) PER SHARE, DILUTED


$               0.15


$               0.08


$               0.20


WEIGHTED-AVERAGE COMMON SHARES
   OUTSTANDING,








BASIC


9,826,435


9,822,273


5,691,686


DILUTED


10,053,684


10,178,487


5,691,686


 

LINKBANCORP, Inc. and Subsidiaries

Financial Highlights (Unaudited)








As Of or For the Three Months Ended

('Dollars In Thousands)


3/31/2022


12/31/2021

Operating Highlights





Net Income 


$                  1,524


$                     788

Net Interest Income


7,477


7,079

Provision for Loan Losses


280


100

Non-Interest Income


711


581

Non-Interest Expense


6,098


6,794






Financial Condition Data





Total Assets


$           1,035,676


$              932,763

Loans Held for Investment, Net


727,618


711,664






     Noninterest-bearing Deposits


165,228


129,243

     Interst-bearing Deposits


696,942


642,422

Total Deposits


862,170


771,665






Selected Ratios





Net Interest Margin


3.40%


3.30%

Annualized Return on Assets


0.62%


0.33%

Annualized Return on Equity


5.64%


2.87%






Capital Ratios (Bank-Level)





Total Capital Ratio


11.14%


11.50%

Tier 1 Capital Ratio


10.67%


11.02%

Common Equity Tier 1 Capital Ratio


10.67%


11.02%

Leverage Ratio


8.71%


8.85%






Asset Quality Data





Non-performing Assets


$                  1,246


$                  1,410

Non-performing Assets to Total Assets


0.12%


0.15%

Non-performing Loans to Total Loans


0.17%


0.20%

Allowance for Loan Losses ("AFLL")


$                  3,443


$                  3,106

AFLL to Total Loans


0.47%


0.43%

 

 

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