TINTON FALLS, N.J., April 25, 2017 (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 first quarter ended March 31, 2017, highlighted by higher net income and earnings per diluted share along with solid loan and core deposit growth. All share and per share data for all referenced reporting periods have been adjusted for a 5% stock dividend paid on February 28, 2017.

Operating and Financial Highlights
  • First quarter 2017 net income increased 6.4% to $1.80 million, or $0.21 per diluted share, up from $1.69 million, or $0.20 per diluted share, in the corresponding prior year's quarter.
  • Non-interest income for the quarter ended March 31, 2017 totaled $1.12 million, an increase of $232,000, or 26.0%, compared to the same period in 2016 as a result of higher mortgage banking revenue.
  • Total loans as of March 31, 2017, net of unearned fees, increased $9.6 million, or 5.1% annualized, from December 31, 2016 to $762.7 million, predominantly due to growth in the commercial real estate sector.
  • Total deposits as of March 31, 2017 were $799.7 million, an increase of $23.1 million from December 31, 2016, largely as a result of a new municipal relationship established in the first quarter of 2017.  
  • Tangible book value per share was $10.05 at March 31, 2017, compared to $9.88 at December 31, 2016, and $9.17 at March 31, 2016.

Management Commentary William D. Moss, President and CEO, stated, "I am pleased to report that our financial results continue to trend in a positive direction, coupled with the expansion of our loan pipeline. Total loans increased 5.1% on an annualized basis despite the sale of $4.6 million of seasoned portfolio residential adjustable rate mortgages. The performance of our mortgage banking business continues to be a highlight, with revenues increasing by 99.0%, which included a $91,000 gain on the sale of such mortgage loans. In addition, Two River continues to achieve exceptionally strong asset quality, with non-performing loans at the lowest level in over a decade."

Dividend Information On April 19, 2017, the Company's Board of Directors declared a quarterly cash dividend of $0.04 per share, payable May 30, 2017 to shareholders of record as of May 12, 2017, which marks the 17 th consecutive quarterly cash dividend paid by the Company to its shareholders. 

Key Quarterly Performance Metrics
    1 st Qtr. 2017     4 th Qtr. 2016     3 rd Qtr. 2016     2 nd Qtr. 2016     1 st Qtr. 2016  
Net Income (in thousands) $ 1,802   $ 2,567   $ 2,644   $ 1,727   $ 1,693  
Earnings per Common Share - Diluted $ 0.21   $ 0.30   $ 0.31   $ 0.20   $ 0.20  
Return on Average Assets   0.76 %   1.08 %   1.16 %   0.78 %   0.78 %
Return on Average Tangible Assets (1)   0.77 %   1.10 %   1.19 %   0.80 %   0.80 %
Return on Average Equity   7.18 %   10.25 %   10.81 %   7.28 %   7.25 %
Return on Average Tangible Equity (1)   8.74 %   12.53 %   13.29 %   8.98 %   8.98 %
Net Interest Margin   3.45 %   3.43 %   3.55 %   3.57 %   3.57 %
Non-Performing Assets to Total Assets   0.18 %   0.19 %   0.20 %   0.22 %   0.22 %
Allowance as a % of Loans   1.25 %   1.27 %   1.25 %   1.30 %   1.27 %
 
(1) Non-GAAP Financial Information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.
 

Loan Composition

The components of the Company's loan portfolio at March 31, 2017 and December 31, 2016 are as follows:  
     
    (In Thousands)
    March 31, 2017     December 31, 2016  
Commercial and industrial   $   94,757     $   93,697  
Real estate - construction     109,066       111,914  
Real estate - commercial     471,259       460,685  
Real estate - residential     58,987       59,065  
Consumer     29,190       28,279  
Unearned fees     (572 )     (548 )
      762,687       753,092  
Allowance for loan losses     (9,567 )     (9,565 )
Net Loans   $   753,120     $   743,527  
                 

Deposit Composition

The components of the Company's deposits at March 31, 2017 and December 31, 2016 are as follows:  
     
    (In Thousands)
    March 31, 2017     December 31,  2016  
Non-interest bearing   $   156,283     $   160,104  
NOW accounts     188,220       152,771  
Savings deposits     258,327       261,438  
Money market deposits     62,412       62,495  
Listed service CD's     44,674       47,648  
Time deposits / IRA     56,893       56,489  
Wholesale deposits     32,896       35,622  
  Total Deposits   $   799,705     $   776,567  
                 

2017 First Quarter Financial Review

Net Income

Net income for the three months ended March 31, 2017 was $1.80 million, or $0.21 per diluted common share, as compared to $1.69 million, or $0.20 per diluted common share, for the same period last year, an increase of 6.4%. The increase was due primarily to higher net interest income and non-interest income, which was partially offset by a provision for loan losses compared to none in the prior year period along with higher non-interest expenses.

Net Interest Income

Net interest income for the quarter ended March 31, 2017 was $7.63 million, an increase of 7.0% compared to $7.13 million in the corresponding prior year period. This was largely due to an increase of $92.7 million, or 11.5%, in average interest earning assets, primarily driven from growth in the Company's loan portfolio. 

Net Interest Margin

The Company reported a net interest margin of 3.45% for the first quarter of 2017, compared to the 3.43% reported in the fourth quarter of 2016, and 3.57% reported for the first quarter of 2016. The net interest margin improvement of 2 basis points from the fourth quarter of 2016 was a result of slightly higher yielding interest-earning assets. 

Non-Interest Income

Non-interest income for the quarter ended March 31, 2017 totaled $1.12 million, an increase of $232,000, or 26.0%, compared to the same period in 2016. This was largely the result of a $212,000, or 99.1%, increase in residential mortgage banking revenue, which included a $91,000 gain from the sale of $4.6 million of adjustable rate mortgages, coupled with higher earnings from bank owned life insurance and gains on the sale of SBA loans. These increases were partially offset by no net realized gain on sale of securities during the period compared to a gain of $72,000 in the prior year period.

Non-Interest Expense

Non-interest expense for the quarter ended March 31, 2017 totaled $5.78 million, an increase of $380,000, or 7.0%, compared to the same period in 2016, largely due to higher salaries and benefits resulting from both annual merit increases along with higher commission payouts on mortgage banking volume generated during the quarter. This was partially offset by lower loan workout expenses.

Provision / Allowance for Loan Losses

During the quarter, the Company reported a $225,000 provision for loan losses as a result of a partial charge-off representing 50% of a loan that was transferred to non-accrual status during the first quarter. This compared to no provision for loan losses in the prior year period. The Company had $223,000 in net loan charge-offs during the quarter, compared to $250,000 in net loan recoveries in the same period last year.

As of March 31, 2017, the Company's allowance for loan losses remained flat at $9.57 million compared to December 31, 2016. The loss allowance as a percentage of total loans was 1.25% at March 31, 2017 compared to 1.27% at December 31, 2016.

Financial Condition / Balance Sheet At March 31, 2017, the Company maintained capital ratios that were in excess of regulatory standards for well-capitalized institutions. The Company's Tier 1 capital to average assets ratio was 8.96%, its common equity Tier 1 to risk weighted assets ratio was 10.31%, its Tier 1 capital to risk weighted assets ratio was 10.31%, and its total capital to risk weighted assets ratio was 12.70%.

Total assets as of March 31, 2017 were $967.1 million, compared to $940.2 million as of December 31, 2016.

Total loans as of March 31, 2017 were $762.7 million, compared to $753.1 million reported at December 31, 2016.

Total deposits as of March 31, 2017 were $799.7 million, compared to $776.6 million as of December 31, 2016.  Core checking deposits at March 31, 2017 increased to $344.5 million, up $31.6 million, or 10.1%, from year-end, primarily due to a new municipal relationship. The Company continues to focus on building core checking account deposit relationships.

Asset Quality

The Company's non-performing assets at March 31, 2017 decreased to $1.77 million as compared to $1.81 million at December 31, 2016 and $1.98 million at March 31, 2016. Non-performing assets to total assets at March 31, 2017 declined to 0.18%, compared to 0.19% at December 31, 2016, and 0.22% at March 31, 2016.

Non-accrual loans decreased to $1.51 million at March 31, 2017, compared to $1.55 million at December 31, 2016 and $1.72 million at March 31, 2016. OREO was $259,000 at March 31, 2017, unchanged from December 31, 2016 and March 31, 2016.

Troubled debt restructured loan balances amounted to $8.16 million at March 31, 2017, with all but $405,000 performing. This compared to $8.23 million at December 31, 2016 and $9.08 million at March 31, 2016.

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 15 branches along with two Loan Production Offices throughout Monmouth, Middlesex, Union, and Ocean Counties, New Jersey. More information about Two River Community Bank and Two River Bancorp is available at  www.tworiverbank.com.

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 "continue," "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; 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, 2016. 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. 
TWO RIVER BANCORP CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) For the Three Months Ended March 31, 2017 and 2016 (in thousands, except per share data)  
   
    Three Months Ended March 31,  
      2017       2016  
INTEREST INCOME:            
Loans, including fees   $   8,403     $ 7,913  
Securities:            
Taxable     233       192  
Tax-exempt     285       200  
Interest-bearing deposits     72       33  
Total Interest Income     8,993       8,338  
INTEREST EXPENSE:            
Deposits     1,038       883  
Securities sold under agreements to repurchase     15       14  
Federal Home Loan Bank ("FHLB") and other borrowings     145       148  
Subordinated debt     165       165  
Total Interest Expense     1,363       1,210  
Net Interest Income     7,630       7,128  
PROVISION FOR LOAN LOSSES       225       -  
Net Interest Income after Provision for Loan Losses     7,405       7,128  
NON-INTEREST INCOME:            
Service fees on deposit accounts     150       136  
Mortgage banking     426       214  
Other loan fees     92       81  
Earnings from investment in bank owned life insurance     136       109  
Gain on sale of SBA loans       117       94  
Net realized gain on sale of securities       -        72  
Other income       204       187  
Total Non-Interest Income     1,125       893  
NON-INTEREST EXPENSES:            
Salaries and employee benefits       3,453       3,105  
Occupancy and equipment       1,054       995  
Professional       341       335  
Insurance       48       47  
FDIC insurance and assessments       123       105  
Advertising       110       110  
Data processing       130       135  
Outside services fees       103       123  
Amortization of identifiable intangibles       -        10  
OREO expenses, impairment and sales, net       (3 )     19  
Loan workout expenses       27       80  
Other operating       391       333  
Total Non-Interest Expenses     5,777       5,397  
Income before Income Taxes     2,753       2,624  
INCOME TAX EXPENSE     951       931  
Net Income     1,802       1,693  
EARNINGS PER COMMON SHARE:            
Basic   $   0.22     $ 0.20  
Diluted   $   0.21     $ 0.20  
Weighted average common shares outstanding:            
Basic     8,341       8,314  
Diluted     8,618       8,493  

 
TWO RIVER BANCORP CONSOLIDATED BALANCE SHEETS (Unaudited) (in thousands, except share data)  
   
  March 31,   December 31,  
  2017   2016  
ASSETS            
Cash and due from banks $ 21,266   $ 19,844  
Interest-bearing deposits in bank     40,395     22,233  
Cash and cash equivalents    61,661     42,077  
             
Securities available for sale    32,797     34,464  
Securities held to maturity    57,067     57,843  
Restricted investments, at cost     4,986     4,805  
Loans held for sale     3,763     4,537  
Loans   762,687     753,092  
Allowance for loan losses   (9,567 )   (9,565 )
Net loans    753,120     743,527  
             
OREO     259     259  
Bank owned life insurance   21,165     21,029  
Premises and equipment, net   5,327     4,662  
Accrued interest receivable    2,090     2,234  
Goodwill   18,109     18,109  
Other assets    6,729     6,665  
             
TOTAL ASSETS $ 967,073   $ 940,211  
             
LIABILITIES            
Deposits:            
Non-interest bearing $ 156,284   $ 160,104  
Interest-bearing   643,421     616,463  
Total Deposits   799,705     776,567  
             
Securities sold under agreements to repurchase   21,437     19,915  
FHLB and other borrowings    24,300     25,300  
Subordinated debt     9,863     9,855  
Accrued interest payable     98     100  
Other liabilities     9,264     7,758  
             
Total Liabilities   864,667     839,495  
             
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 - 8,701,461 and 8,677,536 at March 31, 2017 and December 31, 2016, respectively            
Outstanding - 8,389,367 and 8,365,442 at March 31, 2017 and December 31, 2016, respectively   79,194     79,056  
Retained earnings   25,930     24,447  
Treasury stock, at cost; 312,094 shares at March 31, 2017 and December 31, 2016   (2,396 )   (2,396 )
Accumulated other comprehensive loss   (322 )   (391 )
Total Shareholders' Equity   102,406     100,716  
             
TOTAL LIABILITIES and SHAREHOLDERS' EQUITY $ 967,073   $ 940,211  

 
TWO RIVER BANCORP Selected Consolidated Financial Data  
   
Selected Consolidated Earnings Data  
(in thousands, except per share data)  
   
   Three Months Ended  
  March 31,   Dec. 31,   March 31,  
Selected Consolidated Earnings Data:   2017     2016     2016  
Total Interest Income $   8,993   $ 8,970   $ 8,338  
Total Interest Expense   1,363     1,376     1,210  
Net Interest Income   7,630     7,594     7,128  
Provision for (Recovery of) Loan Losses   225     (345 )   -  
Net Interest Income after Provision for (Recovery of) Loan Losses   7,405     7,939     7,128  
Other Non-Interest Income   1,125     1,447     893  
Other Non-Interest Expenses   5,777     5,360     5,397  
Income before Income Taxes   2,753     4,026     2,624  
Income Tax Expense   951     1,459     931  
Net Income   1,802     2,567     1,693  
             
Per Common Share Data:            
Basic Earnings $   0.22   $ 0.31   $ 0.20  
Diluted Earnings $   0.21   $ 0.30   $ 0.20  
Book Value $   12.21   $ 12.04   $ 11.34  
Tangible Book Value (1) $   10.05   $ 9.88   $ 9.17  
Average Common Shares Outstanding (in thousands):            
Basic   8,341     8,322     8,314  
Diluted   8,618     8,565     8,493  
   
(1) Non-GAAP Financial Information. See "Reconciliation of Non-GAAP Financial Measures" at end of release.  

 
Selected Period End Balances                      
(in thousands)                      
                       
  March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,    
    2017     2016     2016     2016     2016    
Total Assets $   967,073   $ 940,211   $ 909,170   $ 884,700   $ 881,857    
Investment Securities and Restricted Stock    94,850     97,112     82,677     84,246     83,376    
Total Loans    762,687     753,092     753,982     726,414     704,401    
Allowance for Loan Losses    (9,567 )   (9,565 )   (9,452 )   (9,418 )   (8,963 )  
Goodwill and Other Intangible Assets    18,109     18,109     18,109     18,109     18,109    
Total Deposits    799,705     776,567     739,247     726,264     727,104    
Repurchase Agreements    21,437     19,915     18,645     21,683     20,132    
FHLB and Other Borrowings    24,300     25,300     35,300     23,800     23,800    
Subordinated Debt    9,863     9,855     9,847     9,839     9,831    
Shareholders' Equity    102,406     100,716     98,594     96,293     94,613    

 
Asset Quality Data (by Quarter)                      
(dollars in thousands)                      
                       
  March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,    
    2017     2016     2016     2016     2016    
Nonaccrual Loans $   1,511   $ 1,548   $ 1,587   $ 1,697   $ 1,723    
OREO   259     259     259     259     259    
Total Non-Performing Assets   1,770     1,807     1,846     1,956     1,982    
                       
Troubled Debt Restructured Loans:                      
Performing   7,754     8,075     8,366     8,492     8,920    
Non-Performing   405     157     157     158     161    
                       
Non-Performing Loans to Total Loans   0.20 %   0.21 %   0.21 %   0.23 %   0.24 %  
Non-Performing Assets to Total Assets   0.18 %   0.19 %   0.20 %   0.22 %   0.22 %  
Allowance as a % of Loans   1.25 %   1.27 %   1.25 %   1.30 %   1.27 %  

Capital Ratios
  March 31, 2017   December 31, 2016  
  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 10.31 % 8.96 % 10.31 % 12.70 % 10.33 % 8.94 % 10.33 % 12.76 %
Two River Community Bank 11.44 % 9.94 % 11.44 % 12.61 % 11.49 % 9.95 % 11.49 % 12.68 %
"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," the Tier 1 Capital to Risk Weighted Assets has to be at least 6.00%.

Consolidated Average Balance Sheets & Yields
With Resultant Interest and Average Rates
       
  Three Months Ended   Three Months Ended
(dollars in thousands) March 31, 2017   March 31, 2016
    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 $ 38,263   $ 72   0.76 %   $ 29,721   $ 33   0.45 %
Investment securities 96,030   518   2.16 %   79,169   392   1.98 %
Loans, net of unearned fees (1) (2) 762,150   8,403   4.47 %   694,814   7,913   4.58 %
                           
Total Interest-Earning Assets 896,443   8,993   4.07 %   803,704   8,338   4.17 %
                           
Non-Interest-Earning Assets:                          
Allowance for loan losses (9,645 )           (8,795 )        
All other assets 75,551             75,505          
                           
Total Assets $ 962,349               $ 870,414            
                           
LIABILITIES & SHAREHOLDERS' EQUITY                          
Interest-Bearing Liabilities:                          
NOW deposits $ 191,903   212   0.45 %   $ 150,629   151   0.40 %
Savings deposits 256,499   327   0.52 %   225,197   274   0.49 %
Money market deposits 61,668   26   0.17 %   73,860   30   0.16 %
Time deposits 136,474   473   1.41 %   123,433   428   1.39 %
Securities sold under agreements to repurchase 19,376   15   0.31 %   17,700   14   0.32 %
FHLB and other borrowings 24,447   145   2.41 %   24,166   148   2.46 %
Subordinated debt 9,860   165   6.69 %   9,827   165   6.72 %
                           
Total Interest-Bearing Liabilities 700,227   1,363   0.79 %   624,812   1,210   0.78 %
                           
Non-Interest-Bearing Liabilities:                          
Demand deposits 153,185             144,420          
Other liabilities 7,185             7,209          
                           
Total Non-Interest-Bearing Liabilities 160,370             151,629          
                           
Shareholders' Equity 101,752             93,973          
                           
Total Liabilities and Shareholders' Equity $ 962,349               $ 870,414            
                           
NET INTEREST INCOME     $ 7,630             $ 7,128      
                           
NET INTEREST SPREAD (3)         3.28 %           3.39 %
                           
NET INTEREST MARGIN (4)         3.45 %           3.57 %
 
(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.

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  
  March 31,   Dec. 31,   Sept. 30,   June 30,   March 31,  
  2017   2016   2016   2016   2016  
Common shareholders' equity $ 102,406   $ 100,716   $ 98,594   $ 96,293   $ 94,613  
Less: goodwill and other intangibles  (18,109 )   (18,109 )  (18,109 )  (18,109 )  (18,109 )
Tangible common shareholders' equity $ 84,297   $ 82,607   $ 80,485   $ 78,184   $ 76,504  
                     
Common shares outstanding   8,389     8,365     8,358   8,366     8,341  
Book value per common share $ 12.21   $ 12.04   $ 11.80   $ 11.51   $ 11.34  
                     
Book value per common share $ 12.21   $ 12.04   $ 11.80   $ 11.51   $ 11.34  
Effect of intangible assets   (2.16 )   (2.16 )   (2.17 )   (2.16 )   (2.17 )
Tangible book value per common share $ 10.05   $ 9.88   $ 9.63   $ 9.35   $ 9.17  
                     
Return on average assets 0.76 % 1.08 % 1.16 % 0.78 % 0.78 %
Effect of average intangible assets 0.01 % 0.02 % 0.03 % 0.02 % 0.02 %
Return on average tangible assets 0.77 % 1.10 % 1.19 % 0.80 % 0.80 %
                     
Return on average equity 7.18 % 10.25 % 10.81 % 7.28 % 7.25 %
Effect of average intangible assets 1.56 % 2.28 % 2.48 % 1.70 % 1.73 %
Return on average tangible equity 8.74 % 12.53 % 13.29 % 8.98 % 8.98 %

Investor Contact:Adam Prior, Senior Vice PresidentThe Equity Group Inc.Phone: (212) 836-9606E-mail: aprior@equityny.comMedia Contact:Adam Cadmus, Marketing DirectorPhone: (732) 982-2167Email: acadmus@tworiverbank.com

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