Level One Bancorp, Inc. reports third quarter 2019 net income of $4.4 million, representing $0.56 of diluted earnings per common share

Company Release - 10/30/2019 8:30 AM ET

FARMINGTON HILLS, Mich., Oct. 30, 2019 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported financial results for the third quarter of 2019, which included net income of $4.4 million, or $0.56 per diluted share. Excluding expenses related to the pending merger with Ann Arbor State Bank, net income would have been $4.7 million, or $0.60 per diluted share. This compares to net income of  $3.6 million, or $0.45 per diluted share, in the preceding quarter and $3.3 million, or $0.41 per diluted share, in the third quarter of 2018.

Patrick J. Fehring, President and Chief Executive Officer of Level One, commented, "We are pleased to announce a solid third quarter with net income of $4.4 million, which was $1.2 million, or 35%, higher than net income in third quarter of 2018. Our third quarter earnings were driven by net interest income of $13.0 million, noninterest income of $3.9 million, and a previously announced provision benefit related to a loan payoff. Overall, credit quality has improved as nonperforming assets as a  percentage of total assets declined to 0.78% at September 30, 2019 compared with 1.30% at December 31, 2018. Finally, book value per share increased 15.98% over the past twelve months."

He continued, "In addition, during the third quarter of 2019, we announced the signing of a definitive merger agreement with Ann Arbor State Bank. We are extremely excited about this merger as it aligns with our strategic growth goals and affords us an opportunity to accelerate our expansion in the very attractive Ann Arbor market."

Third Quarter 2019 Financial Highlights

  • Net income was $4.4 million, or $0.56 per diluted share, for the third quarter of 2019
  • Net interest margin, on a fully taxable equivalent ("FTE") basis, was 3.59%, compared to 3.50% in the preceding quarter and 3.97% in the third quarter of 2018
  • Noninterest income increased 100.52% to $3.9 million in the third quarter of 2019, compared to $1.9 million in the third quarter of 2018, primarily due to higher income from mortgage banking activities
  • Total assets increased 4.37% to $1.51 billion at September 30, 2019, compared to $1.45 billion at September 30, 2018
  • Total loans increased 4.84% to $1.17 billion at September 30, 2019, compared to $1.11 billion at September 30, 2018
  • Total deposits increased 5.68% to $1.19 billion at September 30, 2019, compared to $1.13 billion at September 30, 2018
  • Book value per share increased 15.98% to $21.77 per share at September 30, 2019, compared to $18.77 per share at September 30, 2018
  • Tangible book value per share increased 17.20% to $20.51 per share at September 30, 2019, compared to $17.50 per share at September 30, 2018

Balance Sheet Review

Level One's total assets were $1.51 billion at September 30, 2019, an increase of $93.2 million, or 6.58%, from $1.42 billion at December 31, 2018, and up $63.2 million, or 4.37%, from $1.45 billion at September 30, 2018. The increase in total assets from December 31, 2018 was primarily due to an increase in originated loans, mortgage loans held for sale, fair value of interest rate swaps and receivables from a loan sub-servicer (both included under "other assets"), and cash and cash equivalents.

The investment securities portfolio was $205.2 million at September 30, 2019, an increase of $984 thousand, or 0.48%, from $204.3 million at December 31, 2018, and up $6.2 million, or 3.11%, from $199.1 million at September 30, 2018. The increase in the investment securities portfolio during the twelve months ended September 30, 2019 reflected our plan to grow the investment securities portfolio proportionately with total assets.

Total loans were $1.17 billion at September 30, 2019, an increase of $42.4 million, or 3.76%, from $1.13 billion at December 31, 2018, and up $53.9 million, or 4.84%, from $1.11 billion at September 30, 2018. The growth in total loans compared to December 31, 2018 and September 30, 2018 was primarily due to growth in both our commercial and residential real estate loan portfolio.

Total deposits were $1.19 billion at September 30, 2019, an increase of $59.9 million, or 5.28%, from $1.13 billion at December 31, 2018, and up $64.2 million, or 5.68%, from $1.13 billion at September 30, 2018.  The increase in deposits compared to December 31, 2018 and September 30, 2018 was primarily due to growth in our money market and savings deposits. Total deposit composition at September 30, 2019 consisted of 32.55% of demand deposit accounts, 27.83% of savings and money market accounts and 39.62% of time deposits.

Operating Results

Level One's net interest income increased $547 thousand, or 4.40%, to $13.0 million in the third quarter of 2019, compared to $12.4 million in the preceding quarter, primarily due to the payoff of a large, nonaccrual loan relationship during the third quarter of 2019 which resulted in $408 thousand in loan interest and fee income. Net interest income remained relatively flat as compared to the third quarter of 2018.

Level One’s net interest margin, on a FTE basis, was 3.59% in the third quarter of 2019, compared to 3.50%  in the preceding quarter and 3.97% in the third quarter of 2018. This increase in the net interest margin compared to the preceding quarter was primarily a result of lower cost of funds quarter over quarter. Average cost of funds was 1.98% for the third quarter of 2019 and 2.07% for the preceding quarter. The decrease in net interest margin year over year was primarily due to lower average loan yield and higher cost of funds as the federal funds rate was 25 basis points higher year over year.

Level One's noninterest income increased $381 thousand, or 10.96%, to $3.9 million in the third quarter of 2019, compared to $3.5 million in the preceding quarter, and increased $2.0 million, or 100.52%, compared to $1.9 million in the third quarter of 2018. The increase in noninterest income compared to the preceding quarter was primarily due to an increase in interest rate swap fees (included in other charges and fees) and net gains on the sale of investment securities. The increase in noninterest income year over year was attributable to the same factors mentioned in the quarter to quarter analysis above, as well as an increase in income related to mortgage banking activities. The increase in the mortgage banking activities income year over year was predominantly as a result of the doubling of our mortgage team in the third quarter of 2018.

Level One's noninterest expense increased $372 thousand, or 3.33%, to $11.5 million in the third quarter of 2019, compared to $11.2 million in the preceding quarter, and increased $1.0 million, or 10.38%, compared to $10.5 million in the third quarter of 2018.  The increase in noninterest expenses quarter over quarter was primarily a result of increased mortgage commissions (included in salary and employee benefits) due to higher loan volumes in the third quarter of 2019. The increase in noninterest expense year over year was primarily a result of increased mortgage commissions, salary and employee benefits due to the overall growth in team member headcount, and $319 thousand of expense related to the pending merger with Ann Arbor State Bank. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the third quarter of 2019 was 68.50%, compared to 70.15% for the preceding quarter and 69.73% in the third quarter of 2018.

Level One's income tax provision was $914 thousand, or 17.17% of pretax income, in the third quarter of 2019, as compared to $767 thousand, or 17.75% of pretax income, in the preceding quarter and $665 thousand, or 16.96% of pretax income, in the third quarter of 2018.

Asset Quality

Nonaccrual loans were $11.5 million, or 0.98% of total loans, at September 30, 2019, a decrease of $7.0 million from nonaccrual loans of $18.4 million, or 1.64% of total loans, at December 31, 2018, and a decrease of $1.4 million from nonaccrual loans of $12.9 million, or 1.15% of total loans, at September 30, 2018. The decrease in nonaccrual loans compared to December 31, 2018 was primarily due to the payoff of three large commercial loan relationships on nonaccrual status during the first and third quarter 2019 totaling $12.4 million. This was partially offset by two commercial loan relationships totaling $5.2 million moving to nonaccrual status. The decrease in nonaccrual loans compared to September 30, 2018 was primarily due to payoffs of three commercial loan relationships on nonaccrual status totaling $7.4 million, partially offset by four commercial loan relationships totaling $6.1 million moving to nonaccrual status.

Level One had $373 thousand of other real estate owned assets at September 30, 2019, compared to no other real estate owned assets at December 31, 2018 and September 30, 2018. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 0.78% at September 30, 2019, compared to 1.30% at December 31, 2018, and 0.89% at September 30, 2018.

In addition, we had $157 thousand of loans 90 days or more past due and still accruing at September 30, 2019, compared to $243 thousand at December 31, 2018 and $354 thousand at September 30, 2018, all of which consisted of purchase credit impaired loans from previously acquired financial institutions.

Performing troubled debt restructured loans that were not included in nonaccrual loans at September 30, 2019 were $914 thousand, compared to $931 thousand at December 31, 2018 and $2.5 million at September 30, 2018. The decrease in performing troubled debt restructurings year over year was due to one commercial loan relationship totaling $1.5 million moving to nonaccrual. Loans to borrowers who are in financial difficulty and who have been granted concessions that may include interest rate reductions, forbearance agreements, and principal deferral or reduction, are categorized as troubled debt restructured loans.

Net chargeoffs in the third quarter of 2019 were $30 thousand, or 0.01% of average loans on an annualized basis, compared to $36 thousand of net chargeoffs, or 0.01% of average loans on an annualized basis, for the preceding quarter and $194 thousand of net chargeoffs, or 0.07% of average loans on an annualized basis, for the quarter ended September 30, 2018.

Level One's third quarter of 2019 provision for loan losses was a provision benefit of $16 thousand, compared to a provision expense of $429 thousand in the preceding quarter and a provision expense of $619 thousand in the third quarter of 2018. The decrease in the provision expense quarter over quarter as well as year over year was primarily due to fewer charge-offs and the release of $362 thousand of specific reserves on a commercial loan relationship that paid off in the third quarter of 2019. The allowance for loan losses was $12.3 million, or 1.05% of total loans, at September 30, 2019, compared to $11.6 million, or 1.03% of total loans, at December 31, 2018, and $11.9 million, or 1.07% of total loans, at September 30, 2018. As of September 30, 2019, the allowance for loan losses as a percentage of nonaccrual loans was 107.46%, compared to 62.70% at December 31, 2018, and 92.36% at September 30, 2018.

Capital

Total shareholders’ equity was $168.0 million at September 30, 2019, an increase of $16.2 million, or 10.68%, compared with $151.8 million at December 31, 2018, primarily as a result of increased retained earnings and accumulated other comprehensive income.  Total shareholders' equity increased $22.5 million, or 15.47%, from $145.5 million at September 30, 2018 as a result of the same factors previously mentioned.

Recent Developments

Merger with Ann Arbor Bank: On August 13, 2019, Level One and Ann Arbor Bancorp, Inc. ("AAB") jointly announced the signing of an Agreement and Plan of Merger, dated August 12, 2019, pursuant to which Level One has agreed to acquire AAB and its wholly owned subsidiary, Ann Arbor State Bank.

Third Quarter Dividend: On September 19, 2019, Level One’s Board of Directors declared a quarterly cash dividend of $0.04 per share. This dividend was paid out on October 15, 2019, to stockholders of record at the close of business on September 30, 2019.

About Level One Bancorp, Inc.

Level One Bancorp, Inc. is the holding company for Level One Bank, a full-service commercial and consumer bank headquartered in Michigan with assets of approximately $1.51 billion as of September 30, 2019. It operates twelve banking centers throughout southeast Michigan and west Michigan. Level One Bank's success has been recognized both locally and nationally as the U.S. Small Business Administration's (SBA) "Community Lender of the Year" and "Export Finance Lender of the Year" and one of S&P Global's Top 10 "Best-Performing Community Banks" in the nation. Level One's commercial division provides a menu of products including lines of credit, term loans, leases, commercial mortgages, SBA loans, export-import financing, and a full suite of treasury management and private banking services. The consumer division offers personal savings and checking accounts and a complete array of consumer loan products including residential mortgages, home equity loans, auto loans, and credit card services. Level One Bank offers a variety of online banking services and a robust mobile banking application for individuals and businesses.  Level One Bank offers the sophistication of a big bank, the heart of a community bank, and the spirit of an entrepreneur. For more information, visit www.levelonebank.com

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect management’s current views of future events and operations. These forward-looking statements are based on the information currently available to the Company as of the date of this release. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "will," "propose," "may," "plan," "seek," "expect," "intend," "estimate," "anticipate," "believe," "continue" or similar technology. It is important to note that these forward-looking statements are not guarantees of future performance and involve risk and uncertainties, including, but not limited to, the ability of the Company to implement its strategy and expand its lending operations, changes in interest rates and other general economic, business and political conditions, including changes in the financial markets, as well as other risks described in the Company's filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statements to reflect changes in assumptions, the occurrence of unanticipated events, or otherwise.

Summary Consolidated Financial Information
(Unaudited)As of or for the three months ended
(Dollars in thousands, except per share data)September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 September 30,
2018
Earnings Summary         
Interest income$17,983  $17,657  $17,442  $17,041  $16,629 
Interest expense4,995  5,216  4,724  4,228  3,560 
Net interest income12,988  12,441  12,718  12,813  13,069 
Provision (benefit) for loan losses(16) 429  422  (51) 619 
Noninterest income3,858  3,477  2,286  2,307  1,924 
Noninterest expense11,539  11,167  10,368  10,384  10,454 
Income before income taxes5,323  4,322  4,214  4,787  3,920 
Income tax provision914  767  747  836  665 
Net income$4,409  $3,555  $3,467  $3,951  $3,255 
Per Share Data         
Basic earnings per common share$0.57  $0.46  $0.45  $0.51  $0.42 
Diluted earnings per common share0.56  0.45  0.44  0.50  0.41 
Book value per common share21.77  21.07  20.15  19.58  18.77 
Tangible book value per share (1)20.51  19.81  18.88  18.31  17.50 
Shares outstanding (in thousands)7,714  7,728  7,749  7,750  7,749 
Average basic common shares (in thousands)7,721  7,741  7,752  7,750  7,749 
Average diluted common shares (in thousands)7,752  7,856  7,869  7,893  7,901 
Selected Period End Balances         
Total assets$1,509,463  $1,505,376  $1,456,552  $1,416,215  $1,446,269 
Securities available-for-sale205,242  218,145  226,874  204,258  199,051 
Total loans1,168,923  1,166,501  1,131,097  1,126,565  1,114,999 
Total deposits1,194,542  1,229,445  1,151,463  1,134,635  1,130,311 
Total liabilities1,341,495  1,342,509  1,300,433  1,264,455  1,300,810 
Total shareholders' equity167,968  162,867  156,119  151,760  145,459 
Tangible shareholders' equity (1)158,250  153,121  146,337  141,926  135,570 
Performance and Capital Ratios         
Return on average assets (annualized)1.16% 0.95% 0.96% 1.11% 0.95%
Return on average equity (annualized)10.58  8.92  8.99  10.69  8.95 
Net interest margin (fully taxable equivalent)(2)3.59  3.50  3.76  3.73  3.97 
Efficiency ratio (noninterest expense/net interest income plus noninterest income)68.50  70.15  69.10  68.68  69.73 
Dividend payout ratio7.03  8.69  6.72  5.87  7.13 
Total shareholders' equity to total assets11.13  10.82  10.72  10.72  10.06 
Tangible equity to tangible assets (1)10.55  10.24  10.11  10.09  9.44 
Common equity tier 1 to risk-weighted assets11.73  11.49  11.78  11.82  11.75 
Tier 1 capital to risk-weighted assets11.73  11.49  11.78  11.82  11.75 
Total capital to risk-weighted assets13.84  13.62  13.95  14.00  13.99 
Tier 1 capital to average assets (leverage ratio)10.12  10.01  10.19  10.21  10.31 
Asset Quality Ratios:         
Net charge-offs to average loans0.01% 0.01% 0.01% 0.10% 0.07%
Nonperforming assets as a percentage of total assets0.78  0.99  1.17  1.30  0.89 
Nonaccrual loans as a percent of total loans0.98  1.25  1.47  1.64  1.15 
Allowance for loan losses as a percentage of period-end loans1.05  1.06  1.06  1.03  1.07 
Allowance for loan losses as a percentage of nonaccrual loans107.46  84.94  71.85  62.70  92.36 
Allowance for loan losses as a percentage of nonaccrual loans, excluding allowance allocated to loans accounted for under ASC 310-30100.52  79.41  66.33  57.71  84.72 
(1) See section entitled "GAAP Reconciliation of Non-GAAP Financial Measures" below.
(2) Presented on a tax equivalent basis using a 21% tax rate.

GAAP Reconciliation of Non-GAAP Financial Measures

Some of the financial measures included in this report are not measures of financial condition or performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share and the ratio of tangible equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe that providing this information to financial analysts and investors allows them to evaluate capital adequacy, as well as better understand and evaluate the Company’s core financial results for the periods in question.

We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles, mortgage servicing rights and goodwill; (ii) tangible book value per share as tangible shareholders' equity divided by shares of common stock outstanding; and (iii) tangible assets as total assets, less core deposit intangibles, mortgage servicing rights and goodwill.

The following presents these non-GAAP financial measures along with their most directly comparable financial measure calculated in accordance with GAAP:

 As of
(Dollars in thousands, except per share data)September 30,
2019
 June 30,
2019
 March 31,
2019
 December 31,
2018
 September 30,
2018
 (Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Total shareholders' equity$167,968  $162,867  $156,119  $151,760  $145,459 
Less:         
Goodwill9,387  9,387  9,387  9,387  9,387 
Other intangible assets, net331  359  395  447  502 
Tangible shareholders' equity$158,250  $153,121  $146,337  $141,926  $135,570 
          
Shares outstanding (in thousands)7,714  7,728  7,749  7,750  7,749 
Tangible book value per share$20.51  $19.81  $18.88  $18.31  $17.50 
          
Total assets$1,509,463  $1,505,376  $1,456,552  $1,416,215  $1,446,269 
Less:         
Goodwill9,387  9,387  9,387  9,387  9,387 
Other intangible assets, net331  359  395  447  502 
Tangible assets$1,499,745  $1,495,630  $1,446,770  $1,406,381  $1,436,380 
          
Tangible equity to tangible assets10.55% 10.24% 10.11% 10.09% 9.44%
          
Net income, as reported$4,409  $3,555  $3,467  $3,951  $3,255 
Acquisition and due diligence fees319         
Income tax benefit (1)(67)        
Net income, excluding acquisition and due diligence fees$4,661  $3,555  $3,467  $3,951  $3,255 
          
Diluted earnings per share, as reported$0.56  $0.45  $0.44  $0.50  $0.41 
Effect of acquisition and due diligence fees, net of tax0.04         
Diluted earnings per common share, excluding acquisition and due diligence fees$0.60  $0.45  $0.44  $0.50  $0.41 
          
(1) Assumes acquisition and due diligence fees are deductible at an income tax rate of 21%.    


Consolidated Balance Sheets     
 As of
 September 30, December 31, September 30,
(Dollars in thousands)2019 2018 2018
Assets(Unaudited)   (Unaudited)
Cash and cash equivalents$49,361  $33,296  $77,837 
Securities available-for-sale205,242  204,258  199,051 
Federal Home Loan Bank stock8,325  8,325  8,325 
Mortgage loans held for sale, at fair value26,864  5,595  9,392 
Loans:     
Originated loans1,093,694  1,041,898  1,022,119 
Acquired loans75,229  84,667  92,880 
Total loans1,168,923  1,126,565  1,114,999 
Less: Allowance for loan losses(12,307) (11,566) (11,890)
Net loans1,156,616  1,114,999  1,103,109 
Premises and equipment, net13,427  13,242  13,506 
Goodwill9,387  9,387  9,387 
Other intangible assets, net331  447  502 
Bank-owned life insurance12,080  11,866  11,785 
Income tax benefit469  2,467  3,201 
Other assets27,361  12,333  10,174 
Total assets$1,509,463  $1,416,215  $1,446,269 
Liabilities     
Deposits:     
Noninterest-bearing demand deposits$322,069  $309,384  $380,369 
Interest-bearing demand deposits66,716  52,804  50,226 
Money market and savings deposits332,432  287,575  238,351 
Time deposits473,325  484,872  461,365 
Total deposits1,194,542  1,134,635  1,130,311 
Borrowings111,937  99,574  146,483 
Subordinated notes14,934  14,891  14,882 
Other liabilities20,082  15,355  9,134 
Total liabilities1,341,495  1,264,455  1,300,810 
Shareholders' equity     
Common stock, no par value per share:     
Authorized - 20,000,000 shares     
Issued and outstanding - 7,714,000 shares at September 30, 2019, 7,750,216 shares at December 31, 2018, and 7,749,216 shares at September 30, 201889,206  90,621  90,411 
Retained earnings73,394  62,891  59,173 
Accumulated other comprehensive income (loss), net of tax5,368  (1,752) (4,125)
Total shareholders' equity167,968  151,760  145,459 
Total liabilities and shareholders' equity$1,509,463  $1,416,215  $1,446,269 


Consolidated Statements of Income          
(Unaudited)Three months ended Nine months ended
 September 30, June 30, September 30, September 30,
 September 30,
(In thousands, except per share data)2019 2019 2018 2019
 2018
Interest income          
Originated loans, including fees$14,633  $14,125  $12,653  $42,652  $35,664 
Acquired loans, including fees1,501  1,637  2,454  4,895  7,173 
Securities:          
Taxable857  980  816  2,773  2,057 
Tax-exempt588  595  450  1,728  1,181 
Federal funds sold and other404  320  256  1,034  708 
Total interest income17,983  17,657  16,629  53,082  46,783 
Interest Expense          
Deposits4,478  4,617  2,802  13,216  7,467 
Borrowed funds261  346  502  960  946 
Subordinated notes256  253  256  759  759 
Total interest expense4,995  5,216  3,560  14,935  9,172 
Net interest income12,988  12,441  13,069  38,147  37,611 
Provision expense (benefit) for loan losses(16) 429  619  835  463 
Net interest income after provision for loan losses13,004  12,012  12,450  37,312  37,148 
Noninterest income          
Service charges on deposits627  662  655  1,914  1,915 
Net gain on sales of securities151  7    151   
Mortgage banking activities2,352  2,316  754  5,788  1,394 
Net gain (loss) on sale of commercial loans(37)     (37) 11 
Other charges and fees765  492  515  1,805  1,428 
Total noninterest income3,858  3,477  1,924  9,621  4,748 
Noninterest expense          
Salary and employee benefits7,536  7,193  6,888  21,642  19,013 
Occupancy and equipment expense1,203  1,168  1,173  3,575  3,293 
Professional service fees465  385  494  1,212  1,231 
Acquisition and due diligence fees319      319   
Marketing expense379  288  264  843  697 
Printing and supplies expense78  104  127  250  343 
Data processing expense661  606  565  1862  1,512 
Other expense898  1,423  943  3,371  3,205 
Total noninterest expense11,539  11,167  10,454  33,074  29,294 
Income before income taxes5,323  4,322  3,920  13,859  12,602 
Income tax provision914  767  665  2,428  2,167 
Net income$4,409  $3,555  $3,255  $11,431  $10,435 
Earnings per common share:          
Basic earnings per common share$0.57  $0.46  $0.42  $1.48  $1.44 
Diluted earnings per common share$0.56  $0.45  $0.41  $1.46  $1.41 
Cash dividends declared per common share$0.04  $0.04  $0.03  $0.12  $0.09 
Weighted average common shares outstanding—basic 7,721   7,741   7,749  7,738   7,264 
Weighted average common shares outstanding—diluted 7,752   7,856   7,901  7,776   7,414 


Net Interest Income and Net Interest Margin         
(Unaudited)For the three months ended
 September 30, 2019 June 30, 2019 September 30, 2018
(Dollars in thousands)Average
Balance
Interest (1)Average
Rate (2)
 Average
Balance
Interest (1)Average
Rate (2)
 Average
Balance
Interest (1)Average
Rate (2)
Interest-earning assets:           
Gross loans (3)$1,182,764 $16,134 5.41% $1,164,871 $15,762 5.43% $1,075,642 $15,107 5.57%
Investment securities: (4)           
Taxable121,473 857 2.80  143,841 980 2.73  134,619 816 2.41 
Tax-exempt85,332 588 3.28  87,287 595 3.26  67,599 450 3.13 
Interest earning cash balances51,142 289 2.24  32,606 206 2.53  28,685 157 2.17 
Federal Home Loan Bank Stock8,325 115 5.48  8,325 114 5.49  8,303 99 4.73 
Total interest-earning assets$1,449,036 $17,983 4.96% $1,436,930 $17,657 4.96% $1,314,848 $16,629 5.04%
Non-earning assets:           
  Cash and due from banks23,103    24,347    22,358   
  Premises and equipment13,228    13,239    13,465   
  Goodwill9,387    9,387    9,387   
  Other intangible assets, net347    376    533   
  Bank-owned life insurance12,023    11,948    11,732   
  Allowance for loan losses(12,241)   (12,039)   (11,591)  
  Other non-earning assets27,145    16,804    7,414   
  Total assets$1,522,028    $1,500,992    $1,368,146   
Interest-bearing liabilities:           
  Interest-bearing demand deposits$51,963 $63 0.48% $56,434 $69 0.49% $60,022 $52 0.34%
  Money market and savings deposits320,363 1,170 1.45  295,371 1,125 1.53  249,595 625 0.99 
  Time deposits543,765 3,245 2.37  582,874 3,423 2.36  463,373 2,125 1.82 
  Borrowings70,766 261 1.46  59,272 346 2.33  95,371 502 2.09 
  Subordinated notes14,925 256 6.81  14,910 253 6.78  14,874 256 6.83 
  Total interest-bearing liabilities$1,001,782 $4,995 1.98% $1,008,861 $5,216 2.07% $883,235 $3,560 1.60%
Noninterest-bearing liabilities and shareholders' equity:           
  Noninterest bearing demand deposits333,690    315,530    329,459   
  Other liabilities19,804    17,144    9,956   
  Shareholders' equity166,752    159,457    145,496   
  Total liabilities and shareholders' equity$1,522,028    $1,500,992    $1,368,146   
Net interest income $12,988    $12,441    $13,069  
Interest spread  2.98%   2.89%   3.44%
Net interest margin (5)  3.56    3.47    3.94 
Tax equivalent effect  0.03    0.03    0.03 
Net interest margin on a fully tax equivalent basis  3.59%   3.50%   3.97%

(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $118 thousand, $115 thousand, and $84 thousand on tax-exempt securities for the three months ended September 30, 2019, June 30, 2019, and September 30, 2018, respectively, using a federal income tax rate of 21%.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

      
 For the nine months ended
 September 30, 2019 September 30, 2018
(Dollars in thousands)Average
Balance
Interest (1)Average
Rate (2)
 Average
Balance
Interest (1)Average
Rate (2)
Interest-earning assets:       
Gross loans (3)$1,157,837 $47,547 5.49% $1,052,942 $42,837 5.44%
Investment securities: (4)       
Taxable135,460 2,773 2.74  117,356 2,057 2.34 
Tax-exempt84,476 1,728 3.28  60,570 1,181 3.13 
Interest earning cash balances37,359 670 2.40  27,207 382 1.88 
Federal Home Loan Bank Stock8,325 364 5.85  8,303 326 5.25 
Total interest-earning assets$1,423,457 $53,082 5.02% $1,266,378 $46,783 4.96%
Non-earning assets:       
  Cash and due from banks24,075    19,577   
  Premises and equipment13,252    13,150   
  Goodwill9,387    9,387   
  Other intangible assets, net383    588   
  Bank-owned life insurance11,955    11,651   
  Allowance for loan losses(11,950)   (11,628)  
  Other non-earning assets18,642    9,132   
  Total assets$1,489,201    $1,318,235   
Interest-bearing liabilities:       
  Interest-bearing demand deposits$53,894 $180 0.45% $62,626 $151 0.32%
  Money market and savings deposits307,461 3,389 1.47  266,508 1,851 0.93 
  Time deposits556,922 9,647 2.32  455,299 5,465 1.60 
  Borrowings62,006 960 2.07  67,073 946 1.89 
  Subordinated notes14,910 759 6.81  14,859 759 6.83 
  Total interest-bearing liabilities$995,193 $14,935 2.01% $866,365 $9,172 1.42%
Noninterest-bearing liabilities and shareholders' equity:       
  Noninterest bearing demand deposits316,754    311,675   
  Other liabilities17,048    9,941   
  Shareholders' equity160,206    130,254   
  Total liabilities and shareholders' equity$1,489,201    $1,318,235   
Net interest income $38,147    $37,611  
Interest spread  3.01%   3.54%
Net interest margin (5)  3.58    3.97 
Tax equivalent effect  0.03    0.02 
Net interest margin on a fully tax equivalent basis  3.61%   3.99%

(1) Interest income is shown on actual basis and does not include taxable equivalent adjustments.
(2) Average rates and yields are presented on an annual basis and includes a taxable equivalent adjustment to interest income of $347 thousand and $235 thousand on tax-exempt securities for the nine months ended September 30, 2019 and September 30, 2018, respectively, using the statutory tax rate of 21%.
(3) Includes nonaccrual loans.
(4) For presentation in this table, average balances and the corresponding average rates for investment securities are based upon historical cost, adjusted for
amortization of premiums and accretion of discounts.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Loan Composition         
 As of
 September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands)2019 2019 2019 2018 2018
Commercial real estate:(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Non-owner occupied$369,284 $364,504 $361,066 $367,671 $362,450
Owner-occupied196,497 193,500 187,001 194,422 190,131
Total commercial real estate565,781 558,004 548,067 562,093 552,581
Commercial and industrial404,130 420,812 401,588 383,455 397,060
Residential real estate198,277 186,737 180,386 180,018 164,356
Consumer735 948 1,056 999 1,002
Total loans$1,168,923 $1,166,501 $1,131,097 $1,126,565 $1,114,999


Impaired Assets         
 As of
 September 30, June 30, March 31, December 31, September 30,
(Dollars in thousands)2019 2019 2019 2018 2018
Nonaccrual loans(Unaudited) (Unaudited) (Unaudited)   (Unaudited)
Commercial real estate$5,043 $2,979 $2,694 $5,927 $4,559
Commercial and industrial4,071 9,559 10,495 9,605 5,763
Residential real estate2,339 2,006 3,456 2,915 2,546
Consumer    5
Total nonaccrual loans11,453 14,544 16,645 18,447 12,873
Other real estate owned373 373 373  
Total nonperforming assets11,826 14,917 17,018 18,447 12,873
Performing troubled debt restructurings         
Commercial real estate    1,511
Commercial and industrial553 558 562 568 574
Residential real estate361 363 363 363 365
Total performing troubled debt restructurings914 921 925 931 2,450
Total impaired assets$12,740 $15,838 $17,943 $19,378 $15,323
          
Loans 90 days or more past due and still accruing$157 $331 $453 $243 $354

Media Contact:
Nicole Ransom
(248) 538-2183

Investor Relations Contact:
Peter Root
(248) 538-2186

Level-One-Logo.png

Source: Level One Bancorp, Inc.