Level One Bancorp, Inc. reports second quarter 2018 net income of $4.0 million, representing $0.53 of earnings per diluted average share

July 30, 2018

Successful completion of initial public offering in April 2018 resulted in net proceeds of $29.0 million, after deducting underwriting commissions and offering expenses

FARMINGTON HILLS, Mich., July 30, 2018 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. (“Level One”) (Nasdaq: LEVL) today reported net income of $4.0 million, or $0.53 per diluted share, in the second quarter of 2018. This compares with net income of $3.2 million, or $0.47 per diluted share, in the preceding quarter and $3.3 million, or $0.50 per diluted share, in the second quarter of 2017.

Patrick J. Fehring, President and Chief Executive Officer, commented, "We are pleased to report a solid second quarter with earnings of $4.0 million, or $0.53 per diluted share. These earnings represent year over year loan growth of 11.70% and reflect our strong credit quality. We are committed to providing shareholder returns with a strategy of quality growth."

Second Quarter Financial Highlights

•         Net income was $4.0 million, or $0.53 per diluted share, for the second quarter of 2018
•         Net interest margin was 3.99%, compared to 4.03% in the preceding quarter and 4.32% in the second quarter of
           2017
•         Annualized return on average assets was 1.23%, compared to 1.12% in the second quarter of 2017
•         Annualized return on average equity was 11.93%, compared to 12.98% in the second quarter of 2017
•         Total assets increased 9.89% to $1.32 billion at June 30, 2018, compared to $1.20 billion at June 30, 2017
•         Total deposits increased 7.55% to $1.07 billion at June 30, 2018, compared to $990.5 million at June 30, 2017
•         Total loans increased 11.70% to $1.05 billion at June 30, 2018, compared to $936.2 million at June 30, 2017
•         Book value per share increased 13.56% to $18.51 per share compared to $16.30 per share at June 30, 2017
•         Tangible book value per share increased 17.13% to $17.23 per share compared to $14.71 per share at June 30, 2017

Balance Sheet Review

Level One's total assets were $1.32 billion at June 30, 2018, an increase of $22.3 million, or 1.71%, from March 31, 2018, and up $119.1 million, or 9.89%, from $1.20 billion at June 30, 2017.

The investment securities portfolio was $196.0 million at June 30, 2018, an increase of $35.7 million, or 22.26%, from $160.3 million at March 31, 2018, and up $80.5 million, or 69.6%, from $115.6 million at June 30, 2017.

Total loans were $1.05 billion at June 30, 2018, a decrease of $5.6 million, or 0.53%, from $1.05 billion at March 31, 2018, and up $109.6 million, or 11.70%, from $936.2 million at June 30, 2017. The growth in total loans compared to June 30, 2017 was primarily due to growth in our commercial and industrial and commercial real estate loan portfolios.

Total deposits were $1.07 billion at June 30, 2018, a decrease of $47.4 million, or 4.26%, from $1.11 billion at March 31, 2018, and up $74.7 million, or 7.55%, from $990.5 million at June 30, 2017. Total deposit composition at June 30, 2018 consisted of 35.42% of demand deposit accounts, 23.24% of savings and money market accounts and 41.34% of time deposits.

Operating Results

Level One's net interest income before the provision for loan losses increased $288 thousand, or 2.37%, to $12.4 million in the second quarter of 2018, compared to $12.1 million in the preceding quarter, and increased $309 thousand, or 2.55%, compared to $12.1 million in the second quarter of 2017, primarily as a result of increased income on originated loans.

Level One’s net interest margin was 3.99% in the second quarter of 2018, compared to 4.03% in the preceding quarter and 4.32% in the second quarter of 2017, primarily as a result of higher cost of funds.

Level One's second quarter 2018 noninterest income increased $80 thousand, or 5.83%, to $1.5 million in the second quarter of 2018, compared to $1.4 million in the preceding quarter, and decreased $332 thousand, or 18.61%, compared to $1.8 million in the second quarter of 2017. The change in noninterest income compared to the prior period was primarily due to an increase in net gain on sale of residential mortgage loans. The change in noninterest income compared to the second quarter of 2017 was impacted by decreases in other charges and fees and service charges on deposits as well as a decrease in net gain on sales of securities.

Level One’s second quarter 2018 noninterest expenses were $9.7 million, compared to $9.1 million in the preceding quarter and $8.9 million in the second quarter of 2017, primarily as a result of increased salary and employee benefits. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the second quarter of 2018 was 69.99%, compared to 67.67% for the preceding quarter and 63.72% in the second quarter of 2017.

Level One's income tax provision was $860 thousand, or 17.65% of pretax income, in the second quarter of 2018, as compared to $642 thousand, or 16.85% of pretax income, in the preceding quarter and $1.7 million, or 33.19% of pretax income, in the second quarter of 2017. The decrease in tax expense during the three months ended June 30, 2018, as compared to the second quarter of 2017, is primarily a result of the change in tax rates from 35% to 21% due to the enactment of the Tax Cuts and Jobs Act.

Asset Quality

Level One's asset quality remained solid during the second quarter of 2018. Total nonperforming loans were $11.3 million, or 1.08% of total loans, at June 30, 2018, a decrease of $1.7 million from nonperforming loans of $13.0 million, or 1.23% of total loans, at March 31, 2018, and an increase of $1.6 million from nonperforming loans of $9.7 million, or 1.04% of total loans, at June 30, 2017. Level One had no other real estate owned assets at June 30, 2018 or March 31, 2018, compared to $268 thousand at June 30, 2017. Nonperforming assets, consisting of nonaccrual loans and other real estate owned, as a percentage of total assets were 0.85% at June 30, 2018, compared to 1.00% at March 31, 2018, and 0.83% at June 30, 2017.

In addition, we had $259 thousand in loans 90 days or more past due and still accruing at June 30, 2018, compared to $263 thousand at March 31, 2018 and $662 thousand at June 30, 2017.

Performing troubled debt restructured loans that were not included in nonaccrual loans at June 30, 2018 were $2.5 million, compared to $2.4 million in the preceding quarter and $1.2 million at June 30, 2017. 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 recoveries in the second quarter of 2018 were $669 thousand, or 0.26% of average loans on an annualized basis, compared to $755 thousand of net charge offs, or 0.29% of average loans on an annualized basis, for the preceding quarter and $96 thousand of net recoveries, or 0.04% of average loans on an annualized basis at June 30, 2017.

Level One's second quarter provision for loan losses was a provision benefit of  $710 thousand, compared to a provision expense of $554 thousand in the preceding quarter and a provision expense of $68 thousand in the second quarter of 2017. The allowance for loan losses was $11.5 million, or 1.10% of total loans, at June 30, 2018, compared to $11.5 million, or 1.09% of total loans, at March 31, 2018, and $11.4 million, or 1.22% of total loans, at June 30, 2017. As of June 30, 2018, the allowance for loan losses as a percentage of nonperforming loans was 101.67%, compared to 88.67% at March 31, 2018, and 117.36% at June 30, 2017.

Capital

Total shareholders’ equity was $143.4 million at June 30, 2018, an increase of $32.9 million, or 29.79%, compared with $110.5 million at March 31, 2018 and increased $39.2 million, or 37.66%, from $104.2 million at June 30, 2017, primarily as the result of our initial public offering.

Recent Developments

Initial Public Offering: On April 24, 2018, Level One completed its initial public offering.  In the offering, Level One sold 1,150,765 shares, including 180,000 shares of common stock pursuant to the exercise in full by the underwriters of their option to purchase additional shares, at an initial public offering price of $28.00 per share. The selling shareholders sold an additional 229,235 shares of common stock in the offering at the initial public offering price. Level One did not receive any proceeds from the sale of shares of common stock sold by the selling shareholders in the offering.  The shares began trading on the Nasdaq Global Select Market on Friday, April 20, 2018, under the symbol "LEVL".

Second Quarter Dividend: On June 21, 2018, Level One’s Board of Directors declared a quarterly cash dividend of $0.03 per share. This dividend was paid out on July 15, 2018, to stockholders of record at the close of business on June 30, 2018.

Expansion of Mortgage Division: On July 9, 2018, Level One announced it was doubling the size of its mortgage division with the addition of new mortgage loan officers and support staff.

“We are excited to welcome a team of 30 successful residential mortgage team members to Level One Bank.  This strategic action was a great opportunity for Level One to expand our mortgage business with a proven team.  We expect the addition of this team will increase our presence in the residential marketplace and add to our fee revenue in future quarters,” commented Level One Bank President and Chief Executive Officer, Patrick J. Fehring.

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 $1.32 billion as of June 30, 2018. It operates eleven 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, auto, 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 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. 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 quarter ended,
(Dollars in thousands, except per share data) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
Earnings Summary                  
Interest income $ 15,380     $ 14,774     $ 14,378     $ 13,752     $ 14,034  
Interest expense 2,965     2,647     2,374     2,075     1,928  
Net interest income 12,415     12,127     12,004     11,677     12,106  
Provision for loan losses (710 )   554     956     194     68  
Noninterest income 1,452     1,372     1,395     1,942     1,784  
Noninterest expense 9,705     9,135     9,193     9,331     8,851  
Income before income taxes 4,872     3,810     3,250     4,094     4,971  
Income tax provision 860     642     2,317     1,259     1,650  
Net income $ 4,012     $ 3,168     $ 933     $ 2,835     $ 3,321  
Per Share Data                  
Basic earnings per common share $ 0.54     $ 0.48     $ 0.15     $ 0.44     $ 0.52  
Diluted earnings per common share 0.53     0.47     0.14     0.43     0.50  
Book value per common share 18.51     16.78     16.78     16.74     16.30  
Tangible book value per share (1) 17.23     15.27     15.21     15.16     14.71  
Shares outstanding (in thousands) 7,749     6,585     6,435     6,392     6,392  
Average basic common shares (in thousands) 7,456     6,539     6,403     6,392     6,391  
Average diluted common shares (in thousands) 7,613     6,699     6,630     6,610     6,606  
Selected Period End Balances                  
Total assets $ 1,322,913     $ 1,300,629     $ 1,301,291     $ 1,266,919     $ 1,203,853  
Securities available-for-sale 196,047     160,349     150,969     141,700     115,581  
Total loans 1,045,789     1,051,354     1,034,923     980,721     936,218  
Total deposits 1,065,216     1,112,644     1,120,382     1,069,874     990,470  
Total liabilities 1,179,468     1,190,106     1,193,331     1,159,934     1,099,647  
Total shareholders' equity 143,445     110,523     107,960     106,985     104,206  
Tangible shareholders' equity (1) 133,501     100,524     97,906     96,872     94,035  
Performance and Capital Ratios                  
Return on average assets (annualized) 1.23 %   1.00 %   0.29 %   0.94 %   1.12 %
Return on average equity (annualized) 11.97     11.64     3.40     10.58     13.02  
Net interest margin (fully taxable equivalent) (2) 3.99     4.03     4.01     4.05     4.32  
Total shareholders' equity to total assets 10.84     8.50     8.30     8.44     8.66  
Tangible equity to tangible assets (1) 10.17     7.79     7.58     7.71     7.88  
Common equity tier 1 capital (3) 12.36     9.47     9.10     9.33     9.50  
Tier 1 leverage ratio (3) 10.83     8.15     7.92     8.14     7.98  
Tier 1 risk-based capital (3) 12.36     9.47     9.10     9.33     9.50  
Total risk-based capital (3) 13.38     11.87     11.55     11.86     12.15  
Asset Quality Ratios:                  
Net charge-offs (recoveries) to average loans (0.26 )%   0.29 %   0.35 %   (0.01 )%   (0.04 )%
Nonperforming assets as a percentage of total assets 0.85     1.00     1.13     1.26     0.83  
Nonperforming loans as a percent of total loans 1.08     1.23     1.36     1.59     1.04  
Allowance for loan losses as a percentage of period-end  loans 1.10     1.09     1.13     1.19     1.22  
Allowance for loan losses as a percentage of nonperforming loans 101.67     88.67     83.38     74.38     117.36  
Allowance for loan losses as a percentage of nonperforming loans, excluding allowance allocated to loans accounted for under ASC 310-30 92.93     80.36     75.68     66.62     104.87  
                             

(1) See section entitled "GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures" below.
(2) Presented on a tax equivalent basis using a 35% tax rate for 2017 time periods and 21% tax rate for 2018 time periods.
(3) Capital ratios for June 30, 2018 are Level One Bank capital ratios.

GAAP Reconciliation and Management Explanation of Non-GAAP Financial Measures

                Some of the financial measures included in this earnings release are not measures of financial performance recognized by GAAP. These non-GAAP financial measures include tangible shareholders' equity, tangible book value per share and the ratio of tangible shareholders' equity to tangible assets. Our management uses these non-GAAP financial measures in its analysis of our performance, and we believe financial analysts and others frequently use these measures, and other similar measures, to evaluate capital adequacy. We calculate: (i) tangible shareholders' equity as total shareholders' equity less core deposit intangibles 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 and goodwill.

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

Reconciliation of Non-GAAP Financial Measures
(Unaudited) As of
(Dollars in thousands, except per share data) June 30,
2018
  March 31,
2018
  December 31,
2017
  September 30,
2017
  June 30,
2017
                   
Total shareholders' equity $ 143,445     $ 110,523     $ 107,960     $ 106,985     $ 104,206  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 557     612     667     726     784  
Tangible shareholders' equity $ 133,501     $ 100,524     $ 97,906     $ 96,872     $ 94,035  
                   
Shares outstanding (in thousands) 7,749     6,585     6,435     6,392     6,392  
Tangible book value per share $ 17.23     $ 15.27     $ 15.21     $ 15.16     $ 14.71  
                   
Total assets $ 1,322,913     $ 1,300,629     $ 1,301,291     $ 1,266,919     $ 1,203,853  
Less:                  
Goodwill 9,387     9,387     9,387     9,387     9,387  
Core deposit intangibles 557     612     667     726     784  
Tangible assets $ 1,312,969     $ 1,290,630     $ 1,291,237     $ 1,256,806     $ 1,193,682  
                   
Tangible equity to tangible assets 10.17 %   7.79 %   7.58 %   7.71 %   7.88 %
                             

 

Balance Sheet              
  June 30,   March 31,   December 31,   June 30,
(Dollars in thousands, except share data) 2018   2018   2017   2017
               
Assets              
Cash and cash equivalents  $  34,767    $  39,882    $  63,661    $  103,444
Securities available-for-sale 196,047   160,349   150,969   115,581
Federal Home Loan Bank stock 8,303   8,303   8,303   8,303
Mortgage loans held for sale, at fair value 3,991   1,871   4,548   3,566
Loans:              
Originated loans 946,724   946,179   920,895   803,573
Acquired loans 99,065   105,175   114,028   132,645
Total loans 1,045,789   1,051,354   1,034,923   936,218
Less: Allowance for loan losses (11,465)   (11,506)   (11,713)   (11,404)
Net loans 1,034,324   1,039,848   1,023,210   924,814
Premises and equipment, net 13,144   13,282   13,435   13,752
Goodwill 9,387   9,387   9,387   9,387
Other intangible assets, net 557   612   667   784
Bank-owned life insurance 11,703   11,622   11,542   11,376
Income tax benefit 2,510   3,026   3,102   3,565
Other assets 8,180   12,447   12,467   9,281
Total assets  $  1,322,913    $  1,260,787    $  1,237,694    $  1,100,512
Liabilities              
Deposits:              
Noninterest-bearing demand deposits  $  320,213    $  298,917    $  324,923    $  326,472
Interest-bearing demand deposits 57,060   68,479   62,644   60,162
Money market and savings deposits 247,542   278,042   289,363   244,001
Time deposits 440,401   467,206   443,452   359,835
Total deposits 1,065,216   1,112,644   1,120,382   990,470
Borrowings 86,594   52,783   47,833   82,005
Subordinated notes 14,867   14,853   14,844   14,815
Other liabilities 12,791   9,826   10,272   12,357
Total liabilities 1,179,468   1,190,106   1,193,331   1,099,647
Shareholders' equity              
Common stock:              
Authorized - 20,000,000 shares at 6/30/18, 3/31/2018, 12/31/2017 and 6/30/2017              
Issued and outstanding - 7,748,641 shares at 6/30/2018, 6,584,676 shares at 3/31/2018, 6,435,461 shares at 12/31/2017 and 6,392,041 shares at 6/30/2017 90,201   60,886   59,511   58,755
Retained earnings 56,383   52,568   49,232   45,464
Accumulated other comprehensive loss, net of tax (3,139)   (2,931)   (783)   (13)
Total shareholders' equity 143,445   110,523   107,960   104,206
Total liabilities and shareholders' equity  $  1,322,913    $  1,300,629    $  1,301,291    $  1,203,853
               

 

 
Income Statement Three months ended   Six months ended
  June 30,   March 31,   June 30,   June 30,   June 30,
(In thousands, except per share data) 2018   2018   2017   2018   2017
Interest income                  
Originated loans, including fees  $  11,833    $  11,178     $  9,739     $  23,011    $  19,093 
Acquired loans, including fees 2,293   2,426   3,438   4,719    6,831 
Securities:                  
Taxable 667   574   402   1241   816
Tax-exempt 380   351   210   731   381
Federal funds sold and other 207   245   245   452    360 
Total interest income 15,380   14,774   14,034   30,154   27,481
Interest Expense                  
Deposits 2,487   2,178   1,451   4,665    2,728 
Borrowed funds 225   219   224   444    400 
Subordinated notes 253   250   253 503    503 
Total interest expense 2,965   2,647   1,928 5,612   3,631
Net interest income 12,415   12,127   12,106   24,542    23,850 
Provision for loan losses  (710)    554     68     (156)    266 
Net interest income after provision for loan losses 13,125   11,573   12,038   24,698    23,584 
Noninterest income                  
Service charges on deposits 618   642   718    1,260     1,298 
Net gain on sale of securities  —    —    58    —    58 
Net gain on sale of residential mortgage loans 404   236   413   640    712 
Net gain on sale of commercial loans 11    —    —   11    146
Other charges and fees 419   494   595   913    950 
Total noninterest income 1,452   1,372   1,784   2,824   3,164
Noninterest expense                  
Salary and employee benefits 6,169   5,956   5,319   12,125    10,590 
Occupancy and equipment expense 1,074   1,046   1,012   2,120    2,024 
Professional service fees 471   266   540   737    1,080 
Marketing expense 291   142   232   433    479 
Printing and supplies expense 112   104   121   216    234 
Data processing expense 511   436   479   947    892 
Other expense 1,077   1,185   1,148   2,262    2,229 
Total noninterest expense 9,705   9,135   8,851   18,840    17,528 
Income before income taxes 4,872   3,810   4,971   8,682    9,220 
Income tax provision 860   642    1,650     1,502     3,147 
Net income  $  4,012    $  3,168    $  3,321    $  7,180    $  6,073
Earnings per common share:                  
Basic  $  0.54    $  0.48    $  0.52    $  1.02    $  0.95
Diluted  $  0.53    $  0.47    $  0.50    $  1.00    $  0.92
Average common shares outstanding - basic 7,456   6,539   6,391   7,050   6,380
Average common shares outstanding - diluted 7,613   6,699   6,606     7,211   6,597
                   

 

Net Interest Income and Net Interest Margin
(Unaudited) For the three months ended,
  June 30, 2018   March 31, 2018   June 30, 2017
(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) $ 1,045,715   $ 14,126   5.42 %   $ 1,037,045   $ 13,604   5.32 %   $ 954,665   $ 13,177   5.54 %
Investment securities (4):                      
Taxable 114,957   667   2.33     102,135   574   2.28     79,488   402   2.03  
Tax-exempt 58,976   380   3.10     54,996   351   3.16     33,892   210   3.66  
Interest earning cash balances 25,828   119   1.85     27,090   106   1.59     59,377   161   1.09  
Federal Home Loan Bank Stock 8,303   88   4.25     8,303   139   6.78     8,303   84   4.06  
Total interest-earning assets 1,253,779   15,380   4.94 %   1,229,569   14,774   4.90 %   1,135,725   14,034   4.99 %
Non-earning assets:                      
  Cash and due from banks 17,800         18,531         19,238      
  Premises and equipment 12,621         13,362         15,235      
  Goodwill 9,387         9,387         9,387      
  Other intangible assets, net 589         644         820      
  Bank-owned life insurance 11,650         11,570         11,323      
  Allowance for loan losses (11,473 )       (11,822 )       (11,520 )    
  Other non-earning assets 7,839         12,195         10,614      
  Total assets $ 1,302,192         $ 1,283,436         $ 1,190,822      
Interest-bearing liabilities:                      
  Interest-bearing demand deposits $ 64,394   $ 48   0.30 %   $ 63,501   $ 51   0.33 %   $ 58,081   $ 39   0.27 %
  Money market and savings deposits 276,496   678   0.98     273,699   548   0.81     264,691   405   0.61  
  Time deposits 445,894   1,761   1.58     456,555   1,579   1.40     359,052   1,007   1.12  
  Borrowings 48,604   225   1.86     56,819   219   1.56     84,838   224   1.06  
  Subordinated notes 14,859   253   6.83     14,844   250   6.83     14,806   253   6.85  
  Total interest-bearing liabilities 850,247   2,965   1.40 %   865,418   2,647   1.24 %   781,468   1,928   0.99 %
Noninterest-bearing liabilities and shareholders' equity:                      
  Noninterest bearing demand deposits 306,547         298,681         297,565      
  Other liabilities 10,923         8,931         9,485      
  Shareholders' equity 134,475         110,406         102,304      
  Total liabilities and shareholders' equity $ 1,302,192         $ 1,283,436         $ 1,190,822      
Net interest income   $ 12,415         $ 12,127         $ 12,106    
Interest spread     3.54 %       3.66 %       4.00 %
Net interest margin (5)     3.97         4.00         4.28  
Tax equivalent effect     0.02         0.03         0.04  
Net interest margin on a fully tax equivalent basis     3.99         4.03         4.32  

(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 $76 thousand, $78 thousand and $99 thousand on tax-exempt securities for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017, respectively, using the statutory tax rate of 21% for the 2018 periods and 35% for the 2017 period.
(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 six months ended,
  June 30, 2018   June 30, 2017
(Dollars in thousands) Average Balance Interest (1) Average Rate (2)   Average Balance Interest (1) Average Rate (2)
Interest-earning assets:              
Gross loans (3) $ 1,041,404   $ 27,730   5.37 %   $ 958,054   $ 25,924   5.46 %
Investment securities (4):              
Taxable 108,581   1,241   2.31     78,979   816   2.08  
Tax-exempt 56,997   731   3.12     31,313   381   3.62  
Interest earning cash balances 26,455   225   1.71     43,496   220   1.02  
Federal Home Loan Bank Stock 8,303   227   5.51     8,022   140   3.52  
Total interest-earning assets 1,241,740   30,154   4.92 %   1,119,864   27,481   4.98 %
Non-earning assets:              
  Cash and due from banks 18,163         18,789      
  Premises and equipment 12,990         15,432      
  Goodwill 9,387         9,387      
  Other intangible assets, net 616         849      
  Company-owned life insurance 11,610         11,282      
  Allowance for loan losses (11,646 )       (11,345 )    
  Other non-earning assets 10,006         10,481      
  Total assets $ 1,292,866         $ 1,174,739      
Interest-bearing liabilities:              
  Deposits:              
  Interest-bearing demand deposits $ 63,950   $ 99   0.31 %   $ 57,774   $ 78   0.27 %
  Money market and savings deposits 275,105   1,226   0.90     275,860   779   0.57  
  Time deposits 451,195   3,340   1.49     338,485   1,871   1.11  
  Borrowings 52,689   444   1.70     95,085   400   0.85  
  Subordinated notes 14,852   503   6.83     14,799   503   6.85  
  Total interest-bearing liabilities 857,791   5,612   1.32 %   782,003   3,631   0.94 %
Noninterest-bearing liabilities and shareholders' equity:              
  Noninterest bearing demand deposits 302,635         283,007      
  Other liabilities 9,933         9,103      
  Shareholders' equity 122,507         100,626      
  Total liabilities and shareholders' equity $ 1,292,866         $ 1,174,739      
Net interest income   $ 24,542         $ 23,850    
Interest spread     3.60 %       4.04 %
Net interest margin (5)     3.99         4.29  
Tax equivalent effect     0.02         0.03  
Net interest margin on a fully tax equivalent basis     4.01         4.32  

(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 $150 thousand and $181 thousand on tax-exempt securities for the six months ended June 30, 2018 and June 30, 2017, respectively, using the statutory tax rate of 21% for the 2018 period and 35% for the 2017 period.
(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
(Unaudited)
As of
  June 30,   March 31,   December 31,   September 30,   June 30,
(Dollars in thousands) 2018   2018   2017   2017   2017
Commercial real estate                  
Non-owner occupied $ 361,341   $ 360,014   $ 343,420   $ 312,644   $ 322,361
Owner-occupied 172,615   172,608   168,342   156,690   159,932
Total commercial real estate 533,956   532,622   511,762   469,334   482,293
Commercial and industrial 363,239   371,464   377,686   380,512   330,114
Residential real estate 147,763   146,436   144,439   130,117   122,427
Consumer 831   832   1,036   758   1384
Total loans $ 1,045,789   $ 1,051,354   $ 1,034,923   $ 980,721   $ 936,218

 

Impaired Assets
(Unaudited)
As of
  June 30,   March 31,   December 31,   September 30,   June 30,
(Dollars in thousands) 2018   2018   2017   2017   2017
Nonaccrual loans                  
Commercial real estate $ 2,557     $ 1,946     $ 2,257     $ 1,998     $ 106  
Commercial and industrial 5,983     8,192     9,024     11,911     7,754  
Residential real estate 2,737     2,838     2,767     1,727     1,857  
Total nonaccrual loans 11,277     12,976     14,048     15,636     9,717  
Other real estate owned         652     384     268  
Total nonperforming assets 11,277     12,976     14,700     16,020     9,985  
Performing troubled debt restructurings                  
Commercial real estate 1,517     1,525         287      
Commercial and industrial 578     582     961     975     988  
Residential real estate 364     258     261     1,049     247  
Total performing troubled debt restructurings 2,459     2,365     1,222     2,311     1,235  
Total impaired assets $ 13,736     $ 15,341     $ 15,922     $ 18,331     $ 11,220  
                   
Loans 90 days or more past due and still accruing $ 259     $ 263     $ 440     $ 486     $ 662  
Media Contact:
Nicole Ransom
(248) 538-2183

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

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Source: Level One Bancorp, Inc.


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