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Source: Glen Burnie Bancorp

Glen Burnie Bancorp Announces Fourth Quarter and Full Year 2019 Results

GLEN BURNIE, Md., Feb. 12, 2020 (GLOBE NEWSWIRE) -- Glen Burnie Bancorp (“Bancorp”) (NASDAQ: GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $0.54 million, or $0.19 per basic and diluted common share for the three-month period ended December 31, 2019, as compared to $0.31 million, or $0.11 per basic and diluted common share for the three-month period ended December 31, 2018.

Bancorp reported net income of $1.60 million, or $0.57 per basic and diluted common share for the year ended December 31, 2019, compared to $1.58 million, or $0.56 per basic and diluted common share for the same period in 2018.  Net loans decreased by $13.9 million, or 4.69% during the twelve-month period ended December 31, 2019, compared to an increase of $27.6 million, or 10.24% during the same period of 2018.  At December 31, 2019, Bancorp had total assets of $384.9 million.  Bancorp, the oldest independent commercial bank in Anne Arundel County, paid its 110th consecutive quarterly dividend on January 31, 2020.

During 2018, the Company conducted a periodic review of the estimated direct cost to originate loans resulting in a change to the estimated materiality of these costs.  As a result, the Company began recognizing certain direct loan origination costs over the life of the related loan as a reduction of the loan’s yield by the interest method based on the contractual term of the loan.  In the fourth quarter of 2018, the Company recorded a reduction of noninterest expense and an increase in loan balances of $375,000, and reduced loan balances and loan interest income by $51,000 due to the amortization of deferred costs.  The effect of these adjustments increased income before taxes for the three- and twelve-months periods ended December 31, 2018 by $324,000 and increased net income by $300,000 or $0.11 per basic and diluted common share for the twelve-month period ended December 31, 2018.

“Although our net interest margin was negatively impacted by the three Federal Reserve federal funds rate decreases that occurred in the third and fourth quarters of 2019, our fourth quarter results were in line with our expectations and highlighted by continued positive momentum,” stated John D. Long, President and CEO.  “We continue to invest in technology systems that allow us to remain competitive in the rapidly changing technology environment.  As such, our strong fundamental performance was partially offset by the significant technology and infrastructure investments made across the Company.  We completed the first phase of our technology infrastructure transformation in November 2019, and Phase II enhancements are on-track for a mid-2020 implementation.  We are encouraged that these investments represent a foundation for sustainable growth as we move forward into the new decade.  Completion of this initial phase is expected to result in lower noninterest expenses and an improving efficiency ratio beginning in the second half of 2020 and beyond.  We continue to grow our business organically and diversify our loan portfolio.  Our loan originators, retail branches and treasury management team are focused on increasing commercial deposits from existing clients and acquiring new client relationships.”

“While the competitive landscape is intense, our continued growth, profitability, credit quality and capital strength demonstrate our ability to continue to deliver value to our shareholders.  We remain confident in our Company’s progress as we move forward,” continued Mr. Long.  “Headquartered in the dynamic Northern Anne Arundel County market, we remain deeply committed to serving the financial needs of the community through the development of new loan and deposit products.”

Highlights for the Quarter and Year ended December 31, 2019

The low interest rate environment and yield-curve inversion in 2019 caused by three 25 basis point rate decreases in the benchmark rate by the Federal Reserve negatively impacted Bancorp’s organic growth strategy resulting in a $28.1 million, or 6.80% decrease in total assets year-over-year.  The effect of the lower interest rate environment on the net interest margin was somewhat mitigated by managing loan and deposit pricing strategies and adjusting the investment portfolio composition and pro-active reduction of high cost wholesale funding.  Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Bank’s total regulatory capital to risk weighted assets of 13.21% at December 31, 2019, as compared to 13.18% for the same period of 2018.

Return on average assets for the three-month period ended December 31, 2019 was 0.55%, as compared to 0.30% for the three-month period ended December 31, 2018.  Return on average equity for the three-month period ended December 31, 2019 was 6.00%, as compared to 3.68% for the three-month period ended December 31, 2018.  Return on average assets for the year ended December 31, 2019 was 0.41%, as compared to 0.39% for the year ended December 31, 2018.  Return on average equity for the year ended December 31, 2019 was 4.55%, as compared to 4.69% for the year ended December 31, 2018.

The book value per share of Bancorp’s common stock was $12.62 at December 31, 2019, as compared to $12.10 per share at December 31, 2018.

At December 31, 2019, the Bank remained above all “well-capitalized” regulatory requirement levels.  The Bank’s tier 1 risk-based capital ratio was approximately 12.47% at December 31, 2019, as compared to 12.27% at December 31, 2018.  Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.

Balance Sheet Review

Total assets were $384.9 million at December 31, 2019, a decrease of $28.1 million or 6.80%, from $413.0 million at December 31, 2018.  Investment securities were $71.5 million at December 31, 2019, a decrease of $10.1 million or 12.38%, from $81.6 million at December 31, 2018.  Loans, net of deferred fees and costs, were $284.7 million at December 31, 2019, a decrease of $14.4 million or 4.81%, from $299.1 million at December 31, 2018.  Net deferred tax assets decreased $0.7 million or 51.76%, from December 31, 2018 to December 31, 2019 primarily due to the increase in fair value of securities available for sale. 

Total deposits were $321.4 million at December 31, 2019, a decrease of $1.1 million or 0.34%, from $322.5 million at December 31, 2018.  Noninterest-bearing deposits were $107.2 million at December 31, 2019, an increase of $5.8 million or 5.72%, from $101.4 million at December 31, 2018.  Interest-bearing deposits were $214.3 million at December 31, 2019, a decrease of $6.8 million or 3.08%, from $221.1 million at December 31, 2018.  Total borrowings were $25.0 million at December 31, 2019, a decrease of $30.0 million or 54.55%, from $55.0 million at December 31, 2018.

Stockholders’ equity was $35.7 million at December 31, 2019, an increase of $1.6 million or 4.69%, from $34.1 million at December 31, 2018.  The $1.5 million decrease in accumulated other comprehensive loss associated with net unrealized losses on the available for sale bond portfolio, 2019 retained earnings and stock issuances under the dividend reinvestment program, offset by unrealized losses on interest rate swap contracts drove the increase in stockholders’ equity.

Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned, represented 1.26% of total assets at December 31, 2019, as compared to 0.70% for the same period of 2018.

Review of Financial Results

For the three-month periods ended December 31, 2019 and 2018

Net income for the three-month period ended December 31, 2019 was $0.54 million, as compared to $0.31 million for the three-month period ended December 31, 2018.

Net interest income for the three-month period ended December 31, 2019 totaled $3.18 million, as compared to $3.24 million for the three-month period ended December 31, 2018.  Average earning-asset balances decreased $26 million to $369 million for the three-month period ended December 31, 2019, as compared to $395 million for the same period of 2018.  Competitive loan origination pressures as well as a declining interest rate environment drove the decrease in average interest-earning asset balances.

Net interest margin for the three-month period ended December 31, 2019 was 3.42%, as compared to 3.26% for the same period of 2018, an increase of 0.16%.  Lower average balances and higher yields on interest-earning assets combined with lower cost of funds were the primary drivers of the results.  The average balance on interest-earning assets decreased $26 million while the yield increased 0.06%.  The cost of funds decreased 0.10% from 0.63% to 0.53% primarily due to the $21 million reduction in borrowed funds year-over-year.

The negative provision for loan losses for the three-month period ended December 31, 2019 was $180,000, as compared to a provision of $256,000 for the same period of 2018.  The decrease for the three-month period ended December 31, 2019 primarily reflects a decrease in the balance of the loan portfolio, decreases in net charge offs, and a decrease in the qualitative factor adjustment.  As a result, the allowance for loan losses was $2.07 million at December 31, 2019, representing 0.73% of total loans, as compared to $2.54 million, or 0.85% of total loans at December 31, 2018.

Noninterest income for the three-month period ended December 31, 2019 was $339,000, as compared to $313,000 for the three-month period ended December 31, 2018.  

For the three-month period ended December 31, 2019, noninterest expense was $3.02 million, as compared to $2.94 million for the three-month period ended December 31, 2018.  The primary contributors to the $0.08 million increase, when compared to the three-month period ended December 31, 2018 were increases in salary and employee benefits, occupancy and equipment expenses, legal, accounting and other professional fees, data processing and item processing services and loan collection costs, offset by decreases in FDIC insurance premiums due to the application of small bank assessment credits.

For the three-month period ended December 31, 2019, income tax expense was $137,000 compared with $58,000 for the same period a year earlier.  The effective tax rate was 20.3%, compared with 15.9% for the same period a year ago.  The 4.4% increase in the effective tax rate was primarily due to the sale, call and maturity of tax-advantaged municipal securities.

For the twelve-month periods ended December 31, 2019 and 2018

Net income for the twelve-month period ended December 31, 2019 was $1.60 million, as compared to net income of $1.58 million for the twelve-month period ended December 31, 2018.

Net interest income for the twelve-month period ended December 31, 2019 totaled $12.6 million, as compared to $12.6 million for the twelve-month period ended December 31, 2018.  Average earning-asset balances decreased $15 million to $371 million for the twelve-month period ended December 31, 2019, as compared to $386 million for the same period of 2018.  Competitive loan origination pressures as well as a declining interest rate environment drove the decrease in average interest-earning asset balances.

Net interest margin for the twelve-month period ended December 31, 2019 was 3.39%, as compared to 3.26% for the same period of 2018, an increase of 0.13%.  Lower average balances and higher yields on interest-earning assets combined with lower cost of funds were the primary drivers of the results.  The average balance on interest-earning assets decreased $15 million while the yield increased 0.10%.  The cost of funds decreased 0.02% from 0.57% to 0.55% primarily due to the $6 million reduction in borrowed funds year-over-year.

The negative provision for loan losses for the twelve-month period ended December 31, 2019 was $115,000, as compared to a provision of $856,000 for the same period of 2018.  The decrease for the twelve-month period ended December 31, 2019 was primarily driven by $544,000 decrease in net loan charge offs year-over-year, $13.7 million decrease in loan balances and 0.13% decrease in the qualitative factor adjustment.  As a result, the allowance for loan losses was $2.07 million at December 31, 2019, representing 0.73% of total loans, as compared to $2.54 million, or 0.85% of total loans for the same period of 2018.

Noninterest income for the twelve-month period ended December 31, 2019 was $1.30 million, as compared to $1.52 million for the twelve-month period ended December 31, 2018.  The decrease for the twelve-month period ended December 31, 2019 was primarily driven by $308,000 gain on redemptions of BOLI policies recognized in 2018.

For the twelve-month period ended December 31, 2019, noninterest expense was $11.9 million, as compared to $11.5 million for the twelve-month period ended December 31, 2018.  The primary contributors to the $0.4 million increase, when compared to the twelve-month period ended December 31, 2018 were increases in salary and employee benefits, occupancy and equipment expenses, and legal, accounting and other professional fees, partially offset by decreases in data processing and item processing services and FDIC insurance premiums due to the application of small bank assessment credits.  

For the twelve-month period ended December 31, 2019, income tax expense was $452,000 compared with $130,000 for the same period a year earlier.  The effective tax rate was 22.0%, compared with 7.6% for the same period a year ago.  The 14.4% increase in the effective tax rate was primarily due to the sale, call and maturity of tax-advantaged municipal securities.


Glen Burnie Bancorp Information

Glen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland.  Founded in 1949, The Bank of Glen Burnie® is a locally owned community bank with 8 branch offices serving Anne Arundel County.  The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations.  The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans.  The Bank also originates automobile loans through arrangements with local automobile dealers.  Additional information is available at www.thebankofglenburnie.com.

Forward-Looking Statements

The statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected.  These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions.  Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true.  For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission.

     
GLEN BURNIE BANCORP AND SUBSIDIARY    
CONSOLIDATED BALANCE SHEETS     
(dollars in thousands)     
      
      
 December 31, September 30, December 31,
  2019   2019   2018 
 (unaudited) (unaudited) (audited)
ASSETS     
Cash and due from banks$2,420  $3,678  $2,605 
Interest bearing deposits with banks and federal funds sold 10,870   15,893   13,349 
  Cash and Cash Equivalents 13,290   19,571   15,954 
      
Investment securities available for sale, at fair value 71,486   64,817   81,572 
Restricted equity securities, at cost 1,437   1,225   2,481 
      
Loans, net of deferred fees and costs 284,738   283,889   299,120 
 Less: Allowance for loan losses (2,066)  (2,307)  (2,541)
  Loans, net 282,672   281,582   296,579 
      
Real estate acquired through foreclosure 705   705   705 
Premises and equipment, net 3,761   3,820   3,106 
Bank owned life insurance 8,023   7,982   7,860 
Deferred tax assets, net 672   1,013   1,392 
Accrued interest receivable 961   976   1,198 
Accrued taxes receivable 1,221   982   1,177 
Prepaid expenses 406   557   466 
Other assets 308   208   556 
  Total Assets$ 384,942  $ 383,438  $ 413,046 
      
LIABILITIES     
Noninterest-bearing deposits$107,158  $111,453  $101,369 
Interest-bearing deposits 214,282   213,813   221,084 
  Total Deposits 321,440   325,266   322,453 
      
Short-term borrowings 25,000   20,000   55,000 
Defined pension liability 317   311   285 
Accrued expenses and other liabilities 2,505   2,493   1,257 
  Total Liabilities 349,262   348,070   378,995 
      
STOCKHOLDERS' EQUITY     
Common stock, par value $1, authorized 15,000,000 shares, issued and outstanding 2,827,473, 2,824,412, and 2,814,157 shares as of December 31, 2019, September 30, 2019, and December 31, 2018, respectively.     
 2,827   2,824   2,814 
Additional paid-in capital 10,525   10,495   10,401 
Retained earnings 22,537   22,280   22,066 
Accumulated other comprehensive loss (209)  (231)  (1,230)
  Total Stockholders' Equity 35,680   35,368   34,051 
  Total Liabilities and Stockholders' Equity$ 384,942  $ 383,438  $ 413,046 
      

 

   
GLEN BURNIE BANCORP AND SUBSIDIARY  
CONSOLIDATED STATEMENTS OF INCOME  
(dollars in thousands, except per share amounts)  
         
         
    Three Months Ended December 31,   Twelve Months Ended December 31,
  2019
(unaudited)
 2018
(unaudited)
 2019
(unaudited)
 2018
(audited)
Interest income        
Interest and fees on loans $3,204  $3,249  $12,747  $12,348
Interest and dividends on securities  368   515   1,429   2,100
Interest on deposits with banks and federal funds sold  68   80   338   245
  Total Interest Income  3,640   3,844   14,514   14,693
         
Interest expense        
Interest on deposits  348   352   1,349   1,348
Interest on short-term borrowings  112   247   578   754
  Total Interest Expense  460   599   1,927   2,102
         
  Net Interest Income  3,180   3,245   12,587   12,591
Provision for loan losses  (180)  256   (115)  856
  Net interest income after provision for loan losses  3,360   2,989   12,702   11,735
         
Noninterest income        
Service charges on deposit accounts  68   61   255   248
Other fees and commissions  230   210   874   774
Gains on redemption of BOLI policies  -   -   -   308
Gain on securities sold  -   -   3   -
Income on life insurance  41   42   163   172
Gain on sale of OREO  -   -   -   15
  Total Noninterest Income  339   313   1,295   1,517
         
Noninterest expenses        
Salary and employee benefits  1,685   1,513   6,826   6,593
Occupancy and equipment expenses  389   320   1,429   1,170
Legal, accounting and other professional fees  261   196   1,056   917
Data processing and item processing services  203   160   531   614
FDIC insurance costs  16   127   131   314
Advertising and marketing related expenses  28   39   107   104
Loan collection costs  45   (8)  107   145
Telephone costs  62   72   244   253
Other expenses  334   518   1,515   1,429
  Total Noninterest Expenses  3,023   2,937   11,946   11,539
         
Income before income taxes  676   365   2,051   1,713
Income tax expense  137   58   452   130
         
  Net income  $ 539  $ 307  $ 1,599  $ 1,583
         
Basic and diluted net income per share of common stock  $ 0.19  $ 0.11  $ 0.57  $ 0.56
         

 

      
GLEN BURNIE BANCORP AND SUBSIDIARY     
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
For the year ended December, 2019 (unaudited) and 2018     
(dollars in thousands)         
          
          
       Accumulated  
   Additional   Other Total
 Common  Paid-in Retained Comprehensive Stockholders'
 Stock Capital Earnings (Loss) Equity
Balance, December 31, 2017$2,801 $10,267 $21,605  $(631) $34,042 
          
Net income -  -  1,583   -   1,583 
Cash dividends, $0.40 per share -  -  (1,122)  -   (1,122)
Dividends reinvested under dividend reinvestment plan 13  134  -   -   147 
Other comprehensive loss -  -  -   (599)  (599)
Balance, December 31, 2018$2,814 $10,401 $22,066  $(1,230) $34,051 
          
          
       Accumulated  
   Additional   Other Total
 Common  Paid-in Retained Comprehensive Stockholders'
 Stock Capital Earnings (Loss)/Income
 Equity
Balance, December 31, 2018$2,814 $10,401 $22,066  $(1,230) $34,051 
          
Net income -  -  1,599   -   1,599 
Cash dividends, $0.40 per share -  -  (1,128)  -   (1,128)
Dividends reinvested under dividend reinvestment plan 13  124  -   -   137 
Other comprehensive income -  -  -   1,021   1,021 
Balance, December 31, 2019$2,827 $10,525 $22,537  $(209) $35,680 
          

 

         
THE BANK OF GLEN BURNIE        
CAPITAL RATIOS           
(dollars in thousands)           
            
            
          To Be Well
          Capitalized Under
      To Be Considered
  Prompt Corrective
      Adequately Capitalized
  Action Provisions
 AmountRatio AmountRatio AmountRatio
As of December 31, 2019:           
(unaudited)           
Common Equity Tier 1 Capital$35,69312.47% $12,8784.50% $18,6026.50%
Total Risk-Based Capital$37,79713.21% $22,8958.00% $28,61910.00%
Tier 1 Risk-Based Capital$35,69312.47% $17,1716.00% $22,8958.00%
Tier 1 Leverage$35,6939.26% $15,4144.00% $19,2685.00%
            
As of September 30, 2019:          
(unaudited)           
Common Equity Tier 1 Capital$35,21612.36% $12,8224.50% $18,5206.50%
Total Risk-Based Capital$37,56113.18% $22,7948.00% $28,49310.00%
Tier 1 Risk-Based Capital$35,21612.36% $17,0966.00% $22,7948.00%
Tier 1 Leverage$35,2169.26% $15,2154.00% $19,0195.00%
            
As of December 31, 2018:           
(audited)           
Common Equity Tier 1 Capital$34,77812.27% $12,7574.50% $18,4276.50%
Total Risk-Based Capital$37,35413.18% $22,6798.00% $28,34910.00%
Tier 1 Risk-Based Capital$34,77812.27% $17,0096.00% $22,6798.00%
Tier 1 Leverage$34,7788.52% $16,3304.00% $20,4135.00%
            

 

     
GLEN BURNIE BANCORP AND SUBSIDIARY    
SELECTED FINANCIAL DATA        
(dollars in thousands, except per share amounts)    
           
           
  Three Months Ended Year EndedYear Ended
      
  December 31, September 30,  December 31,
 December 31, December 31,
   2019   2019   2018   2019   2018 
  (unaudited)
 (unaudited)
 (unaudited)
 (unaudited)
 (audited)
           
Financial Data          
Assets $384,942  $383,438  $413,046  $384,942  $413,046 
Investment securities  71,486   64,817   81,572   71,486   81,572 
Loans, (net of deferred fees & costs) 284,738   283,889   299,120   284,738   299,120 
Allowance for loan losses  2,066   2,307   2,541   2,066   2,541 
Deposits  321,440   325,266   322,453   321,440   322,453 
Borrowings  25,000   20,000   55,000   25,000   55,000 
Stockholders' equity  35,680   35,368   34,051   35,680   34,051 
Net income  539   606   307   1,599   1,583 
           
Average Balances          
Assets $385,603  $380,852  $409,314  $387,315  $401,494 
Investment securities  68,245   61,456   85,055   65,315   89,351 
Loans, (net of deferred fees & costs) 286,427   286,944   297,791   292,076   286,702 
Deposits  327,048   322,893   332,284   324,565   335,167 
Borrowings  20,323   20,000   42,748   25,573   31,595 
Stockholders' equity  35,602   35,489   33,106   35,104   33,777 
           
Performance Ratios          
Annualized return on average assets 0.55%  0.63%  0.30%  0.41%  0.39%
Annualized return on average equity 6.00%  6.77%  3.68%  4.55%  4.69%
Net interest margin  3.42%  3.43%  3.26%  3.39%  3.26%
Dividend payout ratio  52%  47%  91%  71%  71%
Book value per share $12.62  $12.52  $12.10  $12.62  $12.10 
Basic and diluted net income per share  0.19   0.21   0.11   0.57   0.56 
Cash dividends declared per share  0.10   0.10   0.10   0.40   0.40 
Basic and diluted weighted average shares outstanding  2,826,408   2,823,271   2,813,045   2,821,608   2,808,031 
           
Asset Quality Ratios          
Allowance for loan losses to loans  0.73%  0.81%  0.85%  0.73%  0.85%
Nonperforming loans to avg. loans  1.45%  1.55%  0.73%  1.42%  0.76%
Allowance for loan losses to nonaccrual & 90+ past due loans  49.8%  54.3%  128.7%  49.8%  128.7%
Net charge-offs annualize to avg. loans  0.09%  0.02%  0.23%  0.12%  0.32%
           
Capital Ratios          
Common Equity Tier 1 Capital  12.47%  12.36%  12.27%  12.47%  12.27%
Tier 1 Risk-based Capital Ratio  12.47%  12.36%  12.27%  12.47%  12.27%
Leverage Ratio  9.26%  9.26%  8.52%  9.26%  8.52%
Total Risk-Based Capital Ratio  13.21%  13.18%  13.18%  13.21%  13.18%