Landmark Bancorp, Inc. Announces First Quarter Earnings Per Share of $0.64; Declares Cash Dividend of $0.21 per Share


Manhattan, KS, May 02, 2023 (GLOBE NEWSWIRE) -- Landmark Bancorp, Inc. (“Landmark”; Nasdaq: LARK) reported diluted earnings per share of $0.64 for the three months ended March 31, 2023, compared to $0.23 per share in the fourth quarter of 2022 and $0.59 per share in the same quarter last year. Net earnings for the first quarter of 2023 amounted to $3.4 million, compared to $1.2 million in the prior quarter and $3.1 million for the first quarter of 2022. For the three months ended March 31, 2023, the return on average assets was 0.90%, the return on average equity was 12.04%, and the efficiency ratio was 70.1%.

In making this announcement, Michael E. Scheopner, President and Chief Executive Officer of Landmark, said, “We are pleased with our first quarter results, which included continued solid loan growth, lower expenses, and good credit quality. Compared to the fourth quarter 2022, total gross loans increased by $19.6 million, or 9.4% on an annualized basis. Deposits decreased $6.6 million, or 2.1%, during the first quarter of 2023 as expected mainly due to a seasonal decline in public fund deposit balances. We experienced very little deposit runoff in the wake of the bank closures in March and we are very confident in the strength of our deposit base and our overall liquidity. Net interest income increased $2.3 million, or 26.6%, compared to the first quarter of 2022 but declined $939,000, or 7.9%, from the prior quarter as rising interest rates impacted our funding costs. Net interest margin increased to 3.31% during the first quarter of 2023 as compared to 2.99% in the first quarter of last year but declined from 3.53% in the prior quarter. Non-interest income declined 1.9% compared to the same period last year due to lower gains on sales of residential mortgage loans but increased $683,000 from the prior quarter as a result of investment securities losses of $750,000 taken in the fourth quarter 2022. This quarter non-interest expense declined $3.6 million from the prior quarter mainly due to lower expenses overall and acquisition costs of $3.0 million in the prior quarter that did not reoccur in the first quarter 2023. “

Mr. Scheopner continued, “Credit quality remains very strong as non-accrual loans and delinquencies continue to remain low. Landmark recorded net loan charge-offs of $47,000 in the first quarter of 2023 compared to net loan recoveries of $82,000 in the first quarter of 2022 and net loan charge-offs of $67,000 in the fourth quarter of 2022. Non-accrual loans totaled $3.3 million or 0.38% of gross loans at March 31, 2023 and have declined $1.4 million over the last twelve months. Also, the balance of loans past due 30 to 89 days remained low. The allowance for loan losses totaled $10.3 million at March 31, 2023, or 1.18% of period end gross loans. The adoption of Accounting Standards Update 2016-13, Financial Instruments - Credit Losses (Topic 326), commonly referred to as “CECL,” on January 1, 2023, resulted in an increase of $1.5 million in our allowance for credit losses. Our equity to assets ratio totaled 7.74% while loans to deposits totaled 66.4%.”

Total assets at March 31, 2023 were $1.5 billion, total gross loans were $869.8 million and total deposits were $1.3 billion.
Landmark’s Board of Directors declared a cash dividend of $0.21 per share, to be paid May 31, 2023, to common stockholders of record as of the close of business on May 17, 2023.

Management will host a conference call to discuss the Company’s financial results at 10:00 a.m. (Central time) on Wednesday, May 3, 2023. Investors may participate via telephone by dialing (833) 470-1428 and using access code 507849. A replay of the call will be available through June 2, 2023, by dialing (866) 813-9403 and using access code 453843.

SUMMARY OF FIRST QUARTER RESULTS

Net Interest Income

Net interest income in the first quarter of 2023 amounted to $10.9 million representing a decrease of $939,000 compared to the previous quarter. This decrease in net interest income was due mainly to higher interest expense on deposits and borrowed funds but offset mainly by growth in interest income on loans. The net interest margin totaled 3.31% during the first quarter compared to 3.53% in the prior quarter. Compared to the previous quarter, interest income on loans increased $275,000, or 2.5%, to $11.4 million due to both higher rates and balances while the average tax-equivalent yield on the loan portfolio increased 14 basis points to 5.43%. Interest income on investment securities grew to $3.1 million on slightly lower average balances but higher rates. The average tax-equivalent yield on investment securities totaled 2.68% this quarter compared to 2.56% in the prior quarter.

Interest expense on deposits increased $1.1 million in the first quarter 2023 mainly due to higher rates and average balances on interest-bearing deposits. The average rate on interest-bearing deposits increased this quarter to 1.18% compared to 0.68% in the prior quarter. Interest expense on total borrowed funds grew to $1.1 million as the average rate paid increased 99 basis points to 4.69%.

Non-Interest Income

Non-interest income totaled $3.5 million for the first quarter of 2023, a decrease of $68,000, or 1.9%, compared to the same period last year and an increase of $683,000, or 24.3%, from the previous quarter. The decrease in non-interest income during the first quarter of 2023 compared to the same period last year was primarily due to a decline of $212,000 in gains on sales of one-to-four family residential real estate loans as higher interest rates and low housing inventories reduced originations of these fixed rate loans compared to the same quarter last year. Fees and service charges increased $170,000, or 7.8%, over the same period last year mainly due to increased deposit-related income. A loss of $750,000 was recorded in the fourth of 2022 on the sale of certain low yielding investment securities in our portfolio while there were no security gains or losses in the first quarter of 2023 or 2022.

Non-Interest Expense

During the first quarter of 2023, non-interest expense totaled $10.3 million, an increase of $1.5 million, or 17.0%, over the same period in 2022 but a decrease of $3.6 million, or 25.9%, compared to the prior quarter. Compared to the same period last year, higher costs this year for compensation and benefits, occupancy and equipment, data processing and other non-interest expenses were primarily due to higher operating costs associated with the Freedom Bank acquisition, while amortization expense increased $145,000 this quarter due to the core deposit intangible recorded for this acquisition. The decrease in non-interest expense compared to the prior quarter was primarily due to acquisition costs of $3.0 million which did not reoccur. Also, during the fourth quarter of 2022, a one-time valuation allowance of $354,000 was recorded on certain real estate owned and included in other non-interest expense.

Income Tax Expense

Landmark recorded income tax expense of $693,000 in the first quarter of 2023 compared to income tax expense of $737,000 in the first quarter of 2022 and an income tax benefit of $466,000 in the fourth quarter of 2022. The effective tax rate decreased to 17.1% in the first quarter of 2023 compared to 19.0% in the first quarter of 2022 and (62.5%) in the fourth quarter of 2022. The fourth quarter of 2022 included the recognition of $465,000 of previously unrecognized tax benefits, which reduced the effective tax rate in the period.

Liquidity Highlights

In addition to local retail, commercial and public fund deposits, the Company has access to multiple sources of brokered deposits that can be utilized for liquidity. Landmark also has diverse sources of liquidity available through both secured and unsecured borrowing lines of credit. At March 31, 2023, Landmark had collateral pledged to the Federal Home Loan Bank (“FHLB”) that would allow for an additional $151.1 million of FHLB borrowings. Additionally, investment securities were pledged to the Federal Reserve discount window that creates a borrowing capacity with the Federal Reserve of $64.6 million. Landmark also had various other federal funds agreements, both secured and unsecured, with correspondent banks totaling approximately $30.0 million in available credit at March 31, 2023.

As of March 31, 2023, Landmark had unpledged available-for-sale investment securities with a fair value of $71.8 million as well as approximately $111.9 million of pledged investment securities in excess of required levels. The average life of the Company’s investment portfolio is approximately 4.2 years and is projected to generate cash flow of $72.9 million over the next 12 months.

Balance Sheet Highlights

As of March 31, 2023, gross loans totaled $869.8 million, an increase of $19.6 million, or 9.4% annualized since December 31, 2022. During the quarter, loan growth was comprised of commercial real estate (growth of $12.8 million), residential real estate (growth of $9.1 million), consumer (growth of $2.2 million) and construction and land loans (growth of $0.4 million). Investment securities increased $863,000, during the first quarter of 2023, while gross unrealized net losses on these investment securities decreased from $33.2 million at December 31, 2022 to $26.5 million at March 31, 2023. Deposit balances decreased $6.6 million, or 2.1% on an annualized basis, to $1.3 billion at March 31, 2023. The decrease in deposits was mainly driven by seasonal decline in public fund deposit accounts. Growth in non-interest demand (growth of $11.8 million) and certificate of deposit accounts (growth of $20.9 million) this quarter was mainly offset by lower money market and interest checking accounts. Average borrowings, including Federal Home Loan Bank debt and repurchase agreements declined $2.6 million this quarter. At March 31, 2023, the loan to deposits ratio was 66.4% compared to 64.7% in the prior quarter and 54.9% in the same period last year.

Total deposits include uninsured deposits of $224.7 million and $192.9 million as of March 31, 2023 and December 31, 2022, respectively. This represents less than 18% of our total deposits at March 31, 2023 and compares favorably with other similar community banking organizations. Over 99% of Landmark’s total deposits were considered core deposits at March 31, 2023. These deposit balances are from retail, commercial and public fund customers located in the markets where the Company has bank branch locations.

Stockholders’ equity increased to $117.7 million (book value of $22.58 per share) as of March 31, 2023, from $111.4 million (book value of $21.38 per share) as of December 31, 2022, mainly due to a decrease in other comprehensive losses during the first quarter of 2023 related to the decline in the unrealized losses on investment securities mentioned above but offset by the after-tax CECL adjustment of $1.2 million. The ratio of equity to total assets increased to 7.74% on March 31, 2023, from 7.41% on December 31, 2022.

The allowance for credit losses totaled $10.3 million, or 1.18% of total gross loans on March 31, 2023, compared to $8.8 million, or 1.03% of total gross loans on December 31, 2022. The increase in the allowance for credit losses was primarily due to a $1.5 million increase related to the adoption of CECL on January 1, 2023. Net loan charge-offs totaled $47,000 in the first quarter of 2023, compared to $67,000 during the fourth quarter of 2022 and net loan recoveries of $82,000 during the same quarter last year. The ratio of annualized net loan charge-offs to total average loans was 0.02% in the first quarter of 2023, (0.05%) in the first quarter of last year and 0.03% in the prior quarter. A provision for credit losses of $49,000 was made in the first quarter of 2023 related to unfunded loan commitments and held-to-maturity investments securities. No provision for credit losses was recorded in the fourth quarter of 2022 while a credit provision of $500,000 was recorded in the first quarter 2022.

Non-performing loans totaled $3.3 million, or 0.38% of gross loans, while loans 30-89 days delinquent totaled $1.5 million, or 0.17% of gross loans, as of March 31, 2023. Real estate owned totaled $0.9 million at March 31, 2023.

About Landmark

Landmark Bancorp, Inc., the holding company for Landmark National Bank, is listed on the Nasdaq Global Market under the symbol “LARK.” Headquartered in Manhattan, Kansas, Landmark National Bank is a community banking organization dedicated to providing quality financial and banking services. Landmark National Bank has 31 locations in 24 communities across Kansas: Manhattan (2), Auburn, Dodge City (2), Fort Scott (2), Garden City, Great Bend (2), Hoisington, Iola, Junction City, Kincaid, La Crosse, Lawrence (2), Lenexa, Louisburg, Mound City, Osage City, Osawatomie, Overland Park (2), Paola, Pittsburg, Prairie Village, Topeka (2), Wamego and Wellsville, Kansas. Visit www.banklandmark.com for more information.

Contacts:
Michael E. Scheopner
President and Chief Executive Officer
Mark A. Herpich
Chief Financial Officer
(785) 565-2000


Special Note Concerning Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to the financial condition, results of operations, plans, objectives, future performance and business of Landmark. Forward-looking statements, which may be based upon beliefs, expectations and assumptions of our management and on information currently available to management, are generally identifiable by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “intend,” “estimate,” “may,” “will,” “would,” “could,” “should” or other similar expressions. Additionally, all statements in this press release, including forward-looking statements, speak only as of the date they are made, and Landmark undertakes no obligation to update any statement in light of new information or future events. A number of factors, many of which are beyond our ability to control or predict, could cause actual results to differ materially from those in our forward-looking statements. These factors include, among others, the following: (i) the strength of the local, national and international economies, including the effects of inflationary pressures and supply chain constraints on such economies; (ii) changes in state and federal laws, regulations and governmental policies concerning banking, securities, consumer protection, insurance, monetary, trade and tax matters, including any changes in response to the recent failures of other banks; (iii) changes in interest rates and prepayment rates of our assets; (iv) increased competition in the financial services sector and the inability to attract new customers, including from non-bank competitors such as credit unions and “fintech” companies; (v) timely development and acceptance of new products and services; (vi) changes in technology and the ability to develop and maintain secure and reliable electronic systems; (vii) our risk management framework; (viii) interruptions in information technology and telecommunications systems and third-party services; (ix) changes and uncertainty in benchmark interest rates, including the elimination of LIBOR and the development of a substitute; (x) the effects of severe weather, natural disasters, widespread disease or pandemics (including the COVID-19 pandemic), or other external events; (xi) the loss of key executives or employees; (xii) changes in consumer spending; (xiii) integration of acquired businesses; (xiv) unexpected outcomes of existing or new litigation; (xv) changes in accounting policies and practices, such as the implementation of the current expected credit losses accounting standard; (xvi) the economic impact of past and any future terrorist attacks, acts of war, including the current conflict in Ukraine, or threats thereof, and the response of the United States to any such threats and attacks; (xvii) the ability to manage credit risk, forecast loan losses and maintain an adequate allowance for loan losses; (xviii) fluctuations in the value of securities held in our securities portfolio; (xix) concentrations within our loan portfolio, large loans to certain borrowers, and large deposits from certain clients; (xx) the concentration of large deposits from certain clients who have balances above current FDIC insurance limits and may withdraw deposits to diversify their exposure; (xxi) the level of non-performing assets on our balance sheets; (xxii) the ability to raise additional capital; (xxiii) cyber-attacks; (xxiv) declines in real estate values; (xxv) the effects of fraud on the part of our employees, customers, vendors or counterparties; and (xxvi) any other risks described in the “Risk Factors” sections of reports filed by Landmark with the Securities and Exchange Commission. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Additional information concerning Landmark and its business, including additional risk factors that could materially affect Landmark’s financial results, is included in our filings with the Securities and Exchange Commission.


LANDMARK BANCORP,
INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)

(Dollars in thousands) March 31,  December 31,  September 30,  June 30,  March 31,  December 31, 
  2023  2022  2022  2022  2022  2021 
Assets                        
Cash and cash equivalents $23,764  $23,156  $49,234  $30,413  $106,319  $189,213 
Interest-bearing deposits at other banks  8,586   9,084   8,844   8,360   6,381   7,378 
Investment securities available-for-sale, at fair value:                        
U.S. treasury securities  121,759   123,111   127,445   135,459   119,882   42,675 
U.S. federal agency obligations  1,993   1,988   4,979   14,931   17,013   17,195 
Municipal obligations, tax exempt  128,281   127,262   128,392   134,994   130,915   137,984 
Municipal obligations, taxable  73,468   67,244   61,959   49,356   45,586   40,046 
Agency mortgage-backed securities  164,669   169,701   161,331   151,893   153,587   142,817 
Total investment securities available-for-sale  490,170   489,306   484,106   486,633   466,983   380,717 
Investment securities held-to-maturity  3,467   3,524   -   -   -   - 
Bank stocks, at cost  6,876   5,470   6,641   2,881   2,856   2,905 
Loans:                        
One-to-four family residential real estate  246,079   236,982   205,466   192,517   169,514   166,081 
Construction and land  23,137   22,725   18,119   23,092   25,408   27,644 
Commercial real estate  316,900   304,074   228,669   209,879   196,736   198,472 
Commercial  172,331   173,415   144,582   137,929   127,226   132,154 
Paycheck Protection Program (PPP)  21   21   410   652   5,218   17,179 
Agriculture  80,499   84,283   86,114   78,240   82,484   94,267 
Municipal  2,004   2,026   2,036   2,076   2,212   2,050 
Consumer  28,835   26,664   25,911   25,531   24,751   24,541 
Total gross loans  869,806   850,190   711,307   669,916   633,549   662,388 
Net deferred loan (fees) costs and loans in process  2   (250)  (311)  229   (43)  (380)
Allowance for credit losses  (10,267)  (8,791)  (8,858)  (8,315)  (8,357)  (8,775)
Loans, net  859,541   841,149   702,138   661,830   625,149   653,233 
Loans held for sale  1,839   2,488   2,741   6,264   5,424   4,795 
Bank owned life insurance  37,541   37,323   32,672   32,483   32,293   32,106 
Premises and equipment, net  24,241   24,327   20,628   20,679   20,919   20,803 
Goodwill  32,199   32,199   17,532   17,532   17,532   17,532 
Other intangible assets, net  3,809   4,006   36   52   67   84 
Mortgage servicing rights  3,652   3,813   3,980   4,025   4,128   4,193 
Real estate owned, net  934   934   1,288   1,288   1,288   2,551 
Other assets  24,198   26,088   25,456   19,911   17,095   13,458 
Total assets $1,520,817  $1,502,867  $1,355,296  $1,292,351  $1,306,434  $1,328,968 
                         
Liabilities and Stockholders’ Equity                        
Liabilities:                        
Deposits:                        
Non-interest-bearing demand  421,971   410,142   347,942   343,107   350,342   350,005 
Money market and checking  588,366   626,659   504,973   520,056   517,936   536,868 
Savings  169,504   170,570   170,988   170,419   167,823   155,501 
Certificates of deposit  114,189   93,278   93,234   97,885   103,464   106,107 
Total deposits  1,294,030   1,300,649   1,117,137   1,131,467   1,139,565   1,148,481 
Federal Home Loan Bank borrowings  37,804   8,200   74,900   -   -   - 
Subordinated debentures  21,651   21,651   21,651   21,651   21,651   21,651 
Other borrowings  28,750   38,402   16,349   6,223   7,004   7,403 
Accrued interest and other liabilities  20,864   22,532   19,775   15,708   14,701   15,790 
Total liabilities  1,403,099   1,391,434   1,249,812   1,175,049   1,182,921   1,193,325 
Stockholders’ equity:                        
Common stock  52   52   50   50   50   50 
Additional paid-in capital  84,413   84,273   79,329   79,284   79,206   79,120 
Retained earnings  53,231   52,174   58,114   56,662   54,677   52,593 
Treasury stock, at cost  -   -   (1,040)  (538)  -   - 
Accumulated other comprehensive (loss) income  (19,978)  (25,066)  (30,969)  (18,156)  (10,420)  3,880 
Total stockholders’ equity  117,718   111,433   105,484   117,302   123,513   135,643 
Total liabilities and stockholders’ equity $1,520,817  $1,502,867  $1,355,296  $1,292,351  $1,306,434  $1,328,968 


LANDMARK BANCORP,
INC. AND SUBSIDIARIES
Consolidated Statements of Earnings (unaudited)

(Dollars in thousands, except per share amounts) Three months ended, 
  March 31,  December 31,  March 31, 
  2023  2022  2022 
Interest income:            
Loans $11,376  $11,101  $7,191 
Investment securities:            
Taxable  2,317   2,267   991 
Tax-exempt  786   786   722 
Interest-bearing deposits at banks  98   89   62 
Total interest income  14,577   14,243   8,966 
Interest expense:            
Deposits  2,539   1,452   195 
Borrowed funds  1,091   905   126 
Total interest expense  3,630   2,357   321 
Net interest income  10,947   11,886   8,645 
Provision for credit losses  49   -   (500)
Net interest income after provision for credit losses  10,898   11,886   9,145 
Non-interest income:            
Fees and service charges  2,358   2,572   2,188 
Gains on sales of loans, net  693   417   905 
Bank owned life insurance  218   214   187 
(Losses) gains on sales of investment securities, net  -   (750)  - 
Other  226   359   283 
Total non-interest income  3,495   2,812   3,563 
Non-interest expense:            
Compensation and benefits  5,542   5,626   4,775 
Occupancy and equipment  1,369   1,373   1,233 
Data processing  589   495   340 
Amortization of mortgage servicing rights and other intangibles  461   481   316 
Professional fees  491   554   451 
Acquisition costs  -   3,043   - 
Other  1,891   2,380   1,723 
Total non-interest expense  10,343   13,952   8,838 
Earnings before income taxes  4,050   746   3,870 
Income tax expense  693   (466)  737 
Net earnings $3,357  $1,212  $3,133 
             
Net earnings per share (1)            
Basic $0.64  $0.23  $0.60 
Diluted  0.64   0.23   0.59 
Dividends per share (1)  0.21   0.20   0.20 
Shares outstanding at end of period (1)  5,215,575   5,213,232   5,247,332 
Weighted average common shares outstanding - basic (1)  5,213,125   5,214,698   5,247,332 
Weighted average common shares outstanding - diluted (1)  5,220,688   5,228,490   5,267,908 
             
Tax equivalent net interest income $11,144  $12,089  $8,840 


(1)Share and per share values at or for the periods ended March 31, 2022 have been adjusted to give effect to the 5% stock dividend paid during December 2022.

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Select Ratios and Other Data (unaudited)

  As of or for the 
(Dollars in thousands, except per share amounts) three months ended, 
  March 31,  December 31,  March 31, 
  2023  2022  2022 
Performance ratios:            
Return on average assets (1)  0.90%  0.32%  0.97%
Return on average equity (1)  12.04%  4.50%  9.59%
Net interest margin (1)(2)  3.31%  3.53%  2.99%
Effective tax rate  17.1%  -62.5%  19.0%
Efficiency ratio (3)  70.1%  66.8%  71.9%
Non-interest income to total income (3)  24.2%  23.1%  28.5%
             
Average balances:            
Investment securities $499,538  $504,495  $421,996 
Loans  850,331   832,285   636,032 
Assets  1,511,077   1,507,454   1,305,813 
Interest-bearing deposits  872,900   850,041   792,354 
Subordinated debentures and other borrowings  66,868   65,521   21,651 
Repurchase agreements  27,548   31,533   6,825 
Stockholders’ equity $113,115  $106,782   132,429 
             
Average tax equivalent yield/cost (1):            
Investment securities  2.68%  2.56%  1.83%
Loans  5.43%  5.29%  4.59%
Total interest-bearing assets  4.39%  4.22%  3.10%
Interest-bearing deposits  1.18%  0.68%  0.10%
Subordinated debentures and other borrowings  5.65%  4.83%  2.30%
Repurchase agreements  2.36%  1.36%  0.18%
Total interest-bearing liabilities  1.52%  0.99%  0.16%
             
Capital ratios:            
Equity to total assets  7.74%  7.41%  9.45%
Tangible equity to tangible assets (3)  5.50%  5.13%  8.22%
Book value per share $22.58  $21.38  $23.54 
Tangible book value per share (3) $15.67  $14.43  $20.18 
             
Rollforward of allowance for credit losses (loans):            
Beginning balance $8,791  $8,858  $8,775 
Adoption of CECL  1,523   -   - 
Charge-offs  (108)  (101)  (53)
Recoveries  61   34   135 
Provision for credit losses  -   -   (500)
Ending balance $10,267  $8,791  $8,357 
             
Non-performing assets:            
Non-accrual loans $3,311  $3,326  $4,676 
Accruing loans over 90 days past due  -   -   - 
Real estate owned  934   934   1,288 
Total non-performing assets $4,245  $4,260  $5,964 
             
Loans 30-89 days delinquent $1,490  $738  $846 
             
Other ratios:            
Loans to deposits  66.42%  64.67%  54.86%
Loans 30-89 days delinquent and still accruing to gross loans outstanding  0.17%  0.09%  0.13%
Total non-performing loans to gross loans outstanding  0.38%  0.39%  0.74%
Total non-performing assets to total assets  0.28%  0.28%  0.46%
Allowance for credit losses to gross loans outstanding  1.18%  1.03%  1.32%
Allowance for credit losses to gross loans outstanding excluding PPP loans  1.18%  1.03%  1.33%
Allowance for credit losses to total non-performing loans  310.09%  264.31%  178.72%
Net loan charge-offs to average loans (1)  0.02%  0.03%  -0.05%


(1)Information is annualized.
(2)Net interest margin is presented on a fully tax equivalent basis, using a 21% federal tax rate.
(3)Non-GAAP financial measures. See the “Non-GAAP Financial Measures” section of this press release for a reconciliation to the most comparable GAAP equivalent.

LANDMARK BANCORP, INC. AND SUBSIDIARIES
Non-GAAP Finacials Measures (unaudited)

  As of or for the 
(Dollars in thousands, except per share amounts) three months ended, 
  March 31,  December 31,  March 31, 
  2023  2022  2022 
          
Non-GAAP earnings reconciliation:            
Net earnings $3,357  $1,212  $3,133 
Add: acquisition costs  -   3,043   - 
Less: income tax expense (effective tax rate of 24.5%)  -   (746)  - 
Adjusted net earnings (A) $3,357  $3,509  $3,133 
             
Weighted average common shares outstanding - diluted (B)  5,220,688   5,228,490   5,267,908 
             
Adjusted diluted net earnings per share (A/B) $0.64  $0.67  $0.59 
Adjusted return on average assets (1)  0.90%  0.92%  0.97%
Adjusted return on average equity (1)  12.04%  13.04%  9.59%
             
(1) Information is annualized.            
             
             
Non-GAAP financial ratio reconciliation:            
Total non-interest expense $10,343  $13,952  $8,838 
Less: foreclosure and real estate owned expense  (17)  (393)  (124)
Less: amortization of other intangibles  (197)  (200)  (17)
Less: acquisition costs  -   (3,043)  - 
Adjusted non-interest expense (A)  10,129   10,316   8,697 
             
Net interest income (B)  10,947   11,886   8,645 
             
Non-interest income  3,495   2,812   3,563 
Less: losses (gains) on sales of investment securities, net  -   750   - 
Less: gains on sales of premises and equipment and foreclosed assets  (1)  -   (114)
Adjusted non-interest income (C) $3,494  $3,562  $3,449 
             
Efficiency ratio (A/(B+C))  70.1%  66.8%  71.9%
Non-interest income to total income (C/(B+C))  24.2%  23.1%  28.5%
             
Total stockholders’ equity $117,718  $111,433  $123,513 
Less: goodwill and other intangible assets  (36,008)  (36,205)  (17,599)
Tangible equity (D) $81,710  $75,228  $105,914 
             
Total assets $1,520,817  $1,502,867  $1,306,434 
Less: goodwill and other intangible assets  (36,008)  (36,205)  (17,599)
Tangible assets (E) $1,484,809  $1,466,662  $1,288,835 
             
Tangible equity to tangible assets (D/E)  5.50%  5.13%  8.22%
             
Shares outstanding at end of period (F)  5,215,575   5,213,232   5,247,332 
             
Tangible book value per share (D/F) $15.67  $14.43  $20.18