Market Overview

Level One Bancorp, Inc. reports first quarter 2018 net income of $3.2 million, representing $0.47 of earnings per diluted average share

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FARMINGTON HILLS, Mich., May 15, 2018 (GLOBE NEWSWIRE) -- Level One Bancorp, Inc. ("Level One") (NASDAQ:LEVL) today reported net income of $3.2 million, or $0.47 per diluted share, in the first quarter of 2018. This compares with net income of $933 thousand, or $0.14 per diluted share, in the preceding quarter and $2.8 million, or $0.42 per diluted share, in the first quarter of 2017.

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".

First Dividend Payout: On March 15, 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.03 per share. This dividend was paid out on April 16, 2018, to stockholders of record at the close of business on March 31, 2018.

First Quarter Financial Highlights

  • Net income was $3.2 million, or $0.47 per diluted share, for the three months ended March 31, 2018
  • Pre-tax income increased 17.23% to $3.8 million, compared to $3.3 million in the preceding quarter
  • Net interest margin was 4.03% compared to 4.01% in the preceding quarter and 4.34% in the first quarter of 2017
  • Annualized return on average assets was 1.00%, compared to 0.96% in the first quarter of 2017
  • Annualized return on average equity was 11.64%, compared to 11.28% in the first quarter of 2017
  • Total assets increased 11.19% to $1.30 billion at March 31, 2018, compared to $1.17 billion at March 31, 2017
  • Total deposits increased 15.08% to $1.11 billion at March 31, 2018, compared to $966.9 million at March 31, 2017
  • Total loans increased 9.40% to $1.05 billion at March 31, 2018, compared to $961.0 million at March 31, 2017
  • Book value per share increased 7.63% to $16.78 per share compared to $15.59 per share at March 31, 2017
  • Tangible book value per share increased 9.12% to $15.27 per share compared to $13.99 per share at March 31, 2017

Balance Sheet Review

Level One's total assets were $1.30 billion at March 31, 2018, a decrease of $662 thousand, or 0.05%, from December 31, 2017, and up $130.9 million, or 11.19%, from $1.17 billion at March 31, 2017.

The investment securities portfolio was $160.3 million at March 31, 2018, an increase of $9.4 million or 6.21%, from $151.0 million at December 31, 2017, and up $51.9 million, or 47.8%, from $108.5 million at March 31, 2017. The portfolio is mainly comprised of securities issued by state and political subdivisions, collaterized mortgage obligations, mortgage-backed securities and U.S. Treasury securities.

Total loans were $1.05 billion at March 31, 2018, an increase of $16.4 million, or 1.59%, from $1.03 billion at December 31, 2017, and up $90.4 million, or 9.40%, from $961.0 million at March 31, 2017. The growth in total loans compared to December 31, 2017 and March 31, 2017 was primarily due to growth in our commercial real estate and residential real estate loan portfolios.

Total deposits were $1.11 billion at March 31, 2018, an increase of $145.8 million, or 15.08%, compared to $966.9 million at March 31, 2017. Total deposits decreased $7.7 million, or 0.69%, compared to $1.12 billion at December 31, 2017. Total deposit composition at March 31, 2018 consisted of 33% of demand deposit accounts, 25% of savings and money market accounts and 42% of time deposits.

Operating Results

Level One's net interest income before the provision for loan loss increased $123 thousand, or 1.02%, to $12.1 million in the first quarter of 2018, compared to $12.0 million in the preceding quarter, and increased $383 thousand, or 3.26%, compared to $11.7 million in the first quarter of 2017.

Level One's net interest margin was 4.03% in the first quarter of 2018, compared to 4.01% in the preceding quarter and 4.34% in the first quarter of 2017.

Total revenues (net interest income before provision for loan losses, plus noninterest income) increased $101 thousand, or 0.75%, to $13.5 million in the first quarter 2018, compared to $13.4 million in the preceding quarter, and increased $375 thousand, or 2.86%, compared to $13.1 million in the first quarter of 2017.

Level One's first quarter noninterest expenses were $9.1 million, compared to $9.2 million in the preceding quarter and $8.7 million in the first quarter of 2017. The efficiency ratio, which is a measure of operating expenses as a percentage of net interest income and noninterest income, for the first quarter of 2018 was 67.7%, compared to 68.6% for the preceding quarter and 66.1% in the first quarter of 2017.

Level One's income tax provision was $642 thousand, or 16.9% of pretax income, during the three months ended March 31, 2018, as compared to $2.3 million, or 71.3% of pretax income, in the preceding quarter and $1.5 million, or 35.2% of pretax income, in the first quarter of 2017. The decrease in tax expense during the three months ended March 31, 2018, as compared to first quarter 2017 and fourth quarter of 2017, is a result of the change in tax rates due to the enactment of the Tax Cuts and Jobs Act ("TCJA"). The increase in tax expense during the fourth quarter of 2017, as compared to first quarter 2017, was a result of the Company recognizing a $1.3 million tax expense as a result of the TCJA, of which the expense recorded is primarily attributable to the remeasurement of net deferred tax assets.

Asset Quality

Level One's asset quality remained solid during the first quarter of 2018. Total nonperforming assets, consisting of nonaccrual loans and other real estate owned (OREO), were $13.0 million, or 1.23% of total loans, at March 31, 2018, a decrease of $1.7 million from nonperforming assets of $14.7 million, or 1.42% of total loans at December 31, 2017, and a decrease of $3.4 million from nonperforming assets of $16.3 million, or 1.70% of total loans at March 31, 2017. Nonperforming assets as a percentage of total assets were 1.00% at March 31, 2018, compared to 1.13% at December 31, 2017, and 1.40% at March 31, 2017.

Nonaccrual loans decreased by $1.0 million, or 7.63%, to $13.0 million at March 31, 2018, compared to $14.0 million at December 31, 2017. In addition, we had $263 thousand in loans 90 days or more past due and still accruing at March 31, 2018, compared to $440 thousand at December 31, 2017.

Performing troubled debt restructured loans that were not included in nonaccrual loans at March 31, 2018 were $2.4 million, compared to $1.2 million in the preceding quarter. 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 charge offs in the first quarter of 2018 were $755 thousand, or 0.29% of average loans on an annualized basis, compared to $873 thousand, or 0.35% of average loans on an annualized basis for the preceding quarter and $48 thousand, or 0.02% of average loans on an annualized basis at March 31, 2017.

Level One's first quarter provision for loan losses was $554 thousand, compared to $956 thousand in the preceding quarter and $198 thousand in the first quarter of 2017. The allowance for loan losses was $11.5 million, or 1.09% of total loans at March 31, 2018, compared to $11.7 million, or 1.13% of total loans at December 31, 2017, and $11.2 million, or 1.17% of total loans at March 31, 2017. As of March 31, 2018, the allowance for loan losses as a percentage of nonperforming loans was 88.67%, compared to 83.38% at December 31, 2017, and 71.04% at March 31, 2017.

Capital

Total shareholders' equity was $110.5 million at March 31, 2018, an increase of $2.6 million, or 2.37%, compared with $108.0 million at December 31, 2017 and increased $10.9 million, or 10.97%, from $99.6 million at March 31, 2017.

The tier 1 leverage, common equity tier 1, and total capital ratios were 8.15%, 9.47%, and 11.87%, respectively, at March 31, 2018, compared to 7.92%, 9.10%, and 11.55% at December 31, 2017 and 9.02%, 10.18%, and 11.28% at March 31, 2017, respectively.

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 $1.30 billion as of March 31, 2018. It operates twelve banking centers throughout Southeast Michigan and West Michigan.  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, 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          
   2018    2017    2017  
(Dollars in thousands, except per share data) 1st Qtr   4th Qtr   1st Qtr  
Earnings Summary            
Interest income $   14,774   $   14,378   $   13,447  
Interest expense     2,647       2,374       1,703  
Net interest income     12,127       12,004       11,744  
Provision for loan losses     554       956       198  
Noninterest income     1,372       1,394       1,380  
Noninterest expense     9,135       9,193       8,677  
Income before income taxes     3,810       3,250       4,249  
Income tax provision     642       2,317       1,497  
Net income     3,168       933       2,752  
             
Per Share Data            
Basic earnings per common share $   0.48   $   0.15   $   0.43  
Diluted earnings per common share     0.47       0.14       0.42  
Book value per common share     16.78       16.78       15.59  
Tangible book value per share (1)     15.27       15.21       13.99  
Shares outstanding (in thousands)     6,585       6,435       6,387  
Average basic common shares (in thousands)     6,539       6,403       6,368  
Average diluted common shares (in thousands)     6,699       6,630       6,603  
             
Selected Period End Balances            
Total assets     1,300,629   $   1,301,291   $   1,169,759  
Securities available-for-sale     160,349       150,969       108,497  
Total loans     1,051,354       1,034,923       960,990  
Total deposits     1,112,644       1,120,382       966,858  
Total liabilities     1,190,106       1,193,331  
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