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Sussex Bancorp Reports Second Quarter 2018 Results and Declares a Cash Dividend

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ROCKAWAY, N.J., July 26, 2018 (GLOBE NEWSWIRE) -- SB One Bancorp (the "Company") (NASDAQ:SBBX), the holding company for SB One Bank (the "Bank"), today reported net income of $3.0 million, or $0.38 per basic and diluted share, for the quarter ended June 30, 2018, as compared to $1.2 million, or $0.25 per basic and diluted share, for the same period last year.   The increase in net income was mainly attributable to the merger with Community Bank of Bergen County ("Community Bank"), continued double digit loan growth and a 233% increase in SB One Insurance pretax profit. 

During the second quarter of 2018, the Company, along with its' subsidiaries, changed the name of each company and introduced them through various rebranding initiatives and campaigns. In addition, the Company was also added to the Russell 2000® Index and Russell 3000® Index on June 25, 2018.

The Company's net income, adjusted for tax effected merger-related expenses of $321 thousand and non-recurring rebranding expenses of $152 thousand, increased $1.9 million, or 117.4%, to $3.5 million, or $0.44 per diluted share, for the quarter ended June 30, 2018, as compared to the same period last year. The Company's return on average assets, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses, for the quarter ended June 30, 2018, was 0.99%, an increase from 0.71% for the quarter ended June 30, 2017.  The Company also announced net income, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses of $2.7 million and $152 thousand, increased $3.5 million, or 98.1%, to $7.1 million, or $0.91 per diluted share, for the six months ended June 30, 2018, as compared to the same period last year. The Company's return on average assets, adjusted for tax effected merger-related expenses and non-recurring rebranding expenses, for the six months ended June 30, 2018, was 1.04%, an increase from 0.82% for the six months ended June 30, 2017. 

On June 20, 2018, the Company announced the signing of a definitive agreement and plan of merger pursuant to which the Company will acquire Enterprise Bank N.J. ("Enterprise Bank") in an all-stock transaction valued at $48.2 million (the "Merger").  Enterprise Bank will merge with and into SB One Bank and each outstanding share of Enterprise Bank common stock will be exchanged for 0.4538 shares of the Company's common stock.  Based on financials as of March 31, 2018, the combined company will have approximately $1.6 billion in assets, $1.3 billion in gross loans, and $1.2 billion in deposits upon completion of the Merger.  The Merger is expected to be completed in the fourth quarter of 2018.  The consummation of the Merger is subject to receipt of the requisite approval of Enterprise Bank's shareholders, receipt of all required regulatory approvals, and other customary closing conditions.

"These are exciting times for our Company, employees, customers and shareholders as the second quarter reflected a number of great successes for our Company, including the rebranding of our Company as SB One, the first quarter of being fully operationally integrated with Community Bank, the inclusion into the Russell 2000® Index and Russell 3000® Index and the announcement of a merger with Enterprise Bank," said Anthony Labozzetta, President and Chief Executive Officer of Sussex Bancorp.

Mr. Labozzetta also stated, "Our second quarter results reflect continued strong loan growth, some non-recurring merger and operational costs and another strong quarter of financial performance by our insurance agency driving core ROA above 1% for the first six months of 2018." 

Declaration of Quarterly Dividend
On July 25th, The Company's Board of Directors declared a quarterly cash dividend of $0.075 per share, which is payable on August 23, 2018 to common shareholders of record as of the close of business on August 9, 2018.

Financial Performance
Net Income. For the quarter ended June 30, 2018, the Company reported net income of $3.0 million, or $0.38 per basic and diluted share, as compared to net income of $1.2 million, or $0.25 per basic and diluted share, for the same period last year.  The increase in net income for the quarter ended June 30, 2018 was driven by a $4.1 million, or 59.3%, increase in net interest income resulting from loan and deposit growth and a $1.1 million increase in non-interest income driven by insurance commissions and fees. The aforementioned increases were partially offset by a $3.1 million, or 46.8%, increase in non-interest expenses and a $293 thousand increase in income tax expense. The changes were largely attributed to the growth in the Company resulting from the merger with Community Bank, double digit loan growth, and a 233% increase in SB One's Insurance pretax income, partially offset by costs resulting from the rebranding of the Company and its subsidiaries and additional staffing to support growth. 

The Company's net income, adjusted for tax effected merger-related expenses of $321 thousand and non-recurring rebranding expenses of $152 thousand, respectively, increased $1.9 million, or 117.4%, to $3.5 million, or $0.44 per diluted share, for the quarter ended June 30, 2018, as compared to the same period last year.

For the six months ended June 30, 2018, the Company reported net income of $4.3 million, or $0.55 per basic and diluted share, or a 33.7% increase, as compared to net income of $3.2 million, or $0.68 per basic and $0.67 per diluted share, for the same period last year.  The changes in net income were largely attributed to the growth in the Company resulting from the merger with Community Bank, double digit loan growth, and a 51% increase in SB One's Insurance pretax income, partially offset by rebranding of the Company and its subsidiaries and additional staffing to support growth.  The increase in net income for the six months ended June 30, 2018 was largely due to increases in net interest income of $8.1 million and non-interest income of $1.4 million, which were partially offset by an increase in non-interest expenses of $8.7 million.  The increase in non-interest expenses were largely due to the merger with Community Bank. Merger related expenses and salaries and employee benefits increased $3.3 million and $3.2 million, respectively.

The Company's net income, adjusted for tax effected merger-related expenses  of $2.7 million and non-recurring rebranding expenses of $152 thousand, respectively, increased $3.5 million, or 98.1%, to $7.1 million, or $0.91 per diluted share, for the six months ended June 30, 2018, as compared to the same period last year.

Net Interest Income.  Net interest income on a fully tax equivalent basis increased $4.2 million, or 58.9%, to $11.2 million for the second quarter of 2018, as compared to $7.1 million for the same period in 2017.  The increase in net interest income was largely due to a $452.6 million, or 52.7%, increase in average interest earning assets, principally loans receivable, which increased $372.6 million, or 50.4%. The net interest margin increased by 14 basis points to 3.43% for the second quarter of 2018, as compared to the same period in 2017.  These increases were largely attributable to the merger with Community Bank.

Net interest income on a fully tax equivalent basis increased $8.2 million, or 58.8%, to $22.2 million for the first six months of 2018 as compared to $14.0 million for the same period in 2017.  The increase in net interest income was largely due to a $440.1 million, or 52.3%, increase in average interest earning assets, principally loans receivable, which increased $367.3 million, or 50.9%.  The net interest margin increased by 15 basis points to 3.49% for the first six months of 2018, as compared to the same period in 2017. These increases were largely attributable to the merger with Community Bank.

Provision for Loan Losses. Provision for loan losses increased $18 thousand, or 4.7%, to $398 thousand for the second quarter of 2018, as compared to $380 thousand for the same period in 2017.

Provision for loan losses increased $119 thousand, or 15.1%, to $906 thousand for the first six months of 2018, as compared to $787 thousand for the same period in 2017.

Non-interest Income. Non-interest income increased $1.1 million, or 58.5%, to $2.9 million for the second quarter of 2018, as compared to the same period last year.  The increase was principally due to growth of $696 thousand in insurance commissions and fees relating to SB One Insurance Agency. 

The Company's non-interest income increased $1.4 million, or 33.6%, to $5.7 million for the first six months of 2018 as compared to the same period last year.  The increase was principally due to growth of $844 thousand in insurance commissions and fees related to SB One Insurance Agency, an increase of $248 thousand in other income and an increase of $139 thousand in bank owned life insurance. 

Non-interest Expense. The Company's non-interest expenses increased $3.1 million, or 46.8%, to $9.6 million for the second quarter of 2018, as compared to the same period last year. The increase was largely attributed to the growth in the Company resulting from the merger with Community Bank and additional staffing to support growth.  The increase in non-interest expenses occurred largely in salaries and employee benefits of $1.7 million, data processing of $418 thousand, occupancy of $271 thousand, advertising and promotion of $196 thousand, other expenses of $105 thousand and professional fees of $92 thousand. During the second quarter of 2018, the Company incurred costs not expected to reoccur related to a name change, rebranding and additional  advertising of approximately $212 thousand, operating costs associated with the merger and non-recurring operating costs of approximately $255 thousand and a $180 thousand increase in SB One Insurance Agency salary and employee benefits principally associated with higher insurance commissions and fee income.

The Company's non-interest expenses increased $8.7 million, or 69.4%, to $21.2 million for the first six months of 2018 as compared to the same period last year. The increase was largely attributed to the growth in the Company resulting from the merger with Community Bank and additional staffing to support growth.  The increase in non-interest expenses occurred largely in merger related expenses of $3.3 million, salaries and employee benefits of $3.2 million, data processing of $652 thousand, occupancy of $373 thousand, advertising and promotion of $146 thousand and professional fees of $144 thousand.

Income Tax Expense. The Company's income tax expenses increased $293 thousand, or 48.6% to $896 thousand for the second quarter of 2018, as compared to the same period last year. The Company's effective tax rate for the second quarter of 2018 was 23.1% , as compared to 33.4% for the second quarter of 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018.

The Company's income tax expenses decreased $323 thousand, or 22.5%, to $1.1 million for the first six months of 2018, as compared to the same period last year.  The Company's effective tax rate for the first six months of 2018 was 20.5%, as compared to 30.9% for six months ended June 30, 2017, due to the reduction in the statutory federal tax rate to 21% effective January 1, 2018.

Financial Condition
At June 30, 2018, the Company's total assets were $1.4 billion, an increase of $457.9 million, or 46.8%, as compared to total assets of $979.4 million at December 31, 2017.  The increase was largely attributable to the merger with Community Bank.

Total loans receivable, net of unearned income, increased $315.8 million, or 38.5%, to $1.1 billion at June 30, 2018, as compared to $820.7 million at December 31, 2017.  The  merger with Community Bank resulted in an increase in total loans of $236.1 million. During the six months ended June 30, 2018, the Company also had $66.8 million of commercial loan production, which was partly offset by $26.4 million in commercial loan payoffs.

The Company's total deposits increased $299.1 million, or 39.2%, to $1.1 billion at June 30, 2018, from $762.5 million at December 31, 2017. The  merger with Community Bank resulted in an increase in total deposits of $300.2 million. The growth in deposits was mostly due to an increase in interest bearing deposits of $212.4 million, or 34.5%, and non-interest bearing deposits of $86.7 million, or 59.3%, at June 30, 2018, as compared to December 31, 2017, respectively.

At June 30, 2018, the Company's total stockholders' equity was $148.8 million, an increase of $54.6 million when compared to December 31, 2017,  largely due to the merger with Community Bank.  The Company completed the merger on January 4, 2018 which was the primary driver in an increase in book value per common share of 20.4% from $15.59 at December 31, 2017 to $18.77 at June 30, 2018.  At June 30, 2018, the leverage, Tier I risk-based capital, total risk-based capital and common equity Tier I capital ratios for the Bank were 10.62%, 12.87%, 13.60% and 12.87%, respectively, all in excess of the ratios required to be deemed "well-capitalized."

Asset and Credit Quality
The ratio of non-performing assets ("NPAs"), which include non-accrual loans, loans 90 days past due and still accruing, troubled debt restructured loans currently performing in accordance with renegotiated terms and foreclosed real estate, to total assets increased to 1.65% at June 30, 2018 from 0.94% at December 31, 2017.  NPAs exclude $5.2 million of Purchased Credit-Impaired ("PCI") loans acquired through the merger with Community Bank. NPAs increased $14.6 million to $23.8 million at June 30, 2018, as compared to $9.2 million at December 31, 2017.  Non-accrual loans, excluding $5.2 million of PCI loans, increased $13.6 million, or 225.2%, to $19.6 million at June 30, 2018, as compared to $6.0 million at December 31, 2017.  The increase in non-accrual loans was largely attributed to two commercial real estate loans totaling $9.0 million, $1.5 million in loans acquired from Community Bank not classified as PCI, and 7 consumer loans totaling $2.1 million.  Loans past due 30 to 89 days totaled $2.9 million at June 30, 2018, representing a decrease of $3.6 million, or 55.8%, as compared to $6.5 million at December 31, 2017.

The Company continues to actively market its foreclosed real estate properties, the value of which increased $1.1 million to $3.4 million at June 30, 2018 as compared to $2.3 million at December 31, 2017.  At June 30, 2018, the Company's foreclosed real estate properties had an average carrying value of approximately $263 thousand per property.

The allowance for loan losses increased $929 thousand, or 12.7%, to $8.3 million, or 0.73% of total loans, at June 30, 2018, compared to $7.3 million, or 0.89% of total loans, at December 31, 2017. The decline in allowance coverage was primarily driven by the addition of Community Bank acquired loans with no allowance for loan losses; such loans were recorded at fair value at the acquisition date. The Company recorded $906 thousand in provision for loan losses for the six months ended June 30, 2018 as compared to $787 thousand for the six months ended June 30, 2017.  Additionally, the Company recorded net recoveries of $23 thousand for the six months ended June 30, 2018, as compared to $318 thousand in net charge-offs for the six months ended June 30, 2017. The allowance for loan losses as a percentage of non-accrual loans decreased to 42.2% at June 30, 2018 from 121.8% at December 31, 2017.

About SB One Bancorp

SB One Bancorp (NASDAQ:SBBX), is the holding company for SB One Bank, a full-service, commercial bank that operates regionally with 13 branch locations in New Jersey and New York. Established in 1975, SB One Bank's strength is in its ability to build strong personal relationships with its customers and to serve the communities in which it operates. In addition to its branches and loan production offices, SB One Bank offers a full-service insurance agency, SB One Insurance Agency, Inc. and wealth management services through Sussex Investment Services. SB One Bank reinforces its commitment to the communities in which it lives and serves through the SB One Foundation, Inc. which supports various local charitable organizations.

SB One Bancorp was recently added to the Russell 2000® Index and Russell 3000® Index. In 2017, it was recognized as one of the top 29 banks and thrifts nationwide and one of three from New Jersey that comprise the Sandler O'Neill Sm-All Stars Class of 2017. SB One Bancorp is one of the 50 Fastest Growing Companies in New Jersey as ranked by NJBIZ Magazine. SB One Bancorp President and Chief Executive Officer, Anthony Labozzetta, was named one of America's Business Leaders in Banking by Forbes magazine and American Banker's Community Banker of the Year in 2016.

For more details on SB One Bank, visit: www.SBOne.bank

Forward-Looking Statements

This press release contains statements that are forward looking and are made pursuant to the "safe-harbor" provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, but are not limited to, (i) statements about the benefits of the merger between SB One Bancorp and Community Bank, including future financial and operating results, cost savings and accretion to reported earnings that may be realized from the merger; and (ii) statements that may be identified by the use of words such as "expect," "estimate," "assume," "believe," "anticipate," "will," "forecast," "plan," "project" or similar words. Such statements are based on SB One Bancorp's current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, among others, (1) difficulties and delays in integrating the business or fully realizing cost savings and other benefits; (2) operating costs, customer loss and business disruption following the merger, including adverse effects on relationships with employees, may be greater than expected; (3) changes to interest rates; (4) the ability to control costs and expenses; (5) general economic conditions; (6) the success of SB One Bancorp's efforts to diversify its revenue base by developing additional sources of non-interest income while continuing to manage its existing fee-based business; and (7) risks associated with the quality of SB One Bancorp's assets and the ability of its borrowers to comply with repayment terms.  Further information about these and other relevant risks and uncertainties may be found in SB One Bancorp's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and in subsequent filings with the Securities and Exchange Commission. SB One Bancorp undertakes no obligation to publicly release the results of any revisions to those forward looking statements that may be made to reflect events or circumstances after this date or to reflect the occurrence of unanticipated events.

SB ONE BANCORP
Anthony Labozzetta, President/CEO
Steve Fusco, CFO
(p) 844-256-7328

SB ONE BANCORP
SUMMARY FINANCIAL HIGHLIGHTS
(In Thousands, Except Percentages and Per Share Data)
(Unaudited)
                                   
                  6/30/2018 VS.
    6/30/2018   12/31/2017   6/30/2017   6/30/2017   12/31/2017
 BALANCE SHEET HIGHLIGHTS - Period End Balances                             
Total securities   $ 179,943     $ 104,034     $ 106,721       68.6   %     73.0   %
Total loans     1,136,546       820,700       772,279       47.2   %     38.5   %
Allowance for loan losses     (8,264 )     (7,335 )     (7,165 )     15.3   %     12.7   %
Total assets     1,437,302       979,383       928,827       54.7   %     46.8   %
Total deposits     1,061,599       762,491       710,487       49.4   %     39.2   %
Total borrowings and junior subordinated debt     215,793       118,198       121,993       76.9   %     82.6   %
Total shareholders' equity     148,823       94,193       92,267       61.3   %     58.0   %
                                   
 FINANCIAL DATA - QUARTER ENDED:                                   
Net interest income (tax equivalent) (a)   $ 11,214     $ 8,038     $ 7,056       58.9   %     39.5   %
Provision for loan losses     398       459       380       4.7   %     (13.3 ) %
Total other income     2,881       1,961       1,818       58.5   %     46.9   %
Total other expenses     9,580       6,820       6,526       46.8   %     40.5   %
Income before provision for income taxes (tax equivalent)     4,117       2,720       1,968       109.2   %     51.4   %
Provision for income taxes     896       2,039       603       48.6   %     (56.1 ) %
Taxable equivalent adjustment (a)     229       168       161       42.2   %     36.3   %
Net income   $ 2,992     $ 513     $ 1,204       148.5   %     483.2   %
                                   
Net income per common share - Basic   $ 0.38     $ 0.09     $ 0.25       52.3   %     322.9   %
Net income per common share - Diluted   $ 0.38     $ 0.09     $ 0.25       52.5   %     323.6   %
                                   
Return on average assets     0.85   % 0.21   % 0.54   % 59.3   %     301.2   %
Return on average equity     8.10   % 2.16   % 7.23   % 12.1   %     275.6   %
Efficiency ratio (b)     69.09   % 69.37   % 74.90   % (7.8 ) %     (0.4 ) %
Net interest margin (tax equivalent)     3.43   % 3.46   % 3.29   % 4.3   %     (0.9 ) %
Avg. interest earning assets/Avg. interest bearing liabilities     1.28       1.29       1.25       2.0   %     (0.9 ) %
                                   
 FINANCIAL DATA - YEAR TO DATE:                                   
Net interest income (tax equivalent) (a)   $ 22,176           $ 13,962       58.8   %        
Provision for loan losses     906             787       15.1   %        
Total other income     5,738             4,295       33.6   %        
Total other expenses     21,174             12,503       69.4   %        
Income before provision for income taxes (tax equivalent)     5,834             4,967       17.5   %        
Provision for income taxes     1,111             1,434       (22.5 ) %        
Taxable equivalent adjustment (a)     423             318       33.0   %        
Net income   $ 4,300           $ 3,215       33.7   %        
                                   
Net income per common share - Basic   $ 0.55           $ 0.68       (19.1 ) %        
Net income per common share - Diluted   $ 0.55           $ 0.67       (17.9 ) %        
                                   
Return on average assets     0.63   %       0.73   % (14.3 ) %        
Return on average equity     5.90   %       10.03   % (41.2 ) %        
Efficiency ratio (b)     77.02   %       69.70   % 10.5   %        
Net interest margin (tax equivalent)     3.49   %       3.34   % 4.5   %        
Avg. interest earning assets/Avg. interest bearing liabilities     1.28   %       1.24   % 2.7   %        
                                   
 SHARE INFORMATION:                                   
Book value per common share   $ 18.77     $ 15.59     $ 15.27       22.9   %     20.4   %
Tangible book value per common share     15.48       15.13       14.81       4.6   %     2.4   %
Outstanding shares- period ending     7,929,706       6,040,564       6,041,002       31.3   %     31.3   %
Average diluted shares outstanding (year to date)     7,848,468       5,404,381       4,794,669       63.7   %     45.2   %
                                   
 CAPITAL RATIOS:                                   
Total equity to total assets     10.35   % 9.62   % 9.93   % 4.2   %     7.7   %
Leverage ratio (c)     10.62   % 11.86   % 12.64   % (16.0 ) %     (10.5 ) %
Tier 1 risk-based capital ratio (c)     12.87   % 14.26   % 14.59   % (11.8 ) %     (9.7 ) %
Total risk-based capital ratio (c)     13.60   % 15.17   % 15.51   % (12.3 ) %     (10.3 ) %
Common equity Tier 1 capital ratio (c)     12.87   % 14.26   % 14.59   % (11.8 ) %     (9.7 ) %
                                   
 ASSET QUALITY:                                   
Non-accrual loans (e)   $ 19,575     $ 6,020     $ 5,623       248.1   %     225.2   %
Loans 90 days past due and still accruing     -       -       2,229       -   %     -   %
Troubled debt restructured loans ("TDRs") (d)     797       932       943       (15.5 ) %     (14.5 ) %
Foreclosed real estate     3,414       2,275       1,846       84.9   %     50.1   %
Non-performing assets ("NPAs")   $ 23,786     $ 9,227     $ 10,641       123.5   %     157.8   %
                                   
Foreclosed real estate, criticized and classified assets (e)   $ 23,503     $ 18,992     $ 20,144       16.7   %     23.8   %
Loans past due 30 to 89 days   $ 2,869     $ 6,497     $ 521       450.7   %     (55.8 ) %
Charge-offs (Recoveries) , net (quarterly)   $ (38 )   $ 626     $ 12       (416.7 ) %     (106.1 ) %
Charge-offs (Recoveries) , net as a % of average loans (annualized)     (0.01 ) % 0.31   % 0.01   % (310.6 ) %     (104.4 ) %
Non-accrual loans to total loans     1.72   % 0.73   % 0.73   % 136.5   %     134.8   %
NPAs to total assets     1.65   % 0.94   % 1.15   % 44.5   %     75.7   %
NPAs excluding TDR loans (d) to total assets     1.60   % 0.85   % 1.04   % 53.2   %     88.8   %
Non-accrual loans to total assets     1.36   % 0.61   % 0.61   % 125.0   %     121.6   %
Allowance for loan losses as a % of non-accrual loans     42.22   % 121.84   % 127.42   % (66.9 ) %     (65.4 ) %
Allowance for loan losses to total loans     0.73   % 0.89   % 0.93   % (21.6 ) %     (18.6 ) %
                                   
(a) Full taxable equivalent basis, using a 21% effective tax rate and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance      
(b) Efficiency ratio calculated non-interest expense divided by net interest income plus non-interest income                      
(c) SB One Bank capital ratios                                  
(d) Troubled debt restructured loans currently performing in accordance with renegotiated terms                        
(e) PCI loans acquired through merger with Community Bank excluded from non-accrual loans and criticized and classified assets totaled $3.7 million          

 

SB ONE BANCORP
CONSOLIDATED BALANCE SHEETS
(Dollars In Thousands)
         
ASSETS June 30, 2018     December 31, 2017
       
Cash and due from banks $ 6,651     $ 3,270
Interest-bearing deposits with other banks   12,245       8,376
Cash and cash equivalents   18,896       11,646
         
Interest bearing time deposits with other banks   200       100
Securities available for sale, at fair value   174,525       98,730
Securities held to maturity   5,418       5,304
Other Bank Stock, at cost   10,066       4,925
         
Loans receivable, net of unearned income   1,136,546       820,700
Less:  allowance for loan losses   8,264       7,335
Net loans receivable   1,128,282       813,365
         
Foreclosed real estate   3,414       2,275
Premises and equipment, net   18,734       8,389
Accrued interest receivable   3,906       2,472
Goodwill and intangibles   26,048       2,820
Bank-owned life insurance   30,390       22,054
Other assets   17,423       7,303
         
Total Assets $ 1,437,302     $ 979,383
         
LIABILITIES AND STOCKHOLDERS' EQUITY        
         
Liabilities:        
Deposits:        
Non-interest bearing $ 232,862     $ 146,167
Interest bearing   828,737       616,324
Total Deposits   1,061,599       762,491
         
Borrowings   187,940       90,350
Accrued interest payable and other liabilities   11,087       4,501
Subordinated debentures   27,853       27,848
         
Total Liabilities   1,288,479       885,190
         
Total Stockholders' Equity   148,823       94,193
         
Total Liabilities and Stockholders' Equity $ 1,437,302     $ 979,383
         

 

SB ONE BANCORP
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Dollars In Thousands Except Per Share Data)
(Unaudited)
  Three Months Ended June 30,   Six Months Ended June 30,
    2018       2017       2018       2017  
INTEREST INCOME               
               
Loans receivable, including fees $ 12,562     $ 7,876     $ 24,462     $ 15,474  
Securities:              
Taxable   804       344       1,540       685  
Tax-exempt   449       316       830       629  
Interest bearing deposits   16       6       46       22  
Total Interest Income   13,831       8,542       26,878       16,810  
               
INTEREST EXPENSE              
Deposits   1,659       852       3,117       1,569  
Borrowings   874       479       1,380       960  
Junior subordinated debentures   313       316       628       637  
Total Interest Expense   2,846       1,647       5,125       3,166  
               
Net Interest Income   10,985       6,895       21,753       13,644  
PROVISION FOR LOAN LOSSES   398       380       906       787  
Net Interest Income after Provision for Loan Losses   10,587       6,515       20,847       12,857  
               
OTHER INCOME              
Service fees on deposit accounts   311       285       639       538  
ATM and debit card fees   250       200       463       380  
Bank owned life insurance   188       128       373       234  
Insurance commissions and fees   1,839       1,143       3,734       2,890  
Investment brokerage fees   41       -       63       3  
(Loss) gain on securities transactions   36       (30 )     36       77  
Gain (loss) on disposal of fixed assets   9       -       9       -  
Other   207       92       421       173  
Total Other Income   2,881       1,818       5,738       4,295  
               
OTHER EXPENSES              
Salaries and employee benefits   5,411       3,677       10,469       7,235  
Occupancy, net   727       456       1,329       956  
Data processing   939       521       1,730       1,078  
Furniture and equipment   326       234       607       474  
Advertising and promotion   285       89       341       195  
Professional fees   290       198       619       475  
Director fees   142       89       289       196  
FDIC assessment   100       93       210       144  
Insurance   52       66       147       132  
Stationary and supplies   89       44       146       76  
Merger-related expenses   446       481       3,739       481  
Loan collection costs   89       28       150       52  
Expenses and write-downs related to foreclosed real estate   1       32       208       77  
Amortization of intangible assets   60       -       121       -  
Other   623       518       1,069       932  
Total Other Expenses   9,580       6,526       21,174       12,503  
               
Income before Income Taxes   3,888       1,807       5,411       4,649  
INCOME TAX EXPENSE    896       603       1,111       1,434  
Net Income  $ 2,992     $ 1,204     $ 4,300     $ 3,215  
               
OTHER COMPREHENSIVE INCOME (LOSS):              
Unrealized (loss) gains on available for sale securities arising during the period $ (353 )   $ 1,144       (2,520 )   $ 1,820  
Fair value adjustments on derivatives   328       (455 )     1,435       (415 )
Reclassification adjustment for net loss (gain) on securities transactions included in net income   (36 )     30       (36 )     (77 )
Income tax related to items of other comprehensive income (loss)   17       (287 )     294       (531 )
Other comprehensive (loss) income, net of income taxes   (44 )     432       (827 )     797  
Comprehensive income $ 2,948     $ 1,636       3,473     $ 4,012  
               
EARNINGS PER SHARE              
               
Basic $ 0.38     $ 0.25     $ 0.55     $ 0.68  
Diluted $ 0.38     $ 0.25     $ 0.55     $ 0.67  

 

SB ONE BANCORP  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES  
(Dollars In Thousands)  
(Unaudited)  
                           
    Three Months Ended June 30,  
    2018
  2017
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 64,726     $ 678     4.20 %   $ 45,892     $ 477     4.17 %  
Taxable     126,462       804     2.55 %     66,467       344     2.08 %  
Total securities     191,188       1,482     3.11 %     112,359       821     2.93 %  
Total loans receivable (1) (4)     1,112,480       12,562     4.53 %     739,837       7,876     4.27 %  
Other interest-earning assets     8,246       16     0.78 %     7,110       6     0.34 %  
Total earning assets     1,311,914       14,060     4.30 %     859,306       8,703     4.06 %  
                           
Non-interest earning assets     96,979               45,352            
Allowance for loan losses     (8,077 )             (6,956 )          
Total Assets   $ 1,400,816             $ 897,702            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 250,143     $ 347     0.56 %   $ 182,345     $ 130     0.29 %  
Money market     91,597       287     1.26 %     101,079       226     0.90 %  
Savings     220,075       191     0.35 %     138,403       72     0.21 %  
Time     263,248       834     1.27 %     157,283       424     1.08 %  
Total interest bearing deposits     825,063       1,659     0.81 %     579,110       852     0.59 %  
Borrowed funds     173,841       874     2.02 %     79,260       479     2.42 %  
Subordinated debentures     27,852       313     4.51 %     27,842       316     4.55 %  
Total interest bearing liabilities     1,026,756       2,846     1.11 %     686,212       1,647     0.96 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     222,558               140,493            
Other liabilities     3,736               4,364            
Total non-interest bearing liabilities     226,294               144,857            
Stockholders' equity     147,766               66,633            
Total Liabilities and Stockholders' Equity   $ 1,400,816             $ 897,702            
                           
Net Interest Income and Margin (5)         11,214     3.43 %         7,056     3.29 %  
Tax-equivalent basis adjustment         (229 )             (161 )      
Net Interest Income       $ 10,985             $ 6,895        
                           
(1) Includes loan fee income                          
(2) Average rates on securities are calculated on amortized costs                      
(3) Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(4) Loans outstanding include non-accrual loans                          
(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets          
                           
SB ONE BANCORP  
COMPARATIVE AVERAGE BALANCES AND AVERAGE INTEREST RATES  
(Dollars In Thousands)  
(Unaudited)  
                           
    Six Months Ended June 30,  
    2018
  2017
 
      Average       Average      Average       Average   
     Balance    Interest   Rate (2)    Balance    Interest   Rate (2)  
Earning Assets:                          
Securities:                          
Tax exempt (3)   $ 59,883     $ 1,253     4.22 %   $ 46,663     $ 947     4.09 %  
Taxable     123,635       1,540     2.51 %     64,628       685     2.14 %  
Total securities     183,518       2,793     3.07 %     111,291       1,632     2.96 %  
Total loans receivable (1) (4)     1,088,238       24,462     4.53 %     720,954       15,474     4.33 %  
Other interest-earning assets     10,576       46     0.88 %     10,009       22     0.44 %  
Total earning assets     1,282,332       27,301     4.29 %     842,254       17,128     4.10 %  
                           
Non-interest earning assets     96,349               43,218            
Allowance for loan losses     (7,792 )             (6,840 )          
Total Assets   $ 1,370,889             $ 878,632            
                           
Sources of Funds:                          
Interest bearing deposits:                          
NOW   $ 254,884     $ 745     0.59 %   $ 179,741     $ 249     0.28 %  
Money market     94,016       535     1.15 %     87,582       350     0.81 %  
Savings     221,005       268     0.24 %     138,074       143     0.21 %  
Time     264,189       1,569     1.20 %     161,951       827     1.03 %  
Total interest bearing deposits     834,094       3,117     0.75 %     567,348       1,569     0.56 %  
Borrowed funds     143,034       1,380     1.95 %     82,571       960     2.34 %  
Subordinated debentures     27,851       628     4.55 %     27,841       637     4.61 %  
Total interest bearing liabilities     1,004,979       5,125     1.03 %     677,760       3,166     0.94 %  
                           
Non-interest bearing liabilities:                          
Demand deposits     215,665               132,785            
Other liabilities     4,418               3,978            
Total non-interest bearing liabilities     220,083               136,763            
Stockholders' equity     145,827               64,109            
Total Liabilities and Stockholders' Equity   $ 1,370,889             $ 878,632            
                           
Net Interest Income and Margin (5)         22,176     3.49 %         13,962     3.34 %  
Tax-equivalent basis adjustment         (423 )             (318 )      
Net Interest Income       $ 21,753             $ 13,644        
                           
(1) Includes loan fee income                          
(2) Average rates on securities are calculated on amortized costs                      
(3) Full taxable equivalent basis, using an effective tax rate of 21% in 2018 and 39% in 2017 and adjusted for TEFRA (Tax and Equity Fiscal Responsibility Act) interest expense disallowance
(4) Loans outstanding include non-accrual loans                          
(5) Represents the difference between interest earned and interest paid, divided by average total interest-earning assets          

 

SB ONE BANCORP
Segment Reporting
(Dollars In Thousands)
(Unaudited)
                                   
                                   
  Three Months Ended and as of June 30, 2018   Three Months Ended and as of June 30, 2017
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 10,985   $ -   $ 10,985   $ 6,895   $ -   $ 6,895
Other income from external sources   1,009     1,872     2,881     675     1,143     1,818
Depreciation and amortization   447     6     453     258     7     265
Income before income taxes   3,288     600     3,888     1,627     180     1,807
Income tax expense (1)   656     240     896     531     72     603
Total assets   1,425,250     12,052     1,437,302     922,510     6,317     928,827
                                   
                                   
                                   
  Six Months Ended and as of June 30, 2018   Six Months Ended ans as of June 30, 2017
  Banking and               Banking and            
  Financial   Insurance         Financial   Insurance      
  Services   Services   Total   Services   Services   Total
Net interest income from external sources $ 21,753   $ -   $ 21,753   $ 13,644   $ -   $ 13,644
Other income from external sources   1,934     3,804     5,738     1,405     2,890     4,295
Depreciation and amortization   895     12     907     525     13     538
Income before income taxes   3,902     1,509     5,411     3,649     1,000     4,649
Income tax expense (1)   507     604     1,111     1,034     400     1,434
Total assets   1,425,250     12,052     1,437,302     922,510     6,317     928,827
                                   
(1) Calculated at statutory tax rate of 28.1% in 2018 and 39.9% in 2017 for the insurance services segment

 

SB ONE BANCORP
Non-GAAP Reporting
(Dollars In Thousands)
(Unaudited)
           
           
  Three Months Ended June 30,
  2018     2017  
Net income (GAAP) $ 2,992     $ 1,204  
Merger related expenses net of tax (1)   321       345  
Non-recurring rebrand expenses net of tax (2)   152       -  
S-3 Registration filing expenses net of tax (1)   -       45  
Net income, as adjusted $ 3,465     $ 1,594  
           
Average diluted shares outstanding (GAAP)   7,906,600       4,868,534  
Diluted EPS, as adjusted $ 0.44     $ 0.33  
Return on average assets, as adjusted   0.99 %     0.71 %
Return on average equity, as adjusted   9.38 %     9.57 %
           
(1) Merger related expense net of tax expense of $125 thousand QTD 2018, $136 thousand QTD 2017; S-3 Registration filing net of  tax expense of $30 thousand QTD 2017.
(2) Non-recurring rebrand expenses net of tax expense of $54 thousand
           
           
  Six Months Ended June 30,
  2018     2017  
Net income (GAAP) $ 4,300     $ 3,215  
Merger related expenses net of tax (1)   2,688       345  
Non-recurring rebrand expenses net of tax (2)   152       -  
S-3 Registration filing expenses net of tax (1)   -       45  
Net income, as adjusted $ 7,140     $ 3,605  
           
Average diluted shares outstanding (GAAP)   7,848,468       4,794,669  
Diluted EPS, as adjusted $ 0.91     $ 0.75  
Return on average assets, as adjusted   1.04 %     0.82 %
Return on average equity, as adjusted   9.79 %     11.25 %
           
(1) Merger related expenses net of tax expenses $1.1 million YTD 2018 and $136 thousand YTD 2017; S-3 registration filing net of tax expenses of $30 thousand in 2017.
(2) Non-recurring rebrand expenses net of tax expense of $54 thousand

 

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