FLOYD, Va. and INDEPENDENCE, Va., April 24, 2024 (GLOBE NEWSWIRE) -- Skyline Bankshares, Inc. (the “Company”) (OTC QX: SLBK) – the holding company for Skyline National Bank (the “Bank”) – announced its results of operations for the first quarter of 2024.
The Company recorded net income of $2.1 million, or $0.37 per share, for the quarter ended March 31, 2024, compared to net income of $2.7 million, or $0.49 per share, for the same period in 2023. First quarter 2024 earnings represented an annualized return on average assets (“ROAA”) of 0.79% and an annualized return on average equity (“ROAE”) of 9.94%, compared to 1.10% and 14.78%, respectively, for the same period last year.
President and CEO Blake Edwards stated, “We are very pleased with our results for the first quarter of 2024, despite the challenges of higher deposit costs, and the impacts of inflation on our operating costs. The solid loan growth we experienced in 2023 continued into the first quarter of 2024 and has helped to offset much of the increase in deposit costs. Prudent capital management also allowed us to increase our dividend by over 9% during the quarter while repurchasing 20 thousand shares of our company’s stock through our ongoing share repurchase program.”
Edwards continued, “We expect competition for deposits, increased interest expense, and higher operating costs to continue in the near term, and because of this we expect to see continued pressure on earnings and margins; however, as we have demonstrated, our team will continue to focus on our long-term strategy of growing the Skyline franchise and creating shareholder value with an emphasis on relationship-banking and growing our low-cost core deposit base.”
Edwards concluded, “As a part of this long-term strategy we recently announced our pending entrance into Tennessee through our acquisition of Johnson County Bank, which is expected to close during the second half of 2024. This strategic move is not only rooted in our shared values but also aligns with our growth objectives, presenting an exceptional opportunity to strengthen our footprint as Johnson County Bank is located directly between our existing markets of Boone, North Carolina and Abingdon, Virginia. We are excited to bring our commitment to excellence and dedication to the businesses and people of Johnson County, Tennessee. This is an exciting chapter in the history of our bank and we look forward to welcoming Johnson County Bank into the Skyline family.”
Highlights
Net income was $2.1 million, or $0.37 per share, for the first quarter of 2024, compared to $2.7 million, or $0.49 per share, for the first quarter of 2023.
Net interest margin (“NIM”) was 3.64% for the first quarter of 2024, compared to 3.69% in the fourth quarter of 2023, and 3.89% in the first quarter of 2023.
Total assets increased in the first quarter of 2024 by $4.2 million, or 0.41%, remaining comparable at $1.05 billion at March 31, 2024 and December 31, 2023, respectively, and increased by $31.0 million, or 3.04%, from $1.02 billion at March 31, 2023.
Net loans were $819.9 million at March 31, 2024, an increase of $8.9 million, or 1.10%, when compared to $811.0 million at December 31, 2023, and increased $62.1 million when compared to $757.8 million at March 31, 2023.
Total deposits were $930.4 million at March 31, 2024, an increase of $1.7 million, or 0.18%, from $928.7 million at December 31, 2023, and an increase of $24.9 million from $905.5 million at March 31, 2023.
The Company repurchased 20,000 shares of its common stock through its publicly announced share repurchase program during the first quarter of 2024.
First Quarter 2024 Income Statement Review
Net interest income after provision for credit losses in the first quarter of 2024 was $8.8 million, compared to $9.1 million in the first quarter of 2023, reflecting an increase in the provision for credit losses of $199 thousand in the quarterly comparison. Total interest income was $12.0 million in the first quarter of 2024, representing an increase of $1.9 million in comparison to the $10.1 million in the first quarter of 2023. Interest income on loans increased in the quarterly comparison by $2.0 million, primarily due to organic loan growth of $62.8 million from March 31, 2023 to March 31, 2024, and increases in interest rates during that time period. Management anticipates that this loan growth, in addition to higher rates in the current year, will continue to have a positive impact on both earning assets and loan yields. Interest expense on deposits increased by $1.8 million in the quarterly comparison, as a result of rate increases on deposit offerings and migration from lower cost deposits to time deposits. Management anticipates that interest expense on deposits will increase in the near term as competitive pressures for deposits may result in continued increases in rates on deposit offerings, especially on time deposits. Interest on borrowings increased by $268 thousand, due to short-term FHLB advances to fund loan growth.
First quarter 2024 noninterest income was $1.7 million compared with $1.6 million in the first quarter of 2023. Included in noninterest income for the first quarter of 2024 was $218 thousand from life insurance contracts and a net realized security loss of $141 thousand. The net security loss resulted from the recognition of unamortized premiums on a called bond. Excluding these items, noninterest income increased by $58 thousand in the quarter over quarter comparison, primarily as a result of an increase in service charges on deposits of $54 thousand.
Noninterest expense in the first quarter of 2024 was $8.0 million compared with $7.3 million in the first quarter of 2023, an increase of $641 thousand, or 8.74%. Salary and benefits increased by $235 thousand in the quarterly comparison due to personnel additions and routine salary adjustments, as well as increased benefit costs. Occupancy and equipment expenses increased by $225 thousand, and data processing increased by $158 thousand in the quarterly comparisons primarily due to branch expansion costs.
Income tax expense decreased by $166 thousand in the quarter-to-quarter comparison, primarily due to an decrease in net income before taxes of $843 thousand in the quarterly comparison.
Balance Sheet Review
Total assets increased in the first quarter of 2024 by $4.2 million, or 0.41%, remaining comparable at $1.05 billion at March 31, 2024 and December 31, 2023, respectively, and increased by $31.0 million, or 3.04%, from $1.02 billion at March 31, 2023. The increase in total assets during the quarter can be primarily attributed to the loan growth of $9.0 million during the quarter offset by a decrease in investment securities of $5.0 million during the quarter.
Total loans increased during the first quarter by $9.0 million, or 1.10%, to $826.7 million at March 31, 2024 from $817.7 million at December 31, 2023, and increased by $62.1 million, or 8.12%, compared to $764.6 million at March 31, 2023. Core loan growth during the first quarter was at an annualized rate of 4.54%.
Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.22% at March 31, 2024 compared to 0.21% at December 31, 2023. The allowance for credit losses remained comparable at approximately 0.82% of total loans as of March 31, 2024 and December 31, 2023, respectively.
Investment securities decreased by $5.0 million during the first quarter to $122.4 million at March 31, 2024 from $127.4 million at December 31, 2023, and decreased by $14.3 million from $136.7 million at March 31, 2023. The decrease in the first quarter of 2024 was the result of a $718 thousand increase in unrealized losses on investment securities and paydowns and calls of $4.1 million.
Total deposits increased in the first quarter of 2024 by $1.7 million, or 0.18%, to $930.4 million at March 31, 2024 from $928.7 million at December 31, 2023, and increased $24.9 million, or 2.76%, compared to $905.5 million at March 31, 2023. Noninterest bearing deposits decreased by $11.2 million and interest-bearing deposits increased by $12.9 million during the quarter. Lower cost interest bearing deposits decreased by $1.0 million during the quarter, and time deposits increased by $13.9 million, as customers continue to look for higher returns on their deposits.
Stockholders’ equity remained comparable at $82.9 million at March 31, 2024 and December 31, 2023, and increased $6.6 million, or 8.60%, from $76.3 million at March 31, 2023. The change during the quarter was due to earnings of $2.1 million, less dividends paid of $1.3 million, $568 thousand in other comprehensive losses, and stock repurchases of $230 thousand. Book value decreased from $14.84 per share at December 31, 2023 to $14.72 per share at March 31, 2024.
Forward-looking statements
This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. These include statements as to expectations regarding future financial performance and any other statements regarding future results or expectations. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the combined company and its subsidiaries include, but are not limited to: changes in interest rates; general economic and financial market conditions; the effect of changes in banking, tax and other laws and regulations and interpretations or guidance thereunder; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the combined company’s market area; the implementation of new technologies; the ability to develop and maintain secure and reliable electronic systems; accounting principles, policies, and guidelines; the ability to obtain required regulatory and shareholder approvals and meet other closing conditions to the proposed acquisition of Johnson County Bank; the ability to complete the acquisition as expected and within the expected timeframe; disruptions to customer and employee relationships and business operations caused by the acquisition; the ability to implement integration plans associated with the acquisition, which integration may be more difficult, time-consuming or costly than expected; the ability to achieve the cost savings and synergies contemplated by the acquisition within the expected timeframe, or at all; and other factors identified in Item 1A, “Risk Factors,” in the Company’s Annual Report on 10-K for the year ended December 31, 2023. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or clarify these forward‐looking statements, whether as a result of new information, future events or otherwise.
(See Attached Financial Statements for quarter ending March 31, 2024)
Skyline Bankshares, Inc. Condensed Consolidated Balance Sheets March 31, 2024; December 31, 2023; March 31, 2023
March 31,
December 31,
March 31,
(dollars in thousands except share amounts)
2024
2023
2023
(Unaudited)
(Audited)
(Unaudited)
Assets
Cash and due from banks
$
13,115
$
16,811
$
25,017
Interest-bearing deposits with banks
8,233
4,808
14,653
Federal funds sold
384
474
2,378
Investment securities available for sale
122,368
127,389
136,678
Restricted equity securities
3,609
3,338
3,014
Loans
826,684
817,704
764,615
Allowance for credit losses
(6,765
)
(6,739
)
(6,819
)
Net loans
819,919
810,965
757,796
Cash value of life insurance
23,055
22,909
22,623
Properties and equipment, net
31,394
31,183
31,676
Accrued interest receivable
3,450
3,463
2,888
Core deposit intangible
837
917
1,181
Goodwill
3,257
3,257
3,257
Deferred tax assets, net
5,252
5,046
5,321
Other assets
15,207
15,283
12,592
Total assets
$
1,050,080
$
1,045,843
$
1,019,074
Liabilities
Deposits
Noninterest-bearing
$
293,912
$
305,115
$
300,280
Interest-bearing
636,529
623,627
605,175
Total deposits
930,441
928,742
905,455
Borrowings
30,000
27,500
25,000
Accrued interest payable
683
531
261
Other liabilities
6,081
6,188
12,049
Total liabilities
967,205
962,961
942,765
Stockholders’ Equity
Common stock and surplus
33,145
33,356
33,520
Retained earnings
69,638
68,866
63,067
Accumulated other comprehensive loss
(19,908
)
(19,340
)
(20,278
)
Total stockholders’ equity
82,875
82,882
76,309
Total liabilities and stockholders’ equity
$
1,050,080
$
1,045,843
$
1,019,074
Book value per share
$
14.72
$
14.84
$
13.61
Tangible book value per share
$
14.00
$
14.09
$
12.82
Asset Quality Indicators
Nonperforming assets to total assets
0.17
%
0.17
%
0.16
%
Nonperforming loans to total loans
0.22
%
0.21
%
0.22
%
Allowance for credit losses to total loans
0.82
%
0.82
%
0.89
%
Allowance for credit losses to nonperforming loans
378.14
%
389.31
%
407.59
%
Skyline Bankshares, Inc. Condensed Consolidated Statement of Operations
Three Months Ended
March 31,
(dollars in thousands except share amounts)
2024
2023
(Unaudited)
(Unaudited)
Interest income
Loans and fees on loans
$
11,147
$
9,164
Interest-bearing deposits in banks
64
88
Federal funds sold
4
10
Interest on securities
734
796
Dividends
37
10
11,986
10,068
Interest expense
Deposits
2,682
894
Interest on borrowings
437
169
3,119
1,063
Net interest income
8,867
9,005
Provision for (Recovery of) credit losses
93
(106
)
Net interest income after provision for (recovery of) credit losses
8,774
9,111
Noninterest income
Service charges on deposit accounts
551
497
Other service charges and fees
849
823
Net realized losses on securities
(141
)
-
Mortgage origination fees
55
84
Increase in cash value of life insurance
146
139
Life insurance income
218
-
Other income
21
21
1,699
1,564
Noninterest expenses
Salaries and employee benefits
4,321
4,086
Occupancy and equipment
1,411
1,186
Data processing expense
649
491
FDIC Assessments
144
111
Advertising
217
135
Bank franchise tax
99
105
Director fees
58
61
Professional fees
221
221
Telephone expense
107
139
Core deposit intangible amortization
80
105
Other expense
669
695
7,976
7,335
Net income before income taxes
2,497
3,340
Income tax expense
446
612
Net income
$
2,051
$
2,728
Net income per share
$
0.37
$
0.49
Weighted average shares outstanding
5,564,568
5,597,233
Dividends declared per share
$
0.23
$
0.21
Skyline Bankshares, Inc. Reconciliation of Non-GAAP Financial Measures
In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and understanding the Company’s financial condition, capital position and financial results. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions. The non-GAAP financial measure presented in this document includes tangible book value per share. The following tables present calculations underlying non-GAAP financial measures.
March 31,
December 31,
March 31,
(dollars in thousands except share amounts)
2024
2023
2023
(Unaudited)
(Unaudited)
(Unaudited)
Tangible Common Equity
Total stockholders’ equity (GAAP)
$
82,875
$
82,882
$
76,309
Less: Goodwill
(3,257
)
(3,257
)
(3,257
)
Less: Core deposit intangible
(837
)
(917
)
(1,181
)
Tangible common equity (non-GAAP)
$
78,781
$
78,708
$
71,871
Common stock shares outstanding
5,629,204
5,584,204
5,607,416
Tangible book value per share
$
14.00
$
14.09
$
12.82
For more information contact: Blake Edwards, President & CEO – 276-773-2811 Lori Vaught, EVP & CFO – 276-773-2811
