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Citizens Community Bancorp, Inc. Reports Earnings Of $0.38 Per Share in 3Q22; Net Interest Income Increases; Net Loan Growth Up 2.2% From Prior Quarter
المصدر: Nasdaq GlobeNewswire / 24 أكتوبر 2022 16:00:01 America/New_York
EAU CLAIRE, Wisc., Oct. 24, 2022 (GLOBE NEWSWIRE) -- Citizens Community Bancorp, Inc. (the “Company”) (Nasdaq: CZWI), the parent company of Citizens Community Federal N.A. (the “Bank” or “CCFBank”), today reported earnings of $4.0 million and earnings per diluted share of $0.38 for the quarter ended September 30, 2022, compared to $4.4 million and $0.41 per diluted share for the quarter ended June 30, 2022, and $5.0 million and $0.47 per diluted share for the quarter ended September 30, 2021, respectively. For the first nine months of 2022, earnings were $13.1 million, or $1.24 per diluted share, compared to earnings of $15.2 million, or $1.41 per diluted share for the first nine months of 2021.
The Company’s third quarter 2022 operating results reflected the following changes from the second quarter of 2022: (1) net interest income increased $0.2 million, more than offsetting: (a) $0.4 million of interest income on nonaccrual loans in the second quarter; (b) a reduction of $0.2 million in accretion of purchased discounts; and (c) higher subordinated debt expense due to write-off of unamortized issuance costs of $0.1 million; (2) higher compensation expense due to incentives of $0.2 million; and (3) higher other expense of $0.3 million due to the write down of a closed branch facility after receipt of a purchase agreement.
“We generated net loan growth of 2.2% compared to the linked quarter. Our pipeline plus advances on unfunded commitments suggests growth during the fourth quarter as our markets remain strong. Steady core net interest margin expansion was also integral to earnings performance in the quarter. While visibility into 2023 is limited, we do expect aggressive action by the Federal Reserve to slow loan demand across all loan segments in the coming year. To offset expected inflation in existing vendor contracts and colleague compensation expense, our team has taken steps to improve efficiency by closing one branch during the quarter with two more announced branch closures occurring in the fourth quarter, among other steps,” said Stephen Bianchi, Chairman, President and Chief Executive Officer.
Book value per share was $15.59 at September 30, 2022, compared to $15.64 at June 30, 2022, and $15.77 at September 30, 2021. Tangible book value per share (non-GAAP)1 was $12.32 at September 30, 2022, compared to $12.36 at June 30, 2022, and $12.37 at September 30, 2021. The increase in unrealized losses in the securities available for sale portfolio lowered both book and tangible book value in the second and third quarters, with the amount of the unrealized loss moderating in the third quarter of 2022. Net income and intangible amortization partially offset this unrealized loss impact on book value.
September 30, 2022 Highlights: (as of or for the 3-month period ended September 30, 2022 compared to June 30, 2022 and September 30, 2021.)
- Quarterly earnings of $4.0 million, or $0.38 per diluted share for the quarter ended September 30, 2022, decreased from the quarter ended June 30, 2022, earnings of $4.4 million or $0.41 per diluted share, and decreased from the quarter ended September 30, 2021, earnings of $5.0 million or $0.47 per diluted share.
- Quarterly earnings, as adjusted (non-GAAP)1, were $4.2 million, or $0.40 per diluted share for the quarter ended September 30, 2022, compared to $4.4 million or $0.41 per diluted share for the quarter ended June 30, 2022, and $5.0 million or $0.47 per diluted share for the third quarter ended September 30, 2021.
- Earnings for the nine months ended September 30, 2022, were $13.1 million, or $1.24 per share, which is a decrease from $15.2 million, or $1.41 per share, for the same period in the prior year. The Company grew net interest income, despite lower SBA PPP net loan fee accretion in 2022 compared to 2021. The positive benefit of higher net interest income was more than offset year to date fiscal 2022 by higher provision for loan losses, lower gain on sale of loans, a modest increase in expense, partially due to 2022 new market tax depletion, 2022 branch closure expense and lower gains on foreclosed asset sales.
- Net interest income increased $0.2 million from the second quarter of 2022, $0.8 million from the third quarter of 2021 and $2.6 million for the nine months ended September 30, 2022, to $41.9 million. Net interest income was positively impacted by loan growth and the contractual increase in loan and investment yields, which more than offset the reduction in interest income realized on nonaccrual loan payoffs of $0.4 million (9 basis points in net interest margin) and higher liability interest expense.
- The net interest margin without SBA PPP net loan fee accretion and loan purchase accretion has increased each quarter over the past six quarters. For the quarter ended September 30, 2022, the net interest margin without SBA PPP net loan fee accretion and loan purchase accretion was 3.33% compared to 2.82% for the year earlier quarter and 3.29% versus the linked quarter. The linked second quarter net interest margin included the positive benefit of approximately 0.09% due to interest income received on nonaccrual loan payoffs.
- On August 10, 2022, the Company redeemed its $15.0 million subordinated debt with a coupon of 6.75%. For the third quarter, total interest expense on this debt was $0.29 million, including remaining issuance costs.
- The provision for loan losses for the quarter ended September 30, 2022, was $0.38 million due to loan growth, compared to $0.40 million for the quarter ended June 30, 2022. No loan loss provision was realized during the quarters ended March 31, 2022 and September 30, 2021, due to lower CARES Act Section 4013 deferrals, low net charge-off or low net recoveries, decreases in criticized assets and improving economic conditions in our markets.
- Originated loans increased by $49.6 million during the third quarter of 2022, with strong originations in commercial real estate, multi-family real estate and residential mortgages held in the loan portfolio. As a result of current market conditions, residential 10/1 ARM loan originations were added to the portfolio. The acquired loan portfolio declined $21.1 million.
- The allowance for loan losses on originated loans decreased to 1.34% at September 30, 2022, from 1.37% at June 30, 2022. Loans resulting from Bank acquisitions were effectively marked to market value at the time of their acquisition and were excluded from this reserve calculation.
- Nonperforming assets remained at $12.6 million at September 30, 2022.
- Substandard loans decreased modestly by $0.5 million to $20.2 million at September 30, 2022, compared to $20.7 million at June 30, 2022. The decrease was largely due to the payoff of substandard loans that were purchased credit impaired loans classified as substandard when acquired.
- The Company repurchased 53 thousand shares of the Company’s common stock in the third quarter. As of September 30, 2022, approximately 301 thousand shares remain available for repurchase under the current share repurchase authorization.
- Stockholders’ equity as a percent of total assets was 9.17% at September 30, 2022, compared to 9.34% at June 30, 2022. Tangible common equity (“TCE”) as a percent of tangible assets (non-GAAP)1 was 7.40% at September 30, 2022, compared to 7.53% at June 30, 2022. Reductions in stockholders’ equity due to increased unrealized losses in the available for sale portfolio, modest stock buyback activity and modest asset growth, were partially offset by net income and amortization of intangibles.
- In June 2022, the Company notified customers of the St. James, MN branch, with approximately $18.7 million in deposits, that the branch would close in September 2022. In August of 2022, the Company notified customers of the south branch in Rice Lake, WI, that the branch would close and be consolidated with the north branch in Rice Lake, WI. In addition, in August 2022 the Company notified the customers of the Red Wing, MN branch that the branch would close. These August branch closure announcements will occur in the fourth quarter of 2022. The deposit accounts will be consolidated into various nearby branches.
Balance Sheet and Asset Quality
Total assets increased modestly by $16.6 million during the quarter to $1.78 billion at September 30, 2022, compared to $1.76 billion at June 30, 2022.
Securities available for sale decreased $9.3 million during the quarter ended September 30, 2022, to $167.8 million from $177.1 million at June 30, 2022. This decrease was primarily due to a reduced market value of the portfolio associated with higher interest rates and principal repayments, partially offset by purchases of bank issued subordinated debt of $4.8 million.
Securities held to maturity decreased $1.6 million to $97.6 million during the quarter ended September 30, 2022, from $99.2 million at June 30, 2022, due to principal repayments.
Total loans receivable increased to $1.376 billion at September 30, 2022, from $1.347 billion at June 30, 2022. The originated loan portfolio increased $49.6 million in the quarter. The growth was due to strong net new loan fundings and growth in the commercial, multi-family and residential real estate portfolios totaling $43.7 million. Acquired loans decreased by $21.1 million including a loan prepayment of approximately $10 million with an associated loan prepayment of $0.16 million recorded in loan fees and service charges.
The allowance for loan losses increased to $17.2 million at September 30, 2022, representing 1.25% of total loans receivable. At June 30, 2022, the allowance for loan losses was also 1.25% of total loans receivable. The allowance for loan losses allocated to originated loans as a percentage of originated loans, net of deferred fees and costs, was 1.34% at September 30, 2022, compared to 1.37% at June 30, 2022. For the quarter ended September 30, 2022, the Bank had net charge offs of $17 thousand. Approximately 11.1% of the loan portfolio, at September 30, 2022, consists of loans purchased through whole bank acquisitions, resulting in these loans being recorded at fair market value at acquisition.
Allowance for Loan Losses Percentages
(in thousands, except ratios)
September 30, 2022 June 30, 2022 December 31, 2021 September 30, 2021 Originated loans, net of deferred fees and costs $ 1,224,219 $ 1,174,701 $ 1,107,555 $ 1,006,159 SBA PPP loans, net of deferred fees — — 8,457 29,753 Acquired loans, net of unamortized discount 151,657 172,154 194,951 212,742 Loans, end of period $ 1,375,876 $ 1,346,855 $ 1,310,963 $ 1,248,654 SBA PPP loans, net of deferred fees — — (8,457 ) (29,753 ) Loans, net of SBA PPP loans and deferred fees $ 1,375,876 $ 1,346,855 $ 1,302,506 $ 1,218,901 Allowance for loan losses allocated to originated loans $ 16,465 $ 16,053 $ 15,830 $ 15,505 Allowance for loan losses allocated to other loans 752 772 1,083 1,327 Allowance for loan losses $ 17,217 $ 16,825 $ 16,913 $ 16,832 ALL as a percentage of loans, end of period 1.25 % 1.25 % 1.29 % 1.35 % ALL as a percentage of loans, net of SBA PPP loans and deferred fees 1.25 % 1.25 % 1.30 % 1.38 % ALL allocated to originated loans as a percentage of originated loans, net of deferred fees and costs 1.34 % 1.37 % 1.43 % 1.54 % Nonperforming assets remained flat at $12.6 million or 0.71% of total assets at September 30, 2022, compared to June 30, 2022. During the quarter ended September 30, 2022, the Bank repurchased a $0.5 million nonaccrual SBA loan. Acquired nonaccrual loans decreased to $2.6 million at September 30, 2022, from $2.7 million at June 30, 2022. Originated nonperforming assets remained flat at $8.5 million or 0.61% of total assets for the most recent quarter.
(in thousands) September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Special mention loan balances $ 20,178 $ 17,274 $ 1,849 $ 4,536 $ 2,548 Substandard loan balances 20,227 20,680 24,822 22,817 27,137 Criticized loans, end of period $ 40,405 $ 37,954 $ 26,671 $ 27,353 $ 29,685 Special mention loans increased $2.9 million, primarily due to the utilization of a secured line of credit. This loan was categorized as special mention at June 30, 2022, and the loan balance is projected to decrease to June levels by mid-first quarter 2023.
Substandard loans decreased modestly by $0.5 million to $20.2 million at September 30, 2022, compared to $20.7 million at June 30, 2022. The decrease in the third quarter was largely due to the payoff of substandard loans that were purchased credit impaired loans classified as substandard when acquired.
Deposits increased $34.2 million to $1.43 billion at September 30, 2022, from $1.40 billion at June 30, 2022. The increase was largely due to an increase in certificate of deposit (“CD”) accounts of $35.6 million. The increase reflects the addition of $20 million of brokered CD and retail CD accounts. The retail CD increase is partially due to customers moving money market balances to CD accounts. The outflow of money market deposits to CD accounts was replaced with commercial money market accounts.
The Company repurchased 53 thousand shares of the Company’s common stock in the third quarter. As of September 30, 2022, approximately 301 thousand shares remain available for repurchase under the current share repurchase authorization.
Review of Operations
Net interest income was $14.5 million for the third quarter ended September 30, 2022, compared to $14.3 million for the second quarter ended June 30, 2022, and $13.7 million for the quarter ended September 30, 2021. Compared to the second quarter of 2022 and third quarter of 2021, net interest income increased due to the growth in the loan and investment portfolios. “Net interest income was positively impacted by loan growth and contractual increase in loan and investment yields, which more than offset the reduction in interest income realized on nonaccrual loan payoffs of $0.4 million (9 basis points in net interest margin) and higher liability costs. Our net interest margin excluding SBA fee accretion and purchase accretion increased to 3.33% from 3.29% in the second quarter or 3.20% in the second quarter excluding nonaccrual loan income from payoffs. The impact of lower scheduled accretion to $0.15 million, adding brokered certificates late in the quarter, and the retail CD portfolio end of period rates being 22 basis points above the third quarter average will more than offset the positive impact of lower subordinated debt interest expense of $0.30 million in the fourth quarter,” said Jim Broucek, Executive Vice President and Chief Financial Officer.
The table below shows the impact of accretion related to purchased credit impaired loans and SBA PPP net loan fees on interest income and NIM.
Net interest income and net interest margin analysis:
(in thousands, except yields and rates)Three months ended September 30, 2022 June 30, 2022 March 31, 2022 December 31, 2021 September 30, 2021 Net Interest Income Net Interest Margin Net Interest Income Net Interest Margin Net Interest Income Net Interest Margin Net Interest Income Net Interest Margin Net Interest Income Net Interest Margin As reported $ 14,457 3.43 % $ 14,267 3.46 % $ 13,167 3.25 % $ 14,384 3.50 % $ 13,688 3.34 % Less non-accretable difference realized as interest from payoff of purchased credit impaired (“PCI”) loans $ (34 ) (0.01)% $ (70 ) (0.02)% $ (26 ) (0.01)% $ (2 ) — % $ (8 ) — % Less accelerated accretion from payoff of certain PCI loans with transferred non-accretable differences $ (117 ) (0.06)% $ (308 ) (0.08)% $ (11 ) — % $ (200 ) (0.05)% $ (12 ) — % Less scheduled accretion interest $ (247 ) (0.03)% $ (255 ) (0.06)% $ (264 ) (0.07)% $ (264 ) (0.06)% $ (261 ) (0.06)% Without loan purchase accretion $ 14,059 3.33 % $ 13,634 3.30 % $ 12,866 3.17 % $ 13,918 3.39 % $ 13,407 3.28 % Less SBA PPP net loan fee accretion $ — — % $ (39 ) (0.01)% $ (259 ) (0.06)% $ (1,251 ) (0.30)% $ (1,878 ) (0.46)% Without SBA PPP net loan fee accretion and loan purchase accretion $ 14,059 3.33 % $ 13,595 3.29 % $ 12,607 3.11 % $ 12,667 3.09 % $ 11,529 2.82 % Loan loss provisions for the quarter ended September 30, 2022, were $0.4 million. Based on loan growth alone, the provision would have been about $100 thousand higher. However, payments on substandard loans reduced specific reserves. Loan loss provisions for the quarter ended June 30, 2022 were $0.4 million. There were no loan loss provisions for the quarters ended March 31, 2022 or September 30, 2021. Continued improving economic conditions in our markets, as evidenced by unemployment rates below the national average in our two largest population centers, have resulted in improving overall economic trends for businesses.
Non-interest income increased to $2.5 million in the quarter ended September 30, 2022, compared to $2.4 million in the quarter ended June 30, 2022, and decreased from $3.4 million in the quarter ended September 30, 2021. The increase in the third quarter of 2022 compared to the second quarter of 2022 was largely due to: (1) increases in loan fees and service charges due to an increase in prepayment penalties; and (2) increases in other income largely due to the receipt of an annual incentive based on debit card usage. These increases were partially offset by a decrease in gain on sale of loans of $0.2 million largely due to lower mortgage originations. Relative to the comparable quarter one year earlier, non-interest income was lower as a result of lower gain on sale of loans and lower loan servicing income.
Total non-interest expense increased $0.8 million in the third quarter of 2022 to $11.3 million, compared to $10.5 million for the quarter ended June 30, 2022, and $10.3 million for the quarter ended September 30, 2021. The increase from the second quarter of 2022 was due to an increase in: (1) branch closure expenses of $0.3 million primarily recorded in other expense; (2) compensation due to higher incentive accruals of $0.2 million based on year-to-date performance; (3) seasonal expenses in occupancy and marketing of $0.15 million; and (4) compensation and other expenses of $0.2 million reflecting higher salary and benefit expenses. In the fourth quarter, core deposit intangible amortization will decrease to $0.247 million.
Provision for income taxes decreased to $1.3 million in the third quarter of 2022 from $1.4 million in the second quarter of 2022. The provision for income taxes also decreased to $4.2 million for the first nine months of 2022 from $5.5 million for the first nine months of 2021. Both decreases are due to lower pre-tax income and a lower tax rate due to the impact of the tax credits purchased in the first quarter of 2022. The tax credits are expected to be realized over the next seven years. The effective tax rate was 24.3% in the third quarter of 2022, compared to 24.4% the previous quarter and 26.7% for the comparable prior year quarter. The effective tax rate for the first nine months of 2022 was 24.3% compared to 26.5% for the same period in the prior year.
These financial results are preliminary until the Form 10-Q is filed in November 2022.
About the Company
Citizens Community Bancorp, Inc. (NASDAQ: “CZWI”) is the holding company of the Bank, a national bank based in Altoona, Wisconsin, currently serving customers primarily in Wisconsin and Minnesota through 24 branch locations. Its primary markets include the Chippewa Valley Region in Wisconsin, the Twin Cities and Mankato markets in Minnesota, and various rural communities around these areas. The Bank offers traditional community banking services to businesses, ag operators and consumers, including residential mortgage loans.
Cautionary Statement Regarding Forward-Looking Statements
Certain statements contained in this release are considered “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements may be identified using forward-looking words or phrases such as “anticipate,” “believe,” “could,” “expect,” “estimates,” “intend,” “may,” “on pace,” “preliminary,” “planned,” “potential,” “should,” “will,” “would” or the negative of those terms or other words of similar meaning. Such forward-looking statements in this release are inherently subject to many uncertainties arising in the operations and business environment of the Company and the Bank. These uncertainties include conditions in the financial markets and economic conditions generally; adverse impacts to the Company or Bank arising from the COVID-19 pandemic; acts of terrorism and political or military actions by the United States or other governments; the possibility of a deterioration in the residential real estate markets; interest rate risk; lending risk; higher lending risks associated with our commercial and agricultural banking activities; the sufficiency of loan allowances; changes in the fair value or ratings downgrades of our securities; competitive pressures among depository and other financial institutions; disintermediation risk; our ability to maintain our reputation; our ability to maintain or increase our market share; our ability to realize the benefits of net deferred tax assets; our inability to obtain needed liquidity; our ability to raise capital needed to fund growth or meet regulatory requirements; our ability to attract and retain key personnel; our ability to keep pace with technological change; prevalence of fraud and other financial crimes; cybersecurity risks; the possibility that our internal controls and procedures could fail or be circumvented; our ability to successfully execute our acquisition growth strategy; risks posed by acquisitions and other expansion opportunities, including difficulties and delays in integrating the acquired business operations or fully realizing the cost savings and other benefits; restrictions on our ability to pay dividends; the potential volatility of our stock price; accounting standards for loan losses; legislative or regulatory changes or actions, or significant litigation, adversely affecting the Company or Bank; public company reporting obligations; changes in federal or state tax laws; and changes in accounting principles, policies or guidelines and their impact on financial performance. Stockholders, potential investors, and other readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on such forward-looking statements. Such uncertainties and other risks that may affect the Company’s performance are discussed further in Part I, Item 1A, “Risk Factors,” in the Company’s Form 10-K, for the year ended December 31, 2021, filed with the Securities and Exchange Commission (“SEC”) on March 2, 2022 and the Company’s subsequent filings with the SEC. The Company undertakes no obligation to make any revisions to the forward-looking statements contained in this news release or to update them to reflect events or circumstances occurring after the date of this release.
1 Non-GAAP Financial Measures
This press release contains non-GAAP financial measures, such as net income as adjusted, net income as adjusted per share, tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity, which management believes may be helpful in understanding the Company’s results of operations or financial position and comparing results over different periods.
Net income as adjusted and net income as adjusted per share are non-GAAP measures that eliminate the impact of certain expenses such as branch closure costs and related severance pay, accelerated depreciation expense and lease termination fees, and the gain on sale of branch deposits and fixed assets. Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on average tangible common equity are non-GAAP measures that eliminate the impact of goodwill, and intangible assets on our financial position. Management believes these measures are useful in assessing the strength of our financial position.
Where non-GAAP financial measures are used, the comparable GAAP financial measure, as well as the reconciliation to the comparable GAAP financial measure, can be found in this press release. These disclosures should not be viewed as a substitute for operating results determined in accordance with GAAP, nor are they necessarily comparable to non-GAAP performance measures that may be presented by other banks and financial institutions.
Contact: Steve Bianchi, CEO
(715)-836-9994(CZWI-ER)
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Balance Sheets
(in thousands, except shares and per share data)September 30, 2022 (unaudited) June 30, 2022 (unaudited) December 31, 2021 (audited) September 30, 2021 (unaudited) Assets Cash and cash equivalents $ 29,411 $ 31,743 $ 47,691 $ 102,341 Other interest bearing deposits 368 1,505 1,511 1,512 Securities available for sale “AFS” 167,764 177,068 203,068 234,425 Securities held to maturity “HTM” 97,610 99,249 71,141 67,739 Equity investments 1,461 1,365 1,328 327 Other investments 15,907 14,899 15,305 14,965 Loans receivable 1,375,876 1,346,855 1,310,963 1,248,654 Allowance for loan losses (17,217 ) (16,825 ) (16,913 ) (16,832 ) Loans receivable, net 1,358,659 1,330,030 1,294,050 1,231,822 Loans held for sale 666 1,172 6,670 1,675 Mortgage servicing rights, net 4,371 4,520 4,161 4,082 Office properties and equipment, net 21,427 21,589 21,169 21,730 Accrued interest receivable 4,716 4,243 3,916 4,882 Intangible assets 2,701 3,100 3,898 4,297 Goodwill 31,498 31,498 31,498 31,498 Foreclosed and repossessed assets, net 1,584 1,437 1,408 4 Bank owned life insurance (“BOLI”) 24,784 24,622 24,312 24,149 Other assets 17,275 15,567 8,502 8,029 TOTAL ASSETS $ 1,780,202 $ 1,763,607 $ 1,739,628 $ 1,753,477 Liabilities and Stockholders’ Equity Liabilities: Deposits $ 1,434,368 $ 1,400,210 $ 1,387,535 $ 1,408,315 Federal Home Loan Bank (“FHLB”) advances 102,530 102,030 111,527 111,512 Other borrowings 72,351 87,124 58,426 58,400 Other liabilities 7,634 9,500 11,274 9,324 Total liabilities 1,616,883 1,598,864 1,568,762 1,587,551 Stockholders’ equity: Common stock— $0.01 par value, authorized 30,000,000; 10,478,210, 10,530,415 10,502,442, and 10,518,885 shares issued and outstanding, respectively 105 105 105 105 Additional paid-in capital 119,638 119,987 119,925 119,929 Retained earnings 60,833 56,928 50,675 44,660 Accumulated other comprehensive (loss) income (17,257 ) (12,277 ) 161 1,232 Total stockholders’ equity 163,319 164,743 170,866 165,926 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY $ 1,780,202 $ 1,763,607 $ 1,739,628 $ 1,753,477 Note: Certain items previously reported were reclassified for consistency with the current presentation.
CITIZENS COMMUNITY BANCORP, INC.
Consolidated Statements of Operations
(in thousands, except per share data)Three Months Ended Nine Months Ended September 30, 2022 (unaudited) June 30, 2022 (unaudited) September 30, 2021 (unaudited) September 30, 2022 (unaudited) September 30, 2021 (unaudited) Interest and dividend income: Interest and fees on loans $ 15,937 $ 14,893 $ 14,537 $ 44,597 $ 43,014 Interest on investments 2,022 1,810 1,638 5,441 4,260 Total interest and dividend income 17,959 16,703 16,175 50,038 47,274 Interest expense: Interest on deposits 1,681 985 1,354 3,734 4,589 Interest on FHLB borrowed funds 568 297 389 1,176 1,183 Interest on other borrowed funds 1,253 1,154 744 3,237 2,217 Total interest expense 3,502 2,436 2,487 8,147 7,989 Net interest income before provision for loan losses 14,457 14,267 13,688 41,891 39,285 Provision for loan losses 375 400 — 775 — Net interest income after provision for loan losses 14,082 13,867 13,688 41,116 39,285 Non-interest income: Service charges on deposit accounts 535 482 463 1,505 1,256 Interchange income 597 614 600 1,760 1,776 Loan servicing income 611 600 842 1,912 2,560 Gain on sale of loans 194 414 1,014 1,330 4,131 Loan fees and service charges 267 141 118 500 547 Net (losses) gains on investment securities (55 ) (75 ) 73 (167 ) 344 Other 323 196 338 717 801 Total non-interest income 2,472 2,372 3,448 7,557 11,415 Non-interest expense: Compensation and related benefits 5,900 5,589 5,718 16,887 16,736 Occupancy 1,429 1,343 1,313 4,137 3,943 Data processing 1,382 1,415 1,582 4,098 4,374 Amortization of intangible assets 399 399 399 1,197 1,197 Mortgage servicing rights expense, net 197 195 37 65 28 Advertising, marketing and public relations 300 250 220 762 577 FDIC premium assessment 119 118 148 352 395 Professional services 382 368 328 1,152 1,192 Gains on repossessed assets, net (8 ) (2 ) (3 ) (17 ) (149 ) New market tax credit depletion 163 162 — 488 — Other 1,014 625 578 2,286 1,714 Total non-interest expense 11,277 10,462 10,320 31,407 30,007 Income before provision for income taxes 5,277 5,777 6,816 17,266 20,693 Provision for income taxes 1,284 1,411 1,819 4,201 5,484 Net income attributable to common stockholders $ 3,993 $ 4,366 $ 4,997 $ 13,065 $ 15,209 Per share information: Basic earnings $ 0.38 $ 0.41 $ 0.47 $ 1.24 $ 1.41 Diluted earnings $ 0.38 $ 0.41 $ 0.47 $ 1.24 $ 1.41 Cash dividends paid $ — $ — $ — $ 0.26 $ 0.23 Book value per share at end of period $ 15.59 $ 15.64 $ 15.77 $ 15.59 $ 15.77 Tangible book value per share at end of period (non-GAAP) $ 12.32 $ 12.36 $ 12.37 $ 12.32 $ 12.37 Note: Certain items previously reported were reclassified for consistency with the current presentation.
Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
(in thousands, except per share data)Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 GAAP pretax income $ 5,277 $ 5,777 $ 6,816 $ 17,266 $ 20,693 Branch closure costs (1) 302 33 — 335 — FHLB borrowings prepayment fee (2) — — — — 102 Pretax income as adjusted (3) 5,579 5,810 6,816 17,601 20,795 Provision for income tax on net income as adjusted (4) 1,357 1,419 1,819 4,282 5,511 Net income as adjusted (non-GAAP) (3) $ 4,222 $ 4,391 $ 4,997 $ 13,319 $ 15,284 GAAP diluted earnings per share, net of tax $ 0.38 $ 0.41 $ 0.47 $ 1.24 $ 1.41 Branch closure costs, net of tax 0.02 — — 0.02 — FHLB borrowings prepayment fee — — — — 0.01 Diluted earnings per share, as adjusted, net of tax (non-GAAP) $ 0.40 $ 0.41 $ 0.47 $ 1.26 $ 1.42 Average diluted shares outstanding 10,519,079 10,541,905 10,622,595 10,533,414 10,797,502 (1) Branch closure costs include severance pay recorded in compensation and benefits and accelerated depreciation expense included in other non-interest expense in the consolidated statement of operations.
(2) FHLB borrowings prepayment fee resulted from the early termination of $8 million in FHLB borrowings at a weighted average rate of 2.19% and weighted average maturity of 8.75 months included in other non-interest expense in the consolidated statement of operations.
(3) Net income as adjusted is a non-GAAP measure that management believes enhances the market’s ability to assess the underlying business performance and trends related to core business activities.
(4) Provision for income tax on net income as adjusted is calculated at our effective tax rate for each respective period presented.Loan Composition (in thousands) September 30, 2022 June 30, 2022 December 31, 2021 September 30, 2021 Originated Loans: Commercial/Agricultural real estate: Commercial real estate $ 610,348 $ 596,001 $ 578,395 $ 508,540 Agricultural real estate 62,302 57,323 52,372 49,082 Multi-family real estate 193,758 175,964 174,050 150,094 Construction and land development 116,147 114,017 78,613 84,399 C&I/Agricultural operating: Commercial and industrial 124,350 124,113 107,937 90,581 Agricultural operating 20,847 20,287 26,202 25,390 Residential mortgage: Residential mortgage 77,307 65,707 63,855 68,986 Purchased HELOC loans 3,357 3,419 3,871 3,921 Consumer installment: Originated indirect paper 11,234 12,736 15,971 17,689 Other consumer 7,016 7,472 8,473 9,414 Originated loans before SBA PPP loans 1,226,666 1,177,039 1,109,739 1,008,096 SBA PPP loans — — 8,755 31,301 Total originated loans $ 1,226,666 $ 1,177,039 $ 1,118,494 $ 1,039,397 Acquired Loans: Commercial/Agricultural real estate: Commercial real estate $ 91,340 $ 106,916 $ 120,070 $ 129,784 Agricultural real estate 19,405 20,484 26,123 27,552 Multi-family real estate 3,914 3,965 4,299 5,928 Construction and land development 1,703 1,171 907 1,139 C&I/Agricultural operating: Commercial and industrial 10,465 14,889 14,230 16,554 Agricultural operating 5,186 4,182 5,386 4,541 Residential mortgage: Residential mortgage 21,426 22,868 27,135 30,795 Consumer installment: Other consumer 294 313 401 516 Total acquired loans $ 153,733 $ 174,788 $ 198,551 $ 216,809 Total Loans: Commercial/Agricultural real estate: Commercial real estate $ 701,688 $ 702,917 $ 698,465 $ 638,324 Agricultural real estate 81,707 77,807 78,495 76,634 Multi-family real estate 197,672 179,929 178,349 156,022 Construction and land development 117,850 115,188 79,520 85,538 C&I/Agricultural operating: Commercial and industrial 134,815 139,002 122,167 107,135 Agricultural operating 26,033 24,469 31,588 29,931 Residential mortgage: Residential mortgage 98,733 88,575 90,990 99,781 Purchased HELOC loans 3,357 3,419 3,871 3,921 Consumer installment: Originated indirect paper 11,234 12,736 15,971 17,689 Other consumer 7,310 7,785 8,874 9,930 Gross loans before SBA PPP loans 1,380,399 1,351,827 1,308,290 1,224,905 SBA PPP loans — — 8,755 31,301 Gross loans $ 1,380,399 $ 1,351,827 $ 1,317,045 $ 1,256,206 Unearned net deferred fees and costs and loans in process (2,447 ) (2,338 ) (2,482 ) (3,486 ) Unamortized discount on acquired loans (2,076 ) (2,634 ) (3,600 ) (4,066 ) Total loans receivable $ 1,375,876 $ 1,346,855 $ 1,310,963 $ 1,248,654 Nonperforming Originated and Acquired Assets
(in thousands, except ratios)
September 30, 2022 June 30, 2022 December 31, 2021 September 30, 2021 Nonperforming assets: Originated nonperforming assets: Nonaccrual loans $ 8,294 $ 7,770 $ 6,448 $ 6,408 Accruing loans past due 90 days or more 169 700 63 295 Total originated nonperforming loans (“NPL”) 8,463 8,470 6,511 6,703 Other real estate owned (“OREO”) — — — — Other collateral owned — 10 2 2 Total originated nonperforming assets (“NPAs”) $ 8,463 $ 8,480 $ 6,513 $ 6,705 Acquired nonperforming assets: Nonaccrual loans $ 2,478 $ 2,664 $ 5,217 $ 5,298 Accruing loans past due 90 days or more 79 14 97 130 Total acquired nonperforming loans (“NPL”) 2,557 2,678 5,314 5,428 Other real estate owned (“OREO”) 1,584 1,427 1,406 2 Other collateral owned — — — — Total acquired nonperforming assets (“NPAs”) $ 4,141 $ 4,105 $ 6,720 $ 5,430 Total nonperforming assets (“NPAs”) $ 12,604 $ 12,585 $ 13,233 $ 12,135 Loans, end of period $ 1,375,876 $ 1,346,855 $ 1,310,963 $ 1,248,654 Total assets, end of period $ 1,780,202 $ 1,763,607 $ 1,739,628 $ 1,753,477 Ratios: Originated NPLs to total loans 0.61 % 0.63 % 0.50 % 0.54 % Acquired NPLs to total loans 0.19 % 0.20 % 0.41 % 0.43 % Originated NPAs to total assets 0.48 % 0.48 % 0.37 % 0.38 % Acquired NPAs to total assets 0.23 % 0.23 % 0.39 % 0.31 % Nonperforming Assets
(in thousand, except ratios)
September 30, 2022 June 30, 2022 December 31, 2021 September 30, 2021 Nonperforming assets: Nonaccrual loans Commercial real estate $ 5,848 $ 5,275 $ 5,374 $ 5,427 Agricultural real estate 2,729 3,169 3,490 3,567 Construction and land development 43 43 — — Commercial and industrial (“C&I”) 188 211 298 311 Agricultural operating 668 555 993 1,063 Residential mortgage 1,246 1,122 1,433 1,263 Consumer installment 50 59 77 75 Total nonaccrual loans $ 10,772 $ 10,434 $ 11,665 $ 11,706 Accruing loans past due 90 days or more 248 714 160 425 Total nonperforming loans (“NPLs”) 11,020 11,148 11,825 12,131 Foreclosed and repossessed assets, net 1,584 1,437 1,408 4 Total nonperforming assets (“NPAs”) $ 12,604 $ 12,585 $ 13,233 $ 12,135 Troubled Debt Restructurings (“TDRs”) $ 9,336 $ 8,712 $ 12,523 $ 15,689 Nonaccrual TDRs $ 2,426 $ 2,549 $ 4,539 $ 4,324 Loans, end of period $ 1,375,876 $ 1,346,855 $ 1,310,963 $ 1,248,654 Total assets, end of period $ 1,780,202 $ 1,763,607 $ 1,739,628 $ 1,753,477 Ratios: NPLs to total loans 0.80 % 0.83 % 0.90 % 0.97 % NPAs to total assets 0.71 % 0.71 % 0.76 % 0.69 % Deposit Composition
(in thousands)September 30, 2022 June 30, 2022 December 31, 2021 September 30, 2021 Non-interest bearing demand deposits $ 285,670 $ 276,815 $ 276,631 $ 280,611 Interest bearing demand deposits 394,924 401,857 396,231 381,315 Savings accounts 236,107 239,322 222,674 229,623 Money market accounts 328,544 328,718 288,985 291,242 Certificate accounts 189,123 153,498 203,014 225,524 Total deposits $ 1,434,368 $ 1,400,210 $ 1,387,535 $ 1,408,315 Average Balances, Interest Yields and Rates
(in thousands, except yields and rates)Three months ended
September 30, 2022Three months ended
June 30, 2022Three months ended
September 30, 2021Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average interest earning assets: Cash and cash equivalents $ 11,043 $ 60 2.16 % $ 25,195 $ 43 0.68 % $ 111,192 $ 50 0.18 % Loans receivable 1,370,897 15,937 4.61 % 1,328,661 14,893 4.50 % 1,192,636 14,537 4.84 % Interest bearing deposits 1,079 7 2.57 % 1,509 8 2.13 % 1,512 8 2.10 % Investment securities (1) 274,868 1,768 2.57 % 285,332 1,593 2.23 % 303,325 1,412 1.85 % Other investments 14,910 187 4.98 % 14,969 166 4.45 % 14,961 168 4.46 % Total interest earning assets (1) $ 1,672,797 $ 17,959 4.26 % $ 1,655,666 $ 16,703 4.05 % $ 1,623,626 $ 16,175 3.95 % Average interest bearing liabilities: Savings accounts $ 227,985 $ 204 0.36 % $ 230,784 $ 125 0.22 % $ 216,304 $ 95 0.17 % Demand deposits 413,033 575 0.55 % 410,468 300 0.29 % 392,080 280 0.28 % Money market accounts 331,469 519 0.62 % 323,907 287 0.36 % 276,582 193 0.28 % CD’s 136,624 335 0.97 % 134,338 223 0.67 % 207,494 682 1.30 % IRA’s 34,446 48 0.55 % 35,701 50 0.56 % 39,525 104 1.04 % Total deposits $ 1,143,557 $ 1,681 0.58 % $ 1,135,198 $ 985 0.35 % $ 1,131,985 $ 1,354 0.47 % FHLB advances and other borrowings 192,338 1,821 3.76 % 186,050 1,451 3.13 % 169,891 1,133 2.65 % Total interest bearing liabilities $ 1,335,895 $ 3,502 1.04 % $ 1,321,248 $ 2,436 0.74 % $ 1,301,876 $ 2,487 0.76 % Net interest income $ 14,457 $ 14,267 $ 13,688 Interest rate spread 3.22 % 3.31 % 3.19 % Net interest margin (1) 3.43 % 3.46 % 3.34 % Average interest earning assets to average interest bearing liabilities 1.25 1.25 1.25 (1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the quarters ended September 30, 2022, June 30, 2022 and September 30, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $0, $0 and $1 thousand for the three months ended September 30, 2022, June 30, 2022 and September 30, 2021, respectively.
Nine months ended September 30, 2022 Nine months ended September 30, 2021 Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average
BalanceInterest
Income/
ExpenseAverage
Yield/
Rate (1)Average interest earning assets: Cash and cash equivalents $ 23,727 $ 116 0.65 % $ 118,064 $ 107 0.12 % Loans receivable 1,334,811 44,598 4.47 % 1,197,469 43,014 4.80 % Interest bearing deposits 1,365 22 2.15 % 2,227 37 2.22 % Investment securities (1) 282,771 4,777 3.38 % 263,655 3,606 1.83 % Other investments 15,044 525 4.67 % 15,006 510 4.54 % Total interest earning assets (1) $ 1,657,718 $ 50,038 4.04 % $ 1,596,421 $ 47,274 3.96 % Average interest bearing liabilities: Savings accounts $ 227,787 $ 424 0.25 % $ 211,320 $ 277 0.18 % Demand deposits 411,471 1,045 0.34 % 361,248 788 0.29 % Money market accounts 318,246 1,011 0.42 % 263,195 577 0.29 % CD’s 143,965 1,079 1.00 % 237,706 2,592 1.46 % IRA’s 35,729 175 0.65 % 40,119 355 1.18 % Total deposits $ 1,137,198 $ 3,734 0.44 % $ 1,113,588 $ 4,589 0.55 % FHLB advances and other borrowings 181,598 4,413 3.25 % 173,889 3,400 2.61 % Total interest bearing liabilities $ 1,318,796 $ 8,147 0.83 % $ 1,287,477 $ 7,989 0.83 % Net interest income $ 41,891 $ 39,285 Interest rate spread 3.21 % 3.13 % Net interest margin (1) 3.38 % 3.29 % Average interest earning assets to average interest bearing liabilities 1.26 1.24 (1) Fully taxable equivalent (FTE). The average yield on tax exempt securities is computed on a tax equivalent basis using a tax rate of 21% for the nine months ended September 30, 2022 and September 30, 2021. The FTE adjustment to net interest income included in the rate calculations totaled $1 and $3 thousand for the nine months ended September 30, 2022 and September 30, 2021, respectively.
The following table reports key financial metric ratios based on a net income as adjusted basis:
Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Ratios based on net income: Return on average assets (annualized) 0.89 % 0.99 % 1.13 % 0.99 % 1.19 % Return on average equity (annualized) 9.57 % 10.63 % 12.00 % 10.51 % 12.51 % Return on average tangible common equity4 (annualized) 12.99 % 14.41 % 16.24 % 14.22 % 17.06 % Efficiency ratio 64 % 60 % 58 % 61 % 57 % Net interest margin with loan purchase accretion 3.43 % 3.46 % 3.34 % 3.38 % 3.29 % Net interest margin without loan purchase accretion 3.33 % 3.30 % 3.28 % 3.27 % 3.21 % Ratios based on net income as adjusted (non-GAAP) Return on average assets as adjusted2 (annualized) 0.94 % 0.99 % 1.13 % 1.01 % 1.19 % Return on average equity as adjusted3 (annualized) 10.12 % 10.63 % 12.00 % 10.71 % 12.57 % Reconciliation of Return on Average Assets as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 GAAP earnings after income taxes $ 3,993 $ 4,366 $ 4,997 $ 13,065 $ 15,209 Net income as adjusted after income taxes (non-GAAP) (1) $ 4,221 $ 4,391 $ 4,997 $ 13,318 $ 15,284 Average assets $ 1,780,942 $ 1,764,517 $ 1,748,065 $ 1,764,321 $ 1,713,932 Return on average assets (annualized) 0.89 % 0.99 % 1.13 % 0.99 % 1.19 % Return on average assets as adjusted (non-GAAP) (annualized) 0.94 % 1.00 % 1.13 % 1.01 % 1.19 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of Return on Average Equity as Adjusted (non-GAAP)
(in thousands, except ratios)Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 GAAP earnings after income taxes $ 3,993 $ 4,366 $ 4,997 $ 13,065 $ 15,209 Net income as adjusted after income taxes (non-GAAP) (1) $ 4,221 $ 4,391 $ 4,997 $ 13,318 $ 15,284 Average equity $ 165,528 $ 164,737 $ 165,203 $ 166,181 $ 162,510 Return on average equity (annualized) 9.57 % 10.63 % 12.00 % 10.51 % 12.51 % Return on average equity as adjusted (non-GAAP) (annualized) 10.12 % 10.69 % 12.00 % 10.71 % 12.57 % (1) See Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)
Reconciliation of tangible book value per share (non-GAAP)
(in thousands, except per share data)Tangible book value per share at end of period September 30, 2022 June 30, 2022 September 30, 2021 Total stockholders’ equity $ 163,319 $ 164,743 $ 165,926 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (2,701 ) (3,100 ) (4,297 ) Tangible common equity (non-GAAP) $ 129,120 $ 130,145 $ 130,131 Ending common shares outstanding 10,478,210 10,530,415 10,518,885 Book value per share $ 15.59 $ 15.64 $ 15.77 Tangible book value per share (non-GAAP) $ 12.32 $ 12.36 $ 12.37 Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)
(in thousands, except ratios)Tangible common equity as a percent of tangible assets at end of period September 30, 2022 June 30, 2022 September 30, 2021 Total stockholders’ equity $ 163,319 $ 164,743 $ 165,926 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (2,701 ) (3,100 ) (4,297 ) Tangible common equity (non-GAAP) $ 129,120 $ 130,145 $ 130,131 Total Assets $ 1,780,202 $ 1,763,607 $ 1,753,477 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (2,701 ) (3,100 ) (4,297 ) Tangible Assets (non-GAAP) $ 1,746,003 $ 1,729,009 $ 1,717,682 Total stockholders’ equity to total assets ratio 9.17 % 9.34 % 9.46 % Tangible common equity as a percent of tangible assets (non-GAAP) 7.40 % 7.53 % 7.58 % Reconciliation of Return on Average Tangible Common Equity (non-GAAP)
(in thousands, except ratios)Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Total stockholders’ equity $ 163,319 $ 164,743 $ 165,926 $ 163,319 $ 165,926 Less: Goodwill (31,498 ) (31,498 ) (31,498 ) (31,498 ) (31,498 ) Less: Intangible assets (2,701 ) (3,100 ) (4,297 ) (2,701 ) (4,297 ) Tangible common equity (non-GAAP) $ 129,120 $ 130,145 $ 130,131 $ 129,120 $ 130,131 Average tangible common equity (non-GAAP) $ 131,130 $ 129,939 $ 129,208 $ 131,383 $ 126,116 GAAP earnings after income taxes $ 3,993 $ 4,366 $ 4,997 $ 13,065 $ 15,209 Amortization of intangible assets, net of tax 302 302 292 906 879 Tangible net income $ 4,295 $ 4,668 $ 5,289 $ 13,971 $ 16,088 Return on average tangible common equity (annualized) 12.99 % 14.41 % 16.24 % 14.22 % 17.06 % Reconciliation of Efficiency Ratio
(in thousands, except ratios)Three Months Ended Nine Months Ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Non-interest expense (GAAP) $ 11,277 $ 10,462 $ 10,320 $ 31,407 $ 30,007 Less amortization of intangibles (399 ) (399 ) (399 ) (1,197 ) (1,197 ) Efficiency ratio numerator (GAAP) $ 10,878 $ 10,063 $ 9,921 $ 30,210 $ 28,810 Non-interest income $ 2,472 $ 2,372 $ 3,448 $ 7,557 $ 11,415 Loss (Gain) on investment securities 55 75 (73 ) 167 (344 ) Net interest margin 14,457 14,267 13,688 41,891 39,285 Efficiency ratio denominator (GAAP) $ 16,984 $ 16,714 $ 17,063 $ 49,615 $ 50,356 Efficiency ratio (GAAP) 64 % 60 % 58 % 61 % 57 % 1Net income as adjusted and net income as adjusted per share are non-GAAP financial measures that management believes enhances investors’ ability to better understand the underlying business performance and trends related to core business activities. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of GAAP Net Income and Net Income as Adjusted (non-GAAP)”.
2Return on average assets as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average assets. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Assets as Adjusted (non-GAAP)”.
3Return on average equity as adjusted is a non-GAAP measure that management believes enhances investors’ ability to better understand the underlying business performance and trends relative to average equity. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of Return on Average Equity as Adjusted (non-GAAP)”.
4Tangible book value, tangible book value per share, tangible common equity as a percent of tangible assets and return on tangible common equity are non-GAAP measures that management believes enhances investors’ ability to better understand the Company’s financial position. For a detailed reconciliation of GAAP to non-GAAP results, see the accompanying financial table “Reconciliation of tangible book value per share (non-GAAP)”, “Reconciliation of tangible common equity as a percent of tangible assets (non-GAAP)”, and “Reconciliation of return on average tangible common equity)”.
- Quarterly earnings of $4.0 million, or $0.38 per diluted share for the quarter ended September 30, 2022, decreased from the quarter ended June 30, 2022, earnings of $4.4 million or $0.41 per diluted share, and decreased from the quarter ended September 30, 2021, earnings of $5.0 million or $0.47 per diluted share.