Traditions Bancorp reports first quarter 2024 earnings results

YORK, Pa., April 25, 2024 — Traditions Bancorp, Inc. (OTC Pink: TRBK), parent company of Traditions Bank, reported net income of $1.4 million for the first quarter ended March 31, 2024, compared to $0.7 million in the linked quarter and $1.5 million for the first quarter of 2023. The company reported earnings per share (diluted) of 49 cents for the first quarter ended March 31, 2024, compared to 24 cents in the linked quarter and 55 cents for the first quarter of 2023. Unrealized investment portfolio losses, flowing through Accumulated Other Comprehensive Loss, have increased to $11.5 million at quarter end compared to $11.1 million in the linked quarter. Book value per common share was $23.56 on March 31, 2024, versus $23.31 in the linked quarter and $22.41 for the first quarter of 2023.

“Traditions Bancorp’s quarterly net earnings are improved for 2024, despite the continuing challenges of higher-for-longer interest rates and persistent inflation,” stated Eugene J. Draganosky, Chair of the Board and Chief Executive Officer. “Mortgage banking income has exceeded our forecast for the first quarter, with gains on the sale of mortgages helping to offset lower than expected net interest income due to escalating funding costs. We are cautiously optimistic for the remainder of the year, provided that our mortgage banking activity continues to outpace expectations and stubborn inflation abates. Meanwhile, our commercial loan pipeline is gradually building for the next few quarters of 2024.”
Quarterly Highlights – First Quarter 2024 versus First Quarter 2023

Loans grew by $47.4 million, or 8%, over 1Q23. Loan growth was intentionally slowed in 4Q23 and 1Q24 to stem margin compression as funding costs continued to rise.
Over the previous 12 months, deposits increased by $22.1 million, or 3%, over 1Q23. Most of this growth was concentrated in brokered deposits, higher-cost time deposits, and money market specials as depositors became more rate sensitive. Brokered CDs shrank from $64.7 million at the end of 2023 to $54.7 million at the end of 1Q24, representing 7% of total deposits.
The cost of deposits increased to 3.04% for 1Q24, up from 2.84% for 4Q23 and 1.52% for 1Q23.
Net interest margin contracted to 2.91% in 1Q24 compared to 3.45% in 1Q23. This was driven by an increase in the total cost of funds, including borrowings, from 1.65% in 1Q23 to 3.13% in 1Q24.
Gains on the sale of mortgages were $1.2 million for 1Q24, increasing from $1.0 million in 1Q23 and $0.8 million in 4Q23.
Mortgage banking revenue continues to be adversely impacted by higher-for-longer interest rates and limited home inventories. The mortgage pipeline increased to $17.4 million from $9.2 million in the linked quarter and is up from $10.0 million on March 31, 2023.
A first-quarter cash dividend of eight cents per common share was declared on April 18, 2024, and is payable on May 13, 2024, to shareholders of record at the close of business on May 3, 2024.
Net interest income decreased $0.6 million in 1Q24 from 1Q23, or 9%, driven by rising funding costs.
Other expense decreased by 7%, from $6.3 million in 1Q23 to $5.8 million in 1Q24, primarily due to the expense reduction from the strategic realignment completed in 2023.
The 1Q24 credit loss provision was $132 thousand.

Credit Quality and Capital Insights:

Nonaccrual loans decreased from $4.0 million in 4Q23 to $3.8 million in the current quarter. The transfer of $0.6 million of nonaccrual loans into Other Real Estate Owned/repossessed assets in 1Q24 offset the addition of several small residential mortgage, consumer, and commercial loans into nonaccrual status during the quarter.
The company reported no net charge-offs in 1Q24.
Non-performing assets to total assets increased from 0.47% in the linked quarter to 0.53% in the current quarter.
Delinquencies greater than 30 days were 0.85% of total loans as of March 31, 2024, up from 0.70% as of December 31, 2023, and 0.49% as of March 31, 2023.
The company’s ACL ratio was 0.57% as of March 31, 2024, compared to 0.56% as of December 31, 2023, and 0.52% as of March 31, 2023.
Traditions Bancorp and Traditions Bank remain well capitalized.

FINANCIAL HIGHLIGHTS (unaudited):(Dollars in thousands, except per share data)

Selected Financial Data

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Investment securities