Q1 2024 Financial Highlights
May 14, 2024
Summary
For the three months ended March 31, 2024, net income was $1.8 million, an increase of $867 thousand, or 91%, in comparison to the same period in 2023. Loan growth was strong throughout 2023, with an intentional slowdown in 2024 to align with strategic objectives. Ending loan balances when compared to a year ago increased $73 million, or 17%, maintaining higher interest income. The continued success of the money market deposit accounts delivers a stable and organic funding source and supports diversification of funding and management of our cost of funds. Offering a competitive market rate of interest, the MMDA is attractive to our clients as an outlet for excess liquidity. For time deposits, introducing brokered deposits later in 2023 has also helped us manage cost of funds when compared to listing service CDs.
“Our financial performance remains strong into 2024. Consistent loan growth, elevated interest rates and effective management of our funding costs have sustained our strong net interest income growth. Our non-interest income remains consistent as we continue to offer products and services of value to our clients, while thoughtfully managing our non-interest expenses continues to be a top priority for the Bank. This is another great year of continuing the momentum of enhancing the value proposition for our clients and shareholders with the acquisition of Shatswell MacLeod, an internal audit service provider. We shared the exciting news with our clients on May 8, 2024, with an effective date of June 1, 2024. We have the opportunity to provide a high-quality service that our clients need as well as diversify our non-interest income.” said Craig Howie, President and CEO of Atlantic Community Bankers Bank.
Net Interest Income and Balance Sheet
Net interest income, before provision, for the three months of 2024 was $5.9 million, an increase of $1.6 million, or 37%, from the same period a year ago. The increase is driven by higher rates and volume of loans, complemented with a shorter duration, 60% floating rate investment portfolio. Subsequently, interest expense also increased primarily driven by a shift in funding mix from non-interest-bearing deposits to interest bearing deposits, going from $4.8 million for three months of 2023 to $6.4 million in the same period in the current year.
Asset Quality
In the first three months of the year, a provision for credit losses of $9 thousand was recorded in comparison to $251 thousand in the prior year. This is driven by the reclassification of unfunded commitment expense being categorized as provision for credit losses, which was a release in 2024. In the prior year, this expense was included in other non-interest expense. The provision for loan losses recorded in both periods is supported by growth within the loan portfolio and strong asset quality with no charge-offs and only two loans reported as 30+ days delinquent as of March 31, 2024.
Non-interest income
For the first three months of the year, non-interest income was $2.2 million, a decrease of $270 thousand, or 11%, from the prior year due to the prior year including $277k of escrow release from the 2021 sale of the Bank’s BITS subsidiary, which when excluded, shows non-interest income consistent year over year.
Non-interest expense
For the first three months of the year, non-interest expense was $5.7 million, an increase of $200 thousand, or 4%, from the prior year, driven by higher salaries as we focus on retaining and attracting the best talent, investments in equipment and systems upgrades, which were partially offset by decreases in other expense. The Bank’s continues to focus on investing in the best people and tools that will drive operational efficiency while reducing spending that doesn’t have a supportable return on investment.
