GLEN BURNIE, Md., Feb. 12, 2020 (GLOBE NEWSWIRE) — Glen Burnie Bancorp (“Bancorp”) (NASDAQ: GLBZ), the bank holding company for The Bank of Glen Burnie (“Bank”), announced today net income of $0.54 million, or $0.19 per basic and diluted common share for the three-month period ended December 31, 2019, as compared to $0.31 million, or $0.11 per basic and diluted common share for the three-month period ended December 31, 2018.
Bancorp reported net income of $1.60 million, or $0.57 per basic and diluted common share for the year ended December 31, 2019, compared to $1.58 million, or $0.56 per basic and diluted common share for the same period in 2018. Net loans decreased by $13.9 million, or 4.69% during the twelve-month period ended December 31, 2019, compared to an increase of $27.6 million, or 10.24% during the same period of 2018. At December 31, 2019, Bancorp had total assets of $384.9 million. Bancorp, the oldest independent commercial bank in Anne Arundel County, paid its 110th consecutive quarterly dividend on January 31, 2020.During 2018, the Company conducted a periodic review of the estimated direct cost to originate loans resulting in a change to the estimated materiality of these costs. As a result, the Company began recognizing certain direct loan origination costs over the life of the related loan as a reduction of the loan’s yield by the interest method based on the contractual term of the loan. In the fourth quarter of 2018, the Company recorded a reduction of noninterest expense and an increase in loan balances of $375,000, and reduced loan balances and loan interest income by $51,000 due to the amortization of deferred costs. The effect of these adjustments increased income before taxes for the three- and twelve-months periods ended December 31, 2018 by $324,000 and increased net income by $300,000 or $0.11 per basic and diluted common share for the twelve-month period ended December 31, 2018.“Although our net interest margin was negatively impacted by the three Federal Reserve federal funds rate decreases that occurred in the third and fourth quarters of 2019, our fourth quarter results were in line with our expectations and highlighted by continued positive momentum,” stated John D. Long, President and CEO. “We continue to invest in technology systems that allow us to remain competitive in the rapidly changing technology environment. As such, our strong fundamental performance was partially offset by the significant technology and infrastructure investments made across the Company. We completed the first phase of our technology infrastructure transformation in November 2019, and Phase II enhancements are on-track for a mid-2020 implementation. We are encouraged that these investments represent a foundation for sustainable growth as we move forward into the new decade. Completion of this initial phase is expected to result in lower noninterest expenses and an improving efficiency ratio beginning in the second half of 2020 and beyond. We continue to grow our business organically and diversify our loan portfolio. Our loan originators, retail branches and treasury management team are focused on increasing commercial deposits from existing clients and acquiring new client relationships.”“While the competitive landscape is intense, our continued growth, profitability, credit quality and capital strength demonstrate our ability to continue to deliver value to our shareholders. We remain confident in our Company’s progress as we move forward,” continued Mr. Long. “Headquartered in the dynamic Northern Anne Arundel County market, we remain deeply committed to serving the financial needs of the community through the development of new loan and deposit products.”Highlights for the Quarter and Year ended December 31, 2019The low interest rate environment and yield-curve inversion in 2019 caused by three 25 basis point rate decreases in the benchmark rate by the Federal Reserve negatively impacted Bancorp’s organic growth strategy resulting in a $28.1 million, or 6.80% decrease in total assets year-over-year. The effect of the lower interest rate environment on the net interest margin was somewhat mitigated by managing loan and deposit pricing strategies and adjusting the investment portfolio composition and pro-active reduction of high cost wholesale funding. Bancorp has strong liquidity and capital positions that provide ample capacity for future growth, along with the Bank’s total regulatory capital to risk weighted assets of 13.21% at December 31, 2019, as compared to 13.18% for the same period of 2018.Return on average assets for the three-month period ended December 31, 2019 was 0.55%, as compared to 0.30% for the three-month period ended December 31, 2018. Return on average equity for the three-month period ended December 31, 2019 was 6.00%, as compared to 3.68% for the three-month period ended December 31, 2018. Return on average assets for the year ended December 31, 2019 was 0.41%, as compared to 0.39% for the year ended December 31, 2018. Return on average equity for the year ended December 31, 2019 was 4.55%, as compared to 4.69% for the year ended December 31, 2018.The book value per share of Bancorp’s common stock was $12.62 at December 31, 2019, as compared to $12.10 per share at December 31, 2018.At December 31, 2019, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 12.47% at December 31, 2019, as compared to 12.27% at December 31, 2018. Liquidity remained strong due to managed cash and cash equivalents, borrowing lines with the FHLB of Atlanta, the Federal Reserve and correspondent banks, and the size and composition of the bond portfolio.Balance Sheet ReviewTotal assets were $384.9 million at December 31, 2019, a decrease of $28.1 million or 6.80%, from $413.0 million at December 31, 2018. Investment securities were $71.5 million at December 31, 2019, a decrease of $10.1 million or 12.38%, from $81.6 million at December 31, 2018. Loans, net of deferred fees and costs, were $284.7 million at December 31, 2019, a decrease of $14.4 million or 4.81%, from $299.1 million at December 31, 2018. Net deferred tax assets decreased $0.7 million or 51.76%, from December 31, 2018 to December 31, 2019 primarily due to the increase in fair value of securities available for sale. Total deposits were $321.4 million at December 31, 2019, a decrease of $1.1 million or 0.34%, from $322.5 million at December 31, 2018. Noninterest-bearing deposits were $107.2 million at December 31, 2019, an increase of $5.8 million or 5.72%, from $101.4 million at December 31, 2018. Interest-bearing deposits were $214.3 million at December 31, 2019, a decrease of $6.8 million or 3.08%, from $221.1 million at December 31, 2018. Total borrowings were $25.0 million at December 31, 2019, a decrease of $30.0 million or 54.55%, from $55.0 million at December 31, 2018.Stockholders’ equity was $35.7 million at December 31, 2019, an increase of $1.6 million or 4.69%, from $34.1 million at December 31, 2018. The $1.5 million decrease in accumulated other comprehensive loss associated with net unrealized losses on the available for sale bond portfolio, 2019 retained earnings and stock issuances under the dividend reinvestment program, offset by unrealized losses on interest rate swap contracts drove the increase in stockholders’ equity.Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned, represented 1.26% of total assets at December 31, 2019, as compared to 0.70% for the same period of 2018.Review of Financial ResultsFor the three-month periods ended December 31, 2019 and 2018Net income for the three-month period ended December 31, 2019 was $0.54 million, as compared to $0.31 million for the three-month period ended December 31, 2018.Net interest income for the three-month period ended December 31, 2019 totaled $3.18 million, as compared to $3.24 million for the three-month period ended December 31, 2018. Average earning-asset balances decreased $26 million to $369 million for the three-month period ended December 31, 2019, as compared to $395 million for the same period of 2018. Competitive loan origination pressures as well as a declining interest rate environment drove the decrease in average interest-earning asset balances.Net interest margin for the three-month period ended December 31, 2019 was 3.42%, as compared to 3.26% for the same period of 2018, an increase of 0.16%. Lower average balances and higher yields on interest-earning assets combined with lower cost of funds were the primary drivers of the results. The average balance on interest-earning assets decreased $26 million while the yield increased 0.06%. The cost of funds decreased 0.10% from 0.63% to 0.53% primarily due to the $21 million reduction in borrowed funds year-over-year.The negative provision for loan losses for the three-month period ended December 31, 2019 was $180,000, as compared to a provision of $256,000 for the same period of 2018. The decrease for the three-month period ended December 31, 2019 primarily reflects a decrease in the balance of the loan portfolio, decreases in net charge offs, and a decrease in the qualitative factor adjustment. As a result, the allowance for loan losses was $2.07 million at December 31, 2019, representing 0.73% of total loans, as compared to $2.54 million, or 0.85% of total loans at December 31, 2018.Noninterest income for the three-month period ended December 31, 2019 was $339,000, as compared to $313,000 for the three-month period ended December 31, 2018. For the three-month period ended December 31, 2019, noninterest expense was $3.02 million, as compared to $2.94 million for the three-month period ended December 31, 2018. The primary contributors to the $0.08 million increase, when compared to the three-month period ended December 31, 2018 were increases in salary and employee benefits, occupancy and equipment expenses, legal, accounting and other professional fees, data processing and item processing services and loan collection costs, offset by decreases in FDIC insurance premiums due to the application of small bank assessment credits.For the three-month period ended December 31, 2019, income tax expense was $137,000 compared with $58,000 for the same period a year earlier. The effective tax rate was 20.3%, compared with 15.9% for the same period a year ago. The 4.4% increase in the effective tax rate was primarily due to the sale, call and maturity of tax-advantaged municipal securities.For the twelve-month periods ended December 31, 2019 and 2018Net income for the twelve-month period ended December 31, 2019 was $1.60 million, as compared to net income of $1.58 million for the twelve-month period ended December 31, 2018.Net interest income for the twelve-month period ended December 31, 2019 totaled $12.6 million, as compared to $12.6 million for the twelve-month period ended December 31, 2018. Average earning-asset balances decreased $15 million to $371 million for the twelve-month period ended December 31, 2019, as compared to $386 million for the same period of 2018. Competitive loan origination pressures as well as a declining interest rate environment drove the decrease in average interest-earning asset balances.Net interest margin for the twelve-month period ended December 31, 2019 was 3.39%, as compared to 3.26% for the same period of 2018, an increase of 0.13%. Lower average balances and higher yields on interest-earning assets combined with lower cost of funds were the primary drivers of the results. The average balance on interest-earning assets decreased $15 million while the yield increased 0.10%. The cost of funds decreased 0.02% from 0.57% to 0.55% primarily due to the $6 million reduction in borrowed funds year-over-year.The negative provision for loan losses for the twelve-month period ended December 31, 2019 was $115,000, as compared to a provision of $856,000 for the same period of 2018. The decrease for the twelve-month period ended December 31, 2019 was primarily driven by $544,000 decrease in net loan charge offs year-over-year, $13.7 million decrease in loan balances and 0.13% decrease in the qualitative factor adjustment. As a result, the allowance for loan losses was $2.07 million at December 31, 2019, representing 0.73% of total loans, as compared to $2.54 million, or 0.85% of total loans for the same period of 2018.Noninterest income for the twelve-month period ended December 31, 2019 was $1.30 million, as compared to $1.52 million for the twelve-month period ended December 31, 2018. The decrease for the twelve-month period ended December 31, 2019 was primarily driven by $308,000 gain on redemptions of BOLI policies recognized in 2018.For the twelve-month period ended December 31, 2019, noninterest expense was $11.9 million, as compared to $11.5 million for the twelve-month period ended December 31, 2018. The primary contributors to the $0.4 million increase, when compared to the twelve-month period ended December 31, 2018 were increases in salary and employee benefits, occupancy and equipment expenses, and legal, accounting and other professional fees, partially offset by decreases in data processing and item processing services and FDIC insurance premiums due to the application of small bank assessment credits. For the twelve-month period ended December 31, 2019, income tax expense was $452,000 compared with $130,000 for the same period a year earlier. The effective tax rate was 22.0%, compared with 7.6% for the same period a year ago. The 14.4% increase in the effective tax rate was primarily due to the sale, call and maturity of tax-advantaged municipal securities.
Glen Burnie Bancorp InformationGlen Burnie Bancorp is a bank holding company headquartered in Glen Burnie, Maryland. Founded in 1949, The Bank of Glen Burnie® is a locally owned community bank with 8 branch offices serving Anne Arundel County. The Bank is engaged in the commercial and retail banking business including the acceptance of demand and time deposits, and the origination of loans to individuals, associations, partnerships and corporations. The Bank’s real estate financing consists of residential first and second mortgage loans, home equity lines of credit and commercial mortgage loans. The Bank also originates automobile loans through arrangements with local automobile dealers. Additional information is available at www.thebankofglenburnie.com.Forward-Looking StatementsThe statements contained herein that are not historical financial information, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, which could cause the company’s actual results in the future to differ materially from its historical results and those presently anticipated or projected. These statements are evidenced by terms such as “anticipate,” “estimate,” “should,” “expect,” “believe,” “intend,” and similar expressions. Although these statements reflect management’s good faith beliefs and projections, they are not guarantees of future performance and they may not prove true. For a more complete discussion of these and other risk factors, please see the company’s reports filed with the Securities and Exchange Commission. For further information contact: Jeffrey D. Harris, Chief Financial Officer
410-768-8883 106 Padfield Blvd
Glen Burnie, MD 21061
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