JENNINGS, LA / ACCESSWIRE / April 23, 2020 / JD Bancshares, Inc. (the "Company"), (OTCQX:JDVB), the parent holding company of JD Bank (the "Bank"), reports its unaudited financial results for the quarter ended March 31, 2020.
Net income for the three-month period ended March 31, 2020 was $1,557,714 or $1.00 per common share compared to $2,040,973 or $1.31 per share for the prior year comparative period ended March 31, 2019. Financial results for the current quarter were impacted by a large addition to the Bank's credit reserves in consideration of losses which may result from financial distress experienced by loan customers due to the COVID-19 pandemic crisis. Due to the large provision, evaluating performance from a pre-tax, pre-provision operating income basis provides greater insight from a comparative standpoint. Pre-tax, pre-provision operating income for the current quarter declined by $189,337 and was $2,502,249 compared to $2,691,586 for the comparative prior year quarter. Aside from taxes and loan loss provision, pre-tax, pre-provision operating income also excludes losses on the sale of other real estate owned. The decrease in earnings between the current and prior year quarter was due to a combination of lower net interest income, higher loan loss provision and non-interest expenses, offset by improved non-interest income.
Bruce Elder, President and CEO, commented, "The pandemic crisis and the resulting modifications to our operating model have changed the manner in which we run and manage the Bank. Branches remain open as we assist customers through our drive-thru windows and almost 100% of our back-office support staffs are working remotely from home. Despite the challenges, our small business customers count on us to deliver relief in the form of Small Business Administration (SBA) Paycheck Protection Program (PPP) loans and we have responded. As of this communication, we have submitted and been approved by the SBA for over $51.9 million in PPP loans for our customers." Elder continued "As it relates to Q1 2020 performance, the decline in pre-tax, pre-provision operating income was primarily due to a decrease in net interest income. The volume of average loans held for investment were at a lower level for the current quarter compared with a year ago, which had an adverse impact on interest income. This, coupled with higher interest-bearing deposit volumes and deposit rates, caused an overall decline in net interest income."
Asset Quality
Total nonperforming assets, including loans on non-accrual status and other real estate owned (OREO) increased to $9.2 million at March 31, 2020 from $8.7 million at December 31, 2019. Loans on non-accrual status increased by $489,000 to $8.2 million at the end of Q1 2020 from $7.7 million at December 31, 2019. OREO decreased by $25,000 to $931,000 at March 31, 2020 from $956,000 at the prior year-end, reflecting foreclosure activity net of sales and write-downs of certain real estate properties. Management performs a quarterly evaluation of OREO properties and believes the adjusted carrying values are representative of their fair market values, although there is also no assurance that the ultimate sales will be equal or greater than the carrying values.
The Bank recorded $683,000 in provisions for credit losses in Q1 2020 compared to $180,000 in the prior year quarter ended March 31, 2019. The allowance for loan losses (ALLL) was $7.3 million at March 31, 2020 or 1.17% of total loans compared to $6.6 million at December 31, 2019 or 1.06% of total loans. Net charge offs were $9,000 for the current period compared to $83,000 for the prior year comparative period. While we believe the current level of our ALLL is adequate, it is too early to assess the true the impact of the COVID-19 pandemic and there is no assurance that regulators, increased risks in the loan portfolio, or changes in economic conditions will not require additional adjustments to the ALLL.
Net Interest Income
Net interest income decreased to $8.6 million for the quarter ended March 31, 2020 from $8.7 million for the prior year quarter ended March 31, 2019. Net interest income is influenced by the volume of interest-earning assets and interest-bearing liabilities and the effective management of interest yields and costs during each respective reporting period. The net interest margin compressed by 10 basis points to 4.39% for Q1 2020 compared to 4.49% in Q1 2019. The decrease is due to a shift in the mix of earning assets to lower yielding instruments and an increase in both the average volume and cost of interest-bearing deposits for the current quarter compared to the prior year quarter. During March 2020, the Federal Reserve Open Market Committee (FOMC) pushed rates lower by 150 basis points, due in part, to the COVID-19 pandemic crisis. While some portion of that reduction could be considered temporary until the economy recovers, the time table for that recovery and removal of that temporary ease of monetary policy is unknown. This reduction in the prime rate, coupled with the origination of a significant volume of low interest rate loans pursuant to the SBA Paycheck Protection Program (PPP), will have an adverse impact on the yield on earning assets, but significantly increase the volume of loans outstanding in the second quarter.
Non-Interest Income
Total non-interest income increased by $98,000 to $2.3 million for the quarter ended March 31, 2020 from $2.2 million for the prior year quarter. Service charges and fees associated with deposit accounts increased by $103,000. The biggest components of this increase were a $75,000 rise in NSF fees and a $36,000 increase in interchange revenue.
Revenue from the sale of mortgage loans in the current period was $134,000, representing a $43,000 decline over the $178,000 recognized for the prior year quarter. During much of the first quarter of 2020, the Bank was offering a mortgage promotion offering $1,500 off in closing costs for each originated mortgage loan. This promotion resulted in a reduction in income on the sale of loans by $87,000. Other non-interest income was $420,000 for the quarter ended March 31, 2020, which was $38,000 higher than the prior year quarter of $382,000 due primarily to higher revenue from trust services.
There were no gains on sale of investment securities for the current and prior year periods.
Non-Interest Expense
Total non-interest expense was $8.4 million in the current quarter compared to $8.3 million for the quarter ended March 31, 2019. Compensation and benefits is the largest component of non-interest expenses and was relatively flat at $4.6 million for both the current and prior year quarters.
Data processing expenses amounted to $958,000 for the current period, up from $708,000 for the prior year quarter. The $250,000 difference is primarily due to outsourcing of our entire ATM operation to include machine ownership, cash replenishment and maintenance. Other components of the increase include new product offerings and increases related to account volumes.
Occupancy expense recorded in the current quarter and prior year comparative quarter was relatively consistent at $1.3 million, respectively. Advertising, marketing and business development expenses were $368,000 for the quarter ended March 31, 2020 compared with $431,000 for the prior year comparative quarter. While our advertising and marketing expenses have declined over the comparative periods, we would expect marketing expenses to increase over the coming quarters in conjunction with the previously announced opening of two new branch locations. All other non-interest expenses totaled $1.2 million for the current quarter compared to $1.3 million in the comparative quarter. Decreases in professional fees, amortization of intangible assets, travel and other losses were primarily attributable to the decline.
Income tax expense was $236,000 for the current quarter compared with $412,000 for the prior year quarter. The decline was due to lower pre-tax income and a reduction in the effective tax rate to 13.18% compared to 16.80% for the quarter ended March 31, 2019. The reduction reflects the higher volume of tax-exempt income.
Balance Sheet
Total assets increased by $29.4 million or 3.3% to $914.4 million at March 31, 2020 from $885.0 million at December 31, 2019. The increase in total assets was primarily in the categories of interest-bearing deposits at banks, loans held for investment and cash which rose by $25.9 million, $4.3 million and $1.8 million, respectively. At the end of March, the Company had built excess liquidity in anticipation of any adverse impacts due to the COVID-19 pandemic. Loans held for investment compressed in the first two months of the year, but grew by over $7.2 million in March resulting in overall growth for the quarter of $4.3 million.
Total deposits increased by $12.6 million or 1.6% to $784.7 million at March 31, 2020 from $772.1 million at December 31, 2019. Over the three-month period, we have seen increases in savings, money market and time deposits of $7.5 million, $3.1 million and $3.1 million, respectively. We experienced slight decreases in interest-bearing demand of $1.0 million and non-interest bearing demand of $5,000.
Other liabilities increased by approximately $13.7 million during the three month period. We took down a short-term Federal Home Loan Bank advance for $14.0 million at a rate of 0.25% during mid-March. We earned a positive spread on these borrowings until the funds were needed for pandemic-related circumstances.
Stockholders' equity increased by $3.1 million to $91.9 million at March 31, 2020 from $88.9 million at December 31, 2019. The increase is comprised of year-to-date net earnings of $1.6 million, plus the increase in other comprehensive income of $2.4 million, less the declared dividend to common shareholders of $920,000. The tangible equity to assets ratio decreased to 9.24% at March 31, 2020 from 9.46% at December 31, 2019 due to asset growth. There were 1,560,000 common shares outstanding at both March 31, 2020 and December 31, 2019. Tangible book value per common share increased to $54.14 at March 31, 2020 compared to $53.70 for the 2019 year-end.
Key Performance Ratios
Return on average assets (ROA) and return on average equity (ROE) declined in for the current quarter compared with the prior year period. ROA is 0.70% for the quarter ended March 31, 2020 compared to 0.95% for the March 31, 2019 quarter and ROE is 6.93% compared to 10.11% for the respective periods. Both ROA and ROE were significantly impacted by the large loan loss provision recorded in the current quarter.
About JD Bancshares, Inc.
JD Bancshares, Inc. is the bank holding company of JD Bank, a state chartered bank headquartered in Jennings, Louisiana. JD Bank has been serving the citizens of southwest Louisiana since 1947 and offers a variety of personal and commercial lending and deposit products through both physical and digital delivery channels. The Bank also offers both trust and investment services. JD Bank operates through 21 full service branch offices located along the Interstate 10 corridor from Lake Charles to Lafayette, Louisiana. JD Bancshares, Inc. may be accessed on its website at www.jdbank.com/investor relations.
JD Bancshares, Inc. (OTCQX:JDVB) trades on the OTCQX Best Market. Companies meet high financial standards, follow best practice corporate governance, demonstrate compliance with U.S. securities laws, and have a professional third-party sponsor introduction. Investors can find current financial disclosure and Real-Time Level 2 quotes for the Company on www.otcmarkets.com.
Forward-Looking Statements
Statements contained in this release, which are not historical facts, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors which include the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, the risks of changes in interest rates, the effects of competition, and including without limitation to other factors that could cause actual results to differ materially as discussed in documents filed by the Company with the Securities and Exchange Commission from time to time.
JD BANCSHARES, INC. AND SUBSIDIARIES
JENNINGS, LOUISIANA
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| Actual Mar 2020 | Actual Dec 2019 | $ Variance | % Variance | |||||||||||||
| Assets | ||||||||||||||||
| Cash and due from banks | 32,179,280 | 30,370,742 | 1,808,538 | 6.0 | ||||||||||||
| Interest bearing deposits with banks | 37,849,419 | 11,982,637 | 25,866,782 | 215.9 | ||||||||||||
| Investment Securities - Taxable | 69,605,275 | 69,127,279 | 477,996 | 0.7 | ||||||||||||
| Investment Securities - Tax-exempt | 97,815,378 | 100,803,434 | (2,988,055 | ) | (3.0 | ) | ||||||||||
| Mortgage loans held for sale | 1,254,476 | 1,041,433 | 213,042 | 20.5 | ||||||||||||
| Loans, net of unearned income | 625,013,214 | 620,734,159 | 4,279,055 | 0.7 | ||||||||||||
| Less: Allowance for loan losses | (7,283,873 | ) | (6,609,790 | ) | (674,083 | ) | (10.2 | ) | ||||||||
| Premises and equipment, net | 23,927,163 | 24,335,806 | (408,643 | ) | (1.7 | ) | ||||||||||
| Accrued interest receivable | 3,349,638 | 3,456,611 | (106,973 | ) | (3.1 | ) | ||||||||||
| Other real estate | 930,837 | 955,977 | (25,140 | ) | (2.6 | ) | ||||||||||
| Other assets | 29,760,211 | 28,850,470 | 909,741 | 3.2 | ||||||||||||
| Total Assets | $ | 914,401,017 | $ | 885,048,756 | $ | 29,352,260 | 3.3 | |||||||||
| Liabilities | ||||||||||||||||
| Non-Interest Bearing Deposits | 268,303,146 | 268,308,603 | (5,457 | ) | 0.0 | |||||||||||
| Interest bearing demand deposits | 157,740,966 | 158,753,030 | (1,012,065 | ) | (0.6 | ) | ||||||||||
| Savings and Money Market Deposits | 241,359,327 | 230,802,149 | 10,557,178 | 4.6 | ||||||||||||
| Time Deposits - Retail | 116,878,331 | 113,805,537 | 3,072,793 | 2.7 | ||||||||||||
| Time Deposits - Wholesale | 435,710 | 433,722 | 1,988 | 0.5 | ||||||||||||
| Total Deposits | 784,717,479 | 772,103,042 | 12,614,438 | 1.6 | ||||||||||||
| Accrued expenses and other liabilities | 3,296,117 | 3,582,138 | (286,021 | ) | (8.0 | ) | ||||||||||
| FHLB Advances | 16,949,951 | 3,011,367 | 13,938,583 | 462.9 | ||||||||||||
| Other Borrowings | 17,516,171 | 17,490,445 | 25,726 | 0.1 | ||||||||||||
| Total Liabilities | $ | 822,479,717 | $ | 796,186,992 | $ | 26,292,726 | 3.3 | |||||||||
| Equity | ||||||||||||||||
| Common stock | 9,750,000 | 9,750,000 | 0 | 0.0 | ||||||||||||
| Capital surplus | 3,598,000 | 3,598,000 | 0 | 0.0 | ||||||||||||
| Retained earnings | 73,672,138 | 65,644,694 | 8,027,444 | 12.2 | ||||||||||||
| Accumulated other comprehensive income (loss) | 3,633,878 | 1,270,276 | 2,363,602 | 186.1 | ||||||||||||
| Note receivable for common stock | (290,430 | ) | (349,050 | ) | 58,620 | 16.8 | ||||||||||
| Net Income | 1,557,713 | 8,947,844 | (7,390,131 | ) | (82.6 | ) | ||||||||||
| Total Equity | $ | 91,921,299 | $ | 88,861,765 | $ | 3,059,535 | 3.4 | |||||||||
| Total Liabilities & Equity | $ | 914,401,017 | $ | 885,048,756 | $ | 29,352,260 | 3.3 | |||||||||
JD BANCSHARES, INC. AND SUBSIDIARIES
JENNINGS, LOUISIANA
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| QTD Actual Mar 2020 | QTD Actual Mar 2019 | $ Variance | % Variance | |||||||||||||
| Interest Income | ||||||||||||||||
| Interest on Loans | 8,650,340 | 8,627,044 | 23,295 | 0.3 | ||||||||||||
| Interest on federal funds sold | 10,501 | 39,694 | (29,193 | ) | (73.5 | ) | ||||||||||
| Interest on deposits with banks | 48,341 | 115,946 | (67,605 | ) | (58.3 | ) | ||||||||||
| Investment Securities - Taxable | 454,490 | 696,066 | (241,576 | ) | (34.7 | ) | ||||||||||
| Investment Securities - Tax-exempt | 720,311 | 455,381 | 264,930 | 58.2 | ||||||||||||
| Total Interest Income | 9,883,983 | 9,934,131 | (50,148 | ) | (0.5 | ) | ||||||||||
| Interest Expense | ||||||||||||||||
| Interest bearing demand deposits | 227,580 | 229,173 | (1,594 | ) | (0.7 | ) | ||||||||||
| Savings and Money Market Deposits | 212,164 | 159,401 | 52,762 | 33.1 | ||||||||||||
| Time Deposits - Retail | 469,050 | 310,160 | 158,890 | 51.2 | ||||||||||||
| Time Deposits - Wholesale | 3,136 | 1,926 | 1,211 | 62.9 | ||||||||||||
| Total Interest Expense on Deposits | 911,930 | 700,660 | 211,270 | 30.2 | ||||||||||||
| FHLB Advances | 54,513 | 196,736 | (142,222 | ) | (72.3 | ) | ||||||||||
| Interest on other borrowings | 332,916 | 311,208 | 21,708 | 7.0 | ||||||||||||
| Total Interest Expense | 1,299,359 | 1,208,604 | 90,756 | 7.5 | ||||||||||||
| Net Interest Income | 8,584,624 | 8,725,527 | (140,904) | (1.6) | ||||||||||||
| Provision for loan losses | 683,000 | 180,000 | 503,000 | 279.4 | ||||||||||||
| Net In. Inc. After Prov. for Loan Losses | 7,901,624 | 8,545,527 | (643,904) | (7.5) | ||||||||||||
| Non Interest Income | ||||||||||||||||
| Service charges and fees | 1,746,479 | 1,643,459 | 103,020 | 6.3 | ||||||||||||
| Mortgage loan and related fees | 134,400 | 177,734 | (43,335 | ) | (24.4 | ) | ||||||||||
| Other noninterest income | 420,014 | 381,921 | 38,092 | 10.0 | ||||||||||||
| Total Non Interest Income | 2,300,893 | 2,203,114 | 97,778 | 4.4 | ||||||||||||
| Non Interest Expense | ||||||||||||||||
| Salaries and employee benefits | 4,622,703 | 4,568,402 | 54,301 | 1.2 | ||||||||||||
| Occupancy | 1,294,305 | 1,256,782 | 37,523 | 3.0 | ||||||||||||
| Advertising and public relations | 368,149 | 430,992 | (62,843 | ) | (17.1 | ) | ||||||||||
| Data Processing | 958,038 | 708,278 | 249,760 | 26.1 | ||||||||||||
| Other noninterest expense | 1,165,213 | 1,331,010 | (165,797 | ) | 0.9 | |||||||||||
| Total Non Interest Expense | 8,408,408 | 8,295,464 | 112,944 | 1.4 | ||||||||||||
| Income Before Taxes | 1,794,109 | 2,453,177 | (659,070) | (26.9) | ||||||||||||
| Income taxes | 236,395 | 412,204 | (175,809 | ) | (42.7 | ) | ||||||||||
 Net Income | $ | 1,557,714 | $ | 2,040,973 | (483,261) | (23.7) | ||||||||||
| Per common share data: | ||||||||||||||||
| Earnings | $ | 1.00 | $ | 1.31 | ||||||||||||
| Weighted average number of shares outstanding | 1,560,000 | 1,559,156 | ||||||||||||||
JD BANCSHARES, INC. AND SUBSIDIARIES
Margin Analysis Compare
| Average Yield and Rate | Average Funds | Interest Income/Expense | ||||||||||||||||||||||||||||||||||
| QTD Actual Mar 2020 | QTD Actual Mar 2019 | Change | QTD Actual Mar 2020 | QTD Actual Mar 2019 | Change | QTD Actual Mar 2020 | QTD Actual Mar 2019 | Change | ||||||||||||||||||||||||||||
| Earning Assets | ||||||||||||||||||||||||||||||||||||
| Loans | 5.61 | 5.61 | - | 620,487,435 | 623,314,797 | (2,827,362 | ) | 8,650,340 | 8,627,045 | 23,295 | ||||||||||||||||||||||||||
| Loan fees | - | - | - | 0 | 0 | 0 | - | - | - | |||||||||||||||||||||||||||
| Loans with fees | 5.61 | 5.61 | - | 620,487,435 | 623,314,797 | (2,827,362 | ) | 8,650,340 | 8,627,045 | 23,295 | ||||||||||||||||||||||||||
| Mortgage loans held for sale | - | - | - | 715,730 | 608,907 | 106,823 | - | - | - | |||||||||||||||||||||||||||
| Deposits with banks | 1.38 | 2.78 | (1.40 | ) | 17,094,203 | 22,721,068 | (5,626,865 | ) | 58,842 | 155,640 | (96,798 | ) | ||||||||||||||||||||||||
| Investment securities - taxable | 2.74 | 2.75 | (0.01 | ) | 66,439,061 | 101,205,307 | (34,766,246 | ) | 454,490 | 696,066 | (241,576 | ) | ||||||||||||||||||||||||
| Investment securities - tax-exempt | 3.69 | 4.53 | (0.84 | ) | 98,970,950 | 50,845,272 | 48,125,678 | 720,311 | 455,381 | 264,930 | ||||||||||||||||||||||||||
| Total Earning Assets | 5.04 | 5.10 | (0.06) | 803,707,379 | 798,695,351 | 5,012,028 | 9,883,983 | 9,934,131 | (50,148) | |||||||||||||||||||||||||||
| Interest bearing liabilities | ||||||||||||||||||||||||||||||||||||
| Interest bearing demand | 0.61 | 0.62 | (0.01 | ) | 149,952,342 | 148,853,244 | 1,099,098 | 227,580 | 229,173 | (1,594 | ) | |||||||||||||||||||||||||
| Savings and Money Market | 0.36 | 0.29 | 0.07 | 235,240,671 | 220,103,975 | 15,136,696 | 212,164 | 159,401 | 52,762 | |||||||||||||||||||||||||||
| Time deposits | 1.65 | 1.10 | 0.55 | 115,281,374 | 115,031,566 | 249,808 | 472,186 | 312,086 | 160,101 | |||||||||||||||||||||||||||
| Total interest bearing deposits | 0.73 | 0.59 | 0.14 | 500,474,387 | 483,988,785 | 16,485,602 | 911,930 | 700,660 | 211,270 | |||||||||||||||||||||||||||
| Federal home Loan Bank advances | 2.31 | 2.66 | (0.35 | ) | 9,337,584 | 29,548,718 | (20,211,134 | ) | 54,513 | 196,736 | (142,222 | ) | ||||||||||||||||||||||||
| Other borrowings | 7.15 | 6.94 | 0.21 | 18,434,746 | 17,942,906 | 491,840 | 332,916 | 311,208 | 21,708 | |||||||||||||||||||||||||||
| Total borrowed funds | 5.52 | 4.28 | 1.24 | 27,772,329 | 47,491,624 | (19,719,294 | ) | 387,429 | 507,943 | (120,514 | ) | |||||||||||||||||||||||||
| Total interest-bearing liabilities | 0.98 | 0.92 | 0.07 | 528,246,717 | 531,480,408 | (3,233,692) | 1,299,359 | 1,208,604 | 90,756 | |||||||||||||||||||||||||||
| Net interest rate spread | 4.05 | 4.18 | (0.13) | 8,584,624 | 8,725,527 | (140,904) | ||||||||||||||||||||||||||||||
| Effect of non-interest bearing deposits | (0.32 | ) | (0.30 | ) | (0.03 | ) | 264,195,122 | 257,543,696 | 6,651,426 | |||||||||||||||||||||||||||
| Cost of funds | 0.66 | 0.62 | 0.04 | |||||||||||||||||||||||||||||||||
| Net interest margin | 4.39 | 4.49 | (0.10) | |||||||||||||||||||||||||||||||||
JD BANCSHARES, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
| Financial Ratios | |||||||||||
| QTD Actual Mar 2020 | QTD Actual Mar 2019 | ||||||||||
| Performance Ratios | |||||||||||
| Return on Average Assets | 0.70 | % | 0.95 | % | |||||||
| Return on Average Equity | 6.93 | % | 10.11 | % | |||||||
| Earnings per Share | $ | 1.00 | $ | 1.31 | |||||||
| Net Interest Margin | 4.39 | % | 4.49 | % | |||||||
| Capital | |||||||||||
| Tier 1 Leverage Ratio | 9.56 | % | 9.63 | % | |||||||
| Common Equity Tier 1 Ratio | 13.17 | % | 13.20 | % | |||||||
| Tier 1 Risk-Based Capital Ratio | 13.17 | % | 13.20 | % | |||||||
| Total Risk-Based Capital Ratio | 14.31 | % | 14.25 | % | |||||||
| Tangible Equity / Total Assets | 9.24 | % | 8.82 | % | |||||||
| Tangible Book Value per Share | $ | 54.14 | $ | 51.15 | |||||||
| Reconcilement of GAAP to Pre-tax, Pre-Provision Operating Income: | |||||||||||
| Net Income (GAAP) | $ | 1,557,714 | $ | 2,040,973 | |||||||
| Provision for Loan Losses | 683,000 | 180,000 | |||||||||
| Loss on OREO | 25,140 | 58,409 | |||||||||
| Income Tax Expense | 236,395 | 412,204 | |||||||||
| Pre-tax, Pre-Provision Operating Income | $ | 2,502,249 | $ | 2,691,586 | |||||||
CONTACT:
JD Bancshares, Inc.
Bruce Elder (CEO) (337-246-5399)
Paul Brummett (CFO) (337-824-1422)
Website: www.jdbank.com
SOURCE: JD Bancshares, Inc.
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https://www.accesswire.com/586390/JD-Bancshares-Inc-Reports-Financial-Results-for-Q1-2020
