Yahoo Finance

Highlights for the First Six Months of 2024

Despite growth in loans and deposits in the first six months of the year, net interest income decreased $935,000, or 14.86% to $5.4 million through June 30, 2024, as compared to $6.3 million during the same period of 2023. The decrease resulted primarily from a $1.7 million increase in interest expense. The increase in interest on deposits was driven by the higher cost of money market deposit balances. The increase in interest on borrowings was driven by a $33.4 million increase in the average balance of borrowed funds due to the elevated level of deposit runoff that occurred in 2023.

Due to growth of $24.7million in the loan portfolio and a 0.07% increase in the current expected credit loss (“CECL”) percentage, the Company added $468,000 to its allowance for credit losses on loans in the first half of 2024, as compared to $60,000 in the first half of 2023. While this provision negatively impacted earnings in the first half of the year, the growth in loan balances should generate additional interest revenue in future periods. The Company expects that its strong liquidity and capital positions, along with the Bank’s total regulatory capital to risk weighted assets of 16.84% on June 30, 2024, as compared to 17.88% for the same period of 2023, will provide ample capacity for future growth.

Return on average assets for the three-month period ended June 30, 2024, was -0.22%, as compared to 0.31% for the three-month period ended June 30, 2023. Return on average equity for the three-month period ended June 30, 2024, was -4.72%, as compared to 5.88% for the three-month period ended June 30, 2023. Lower net income and a higher average asset balance primarily drove the lower return on average assets, while lower net income and a lower average equity balance primarily drove the lower return on average equity.

The cost of funds increased 0.99% when comparing June 30, 2024, to the same period in 2023 from 0.15% to 1.14%. This 0.99% increase was primarily due to the change in the funding mix between lower cost interest-bearing and noninterest-bearing deposit balances and higher cost borrowed funds.

On June 30, 2024, the Bank remained above all “well-capitalized” regulatory requirement levels. The Bank’s tier 1 risk-based capital ratio was approximately 15.59% on June 30, 2024, as compared to 17.37% on December 31, 2023. 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 Review

Total assets were $355.7 million on June 30, 2024, a decrease of $7.9 million or 2.17%, from $363.6 million on June 30, 2023.   Investment securities decreased by $33.6 million or 22.30% to $117.2 million as of June 30, 2024, compared to $150.8 million for the same period of 2023.   Loans, net of deferred fees and costs, were $201.5 million on June 30, 2024, an increase of $20.9 million or 11.60%, from $180.6 million on June 30, 2023. Cash and cash equivalents increased $5.0 million or 42.89%, from June 30, 2023, to June 30, 2024.

Total deposits were $305.9 million on June 30, 2024, a decrease of $23.4 million or 7.09%, from $329.2 million on June 30, 2023. Despite the year-over-year decline, deposit balances have increased $5.8 million or 1.9% from December 31, 2023. Noninterest-bearing deposits were $109.6 million on June 30, 2024, a decrease of $20.8 million or 15.95%, from $130.4 million on June 30, 2023.   Interest-bearing deposits were $196.2 million on June 30, 2024, a decrease of $2.6 million or 1.29%, from $198.8 million on June 30, 2023. Total borrowings were $30.0 million on June 30, 2024, an increase of $15.0 million or 100.00%, from $15.0 million on June 30, 2023.

As of June 30, 2024, total stockholders’ equity was $17.5 million (4.91% of total assets), equivalent to a book value of $6.04 per common share. Total stockholders’ equity on June 30, 2023, was $17.3 million (4.75% of total assets), equivalent to a book value of $6.01 per common share.

Asset quality, which has trended within a narrow range over the past several years, has remained sound as of June 30, 2024. Nonperforming assets, which consist of nonaccrual loans, troubled debt restructurings, accruing loans past due 90 days or more, and other real estate owned (“OREO”), represented 0.09% of total assets on June 30, 2024, compared to 0.15% on December 31, 2023, demonstrating positive asset quality trends across the portfolio. The allowance for credit losses on loans was $2.63 million, or 1.30% of total loans, as of June 30, 2024, compared to $2.16 million, or 1.22% of total loans, as of December 31, 2023. The allowance for credit losses for unfunded commitments was $571,000 as of June 30, 2024, compared to $473,000 as of December 31, 2023.

Review of Financial Results

For the three-month periods ended June 30, 2024, and 2023

Net loss for the three-month period ended June 30, 2024, was $204,000, as compared to net income of $276,000 for the three-month period ended June 30, 2023. The decrease is primarily the result of a $485,000 increase in interest expense on short-term borrowings, a $469,000 increase in interest expense on deposits and a $399,000 increase in the provision for credit losses on loans, partially offset by an increase of $389,000 in loan interest income and fees, a $381,000 increase in interest on deposits with banks and a $215,000 decrease in the provision for income taxes. The Company’s need to defend its deposit base as well as grow interest-earning asset balances necessitated a strategic change in direction.

Net interest income for the three-month period ended June 30, 2024, totaled $2.8 million, a decrease of $328,000 from the three-month period ended June 30, 2023. The decrease in net interest income was due to a $955,000 increase in the cost of interest-bearing deposits and borrowings driven by a $26.6 million increase in the average balance of interest-bearing funds and a $19.1 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $626,000 increase in total interest income due to a $7.4 million increase in the average balance of interest earning assets.

Net interest margin for the three-month period ended June 30, 2024, was 3.02%, compared to 3.44% for the same period of 2023.   Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds partially offset by higher average yields and balances on interest-earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $26.6 million and decreased $19.1 million, respectively, and the cost of funds increased 1.11%, when comparing the three-month periods ending June 30, 2023, and 2024. The average balance of interest-earning assets increased $7.4 million while the yield increased 0.62% from 3.60% to 4.22%, when comparing the three-month periods ending June 30, 2023, and 2024, respectively.

The average balance of interest-bearing deposits in banks and investment securities increased $2.4 million from $181.9 million to $184.3 million for the second quarter of 2024, compared to the same period of 2023 while the yield increased from 2.49% to 2.97% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Average loan balances increased $5.0 million to $186.7 million for the three-month period ended June 30, 2024, compared to $181.7 million for the same period of 2023, while the yield increased from 4.71% to 5.44% during that same period. The increase in loan yields for the second quarter of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

The provision of allowance for credit loss on loans for the three-month period ended June 30, 2024, was $526,000, compared to $127,000 for the same period of 2023. The increase in the provision for the three-month period ended June 30, 2024, when compared to the three-month period ended June 30, 2023, primarily reflects a $20.9 million increase in the reservable balance of the loan portfolio and a 0.07% increase in the current expected credit loss percentage.

For the three-month period ended June 30, 2024, noninterest expense was $2.89 million, compared to $2.92 million for the three-month period ended June 30, 2023, a decrease of $31,000. The primary contributors to the $31,000 decrease, when compared to the three-month period ended June 30, 2023, were decreases in salary and employee benefits, and data processing and item processing services, offset by increases in occupancy and equipment expenses, legal, accounting, and other professional fees, and other expenses.

For the six-month periods ended June 30, 2024, and 2023

Net loss for the six-month period ended June 30, 2024, was $201,000, as compared to net income of $710,000 for the six-month period ended June 30, 2023. The decrease is primarily the result of a $917,000 increase in interest expense on short-term borrowings, a $764,000 increase in interest expense on deposits and a $609,000 increase in the provision for credit losses on loans, partially offset by an increase of $517,000 in loan interest income and fees, a $402,000 increase in interest on deposits with banks and a $532,000 decrease in the provision for income taxes.

Net interest income for the six-month period ended June 30, 2024, totaled $5.4 million, a decrease of $935,000 from the six-month period ended June 30, 2023. The decrease in net interest income was due to a $1.7 million increase in the cost of interest-bearing deposits and borrowings driven by a $17.3 million increase in the average balance of interest-bearing funds and a $21.7 million decrease in the average balance of noninterest-bearing deposits. The higher expenses were partially offset by a $746,000 increase in total interest income due to a 0.44% increase in the yield of interest earning assets.

Net interest margin for the six-month period ended June 30, 2024, was 2.94%, compared to 3.42% for the same period of 2023. Higher average interest-bearing funds, lower average noninterest-bearing funds, and higher cost of funds partially offset by higher average yields on interest-earning assets were the primary drivers of year-over-year results. The average balance of interest-bearing funds and noninterest-bearing funds increased $17.3 million and decreased $21.7 million, respectively, and the cost of funds increased 0.99%, when comparing the six-month periods ending June 30, 2023, and 2024. The average balance of interest-earning assets decreased $4.5 million while the yield increased 0.44% from 3.56% to 4.00%, when comparing the six-month periods ending June 30, 2023, and 2024, respectively.

The average balance of interest-bearing deposits in banks and investment securities decreased $2.5 million from $187.7 million to $185.2 million for the first half of 2024, compared to the same period of 2023 while the yield increased from 2.48% to 2.76% during that same period. The increase in yields is attributed to the higher interest rate environment and its positive impact on cash balances and investment yields.

Average loan balances decreased $1.9 million to $181.3 million for the six-month period ended June 30, 2024, compared to $183.2 million for the same period of 2023, while the yield increased from 4.65% to 5.26% during that same period. The increase in loan yields for the first half of 2024 reflected the runoff of the lower yielding loans and origination of higher yielding loans in the current higher rate environment.

The Company recorded a provision of allowance for credit loss on loans of $694,000 for the six-month period ending June 30, 2024, compared to $85,000 for the same period in 2023. The $609,000 increase in the provision in 2024, compared to 2023, primarily reflects a $20.9 million increase in the reservable balance of the loan portfolio and a 0.07% increase in the current expected credit loss percentage.   As a result, the allowance for credit loss on loans was $2.63 million on June 30, 2024, representing 1.30% of total loans, compared to $2.22 million, or 1.23% of total loans on June 30, 2023.

For the six-month period ended June 30, 2024, noninterest expense was $5.8 million, compared to $5.9 million for the six-month period ended June 30, 2023. The primary contributors when comparing to the six-month period ended June 30, 2023, were decreases in salary and employee benefits costs, and data processing and item processing services, partially offset by increases in occupancy and equipment expenses, and other expenses.

Glen Burnie Bancorp Information

Glen 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 Statements

The 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.

CONTACT: For further information contact: Jeffrey D. Harris, Chief Financial Officer 410-768-8883 jdharris@bogb.net 106 Padfield Blvd Glen Burnie, MD 21061