First Quarter Report March 31, 2020

First Quarter Report March 31, 2020

Dear Shareholders:

Net income totaled $305,000, or $0.59 per share for the quarter ended March 31, 2020 compared with net income of $532,000, or $1.03 per share, reported for the first quarter of 2019. A decrease in noninterest income of $363,000 was primarily due to a $209,000 loss in fair value of equity securities compared with a $213,000 gain during the same period of 2019. The current quarter’s unrealized loss was due to equity market volatility associated with the Coronavirus (COVID-19) pandemic and resulting economic downturn.

Return on average assets was 0.76% for the first quarter of 2020, and net interest income, which is the primary driver of earnings, increased $88,000 compared with first quarter 2019. This was primarily due to a $110,000 decrease in interest expense as rates fell significantly, which is typical for a weakening economy. Interest income continues to transition from investment securities into higher yielding loans.

Distance Banking has been facilitating safe operations since March 20th with limited disruptions while, most importantly, protecting customers and employees. Borrowers who are experiencing income reductions are also receiving payment deferrals consistent with guidance from the government.

First quarter loan growth has moderated from notable levels during the previous several years and the loan portfolio currently exceeds $119 million. Also, the loan to deposit ratio is a robust 96%. Asset quality remains strong with low delinquency, few watchlist credits and minimal charge-offs.

A dividend of $0.52 per share was paid April 1st, and a number of shareholders participated in the Company’s first digital annual meeting on April 14th. Please do not hesitate to contact me if you have any questions.

Sincerely,

Nelson L. Person
President & CEO