Second Quarter Report June 30, 2020

Second Quarter Report June 30, 2020

Dear Shareholders:

Net income totaled $450,000, or $0.87 per share for the quarter ended June 30, 2020 compared with net income of $533,000, or $1.03 per share, reported for the second quarter of 2019.  Earnings decreased primarily due to a $144,000 reduction in noninterest income, of which $75,000 was attributed to nonrecurring equity securities gains in 2019.  Service charges on deposit accounts also decreased by $68,000, comparatively, and mostly for pandemic reasons. However, net interest income increased $65,000 during the second quarter of 2020 due to lower interest expense.

Net income through June 30, 2020 totaled $755,000 compared with $1,065,000 reported for the first six months of 2019.  The decrease was primarily due to a $426,000 change in income from the equity securities portfolio caused by pandemic related market volatility. Net interest income increased by $153,000, and noninterest income decreased by $81,000, compared with the first six months of 2019.  Interest income continues to move from investment securities into higher yielding loans.  The annualized return on average assets was 0.93% through June 30, 2020.

There was a notable increase in lending during the second quarter of 2020 with $12 million in new loan originations, which increased the portfolio to over $124 million.  Annualized loan growth year-to-date is a robust 9.4%. Asset quality remains strong with low delinquency and few watchlist credits. Also, a significant and unprecedented growth in deposits of $9 million, or 7.3%, occurred during the second quarter and increased balances to $134 million.

Lobby offices resumed full service operations on June 1st and are equipped to provide a safe atmosphere for customers and employees.  The business environment presents a variety of unique challenges; however, our employees’ dedicated commitment facilitates the company’s ongoing success.  A dividend of $0.52 per share for the second quarter was paid July 1st.  Please do not hesitate to contact me if you have any questions.

Sincerely,

Nelson L. Person
President & CEO