Sat, 28 May 2022

JENNINGS, LA / ACCESSWIRE / January 20, 2022 / JD Bancshares, Inc. (the 'Company'), (OTCQX:JDVB), the parent holding company of JD Bank (the 'Bank'), reports its unaudited financial results for the three and twelve-month periods ended December 31, 2021.

Net income is $2,977,819 or $0.87 per common share for the three-month period ended December 31, 2021 compared to $3,539,845 or $1.03 per common share for the linked quarter ended September 30, 2021 and $2,303,079 or $0.67 per share for the prior year quarter ended December 31, 2020. Although net income improved over the prior year comparative quarter, the impact of lower interest income in Q4 2021, combined with the net effect of two non-recurring items in the third quarter, resulted in a decline in net income compared to the linked quarter. Pre-tax, pre-provision operating income for the current quarter is $3,554,464 compared to $4,075,010 for the linked quarter and $2,508,474 for the comparative prior year quarter. Pre-tax, pre-provision operating income excludes taxes, provision for loan losses, net losses on the sale of other real estate owned, gains on the sale of investment securities and net gains on the disposal of fixed assets.

For the twelve-month period ended December 31, 2021, net income was $11,015,318 or $3.21 per share compared to $7,203,708 or $2.10 per share for the prior year comparative period. Pre-tax, pre-provision operating earnings for the two comparative twelve-month periods was $13,689,189 and $10,443,300, respectively.

Bruce W. Elder, President & CEO commented, 'Despite a second year of COVID-19 and a slow moving recovery from the 2020 hurricane season, the Company showed improved earnings and solid net, non-PPP loan growth in 2021. Net income of $11.0 million for 2021 reflects a 52.9% increase over that of 2020. As economic conditions have improved, loan demand from businesses and consumers has increased and we enjoyed the best core, net loan growth since 2015. We still have a tremendous volume of liquidity on our balance sheet and will continue to look for opportunities to transition lower yielding assets to higher yielding assets.'

Elder continued by saying 'During the month of December, we were able to issue $30.0 million in new subordinated debt at a rate of 3.75%. A portion of the money was used on January 15, 2022 to redeem $17.5 million of previously issued subordinated debt carrying an interest rate of 6.75%. The remaining proceeds will be used to support our future growth and for other general corporate purposes.'

Paycheck Protection Program Lending (PPP)

The Company made 1,422 PPP loans totaling $110.4 million between April 2020 and May 2021. Of the $74.0 million of PPP loans made in 2020, $60.7 million in loans remained outstanding at the end of 2020. An additional $36.4 million PPP loans were originated in 2021. As of December 31, 2021, $16.2 million in loans remain outstanding and $94.2 million have been repaid through SBA forgiveness and customer payments. Of the $94.2 million in total PPP loan repayments, $80.9 million in repayments occurred in 2021. Of the original $74.0 million in 2020 vintage loans, $72.3 million have been repaid and 5 loans totaling $1.7 million remain outstanding. Of the original $36.4 million of PPP loans made in 2021, $21.9 million have been repaid and 240 loans totaling $14.5 million remain outstanding. The 2021 vintage borrowers have until the middle of 2022 to apply for forgiveness and therefore some portion of these loans may remain outstanding well into 2022.

The Company received origination fees from the SBA for participating in the program. At origination, we recognized as interest income that portion of the fee estimated to be our internal cost of origination. The remainder is amortized over the contractual life of the loan. If the loan is forgiven or repaid early, the remaining unamortized portion is recognized as interest income in the month of repayment. Amounts recognized as interest income for the quarters ended December 31, 2021, September 30, 2021 and December 31, 2020 are $498,000, $799,000 and $555,000, respectively. Origination fees recognized for the two twelve-month periods ended December 31, 2021 and 2020 are $2,683,000 and $1,442,000, respectively. As of December 31, 2021, we had approximately $619,000 in deferred PPP origination fees to be recognized in future periods.

Asset Quality

Loans past due of 30 to 89 days at December 31, 2021 are $1.3 million or 0.21% of the total loans outstanding compared to $1.1 million or 0.18% of the total loan portfolio at September 30, 2021 and $1.3 million or 0.21% of total loans reported at December 31, 2020. Total nonperforming assets, including loans on non-accrual status, other real estate owned (OREO) and repossessed assets are $5.2 million at December 31, 2021 compared to $9.1 million at December 31, 2020. Loans on non-accrual status at December 31, 2021 decreased to $4.1 million from $8.8 million at December 31, 2020, OREO increased to $1.1 million from $291,000 and there are currently no repossessed assets compared to $33,000 a year ago. Management performs a quarterly evaluation of OREO properties and repossessions and believes the adjusted carrying values are representative of their fair market values, although there is no assurance that the ultimate sales will be equal or greater than the carrying values.

The Company did not record a provision for credit losses in either the current or linked quarters compared to $190,000 for the prior year quarter. The allowance for loan losses (ALLL) is $8.2 million at December 31, 2021 or 1.32% of total loans compared to $8.6 million at December 31, 2020 or 1.36% of total loans. Net charge offs are $723,000 for 2021 compared to $755,000 for the prior year comparative period. We believe the current level of our ALLL is adequate, but there is no assurance that regulators, increased risks in the loan portfolio, or changes in economic conditions will not require future adjustments to the ALLL.

Net Interest Income

Net interest income for the current quarter is $9.0 million, a decrease of $484,000 compared to the $9.4 million for the linked quarter, and is $522,000 higher than the $8.4 million reported for the prior year quarter. The decline in net interest income between the September and December 2021 quarters is due to a reduction in average outstanding loan balances during the respective periods as well as a decrease in PPP origination fee recognition. Average loans outstanding for the current period were down $8.0 million compared to that of the linked quarter. Additionally, origination fees recognized as interest income due to PPP forgiveness was $301,000 more in Q3 than Q4. The increase in current quarter net interest over the prior year comparative quarter is primarily due to an increase in interest income from higher volumes of investment securities, partially offset by lower interest income on loans.

Net interest income for the year ended December 31, 2021 increased by $1.7 million or 4.9% to $35.7 million compared to $34.0 million for the year ended December 31, 2020. The increase is primarily attributable to higher interest income on securities and lower interest expense, offset by a decrease in interest income on loans. Due an overall increase in average volume of investment securities of $245.5 million, interest income from securities is $2.6 million more than the prior year. Interest expense declined by $346,000 despite an increase in average interest-bearing deposits of $193.0 million. Interest income on loans declined by $1.2 million during the year as a net result of lower average loan volume, partially offset by higher PPP origination fees.

The net interest margin for the current quarter was 2.90% and declined by 12 basis points from 3.02% for the linked quarter and 29 basis points compared to 3.19% for the prior year quarter. The yield on earning assets for the current quarter is 3.25% compared to 3.36% and 3.63% for the two comparative periods, respectively. The cost of funds is 0.35% for both the current and linked quarters compared to 0.43% for the prior year quarter. Net interest margin for the current year period is 2.91% compared to 3.76% for the prior year. The yield on earning assets and cost of funds for the two comparative year end periods were 3.27% and 4.28%, respectively, and 0.36% and 0.52%, respectively. Margins for the three and twelve month 2021 periods were adversely impacted by the volume of liquid assets on the Company's balance sheet invested in a low interest rate environment.

The Federal Open Market Committee (the 'Committee') of the Federal Reserve Bank has signaled a tapering of their asset purchases to remove some of the accommodations of monetary policy during the first quarter of 2022. Additionally, Committee members believe that a number of future short-term rate hikes may be appropriate over the coming year. The Company's balance sheet is well positioned to benefit from a rising interest rate environment which will have a positive impact on net income. Additionally, with the majority of our PPP loan originations having been repaid and no longer being a significant headwind to net new loan growth, average loan volumes should improve during 2022.

Non-Interest Income

Total non-interest income is $3.3 million for the current three-month period compared to $3.8 million for the linked quarter and $3.0 million for the prior year quarter. Service charges and fees associated with deposit accounts are $2.3 million for Q4 2021 and increased by $30,000 and $431,000 compared to the linked and prior year quarters, respectively. Interchange revenue from debit card usage continues to be an important component of non-interest income contributing $1.3 million for both the current and linked quarters and $1.1 million for the prior year quarter.

While mortgage rates through the end of 2021 remained at attractive levels, the volume of mortgage activity in the fourth quarter tends to lag other quarters of the year due to the holidays. Gains on the sale of originated mortgages is $342,000 for the current quarter compared to $430,000 for the September 30, 2021 quarter and $249,000 for the prior year comparative quarter. Although interest rates on conventional mortgages may begin to increase in 2022, we anticipate rates to remain at attractive levels and demand for housing in our footprint continues to be robust as the region recovers from the hurricanes of 2020.

Other non-interest income is $691,000 for the current quarter compared to $1.1 million for the linked quarter and $895,000 for the prior year quarter. Revenue from our Trust and Investment Divisions are typically the largest components of other non-interest income. Revenue from investment activities is $313,000, $208,000 and $139,000 and revenue from trust activities is $161,000, $144,000 and $142,000 for the three comparative periods, respectively. The linked September 2021 and the prior year December 2020 quarters include non-recurring, non-operating revenue items. The September 30, 2021 quarter includes a $364,000 gain on a real estate land swap and the quarter ended December 31, 2020 includes a gain from disposal of fixed assets of $454,000.

Non-interest income for the twelve-month period ended December 31, 2021 was $13.0 million, an increase of $2.5 million over the $10.5 million reported for the comparative 2020 period. Interchange revenue from debit card usage increased by $1.7 million year over year, gain on sale of originated mortgage loans increased by $676,000 and other non-interest income increased by $23,000. Both periods include non-recurring gains on the sale of investment securities of $7,000 for the current period and $252,000 for the prior year period. The current year included the aforementioned gain on a real estate land swap of $364,000 and the prior year included gains on disposal of fixed assets of $506,000.

Non-Interest Expense

Total non-interest expense is $8.7 million for the current quarter compared to $9.0 million for linked quarter and $8.5 million for the fourth quarter of 2020. Salary and benefits expense is the largest component of non-interest expenses and is $4.6 million for the current period compared to $4.5 million for both the linked and prior year quarters. The prior year quarter salary expense includes a severance payment made to a former contractual employee who is no longer with the Company.

All other non-interest expense categories remained relatively stable over the three comparative periods. Occupancy expense is $1.4 million for the current and linked quarters compared with $1.3 million for the prior year quarter. Data processing expense is $1.0 million for both the current and linked quarters compared to $910,000 for the quarter from a year ago. Marketing, business development and public relations expenses total $313,000 in the current quarter compared to $269,000 in the linked quarter and $362,000 for the prior year quarter. Other non-interest expenses were $1.4 million for the current quarter compared to $1.7 million for the linked quarter and $1.5 million for the prior year quarter. The largest components of other non-interest expenses include real estate ad valorem fees, professional fees, FDIC insurance premiums, telecommunication costs, and losses associated with fraud. Net losses (gains) on the sale of OREO are $5,000, $(29,000) and $45,000 for the three comparative periods, respectively.

Non-interest expenses for the twelve-month period ended December 31, 2021 are $35.2 million, reflecting a $1.8 million increase compared to $33.5 million for the prior year. Increases in occupancy, data processing, FDIC insurance premiums, OREO expenses and fraud losses were partially offset by decreases in salary and employee benefits. Net losses on the sale of OREO for the current and prior twelve-month periods are $384,000 and $114,000, respectively. The Company also paid a penalty on the pre-payment of an FHLB advance of $200,000 in the current year.

Income tax expense is $571,000 for the current quarter compared to $728,000 for the Q3 2021 and $424,000 for Q4 2020. Income tax expense for the twelve months ended December 31, 2021 is $2.1 million with an effective rate of 16.21% compared to $1.1 million and 13.82% for the prior year twelve-month period. The increase in effective tax rate is primarily due to a larger percentage of revenue being derived from taxable sources.

Balance Sheet

Total assets are $1.4 billion at December 31, 2021, reflecting a $68.2 million or 5.3% increase over the $1.3 billion at December 31, 2020. Investment securities are up $144.9 million or 42.6% to $485.4 million from $340.5 million at the prior year end. Over the course of 2021, we transitioned $70.9 million of cash and interest-earning deposits with banks into the investment portfolio. The growth in our deposit base and additional liquidity generated through the issuance of a new tranche of subordinated debt was also deployed into the investment portfolio. The loan portfolio, net of unearned income, declined by $7.9 million during 2021 to $622.3 million from $630.2 million. As previously disclosed, we experienced $80.9 million in PPP loan repayments during 2021. Excluding the PPP repayments, the loan growth for 2021, was $73.0 million of which $36.4 million represented 2021 vintage PPP loans. Therefore, net new non-PPP related loan growth was $36.6 million or 5.8% year-over-year growth. This represents the largest net loan growth for the Company since 2015.

Total deposits are $1.2 billion at December 31, 2021, reflecting a $37.9 million or 3.3% increase over the total deposits reported at year end 2020. Savings accounts balances increased by $48.4 million or 16.2% and money market account balances increased by $32.0 million or 69.0%. Non-interest bearing demand deposits, time deposits and interest-bearing demand deposits declined by $29.2 million, $10.1 million and $3.3 million, respectively. The volume of government stimulus flowing into both personal and business deposit accounts during 2021 allowed customers to transfer excess funds from non-interest bearing accounts into interest-bearing money market and savings accounts. In 2021, we opened approximately 5,100 new non-maturity accounts with average opening balances of $17,800.

Other liabilities increased by approximately $27.8 million to $53.3 million at December 31, 2021. The increase is primarily due to the issuance of $30.0 million in new subordinated debt. The $17.5 million in subordinated debt issued in January 2017 was redeemed on January 15, 2022.

Stockholders' equity increased by $2.5 million to $101.2 million at December 31, 2021 from $98.7 million at December 31, 2020. The increase is primarily comprised of 2021 net income of $11.0 million, less the decrease in other comprehensive income of $5.3 million, less the dividends paid to common shareholders of $2.6 million. The tangible equity to assets ratio decreased to 7.16% at December 31, 2021 from 7.34% at December 31, 2020 primarily due to the drop in other comprehensive income. There were 3,430,060 common shares outstanding at December 31, 2021 and 1,558,757 shares outstanding at December 31, 2020. The increase in shares outstanding reflects a 10% stock dividend and a 2-for-1 stock split occurring in 2021. Tangible book value per common share increased to $28.30 at December 31, 2021 compared to $27.55 at December 31, 2020, as adjusted for the stock dividend and split.

Key Performance Ratios

Return on average assets (ROA) is 0.88% for the current quarter compared to 1.04% for the linked quarter and 0.76% for prior year quarter. Return on average equity (ROE) is 11.87%, 13.91% and 9.52% for the three comparative quarters ended December 2021, September 2021 and December 2020, respectively. ROA and ROE for the twelve-month periods ended December 31, 2021 and 2020 were 0.82% and 0.70%, and 11.24% and 7.65%, respectively.

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 23 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 jdbank.com .

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 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.
(OTCQX:JDVB)

JD BANCSHARES, INC. AND SUBSIDIARIES
JENNINGS, LOUISIANA

CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

JD BANCSHARES, INC. AND SUBSIDIARIES
JENNINGS, LOUISIANA

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

JD BANCSHARES, INC. AND SUBSIDIARIES
JENNINGS, LOUISIANA

CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

JD BANCSHARES, INC. AND SUBSIDIARIES

Margin Analysis Compare

JD BANCSHARES, INC. AND SUBSIDIARIES

Margin Analysis Compare

JD BANCSHARES, INC. AND SUBSIDIARIES

SUPPLEMENTAL FINANCIAL INFORMATION

Financial Ratios

Capital

Reconcilement of GAAP to Pre-tax, Pre-Provision Operating Income:

CONTACT:

Bruce Elder (CEO) 337-246-5399
Paul Brummett (CFO) 337-246-5395

SOURCE: JD Bancshares, Inc.



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