An independent community bank serving the Eastern Shore since 1880

Third Quarter 2018 Shareholder Letter & Financials

Delmarva Bancshares, Inc. (the “Company” or “Delmarva”), parent company for 1880 Bank, today reported net income of $731 thousand or $0.12 per share for the quarter ended September 30, 2018, compared to net income of $597 thousand or $0.10 per share for the third quarter of 2017. The Company’s net income for the nine months ended September 30, 2018 was $2.2 million or $0.37 per share, compared to $2.9 million or $0.49 per share for the September 2017 nine month period. Net income for the September 2017 nine month period included $991 thousand, $0.17 per share, of deferred tax asset (DTA) valuation allowance recapture. Excluding the impact of recapturing the DTA, core net income was $1.9 million, or $0.32 per share for the September 2017 nine month period. Fully diluted tangible book value per share increased to $7.04 at September 30, 2018 from $6.55 at September 30, 2017.

Delmarva’s total assets were $355 million at September 30, 2018, compared to $328 million at September 30, 2017. Total loans were $253 million at September 30, 2018, representing an $11.4 million or 5% over September 2017. Total deposits were $297 million at September 30, 2018, compared to $274 million at September 30, 2017. Non-interest bearing deposits represented 29% of total deposits at September 30, 2018. As of September 30, 2018, non-performing assets were 1.16% of total assets compared to 1.69% at September 30, 2017.

Third Quarter Performance Highlights:

  • Net income was $731 thousand or $0.12 per share for the September 2018 quarter, compared to net income of $597 thousand or $0.10 per share in the third quarter of 2017. Net income for the nine months ended September 30, 2018 was $2.2 million or $0.37 per share, compared to $2.9 million or $0.49 per share for the September 2017 nine month period. Net income for the September 2017 nine month period included $991 thousand, $0.17 per share, of DTA valuation allowance recapture.
  • Total loans increased by $11.4 million or 5% over September 2017.
  • Non-performing assets were 1.16% of total assets at September 30, 2018, compared to 1.69% of total assets at September 30, 2017.
  • Total assets at September 30, 2018 were $355 million versus $328 million at September 30, 2017.
  • Cost of funds at the Bank was 0.33% and 0.25% for the three months ended September 30, 2018 and 2017, respectively.
  • Net interest margin at the Bank was 4.01% and 4.13% for the three months ended September 30, 2018 and 2017, respectively.
  • Return on assets (ROA) was 0.84% and return on equity (ROE) was 6.57% for the three months ended September 30, 2018, compared to 0.74% and 5.73%, respectively, for the three months ended September 30, 2017. Core ROA was 0.85% and ROE was 6.73% for the nine months ended September 30, 2018, compared to 0.81% and 6.21%, respectively, for the nine months ended September 30, 2017, excluding the impact of recapturing the DTA valuation allowance.
  • The efficiency ratio was 70.17% and 70.47% for the three months ended September 30, 2018 and 2017, respectively.
  • Fully diluted tangible book value per share was $7.04 at September 30, 2018 compared to $6.55 at September 30, 2017.
  • Liquidity remained strong and capital ratios exceeded all regulatory guidelines for a “wellcapitalized” financial institution.

“Competition for deposits continues to be fierce with a majority of financial institutions rapidly raising rates on certificates of deposit. We remain disciplined in our approach to building relationships without reaching for rate sensitive shoppers. Given the competitive landscape, there is significant pressure to increase rates. However, we believe the upward movement in rates may create opportunity for consolidation in the markets we serve,” said Kim C. Liddell, Delmarva’s Chairman and President.

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