Yahoo Finance

Highlights

• In connection with the acquisition of JCB, effective September 1, 2024, the Company acquired $154.1 million in assets at fair value, including $87.2 million in loans. The Company also assumed $133.8 million of liabilities at fair value, including $125.3 million of total deposits with a core deposit intangible asset recorded of $3.4 million, and goodwill of $4.6 million.

• Net income was $2.5 million, or $0.45 per share, in the fourth quarter of 2024, compared to $2.2 million, or $0.39 per share, in the fourth quarter of 2023.

• Net interest margin (“NIM”) was 4.10% for the fourth quarter of 2024, compared to 3.78% in the third quarter of 2024, and 3.69% in the fourth quarter of 2023.

• Total assets increased $171.8 million, or 16.42%, to $1.22 billion at December 31, 2024 from $1.05 billion at December 31, 2023.

• Net loans were $976.4 million at December 31, 2024, an increase of $165.5 million, or 20.40%, when compared to $811.0 million at December 31, 2023. Excluding the $87.2 million in loans acquired as part of the JCB merger, gross loans increased by $79.6 million, or 9.73%, for the year 2024.

• Total deposits were $1.09 billion at December 31, 2024, an increase of $163.5 million, or 17.60%, from $928.7 million at December 31, 2023. Excluding the $125.3 million of total deposits acquired as part of the JCB merger, total deposits increased by $38.2 million, or 4.11%, during the year 2024.

• During the quarter, the Company incurred $923 thousand in merger-related expenses related to the acquisition of JCB. Excluding these merger-related expenses, net income would have been $3.2 million, or $0.58 per share, for the fourth quarter of 2024.

Fourth Quarter and Year Ended December 31, 2024 Income Statement Review

Net interest income after provision for credit losses in the fourth quarter of 2024 was $11.4 million compared to $8.9 million in the fourth quarter of 2023. Total interest income was $15.4 million in the fourth quarter of 2024, representing an increase of $3.7 million, or 31.67%, in comparison to the fourth quarter of 2023. Interest income on loans increased in the quarterly comparison by $3.7 million, primarily due to organic loan growth, and the addition of loan balances from the JCB acquisition which added approximately $87.2 million. Management anticipates this loan growth will continue to have a positive impact on both earning assets and loan yields. Interest expense on deposits increased by $1.2 million in the quarterly comparison as a result of rate increases on deposit offerings, and the additional interest-bearing deposits from the JCB acquisition. Management anticipates interest expense on deposits could increase in the near term as competitive pressures for deposits may result in continued increases in rates on deposit offerings, especially on time deposits. Interest on borrowings decreased by $121 thousand in the quarterly comparison.

For the year ended December 31, 2024, net interest income after provision for (recovery of) credit losses was $38.4 million compared to $35.6 million for the year ended December 31, 2023. Interest income increased by $10.2 million, primarily due to an increase of $10.1 million in interest income on loans. Interest expense on deposits increased by $6.0 million for the year ended December 31, 2024 compared to the same period last year. As previously discussed, this is a reflection of the increased competitive pressures for deposits as well as the additional interest-bearing deposits from the JCB acquisition. Interest on borrowings increased by $266 thousand in the year-over-year comparison, due to short-term borrowings to help fund loan growth.

Fourth quarter 2024 noninterest income was $2.1 million compared with $1.8 million in the fourth quarter of 2023. Service charges and fees increased by $263 thousand in the quarterly comparison.

For the year ended December 31, 2024 and 2023, noninterest income was $7.3 million and $7.0 million, respectively. Included in noninterest income for the year 2024 was $221 thousand from life insurance contracts and a net realized security loss of $141 thousand. The net security loss resulted from the recognition of unamortized premiums on a called bond. Included in noninterest income for the year 2023 was income of $129 thousand related to loan hedge fees from a correspondent bank that was recorded in other income, a $197 thousand gain on a sale leaseback, $69 thousand from life insurance contracts and security losses of $16 thousand. Excluding these items noninterest income increased by $614 thousand in the year-over-year comparison, primarily as a result on an increase in service charges and fees of $502 thousand and an increase of $22 thousand in mortgage origination fees.

Noninterest expense in the fourth quarter of 2024 was $10.3 million compared with $7.9 million in the fourth quarter of 2023, an increase of $2.4 million, or 30.22%. Salary and benefit costs increased by $489 thousand due to the increase in employees resulting from the JCB acquisition, combined with routine personnel additions and salary adjustments, as well as increased benefit costs. Occupancy and equipment expenses increased $134 thousand and data processing increased by $330 thousand in the quarterly comparisons primarily due to branch expansion costs and the costs associated with running two core processing systems before the core conversion for Johnson County Bank occurred. Also included in noninterest expense in the fourth quarter of 2024 was $923 thousand in merger-related expenses related to the acquisition of Johnson County Bank.

For the year ended December 31, 2024, total noninterest expenses increased by $5.7 million compared to the same period in 2023, primarily due to employee costs and branch costs discussed above. Salary and benefit cost increased by $1.1 million. Occupancy and equipment expenses increased by $604 thousand, and data processing increased by $788 thousand in the year-over-year comparison. Merger-related expenses related to the acquisition of Johnson County Bank were $2.4 million for the year ended December 31, 2024.

Net income before taxes increased by $364 thousand in the quarterly comparison causing an increase in income tax expense of $16 thousand. In the year-over-year comparison, net income before taxes decreased by $2.7 million, resulting in a decrease in income tax expense of $443 thousand.

Balance Sheet Review

Total assets increased in the fourth quarter of 2024 by $11.1 million, or 0.92%, to $1.22 billion at December 31, 2024 from $1.21 billion at September 30, 2024, and increased by $171.8 million, or 16.42%, from $1.05 billion at December 31, 2023. Total loans increased during the fourth quarter by $31.3 million, or 3.29%, to $984.5 million at December 31, 2024 from $953.1 million at September 30, 2024, and increased by $166.8 million, or 20.39%, compared to $817.7 million at December 31, 2023. Core loan growth was $31.4 million during the fourth quarter of 2024, which is an annualized rate of 13.13%.

Asset quality has remained strong, with a ratio of nonperforming loans to total loans of 0.26% at December 31, 2024 compared to 0.21% at December 31, 2023. The allowance for credit losses remained comparable at approximately 0.82% of total loans as of December 31, 2024 and December 31, 2023, respectively.

Investment securities decreased by $5.6 million during the fourth quarter to $118.3 million at December 31, 2024 from $123.9 million at September 30, 2024, and decreased by $9.1 million from $127.4 million at December 31, 2023. The decrease in the fourth quarter of 2024 was the result of $1.5 million in paydowns, and an increase in unrealized losses of $4.1 million because of the changes in interest rates during the quarter.

Total deposits increased in the fourth quarter of 2024 by $6.3 million, or 0.58%, to $1.09 billion at December 31, 2024 from $1.09 billion at September 30, 2024, and increased $163.5 million, or 17.60%, compared to $928.7 million at December 31, 2023. Noninterest bearing deposits decreased by $2.4 million and interest-bearing deposits increased by $8.7 million during the quarter. Lower cost interest bearing deposits increased by $8.0 million during the quarter, and time deposits increased by $689 thousand. Excluding the $125.3 million of total deposits acquired as part of the JCB merger, total deposits increased by $38.2 million, or 4.11%, during the year 2024.

Total stockholders’ equity increased by $45 thousand, or 0.05%, to $88.7 million at December 31, 2024, from $88.6 million three months earlier, and increased $5.8 million, or 6.98%, from $82.9 million at December 31, 2023. The change during the quarter was due to earnings of $2.5 million offset by $2.7 million in other comprehensive losses.

Forward-looking statements

This release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934 as amended. These include statements as to expectations regarding future financial performance and any other statements regarding future results or expectations. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995 and are including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identified by the use of words such as "believe," "expect," "intend," "anticipate," "estimate," or "project" or similar expressions. Our ability to predict results, or the actual effect of future plans or strategies, is inherently uncertain. Factors which could have a material adverse effect on the operations and future prospects of the Company and its subsidiaries include, but are not limited to: changes in interest rates; general economic and financial market conditions; the effect of changes in banking, tax and other laws and regulations and interpretations or guidance thereunder; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality and composition of the loan and securities portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company’s market area; the implementation of new technologies; the ability to develop and maintain secure and reliable electronic systems; accounting principles, policies, and guidelines; disruptions to customer and employee relationships and business operations caused by the Johnson County Bank acquisition; the ability to implement integration plans associated with the acquisition, which integration may be more difficult, time-consuming or costly than expected; the ability to achieve the cost savings and synergies contemplated by the acquisition within the expected timeframe, or at all; and other factors identified in Item 1A, “Risk Factors,” in the Company’s Annual Report on 10-K for the year ended December 31, 2023 and the Company’s most recently filed Quarterly Report on Form 10-Q. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. We undertake no obligation to update or clarify these forward‐looking statements, whether as a result of new information, future events or otherwise.

(See Attached Financial Statements for quarter ending December 31, 2024)

Skyline Bankshares, Inc.
Condensed Consolidated Balance Sheets
December 31, 2024; September 30, 2024; December 31, 2023

Skyline Bankshares, Inc.
Condensed Consolidated Statement of Operations

Skyline Bankshares, Inc.
Reconciliation of Non-GAAP Financial Measures

In addition to financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses certain non-GAAP financial measures that provide useful information for financial and operational decision making, evaluating trends, and understanding the Company’s financial condition, capital position and financial results. Non-GAAP financial measures are supplemental and not a substitute for, or more important than, financial measures prepared in accordance with GAAP and may not be comparable to those reported by other financial institutions. The non-GAAP financial measure presented in this document includes tangible book value per share, and the following items adjusted for merger-related expenses: return on average assets, return on average equity, and net income per share. For periods that are shorter than twelve months, the Company annualizes net income for the return on average assets and the return on average equity. The following tables present calculations underlying non-GAAP financial measures.

For more information contact:
Blake Edwards, President & CEO – 276-773-2811
Lori Vaught, EVP & CFO – 276-773-2811