Income Statement Highlights

For the third quarter of 2024, net interest income totaled $4.5 million, representing an increase of $1.5 million, or 50%, from $3.0 million for the third quarter of 2023. For the first nine months of 2024, net interest income totaled $11.0 million, representing an increase of $1.8 million, or 19%, when compared to $9.2 million the same period in 2023. Excluding the interest recovery of $1.3 million, net interest income increased $247 thousand when comparing the third quarter 2024 to the same period in 2023 and increased $508 thousand when comparing the first nine months of 2024 to the same period in 2023. The increase in net interest income for the quarter ended and nine months ended 2024 was attributed to higher loan balances and yields on earning assets, partially offset by higher deposit costs related to the deposit mix and pricing.

Interest and fees on loans totaled $6.5 million and $4.1 million for the third quarter of 2024 and 2023, respectively, and $16.2 million and $11.4 million for the nine months ended September 30, 2024 and 2023, respectively. Interest and fees on loans increased with organic growth in the loan portfolio, which was primarily led by residential mortgage loan and commercial real estate loan originations. The mix of the loan portfolio shifted slightly with commercial real estate loans representing 23% of total loans as of September 30, 2024, compared to 21% as of December 31, 2023. The yield on earning assets improved when compared to the prior year due primarily to higher interest rates on new loan originations as well as repricing of variable rate loans.

Total interest expense was $3.1 million for the third quarter of 2024, representing an increase of $1.3 million when compared to $1.8 million for the third quarter 2023. For the nine months ended 2024, interest expense totaled $8.1 million, representing an increase of $3.5 million, when compared to $4.6 million for the same period in 2023. This increase was driven by higher deposit balances and costs of interest-bearing deposits as customers have migrated to higher yielding deposit products. With strong deposit growth, the level of noninterest bearing deposits remains at 24% of total deposits.

The net interest margin was 2.90% for the third quarter of 2024 compared to 2.73% the third quarter of 2023.

Noninterest income for the three and nine months ended September 30, 2024 totaled $586 thousand and $1.7 million, respectively, compared to $583 thousand and $1.7 million for the three and nine months ended September 30, 2023, respectively.

Noninterest expense for the three and nine months ended September 30, 2024 totaled $2.9 million and $8.5 million, respectively, compared to $2.8 million and $8.0 million for the three and nine months ended September 30, 2023, respectively. The increase in noninterest expense was primarily related to salaries and employee benefits from increased staffing levels and wages.

Balance Sheet Highlights

Total assets were $577.3 million as of September 30, 2024, an increase of $76.7 million, or 15.3%, from $500.6 million as of December 31, 2023. Year-over-year total assets increased $78.9 million, or 15.8%, from $498.4 million as of September 30, 2023.

Loans, net of the allowance for credit losses, were $376.7 million as of September 30, 2024, an increase of $28.8 million, or 8.3%, from $347.9 million as of December 31, 2023. Year-over-year net loans grew $34.7 million, or 10.2%, from $342.0 million as of September 30, 2023.

Investment securities, excluding restricted securities, were $114.7 million as of September 30, 2024, $118.7 million as of December 31, 2023 and $117.8 million as of September 30, 2023. Investment securities decreased during the nine months ended September 30, 2024, primarily due to principal repayments and maturities totaling $7.1 million, offset in part by a decrease in the investment portfolio’s unrealized losses on available for sale securities totaling $1.8 million.

Total deposits were $514.7 million as of September 30, 2024, an increase of $88.6 million, or 20.8%, from $426.1 million as of December 31, 2023. Year-over-year total deposits increased $73.6 million, or 16.7%, from $441.1 million as of September 30, 2023. Noninterest bearing deposits represent 24.0% of total deposits as of September 30, 2024, which is down slightly from 26.4% as of December 31, 2023 and 27.4% as of September 30, 2023. During the nine months ended September 30, 2024, noninterest bearing balances increased $11.0 million and interest-bearing balances increased $77.6 million.

At September 30, 2024, total borrowings decreased $18.1 million since December 31, 2023 and $2.9 million from September 30, 2023. Borrowings through the Federal Reserve’s Bank Term Funding Program (BTFP) totaled $28.0 million as of September 30, 2024. There were no borrowings through FHLB as of September 30, 2024. At September 30, 2024, total liquidity sources exceeded $304 million and included on and off-balance sheet liquidity through cash and cash equivalents; unpledged available for sale securities at fair value; Federal Home Loan Bank (FHLB) and Federal Reserve borrowing capacities; and unsecured correspondent bank lines of credit.

Shareholders’ equity at September 30, 2024 was $29.5 million, representing an increase of $4.6 million, or 18.3% from December 31, 2023. Book value per share of $114.65 at September 30, 2024 increased from $96.93 at December 31, 2023. Year-to-date earnings contributed $3.4 million to the increase in shareholders’ equity. Accumulated other comprehensive loss decreased $1.7 million, which was primarily related to the change in unrealized losses on available for sale securities at September 30, 2024. During the third quarter 2024 the Company declared a regular semi-annual dividend of $1.20 per share payable on September 13, 2024. This dividend was consistent with the previous semi-annual dividend and resulted in an annual dividend of $2.40 per share in 2024, representing an increase of $0.10 per share or 4.3% from $2.30 per share in 2023. Year-over-year shareholders’ equity increased $6.6 million, or 28.9%, from $22.9 million as of September 30, 2023.

All bank regulatory capital ratios remain in excess of applicable regulatory requirements for well-capitalized institutions. The Tier 1 leverage ratio declined to 7.47% from 7.65% at December 31, 2023 and 8.01% at September 30, 2023. The ratio of Common Equity Tier 1 capital and Tier 1 capital to risk weighted assets was 12.45%, 12.40% and 12.85% at September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The total risk-based capital ratio was 13.70%, 13.65% and 14.09% at September 30, 2024, December 31, 2023 and September 30, 2023, respectively. The decline in regulatory capital ratios reflects the impact of continued trend of growth in total assets through the first nine months of 2024. This growth was in part related to management’s decision to increase total assets and maintain a higher level of cash and cash equivalents on the balance sheet. Management conducts regular monitoring of capital planning strategies to support and maintain adequate capital levels.

Asset Quality

As of September 30, 2024, the credit quality of the loan portfolio remained strong with nonaccrual loans totaling $47 thousand, or 0.01% of total loans, compared to $51 thousand, or 0.01% of total loans, at December 31, 2023 and $53 thousand, or 0.02% of total loans, at September 30, 2023. As of September 30, 2024, total past due loans decreased to $349 thousand, or 0.09% of total loans, compared to $385 thousand, or 0.11%, of total loans at December 31, 2023 and decreased when compared to $357 thousand, or 0.10% of total loans, as of September 30, 2023.

At September 30, 2024 and December 31, 2023, the allowance for credit losses on loans was $4.0 million, or 1.06% of total loans, and $3.8 million, or 1.08% of total loans, respectively. During its assessment of the allowance for credit losses, the Company reviews and addresses credit risk associated with all loan portfolio segments and has appropriately reserved for economic conditions with consideration of management’s prudent underwriting at loan origination and ongoing loan monitoring procedures.

The company recorded net recoveries on loans totaling $237 thousand for the three and nine months ended September 30, 2024, respectively. As a result, the company released provisioning for credit losses totaling $266 thousand and $86 thousand for the three and nine months ended September 30, 2024, respectively. This is compared to a provision expense of $75 thousand and $122 thousand for the three and nine months ended September 30, 2023, respectively. The release of provisioning in 2024 was related to the recovery of a previously charged off loan totaling $252 thousand and continued stability in the economic environment and the credit quality of the loan portfolio.

Third Quarter 2024 Compared to Second Quarter of 2024

Compared to the quarter ended June 30, 2024, net income increased $1.2 million primarily due to higher revenue and lower provision for credit losses. Excluding the notable items in the third quarter of 2024, pretax income decreased by $6 thousand, or 0.6%, compared to the same period in 2023.

Net interest income increased by $1.3 million, or 39%, from the second quarter of 2024. Excluding the notable item, net interest income increased $11 thousand, or 0.3%, compared to the quarter ended June 30, 2024. This slight increase to net interest income shows the continued improvement in both the yield and mix of earning assets, while the Company also continued to experience pricing pressures on deposits. Management is actively monitoring the interest rates and the mix of deposits and wholesale funding to control funding costs.

The Company recorded a release of provisioning for credit losses of $266 thousand for the third quarter of 2024, compared to a provision for credit losses expense of $60 thousand for the second quarter of 2024. This change was primarily driven by similar factors as the year-over-year changes stated above.

Noninterest income for the three months ended September 30, 2024 totaled $586 thousand, compared to $582 thousand for the three months ended June 30, 2024. Noninterest expense for the three months ended September 30, 2024 totaled $2.9 million, compared to $2.8 million for the three months ended June 30, 2024.

When comparing September 30, 2024 to June 30, 2024, total assets increased $35.2 million, or 6.5%, loans, net of the allowance for credit losses, increased by $2.8 million, or 0.7%, total deposits increased $46.1 million, or 9.8%, and shareholders’ equity increased $3.6, or 14.0%.

About JSB Financial Inc.

JSB Financial Inc. (OTCPink: JFWV) is the holding company for Jefferson Security Bank, an independent community bank operating six banking offices located in Berkeley County and Jefferson County, West Virginia and Washington County, Maryland. Founded in 1869, Jefferson Security Bank serves individuals, businesses, municipalities and community organizations through a comprehensive suite of banking services delivered by an exceptional team who put customers first. Jefferson Security Bank has received industry recognition by American Banker magazine five years in a row. Most recently, as a Top 100 Community Bank in 2024 and prior as a Top 200 Community Bank for four consecutive years. Operating for over 155 years, Jefferson Security Bank is the oldest, independent, locally owned and managed bank in West Virginia. Visit www.jsb.bank for more information.

Offices:

105 East Washington Street, Shepherdstown, WV (304-876-9000)
7994 Martinsburg Pike, Shepherdstown, WV (304-876-2800)
873 East Washington Street, Suite 100, Charles Town, WV (304-725-9752)
277 Mineral Drive, Suite 1, Inwood, WV (304-229-6000)
1861 Edwin Miller Boulevard, Martinsburg, WV (304-264-0900)
103 West Main Street, Sharpsburg, MD (301-432-3900)

View source version on businesswire.com: https://www.businesswire.com/news/home/20241115698441/en/

Contacts

Jenna Kesecker, CPA, Executive Vice President
and Chief Financial Officer
304-876-9016

Regular readers will know that we love our dividends at Simply Wall St, which is why it’s exciting to see Manulife Financial Corporation (TSE:MFC) is about to trade ex-dividend in the next 4 days. The ex-dividend date is usually set to be one business day before the record date which is the cut-off date on which you must be present on the company’s books as a shareholder in order to receive the dividend. It is important to be aware of the ex-dividend date because any trade on the stock needs to have been settled on or before the record date. Accordingly, Manulife Financial investors that purchase the stock on or after the 20th of November will not receive the dividend, which will be paid on the 19th of December.

The company’s next dividend payment will be CA$0.40 per share. Last year, in total, the company distributed CA$1.60 to shareholders. Looking at the last 12 months of distributions, Manulife Financial has a trailing yield of approximately 3.5% on its current stock price of CA$46.23. Dividends are a major contributor to investment returns for long term holders, but only if the dividend continues to be paid. So we need to investigate whether Manulife Financial can afford its dividend, and if the dividend could grow.

View our latest analysis for Manulife Financial

If a company pays out more in dividends than it earned, then the dividend might become unsustainable – hardly an ideal situation. Manulife Financial paid out more than half (55%) of its earnings last year, which is a regular payout ratio for most companies.

When a company paid out less in dividends than it earned in profit, this generally suggests its dividend is affordable. The lower the % of its profit that it pays out, the greater the margin of safety for the dividend if the business enters a downturn.

Click here to see the company’s payout ratio, plus analyst estimates of its future dividends.

Companies with consistently growing earnings per share generally make the best dividend stocks, as they usually find it easier to grow dividends per share. Investors love dividends, so if earnings fall and the dividend is reduced, expect a stock to be sold off heavily at the same time. With that in mind, we’re encouraged by the steady growth at Manulife Financial, with earnings per share up 4.5% on average over the last five years.

Another key way to measure a company’s dividend prospects is by measuring its historical rate of dividend growth. In the past 10 years, Manulife Financial has increased its dividend at approximately 12% a year on average. It’s encouraging to see the company lifting dividends while earnings are growing, suggesting at least some corporate interest in rewarding shareholders.

Story Continues

The UN climate talks, COP29, is well underway, and countries have entered final negotiations on the New Collective Quantified Goal (NCQG), a new climate finance goal to boost funding for climate action in developing countries. Reaching agreement on the goal may be difficult in the face of the U.S election results, but it remains an urgent priority. 

One glaring finance gap that we need to address in the new goal is finance for climate adaptation. Adaptation is how governments and communities prepare for and adjust to the impacts of climate change. It’s about making changes to reduce or prevent the harm caused by climate impacts like rising sea levels, more frequent storms, and hotter temperatures. 

According to a new report from the United Nations Environment Programme (UNEP), adaptation needs are not being met worldwide. Developing countries will need $215 billion per year over the next decade for their adaptation priorities, from building climate resilient infrastructure to restoring ecosystems. Yet international finance flows for adaptation were just $28 billion in 2022 – an increase over prior years, but nowhere near enough.  

Transformational adaptation requires closing the finance gap and maximizing the impact of every dollar. 

Where is the world falling behind on adaptation? 

Many developing countries are particularly vulnerable to climate change impacts, and the good news is that they are prioritizing efforts to build resilience. UNEP’s Adaptation Gap Report found that 87% of countries have at least one national adaptation planning instrument in place, compared to around just 50% a decade ago. These instruments include National Adaptation Plans (NAPs) and other strategies or policies that guide adaptation. 

Now time for the bad news: although planning has improved, there is a growing gap in implementation as countries lack the necessary finance to meet their objectives. Adaptation has consistently been underfunded compared to mitigation, and while developed countries are working to double adaptation finance, the current $28 billion in annual flows represents just 13% of the $215 billion needed annually. 

[Source: UNEP Adaptation Gap Report 2024] 

The lack of finance for adaptation has serious implications for many developing countries, especially small island states which urgently need international support to strengthen resilience. For example, the Caribbean nation of Dominica is installing early warning systems to improve preparedness and reduce the impact of future hurricanes, but by 2023 they had only installed three systems and need 50 more to adequately cover the island. Without sufficient adaptation finance, the country will remain highly exposed to sudden climate shocks. 

This finance gap is further complicated by limited private sector engagement in adaptation. UNEP finds that many transformational adaptation projects are seen as risky by private investors, due to their longer time frame for benefits and less clear return on investment. Private finance does flow to projects in infrastructure and commercial agriculture, but often not without efforts by the public sector to de-risk investments. 

It is not surprising that two-thirds of adaptation financing needs are anticipated to be financed by the public sector. But the quality of public finance for adaptation has room for improvement as well. 62% of public finance for adaptation is delivered through loans, of which 25% are non-concessional, or at market rate with no favorable terms. And the use of non-concessional loans for adaptation in most vulnerable countries has actually increased in recent years. These tools have the potential to drive up the debt burden in developing nations which are already struggling to pay the bills. Expanding grant and concessional finance will be important to mitigate these challenges. 

How do we unlock quality adaptation finance? 

The Adaptation Gap Report suggests that filling the finance gap will require several enabling factors that can unlock new finance flows. Notably, in EDF’s new report ‘Quality Matters: Strengthening Climate Finance to Drive Climate Action,’ we identify similar strategies as we call for structural reforms within the international climate finance system. Three key recommendations overlap in both reports. 

First, countries need to mainstream their climate objectives and adaptation goals within national planning and budgeting processes. This integration should be paired with robust stakeholder engagement that systematically includes subnational authorities, marginalized groups and potential implementing entities in the planning process. Doing so will better align adaptation activities with other national priorities and create more fundable projects. Moreover, planning processes should emphasize project evaluation and evidence gathering to better understand what interventions are most impactful and maximize the potential of climate resources. 

Second, countries should adopt investment planning approaches to climate action. Specifically, they should work to develop a pipeline of bankable projects that can meet the objectives within their NAPs and other planning instruments. This can help attract investors to projects and ensure successful implementation of adaptation plans. 

Third, multilateral financial institutions including multilateral development banks (MDBs) and climate funds need to undergo structural reform to improve the quality of finance. The MDBs are currently pursuing reforms to become better fit-for-purpose for addressing the climate crisis, and at COP29 they jointly announced that their collective climate finance will reach $120 billion by 2030 – though only $42 billion will be dedicated for adaptation. Improving the balance between mitigation and adaptation finance will be important to ensure that developing countries’ priorities don’t go unfunded. Additional actions these institutions can take include strengthening the concessionality of terms for adaptation projects to alleviate debt burdens and spark new blended finance opportunities, and leveraging innovative instruments like adaptation swaps which can foster positive adaptation outcomes in exchange for forgiving debt. 

The NCQG is an important milestone which has the potential to advance action on these reforms and strengthen adaptation finance flows. Alongside supporting a strong quantitative goal, countries should call for improvements in the quality of finance, to ensure that finance for adaptation projects is available, accessible, concessional, and impactful.