Linkbancorp Inc (LNKB) Reports Fourth Quarter and Full Year 2023 Results Amid Merger Expenses
Net Loss: Reported a net loss of $13.2 million for Q4 and $12.2 million for the full year 2023.
Merger Impact: Merger with Partners Bancorp resulted in significant one-time costs but expanded the company's market presence.
Asset Growth: Total assets increased to $2.66 billion, with substantial growth in loans and deposits.
Net Interest Margin: Improved to 3.55% in Q4 from 2.89% in the previous quarter.
Capital Ratios: The Bank's Total Capital Ratio and Tier 1 Capital Ratio remained well above regulatory minimums.
On January 29, 2024, Linkbancorp Inc (NASDAQ:LNKB) released its 8-K filing, detailing the financial results for the fourth quarter and full year ended December 31, 2023. The results were significantly influenced by one-time expenses related to the merger with Partners Bancorp, which was completed on November 30, 2023. The merger has been a strategic move to establish a more robust Mid-Atlantic community banking franchise.
Linkbancorp Inc operates in the banking industry, offering services such as commercial lending, non-profit banking, treasury management, and various deposit and loan products to individuals and businesses.
The merger-related expenses and initial non-purchase credit deteriorated (non-PCD) provision amounted to $19.2 million pre-tax ($15.2 million after tax) for the fourth quarter and $20.9 million pre-tax ($16.5 million after tax) for the full year. Excluding these one-time costs, adjusted earnings for Q4 would have been $2.0 million, or $0.091 per diluted share, and $6.2 million, or $0.351 per diluted share, for the full year.
Linkbancorp Inc's financial achievements in the context of the banking industry are notable, particularly the expansion of total assets to $2.66 billion and total deposits to $2.30 billion. The net interest margin expansion to 3.55% reflects the company's ability to generate earnings from its interest-earning assets, a critical metric for banks.
Chief Executive Officer Andrew Samuel commented on the transformational year, stating:
"We believe our increased scale and presence in growing and diverse markets will drive profitable growth and shareholder value... While merger-related expenses and accounting adjustments negatively impacted fourth quarter and 2023 earnings, we are pleased with our core operating results."
The merger has expanded Linkbancorp's footprint into Maryland, Delaware, Virginia, and New Jersey, adding $1.50 billion in assets and $1.24 billion in loans. However, the merger also resulted in a dilution of the company's tangible book value per share to $4.901 at year-end, primarily due to net fair value discount adjustments of approximately $64.5 million to the acquired loan portfolio.
Despite the net loss reported for the fourth quarter and full year, the company's core operating results remain strong. The increase in net interest income to $14.3 million for Q4, up from $8.4 million in the previous quarter, and the improvement in net interest margin are indicative of the company's underlying financial health.
Asset quality metrics have remained robust, with non-performing assets representing only 0.34% of total assets as of December 31, 2023. The allowance for credit losses-loans was $23.8 million, or 1.06% of total loans, reflecting a prudent approach to risk management.
Linkbancorp Inc's performance in the fourth quarter and full year 2023 demonstrates the impact of strategic decisions such as mergers and acquisitions, which can result in short-term costs but potentially lead to long-term gains. Investors and stakeholders will be watching closely to see how the integration with Partners Bancorp evolves and contributes to the company's future growth and profitability.
Explore the complete 8-K earnings release (here) from Linkbancorp Inc for further details.
This article first appeared on GuruFocus.
