Lincoln Park Bancorp Announces Fourth Quarter and 2020 Annual Results

PINE BROOK, NJ / ACCESSWIRE / February 24, 2021 / Lincoln Park Bancorp (OTC PINK:LPBC) (the "Company"), the holding company of Lincoln 1^st Bank (the "Bank" or "Lincoln"), announced a net loss of $762 thousand or $0.44 per diluted share for the year ended December 31, 2020 compared to a net loss of $2.5 million or $1.45 per diluted share for the year ended December 31, 2019.

The Company reported a net loss of $278 thousand or $0.16 per diluted share for the three months ended December 31, 2020 compared to a net loss of $1.3 million or $0.77 per diluted share for the three months ended December 31, 2019.

Erik Terpstra, Co-President & Chief Financial Officer of Lincoln 1^st Bank, commented: "Reflecting back on 2020, the turnaround story for Lincoln Park Bancorp continued. Through the black swan event of COVID-19 we continued to grow our principal business lines. The shift in our asset mix along with the reduction in our cost of funds is evidenced in the improvement in the Company's net interest margin. During the year Lincoln consolidated multiple locations, added leadership positions within the Bank and adapted our operating procedures to continue to service the local community in these unprecedented times. I am proud of the hard work of our employees here at Lincoln and look forward to 2021."

Financial Performance Overview:

4Q 2020 v. 4Q 2019

For the three months ended December 31, 2020, the net loss totaled $278 thousand which reflects a decreased loss of $1.1 million in comparison to a net loss of $1.3 million for the three months ended December 31, 2019.

Net interest income for the three months ended December 31, 2020 remained flat at $1.3 million as compared to the three months ended December 31, 2019, while net interest margin decreased 5 basis points over the same periods. The decrease in the net interest margin was mostly due to a decline in the average rate earned on interest earning assets. This decline was partially offset by a reduction in the average rate paid on total interest-bearing liabilities.

"We continue to make progress towards reducing our legacy high-cost funding, which was a primary goal for 2020. This quarter we have reduced our cost of funds by 53 basis points as compared to the same period last year. With the fourth quarter increase in core deposits we are hopeful this momentum will continue into 2021", said Philip Vaz, Co-President and Chief Operating Officer of Lincoln 1^st Bank.

The provision for loan losses for the three months ended December 31, 2020 decreased $1.2 million, to $65 thousand as compared to $1.2 million for the three months ended December 31, 2019. The net provision entry during the quarter was the result of net charge-offs totaling $374 thousand in the Company's CRE loan portfolio, partially offset by a decline in loans receivable.

Non-interest income remained flat at $117 thousand for the three months ended December 31, 2020, compared to the three months ended December 31, 2019.

Non-interest expenses decreased $300 thousand for the three months ended December 31, 2020 months to $1.8 million as compared to $2.1 million for the three months ended December 31, 2019. This decrease in expense is attributed to rightsizing of the organization seen through reduced salary expense with a decrease in auditing expense.

2020 v. 2019

For the year ended December 31, 2020, the net loss totaled $762 thousand which reflects a decreased loss of $1.8 million, in comparison to a net loss of $2.5 million for the year ended December 31, 2019.

Net interest income for the year ended December 31, 2020 decreased to $5.3 million, as compared to $5.5 million for the year ended December 31, 2019. During 2020 average interest earning assets decreased $22 million from December 31, 2019 while its net interest margin improved 6 basis points. The improvement in net interest margin was driven by decreased cost of funds of 37 basis points.

The provision for loan losses for the year ended December 31, 2020 decreased $301 thousand, to $1.1 million as compared to $1.4 million for the year ended December 31, 2019. The decrease in the provision derives from a reduced loans portfolio netted against charge-offs totaling $623 thousand in the Company's C&I and CRE loan portfolios.

Non-interest income increased $574 thousand, or 100.2%, to $1.1 million for the year ended December 31, 2020, compared with non-interest income of $573 thousand for the year ended December 31, 2019. This increase is primarily attributable to realized gains on the sales of securities and increased fee income related to commercial loans and deposits.

The mark-to-market valuation of the interest rate cap resulted in an expense of $48 thousand for the year ended December 31, 2020. The expense is $400 thousand less than the $448 thousand write-down for the year ended December 31, 2019. The remaining fair value associated with the interest rate cap is less than $1 thousand.

Non-interest expenses decreased $800 thousand for the year ended December 31, 2020 to $7.1 million as compared to $7.9 million for the year ended December 31, 2019. This decrease in expense is mainly attributable to a reduction in salary expense arising from the consolidation of corporate headquarters allowing for greater efficiencies and streamlined reporting.

Year over year the Company's tax benefit increased 76% as the Company benefited from a one-time tax recovery of $372 thousand associated with the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"). This benefit is not expected to recur and was derived from changes made, allowing the Company to carry-back some of its net-operating losses.

Financial Condition:

As of December 31, 2020, the Company's total assets were $314.4 million, an increase of $6.7 million, or 2.2%, as compared to total assets of $307.7 million at December 31, 2019. The increase in total assets stemmed from an increase in cash & due from banks to $52.1 million, which was partially offset by a decline in the securities portfolio and the loan portfolio.

Net loans receivable decreased $19.4 million, or 9.6%, to $181.7 million as of December 31, 2020, compared to $201.1 million at December 31, 2019. The decrease in net loans receivable was due to payoffs in the Bank's participated-in loan portfolio which decreased $18.3 million.

Non-interest-bearing deposits increased $15.2 million year-over-year, which reflects the Bank's continued focus on increased relationships with depositors and small businesses within the Company's footprint. Interest bearing deposits remained generally flat, decreasing $240 thousand, to $193.9 million at December 31, 2020, while brokered deposits increased $15 million.

As of December 31, 2020, the Company's total stockholders' equity was $16.6 million, which was flat when compared to December 31, 2019. The Company's accumulated other comprehensive income relating to securities went from an unrealized loss of $82 thousand at December 31, 2019 to an unrealized gain of $607 thousand at December 31, 2020. This income was netted with the losses the Company realized in 2020. As of December 31, 2020, Tier I capital leverage ratio, common equity tier 1 capital ratio, Tier 1 capital ratio and total capital ratios for the Bank were 6.58%, 12.63%, 12.63% and 13.88%, respectively, all in excess of the ratios required to be deemed "well-capitalized."

About Lincoln Park Bancorp

LINCOLN PARK BANCORP
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LINCOLN PARK BANCORP
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