TYSONS CORNER, Va., October 31, 2024 – ODNB Financial Corporation (“ODNB” or the “Company”), the holding company for Old Dominion National Bank (the “Bank”) and its Centre 1st Bank division (“Centre 1st Bank”), reported financial results for the third quarter ended September 30, 2024.

“With the support of our Board, shareholders, and teammates, we have built deep and enduring relationships with our local customers,” said Chief Executive Officer and Chairman Mark Merrill. “Core deposit relationships are central to our funding strategy and fuel the in-market lending activity that has made ODNB one of the fastest growing community banks in the country. The success of these efforts continued to pay off in the third quarter.” Mr. Merrill added: “Double digit loan growth and improved net interest margin boosted net interest income and total revenues to new record levels. With strong pipelines, abundant liquidity and capital strength, we are well positioned to continue executing our growth strategy through the end of 2024, and into the new year.”

Third Quarter 2024 Highlights & Developments

  • Strong Loan Growth – Loans increased $46.1 million, or 16.6% annualized during the quarter to $1.16 billion at September 30, 2024. The Bank continues to emphasize relationship-based lending to small- and mid-sized businesses, entrepreneurs and individuals in Northern Virginia and the Washington, D.C. metropolitan area, Pennsylvania, and Central Virginia.
  • Valuable Core Deposit Franchise – Deposits increased $5.7 million, or 2.1% annualized during the quarter to a record $1.09 billion at September 30, 2024. Over the last twelve months, deposits increased $138.7 million, or 14.61%.
  • Increased Revenue and Margin Expansion – Net interest income grew to $8.4 million, increasing $652 thousand or 8.4% from the second quarter of 2024, while net interest margin expanded to 2.56%, up 4 basis points from the linked quarter.
  • Excellent Asset Quality – Non-accrual loans were $140 thousand, representing just 0.01% of total assets at September 30, 2024, compared to 0.02% on June 30, 2024. The Bank charged off $77 thousand for one residential loan during the quarter, representing just 0.02% of average loans on an annualized basis, and recorded no charge offs in the comparable periods. A non-cash provision for credit losses of $623 thousand was accrued in the current quarter to replenish reserves and accommodate continued loan growth.
  • Net Operating Income – A pre-tax recovery of $174 thousand from a previously disclosed litigation reserve followed a recent settlement of the matter. Including the after-tax impact of the recovery, the Company recorded net income of $1.3 million in the quarter. Pre-tax, pre-provision income in the quarter was $2.4 million.  
  • Sound, Well Capitalized Balance Sheet – The Bank’s regulatory capital ratios were well in excess of thresholds required to be considered “well capitalized,” with total risk-based capital to risk-weighted assets of 13.77% at September 30, 2024. The tangible common equity (“TCE”) to the tangible assets (“TA”) ratio for the Company was 9.78% at September 30, 2024.

Operating Results

Net interest income was $8.4 million for the third quarter of 2024, compared to $7.8 million in the linked quarter, and $7.5 million for the same period the year prior. Net interest income increased from the linked quarter with growth in interest income outpacing interest expense. Net interest margin was 2.56% for the third quarter of 2024, compared to 2.52% in the linked quarter, and 2.63% in the prior-year period.

Non-interest income was $372 thousand for the third quarter of 2024, compared to $371 thousand for the linked quarter and $347 thousand for the same period the year prior. Higher service charges, bank owned life insurance income, and miscellaneous other income drove the modest increase in the comparable periods.

The Company reported non-interest expense of $6.4 million for the third quarter of 2024, compared to $8.5 million in the linked quarter and $5.9 million in the same period the year prior. Excluding the effect of the litigation reserve, non-GAAP non-interest expense was $6.6 million for the third and second quarters of 2024. Operating expenses remained relatively flat, compared to the second quarter, as lower salaries and employee benefits were partially offset by a small increase in occupancy and equipment and other operating expenses. Excluding the effect of the litigation reserve, annualized operating expense improved to 1.97% of assets in the third quarter of 2024 from 2.10% and 2.02% of average assets in the linked and prior year quarters, respectively.

The Company recorded tax expense of $423 thousand for the third quarter of 2024, compared to a tax benefit of $30 thousand for the linked quarter and tax expense of $425 thousand in the prior-year period.

ODNB earned net income of $1.3 million in the third quarter of 2024, compared to a net loss of $679 thousand in the linked quarter and net income of $1.7 million in the prior-year period. Excluding the effect of the litigation reserve, non-GAAP net income was $1.2 million in the third quarter of 2024 and $868 thousand in the linked quarter.

Financial Condition

Total assets grew to $1.35 billion at September 30, 2024, increasing 0.7% from $1.34 billion at June 30, 2024 and 11.7% from $1.21 billion at September 30, 2023. Gross loans were $1.16 billion at September 30, 2024, increasing 4.2% from $1.11 billion at the end of the linked quarter and 16.2% from $996.8 million at September 30, 2023.

Total deposits grew to $1.09 billion on September 30, 2024, increasing 0.5% from $1.08 billion at the end of the linked quarter and 14.6% from $949.8 million at September 30, 2023. As a percentage of total deposits at September 30, 2024, non-interest-bearing customer deposits represented 20.9%, interest-bearing checking, savings and money market customer deposits totaled 49.5%, and customer certificates of deposit (“CDs”) and brokered CDs represented 29.6%.

The Company’s balance sheet continues to remain highly liquid during this current rate environment. The liquidity ratio, defined as the sum of cash and unencumbered marketable securities totaling $148.6 million to total liabilities, was 12.2% as of September 30, 2024.

Asset Quality and Capital Strength

Asset quality remained pristine with one non-accrual loan totaling $140 thousand, representing just 0.01% of total assets at September 30, 2024. The Bank charged off $77 thousand for one residential loan in the quarter, representing an annualized 0.02% of average loans, and recorded no charge offs in the comparable periods. The Company accrued a non-cash provision for credit losses of $623 thousand in the current quarter. As a result, the allowance for credit losses increased during the third quarter to $11.7 million, or 1.01% of gross loans, on September 30, 2024 from $10.8 million and $10.2 million at the end of the linked and prior year quarters, respectively.

The Bank’s regulatory capital ratios at the end of the third quarter of 2024 remain above levels required to be considered well-capitalized, with tier one leverage of 11.32%, tier one risk based capital of 12.72%, and total risk based capital of 13.77%. The Company’s tangible common equity to total assets ratio was 9.78% at September 30, 2024.

Tangible book value (“TBV”) per share grew to $11.54 on September 30, 2024, increasing from $11.27 at the end of the linked quarter and from $10.93 at September 30, 2023. Excluding the available for sale (“AFS”) securities losses reported in accumulated other comprehensive income (“AOCI”), tangible book value per share grew to $11.94, increasing from $11.81 at the end of the linked quarter and $11.62 at September 30, 2023.

About ODNB Financial Corporation

ODNB Financial Corporation is the holding company for Old Dominion National Bank, a locally owned community bank serving markets including the Washington, D.C. metro area, with its executive headquarters in the heart of Northern Virginia at Tysons Corner. ODNB serves the Washington, D.C. metro area from its full service branches in Tysons Corner and Leesburg, Va., as well as communities in Central Virgina from its Albemarle County branches and in Southeast Florida from its Boca Raton office. Centre 1st Bank, a division of ODNB, serves Pennsylvania and New Jersey markets from offices in State College, Pa. ODNB offers a full range of commercial and consumer financial services in the communities it serves. The Company had over $1.3 billion in assets as of September 30, 2024.

Forward-Looking Statements

This news release may contain certain forward-looking statements, such as statements of the Company’s plans, objectives, expectations, estimates and intentions. Forward-looking statements may be identified using words such as “expects,” “subject,” “will,” “intends,” “will be” or “would,” These statements are subject to change based on various important factors (some of which are beyond the Company’s control) and actual results may differ materially. Accordingly, readers should not place undue reliance on any forward-looking statements (which reflect management’s analysis of factors only as of the date of which they are given). These factors include general economic conditions, trends in interest rates, the ability of the Company to effectively manage its growth and results of regulatory examinations, among other factors. The foregoing list of important factors is not exclusive.

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Use of Non-GAAP Financial Measures

Certain information set forth in this press release refers to financial measures that are determined by methods other than in accordance with generally accepted accounting principles (“GAAP”). The Company believes that certain non-GAAP measures may be helpful to investors and provide a greater understanding of its business and financial results. These measures are not necessarily comparable to similar measures that may be presented by other companies and should not be considered in isolation or as a substitute for the related GAAP measure. See the table below for reconciliations of the non-GAAP information identified herein and its most comparable GAAP measures.