The Ellicott City–based community bank reported net income available to common shareholders had increased 73 percent compared to the same quarter last year, but earnings per share were up only 38 percent.
Chairman and CEO Anne Scully attributed the disparity in EPS and net income growth to a common stock offering, which increased the company’s equity by 1.8 million shares worth $41 million.
Scully stated, “Our capital raise was not about doing anything differently but rather was about ensuring that we have the capital infrastructure in place to support the continued growth we can achieve given our focus on talent retention as well as the talent we attracted during 2016 and early 2017.”
The offering closed on Feb. 1, and included an additional 360,000 shares available to the underwriters for purchase at $15 per share.
After the decision to exercise this option, the total number of shares sold by the company was 2.76 million
Average common shares outstanding increased from 7 million at the end of 2016 to 8.8 million on Mar. 31, 2017, and the company’s total equity increased from $85 million to $126 million over the same time.
The addition of equity increased the company’s leverage ratio to 12.1 percent from 8.4 percent the same time last year.
Scully said that the 73 percent increase in net income was due in part to the growth of the bank’s commercial loan portfolio by an annualized 12 percent.
As a result of the company’s mortgage banking operations, non-interest income increased 56 percent to $4.5 million in the first quarter of 2017 from $2.9 million the same time last year.
The bank’s primary market focus is on providing loans to small and medium size commercial business and high-net-worth individuals, and the bank has 13 branches in the Baltimore area with just over $1 billion in total assets.
Since the company reported fourth quarter earnings on Jan. 21, the stock price has increased nearly 25 percent.
This story is from the Maryland Business News Wire, a service of UNC-Chapel Hill’s School of Media and Journalism.