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LINKBANCORP, Inc. (LNKB)·Q3 2024 Earnings Summary

Executive Summary

  • Record quarter: Net income of $7.10M and diluted EPS of $0.19; adjusted diluted EPS of $0.19, with efficiency ratio improving to 66.71% and NIM essentially flat at 3.82% quarter-over-quarter .
  • Core franchise strengthening: Deposits +$9.3M sequentially to $2.47B, driven by +$54.5M demand deposits with brokered deposits reduced by $69.4M; noninterest income rose to $2.7M (+$0.8M q/q) .
  • Asset quality mixed: Non-performing assets increased to $17.4M (0.60% of assets), largely due to one acquired loan; ACL to loans held for investment steady at 1.20% .
  • Outlook update: FY24 core operating ROA target revised to ~0.95% (from 1.15% in July), NIM expectation maintained at 3.90–3.95%; targeted loan growth 5–10%, opex/avg assets 2.60–2.65%, tax rate 22% .
  • Potential stock catalysts: Closing the NJ branch sale, continued deposit mix improvement lowering funding costs, and sustained operating efficiency gains .

What Went Well and What Went Wrong

What Went Well

  • Record earnings and operating leverage: Net income rose to $7.10M; efficiency ratio improved to 66.71% with adjusted efficiency 66.09%, reflecting lower noninterest expense and revenue gains .
  • Deposit franchise quality improved: Demand deposits +$54.5M; brokered deposits –$69.4M; cost of deposits fell to 2.25%, supporting stable NIM at 3.82% .
  • Management execution and tone: “We are pleased to announce another quarter of record earnings…strategies to reduce funding costs and operational expenses and generate additional revenue…” — CEO Andrew Samuel .

What Went Wrong

  • Asset quality deterioration in one acquired credit: NPAs increased to $17.4M (0.60% of assets) from $10.6M (0.37%), primarily due to a single real estate-secured loan from the Partners merger; specific reserve not required at quarter-end .
  • NIM headwinds from macro: Average yield on earning assets decreased from 6.19% to 6.16% due to the cut in the target federal funds rate, partially offset by modestly lower cost of funds (2.43%→2.42%) .
  • Guidance reset on ROA: FY24 core operating ROA expectation updated to ~0.95%, down from 1.15% in July, reflecting the rate environment and business mix evolution .

Financial Results

MetricQ3 2023Q2 2024Q3 2024
Net Interest Income ($USD Millions)$8.35 $24.48 $24.98
Noninterest Income ($USD Millions)$0.88 $1.86 $2.68
Adjusted Revenue (Non-GAAP) ($USD Millions)$9.23 $26.34 $27.66
Diluted EPS ($USD)$0.08 $0.16 $0.19
Adjusted Diluted EPS (Non-GAAP) ($USD)$0.11 $0.17 $0.19
Net Interest Margin (%)2.89% 3.83% 3.82%
Efficiency Ratio (%)86.59% 71.75% 66.71%
ROA (Annualized) (%)0.39% 0.84% 1.00%
ROE (Annualized) (%)3.46% 8.65% 10.30%

Segment/Balance Sheet Mix

Deposits ($USD Millions)Q3 2023Q2 2024Q3 2024
Noninterest-bearing Demand$210.4 $692.1 $687.5
Interest-bearing Demand$273.7 $488.0 $547.1
Money Market & Savings$258.3 $582.6 $585.4
Time Deposits ≥$250k$51.6 $156.6 $169.6
Time Deposits (Other)$172.8 $393.6 $402.0
Brokered Deposits$75.0 $144.4 $75.0
Total Deposits$1,041.8 $2,360.5 $2,372.7

Key KPIs

KPIQ3 2023Q2 2024Q3 2024
Total Assets ($USD Billions)$1.26 $2.86 $2.88
Loans Receivable, Net ($USD Billions)$0.97 $2.17 $2.19
Cash & Cash Equivalents ($USD Millions)$68.0 $181.7 $191.2
ACL – Loans ($USD Millions)$10.0 $26.3 $26.5
Non-performing Assets ($USD Millions)$3.0 $10.6 $17.4
TCE / TA (Non-GAAP) (%)8.58% 6.82% 7.02%
Tangible Book Value per Share ($USD)$6.44 $5.07 $5.26
Cost of Funds (%)2.35% 2.43% 2.42%
Cost of Deposits (%)N/A2.26% 2.25%

Guidance Changes

MetricPeriodPrevious Guidance (July 2024)Current Guidance (October 2024)Change
Net Interest MarginFY 20243.90%–3.95% 3.90%–3.95% Maintained
Core Operating ROA (ex-merger/NJ sale)FY 20241.15% ~0.95% Lowered
Loan Growth (ex loans HFS)FY 20245%–10% 5%–10% Maintained
Noninterest Expense to Avg AssetsFY 20242.60%–2.65% 2.60%–2.65% Maintained
Effective Tax RateFY 202422% 22% Maintained
DividendOngoing$0.075/qtr commitment $0.075/qtr noted Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 & Q2)Current Period (Q3)Trend
Branch-lite operating modelConsolidated 3 client solution centers; continuing optimization 26 client centers maintained; continued efficiency execution Execution continuing
NJ branch saleAgreement announced; assets/liabilities reclassified HFS Expected closing 4Q24/1Q25; HFS balances noted Proceeding to close
Deposit mix & funding costsGrowth in core deposits; competitive funding pressures Demand deposits +$54.5M; brokered –$69.4M; cost of deposits 2.25% Improving mix, lower cost
Net interest margin & ratesNIM 4.03% in Q1; 3.83% in Q2 amid higher funding costs NIM 3.82%; average asset yield down on Fed rate cut Stable NIM, macro-dampened yields
Asset quality & acquired loanAllowance increased due to acquired credit issues in Q2 NPAs up to 0.60% of assets due to single acquired loan; no specific reserve Mixed; contained issue
Noninterest income initiativesGrowth in service charges; merchant & swap fees rising Noninterest income +$0.8M q/q (to $2.7M) on fees and loan sales Positive momentum

Management Commentary

  • CEO message: “We are pleased to announce another quarter of record earnings…prioritizing high quality loan and strong core deposit growth…cost efficiencies from the merger and branch consolidations…strategies to reduce funding costs and operational expenses and generate additional revenue to support further earnings growth.” — Andrew Samuel, CEO .
  • Operating narrative: Third-quarter net interest income $25.0M; NIM 3.82%; average earning asset yield decreased due to federal funds rate cut; noninterest income strengthened via service charges, merchant fees, swap fees, and gain on loan sales .
  • Capital and liquidity: Cash & equivalents $191.2M; total available funding $1.34B; bank capital ratios well above “well-capitalized” thresholds, TCE/TA 7.02% (Non-GAAP) .

Q&A Highlights

  • The Q3 2024 earnings call transcript was not available in our document set; as a result, no Q&A themes or clarifications could be extracted [Search returned none].
  • Guidance clarifications are embedded in the October investor presentation (e.g., FY24 ROA update, NIM expectation, opex ratio, tax rate) .

Estimates Context

  • Wall Street consensus EPS and revenue estimates from S&P Global were unavailable due to a retrieval error at the time of this analysis, so we cannot assess beat/miss versus consensus for Q3 2024 [SPGI error from GetEstimates].
  • Given the absence of consensus, we anchor evaluation to reported results and management guidance trends .

Key Takeaways for Investors

  • Deposit mix is improving and brokered balances are down; combined with lowered cost of deposits (2.25%), this supports stable NIM despite macro rate headwinds — positive for medium-term margin resilience .
  • Efficiency is trending better (66.71% GAAP; 66.09% adjusted), suggesting operating leverage post-merger is materializing; continued opex discipline is a key earnings driver .
  • Asset quality issues center on a single acquired loan; no specific reserve required at quarter-end, but monitor NPA trajectory and ACL coverage vs. nonperformers (152.7% in Q3) .
  • Guidance reset on ROA to ~0.95% reflects realistic macro assumptions; watch for NJ branch sale closing and continued noninterest income initiatives to support returns .
  • Book value and TBVPS are rising (BVPS $7.42; TBVPS $5.26), alongside TCE/TA improvement to 7.02%—supportive of capital adequacy and valuation floor .
  • Short-term trading: Potential positive reaction to sustained efficiency gains and core deposit growth; risk is further NIM pressure if asset yields compress faster than funding cost declines .
  • Medium-term thesis: Branch-lite model and market footprint enable organic growth; deposit franchise strength and cost control post-merger underpin earnings compounding as rate environment stabilizes .
Sources: LNKB Q3 2024 press release and tables **[1756701_20241028PH41777:0]** **[1756701_20241028PH41777:1]** **[1756701_20241028PH41777:2]** **[1756701_20241028PH41777:5]** **[1756701_20241028PH41777:6]** **[1756701_20241028PH41777:7]** **[1756701_20241028PH41777:8]** **[1756701_20241028PH41777:10]** **[1756701_20241028PH41777:11]** **[1756701_20241028PH41777:12]**; LNKB Q3 2024 Form 8-K including EX-99.1 and investor presentation excerpts **[1756701_0000950170-24-117761_lnkb-20241028.htm:0]** **[1756701_0000950170-24-117761_lnkb-20241028.htm:1]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:0]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:1]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:2]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:3]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:4]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:5]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:6]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:7]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:8]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:9]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:10]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:11]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:12]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:13]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:14]** **[1756701_0000950170-24-117761_lnkb-ex99_1.htm:15]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:0]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:1]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:2]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:3]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:4]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:5]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:6]** **[1756701_0000950170-24-117761_lnkb-ex99_2.htm:7]**; LNKB Q2 2024 press release and 8-K **[1756701_20240729PH71799:0]** **[1756701_20240729PH71799:1]** **[1756701_20240729PH71799:2]** **[1756701_20240729PH71799:5]** **[1756701_20240729PH71799:6]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:0]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:1]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:3]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:4]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:5]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:8]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:10]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:11]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:12]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:13]** **[1756701_0000950170-24-087332_lnkb-ex99_1.htm:18]** **[1756701_0000950170-24-087332_lnkb-ex99_2.htm:5]** **[1756701_0000950170-24-087332_lnkb-ex99_2.htm:6]** **[1756701_0000950170-24-087332_lnkb-ex99_2.htm:7]**; LNKB Q1 2024 press release **[1756701_20240429PH00163:0]** **[1756701_20240429PH00163:1]** **[1756701_20240429PH00163:5]** **[1756701_20240429PH00163:6]**.