William Penn Bancorporation Announces Quarter End Results And Cash Dividend To Shareholders

BRISTOL, PA / ACCESSWIRE / October 16, 2024 / William Penn Bancorporation ("William Penn" or the "Company") (NASDAQ CM:WMPN), the parent company of William Penn Bank (the "Bank"), today announced its financial results for the quarter ended September 30, 2024. William Penn recorded a $21 thousand net loss, or $(0.00) per basic and diluted share, for the quarter ended September 30, 2024 compared to net income of $179 thousand, or $0.02 per basic and diluted share, for the quarter ended September 30, 2023. William Penn recorded a core net loss ⁽¹⁾ of $82 thousand, or $(0.01) per basic and diluted share, for the quarter ended September 30, 2024 compared to core net income ⁽¹⁾ of $123 thousand, or $0.01 per basic and diluted share, for the quarter ended September 30, 2023.

In addition, William Penn announced that its Board of Directors has declared a cash dividend of $0.03 per share, payable on November 7, 2024, to common shareholders of record at the close of business on October 28, 2024.

Kenneth J. Stephon, William Penn's Chairman, President, and CEO, stated, "We are encouraged by the 50 basis point rate cut by the Fed in September and the broader decline in market interest rates, which helped to reduce the equity component of the unrealized loss on our available for sale securities by $4.8 million, or 21.9%, during the quarter ended September 30, 2024. We believe that the September rate cut, and any further rate cuts by the Fed, will help to improve our profitability prospectively due to the liability-sensitive position of our balance sheet. Our net interest margin expanded modestly during the quarter, demonstrating a further gain following an inflection point achieved last quarter.

"During the quarter, we continued to post strong credit quality metrics, with a non-performing assets to total assets ratio of 0.38% as of September 30, 2024. We also experienced a decrease in delinquent loans during the quarter and we recorded a $395 thousand recovery for credit losses during the quarter ended September 30, 2024. Operating expenses remained well-controlled, with a year-over-year increase of 1.9%."

Mr. Stephon added, "We maintain our commitment to delivering the maximum value to our shareholders through diligent capital management. During our first fiscal quarter, we continued to repurchase shares under our existing stock repurchase programs and we repurchased 125,441 shares at a total cost of $1.5 million, an average cost of $11.83 per share. As of September 30, 2024, we have repurchased a total of 6,423,527 shares, or approximately 50% of shares sold in our second-step conversion, at a total cost of $75.2 million, an average of $11.70 per share."

Highlights for the quarter ended September 30, 2024 are as follows:

• During the quarter ended September 30, 2024, we repurchased 125,441 shares at a total cost of $1.5 million, an average of $11.83 per share. As of September 30, 2024, the Company had repurchased a total of 6,423,527 shares under its previously announced repurchase programs at a total cost of $75.2 million, or $11.70 per share.

• William Penn recorded a $21 thousand net loss, or $(0.00) per basic and diluted share, and a core net loss ⁽¹⁾ of $82 thousand, or $(0.01) per basic and diluted share, for the quarter ended September 30, 2024.

• The accumulated other comprehensive loss component of equity related to the unrealized loss on available for sale securities decreased $4.8 million, or 21.9%, during the quarter ended September 30, 2024.

• During the quarter ended September 30, 2024, we recorded a $395 thousand recovery for credit losses primarily due to a decrease in delinquent loans, as well as consistently low levels of net charge-offs, strong asset quality metrics and continued conservative lending practices. Non-performing assets to total assets decreased to 0.38% as of September 30, 2024 from 0.40% as of June 30, 2024.

• Book value per share measured $13.91 as of September 30, 2024 compared to $13.33 as of June 30, 2024. Tangible book value per share ⁽²⁾ measured $13.35 as of September 30, 2024 compared to $12.78 as of June 30, 2024. The increase in both book value per share and tangible book value per share was primarily due to a $4.8 million decrease in the accumulated other comprehensive loss component of equity related to the unrealized loss on available for sale securities.

Statement of Financial Condition

Total assets decreased $6.5 million, or 0.8%, to $812.2 million at September 30, 2024, from $818.7 million at June 30, 2024, primarily due to an $8.4 million decrease in net loans and a $2.9 million decrease in investments, partially offset by a $6.3 million increase in cash and cash equivalents.

Cash and cash equivalents increased $6.3 million, or 31.3%, to $26.5 million at September 30, 2024, from $20.2 million at June 30, 2024. The increase in cash and cash equivalents was primarily due to $9.2 million of investment paydowns and an $8.4 million decrease in net loans, partially offset by a $9.0 million decrease in advances from the Federal Home Loan Bank ("FHLB") of Pittsburgh and the repurchase of $1.5 million of shares of stock under previously announced repurchase programs.

Total investments decreased $2.9 million, or 1.2%, to $243.0 million at September 30, 2024, from $245.9 million at June 30, 2024. The decrease in investments was primarily due to the maturity and principal paydowns of securities included in the available for sale and held to maturity portfolios, partially offset by a $6.3 million decrease in the gross unrealized loss on available for sale securities. The unrealized loss on available for sale securities is due to current interest rate levels relative to the Company's cost and not credit quality. The Company remains focused on maintaining a high-quality investment portfolio that provides a steady stream of cash flows both in the current and in rising interest rate environments.

Net loans decreased $8.4 million, or 1.8%, to $462.2 million at September 30, 2024, from $470.6 million at June 30, 2024. The Company maintains conservative lending practices and credit pricing discipline, and is focused on lending to borrowers with high credit quality within its market footprint.

Deposits remained relatively consistent at $629.8 million at both September 30, 2024 and June 30, 2024. During the quarter ended September 30, 2024, we experienced a $6.0 million decrease in interest bearing checking accounts, a $3.3 million decrease in savings accounts and a $2.5 million decrease in money market accounts, partially offset by a $10.2 million increase in time deposit accounts.

Borrowings decreased $9.0 million, or 18.8%, to $39.0 million at September 30, 2024, from $48.0 million at June 30, 2024.

Stockholders' equity increased $3.7 million, or 2.9%, to $128.3 million at September 30, 2024, from $124.6 million at June 30, 2024. The increase in stockholders' equity was primarily due to a $4.8 million decrease in the accumulated other comprehensive loss component of equity related to the unrealized loss on available for sale securities. This increase to stockholders' equity was partially offset by the repurchase of 125,441 shares at a total cost of $1.5 million, or $11.83 per share, during the quarter ended September 30, 2024 under the Company's previously announced stock repurchase programs, the payment of a $0.03 per share quarterly cash dividend in August 2024 totaling $256 thousand and a $21 thousand net loss recorded during the quarter ended September 30, 2024. Book value per share measured $13.91 as of September 30, 2024 compared to $13.33 as of June 30, 2024, and tangible book value per share ⁽³⁾ measured $13.35 as of September 30, 2024 compared to $12.78 as of June 30, 2024.

Net Interest Income

For the quarter ended September 30, 2024, net interest income was $4.1 million, a decrease of $603 thousand, or 12.7%, from the quarter ended September 30, 2023. The decrease in net interest income was primarily due to an increase in interest expense on deposits, partially offset by an increase in interest income on loans. The net interest margin measured 2.29% for the quarter ended September 30, 2024, compared to 2.52% for the quarter ended September 30, 2023. The decrease in the net interest margin during the quarter ended September 30, 2024, compared to the same period in 2023 was primarily due to an increase in interest rates during the period that caused an increase in the cost of deposits and borrowings that exceeded the increase in interest income on loans.

Non-interest Income

For the quarter ended September 30, 2024 and 2023, non-interest income totaled $650 thousand, respectively. Earnings on bank-owned life insurance increased $35 thousand during the quarter ended September 30, 2024 compared to the quarter ended September 30, 2023. This increase to non-interest income was offset by a decrease in other non-interest income.

Non-interest Expense

For the quarter ended September 30, 2024, non-interest expense totaled $5.3 million, an increase of $98 thousand, or 1.9%, from the quarter ended September 30, 2023. The increase in non-interest expense was primarily due to a $118 thousand increase in professional fees primarily due to an increase in legal fees.

Income Taxes

For the quarter ended September 30, 2024, the Company recorded a $116 thousand income tax benefit, reflecting an effective tax rate of (84.7)%, compared to a $15 thousand income tax benefit, reflecting an effective tax rate of (9.1)%, for the same period in 2023. The income tax benefit recorded during these periods was primarily due to the $329 thousand and $294 thousand of federal tax-exempt income recorded on bank-owned life insurance recorded during the quarter ended September 30, 2024 and 2023, respectively.

Asset Quality

Asset quality metrics remain strong with non-performing assets to total assets decreasing to 0.38% as of September 30, 2024 from 0.40% as of June 30, 2024. During the quarter ended September 30, 2024, we recorded a $395 thousand recovery for credit losses primarily due to a decrease in delinquent loans, as well as consistently low levels of net charge-offs, strong asset quality metrics and continued conservative lending practices. During the quarter ended September 30, 2023, we recorded a $5 thousand provision for credit losses primarily due to an increase in our commercial construction and land loans. Our allowance for credit losses ("ACL") totaled $2.5 million, or 0.54% of total loans, as of September 30, 2024, compared to $3.0 million, or 0.63% of total loans, as of June 30, 2024. Our total credit losses coverage ratio ⁽³⁾ , including $2.1 million of fair value marks on acquired loans and the $2.5 million ACL, was 0.99% as of September 30, 2024 compared to 1.08% as of June 30, 2024, including $2.2 million of fair value marks on acquired loans and the $3.0 million ACL.

Capital and Liquidity

As of September 30, 2024, William Penn's stockholders' equity to assets totaled 15.79% and tangible capital to tangible assets ⁽⁴⁾ totaled 15.25%. The Bank's capital position remains strong relative to current regulatory requirements. The Bank has elected to follow the community bank leverage ratio framework and, as of September 30, 2024, the Bank had a community leverage ratio of 16.52% and is considered well-capitalized under the prompt corrective action framework.

The Bank continues to have substantial liquidity that has been retained in cash or invested in high quality government-backed securities. In addition, at September 30, 2024, we had the ability to borrow up to $283.6 million from the FHLB of Pittsburgh, $10.0 million with the Atlantic Community Bankers Bank, and $3.8 million with the Federal Reserve Bank.

About William Penn Bancorporation and William Penn Bank

William Penn Bancorporation, headquartered in Bristol, Pennsylvania, is the holding company for William Penn Bank, which is a community bank that serves the Delaware Valley area through twelve full-service branch offices in Bucks County and Philadelphia, Pennsylvania, and Burlington, Camden and Mercer Counties in New Jersey. The Company's executive offices are located at 10 Canal Street, Suite 104, Bristol, Pennsylvania 19007. William Penn Bank's deposits are insured up to the legal maximum (generally $250,000 per depositor) by the Federal Deposit Insurance Corporation (FDIC). The primary federal regulator for William Penn Bank is the FDIC. For more information about the Bank and William Penn, please visit www.williampenn.bank.

Forward Looking Statements

This news release may contain forward-looking statements, which can be identified by the use of words such as "believes," "expects," "anticipates," "estimates" or similar expressions. Such forward-looking statements and all other statements that are not historic facts are subject to risks and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors. These factors include, but are not limited to, general economic conditions (including higher inflation and its impact on national and local economic conditions), changes in the interest rate environment, legislative or regulatory changes that may adversely affect our business, changes in accounting policies and practices, changes in competition and demand for financial services, changes to consumer and business confidence, investor sentiment, or consumer spending of savings behavior, adverse changes in the securities markets, changes in deposit flows, changes in the quality or composition of our loan or investment portfolios and our ability to successfully integrate the business operations of acquired businesses into our business operations, the ability to attract, develop and retain qualified employees, our ability to maintain the security of our data processing and information technology systems, and that the Company may not be successful in the implementation of its business strategy. Additionally, other risks and uncertainties may be described in William Penn's Annual Report on Form 10-K for the year ended June 30, 2024, which is available through the SEC's EDGAR website located at www.sec.gov. Should one or more of these risks materialize, actual results may vary from those anticipated, estimated or projected. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as may be required by applicable law or regulation, William Penn assumes no obligation to update any forward-looking statements.

⁽¹⁾ As used in this press release, core net (loss) income is a non-GAAP financial measure. This non-GAAP financial measure excludes certain pre-tax adjustments and the tax impact of such adjustments, and income tax benefit adjustments. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measure, see "Non-GAAP Reconciliation" at the end of the press release.

⁽²⁾ As used in this press release, tangible book value per share is a non-GAAP financial measure. This non-GAAP financial measure excludes goodwill and other intangible assets. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

⁽³⁾ As used in this press release, total credit losses coverage ratio is a non-GAAP financial measure. This non-GAAP financial measure includes the fair value mark on acquired loans. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

⁽⁴⁾ As used in this press release, tangible capital to tangible assets is a non-GAAP financial measure. This non-GAAP financial measure excludes goodwill and other intangible assets. For a reconciliation of this and other non-GAAP financial measures to their comparable GAAP measures, see "Non-GAAP Reconciliation" at the end of the press release.

WILLIAM PENN BANCORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Financial Condition
(Dollars in thousands, except share amounts)

WILLIAM PENN BANCORPORATION AND SUBSIDIARIES
Unaudited Consolidated Statements of Income
(Dollars in thousands, except per share amounts)

WILLIAM PENN BANCORPORATION AND SUBSIDIARIES
Unaudited Selected Consolidated Financial and Other Data
(Dollars in thousands)

The following tables present information regarding average balances of assets and liabilities, the total dollar amounts of interest income and dividends from average interest-earning assets, the total dollar amounts of interest expense on average interest-bearing liabilities, and the resulting annualized average yields and costs. The yields and costs for the periods indicated are derived by dividing income or expense by the average daily balances of assets or liabilities, respectively, for the periods presented. Loan fees, including prepayment fees, are included in interest income on loans and are not material. Non-accrual loans are included in the average balances only. Any adjustments necessary to present yields on a tax equivalent basis are insignificant.

(1) Includes nonaccrual loan balances and interest, if any, recognized on such loans.
(2) Includes securities available for sale and securities held to maturity.
(3) Net interest rate spread represents the difference between the yield on average interest-earning assets and the cost of average interest-bearing liabilities.
(4) Net interest-earning assets represents total interest-earning assets less total interest-bearing liabilities.
(5) Net interest margin represents net interest income divided by average total interest-earning assets.

Asset Quality Indicators (unaudited)

Key Performance Ratios (unaudited)