 FARMINGTON HILLS, Mich., July 29, 2020 GLOBE NEWSWIRE -- Level One Bancorp, Inc. Level One Nasdaq: LEVL today reported financial results for the second quarter of 2020, which included net income of 2.7 million, or 0.35 diluted earnings per share. This compares to net income of 4.1 million, or 0.53 diluted earnings per share, in the preceding quarter and 3.6 million, or 0.45 diluted earnings per share, in the second quarter of 2019. Patrick J. Fehring, President and Chief Executive Officer of Level One, commented, We are pleased to report strong second quarter operating results despite being faced with the challenges of the COVID-19 pandemic. The second quarter revenue reflects the significant and continuing growth in our residential mortgage banking business, which experienced a record quarterly increase in mortgage banking revenue of 3.1 million, or 119.63, over the previous quarter. This increase is due to the continued low interest rate environment, the dedicated efforts of our team members, as well as management leveraging efficiencies in the production process to meet the unprecedented demand. Level One originated 203.6 million of residential mortgage loans during the three months ended June 30, 2020, a 124.0 increase from 90.9 million originated in the first quarter 2020. Also during the quarter, our efficiency ratio declined to 62.79, reflecting the positive impact of the successful integration of Ann Arbor State Bank during first quarter of 2020.Commenting on credit quality, Mr. Fehring stated, Although we did see an improvement in our credit quality as our nonperforming loans decreased to 0.46 of total loans, we still believe it was prudent to record a provision for loan losses of 5.6 million for the quarter. The increase in provision expense reflects the uncertainty of forecasted economic conditions as businesses and individuals face impacts of the pandemic, in addition to a large chargeoff taken during the second quarter. Overall, management believes that the Banks reserves remain appropriate, and we will continue to be diligent in our review of credit as circumstances related to the pandemic unfold.Mr. Fehring concluded, I am very proud of the Level One team for their great efforts this quarter in assisting our clients during these challenging times. By quarter end, Level One had closed 399.2 million of Paycheck Protection Program PPP loans to more than 2,000 small and mid-sized businesses, making a difference in the communities we serve. Approximately 40 of these PPP loans are to new clients, which provides us an opportunity for future growth. We will continue to monitor the COVID-19 pandemic and evaluate the impact that it could have on our customers and our team members.Financial Highlights Net income was 2.7 million, or 0.35 diluted earnings per share Net interest margin, on a fully taxable equivalent FTE basis, was 2.98, compared to 3.42 in the preceding quarter and 3.50 in the second quarter of 2019 Noninterest income was 4.3 million higher at 7.8 million in the second quarter of 2020, compared to 3.5 million in the second quarter of 2019 Total assets increased 60.37 to 2.54 billion at June 30, 2020, compared to 1.58 billion at December 31, 2019 Total loans increased 47.88 to 1.82 billion at June 30, 2020, compared to 1.23 billion at December 31, 2019, which reflected the origination of 399.2 million in PPP loans to more than 2,000 small and mid-sized businesses Total deposits increased 60.41 to 1.82 billion at June 30, 2020, compared to 1.14 billion at December 31, 2019 Book value per share increased 5.33 to 23.31 per share at June 30, 2020, compared to 22.13 per share at December 31, 2019 Tangible book value per share decreased 13.28 to 18.09 per share at June 30, 2020, compared to 20.86 per share at December 31, 2019 Provision for loan loss was 5.1 million higher at 5.6 million in the second quarter of 2020, compared to 429 thousand in the second quarter of 2019Balance Sheet ReviewLevel One recorded significant balance sheet growth in the second quarter of 2020 as a result of the PPP program, although much of it is expected to be temporary. Total assets were 2.54 billion at June 30, 2020, an increase of 956.8 million, or 60.37, from 1.58 billion at December 31, 2019, and up 1.04 billion, or 68.84, from 1.51 billion at June 30, 2019. The increase in total assets from December 31, 2019 was due to 399.2 million of PPP loans originated in the second quarter of 2020, the acquisition of Ann Arbor State Bank on January 2, 2020, which contributed 325.3 million of growth in total assets, and an increase of 260.2 million in cash and cash equivalents resulting from funding under the Paycheck Protection Program Liquidity Facility PPPLF to facilitate PPP lending. The increase in total assets year over year was primarily attributable to the same factors.The investment securities portfolio grew 36.3 million, or 20.05, to 217.2 million at June 30, 2020, from 180.9 million at December 31, 2019, while remaining relatively flat compared to June 30, 2019. The increase in the investment securities portfolio compared to December 31, 2019 was primarily due to the acquisition of Ann Arbor State Bank, which contributed 47.4 million of investment securities. In addition, during the six months ended June 30, 2020, we repositioned the investment portfolio through purchases of 38.7 million and sales of 49.8 million.Total loans were 1.82 billion at June 30, 2020, an increase of 587.7 million, or 47.88, from 1.23 billion at December 31, 2019, and up 648.9 million, or 55.62, from 1.17 billion at June 30, 2019. The growth in total loans compared to December 31, 2019 and June 30, 2019 was primarily due to the origination of 399.2 million in PPP loans in the second quarter of 2020. The acquisition of Ann Arbor State Bank also contributed 224.1 million of loans. The loan growth was partially offset by 30.2 million of runoff of acquired loans and 5.2 million of originated loans during the first two quarters of 2020. The increase in total assets year over year was attributable to the same factors mentioned in the analysis above, and organic loan growth of 61.1 million in the third and fourth quarters of 2019.Total deposits were 1.82 billion at June 30, 2020, an increase of 685.9 million, or 60.41, from 1.14 billion at December 31, 2019, and increased 591.9 million, or 48.14, from 1.23 billion at June 30, 2019. The increase in deposits compared to December 31, 2019 and June 30, 2019 was primarily due to 421.1 million of organic deposit growth during the six months ended June 30, 2020, driven by deposits of PPP loan funds into customer accounts. In addition, the acquisition of Ann Arbor State Bank contributed 264.8 million in deposits. Total deposit composition at June 30, 2020 consisted of 41.93 of demand deposit accounts, 25.95 of savings and money market accounts and 32.12 of time deposits.Total debt outstanding was 499.6 million at June 30, 2020, an increase of 243.0 million, or 94.66, from 256.6 million at December 31, 2019, and an increase of 407.8 million, or 443.92, from 91.8 million at June 30, 2019. The increase in debt outstanding compared to December 31, 2019 was primarily due to increases of 270.4 million in Federal Reserve Bank FRB borrowings under the PPPLF, and 38.0 million in long-term FHLB advances of which 15.3 million related to FHLB advances acquired from the Ann Arbor State Bank acquisition, partially offset by a decrease of 60.0 million in short-term FHLB advances and 5.0 million in federal funds purchased. The increase in total borrowings compared to June 30, 2019 was primarily due to increases of 270.4 million in FRB borrowings, 153.0 million in long-term FHLB advances and 30.0 million in subordinated notes, partially offset by a decrease of 45.0 million in short-term FHLB advances. The increase in debt outstanding, as well as the issuance of new subordinated notes during the fourth quarter of 2019, reflected managements efforts to fund the liquidity needs of Level One in a cost-effective manner.Operating ResultsLevel Ones net interest income increased 1.4 million, or 9.53, to 16.2 million in the second quarter of 2020, compared to 14.8 million in the preceding quarter and increased 3.8 million, or 30.48, compared to 12.4 million in the second quarter of 2019.Level Ones net interest margin, on a FTE basis, was 2.98 in the second quarter of 2020, compared to 3.42 in the preceding quarter and 3.50 in the second quarter of 2019. This decrease in the net interest margin compared to the preceding quarter and second quarter of 2019 was partially a result of lower average loan yield. Average loan yield decreased 66 basis points to 4.34 for the second quarter of 2020, compared to 5.00 for the preceding quarter and down 109 basis points from 5.43 for the second quarter of 2019, primarily due to the target federal funds rate dropping 150 basis points in March 2020 in response to the COVID-19 pandemic health crisis as well as decreasing 75 basis points in the second half of 2019. Another contributing factor to the decrease in loan yields, was the impact of the PPP loans originated during the second quarter of 2020 which had a yield of 2.99, net of deferred feescosts, compared to the non-PPP loans which had a yield of 4.60. The decrease in loan yields was accompanied by a corresponding decrease in the cost of funds, which declined 47 basis points to 1.09 in the second quarter of 2020, compared to 1.56 in the preceding quarter and down 98 basis points from 2.07 in the second quarter of 2019. Finally, during the second quarter of 2020, our average cash balances of 226. 