Cashmere Valley Bank Earnings Increase 18.4% From Prior Year
07/20/2021 - 10:00 PM
CASHMERE, WA / ACCESSWIRE / July 20, 2021 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced 2021 year to date earnings of $14.2 million and quarterly earnings of $6.9 million for the periods ended June 30, 2021. Year to date diluted earnings per share were $3.59, representing an increase of $0.57 per share, or 18.8%.
As of June 30, 2021, deposit balances totaled $1.9 billion. Deposit balances increased approximately $152.4 million from December 31, 2021, representing an 8.9% increase.
"Our deposit growth has been the driver for our increasing earnings," said Greg Oakes, President and CEO. "Our deposit growth continued in the second quarter, exceeding our expectations. Deposit growth along with fees earned from PPP forgiveness have been welcome surprises in light of the industry's compressed interest rate environment. We were also pleased with the results of our tender offer which was completed during the second quarter."
Q2 Highlights The Bank reported the following statement of condition highlights as of June 30, 2021:
June 30, 2021 gross loans totaled $941.2 million representing a decrease of $9.8 million or 1.0% from December 31, 2020. Total deposits increased by $152.4 million or 8.9% from December 31, 2020. Non-interest bearing deposits have increased $57.0 million or 15.6% since December 31, 2020. Non-interest bearing deposits total $422.6 million and represent 22.6% of total deposits. On May 14, 2021 the Bank announced the completion of a tender offer to repurchase the Bank's stock at $70.00 per share. The Bank was approved to repurchase 340,000 shares and successfully repurchased 98,223 shares. Net income for the quarter was $6.9 million, an increase of $348,000 or 5.3% over the prior year. Diluted earnings per share increased $0.10 to $1.75 per share. An increase of $1,358,000 in net interest income combined with a reduction in provision for loan losses of $1,996,000 were the primary reasons for the increase in income. The second quarter of 2020 did have a non-recurring gain of $2.5 million on the sale of securities. Pandemic Response Update As of June 30, 2021, the remaining balance on PPP loans totaled $40.1 million. Remaining fees to be earned totaled $1.9 million. During the quarter, net deferred fees reported through income totaled $762,000 and year to date net deferred fees totaled $1,835,000, which have had a positive impact on the Bank's earnings and net interest margin.
The Bank began providing support to its employees at the onset of COVID-19 including at-risk employees and employees with child care needs. Those employees have been allowed to stay home, Bank paid as needed on an unlimited basis, or work from home if their position allows. While some employees will continue to work from home at a reduced level, the program to financially support for COVID related illnesses has been suspended.
Cash, Cash Equivalents and Restricted Cash Total cash, cash equivalents and restricted cash were $134.7 million at June 30, 2021, compared to $135.7 million at December 31, 2020.
Investments The investment portfolio totaled $1.0 billion at June 30, 2021, an increase of $151.5 million from December 31, 2020 and an increase of $330.0 million from June 30, 2020. The increase is a result of significant deposit growth combined with marginal loan demand. Security types showing the most significant increases year to date were CMO's $77.9 million, taxable municipal securities $54.2 million and treasury securities $22.4 million.
Loans and Credit Quality Gross loans totaled $941.2 million as of June 30, 2021 a decrease of $21.9 million from March 31, 2021 and a decrease of $33.8 million from June 30, 2020. As compared to the prior June 30, real estate balances consisting of multifamily and consumer adjustable rate mortgages have decreased $29.0 million. Commercial and agriculture balances have decreased $15.1 million. The decrease in commercial and agriculture balances were primarily the result of a decrease of $26.3 million in PPP loans which were partially offset by increases in commercial loans. Over the last 12 months the Bank did see a significant increase in commercial real estate (CRE) loans. CRE loans increased $25.6 million or 10.4%.
The allowance for loans and lease losses (ALLL) was 1.47% of gross loans as compared to 1.36% one year ago. The Bank did not make any provisions during the first half of 2021 and the allowance totals $13.9 million.
Credit quality remains exceptionally strong with non-performing loans totaling $856,000 representing 0.09% of total loans as of June 30, 2021.
Deposits Deposits totaled $1.872 billion at June 30, 2021, as compared to $1.585 billion at June 30, 2020. The $286.9 million increase in deposits from the year end represented an 18.1% increase. Transaction accounts grew $322.7 million while time deposits decreased $35.9 million over the prior 12 months.
Earnings
Net Interest Income Net interest income totaled $25.5 million during the first six months of 2021, compared to $23.2 million during the first six months of 2020. The primary reason for increases in net interest income were increases in PPP fees which are generally recorded into income at the time of PPP loan forgiveness. Net PPP fees totaled approximately $1.8 million in the first six months of 2021. Net fees in the second quarter were approximately $762,000 which was a decrease from $1,073,000 in the first quarter of 2021. PPP fees recognized in the first six months of 2020 were negligible.
Interest income from available for sale securities totaled $8.7 million in the first half of 2021, compared to $7.6 million in the comparable period from one year ago. As compared to the prior year, yields on investment securities have decreased from 2.54% to 1.90%. Securities portfolio growth has driven the increase in securities income.
The net interest margin was 2.61% for the first six months of 2021, compared to 2.87% in the first six months of 2020. Loan yields have increased six basis points, while cash and available for sale securities yields have decreased 68 and 64 basis points respectively.
Non-Interest Income Non-interest income totaled $9.6 million in the first half of 2021 as compared to $11.0 million in the first half of 2020. The decrease was due to a $2.5 million reduction on gains on security sales. Mortgage banking income remained strong and was largely unchanged from the prior year. Interchange income increased significantly by $539,000 (56.6%) due to program and network changes.
Non-Interest Expense Non-interest expense totaled $18.5 million in the first half of 2021 as compared to $17.8 million in the first half of 2020.
As compared to the same period one year ago, wages and benefits expense increased $352,000 or 3.4% and professional services including legal, audits and examination expenses increased $269,000.
The Bank's efficiency ratio was 55.4% in the first half of 2021 as compared to 54.2% in the first half of 2020.
About Cashmere Valley Bank Cashmere Valley Bank was established September 24, 1932 and now has 11 retail offices in Chelan, Douglas, Kittitas and Yakima Counties and a municipal lending office in King County. The Bank provides business and personal banking, commercial lending, insurance services through its wholly owned subsidiary Mitchell, Reed & Schmitten Insurance, investment services, mortgage services, equipment lease financing, auto and marine dealer financing and municipal lending. The success of Cashmere Valley Bank is the result of maintaining a high level of personal service and controlling expenses so our fees and charges offer our customers the best value available. We remain committed to those principles that we feel are best summarized as, "the little Bank with the big circle of friends."
Forward-Looking Statements This release may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Bank's earnings in future periods. Forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts. They often include the words "believe," "expect," "intend," "anticipate," "estimate," "will," "would," "should," "could" or "may." Factors that could cause future results to vary materially from current management expectations include, but are not limited to, general economic conditions, economic uncertainty in the United States and abroad, changes in interest rates, deposit flows, real estate values, costs or effects of acquisitions, competition, changes in accounting principles, policies or guidelines, legislation or regulation, and other economic, competitive, governmental, regulatory and technological factors affecting the Bank's operations. The Bank undertakes no obligation to release publicly the result of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this press release or to reflect the occurrence of unanticipated events.
Media Contact: Greg Oakes, CEO, (509) 782-2092 Mike Lundstrom, CFO, (509) 782-5495
Consolidated Balance Sheets (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank and Subsidiary
June 30, 2021 December 31, 2020 June 30, 2020 Assets
Cash and Cash Equivalent:
Cash & due from banks
$ 21,890 $ 27,258 $ 28,355 Interest bearing deposits
94,013 97,466 108,387 Fed funds sold
18,743 10,990 4,872 Total Cash and Cash Equivalent
134,646 135,714 141,614
Securities available for sale
1,007,823 856,327 677,793 Federal Home Loan Bank stock, at cost
2,393 1,982 1,982 Loans held for sale
532 1,470 5,497
Loans
941,176 950,970 974,953 Allowance for credit losses
(13,854 ) (13,730 ) (13,226 ) Net loans
927,322 937,240 961,727
Premises and equipment
17,348 16,381 16,680 Accrued interest receivable
8,181 7,829 7,228 Foreclosed real estate
- - - Bank Owned Life Insurance
26,138 15,908 15,675 Goodwill
7,518 7,182 7,162 Intangibles
2,233 1,564 1,684 Mortgage servicing rights
2,808 2,856 2,659 Other assets
10,552 9,835 7,073
Total assets
$ 2,147,494 $ 1,994,288 $ 1,846,774
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand
$ 422,606 $ 365,645 $ 348,397 Savings and interest-bearing demand
1,232,659 1,121,111 984,123 Time
217,057 233,215 252,927 Total deposits
1,872,322 1,719,971 1,585,447
Accrued interest payable
506 612 699 Short-term borrowings
25,409 16,395 14,122 Long-term borrowings
- - - Other liabilities
14,587 18,632 23,549
Total liabilities
1,912,824 1,755,610 1,623,817
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 6/30/2021 -- 3,876,931 ; 3/31/2021 -- 3,972,304 ; 6/30/2020 -- 3,972,149
3,898 3,723 3,649 Treasury stock
(16,784 ) (9,908 ) (9,908 ) Retained Earnings
228,723 217,487 206,753 Accumulated other comprehensive income
18,833 27,376 22,463 Total shareholders' equity
234,670 238,678 222,957
Total liabilities and shareholders' equity
$ 2,147,494 $ 1,994,288 $ 1,846,774
Quarterly Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
For the quarters ended,
June 30, 2021 December 31, 2020 June 30, 2020 Interest Income
Loans
$ 9,656 $ 9,761 $ 9,409 Deposits at other financial institutions
21 26 (7 ) Federal funds sold
2 1 2 Securities available for sale:
Taxable
2,862 2,259 2,362 Tax-exempt
1,657 1,617 1,466 Total interest income
14,198 13,664 13,232
Interest Expense
Deposits
1,341 1,515 1,735 Short-term borrowings
11 9 9 Long-term borrowings
- - - Total interest expense
1,352 1,524 1,744
Net interest income
12,846 12,140 11,488
Provision for Credit Losses
8 321 2,004
Net interest income after provision for credit losses
12,838 11,819 9,484
Non-Interest Income
Service charges on deposit accounts
354 327 204 Mortgage banking operations
1,364 2,110 2,121 Net gain (loss) on sales of securities available for sale
21 - 2,508 Brokerage commissions
369 202 241 Insurance commissions and fees
1,264 1,182 1,143 Net interchange income (expense)
783 587 552 BOLI cash value
116 117 116 Dividends from correspondent banks
15 15 14 Other
314 332 267 Total non-interest income
4,600 4,872 7,166
Non-Interest Expense
Salaries and employee benefits
5,349 4,951 5,208 Occupancy and equipment
756 799 728 Audits and examinations
316 216 233 State and local business and occupation taxes
228 239 259 Legal and professional fees
217 98 140 Net loss (gain) on foreclosed real estate
- - - Check losses and charge-offs
131 99 114 Low income housing investment losses
155 134 336 Data processing
1,214 1,155 1,087 Product delivery
284 255 301 Other
797 786 618 Total non-interest expense
9,447 8,732 9,024
Income before income taxes
7,991 7,959 7,626
Income Taxes
1,092 967 1,075
Net income
$ 6,899 $ 6,992 $ 6,551
Earnings Per Share
Basic
$ 1.76 $ 1.76 $ 1.65 Diluted
$ 1.75 $ 1.76 $ 1.65
Year-to-Date Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
For the six months ended,
June 30, 2021 June 30, 2020 Interest Income
Loans
$ 19,578 $ 18,898 Deposits at other financial institutions
44 324 Federal Funds Sold
3 26 Securities available for sale:
Taxable
5,416 5,048 Tax-exempt
3,298 2,563 Total interest income
28,339 26,859
Interest Expense
Deposits
2,779 3,650 Short-term borrowings
19 18 Long-term borrowings
- - Total interest expense
2,798 3,668
Net interest income
25,541 23,191
Provision for Credit Losses
4 2,467
Net interest income after provision for credit losses
25,537 20,724
Non-Interest Income
Service charges on deposit accounts
681 667 Mortgage banking operations
3,244 3,269 Net gain (loss) on sales of securities available for sale
21 2,520 Brokerage commissions
584 463 Insurance commissions and fees
2,516 2,329 Net interchange income (expense)
1,492 953 BOLI cash value
230 228 Dividends from correspondent banks
37 36 Other
778 573
9,583 11,038 Total non-interest income
Non-Interest Expense
Salaries and employee benefits
10,562 10,210 Occupancy and equipment
1,501 1,478 Audits and examinations
619 513 State and local business and occupation taxes
479 462 Legal and professional fees
439 276 Net loss (gain) on foreclosed real estate
- - Check losses and charge-offs
332 220 Low income housing investment losses
300 418 Data processing
2,264 2,270 Product delivery
517 553 Other
1,536 1,358 Total non-interest expense
18,549 17,758
Income before income taxes
16,571 14,004
Income Taxes
2,356 1,997
Net income
$ 14,215 $ 12,007
Earnings Per Share
Basic
$ 3.60 $ 3.02 Diluted
$ 3.59 $ 3.02
SOURCE: Cashmere Valley Bank
View source version on accesswire.com:
https://www.accesswire.com/656384/Cashmere-Valley-Bank-Earnings-Increase-184-From-Prior-Year