Cashmere Valley Bank Reports Annual Earnings of $28.0 Million
Cashmere Valley Bank (CSHX) announced annual earnings of $28.0 million for the year ended December 31, 2023, with diluted earnings per share of $7.20. The bank declared a semi-annual dividend payment of $0.85 per share. The net income increased by 7.6% to $28.0 million, and the return on equity increased to 15.69% in fiscal 2023. However, there was a decrease in cash balances, and non-interest bearing deposits totaled $424.4 million, which was 23.9% of total deposits. The Bank's net interest margin increased to 3.30% in 2023, and the book value on AFS and HTM securities totaled $858.0 million at December 31, 2023. Gross loans totaled $1.042 billion, representing an increase of $36.7 million from December 31, 2022. The allowance for credit losses on loans (ACL) was 1.26%, and the Bank recorded provision expense of $2,942,000 in 2023. Total deposits were $1.8 billion as of December 31, 2023, representing a decrease of $126.3 million from December 31, 2022. Shareholders' equity totaled $202.8 million, a 28.0% increase from December 31, 2022.
01/16/2024 - 11:30 PM
CASHMERE, WA / ACCESSWIRE / January 16, 2024 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced annual earnings of $28.0 million for the year ended December 31, 2023. Diluted earnings per share was $7.20 , representing an increase of $0.51 per share, or 7.7% .
On January 16, 2024 the Bank's Board of Directors declared a semi-annual dividend payment of $0.85 per share to shareholders of record on January 26, 2024. The dividend will be paid on February 5, 2024.
"I am delighted with how we navigated 2023," said Greg Oakes, President and CEO. "The ability to increase earnings by $2.0 million in light of deposit outflows and interest rate pressure on our deposits is outstanding. 2022 and 2023 stressed financial markets in terms of capital, liquidity and interest rate risk. Those pressures have not entirely abated as of yet. Nonetheless, the increase in earnings and opening of our Union Gap location are reasons to celebrate."
2023 Highlights
The Bank reported the following statement of condition highlights as of December 31, 2023:
Net income increased 7.6% to $28.0 million for the year ended December 31, 2023 versus $26.0 million for fiscal year 2022. Fourth quarter net income totaled $7.7 million or $1.98 per share. Diluted earnings per share increased 7.7% to $7.20 per share. Earnings increased as the Bank's net interest margin expanded and the Bank qualified for an Employee Tax Retention Credit of $3.9 million . Return on equity increased to 15.69% in fiscal 2023 as compared to 14.68% in 2022. Return on assets increased 19 basis points to 1.39% . The increase was a result of an earnings improvement of $2.0 million in conjunction with a reduction in average assets. The Bank's net interest margin increased to 3.30% in 2023 as compared to 2.91% a year ago. Rate increases on cash held with the Federal Reserve, variable rate assets and new asset production or purchases led to an expanding margin. An increasing treasury yield curve resulted in higher yields on interest earning assets. A significant increase in deposit costs offset a portion of asset yield improvement. The efficiency ratio improved to 53.5% from 58.4% . The improvement was largely attributable to an increase in net interest income, a $3.9 million Employee Tax Retention Credit and a reduction from the prior year in losses on available for sale securities sales. Cash, Cash Equivalents and Restricted Cash
Cash balances decreased to $117.1 million at December 31, 2023 from $180.3 million as of December 31, 2022. The Bank continued to see deposit outflows during the year which reduced cash on hand. In December, the Bank entered into a 30-day borrowing from the Federal Home Loan Bank (FHLB) of $39.0 million . The borrowing was used to fund the purchase of agency mortgage backed securities. The transaction also entailed a swap arrangement. The purpose of the swap was to attempt to lock in the interest rate spread between the mortgage backed securities less FHLB borrowings
Investments
The book value on AFS and HTM securities totaled $858.0 million at December 31, 2023, a decrease of $51.0 million , or 5.6% , from December 31, 2022. AFS security sales totaled $90.2 million and the Bank recognized a pre-tax loss of $4.8 million on those security sales. Security maturities and payoffs totaled $22.2 million . AFS security purchases of $110.0 million were made in 2023. The overwhelming majority of securities purchases were amortizing mortgage backed or asset backed securities.
Held to maturity securities totaled $139.8 million at December 31, 2023 as compared to $146.4 at December 31, 2022.
During 2023 the average rate earned on HTM and AFS securities increased from 2.34% to 3.44% . The increase was due to a combination of increasing yields on floating rate securities along with purchasing higher yielding securities funded by sales of lower yielding securities.
Loans and Credit Quality
At December 31, 2023 gross loans totaled $1.04 2 billion, representing an increase of $36.7 million , or 3.6% , from December 31, 2022. Multifamily loans increased 88.8% to $112.3 million as of December 31, 2023, which was mostly driven by construction loans rolling over into term loans. Indirect dealer loans increased 4.1% to $234.2 million as of December 31, 2023. Municipal loans increased 10.4% to $91.0 million as of December 31, 2023. Construction and land development loans decreased 19.8% to $81.7 million as of December 31, 2023.
The allowance for credit losses on loans (ACL) was 1.26% , or $13.1 million , as of December 31, 2023. The reserve methodology in place as of December 31, 2022 changed to the Current Expected Credit Loss (CECL) methodology on January 1, 2023.
The Bank recorded provision expense of $2,942,000 in 2023 as compared to $800,000 in 2022. The increase in provision expense was largely due to an increase in charged off loans. Charged off loans totaled $4.7 million as compared to $1.4 million in 2022. The majority of charged off loans came from the equipment finance division which was adversely affected by a recession in long haul trucking throughout 2023.
Non-performing loan totals were largely unchanged from the prior year. As of December 31, 2023, non-performing loans totaled $1,998,000 , representing 0.19% of gross loans.
Deposits
Total deposits were $1.8 billion as of December 31, 2023, which represented a decrease of $126.3 million , or 6.6% , from December 31, 2022. Non-interest bearing deposits totaled $424.4 million , which was 23.9% of total deposits. Certificate of deposit balances increased significantly from $214.0 million at December 31, 2022 to $393.1 million as of December 31, 2023.
Capital
As of December 31, 2023, shareholders' equity totaled $202.8 million , a 28.0% increase from $158.4 million at December 31, 2022. The increase in capital was due to unrealized losses in available for sale securities improving by $23.5 million in combination with annual earnings less dividends paid. At period end, the Bank's GAAP capital to assets ratio was 9.91% as compared to 7.58% one year ago.
Earnings
Net Interest Income
Net interest income totaled $65.6 million for the year ended December 31, 2023 as compared to $61.9 million for the year ended December 31, 2022. The increase of $3.8 million represented an increase of 6.1% . Interest income increased $15.9 million while interest expense increased by $12.1 million . The average yield on earning assets improved from 3.11% to 4.11% while interest bearing liabilities increased from 0.29% to 1.18% . Loan income increased $7.4 million , securities income increased $5.7 million , fed funds and deposits with other financial institutions increased $2.8 million .
Non-Interest Income
Non-interest income increased $2.6 million , or 22.7% , as compared to 2022. Losses on sales of available for sale securities improved by $3.4 million and totaled $4.8 million during 2023. Mitchell, Reed and Schmitten revenues increased $172,000 in 2023 and finished the year with record net income of $2.4 million . Net interchange income increased $746,000.
Non-Interest Expense
Non-interest expense remained flat in 2023. In large part, level non-interest expenses were due to a $3.9 million Employee Retention Tax Credit. The credit was applied for and accounted for as a reduction to payroll tax expense in 2023. Payment of the tax credit is not anticipated until late 2024 or 2025. Wages and commissions increased $1.1 million , or 5.5% , in 2023. Occupancy expense also increased $696,000. Increases in occupancy expense were largely due to non-depreciable improvements in our facilities.
The provision for loans losses increased $2.1 million in 2023, which was necessitated by increases in charged-off loans.
Federal income tax expense increased approximately $2.4 million from the prior year due to an increase in earnings, and in combination with an increase in the Bank's effective tax rate. The Bank's effective tax rate was 18.1% for 2023 as compared to 12.8% in 2022.
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 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:
Consolidated Balance Sheets (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank and Subsidiary
December 31, 2023 September 30, 2023 December 31, 2022 Assets
Cash and Cash Equivalent:
Cash & due from banks
$ 26,619 $ 26,859 $ 27,706 Interest bearing deposits
86,432 105,325 142,617 Fed funds sold
4,085 2,662 9,989 Total Cash and Cash Equivalent
117,136 134,846 180,312
Securities available for sale
650,905 600,278 670,077 Securities held to maturity, net of allowance for credit losses $20 , $21 and $0 , respectively
139,775 141,258 146,409 Federal Home Loan Bank stock, at cost
3,008 2,505 2,669 Loans held for sale
4 1,223 142
Loans
1,042,453 1,026,040 1,005,741 Allowance for credit losses
(13,085 ) (13,252 ) (13,746 ) Net loans
1,029,368 1,012,788 991,995
Premises and equipment
21,017 21,061 18,275 Accrued interest receivable
9,411 8,734 8,199 Other real estate and foreclosed assets
97 97 -- Bank Owned Life Insurance
26,809 26,628 26,105 Goodwill
7,576 7,576 7,576 Intangibles
3,465 3,557 3,796 Mortgage servicing rights
2,536 2,567 2,685 Net deferred tax assets
19,037 23,735 21,021 Other assets
12,594 12,302 8,501
Total assets
$ 2,042,738 $ 1,999,155 $ 2,087,762
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand
$ 424,380 $ 441,561 $ 457,666 Savings and interest-bearing demand
956,290 1,008,861 1,228,375 Time
393,097 346,346 213,978 Total deposits
1,773,767 1,796,768 1,900,019
Accrued interest payable
2,216 1,476 434 Short-term borrowings
48,858 8,267 17,166 Other liabilities
15,099 14,243 11,753
Total liabilities
1,839,940 1,820,754 1,929,372
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 12/31/2023 -- 3,883,986 ;
-- -- -- Additional paid-in capital
4,833 4,782 4,540 Treasury stock
(16,784 ) (16,784 ) (16,784 ) Retained Earnings
280,087 272,400 259,839 Other comprehensive income
(65,758 ) (82,171 ) (89,239 ) Total Cashmere Valley Bank shareholders' equity
202,378 178,227 158,356
Noncontrolling interest
420 174 34 Total shareholders' equity
202,798 178,401 158,390
Total liabilities and shareholders' equity
$ 2,042,738 $ 1,999,155 $ 2,087,762
Year-to-Date Consolidated Statements of Income (UNAUDITED) (Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
For the twelve months ended,
December 31, 2023 December 31, 2022 Interest Income
Loans
$ 47,392 $ 39,950 Fed funds sold and deposits at other financial institutions
4,992 2,199 Securities available for sale:
Taxable
24,548 16,528 Tax-exempt
1,886 5,653 Securities held to maturity:
Taxable
3,151 1,856 Tax-exempt
184 58 Total interest income
82,153 66,244
Interest Expense
Deposits
16,259 4,319 Short-term borrowings
257 63 Total interest expense
16,516 4,382
Net interest income
65,637 61,862
Provision for Credit Losses
2,942 800
Net interest income after provision for credit losses
62,695 61,062
Non-Interest Income
Service charges on deposit accounts
2,128 2,130 Mortgage banking operations
1,514 2,320 Net gain (loss) on sales of securities available for sale
(4,818 ) (8,179 ) Brokerage commissions
999 1,136 Insurance commissions and fees
7,720 7,552 Net interchange income (expense)
4,743 3,997 BOLI cash value
704 1,247 Dividends from correspondent banks
86 84 Other
1,234 1,379 Total non-interest income
14,310 11,666
Non-Interest Expense
Salaries and employee benefits
22,359 24,558 Occupancy and equipment
4,013 3,317 Audits and examinations
409 546 State and local business and occupation taxes
1,346 1,248 FDIC insurance & WA state assessments
1,017 687 Legal and professional fees
1,361 809 Check losses and charge-offs
582 495 Low income housing investment losses
633 656 Data processing
6,372 5,541 Product delivery
1,255 1,222 Other
3,412 3,831 Total non-interest expense
42,759 42,910
Income before income taxes
34,246 29,818
Income Taxes
6,214 3,818
Net income
$ 28,032 $ 26,000
Net income attributable to noncontrolling interest
50 -- Net income attributable to Cashmere Valley Bank
27,982 26,000
Earnings Per Share
Basic
$ 7.20 $ 6.70 Diluted
$ 7.20 $ 6.69
Quarterly Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
For the quarters ended,
December 31, 2023 September 30, 2023 December 31, 2022 Interest Income
Loans
$ 12,767 $ 12,115 $ 10,641 Fed funds sold and deposits at other financial institutions
1,087 1,448 1,190 Securities available for sale:
Taxable
6,750 6,254 4,904 Tax-exempt
357 372 1,099 Securities held to maturity:
Taxable
787 778 773 Tax-exempt
46 46 41 Total interest income
21,794 21,013 18,648
Interest Expense
Deposits
5,163 4,709 1,261 Short-term borrowings
150 49 12 Total interest expense
5,313 4,758 1,273
Net interest income
16,481 16,255 17,375
Provision for Credit Losses
1,115 743 307
Net interest income after provision for credit losses
15,366 15,512 17,068
Non-Interest Income
Service charges on deposit accounts
473 553 557 Mortgage banking operations
374 465 422 Net gain (loss) on sales of securities available for sale
(2,560 ) -- (1,019 ) Brokerage commissions
232 247 275 Insurance commissions and fees
2,007 1,830 2,091 Net interchange income (expense)
1,043 1,188 1,204 BOLI cash value
182 180 729 Dividends from correspondent banks
19 19 21 Other
367 298 330 Total non-interest income
2,137 4,780 4,610
Non-Interest Expense
Salaries and employee benefits
2,512 6,374 5,935 Occupancy and equipment
1,025 1,041 916 Audits and examinations
56 157 103 State and local business and occupation taxes
345 346 360 FDIC insurance & WA state assessments
229 265 171 Legal and professional fees
622 232 223 Check losses and charge-offs
128 185 109 Low income housing investment losses
154 153 151 Data processing
1,676 1,657 1,479 Product delivery
324 301 309 Other
859 817 889 Total non-interest expense
7,930 11,528 10,645
Income before income taxes
9,573 8,764 11,033
Income Taxes
1,858 1,574 1,344
Net income
$ 7,715 $ 7,190 $ 9,689
Net income attributable to noncontrolling interest
27 7 -- Net income attributable to Cashmere Valley Bank
$ 7,688 $ 7,183 $ 9,689
Earnings Per Share
Basic
$ 1.98 $ 1.85 $ 2.49 Diluted
$ 1.98 $ 1.85 $ 2.49
SOURCE: Cashmere Valley Bank
press release on accesswire.com
The annual earnings were $28.0 million.
The diluted earnings per share was $7.20.
The dividend payment was $0.85 per share.
The net income increased by 7.6% to $28.0 million.
The return on equity increased to 15.69%.
The net interest margin increased to 3.30% in 2023.
Gross loans totaled $1.042 billion.
Total deposits were $1.8 billion.
Shareholders' equity totaled $202.8 million, a 28.0% increase from December 31, 2022.
