Cashmere Valley Bank Reports Year-to-Date Earnings of $13.1 Million, Gross Loans at All Time High
Cashmere Valley Bank (OTCQX:CSHX) announced quarterly earnings of $5.4 million, with year-to-date earnings totaling $13.1 million. Diluted earnings per share increased by 77.1% to $3.37. Deposit balances decreased by 5.3% to $1.799 billion. Gross loans reached an all-time high of $1.026 billion. The Bank's return on assets increased to 1.30% from 0.68%, and return on equity was 15.21% compared to 7.51% last year.
Positive
Quarterly earnings of $5.4 million, with year-to-date earnings of $13.1 million.
Diluted earnings per share increased by 77.1% to $3.37.
Gross loans reached an all-time high of $1.026 billion.
Return on assets increased to 1.30% from 0.68%.
Return on equity was 15.21% compared to 7.51% last year.
07/18/2023 - 10:00 PM
CASHMERE, WA / ACCESSWIRE / July 18, 2023 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced quarterly earnings of $5.4 million for the quarter ended June 30, 2023. Year-to-date earnings totaled $13.1 million as compared to $7.4 million for the six months ended June 30, 2022. Year-to-date diluted earnings per share were $3.37 , representing an increase of $1.46 per share, or 77.1% . In the first six months of 2023, losses on securities sold totaled $2.3 million as compared $7.3 million in 2022.
As of June 30, 2023, deposit balances totaled $1.79 9 billion, a decrease of $101.2 million from 5.3% decrease. For the second quarter, deposit balances fell by $42.3 million , or 2.3% .
"The banking environment continues to be a challenging one," said Greg Oakes, President and CEO. "While the economy and rate volatility are difficult to manage, we are very pleased with our financial results. Deposit outflows have slowed for the time being and our net interest margin appears to be stabilizing. Growing our GAAP capital was our primary focus one year ago and we have significantly increased our capital levels. Currently, we are diligently managing our net interest margin and on hand liquidity, but at this point those metrics are strong."
Q2 Highlights
The Bank reported the following statement of condition highlights as of June 30, 2023:
On July 18, 2023, the Bank's Board of Directors declared a dividend of $0.85 per share. The dividend will be payable on August 7, 2023 for shareholders of record on July 28, 2023. As of June 30, 2023, gross loans totaled $1.02 6 billion representing an increase from June 30, 2022 of $17.1 million . The Bank's return on assets increased to 1.30% from 0.68% primarily due to the aforementioned security sales and increases in net interest income. The Bank's return on equity was 15.21% as compared to 7.51% one year ago. Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $121.3 million at June 30, 2023, compared to $136.5 million at June 30, 2022. The Bank has made a concerted effort to maintain large cash balances through security sales and paydowns without full reinvestment of principal.
Investments
The book value of the Bank's investment portfolio totaled $850.9 million at June 30, 2023, a decrease of $163.2 million from June 30, 2022. As of June 30, 2023, $142.8 million in securities were classified as held-to-maturity as compared to $139.6 million as of June 30, 2022. Yields on securities have significantly increased from 2.07% for the first six months of 2022 to 3.25% for the first six months of 2023. Yields have increased due to new purchases and floating rate securities repricing upwards.
During the quarter, the Bank sold securities for $34.3 million resulting in a $1.9 million loss. The sale was executed as favorable pricing existed on some tax-exempt municipal securities. The sales resulted in additional cash on hand and also increased the yield on earning assets.
Loans and Credit Quality
Gross loans reached an all-time high of $1.02 6 billion as of June 30, 2023, which represents an increase of $20.5 million from December 31, 2022 and an increase of $17.1 million from June 30, 2022. During 2023, loan growth has come primarily from multi-family loans, municipal loans and construction and land development loans. While loan pricing has increased we continue to see moderate demand from our customer base.
As of June 30, 2023, the allowance for credit losses on loans (ACL) was 1.22% of gross loans as compared to 1.36% one year ago. The Bank has allocated $1,085,000 t o the loan loss provisions through the second quarter of 2023 as compared to $106,000 t hrough the second quarter of 2022. The reduction in allowance percentage was primarily attributable to the required implementation of Current Expected Credit Loss Model, effective January 1, 2023.
Credit quality remains exceptionally strong with non-performing loans representing 0.14% of gross loans as of June 30, 2023. This is a slight increase from 0.04% as of June 30, 2022.
Deposits
Total deposits decreased by $164.9 million , or 8.4% , from June 30, 2022. From March 31, 2023 to June 30, 2023 total deposits decreased $42.3 million , or 2.3% . Non-interest deposits totaled $415.2 million as of June 30, 2023, which represents 23.1% of total deposits. The average cost of deposits increased 64 basis points to 0.91% as compared to the six months ended June 30, 2022.
Construction on the Union Gap facility is nearing completion. The Bank anticipates opening that location sometime during the third quarter. The branch will house traditional banking services along with a mortgage lender and MRS Insurance personnel.
Equity
Tier 1 capital remains strong. Tier 1 capital increased to $243.5 million from $219.5 at June 30, 2023, due to earnings less dividends paid during 2023.
GAAP capital reflected an increase of $22.6 million from June 30, 2022, and an increase of $24.0 million from December 31, 2022. The Bank entered into three swaps with notional value of $125 million during 2023 that effectively turn some of the Bank's fixed rate securities into floating rate securities. An unrealized gain of $1.3 million existed on those swaps as of June 30, 2023. As of June 30, 2023, the Bank's GAAP capital to assets ratio was 9.07% as compared to 7.36% one year ago.
Earnings
Net Interest Income
For the six months ended June 30, 2023, net interest income totaled $32.9 million compared to $28.2 million in the same period one year ago. The increase from the prior quarter was a result of increasing loan income of $3.5 million , securities income of $3.3 million and from higher rates paid on cash balances with other institutions totaling $2.2 million . Interest income has increased as a result of the increasing yield curve, which positively affects variable rate assets and also causes higher rates on new loans, securities and cash.
For the quarter ended June 30, 2023, net interest income increased $974,000 over the prior year, however net interest income decreased $1.7 million over the quarter ended March 31, 2023. The decrease from the prior quarter was due to increasing cost of funds on deposits, which increased approximately $2.0 million quarter over quarter.
The net interest margin was 3.30% for the first six months of 2023, compared to 2.67% during the first six months of 2022. The improvement in net interest income is attributable to higher yields on earning assets.
Non-Interest Income
Non-interest income totaled $7.4 million in the first six months of 2023 as compared to $2.0 million in the first six months of 2022. Losses on securities sales represented $7.3 million of the reduction in income in 2022. The Bank has realized $2.3 million in losses through the first six months of 2023, a reduction of $5.0 million . As mortgage refinances have slowed, income from mortgage banking operations has decreased to $676,000 in the first six months of 2023 as compared to $1,423,000 in the first six months of 2022. Income from insurance commission and fees increased to $3.88 million from $3.54 million in the first six months of 2022.
Non-Interest Expense
Non-interest expense totaled $23.3 million in the first six months of 2023, as compared to $21.6 million in the first six months of 2022.
Increases in salary and benefits were primarily responsible for the increase in non-interest expense. As compared to the same period one year ago, wages and benefits expense increased $1.1 million , or 8.5% .
Data processing costs have also increased 15.8% , or $415,000 , from the prior year and occupancy costs have increased $324,000.
The Bank's efficiency ratio was 57.8% in the first six months of 2023 as compared to 71.5% in the first six months of 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 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.
Consolidated Balance Sheets (UNAUDITED) (Dollars in Thousands)
June 30, 2023 March 31, 2023 June 30, 2022 Assets
Cash and Cash Equivalent:
Cash & due from banks
$ 26,674 $ 24,027 $ 24,755 Interest bearing deposits
91,422 82,565 101,080 Fed funds sold
3,179 3,863 10,634 Total Cash and Cash Equivalent
121,275 110,455 136,469
Securities available for sale
627,646 691,926 804,607 Securities held to maturity, net of allowance for credit losses $22 , $347 and $0 , respectively
142,796 144,381 139,637 Federal Home Loan Bank stock, at cost
2,505 2,505 2,669 Loans held for sale
165 4 564
Loans
1,026,191 1,016,257 1,009,137 Allowance for credit losses
(12,540 ) (12,831 ) (13,686 ) Net loans
1,013,651 1,003,426 995,451
Premises and equipment
20,749 19,286 16,824 Accrued interest receivable
8,081 8,486 8,442 Other real estate and foreclosed assets
97 - - Bank Owned Life Insurance
26,447 26,275 26,823 Goodwill
7,576 7,576 7,576 Intangibles
3,633 3,715 3,969 Mortgage servicing rights
2,587 2,628 2,732 Net deferred tax assets
21,634 21,293 15,885 Other assets
9,890 7,861 9,611
Total assets
$ 2,008,732 $ 2,049,817 $ 2,171,259
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand
$ 415,164 $ 425,526 $ 459,975 Savings and interest-bearing demand
1,023,585 1,093,805 1,315,476 Time
360,056 321,767 188,298 Total deposits
1,798,805 1,841,098 1,963,749
Accrued interest payable
1,526 1,060 334 Short-term borrowings
13,350 14,163 36,213 Other liabilities
12,697 15,326 11,227
Total liabilities
1,826,378 1,871,647 2,011,523
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 6/30/2023 -- 3,883,981 ;
-- -- -- Additional paid-in capital
4,721 4,660 4,432 Treasury stock
(16,784 ) (16,784 ) (16,784 ) Retained Earnings
268,517 263,123 244,560 Other comprehensive income
(74,266 ) (72,986 ) (72,472 ) Total Cashmere Valley Bank shareholders' equity
182,188 178,013 159,736
Noncontrolling interests
166 157 -- Total shareholders' equity
182,354 178,170 159,736
Total liabilities and shareholders' equity
$ 2,008,732 $ 2,049,817 $ 2,171,259
Year-to-Date Consolidated Statements of Income (UNAUDITED) (Dollars in Thousands)
For the six months ended,
June 30, 2023 June 30, 2022 Interest Income
Loans
$ 22,511 $ 19,016 Fed funds sold and deposits at other financial institutions
2,457 219 Securities available for sale:
Taxable
11,544 7,442 Tax-exempt
1,156 3,247 Securities held to maturity:
Taxable
1,586 357 Tax-exempt
92 6 Total interest income
39,346 30,287
Interest Expense
Deposits
6,386 2,043 Short-term borrowings
59 34 Total interest expense
6,445 2,077
Net interest income
32,901 28,210
Provision for Credit Losses
1,085 106
Net interest income after provision for credit losses
31,816 28,104
Non-Interest Income
Service charges on deposit accounts
1,103 1,007 Mortgage banking operations
676 1,423 Net gain (loss) on sales of securities available for sale
(2,258 ) (7,272 ) Brokerage commissions
520 575 Insurance commissions and fees
3,883 3,541 Net interchange income (expense)
2,512 1,711 BOLI cash value
342 338 Dividends from correspondent banks
47 43 Other
569 617 Total non-interest income
7,394 1,983
Non-Interest Expense
Salaries and employee benefits
13,473 12,412 Occupancy and equipment
1,947 1,623 Audits and examinations
196 349 State and local business and occupation taxes
655 563 FDIC insurance & WA state assessments
523 341 Legal and professional fees
507 424 Check losses and charge-offs
269 246 Low income housing investment losses
326 353 Data processing
3,039 2,624 Product delivery
630 613 Other
1,735 2,032 Total non-interest expense
23,300 21,580
Income before income taxes
15,910 8,507
Income Taxes
2,783 1,088
Net income
$ 13,127 $ 7,419
Net income attributable to noncontrolling interest
16 -- Net income attributable to Cashmere Valley Bank
13,111 7,419
Earnings Per Share
Basic
$ 3.38 $ 1.91 Diluted
$ 3.37 $ 1.91
Quarterly Consolidated Statements of Income (UNAUDITED) (Dollars in Thousands)
For the quarters ended,
June 30, 2023 March 31, 2023 June 30, 2022 Interest Income
Loans
$ 11,559 $ 10,952 $ 9,819 Fed funds sold and deposits at other financial institutions
990 1,467 187 Securities available for sale:
Taxable
5,975 5,568 3,697 Tax-exempt
467 689 1,602 Securities held to maturty:
Taxable
781 804 357 Tax-exempt
46 46 6 Total interest income
19,818 19,526 15,668
Interest Expense
Deposits
4,156 2,230 1,014 Short-term borrowings
52 7 18 Total interest expense
4,208 2,237 1,032
Net interest income
15,610 17,289 14,636
Provision for Credit Losses
480 605 59
Net interest income after provision for credit losses
15,130 16,684 14,577
Non-Interest Income
Service charges on deposit accounts
562 541 515 Mortgage banking operations
364 312 668 Net gain (loss) on sales of securities available for sale
(1,893 ) (365 ) (7,407 ) Brokerage commissions
250 270 299 Insurance commissions and fees
2,020 1,863 1,868 Net interchange income (expense)
1,152 1,360 1,057 BOLI cash value
172 170 170 Dividends from correspondent banks
20 27 18 Other
283 287 306 Total non-interest income
2,930 4,465 (2,506 )
Non-Interest Expense
Salaries and employee benefits
6,399 7,075 6,007 Occupancy and equipment
1,019 928 717 Audits and examinations
106 89 156 State and local business and occupation taxes
332 323 285 FDIC insurance & WA state assessments
358 165 169 Legal and professional fees
262 245 215 Check losses and charge-offs
152 117 113 Low income housing investment losses
171 155 209 Data processing
1,500 1,539 1,340 Product delivery
316 314 290 Other
929 806 1,054 Total non-interest expense
11,544 11,756 10,555
Income before income taxes
6,516 9,393 1,516
Income Taxes
1,113 1,670 175
Net income
$ 5,403 $ 7,723 $ 1,341
Net income attributable to noncontrolling interest
9 6 -- Net income attributable to Cashmere Valley Bank
$ 5,394 $ 7,717 $ 1,341
Earnings Per Share
Basic
$ 1.39 $ 1.99 $ 0.35 Diluted
$ 1.39 $ 1.99 $ 0.34
MEDIA CONTACT:
SOURCE: Cashmere Valley Bank
https://www.accesswire.com/768815/Cashmere-Valley-Bank-Reports-Year-to-Date-Earnings-of-131-Million-Gross-Loans-at-All-Time-High
Cashmere Valley Bank reported quarterly earnings of $5.4 million.
Cashmere Valley Bank's year-to-date earnings totaled $13.1 million.
Diluted earnings per share increased by 77.1% to $3.37.
Deposit balances decreased by 5.3% to $1.799 billion.
Gross loans reached an all-time high of $1.026 billion.
The Bank's return on assets increased to 1.30% from 0.68%.
The Bank's return on equity was 15.21% compared to 7.51% last year.
