White River Bancshares Co. Earns $1.42 Million, or $1.42 Per Diluted Share, in Fourth Quarter 2022 and Earns $5.62 Million, or $5.64 Per Diluted Share for the Year; Highlighted By Strong Quarterly Loan and Deposit Growth
01/18/2023 - 09:00 AM
FAYETTEVILLE, Ark., Jan. 18, 2023 (GLOBE NEWSWIRE) -- White River Bancshares Company (OTCQX: WRIV), (the “Company”) the holding company for Signature Bank of Arkansas (the “Bank”), today reported net income of $1.42 million , or $1.42 per dilute share, in the fourth quarter of 2022, compared to $1.50 million , or $1.50 per diluted share, in the fourth quarter of 2021. In the immediate prior quarter, the Company earned $1.33 million , or $1.34 per diluted share. For the full year 2022, net income was $5.62 million , or $5.64 per diluted share, compared to $7.05 million , or $7.23 per diluted share, in 2021. All financial results are unaudited.
“2022 was a transformational year for our Company,” said Gary Head, President and Chief Executive Officer. “We opened new markets in Harrison and Jonesboro earlier in the year, which are parts of our state that have been searching for a more personalized approach to its community banking needs. Later in the year, we opened Banco Sí! in downtown Rogers, a new division of our Company dedicated to serving the needs of our growing Hispanic and Latino population with a fully bilingual staff. This market expansion contributed to double digit loan and deposit growth for the year, which fueled our compelling results and strengthened our balance sheet. While these investments in market expansions impacted net income for the year, we were still able to achieve the second highest annual earnings in our Company’s history. Looking ahead, our plans for 2023 are to focus on expanding our presence in the markets we opened last year and improving our performance metrics.”
“A large part of our market growth strategy was to build out our deposit base to fund new loan activity with low cost deposits to reduce our reliance on borrowed funds. We continue to strengthen our core funding mix and, as a result, total deposits increased 11.6% compared to a year ago, with demand and non-interest bearing deposits representing 30.5% of total deposits and savings and interest bearing transaction accounts representing 40.5% of total deposits at year end,” said Scott Sandlin, Chief Strategy Officer. “New customer relationships are fueling the deposit growth and we expect that to continue as we grow into our new locations.”
Fourth Quarter 2022 Financial Highlights:
Fourth quarter net income was $1.42 million , or $1.42 per diluted share, compared to $1.50 million , or $1.50 per diluted share, in the fourth quarter of 2021. Fourth quarter net interest margin (“NIM”) expanded 14 basis points to 3.80% , compared to 3.66% in the fourth quarter a year ago. Annualized return on average assets was 0.58% , compared to 0.70% in the fourth quarter a year ago. Annualized return on average equity was 7.49% , unchanged from the fourth quarter a year ago. The Company recorded a $350,000 provision for loan losses in the fourth quarter of 2022, compared to no provision for loan losses in the fourth quarter of 2021. Net loans increased 20.6% to $826.7 million at December 31, 2022, compared to $685.4 million at December 31, 2021. Total deposits increased 11.6% to $810.6 million at December 31, 2022, compared to $726.2 million a year ago. Nonperforming assets totaled $124,000 , or 0.01% of total assets at December 31, 2022, compared to $932,000 , or 0.03% of total assets, at December 31, 2021. Book value per common share was $77.64 at December 31, 2022, from $80.77 a year ago. Total risk-based capital ratio was 13.16% and the Tier 1 leverage ratio was 10.88% for the Bank at December 31, 2022. The Company paid a $1.00 per share annual cash dividend on August 31, 2022 to shareholders of record at the close of business on July 20, 2022. Income Statement 3.80% in the fourth quarter of 2022, compared to 3.66% in the fourth quarter of 2021. In the third quarter of 2022, the Company’s NIM was 3.88% . For the year 2022, the NIM improved 12 basis points to 3.83% , compared to 3.71% in 2021.
“The changes we made in our investments and funding mix over the last several quarters, augmented by the Fed rate increases, resulted in net interest margin expansion during the fourth quarter compared to the fourth quarter a year ago,” said Brant Ward, Chief Operating Officer. “However, fourth quarter NIM contracted slightly from the third quarter due to a modest increase in funding costs.”
Net interest income increased 18.9% to $8.8 million , compared to $7.4 million in the fourth quarter of 2021. Total interest income increased 33.6% to $11.2 million in the fourth quarter of 2022, compared to $8.4 million in the fourth quarter of 2021. Total interest expense increased to $2.4 million in the fourth quarter of 2022, from $986,000 during the fourth quarter of 2021. For the year 2022, net interest income increased 16.3% to $32.9 million , compared to $28.3 million in 2021.
Noninterest income decreased 17.9% to $1.3 million in the fourth quarter of 2022, compared to $1.5 million in the fourth quarter a year ago. Substantially lower secondary market fee income, and to a lesser extent lower wealth management fee income due to volatility in the stock market contributed to the decline during the fourth quarter of 2022. For the year 2022, noninterest income decreased 15.9% to $5.5 million , compared to $6.6 million in 2021.
Noninterest expense increased to $7.8 million in the fourth quarter of 2022, compared to $6.9 million in the fourth quarter of 2021. Costs associated with the two new markets, higher commissions due to increased revenues in business lines, and an increase in salaries and employee benefits due to wage competition contributed to the increase during the fourth quarter of 2022, compared to the fourth quarter a year ago. For the year, noninterest expense increased to $30.1 million , compared to $25.3 million in 2021.
Balance Sheet 15.4% to $982.7 million at December 31, 2022, from $852.0 million at December 31, 2021, and increased 5.1% compared to $935.0 million at September 30, 2022. Cash and cash equivalents decreased to $11.8 million at December 31, 2022 from $45.9 million a year ago and decreased when compared to $16.5 million at September 30, 2022. Investment securities increased 17.2% to $94.4 million at December 31, 2022, from $80.6 million a year ago, as the Company continued to move cash balances into better yielding investment securities during the quarter.
Loans, net of allowance for loan losses, increased 20.6% to $826.7 million at December 31, 2022, compared to $685.4 million a year ago, and increased 5.9% compared to $780.5 million three months earlier.
“Loan growth was solid during the quarter, increasing $46.3 million over the three-month period, and the loan pipeline remains strong,” said Jeff Maland, Chief Risk Officer.
Total deposits increased 11.6% to $810.6 million at December 31, 2022, compared to $726.2 million a year ago and increased 2.4% compared to $791.5 million at September 30, 2022. New customer relationships continue to account for a majority of the deposit growth year-over-year.
FHLB advances increased during the quarter to $31.7 million at December 31, 2022, from $12.3 million at December 31, 2021. Total stockholders’ equity was $77.5 million at December 31, 2022, compared to $80.2 million at December 31, 2021, and $75.4 million at September 30, 2022. Tangible book value per common share was $77.64 at December 31, 2022, from $80.77 at December 31, 2021, and $75.73 at September 30, 2022. The decrease in total stockholders’ equity and tangible book value per share during the current quarter compared to the year ago was primarily due to a $8.3 million decrease in accumulated other comprehensive income (“AOCI”) related primarily to an increase in the unrealized loss on available for sale securities reflecting the increase in interest rates during the current quarter. Excluding AOCI, tangible book value per share was $88.64 at December 31, 2022.
Credit Quality $350,000 provision for loan losses due to the extraordinary levels of loan growth during the fourth quarter. This compared to a $410,000 provision for loan losses in the third quarter of 2022, and no provision for loan losses in the fourth quarter of 2021.”
Nonperforming loans totaled $124,000 at December 31, 2022. This compared to $153,000 in nonperforming loans at September 30, 2022, and $221,000 in nonperforming loans at December 31, 2021. Nonperforming assets were $123,000 at December 31, 2022, compared to $153,000 at September 30, 2022, and $932,000 at December 31, 2021. Total nonperforming assets were 0.01% of total assets at December 31, 2022, compared to 0.02% at September 30, 2022, and 0.11% at December 31, 2021.
The allowance for loan losses was $9.2 million , or 1.10% of total loans, at December 31, 2022, compared to $8.2 million , or 1.18% of total loans, at December 31, 2021. Net loan recoveries were $105,000 in the fourth quarter of 2022, compared to net loan recoveries of $43,000 in the third quarter of 2022, and net loan charge-offs of $394,000 in the fourth quarter of 2021.
Capital 13.16% , Common equity Tier 1 capital ratio of 12.13% , Tier 1 risk-based capital ratio of 12.13% and Tier 1 leverage ratio of 10.88% , at December 31, 2022.
On July 13, 2022, the Company issued $15 million in subordinated notes to certain qualified institutional accredited investors through a private placement offering. The Company intends to use the net proceeds from the offering to down stream capital to the bank for growth and for general corporate purposes.
Recent Developments
“The Latino community has grown to become the largest minority community in the region and the United States, and we believe it is underserved,” said Ward. “Our mission is to create economic growth and access to banking services, capital, and funds for small and midsize businesses. To help us accelerate our outreach and engagement of this growing community and to grow our capability to better serve them, we employed bilingual staff and invested in multicultural inclusion training for our leadership and staff.”
During the first quarter of 2022, the Company opened its seventh market, located at 111 East Jackson Avenue in Jonesboro. This facility will serve as a temporary location for the market and marks the Company’s entry into Craighead County. According to the 2020 Census, Jonesboro had a population of 78,576 and is the fifth-largest city in Arkansas.
During the fourth quarter of 2021, the Company opened its sixth market, located in Harrison in the Durand Center at 303 N. Main Street, Suite 100. Harrison, located in the heart of the Ozark Mountains, is nationally recognized as one of the "Best Small Towns in America" and was previously featured in Where to Retire Magazine as one of the best retirement towns in the United States. https://www.cityofharrison.com/
About White River Bancshares Company White River Bancshares Company (OTCQX: WRIV), trades on the OTCQX® Best Market.
About the Region
Recently, the Company has expanded into Northeast Arkansas, with new markets in Jonesboro and Harrison. Jonesboro, located in Craighead County, is a city located on Crowley's Ridge in the northeastern corner of Arkansas. It is the home of Arkansas State University and the cultural and economic center of Northeast Arkansas. Jonesboro also houses the region’s hospital network. U.S. Steel Corp. announced in January 2022 that it would locate a new $3 billion steel factory in Northeast Arkansas in Osceola, a move expected to create 900 jobs with an average pay over $100,000 annually, making it the largest capital investment project in Arkansas history. Dubbed “Project Blueprint,” the steel mill will begin construction in early 2022. Harrison sits below Branson, Missouri, which is a family tourist destination and outdoor recreation, and is well known as an entertainment destination.
The Company currently operates two markets in Washington County, two markets in Benton County, two markets in Monroe County, one market in Boone County and one market in Craighead County.
The housing market in Washington and Benton counties remains robust. According to the Northwest Multiple Listing Service, the average home in Washington County sold for $381,000 , up 15.7% in November 2022, compared to a year ago, with an average of 93 days on the market. For Benton County, the average house sold for $396,000 , up 18.2% from a year ago with an average of 88 days on the market.
Washington County’s population is projected to grow 5.96% from 2023 through 2028, and median household income is projected to increase by 11.12% during the same time frame. Benton County’s population is projected to grow 8.05% from 2023 through 2028, and median household income is projected to increase by 11.31% . Monroe County’s population is projected to decrease by 6.07% from 2023 through 2028 and median household income is projected to increase by 15.34% . Boone County’s population is projected to grow 1.66% from 2023 through 2028 and median household income is projected to increase by 13.62% . Craighead County’s population is projected to grow 4.40% from 2023 through 2028, and the median household income is projected to increase by 17.69% .
Sources:
http://www.nwarealtors.org/market-statistics/
Forward Looking Statements
WHITE RIVER BANCSHARES COMPANY CONSOLIDATED BALANCE SHEETS (Unaudited) December 31, 2022 September 30, 2022 December 31, 2021 ASSETS Cash and cash equivalents $ 11,835,438 $ 16,452,466 $ 45,924,111 Investment securities 94,429,007 95,169,822 80,596,752 Loans held for sale - 1,682,618 2,737,798 Loans, net of allowance for loan losses 826,738,234 780,452,305 685,383,789 Premises and equipment, net 28,555,250 28,317,468 26,902,610 Foreclosed assets held for sale - - 711,100 Accrued interest receivable 3,111,863 2,804,238 2,451,610 Bank owned life insurance ("BOLI") 9,134,324 1,058,617 1,053,068 Deferred income taxes 4,282,651 4,631,813 1,967,775 Other investments 3,251,098 3,226,173 2,826,485 Other assets 1,413,549 1,155,722 1,400,708 Total Assets $ 982,751,414 $ 934,951,242 $ 851,955,806 LIABILITIES & STOCKHOLDERS' EQUITY Deposits: Demand and non-interest-bearing $ 246,960,916 $ 257,288,208 $ 231,800,711 Savings and interest-bearing transaction accounts 328,108,850 354,185,035 310,535,802 Time deposits 235,513,697 179,985,925 183,849,227 Total deposits 810,583,463 791,459,168 726,185,740 Federal funds purchased 18,150,000 - - Federal Home Loan Bank advances 31,686,052 22,769,235 12,264,849 Notes payable 25,402,941 25,385,663 10,798,035 Accrued interest payable 912,615 505,504 175,835 Other liabilities 18,547,205 19,477,404 22,378,553 Total Liabilities 905,282,276 859,596,974 771,803,012 Stockholders' equity: Common stock 10,084 10,039 10,072 Surplus 89,665,389 89,416,483 88,475,229 Accumulated deficit (3,287,098 ) (4,708,340 ) (7,907,902 ) Treasury stock, at cost (711,111 ) (563,441 ) (563,128 ) Accumulated other comprehensive (loss) income (8,208,126 ) (8,800,473 ) 138,523 Total stockholders' equity 77,469,138 75,354,268 80,152,794 Total Liabilities and Stockholders' Equity $ 982,751,414 $ 934,951,242 $ 851,955,806
WHITE RIVER BANCSHARES COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) For the Three Months Ended December 31, September 30, December 31, 2022 2022 2021 Interest income: Loans, including fees $ 10,474,093 $ 9,067,631 $ 7,997,979 Investment securities 618,676 574,963 365,232 Federal funds sold and other 101,035 129,443 12,300 Total interest income 11,193,804 9,772,037 8,375,511 Interest expense: Deposits 1,654,667 781,647 734,370 Federal Home Loan Bank advances 300,424 70,336 83,504 Notes payable 394,465 362,254 167,874 Federal funds purchased and other 56,193 7,603 - Total interest expense 2,405,749 1,221,840 985,748 Net interest income 8,788,055 8,550,197 7,389,763 Provision for loan losses 350,000 410,000 - Net interest income after provision for loan losses 8,438,055 8,140,197 7,389,763 Non-interest income: Service charges and fees on deposits 144,208 136,156 133,424 Wealth management fee income 559,674 559,358 584,577 Secondary market fee income 84,303 231,012 668,751 Bank owned life insurance income 75,707 1,822 2,345 Loss on sales and write-downs of foreclosed assets - - (194,831 ) Other non-interest income 389,814 440,569 333,219 Total non-interest income 1,253,706 1,368,917 1,527,485 Non-interest expense: Salaries and benefits 4,877,480 5,009,832 4,684,822 Occupancy and equipment 901,551 886,450 708,879 Data processing 609,252 577,219 462,838 Marketing and business development 380,481 320,613 328,585 Professional services 517,852 533,614 396,947 Other non-interest expense 552,265 320,179 291,099 Total non-interest expense 7,838,881 7,647,907 6,873,170 Income before income taxes 1,852,880 1,861,207 2,044,078 Income tax provision 431,638 526,576 548,710 Net income $ 1,421,242 $ 1,334,631 $ 1,495,368 Earnings per share: Basic $ 1.42 $ 1.34 $ 1.51 Diluted $ 1.42 $ 1.34 $ 1.50
WHITE RIVER BANCSHARES COMPANY CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Twelve Months Ended December 31, 2022 2021 Interest income: Loans, including fees $ 35,863,945 $ 31,270,541 Investment securities 2,018,974 1,464,323 Federal funds sold and other 378,268 33,155 Total interest income 38,261,187 32,768,019 Interest expense: Deposits 3,739,902 3,435,404 Federal Home Loan Bank advances 496,148 389,540 Notes payable 1,092,467 671,496 Federal funds purchased and other 63,796 2,242 Total interest expense 5,392,313 4,498,682 Net interest income 32,868,874 28,269,337 Provision for loan losses 760,000 - Net interest income after provision for loan losses 32,108,874 28,269,337 Non-interest income: Service charges and fees on deposits 533,910 516,836 Wealth management fee income 2,376,325 2,225,782 Secondary market fee income 1,114,915 2,954,448 Bank owned life insurance income 81,256 9,537 Loss on sales and write-downs of foreclosed assets (151,480 ) (194,831 ) Other non-interest income 1,584,852 1,076,433 Total non-interest income 5,539,778 6,588,205 Non-interest expense: Salaries and benefits 19,460,554 16,659,978 Occupancy and equipment 3,366,093 2,723,315 Data processing 2,444,067 1,824,468 Marketing and business development 1,373,196 788,477 Professional services 1,936,620 2,098,437 Other non-interest expense 1,541,468 1,250,652 Total non-interest expense 30,121,998 25,345,327 Income before income taxes 7,526,654 9,512,215 Income tax provision 1,910,853 2,461,392 Net income $ 5,615,801 $ 7,050,823 Earnings per share: Basic $ 5.64 $ 7.23 Diluted $ 5.64 $ 7.23
WHITE RIVER BANCSHARES COMPANY SUPPLEMENTAL INFORMATION (Unaudited) Three Months Ended Year ended December 31, September 30, December 31, December 31, 2022 2022 2021 2021 Earnings per share: Numerator: Net income available to common shareholders' $ 1,421,242 $ 1,334,631 $ 1,495,368 $ 7,050,823 Denominator: Weighted average common shares outstanding 997,686 994,996 992,965 975,058 Effect of dilutive securities: Stock options 1,051 691 1,539 - Weighted average common shares outstanding - assuming dilution $ 998,737 $ 995,687 $ 994,504 $ 975,058 Basic earnings per common share $ 1.42 $ 1.34 $ 1.51 $ 7.23 Diluted earnings per common share $ 1.42 $ 1.34 $ 1.50 $ 7.23 Profitability: Numerator: Net income $ 1,421,242 $ 1,334,631 $ 1,495,368 $ 7,050,823 Denominator: Average total assets for period 980,111,912 908,692,882 849,391,347 806,437,028 Average total equity for period 75,320,820 77,112,599 79,246,635 77,002,249 Return on average assets 0.58 % 0.58 % 0.70 % 0.87 % Return on average equity 7.49 % 6.87 % 7.49 % 9.16 % Efficiency Ratio: Numerator: Net interest income $ 8,788,055 $ 8,550,197 $ 7,389,763 $ 28,269,337 Non-interest income 1,253,706 1,368,917 1,527,485 6,588,205 Total Income $ 10,041,761 $ 9,919,114 $ 8,917,248 $ 34,857,542 Denominator: Non-interest expense $ 7,838,881 $ 7,647,907 $ 6,873,170 $ 25,345,327 Efficiency ratio 78.06 % 77.10 % 77.08 % 72.71 % December 31, September 30, December 31, December 31, 2022 2022 2021 2021 Asset Quality: Net (recoveries) charge-offs $ (105,153 ) $ (43,488 ) $ 393,795 $ 461,663 Classified assets 393,189 411,636 5,434,111 5,434,111 Nonperforming loans 123,922 153,362 220,616 220,616 Nonperforming assets 123,922 153,362 932,326 932,326 Total nonperforming loans to total loans 0.01 % 0.02 % 0.03 % 0.03 % Total nonperforming loans to total assets 0.01 % 0.02 % 0.03 % 0.03 % Total nonperforming assets to total assets 0.01 % 0.02 % 0.11 % 0.11 %
WHITE RIVER BANCSHARES COMPANY INTEREST INCOME AND EXPENSE (Unaudited) Three Months Ended December 31, 2022 2021 Average Average Average Average Balance Interest Yield/Rate Balance Interest Yield/Rate Interest-earning assets: Federal funds sold and other $ 9,543,812 $ 101,035 4.20 % $ 34,742,982 $ 12,300 0.14 % Investment securities 96,613,992 618,676 2.54 % 86,453,958 365,232 1.68 % Loans receivable (1) 814,261,408 10,474,093 5.10 % 690,968,859 7,997,979 4.59 % Total interest-earning assets 920,419,212 $ 11,193,804 4.82 % 812,165,799 $ 8,375,511 4.09 % Noninterest-earning assets 59,692,700 37,225,548 Total assets $ 980,111,912 $ 849,391,347 Interest-bearing liabilities: Interest-bearing deposits $ 558,052,737 $ 1,654,667 1.18 % $ 477,926,717 $ 734,370 0.61 % FHLB advances and federal funds purchased 43,158,724 356,617 3.28 % 15,674,909 83,504 2.11 % Notes payable 25,395,116 394,465 6.16 % 10,795,496 167,874 6.17 % Total interest-bearing liabilities 626,606,577 $ 2,405,749 1.52 % 504,397,122 $ 985,748 0.78 % Noninterest-bearing liabilities 278,184,515 265,747,590 Total liabilities 904,791,092 770,144,712 Stockholders' equity 75,320,820 79,246,635 Total liabilities and stockholders' equity $ 980,111,912 $ 849,391,347 Net interest-earning assets $ 293,812,635 $ 307,768,677 Net interest spread $ 8,788,055 3.30 % $ 7,389,763 3.32 % Net interest margin 3.79 % 3.61 % (1) Origination fee income and costs are generally recognized in earnings when incurred which, in our opinion does not produce results that differ materially from recognizing the fees and costs over the life of the loan as required by GAAP.
WHITE RIVER BANCSHARES COMPANY INTEREST INCOME AND EXPENSE (Unaudited) Twelve Months Ended December 31, 2022 2021 Average Average Average Average Balance Interest Yield/Rate Balance Interest Yield/Rate Interest-earning assets: Federal funds sold and other $ 36,557,767 $ 378,268 1.03 % $ 30,064,184 $ 33,155 0.11 % Investment securities 92,326,033 2,018,974 2.19 % 82,290,111 1,464,323 1.78 % Loans receivable (1) 732,179,484 35,863,945 4.90 % 661,460,761 31,270,541 4.73 % Total interest-earning assets 861,063,284 $ 38,261,187 4.44 % 773,815,056 $ 32,768,019 4.23 % Noninterest-earning assets 50,087,853 32,828,999 Total assets $ 911,151,137 $ 806,644,055 Interest-bearing liabilities: Interest-bearing deposits $ 522,249,813 $ 3,739,902 0.72 % $ 477,264,565 $ 3,435,404 0.72 % FHLB advances and federal funds purchased 19,943,714 559,944 2.81 % 18,024,528 391,782 2.17 % Notes payable 17,199,936 1,092,467 6.35 % 10,785,400 671,496 6.23 % Total interest-bearing liabilities 559,393,463 $ 5,392,313 0.96 % 506,074,493 $ 4,498,682 0.89 % Noninterest-bearing liabilities 274,438,527 223,567,313 Total liabilities 833,831,990 729,641,806 Stockholders' equity 77,319,147 77,002,249 Total liabilities and stockholders' equity $ 911,151,137 $ 806,644,055 Net interest-earning assets $ 301,669,821 $ 267,740,563 Net interest spread $ 32,868,874 3.48 % $ 28,269,337 3.35 % Net interest margin 3.82 % 3.65 % (1) Origination fee income and costs are generally recognized in earnings when incurred which, in our opinion does not produce results that differ materially from recognizing the fees and costs over the life of the loan as required by GAAP.
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