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Cash, Cash Equivalents and Restricted Cash

Cash balances increased $101.8 million to $220.0 million at December 31, 2024 from $118.1 million as of December 31, 2023. Deposit balances stabilized in the early part of the year, then grew throughout the third and fourth quarters. There were also a number of large loan payoffs throughout the year. Proceeds from deposit growth and reductions in the loan portfolio were initially utilized to increase on-hand liquidity. Excess proceeds have been used to purchase available for sale securities.

Investments

The fair value of AFS securities and the book value less allowance for credit losses of HTM securities totaled $846.8 million at December 31, 2024. This represented an increase of $56.1 million from December 31, 2023. There were no available for sale security sales in 2024.

Security purchases totaling $172.5 million were made during 2024. The overwhelming majority of purchases were amortizing asset-backed securities in which portions of principal are returned to the Bank on a monthly basis.

Unrealized losses on available for sale securities decreased $3.9 million during 2024 and totaled $63.4 million as of December 31, 2024.

Loans and Credit Quality

At December 31, 2024 gross loans totaled $962.4 million, representing a decrease of $80.1 million, or 7.7%, from December 31, 2023. Significant loan payoffs adversely affected loan totals. Larger loan payoff activity occurred primarily in the multifamily and municipal loan portfolios. Additionally, loan demand on qualifying projects was soft throughout the year due in part to higher loan rates.

The allowance for credit losses on loans (ACL) was 1.32%, or $12.7 million, as of December 31, 2024 as compared to 1.26%, or $13.1 million, as of December 31, 2023.

The Bank recorded provision expense of $2.0 million in 2024 as compared to $2.9 million in 2023. The decrease in provision expense was largely due to a decrease in charged-off loans. Charged-off loans totaled $3.5 million as compared to $4.5 million in 2023. The majority of charged-off loans came from the equipment finance division which was adversely affected by a recession in long-haul trucking.

Non-performing loan totals were largely unchanged from the prior year. As of December 31, 2024, non-performing loans totaled $3.3 million, or 0.34%, of gross loans as compared to $2.0 million, which represented 0.19% of gross loans as of December 31, 2023.

Deposits

Total deposits were $1.8 billion as of December 31, 2024, which represented an increase of $64.2 million, or 3.6%, from December 31, 2023. Non-interest bearing deposits totaled $395.3 million, which was 21.5% of total deposits. Certificate of deposit balances increased significantly from $393.1 million at December 31, 2023 to $502.5 million as of December 31, 2024. The majority of the increase in CD balances occurred due to three-month and seven-month CD specials offered by the Bank.

Capital

As of December 31, 2024, shareholders' equity totaled $232.2 million, a 14.5% increase from $202.8 million at December 31, 2023. Equity increased due to an improvement in unrealized losses on available for sale securities totaling $7.1 million in combination with annual earnings less dividends paid. At period end, the Bank's GAAP capital to assets ratio was 10.94% as compared to 9.91% one year ago.

Earnings

Net Interest Income

Net interest income totaled $63.2 million for the year ended December 31, 2024 as compared to $65.6 million for the year ended December 31, 2023. The decrease of $2.5 million represented a decline of 3.7%.

Interest income increased $11.8 million, while interest expense increased by $14.2 million. Loan income increased $5.2 million, securities income increased $4.6 million, and fed funds and deposits with other financial institutions increased $2.0 million.

The average yield on earning assets improved from 4.14% to 4.66%, while the Bank's cost of funds increased from 0.91% to 1.68%. The cost of interest-bearing liabilities more than doubled from 1.02% to 2.14%. The significant increases in deposit costs were a result of increases in the interest rate environment and customer expectations.

Non-Interest Income

Non-interest income increased $6.2 million, or 43.7%, as compared to 2023. Losses on sales of available for sale securities improved by $4.8 million as no securities were sold at a loss in 2024. Insurance commission and fees increased $1.0 million in 2024, and brokerage commissions increased $383,000.

Non-Interest Expense

Non-interest expense increased $4.9 million, or 11.6%. In large part, non-interest expense increased primarily due to a $3.9 million Employee Retention Tax Credit (ERTC) application submitted and recorded in 2023. Payment from the IRS for the ERTC remains pending. Salaries and benefits increased $5.2 million, of which $3.9 million was attributed to the ERTC. Occupancy expense decreased $542,000.

The provision for loan losses decreased $971,000 in 2024, as charged-off loans decreased from the prior year.

Federal income tax expense decreased approximately $385,000 from the prior year. The Bank's effective tax rate was 17.1% for 2024 as compared to 18.1% in 2023.

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:
Greg Oakes, CEO, (509) 782-2092 or
Mike Lundstrom, CFO, (509) 782-5495

SOURCE: Cashmere Valley Bank