CASHMERE, WA / ACCESSWIRE / July 16, 2024 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced quarterly earnings of $6.6 million for the quarter ended June 30, 2024. Year-to-date earnings totaled $13.9 million as compared to $13.1 million for the six months ended June 30, 2023. Year-to-date diluted earnings per share equaled $3.58, representing an increase of $0.21 per share, or 6.1%. Quarterly diluted earnings per share totaled $1.71 in the second quarter, an increase of $0.32 per share, or 23.1%, from the second quarter 2023.
As of June 30, 2024, deposit balances totaled $1.772 billion, a decrease of $1.3 million, or 0.1%, from December 31, 2023. For the second quarter, deposit balances fell by $12.3 million, or 0.7%.
"Our deposits have stabilized in 2024," said Greg Oakes, President and CEO. "We are relieved that pressures on deposit balances have somewhat subsided. Additionally, our net interest margin appears to have settled in at a level above our projections. Our core earnings remain very strong, especially in comparison to peers, and we are extremely pleased with our second quarter results."
Q2 Highlights
The Bank reported the following statement of condition highlights as of June 30, 2024:
On July 16, 2024, the Bank's Board of Directors declared a dividend of $0.85 per share. The dividend will be payable on August 5, 2024 for shareholders of record on July 26, 2024.
As of June 30, 2024, gross loans totaled $1.015 billion representing a decrease from June 30, 2023 of $10.7 million. The reduction was primarily due to a pair of significant multifamily loan payoffs.
Non-interest deposits totaled $389.6 million, or 22.0% of the Bank's total deposits.
The Bank's year to date return on assets increased to 1.37% from 1.30%
The Bank's return on equity through the first six months of 2024 was 13.48% as compared to 15.21% one year ago. Return on equity has declined as the Bank's capital levels have increased through earnings and a reduction in unrealized losses.
Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash totaled $159.1 million at June 30, 2024, compared to $121.3 million at June 30, 2023. The Bank has made a concerted effort to bolster its cash position through loan and security maturities and paydowns without full reinvestment of principal.
Investments
The fair value of the Bank's investment portfolio totaled $652.1 million at June 30, 2024, which represents an increase of $24.5 million from June 30, 2023. As of June 30, 2024, $133.5 million in securities were classified as held-to-maturity as compared to $142.8 million one year ago. Yields on securities have significantly increased to 3.91% for the first six months of 2024 from 3.24% for the first six months of 2023. Yields have increased due to new purchases in the current rate environment and floating rate securities repricing upwards.
The Bank has not sold any securities at a loss in 2024. In 2023, the Bank realized losses of $2.3 million on security sales through the second quarter.
Loans and Credit Quality
Gross loans totaled $1.015 billion as of June 30, 2024, which represents a decrease of $27.0 million from December 31, 2023 and a decrease of $10.7 million from June 30, 2023. Since December 31, 2023, multifamily loans have decreased $23.7 million and commercial real estate loans have decreased $13.6 million. Construction and land development totals increased by $10.5 million.
At June 30, 2024, the allowance for credit losses on loans (ACL) was 1.30% of gross loans as compared to 1.22% one year ago.
Credit quality remains exceptionally strong with non-performing loans representing 0.23% of gross loans as of June 30, 2024. This is a slight increase from 0.14% as of June 30, 2023.
Deposits
Total deposits decreased by $26.3 million, or 1.5%, from June 30, 2023. From December 31, 2023 to June 30, 2024 total deposits decreased $1.3 million, or 0.1%. Non-interest deposits totaled $389.6 million as of June 30, 2024, which represents 22.0% of total deposits. The average cost of interest-bearing liabilities increased 109 basis points to 2.10% as compared to the six months ended June 30, 2023.
Equity
As of June 30, 2024, Tier 1 capital remains strong. Tier 1 capital increased to $266.7 million from $243.5 million at June 30, 2023, due to earnings less dividends paid during 2024.
GAAP capital reflected an increase of $35.6 million from June 30, 2023, and an increase of $15.4 million from December 31, 2023. As of June 30, 2024, the Bank's GAAP capital to assets ratio was 10.60% as compared to 9.07% one year ago. GAAP capital levels increased primarily due to Bank earnings and a reduction of $12.9 million in unrealized losses. As of June 30, 2024, unrealized losses on available for sale securities totaled $61.4 million.
Earnings
Net Interest Income
For the six months ended June 30, 2024, net interest income totaled $30.9 million compared to $32.9 million in the same period one year ago. The decrease from the prior quarter was a result of increasing interest expense. Interest expense grew $8.4 million dollars to $14.8 million from the prior year. The significant increase in interest expense was partially offset by increases in loan income of $3.8 million and securities income of $2.3 million.
For the quarter ended June 30, 2024, net interest income decreased a modest $325,000 from the quarter ended March 31, 2024. The decrease from the prior quarter was due to increasing cost of funds on deposits, which increased approximately $720,000 quarter over quarter.
The net interest margin was 3.11% for the first six months of 2024, compared to 3.30% during the first six months of 2023. For the quarter ended June 30, 2024 the net interest margin was 3.07% as compared to 3.17% in the second quarter of 2023.
Non-Interest Income
Non-interest income totaled $10.0 million in the first six months of 2024 as compared to $7.4 million in the first six months of 2023. Losses on securities sales represented $2.3 million reduction to income in 2023. Increases were noted in non-interest income from insurance commissions and fees, brokerage commissions and mortgage banking operations.
Non-Interest Expense
Non-interest expense totaled $23.7 million in the first six months of 2024, as compared to $23.3 million in the first six months of 2023. The rate of increase in salaries and benefits, occupancy and data processing have all slowed greatly contributing to the modest increase in non-interest expense.
The Bank's efficiency ratio was 58.1% in the first six months of 2024 as compared to 57.8% in the first six months of 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 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) Cashmere Valley Bank and Subsidiary
June 30, 2024
March 31, 2024
June 30, 2023
Assets
Cash and Cash Equivalent:
Cash & due from banks
$
21,484
$
21,393
$
26,674
Interest bearing deposits
134,051
113,141
91,422
Fed funds sold
3,578
3,639
3,179
Total Cash and Cash Equivalent
159,113
138,173
121,275
Securities available for sale
652,136
655,680
627,646
Securities held to maturity, net of allowance for credit losses of $18, $19 and $22, respectively
133,434
137,936
142,796
Federal Home Loan Bank stock, at cost
2,936
2,981
2,505
Loans held for sale
673
342
165
Loans
1,015,444
1,041,410
1,026,191
Allowance for credit losses
(13,198
)
(12,947
)
(12,540
)
Net loans
1,002,246
1,028,463
1,013,651
Premises and equipment
20,097
20,510
20,749
Accrued interest receivable
9,416
9,444
8,081
Other real estate and foreclosed assets
97
97
97
Bank Owned Life Insurance
27,212
27,009
26,447
Goodwill
7,579
7,576
7,576
Intangibles
3,152
3,291
3,633
Mortgage servicing rights
2,477
2,485
2,587
Net deferred tax assets
18,394
18,695
21,634
Other assets
14,404
13,569
9,890
Total assets
$
2,053,366
$
2,066,251
$
2,008,732
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand
$
389,580
$
398,960
$
415,164
Savings and interest-bearing demand
918,205
936,416
1,023,585
Time
464,688
449,462
360,056
Total deposits
1,772,473
1,784,838
1,798,805
Accrued interest payable
2,642
2,661
1,526
Short-term borrowings
48,322
54,636
13,350
Other liabilities
11,725
14,008
12,697
Total liabilities
1,835,162
1,856,143
1,826,378
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
