“We’re very pleased with the progress we have made in the third quarter,” said
“Our shareholders will be pleased by the Board’s decision to double the annual cash dividend to
“We continue to strengthen our core funding mix and as a results total deposits increased 7.0% compared to a year ago, with demand and non-interest bearing deposits representing 32.5% of total deposits and savings and interest bearing transaction accounts representing 44.7% of total deposits at quarter end,” said
Third Quarter 2022 Financial Highlights:
- Third quarter net income was
$1.33 million , or$1.34 per diluted share, compared to$1.93 million , or$1.99 per diluted share, in the third quarter of 2021. - Third quarter net interest margin (“NIM”) expanded 23 basis points to 3.88%, compared to 3.65% in the third quarter a year ago.
- Annualized return on average assets was 0.58%, compared to 0.95% in the third quarter a year ago.
- Annualized return on average equity was 6.87%, from 9.80% in the third quarter a year ago.
- The Company recorded a
$410,000 provision for loan losses in the third quarter of 2022, compared to no provision for loan losses in the third quarter of 2021. - Net loans increased 17.9% to
$780.5 million atSeptember 30, 2022 , compared to$661.7 million atSeptember 30, 2021 . - Total deposits increased 7.0% to
$791.5 million atSeptember 30, 2022 , compared to$739.7 million a year ago. - Nonperforming assets totaled
$153,000 , or 0.02% of total assets atSeptember 30, 2022 , compared to$149,000 , or 0.02% of total assets, atSeptember 30, 2021 . - Book value per common share was
$75.73 atSeptember 30, 2022 , from$81.47 a year ago. - Total risk-based capital ratio was 13.57% and the Tier 1 leverage ratio was 11.53% for the Bank at
September 30, 2022 . - The Company paid a
$1.00 per share annual cash dividend onAugust 31, 2022 to shareholders of record at the close of business onJuly 20, 2022 .
Income Statement
The Company’s NIM expanded 23 basis points to 3.88% in the third quarter of 2022, compared to 3.65% in the third quarter of 2021. In the first nine months of 2022, the NIM was 3.79%, compared to 3.68% in the first nine months of 2021.
“The changes we made in our investments and funding mix over the last several quarters, augmented by the recent Fed rate increases, resulted in net interest margin expansion during the third quarter. Our balance sheet remains well positioned to continue to benefit from additional Fed rate increases,” said
Net interest income increased 21.1% to
Noninterest income decreased 19.1% to
Noninterest expense increased to
Balance Sheet
Total assets increased 8.0% to
Loans, net of allowance for loan losses, increased 17.9% to
“Loan growth was solid during the quarter, increasing 10.0% over the three-month period. Our team has done an excellent job with new loan originations, and the loan pipeline remains strong,” said
Total deposits increased 7.0% to
FHLB advances increased during the quarter to
Credit Quality
“While asset quality remains exemplary, we recorded a
Nonperforming loans totaled
The allowance for loan losses was
Capital
The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Tier 1 leverage ratio estimate of 11.53%, Common equity Tier 1 capital ratio of 12.54%, Tier 1 risk-based capital ratio of 12.54% and Total capital ratio of 13.57%, at
On
Recent Developments
Earlier this year, the Company launched a new market employing bilingual staff as it increased its efforts to better serve
“The Latino community has grown to become the largest minority community in the region and
During the first quarter of 2022, the Company opened its seventh market, located at
During the fourth quarter of 2021, the Company opened its sixth market, located in
About
About the Region
Recently, the Company has expanded into
The Company currently operates two markets in
The housing market in
Washington County’s population is projected to grow 4.52% from 2022 through 2027, and median household income is projected to increase by 8.35% during the same time frame. Benton County’s population is projected to grow 5.89% from 2022 through 2027, and median household income is projected to increase by 11.08%. Monroe County’s population is projected to decrease by 7.25% from 2022 through 2027 and median household income is projected to increase by 11.05%. Boone County’s population is projected to grow 0.37% from 2022 through 2027 and median household income is projected to increase by 12.48%. Craighead County’s population is projected to grow 4.13% from2022 through 2027, and the median household income is projected to increase by 4.13%.
Sources:
http://www.nwarealtors.org/market-statistics/
https://www.capitaliq.spglobal.com/
Forward Looking Statements
This press release contains statements about future events. These forward-looking statements, which are based on certain assumptions of management of the Company and the Bank and describe our future plans, strategies and expectations, can generally be identified by use of forward-looking terminology such as “may,” “will,” “believe,” “plan,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions or the negative of those terms. Our ability to predict results of future events and the actual effect of future plans or strategies are inherently uncertain and actual results may differ materially from those predicted in such forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects or that could affect the outcome of such forward-looking statements include, but are not limited to, changes in interest rates; the economic health of the local real estate market; general economic conditions; credit deterioration in our loan portfolio that would cause us to increase our allowance for loan losses; legislative or regulatory changes; technological developments; monetary and fiscal policies of the
CONSOLIDATED BALANCE SHEETS | ||||||||||||
(Unaudited) | ||||||||||||
ASSETS | ||||||||||||
Cash and cash equivalents | $ | 16,452,466 | $ | 50,573,165 | $ | 77,519,778 | ||||||
Investment securities | 95,169,822 | 95,838,246 | 84,719,875 | |||||||||
Loans held for sale | 1,682,618 | 850,823 | 7,300,173 | |||||||||
Loans, net of allowance for loan losses | 780,452,305 | 709,314,619 | 661,748,201 | |||||||||
Premises and equipment, net | 28,317,468 | 28,190,083 | 25,202,545 | |||||||||
Foreclosed assets held for sale | - | - | 100 | |||||||||
Accrued interest receivable | 2,804,238 | 2,277,196 | 2,336,515 | |||||||||
Deferred income taxes | 4,631,813 | 3,725,608 | 1,899,258 | |||||||||
Other investments | 3,226,173 | 3,112,208 | 2,899,285 | |||||||||
Other assets | 2,214,339 | 2,217,851 | 2,507,609 | |||||||||
Total Assets | $ | 934,951,242 | $ | 896,099,799 | $ | 866,133,339 | ||||||
LIABILITIES & STOCKHOLDERS' EQUITY | ||||||||||||
Deposits: | ||||||||||||
Demand and non-interest-bearing | $ | 257,288,208 | $ | 264,120,048 | $ | 518,110,563 | ||||||
Savings and interest-bearing transaction accounts | 354,185,035 | 338,840,798 | 23,631,159 | |||||||||
Time deposits | 179,985,925 | 175,145,169 | 197,930,268 | |||||||||
Total deposits | 791,459,168 | 778,106,015 | 739,671,990 | |||||||||
22,769,235 | 10,851,757 | 16,095,431 | ||||||||||
Notes payable | 25,385,663 | 10,810,660 | 10,791,724 | |||||||||
Accrued interest payable | 505,504 | 131,828 | 352,228 | |||||||||
Other liabilities | 19,477,404 | 19,973,364 | 20,348,822 | |||||||||
Total Liabilities | 859,596,974 | 819,873,624 | 787,260,195 | |||||||||
Stockholders' equity: | ||||||||||||
Common stock | 10,039 | 10,039 | 9,763 | |||||||||
Surplus | 89,416,483 | 89,091,965 | 88,181,971 | |||||||||
Accumulated deficit | (4,708,340 | ) | (6,042,971 | ) | (9,403,269 | ) | ||||||
(563,441 | ) | (563,441 | ) | (504,242 | ) | |||||||
Accumulated other comprehensive (loss) income | (8,800,473 | ) | (6,269,417 | ) | 588,921 | |||||||
Total stockholders' equity | 75,354,268 | 76,226,175 | 78,873,144 | |||||||||
Total Liabilities and Stockholders' Equity | $ | 934,951,242 | $ | 896,099,799 | $ | 866,133,339 | ||||||
CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
(Unaudited) | ||||||||||||
For the Three Months Ended | ||||||||||||
2022 | 2022 | 2021 | ||||||||||
Interest income: | ||||||||||||
Loans, including fees | $ | 9,067,631 | $ | 8,539,519 | $ | 7,726,879 | ||||||
Investment securities | 574,963 | 443,419 | 397,755 | |||||||||
Federal funds sold and other | 129,443 | 121,771 | 5,428 | |||||||||
Total interest income | 9,772,037 | 9,104,709 | 8,130,062 | |||||||||
Interest expense: | ||||||||||||
Deposits | 781,647 | 642,622 | 801,145 | |||||||||
70,336 | 58,483 | 100,671 | ||||||||||
Notes payable | 362,254 | 167,874 | 167,874 | |||||||||
Federal funds purchased and other | 7,603 | - | 133 | |||||||||
Total interest expense | 1,221,840 | 868,979 | 1,069,823 | |||||||||
Net interest income | 8,550,197 | 8,235,730 | 7,060,239 | |||||||||
Provision for loan losses | 410,000 | - | - | |||||||||
Net interest income after provision for loan losses | 8,140,197 | 8,235,730 | 7,060,239 | |||||||||
Non-interest income: | ||||||||||||
Service charges and fees on deposits | 136,156 | 123,432 | 131,131 | |||||||||
Wealth management fee income | 559,358 | 632,367 | 574,074 | |||||||||
Secondary market fee income | 231,012 | 397,351 | 697,477 | |||||||||
Loss on sales and write-downs of foreclosed assets | - | 9,520 | - | |||||||||
Other non-interest income | 442,391 | 414,046 | 288,553 | |||||||||
Total non-interest income | 1,368,917 | 1,576,716 | 1,691,235 | |||||||||
Non-interest expense: | ||||||||||||
Salaries and benefits | 5,009,832 | 4,933,794 | 4,111,369 | |||||||||
Occupancy and equipment | 886,450 | 815,223 | 702,058 | |||||||||
Data processing | 577,219 | 517,583 | 430,858 | |||||||||
Marketing and business development | 320,613 | 382,409 | 186,950 | |||||||||
Professional services | 533,614 | 420,007 | 487,428 | |||||||||
Other non-interest expense | 320,179 | 357,930 | 259,239 | |||||||||
Total non-interest expense | 7,647,907 | 7,426,946 | 6,177,902 | |||||||||
Income before income taxes | 1,861,207 | 2,385,500 | 2,573,572 | |||||||||
Income tax provision | 526,576 | 600,433 | 647,957 | |||||||||
Net income | $ | 1,334,631 | $ | 1,785,067 | $ | 1,925,615 | ||||||
Earnings per share: | ||||||||||||
Basic | $ | 1.34 | $ | 1.79 | $ | 1.99 | ||||||
Diluted | $ | 1.34 | $ | 1.79 | $ | 1.99 | ||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||
(Unaudited) | |||||||||
Nine Months Ended | |||||||||
2022 | 2021 | ||||||||
Interest income: | |||||||||
Loans, including fees | $ | 25,389,852 | $ | 23,272,562 | |||||
Investment securities | 1,400,298 | 1,099,091 | |||||||
Federal funds sold and other | 277,233 | 20,855 | |||||||
Total interest income | 27,067,383 | 24,392,508 | |||||||
Interest expense: | |||||||||
Deposits | 2,085,235 | 2,701,034 | |||||||
195,724 | 306,036 | ||||||||
Notes payable | 698,002 | 503,622 | |||||||
Federal funds purchased and other | 7,603 | 2,242 | |||||||
Total interest expense | 2,986,564 | 3,512,934 | |||||||
Net interest income | 24,080,819 | 20,879,574 | |||||||
Provision for loan losses | 410,000 | - | |||||||
Net interest income after provision for loan losses | 23,670,819 | 20,879,574 | |||||||
Non-interest income: | |||||||||
Service charges and fees on deposits | 389,702 | 383,412 | |||||||
Wealth management fee income | 1,816,651 | 1,641,205 | |||||||
Secondary market fee income | 1,030,612 | 2,285,697 | |||||||
Loss on sales and write-downs of foreclosed assets | (151,480 | ) | - | ||||||
Other non-interest income | 1,200,587 | 750,406 | |||||||
Total non-interest income | 4,286,072 | 5,060,720 | |||||||
Non-interest expense: | |||||||||
Salaries and benefits | 14,583,074 | 11,975,156 | |||||||
Occupancy and equipment | 2,464,542 | 1,929,421 | |||||||
Data processing | 1,834,815 | 1,361,630 | |||||||
Marketing and business development | 992,715 | 459,892 | |||||||
Professional services | 1,418,768 | 1,786,505 | |||||||
Other non-interest expense | 989,203 | 959,553 | |||||||
Total non-interest expense | 22,283,117 | 18,472,157 | |||||||
Income before income taxes | 5,673,774 | 7,468,137 | |||||||
Income tax provision | 1,479,215 | 1,912,682 | |||||||
Net income | $ | 4,194,559 | $ | 5,555,455 | |||||
Earnings per share: | |||||||||
Basic | $ | 4.22 | $ | 5.73 | |||||
Diluted | $ | 4.22 | $ | 5.73 | |||||
SUPPLEMENTAL INFORMATION | ||||||||||||||||
(Unaudited) | (Audited) | |||||||||||||||
Three Months Ended | Year ended | |||||||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||||
Earnings per share: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income available to common shareholders' | $ | 1,334,631 | $ | 1,785,067 | $ | 1,925,615 | $ | 7,050,823 | ||||||||
Denominator: | ||||||||||||||||
Weighted average common shares outstanding | 994,996 | 994,996 | 968,946 | 975,058 | ||||||||||||
Effect of dilutive securities: | ||||||||||||||||
Stock options | 691 | 499 | - | - | ||||||||||||
Weighted average common shares outstanding - assuming dilution | $ | 995,687 | $ | 995,495 | $ | 968,946 | $ | 975,058 | ||||||||
Basic earnings per common share | $ | 1.34 | $ | 1.79 | $ | 1.99 | $ | 7.23 | ||||||||
Diluted earnings per common share | $ | 1.34 | $ | 1.79 | $ | 1.99 | $ | 7.23 | ||||||||
Profitability: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net income | $ | 1,334,631 | $ | 1,785,067 | $ | 1,925,615 | $ | 7,050,823 | ||||||||
Denominator: | ||||||||||||||||
Average total assets for period | 908,692,882 | 887,698,554 | 802,375,174 | 806,437,028 | ||||||||||||
Average total equity for period | 77,112,599 | 77,135,728 | 77,961,111 | 77,002,249 | ||||||||||||
Return on average assets | 0.58 | % | 0.81 | % | 0.95 | % | 0.87 | % | ||||||||
Return on average equity | 6.87 | % | 9.28 | % | 9.80 | % | 9.16 | % | ||||||||
Efficiency Ratio: | ||||||||||||||||
Numerator: | ||||||||||||||||
Net interest income | $ | 8,550,197 | $ | 8,235,730 | $ | 7,060,239 | $ | 28,269,337 | ||||||||
Non-interest income | 1,368,917 | 1,576,716 | 1,691,235 | 6,588,205 | ||||||||||||
Total Income | $ | 9,919,114 | $ | 9,812,446 | $ | 8,751,474 | $ | 34,857,542 | ||||||||
Denominator: | ||||||||||||||||
Non-interest expense | $ | 7,647,907 | $ | 7,426,946 | $ | 6,177,902 | $ | 25,345,327 | ||||||||
Efficiency ratio | 77.10 | % | 75.69 | % | 70.59 | % | 72.71 | % | ||||||||
(Unaudited) | (Audited) | |||||||||||||||
2022 | 2022 | 2021 | 2021 | |||||||||||||
Asset Quality: | ||||||||||||||||
Net (recoveries) charge-offs | $ | (43,488 | ) | $ | (49,997 | ) | $ | 80,675 | $ | 461,663 | ||||||
Classified assets | 411,636 | 484,483 | 4,642,205 | 5,434,111 | ||||||||||||
Nonperforming loans | 153,362 | 184,570 | 148,657 | 220,616 | ||||||||||||
Nonperforming assets | 153,362 | 184,570 | 148,657 | 932,326 | ||||||||||||
Total nonperforming loans to total loans | 0.02 | % | 0.03 | % | 0.02 | % | 0.03 | % | ||||||||
Total nonperforming loans to total assets | 0.02 | % | 0.02 | % | 0.02 | % | 0.03 | % | ||||||||
Total nonperforming assets to total assets | 0.02 | % | 0.02 | % | 0.02 | % | 0.11 | % | ||||||||
INTEREST INCOME AND EXPENSE | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Federal funds sold and other | $ | 23,960,268 | $ | 129,443 | 2.14 | % | $ | 15,558,696 | $ | 5,428 | 0.14 | % | ||||||||||
Investment securities | 99,741,280 | 574,963 | 2.29 | % | 87,309,682 | 397,755 | 1.81 | % | ||||||||||||||
Loans receivable (1) | 750,079,728 | 9,067,631 | 4.80 | % | 664,338,877 | 7,726,879 | 4.61 | % | ||||||||||||||
Total interest-earning assets | 873,781,276 | $ | 9,772,037 | 4.44 | % | 767,207,255 | $ | 8,130,062 | 4.20 | % | ||||||||||||
Noninterest-earning assets | 34,911,606 | 35,167,919 | ||||||||||||||||||||
Total assets | $ | 908,692,882 | $ | 802,375,174 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing deposits | $ | 534,033,840 | $ | 781,647 | 0.58 | % | $ | 477,561,034 | $ | 801,145 | 0.67 | % | ||||||||||
FHLB advances and federal funds purchased | 13,285,949 | 77,939 | 2.33 | % | 16,563,988 | 100,804 | 2.41 | % | ||||||||||||||
Notes payable | 21,587,065 | 362,254 | 6.66 | % | 10,788,545 | 167,874 | 6.17 | % | ||||||||||||||
Total interest-bearing liabilities | 568,906,854 | $ | 1,221,840 | 0.85 | % | 504,913,567 | $ | 1,069,823 | 0.84 | % | ||||||||||||
Noninterest-bearing liabilities | 262,673,429 | 218,119,671 | ||||||||||||||||||||
Total liabilities | 831,580,283 | 723,033,238 | ||||||||||||||||||||
Stockholders' equity | 77,112,599 | 77,961,111 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 908,692,882 | $ | 800,994,349 | ||||||||||||||||||
Net interest-earning assets | $ | 304,874,422 | $ | 262,293,688 | ||||||||||||||||||
Net interest spread | $ | 8,550,197 | 3.58 | % | $ | 7,060,239 | 3.36 | % | ||||||||||||||
Net interest margin | 3.88 | % | 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. | |||||||||||||||||||||
INTEREST INCOME AND EXPENSE | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||
Nine Months Ended | ||||||||||||||||||||||
2022 | 2021 | |||||||||||||||||||||
Average | Average | Average | Average | |||||||||||||||||||
Balance | Interest | Yield/Rate | Balance | Interest | Yield/Rate | |||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||
Federal funds sold and other | $ | 45,661,372 | $ | 277,233 | 0.81 | % | $ | 28,487,448 | $ | 20,855 | 0.10 | % | ||||||||||
Investment securities | 91,227,775 | 1,400,298 | 2.05 | % | 77,965,654 | 1,099,091 | 1.88 | % | ||||||||||||||
Loans receivable (1) | 712,785,592 | 25,389,852 | 4.76 | % | 651,516,641 | 23,272,562 | 4.78 | % | ||||||||||||||
Total interest-earning assets | 849,674,739 | $ | 27,067,383 | 4.26 | % | 757,969,743 | $ | 24,392,508 | 4.30 | % | ||||||||||||
Noninterest-earning assets | 35,352,522 | 32,687,728 | ||||||||||||||||||||
Total assets | $ | 885,027,261 | $ | 790,657,471 | ||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||
Interest-bearing deposits | $ | 509,887,837 | $ | 2,085,235 | 0.55 | % | $ | 476,704,627 | $ | 2,701,034 | 0.76 | % | ||||||||||
FHLB advances and federal funds purchased | 12,120,343 | 203,327 | 2.24 | % | 18,309,108 | 308,278 | 2.25 | % | ||||||||||||||
Notes payable | 14,438,191 | 698,002 | 6.46 | % | 10,781,999 | 503,622 | 6.25 | % | ||||||||||||||
Total interest-bearing liabilities | 536,446,371 | $ | 2,986,564 | 0.74 | % | 505,795,734 | $ | 3,512,934 | 0.93 | % | ||||||||||||
Noninterest-bearing liabilities | 270,588,314 | 208,615,838 | ||||||||||||||||||||
Total liabilities | 807,034,685 | 714,411,572 | ||||||||||||||||||||
Stockholders' equity | 77,992,576 | 76,245,899 | ||||||||||||||||||||
Total liabilities and stockholders' equity | $ | 885,027,261 | $ | 790,657,471 | ||||||||||||||||||
Net interest-earning assets | $ | 313,228,368 | $ | 252,174,009 | ||||||||||||||||||
Net interest spread | $ | 24,080,819 | 3.51 | % | $ | 20,879,574 | 3.37 | % | ||||||||||||||
Net interest margin | 3.79 | % | 3.68 | % | ||||||||||||||||||
(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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