Cashmere Valley Bank Reports Robust Year-to-Date Earnings of $13.9 Million

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;

Issued and outstanding: 6/30/2024 -- 3,890,990 ;
3/31/2024 -- 3,884,186 ; 6/30/2023 -- 3,883,981

--

--

--

Additional paid-in capital

5,184

4,895

4,721

Treasury stock

(16,784

)

(16,784

)

(16,784

)

Retained Earnings

290,710

284,062

268,517

Other comprehensive income

(61,360

)

(62,491

)

(74,266

)

Total Cashmere Valley Bank shareholders' equity

217,750

209,682

182,188


Noncontrolling interest

454

426

166

Total shareholders' equity

218,204

210,108

182,354



Total liabilities and shareholders' equity

$

2,053,366

$

2,066,251

$

2,008,732

Year-to-Date Consolidated Statements of Income (UNAUDITED)

(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary






For the six months ended,


December 31, 2023

December 31, 2022

Interest Income



Loans

$

26,285

$

22,511

Fed funds sold and deposits at other financial institutions

2,756

2,457

Securities available for sale:

Taxable

14,365

11,544

Tax-exempt

621

1,156

Securities held to maturity:

Taxable

1,571

1,586

Tax-exempt

94

92

Total interest income

45,692

39,346


Interest Expense

Deposits

13,615

6,386

Short-term borrowings

1,221

59

Total interest expense

14,836

6,445


Net interest income

30,856

32,901


Provision for Credit Losses

602

1,085


Net interest income after provision for credit losses

30,254

31,816


Non-Interest Income

Service charges on deposit accounts

962

1,103

Mortgage banking operations

753

676

Net gain (loss) on sales of securities available for sale

--

(2,258

)

Brokerage commissions

718

520

Insurance commissions and fees

4,175

3,883

Net interchange income (expense)

2,297

2,512

BOLI cash value

403

342

Dividends from correspondent banks

93

47

Other

567

569

Total non-interest income

9,968

7,394


Non-Interest Expense

Salaries and employee benefits

13,606

13,473

Occupancy and equipment

1,735

1,947

Audits and examinations

378

196

State and local business and occupation taxes

573

655

FDIC insurance & WA state assessments

468

523

Legal and professional fees

545

507

Check losses and charge-offs

268

269

Low income housing investment losses

169

326

Data processing

3,177

3,039

Product delivery

700

630

Other

2,079

1,735

Total non-interest expense

23,698

23,300


Income before income taxes

16,524

15,910


Income Taxes

2,565

2,783


Net income

$

13,959

$

13,127


Net income attributable to noncontrolling interest

33

16

Net income attributable to Cashmere Valley Bank

13,926

13,111


Earnings Per Share

Basic

$

3.58

$

3.38

Diluted

$

3.58

$

3.37

Quarterly Consolidated Statements of Income (UNAUDITED)

(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary





For the quarters ended,


June 30, 2024

March 31, 2024

June 30, 2023

Interest Income




Loans

$

13,264

$

13,021

$

11,559

Fed funds sold and deposits at other financial institutions

1,458

1,299

990

Securities available for sale:

Taxable

7,145

7,220

5,975

Tax-exempt

344

277

467

Securities held to maturty:

Taxable

786

785

781

Tax-exempt

47

47

46

Total interest income

23,044

22,649

19,818


Interest Expense

Deposits

7,166

6,449

4,156

Short-term borrowings

612

609

52

Total interest expense

7,778

7,058

4,208


Net interest income

15,266

15,591

15,610


Provision for Credit Losses

657

(54

)

480


Net interest income after provision for credit losses

14,609

15,645

15,130


Non-Interest Income

Service charges on deposit accounts

502

460

562

Mortgage banking operations

463

290

364

Net gain (loss) on sales of securities available for sale

--

--

(1,893

)

Brokerage commissions

349

369

250

Insurance commissions and fees

2,225

1,950

2,020

Net interchange income (expense)

1,131

1,166

1,152

BOLI cash value

203

200

172

Dividends from correspondent banks

59

34

20

Other

309

257

283

Total non-interest income

5,241

4,726

2,930


Non-Interest Expense

Salaries and employee benefits

6,537

7,069

6,399

Occupancy and equipment

855

880

1,019

Audits and examinations

195

183

106

State and local business and occupation taxes

239

335

332

FDIC insurance & WA state assessments

224

244

358

Legal and professional fees

303

242

262

Check losses and charge-offs

148

120

152

Low income housing investment losses

169

--

171

Data processing

1,578

1,599

1,500

Product delivery

369

330

316

Other

1,087

993

929

Total non-interest expense

11,704

11,995

11,544


Income before income taxes

8,146

8,376

6,516


Income Taxes

1,472

1,093

1,113


Net income

$

6,674

$

7,283

$

5,403


Net income attributable to noncontrolling interest

27

6

9

Net income attributable to Cashmere Valley Bank

$

6,647

$

7,277

$

5,394


Earnings Per Share

Basic

$

1.71

$

1.87

$

1.39

Diluted

$

1.71

$

1.87

$

1.39

SOURCE: Cashmere Valley Bank



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