Alpine Banks of Colorado Announces Financial Results for Second Quarter 2023

GLENWOOD SPRINGS, Colo., July 31, 2023 (GLOBE NEWSWIRE) -- Alpine Banks of Colorado (OTCQX: ALPIB) (“Alpine” or the “Company”), the holding company for Alpine Bank (the “Bank”), today announced results (unaudited) for the second quarter ended June 30, 2023. The Company reported net income of $14.7 million, or $134.31 per basic Class A common share, and $0.90 per basic Class B common share, for second quarter 2023.

Highlights in second quarter 2023 include:

• Basic earnings per Class A common share decreased 25.5%, or $46.07, during second quarter 2023.
• Basic earnings per Class A common share increased 6.6%, or $19.40 during the last 12 months ended June 30, 2023.
• Basic earnings per Class B common share decreased 25.5%, or $0.31, during second quarter 2023.
• Basic earnings per Class B common share increased 6.6%, or $0.13 during the last 12 months ended June 30, 2023.
• Net interest margin for second quarter 2023 was 3.15%, compared to 3.52% in first quarter 2023, and 3.31% in second quarter 2022.
  

“The second quarter of 2023 produced solid results for Alpine Bank,” said Alpine Banks of Colorado President and Vice Chairman Glen Jammaron. “The deposit market continues to be competitive with both banks and non-banks searching for funding. Alpine Bank continues to add over 1,200 net new deposit accounts per month. Active new account activity along with close personal relationships with the existing customer base bode well for our ability to meet any funding challenges.”

Net Income
Net income for second quarter 2023 and first quarter 2023 was $14.6 million and $19.7 million, respectively. Interest income increased $4.8 million in second quarter 2023 compared to first quarter 2023, primarily due to an increase in volume in the loan portfolio and balances due from banks, along with increases in yields on the loan portfolio and the balances due from banks. This increase was slightly offset by decreases in volume in the securities portfolio and decreases in yield on the securities portfolio. Interest expense increased $9.1 million in second quarter 2023 compared to first quarter 2023, primarily due to an increase in volume in borrowings and increases in costs on the Company’s trust preferred securities, other borrowings and cost of deposits. Noninterest income increased $0.2 million in second quarter 2023 compared to first quarter 2023, due to increases in service charges on deposit accounts and an increase in earnings on bank-owned life insurance. This increase was slightly offset by a decrease in other income. Noninterest expense increased $2.9 million in second quarter 2023 compared to first quarter 2023, due to increases in salaries and employee benefit expenses, occupancy expenses and furniture and fixture expenses, slightly offset by decreases in other expenses. A provision for loan losses of $0.4 million was recorded in second quarter 2023 compared to a provision for loan losses recorded in first quarter 2023 of $0.3 million.

Net income for the six months ended June 30, 2023 and June 30, 2022 was $34.3 million and $30.3 million, respectively. Interest income increased $36.9 million in the first six months of 2023 compared to the first six months of 2022, primarily due to increases in volume in the securities and loan portfolios and increases in yields in the balances due from banks, loan, and securities portfolios. This increase was slightly offset by a decrease in volume in balances due from banks. Interest expense increased $25.7 million in the first six months of 2023 compared to the first six months of 2022, primarily due to increases in costs on the Company’s trust-preferred securities, other borrowings, and cost of deposits, along with increases in volume in other borrowings. Noninterest income increased $5.2 million in the first six months of 2023, compared to the first six months of 2022, primarily due to increases in other income and earnings on life insurance. In addition, noninterest income in second quarter 2022 was negatively impacted by realized losses on the sale of the Bank’s equity investment in a bond fund. The increase in noninterest income was slightly offset by decreases in service charges on deposit accounts. Noninterest expense increased $10.5 million in the first six months of 2023 compared to the first six months of 2022, due to increases in other expenses, salary and employee benefit expenses, furniture and fixtures expenses and occupancy expenses. Provision for loan losses increased $0.7 million in the first six months of 2023 due to portfolio growth and a small volume of loan chargeoffs, compared to no provision for loan losses in the six months ended June 30, 2022.

Net interest margin decreased from 3.52% to 3.15% from first quarter 2023 to second quarter 2023. Net interest margin for the six months ended June 30, 2023, and June 30, 2022, was 3.33% and 3.09%, respectively.

Assets
Total assets decreased $59.3 million, or 0.90%, to $6.5 billion as of June 30, 2023, compared to March 31, 2023, primarily due to decreased cash balances offset by organic loan growth. Total assets grew $421.4 million, or 6.93%, from June 30, 2022, to June 30, 2023. The Alpine Bank Wealth Management* division had assets under management of $1.12 billion on June 30, 2023, compared to $1.03 billion on June 30, 2022, an increase of 9.3%.

Loans
Loans outstanding as of June 30, 2023 totaled $4.0 billion. The loan portfolio increased $96.5 million, or 2.5%, during second quarter 2023 compared to March 31, 2023. This growth was driven by a $39.8 million increase in residential real estate loans, a $26.2 million increase in real estate construction loans, a $22.7 million increase in commercial real estate loans, a $8.4 million increase in commercial and industrial loans and a $0.4 million increase in other loans. This increase was slightly offset by a $0.8 million decrease in consumer loans.

Loans outstanding as of June 30, 2023, reflected an increase of $434.6 million, or 12.1%, compared to loans outstanding of $3.6 billion on June 30, 2022. This growth was driven by a $240.0 million increase in residential real estate loans, a $127.4 million increase in commercial real estate loans a $72.1 million increase in real estate construction loans and a $1.4 million increase in consumer loans. This year-over-year growth was slightly offset by a $4.2 million decrease in commercial and industrial loans and a $0.1 million decrease in other loans.

Effective January 1, 2023, the Bank adopted the FASB’s Accounting Standard Update (ASU) 2016-13, commonly known as CECL. Upon adoption, the Bank recorded no change in the beginning allowance for credit losses – loans. However, the adoption of ASU 2016-13 did result in an $8.6, million increase to its allowance for credit losses – unfunded loan commitments. The increase was recorded net of tax as a reduction to retained earnings, as of the adoption date.

Deposits
Total deposits increased $52.9 million, or 0.93%, to $5.8 billion during second quarter 2023 compared to March 31, 2023, primarily due to a $399.4 million increase in certificate of deposit accounts offset by a $346.0 million decrease in demand deposits and interest checking.

Total deposits of $5.8 billion on June 30, 2023, reflected an increase of $251.3 million, or 4.6%, compared to total deposits of $5.5 billion on June 30, 2022. This increase was due to a $881.0 million increase in certificate of deposit accounts and a $23.1 million increase in money fund accounts. This increase was partially offset by a $399.7 million decrease in demand deposits, a $228.1 million decrease in interest-bearing checking accounts and a $25.0 million decrease in savings accounts. Brokered certificates of deposit totaled $597.1 million on June 30, 2023. Noninterest-bearing demand accounts comprised 32.2% of all deposits on June 30, 2023, compared to 40.9% on June 30, 2022.

Capital
The Bank continues to be designated as a “well capitalized” institution as its capital ratios exceed the minimum requirements for this designation. As of June 30, 2023, the Bank’s Tier 1 Leverage Ratio was 9.17%, Tier 1 Risk-Based Capital Ratio was 13.28% and Total Risk-Based Capital Ratio was 14.43%. On a consolidated basis, the Company’s Tier 1 Leverage Ratio was 8.68%, Tier 1 Risk-Based Capital Ratio was 12.56% and Total Risk-Based Capital Ratio was 14.82%, as of June 30, 2023.

Book value per share on June 30, 2023, was $4,035.59 per Class A common share and $26.90 per Class B common share, an increase of $37.58 per Class A common share and $0.25 per Class B common share from March 31, 2023.

Dividends
During second quarter 2023, Alpine paid cash dividends of $30.00 per Class A common share and $0.20 per Class B common share. On July 13, 2023, Alpine declared cash dividends of $30.00 per Class A common share and $0.20 per Class B common share, payable on July 31, 2023, to shareholders of record on July 24, 2023.

About Alpine Banks of Colorado
Alpine Banks of Colorado, through its wholly owned subsidiary Alpine Bank, is a $6.5 billion, employee-owned organization founded in 1973 with headquarters in Glenwood Springs, Colorado. With banking offices across Colorado’s Western Slope, mountains and Front Range, Alpine Bank employs 837 people and serves 170,000 customers with personal, business, wealth management*, mortgage, and electronic banking services. Alpine Bank has a 5-star rating – meaning it has earned a superior performance classification – from BauerFinancial, an independent organization that analyzes and rates financial institutions’ performance in the United States. Shares of the Class B non-voting common stock of Alpine Banks of Colorado trade under the symbol “ALPIB" on the OTCQX® Best Market. Learn more at www.alpinebank.com.

*Alpine Bank Wealth Management services are not FDIC insured, may lose value, and are not guaranteed by the Bank.

Contacts:	Glen Jammaron	Eric A. Gardey
	President and Vice Chairman	Chief Financial Officer
	Alpine Banks of Colorado	Alpine Banks of Colorado
	2200 Grand Avenue	2200 Grand Avenue
	Glenwood Springs, CO 81601	Glenwood Springs, CO 81601
	(970) 384-3266	(970) 384-3257

A note about forward-looking statements
This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “reflects,” “believes,” “estimates,” “continues”, “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding our evaluation of macro-environment risks, Federal Reserve rate management, and trends reflecting things such as regulatory capital standards and adequacy. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward- looking statements. They are neither statements of historical fact or guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statement include, but are not limited to:

• The ability to attract new deposits and loans;
• Demand for financial services in our market areas;
• Competitive market-pricing factors;
• Changes in assumptions underlying the establishment of allowances for loan losses and other estimates;
• Effects of future economic, business and market conditions, including higher inflation;
• Adverse effects of public health events, such as the COVID-19 pandemic, including governmental and societal responses;
• Deterioration in economic conditions that could result in increased loan losses;
• Actions by competitors and other market participants that could have an adverse impact on our expected performance;
• Risks associated with concentrations in real estate-related loans;
• Risks inherent in making loans, such as repayment risks and fluctuating collateral values;
• Market interest rate volatility, including changes to the federal funds rate;
• Stability of funding sources and continued availability of borrowings;
• Geopolitical events, including the military conflict between Russia and Ukraine;
• Assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, which may prove unreliable, inaccurate, or not predictive of actual results;
• Actions of government regulators, including the recent and potential future interest rate hikes by the Board of Governors of the Federal Reserve Board;
• Sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs;
• Any increases in FDIC assessments;
• Risk associated with potential cyber threats;
• The ability to maintain adequate liquidity and regulatory capital, and comply with evolving federal and state banking regulations;
• Changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth;
• The ability to recruit and retain key management and staff;
• The ability to raise capital or incur debt on reasonable terms; and
• Effectiveness of legislation and regulatory efforts to help the U.S. and global financial markets.
  

There are many factors that could cause actual results to differ materially from those contemplated by forward-looking statements. Any forward-looking statement made by us in this press release or in any subsequent written or oral statements attributable to the Company are expressly qualified in their entirety by the cautionary statements above. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Key Financial Measures
The attached tables highlight Alpine’s key financial measures for the periods indicated (unaudited).

Key Financial Measures 06/30/2023

Statement of Income 06/30/2023

Statement of Financial Condition 06/30/2023

Statement of Comprehensive Income 06/30/2023