Cashmere Valley Bank Reports Another Strong Quarter of Earnings at $7.2 Million, Year to Date Earnings of $21.1 Million

Rhea-AI Summary

Cashmere Valley Bank (CSHX) reported Q3 2024 earnings of $7.2 million, with year-to-date earnings reaching $21.1 million, up from $20.3 million in the same period of 2023. Diluted earnings per share were $5.42 year-to-date, a 3.9% increase. Deposits grew by $52.5 million in Q3 to $1.825 billion, with non-interest deposits at $409.4 million. The bank's net interest margin improved to 3.22% in Q3 2024 from 3.07% a year ago, despite gross loans decreasing by $45.3 million to $997.1 million since December 2023.

Positive

• Year-to-date earnings increased to $21.1 million from $20.3 million YoY
• Deposits grew by $52.5 million (3.0%) in Q3 2024
• Net interest margin improved to 3.22% in Q3 2024 from 3.07% YoY
• Non-interest income increased to $15.2 million from $12.2 million YoY
• Strong credit quality with non-performing loans at only 0.28% of gross loans

Negative

• Gross loans decreased by $45.3 million since December 2023
• Return on equity declined to 13.25% from 15.31% YoY
• Net interest income decreased to $47.2 million from $49.2 million YoY
• Non-interest expenses increased by $738,000 (2.1%) YoY

CASHMERE, WA / ACCESSWIRE / October 23, 2024 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced quarterly earnings of $7.2 million for the quarter ended September 30, 2024. Year to date earnings totaled $21.1 million as compared to $20.3 million for the nine months ended September 30, 2023. Year to date diluted earnings per share were $5.42, representing an increase of $0.20 per share, or 3.9%. Third quarter earnings per share totaled $1.84, which represented a decrease of $0.01 per diluted share from the third quarter 2023.

As of September 30, 2024, deposit balances totaled $1.825 billion, an increase of $51.2 million, or 2.9%, from December 31, 2023. For the third quarter, deposit balances increased $52.5 million, or 3.0%. Non-interest deposits totaled $409.4 million, which represented 22.4% of total deposits. During the third quarter non-interest deposits grew $19.8 million, or 5.1%.

"We are extremely pleased that deposit balances are increasing again," said Greg Oakes, President and CEO. "The rate of increase in the cost of our deposits also slowed. The combination of these two is a tremendous relief. Seeing an expansion in our net interest margin in the quarter was a pleasant surprise and should bode well for us to wrap up another successful year."

Q3 Highlights

The Bank reported the following statement of condition highlights as of September 30, 2024:

• As of September 30, 2024, gross loans totaled $997.1 million, representing a decrease from December 31, 2023 of $45.3 million. Gross loans decreased during the third quarter by $18.3 million as originations remained soft.

• For the third quarter, return on assets was 1.37%. The Bank's return on assets year to date increased to 1.37% from 1.34% one year ago.

• The Bank's year to date return on equity was 13.25% as compared to 15.31% one year ago. For the third quarter, return on equity was 12.82%. The decrease in return on equity was primarily related to an increasing capital base. Year to date earnings and a reduction in unrealized loss on available for sale securities have increased the Bank's capital position.

Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash totaled $186.9 million at September 30, 2024, compared to $117.1 million at December 31, 2023. The Bank has made a concerted effort to maintain large cash balances through security sales and paydowns without full reinvestment of principal, and through deposit growth that occurred during the third quarter.

Investments
The book value of the Bank's investment portfolio totaled $890.6 million at September 30, 2024, an increase of $32.6 million from December 31, 2023. As of September 30, 2024, $131.6 million in securities were classified as held-to-maturity as compared to $139.8 million as of December 31, 2023. Unrealized losses on securities have decreased from $67.3 million as of December 31, 2023 to $47.8 million as of September 30, 2024.

As of September 30, 2024, the Bank had not realized any losses on security sales. In 2023, the Bank realized $2.3 million in security losses through September 30, 2023.

Loans and Credit Quality
Gross loans decreased $18.3 million from the prior quarter and totaled $997.1 million as of September 30, 2024. Gross loans have decreased $45.3 million from December 31, 2023. During 2024, auto dealer loans have decreased $20.2 million, commercial real estate loans have decreased $18.1 million, and multifamily loans are down $11.4 million.

As of September 30, 2024, the allowance for credit losses on loans (ACL) was 1.32% of gross loans as compared to 1.26% one year ago. The Bank allocated $1,506,000 to the loan loss provisions through the third quarter of 2024 as compared to $1,828,000 through the third quarter of 2023. The balance in the allowance for credit losses was $13.1 million at September 30, 2024.

Credit quality remains strong. Non-performing loans represented 0.28% of gross loans as of September 30, 2024, as compared to 0.23% as of September 30, 2023.

Deposits
Total deposits increased by $52.5 million from June 30, 2024 to September 30, 2024. Year to date, the Bank's cost of funds was 1.68%.

Equity
GAAP capital reflected an increase of $54.1 million from September 30, 2023, and an increase of $30.0 million from December 31, 2023. Earnings during those time periods along with significant reductions in unrealized losses on available for sale securities bolstered the Bank's capital position. The capital to assets ratio was 11.0% as of September 30, 2024.

Earnings
Net Interest Income
For the nine months ended September 30, 2024, net interest income totaled $47.2 million as compared to $49.2 million during the same period one year ago. The decrease from the prior year was due to rapidly increasing costs on deposits. Deposit rates changed substantially due to an increase in fed funds rates along with competition for deposits. Higher rates have benefited the Bank's assets. Income from loans increased $4.9 million, securities income increased $3.9 million, and cash income increased $1.0 million as compared to the prior year.

Net interest income increased $1.1 million over the prior quarter. Deposit costs continued to rise during the quarter, however, the rate of increase slowed substantially. Deposit balances also grew, which enabled the Bank to hold more cash on hand, invest in securities, and resulted in higher interest income for the quarter. Interest expense increased from the prior quarter by $330,000, or 4.2%, while interest income increased $1.4 million, or 6.1%.

The net interest margin was 3.14% for the first nine months of 2024, compared to 3.29% during the first nine months of 2023. The margin has been adversely affected by deposit costs. For the quarter ended September 30, 2024 the net interest margin showed improvement over the same quarter one year ago. The quarterly margin was 3.22% as compared to 3.07% one year ago.

Non-Interest Income
Non-interest income totaled $15.2 million in the first nine months of 2024 as compared to $12.2 million in the first nine months of 2023. The primary driver for the increase in non-interest income was a reduction in realized losses on available for sale securities. Available for sale security losses totaled $2.3 million through September 30, 2023 and no security losses were realized through September 30, 2024. Insurance commissions also increased $639,000 and wealth management commissions increased $298,000.

Non-Interest Expense
Non-interest expense totaled $35.6 million in the first nine months of 2024 as compared to $34.8 million in the first nine months of 2023. The increase in costs totaled $738,000, or 2.1%.

Increases in salary and benefits were primarily responsible for the increase in non-interest expense. As compared to the same period one year ago, wages and benefits expense increased $540,000, or 2.7%. In late 2023, the Bank applied for and recorded a $3.9 million reduction in payroll taxes due to the Employee Retention Tax Credit. To date, the Bank's application has not been reviewed or approved by the IRS.

The Bank's efficiency ratio was 57.0% in the first nine months of 2024 as compared to 56.8% in the first nine 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 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
		September 30, 2024				June 30, 2024				September 30, 2023
Assets
Cash and Cash Equivalent:
Cash & due from banks		$	33,150			$	21,484			$	26,859
Interest bearing deposits			149,764				134,051				105,325
Fed funds sold			3,982				3,578				2,662
Total Cash and Cash Equivalent			186,896				159,113				134,846
Securities available for sale			711,205				652,136				600,278
Securities held to maturity, net of allowance for credit losses of $17, $18 and $21, respectively			131,558				133,434				141,258
Federal Home Loan Bank stock, at cost			2,891				2,936				2,505
Loans held for sale			964				673				1,223
Loans			997,119				1,015,444				1,026,040
Allowance for credit losses			(13,134	)			(13,198	)			(13,252	)
Net loans			983,985				1,002,246				1,012,788
Premises and equipment			19,645				20,097				21,061
Accrued interest receivable			9,466				9,416				8,734
Other real estate and foreclosed assets			97				97				97
Bank Owned Life Insurance			27,428				27,212				26,628
Goodwill			7,579				7,579				7,576
Intangibles			2,964				3,152				3,557
Mortgage servicing rights			2,460				2,477				2,567
Net deferred tax assets			15,548				18,394				23,735
Other assets			10,152				14,404				12,302
Total assets		$	2,112,838			$	2,053,366			$	1,999,155
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand		$	409,407			$	389,580			$	441,561
Savings and interest-bearing demand			928,238				918,205				1,008,861
Time			487,341				464,688				346,346
Total deposits			1,824,986				1,772,473				1,796,768
Accrued interest payable			2,991				2,642				1,476
Short-term borrowings			37,000				48,322				8,267
Other liabilities			15,007				11,725				14,243
Total liabilities			1,879,984				1,835,162				1,820,754
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 9/30/2024 -- 3,890,990 ; 6/30/2024 -- 3,890,990 ; 9/30/2023 -- 3,883,981			--				--				--
Additional paid-in capital			5,233				5,184				4,782
Treasury stock			(16,784	)			(16,784	)			(16,784	)
Retained Earnings			294,578				290,710				272,400
Other comprehensive income			(50,652	)			(61,360	)			(82,171	)
Total Cashmere Valley Bank shareholders' equity			232,375				217,750				178,227
Noncontrolling interest			479				454				174
Total shareholders' equity			232,854				218,204				178,401
Total liabilities and shareholders' equity		$	2,112,838			$	2,053,366			$	1,999,155

Quarterly Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
		For the quarters ended,
		September 30, 2024				June 30, 2024				September 30, 2023
Interest Income
Loans		$	13,210			$	13,264			$	12,115
Fed funds sold and deposits at other financial institutions			2,193				1,458				1,448
Securities available for sale:
Taxable			7,921				7,145				6,254
Tax-exempt			348				344				372
Securities held to maturity:
Taxable			759				786				778
Tax-exempt			24				47				46
Total interest income			24,455				23,044				21,013
Interest Expense
Deposits			7,560				7,166				4,709
Short-term borrowings			548				612				49
Total interest expense			8,108				7,778				4,758
Net interest income			16,347				15,266				16,255
Provision for Credit Losses			904				657				743
Net interest income after provision for credit losses			15,443				14,609				15,512
Non-Interest Income
Service charges on deposit accounts			543				502				553
Mortgage banking operations			399				463				465
Net gain (loss) on sales of securities available for sale			--				--				--
Brokerage commissions			346				349				247
Insurance commissions and fees			2,177				2,225				1,830
Net interchange income (expense)			1,169				1,131				1,188
BOLI cash value			216				203				180
Dividends from correspondent banks			60				59				19
Other			303				309				298
Total non-interest income			5,213				5,241				4,780
Non-Interest Expense
Salaries and employee benefits			6,781				6,537				6,374
Occupancy and equipment			818				855				1,041
Audits and examinations			108				195				157
State and local business and occupation taxes			374				239				346
FDIC insurance & WA state assessments			244				224				265
Legal and professional fees			290				303				232
Check losses and charge-offs			115				148				185
Low income housing investment losses			157				169				153
Data processing			1,555				1,578				1,657
Product delivery			354				369				301
Other			1,073				1,087				817
Total non-interest expense			11,869				11,704				11,528
Income before income taxes			8,787				8,146				8,764
Income Taxes			1,587				1,472				1,574
Net income		$	7,200			$	6,674			$	7,190
Net income attributable to noncontrolling interest			25				27				7
Net income attributable to Cashmere Valley Bank		$	7,175			$	6,647			$	7,183
Earnings Per Share
Basic		$	1.84			$	1.71			$	1.85
Diluted		$	1.84			$	1.71			$	1.85

Year-to-Date Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
		For the nine months ended,
		September 30, 2024				September 30, 2023
Interest Income
Loans		$	39,495			$	34,626
Fed funds sold and deposits at other financial institutions			4,949				3,906
Securities available for sale:
Taxable			22,286				17,797
Tax-exempt			969				1,529
Securities held to maturity:
Taxable			2,330				2,364
Tax-exempt			118				138
Total interest income			70,147				60,360
Interest Expense
Deposits			21,177				11,096
Short-term borrowings			1,768				108
Total interest expense			22,945				11,204
Net interest income			47,202				49,156
Provision for Credit Losses			1,506				1,828
Net interest income after provision for credit losses			45,696				47,328
Non-Interest Income
Service charges on deposit accounts			1,504				1,656
Mortgage banking operations			1,152				1,140
Net gain (loss) on sales of securities available for sale			--				(2,258	)
Brokerage commissions			1,065				767
Insurance commissions and fees			6,352				5,713
Net interchange income (expense)			3,467				3,700
BOLI cash value			619				523
Dividends from correspondent banks			153				66
Other			868				867
Total non-interest income			15,180				12,174
Non-Interest Expense
Salaries and employee benefits			20,387				19,847
Occupancy and equipment			2,553				2,988
Audits and examinations			486				353
State and local business and occupation taxes			947				1,001
FDIC insurance & WA state assessments			712				788
Legal and professional fees			834				740
Check losses and charge-offs			382				454
Low income housing investment losses			327				479
Data processing			4,732				4,696
Product delivery			1,054				931
Other			3,153				2,552
Total non-interest expense			35,567				34,829
Income before income taxes			25,309				24,673
Income Taxes			4,152				4,356
Net income		$	21,157			$	20,317
Net income attributable to noncontrolling interest			57				23
Net income attributable to Cashmere Valley Bank			21,100				20,294
Earnings Per Share
Basic		$	5.43			$	5.23
Diluted		$	5.42			$	5.22

MEDIA CONTACT:

Greg Oakes, CEO, (509) 782-2092

or
Mike Lundstrom, CFO, (509) 782-5495

SOURCE: Cashmere Valley Bank

View the original press release on accesswire.com

FAQ

What was Cashmere Valley Bank's (CSHX) Q3 2024 earnings?

Cashmere Valley Bank reported Q3 2024 earnings of $7.2 million, with diluted earnings per share of $1.84.

How much did CSHX deposits grow in Q3 2024?

CSHX deposits increased by $52.5 million (3.0%) in Q3 2024, reaching a total of $1.825 billion.

What was CSHX's net interest margin in Q3 2024?

CSHX's net interest margin was 3.22% in Q3 2024, an improvement from 3.07% in Q3 2023.

How did CSHX's loan portfolio perform in Q3 2024?

CSHX's gross loans decreased by $18.3 million in Q3 2024, totaling $997.1 million, with a total decrease of $45.3 million since December 2023.