Cashmere Valley Bank Reports Quarterly Earnings of $6.1 Million

Rhea-AI Summary

Cashmere Valley Bank (OTCQX:CSHX) reported a quarterly earnings of $6.1 million for the period ending March 31, 2022, with diluted earnings per share at $1.56, down 15.2% year-over-year. Total deposits increased by 1.3% to $1.96 billion, while gross loans rose to $971.7 million, reflecting a 3.3% quarterly increase. However, net interest income decreased slightly from the previous quarter. The bank noted strong credit quality, with non-performing loans at 0.03%.

Positive

• Deposits increased 1.3% quarter-over-quarter to $1.96 billion.
• Gross loans increased by 3.3% from the previous quarter.
• Credit quality remains strong with non-performing loans at 0.03%.

Negative

• Diluted earnings per share decreased by $0.28 or 15.2% year-over-year.
• Net interest income decreased to $13.6 million from $13.8 million in the previous quarter.
• Non-interest expense increased to $11.0 million, a 21.0% year-over-year rise.

CASHMERE, WA / ACCESSWIRE / April 19, 2022 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced quarterly earnings of $6.1 million for the quarter ended March 31, 2022. Diluted earnings per share were $1.56, representing a decrease of $0.28 per share, or 15.2%.

As of March 31, 2022, deposit balances totaled $1.96 billion. Deposit balances increased approximately $25.5 million from December 31, 2021, representing a 1.3% increase.

"We believed that it was going to be a challenge to repeat 2021's earnings. We are pleased that first quarter earnings are well ahead of 2020's quarter one earnings." said Greg Oakes, President and CEO. "The rapid acceleration in interest rates during the quarter provides relief to our net interest margin as we are seeing an increase in loan and investment rates. However, the price change in our available for sale securities is substantial and something we are carefully monitoring. We are fortunate that we entered this period with excess capital and excess cash on hand."

Q1 Highlights

The Bank reported the following statement of condition highlights as of March 31, 2022:

• March 31, 2022 gross loans totaled $971.7 million representing an increase from March 31, 2021 of $8.7 million. From December 31, 2021 to March 31, 2022 loan growth accelerated and reflects an increase of $30.9 million or 3.3%.
• Total deposits increased by $109.8 million or 5.9% from March 31, 2021. From December 31, 2021 to March 31, 2022 total deposits increased $25.5 million or 1.3%. Non-interest deposits totaled $440.8 million as of March 31, 2022, which represents 22.5% of total deposits.

Pandemic Response Update
Payment Protection Program (PPP) loan balances as of March 31, 2022 totaled $6.6 million. Net deferred fees remaining as of March 31, 2022 totaled approximately $159,000.

Income earned through PPP forgiveness totaled $281,000 during the first quarter of 2022 as compared to $1.1 million in the first quarter of 2021. This change in income was expected as PPP draws to a close.

Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $87.6 million at March 31, 2022, compared to $114.0 million at December 31, 2021. The $26.4 million decrease was primarily due to loan originations and advances.

Investments
The investment portfolio totaled $1.061 billion at March 31, 2022, an increase of $88.2 million from March 31, 2021. PPP payoffs in 2021 in combination with increasing deposits and Fed Funds rates near zero resulted in a growing securities portfolio. As interest rates have increased the market value of the portfolio decreased $67.0 million in the first quarter. The market value loss represents 5.0% of the investment portfolio. Each quarter all securities are evaluated for impairment. As of March 31, 2022, no securities were determined to be impaired.

Loans and Credit Quality
Gross loans totaled $971.7 million as of March 31, 2022 an increase of $30.9 million from December 31, 2021 and an increase of $8.7 million from March 31, 2021. Equipment Finance and Construction loans have both increased $9.8 million from December 31, 2021, and auto finance loans have increased $5.5 million.

The allowance for loans and lease losses (ALLL) was 1.41% of gross loans as compared to 1.43% one year ago. The Bank did not make any loan loss provisions during the first quarter of 2022 and the allowance totals $13.7 million.

Credit quality remains exceptionally strong with non-performing loans representing 0.03% of gross loans as of March 31, 2022. This is a slight decrease from 0.09% as of March 31, 2021.

Deposits
Deposits totaled $1.962 billion at March 31, 2022, as compared to $1.937 billion at December 31, 2021. The $25.5 million increase in deposits from the year end represented a 1.3% increase. The average cost of deposits decreased 15 basis points to 0.27% as compared to the three months ended March 31, 2021.

Equity
Tier 1 capital remains strong. Tier 1 capital increased to $217.9 million from $214.8 at December 31, 2021 due to earnings less dividends paid during the first quarter. The first quarter dividend was paid February 7, 2022 at a rate of $0.85 per share. Regulatory capital remains well capitalized with a Tier 1 capital ratio of 9.87% which is a decrease of 0.01% from December 31, 2021.

GAAP capital reflects a decrease of $49.9 million. The decrease was a result of market value changes in securities as a result of the increase in the treasury yield curve.

Earnings
Net Interest Income
Net interest income totaled $13.6 million in the first quarter of 2022, compared to $13.8 million in the prior quarter and $12.7 million in the same quarter a year ago. The decrease from the prior quarter was primarily due to an anticipated slowdown in PPP forgiveness which was partially offset by an increase in income from available-for-sale securities.

Interest income from available for sale securities totaled $5.4 million in the first quarter of 2022, compared to $5.1 million in the previous quarter and $4.2 million in the first quarter of 2021. Yields on investment securities have increased approximately 6 basis points from one year ago as variable rate securities reprice and yields on newly purchased securities have increased.

The net interest margin was 2.58% for the first quarter of 2022, compared to 2.66% during the first quarter of 2021. The eight-basis point decrease from the prior year was primarily due to decreased loan income from PPP loan forgiveness.

Non-Interest Income
Non-interest income totaled $4.5 million in the first quarter of 2022 as compared to $4.8 million in the fourth quarter of 2021 and compared to $5.0 million in the first quarter of 2021. As mortgage refinances have slowed, income from mortgage banking operations has decreased to $755,000 in the first quarter of 2022 as compared to $1.2 million in the fourth quarter of 2021 and $1.9 million in the first quarter of 2021. Income from insurance commission and fees increased to $1.7 million from $1.3 million in the first quarter of 2021.

Non-Interest Expense
Non-interest expense totaled $11.0 million in the first quarter of 2022 as compared to $10.4 million in the fourth quarter of 2021 and $9.1 million in the first quarter of 2021.

The primary driver of the increase in non-interest expense has been the increase in salaries and benefits. As compared to the same period one year ago, wages and benefits expense increased $1.2 million or 22.9%. Wages and health care premiums are up substantially in an effort to attract and retain employees.

The Bank's efficiency ratio was 61.0% in the first quarter of 2022 as compared to 51.5% in the first quarter of 2021.

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
		March 31, 2022			December 31, 2021			March 31, 2021
Assets
Cash and Cash Equivalent:
Cash & due from banks		$	24,697		$	22,450		$	21,959
Interest bearing deposits			54,485			81,399			101,786
Fed funds sold			8,434			10,155			7,435
Total Cash and Cash Equivalent			87,616			114,004			131,180
Securities available for sale			1,060,851			1,103,232			972,609
Federal Home Loan Bank stock, at cost			2,669			2,393			2,393
Loans held for sale			910			1,148			1,163
Loans			971,745			940,802			963,046
Allowance for credit losses			(13,707	)		(13,774	)		(13,776	)
Net loans			958,038			927,028			949,270
Premises and equipment			17,047			17,058			16,811
Accrued interest receivable			9,237			8,553			8,685
Bank Owned Life Insurance			26,653			26,485			16,022
Goodwill			7,576			7,576			7,182
Intangibles			4,115			4,285			1,451
Mortgage servicing rights			2,744			2,802			2,843
Other assets			22,051			9,738			9,900
Total assets		$	2,199,507		$	2,224,302		$	2,119,509
Liabilities and Shareholders' Equity
Liabilities
Deposits:
Non-interest bearing demand		$	440,821		$	432,621		$	414,109
Savings and interest-bearing demand			1,325,500			1,301,169			1,214,123
Time			195,719			202,787			224,021
Total deposits			1,962,040			1,936,577			1,852,253
Accrued interest payable			363			403			551
Short-term borrowings			34,887			34,504			18,752
Other liabilities			13,027			13,720			19,475
Total liabilities			2,010,317			1,985,204			1,891,031
Shareholders' Equity
Common stock (no par value); authorized 10,000,000 shares;
Issued and outstanding: 3/31/2022 -- 3,883,801 ; 12/31/2021 -- 3,880,811 ; 3/31/2021-- 3,972,304			--			--			--
Additional paid-in capital			4,393			4,186			3,762
Treasury stock			(16,784	)		(16,784	)		(9,908	)
Retained Earnings			243,219			240,440			221,823
Accumulated other comprehensive income			(41,638	)		11,256			12,801
Total shareholders' equity			189,190			239,098			228,478
Total liabilities and shareholders' equity		$	2,199,507		$	2,224,302		$	2,119,509

Quarterly Consolidated Statements of Income (UNAUDITED)
(Dollars in Thousands)
Cashmere Valley Bank & Subsidiary
		For the quarters ended,
		March 31, 2022			December 31, 2021			March 31, 2021
Interest Income
Loans		$	9,197		$	9,794		$	9,922
Fed funds sold and deposits at other financial institutions			33			26			25
Securities available for sale:
Taxable			3,746			3,481			2,554
Tax-exempt			1,646			1,652			1,641
Total interest income			14,622			14,953			14,142
Interest Expense
Deposits			1,029			1,110			1,437
Short-term borrowings			16			16			8
Total interest expense			1,045			1,126			1,445
Net interest income			13,577			13,827			12,697
Provision for Credit Losses			47			36			(4	)
Net interest income after provision for credit losses			13,530			13,791			12,701
Non-Interest Income
Service charges on deposit accounts			491			486			327
Mortgage banking operations			755			1,237			1,879
Net gain (loss) on sales of securities available for sale			135			(19	)		-
Brokerage commissions			276			453			215
Insurance commissions and fees			1,673			1,459			1,252
Net interchange income (expense)			654			655			710
BOLI cash value			168			172			114
Dividends from correspondent banks			25			19			22
Other			311			329			463
Total non-interest income			4,488			4,791			4,982
Non-Interest Expense
Salaries and employee benefits			6,405			6,128			5,213
Occupancy and equipment			906			770			745
Audits and examinations			193			20			158
State and local business and occupation taxes			279			277			251
FDIC insurance & WA state assessments			173			167			145
Legal and professional fees			209			293			222
Check losses and charge-offs			133			121			201
Low income housing investment losses			144			144			144
Data processing			1,283			1,213			1,050
Product delivery			323			322			233
Other			979			929			742
Total non-interest expense			11,027			10,384			9,104
Income before income taxes			6,991			8,198			8,579
Income Taxes			913			1,367			1,264
Net income		$	6,078		$	6,831		$	7,315
Earnings Per Share
Basic		$	1.57		$	1.76		$	1.84
Diluted		$	1.56		$	1.75		$	1.84

MEDIA CONTACT:
Greg Oakes, CEO, (509) 782-2092 or
Mike Lundstrom, CFO, (509) 782-5495

SOURCE: Cashmere Valley Bank

View source version on accesswire.com:
https://www.accesswire.com/698047/Cashmere-Valley-Bank-Reports-Quarterly-Earnings-of-61-Million

FAQ

What are the latest earnings results for Cashmere Valley Bank (CSHX)?

Cashmere Valley Bank reported earnings of $6.1 million and diluted earnings per share of $1.56 for the quarter ending March 31, 2022.

How did Cashmere Valley Bank's deposits change in Q1 2022?

Total deposits increased by 1.3% to $1.96 billion from the previous quarter.

What is the current loan growth for Cashmere Valley Bank (CSHX)?

Gross loans rose to $971.7 million, reflecting a 3.3% increase from December 31, 2021.

What is the status of non-performing loans at Cashmere Valley Bank?

Non-performing loans represented only 0.03% of gross loans as of March 31, 2022.

What are the key challenges highlighted in the latest press release for Cashmere Valley Bank?

The bank experienced a decline in diluted earnings per share and net interest income compared to previous periods.