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

Rhea-AI Summary

Cashmere Valley Bank (OTCQX:CSHX) reported robust year-to-date earnings of $13.9 million for the six months ended June 30, 2024, up from $13.1 million in the same period last year. Quarterly earnings reached $6.6 million, with diluted earnings per share increasing 23.1% to $1.71. The bank's deposits have stabilized, totaling $1.772 billion as of June 30, 2024. Despite a slight decrease in gross loans to $1.015 billion, credit quality remains strong with non-performing loans at just 0.23% of gross loans. The bank's net interest margin settled at 3.11% for the first half of 2024, down from 3.30% in the same period of 2023. Notably, the bank's GAAP capital to assets ratio improved to 10.60% from 9.07% a year ago, reflecting strong Tier 1 capital growth.

Positive

• Year-to-date earnings increased to $13.9 million from $13.1 million last year
• Quarterly diluted earnings per share rose 23.1% to $1.71
• Deposits stabilized at $1.772 billion, with only a 0.1% decrease from December 31, 2023
• Non-interest deposits represented 22.0% of total deposits
• Credit quality remains strong with non-performing loans at only 0.23% of gross loans
• GAAP capital to assets ratio improved to 10.60% from 9.07% last year
• Tier 1 capital increased to $266.7 million from $243.5 million last year

Negative

• Net interest income decreased to $30.9 million from $32.9 million in the same period last year
• Net interest margin declined to 3.11% from 3.30% in the first half of 2023
• Gross loans decreased by $27.0 million from December 31, 2023
• Interest expense grew significantly by $8.4 million to $14.8 million from the prior year
• Return on equity declined to 13.48% from 15.21% one year ago

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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FAQ

What were Cashmere Valley Bank's (CSHX) earnings for Q2 2024?

Cashmere Valley Bank (CSHX) reported quarterly earnings of $6.6 million for the quarter ended June 30, 2024.

How did Cashmere Valley Bank's (CSHX) year-to-date earnings in 2024 compare to 2023?

Cashmere Valley Bank's year-to-date earnings for 2024 totaled $13.9 million, compared to $13.1 million for the six months ended June 30, 2023, representing an increase of $0.8 million.

What was Cashmere Valley Bank's (CSHX) diluted earnings per share for Q2 2024?

Cashmere Valley Bank's quarterly diluted earnings per share totaled $1.71 in the second quarter of 2024, an increase of $0.32 per share, or 23.1%, from the second quarter of 2023.

How much did Cashmere Valley Bank's (CSHX) deposits change in Q2 2024?

For the second quarter of 2024, Cashmere Valley Bank's deposit balances fell by $12.3 million, or 0.7%.

What dividend did Cashmere Valley Bank (CSHX) declare for Q2 2024?

On July 16, 2024, Cashmere Valley Bank's Board of Directors declared a dividend of $0.85 per share, payable on August 5, 2024, for shareholders of record on July 26, 2024.