Cashmere Valley Bank Earnings Increase 18.4% From Prior Year
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Cashmere Valley Bank Earnings Increase 18.4% From Prior Year

Tuesday, July 20, 2021 10:00 PM
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CASHMERE, WA / ACCESSWIRE / July 20, 2021 / Cashmere Valley Bank (OTCQX:CSHX) ("Bank"), announced 2021 year to date earnings of $14.2 million and quarterly earnings of $6.9 million for the periods ended June 30, 2021. Year to date diluted earnings per share were $3.59, representing an increase of $0.57 per share, or 18.8%.

As of June 30, 2021, deposit balances totaled $1.9 billion. Deposit balances increased approximately $152.4 million from December 31, 2021, representing an 8.9% increase.

"Our deposit growth has been the driver for our increasing earnings," said Greg Oakes, President and CEO. "Our deposit growth continued in the second quarter, exceeding our expectations. Deposit growth along with fees earned from PPP forgiveness have been welcome surprises in light of the industry's compressed interest rate environment. We were also pleased with the results of our tender offer which was completed during the second quarter."

Q2 Highlights
The Bank reported the following statement of condition highlights as of June 30, 2021:

  • June 30, 2021 gross loans totaled $941.2 million representing a decrease of $9.8 million or 1.0% from December 31, 2020.
  • Total deposits increased by $152.4 million or 8.9% from December 31, 2020. Non-interest bearing deposits have increased $57.0 million or 15.6% since December 31, 2020. Non-interest bearing deposits total $422.6 million and represent 22.6% of total deposits.
  • On May 14, 2021 the Bank announced the completion of a tender offer to repurchase the Bank's stock at $70.00 per share. The Bank was approved to repurchase 340,000 shares and successfully repurchased 98,223 shares.
  • Net income for the quarter was $6.9 million, an increase of $348,000 or 5.3% over the prior year. Diluted earnings per share increased $0.10 to $1.75 per share. An increase of $1,358,000 in net interest income combined with a reduction in provision for loan losses of $1,996,000 were the primary reasons for the increase in income. The second quarter of 2020 did have a non-recurring gain of $2.5 million on the sale of securities.

Pandemic Response Update
As of June 30, 2021, the remaining balance on PPP loans totaled $40.1 million. Remaining fees to be earned totaled $1.9 million. During the quarter, net deferred fees reported through income totaled $762,000 and year to date net deferred fees totaled $1,835,000, which have had a positive impact on the Bank's earnings and net interest margin.

The Bank began providing support to its employees at the onset of COVID-19 including at-risk employees and employees with child care needs. Those employees have been allowed to stay home, Bank paid as needed on an unlimited basis, or work from home if their position allows. While some employees will continue to work from home at a reduced level, the program to financially support for COVID related illnesses has been suspended.

Cash, Cash Equivalents and Restricted Cash
Total cash, cash equivalents and restricted cash were $134.7 million at June 30, 2021, compared to $135.7 million at December 31, 2020.

Investments
The investment portfolio totaled $1.0 billion at June 30, 2021, an increase of $151.5 million from December 31, 2020 and an increase of $330.0 million from June 30, 2020. The increase is a result of significant deposit growth combined with marginal loan demand. Security types showing the most significant increases year to date were CMO's $77.9 million, taxable municipal securities $54.2 million and treasury securities $22.4 million.

Loans and Credit Quality
Gross loans totaled $941.2 million as of June 30, 2021 a decrease of $21.9 million from March 31, 2021 and a decrease of $33.8 million from June 30, 2020. As compared to the prior June 30, real estate balances consisting of multifamily and consumer adjustable rate mortgages have decreased $29.0 million. Commercial and agriculture balances have decreased $15.1 million. The decrease in commercial and agriculture balances were primarily the result of a decrease of $26.3 million in PPP loans which were partially offset by increases in commercial loans. Over the last 12 months the Bank did see a significant increase in commercial real estate (CRE) loans. CRE loans increased $25.6 million or 10.4%.

The allowance for loans and lease losses (ALLL) was 1.47% of gross loans as compared to 1.36% one year ago. The Bank did not make any provisions during the first half of 2021 and the allowance totals $13.9 million.

Credit quality remains exceptionally strong with non-performing loans totaling $856,000 representing 0.09% of total loans as of June 30, 2021.

Deposits
Deposits totaled $1.872 billion at June 30, 2021, as compared to $1.585 billion at June 30, 2020. The $286.9 million increase in deposits from the year end represented an 18.1% increase. Transaction accounts grew $322.7 million while time deposits decreased $35.9 million over the prior 12 months.

Earnings

Net Interest Income
Net interest income totaled $25.5 million during the first six months of 2021, compared to $23.2 million during the first six months of 2020. The primary reason for increases in net interest income were increases in PPP fees which are generally recorded into income at the time of PPP loan forgiveness. Net PPP fees totaled approximately $1.8 million in the first six months of 2021. Net fees in the second quarter were approximately $762,000 which was a decrease from $1,073,000 in the first quarter of 2021. PPP fees recognized in the first six months of 2020 were negligible.

Interest income from available for sale securities totaled $8.7 million in the first half of 2021, compared to $7.6 million in the comparable period from one year ago. As compared to the prior year, yields on investment securities have decreased from 2.54% to 1.90%. Securities portfolio growth has driven the increase in securities income.

The net interest margin was 2.61% for the first six months of 2021, compared to 2.87% in the first six months of 2020. Loan yields have increased six basis points, while cash and available for sale securities yields have decreased 68 and 64 basis points respectively.

Non-Interest Income
Non-interest income totaled $9.6 million in the first half of 2021 as compared to $11.0 million in the first half of 2020. The decrease was due to a $2.5 million reduction on gains on security sales. Mortgage banking income remained strong and was largely unchanged from the prior year. Interchange income increased significantly by $539,000 (56.6%) due to program and network changes.

Non-Interest Expense
Non-interest expense totaled $18.5 million in the first half of 2021 as compared to $17.8 million in the first half of 2020.

As compared to the same period one year ago, wages and benefits expense increased $352,000 or 3.4% and professional services including legal, audits and examination expenses increased $269,000.

The Bank's efficiency ratio was 55.4% in the first half of 2021 as compared to 54.2% in the first half of 2020.

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.

Media Contact:
Greg Oakes, CEO, (509) 782-2092
Mike Lundstrom, CFO, (509) 782-5495

Consolidated Balance Sheets 
(UNAUDITED)

 
(Dollars in Thousands)
 
 
  
 
  
 
  
Cashmere Valley Bank and Subsidiary
 
 
  
 
  
 
  

 
 June 30, 2021  December 31, 2020  June 30, 2020  
Assets
 
 
  
 
  
 
  
Cash and Cash Equivalent:
 
 
  
 
  
 
  
Cash & due from banks
 21,890  27,258  28,355  
Interest bearing deposits
  94,013   97,466   108,387  
Fed funds sold
  18,743   10,990   4,872  
Total Cash and Cash Equivalent
  134,646   135,714   141,614  

 
             
Securities available for sale
  1,007,823   856,327   677,793  
Federal Home Loan Bank stock, at cost
  2,393   1,982   1,982  
Loans held for sale
  532   1,470   5,497  

 
             
Loans
  941,176   950,970   974,953  
Allowance for credit losses
  (13,854)  (13,730)  (13,226) 
Net loans
  927,322   937,240   961,727  

 
             
Premises and equipment
  17,348   16,381   16,680  
Accrued interest receivable
  8,181   7,829   7,228  
Foreclosed real estate
  -   -   -  
Bank Owned Life Insurance
  26,138   15,908   15,675  
Goodwill
  7,518   7,182   7,162  
Intangibles
  2,233   1,564   1,684  
Mortgage servicing rights
  2,808   2,856   2,659  
Other assets
  10,552   9,835   7,073  

 
             
Total assets
 2,147,494  1,994,288  1,846,774  

 
             
Liabilities and Shareholders' Equity
             

 
             
Liabilities
             
Deposits:
             
Non-interest bearing demand
 422,606  365,645  348,397  
Savings and interest-bearing demand
  1,232,659   1,121,111   984,123  
Time
  217,057   233,215   252,927  
Total deposits
  1,872,322   1,719,971   1,585,447  

 
             
Accrued interest payable
  506   612   699  
Short-term borrowings
  25,409   16,395   14,122  
Long-term borrowings
  -   -   -  
Other liabilities
  14,587   18,632   23,549  

 
             
Total liabilities
  1,912,824   1,755,610   1,623,817  

 
             
Shareholders' Equity
             
Common stock (no par value); authorized 10,000,000 shares;
             
Issued and outstanding: 6/30/2021 -- 3,876,931 ; 
3/31/2021 -- 3,972,304 ; 6/30/2020 -- 3,972,149
  3,898   3,723   3,649  
Treasury stock
  (16,784)  (9,908)  (9,908) 
Retained Earnings
  228,723   217,487   206,753  
Accumulated other comprehensive income
  18,833   27,376   22,463  
Total shareholders' equity
  234,670   238,678   222,957  

 
             
Total liabilities and shareholders' equity
 2,147,494  1,994,288  1,846,774  

 
             
              

Quarterly Consolidated Statements of Income 
(UNAUDITED)

 
(Dollars in Thousands)
 
 
  
 
  
 
  
Cashmere Valley Bank & Subsidiary
 
 
  
 
  
 
  

 
 For the quarters ended,  

 
 June 30, 2021  December 31, 2020  June 30, 2020  
Interest Income
 
 
  
 
  
 
  
Loans
 9,656  9,761  9,409  
Deposits at other financial institutions
  21   26   (7) 
Federal funds sold
  2   1   2  
Securities available for sale:
             
Taxable
  2,862   2,259   2,362  
Tax-exempt
  1,657   1,617   1,466  
Total interest income
  14,198   13,664   13,232  

 
             
Interest Expense
             
Deposits
  1,341   1,515   1,735  
Short-term borrowings
  11   9   9  
Long-term borrowings
  -   -   -  
Total interest expense
  1,352   1,524   1,744  

 
             
Net interest income
  12,846   12,140   11,488  

 
             
Provision for Credit Losses
  8   321   2,004  

 
             
Net interest income after provision for credit losses
  12,838   11,819   9,484  

 
             
Non-Interest Income
             
Service charges on deposit accounts
  354   327   204  
Mortgage banking operations
  1,364   2,110   2,121  
Net gain (loss) on sales of securities available for sale
  21   -   2,508  
Brokerage commissions
  369   202   241  
Insurance commissions and fees
  1,264   1,182   1,143  
Net interchange income (expense)
  783   587   552  
BOLI cash value
  116   117   116  
Dividends from correspondent banks
  15   15   14  
Other
  314   332   267  
Total non-interest income
  4,600   4,872   7,166  

 
             
Non-Interest Expense
             
Salaries and employee benefits
  5,349   4,951   5,208  
Occupancy and equipment
  756   799   728  
Audits and examinations
  316   216   233  
State and local business and occupation taxes
  228   239   259  
Legal and professional fees
  217   98   140  
Net loss (gain) on foreclosed real estate
  -   -   -  
Check losses and charge-offs
  131   99   114  
Low income housing investment losses
  155   134   336  
Data processing
  1,214   1,155   1,087  
Product delivery
  284   255   301  
Other
  797   786   618  
Total non-interest expense
  9,447   8,732   9,024  

 
             
Income before income taxes
  7,991   7,959   7,626  

 
             
Income Taxes
  1,092   967   1,075  

 
             
Net income
 6,899  6,992  6,551  

 
             
Earnings Per Share
             
Basic
 1.76  1.76  1.65  
Diluted
 1.75  1.76  1.65  

 
             
              

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

 
(Dollars in Thousands)
 
 
  
 
  
Cashmere Valley Bank & Subsidiary
 
 
  
 
  

 
 For the six months ended,  

 
 June 30, 2021  June 30, 2020  
Interest Income
 
 
  
 
  
Loans
 19,578  18,898  
Deposits at other financial institutions
  44   324  
Federal Funds Sold
  3   26  
Securities available for sale:
         
Taxable
  5,416   5,048  
Tax-exempt
  3,298   2,563  
Total interest income
  28,339   26,859  

 
         
Interest Expense
         
Deposits
  2,779   3,650  
Short-term borrowings
  19   18  
Long-term borrowings
  -   -  
Total interest expense
  2,798   3,668  

 
         
Net interest income
  25,541   23,191  

 
         
Provision for Credit Losses
  4   2,467  

 
         
Net interest income after provision for credit losses
  25,537   20,724  

 
         
Non-Interest Income
         
Service charges on deposit accounts
  681   667  
Mortgage banking operations
  3,244   3,269  
Net gain (loss) on sales of securities available for sale
  21   2,520  
Brokerage commissions
  584   463  
Insurance commissions and fees
  2,516   2,329  
Net interchange income (expense)
  1,492   953  
BOLI cash value
  230   228  
Dividends from correspondent banks
  37   36  
Other
  778   573  

 
  9,583   11,038  
Total non-interest income
         
Non-Interest Expense
         
Salaries and employee benefits
  10,562   10,210  
Occupancy and equipment
  1,501   1,478  
Audits and examinations
  619   513  
State and local business and occupation taxes
  479   462  
Legal and professional fees
  439   276  
Net loss (gain) on foreclosed real estate
  -   -  
Check losses and charge-offs
  332   220  
Low income housing investment losses
  300   418  
Data processing
  2,264   2,270  
Product delivery
  517   553  
Other
  1,536   1,358  
Total non-interest expense
  18,549   17,758  

 
         
Income before income taxes
  16,571   14,004  

 
         
Income Taxes
  2,356   1,997  

 
         
Net income
 14,215  12,007  

 
         
Earnings Per Share
         
Basic
 3.60  3.02  
Diluted
 3.59  3.02  

 
         

SOURCE: Cashmere Valley Bank

Cashmere Valley Bank
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