White River Bancshares Co. Earns a Record $2.74 million, or $1.12 Per Diluted Share, in 3Q24; Highlighted by Net Interest Margin Expansion
FAYETTEVILLE, Ark., Oct. 15, 2024 (GLOBE NEWSWIRE) -- White River Bancshares Company (OTCQX:WRIV), (the "Company") the holding company for Signature Bank of Arkansas (the "Bank"), today reported net income increased substantially to $2.74 million, or $1.12 per diluted share, in the third quarter of 2024, compared to $639,000, or $0.32 per diluted share, in the third quarter of 2023. In the preceding quarter, the Company earned $1.85 million, or $0.81 per diluted share. In the first nine months of 2024, net income increased to $5.10 million, or $2.28 per diluted share, compared to $1.76 million, or $0.88 per diluted share, in the first nine months of 2023. All financial results are unaudited. All per share data has been adjusted to reflect the two-for-one stock split issued September 4, 2024.
"Our third quarter produced record financial results, with net income and earnings per share increasing significantly compared to the year ago quarter," said Gary Head, Chairman and Chief Executive Officer. "Our bankers achieved these quarterly earnings through strong net interest income generation and net interest margin expansion, augmented with the $12.46 million private placement of common shares that we completed in the prior quarter. The additional capital is already helping support our strategic growth plans and contributing to our bottom line. We plan to build on this earnings momentum over the next several years, as we have the right leadership team, infrastructure and technology in place to continue to optimize our operations."
"We continue to focus on building out our deposit franchise to fund new loan activity," said Scott Sandlin, Chief Strategy Officer. "Total deposits increased 2.2% during the quarter and 12.1% year-over-year. While rising rates changed the deposit mix as customers pursued higher yielding accounts, demand and non-interest bearing accounts remained strong. They accounted for 21.2% of total deposits, and savings and interest-bearing transaction accounts represented 37.6% of total deposits as of September 30, 2024. We see significant opportunities for growing non-interest bearing deposits in the coming quarters as we continue to attract new customers to the Bank."
Third Quarter 2024 Financial Highlights:
Net income for the third quarter of 2024 increased substantially to $2.74 million, or $1.12 per diluted share, compared to $639,000, or $0.32 per diluted share, in the third quarter of 2023.
Net interest income increased 30.1% to $9.4 million in the third quarter of 2024, compared to $7.3 million in the third quarter of 2023.
Net interest margin ("NIM") increased 43 basis points to 3.32% in the third quarter of 2024, compared to 2.89% in the third quarter of 2023.
Annualized return on average assets was 0.91%, compared to 0.24% in the third quarter of 2023.
Annualized return on average equity was 11.33%, compared to 3.25% in the third quarter a year ago.
The Company recorded a $250,000 release from the allowance for credit losses in the third quarter of 2024, compared to a $325,000 provision in the third quarter of 2023.
Net loans increased 8.9% to $977.0 million at September 30, 2024, compared to $897.2 million at September 30, 2023.
There were zero nonperforming loans at September 30, 2024.
Total deposits increased $111.8 million, or 12.1%, to $1.036 billion at September 30, 2024, compared to $923.9 million a year ago.
Core deposits (demand and non-interest-bearing, and savings and interest-bearing transaction accounts, and CDs under $250,000) represent 74.10% of total deposits at September 30, 2024.
Total risk-based capital ratio estimate of 13.48%, Tier 1 ratio of 12.25%, and Leverage ratio of 10.11% for the Bank at September 30, 2024.
Tangible book value per common share was $39.15 at September 30, 2024, compared to $36.81 a year ago.
On August 30, 2024, the Company paid an annual cash dividend of $0.50 per share to shareholders of record on July 31, 2024. The annual dividend was adjusted from $1.00 per share to $0.50 cents per share to reflect the two-for-one stock split issued September 4, 2024.
Income Statement
In the third quarter of 2024, the Company generated a ROAA of 0.91% and a ROAE of 11.33%, compared to 0.63% and 8.26%, respectively, in the second quarter of 2024 and 0.24% and 3.25%, respectively, in the third quarter a year ago.
"Our NIM expanded seven basis points during the third quarter of 2024, as higher asset yields more than offset the modest increase in funding costs," said Brant Ward, President. "We anticipate our NIM will continue to expand for the remainder of 2024 if interest rates remain at current levels or continue to decline." The Company's NIM was 3.32% in the third quarter of 2024, compared to 3.25% in the second quarter of 2024, and expanded 43 basis points compared to 2.89% in the third quarter of 2023. In the first nine months of 2024, the NIM expanded 18 basis points to 3.18%, compared to 3.00% in the first nine months of 2023.
Net interest income increased 30.1% to $9.4 million in the third quarter of 2024, compared to $7.3 million in the third quarter of 2023. Total interest income increased 34.0% to $17.8 million in the third quarter of 2024, compared to $13.3 million in the third quarter of 2023. Largely due to the increase in deposit costs, total interest expense increased to $8.3 million in the third quarter of 2024, from $6.0 million in the third quarter of 2023. In the first nine months of 2024, net interest income increased 19.8% to $26.5 million, compared to $22.1 million in the first nine months of 2023.
Noninterest income increased 22.0% to $2.0 million in the third quarter of 2024, compared to $1.6 million in the third quarter a year ago. Wealth management fee income, the largest component of noninterest income, increased 11.0% to $996,000 during the third quarter of 2024, compared to $897,000 in the third quarter of 2023. The Company acquired a wealth management division in July 2023, which continues to generate noninterest income and fuel operating results. Secondary market fee income increased to $244,000 during the third quarter of 2024, compared to $71,000 in the third quarter a year ago. In the first nine months of the year, noninterest income increased 28.2% to $5.5 million, compared to $4.3 million in the first nine months of 2023.
Noninterest expense was $8.3 million in the third quarter of 2024, compared to $7.8 million in the third quarter of 2023, as expenses are starting to normalize following the market expansion over the past few years. The Company anticipates further expense stabilization over the next several quarters. In the first nine months of the year, noninterest expense increased 4.4% to $24.6 million, compared to $23.6 million in the first nine months of 2023.
Balance Sheet
Total assets increased 11.8% to $1.216 billion at September 30, 2024, from $1.087 billion at September 30, 2023, and increased modestly compared to $1.211 billion at June 30, 2024. Cash and cash equivalents totaled $41.7 million at September 30, 2024, compared to $32.3 million a year ago. Investment securities totaled $127.6 million at September 30, 2024, from $97.5 million a year ago.
Loans, net of allowance for credit losses, increased 8.9% to $977.0 million at September 30, 2024, compared to $897.2 million a year ago, and decreased slightly compared to $982.3 million three months earlier.
Total deposits increased 12.1% to $1.036 billion at September 30, 2024, compared to $923.9 million a year ago and increased 2.2% compared to $1.014 billion at June 30, 2024. Demand and non-interest-bearing deposits decreased 6.0% compared to a year ago while savings and interest-bearing transaction accounts increased 16.1% compared to a year ago.
FHLB advances decreased to $26.7 million at September 30, 2024, from $37.9 million at September 30, 2023, and $54.3 million at June 30, 2024. Largely due to the capital raise, total stockholders' equity increased to $97.2 million at September 30, 2024, compared to $75.3 million at September 30, 2023, and $92.0 million at June 30, 2024. Tangible book value per common share was $39.15 at September 30, 2024, compared to $36.81 at September 30, 2023, and $37.01 at June 30, 2024.
Credit Quality
Due to pristine credit quality, net loan recoveries, and muted loan growth, the Company recorded a $250,000 release from the allowance for credit losses in the third quarter of 2024. This compared to a $432,000 provision in the second quarter of 2024, and a $325,000 provision in the third quarter of 2023.
There were zero nonperforming loans at September 30, 2024. This compared to nonperforming loans of $32,000 at June 30, 2024, and $125,000 at September 30, 2023. Nonperforming loans represented 0.00% of total loans at September 30, 2024, and June 30, 2024, and 0.01% of total loans a year ago.
The allowance for credit losses was $12.2 million, or 1.23% of total loans, at September 30, 2024, compared to $12.4 million, or 1.25% of total loans, at June 30, 2024, and $10.9 million, or 1.20% of total loans, at September 30, 2023. "We continue to closely monitor our portfolio mix, growth, and local and national conditions to maintain the appropriate allowance for credit losses," said Jeff Maland, Chief Risk Officer.
Net loan recoveries were $19,000 in the third quarter of 2024, compared to net loan charge-offs of $111,000 in the second quarter of 2024, and net loan recoveries of $5,000 in the third quarter of 2023.
Capital
The Bank's capital ratios continued to exceed regulatory "well-capitalized" requirements, with a Total risk-based capital ratio estimate of 13.48%, a Tier 1 ratio of 12.25%, and a Leverage ratio of 10.11% for the Bank at September 30, 2024.
Recent Developments
James Baird, Senior Vice President & Controller, has been appointed interim Chief Financial Officer until such time a search for a permanent replacement has been completed. Edward P. Riendeau resigned from his position as Chief Financial Officer effective September 18, 2024.
During the second quarter of 2024, the Company opened its second Banco Sí, location in downtown Springdale, and celebrated a public launch and grand opening during the third quarter of 2024. The Company also moved the Jonesboro location to its permanent home in Downtown Jonesboro in September, with a grand opening celebration planned for October 24, 2024.
About White River Bancshares Company
White River Bancshares Company is the single bank holding company for Signature Bank of Arkansas, headquartered in Fayetteville, Arkansas. The Bank has locations in Fayetteville, Springdale, Bentonville, Rogers, Brinkley, Harrison and Jonesboro, Arkansas. Founded in 2005, Signature Bank of Arkansas provides a full line of financial services to small businesses, families and farms. White River Bancshares Company (OTCQX: WRIV), trades on the OTCQX® Best Market.
About the Region
White River Bancshares Company is headquartered in thriving Northwest Arkansas in the Fayetteville-Springdale-Rogers MSA. The region is home to the corporate headquarters for Walmart Stores Inc, Sam's Club, Tyson Foods, Simmons Foods, and J.B. Hunt Transport. Hundreds of other market-leading companies including Procter & Gamble, Johnson & Johnson, Coca-Cola and Rubbermaid maintain offices in the region in order to maintain their relationships with the locally-based Fortune 500 companies. Northwest Arkansas is also home to the state's flagship public educational institution, The University of Arkansas and its Sam M. Walton College of Business. The region has seen significant growth in its medical and arts infrastructures with the continued expansion of Washington Regional Medical System, Northwest Medical System, Mercy Health System of Northwest Arkansas and Arkansas Children's Hospital Northwest. Crystal Bridges Museum of American Art and the Walton Arts Center have led the expansion of the arts. Northwest Arkansas has been repeatedly recognized in recent years as one of the best places to live in the country and remains one of the nation's fastest-growing regions.
The Company has expanded eastward, with new markets in Jonesboro and Harrison. Jonesboro, located in Craighead County, is a city located on Crowley's Ridge in the northeastern corner of Arkansas. It is the home of Arkansas State University and the cultural and economic center of Northeast Arkansas. Jonesboro also houses the region's hospital network. U.S. Steel Corp. announced that it would locate a new $3 billion steel factory in Northeast Arkansas in Osceola, a move expected to create 900 jobs with an average pay over $100,000 annually, making it the largest capital investment project in Arkansas history. Harrison sits below Branson, Missouri, which is a family tourist destination and outdoor recreation, and is well known as an entertainment destination.
The Company currently operates out of ten locations; three in Washington County; three in Benton County; two in Monroe County; one in Boone County; and one in Craighead County.
The housing market in Washington and Benton counties remains robust. According to the Northwest Arkansas Board of Realtors, the average home in Washington County sold for $412,000 in August 2024, with an average of 83 days on the market. For Benton County, the average house sold for $464,000, with an average of 96 days on the market.
Washington County's population is projected to grow 7.18% from 2024 through 2029, and median household income is projected to increase by 12.63% during the same time frame. Benton County's population is projected to grow 9.34% from 2024 through 2029, and median household income is projected to increase by 3.75%. Monroe County's population is projected to decrease by 5.23% from 2024 through 2029 and median household income is projected to increase by 9.82%. Boone County's population is projected to grow 3.61% from 2024 through 2029 and median household income is projected to increase by 8.83%. Craighead County's population is projected to grow 4.99% from 2024 through 2029, and the median household income is projected to increase by 9.57%.
Sources: http://www.nwarealtors.org/market-statistics/https://www.capitaliq.spglobal.com/
Forward Looking Statements
This press release contains statements about future events. These forward-looking statements, which are based on certain assumptions of management of the Company and the Bank and describe our future plans, strategies and expectations, can generally be identified by use of forward-looking terminology such as "may," "will," "believe," "plan," "expect," "intend," "anticipate," "estimate," "project," or similar expressions or the negative of those terms. Our ability to predict results of future events and the actual effect of future plans or strategies are inherently uncertain and actual results may differ materially from those predicted in such forward-looking statements. Factors that could have a material adverse effect on our operations and future prospects or that could affect the outcome of such forward-looking statements include, but are not limited to, changes in interest rates; the economic health of the local real estate market; general economic conditions; credit deterioration in our loan portfolio that would cause us to increase our allowance for loan losses; legislative or regulatory changes; technological developments; monetary and fiscal policies of the U.S. government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of our loan and securities portfolios; demand for loan products in our market areas; deposit flows and costs of capital; competition; retention and recruitment of qualified personnel; demand for financial services in our market areas; and changes in accounting principles, policies, and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. The Company does not undertake and specifically declines any obligation to publicly release the result of any revisions that may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.
WHITE RIVER BANCSHARES COMPANY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, 2024
June 30, 2024
September 30, 2023
ASSETS
Cash and cash equivalents
$
41,716,400
$
49,495,763
$
32,312,380
Investment securities
127,611,833
115,526,915
97,523,688
Loans held for sale
1,840,634
997,907
562,500
Loans
989,199,456
994,754,063
908,174,628
Allowance for credit losses
(12,203,483
)
(12,434,130
)
(10,928,878
)
Net loans
976,995,973
982,319,933
897,245,750
Premises and equipment, net
35,808,779
30,442,837
29,425,104
Foreclosed assets held for sale
807,497
777,606
-
Accrued interest receivable
5,273,311
5,433,391
3,928,509
Bank owned life insurance
9,697,136
9,614,851
9,374,336
Deferred income taxes
3,678,102
4,788,942
5,628,076
Other investments
8,442,859
8,094,125
7,151,204
Intangible assets, net
1,856,277
1,909,313
2,068,423
Other assets
2,025,863
1,733,790
2,170,842
TOTAL ASSETS
$
1,215,754,664
$
1,211,135,373
$
1,087,390,812
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand and non-interest-bearing
$
219,590,080
$
233,230,007
$
233,500,987
Savings and interest-bearing transaction accounts
389,760,755
348,391,562
335,602,053
Time deposits
426,391,052
432,248,979
354,828,320
Total deposits
1,035,741,887
1,013,870,548
923,931,360
Federal Home Loan Bank advances
26,741,342
54,314,495
37,932,481
Notes payable
26,107,279
26,090,002
26,303,355
Operating lease liability
20,980,470
15,930,503
16,521,696
Reserve for losses on unfunded commitments
1,433,000
1,433,000
1,558,000
Accrued interest payable
2,676,428
2,714,687
2,062,419
Other liabilities
4,855,916
4,745,292
3,803,220
TOTAL LIABILITIES
1,118,536,322
1,119,098,527
1,012,112,531
Stockholders' equity:
Common stock (1)
24,698
24,698
20,168
Surplus (1)
102,557,371
102,457,705
90,325,731
Retained earnings (accumulated deficit)
255,449
(2,484,500
)
(4,412,565
)
Treasury stock, at cost
(1,138,736
)
(1,132,905
)
(929,517
)
Accumulated other comprehensive loss
(4,480,440
)
(6,828,152
)
(9,725,536
)
TOTAL STOCKHOLDERS' EQUITY
97,218,342
92,036,846
75,278,281
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$
1,215,754,664
$
1,211,135,373
$
1,087,390,812
(1)
Prior periods adjusted to give effect to stock split effected
in the form of a dividend on September 4, 2024.
WHITE RIVER BANCSHARES COMPANY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
For the Three Months Ended
September 30,
June 30,
September 30,
2024
2024
2023
INTEREST INCOME
Loans, including fees
$
16,329,569
$
15,763,452
$
12,381,749
Investment securities
1,079,376
1,083,415
706,441
Federal funds sold and other
365,012
162,250
175,691
Total interest income
17,773,957
17,009,117
13,263,881
INTEREST EXPENSE
Deposits
7,580,319
7,106,512
5,202,219
Federal Home Loan Bank advances
354,480
448,263
399,306
Notes payable
396,900
398,017
398,017
Federal funds purchased and other
12,152
21,787
14,302
Total interest expense
8,343,851
7,974,579
6,013,844
NET INTEREST INCOME
9,430,106
9,034,538
7,250,037
Provision for credit losses
(250,000
)
432,000
325,000
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES
9,680,106
8,602,538
6,925,037
NON-INTEREST INCOME
Service charges and fees on deposits
164,982
154,816
151,016
Wealth management fee income
995,784
1,065,553
896,768
Secondary market fee income
244,063
113,926
