White River Bancshares Co. Earns $1.15 Million, or $1.19 Per Diluted Share, in Third Quarter 2020

FAYETTEVILLE, Ark., Oct. 21, 2020 (GLOBE NEWSWIRE) -- White River Bancshares Company (OTCQX: WRIV), (the “Company”) the holding company for Signature Bank of Arkansas (the “Bank”), today reported net income of $1.15 million, or $1.19 per diluted share, in the third quarter of 2020, compared to $668,600, or $0.69 per diluted share, in the second quarter of 2020 and $1.33 million, or $1.36 per diluted share, in the third quarter of 2019.

In the first nine months of the year, net income was $2.56 million, or $2.64 per diluted share, compared to $4.01 million, or $4.11 per diluted share, in the first nine months of 2019. All financial results are unaudited.

“In the third quarter, the bank had solid earnings, fueled by strong growth in low cost deposits, loans and revenue. We drove non-performing assets down 70% during the quarter and 93.3% from a year ago,” said Gary Head, President and Chief Executive Officer. “Due to the growth in the loan portfolio and our continuous evaluation of the Covid situation, we added $300,000 into our loan loss reserve for the quarter, bringing the bank to what we believe is a solid position of 1.39% of total loans and 1.44% of total loans without the government guaranteed Paycheck Protection Program (“PPP”) loans.” The Company booked a $1.4 million provision for loan losses during the preceding quarter and had no provision for loan losses in the third quarter a year ago. “We continue to lower the cost of deposits by bringing in more business and personal checking accounts and repricing the cost of our CDs due to interest rates being considerably lower than the last couple of years.”

“The health and safety of our customers, teammates and community is a primary focus, as we deal with the pandemic on a local and national level,” said Brant Ward, Chief Administrative Officer. “The Bank continues to keep lobbies open by appointment only. Our customers were already using our digital platforms prior to the pandemic, but have really embraced the platform this year, with online utilization up meaningfully compared to a year ago. At the completion of the SBA’s PPP program on August 8, we had made $20.7 million in PPP loans, helping 274 local businesses. This represents approximately 1,717 years’ worth of small businesses that we were able to help.”

“Our strategic focus remains consistent, investing in digital technology to help gather low cost deposits, ensuring we continue to diversify our loan portfolios, and focusing on improving our overall efficiencies,” said Scott Sandlin, Chief Strategy Officer.

As of June 30 2020, loan modifications represented 14.25% of total loans outstanding, excluding PPP loans. As of September 30, 2020, the percentage of deferred loans to total loans excluding PPP loans had declined to 2.05%. “Our customers have done a fantastic job navigating through a difficult past six months, as seen by our drastically reduced deferral levels and our very low non-performing asset ratio,” said Jeff Maland, Chief Risk Officer. “We feel good about the underlying quality of deferred loans, most of which are longtime customer relationships with strong guarantor support. We feel our portfolio is positioned well to handle the economic impact of the pandemic, as we had less than 1% of the total loan portfolio in hotels, restaurants, and energy loans as of the end of the third quarter.”

Third Quarter 2020 Financial Highlights:

• Third quarter net income was $1.15 million or $1.19 per diluted share.
• Third quarter provision for loan losses was $300,000, compared to $1.4 million in the preceding quarter and no provision for loan losses in the third quarter of 2019.
• Third quarter net interest margin (“NIM”) was 3.33%, compared to 3.65% in the preceding quarter and 3.87% in the third quarter a year ago.
• Net loans increased 6.8% to $588.4 million at September 30, 2020, compared to $551.2 million at September 30, 2019.
• The Bank had funded approximately 274 PPP loans totaling $20.7 million as of the close of the program on August 8, 2020.
• Total deposits increased 17.2% to $632.5 million at September 30, 2020, compared to $539.6 million a year ago.
• Non-interest-bearing deposits increased 56.2% to $168.5 million at September 30, 2020, compared to $107.9 million a year ago.
• Non-performing assets decreased 70.0% to $400,100 at September 30, 2020, compared to $1.3 million at June 30, 2020 and decreased 93.3% when compared to $5.9 million a year ago.
• Nonperforming assets (NPAs) represent 0.05% of total assets at September 30, 2020, compared to 0.18% of total assets three months earlier and 0.90% of total assets a year earlier.
• As of September 30, 2020, the bank had loans still within the deferral process of $10.8 million, which represents 1.78% of gross loans.
• Book value per diluted common share increased to $75.17 at September 30, 2020, from $70.13 a year ago.
• Total risk-based capital ratio was 13.35% and Tier 1 leverage ratio was 10.77% for the Bank at September 30, 2020.

Income Statement

The Company’s net interest margin was 3.33% in the third quarter of 2020, compared to 3.87% in the third quarter of 2019 and 3.65% in the second quarter of 2020. In the first nine months of 2020, the net interest margin was 3.54%, compared to 3.94% in the first nine months of 2019.

Third quarter net interest income was $6.0 million, compared to $6.1 million in the third quarter of 2019. Total interest income decreased by 4.0% to $7.9 million in the third quarter of 2020, from $8.2 million during the third quarter of 2019. Total interest expense decreased by 10.8% to $1.9 million in the third quarter of 2020, from $2.1 million during the third quarter of 2019. In the first nine months of 2020, net interest income increased 2.4% to $18.4 million, compared to $18.0 million in the first nine months of 2019.

Non-interest income increased 98.9% to $1.2 million in the third quarter of 2020, compared to $622,000 in the third quarter a year ago. In the first nine months of the year, non-interest income increased 52.3% to $3.5 million, compared to $2.3 million in the first nine months of 2019.

Non-interest expense was $5.4 million in the third quarter of 2020, compared to $4.9 million in the third quarter of 2019. Year-to-date, non-interest expense was $16.1 million, compared to $14.9 million in the same period a year ago.

Balance Sheet Review

Total assets increased by 14.0% to $752.6 million at September 30, 2020, from $660.3 million at September 30, 2019, and decreased modestly compared to $754.2 million at June 30, 2020. Cash and cash equivalents increased to $49.6 million at September 30, 2020 from $17.2 million a year ago. Investment securities increased to $70.4 million at September 30, 2020 from $55.9 million a year ago.

Loans, net of allowance for loan losses, increased 6.8% to $588.4 million at September 30, 2020, compared to $551.2 million a year ago, and increased 3.7% compared to $567.6 million three months earlier. Through the close of the program on August 8, 2020, the Bank had funded approximately 274 PPP loans totaling $20.7 million to both existing and new customers.

Total deposits increased 17.2% to $632.5 million at September 30, 2020, compared to $539.6 million a year ago and decreased modestly compared to $635.3 million at June 30, 2020, with non-interest bearing deposits increasing 56.2% to $168.5 million at September 30, 2020, compared to $107.9 million a year ago.

FHLB advances totaled $17.2 million at September 30, 2020 from $27.6 million at September 30, 2019. Notes payable decreased to $10.8 million at September 30, 2020 from $11.6 million a year ago.

Total stockholders’ equity increased 6.6% to $72.8 million at September 30, 2020 from $68.3 million at September 30, 2019 and increased 1.6% when compared to $71.7 million at June 30, 2020. Book value per diluted common share increased to $75.17 at September 30, 2020 from $70.13 at September 30, 2019 and $73.89 at June 30, 2020.

Credit Quality

The provision for loan losses was $300,000 during the third quarter of 2020. This compares to a $1.4 million provision for loan losses in the preceding quarter and no provision for loan losses in the third quarter of 2019.  

Credit quality improved with nonperforming loans declining to $200,000 at September 30, 2020, compared to $985,000 at June 30, 2020 and $129,000 at September 30, 2019. Nonperforming assets decreased 70.0% to $400,000 at September 30, 2020 compared to $1.3 million at June 30, 2020 and decreased 93.3% when compared to $5.9 million at September 30, 2019. Total non-performing assets improved to 0.05% of total assets at September 30, 2020, compared to 0.18% of total assets three months earlier and 0.90% of total assets a year earlier.

The allowance for loan losses was $8.4 million, or 1.44% of total loans, at September 30, 2020 when excluding the $20.7 million of PPP loans, which are 100% guaranteed by the SBA. This compares to $7.0 million, or 1.25% of total loans, at September 30, 2019. Net loan charge-offs were $169,000 in the third quarter of 2020. This compares to net charge-offs of $512,000 in the second quarter of 2020 and net loan recoveries of $14,000 in the third quarter of 2019.

As of September 30, 2020, the bank had loans still within the deferral process of $12.0 million, which represents 2.05% of total loans, excluding PPP balances. Within that balance, $8.2 million of the loans were full P & I deferrals, while $3.8 million were principal deferrals.

Capital

The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Tier 1 leverage ratio of 10.77%, Common equity tier 1 capital ratio of 12.10%, Tier 1 capital ratio of 12.10% and Total capital ratio of 13.35%, at September 30, 2020.

About White River Bancshares Company

White River Bancshares Company is the single bank holding company for Signature Bank of Arkansas. Both are headquartered in Fayetteville, Arkansas. The Bank has locations in Fayetteville, Springdale, Bentonville, Rogers and Brinkley, 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), qualified to trade on the OTCQX® Best Market in December 2018. 

About the Region

White River Bancshares Company is located 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.

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.