CORRECTION: White River Bancshares Co. Earns $928,000 in the Fourth Quarter of 2018 and $4.6 Million for the Year

FAYETTEVILLE, Ark., March 15, 2019 (GLOBE NEWSWIRE) -- White River Bancshares Company (OTCQX: WRIV), (the “Company”) the holding company for Signature Bank of Arkansas (the “Bank”), today reported that growing revenues and an expanding net interest margin contributed to fourth quarter net income of $928,000, or $0.95 per diluted share.  This compares to a net loss of $132,000, or $0.16 loss per diluted share in the fourth quarter of 2017, which included an additional tax expense of $911,997 from a one-time write-down of its deferred tax assets and liabilities due to the impact of the Tax Cuts and Jobs Act of 2017.  For the full year ended December 31, 2018, net income increased to $4.6 million, or $4.74 per diluted share, compared to $3.0 million, or $3.67 per diluted share, in 2017.

Financial Highlights:

• Annual net income of $4.6 million, or $4.74 per diluted share.
• Quarterly net income of $928,000, or $0.95 per diluted share.
• Quarterly net interest margin (“NIM”) expanded by seven basis points to 3.87% compared to the fourth quarter a year ago.
• Net loans of $504.2 million at December 31, 2018, an increase of 3.28% from December 31, 2017.
• Total deposits of $510.11 million at December 31, 2018, an increase of 6.70% from December 31, 2017.
• Non-performing assets at December 31, 2018 improved to 1.26% of total assets from 1.94% a year ago.
• Book value per common share of $64.43 at December 31, 2018.
• Total risk-based capital ratio of 15.18% and Tier 1 leverage ratio of 11.86% for the Bank at December 31, 2018.

“We reported strong fourth quarter and year end operating results, delivering steady loan and deposit growth, while expanding our net interest income,” said Gary Head, President and Chief Executive Officer.  “Looking forward, we remain focused on growing low cost deposits, diversifying our loan portfolio and improving operating efficiencies across the board.  The economic fundamentals in our market are strong and we remain optimistic about the upcoming year.  At the same time, we will continue to execute upon our commitment to improve liquidity and to increase our franchise value.”

“As previously announced at the end of 2018, the Company shares qualified to trade on the OTCQX Best Markets,” added Head.  “This enables us to improve communications and tell our story through a public medium and provides new and existing shareholders with access to a public trading market for our shares.”   

Income Statement

The Company’s net interest margin improved 7 basis points to 3.87% in the fourth quarter of 2018, compared to 3.80% in fourth quarter a year ago.  For the full year 2018, the net interest margin was 3.73% compared to 3.92% in 2017.

Fourth quarter net interest income increased by 7.75% to $5.69 million, from $5.28 million in the fourth quarter of 2017.  Total interest income increased by 8.61% to $7.32 million in the fourth quarter of 2018 from $6.74 million during the like period in 2017.  Total interest expense increased by 11.69% to $1.63 million in the fourth quarter of 2018, from $1.46 million during the same period in 2017 largely as a result of the increase in interest-bearing deposits.

For the year ended December 31, 2018, net interest income increased by 7.79% to $22.12 million from $20.52 million in 2017.  Total interest income increased by 10.99% to $28.53 million in 2018, from $25.70 million in 2017; total interest expense increased by 23.66% to $6.42 million in 2018 from $5.19 million in 2017, primarily due to the increase in interest bearing deposits.

Non-interest income was ($567,806) in the fourth quarter of 2018 and $774,121 in the fourth quarter of 2017, a decrease of 173.35%.  The decrease was largely a result of a $1.94 million increase in loss on sales and write-downs of foreclosed assets during the fourth quarter of 2018 over the same period in 2017.  For the year ended December 31, 2018, non-interest income decreased 9.42% to $2.38 million compared to $2.63 million in 2017.  The decrease was mainly a result of a $1.03 million increase in loss on sales and write-downs of foreclosed assets over the same period.

Non-interest expense decreased 3.28% to $4.62 million in the fourth quarter of 2018 compared to $4.78 million in the fourth quarter of 2017.  Salaries and benefits, the largest component of non-interest expense, decreased by $117,800, or 3.78%, over the like period.  For the year ended December 31, 2018, non-interest expense was $19.17 million compared to $18.06 million in 2017, an increase of 6.14%.  Salaries and benefits increased by $640,239, or 5.45%, over the same period.

Balance Sheet Review

Total assets increased by 3.58% to $613.69 million at December 31, 2018 from $592.46 million at December 31, 2017. Cash and cash equivalents increased to $29.05 million at December 31, 2018 from $27.95 million a  year ago. Investment securities increased to $53.94 million at December 31, 2018 from $47.77 million at December 31, 2017.

Loans, net of allowance for loan losses, increased 3.28% to $504.16 million at December 31, 2018 from $488.13 million at December 31, 2017. 

Total deposits increased 6.70% to $510.11 million at December 31, 2018 from $478.06 million at December 31, 2017.  Non-interest-bearing deposits increased to $99.94 million at December 31, 2018 from $89.27 million a year ago, and interest-bearing deposits increased to $410.17 million at year-end from $388.78 million a year ago.

FHLB advances decreased to $25.37 million at December 31, 2018 from $38.26 million at December 31, 2017.  Notes payable decreased to $12.09 million from $14.63 million over the same period.

Total stockholders’ equity increased to $62.83 million at December 31, 2018 from $58.54 million at December 31, 2017.  Book value per common share increased to $64.43 at December 31, 2018 from $60.97 at December 31, 2017.

Credit Quality

“We had net loan recoveries during the quarter, and as a result we recorded a negative provision for loan losses of $750,000 in the fourth quarter,” added Head.  “This compares to no provision for loan losses in the fourth quarter of 2017.”  Net loan recoveries were $408,930 in the fourth quarter compared to net charge offs of $180,425 in the fourth quarter a year ago.

For the full year, the negative provision for loan losses was $750,000, compared to a negative provision of $1.35 million in 2017.  Net loan recoveries totaled $493,788 for 2018 compared to net loan recoveries of $2.25 million in 2017.

There were no non-performing loans on the books at the end of 2018, compared to $575,534 in non-performing loans at December 31, 2017.  Foreclosed assets held for sale decreased to $7.73 million at December 31, 2018 from $10.93 million at December 31, 2017.  Total non-performing assets improved to 1.26% of total assets at year-end, compared to 1.94% of total assets one year ago.

The allowance for loan losses was $6.97 million, or 1.36% of total loans, at December 31, 2018 as compared to $7.22 million, or 1.46% of total loans, at December 31, 2017.

Capital

The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Tier 1 leverage ratio of 11.86%, Common equity tier 1 capital ratio of 13.92%, Tier 1 capital ratio of 13.92% and Total capital ratio of 15.18% at December 31, 2018.

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, and Brinkley, Arkansas, with plans to open a new location in Rogers, Arkansas in the second quarter of 2019.  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

The Company is located in Northwest Arkansas in the Fayetteville-Springdale-Rogers MSA. Our region is the corporate headquarters for Walmart Stores Inc., Tyson Foods, Simmons Foods, and J.B. Hunt Transport.  Hundreds of companies, including Procter & Gamble, Johnson & Johnson, Coca-Cola and Rubbermaid, have offices in order to manage their relationships with the locally based Fortune 500 companies.  Northwest Arkansas is also the home of the University of Arkansas, the state’s flagship public institution including the Sam M. Walton College of Business.  Northwest Arkansas has also seen significant growth in its medical and arts infrastructures with Washington Regional Medical System, Northwest Medical System, Mercy Health System of Northwest Arkansas and Arkansas Children’s Hospital Northwest expanding throughout the area in recent years.  Crystal Bridges Museum, an American art museum and the Walton Arts Center, have led the arts expansion throughout the region.  Northwest Arkansas has ranked among the nation’s fastest-growing regions in recent years.

Northwest Arkansas has an unemployment rate of 2.7% compared to the national average of 3.9%.  Northwest Arkansas has seen its job market increase by 0.7% over the last year.  Future job growth over the next ten years is predicted to be 42.2%, which is higher than the US average of 33.5%.  https://www.forbes.com/places/ar/fayetteville/

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.