Alpine Banks of Colorado Announces Second Quarter 2020 Financial Results

GLENWOOD SPRINGS, Colo., July 28, 2020 (GLOBE NEWSWIRE) -- Alpine Banks of Colorado (OTC Pink: ALPIB) (“Alpine” or “the Company”), the holding company for Alpine Bank, today announced results (unaudited) for the second quarter ended June 30, 2020. The Company reported net income of $12.5 million, or $120.33 per basic common share for the second quarter 2020. Achievements in the second quarter of 2020 include:

• Book Value per Share increased 2.6% or $85.71 to $3,427.35 per share vs. first quarter 2020
• Loan balances during second quarter 2020 increased 12.7% or $349.8 million vs. first quarter 2020
• Deposits during second quarter 2020 increased 18.6% or $638.7 million vs. first quarter 2020
• Successfully completed a private placement of $50 million in fixed-to-floating subordinated notes due 2030

President and Vice Chairman Glen Jammaron stated, “I couldn’t be more proud of how our employee owners have stepped up during these difficult times. Amid all the medical and economic disruptions, our people have continued to take care of our customers, communities, shareholders and most importantly, each other. While we reopened our branches in early June, life is far from normal. Our employee owners are truly the difference that makes Alpine Bank special and will carry us through.”

Mr. Jammaron continued, “Alpine continues to support our communities through the COVID-19 pandemic. As of June 30, we have made 3,997 Paycheck Protection Program (PPP) loans totaling $305 million while granting loan payment deferrals on approximately $823 million or 26% of our loan portfolio. A bank is only as strong as its community, and we intend to do our part to see our communities through these unprecedented times. The commitment to our communities is underlined by our decision to issue $50 million in subordinated debt during the second quarter. This additional capital enhances our ability to serve our friends and neighbors throughout Colorado.”

Net Income

Net income for the second quarter 2020 and the first quarter 2020 was $12.5 million and $10.9 million, respectively. Interest income increased $4.1 million in the second quarter 2020 compared to the first quarter 2020 primarily due to an increase in loan volume slightly offset by a decrease in yield on cash and due from banks. Recognition of a portion of the fees collected on PPP loans also increased interest income for the second quarter. Interest expense decreased $0.3 million in the second quarter 2020 compared to the first quarter 2020 due to reduced interest rates on deposit accounts. Noninterest income decreased $2.5 million in the second quarter 2020 compared to the first quarter 2020 primarily due to a decrease in the positive mark to market for mortgage loans held for resale and a decrease in service charges on deposit accounts. These decreases were partially offset with increased revenue from mortgages sold on the secondary market. Noninterest expense decreased $4.2 million in the second quarter 2020 compared to the first quarter 2020 primarily due to a decrease in the negative mark to market for mortgage loans held for resale and reduced salary and benefit costs. Provision for loan losses increased $4.1 million in the second quarter 2020 compared to the first quarter 2020 primarily due to the ongoing uncertainties and potential effects of COVID-19.

Net income for the six months ended June 30, 2020 and 2019 was $23.4 million and $29.1 million, respectively. Interest income increased $2.9 million for the first six months of 2020 compared to the first six months of 2019 primarily due to an increase in loan volume offset by a decrease in yield in the securities portfolio and cash and due from banks. Interest expense decreased $0.9 million for the first six months of 2020 compared to the first six months of 2019 due to decreased interest rates on deposit accounts. Noninterest income increased $0.4 million for the first six months of 2020 compared to the first six months of 2019 due to an increase in mortgage banking fee income slightly offset by a decrease in service charges on deposit accounts. Noninterest expense increased $2.8 million for the first six months of 2020 compared to the first six months of 2019 due to an increase in salaries and employee benefits expenses. Provision for loan losses increased $8.7 million in the first six months of 2020 compared to the first six months of 2019 primarily due to the ongoing uncertainties and potential effects of COVID-19.

Net interest margin decreased slightly from 4.27% to 4.26% from the first quarter 2020 to the second quarter 2020. Net interest margin for the second quarter 2020 was influenced by the PPP loans made during the quarter. Net interest margin for the second quarter 2020 net of the PPP loan influence was 3.88%. For the first six months of 2020, net interest margin decreased to 4.26% from 4.50% for the same period in 2019. Net interest margin for the first six months of 2020 net of the PPP loan influence was 4.07%.

Assets

As of June 30, 2020, total assets were $4.7 billion, up 25.8% or $1.0 billion from June 30, 2019. Asset growth totaled $0.7 billion in the second quarter 2020 due to PPP loans along with core deposit increases. Alpine’s Wealth Management Division had assets under management of $940 million on June 30, 2020, compared to $900 million on June 30, 2019, an increase of 4.4%.

Loans

Loans outstanding as of June 30, 2020 totaled $3.1 billion. The loan portfolio increased $349.8 million or 12.7% during the second quarter 2020 compared to March 31, 2020. This growth was primarily driven by the Commercial and Industrial loan portfolio, which increased $296.2 million during the second quarter 2020, as a result of booking $304.7 million in SBA PPP loans. In addition, Real Estate Construction loans grew $35.2 million during the second quarter 2020 and Residential Real Estate loans grew $29.8 million during the second quarter 2020 primarily due to an increase in one-to-four family residential loans. This growth was slightly offset by a decrease in the Commercial Real Estate loan portfolio of $3.8 million for the same period.

Deposits

Total deposits increased $638.7 million to $4.1 billion during the second quarter 2020 compared to March 31, 2020, primarily due to a $287.2 million increase in Demand accounts, a $182.3 million increase in Money Fund accounts, an $80.8 million increase in Certificates of Deposit accounts, a $79.8 million increase in Interest Checking accounts and an $8.5 million increase in Savings accounts. It should be noted that $80.7 million of the increase in Certificates of Deposit accounts was related to brokered CDs that will mature during the third and fourth quarters of 2020. A large portion of the second quarter 2020 deposit growth resulted from PPP loan recipients depositing the funds directly into Alpine Bank deposit accounts.

Capital

The Company’s banking subsidiary, Alpine Bank (the “Bank”), continues to be designated as a “well capitalized” institution as its capital ratios exceed the minimum requirements for this designation. As of June 30, 2020, the Bank’s Tier 1 Leverage Ratio was 9.06%, Tier 1 Capital Ratio was 12.58% and Total Capital Ratio was 13.68%. On a consolidated level, Tier 1 Leverage Ratio was 9.28%, Tier 1 Capital Ratio was 12.88% and Total Capital Ratio was 15.58% as of June 30, 2020.

On June 11, 2020, Alpine announced the completion of the private placement of $50 million in fixed-to-floating rate subordinated notes (the “Notes”) due 2030 to certain qualified institutional buyers and institutional accredited investors. The Notes were structured to qualify as Tier 2 capital at the Company level for regulatory purposes, and the Company intends to utilize the proceeds from the sale of the Notes for general corporate purposes. The Notes will initially bear interest at a fixed rate of 5.875% per annum until June 15, 2025, payable semi-annually in arrears. For the remainder of the term or up to an earlier redemption date, the Notes, which mature on June 15, 2030, will bear an interest rate that will reset quarterly to an annual floating rate equal to the then-current three-month term Secured Overnight Financing Rate (SOFR) plus 569 basis points, payable quarterly in arrears. The Company is entitled to redeem the Notes, in whole or in part, on any interest payment date on or after June 15, 2025, and to redeem the Notes at any time in whole upon certain other specified events.

Dividends

During the second quarter 2020, Alpine paid a $16.00 per common share cash dividend, a decrease from $31.00 per common share paid during the first quarter 2020. This decrease was a result of the numerous challenges and uncertainty presented by the COVID-19 pandemic. On July 9, 2020, Alpine declared a dividend of $16.00 per common share payable on July 27, 2020. The Board of Directors believed that it was prudent to maintain the third quarter 2020 dividend at $16.00 per common share in order to preserve capital.

COVID-19 Pandemic Response

The Company continues to respond to the COVID-19 pandemic as circumstances change. Alpine closed all branch lobbies except by appointment on March 20, 2020. We were able to reopen the majority of our lobbies by June 8, 2020. Three small lobbies continue to be closed. An outbreak in one office did cause us to reclose one branch lobby for fourteen days in early July. Additional actions taken include: enhanced facility cleaning, split shifts, increased remote working arrangements and enhanced sick leave policies. The majority of back office personnel continue to work remotely. Alpine will respond appropriately to evolving guidance from state and local governments and health authorities.

In order to support our customer base, Alpine enacted a 90-day loan payment deferral program in late March. As of June 30, 2020, $823.0 million of the loan portfolio (26.5%) has taken advantage of this opportunity. Both principal and interest payments during the period are being deferred to the end of the loan. As the 90-day deferral periods are beginning to expire, Alpine is reviewing options to extend the deferral period up to 180 days as provided for in regulatory guidance. Reviews for an additional 90-day extension to the deferral period include a thorough analysis of the borrowers plan and ability to once again begin normal payments once the deferral period ends.

The Company continues to actively participate in the PPP loan program. As of June 30, 2020, Alpine had funded 3,997 PPP loans aggregating $304.7 million. New requests for PPP loans are rare. We have entered into a contract with a third party technology provider to assist with the PPP loan forgiveness process for our borrowers. We currently anticipate that the vast majority of our PPP loans will be forgiven in the third and fourth quarters of 2020. Alpine is prepared to participate in the Federal Reserve’s PPP Lending Facility, if necessary, but at this time has not done so.

About Alpine Banks of Colorado

Alpine Banks of Colorado, through its wholly owned subsidiary Alpine Bank, is a $4.7 billion, employee-owned organization founded in 1973 with headquarters in Glenwood Springs, Colorado. With 40 banking offices across Colorado, Alpine Bank employs more than 750 people and serves more than 145,000 customers with personal, business, wealth management, mortgage and electronic banking services. Alpine Bank has a 5-star rating for financial strength by BauerFinancial, Inc., the nation’s leading bank rating firm. The 5-star rating is BauerFinancial’s highest rating for financial institutions. Learn more at www.alpinebank.com.

Forward-Looking Statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding our evaluation of macro-environment risks, Federal Reserve rate management, and trends reflecting things such as regulatory capital standards and adequacy. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward- looking statements. They are neither statements of historical fact or guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statement include:

• the ability to attract new deposits and loans;
• demand for financial services in our market areas;
• competitive market-pricing factors;
• the adverse effects of public health events, such as the current COVID-19 pandemic, including governmental and societal responses;
• deterioration in economic conditions that could result in increased loan losses;
• actions by competitors and other market participants that could have an adverse impact on our expected performance;
• risks associated with concentrations in real estate-related loans;
• market interest rate volatility;
• stability of funding sources and continued availability of borrowings;
• risk associated with potential cyber threats;
• changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth;
• the ability to recruit and retain key management and staff;
• the ability to raise capital or incur debt on reasonable terms; and
• effectiveness of legislation and regulatory efforts to help the U.S. and global financial markets.

There are many factors that could cause actual results to differ materially from those contemplated by forward-looking statements. Any forward-looking statement made by us in this press release speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Key Financial Measures

Click the following links for tables that highlight Alpine’s key financial measures for the quarter indicated.

https://www.alpinebank.com/_/kcms-doc/1507/58407/key-financial-measures_06.30.2020.pdf
https://www.alpinebank.com/_/kcms-doc/1507/58408/statement-of-comprehensive-income1_06.30.2020.pdf
https://www.alpinebank.com/_/kcms-doc/1507/58409/statement-of-comprehensive-income2_06.30.2020.pdf
https://www.alpinebank.com/_/kcms-doc/1507/58410/statement-of-financial-condition_06.30.2020.pdf