White River Bancshares Co. Earns $1.93 Million, or $1.99 Per Diluted Share, in Third Quarter 2023; Results Highlighted By Double Digit Loan and Deposit Growth Year-Over-Year; Book Value Increases to $81.47 Per Common Share

FAYETTEVILLE, Ark., Oct. 14, 2023 (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 67.4% to $1.93 million, or $1.99 per diluted share, in the third quarter of 2023, compared to $1.15 million, or $1.19 per diluted share, in the third quarter of 2020. In the prior quarter, the Company earned a record $2.08 million, or $2.14 per diluted share. In the first nine months of 2023, net income more than doubled to $5.56 million, or $5.73 per diluted share, compared to $2.56 million, or $2.64 per diluted share, in the first nine months of 2020. All financial results are unaudited.

“We achieved the highest third quarter earnings in the company’s history, fueled by strong revenue generation, double digit loan and deposit growth year-over-year and an expanding net interest margin,” said Gary Head, President and Chief Executive Officer. “Northwest Arkansas is one of the fastest growing markets in the United States, and we are taking advantage of this growth by capturing market share and expanding our balance sheet while looking for new opportunities.”

“Another highlight of the quarter was the Board’s decision to pay an annual cash dividend of $0.50 per share,” Head continued. “The dividend is a testament to the strength of our core banking activities and financial performance of our franchise. We are pleased that our earnings growth provides us the opportunity to both begin this dividend program and support future growth at the Bank.”

“Deposit balances remained at record levels at the end of September, with new customer relationships contributing to strong quarterly deposit growth,” said Scott Sandlin, Chief Strategy Officer. “Part of our success in gathering new low-cost deposits has been our enhanced marketing initiatives that emphasize full banking relationships. Our banking teams have done an excellent job of offering deposit products to compliment every lending relationship, as noninterest bearing deposits are up 56.4% year-over-year.”

“During both rounds of Federal funding, we were active with helping our customers receive PPP loans from the SBA,” said Jeff Maland, Chief Risk Officer. “Over the course of the two rounds of PPP lending, we funded 433 PPP loans totaling $29.0 million to both existing and new customers. At quarter-end, only 90 PPP loans totaling $6.2 million remained on the books, as a majority of these loans were forgiven during the prior quarter. We have also done an excellent job of replacing PPP loans with new loan originations, with heavy demand for new home loans, and construction and land development loans.”

Third Quarter 2023 Financial Highlights:

• Third quarter net income increased 67.4% to $1.93 million, or $1.99 per diluted share, compared to $1.15 million, or $1.19 per diluted share, in the third quarter of 2020.
• Annualized return on average assets was 0.95%, compared to 0.61% in the third quarter a year ago.
• Annualized return on average equity was 9.80%, compared to 6.34% in the third quarter a year ago.
• There was no provision for loan losses in the third quarter or second quarter of 2023. This compares to a $300,000 provision in the third quarter of 2020.
• Net loans increased 12.5% to $661.7 million at September 30, 2023, compared to $588.4 million at September 30, 2020.
• Total deposits increased 16.9% to $739.7 million at September 30, 2023, compared to $632.5 million a year ago.
• Noninterest bearing deposits increased 56.4% to $263.5 million at September 30, 2023, compared to $168.5 million a year ago.
• Nonperforming assets totaled $149,000, or 0.02% of total assets at September 30, 2023, compared to $400,000, or 0.05% of total assets, at September 30, 2020.
• Book value per common share increased to $81.47 at September 30, 2023, from $75.17 a year ago.
• Total risk-based capital ratio was 12.84% and the Tier 1 leverage ratio was 10.89% for the Bank at September 30, 2023.

Income Statement

“The changes we have made in investments and funding mix has reduced our dependency on internet CD’s and FHLB advances. We are now primarily funding loan growth with low-cost deposits, which helped our net interest margin expand 31 basis points during the quarter,” said Brant Ward, Chief Operating Officer.

The Company’s NIM improved to 3.64% in the third quarter of 2023, compared to 3.33% in the third quarter of 2020, and expanded eight basis points compared to 3.56% in the prior quarter. In the first nine months of 2023, the net interest margin improved 13 basis points to 3.67%, compared to 3.54% in the first nine months of 2020.

Third quarter net interest income increased 17.7% to $7.1 million, compared to $6.0 million in the third quarter of 2020. Total interest income increased 3.4% to $8.1 million in the third quarter of 2023, from $7.9 million in the third quarter of 2020. Total interest expense decreased by 42.7% to $1.1 million in the third quarter of 2023, from $1.9 million during the third quarter of 2020. In the first nine months of 2023, net interest income increased 13.5% to $20.9 million, compared to $18.4 million in the first nine months of 2020.

Noninterest income increased 36.7% to $1.7 million in the third quarter of 2023, compared to $1.2 million in the third quarter a year ago. The Company benefitted from higher wealth management fee income, steady service charges and deposit fees and substantially higher secondary market fee income compared to the third quarter in the prior year. In the first nine months of the year, noninterest income increased 45.2% to $5.1 million, compared to $3.5 million in the first nine months of 2020.

Noninterest expense increased to $6.2 million in the third quarter of 2023, compared to $5.4 million in the third quarter of 2020. Higher commissions due to increased revenues in our lines of business along with ancillary costs related to our core conversion and new branch contributed to the increase during the third quarter of 2023.

Balance Sheet

Total assets increased by 15.1% to $866.1 million at September 30, 2023, from $752.6 million at September 30, 2020, and increased 6.8% compared to $810.7 million at June 30, 2023. Cash and cash equivalents increased to $77.5 million at September 30, 2023 from $49.6 million a year ago. Investment securities increased to $84.7 million at September 30, 2023 from $70.4 million a year ago, as the Company actively moved cash balances into better yielding investment securities during the quarter.

Loans, net of allowance for loan losses, increased 12.5% to $661.7 million at September 30, 2023, compared to $588.4 million a year ago, and increased 2.8% compared to $643.6 million three months earlier. Through the close of the first round of the PPP program on August 8, 2020, the Bank had funded approximately 274 PPP loans totaling $20.7 million to both existing and new customers. Through the close of the second round of the PPP program on May 31, 2023, the Bank had funded approximately 159 PPP loans totaling $8.3 million. As of September 30, 2023, no PPP loans from round one, and $6.2 million in PPP loans from round two, remained on the books.

Deposit balances remained at record levels, with new customer relationships contributing to strong quarterly deposit growth. Total deposits increased 16.9% to $739.7 million at September 30, 2023, compared to $632.5 million a year ago and increased 7.8% compared to $685.9 million at June 30, 2023, with noninterest bearing deposits increasing 56.4% to $263.5 million at September 30, 2023, compared to $168.5 million a year ago.

FHLB advances totaled $16.1 million at September 30, 2023 from $17.2 million at September 30, 2020. Total stockholders’ equity increased 8.3% to $78.9 million at September 30, 2023, from $72.8 million at September 30, 2020 and increased 1.9% when compared to $77.4 million at June 30, 2023. Book value per common share increased to $81.47 at September 30, 2023 from $75.17 at September 30, 2020, and $79.91 at June 30, 2023.

Credit Quality

“We continue to be encouraged by the overall asset quality of our loan portfolio, including minimal nonperforming assets as of quarter end,” said Maland. “Additionally, we no longer have any loans on deferral at September 30, 2023 from the payment forbearance agreements we had made with some customers experiencing financial hardship at the early onset of the pandemic.”  

Due to excellent credit quality and a strong allowance for loan losses, the Company reported no provision for loan losses in both the third quarter of 2023 and the second quarter of 2023. This compares to a $300,000 provision for loan losses during the third quarter of 2020.  

Nonperforming loans totaled $149,000 at September 30, 2023. This compared to no nonperforming loans at June 30, 2023, and $200,000 in nonperforming loans at September 30, 2020. Nonperforming assets were $149,000 at September 30, 2023, compared to no nonperforming assets at June 30, 2023, and $400,000 in nonperforming assets at September 30, 2020. Total nonperforming assets were 0.02% of total assets at September 30, 2023, 0.00% at June 30, 2023, and 0.05% at September 30, 2020.

The allowance for loan losses was $8.6 million, or 1.28% of total loans, at September 30, 2023, when excluding the $6.2 million of PPP loans, which are 100% guaranteed by the SBA. This compared to $8.4 million, or 1.39% of total loans, at September 30, 2020. Net loan charge-offs were $81,000 in the third quarter of 2023, compared to net loan recoveries of $3,000 in the second quarter of 2023, and net loan charge-offs of $169,000 in the third quarter of 2020.

Capital

The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Tier 1 leverage ratio estimate of 10.89%, Common equity Tier 1 capital ratio of 11.69%, Tier 1 risk-based capital ratio of 11.69% and Total capital ratio of 12.84%, at September 30, 2023.

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), trades on the OTCQX® Best Market.  

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.