Q1 Generate Strong Earnings and Liquidity
06/12/24
By Christine Haugen, EVP and Chief Financial
Consolidated earnings were $713,000, or $0.40 per share, for the quarter ended March 31, 2024, as compared to consolidated earnings of $462,000, or $0.26 per share, for the quarter ended March 31, 2023, representing an increase of 54% quarter-over-quarter.
The first quarter of 2024 generated a strong yield on earning assets as the Company received the full benefit from the significant loan production that came late in the fourth quarter of 2023. Interest income of $4.2 million as of March 31, 2024, is up 10% from the previous quarter and 38% from the same quarter of the prior year. However, the Company also experienced a significant increase in its interest expense in Q1 2024 as the result of continued upward rate pressure from the Federal Reserve keeping rates elevated through the quarter. Additionally, the Company is continuing to see customers place funds in interest bearing products to take advantage of the high-rate environment in anticipation of potential rate decreases later in 2024. Overall, the Company maintained a strong net interest margin at 4.01%, serving as the primary driver for the Company’s quarterly earnings success.
From a balance sheet perspective, total assets were $279.1 million on March 31, 2024, which equates to net growth of 3% since December 31, 2023. Balance sheet growth is primarily derived from an increase in the Company’s liabilities, which experienced a significant shift in composition since year-end. Deposits ended the quarter at $249.7 million, an increase of $21.5 million or 9% since December 31, 2023, and relate entirely to core deposit generation. The increase in core deposits was the result of deepening of existing relationships and cultivation of new banking relationships. Offsetting this significant deposit growth was the repayment of $15.0 million in borrowings from the Federal Home Loan Bank during the quarter. On March 31, 2024, the Company’s available liquidity is sourced entirely from its core deposit base; a significant achievement given the tightening of liquidity experienced in the industry over the past 18 months.
On March 31, 2024, the Company’s loan portfolio totaled $199.7 million, which represents a slight decrease of $2.1 million or 1% from year-end as the Company had significant maturities during the quarter exceeding funding from new loan originations. While loan production during the quarter was strong, it was concentrated in construction and commercial lines of credit, which resulted in lower balances at origination but provide opportunity for significant future funding. Heading into the second quarter, the Company has a very healthy loan pipeline.
The Bank remains Well Capitalized with a community bank leverage ratio of 10.39% and maintains its Bauer five-star rating.