White River Bancshares Co. Earns $788,000, or $0.79 Per Diluted Share, in Fourth Quarter 2023 and Earns $2.55 Million, or $2.56 Per Diluted Share for the Year; Highlighted by Double Digit Loan and Deposit Growth Year-Over-year

FAYETTEVILLE, Ark., Jan. 18, 2024 (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 $788,000, or $0.79 per diluted share, in the fourth quarter of 2023, compared to $1.42 million, or $1.42 per diluted share, in the fourth quarter of 2022. In the preceding quarter, the Company earned $639,000, or $0.64 per diluted share. All financial results are unaudited.

“Our results for the fourth quarter of 2023 reflect solid growth in our loan portfolio, especially as our newer markets are becoming more established fixtures in their respective communities,” said Gary Head, Chairman and Chief Executive Officer. “A year ago, we invested in an expansion of our brand with new locations in Harrison and Jonesboro, in addition to our new bilingual banking offering, Banco Sí! We’re energized by the impact these new locations are having on new customer relationships. Coupled with the growth in Northwest Arkansas, the market where we got started, we’re operating from a position of strength as we enter 2024. We are proud of our loan and deposit growth in 2023, which strengthened our balance sheet, and we will build upon this growth to add value for our shareholders, customers, and communities.”

“Our brand of community banking is being well received in all the markets we serve, and centers on fostering new customer relationships. Whether it’s a small business account or a household account, an operating account is an integral piece to a longstanding banking relationship,” said Scott Sandlin, Chief Strategy Officer. “When entering these new markets in 2022, our goal was to build our deposit base to fund new loan activity. While rising rates changed the deposit mix as customers pursued higher yielding accounts, demand and non-interest bearing accounts remained strong. They accounted for 23.2% of total deposits, and savings and interest-bearing transaction accounts represented 35.8% of total deposits as of December 31, 2023. New relationships are fueling loan and deposit growth, and we expect this trajectory to continue.”

For the full year of 2023, net income was $2.55 million, or $2.56 per diluted share, compared to $5.62 million, or $5.63 per diluted share, for the year 2022.

Fourth Quarter 2023 Financial Highlights:

• Fourth quarter net income was $788,000, or $0.79 per diluted share, compared to $1.42 million, or $1.42 per diluted share, in the fourth quarter of 2022.
• Fourth quarter net interest margin (“NIM”) was 3.00%, compared to 3.79% in the fourth quarter a year ago.
• The Company recorded a $575,000 provision for credit losses in the fourth quarter of 2023, which included a $700,000 provision for credit losses on loans and a $125,000 reversal of credit loss expense for off-balance sheet exposures. This compared to a $350,000 provision in the fourth quarter of 2022.
• Net loans increased $114.5 million, or 13.9%, to $941.2 million at December 31, 2023, compared to $826.7 million at December 31, 2022.
• Nonperforming assets totaled $1.36 million, or 0.10% of total assets at December 31, 2023, compared to $124,000, or 0.01% of total assets, at December 31, 2022.
• Total deposits increased $148.6 million, or 18.3%, to $959.2 million at December 31, 2023, compared to $810.6 million a year ago.
• Core deposits (demand and non-interest-bearing, and savings and interest-bearing transaction accounts) represent 59.0% of total deposits at December 31, 2023.
• The Bank’s uninsured/unpledged deposits totaled approximately 31.5% of total deposits at December 31, 2023.
• Available borrowing capacity totaled $344.8 million at December 31, 2023, compared to $360.0 million at September 30, 2023.
• Total risk-based capital ratio was 12.02% and the Tier 1 leverage ratio was 9.56% for the Bank at December 31,  2023.
• Tangible book value per common share was $78.17 at December 31, 2023, compared to $77.64 a year ago.

Income Statement
“While funding costs remain elevated, higher asset yields contributed to a 12 basis-point expansion in NIM during the fourth quarter, compared to the preceding quarter,” said Brant Ward, President. “We anticipate our NIM will continue to stabilize over the next few quarters if interest rates remain steady or start to decline.” The Company’s NIM was 3.00% in the fourth quarter of 2023, compared to 2.88% in the preceding quarter and 3.79% in the fourth quarter of 2022. For the year 2023, the NIM was 3.01%, compared to 3.82% in 2022.

Net interest income was $7.8 million in the fourth quarter of 2023, compared to $8.8 million in the fourth quarter of 2022. Total interest income increased 31.3% to $14.7 million in the fourth quarter of 2023, compared to $11.2 million in the fourth quarter of 2022. Largely due to the increase in deposit costs, total interest expense increased to $6.9 million in the fourth quarter of 2023, from $2.4 million in the fourth quarter of 2022. For the full year, net interest income was $29.9 million, compared to $32.9 million in 2022.

Noninterest income increased 43.9% to $1.8 million in the fourth quarter of 2023, compared to $1.3 million in the fourth quarter a year ago. Wealth management fee income, the largest component of noninterest income, increased 78.3% to $998,000 during the fourth quarter of 2023, compared to $560,000 in the fourth quarter of 2022. For the year, noninterest income increased 10.2% to $6.0 million, compared to $5.5 million in 2022.

Noninterest expense increased 2.4% to $8.0 million in the fourth quarter of 2023, compared to $7.8 million in the fourth quarter of 2022. Higher data processing and marketing and business development fees during the fourth quarter of 2023 more than offset the decline in salaries and employee benefits during the same period. For the year, noninterest expense increased to $31.6 million, compared to $30.1 million in 2022. The increase in noninterest expense during 2023 was in part due to costs associated with the purchase of the wealth management group in Harrison in June 2023.

Balance Sheet
Total assets increased 15.3% to a record $1.133 billion at December 31, 2023, from $982.8 million at December 31, 2022, and increased 4.2% compared to $1.087 billion at September 30, 2023. Cash and cash equivalents totaled $17.6 million at December 31, 2023, compared to $11.8 million a year ago. Investment securities totaled $114.6 million at December 31, 2023, from $94.4 million a year ago.

Loans, net of allowance for credit losses, increased 13.9% to $941.2 million at December 31, 2023, compared to $826.7 million a year ago, and increased 4.9% compared to $897.2 million three months earlier.

Total deposits increased 18.3% to $959.2 million at December 31, 2023, compared to $810.6 million a year ago and increased 3.8% compared to $923.9 million at September 30, 2023. Due to the interest rate environment, the deposit mix is changing, and time deposits account for the majority of the deposit growth year-over-year.

FHLB advances increased to $45.0 million at December 31, 2023, from $31.7 million at December 31, 2022, and $37.9 million at September 30, 2023. Total stockholders’ equity increased to $79.5 million at December 31, 2023, compared to $77.5 million at December 31, 2022 and $75.3 million at September 30, 2023. Tangible book value per common share was $78.17 at December 31, 2023, up from $77.64 at December 31, 2022, and $73.61 at September 30, 2023. The increase in accumulated other comprehensive income (“AOCI”) during the fourth quarter of 2023 was $3.6 million. Excluding AOCI, tangible book value per share was $86.43 at December 31, 2023.

Credit Quality
Beginning January 1, 2023, the Company adopted the Current Expected Credit Losses (“CECL”) methodology, which replaced the former “incurred loss” model for recognizing credit losses with an “expected loss” model. Utilizing CECL may have an impact on the Company’s allowance for credit losses going forward and may result in a lack of comparability between 2023 and 2022 quarterly periods.

The Company recorded a $575,000 provision for credit losses in the fourth quarter of 2023, which included a $700,000 provision for credit losses on loans and $125,000 reversal of credit loss expense for off-balance sheet exposures. This compared to a $325,000 provision in the third quarter of 2023, and a $350,000 provision in the fourth quarter of 2022. For the full year 2023, the Company recorded a $1.3 million provision for credit losses, compared to a $760,000 provision for 2022.

Nonperforming loans increased during the quarter to $1.15 million, and represented 0.12% of total loans at December 31, 2023, compared to $125,000, or 0.01% at September 30, 2023, and $124,000, or 0.01% of total loans a year ago. The increase during the quarter was primarily due to two relationships, both of which are secured by 1-4 family construction projects.

“Credit quality continues to hold up, as we focus on maintaining a moderate risk profile. While nonperforming loans increased during the quarter, we believe these to be isolated credits and not reflective of the overall loan portfolio,” said Jeff Maland, Chief Risk Officer.

The allowance for credit losses was $11.4 million, or 1.20% of total loans, at December 31, 2023, compared to $10.9 million, or 1.20% of total loans, at September 30, 2023, and $9.2 million, or 1.10% of total loans, at December 31, 2022. Net loan charge-offs were $185,000 in the fourth quarter of 2023, compared to net loan recoveries of $5,000 in the third quarter of 2023, and net loan recoveries of $105,000 in the fourth quarter of 2022.

Capital

The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Total risk-based capital ratio estimate of 12.02% and Tier 1 leverage ratio of 9.56%, at December 31, 2023.

Recent Developments

The Company launched a new initiative, Banco Sí, to focus on and serve the burgeoning Hispanic and Latino communities. This new market was formed as a division of Signature Bank of Arkansas during the third quarter of 2022, and its initial location opened in downtown Rogers in a historic building at 114 South 1st Street. Development is underway for a second location in downtown Springdale, with plans to open in the second quarter of 2024. Banco Sí was launched to create economic growth and access to banking services, capital, and funds for small and midsize businesses within these communities.

During the first quarter of 2022, the Company opened its seventh market, located at 111 East Jackson Avenue in Jonesboro. This facility will serve as a temporary location for the market and marks the Company’s entry into Craighead County. According to the 2020 Census, Jonesboro had a population of 78,576 and is the fifth-largest city in Arkansas. Ground was broken on the permanent facility at 502 East Washington on September 22, 2023, and construction is well underway.

In the second quarter of 2022, the Company held its grand opening of the sixth market, Harrison, which had been operating in a temporary space for several months while the permanent space was under construction. The entry to Boone County was a new, but familiar market to the Company, as many of its shareholders reside in and around the Harrison area. According to the 2020 Census, Harrison had a population of 13,124.

About White River Bancshares Company

White River Bancshares Company is the single bank holding company for Signature Bank of Arkansas, headquartered in Fayetteville, Arkansas. The Bank has locations in Fayetteville, Springdale, Bentonville, Rogers, Brinkley, Harrison and Jonesboro, 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 headquartered 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.

The Company has expanded eastward, with new markets in Jonesboro and Harrison. Jonesboro, located in Craighead County, is a city located on Crowley’s Ridge in the northeastern corner of Arkansas. It is the home of Arkansas State University and the cultural and economic center of Northeast Arkansas. Jonesboro also houses the region’s hospital network. U.S. Steel Corp. announced that it would locate a new $3 billion steel factory in Northeast Arkansas in Osceola, a move expected to create 900 jobs with an average pay over $100,000 annually, making it the largest capital investment project in Arkansas history. Dubbed “Project Blueprint,” the steel mill began construction in early 2022. Harrison sits below Branson, Missouri, which is a family tourist destination and outdoor recreation, and is well known as an entertainment destination.

The Company currently operates out of nine locations; two in Washington County; three in Benton County; two in Monroe County; one in Boone County; and one in Craighead County.

The housing market in Washington and Benton counties remains robust. According to the Northwest Arkansas Board of Realtors, the average home in Washington County sold for $414,000, up 8.8% in November 2023, compared to a year ago, with an average of 85 days on the market. For Benton County, the average house sold for $444,000, up 12.3% from a year ago with an average of 95 days on the market.

Washington County’s population is projected to grow 5.96% from 2023 through 2028, and median household income is projected to increase by 11.12% during the same time frame. Benton County’s population is projected to grow 8.05% from 2023 through 2028, and median household income is projected to increase by 11.31%. Monroe County’s population is projected to decrease by 6.07% from 2023 through 2028 and median household income is projected to increase by 15.34%. Boone County’s population is projected to grow 1.66% from 2023 through 2028 and median household income is projected to increase by 13.62%. Craighead County’s population is projected to grow 4.40% from 2023 through 2028, and the median household income is projected to increase by 17.69%.

Sources:

http://www.nwarealtors.org/market-statistics/
https://www.capitaliq.spglobal.com/

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.

Contact:
Scott Sandlin, Chief Strategy Officer
479-684-3754