White River Bancshares Co. Earns Record $2.08 Million, or $2.14 Per Diluted Share, for Second Quarter 2021

FAYETTEVILLE, Ark., July 19, 2021 (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 33.8% to a record $2.08 million, or $2.14 per diluted share, in the second quarter of 2021, compared to $1.55 million, or $1.60 per diluted share, in the first quarter of 2021 and increased 210.7% compared to $669,000, or $0.69 per diluted share, in the second quarter of 2020. In the first six months of 2021, net income more than doubled to $3.6 million, or $3.75 per diluted share, compared to $1.4 million, or $1.45 per diluted share, in the first six months of 2020. All financial results are unaudited.

“Our record results for both the second quarter and the first six months of 2021 were highlighted by strong revenue generation, record deposit growth and improved operating efficiencies,” said Gary Head, President and Chief Executive Officer. “We are extremely proud of all of our team, who have stepped up to meet the challenges of a new normal banking experience. Overall, these factors contributed to a return on average assets of 1.04% and a return on average equity of 10.95% for the quarter. We have been successful at keeping operating expenses in check while growing the franchise, and anticipate further growth throughout the rest of 2021.”

“Deposit balances remained at record levels at the end of June, with new client relationships contributing to strong quarterly deposit growth,” said Scott Sandlin, Chief Strategy Officer. “As a result, noninterest bearing deposits are up 29.2% year-over-year. Part of our success in gathering new low cost deposits has been due to the investments we have made with our digital and treasury service platforms over the last few quarters. Our banking teams now have both the deposit products offerings and the digital enhancements in place to capture additional market share.”

“Since the early onset of the pandemic, we have been actively helping our customers receive PPP loans from the SBA,” said Brant Ward, Chief Operating Officer. “Over the last fifteen months, we funded 433 PPP loans totaling $29.0 million to both existing and new customers. Of this amount, 69 loans totaling $13.1 million remain on the books as of June 30, 2021. Due to the low interest rate environment, our secondary mortgage department continues to outperform expectation. The low interest rate environment also helps us manage our cost of funds down as we continue to build our deposit franchise through the acquisition of new relationships.”

“In April 2020, we implemented additional programs to support our customers experiencing financial hardship. These assistances included payment forbearance agreements with some customers for periods of up to six months. At the peak of our assistance, at June 30, 2020, we had deferred payment on 120 loans totaling $79.7 million. As of June 30, 2021, we no longer had any loans on deferral. We continue to be extremely encouraged by our overall asset quality, including zero nonperforming assets for the second quarter in a row,” said Jeff Maland, Chief Risk Officer.

Second Quarter 2021 Financial Highlights:

• Second quarter net income increased 210.7% to $2.08 million, or $2.14 per diluted share, compared to $669,000, or $0.69 per diluted share, in the second quarter of 2020.
• Annualized return on average assets was 1.04%, compared to 0.37% in the second quarter a year ago.
• Annualized return on average equity was 10.95%, compared to 3.79% in the second quarter a year ago.
• There was no provision for loan losses in the second quarter or first quarter of 2021. This compares to a $1.4 million provision in the second quarter of 2020.
• Net loans increased 13.4% to $643.6 million at June 30, 2021, compared to $567.6 million at June 30, 2020.
• Total deposits increased 8.0% to $685.9 million at June 30, 2021, compared to $635.3 million a year ago.
• Noninterest bearing deposits increased 29.2% to $211.3 million at June 30, 2021, compared to $163.6 million a year ago.
• There were no nonperforming assets at June 30, 2021, and at March 31, 2021. This compared to nonperforming assets of $1.3 million, or 0.18% of total assets, at June 30, 2020.
• Book value per common share increased to $79.91 at June 30, 2021, from $73.89 a year ago.
• Total risk-based capital ratio was 13.32% and the Tier 1 leverage ratio was 10.65% for the Bank at June 30, 2021.

Income Statement

The Company’s NIM was 3.56% in the second quarter of 2021, compared to 3.65% in the second quarter of 2020, and 3.82% in the prior quarter. High levels of balance sheet liquidity and lower yields on assets continued to put pressure on the Company’s NIM. In the first six months of 2021, the net interest margin improved four basis points to 3.69%, compared to 3.65% in the first six months of 2020.

Second quarter net interest income increased 7.2% to $6.9 million, compared to $6.4 million in the second quarter of 2020. Total interest income decreased 5.0% to $8.0 million in the second quarter of 2021, from $8.5 million in the second quarter of 2020. Total interest expense decreased by 43.2% to $1.2 million in the second quarter of 2021, from $2.1 million during the second quarter of 2020.   In the first six months of 2021, net interest income increased 11.4% to $13.8 million, compared to $12.4 million in the first six months of 2020.

Noninterest income increased 38.5% to $1.6 million in the second quarter of 2021, compared to $1.2 million in the second 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 second quarter in the prior year. In the first six months of the year, noninterest income increased 49.8% to $3.4 million, compared to $2.2 million in the first six months of 2020.

Noninterest expense increased to $5.7 million in the first quarter of 2021, compared to $5.3 million in the first quarter of 2020. Higher professional services related to a one-time expense associated with a conversion fee for digital, core and EFT platforms contributed to the increase during the first quarter of 2021.

Balance Sheet Review

Total assets increased by 7.5% to $810.7 million at June 30, 2021, from $754.2 million at June 30, 2020, and increased modestly compared to $806.0 million at March 31, 2021. Cash and cash equivalents decreased to $40.9 million at June 30, 2021 from $82.6 million a year ago. Investment securities increased to $87.7 million at June 30, 2021 from $66.2 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 13.4% to $643.6 million at June 30, 2021, compared to $567.6 million a year ago, and increased 1.4% compared to $635.0 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, 2021, the Bank had funded approximately 159 PPP loans totaling $8.3 million. As of June 30, 2021, $5.2 million in PPP loans from round one, and $7.9 million in PPP loans from round two, remained on the books.

Deposit balances remained at record levels, with the second round of PPP and new customer relationships contributing to strong quarterly deposit growth. Total deposits increased 8.0% to $685.9 million at June 30, 2021, compared to $635.3 million a year ago and increased nominally compared to $682.6 million at June 30, 2020, with non-interest bearing deposits increasing 29.2% to $211.3 million at June 30, 2021, compared to $163.6 million a year ago.

FHLB advances totaled $16.8 million at June 30, 2021 from $17.3 million at June 30, 2020. Total stockholders’ equity increased 8.0% to $77.4 million at June 30, 2021, from $71.7 million at June 30, 2020 and increased 2.9% when compared to $75.2 million at March 31, 2021. Book value per common share increased to $79.91 at June 30, 2021 from $73.89 at June 30, 2020, and $77.63 at March 31, 2021.

Credit Quality

Due to excellent credit quality and a strong allowance for loan losses, the Company reported no provision for loan losses in the second quarter of 2021 nor the first quarter of 2021. This compares to a $1.4 million provision for loan losses during the second quarter of 2020. “Our credit quality remains exemplary, and we believe our current reserve level is adequate to cover any potential loan losses resulting from the pandemic,” said Head.

There were no nonperforming loans at June 30, 2021, or at March 31, 2021. This compared to $985,000 in nonperforming loans at June 30, 2020. Additionally, there were no nonperforming assets at June 30, 2021, or at March 31, 2021, compared with $1.3 million in nonperforming assets at June 30, 2020. Total nonperforming assets were 0.00% of total assets at June 30, 2021, 0.00% at March 31, 2021, and 0.18% at June 30, 2020.

The allowance for loan losses was $8.7 million, or 1.35% of total loans, at June 30, 2021, when excluding the $13.1 million of PPP loans, which are 100% guaranteed by the SBA. This compared to $8.3 million, or 1.43% of total loans, at June 30, 2020. Net loan recoveries were $3,000 in the second quarter of 2021, compared to net loan recoveries of $10,000 in the first quarter of 2021, and net loan charge-offs of $512,000 in the second quarter of 2020.

As of June 30, 2021, the Bank had zero loans within the COVID deferral process.

Capital

The Bank’s capital ratios continued to exceed regulatory “well-capitalized” requirements, with a Tier 1 leverage ratio estimate of 10.65%, Common equity Tier 1 capital ratio of 12.09%, Tier 1 risk-based capital ratio of 12.09% and Total capital ratio of 13.32%, at June 30, 2021.

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.