Lewis & Clark Bancorp (OTC Pink: LWCL) announces 2023
fourth-quarter and year-to-date consolidated results.
Quarter-to-date net income totaled $191,000 for the three months
ended December 31, 2023, compared to net income for the same period
last year of $617,000. Earnings per share were $0.18 for the
current-year quarter, compared to $0.57 for the prior-year
quarter.
Investment Securities
The full-year 2023 net loss was substantially due to a $3.2
million pre-tax loss on the sale of investment securities. In
response to the rapid and unprecedented increase in market interest
rates and resulting negative net interest margin earned on the
investment portfolio, Management effected the sale of $72.9 million
(amortized cost) of fixed-rate investment securities. The proceeds
from the sale of investments totaled $69.7 million, resulting in a
$3.2 million pre-tax loss. The bulk of the proceeds from this sale
were reinvested into higher-yielding investment securities, with
the remainder being held in interest-bearing cash balances. This
sale better positioned the Company’s balance sheet in three ways:
increased earnings going forward, enhanced on-balance-sheet
liquidity, and a more flexible interest-rate risk position.
The weighted-average net yield of the securities sold was 0.62%,
compared to the weighted-average net yield of the replacement
securities of 6.09%, while the interest-bearing cash balance is
currently earning 5.38%. This repositioning provides a significant
increase in earnings on the $69.7 million in sale proceeds. As of
December 31, 2023, the Company still holds $81.0 million of
investment securities currently yielding a weighted-average
1.11%.
Income Statement
The decreased earnings in the current-year quarter were due to a
decrease in net interest income, a decrease in the recapture of
credit losses, and an increase in noninterest expense, partially
offset by an in increase in noninterest income and a decrease in
the provision for income taxes compared to the same period one year
ago. The decrease in net interest income was due to an increase in
interest expense as a result of increased rates paid on deposits
and interest expense on borrowings, partially offset by an increase
in earnings from investments and interest-bearing cash. Net
interest margin was 2.62% for the current-year quarter compared to
2.89% for the same quarter one year ago. The decrease in the net
interest margin was due to an increase in interest expense on
deposits and borrowed funds. The decrease in the recapture of
credit losses compared to the prior year period was primarily due
to adjusting the allowance for credit losses to reflect the
estimated balance anticipated upon the adoption of the current
expected credit loss methodology. The increase in noninterest
expense was due to increases in salaries and employee benefits and
the FDIC assessment, partially offset by decreases in data
processing, professional fees, bank service charges and intangible
amortization compared to the prior year quarter. The increase in
noninterest income was due to increases in fees earned from
strategic partnerships, and unrealized gains on equity securities.
The decrease in the provision for income taxes was due to a
decrease in pre-tax earnings compared to the prior year
quarter.
The full-year 2023 net loss totaled $2.5 million, or ($2.35) per
share, compared to net income of $1.8 million, or $1.71 per share
for the same period last year. The decreased earnings in the
current-year period were due to a decrease in net interest income,
a decrease in the recapture of credit losses, an increase in loss
on sale of securities, and an increase in noninterest expense,
partially offset by an increase in noninterest income and a
decrease in the provision for income taxes compared to the same
period one year ago. The decrease in both the net interest income
and the recapture of credit losses is substantially the same as
that of the current year quarter as previously discussed. The
increase in loss on sale of securities was due to the sale of
investment securities as previously discussed. The increase in
noninterest expense was due to increases in salaries and employee
benefits, FDIC assessment, insurance and employee travel, partially
offset by decreases in occupancy expense, professional fees,
education, bank service charges and intangible amortization
compared to the same period last year. The increase in noninterest
income was due to increases in fees earned from strategic
partnerships, dividends earned, and an unrealized gain on equity
securities compared to the prior-year period. The decrease in the
provision for income taxes was due to a decrease in pre-tax
earnings compared to the prior year period.
Strategic Partnerships
The Company will continue to selectively evaluate and enter into
market-facing partnerships as part of strategic partnerships
division. These partnerships include programs that generate loans,
deposits, transaction fees and platform revenue. Examples of select
programs that are either live or in implementation include
brand-integrated commercial and consumer deposit accounts and debit
cards, government-guaranteed consumer installment loans, commercial
spend management platform, commercial fleet management, and deposit
custody. While the Bank entered into its first strategic
partnership in 2017, expanding these relationships into a
full-fledged division began in late 2020. Since that time, the Bank
has made substantial investments in governance, risk management,
support infrastructure and personnel to enable capacity and
oversight in an effort to ensure the scalability and sustainability
of its strategic partnership division. In the first quarter of
2023, the return on investment for the division shifted into
positive earnings territory and made a favorable contribution to
net income.
Jeffrey Sumpter, President and CEO, commented, “With the full
year now behind us we are ready to close the books on 2023 and
focus on continued improvement and increased earnings as we
transition into 2024.” Sumpter added, “The impact of restructuring
the investment portfolio has yielded favorable results and
generated positive earnings during the second half of the
year.”
Balance Sheet
As of December 31, 2023, total consolidated assets were $392.1
million, an increase of $29.1 million compared to December 31,
2022, primarily due to increases in cash and borrowings, partially
offset by decreases in investment securities, gross loans and total
deposits. Cash increased year to date by $53.3 million, due to
proceeds from the sale of securities, principal reductions on
loans, and increased borrowings, partially offset by securities
purchased, and a decrease in total deposits. Borrowings increased
year to date by $59.0 million as a result of borrowings secured
through the Federal Reserve’s Bank Term Funding Program. Investment
securities decreased year to date by $10.0 million primarily due to
the sale and subsequent purchases as previously discussed. Gross
loans decreased by $14.8 million primarily due to principal
reductions and payoffs exceeding new originations. Total deposits
decreased year to date by $33.6 million, primarily due to select
customers moving excess funds to higher-yielding vehicles,
consistent with industry trends. Although total deposits reflect a
decrease from December 31, 2022, interest-bearing demand balances
increased by $17.2 million. This increase is substantially due to
deposits obtained from strategic partnership relationships.
Shareholders’ equity totaled $30.9 million at December 31, 2023, an
increase of $661 thousand, compared to $30.3 million at December
31, 2022. The increase was due to a $3.3 million decrease in
unrealized losses on investment securities, partially offset by the
$2.5 million net loss, and shareholder dividends totaling $161
thousand.
About Lewis & Clark Bancorp
Headquartered in Oregon City, Oregon, Lewis & Clark Bancorp
(the “Company”) is the holding company for Lewis & Clark Bank
(the “Bank”), a state-chartered full-service commercial bank.
Partnering with individuals and businesses—whether in our local
geographic footprint within Oregon and SW Washington or through
select strategic partnerships nationally—we believe that being an
integral part of the communities we serve helps promote both growth
and success for all stakeholders.
For more information about Lewis & Clark Bank, visit
www.lewisandclarkbank.com.
Forward-looking Statements
Statements included in this press release that are not
historical or current fact are subject to certain risks and
uncertainties that could cause actual results to differ materially
from historical earnings and those presently anticipated or
projected. Lewis & Clark Bancorp disclaims any obligation to
subsequently revise 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 or
circumstances.
Summary Balance Sheet
(dollars in thousands)
December 31, 2023
December 31, 2022
$ Change
% Change
ASSETS
Cash
$
69,745
$
16,465
$
53,280
323.6
%
Equity Securities
2,583
2,439
144
5.9
%
Investment Securities
141,137
151,128
(9,991
)
-6.6
%
Gross loans
156,876
171,689
(14,813
)
-8.6
%
Allowance for credit losses
(2,166
)
(2,328
)
162
-7.0
%
Net loans
154,710
169,361
(14,651
)
-8.7
%
Fixed Assets
6,826
6,970
(144
)
-2.1
%
Other Assets
17,118
16,615
503
3.0
%
Total Assets
$
392,119
$
362,978
$
29,141
8.0
%
LIABILITIES AND EQUITY
Deposits:
Noninterest-bearing
$
89,754
$
91,070
$
(1,316
)
-1.4
%
Interest-bearing demand
34,309
17,074
17,235
100.9
%
Money market and savings
126,049
165,666
(39,617
)
-23.9
%
Time deposits
19,307
29,194
(9,887
)
-33.9
%
Total deposits
269,419
303,004
(33,585
)
-11.1
%
Subordinated debentures, net
6,956
6,931
25
0.4
%
Borrowings
80,000
21,000
59,000
281.0
%
Other liabilities
4,753
1,713
3,040
177.5
%
Total liabilities
361,128
332,648
28,480
8.6
%
Equity
30,991
30,330
661
2.2
%
Total Liabilities and Equity
$
392,119
$
362,978
$
29,141
8.0
%
Net loans to deposits
57.42
%
55.89
%
Allowance for loan losses to total
loans
1.38
%
1.36
%
DDA deposits to total deposits
33.31
%
30.06
%
Tangible book value per share
$
28.30
$
27.62
Summary Income Statement
(dollars in thousands)
Three months ended December
31,
Twelve months ended December
31,
2023
2022
2023
2022
Interest and fees on loans and
investments
$
4,580
$
3,163
$
15,763
$
12,410
Interest expense
2,229
701
7,535
1,434
Net interest income
2,351
2,462
8,228
10,976
Recapture of credit losses
-
(730
)
-
(730
)
Net interest income after
provision
2,351
3,192
8,228
11,706
Noninterest income
638
306
2,008
959
Gain (Loss) on sale on securities
0
0
(3,181
)
151
Noninterest expense
2,753
2,665
10,596
10,377
Pre-tax income (loss)
236
833
(3,541
)
2,439
Provision (benefit) for income taxes
45
216
(1,023
)
605
Net income (loss)
$
191
$
617
$
(2,518
)
$
1,834
Return on average equity
2.58
%
8.55
%
-8.37
%
5.70
%
Return on average assets
0.20
%
0.67
%
-0.67
%
0.46
%
Net interest margin
2.62
%
2.89
%
2.36
%
2.95
%
Efficiency ratio
92.09
%
96.27
%
150.18
%
85.86
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240327167739/en/
Jeffrey Sumpter – President and Chief Executive Officer Phone:
(503) 212-3107
John Lende – Executive Vice President and Chief Financial
Officer Phone: (503) 212-3141