Net Interest Income Improves Amidst Rate Pressure
Christine Haugen, Executive Vice President and Chief Financial Officer
Consolidated earnings were $1,270,000, or $0.70 per share, for the nine months ended September 30, 2022 compared to $1,545,000, or $0.86 per share, for the comparative period in 2021. While total year-to-date consolidated earnings in 2022 trailed slightly behind those of 2021, consolidated earnings related to the Company’s core operations have increased.
Current year consolidated earnings of $0.70 per share were comprised of $0.60 per share attributable to core operations and $0.10 per share due to impacts from the Paycheck Protection Program (PPP), whereas prior year consolidated earnings of $0.86 per share were comprised of $0.50 per share attributable to core operations and $0.36 per share due to impacts from the PPP.
This represents a 20% increase in core consolidated earnings year-over-year as increases in core interest income notably outpaced increases in interest expense. The Company has focused efforts to keep topline revenues growing knowing that the PPP program has come close to its end. However, pressures to raise deposits rates began in the second half of the year. With liabilities repricing faster than assets in
the current and projected interest rate environment, the Company can expect to see margin compression until the rate environment balances.
The Company experienced a reduction in its overall balance sheet with total assets ending September 30, 2022 at $226.3 million, a decrease of 2% since December 31, 2021.
The decrease in total assets can be attributed to a reduction in total deposits, which ended the quarter at $201.5 million, a decrease of 2% annually. This decrease consisted of $17.3 million in anticipated deposit outflows relating to capital accounts for De Novo institutions that opened for business during 2022, offset by $13.3 million in deposit growth through deepening of existing relationships and generation of new banking relationships.
Loans experienced a strong third quarter ending at $142.9 million, an increase of 5.5% annually. This increase consisted of $12.0 million in net portfolio loan growth, offset by $4.6 million of PPP loan forgiveness received during the year. The Company has a strong loan pipeline in place to fuel additional growth before the end of the year.
The Bank remains well capitalized with a 10.67% leverage capital ratio and maintains its Bauer five-star rating.