Pacific West Bank today announced third-quarter net income of $523 thousand or $0.20 per diluted share and net income for the first nine months of the year of $1.3 million or $0.48 per diluted share.
Third Quarter 2022 Results:
- Net income grew by $125 thousand, or 31.5% when compared to prior quarter.
- $20.1 million in core loan commitments originated during the quarter.
- Deposits grew $18.5 million, or 7.9%.
- Gross interest income grew by $284 thousand, or 10.2% compared to prior quarter.
- Total assets as of quarter-end were $291.3 million.
- There were no non-accrual loans or past-due loans greater than 30-days as of quarter-end.
- Capital levels as of September 30, 2022, remained strong with a leverage ratio of 11.30%.
“Net interest income growth was strong during the third quarter driven by both loan growth and higher interest rates,” said Terry Peterson, Chief Executive Officer. “Our results reflect the accelerating endorsement from the Portland business community that demands local decisioning from experienced bankers, delivering a client-focused service model.”
Loan interest income for the first nine months of 2022 grew by $1.5 million, or 30.5%, when compared to the same period in 2021. Investment interest income for the first nine months of 2022 grew by $696 thousand, or 145.3%, when compared to the same period in 2021. Year-to-date loan fees recognized show a negative variance of $1.0 million, or 53.4%, from 2021 due to non-recurring fees related to the Bank’s participation in the Small Business Administration’s Payment Protection Program (PPP).
Total assets were $291.3 million as of September 30, 2022, a 6.0% increase compared to year-end 2021. Investments increased by 41.9%, or $15.1 million, as excess cash balances were deployed into debt securities. Core loans, net of PPP totaled $196.0 million, an increase of $22.6 million, or 13.1%, compared to year-end 2021 totals. Loan growth was driven by $60.3 million in loan commitments originated in the first nine months of 2022. During the third quarter of 2022, core loans grew by $13.1 million, or by 7.2%. There were no loans past-due greater than 30 days, or on non-accrual status as of September 30, 2022. The Bank continues to diligently monitor the loan portfolio as market interest rates increase.
As index interest rates have risen, there has been improvement in net interest margin by 52 basis points, from 3.51% for the first nine months of 2021, compared to 4.03% for the first nine months of 2022. The increase in margin was partially driven by earnings from investments, which were up 145.3% when compared to the same period in 2021. While the rise in index interest rates has improved the Bank’s earnings and net interest margin, the change has also caused a negative accounting adjustment to equity of $3.7 million, due to marking the investment portfolio to market value. These adjustments are being experienced industry wide, and the Bank does not expect to realize any losses related to this accounting adjustment.
Deposits totaled $250.6 million as of September 30, 2022, which represents an increase of $18.5 million, or 7.9%, compared to $232.1 million as of June 30, 2022. The Bank continues to focus on growing non-interest-bearing deposits, which grew $11.7 million, or 13%, during the quarter. Deposit growth for the first nine months of 2022 was 8.37%, or $19.3 million. Rising market index interest rates have caused headwinds for deposit growth and have caused the cost of funds to increase during the quarter.
“During the quarter we were proud to promote seasoned bankers to leadership positions in the Bank, including Jim Wilcox as Director of Commercial Real Estate, Eric Deisler and Andy Bennett as Commercial Lending Team Leads, and Kyle Baisch as Commercial Banking Team Lead,” said Jason Wessling, President and CFO. “Our growth has provided an opportunity to promote talented leaders within our organization.”
