Net Interest Margin Up 22% QoQ
PHOENIX, Oct. 29, 2024 (GLOBE NEWSWIRE) -- RBAZ Bancorp, Inc. (OTCIQ: RBAZ) (the “Company”), parent company of Republic Bank of Arizona (the “Bank” or “RBAZ”), announced a consolidated net income of $981,000, or $0.55 per share, for the quarter ended September 30, 2024 and $2,586,000, or $1.45 per share, for the nine months ended September 30, 2024 as compared to a consolidated net income of $748,000, or $0.41 per share, for the quarter ended September 30, 2023 and $1,771,000, or $0.98 per share, for the nine months ended September 30, 2023.
President and CEO Brian Ruisinger stated “I am pleased with our strong Q3 earnings performance as we achieved a 22% increase in our net interest margin while the increase in overhead costs was nominal at 2% from the year ago quarter. Net interest margin was bolstered by premium loan pricing that more than offset the increase in cost of deposits over the same period. Additionally, non-interest income was up 26% over the same quarter from a year ago. RBAZ experienced a surge in loan growth in Q3, which necessitated a commensurate increase in our allowance for credit losses, driving the provision expense recorded for the quarter.”
Mr. Ruisinger continued, “During the quarter, the Federal Reserve executed its first rate cut in over four years. As a result of this signaling from the Fed, we have seen both loan and deposit rates begin to drop in the Phoenix market. RBAZ management closely monitors our peer and competitor banks and will adjust rates accordingly to remain competitive in our market while maintaining a healthy net interest margin.”
Mr. Ruisinger concluded, “At a Special Shareholder meeting held on August 22nd, shareholders approved the transaction to join forces with Pima Federal Credit Union, headquartered in Tucson, AZ, that was announced on May 16th of this year. Our coming together will create a premier banking experience in Maricopa County as RBAZ’s commercial expertise will be combined with Pima’s strength in consumer products. This proposed transaction is a great outcome for our loyal shareholders and customers and is pending regulatory approval. Additional information will be provided once approvals are obtained, and a closing date is established.”
September 30, 2024 Company Highlights Include:
- Total loans of $216,451,000 increased $14,622,000, or 7.2%, from December 31, 2023. This increase consisted of $40,976,000 in new loan originations and advances on construction lines of credit, offset by $25,879,000 in loan maturities and participations sold. Advances and repayments on commercial lines of credit and normal payment attrition comprise the balance of the loan activity in the first three quarters of 2024.
- Total deposits of $259,902,000 increased $31,730,000, or 13.9%, from December 31, 2023 and related entirely to core deposit generation. The increase in core deposits was the result of deepening of existing relationships and cultivation of new banking relationships. Liquidity continues to be a top priority for the remainder of 2024.
- Total interest income increased $694,000 to $4,653,000 for the quarter ended September 30, 2024 outpacing total interest income of $3,959,000 for the same period of the prior year equating to an increase of 17.5%.
- Cost of deposits increased to 2.11% for the quarter ended September 30, 2024 from 1.93% for the quarter ended September 30, 2023 representing an increase of 18 basis points. For two consecutive quarters, the increase in cost of deposits over the prior year comparative quarter has been at a declining rate evidencing stabilization in the interest rate environment.
- Total non-interest expense increased $45,000 to $1,881,000 for the quarter ended September 30, 2024 compared to $1,836,000 for the same period of the prior year resulting primarily from additional full-time employees and the addition of the new Scottsdale branch and conversion of the existing location to an administrative office, all of which took place in Q4 2023.
The Bank remains “Well Capitalized” under the Community Bank Leverage Ratio (CBLR) framework as follows:
| September 30, 2024 (%) | Ratio to be Well Capitalized (%) | ||
| CBLR ratio | 10.67 | 9.00 | |
About the Company
RBAZ Bancorp, Inc. was established on June 10, 2021 as a single-bank holding company for its Arizona state-chartered bank subsidiary, Republic Bank of Arizona. The Company is traded over-the-counter as RBAZ.
About the Bank
Republic Bank of Arizona is a locally owned, community bank in Phoenix, Scottsdale and Gilbert, Arizona. RBAZ is a full service, community bank providing deposit and loan products and convenient, online and mobile banking to individuals, businesses and professionals. The Bank was established in April 2007 and is headquartered at 645 E. Missouri Avenue, Suite 108, Phoenix, AZ. Additional branches are located at 7373 N. Scottsdale Road, Suite A-195, Scottsdale, AZ and 1417 W. Elliot Road, Gilbert, AZ. The Bank is the wholly-owned subsidiary of RBAZ Bancorp, Inc. For further information, please visit our web site: www.republicbankaz.com.
Forward-Looking Statements
This press release may include forward-looking statements about the Company and the Bank (collectively referred to herein as the “Company”), for which the Company claims the protection of safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on management’s knowledge and belief as of today and include information concerning the Company’s possible or assumed future financial condition, and its results of operations and business. Forward-looking statements are subject to risks and uncertainties. Several important factors could cause actual results to differ materially from those in the forward-looking statements. Those factors include fluctuations in interest rates, government policies and regulations (including monetary and fiscal policies), legislation, economic conditions, borrower capacity to repay, operational factors and competition in the geographic and business areas in which the Company conducts its operations. All forward-looking statements included in this press release are based on information available at the time of the release, and the Company assumes no obligation to update any forward-looking statement.
| Summary Company Financial Information (unaudited) | |||||
| For the three months ended September 30, | For the nine months ended September 30, | Year-End | |||
| 2024 | 2023 | 2024 | 2023 | 2023 | |
| (dollars in thousands, except per share data) | |||||
| Summary Income Data: | |||||
| Interest income | $4,653 | $3,959 | $13,321 | $10,393 | $14,208 |
| Interest expense | 1,469 | 1,346 | 4,467 | 3,383 | 4,742 |
| Net interest income | 3,184 | 2,613 | 8,854 | 7,010 | 9,466 |
| Provision for credit losses | 269 | - | 394 | - | - |
| Non-interest income | 246 | 196 | 722 | 601 | 820 |
| Non-interest expense | 1,881 | 1,836 | 5,810 | 5,285 | 7,142 |
| Income before provision for income tax | 1,280 | 973 | 3,372 | 2,326 | 3,144 |
| Provision for income tax | 299 | 225 | 786 | 555 | 684 |
| Net income | $981 | $748 | $2,586 | $1,771 | $2,460 |
| Per Share Data: | |||||
| Shares outstanding end-of-period | 1,779 | 1,831 | 1,779 | 1,831 | 1,795 |
| Earnings per common share | $0.55 | $0.41 | $1.45 | $0.98 | $1.36 |
| Diluted earnings per common share | $0.52 | $0.40 | $1.36 | $0.96 | $1.33 |
| Book value per share | $13.56 | $10.73 | $13.56 | $10.73 | $11.77 |
| Selected Balance Sheet Data: | |||||
| Total assets | $291,765 | $285,627 | $291,765 | $285,627 | $272,044 |
| Securities available-for-sale, at fair value | 34,746 | 36,318 | 34,746 | 36,318 | 40,998 |
| Securities held-to-maturity | 9,850 | 10,907 | 9,850 | 10,907 | 10,648 |
| Loans | 216,451 | 187,117 | 216,451 | 187,117 | 201,829 |
| Allowance for credit losses | 2,290 | 2,116 | 2,290 | 2,116 | 2,116 |
| Deposits | 259,902 | 257,997 | 259,902 | 257,997 | 228,172 |
| Other borrowings | 5,951 | 5,921 | 5,951 | 5,921 | 20,929 |
| Shareholders’ equity | 24,123 | 19,646 | 24,123 | 19,646 | 21,128 |
| Performance Ratios: | |||||
| Return on average shareholders’ equity (annualized) (%) | 16.27 | 15.23 | 14.29 | 12.02 | 11.64 |
| Net interest margin (%) | 4.48 | 3.76 | 4.24 | 3.65 | 3.68 |
| Average assets | $292,192 | $283,605 | $290,218 | $264,252 | $264,488 |
| Return on average assets (annualized) (%) | 1.34 | 1.05 | 1.19 | 0.89 | 0.93 |
| Shareholders’ equity to assets (%) | 8.27 | 6.88 | 8.27 | 6.88 | 7.77 |
| Efficiency ratio (%) | 54.84 | 65.36 | 60.67 | 69.44 | 69.43 |
| Asset Quality Data: | |||||
| Nonaccrual loans | $387 | $219 | $387 | $219 | $209 |
| Loan modifications to borrowers experiencing financial difficulty | $- | $54 | $- | $54 | $- |
| Other real estate owned | $- | $- | $- | $- | $- |
| Nonperforming loans | $387 | $219 | $387 | $219 | $209 |
| Nonperforming loans to total assets (%) | 0.13 | 0.08 | 0.13 | 0.08 | 0.08 |
| Nonperforming loans to total loans (%) | 0.18 | 0.12 | 0.18 | 0.12 | 0.10 |
| Allowance for credit losses to total loans (%) | 1.06 | 1.13 | 1.06 | 1.13 | 1.05 |
| Allowance for credit losses to nonperforming loans (%) | 591.73 | 966.21 | 591.73 | 966.21 | 1,012.44 |
| Net charge-offs (recoveries) for period | $141 | $- | $164 | ($352) | ($352) |
| Average loans | $213,008 | $183,063 | $204,992 | $171,002 | $176,146 |
| Ratio of net charge-offs (recoveries) to average loans (%) | 0.07 | n/a | 0.08 | (0.21) | (0.20) |
