First Quarter 2025 Highlights
Net Income - $2.3 million
Bank Net Income - $2.6 million
TBVPS quarter - $11.06
Diluted EPS- $0.31
SCOTTSDALE, AZ / ACCESS Newswire / May 30, 2025 / Bancorp 34, Inc. (OTCQB:BCTF), the parent company for Southwest Heritage Bank, together, the "Company" reports first quarter of 2025 performance.
Management Comments - Ciaran McMullan, Chairman & CEO
Successfully completed merger with Commerce Bank of Arizona in March 2024, rebranding as Southwest Heritage Bank.
Immediately appointed new leadership with large bank experience, and expertise in turnarounds, organic growth, and M&A.
Restructured and de-risked the legacy Bank 34 loan portfolio by exiting $70.5 million in non-relationship, out-of-market, low yielding loans during 2024 - contributing to a 9.8% post-merger decline in total loans.
As part of a post-merger talent realignment, reduced our loan officer count by five (38%) to enable the recruitment of more seasoned lenders capable of originating larger, primarily C&I loans.
Our balance sheet is now repositioned for growth, supported by robust levels of capital, liquidity, and reserves, with capacity to expand across all lending categories.
Reported our first positive loan growth quarter since the merger and set to capitalize on Arizona's recent banking consolidation, and our unique position as the largest locally headquartered community bank.
1Q25 Highlights (Compared to 4Q24)
Net Income and NIM
Net Income includes $350,000 of debt interest expense at an average rate of 4.9% and was positively impacted by a one-time recovery of $1.5 million.
NIM declined slightly primarily due to market rate declines while the cost of funds improved by 6 basis points.
Non-interest expense improved by $1.6 million (19%) primarily due to a reduction in salary costs and one-time costs recognized in Q4.
Balance Sheet
Total assets increased by $26 million, driven by deposit growth of $22 million.
Deposit mix improved, non-maturity deposits increased ~$40 million, CD balances declined ~$18 million.
Total loans grew by a modest $0.5 million.
Asset Quality
NPA2 improved modestly by 3 basis points, and we continued to maintain a reserve position of 1.50%.
ACL recovery of $1.5 million was repayment of a commercial loan charged off in 2022.
Capital
TBVPS increased by $0.52 during the quarter and by $1.20 post-merger, with $0.18 due to AOCI
Tier 1 Leverage Ratio of 11.10%
Performance Metrics |
|
|
1Q25 |
|
|
|
4Q24 |
|
|
Bank Only 1Q25 |
|
|
ROATA |
|
|
1.01 |
% |
|
|
0.06 |
% |
|
|
1.13 |
% |
ROATE |
|
|
11.67 |
% |
|
|
0.74 |
% |
|
|
10.81 |
% |
Core1 ROATA |
|
|
0.35 |
% |
|
|
0.34 |
% |
|
|
0.47 |
% |
Core1 ROATE |
|
|
4.11 |
% |
|
|
3.91 |
% |
|
|
4.37 |
% |
Net Interest Margin |
|
|
3.63 |
% |
|
|
3.70 |
% |
|
|
3.73 |
% |
Cost of Funds |
|
|
2.70 |
% |
|
|
2.76 |
% |
|
|
2.61 |
% |
Overhead Ratio |
|
|
2.79 |
% |
|
|
3.46 |
% |
|
|
2.75 |
% |
Efficiency Ratio |
|
|
81.98 |
% |
|
|
97.58 |
% |
|
|
77.40 |
% |
NPA2 |
|
|
0.27 |
% |
|
|
0.30 |
% |
|
|
0.27 |
% |
ACL to Total Loans |
|
|
1.50 |
% |
|
|
1.50 |
% |
|
|
1.50 |
% |
1 - Excludes merger related accretion and amortization, as well as material non-recurring income and expense items.
2 - NPA is non-performing assets as a % of total assets, net of government guarantees.
|
Income Statement
(000s except EPS)
|
|
|
1Q25 |
|
|
|
4Q24 |
|
|
Bank Only 1Q25 |
|
|
Net Interest Income |
|
$ |
8,020 |
|
|
$ |
8,269 |
|
|
$ |
8,343 |
|
Non-interest Income |
|
$ |
265 |
|
|
$ |
349 |
|
|
$ |
265 |
|
Non-interest Expense |
|
$ |
6,792 |
|
|
$ |
8,409 |
|
|
$ |
6,676 |
|
Pre-tax Pre-Provision |
|
$ |
1,493 |
|
|
$ |
209 |
|
|
$ |
1,931 |
|
Provision Expense |
|
$ |
-1,500 |
|
|
$ |
-41 |
|
|
$ |
-1,500 |
|
Tax Expense |
|
$ |
685 |
|
|
$ |
101 |
|
|
$ |
794 |
|
Net Income |
|
$ |
2,308 |
|
|
$ |
149 |
|
|
$ |
2,637 |
|
Core Net Income |
|
$ |
813 |
|
|
$ |
784 |
|
|
$ |
1,067 |
|
Diluted Earnings per Share |
|
$ |
0.31 |
|
|
$ |
0.06 |
|
|
|
N/A |
|
Balance Sheet (in 000s) |
|
|
1Q25 |
|
|
|
4Q24 |
|
|
Bank Only 1Q25 |
|
|
Total Assets |
|
$ |
943,639 |
|
|
$ |
918,095 |
|
|
$ |
940,015 |
|
Total Loans |
|
$ |
676,612 |
|
|
$ |
676,092 |
|
|
$ |
676,612 |
|
Total Deposits |
|
$ |
814,255 |
|
|
$ |
792,567 |
|
|
$ |
817,954 |
|
Total Capital |
|
$ |
90,057 |
|
|
$ |
86,515 |
|
|
$ |
109,041 |
|
TBVPS |
|
$ |
11.06 |
|
|
$ |
10.54 |
|
|
|
N/A |
|
ABOUT BANCORP 34, INC. - Bancorp 34 is the holding company for Southwest Heritage Bank. The bank's headquarters are located at 8777 East Hartford Drive, Suite 100, Scottsdale, Arizona 85255. In addition, we operate seven full-service community bank branches, two in Maricopa County, Arizona, in the cities of Scottsdale and Gilbert; three in Pima County, Arizona, in the cities of Tucson and Green Valley; one branch in Otero County, New Mexico in the city of Alamogordo; and one branch in Dona Ana County New Mexico, in the city of Las Cruces.
FORWARD-LOOKING STATEMENTS - Certain statements herein constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may be identified by words such as "believes," "will," "expects," "project," "may," "could," "developments," "strategic," "launching," "opportunities," "anticipates," "estimates," "intends," "plans," "targets" and similar expressions. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may differ materially from those set forth in the forward-looking statements as a result of numerous factors. Factors that could cause such differences to exist include, but are not limited to, general economic conditions, changes in interest rates, the effects of any health pandemic, regulatory considerations, competition and the other risks. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Forward-looking statements speak only as of the date they are made, and we assume no obligation to update any of these statements in light of new information, future events or otherwise unless required under federal securities laws.
NON-GAAP FINANCIAL MEASURES - Some of the financial measures included in this release are not measures of financial performance recognized in accordance with generally accepted accounting principles in the United States ("GAAP"). These non-GAAP financial measures include: (i) core net income; (ii) core net interest margin; (iii) core ROAA; (iv) core ROAE (v) core ROATA; (vi) core ROATE; (vii) core NIE to average assets; and (viii) core efficiency ratio. We believe these non-GAAP financial measures provide investors and management with a more complete understanding of our financial position and performance. These non-GAAP financial measures are supplemental and are not a substitute for any analysis based on GAAP financial measures. Not all companies use the same calculation of these measures; therefore, this presentation may not be comparable to other similarly titled measures as presented by other companies. A reconciliation of our non-GAAP financial measures to the comparable GAAP financial measures is included at the end of the financial statement tables.
Select Financial Ratios |
|
|
1Q25 |
|
|
|
4Q25 |
|
|
Bank 1Q25 |
|
|
Return on Average Assets (ROAA) |
|
|
1.00 |
% |
|
|
0.06 |
% |
|
|
1.12 |
% |
Core ROAA |
|
|
0.35 |
% |
|
|
0.32 |
% |
|
|
0.46 |
% |
Return on Average Tangible Assets (ROATA) |
|
|
1.01 |
% |
|
|
0.06 |
% |
|
|
1.13 |
% |
Core ROATA |
|
|
0.36 |
% |
|
|
0.33 |
% |
|
|
0.47 |
% |
Return on Average Equity (ROAE) |
|
|
10.63 |
% |
|
|
0.68 |
% |
|
|
10.05 |
% |
Core ROAE |
|
|
3.77 |
% |
|
|
3.56 |
% |
|
|
4.07 |
% |
Return on Average Tangible Equity |
|
|
11.67 |
% |
|
|
0.74 |
% |
|
|
10.81 |
% |
Core ROATE |
|
|
4.15 |
% |
|
|
4.06 |
% |
|
|
4.37 |
% |
Noninterest Expense (NIE) to Average Assets |
|
|
2.90 |
% |
|
|
3.61 |
% |
|
|
2.86 |
% |
Core NIE to Average Assets |
|
|
2.64 |
% |
|
|
2.60 |
% |
|
|
2.64 |
% |
Efficiency Ratio |
|
|
81.98 |
% |
|
|
97.58 |
% |
|
|
77.14 |
% |
Core Efficiency Ratio |
|
|
86.06 |
% |
|
|
85.14 |
% |
|
|
82.14 |
% |
Overhead Ratio |
|
|
2.79 |
% |
|
|
3.46 |
% |
|
|
2.75 |
% |
Net Interest Margin |
|
|
3.63 |
% |
|
|
3.70 |
% |
|
|
3.73 |
% |
Core Net Interest Margin |
|
|
3.10 |
% |
|
|
3.17 |
% |
|
|
3.23 |
% |
Cost of Funds |
|
|
2.70 |
% |
|
|
2.76 |
% |
|
|
2.61 |
% |
Earnings Per Share (EPS) |
|
$ |
0.31 |
|
|
$ |
0.06 |
|
|
|
N/A |
|
Diluted EPS |
|
$ |
0.31 |
|
|
$ |
0.06 |
|
|
|
N/A |
|
Credit Quality3
|
|
|
1Q25 |
|
|
|
4Q25 |
|
Total Classified Loans |
|
$ |
10,632 |
|
|
$ |
11,416 |
|
Classified - Accrual Loans |
|
$ |
8,106 |
|
|
$ |
8,711 |
|
Classified - Non-Accrual Loans |
|
$ |
2,526 |
|
|
$ |
2,705 |
|
Non-Performing Assets |
|
$ |
2,526 |
|
|
$ |
2,705 |
|
Total Classified / Total Loans |
|
|
1.57 |
% |
|
|
1.69 |
% |
Adversely Classified Items/Total Capital |
|
|
9.45 |
% |
|
|
10.22 |
% |
Period |
|
|
GAAP Net Income |
|
|
Non-recurring interest income or expense |
|
|
Loan Accreted Income |
|
|
CDI Amortized Expense |
|
|
Other Non-Recurring Items4 |
|
|
Non-GAAP Core Net Income |
|
||||||
1Q25 |
|
|
$ |
2,308 |
|
|
$ |
-10 |
|
|
$ |
-1,103 |
|
|
$ |
414 |
|
|
$ |
-1,294 |
|
|
$ |
813 |
|
4Q24 |
|
|
$ |
149 |
|
|
$ |
-125 |
|
|
$ |
-1,112 |
|
|
$ |
447 |
|
|
$ |
1,637 |
|
|
$ |
784 |
|
1Q25 Bank |
|
|
$ |
2,637 |
|
|
$ |
-10 |
|
|
$ |
-1,103 |
|
|
$ |
414 |
|
|
$ |
-1,394 |
|
|
$ |
1,067 |
|
3 - Classified and non-performing assets are net of government guarantees
4 - Includes ACL reverse provision
Contact: Kevin Vaughn
Chief Financial Officer
(623) 334-6064
BCTF@swhb.com
SOURCE: Southwest Heritage Bank
View the original press release on ACCESS Newswire
