CORNELIUS, N.C., April 25, 2016 (GLOBE NEWSWIRE) — Aquesta Financial Holdings, Inc and subsidiaries – including its primary subsidiary Aquesta Bank (“Aquesta”) (OTC Market symbol AQFH) announced today net income for the first quarter of 2016 (three month period ending March 31, 2016). For the first quarter, Aquesta had unaudited net income of $368,000 (12 cents per share) compared to first quarter of 2015 net income of $500,000 (16 cents per share).
Jim Engel, CEO and President of Aquesta, said “I’m very pleased with our loan growth that far exceeds industry norms and I’m also satisfied Aquesta was able to achieve this growth with minimal impact on continuing earnings. We recently hired our Charlotte City Executive and increased our presence in the Wilmington market with an experienced lender. These additional resources should help us to continue our rapid growth of loans and deposits.”
Key Highlights
- Excellent loan growth of $9.8 million in the first quarter of 2016. Annualized this is an increase of 20%
- Solid asset quality with only one nonperforming loan
- Low levels of foreclosed property (OREO)
- Recent expansion in the Charlotte market with a branch in SouthPark that opened in July of 2015
- Wilmington branch expected to open in mid-2016
Excellent Balance Sheet Growth
At March 31, 2016, Aquesta’s total assets were $319.0 million compared to $293.0 million at December 31, 2015. This represents an annualized increase of 35.4%. Total loans were $205.4 million at March 31, 2016 compared to $195.6 million or a 20.0% annualized increase. Core deposits were $150.5 million at March 31, 2016 compared to $147.4 million at December 31, 2015. This represents an annualized increase of 8.4% over December 31, 2015, respectively. Engel stated “With Aquesta’s strategy to balance growth and earnings, we continue to see strong loan demand and growing deposits in our new markets.”
Strong Asset Quality
Asset quality remains very strong. Nonperforming assets increased to $2.9 million at March 31, 2016 from $900 thousand at December 31, 2015. The increase was due to one loan which was put on nonaccrual in the first quarter of 2016. Aquesta had $2.1 million in nonaccrual loans as of March 31, 2016 compared to no nonaccrual loans as of December 31, 2015. Other real estate owned was $783 thousand at March 31, 2016 down from $900 thousand as of December 31, 2015. Engel noted, “Asset quality remains very strong despite a single customer having financial difficulty. We don’t see a negative trend and, in fact, continue to see strength as we continue to decrease foreclosed property and experience strong loan demand.”
Net Interest Income
Net interest income was $2.6 million as of March 31, 2016 compared to $2.3 million as of March 31, 2015. This is an increase of $185 thousand or 7.9%. The first quarter of 2016 was negatively impacted by $35 thousand for the reversal of accrued interest income for the loan that was put on nonaccrual. In addition, Aquesta funded a majority of its loan growth at the end of the quarter and thus did not realize the positive effects of this growth. We anticipate the net interest income to increase for these loans specifically by about $90 thousand per quarter going forward.
Non Interest Expense
Non-interest expense was $3.0 million for the first quarter of 2016 compared to $2.3 million for the first quarter of 2015. The increase in expense was due to additional personnel and occupancy costs associated with the new SouthPark branch and continued expansion in the Charlotte market.
Personnel expense was $1.8 million for the first quarter of 2016 compared to $1.5 million for the first quarter of 2015. The number of employees has increased by 20 from 63 as of March 31, 2015 to 83 as of March 31, 2016 or 32%.
Occupancy expense increased $71 thousand for the first quarter of 2016 compared to the first quarter of 2015 mainly due to the addition of the SouthPark branch. In addition, Aquesta had losses on OREO of $84 thousand for the quarter primarily due to a market write down of the Bank’s remaining foreclosed property.
Jim Engel notes, “Expansion costs must be incurred prior to revenue recognition. For example, the bank’s investment in lenders is always a loss leader until such time as the related loan portfolio grows enough to cover the associated payroll costs. Based on our recent extraordinary loan growth, I believe the growth in interest income will more than offset the increase in non-interest expense in the near-term.”
Below are the following financial highlights for comparison:
| Aquesta Financial Holdings, Inc. | ||||||||||
| Select Financial Highlights | ||||||||||
| (Dollars in thousands, except per share data) | ||||||||||
| 3/31/2016 | 12/31/2015 | |||||||||
| (unaudited) | (audited) | |||||||||
| Period End Balance Sheet Data: | ||||||||||
| Loans | $ | 205,371 | $ | 195,638 | ||||||
| Less: Allowance for loan losses | 2,591 | 2,561 | ||||||||
| Investment securities | 72,080 | 65,275 | ||||||||
| Goodwill | 687 | 687 | ||||||||
| Insurance agency intangible | 2,051 | 1,067 | ||||||||
| Total assets | 318,980 | 293,065 | ||||||||
| Core deposits | 150,494 | 147,435 | ||||||||
| CDs and IRAs | 67,175 | 64,458 | ||||||||
| Shareholders equity | 23,357 | 23,461 | ||||||||
| Ending shares outstanding* | 3,048 | 3,048 | ||||||||
| Book value per share* | 7.66 | 7.70 | ||||||||
| Tangible book value per share* | 6.76 | 7.12 | ||||||||
| * For the purposes of consistency, share data was adjusted to 3,048,170 shares after 20% stock dividend in February 2016. | ||||||||||
| For the three months ended | ||||||||||
| 3/31/2016 | 3/31/2015 | |||||||||
| (unaudited) | (audited) | |||||||||
| Income and Per Share Data: | ||||||||||
| Interest income | $ | 2,927 | $ | 2,683 | ||||||
| Interest expense | 412 | 353 | ||||||||
| Net interest income | 2,515 | 2,330 | ||||||||
| Provision for loan losses | 25 | 20 | ||||||||
| Net interest income after | ||||||||||
| provision for loan losses | 2,490 | 2,310 | ||||||||
| Non interest income | 1,060 | 841 | ||||||||
| Non interest expense | 3,004 | 2,347 | ||||||||
| Income before income taxes | 546 | 804 | ||||||||
| Income tax expense | 178 | 304 | ||||||||
| Net income | $ | 368 | $ | 500 | ||||||
| Earnings per share – basic* | $ | 0.12 | $ | 0.16 | ||||||
| Earnings per share – diluted* | 0.11 | 0.16 | ||||||||
| Weighted average shares – basic* | 3,048,170 | 3,048,170 | ||||||||
| Weighted average shares – diluted* | 3,240,406 | 2,165,441 | ||||||||
| Select performance ratios: | ||||||||||
| Return on average assets | 0.48 | % | 0.76 | % | ||||||
| Return on average equity | 6.29 | % | 8.75 | % | ||||||
| Net interest margin | 3.67 | % | 3.93 | % | ||||||
| 03/31/2016 | 12/31/2015 | |||||||||
| (unaudited) | (audited) | |||||||||
| Asset quality data: | ||||||||||
| 90 days or more and accruing | $ | – | $ | – | ||||||
| Non accrual loans | 2,112 | – | ||||||||
| Other real estate loans | 783 | 900 | ||||||||
| Total non performing assets | 2,895 | 900 | ||||||||
| Troubled debt restructurings | $ | 262 | $ | 277 | ||||||
| Non performing assets / total assets | 0.91 | % | 0.31 | % | ||||||
| Allowance for loan losses / total loans | 1.26 | % | 1.31 | % | ||||||
Aquesta Financial Holdings, Inc is the holding company to its wholly owned subsidiary, Aquesta Bank and Aquesta Insurance Services, Inc.
For additional information, please contact Kristin Couch (Executive Vice President and Chief Financial Officer) at 704-439-4343 or visit us online at www.aquesta.com.
Information in this press release may contain forward looking statements that might involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, and changes in interest rates.