SAINT JOSEPH, Mich., Oct. 26, 2018 (GLOBE NEWSWIRE) — Edgewater Bancorp, Inc. (EGDW) announced year-to-date September 30, 2018 net income of $1,027,708, or $1.59 per share, compares favorably to net income of $313,889 or $0.50 per share, for the third quarter of 2017, representing a 227% increase in net income. Return on Average Equity (annualized) was 9.44% at September 30, 2018 compared to 3.52% for December 31, 2017 and Return on Average Assets (annualized) was .88% compared to .32%. President & CEO Richard Dyer indicated, “The organization’s financial results continue to exceed previous years’ results due to the growth in the balance sheet, especially the commercial loan portfolio and the investment portfolio.”
Total interest income for the first three quarters of 2018 increased $638,542, or 15.8%, to $4.7 million from $4.1 million during the first three quarters of 2017. Offsetting the increase in interest income is a $108,187, or 21.4% increase in interest expense, attributed to higher market-based deposit rates and an $8.2 million increase in total deposit balances and FHLB advances from December 31, 2017 to September 30, 2018. Dyer said, “Competitive pressures and overall interest rate trends have pushed funding rates higher in the past several months however, the overall impact of volume and market interest rates on the organization’s net interest income is a $530,355, or 15.0% increase through the first nine months of 2018 versus the first nine months of 2017.”
The provision for loan losses of $80,000 at September 30, 2018 is twice the level it was for the same period in 2017. The increase is due to loan portfolio growth, not a deterioration of asset quality.
Non-interest income (primarily the gain on sale of residential mortgage loans) decreased $54,612 for the first nine months of 2018 compared to the first nine months of 2017. The drop is a result of the slower residential mortgage loan market.
Total non-interest expense increased 30.5% from $3.9 million at September 30, 2017 to $5.1 million at September 30, 2018, however $1.2 million, or almost the entire increase, is due to a one-time defined benefit plan contribution made during the second quarter of 2018. Without the one-time expense, total non-interest expense has been flat even with balance sheet growth.
Edgewater’s income tax benefit is the result of a $1.4 million reversal of the total $1.9 million deferred tax asset valuation reserve that was recognized during the second quarter of 2018. The reversal more than offsets the $1.2 million defined benefit plan expense.
The loan portfolio, investment portfolio, and deposit growth resulted in an increase in Edgewater’s balance sheet with consolidated total assets increasing from $156.4 million at December 31, 2017 to $168.9 million at September 30, 2018. Total deposits grew from $137.6 million at December 31, 2017 to $142.8 million at September 30, 2018, or 3.8%, while Federal Home Loan Bank advances increased from $4.0 million to $7.0 million over the same time frame for loan funding, liquidity, and interest rate management purposes. The overall growth of the balance sheet was 8.0% from December 31, 2017 to September 30, 2018.
Total equity increased to $14.9 million as of September 30, 2018, with Edgewater’s Tier 1 capital ratio improving from 9.01% at December 31, 2017 to 9.64% at September 30, 2018.
Based in Saint Joseph, Michigan, Edgewater Bancorp is the bank holding company for Edgewater Bank. Edgewater provides commercial, mortgage, and consumer loan and deposit banking services from 5 banking offices in St. Joseph, Bridgman, Buchanan, Coloma, and Royalton Township. Edgewater Bancorp’s common stock is listed under the symbol “EGDW.”
This news release contains comments or information that constitute forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations that involve a number of risks and uncertainties. Actual results may differ materially from the results expressed in forward-looking statements. Factors that might cause such a difference include changes in interest rates and interest rate relationships; demand for products and services; the degree of competition by traditional and nontraditional competitors; changes in banking regulation or actions by bank regulators; changes in tax laws; changes in prices, levies, and assessments; the impact of technological advances; governmental and regulatory policy changes; the outcomes of contingencies; trends in customer behavior as well as their ability to repay loans; changes in local real estate values; changes in the national and local economies; and other factors. Edgewater undertakes no obligation to update or clarify forward-looking statements, whether as a result of new information, future events or otherwise.
Edgewater Bancorp, Inc.
EVP & Chief Financial Officer