Aquesta Financial Holdings, Inc Announces Results of
CORNELIUS, NC, October 21, 2020 (GLOBE NEWSWIRE) – Aquesta Financial Holdings, Inc and its subsidiaries (“Aquesta”) (OTC market symbol AQFH) – including its subsidiary Aquesta Bank today announced net income third quarter 2020 (three month period ending September 30, 2020). For the third quarter of 2020, Aquesta achieved unaudited net income of $ 1.1 million (20 cents per share) compared to net income of $ 1.0 million (19 cents per share) in the third quarter of 2019. Thus, profits increased by 10.7% for the third quarter of 2020 compared to the third quarter of 2019.
Jim Engel, CEO and President of Aquesta, said: “Despite the continued economic uncertainty caused by the COVID-19 pandemic, at Aquesta we experienced another quarter of solid growth in earnings, core deposits and ready. In addition to our strong performance, we continue to focus on serving our communities and our customers. Specifically, after actively participating in the Payroll Protection Program (“PPP”) earlier in the year, we are now focused on helping our remaining 1,052 PPP clients request the cancellation of their loans as well. only to help all of our customers in any way possible. We look to continue our commitment to service and strong performance as we approach the end of 2020. ”
Highlights
- Total loan growth of $ 163.4 million for the first nine months of 2020. Loan growth is mainly due to PPP loans as Aquesta has focused its resources on helping our communities. The increase in the total loan portfolio size associated with these PPP loans is expected to be temporary and will decrease as the PPP loans are canceled and / or repaid. However, organic loan growth was strong in the third quarter of 2020, with the net increase in non-PPP loans amounting to $ 21.1 million.
- Total growth in core deposits of $ 100.0 million for the first nine months of 2020 (annualized rate of 35.7 percent). The growth in core deposits is driven by the large number of new customer deposits brought to Aquesta through PPP loans and organic growth.
- Profit growth for the third quarter of 2020 increased by 10.7% compared to the third quarter of 2019.
- Received FDIC approval to open a branch in Mount Pleasant, SC.
Strong balance sheet growth
As of September 30, 2020, Aquesta’s total assets were $ 685.0 million, compared to $ 523.0 million as of December 31, 2019. Total loans amounted to $ 578.5 million as of September 30, 2020, compared to $ 415.1 million as of December 31, 2019. Loan growth in 2020 is mainly due to PPP. loans, which totaled $ 146.3 million as of September 30, 2020. However, organic loan growth continues to improve, with the net increase in non-PPP loans reaching $ 21.1 million in the third quarter of 2020 Base deposits amounted to $ 473.6 million as of September 30, 2020, compared to $ 373.6 million as of December 31, 2019.
Asset quality
Non-performing assets stood at $ 7.9 million as at September 30, 2020, compared to $ 1.2 million as at December 31, 2019. Aquesta had $ 7.9 million in unrecognized loans as at September 30, 2020, compared to 1 , $ 2 million as at December 31, 2019. The increase in non-performing assets and unrecognized loans is mainly due to a low concentration of customers. Aquesta did not own any other real estate (ie “OREO” or seized property) at the end of 3e quarter 2020 or at the end of 4e quarter 2019.
Net interest income
Net interest income was $ 13.8 million for the nine-month period ended September 30, 2020, compared to $ 12.3 million for the nine-month period ended September 30, 2019. It This is an increase of $ 1.5 million or 12.4%. The increase in net interest income is associated with an increased reliance on lower cost core deposits replacing higher cost funding. In addition, Aquesta was able to accumulate $ 876,000 in PPP fees in interest income for PPP loans held during the quarter. Aquesta has deferred $ 3.2 million in PPP commission income which will be accrued in subsequent quarters as the PPP loans are canceled or repaid.
Allowance for loan losses
The allowance for loan losses was $ 1.5 million for the nine-month period ended September 30, 2020, compared to $ 340,000 for the nine-month period ended September 30, 2019. These are ” an increase of $ 1.2 million. The increase is due to the ongoing COVID-19 pandemic and management’s estimate of potential losses in the loan portfolio.
The ALLL / total loans ratio is 0.89% as of September 30, 2020. The ALLL / total loans ratio, excluding PPP loans, is 1.20% as of September 30, 2020. The ALLL / total loans ratio, excluding PPP loans and balances guaranteed by the SBA, is 1.38% as of September 30, 2020.
Non-interest income
Non-interest income was $ 1.8 million for the nine-month period ended September 30, 2020, compared to $ 1.7 million for the nine-month period ended September 30, 2019.
Non-interest charges
Non-interest expense was $ 9.7 million for the nine-month period ended September 30, 2020, compared to $ 9.6 million for the nine-month period ended September 30, 2019.
Staff costs amounted to $ 5.2 million as at September 30, 2020, compared to $ 5.9 million as at September 30, 2019. The decrease in staff costs is due to compensation of salary costs with assembly costs of PPP in accordance with ASC 310-20 arising from the closing and financing of PPP loans.
Occupancy costs increased by $ 148,000 for the nine month period ended September 30, 2020 compared to the nine month period ended September 30, 2019. The increase is due to the addition of the Rae Farms branch and the adoption of new lease accounting standards which required the recognition of additional rental charges in 2020.
Aquesta realized gains on the sale of OREO of $ 13,000 for the nine months ended September 30, 2020, compared to gains on sales of $ 18,000 for the nine months ended September 30, 2019.
Here are the financial highlights for comparison:
| Aquesta Financial Holdings, Inc. | |||||||||
| Select financial highlights | |||||||||
| (In thousands of dollars, except per share data) | |||||||||
| 09/30/20 | 12/31/19 | ||||||||
| (unaudited) | (checked) | ||||||||
| End of period balance sheet data: | |||||||||
| Loans | $ | 578,499 | $ | 415 071 | |||||
| Provision for losses on loans and rentals | 5 166 | 3,868 | |||||||
| Investment security | 30,736 | 56,688 | |||||||
| Total assets | 684,979 | 523 010 | |||||||
| Basic deposits | 473,601 | 373,557 | |||||||
| CD and IRA | 70,308 | 46,413 | |||||||
| Equity | 57,669 | 53,367 | |||||||
| Closing shares in circulation * | 5,472,667 | 5,450,585 | |||||||
| Book value per share * | 10.54 | 9.79 | |||||||
| Tangible book value per share * | 10.53 | 9.79 | |||||||
| * assuming the conversion of Series A convertible perpetual preferred shares | |||||||||
| For the three months ended | For the nine months ended | ||||||||
| 09/30/20 | 09/30/19 | 09/30/20 | 09/30/19 | ||||||
| (unaudited) | (checked) | (unaudited) | (checked) | ||||||
| Income and per share data: | |||||||||
| Interest income | $ | 6,063 | $ | 5 696 | $ | 17,407 | $ | 16,773 | |
| Interest charges | 986 | 1,488 | 3,613 | 4,503 | |||||
| Net interest income | 5,077 | 4 208 | 13,794 | 12,270 | |||||
| Allowance for loan losses | 375 | 135 | 1,508 | 340 | |||||
| Net interest income after | |||||||||
| allowance for loan losses | 4,702 | 4,073 | 12 286 | 11 930 | |||||
| Non-interest income | 484 | 344 | 1771 | 1732 | |||||
| Non-interest charges | 3,745 | 3,154 | 9,692 | 9,527 | |||||
| Income before taxes | 1,441 | 1,263 | 4 365 | 4 135 | |||||
| Income tax expense | 330 | 259 | 954 | 875 | |||||
| Net revenue | 1,111 | 1004 | 3 411 | 3,260 | |||||
| For the three months ended | For the nine months ended | |||||||||
| 09/30/20 | 09/30/19 | 09/30/20 | 09/30/19 | |||||||
| (unaudited) | (checked) | (unaudited) | (checked) | |||||||
| Earnings per share – basic * | $ | 0.20 | $ | 0.19 | $ | 0.62 | $ | 0.62 | ||
| Earnings per share – diluted * | 0.19 | 0.17 | 0.59 | 0.58 | ||||||
| Weighted average shares – basic * | 5 457 958 | 5 427 291 | 5,465,321 | 5 257 275 | ||||||
| Weighted average equities – diluted * | 5,728,365 | 5,775,464 | 5,798,837 | 5 610 647 | ||||||
| * assumes conversion of Series A convertible perpetual preferred shares | ||||||||||
| 09/30/20 | 12/31/19 | |||||||||
| (unaudited) | (checked) | |||||||||
| Select the performance ratios: | ||||||||||
| Return on average assets | 0.75% | 0.89% | ||||||||
| Average return on equity | 8.19% | 10.03% | ||||||||
| Data on asset quality: | ||||||||||
| 90 days or more and accumulating | $ | – | $ | – | ||||||
| Unaccounted loans | 7 889 | 1 192 | ||||||||
| Other mortgage loans | – | – | ||||||||
| Total non-productive assets | 7 889 | 1 192 | ||||||||
| Debt restructuring in difficulty | $ | 55 | $ | 84 | ||||||
| Non-performing assets / Total assets | 1.15% | 0.23% | ||||||||
| Allowance for loan losses / total loans | 0.89% | 0.93% | ||||||||
Aquesta Financial Holdings, Inc. is the holding company of its wholly owned subsidiary, Aquesta Bank. Aquesta Bank is a full-service community bank based in Cornelius, NC with eight branches in the Charlotte, Lake Norman and Wilmington, NC areas, and loan production offices in Raleigh, NC. North, as well as Greenville and Charleston, South Carolina.
For more information, please contact Kristin Couch (Executive Vice President and Chief Financial Officer) at 704-439-4343 or visit us online at www.aquesta.com.
The information contained in this press release may contain forward-looking statements that may involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include, but are not limited to, the effects of future economic conditions, government fiscal and monetary policies, legislative and regulatory changes and changes in interest rates.