Cashmere Valley Bank · OTC:CSHX
Cashmere Valley Bank — Q1 2025 Earnings Presentation
28 slides from Cashmere Valley Bank's earnings presentation, Jun 20, 2025
Slide 1: Cashmere Valley Bank
Cashmere Valley Bank Greg Oakes, President and Chief Executive Officer Mike Lundstrom, Chief Financial Officer
Slide 2: Forward-Looking Statements
Forward-Looking Statements This discussion of financial results may contain certain forward-looking statements that are based on management's current expectations regarding economic, legislative, and regulatory issues that may impact the Bank’s earnings in future periods. Forward-looking statements
Slide 3: Overview – We Answer the Phone
Overview – We Answer the Phone • Cashmere Valley Bank was established in 1932 and is headquartered in Cashmere, Washington • 11 branches throughout North Central Washington • Provides loan and deposit services to predominantly small and middle-market business and retail customers. • The Bank is majo
Slide 4: About Cashmere Valley Bank
About Cashmere Valley Bank Company Highlights 2024 Awards Listing OTCQX: CSHX • BankDirector magazine ranked Total Assets $2.12 Billion Cashmere Valley Bank as seventh-best Total Loans bank nationwide. $967.4 Million Total Deposits $1.83 Billion Market Cap $247.5 Million 103.4% • BankDirector magazi
Slide 5: Historical Stock Performance
Historical Stock Performance Historical Stock Price Performance $80.00 $70.00 $60.00 $50.00 $40.00 $30.00 $20.00 $10.00 $- 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024
Slide 6: Market Area
Market Area • Chelan County is home to tourist destinations of Leavenworth and Lake Chelan. Wenatchee and East Wenatchee are separated by the Columbia River. • Cashmere Valley Bank is separated from Seattle by the Cascade Mountain Range. • Union Gap near Yakima opened in September 2023 and the Bank
Slide 7: Q1 2025 PT Score Overview
Q1 2025 PT Score Overview • Cashmere Valley Bank is considered a very low risk institution. • Earnings relative to risk level are very strong.
Slide 8: Q1 2025 Highlights
Q1 2025 Highlights • The Bank purchased property for a new branch in East Wenatchee, scheduled to open in 2026. East Wenatchee is located in Douglas County, which is expected to grow in the next few years. • Net interest margin was 3.17% in Q1 2025, compared to 3.12% Q1 2024. Net interest margin was
Slide 9: Year End Deposit Portfolio Detail
Year End Deposit Portfolio Detail • Noninterest bearing deposits increased $29.8 million, or 8.14%, from 2020 to 2024. • As of Q4 2024, noninterest bearing deposits represented 21.5% of total deposits. Deposit Portfolio Detail at Year End Cost of Interest Bearing Liabilities ($ in Thousands) 2,000,0
Slide 10: Q1 2025 Deposit Portfolio Detail
Q1 2025 Deposit Portfolio Detail • CDs increased $18.5 million, or 3.7%, in Q1 2025, and totaled $521.0 million as of Q1 2025. • $483.3 million, or 92.8% of total CDs, reprice within one year. Q1 2025 Deposit Mix Deposit Growth Trends Noninterest Bearing Demand ($ in Thousands) Time Deposits Deposit
Slide 11: Year End Loan Portfolio Detail
Year End Loan Portfolio Detail • As of Q4 2024, dealer paper represented $206.9 million of Consumer and Other loans. • As of Q4 2024, equipment finance represented $94.2 million of Commercial and Agricultural loans. Loan Portfolio Detail at Year End 1,200,000 ($ in Thousands) 6.00% 5.26% 4.09% 4.69%
Slide 12: Q1 2025 Loan Portfolio Detail
Q1 2025 Loan Portfolio Detail • Yield on loans was 5.40% as of March 31, 2025. • The decrease in municipal loans was strategic to counter increases in treasury curve rates, and to shorten the duration in the portfolio. • Since year end, Commercial and Agricultural loans increased by $7.6, or 5.6%. Q
Slide 13: Loan Portfolio Repricing
Loan Portfolio Repricing Repricing Term ($ in Thousands) 3 Mos or Less 3-12 Mos 1-3 Years 3-5 Years 5-15 Years Over 15 Years Total Commercial and Agricultural $18,529 $19,757 $27,811 $57,277 $19,228 $-- $142,602 Residential 1-4 Family Real Estate 44,654 21,944 14,737 4,412 3,498 19,871 109,116 Comme
Slide 14: Equipment Finance Portfolio
Equipment Finance Portfolio • As of Q1 2025, 20.7% of equipment finance loans were concentrated in trucking. • In 2023, the Bank adjusted the lease requirements to include a minimum of five trucks in the lease. Further, in 2025, the Bank tightened standards over type of freight to counter charge-off
Slide 15: Commercial Real Estate Portfolio
CRE by Property Type Commercial Real Entertainment 1% Medical Offices and Services Estate Portfolio Restaurant 2% 1% Other 3% • Commercial real estate loans Multifamily 8% represented 98.7% of total Office 22% capital as of March 31, 2025, which is significantly under the Self Storage regulatory gui
Slide 16: CRE Non-Owner Occupied
CRE Non-Owner Occupied • Seattle is located in King County and may contain elevated risk relative to more rural counties. • As of March 31, 2025, non-owner occupied commercial real estate in King County totaled $14.8 million. The remaining commercial real estate loans are more rural in nature. Hotel
Slide 17: CRE Office
CRE Office • Three relationships make up the majority of the CRE owner-occupied and non-owner occupied office loans located in King County. • Total commercial real estate office loans in King County declined by 3.4% from Q1 2024 to Q1 2025. CRE NOO Office CRE OO Office Douglas Yakima Chelan 1% 8% 14
Slide 18: Securities Portfolio
Securities Portfolio • The Bank entered into several pay fixed, receive variable swap agreements with a notional value totaling $165.0 million. The book value of hedged securities totaled $265.8 million as of Q1 2025. Q1 2025 AFS Q1 2025 HTM TEMUNI ABS/OAS 2% ABS/OAS TEMUNI 7% 6% 7% TAXMUNI TAXMUNI
Slide 19: Non-Agency Securities
Non-Agency Securities • A portion of the securities portfolio is made up of non-agency securities. The Bank remains under policy limit for non-agency securities. Non-Agency Securities ($ in Thousands) Total Book Value % of Capital % of Portfolio Subordinated Debt $54,191 22.56% 6.75% CFGs 35,190 14.
Slide 20: Income Statement – Total Return
Income Statement – Total Return • Total return measures the income earned over a time period plus or minus the change in market value, all divided by the starting principal invested. • The total return shape has changed dramatically from 2022 as the Bank has focused on being more interest rate neutr
Slide 21: Income Statement – Key Ratios
Net Interest Margin – Tax Equivalent Income Statement 3.36% 3.40% 2.99% 2.82% 2.70% – Key Ratios 2020 2021 2022 2023 2024 • The Bank tries to maintain a low cost structure and keep Earnings per Share - Basic $7.42 operating expenses down. $6.70 $7.20 $7.24 $6.43 • In 2023, the Bank recognized $3.9 m
Slide 22: Historical Returns
Historical Returns • Cashmere Valley Bank produces consistent returns on assets and equity. • During the Great Recession, the Bank continued to have positive net income. ROA 1.45% 1.49% 1.43% 1.35% 1.41% 1.36% 1.39% 1.36% 1.31% 1.31% 1.25% 1.24% 1.23% 1.22% 1.12% 1.14% 1.21% 1.08% 0.92% 0.74% 2005 2
Slide 23: Sources of Non-Interest Income
Non-Interest Income Q1 2025 Sources of Non- Dividends from correspondent Service charges on Interest Income banks Other deposit accounts 2% 5% 9% Earnings from Mortgage banking Bank Owned Life operations 6% • The Bank has worked to grow Insurance 4% Net gain (loss) on net interchange income. sales o
Slide 24: Sources of Non-Interest Expense
Non-Interest Expense Q1 2025 Sources of Non- Other 16% Interest Expense Product delivery • Salaries and employee benefits 3% have increased 9.75% year over year. • 2025 includes a significant increase in health care premiums. The Bank pays 100% of employee premiums. Data processing 13% Salaries and
Slide 25: Nonaccrual Loan Summary
Nonaccrual Loan Summary • Allowance for credit losses totaled $12.4 million as of Q1 2025 and represented 1.28% of total loans. • Nonaccrual loans totaled $3.3 million as of Q1 2025. Of the total nonaccrual loans, equipment finance loans accounted for $1.3 million, and dealer paper loans accounted f
Slide 26: Charge-Off Activity
Charge-Off Activity • The primary driver of Commercial and Agricultural charge-off activity is equipment finance loans. • Underwriting requirements have been adjusted for equipment finance loans noted on page 13. Net Charge-Offs to Total Loans By Loan Type 3.00% 2.50% 2.00% 1.50% 1.00% 0.50% 0.00% 2
Slide 27: Capital and Asset Quality
Capital and Asset Quality • Tier 1 capital continues to increase. • The Bank elected to use the Community Banking Leverage Ratio (CBLR) framework, and is therefore only required to calculate a leverage ratio to measure capital adequacy. Tier 1 Leverage Ratio 13.02% Sensitivity Analysis – Net Interes
Slide 28: Liquidity
Liquidity • The Bank has a loan to asset target of 65%. • Additional earnings and a decrease in unrealized losses have improved the GAAP Capital to Assets ratio. • The Bank aggressively utilized a variety of strategies beginning in April 2022 to lessen the risk of a continued rising rate environment