April 30. Aquesta Financial Holdings, the parent company of Aquesta Bank, reports first-quarter net fell to $881,000 from the first quarter of 2019.
Nonperforming assets climbed to $8.8 million as of March 31, compared to $1.2 million as of year-end 2019. Aquesta held $536,000 of foreclosed real estate as of March 31; there was no foreclosed real estate as of Dec. 31 last year.
“Aquesta has continued to perform well despite the unprecedented economic strain put on the global economy by the COVID-19 pandemic,” said Jim Engel, CEO of Aquesta.
He anticipates many customers will face economic uncertainty.
“Accordingly, we have been proactive in assisting our customers and community through our own initiatives and then became one of the leading community banks in participating in the Paycheck Protection Program,” he said.
Aquesta is funding almost $130 million of the government guaranteed loans. The program began in mid-March with personnel reassignments and training as well as systems upgrades—all accomplished with 85 percent of the staff working from home.
Aquesta has filed almost 1,000 applications helping 11,000 families, Engel said.
Continued Balance Sheet Growth
ENGEL
At March 31, Aquesta’s total assets were $525.9 million compared to $523.0 million at Dec. 31, 2019. Total loans were $404.6 million at March 31, 2020 compared to $415.1 million at Dec. 31, 2019. Core deposits were $346.0 million at March 31, 2020 compared to $373.6 million at Dec. 31, 2019. Loan production during the quarter was strong, but a large number of normal loan payoffs (e.g., projects sold) hindered loan growth. Core deposit growth remains strong. The apparent decrease in core deposits in the 2020 first quarter relates to large cash deposits by a limited number of customers in the fourth quarter of 2019 that temporarily increased the 2019 year end balances, resulting in the quarter over quarter apparent decrease. These fluctuations are normal activity and have subsequently been replaced.
Strong Asset Quality
Asset quality remains strong. Nonperforming assets were at $8.8 million as of the end of the first quarter of 2020 compared to $1.2 million as of Dec. 31, 2019. Aquesta held $536 thousand of foreclosed real estate as of March 31, 2020 while there was no foreclosed real estate as of Dec. 31, 2019. The increase in nonperforming assets is related to one large relationship where the bank’s position is well secured based on most recent appraisals of collateral. Reversal of accrued income on that relationship during the quarter negatively impacted earnings by about $44,000.
Net Interest Income
Net interest income was $3.9 million as of March 31 this year, compared to $3.7 million as of March 31, 2019. This is an increase of $200 thousand or 5.3 percent. The increase in net interest income is associated with Aquesta’s loan growth during 2019 such that matched quarterly net interest income was higher in the current year.
Non Interest Income
Non interest income was $629,000 as of March 31, 2020 compared to $776,000 as of March 31, 2019. The decrease in non-interest income is related to a bank owned life insurance payment received in the first quarter of 2019 but not repeated in the first quarter of 2020.
Non Interest Expense
Non interest expense was $3.4 million for the three months ended March 31, 2020 compared to $3.2 million for the three months ended March 31, 2019. Personnel expense was at $2.1 million for the three months ended March 31, compared to $1.9 million for the three months ended March 31, 2019. The increase was primarily due to Aquesta’s continued growth, specifically the addition of the Rea Farms branch in third quarter of 2019.
Occupancy expense was $350,000 for the three months ended March 31 this year compared to $338,000 for the same three month period last year. This increase is related to the additional branch that opened in the third quarter of 2019.
