Alpine Banks of Colorado announces financial results for third quarter 2023

GLENWOOD SPRINGS, Colo., Oct. 31, 2023 (GLOBE NEWSWIRE) -- Alpine Banks of Colorado (OTCQX: ALPIB) (“Alpine” or the “Company”), the holding company for Alpine Bank (the “Bank”), today announced results (unaudited) for the third quarter ended September 30, 2023. The Company reported net income of $11.7 million, or $108.86 per basic Class A common share, and $0.73 per basic Class B common share, for third quarter 2023.

Highlights in third quarter 2023 include:

• Basic earnings per Class A common share decreased 19.0%, or $25.45, during third quarter 2023.
• Basic earnings per Class A common share decreased 16.2%, or $81.88 during the last 12 months ended September 30, 2023.
• Basic earnings per Class B common share decreased 19.0%, or $0.17, during third quarter 2023.
• Basic earnings per Class B common share decreased 16.1%, or $0.54 during the last 12 months ended September 30, 2023.
• Net interest margin for third quarter 2023 was 2.87%, compared to 3.15% in second quarter 2023, and 3.49% in third quarter 2022.

“The current economic environment brings challenges to both the banking industry and our communities. Alpine has taken a back-to-basics approach, refocusing our team on core deposit growth and relationship banking. An indication of the strength of this strategy was the reduction in wholesale funding during the third quarter,” said Glen Jammaron, President and Vice Chairman. “Interest rates paid by the Bank on deposits stabilized during the third quarter 2023. However, migration of customer deposits from non and low interest-bearing accounts to high yield accounts continues to pressure the Bank’s net interest margin. As a true community bank, Alpine is a reflection of our communities. Working together we will thrive no matter the economic conditions.”

Net Income

Net income for third quarter 2023 and second quarter 2023 was $11.7 million and $14.6 million, respectively. Interest income increased $2.0 million in third quarter 2023 compared to second quarter 2023, primarily due to an increase in volume in the loan portfolio and balances due from banks along with increases in yields on the loan portfolio. This increase was slightly offset by decreases in volume in the securities portfolio and decreases in yield on the securities portfolio and the balances due from banks. Interest expense increased $5.6 million in third quarter 2023 compared to second quarter 2023, primarily due to increases in the costs on the Company’s trust preferred securities, other borrowings, and cost of deposits along with an increase in volume of deposits. This increase was partially offset by a decrease in volume of other borrowings. Noninterest income increased $0.7 million in third quarter 2023 compared to second quarter 2023, due to increases in service charges on deposit accounts and an increase in other income. This increase was slightly offset by a decrease in earnings on bank-owned life insurance. Noninterest expense increased $0.4 million in third quarter 2023 compared to second quarter 2023, due to increases in other expenses and occupancy expenses, slightly offset by decreases in salaries and employee benefit expenses and furniture and fixture expenses. A provision for loan losses of $0.3 million was recorded in third quarter 2023 compared to a provision for loan losses recorded in second quarter 2023 of $0.4 million.

Net income for the nine months ended September 30, 2023, and September 30, 2022, was $46.0 million and $52.7 million, respectively. Interest income increased $52.2 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to increases in volume in the securities and loan portfolios and increases in yields in the balances due from banks, loan, and securities portfolios. This increase was slightly offset by a decrease in volume in balances due from banks. Interest expense increased $48.3 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to increases in costs on the Company’s trust preferred securities, other borrowings, and cost of deposits, along with increases in volume in other borrowings. Noninterest income increased $4.1 million in the first nine months of 2023 compared to the first nine months of 2022, primarily due to increases in other income and earnings on life insurance. In addition, noninterest income in the first nine months of 2022 was negatively impacted by realized losses on the sale of the Bank’s equity investment in a bond fund. The increase in noninterest income was slightly offset by decreases in service charges on deposit accounts. Noninterest expense increased $15.2 million in the first nine months of 2023 compared to the first nine months of 2022, due to increases in other expenses, salary and employee benefit expenses, furniture and fixtures expenses, and occupancy expenses. Provision for loan losses increased $1.0 million in the first nine months of 2023 due to portfolio growth and a small volume of loan chargeoffs, compared to no provision for loan losses in the nine months ended September 30, 2022.

Net interest margin decreased from 3.15% to 2.87% from second quarter 2023 to third quarter 2023. Net interest margin for the nine months ended September 30, 2023, and September 30, 2022, was 3.17% and 3.22%, respectively.

Assets

Total assets decreased $36.9 million, or 0.6%, to $6.48 billion as of September 30, 2023, compared to June 30 30, 2023, primarily due to decreased investment securities balances. Total assets grew $199.5 million, or 3.2%, from September 30, 2022, to September 30, 2023. The Alpine Bank Wealth Management* division had assets under management of $1.09 billion on September 30, 2023, compared to $1.01 billion on September 30, 2022, an increase of 7.7%.

Loans

Loans outstanding as of September 30, 2023, totaled $4.0 billion. The loan portfolio decreased $5.5 million, or 0.1%, during third quarter 2023 compared to June 30, 2023. This decrease was driven by a $9.8 million decrease in residential real estate loans and a $4.6 million decrease in commercial real estate loans. This decrease was slightly offset by a $5.8 million increase in real estate construction loans, a $1.8 million increase in commercial and industrial loans, a $0.8 million increase in consumer loans and a $0.1 million increase in other loans.

Loans outstanding as of September 30, 2023, reflected an increase of $288.7 million, or 7.8%, compared to loans outstanding of $3.7 billion on September 30, 2022. This growth was driven by a $153.7 million increase in residential real estate loans, a $97.4 million increase in commercial real estate loans, a $37.5 million increase in real estate construction loans, a $1.9 million increase in consumer loans, a $1.5 million increase in commercial and industrial loans, and a $0.3 million increase in other loans.

Effective January 1, 2023, the Bank adopted the Financial Accounting Standards Board’s (FASB) Accounting Standard Update (ASU) 2016-13, commonly known as the current expected credit loss (CECL) model. Upon adoption, the Bank recorded no change in the beginning allowance for credit losses - loans. However, the adoption of ASU 2016-13 did result in an $8.6 million increase to its allowance for credit losses – unfunded loan commitments. The increase was recorded net of tax as a reduction to retained earnings as of the adoption date.

Deposits

Total deposits increased $60.8 million, or 1.1%, to $5.8 billion during third quarter 2023 compared to June 30, 2023, primarily due to a $159.4 million increase in certificate of deposit accounts and money fund accounts offset by a $98.6 million decrease in demand deposits, savings accounts, and interest checking accounts.

Total deposits of $5.8 billion on September 30, 2023, reflected an increase of $163.0 million, or 2.9%, compared to total deposits of $5.7 billion on September 30, 2022. This increase was due to a $962.7 million increase in certificate of deposit accounts and a $18.4 million increase in money fund accounts. This increase was partially offset by a $478.7 million decrease in demand deposits, a $296.1 million decrease in interest-bearing checking accounts and a $43.3 million decrease in savings accounts. Brokered certificates of deposit totaled $563.7 million on September 30, 2023. Noninterest-bearing demand accounts comprised 31.4% of all deposits on September 30, 2023, compared to 40.8% on September 30, 2022.

Capital

The Bank continues to be designated as a “well capitalized” institution as its capital ratios exceed the minimum requirements for this designation. As of September 30, 2023, the Bank’s Tier 1 Leverage Ratio was 9.23%, Tier 1 Risk-Based Capital Ratio was 13.53% and Total Risk-Based Capital Ratio was 14.68%. On a consolidated basis, the Company’s Tier 1 Leverage Ratio was 8.78%, Tier 1 Risk-Based Capital Ratio was 12.86% and Total Risk-Based Capital Ratio was 15.12% as of September 30, 2023.

Book value per share on September 30, 2023, was $4,016.93 per Class A common share and $26.78 per Class B common share, a decrease of $18.66 per Class A common share and $0.12 per Class B common share from June 30, 2023.

Dividends

During third quarter 2023, the Company paid cash dividends of $30.00 per Class A common share and $0.20 per Class B common share. On October 12, 2023, the Company declared cash dividends of $30.00 per Class A common share and $0.20 per Class B common share, payable on October 30, 2023, to shareholders of record on October 23, 2023.

About Alpine Banks of Colorado

Alpine Banks of Colorado, through its wholly owned subsidiary Alpine Bank, is a $6.5 billion, employee-owned organization founded in 1973 with headquarters in Glenwood Springs, Colorado. With banking offices across Colorado’s Western Slope, mountains and Front Range, Alpine Bank employs 843 people and serves 170,000 customers with personal, business, wealth management*, mortgage, and electronic banking services. Alpine Bank has a 5-star rating – meaning it has earned a superior performance classification – from BauerFinancial, an independent organization that analyzes and rates financial institutions’ performance in the United States. Shares of the Class B non-voting common stock of Alpine Banks of Colorado trade under the symbol “ALPIB" on the OTCQX® Best Market. Learn more at www.alpinebank.com.

*Alpine Bank Wealth Management services are not FDIC insured, may lose value, and are not guaranteed by the Bank.

A note about forward-looking statements

This press release contains “forward-looking statements” within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “reflects,” “believes,” “can,” “would,” “should,” “will,” “estimates,” “continues,” “expects” and similar references to future periods. Examples of forward-looking statements include, but are not limited to, statements we make regarding our evaluation of macro-environment risks, Federal Reserve rate management, and trends reflecting things such as regulatory capital standards and adequacy. Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward- looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statement include, but are not limited to:

• The ability to attract new deposits and loans;
• Demand for financial services in our market areas;
• Competitive market-pricing factors;
• Changes in assumptions underlying the establishment of allowances for loan losses and other estimates;
• Effects of future economic, business and market conditions, including higher inflation;
• Adverse effects of public health events, such as the COVID-19 pandemic, including governmental and societal responses;
• Deterioration in economic conditions that could result in increased loan losses;
• Actions by competitors and other market participants that could have an adverse impact on our expected performance;
• Risks associated with concentrations in real estate-related loans;
• Risks inherent in making loans, such as repayment risks and fluctuating collateral values;
• Market interest rate volatility, including changes to the federal funds rate;
• Stability of funding sources and continued availability of borrowings;
• Geopolitical events, including acts of war, international hostilities and terrorist activities;
• Assumptions and estimates used in applying critical accounting policies and modeling, including under the CECL model, which may prove unreliable, inaccurate, or not predictive of actual results;
• Actions of government regulators, including the recent and potential future interest rate hikes by the Board of Governors of the Federal Reserve Board;
• Sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs;
• Any increases in FDIC assessments;
• Risks associated with potential cybersecurity incidents, data breaches or failures of key information technology systems;
• The ability to maintain adequate liquidity and regulatory capital, and comply with evolving federal and state banking regulations;
• Changes in legal or regulatory requirements or the results of regulatory examinations that could restrict growth;
• The ability to recruit and retain key management and staff;
• The ability to raise capital or incur debt on reasonable terms; and
• Effectiveness of legislation and regulatory efforts to help the U.S. and global financial markets.

There are many factors that could cause actual results to differ materially from those contemplated by forward-looking statements. Any forward-looking statement made by us in this press release or in any subsequent written or oral statements attributable to the Company are expressly qualified in their entirety by the cautionary statements above. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

Key Financial Measures

The attached tables highlight the Company’s key financial measures for the periods indicated (unaudited).

Key Financial Measures 09/30/2023

Statement of Income 09/30/2023

Statement of Financial Condition 09/30/2023

Statement of Comprehensive Income 09/30/2023