Loading...
01/10 17:00
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reveals a mixed sentiment. There is optimism in loan commitments and deposit trends, but concerns arise from increased nonaccrual and nonperforming loans. Although commercial loan commitments increased, the Q&A highlights muted margin growth and competition for deposits. The Olympic acquisition's progress is positive, but management's unclear responses on capital management and buybacks post-acquisition add uncertainty. Overall, the sentiment is neutral, with no strong positive or negative indicators.
Adjusted Earnings Per Share (EPS) Increased by 5.7% versus last quarter and 24.4% year-over-year (YoY). The increase was driven by improving net interest margin and tight controls on noninterest expense growth.
Return on Average Assets (ROAA) Improved to 1.11% from 0.87% YoY. This improvement was attributed to better earnings performance.
Total Loan Balances Decreased by $5.7 million in Q3. Although loan originations increased, payoffs and prepayments also rose, and utilization rates decreased.
Loan Portfolio Yields Increased to 5.53%, up 3 basis points from Q2. This was due to new loans being originated at higher rates and adjustable-rate loans repricing higher.
Total Deposits Increased by $73 million in Q3, with noninterest-bearing deposits rising by $33.7 million. The increase was net of a $31.4 million decrease in certificates of deposit accounts, primarily due to a $25 million decrease in brokered CDs.
Cost of Interest-Bearing Deposits Decreased to 1.89% from 1.94% in the prior quarter, driven by a rate cut in September.
Investment Balances Decreased by $33 million due to expected principal cash flows on the portfolio. Loss trade activity was halted to preserve capital for a pending acquisition.
Net Interest Income Increased by $2.4 million or 4.3% from the prior quarter, driven by a higher net interest margin. The net interest margin rose to 3.64% from 3.51% in the prior quarter and 3.30% YoY.
Provision for Credit Losses Increased to $1.8 million from $956,000 in the prior quarter, primarily due to an increase in the weighted average life of the construction loan portfolio.
Noninterest Expense Increased by $530,000 from the prior quarter, mainly due to higher compensation and benefits expenses and professional services. Merger-related expenses accounted for $635,000 of this increase.
Regulatory Capital Ratios TCE ratio increased to 9.8% from 9.4% in the prior quarter, with no stock buybacks in Q3 to preserve capital for the pending acquisition.
Nonaccrual Loans Increased to $17.6 million, representing 0.37% of total loans, up from 0.21% in Q2. The increase was primarily due to two loans totaling $6.7 million tied to a townhome construction project.
Nonperforming Loans Increased modestly to 0.44% of total loans from 0.39% in Q2, primarily due to the increase in nonaccrual loans.
Criticized Loans Decreased by $19 million during the quarter, with substandard and special mention loans down by 5% and 12%, respectively, due to payoffs and upgrades.
Net Charge-Offs Remained low at $118,000 for the quarter, with total charge-offs of $374,000 offset by $256,000 in recoveries.
Commercial Loan Commitments Increased to $317 million in Q3, up from $248 million in Q2 and $253 million YoY. The commercial loan pipeline also increased to $511 million from $473 million in Q2.
Average Interest Rate for New Commercial Loans Increased to 6.67%, up 12 basis points from 6.55% in Q2. The rate for all new loans was 6.71%, up 13 basis points from 6.58% in Q2.
New Loan Commitments: Commercial teams closed $317 million in new loan commitments in Q3, up from $248 million last quarter and $253 million in Q3 2024.
Interest Rates on New Loans: The average interest rate for new commercial loans was 6.67%, up 12 basis points from last quarter.
Merger with Olympic Bancorp: The pending merger with Olympic Bancorp is expected to enhance profitability and position the company for growth in the Puget Sound market.
Net Interest Income: Increased by $2.4 million (4.3%) from the prior quarter, driven by higher net interest margin.
Deposit Growth: Total deposits increased by $73 million in Q3, with noninterest-bearing deposits up $33.7 million.
Cost of Interest-Bearing Deposits: Decreased to 1.89% from 1.94% in the prior quarter.
Credit Quality: Nonaccrual loans totaled $17.6 million, representing 0.37% of total loans. Criticized loans declined by $19 million during the quarter.
Loan Portfolio Strategy: Loan balances are expected to remain flat in Q4 2025 but resume growth in 2026 as payoffs moderate.
Loan Portfolio Stability: Total loan balances were relatively flat in Q3, with a decrease of $5.7 million. Elevated payoffs and prepayments, along with reduced portfolio utilization rates, pose challenges to maintaining loan growth.
Nonaccrual Loans: Nonaccrual loans increased to $17.6 million, representing 0.37% of total loans, up from 0.21% in the prior quarter. This increase was primarily due to two loans tied to a townhome construction project. While no loss is expected, the delinquency status is a concern.
Nonperforming Loans: Nonperforming loans increased modestly from 0.39% to 0.44% of total loans. This rise, though small, indicates a potential risk to credit quality.
Merger-Related Expenses: The company incurred $635,000 in merger-related expenses in Q3, which could strain operational budgets during the integration process with Olympic Bancorp.
Economic Volatility: While credit quality remains strong, the company is closely monitoring economic volatility, which could impact credit metrics in the future.
Loan Payoffs and Prepayments: Year-over-year, prepayments and payoffs increased by $124 million, negatively impacting net advances on loans, which swung from a positive $142 million last year to a negative $75 million year-to-date in 2025.
Deposit Growth and Cost: While deposits increased by $73 million in Q3, the cost of interest-bearing deposits remains a factor, though it decreased slightly to 1.89% from 1.94% in the prior quarter.
Net Interest Margin: The company expects continued decreases in the cost of deposits due to the rate cut in September, which will positively impact the net interest margin.
Loan Balances: Loan balances are expected to remain near Q3 levels in the fourth quarter of 2025, with growth resuming to more normal levels in 2026 as loan payoffs moderate and net advances move back to a positive position.
Commercial Loan Commitments: The company estimates new commercial team loan commitments of $320 million in the fourth quarter of 2025, similar to Q3 levels.
Deposit Growth: Deposits increased $73 million during Q3 and are up $173 million year-to-date. The deposit pipeline ended the quarter at $149 million, compared to $132 million in Q2. Average balances on new accounts opened during Q3 are estimated at $40 million.
Interest Rates on New Loans: The average interest rate for new commercial loans in Q3 was 6.67%, up 12 basis points from Q2. The rate for all new loans was 6.71%, up 13 basis points from Q2.
Merger with Olympic Bancorp: The pending merger with Olympic Bancorp and its subsidiary, Kitsap Bank, is expected to add to the profitability of operations and better position the company for growth in the Puget Sound market.
stock buybacks: Similar to our inactivity and loss trades on investments, we were also inactive in stock buybacks in Q3 and are unlikely to resume stock buybacks this calendar year.
The earnings call reveals a mixed sentiment. There is optimism in loan commitments and deposit trends, but concerns arise from increased nonaccrual and nonperforming loans. Although commercial loan commitments increased, the Q&A highlights muted margin growth and competition for deposits. The Olympic acquisition's progress is positive, but management's unclear responses on capital management and buybacks post-acquisition add uncertainty. Overall, the sentiment is neutral, with no strong positive or negative indicators.
The earnings call reveals positive financial performance with increased deposits and strong credit quality. Loan production is growing, although slightly down from last quarter. The Q&A highlights strong loan growth potential, a healthy loan pipeline, and strategic capital management. Despite some vague responses, overall sentiment remains optimistic due to strong NIM, potential stock buybacks, and robust loan yields. The market strategy and shareholder return plans are well-received, contributing to a positive outlook for the stock price over the next two weeks.
The earnings call presents a mixed outlook: strong loan growth, improved net interest margin, and a solid balance sheet are positive, but economic uncertainties, increased non-interest expenses, and a decrease in loan production pose risks. The Q&A section highlights management's cautious stance on M&A and economic conditions, which tempers optimism. The lack of share repurchases in Q1 and investment losses also contribute to a neutral sentiment. Without a clear market cap, the stock's reaction could be muted, leading to a likely neutral stock price movement.
The earnings call presents mixed signals. Positive factors include strong loan growth, effective cost management, and a robust stock repurchase program. However, challenges such as flat deposit growth, potential economic impacts, and unclear management responses temper enthusiasm. The Q&A reveals cautious optimism but also highlights uncertainties, particularly in M&A and deposit management. The lack of decisive positive or negative elements suggests a neutral impact on the stock price, with potential fluctuations depending on external economic conditions.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
