Third Quarter Report September 30, 2023

Net income for the quarter ended September 30, 2023 totaled $475,000, or $0.91 per share. This represented a decrease compared with net income of $539,000, or $1.04 per share, reported for the third quarter of 2022. The change in earnings was primarily due to a $62,000 increase in net interest income offset by a $144,000 increase in noninterest expense. Steady lending resulted in $2.6 million portfolio growth during the third quarter of 2023, but higher wholesale funding expense reduced the net interest spread.

Net income year to date September 30, 2023 totaled $1,278,000 compared with $1,440,000 reported for the same period in 2022. Higher interest rates and loan growth throughout the current and previous years notably increased net interest income by $386,000 year to date compared with 2022. However, the aforementioned spread tightening was quite evident during the third quarter.

Increasing expenses in personnel, technology and facilities throughout the current and previous years have been necessary due to inflation and competitive considerations. However, the core driver of profitability, which is net interest income, continued to grow despite higher funding expense from short-term borrowings.

Earnings per share totaled $2.46 and generated 0.90% return on average assets and 7.59% return on equity for the nine months ended September 30, 2023. A dividend of $0.55 per share for the third quarter was paid October 2.

My sincere thanks and congratulations are extended to longtime employee Rich Dixon on his retirement. His loyalty, likeability and sense of humor have made the bank an outstanding place to work for many individuals. Please do not hesitate to contact me if you have any questions.

Sincerely,

Nelson L. Person
President & CEO