Endeavor Bancorp Reports Net Income of $1.1 Million for the Fourth Quarter of 2024; Highlighted by Quarterly Net Interest Margin Expansion

SAN DIEGO, Jan. 28, 2025 (GLOBE NEWSWIRE) -- Endeavor Bancorp (OTCQX: EDVR) (the "Company," or "Bancorp"), the holding company for Endeavor Bank (the "Bank"), today reported net income of $1.08 million, or $0.25 per diluted share, for the fourth quarter of 2024, compared to net income of $924,000, or $0.22 per diluted share, for the third quarter of 2024, and $852,000, or $0.20 per diluted share, for the fourth quarter of 2023. Pretax net income was $1.55 million in the fourth quarter compared to $1.32 million in the preceding quarter and $1.24 million in the fourth quarter of 2023. All financial results are unaudited.

Results for the fourth quarter of 2024 included a $374,000 provision for credit losses, compared to a $609,000 provision for credit losses in the third quarter of 2024, and a $181,000 provision for credit losses in the fourth quarter of 2023. Also noteworthy was the interest expense on borrowings in the past three quarters, with interest expense on borrowings of $493,000 for the third and fourth quarters of 2024, and $201,000 for the fourth quarter of 2023. The additional interest expense was associated with the recent subordinated debt issued late in the first quarter of 2024. Excluding taxes and loan loss provisions, the Company's pretax, pre-provision net income was $1.93 million in the fourth quarter of 2024, which was unchanged compared to the preceding quarter and an increase compared to $1.41 million in the fourth quarter of 2023.

"Endeavor's fourth quarter 2024 operating results were highlighted by strong net interest income generation and net interest margin expansion, " stated Julie Glance, CFO. "We had another year of double-digit loan and deposit growth, with net loans increasing 31.1% and deposits increasing 18.5%, compared to a year ago. In addition, our earning assets yield also increased, up 69 basis points in 2024 over 2023, which is contributing to net interest margin expansion. As we look to 2025, our primary focus is shifting to deposit gathering, with an emphasis on bringing in full client relationships to grow our core deposit base."

"Our thoughts and prayers are with the people and communities impacted by the Southern California wildfires and straight-line winds. Our team is actively reviewing our records to determine if any clients may be affected by these tragic events," said Dan Yates, CEO.

Income Statement

Strong fourth quarter earnings were driven by loan growth and earning asset rates. Total interest income on loans and bank deposits and investments was $10.8 million, an increase of $568,000 compared to the preceding quarter, while total interest expenses decreased $30,000 during the same timeframe. Net interest income was $6.5 million in the fourth quarter of 2024, which was an increase of $598,000, or 10.1% compared to the preceding quarter and a 29.8% increase compared to the fourth quarter of 2023.

"The 12 basis point increase in our net interest margin during the fourth quarter of 2024, compared to the prior quarter, was the result of strong loan growth and higher interest earning assets, in addition to improving funding costs," said Yates.

Net interest margin $(NIM)$ increased 12 basis points to 3.97% in the fourth quarter of 2024 compared to 3.85% in the third quarter of 2024 and increased 40 basis points compared to 3.57% in the fourth quarter of 2023. The yield on total earning assets remained strong, decreasing only seven basis points during the fourth quarter of 2024 to 6.54%, compared to 6.61% in the preceding quarter, and up from 6.00% in the fourth quarter of 2023. The cost of deposits decreased significantly to 2.76% in the fourth quarter, compared to 2.98% in the third quarter, and up from 2.62% in the fourth quarter of 2023

Non-Interest income decreased to $160,000 in the fourth quarter, compared to $217,000 in the third quarter of 2024, and increased compared to $138,000 in the fourth quarter 2023.

Non-Interest expenses increased $547,000, an increase of 13.0%, in the fourth quarter compared to the third quarter of 2024, and increased $1.0 million compared to the fourth quarter of 2023. "The increase in expenses during the fourth quarter of 2024 was primarily driven by growth-related investment in infrastructure, as well as some non-recurring expenses specific to the quarter. Also worth noting, non-interest expenses for the year were well within our budgeted operating plan," said Glance.

The Company's annualized return on average equity for the fourth quarter of 2024 was 9.35%, compared to 8.17% in the third quarter of 2024 and 7.99% in the fourth quarter of 2023. The annualized return on average assets for the fourth quarter of 2024 was 0.65% compared to 0.59% in the third quarter of 2024 and 0.60% in the fourth quarter of 2023.

Balance Sheet

Total assets increased $23.0 million, or 3.5%, during the fourth quarter of 2024 to $678.3 million at December 31, 2024, compared to $655.3 million at September 30, 2024, and increased $108.2 million, or 19.0%, compared to December 31, 2023. Balance sheet liquidity remains strong with cash balances of $80.5 million, which represents 11.9% of total assets as of December 31, 2024. The Company's bond portfolio increased $5.7 million during the fourth quarter to $25.8 million as of December 31, 2024, representing only 3.8% of total assets. Total available borrowing capacity through the Federal Home Loan Bank and the Federal Reserve discount window exceeded $140.1 million as of quarter end.

"At a time where other banks are shrinking their balance sheet, we have remained focused on expanding. Loan growth and new loan originations remained strong during the fourth quarter of 2024, as we continue to seek out high quality lending opportunities in our markets," said Steve Sefton, President. "In early 2024, we expanded our team and moved into the greater Los Angeles Metro and Inland Empire markets. While this expansion north is still in its early stages, we are already seeing positive momentum and is already contributing to operating results."

Total loans outstanding increased $33.4 million, or 6.2%, during the fourth quarter of 2024 to $571.8 million at December 31, 2024, compared to $538.4 million three months earlier, and increased $135.6 million, or 31.1%, when compared to $436.3 million a year earlier. Total non-performing loans decreased to 0.46% of the total loan portfolio as of December 31, 2024, compared to 1.22% in the prior quarter. The decrease compared to the prior quarter was due to one borrower who had been in the renewal process whose loans were successfully renewed during the fourth quarter of 2024 and are now current. The Company had no net charge offs during the fourth quarter of 2024, or in the prior quarter.

Total deposits increased $23.4 million, or 4.1%, during the quarter to $601.2 million at December 31, 2024, compared to $577.8 million three months earlier, and increased $93.4 million, up 18.5% when compared to $577.8 million a year earlier. The loan to deposit ratio was 95.1% at December 31, 2024, compared to 93.2% at September 30, 2024, and 86.0% as of December 31, 2023.

As a result of its participation in a reciprocal deposit placement network, the Bank accepted "reciprocal" deposits from other institutions, enabling the Bank to offer customers FDIC insurance on accounts in excess of the typical $250,000 FDIC insurance limit. Although the reciprocal deposit accounts maintained through the network are core deposits seeking FDIC insurance, the FDIC rules indicate that reciprocal deposits aggregating over 20% of total liabilities are classified as deposits obtained by or through a deposit broker. The total reciprocal deposits reported as brokered deposits were $113.7 million at December 31, 2024, and $127.0 million as of September 30, 2024. To support the strong loan growth, the Company is utilizing a conservative amount of wholesale deposits. As of December 31, 2024, total wholesale deposits, excluding the reciprocal deposits, was $60.7 million, representing 10.1% of total deposits compared to $40.7 million as of September 30, 2024, or 7.0% of total deposits.

Shareholders' equity was $46.0 million at December 31, 2024, compared to $45.3 million at September 30, 2024, and $42.5 million at December 31, 2023. Tangible book value per share increased to $13.17 at December 31, 2024, compared to $12.97 three months earlier and $12.48 a year earlier.

Capital

The Bank's Tier 1 leverage ratio was 10.90% as of December 31, 2024, compared to 11.38% at September 30, 2024. The Tier 1 risk-based capital ratio was 10.71% as of December 31, 2024, compared to 10.95% on September 30, 2024, and the Total risk-based capital ratio was 11.92% compared to 12.13% three months earlier, all of which were well above regulatory minimums.

On March 5, the Company completed the issuance of $12.5 million in fixed-to-floating rate subordinated notes. The subordinated debt was structured such that it qualified as Tier 2 capital at the holding company with most of the new capital down streamed to the Bank as Tier 1 capital.

About Endeavor Bancorp

Endeavor Bancorp, the holding company for Endeavor Bank, is primarily owned and operated by Southern Californians for Southern California businesses and their owners. The bank's focus is local: local decision-making, local board, local founders, local owners, and relationships with local clients in Southern California.

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