Increased residential mortgage activity spurred largely by the refinance market has helped St. Joseph-based Edgewater Bank to more than double their total net-interest income in the first half of the year compared to the same period a year ago.
That news comes in the recent filing of Edgewater Bancorps second quarter earnings report for 2020, which includes information on the bank’s activities in the Paycheck Protection Program helping local businesses survive critical times in the pandemic.
The bank, anchored in the central business district of downtown St. Joseph reports that total non-interest income was up $398,908 from $387,827 during the first six months of 2019 to $786,735 during the first six months of 2020. That increase was due to increased residential mortgage sales as a result of the refinance market which was driven by a decline in rates. At the same time, total non-interest expenses increased by $614,482 from the prior year to $3.4 million, with that increase is attributed to expenses related to personnel costs from staff additions over the prior year and $261,000 of defined benefit plan expense needed for the final funding to terminate that plan. As of June 30th, 2020, that plan was funded and the obligation was assumed by a new issuer. Bank officials do not anticipate any future expense associated with the plan. Data processing has increased over prior year due to upgrading equipment, products, and support.
Edgewater announced year-to-date June 30, 2020 net income of $634,482, or $.92 per share, as compared to net income of $949,575 or $1.32 per share, for the second quarter a year earlier in 2019. The net income before taxes increased $283,421 or 53.9-percent and after taxes decreased $315,093 over second quarter of 2019 or 33.2-percent. During the first six months of 2019, the remaining $528,146 of the deferred tax asset valuation reserve was reversed. The reserve reversal is recognized in the financial statements as an income tax benefit.
Net interest income increased $538,995 or 18.3-percent to $3.5 million for the first six months of 2020, compared to $2.9 million during the first six months of 2019. Total loan loss provision expense was $85,000 for the first six months of 2020 compared to $45,000 for the first six months of 2019. The level of provision expense is calculated based on growth and other various asset quality considerations including the COVID-19 pandemic.
Total consolidated assets for Edgewater Bancorp as of June 30, 2020 were $228.5 million, up from $185.9 million on December 31, 2019. Cash and Cash equivalents increased $35.2 million from $7.4 million on December 31, 2019 to $42.6 million on June 30, 2020. Loans receivable, net of allowance, increased from $158.1 million on December 31, 2019 to $165.3 million at June 30, 2020.
The loans receivable figure includes approximately $26.4 million of Paycheck Protection Program (PPP) loans made available through the CARES Act. There also was a reduction in the Warehouse Line Participation of $13.2 million. Loans held for sale increased $2.3 million from $50,000 on December 31, 2019 to $2.4 million on June 30, 2020. Bank investment securities and interest-bearing time deposits decreased $2.4 million to $11.1 million, compared to $13.5 million on December 31, 2019.
Total deposits increased by $23.6 million to $175.7 million during the quarter. The Federal Home Loan Bank Advances decreased $5.0 million to $8.0 million as of June 30, 2020. The Federal Reserve-Paycheck Protection Program Liquidity Fund (PPPLF) was used to fund the PPP loans. That borrowing will be paid off as the PPP loans are forgiven or paid off.
Total equity increased to $17.7 million at June 30, 2020 compared to $16.8 million at December 31, 2019.
Based in Saint Joseph, Edgewater Bancorp is the bank holding company for Edgewater Bank, which provides commercial, mortgage, and consumer loan and deposit banking services from 5 banking offices in St. Joseph, Bridgman, Buchanan, Coloma, and Royalton Township. Edgewater Bancorp’s common stock is listed under the symbol “EGDW.”
