Financial Highlights
Diluted EPS increased 34%
Net income up 34%
Pre-tax, pre-provision income up 53%
Year-over-year balance sheet growth
$1.3B in total assets
40% growth in total loans year over year to $1.1B
Steady total deposits at $1.1B
Wealth assets of $1.9 Billion
Down 5% from one year ago and impacted significantly by current market conditions
Book value per share of $22.34 compared to $21.04 one year ago
Impacted by $5MM in year-over-year downward “mark to market” adjustments to the securities profile, or $1.05/share
$0.45/share dividend
Record date 12/15/22 and paid on 1/13/23
*For additional detail on our quarterly financial performance, read our latest Earnings Report.
Letter to Shareholders
First quarter 2023 was an eventful one in the financial services industry.
Safety and soundness of banks became national and international news with unexpected bank failures taking the spotlight. There has been much commentary and “finger pointing” about why these institutions failed. Without getting too far into the specifics, each case represents some level of foregoing disciplined management in favor of reaching for short term yield (and profit).
While no institution is completely insulated from market forces, Oakworth is one of the safest banks in the country with a well-capitalized balance sheet, a strong liquidity position and a stellar credit quality record.
BauerFinancial, an independent bank rating firm, recently awarded Oakworth with its highest 5-star rating which is determined by a formula that analyzes factors such as profitability, adequacy of loan loss reserves, regulatory capital levels and asset quality.
Securities portfolios have been the topic of much discussion in the financial press.
Oakworth’s securities portfolio, which represents approximately 10% of the balance sheet as compared to industry levels closer to 30%, is all held in available for sale which means the mark-to-market flows through equity capital (and is not “hidden” from the balance sheet). That mark-to-market represents approximately 9% of tangible common equity and would not materially impact our capital ratios were it included.
At the same time and as anticipated, Oakworth experienced strong balance sheet and profitability growth after making significant investments in our markets and our support infrastructure.
Pre-tax, pre-provision income increased 53% over first quarter 2023 while returns improved to 11.5% of average equity and 0.9% of average assets with a nearly 5-point improvement in the efficiency ratio to 65%.
Loans & Deposits:
Loan growth was exceptional at 40% year-over-year and deposits were steady in a market where bank deposits were under pressure. (Note while our reported deposits were down 4% since fourth quarter, they increased $20MM or approximately 2% since January 31 as a result of season build in December that was distributed in January.) Oakworth monitors its liquidity carefully against internal targets to ensure long-term viability. This has been management’s approach since our founding and is the primary reason we are consistently cited for safety and soundness.
Oakworth is positioned well in the current environment.
We remain excited about our entry into the Central Carolinas via our office in Charlotte, North Carolina, and, while we are mindful of a potential recessionary economy, we continue to expect our business model to perform well with above average loan growth, sufficient deposit growth to enable that loan growth and continued growth in our core wealth assets.
We are confident in our creation of value for our shareholders and we look forward to market dynamics surrounding bank stocks to return to a more normalized level that reflect the significant growth in our core book value and EPS in recent years.
As always, thank you for your business and thank you for your support.
Sincerely,
Scott Reed
Chairman and CEO
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