July 23. Aquesta Financial Holdings reported unaudited net income during the second quarter of 2017  fell to $482,000 (15 cents per share) compared to second quarter of 2016 net income of $623,000 (20 cents per share).

Total assets were $356.6 million at the end of the second quarter vs. $353.1 million at year-end.

“The primary reason for the decrease during this quarter was that this year we did not recognize any SBA (Small Business Administration loans) gains or security gains unlike the same period last year. With increasing interest rates, we strategically chose to keep the variable rate SBA loans we originated to benefit our long-term net income in a rising rate environment. Even with this strategic decision, second quarter net income was up an annualized 10.0 percent compared to the first quarter of this current year,” said Jim Engel, CEO and president. He said second quarter loan growth was more than 20 percent annualized.

Key Highlights

Loan growth of $17.3 million for the six months ended June 30, 2017 (annualized 13.8 percent).
Core deposit growth of $13.4 million for the six months ended June 30, 2017 (annualized 13.0 percent).

Solid Balance Sheet Growth

At June 30, 2017, Aquesta’s total assets were $365.6 million compared to $353.1 million at December 31, 2016. Total loans were $268.1 million at June 30, 2017 compared to $250.8 million at December 31, 2016. Core deposits were $218.7 million at June 30, 2017 compared to $205.3 million at December 31, 2016.

Strong Asset Quality

Asset quality remains very strong. Nonperforming assets as of June 30, 2017 were at $1.8 million compared to $1.7 million as of December 31, 2016 Aquesta had $291,000 in nonaccrual loans as of June 30, 2017 compared to $122,000 in nonaccrual loans as of December 31, 2016. Other real estate owned was $1.5 million at the end of the second quarter 2017, as well as at the end of the fourth quarter 2016. Aquesta only has two pieces of OREO property.

Net Interest Income

Net interest income was $5.9 million for the six months ended June 30, 2017 compared to $5.2 million for the six months ended June 30, 2016. This is an increase of $711 thousand or 13.6%. The increase in net interest income continues to be directly associated with the Company’s continued loan growth.

Non Interest Expense

Non-interest expense was $6.4 million for the six months ended June 30, 2017 compared to $6.1 million for the six months ended June 30, 2016. Non-interest expense increased primarily due to additional personnel as the Company continues to expand. Personnel expense was at $4.1 million for the six months ended June 30, 2017 compared to $3.8 million for the six months ended June 30, 2016.

Occupancy expense decreased by $10,000 for the six months ended June 30, 2017 compared to the six months ending June 30, 2016. The decrease in occupancy expense was due to the consolidation of the Wilmington bank and insurance branch. Aquesta had $80,000 in OREO losses for the six months ended June 30, 2017 as compared to $153,000 for the six months ending June 30, 2016.