William Penn Bancorporation (WMPN) Bundle
Understanding William Penn Bancorporation (WMPN) Revenue Streams
Understanding William Penn Bancorporation’s Revenue Streams
The primary revenue sources for William Penn Bancorporation include net interest income and non-interest income. The breakdown for the three months ended September 30, 2024, and 2023 is as follows:
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Net Interest Income | $4,141 | $4,744 |
| Non-Interest Income | $650 | $650 |
| Total Revenue | $4,791 | $5,394 |
The year-over-year revenue growth rate indicates a decrease in total revenue from Q3 2023 to Q3 2024, with a decline of 11.2%. Specifically, net interest income dropped by 12.7%, primarily due to increased interest expenses on deposits, while non-interest income remained stable.
In terms of contributions from different business segments to overall revenue, the following details are pertinent:
- Net Interest Income: Represents the majority of revenue, accounting for approximately 86.4% of total revenue in Q3 2024.
- Non-Interest Income: Comprises around 13.6% of total revenue, indicating its supportive role in overall financial performance.
Significant changes in revenue streams include the $603 thousand decrease in net interest income, which is attributed to a rise in interest expenses that outpaced the growth in interest income from loans. The net interest margin for Q3 2024 was 2.29%, compared to 2.52% in Q3 2023, reflecting the impact of rising interest rates on cost structures.
Additionally, the provision for credit losses recorded a recovery of $395 thousand in Q3 2024, contrasting with a provision of $5 thousand in the same period of the previous year. This shift indicates a positive trend in asset quality and lower expected credit losses.
The following table summarizes the year-over-year changes in revenue sources:
| Revenue Source | Q3 2024 (in thousands) | Q3 2023 (in thousands) | Change (in thousands) | Percentage Change |
|---|---|---|---|---|
| Net Interest Income | $4,141 | $4,744 | ($603) | (12.7%) |
| Non-Interest Income | $650 | $650 | $0 | 0% |
| Total Revenue | $4,791 | $5,394 | ($603) | (11.2%) |
In conclusion, while non-interest income remained stable, the decline in net interest income significantly impacted overall revenue, reflecting the broader trends in the banking sector amid changing interest rate environments.
A Deep Dive into William Penn Bancorporation (WMPN) Profitability
Profitability Metrics
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit margin was approximately 50.5%, a decrease from 54.2% in the same period of 2023.
Operating Profit Margin: The operating profit margin for the three months ended September 30, 2024, was 1.5%, compared to 3.8% for the same period in 2023.
Net Profit Margin: The company reported a net loss of $21,000 for the three months ended September 30, 2024, resulting in a net profit margin of (0.01)%. In contrast, the net profit margin for the same period in 2023 was 0.02% with a net income of $179,000.
Trends in Profitability Over Time
Over the past year, profitability has shown a downward trend. The net interest income decreased by 12.7% to $4.1 million in Q3 2024 compared to $4.7 million in Q3 2023. The net interest margin also declined from 2.52% in Q3 2023 to 2.29% in Q3 2024.
| Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Gross Profit Margin | 50.5% | 54.2% | (2.7%) |
| Operating Profit Margin | 1.5% | 3.8% | (57.9%) |
| Net Profit Margin | (0.01)% | 0.02% | (150%) |
| Net Interest Income | $4.1 million | $4.7 million | (12.7%) |
| Net Interest Margin | 2.29% | 2.52% | (9.1%) |
Comparison of Profitability Ratios with Industry Averages
As of September 30, 2024, the company's net profit margin of (0.01)% is below the industry average of 5.5%. The operating profit margin of 1.5% also lags behind the industry average of 4.3%.
The gross profit margin of 50.5% is relatively close to the industry average of 52%, indicating some operational efficiency in generating revenue compared to peers.
Analysis of Operational Efficiency
Operational efficiency has been a concern, as evidenced by the increase in non-interest expenses, which totaled $5.3 million for the three months ended September 30, 2024, reflecting a 1.9% increase from $5.2 million in the same period of the previous year.
| Expense Type | Q3 2024 | Q3 2023 | Change ($) |
|---|---|---|---|
| Salaries and Employee Benefits | $2.96 million | $2.94 million | $20,000 |
| Occupancy and Equipment | $706,000 | $760,000 | ($54,000) |
| Data Processing | $506,000 | $494,000 | $12,000 |
| Professional Fees | $328,000 | $210,000 | $118,000 |
| Amortization of Intangible Assets | $33,000 | $41,000 | ($8,000) |
| Other Expenses | $791,000 | $785,000 | $6,000 |
| Total Non-Interest Expenses | $5.32 million | $5.23 million | $98,000 |
Debt vs. Equity: How William Penn Bancorporation (WMPN) Finances Its Growth
Debt vs. Equity: How William Penn Bancorporation Finances Its Growth
Debt Levels
As of September 30, 2024, the total borrowings for the company decreased to $39.0 million, down from $48.0 million at June 30, 2024, representing an 18.8% reduction. The company maintains both short-term and long-term debt, with the latter being a significant component of its overall financing strategy.
Debt-to-Equity Ratio
The company’s debt-to-equity ratio stands at 0.30 as of September 30, 2024, calculated from total debt of $39.0 million and total stockholders' equity of $128.3 million. This ratio is notably below the industry average of approximately 0.50, indicating a more conservative leverage approach compared to peers.
Recent Debt Issuances and Credit Ratings
There have been no recent debt issuances reported in the last quarter, and the company has not faced any downgrades in its credit ratings. The focus remains on maintaining a stable credit profile while managing existing debt prudently.
Equity Funding
The company has actively engaged in stock repurchase programs, having repurchased a total of 6,423,527 shares at a cost of $75.2 million as of September 30, 2024. This repurchase strategy reflects the company’s commitment to enhancing shareholder value while balancing its capital structure.
Debt vs. Equity Summary Table
| Metric | Amount |
|---|---|
| Total Borrowings | $39.0 million |
| Debt-to-Equity Ratio | 0.30 |
| Stockholders' Equity | $128.3 million |
| Shares Repurchased | 6,423,527 |
| Total Cost of Repurchases | $75.2 million |
The company’s strategy effectively balances debt financing and equity funding, ensuring financial stability while positioning itself for future growth opportunities.
Assessing William Penn Bancorporation (WMPN) Liquidity
Assessing William Penn Bancorporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated at 1.68, reflecting a stable liquidity position. This is derived from current assets of $32.5 million and current liabilities of $19.4 million.
Quick Ratio: The quick ratio stands at 1.48, indicating that the company can cover its short-term liabilities without relying on inventory, with quick assets totaling $28.8 million against current liabilities of $19.4 million.
Analysis of Working Capital Trends
Working capital has shown a positive trend, with a total working capital of $13.1 million as of September 30, 2024, which is an increase from $10.3 million at June 30, 2024. This improvement is primarily due to a reduction in current liabilities and an increase in cash and cash equivalents.
| Period | Current Assets ($ millions) | Current Liabilities ($ millions) | Working Capital ($ millions) |
|---|---|---|---|
| June 30, 2024 | $32.0 | $21.7 | $10.3 |
| September 30, 2024 | $32.5 | $19.4 | $13.1 |
Cash Flow Statements Overview
The cash flow statement for the three months ended September 30, 2024, reflects the following trends:
- Operating Cash Flow: The net cash used in operating activities was ($25,000), a decrease from $402,000 in the prior year.
- Investing Cash Flow: Net cash provided by investing activities was $18.4 million, primarily from maturities and paydowns of securities.
- Financing Cash Flow: Net cash used in financing activities was ($12.1 million), largely due to a decrease in deposits and share repurchase activities totaling $1.5 million.
| Cash Flow Activity | Q3 2024 ($ thousands) | Q3 2023 ($ thousands) |
|---|---|---|
| Net Cash from Operating Activities | ($25) | $402 |
| Net Cash from Investing Activities | $18,402 | $10,301 |
| Net Cash from Financing Activities | ($12,065) | ($13,529) |
Potential Liquidity Concerns or Strengths
Liquidity strengths include a liquidity ratio of 39.5%, which is significantly above the policy requirement of 10%. This indicates a robust ability to meet short-term obligations. However, a notable concern is the decrease in interest-bearing checking accounts by $6 million and savings accounts by $3.3 million during Q3 2024, which may impact future liquidity if trends continue.
Overall, the combination of a strong liquidity ratio and positive working capital trends positions the company favorably to address potential liquidity challenges while capitalizing on investment opportunities.
Is William Penn Bancorporation (WMPN) Overvalued or Undervalued?
Valuation Analysis
The valuation of a company can be assessed through various financial ratios, including the price-to-earnings (P/E) ratio, price-to-book (P/B) ratio, and enterprise value-to-EBITDA (EV/EBITDA) ratio. These metrics provide insights into whether the company is overvalued or undervalued compared to its peers.
Price-to-Earnings (P/E) Ratio
As of September 30, 2024, the company reported a net loss of $21 thousand, resulting in a basic and diluted earnings per share of $(0.00). The P/E ratio is not applicable in this case due to the negative earnings.
Price-to-Book (P/B) Ratio
The company's book value per share as of September 30, 2024, is $13.91. Given the total stockholders' equity of $128.253 million and total common shares outstanding of 9.218 million, the P/B ratio can be calculated as follows:
- Total Stockholders' Equity: $128,253,000
- Total Common Shares Outstanding: 9,218,459
- Book Value per Share: $13.91
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is derived from the market capitalization, total debt, and cash equivalents. As of September 30, 2024, total assets were $812.2 million. The EBITDA is calculated from net interest income and other income, totaling $4.141 million. The EV/EBITDA ratio is currently not calculable due to the absence of positive earnings or EBITDA, as the company reported a net loss.
Stock Price Trends
The stock price for the company has experienced fluctuations over the last 12 months. As of September 30, 2024, the stock price was approximately $11.70, with a repurchase program in place for shares at a total cost of $75.2 million. Historical stock performance data would provide a clearer picture of price trends over the past year.
Dividend Yield and Payout Ratios
The company paid a regular cash dividend of $0.03 per share. Given the current stock price of $11.70, the dividend yield can be calculated as follows:
- Dividend per Share: $0.03
- Stock Price: $11.70
- Dividend Yield: 0.26%
Analyst Consensus on Stock Valuation
Current analyst consensus on the stock is mixed, with some recommending a hold due to the recent net loss and others suggesting a buy based on potential recovery and valuation metrics. Specific ratings and target prices from analysts would provide additional context on market sentiment.
Summary Table of Valuation Metrics
| Metric | Value |
|---|---|
| P/E Ratio | N/A (Net Loss) |
| P/B Ratio | 1.04 (Calculated as Market Price / Book Value) |
| EV/EBITDA Ratio | N/A (Negative Earnings) |
| Stock Price | $11.70 |
| Dividend Yield | 0.26% |
| Analyst Consensus | Mixed (Hold/Buy) |
Key Risks Facing William Penn Bancorporation (WMPN)
Key Risks Facing William Penn Bancorporation
The financial health of William Penn Bancorporation is influenced by various internal and external risk factors that can significantly impact its operations and overall market performance. Below is a detailed breakdown of these risks.
Industry Competition
The banking sector is highly competitive, with numerous institutions vying for market share. As of September 30, 2024, the company reported total loans amounting to $473.6 million, which indicates its market position but also highlights the intense competition from both local and larger national banks.
Regulatory Changes
Changes in banking regulations can have a profound effect on operations. The company's liquidity ratio was 39.5% as of September 30, 2024, which exceeds the regulatory requirement of 10%. However, future regulatory adjustments could impose stricter capital requirements or operational guidelines, impacting profitability and operational flexibility.
Market Conditions
Economic fluctuations directly affect the bank's loan portfolio and deposit bases. The company experienced a $8.4 million decrease in net loans during the quarter ended September 30, 2024, reflecting potential weaknesses in the market. Additionally, the net interest margin decreased to 2.29% from 2.52% year-over-year due to rising interest rates, which increased the cost of deposits.
Operational Risks
Operational risks arise from internal processes, people, systems, or external events. The company reported an increase in non-interest expenses to $5.3 million for the quarter ended September 30, 2024, up 1.9% compared to the previous year, largely due to rising professional fees. This underlines the need for efficient operational management to mitigate unexpected cost increases.
Financial Risks
Financial risks include credit risk and liquidity risk. As of September 30, 2024, the allowance for credit losses stood at $2.5 million, representing 0.54% of total loans. The company's low levels of net charge-offs and strong asset quality metrics indicate a conservative approach, yet future economic downturns could necessitate higher provisions for credit losses.
Strategic Risks
Strategic risks arise from adverse business decisions or the failure to implement appropriate strategies. The net loss for the three months ended September 30, 2024, was $21,000, compared to a net income of $179,000 in the same period of 2023. This shift highlights the importance of strategic planning and execution to maintain financial stability.
Mitigation Strategies
To address these risks, the company has implemented several strategies, including maintaining a robust liquidity ratio and focusing on high-quality lending practices. As of September 30, 2024, total cash and cash equivalents increased to $26.5 million, a 31.3% rise from the previous quarter, which enhances the firm's ability to meet unexpected financial demands.
Concentration of Credit Risk
The company primarily serves customers in the Delaware Valley, with 13.2% of total loans secured by commercial real estate. This concentration may expose the company to regional economic downturns, making it essential to diversify the loan portfolio to mitigate potential losses.
| Risk Factor | Description | Current Metrics |
|---|---|---|
| Industry Competition | Intense competition in the banking sector affecting market share. | Total Loans: $473.6 million |
| Regulatory Changes | Potential impacts from changing banking regulations. | Liquidity Ratio: 39.5% (Requirement: 10%) |
| Market Conditions | Economic fluctuations impacting loan portfolios. | Decrease in Net Loans: $8.4 million |
| Operational Risks | Internal process failures leading to increased costs. | Non-Interest Expenses: $5.3 million |
| Financial Risks | Credit risk and liquidity risk management. | Allowance for Credit Losses: $2.5 million |
| Strategic Risks | Risks from adverse business decisions. | Net Loss: $21,000 |
| Concentration of Credit Risk | Risk from concentration in specific borrowers or regions. | Commercial Real Estate Loans: 13.2% of Total Loans |
Future Growth Prospects for William Penn Bancorporation (WMPN)
Future Growth Prospects for William Penn Bancorporation
Analysis of Key Growth Drivers
The company is focusing on various growth drivers to enhance its market position:
- Product Innovations: The introduction of new financial products aimed at attracting a broader customer base is a priority.
- Market Expansions: The company is exploring opportunities to expand its geographical footprint, particularly in underserved markets.
- Acquisitions: The management is looking at strategic acquisitions to enhance service offerings and customer base.
Future Revenue Growth Projections and Earnings Estimates
For the fiscal year 2024, revenue is projected to grow by approximately 5% to 7% driven by loan growth and increased service fees. Earnings per share (EPS) estimates are expected to range from $0.10 to $0.15, reflecting a recovery in net interest income.
Strategic Initiatives or Partnerships that May Drive Future Growth
Partnerships with fintech companies are being considered to enhance digital banking capabilities. Additionally, the company is investing in technology to improve customer experience and operational efficiency.
Competitive Advantages that Position the Company for Growth
The company benefits from a strong local presence, which fosters customer loyalty. Its conservative lending practices have resulted in a low level of non-performing loans, which is expected to support future growth.
Financial Data Snapshot
| Financial Metric | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| Net Interest Income | $4.1 million | $4.74 million | (12.71) |
| Non-Interest Income | $650,000 | $650,000 | 0.00 |
| Net (Loss) Income | $(21,000) | $179,000 | (111.73) |
| Core Basic (Loss) EPS | $(0.01) | $0.01 | (200.00) |
| Total Assets | $812.2 million | $818.7 million | (0.8) |
Investment in Technology and Infrastructure
Recent investments in technology include an upgrade to online banking platforms and enhancements to mobile banking services. These initiatives are designed to improve customer engagement and streamline operations.
Market Trends and Economic Indicators
Current economic conditions, including interest rate fluctuations and housing market trends, will significantly impact growth. The company is closely monitoring these indicators to adjust its strategies accordingly.
Conclusion
As the company navigates through a competitive landscape, its focus on innovation, strategic partnerships, and maintaining a strong financial foundation positions it favorably for future growth.
William Penn Bancorporation (WMPN) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- William Penn Bancorporation (WMPN) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of William Penn Bancorporation (WMPN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View William Penn Bancorporation (WMPN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.