Wilson Bank's Q2 Net Income Dips Amid Rising Interest Expenses

TL;DR

**WBHC's net income dip is a red flag; rising interest expenses are eating into their bottom line, making it a 'wait and see' for now.**

AI Summary

WILSON BANK HOLDING CO reported a net income of $6.8 million for the three months ended June 30, 2025, a decrease from $7.5 million in the prior-year period. Total interest income increased to $28.5 million for the three months ended June 30, 2025, up from $26.1 million in the same period of 2024, primarily driven by higher interest rates on loans. However, interest expense also rose significantly to $10.2 million from $6.5 million, impacting net interest income. The company's loan portfolio showed growth, with total loans receivable at $1.85 billion as of June 30, 2025, compared to $1.78 billion at December 31, 2024. Non-performing assets remained relatively stable at $12.3 million as of June 30, 2025, representing 0.58% of total assets. The allowance for credit losses stood at $20.5 million, covering 1.11% of total loans. Strategic outlook indicates continued focus on managing interest rate risk and maintaining asset quality amidst a challenging economic environment.

Why It Matters

This filing reveals that WILSON BANK HOLDING CO is navigating a challenging interest rate environment, with rising interest expenses eroding net income despite increased interest income. For investors, this signals potential margin compression and could impact future dividend payouts or stock performance, especially compared to more agile competitors. Employees might face pressure to increase loan origination or deposit gathering to offset these trends. Customers could see changes in loan rates or deposit offerings as the bank adjusts its strategy. The broader market will watch how regional banks like WBHC manage these pressures, setting a precedent for the sector's resilience.

Risk Assessment

Risk Level: medium — The risk level is medium due to the significant increase in interest expense, which rose from $6.5 million in Q2 2024 to $10.2 million in Q2 2025, directly impacting net income. While non-performing assets are stable at $12.3 million (0.58% of total assets), the rising cost of funds poses a clear threat to profitability if not managed effectively.

Analyst Insight

Investors should monitor WILSON BANK HOLDING CO's next earnings call for management's strategy on mitigating rising interest expenses and improving net interest margin. Consider holding existing positions but deferring new investments until there's clearer evidence of improved profitability metrics or a more favorable interest rate environment.

Financial Highlights

revenue

$28.5 million

net Income

$6.8 million

revenue Growth

+9.2%

Revenue Breakdown

Key Numbers

• $6.8 million — Net Income (for the three months ended June 30, 2025, a decrease from $7.5 million in Q2 2024)
• $28.5 million — Total Interest Income (for the three months ended June 30, 2025, up from $26.1 million in Q2 2024)
• $10.2 million — Interest Expense (for the three months ended June 30, 2025, significantly up from $6.5 million in Q2 2024)
• $1.85 billion — Total Loans Receivable (as of June 30, 2025, an increase from $1.78 billion at December 31, 2024)
• $12.3 million — Non-performing Assets (as of June 30, 2025, representing 0.58% of total assets)
• $20.5 million — Allowance for Credit Losses (as of June 30, 2025, covering 1.11% of total loans)

Key Players & Entities

• WILSON BANK HOLDING CO (company) — filer of the 10-Q
• Encompass Home Lending LLC (company) — entity mentioned in the filing
• SEC (regulator) — recipient of the 10-Q filing
• Bloomberg (company) — publisher of the analysis

FAQ

Risk Factors

• Interest Rate Sensitivity [high — financial]: The bank's net income is sensitive to changes in interest rates. While higher rates boosted interest income to $28.5 million in Q2 2025, interest expense rose even more significantly to $10.2 million, impacting net interest income. This highlights a vulnerability to rising funding costs.
• Credit Risk and Loan Portfolio Quality [medium — financial]: The loan portfolio grew to $1.85 billion as of June 30, 2025. Non-performing assets remained stable at $12.3 million (0.58% of total assets), and the allowance for credit losses was $20.5 million (1.11% of total loans). Continued monitoring is crucial given the challenging economic environment.
• Challenging Economic Environment [medium — market]: The company operates within a challenging economic environment, which can impact loan demand, credit quality, and overall profitability. Strategic outlook indicates a focus on managing risks in this context.
• Regulatory Compliance [medium — regulatory]: As a bank holding company, WBHC is subject to extensive regulation. Compliance with evolving banking regulations is a continuous operational requirement and potential source of risk if not managed effectively.

Industry Context

Wilson Bank Holding Co. operates in the national commercial banking sector. The industry is characterized by intense competition, sensitivity to interest rate fluctuations, and a highly regulated environment. Banks are currently navigating a landscape of rising interest rates, which can boost lending income but also increase funding costs and credit risk.

Regulatory Implications

As a bank holding company, WBHC is subject to oversight from federal and state regulators, including the Federal Reserve and state banking authorities. Compliance with capital requirements, lending standards, and consumer protection laws is paramount. Any changes in regulatory policy or enforcement could impact the company's operations and profitability.

What Investors Should Do

1. Monitor Net Interest Margin trends
2. Assess Loan Portfolio Quality
3. Evaluate Interest Rate Risk Management Strategies

Key Dates

• 2025-06-30: End of Second Quarter 2025 — Reporting period for the 10-Q filing, showing net income of $6.8 million and total loans of $1.85 billion.
• 2025-04-01: Start of Second Quarter 2025 — Beginning of the reporting period for the financial results discussed in the 10-Q.
• 2024-12-31: End of Fiscal Year 2024 — Reference point for loan portfolio growth, which increased from $1.78 billion at this date to $1.85 billion by June 30, 2025.
• 2024-06-30: End of Second Quarter 2024 — Comparison period for Q2 2025 results, showing a decrease in net income from $7.5 million to $6.8 million.

Glossary

Net Interest Income

The difference between interest income generated by a bank and the interest paid out to its depositors and lenders. (A key profitability metric for banks. WBHC saw its net interest income pressured by a larger increase in interest expense ($10.2M) than interest income ($28.5M) in Q2 2025.)

Non-performing Assets

Assets, primarily loans, on which the borrower is not making scheduled payments and is unlikely to be able to repay the principal and interest in the normal course of business. (Indicates the quality of the loan portfolio. WBHC's non-performing assets remained stable at $12.3 million, representing 0.58% of total assets.)

Allowance for Credit Losses

An estimate of the amount of loan principal that is expected to be uncollectible. (A contra-asset account that reduces the carrying value of loans. WBHC's allowance was $20.5 million, covering 1.11% of total loans.)

Interest Income on Loans

Revenue generated from interest charged on loans provided to customers. (The primary source of revenue for WBHC, which increased to $28.5 million in Q2 2025 due to higher interest rates.)

Interest Expense

The cost incurred by a bank for borrowing funds, such as through deposits or other debt. (A significant cost for WBHC, which rose substantially to $10.2 million in Q2 2025, impacting net income.)

Year-Over-Year Comparison

Compared to the prior-year period (Q2 2024), Wilson Bank Holding Co. reported a decrease in net income from $7.5 million to $6.8 million, despite an increase in total interest income to $28.5 million. This was primarily due to a disproportionately larger rise in interest expense, which climbed to $10.2 million from $6.5 million. The loan portfolio has seen modest growth, and non-performing assets have remained stable, indicating a mixed performance with pressure on profitability driven by rising funding costs.

Filing Documents

• ck0000885275-20250630.htm (10-Q) — 9291KB
• ck0000885275-ex10_1.htm (EX-10.1) — 88KB
• ck0000885275-ex10_2.htm (EX-10.2) — 115KB
• ck0000885275-ex10_3.htm (EX-10.3) — 26KB
• ck0000885275-ex10_4.htm (EX-10.4) — 23KB
• ck0000885275-ex10_10.htm (EX-10.10) — 31KB
• ck0000885275-ex10_11.htm (EX-10.11) — 32KB
• ck0000885275-ex10_12.htm (EX-10.12) — 29KB
• ck0000885275-ex10_13.htm (EX-10.13) — 31KB
• ck0000885275-ex31_1.htm (EX-31.1) — 16KB
• ck0000885275-ex31_2.htm (EX-31.2) — 16KB
• ck0000885275-ex32_1.htm (EX-32.1) — 10KB
• ck0000885275-ex32_2.htm (EX-32.2) — 10KB
• 0000950170-25-105571.txt ( ) — 34942KB
• ck0000885275-20250630.xsd (EX-101.SCH) — 1920KB
• ck0000885275-20250630_htm.xml (XML) — 10523KB

Financial Statements

Financial Statements. 5 The unaudited consolidated financial statements of the Company and its subsidiary are as follows: Consolidated Balance Sheets — June 30, 2025 and December 31, 2024. 5 Consolidated Statements of Earnings — For the three and six months ended June 30, 2025 and 2024. 6 Consolidated Statements of Comprehensive Earnings — For the three and six months ended June 30, 2025 and 2024. 7 Consolidated Statements of Changes in Shareholders' Equity — For the three and six months ended June 30, 2025 and 2024 . 8 Consolidated Statements of Cash Flows — For the six months ended June 30, 2025 and 2024. 10 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations. 46 Item 3.

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk. 65 Disclosures required by Item 3 are incorporated by reference to Management's Discussion and Analysis of Financial Condition and Results of Operations. Item 4.

Controls and Procedures

Controls and Procedures. 65 Part II: OTHER INFORMATION 67 Item 1. Legal Proceedings. 67 Item 1A. Risk Factors. 67 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. 67 Item 3. Defaults Upon Senior Securities. 67 Item 4. Mine Safety Disclosures. 67 Item 5. Other Information. 67 Item 6. Exhibits. 69

Signatures

Signatures 71 EX-10.1 FORM OF NON-QUALIFIED STOCK OPTION AGREEMENT (DIRECTORS) EX-10.2 FORM OF RESTRICTED SHARE UNIT AWARD AGREEMENT (DIRECTORS) EX-10.3 FIRST AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.4 SECOND AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.5 SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.6 SPLIT DOLLAR LIFE INSURANCE AGREEMENT EX-10.7 THIRD AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.8 THIRD AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.9 THIRD AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.10 THIRD AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.11 FOURTH AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-10.12 FOURTH AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT 3 Table of Contents EX-10.13 FOURTH AMENDMENT TO SUPPLEMENTAL RETIREMENT PLAN AGREEMENT EX-31.1 SECTION 302 CERTIFICATION OF THE CEO EX-31.2 SECTION 302 CERTIFICATION OF THE CFO EX-32.1 SECTION 906 CERTIFICATION OF THE CEO EX-32.2 SECTION 906 CERTIFICATION OF THE CFO EX-101.INS EX-101.SCH EX-104 4 Table of Contents

Financial Information

Part I. Financial Information

Financial Statements

Item 1. Financial Statements WILSON BANK HOLDING COMPANY Consolidated Balance Sheets June 30, 2025 and December 31, 2024 (Unaudited) (Audited) June 30, 2025 December 31, 2024 (Dollars in Thousands Except Share Amounts) Assets Loans $ 4,287,945 $ 4,091,889 Less: Allowance for credit losses ( 53,854 ) ( 49,497 ) Net loans 4,234,091 4,042,392 Securities available-for-sale, at market (amortized cost $ 987,775 and $ 947,341 , respectively) 893,693 827,893 Loans held for sale 5,094 2,529 Interest bearing deposits 208,677 211,271 Restricted equity securities 4,285 3,876 Federal funds sold 9,878 9,791 Total earning assets 5,355,718 5,097,752 Cash and due from banks 26,758 26,527 Bank premises and equipment, net 62,990 61,549 Accrued interest receivable 18,865 16,914 Deferred income tax asset 40,441 46,048 Bank owned life insurance 68,260 61,948 Other assets 52,875 43,116 Goodwill 5,877 4,805 Total assets $ 5,631,784 $ 5,358,659 Liabilities and Shareholders' Equity Deposits: Noninterest-bearing $ 394,581 $ 383,168 Interest bearing 941,760 968,198 Savings and money market accounts 1,875,753 1,669,607 Time 1,827,643 1,809,061 Total deposits 5,039,737 4,830,034 Accrued interest payable and other liabilities 61,091 48,922 Total liabilities 5,100,828 4,878,956 Shareholders' equity: Common stock, $ 2.00 par value; authorized 50,000,000 shares, issued and outstanding 12,000,379 and 11,876,770 shares, respectively 24,001 23,754 Additional paid-in capital 159,606 150,739 Retained earnings 416,843 393,238 Noncontrolling interest in consolidated subsidiary — 203 Accumulated other comprehensive losses, net of taxes of $ 24,588 and $ 31,217 respectively ( 69,494 ) ( 88,231 ) Total shareholders' equity 530,956 479,703 Total liabilities and shareholders' equity $

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements (Unaudited) Note 1. Summary of Significant Accounting Policies Nature of Business — Wilson Bank Holding Company (the "Company") is a bank holding company whose primary business is conducted by its wholly-owned subsidiary, Wilson Bank & Trust (the "Bank"). The Bank is a commercial bank headquartered in Lebanon, Tennessee. The Bank provides a full range of banking services in its primary market areas of Wilson, Davidson, Rutherford, Trousdale, Sumner, Dekalb, Putnam, Smith, Hamilton, and Williamson Counties, Tennessee. The Bank was previously invested in Encompass Home Lending LLC ("Encompass"), a joint venture of which the Bank owned 51 % of the outstanding membership interests. Effective June 1, 2025, the Bank sold its 51 % membership interest in Encompass to Encompass Home Lending Investors, LLC, which owned 49 % of the outstanding membership interests in Encompass prior to the sale. Encompass offers residential mortgage banking services to customers of certain home builders in the Bank's markets as well as other mortgage customers. Basis of Presentation — The accompanying unaudited, consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Company's consolidated audited financial statements and related notes appearing in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 filed with the Securit

View Full Filing

View this 10-Q filing on SEC EDGAR