Touchstone Bank Reports 2019 Financial Results
PRINCE GEORGE, Va., Jan. 29, 2020 /PRNewswire/ -- Touchstone Bank (the "Bank") (OTC Pink: TSBA) today announced its unaudited results for the year ended December 31, 2019.
The Bank reported net income of $3.28 million available to common shareholders for the year ended December 31, 2019. Basic and diluted earnings per common share for the year ended December 31, 2019 amounted to $0.99 and $0.98, respectively, and return on average assets was 0.72%. By comparison, the Bank had net income of $1.24 million available to common shareholders for the year ended December 31, 2018. Basic and diluted earnings per common share for the year ended December 31, 2018 amounted to $0.37 and return on average assets was 0.29%. For the fourth quarter of 2019, the Bank reported net income of $1.1 million available to common shareholders or $0.32 per share on a basic and diluted basis. For the quarter ended December 31, 2018, net income available to common shareholders was $294 thousand, or $0.09 per share on a basic and diluted basis.
"I am pleased with the success and progress made as our great team continues to gain momentum in many ways. For 2019, we improved earnings, all while increasing loans and deposits modestly and expanded the customer base. Our intense focus on high-quality customer service, leveraging technology and taking advantage of efficiency opportunities, should bode well for 2020 and beyond," remarked James Black, President and CEO.
Earnings
Net interest income for the year ended December 31, 2019 was $17.1 million, compared to $16.7 million for the same period in 2018, an increase of $455 thousand, or 2.7%. Net interest income for the fourth quarters of 2019 and 2018 was $4.3 million. Net interest income was $4.4 million for the third quarter of 2019. The net interest margin for the year ended December 31, 2019 was 4.14% compared to 4.38% for the year ended December 31, 2018. The net interest margin for the fourth quarter of 2019 was 3.92% compared to 4.41% for the same period in 2018. The Bank experienced net interest margin compression in 2019 mainly due to an increase in its costs of funds.
The Bank recorded a $100 thousand provision for loan losses in the fourth quarter of 2019, bringing the 2019 year-to-date total to $63 thousand. The provision for loan losses for the year ended December 31, 2018 totaled $1.0 million.
Noninterest income totaled $3.09 million for the year ended December 31, 2019, an increase of $200 thousand, or 6.9%, when compared to the same period in 2018.
The following table is a comparison of the components of noninterest income for the years end December 31, 2019 and 2018:
2019 |
2018 |
Change $ |
Change % |
|||||
(dollars in thousands) |
||||||||
Service charges on deposit accounts |
$ 1,578 |
$ 1,393 |
$ 185 |
13.3% |
||||
Secondary market origination fees |
204 |
128 |
76 |
59.4% |
||||
Bank-owned life insurance |
319 |
296 |
23 |
7.8% |
||||
Gain (loss) on security sales |
106 |
(19) |
125 |
657.9% |
||||
Loss on sale of fixed assets |
(30) |
- |
(30) |
- |
||||
Other operating income |
914 |
1,093 |
(179) |
-16.4% |
||||
Total |
$ 3,091 |
$ 2,891 |
$ 200 |
6.9% |
||||
The following table is a comparison of the components of noninterest income for the quarters end December 31, 2019 and 2018:
2019 |
2018 |
Change $ |
Change % |
|||||
(dollars in thousands) |
||||||||
Service charges on deposit accounts |
$ 424 |
$ 302 |
$ 122 |
40.4% |
||||
Secondary market origination fees |
39 |
8 |
31 |
387.5% |
||||
Bank-owned life insurance |
130 |
63 |
67 |
106.3% |
||||
Gain (loss) on security sales |
18 |
(19) |
37 |
194.7% |
||||
Other operating income |
291 |
222 |
69 |
31.1% |
||||
Total |
$ 902 |
$ 576 |
$ 326 |
56.6% |
||||
The increase in service charges on deposit accounts year-over-year as well as quarter-over-quarter was mainly driven by an increase in overdraft fees. The Bank implemented a new overdraft program in the first quarter of 2019. In early 2019, the Bank restructured its secondary market department which positively impacted secondary market origination fees in all of 2019. In the fourth quarter of 2019, the Bank recorded $67 thousand of income from a death benefit on one of its bank-owned life insurance policies. Other operating income was down $179 thousand for the 2019 year when compared to 2018. However, the 2018 total included a one-time credit of $250 thousand from the Bank's core vendor.
Noninterest expense for the year ended December 31, 2019 was $16.1 million, a decrease of $904 thousand, or 5.3%, over the $17.0 million of noninterest expense incurred during the year ended December 31, 2018.
The following table is a comparison of the components of noninterest expense for the years end December 31, 2019 and 2018:
2019 |
2018 |
Change $ |
Change % |
|||||
(dollars in thousands) |
||||||||
Salaries and employee benefits |
$ 8,705 |
$ 9,031 |
$ (326) |
-3.6% |
||||
Occupancy expense |
1,059 |
911 |
148 |
16.2% |
||||
Funiture and equipment expense |
1,175 |
1,006 |
169 |
16.8% |
||||
Data processing |
745 |
1,171 |
(426) |
-36.4% |
||||
Telecommunications |
762 |
619 |
143 |
23.1% |
||||
Legal and professional fees |
492 |
791 |
(299) |
-37.8% |
||||
OREO losses and related expenses |
40 |
376 |
(336) |
-89.4% |
||||
FDIC assessments |
99 |
173 |
(74) |
-42.8% |
||||
Other noninterest expenses |
3,068 |
2,971 |
97 |
3.3% |
||||
Total |
$ 16,145 |
$ 17,049 |
$ (904) |
-5.3% |
||||
The following table is a comparison of the components of noninterest expense for the quarters end December 31, 2019 and 2018:
2019 |
2018 |
Change $ |
Change % |
|||||
(dollars in thousands) |
||||||||
Salaries and employee benefits |
$ 2,082 |
$ 2,204 |
$ (122) |
-5.5% |
||||
Occupancy expense |
295 |
236 |
59 |
25.0% |
||||
Funiture and equipment expense |
247 |
277 |
(30) |
-10.8% |
||||
Data processing |
162 |
318 |
(156) |
-49.1% |
||||
Telecommunications |
194 |
227 |
(33) |
-14.5% |
||||
Legal and professional fees |
(2) |
(50) |
48 |
-96.0% |
||||
OREO losses and related expenses |
16 |
206 |
(190) |
-92.2% |
||||
FDIC assessments |
- |
29 |
(29) |
- |
||||
Other noninterest expenses |
817 |
683 |
134 |
19.6% |
||||
Total |
$ 3,811 |
$ 4,130 |
$ (319) |
-7.7% |
||||
The slight decline in salaries and employee benefits year-over-year was mainly due to an uptick in deferred loan costs. The decline in legal and professional fees year-over-year was mainly due to added third-party resources associated with the core platform conversion in the first half of 2018 as well as additional accounting support associated with merger accounting. The Bank over-accrued for legal and professional fees during the years ended in 2019 and 2018 and the negative expense totals shown above in the noninterest expense table for the quarters end December 31, 2019 and 2018 represent a reversal of those accruals at year end. The decline in other real estate owned losses and related expenses was due to the decline in other real estate owned properties. The improvement in FDIC assessments was due to the ability to use credits in the third and fourth quarters of 2019 to offset the quarterly assessments.
Balance Sheet
At December 31, 2019, total assets were $468.2 million, compared to $427.0 million as of December 31, 2018, an increase of $41.2 million, or 9.7%. Total loans increased $12.3 million, or 3.6%, when comparing total loans of $350.3 million at December 31, 2019 to total loans of $338.0 million at December 31, 2018. Loan activity throughout the Bank's markets remains stable. Deposits totaled $382.9 million at December 31, 2019, as compared to $370.1 million as of December 31, 2018. Borrowings from the Federal Home Loan Bank totaled $30.0 million at December 31, 2019, compared to $4.0 million at December 31, 2018.
Total equity at December 31, 2019 was $47.2 million, compared to $44.3 million at December 31, 2018. The Bank remains well capitalized as defined by regulatory guidelines.
Asset Quality
The allowance for loan losses at December 31, 2019 was $2.3 million, or 0.65%, of total loans, compared to $2.3 million, or 0.67% of total loans, at December 31, 2018. Charge offs, net of recoveries, for the quarter ended December 31, 2019, were $56 thousand, bringing the year-to-date total of net charge offs to $52 thousand. Nonperforming loans were $807 thousand, or 0.23% of total loans, at December 31, 2019. This is an improvement of $1.4 million, or 63.4%, when compared to nonperforming loans of $2.2 million at December 31, 2018. Other real estate owned at December 31, 2019 was $82 thousand, an improvement of $237 thousand when compared to the other real estate owned total of $319 thousand at December 31, 2018.
About Touchstone Bank
Touchstone Bank is a full-service community bank headquartered in Prince George, Virginia, with $468.2 million in total assets. The Bank has eleven branches serving Southern and Central Virginia and two branches and a loan center serving Northern North Carolina. Visit www.touchstone.bank for more information.
Forward-Looking Statements
Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from those included in these statements due to a variety of factors.
Touchstone Bank |
||||||||||
Financial Highlights |
||||||||||
(unaudited) |
||||||||||
For the Three Months Ended |
||||||||||
(in thousands, except per share data) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|||||
Selected Operating Data: |
2019 |
2019 |
2019 |
2019 |
2018 |
|||||
Net interest income |
$ 4,283 |
$ 4,388 |
$ 4,296 |
$ 4,179 |
$ 4,277 |
|||||
Provision for (recovery of) loan losses |
100 |
- |
(112) |
75 |
300 |
|||||
Noninterest income |
902 |
750 |
797 |
642 |
576 |
|||||
Noninterest expense |
3,811 |
4,080 |
4,148 |
4,106 |
4,130 |
|||||
Income before income tax |
1,274 |
1,058 |
1,057 |
640 |
423 |
|||||
Income tax expense |
211 |
212 |
221 |
99 |
121 |
|||||
Net income |
1,063 |
846 |
836 |
541 |
302 |
|||||
Less: Preferred dividends |
8 |
- |
- |
- |
8 |
|||||
Net income available to common shareholders |
$ 1,055 |
$ 846 |
$ 836 |
$ 541 |
$ 294 |
|||||
Income per share available to common shareholders: |
||||||||||
Basic |
$ 0.32 |
$ 0.26 |
$ 0.25 |
$ 0.16 |
$ 0.09 |
|||||
Diluted |
$ 0.32 |
$ 0.25 |
$ 0.25 |
$ 0.16 |
$ 0.09 |
|||||
Average common shares outstanding, basic |
3,321,850 |
3,321,458 |
3,321,443 |
3,319,170 |
3,315,172 |
|||||
Average common shares outstanding, diluted |
3,351,202 |
3,350,810 |
3,350,795 |
3,348,627 |
3,344,749 |
|||||
For the year ended |
||||||||||
December 31, |
December 31, |
|||||||||
2019 |
2018 |
|||||||||
Net interest income |
$ 17,146 |
$ 16,691 |
||||||||
Provision for loan losses |
63 |
1,000 |
||||||||
Noninterest income |
3,091 |
2,891 |
||||||||
Noninterest expense |
16,145 |
17,049 |
||||||||
Income before income tax |
4,029 |
1,533 |
||||||||
Income tax expense |
743 |
287 |
||||||||
Net income |
$ 3,286 |
$ 1,246 |
||||||||
Less: Preferred dividends |
$ 8 |
$ 8 |
||||||||
Net income available to common |
||||||||||
shareholders |
$ 3,278 |
$ 1,238 |
||||||||
Income per share available to common shareholders: |
||||||||||
Basic |
$ 0.99 |
$ 0.37 |
||||||||
Diluted |
$ 0.98 |
$ 0.37 |
||||||||
Average common shares outstanding, basic |
3,320,989 |
3,313,731 |
||||||||
Average common shares outstanding, diluted |
3,350,367 |
3,343,339 |
||||||||
Touchstone Bank |
||||||||||
Financial Highlights (continued) |
||||||||||
(unaudited) |
||||||||||
(in thousands, except per share data) |
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
|||||
Balance Sheet Data: |
2019 |
2019 |
2019 |
2019 |
2018 |
|||||
Total assets |
$ 468,188 |
$ 471,623 |
$ 458,083 |
$ 439,348 |
$ 426,964 |
|||||
Total loans |
350,276 |
349,727 |
350,225 |
342,217 |
338,016 |
|||||
Allowance for loan losses |
(2,280) |
(2,236) |
(2,328) |
(2,358) |
(2,269) |
|||||
Core deposit intangible |
1,434 |
1,523 |
1,615 |
1,710 |
1,808 |
|||||
Deposits |
382,924 |
386,680 |
373,877 |
374,627 |
370,147 |
|||||
Borrowings |
30,000 |
29,999 |
30,999 |
12,998 |
4,463 |
|||||
Subordinated debt |
3,542 |
3,551 |
3,560 |
3,569 |
3,579 |
|||||
Preferred stock |
59 |
59 |
59 |
59 |
59 |
|||||
Shareholders' equity |
47,219 |
47,446 |
46,193 |
44,951 |
44,343 |
|||||
Book value per common share |
$ 14.18 |
$ 14.27 |
$ 13.89 |
$ 13.52 |
$ 13.36 |
|||||
Tangible book value per common share |
$ 13.75 |
$ 13.81 |
$ 13.40 |
$ 13.01 |
$ 12.81 |
|||||
Total common shares outstanding |
3,325,043 |
3,321,371 |
3,321,491 |
3,319,319 |
3,315,172 |
|||||
Total preferred shares outstanding |
29,352 |
29,352 |
29,352 |
29,352 |
29,577 |
|||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||
2019 |
2019 |
2019 |
2019 |
2018 |
||||||
Performance Ratios: |
(QTD annualized) |
(QTD annualized) |
(QTD annualized) |
(QTD annualized) |
(QTD annualized) |
|||||
Return on average assets |
0.89% |
0.72% |
0.75% |
0.51% |
0.28% |
|||||
Return on average common equity |
8.83% |
7.17% |
7.39% |
4.92% |
2.71% |
|||||
Net interest margin |
3.92% |
4.12% |
4.23% |
4.31% |
4.41% |
|||||
Overhead efficiency (non-GAAP) |
82.10% |
79.63% |
82.65% |
85.19% |
84.99% |
|||||
December 31, |
December 31, |
|||||||||
2019 |
2018 |
|||||||||
Performance Ratios: |
YTD |
YTD |
||||||||
Return on average assets |
0.72% |
0.29% |
||||||||
Return on average common equity |
6.90% |
2.80% |
||||||||
Net interest margin |
4.14% |
4.38% |
||||||||
Overhead efficiency (non-GAAP) |
79.90% |
84.81% |
||||||||
December 31, |
September 30, |
June 30, |
March 31, |
December 31, |
||||||
Asset Quality Data: |
2019 |
2019 |
2019 |
2019 |
2018 |
|||||
Allowance for loan losses |
$ 2,280 |
$ 2,236 |
$ 2,328 |
$ 2,358 |
$ 2,269 |
|||||
Nonperforming loans |
807 |
845 |
951 |
2,233 |
2,202 |
|||||
Other real estate owned, net of allowance |
82 |
155 |
166 |
174 |
319 |
|||||
Nonperforming assets |
889 |
1,000 |
1,117 |
2,407 |
2,521 |
|||||
Net charge-offs (recoveries) , QTD |
56 |
92 |
(81) |
(15) |
228 |
|||||
Asset Quality Ratios: |
||||||||||
Allowance for loan losses to total loans |
0.65% |
0.64% |
0.66% |
0.68% |
0.67% |
|||||
Nonperforming loans to total loans |
0.23% |
0.24% |
0.27% |
0.65% |
0.65% |
|||||
Nonperforming assets to total assets |
0.19% |
0.21% |
0.24% |
0.55% |
0.59% |
|||||
YTD net charge-offs (recoveries) to average loans, annualized |
0.06% |
0.10% |
(0.09)% |
(0.02)% |
0.27% |
|||||
Capital Ratios: |
||||||||||
Total risk-based capital |
14.18% |
14.21% |
13.82% |
14.08% |
14.23% |
|||||
Tier 1 risk-based capital |
12.57% |
12.60% |
12.19% |
12.38% |
12.52% |
|||||
Tier 1 leverage capital |
9.61% |
9.80% |
9.93% |
10.00% |
10.03% |
|||||
SOURCE Touchstone Bank
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