Tri-County Financial Group, Inc. Reports Third Quarter 2021 Financial Results

MENDOTA, Ill., Nov. 10, 2021 /PRNewswire/ -- Tri-County Financial Group, Inc. (The Company) (OTCQX: TYFG) today announced financial results for the third quarter of 2021.

Net income for the third quarter of 2021 was $4.1 million ($1.64 per share), compared to $7.1 million ($2.87 per share) during the third quarter of 2020.

Net interest income was $11.2 million during the quarter ended September 30, 2021, compared to $8.9 million in the same period of 2020, an increase of 26%. The net interest margin was 3.42% for the third quarter of 2021 compared to 2.96% in the same quarter a year ago due in part to higher PPP loan balances in 2020 combined with related fees recognized upon forgiveness in 2021.

Noninterest income was $8.8 million for the quarter ended September 30, 2021, a decrease of $10.1 million, or 53%, compared to $18.9 million during the quarter ended September 30, 2020. The decrease can be primarily attributed to 46% lower mortgage volume from the prior year peak levels. First State Mortgage continues to contribute positively to earnings, although their standalone net income decreased by $4.0 million compared to the record third quarter of 2020 when nearly $300 million of loans were originated.

Noninterest expense was $14.0 million during the quarter ended September 30, 2021, compared to $16.7 million for the third quarter of 2020, a decrease of $2.7 million, or 16%. The decrease is primarily related to lower levels of mortgage production costs in 2021.

Total loans declined $49.0 million, or 5%, to $1.005 billion at September 30, 2021, from $1.054 billion at September 30, 2020. There were $13.5 million in Paycheck Protection Program (PPP) loans included in loan balances at September 30, 2021 compared to $52.5 million the prior year quarter end, a decrease of $38.9 million. Non-agricultural business loan demand continues to be soft due to the supply chain impacts, while portfolio mortgage and home equity loan balances continue to be refinanced into the secondary market due to historically low rates and higher housing valuations. Nonperforming loans as a percent of total loans were 0.45% as of September 30, 2021, down from 1.25% at September 30, 2020.

The provision for loan loss decreased $1.1 million as asset quality continues to improve. The Company provided $450,000 during the third quarter of 2021 compared to $1,500,000 in the prior year period. The allowance for loan loss ended at $16.3 million at September 30, 2021 and represented 1.62% of gross loans compared to 1.41% at September 30, 2020.

Deposits increased $51.0 million, or 5%, year-over-year, with the majority of the growth due to CARES Act economic relief programs and PPP proceeds.  The investment portfolio rose $34.7 million or 34% year over year and totaled $137 million at September 30, 2021 due to the significant increase in liquidity from net loan runoff and direct deposit of government relief funds.

The Company's capital levels remain solid as of September 30, 2021, with a Tier 1 leverage ratio of 9.11%, up from 8.34% last year.

On September 14, 2021, the Board of Directors declared a regular dividend of $0.15 per share payable October 7, 2021, to shareholders of record on September 30, 2021.

In announcing the results, President and CEO, Tim McConville, stated, "Our third quarter numbers, although down from a record quarter a year ago, represented respectable earnings performance from the volume last year.  Mortgage activity continues to positively contribute to earnings. Total mortgage production this year totaled $581 million, down from $659 million in 2020.  Asset quality as measured by nonperforming loans to total loans is very good as we see strong agricultural performance and good liquidity with our borrowers. We continue to monitor the impact of supply chain issues and staffing shortages on our businesses and consumers. Overall, we anticipate loan demand to return to more normal levels in 2022 and we look forward to supporting the credit needs of our businesses and communities."

After the end of the quarter, Tri-County Financial Group completed a private placement of $10 million in aggregate principal amount of 3.50% fixed-to-floating subordinated notes due 2031 (the "Notes"). The Company intends to use the proceeds for general corporate purposes, including support for organic growth plans, support for bank level capital ratios or the redemption of a part of the Company's existing 7.00% Fixed-to-Floating Rate Subordinated notes, due 2026. The Notes will initially bear interest at a fixed interest rate of 3.50% until October 15, 2026, after which time the interest rate will reset quarterly to an interest rate per annum equal to the then current three-month Secured Overnight Financing Rate (SOFR) plus 266 basis points until the Notes maturity on October 15, 2031. The Notes are redeemable by the Company, in whole or part, on or after October 15, 2026 and at any time upon the occurrence of certain events. The Notes have been structured to qualify as Tier 2 capital for the Company for regulatory purposes. "We are pleased to refinance our subordinated Notes at such an attractive rate and provide a non-dilutive form of capital to deliver shareholder value," said McConville. Raymond James & Associates, Inc. acted as Placement Agent for the transaction and the Company was represented by the Howard & Howard law firm.

The Notes have not been registered under the Securities Act of 1933, amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

Tri-County Financial Group, Inc. is the parent holding company for First State Bank, with offices in Mendota, Batavia, Bloomington, Geneva, LaMoille, McNabb, North Aurora, Ottawa, Peru, Princeton, Rochelle, Shabbona, St. Charles, Streator, Sycamore, Waterman and West Brooklyn. First State Bank is the parent company of First State Mortgage, LLC and First State Insurance. Tri-County Financial Group, Inc. shares are quoted under the symbol TYFG and traded on OTCQX.

SOURCE Tri-County Financial Group, Inc.

WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?

440k+
Newsrooms &
Influencers

9k+
Digital Media
Outlets

270k+
Journalists
Opted In

GET STARTED