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Touchstone Bank Reports Financial Results for the Third Quarter 2019

PRINCE GEORGE, Va., Oct. 30, 2019 /PRNewswire/ -- Touchstone Bank (the "Bank") (OTC Pink: TSBA) reported net income of $846 thousand for the quarter ended September 30, 2019, an increase of $390 thousand, or 85.5%, when compared to the $456 thousand of net income recorded for the same quarter in 2018. Return on average assets was 0.72% for the third quarter of 2019, an increase of 29 basis points when compared to the 0.43% return on average assets recorded for the third quarter of 2018.  Basic and diluted earnings per common share for the quarter ended September 30, 2019 was $0.25. For the nine months ended September 30, 2019, net income was $2.2 million and basic and diluted earnings per common share was $0.67 and $0.66, respectively.   

"It proved to be a successful quarter as the team continued to execute on enhancing our brand and financial performance. We have a valuable and dedicated team that is becoming culturally stronger and even more focused, which should equate to higher future results.  Building a high performing and sustainable business model takes time and quality will not be compromised in the process. We are cautiously optimistic on loan growth as late cycle activity is of concern and unprofitable loan opportunities are being passed on," remarked James Black, President and CEO.

Earnings

Net interest income for the quarter ended September 30, 2019 was $4.4 million, while net interest income was $4.2 million for the same period in 2018. Net interest income for the second quarter of 2019 was $4.3 million. The net interest margin for the third quarter of 2019 was 4.12% compared to 4.46% for the same period in 2018.  The decline in the margin year over year was mainly driven by the increased cost of funds. The net interest margin for the second quarter of 2019 was 4.23%.  Net interest income for the nine months ended September 30, 2019 was $12.9 million compared to $12.4 million for the same period in 2018. The net interest margin declined 15 basis points to 4.22% for the nine months ended September 30, 2019 when compared to the 4.37% recorded for the nine months ended September 30, 2018.  The Bank anticipates a continued slight decline in the net interest margin as competition and Federal Reserve rate cuts drive down earning asset yields more quickly than the cost of funds.

The Bank recorded no provision for loan losses in the third quarter of 2019, while a provision for loan losses of $300 thousand was recorded in the third quarter of 2018. Year to date, the Bank has recorded a recovery of loan losses of $37 thousand, while a provision for loan losses of $700 thousand was recorded for the same period in 2018.

Noninterest income totaled $750 thousand for the quarter ended September 30, 2019, a decrease of $170 thousand, or 18.5%, when compared to the same period in 2018. Increases in non-interest income were recognized in almost all categories as service charges on deposits, secondary market origination fees, and income from investments in unconsolidated subsidiaries all increased year over year.  However, in the quarter ended September 30, 2018 a one-time payment of $250 thousand from the Bank's core system provider was recorded in other noninterest income. Noninterest income for the nine months ended September 30, 2019 and 2018 was $2.2 million and $2.3 million, respectively.

Noninterest expense for the three months ended September 30, 2019 and 2018 was $4.1 million and $4.4 million, respectively.  Noninterest expense for the second quarter of 2019 was $4.1 million.  For the nine months ended September 30, 2019, noninterest expense was $12.3 million, an improvement of $592 thousand when compared to the $12.9 million of noninterest expense recorded in the first nine months of 2018.  This year-over-year improvement was mainly attributable to the non-recurring core conversion expenses associated with the merger with Citizens Community Bankshares, Inc. incurred in the first quarter of 2018.

Balance Sheet

At September 30, 2019, total assets were $471.6 million, compared to $424.1 million as of September 30, 2018, an increase of $47.5 million, or 11.2%. Total loans increased $19.0 million, or 5.7%, when comparing total loans of $349.7 million at September 30, 2019 to total loans of $330.8 million at September 30, 2018.  Loan activity throughout the Bank's markets remains stable. Deposits totaled $386.7 million at September 30, 2019, as compared to $368.6 million as of September 30, 2018.  Borrowings from the Federal Home Loan Bank totaled $30.0 million at September 30, 2019, compared to $4.1 million at September 30, 2018. 

Total equity at September 30, 2019 was $47.4 million, compared to $44.7 million at September 30, 2018. The Bank remains well capitalized as defined by regulatory guidelines.

Asset Quality

The allowance for loan losses at September 30, 2019 was $2.2 million, or 0.64%, of total loans, compared to $2.2 million, or 0.67% of total loans, at September 30, 2018.  Charge offs, net of recoveries, for the quarter ended September 30, 2019, were $92 thousand, bringing the year-to-date total of net recoveries to $4 thousand.  Nonperforming loans were $845 thousand, or 0.24% of total loans, at September 30, 2019.  This is an improvement of $1.7 million, or 67.0%, when compared to nonperforming loans of $2.6 million at September 30, 2018. Other real estate owned at September 30, 2019 was $155 thousand, an improvement of $433 thousand when compared to the other real estate owned total of $588 thousand at September 30, 2018. 

About Touchstone Bank

Touchstone Bank is a full-service community bank headquartered in Prince George, Virginia, with $471.6 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)


September 30,


June 30, 


March 31, 


December 31,


September 30,


Selected Operating Data:


2019


2019


2019


2018


2018


Net interest income


$               4,388


$           4,296


$           4,179


$           4,277


$           4,217


Provision for (recovery of) loan losses


-


(112)


75


300


300


Noninterest income


750


797


642


576


920


Noninterest expense


4,080


4,148


4,106


4,130


4,357


Income before income tax 


1,058


1,057


640


423


480


Income tax expense


212


221


99


121


24


Net income 


846


836


541


302


456


Less: Preferred dividends


-


-


-


8


-


Net income available to common shareholders


$                  846


$              836


$              541


$              294


$              456














Income per share available to common shareholders:












Basic 


$                 0.25


$             0.25


$             0.16


$             0.09


$             0.14


Diluted


$                 0.25


$             0.25


$             0.16


$             0.09


$             0.14














Average common shares outstanding, basic


3,321,458


3,321,443


3,319,170


3,315,172


3,313,814


Average common shares outstanding, diluted


3,350,810


3,350,795


3,348,627


3,344,749


3,343,391




























For the Nine Months Ended










September 30,


September 30,










2019


2018








Net interest income


$             12,863


$         12,410








(Recovery of) provision for  loan losses


(37)


700








Noninterest income


2,189


2,326








Noninterest expense


12,334


12,926








Income before income tax 


2,755


1,110








Income tax expense 


532


166








Net income 


$               2,223


$              944








Less: Preferred dividends


$                      -


$                   -








Net income available to common












shareholders


$               2,223


$              944




















Income per share available to common shareholders:










Basic 


$                 0.67


$             0.28








Diluted


$                 0.66


$             0.28




















Average common shares outstanding, basic


3,320,699


3,312,977








Average common shares outstanding, diluted


3,350,086


3,342,595




















 

 

Touchstone Bank


Financial Highlights (continued)


(unaudited)














(in thousands, except per share data)


September 30,


June 30,


March 31,


December 31,


September 30,


Balance Sheet Data:


2019


2019


2019


2018


2018


Total assets


$             471,623


$             458,083


$         439,348


$         426,964


$           424,118


Total loans


349,727


350,225


342,217


338,016


330,773


Allowance for loan losses


(2,236)


(2,328)


(2,358)


(2,269)


(2,225)


Core deposit intangible


1,523


1,615


1,710


1,808


1,909


Deposits


386,680


373,877


374,627


370,147


368,614


Borrowings


29,999


30,999


12,998


4,463


4,078


Subordinated debt


3,551


3,560


3,569


3,579


3,588


Preferred stock


59


59


59


59


59


Shareholders' equity


47,446


46,193


44,951


44,343


44,689


Book value per common share 


$                 14.27


$                 13.89


$             13.52


$             13.36


$               13.46


Tangible book value per common share 


$                 13.81


$                 13.40


$             13.01


$             12.81


$               12.89


Total common shares outstanding


3,321,371


3,321,491


3,319,319


3,315,172


3,315,172


Total preferred shares outstanding


29,352


29,352


29,352


29,577


29,577
















September 30,


June 30,


March 31,


December 31,


September 30,




2019


2019


2019


2018


2018


Performance Ratios:


(QTD annualized)


(QTD annualized)


(QTD annualized)


(QTD annualized)


(QTD annualized)


Return on average assets


0.72%


0.75%


0.51%


0.28%


0.43%


Return on average common equity


7.17%


7.39%


4.92%


2.71%


4.06%


Net interest margin 


4.12%


4.23%


4.31%


4.41%


4.46%


Overhead efficiency (non-GAAP)


79.63%


82.65%


85.19%


84.99%


84.84%
















September 30,


September 30,










2019


2018








Performance Ratios:


YTD


YTD








Return on average assets


0.66%


0.29%








Return on average common equity


6.51%


2.84%








Net interest margin 


4.22%


4.37%








Overhead efficiency (non-GAAP)


82.44%


87.40%


































September 30,


June 30,


March 31,


December 31,


September 30,


Asset Quality Data:


2019


2019


2019


2018


2018


Allowance for loan losses


$                 2,236


$                 2,328


$             2,358


$             2,269


$               2,225


Nonperforming loans 


845


951


2,233


2,201


2,561


Other real estate owned, net of allowance


155


166


174


319


588


Nonperforming assets


1,000


1,117


2,407


2,520


3,409


Net charge-offs (recoveries) , QTD


92


(81)


(15)


228


113














Asset Quality Ratios:












Allowance for loan losses to total loans


0.64%


0.66%


0.68%


0.67%


0.67%


Nonperforming loans to total loans


0.24%


0.27%


0.65%


0.65%


0.77%


Nonperforming assets to total assets


0.21%


0.24%


0.55%


0.59%


0.80%


YTD net charge-offs (recoveries) to average loans, annualized 


0.10%


(0.09)%


(0.02)%


0.27%


0.14%














Capital Ratios:












Total risk-based capital


14.21%


13.82%


14.08%


14.23%


14.92%


Tier 1 risk-based capital


12.60%


12.19%


12.38%


12.52%


13.15%


Tier 1 leverage capital


9.80%


9.93%


10.00%


10.03%


10.19%



 

Cision

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