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News

Touchstone Bankshares Reports 2022 First Quarter Financial Results

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PRINCE GEORGE, Va., April 29, 2022 /PRNewswire/ — Touchstone Bankshares, Inc. (the “Company”) (OTC Pink: TSBA), and its wholly owned subsidiary, Touchstone Bank (the “Bank”), reported unaudited results for the quarter ended March 31, 2022.

The Company reported net income of $1.1 million available to common shareholders for the quarter ended March 31, 2022. Basic and diluted earnings per common share for the quarter were $0.35 and $0.34, respectively. Return on average assets was 0.78% while return on average common equity was 9.30%. By comparison, the Company's net income for the quarter ended March 31, 2021 was $919 thousand and basic and diluted earnings per common share were $0.28 and $0.27, respectively. The return on average assets was 0.69%. For the fourth quarter of 2021, the Company reported net income available to common shareholders of $1.2 million or $0.37 per common share on a basic and diluted basis.

James Black, President and CEO, stated, “Touchstone Bank demonstrated strong loan growth during the first quarter, continuing the 2021 momentum and on a pace to meet double-digit loan growth for 2022.  The growth was supported by the $10 million subordinated debt raise that closed earlier in the quarter along with solid growth in core deposits.  We improved return on equity over the first quarter of 2021, despite a reduction in Paycheck Protection Program (“PPP”) income, additional subordinated debt interest and higher operating cost due to internal investments and wage inflation.”

He continued, “We are also pleased to announce that we are expanding our physical presence with a loan center at 3101 Glenwood Avenue, Raleigh, North Carolina in the second quarter of 2022, which will complement our existing loan center in Wake Forest, North Carolina. Together, these offices provide the convenience to deliver our services throughout the Raleigh, MSA and in alignment with our franchise building focus. We expect another successful year as the team is focused on our mission.”

Earnings

Net interest income for the first quarter of 2022 was $4.6 million, compared to $4.3 million for the same period in 2021, an increase of $216 thousand, or 5.0%. Net interest income for the fourth quarter of 2021 was $4.7 million. The Company's cost of funds were 40 basis points in the first quarter of 2022 which is 12 basis points lower than the 52 basis points cost   of funds for the first quarter of 2021. The net interest margin for the quarter ended March 31, 2022 was 3.34% compared to 3.50% for the quarter ended March 31, 2021. The net interest margin for the fourth quarter of 2021 was 3.31%.The Company expects its net interest margin to remain stable or show a nominal increase for the remainder of 2022, depending on federal interest rate changes.

The Bank recorded no provision for loan losses in the first quarter of 2022 as credit metrics remain sound and the potential for credit losses from the pandemic have mostly subsided. No provisions were recorded in 2021.

Noninterest income totaled $868 thousand for the quarter ended March 31, 2022, a nominal decrease of the $871 thousand recorded in the same period in 2021. 

The following table is a comparison of the components of noninterest income for the three months ended March 31, 2022, and 2021:

For the three months ended

March 31,

2022

2021

 Change $ 

 Change % 

(dollars in thousands)

Service charges on deposit accounts

$          479

$          424

$            55

13.0%

Secondary market origination fees

45

54

(9)

-16.7%

Bank-owned life insurance

75

51

24

47.1%

Gain on security sales

10

(10)

-100.0%

Other operating income

269

332

(63)

-19.0%

  Total 

$          868

$          871

$            (3)

-0.3%

Notable variances for the noninterest income table above:

  • The increase in service charges on deposit accounts was mainly due to an increase in ATM and debit card interchange fees.
  • The decrease in other operating income was mainly due to recoveries received in the first quarter of 2021 from charge offs from legacy Citizens Community Bank before its merger into Touchstone Bank in 2017.

Noninterest expense totaled $4.3 million for the quarter ended March 31, 2022, an increase of $253 thousand, or 6.2% when compared to the $4.1 million recorded in the same period in 2021. The following table is a comparison of the components of noninterest expense for the quarters ended March 31, 2022, and 2021:

For the three months ended

March 31,

2022

2021

 Change $ 

 Change % 

(dollars in thousands)

Salaries and employee benefits

$       2,327

$       2,064

$          263

12.7%

Occupancy expense

295

272

23

8.5%

Funiture and equipment expense

279

286

(7)

-2.4%

Data processing

77

269

(192)

-71.4%

Telecommunications

222

186

36

19.4%

Legal and professional fees

193

120

73

60.8%

FDIC assessments

56

38

18

47.4%

Other noninterest expenses

898

859

39

4.5%

  Total 

$       4,347

$       4,094

$          253

6.2%

Notable variances for the noninterest expense table above:

  • The increase in salaries and employee benefits for 2021 when compared to the same period in 2020 is mainly due to added staff, wage inflation, and various one-time bonuses paid.
  • The increase in occupancy expense is due to the Bank paying its lease on its headquarters as a part of the sales-leaseback transaction recorded in the fourth quarter of 2021.
  • The decrease in data processing expense in 2022 when compared to the same period in 2021 was mainly due to the renegotiation of the Bank's core contract as well as the use of additional credits provided by the Company's core provider.
  • The increase in telecommunications in 2022 versus 2021 was due to the Bank switching over its services and temporarily paying for two vendors.
  • Legal and professional fees are higher for the three months ended March 31, 2022, when compared to the same period in 2021 due to recruiting and consulting fees.

In the first quarter of 2022, the Bank recorded a one-time tax benefit of $241 thousand bringing the total income tax benefit to $51 thousand for the quarter.

Balance Sheet

At March 31, 2022, total assets were $594.2 million, compared to $568.9 million at March 31, 2021, an  increase of $25.3 million, or 4.4% as the Bank experienced a spike in deposits in 2021  which was used mainly to fund loan growth on the asset side of the balance sheet. Total assets increased $13.1 million, or 2.3% during the quarter.

Total loans were $427.0 million at March 31, 2022. Total loans increased $24.1 million, or 6.4% during the quarter. Total loans increased $25.9 million, or 6.9%, during the fourth quarter of 2021. Total PPP loans outstanding at March 31, 2022, were $5.8 million.

On the liability side of the balance sheet, deposits totaled $537.9 million at March 31, 2022, as compared to $517.4 million at December 31, 2021.  This represents an increase of $20.5 million or 4.2%. 

In the fourth quarter of 2021, the Bank prepaid its outstanding $3.0 million FHLB note. The Bank had no outstanding FHLB borrowings at December 31, 2021 or March 31, 2022.  This compares to $18.0 million of FHLB borrowings at March 31, 2021.  

At March 31, 2022, the Bank had $17.5 million of outstanding subordinated debt. In August of 2020, the Company issued $8 million of subordinated debt with a 10-year maturity and an initial 6.00% coupon. In January of 2022, the Company issued an additional $10.0 million of subordinated debt.  These notes have a maturity date of January 30, 2032 and carried an initial coupon of 4%.

Shareholders' Equity totaled $47.6 million at March 31, 2022. The Company initiated a stock repurchase program in the fourth quarter of 2021 in which 76,706 shares had been repurchased as of March 31, 2022. The Bank's Community Bank Leverage Ratio was 9.59% at March 31, 2022, and remains well capitalized as defined by regulatory guidelines.

Asset Quality

The allowance for loan losses at March 31, 2022, was $4.3 million, or 1.01%, of total loans. Loans past due 30 days or more and still accruing were $451 thousand at March 31, 2022, while nonaccrual loans, excluding purchased credit impaired loans, totaled $254 thousand. The Bank believes the current level of allowance for loan loss reserves are adequate to cover anticipated losses as credit metrics remain stable.

About Touchstone Bankshares, Inc.

Touchstone Bankshares, Inc. is the bank holding company for Touchstone Bank. The majority of the Company's business activities are conducted through Touchstone Bank. Touchstone Bank is a full-service community bank headquartered in Prince George, Virginia. The Bank has ten branches serving Southern and Central Virginia and two branches and two loan centers serving Northern North Carolina. Visit www.touchstone.bank for more information.

Forward-Looking Statements

In addition to historical information, this press release may contain certain forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. For this purpose, any statement that is not a statement of historical fact may be deemed to be a forward-looking statement. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, and actual results could differ materially from historical results or those anticipated by such statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements include, but are not limited to, the impacts of the ongoing COVID-19 pandemic; changes in interest rates and general economic conditions; the legislative/regulatory climate; monetary and fiscal policies of the U.S. Government; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market area; mergers, acquisitions and dispositions; implementation of new technologies and the ability to develop and maintain secure and reliable electronic systems; and tax and accounting rules, principles, policies and guidelines.

 

Touchstone Bankshares, Inc.

Consolidated Financial Highlights 

(unaudited)

For the Three Months Ended 

(in thousands, except per share data)

March 31,

December 31,

September 30,

June 30,

March 31,

Selected Operating Data:

2022

2021

2021

2021

2021

Net interest income

$    4,564

$           4,674

$            5,009

$   4,772

$    4,348

Provision for loan losses

Noninterest income

868

1,230

772

990

871

Noninterest expense

4,347

4,393

4,300

4,409

4,094

Income before income tax 

1,085

1,511

1,481

1,353

1,125

Income tax (benefit) expense

(51)

284

279

253

206

Net income 

1,136

1,227

1,202

1,100

919

Less: Preferred dividends

9

Net income available to common shareholders

$    1,136

$           1,218

$            1,202

$   1,100

$       919

Income per share available to common shareholders:

Basic 

$      0.35

$             0.37

$              0.36

$     0.33

$      0.28

Diluted

$      0.34

$             0.37

$              0.36

$     0.33

$      0.27

Average common shares outstanding, basic

3,268,056

3,301,674

3,336,504

3,336,504

3,334,632

Average common shares outstanding, diluted

3,297,204

3,330,822

3,365,652

3,365,652

3,363,780

 

 

Touchstone Bankshares, Inc.

Consolidated Financial Highlights (continued)

(unaudited)

(in thousands, except per share data)

March 31,

December 31,

September 30,

June 30,

March 31,

Balance Sheet Data:

2022

2021

2021

2021

2021

Total assets

$           594,192

$           581,136

$           586,843

$           563,828

$           568,881

Total loans

426,995

402,910

377,015

383,981

377,172

Allowance for loan losses

(4,326)

(4,375)

(4,445)

(4,440)

(4,386)

Core deposit intangible

749

815

882

953

1,026

Deposits

537,879

517,396

521,104

498,682

489,465

Borrowings

3,000

3,000

18,000

Subordinated debt

17,537

7,825

7,813

7,801

7,788

Preferred stock

58

58

58

58

58

Shareholders' equity

47,558

50,896

51,921

51,339

49,750

Book value per common share 

$               14.49

$               15.57

$               15.54

$               15.37

$               14.89

Tangible book value per common share 

$               14.26

$               15.32

$               15.28

$               15.08

$               14.59

Total common shares outstanding

3,278,558

3,265,615

3,336,504

3,336,504

3,336,504

Total preferred shares outstanding

29,148

29,148

29,148

29,148

29,148

March 31,

December 31,

September 30,

June 30,

March 31,

2022

2021

2021

2021

2021

Performance Ratios:

(QTD annualized)

(QTD annualized)

(QTD annualized)

(QTD annualized)

(QTD annualized)

Return on average assets

0.78%

0.81%

0.82%

0.77%

0.69%

Return on average common equity

9.30%

9.36%

9.19%

8.72%

7.47%

Net interest margin 

3.34%

3.31%

3.68%

3.60%

3.50%

Overhead efficiency (non-GAAP)

80.04%

78.67%

74.37%

79.30%

78.60%

March 31,

December 31,

September 30,

June 30

March 31,

Asset Quality Data:

2022

2021

2021

2021

2021

Allowance for loan losses

$               4,326

$               4,375

$               4,445

$               4,440

$               4,386

Nonperforming loans (excluding PCI loans)

254

253

1,259

1,738

2,051

Other real estate owned, net of allowance

22

22

Nonperforming assets

254

253

1,259

1,760

2,073

Net charge-offs (recoveries)  , QTD

49

70

(5)

(54)

(29)

Asset Quality Ratios:

Allowance for loan losses to total loans

1.01%

1.09%

1.18%

1.16%

1.16%

Nonperforming loans to total loans

0.06%

0.06%

0.33%

0.45%

0.54%

Nonperforming assets to total assets

0.04%

0.04%

0.21%

0.31%

0.36%

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

0.05%

0.05%

(0.01%)

(0.06%)

(0.03%)

Community Bank Leverage Ratio

9.59%

9.27%

9.48%

9.37%

9.60%

 

 

Cision View original content to download multimedia:https://www.prnewswire.com/news-releases/touchstone-bankshares-reports-2022-first-quarter-financial-results-301536391.html

SOURCE Touchstone Bankshares, Inc.

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