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Touchstone Bankshares, Inc. Reports Financial Results for the Second Quarter 2024

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Touchstone Bankshares (OTC Pink: TSBA) reported Q2 2024 net income of $451,000 or $0.14 per share, up 58.2% from $285,000 or $0.09 per share in Q2 2023. Key highlights:

- Net interest income increased 0.9% to $5.2 million
- Net interest margin improved 3 basis points to 3.47%
- Noninterest income decreased 8.9% to $871,000
- Noninterest expense decreased 7.4% to $5.2 million
- Total assets grew 0.6% to $662.7 million
- Total loans decreased 1.6% to $500.6 million
- Total deposits increased 0.8% to $546.7 million

Results were impacted by $186,000 provision for credit losses and $202,000 in merger-related expenses for pending merger with First National Excluding merger costs, adjusted Q2 EPS would have been $0.19.

Touchstone Bankshares (OTC Pink: TSBA) ha riportato un utile netto di $451,000 nel secondo trimestre 2024, ovvero $0.14 per azione, in aumento del 58.2% rispetto ai $285,000 o $0.09 per azione nel secondo trimestre 2023. Punti chiave:

- Il reddito netto da interessi è aumentato dello 0.9% a $5.2 milioni
- Il margine di interesse netto è migliorato di 3 punti base al 3.47%
- Il reddito non da interessi è diminuito dell'8.9% a $871,000
- La spesa non da interessi è diminuita del 7.4% a $5.2 milioni
- Il totale degli attivi è cresciuto dello 0.6% a $662.7 milioni
- Il totale dei prestiti è diminuito dell'1.6% a $500.6 milioni
- Il totale dei depositi è aumentato dello 0.8% a $546.7 milioni

I risultati sono stati influenzati da una provvidenza per perdite su crediti di $186,000 e da $202,000 di spese legate alla fusione per la fusione in sospeso con First National. Escludendo i costi di fusione, l'utile per azione rettificato del secondo trimestre sarebbe stato $0.19.

Touchstone Bankshares (OTC Pink: TSBA) reportó un ingreso neto de $451,000 en el segundo trimestre de 2024, o $0.14 por acción, un aumento del 58.2% en comparación con $285,000 o $0.09 por acción en el segundo trimestre de 2023. Puntos clave:

- Los ingresos netos por intereses aumentaron un 0.9% a $5.2 millones
- El margen de interés neto mejoró 3 puntos básicos al 3.47%
- Los ingresos no relacionados con intereses disminuyeron un 8.9% a $871,000
- Los gastos no relacionados con intereses disminuyeron un 7.4% a $5.2 millones
- Los activos totales crecieron un 0.6% a $662.7 millones
- Los préstamos totales disminuyeron un 1.6% a $500.6 millones
- Los depósitos totales aumentaron un 0.8% a $546.7 millones

Los resultados se vieron afectados por una provisión para pérdidas crediticias de $186,000 y $202,000 en gastos relacionados con la fusión pendiente con First National. Excluyendo los costos de fusión, el EPS ajustado del segundo trimestre habría sido $0.19.

Touchstone Bankshares (OTC Pink: TSBA)는 2024년 2분기 순이익이 $451,000, 즉 주당 $0.14로, 2023년 2분기 $285,000 또는 주당 $0.09에 비해 58.2% 증가했다고 보고했습니다. 주요 사항:

- 순 이자 수익이 0.9% 증가하여 $5.2백만에 달함
- 순 이자 마진이 3bp 개선되어 3.47%에 도달함
- 비이자 수익이 8.9% 감소하여 $871,000
- 비이자 비용이 7.4% 감소하여 $5.2백만
- 총 자산이 0.6% 증가하여 $662.7백만
- 총 대출이 1.6% 감소하여 $500.6백만
- 총 예금이 0.8% 증가하여 $546.7백만

결과는 $186,000의 신용 손실 충당금과 First National과의 합병을 위한 $202,000의 합병 관련 비용의 영향을 받았습니다. 합병 비용을 제외하면 조정된 2분기 주당순이익(EPS)은 $0.19가 되었을 것입니다.

Touchstone Bankshares (OTC Pink: TSBA) a annoncé un revenu net de $451,000 pour le deuxième trimestre 2024, soit $0.14 par action, en hausse de 58.2% par rapport à $285,000 ou $0.09 par action au deuxième trimestre 2023. Points clés :

- Le revenu net d'intérêts a augmenté de 0.9% pour atteindre $5.2 millions
- La marge d'intérêt net s'est améliorée de 3 points de base à 3.47%
- Les revenus non liés aux intérêts ont diminué de 8.9% pour atteindre $871,000
- Les dépenses non liées aux intérêts ont diminué de 7.4% pour s'établir à $5.2 millions
- Les actifs totaux ont augmenté de 0.6% pour atteindre $662.7 millions
- Les prêts totaux ont diminué de 1.6% pour s'établir à $500.6 millions
- Les dépôts totaux ont augmenté de 0.8% pour atteindre $546.7 millions

Les résultats ont été affectés par une provision pour pertes de crédit de $186,000 et $202,000 de dépenses liées à la fusion pour la fusion en attente avec First National. En excluant les coûts de fusion, le bénéfice par action ajusté pour le deuxième trimestre aurait été de $0.19.

Touchstone Bankshares (OTC Pink: TSBA) hat für das 2. Quartal 2024 einen Nettogewinn von $451,000 oder $0.14 pro Aktie gemeldet, was einem Anstieg von 58.2% gegenüber $285,000 oder $0.09 pro Aktie im 2. Quartal 2023 entspricht. Wichtige Eckdaten:

- Der Nettozinsüberschuss stieg um 0.9% auf $5.2 Millionen
- Die Nettozinsmarge verbesserte sich um 3 Basispunkte auf 3.47%
- Die nichtzinslichen Einnahmen fielen um 8.9% auf $871,000
- Die nichtzinslichen Aufwendungen verringerten sich um 7.4% auf $5.2 Millionen
- Die Gesamtaktiva wuchsen um 0.6% auf $662.7 Millionen
- Die gesamten Kredite sanken um 1.6% auf $500.6 Millionen
- Die gesamten Einlagen stiegen um 0.8% auf $546.7 Millionen

Die Ergebnisse wurden durch eine Rückstellung für Kreditverluste von $186,000 und $202,000 an fusionsbedingten Kosten für die bevorstehende Fusion mit First National beeinträchtigt. Ohne die Fusionskosten hätte der bereinigte EPS für das 2. Quartal bei $0.19 gelegen.

Positive
  • Net income increased 58.2% year-over-year to $451,000 in Q2 2024
  • Net interest income grew 0.9% to $5.2 million
  • Net interest margin improved 3 basis points to 3.47%
  • Noninterest expense decreased 7.4% to $5.2 million
  • Total assets grew 0.6% to $662.7 million
  • Total deposits increased 0.8% to $546.7 million
Negative
  • Noninterest income decreased 8.9% to $871,000
  • Total loans decreased 1.6% to $500.6 million
  • Incurred $186,000 provision for credit losses
  • Incurred $202,000 in merger-related expenses

Insights

Touchstone Bankshares' Q2 2024 results show modest improvement but are impacted by merger-related expenses. Key takeaways:

  • Net income available to common shareholders increased to $451,000 ($0.14 per share) from $285,000 ($0.09 per share) in Q2 2023.
  • Excluding merger expenses, adjusted net income would be $611,000 ($0.19 per share).
  • Net interest margin improved slightly to 3.47% from 3.44% in Q2 2023.
  • Efficiency ratio improved to 87% from 93% in Q2 2023.
  • Total loans decreased by 1.6% to $500.6 million since year-end 2023.
  • Deposits grew by 0.8% to $546.7 million.

The pending merger with First National is expected to close in Q4 2024, subject to regulatory and shareholder approvals. This merger could provide scale benefits but also brings integration risks. The bank's focus on efficiency and relationship banking is yielding results, but loan growth remains challenging. Asset quality appears stable with a 1.02% allowance for credit losses to total loans ratio.

Touchstone's results reflect broader industry trends and challenges:

  • The slight improvement in net interest margin (3.47% vs 3.44%) indicates the bank is managing the rate environment better than some peers, but pressure remains.
  • Deposit growth of 0.8% is positive given industry-wide competition, though the shift to higher-yielding products will impact costs.
  • The 1.6% decline in loans highlights the economic uncertainties affecting lending demand.
  • Efficiency improvements (ratio down to 87% from 93%) are important in this environment.
  • The stable noninterest-bearing deposit ratio (24.7% vs 25.3%) is a strength in the current high-rate context.

The merger with First National is part of a broader consolidation trend in community banking, driven by regulatory costs and technology demands. This could enhance Touchstone's competitive position but execution will be key. The focus on relationship banking and efficiency is prudent, but generating loan growth without compromising credit quality will be a key challenge in the coming quarters.

The pending merger with First National is a significant development for Touchstone:

  • Merger-related expenses ($202,000 in Q2, $745,000 YTD) are impacting short-term results but are typical in such transactions.
  • The projected Q4 2024 closing suggests a relatively quick integration timeline, which could be positive if executed well.
  • The merger aligns with industry trends of consolidation to achieve scale and efficiency.
  • Cultural fit, highlighted by management, is important for successful post-merger integration.
  • The combined entity should offer enhanced products and services, potentially improving competitive positioning.

However, merger execution risks exist, including potential customer attrition, systems integration challenges and unforeseen regulatory hurdles. The 0.8% deposit growth and stable non-interest bearing deposit ratio suggest Touchstone has maintained customer relationships well, which is positive for retention post-merger. Investors should monitor integration progress and any synergy realization in future quarters. The merger's success will depend on maintaining asset quality, realizing cost savings and leveraging the combined entity's larger scale in the market.

PRINCE GEORGE, Va., July 31, 2024 /PRNewswire/ -- Touchstone Bankshares, Inc. (the "Company") (OTC Pink: TSBA), and its wholly owned subsidiary, Touchstone Bank (the "Bank"), reported unaudited results for the three and six months ended June 30, 2024.

The Company reported net income available to common shareholders of $451 thousand for the three months ended June 30, 2024. Basic and diluted earnings per common share for the three months ended June 30, 2024, was $0.14, while return on average assets (annualized), return on average common equity (annualized) and the efficiency ratio was 0.27%, 4.08%, and 87%, respectively. By comparison, the Company reported net income available to common shareholders for the three months ended June 30, 2023 of $285 thousand, and basic and diluted earnings per common share was $0.09. Return on average assets (annualized), return on average common equity (annualized), and the efficiency ratio was 0.18%, 2.61%, and 93%, respectively, for the three months ended June 30, 2023.

The Company's results of operations for the three months ended June 30, 2024 were negatively impacted by incurring $186 thousand in provision for credit losses and $202 thousand in merger related expenses in connection with its pending merger with First National Corporation ("First National") (NASDAQ: FXNC). Excluding the impact of the merger related expenses, for the three months ended June 30, 2024, the Company would have reported adjusted net income available to common shareholders of $611 thousand, adjusted basic and diluted earnings per common share of $0.19, and an adjusted return on average assets (annualized), an adjusted return on average common equity (annualized) and an adjusted efficiency ratio of 0.37%, 5.52%, and 83%, respectively. 

For the six months ended June 30, 2024, the Company reported net income available to common shareholders of $778 thousand. Basic and diluted earnings per common share for the six months ended June 30, 2024, was $0.24, while return on average assets (annualized), return on average common equity (annualized) and the efficiency ratio was 0.24%, 3.50%, and 90%, respectively. By comparison, the Company reported net income available to common shareholders for the six months ended June 30, 2023 of $89 thousand, and basic and diluted earnings per common share was $0.03. Return on average assets (annualized), return on average common equity (annualized), and the efficiency ratio was 0.03%, 0.42%, and 91%, respectively, for the six months ended June 30, 2023.

The Company's results of operations for the six months ended June 30, 2024 were negatively impacted by incurring $186 thousand in provision for credit losses and $745 thousand in merger related expenses in connection with its pending merger with First National. Excluding the impact of the merger related expenses, for the six months ended June 30, 2024, the Company would have reported adjusted net income available to common shareholders of $1.4 million, adjusted basic and diluted earnings per common share of $0.42 and $0.41, respectively, and an adjusted return on average assets (annualized), an adjusted return on average common equity (annualized) and an adjusted efficiency ratio of 0.42%, 6.14%, and 84%, respectively. 

As previously disclosed, on March 25, 2024, the Company and First National, the parent holding company for First Bank, entered into an Agreement and Plan of Merger (the "Agreement"), which provides that, subject to the terms and conditions set forth in the Agreement, the Company will merge with and into First National (the "Merger") with First National being the surviving corporation in the Merger. In addition, simultaneously with or immediately following the Merger of the Company with and into First National, the Bank will be merged with and into First Bank.

The Agreement and the transactions contemplated thereby are subject to the approval of the respective shareholders of the Company and First National, approval by the Bureau of Financial Institutions division of the State Corporation Commission of the Commonwealth of Virginia, and other customary closing conditions. The Company and First National anticipate closing the mergers in the fourth quarter of 2024.

James R. Black, the Company's President and CEO commented, "I am pleased with the team's ability to show continual improvement for the Company on a standalone basis while simultaneously working with First National on merger integration and transition processes. The team's resiliency and efforts continue to demonstrate the cultural strength that fits well with our future partner's culture and mission. Together the combined entity should create and offer many valuable aspects for all stakeholders. Again, I am thankful and proud of the hard work and dedication from the Company's team, they are doing an amazing job."

Earnings Analysis

Three Months Ended June 30, 2024, and 2023

As noted above, net income available to common shareholders for the three months ended June 30, 2024, was $451 thousand, or $0.14 per basic and diluted common share. This represents an increase of $166 thousand, or 58.2%, when compared with the net income available to common shareholders of $285 thousand, or $0.09 per basic and diluted common share for the same period in 2023.

Net interest income for the three months ended June 30, 2024, and 2023, was $5.2 million and $5.1 million, respectively, representing an increase of $44 thousand, or 0.9%. The net interest margin increased 3 basis points from 3.44% in the second quarter of 2023 to 3.47% for the same quarter in 2024 due primarily to the yields on interest-earning assets continuing to reprice higher, which was partially offset by repricing on interest-bearing liabilities driven by competitive pressures in the higher interest rate environment and the negative banking industry developments associated with multiple high-profile bank failures that occurred during the first six months of 2023.  While the Company's overall cost of funds for the second quarter of 2024 increased as compared to prior periods, the yields on interest-earning assets continued to reprice higher and at a slightly faster pace. As a result, net interest income increased by $58 thousand, or 1.1%, and the net interest margin increased by 1 basis point when compared to the first quarter of 2024.

The Company recorded $186 thousand in provision for credit losses for the three months ended June 30, 2024, an increase of $86 thousand, or 86.0%, when compared to the same period in 2023. The increase in the provision for credit losses was primarily due to the Company recording a full impairment in the amount of $243 thousand on one C&I loan that was moved to nonaccrual status and downgraded to a risk grade 8 late in the second quarter of 2024 and a higher required reserve on unfunded credit commitments, which were partially offset by a decrease in total loans and recording net (recoveries) during the second quarter of 2024 as compared to recording net charge-offs for the same period in 2023.  As of June 30, 2024, the Company's credit quality metrics remained strong with minimal nonperforming assets and past due loans.

Noninterest income totaled $871 thousand for the three months ended June 30, 2024, a decrease of $85 thousand, or 8.9%, when compared to the same period in 2023. 

The following table is a comparison of the components of noninterest income for the three months ended June 30, 2024, and 2023:



For the Three Months Ended







June 30,







2024


2023


 Change $ 


 Change % 

(dollars in thousands)









Service charges on deposit accounts


$            511


$                 506


$                5


1.0 %

Secondary market origination fees


41


170


(129)


-75.9 %

Bank-owned life insurance


40


75


(35)


-46.7 %

Bank-owned life insurance death benefits


-


19


(19)


-100.0 %

Gain on the sale of other real estate owned


13


-


13


100.0 %

Other operating income


266


186


80


43.0 %

Total 


$            871


$                 956


$            (85)


-8.9 %

Notable variances for the noninterest income table above are as follows:

  • The decrease in secondary market origination fees was primarily due to the continued slowing of home refinancing and purchases, partially offset by prior year investments in personnel and related products and services.
  • The decrease in bank-owned life insurance was primarily due to adjustments recorded during the second quarter of 2024 to adjust the recorded amount that can be realized under the life insurance contracts to their cash surrender values as reported by the insurance carriers.
  • The increase in other operating income was primarily due to increases in income from other investments, partially offset by a decrease in merchant services fees.

Noninterest expense totaled $5.2 million for the three months ended June 30, 2024, a decrease of $417 thousand, or 7.4%, when compared to the same period in 2023. 

The following table is a comparison of the components of noninterest expense for the three months ended June 30, 2024, and 2023:



For the Three Months Ended







June 30,







2024


2023


 Change $ 


 Change % 

(dollars in thousands)









Salaries and employee benefits


$         2,642


$              3,103


$          (461)


-14.9 %

Occupancy expense


300


319


(19)


-6.0 %

Furniture and equipment expense


270


282


(12)


-4.3 %

Data processing


393


346


47


13.6 %

Telecommunications


147


138


9


6.5 %

Legal and professional fees


143


187


(44)


-23.5 %

FDIC insurance assessments


85


113


(28)


-24.8 %

Merger related expenses


202


-


202


100.0 %

Other noninterest expenses


1,035


1,146


(111)


-9.7 %

Total 


$         5,217


$              5,634


$          (417)


-7.4 %

Notable variances for the noninterest expense table above are as follows:

  • The decrease in salaries and employee benefits was primarily due to managements focused efforts to streamline operations and improve efficiencies after the core conversion was completed during the first quarter of 2023. These efforts lead to a reduction in the work force that was implemented during the third quarter of 2023, with full cost savings becoming accretive in the fourth quarter of 2023. In addition, this decrease was driven by employee attrition during the second quarter of 2024, and lower expenses related to bonus accruals, payroll taxes, benefit costs including 401(k) contributions, and deferred incentive compensation, which were partially offset by merit increases, wage inflation, and a lower impact from deferred loan origination costs.
  • The increase in data processing was primarily due to additional services, as well as volume based and other one-time charges.
  • The decrease in legal and professional fees was primarily due to lower expenses related to professional fees, which was partially offset by higher expenses related to legal, audit and compliance.
  • The decrease in FDIC insurance assessments was primarily due to a decrease in the Bank's assessment base, which was partially offset by an increase to the initial base deposit insurance assessment rate schedules that began with the first quarterly assessment period of 2023.
  • The increase in merger related expenses was primarily due to legal fees, as well as other costs associated with the pending merger with First National that were incurred during the second quarter of 2024, as compared to no merger related expenses being incurred during the same period of 2023.
  • The decrease in other noninterest expenses was primarily due to lower expenses related to insurance, deposits, meals and entertainment, marketing and advertising, miscellaneous other operating, and core deposit intangible amortization, which were partially offset by higher expenses related to state franchise taxes.

Six Months Ended June 30, 2024, and 2023

As noted above, net income available to common shareholders for the six months ended June 30, 2024, was $778 thousand, or $0.24 per basic and diluted common share. This represents an increase of $689 thousand, or 774.2%, when compared with the net income available to common shareholders of $89 thousand, or $0.03 per basic and diluted common share for the same period in 2023.

Net interest income for the six months ended June 30, 2024, and 2023, was $10.2 million and $10.5 million, respectively, representing a decrease of $295 thousand, or 2.8%. The net interest margin decreased 15 basis points from 3.61% in the first six months of 2023 to 3.46% for the same period in 2024 due primarily to material repricing on interest-bearing liabilities driven by competitive pressures in the higher interest rate environment and the negative banking industry developments associated with multiple high-profile bank failures that occurred during the first six months of 2023 and the time needed for interest-earning assets to reprice higher. 

The Company recorded $186 thousand in provision for credit losses for the six months ended June 30, 2024, a decrease of $923 thousand, or 83.2%, when compared to the same period in 2023. The decrease in the provision for credit losses was primarily due to $1.0 million in provision for credit losses related to the Company's previous investment in Signature Bank of New York subordinated debt that was fully charged-off in the first quarter of 2023 and subsequently sold in the fourth quarter of 2023, a decrease in total loans, and recording net (recoveries) during the first six months of 2024 as compared to recording net charge-offs for the same period in 2023, which were partially offset by the Company recording a full impairment in the amount of $243 thousand on one C&I loan that was moved to nonaccrual status and downgraded to a risk grade 8 late in the second quarter of 2024 and a higher required reserve on unfunded credit commitments. 

Noninterest income totaled $1.7 million for the six months ended June 30, 2024, a decrease of $39 thousand, or 2.3%, when compared to the same period in 2023. 

The following table is a comparison of the components of noninterest income for the six months ended June 30, 2024, and 2023:



For the Six Months Ended







June 30,







2024


2023


 Change $ 


 Change % 

(dollars in thousands)









Service charges on deposit accounts


$         1,003


$                 979


$              24


2.5 %

Secondary market origination fees


100


170


(70)


-41.2 %

Bank-owned life insurance


100


150


(50)


-33.3 %

Bank-owned life insurance death benefits


-


19


(19)


-100.0 %

Gain on the sale of other real estate owned


13


-


13


100.0 %

Other operating income


469


406


63


15.5 %

Total 


$         1,685


$              1,724


$            (39)


-2.3 %

Notable variances for the noninterest income table above are as follows:

  • The increase in service charges on deposit accounts was primarily due to an increase in ATM and debit card interchange fees, partially offset by small business and commercial accounts receiving higher earnings credit rates which offset previous fee opportunities.
  • The decrease in secondary market origination fees was primarily due to the continued slowing of home refinancing and purchases, partially offset by prior year investments in personnel and related products and services.
  • The decrease in bank-owned life insurance was primarily due to adjustments recorded during the first six months of 2024 to adjust the recorded amount that can be realized under the life insurance contracts to their cash surrender values as reported by the insurance carriers.
  • The increase in other operating income was primarily due to increases in income from other investments, partially offset by a decrease in merchant services fees.

Noninterest expense totaled $10.7 million for the six months ended June 30, 2024, a decrease of $458 thousand, or 4.1%, when compared to the same period in 2023. 

The following table is a comparison of the components of noninterest expense for the six months ended June 30, 2024, and 2023:

 



 For the Six Months Ended 







June 30,







2024


2023


 Change $ 


 Change % 

(dollars in thousands)









Salaries and employee benefits


$         5,276


$              6,185


$          (909)


-14.7 %

Occupancy expense


636


632


4


0.6 %

Furniture and equipment expense


550


559


(9)


-1.6 %

Data processing


758


653


105


16.1 %

Telecommunications


293


287


6


2.1 %

Legal and professional fees


278


362


(84)


-23.2 %

FDIC insurance assessments


183


166


17


10.2 %

Merger related expenses


745


-


745


100.0 %

Other noninterest expenses


1,982


2,315


(333)


-14.4 %

Total 


$       10,701


$            11,159


$          (458)


-4.1 %

Notable variances for the noninterest expense table above are as follows:

  • The decrease in salaries and employee benefits was primarily due to managements focused efforts to streamline operations and improve efficiencies after the core conversion was completed during the first quarter of 2023. These efforts lead to a reduction in the work force that was implemented during the third quarter of 2023, with full cost savings becoming accretive in the fourth quarter of 2023. In addition, this decrease was driven by employee attrition during the second quarter of 2024, and lower expenses related to bonus accruals, payroll taxes, benefit costs including 401(k) contributions, and deferred incentive compensation, which were partially offset by merit increases, wage inflation, and a lower impact from deferred loan origination costs.
  • The increase in data processing was primarily due to additional services, as well as volume based and other one-time charges.
  • The decrease in legal and professional fees was primarily due to lower expenses related to professional fees, which was partially offset by higher expenses related to legal, audit and compliance.
  • The increase in merger related expenses was primarily due to legal and investment banker fees, as well as other costs associated with the pending merger with First National that were incurred during the first six months of 2024, as compared to no merger related expenses being incurred during the same period of 2023.
  • The decrease in other noninterest expenses was primarily due to lower expenses related to printing and supplies, network management services, marketing and advertising, loans, meals and entertainment, other losses, miscellaneous other operating, and core deposit intangible amortization, which were partially offset by higher expenses related to internet banking, shareholder relations, customer service, and state franchise taxes.

Balance Sheet

At June 30, 2024, total assets were $662.7 million, compared to $658.7 million at December 31, 2023, an  increase of $4.0 million, or 0.6%.

Cash and cash equivalents as of June 30, 2024, were $57.7 million, an increase of $15.4 million, or 36.4%, from December 31, 2023. Key drivers of this change were deposit growth outpacing loan growth and a decrease in investment securities available for sale, at fair value. Cash and cash equivalents represented 8.7% and 6.4% of total assets as of June 30, 2024, and December 31, 2023, respectively.

Investment securities available for sale, at fair value as of June 30, 2024, were $70.7 million, a decrease of $2.5 million, or 3.4%, from December 31, 2023. Key drivers of this change were scheduled payments of principal and an increase in unrealized losses on the investment securities available for sale portfolio because of increases in market interest rates.

Total loans as of June 30, 2024, were $500.6 million, a decrease of $8.2 million, or 1.6%, from December 31, 2023. The key driver of this change was higher than expected payoffs, which were partially offset by organic growth. The Company's loan to deposit ratio was 91.6% as of June 30, 2024, as compared to 93.8% as of December 31, 2023.

Total deposits as of June 30, 2024, were $546.7 million, an increase of $4.5 million, or 0.8%, from December 31, 2023. Key drivers of this change were organic growth due to our continued focus on total relationship banking, which was partially offset by deposit outflows due to competitive pressures in the higher interest rate environment. While the Company has continued to see the deposit mix shift into higher yielding products, particularly interest-bearing checking and money market accounts, the balance and level of noninterest-bearing deposits to total deposits has remained relatively stable. As of June 30, 2024, total noninterest-bearing deposits were $135.3 million, a decrease of $2.0 million, or 1.5%, from December 31, 2023. These deposits represented 24.7% and 25.3% of total deposits as of June 30, 2024, and December 31, 2023, respectively. As of June 30, 2024, and December 31, 2023, there were no brokered deposits outstanding.

Total Federal Home Loan Bank borrowings as of June 30, 2024, were $49.0 million, representing no change from December 31, 2023.

Total subordinated debt, net of issuance costs as of June 30, 2024, were $17.8 million, an increase of $55 thousand, or 0.3%, from December 31, 2023. The key driver of this change was the amortization of the issuance costs. In August 2020, the Company issued $8.0 million of subordinated debt with a 10-year maturity and an initial 6.00% coupon. In February 2021, the Company redeemed the $3.5 million of legacy subordinated  debt issued in February 2016, which notes carried a 7% coupon. In January 2022, the Company issued an additional $10.0 million of subordinated debt. These notes have a maturity date of January 30, 2032, and carry an initial coupon of 4%

Total shareholders' equity as of June 30, 2024, was $45.1 million, an increase of $282 thousand, or 0.6%, from December 31, 2023. Key drivers of this change were the net income attributable to the Company for the six months ended June 30, 2024, and stock-based compensation expense related to restricted stock awards, which were partially offset by an increase in accumulated other comprehensive (loss), net of tax. Total accumulated other comprehensive (loss), net of tax as of June 30, 2024, was $10.1 million, an increase of $547 thousand, or 5.7%, from December 31, 2023. The key driver of this change was increases in market interest rates over the comparable periods. The Bank's Community Bank Leverage Ratio   was 9.92% as of June 30, 2024, as compared to 9.68% as of December 31, 2023. The Bank continues to remain well capitalized as defined by regulatory guidelines.

Asset Quality

The allowance for credit losses as of June 30, 2024, was $5.1 million, or 1.02%, of total loans, as compared to $5.0 million as of December 31, 2023, or 0.98%, of total loans. Loans past due 30 days or more and still accruing interest were $287 thousand as of June 30, 2024, while nonaccrual loans, excluding purchased credit deteriorated loans, totaled $490 thousand. The Company believes the current level of the allowance for credit losses is adequate to cover expected losses as credit metrics remain stable.

Source: Touchstone Bankshares, Inc.

About Touchstone Bankshares, Inc.

Touchstone Bankshares, Inc. (the "Company") is the bank holding company for Touchstone Bank (the "Bank"). Most of the Company's business activities are conducted through the Bank. The 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 completion and benefits of the Merger with First National; the occurrence of any event, change or other circumstances that could give rise to the right of one or both of the parties to terminate the Agreement between the Company and First National; the outcome of any legal proceedings that may be instituted against the Company or First National; the possibility that the proposed transaction will not close when expected or at all because required regulatory, shareholder or other approvals are not received or other conditions to the closing are not satisfied on a timely basis or at all, or are obtained subject to conditions that are not anticipated (and the risk that required regulatory approvals may result in the imposition of conditions that could adversely affect the combined company or the expected benefits of the proposed transaction); the ability of the Company and First National to meet expectations regarding the timing, completion and accounting and tax treatments of the proposed transaction; the risk that any announcements relating to the proposed transaction could have adverse effects on the market price of the common stock of either or both parties to the proposed transaction; the possibility that the anticipated benefits of the proposed transaction will not be realized when expected or at all, including as a result of the impact of, or problems arising from, the integration of the two companies or as a result of the strength of the economy and competitive factors in the areas where the Company and First National do business; certain restrictions during the pendency of the proposed transaction that may impact the parties' ability to pursue certain business opportunities or strategic transactions; the possibility that the transaction may be more expensive to complete than anticipated, including as a result of unexpected factors or events; diversion of management's attention from ongoing business operations and opportunities; the possibility that the parties may be unable to achieve expected synergies and operating efficiencies in the Merger within the expected timeframes or at all and to successfully integrate the Company's operations and those of First National, which may be more difficult, time-consuming or costly than expected; revenues following the proposed transaction may be lower than expected; the Company's and First National's success in executing their respective business plans and strategies and managing the risks involved in the foregoing; effects of the announcement, pendency or completion of the proposed transaction on the ability of the Company and First National to retain customers and retain and hire key personnel and maintain relationships with their suppliers, and on their operating results and businesses generally; 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 securities 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)


June 30,


March 31,


December 31,


September 30,


June 30,

Selected Operating Data:


2024


2024


2023


2023


2023

Net interest income


$                  5,152


$              5,094


$              5,229


$              5,078


$              5,108

Provision for (recovery of) credit losses


186


-


(206)


75


100

Noninterest income


871


814


876


930


956

Noninterest expense


5,217


5,483


5,075


5,321


5,634

Income before income tax 


620


425


1,236


612


330

Income tax expense


169


98


170


159


45

Net income


451


327


1,066


453


285

Less: Preferred dividends


-


-


9


-


-

Net income available to common shareholders


$                     451


$                 327


$              1,057


$                 453


$                 285












Income per share available to common shareholders:











Basic 


$                    0.14


$                0.10


$                0.32


$                0.14


$                0.09

Diluted


$                    0.14


$                0.10


$                0.32


$                0.14


$                0.09












Average common shares outstanding, basic


3,271,219


3,270,982


3,273,588


3,260,093


3,258,230

Average common shares outstanding, diluted


3,300,103


3,300,130


3,302,736


3,289,241


3,287,378

























For the Six Months Ended









June 30,


June 30,









2024


2023







Net interest income


$                10,247


$            10,542







Provision for credit losses


186


1,109







Noninterest income


1,685


1,724







Noninterest expense


10,701


11,159







Income (loss) before income tax 


1,045


(2)







Income tax expense (benefit)


267


(91)







Net income 


778


89







Less: Preferred dividends


-


-







Net income available to common shareholders


$                     778


$                   89





























Income per share available to common shareholders:











Basic 


$                    0.24


$                0.03







Diluted


$                    0.24


$                0.03


















Average common shares outstanding, basic


3,271,103


3,253,077







Average common shares outstanding, diluted


3,300,119


3,282,225







 

Touchstone Bankshares, Inc.

Consolidated Financial Highlights (continued)

(unaudited)












(in thousands, except per share data)


 June 30,


 March 31,


 December 31,


 September 30,


June 30,

Balance Sheet Data:


2024


2024


2023


2023


2023

Total assets


$                 662,717


$                 673,182


$            658,695


$            660,883


$              644,415

Total loans


500,571


506,028


508,810


512,478


505,661

Allowance for credit losses


(5,089)


(4,981)


(4,979)


(4,999)


(4,973)

Core deposit intangible


285


326


369


416


464

Deposits


546,732


557,598


542,239


549,876


529,752

Borrowings


49,000


49,000


49,000


49,000


51,000

Subordinated debt, net of issuance costs


17,787


17,759


17,731


17,704


17,676

Preferred stock


58


58


58


58


58

Other comprehensive (loss)


(10,115)


(9,982)


(9,568)


(13,111)


(11,605)

Shareholders' equity


45,091


44,750


44,809


41,209


42,208

Book value per common share 


$                     13.77


$                     13.67


$                13.68


$                12.61


$                  12.94

Tangible book value per common share 


$                     13.68


$                     13.57


$                13.57


$                12.48


$                  12.79

Total common shares outstanding


3,271,442


3,270,141


3,270,676


3,263,794


3,258,230

Total preferred shares outstanding


28,848


29,148


29,148


29,148


29,148














 June 30,


 March 31,


 December 31,


 September 30,


June 30,



2024


2024


2023


2023


2023

Performance Ratios:


(QTD annualized)


(QTD annualized)


(QTD annualized)


(QTD annualized)


(QTD annualized)

Return on average assets


0.27 %


0.20 %


0.63 %


0.28 %


0.18 %

Return on average common equity


4.08 %


2.93 %


9.85 %


4.34 %


2.61 %

Net interest margin 


3.47 %


3.46 %


3.47 %


3.45 %


3.44 %

Overhead efficiency (non-GAAP)


87 %


93 %


83 %


89 %


93 %














 June 30,


 June 30,









2024


2023







Performance Ratios:


(YTD Annualized)


(YTD Annualized)







Return on average assets


0.24 %


0.03 %







Return on average common equity


3.50 %


0.42 %







Net interest margin 


3.46 %


3.61 %







Overhead efficiency (non-GAAP)


90 %


91 %































 June 30,


 March 31,


 December 31,


 September 30,


June 30,

Asset Quality Data:


2024


2024


2023


2023


2023

Allowance for credit losses


$                     5,089


$                     4,981


$                4,979


$                4,999


$                  4,973

Nonperforming loans (excluding PCD loans)


491


141


326


314


332

Other real estate owned, net of allowance


-


32


-


-


-

Nonperforming assets


491


173


326


314


332

Net (recoveries) charge-offs, QTD


(3)


(2)


20


50


36












Asset Quality Ratios:











Allowance for credit losses to total loans


1.02 %


0.98 %


0.98 %


0.98 %


0.98 %

Nonperforming loans to total loans


0.10 %


0.03 %


0.06 %


0.06 %


0.07 %

Nonperforming assets to total assets


0.07 %


0.03 %


0.05 %


0.05 %


0.05 %

YTD net charge-offs to average loans, annualized 


0.00 %


0.00 %


0.02 %


0.02 %


<0.01%












Community Bank Leverage Ratio


9.92 %


9.89 %


9.68 %


9.71 %


9.99 %

Tangible common equity/tangible assets ratio


6.76 %


6.59 %


6.74 %


6.17 %


6.47 %

 



Quarter to Date


Year to Date

(in thousands, except per share data)


June 30,


June 30,

Reconciliation of non-GAAP Financial Measures (1):


2024


2024






Net income before one-time adjustments


$                   451


$                778

Merger related expenses, net of tax effect


160


589

Core earnings (1)


$                   611


$             1,367






Core earnings per share available to common shareholders:



Basic 


$                  0.19


$               0.42

Diluted


$                  0.19


$               0.41






Average common shares outstanding, basic


3,271,219


3,271,103

Average common shares outstanding, diluted


3,300,103


3,300,119






Performance Ratios:





Return on average assets (annualized)


0.37 %


0.42 %

Return on average common equity (annualized)


5.52 %


6.14 %

Overhead efficiency (non-GAAP)


83 %


84 %






(1) Core earnings is determined by methods other than in accordance with U.S. generally

accepted accounting principles ("GAAP").  Non-GAAP measures should not be viewed as

a substitute for operating results determined in accordance with GAAP, nor are they


necessarily comparable to non-GAAP performance measures that may be presented by other

companies.





 

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SOURCE Touchstone Bankshares, Inc.

FAQ

What was Touchstone Bankshares' (TSBA) net income for Q2 2024?

Touchstone Bankshares reported net income of $451,000 for Q2 2024.

How did Touchstone Bankshares' (TSBA) Q2 2024 earnings compare to Q2 2023?

Q2 2024 net income of $451,000 was up 58.2% from $285,000 in Q2 2023.

What was Touchstone Bankshares' (TSBA) earnings per share for Q2 2024?

Touchstone Bankshares reported earnings of $0.14 per share for Q2 2024.

How did Touchstone Bankshares' (TSBA) net interest margin change in Q2 2024?

The net interest margin improved 3 basis points to 3.47% in Q2 2024 compared to Q2 2023.

What was the impact of merger-related expenses on Touchstone Bankshares' (TSBA) Q2 2024 results?

Touchstone Bankshares incurred $202,000 in merger-related expenses in Q2 2024 related to its pending merger with First National

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Prince George