Touchstone Bankshares Reports Restated 2021 Financial Results
Touchstone Bankshares, Inc. (OTC Pink: TSBA) announced restated financial results for 2021, reversing a $531 thousand IRS penalty accrual after it was abated. For the year, net income reached $4.4 million ($1.33 per share), up 94.6% from $2.3 million in 2020. The return on average assets improved to 0.77%, and loans rose 11% to $402.9 million. Amid strong loan growth, a $10 million subordinated debt issue was announced to support future initiatives, despite potential short-term earnings pressure.
- Net income increased 94.6% year-over-year to $4.4 million.
- Earnings per share rose to $1.33 from $0.69 in 2020.
- 11% increase in loans to $402.9 million.
- Noninterest income grew by 33.9% to $3.9 million.
- No provision for loan losses in 2021 compared to $2.25 million in 2020.
- Net interest margin decreased from 3.86% in 2020 to 3.52% in 2021.
- Noninterest expense rose 9.1% to $17.2 million.
- Short-term earnings pressure anticipated from new subordinated debt.
PRINCE GEORGE, Va., March 11, 2022 /PRNewswire/ --
Explanatory Note
On January 28, 2022, Touchstone Bankshares, Inc. (the "Company") issued a press release reporting its preliminary financial results for the fourth quarter and year ended December 31, 2021. Included in those preliminary financial results was a one-time expense accrual of
Touchstone Bankshares, Inc. (the "Company") (OTC Pink: TSBA), and its wholly owned subsidiary, Touchstone Bank (the "Bank"), reported restated unaudited results for the quarter and year ended December 31, 2021.
The Company reported net income available to common shareholders of
Basic and diluted earnings per common share for the quarter ended December 31, 2021, was
James Black, President and CEO stated, "Our improved results and momentum are clearly attributable to a dedicated team focused on delivering excellent customer service and building the future of Touchstone Bank. We experienced exceptional loan growth during the fourth quarter and expect double-digit loan growth for 2022. With expectations and planned growth continuing, we recently announced a
Earnings
Year-over-Year Twelve Months
Net income available to common shareholders for the year ended December 31, 2021, was
Net interest income for the years ended December 31, 2021, and 2020, was
The Bank recorded no provision for loan losses in 2021. Comparatively, the Company recorded a
Noninterest income totaled
The following table is a comparison of the components of noninterest income for the years ended December 30, 2021, and 2020:
For the year ended | ||||||||
December 31, | ||||||||
2021 | 2020 | Change $ | Change % | |||||
(dollars in thousands) | ||||||||
Service charges on deposit accounts | $ 1,872 | $ 1,611 | $ 261 | |||||
Secondary market origination fees | 224 | 272 | (48) | - | ||||
Bank-owned life insurance | 234 | 232 | 2 | |||||
Gain on security sales | 218 | 113 | 105 | |||||
Gain on sale of fixed assets | 320 | - | 320 | |||||
Other operating income | 995 | 656 | 339 | |||||
Total | $ 3,863 | $ 2,884 | $ 979 |
Notable variances for the noninterest income table above:
- The increase in service charges on deposit accounts year-over-year was mainly due to an increase in ATM and debit card interchange fees and an increase in volume of overdraft fees.
- The Company began seeing an increase in secondary market origination fees in the second quarter of 2020 due to the 150-basis point drop in federal interest rates in the latter part of the first quarter of 2020 which spurred home refinancing and purchases.
- In the fourth quarter of 2021, the Company executed a sale-leaseback on its corporate headquarters building. The company recognized a
$320 thousand gain on the sale and entered into a five-year lease with an option to renew after the initial five years. - The increase in other operating income was mainly due to increases in income from other investments.
For the year ended December 31, 2021, noninterest expense was
For the year ended | ||||||||
December 31, | ||||||||
2021 | 2020 | Change $ | Change % | |||||
(dollars in thousands) | ||||||||
Salaries and employee benefits | $ 8,591 | $ 8,209 | $ 382 | |||||
Occupancy expense | 1,072 | 1,074 | (2) | - | ||||
Funiture and equipment expense | 1,164 | 1,160 | 4 | |||||
Data processing | 1,152 | 927 | 225 | |||||
Telecommunications | 841 | 746 | 95 | |||||
Legal and professional fees | 716 | 628 | 88 | |||||
OREO losses and related expenses | 2 | 23 | (21) | - | ||||
FDIC assessments | 186 | 188 | (2) | - | ||||
Other noninterest expenses | 3,472 | 2,812 | 660 | |||||
Total | $ 1,429 |
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 was mainly due to added staff. Also, in response to the Covid-19 pandemic, Management halted its accrual for bonuses in 2020, but not for 2021.
- The increase in data processing expense in 2021 when compared to 2020 was mainly due to the use of additional credits provided by the Company's core provider in 2020. In the fourth quarter of 2021, the Company renegotiated its contract with the core provider and expects to see a reduction of data processing expenses going forward.
- The increase in telecommunications was mostly due to a one-time fee paid in relation to a project completed in 2021.
- Legal and professional fees were higher in 2021, when compared to the same period in 2020, mainly due to paying outsourced credit analysis assistance as well recruiter fees.
- Other noninterest expenses was up in 2021 when compared to 2020 due to various items such as a
$103 thousand penalty associated with the early payoff of the$3 million FHLB note, a one-time settlement of$99 thousand on a deposit-related fraud case, higher internet banking fees due to higher internet banking usage, and several other elevated expense categories.
Year-over-Year Fourth Quarter
Net income available to common shareholders for the quarter ended December 31, 2021, was
Net interest income for the quarters ended December 31, 2021, and 2020, was
Noninterest income totaled
The following table is a comparison of the components of noninterest income for the three months ended December 31, 2021, and 2020:
For the three months ended | ||||||||
December 31, | ||||||||
2021 | 2020 | Change $ | Change % | |||||
(dollars in thousands) | ||||||||
Service charges on deposit accounts | $ 601 | $ 423 | $ 178 | |||||
Secondary market origination fees | 58 | 51 | 7 | |||||
Bank-owned life insurance | 75 | 57 | 18 | |||||
Gain on security sales | 6 | - | 6 | |||||
Gain on sale of fixed assets | 320 | - | 320 | |||||
Other operating income | 170 | 226 | (56) | - | ||||
Total | $ 1,230 | $ 757 | $ 473 |
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 and increase in volume of overdraft fees.
- In the fourth quarter of 2021, the Company executed a sale-leaseback on its corporate headquarters building. The company recognized a
$320 thousand gain on the sale and entered into a five-year lease with an option to renew after the initial five years. - The decrease in other operating income was mainly due to declines in income from other investments.
The following table is a comparison of the components of noninterest expense for the quarters ended December 31, 2021, and 2020:
For the three months ended | ||||||||
December 31, | ||||||||
2021 | 2020 | Change $ | Change % | |||||
(dollars in thousands) | ||||||||
Salaries and employee benefits | $ 2,222 | $ 1,848 | $ 374 | |||||
Occupancy expense | 264 | 265 | (1) | - | ||||
Funiture and equipment expense | 287 | 309 | (22) | - | ||||
Data processing | 361 | 215 | 146 | |||||
Telecommunications | 227 | 189 | 38 | |||||
Legal and professional fees | 41 | 184 | (143) | - | ||||
OREO losses and related expenses | - | 1 | (1) | - | ||||
FDIC assessments | 48 | 54 | (6) | - | ||||
Other noninterest expenses | 943 | 585 | 358 | |||||
Total | $ 4,393 | $ 3,650 | $ 743 |
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 as well as management halted its accrual for bonuses in 2020, but not for 2021.
- The increase in data processing expense in 2021 when compared to the same periods in 2020 was mainly due to the use of additional credits provided by the Company's core provider in 2020. See above discussion on data processing expense.
- The increase in telecommunications in 2021 versus 2020 was due to the Bank switching over its services and temporarily paying for two vendors. However, this switch should reduce telecommunication costs going forward.
- Legal and professional fees are lower for the three months ended December 31, 2021, when compared to the same periods in 2020, respectively, due to legal fees paid in connection with forming the bank holding company in the latter part of 2020.
- See discussion in Year-over-Year Twelve Months section above for other noninterest expense variances.
Balance Sheet
At December 31, 2021, total assets were
Total loans were
On the liability side of the balance sheet, deposits totaled
In the fourth quarter of 2021, the Bank prepaid its outstanding
In August of 2020, the Company issued
In January of 2022, the Company issued an additional
Shareholders' Equity totaled
Asset Quality
The allowance for loan losses at December 31, 2021, was
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 a loan center 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) | December 31, | September 30, | June 30, | March 31, | December 31, | |||||
Selected Operating Data: | 2021 | 2021 | 2021 | 2021 | 2020 | |||||
Net interest income | $ 4,674 | $ 5,009 | $ 4,772 | $ 4,348 | $ 4,647 | |||||
Provision for loan losses | - | - | - | - | 750 | |||||
Noninterest income | 1,230 | 772 | 990 | 871 | 757 | |||||
Noninterest expense | 4,393 | 4,300 | 4,409 | 4,094 | 3,650 | |||||
Income before income tax | 1,511 | 1,481 | 1,353 | 1,125 | 1,004 | |||||
Income tax expense | 284 | 279 | 253 | 206 | 170 | |||||
Net income | 1,227 | 1,202 | 1,100 | 919 | 834 | |||||
Less: Preferred dividends | 9 | - | - | - | 8 | |||||
Net income available to common shareholders | $ 1,218 | $ 1,202 | $ 1,100 | $ 919 | $ 826 | |||||
Income per share available to common shareholders: | ||||||||||
Basic | $ 0.37 | $ 0.36 | $ 0.33 | $ 0.28 | $ 0.25 | |||||
Diluted | $ 0.37 | $ 0.36 | $ 0.33 | $ 0.27 | $ 0.25 | |||||
Average common shares outstanding, basic | 3,298,688 | 3,336,504 | 3,336,504 | 3,334,632 | 3,327,114 | |||||
Average common shares outstanding, diluted | 3,327,836 | 3,365,652 | 3,365,652 | 3,363,780 | 3,356,262 | |||||
For the year ended | ||||||||||
December 31, | December 31, | |||||||||
2021 | 2020 | |||||||||
Net interest income | $ 18,803 | $ 17,857 | ||||||||
Provision for loan losses | - | 2,250 | ||||||||
Noninterest income | 3,863 | 2,884 | ||||||||
Noninterest expense | 17,196 | 15,767 | ||||||||
Income before income tax | 5,470 | 2,724 | ||||||||
Income tax expense | 1,022 | 435 | ||||||||
Net income | 4,448 | 2,289 | ||||||||
Less: Preferred dividends | 9 | 8 | ||||||||
Net income available to common | ||||||||||
shareholders | $ 4,439 | $ 2,281 | ||||||||
Income per share available to common shareholders: | ||||||||||
Basic | $ 1.33 | $ 0.69 | ||||||||
Diluted | $ 1.33 | $ 0.68 | ||||||||
Average common shares outstanding, basic | 3,326,511 | 3,326,507 | ||||||||
Average common shares outstanding, diluted | 3,355,659 | 3,355,786 |
Touchstone Bankshares, Inc. | ||||||||||
Consolidated Financial Highlights (continued) | ||||||||||
(unaudited) | ||||||||||
(in thousands, except per share data) | December 31, | September 30, | June 30, | March 31, | December 31, | |||||
Balance Sheet Data: | 2021 | 2021 | 2021 | 2021 | 2020 | |||||
Total assets | $ 581,136 | $ 586,843 | $ 563,828 | $ 568,881 | $ 532,732 | |||||
Total loans | 402,910 | 377,015 | 383,981 | 377,172 | 363,029 | |||||
Allowance for loan losses | (4,375) | (4,445) | (4,440) | (4,386) | (4,357) | |||||
Core deposit intangible | 815 | 882 | 953 | 1,026 | 1,102 | |||||
Deposits | 517,396 | 521,104 | 498,682 | 489,465 | 445,774 | |||||
Borrowings | - | 3,000 | 3,000 | 18,000 | 21,000 | |||||
Subordinated debt | 7,825 | 7,813 | 7,801 | 7,788 | 11,282 | |||||
Preferred stock | 58 | 58 | 58 | 58 | 58 | |||||
Shareholders' equity | 50,896 | 51,921 | 51,339 | 49,750 | 50,124 | |||||
Book value per common share | $ 15.57 | $ 15.54 | $ 15.37 | $ 14.89 | $ 15.01 | |||||
Tangible book value per common share | $ 15.32 | $ 15.28 | $ 15.08 | $ 14.59 | $ 14.68 | |||||
Total common shares outstanding | 3,265,615 | 3,336,504 | 3,336,504 | 3,336,504 | 3,334,445 | |||||
Total preferred shares outstanding | 29,148 | 29,148 | 29,148 | 29,148 | 29,148 | |||||
December 31, | September 30, | June 30, | March 31, | December 31, | ||||||
2021 | 2021 | 2021 | 2021 | 2020 | ||||||
Performance Ratios: | (QTD annualized) | (QTD annualized) | (QTD annualized) | (QTD annualized) | (QTD annualized) | |||||
Return on average assets | ||||||||||
Return on average common equity | ||||||||||
Net interest margin | ||||||||||
Overhead efficiency (non-GAAP) | ||||||||||
December 31, | December 31, | |||||||||
2021 | 2020 | |||||||||
Performance Ratios: | Year to Date | Year to Date | ||||||||
Return on average assets | ||||||||||
Return on average common equity | ||||||||||
Net interest margin | ||||||||||
Overhead efficiency (non-GAAP) | ||||||||||
December 31, | September 30, | June 30 | March 31, | December 31, | ||||||
Asset Quality Data: | 2021 | 2021 | 2021 | 2021 | 2020 | |||||
Allowance for loan losses | $ 4,375 | $ 4,445 | $ 4,440 | $ 4,386 | $ 4,357 | |||||
Nonperforming loans (excluding PCI loans) | 253 | 1,259 | 1,738 | 2,051 | 2,393 | |||||
Other real estate owned, net of allowance | - | - | 22 | 22 | 22 | |||||
Nonperforming assets | 253 | 1,259 | 1,760 | 2,073 | 2,415 | |||||
Net (recoveries) charge-offs , QTD | 70 | (5) | (54) | (29) | 68 | |||||
Asset Quality Ratios: | ||||||||||
Allowance for loan losses to total loans | ||||||||||
Nonperforming loans to total loans | ||||||||||
Nonperforming assets to total assets | ||||||||||
YTD net (recoveries) charge-offs to average loans, annualized | ( | ( | ( | |||||||
Community Bank Leverage Ratio |
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SOURCE Touchstone Bankshares, Inc.
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