Touchstone Bank Reports Financial Results for First Quarter 2018

PRINCE GEORGE, Va., May 14, 2018 /PRNewswire/ -- Touchstone Bank (the "Bank") (OTC Pink: TSBA) today announced its unaudited results of operations for the first quarter of 2018.

The Bank reported net earnings of $30 thousand to common shareholders for the first quarter of 2018.  Earnings per share on a basic and dilutive basis were $0.01 and return on average assets was 0.03%.  For the first quarter of 2017, the Bank reported net income of $372 thousand or $0.20 and $0.19 per share respectively on a basic and diluted basis.  

In reflecting on the first quarter of 2018, James R. Black, President and CEO stated, "Our focus during the period has been on completion of our merger from an integration and system conversion standpoint, requiring one-time expenditures totaling approximately $688 thousand.  Additionally, we provisioned $300 thousand to complement our diversified post-merger loan portfolio and to reflect impairment adjustments on a few smaller deteriorated loans.  Building on our efforts over this quarter, we continued to prudently invest resources to ensure that our customers are provided the ultimate customer experience while maximizing value for all stakeholders.  In the coming days, we will open a new full-service branch in Clarksville, VA with state-of-the-art, 24-hour banking capabilities and we look forward to better serving the community."

Earnings

Net interest income for the first quarter of 2018 was $4.1 million, compared to $2.1 million for the first quarter of 2017, an increase of 97.4% reflective of the first full quarter as a combined Bank.  The yield on earning assets was 4.88% for the first quarter of 2018, compared to 4.65% for the first quarter of 2017, with this 23 basis point improvement related primarily to loans comprising an increased proportion of total earning assets.  Because of increasing cost of funds in our market footprint as well as the addition of subordinated debt acquired in the merger, the cost of funds for the first quarter of 2018 was 0.54%, a 15-basis point increase over the first quarter of 2017. As a result, the net interest margin for the first quarter of 2018 was 4.33% compared to 4.11% for the same period of 2017. 

Noninterest income totaled $658 thousand for the first quarter of 2018, an increase of $238 thousand or 56.6% from the first quarter of 2017 resulting from the combined revenue streams created by the merger.  Deposit related service charge fee income at March 31, 2018 increased by $62 thousand or 63.9% over March 31, 2017. Other non-interest income increased by $198 thousand or 70.2% over March 31, 2017.

Noninterest expense for the first quarter of 2018 was $4.4 million, an increase of $2.5 million or 134.4% over the first quarter of 2017.  Included in this comparison of noninterest expense is personnel expense which increased by $1.3 million or 127.8% and other operating expense which increased by $850 thousand or 155.1%. These measures are reflective of combined Bank operating expenses as well as conversion and integration costs brought by the merger.

Return on average common equity was 0.28% for the quarter ended March 31, 2018 compared to 5.79% for the same period in 2017 and return on average assets was 0.03% compared to 0.67% in 2017. In the first quarter of 2018, net income available to common shareholders was $30 thousand compared to $372 thousand in the same period in 2017, the variance being driven largely by merger and conversion related costs and to a lesser extent by an increased loan loss provision in the first quarter of 2018.

Balance Sheet

At March 31, 2018, total assets were $429.2 million, as compared to $ 439.0 million as of December 31, 2017 and $230.9 million as of March 31, 2017.  Net loans were $334.8 million, as compared to $ 336.7 million as of December 31, 2017 and $164.4 million as of March 31, 2017. Loan activity throughout our markets remains stable and competitive while the Bank remains committed to profitable growth without compromise of asset quality, liquidity, or interest rate risk.   Deposits totaled $376.5 million at March 31, 2018, as compared to $ 382.0 million as of December 31, 2017 and $202.2 million as of March 31, 2017.

Total equity at March 31, 2018 was $44.0 million, compared to $44.1 million at the end of 2017 and $26.2 million at March 31, 2017.  The decrease of $60 thousand or 0.1% was the result of net earnings offset by changes in other comprehensive income.

Asset Quality

The allowance for loan losses at March 31, 2018 was $1.9 million or 0.57% of total loans, compared to $1.7 million at March 31, 2017 and $1.6 million at December 31, 2017.  Net recoveries for the quarter ended March 31, 2018 were $9 thousand, compared to $1 thousand at March 31, 2017.  Nonperforming loans, which exclude performing troubled debt restructurings, equaled $2.5 million or 0.74% of total loans at March 31, 2018 compared to $2.6 million or 1.57% at March 31, 2017 and $1.9 million or 0.57% at December 31, 2017.  As always, appropriate risk management through maintenance of high asset quality standards and an adequate reserve for loan losses continue to be priorities for the Bank.    

Other real estate owned totaled $673 thousand at March 31, 2018, compared to $375 thousand at March 31, 2017 and $673 thousand at December 31, 2017.  Nonperforming assets, which excludes performing troubled debt restructurings, equaled $3.2 million or 0.74% of total assets at March 31, 2018 compared to $3.0 million or 1.29% at March 31, 2017 and $2.6 million or 0.60% at December 31, 2017.

Capital

As of March 31, 2018, the Bank's total risk-based capital was 14.0% compared to 15.3% one year ago and 13.9% as of December 31, 2017. Tier 1 risk-based capital was 12.4% compared to 14.4% one year ago and 12.4% as of December 31, 2017. Tier 1 leverage capital was 9.8% compared to 11.7% one year ago and 12.2% as of December 31, 2017.   For purposes of determination of risk-based capital, the Bank's subordinated debt is a component of Tier 2 capital.  Capital ratios continue to remain above the minimum regulatory requirements for well capitalized institutions.

About Touchstone Bank

Touchstone Bank is a full-service community bank with approximately $429 million in total assets headquartered in Prince George, Virginia.  The Bank has thirteen branches and one loan center serving Southern and Central Virginia and 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. More information about these factors is contained in Touchstone Bank's filings with the Board of Governors of the Federal Reserve.

SOURCE Touchstone Bank

Related Links

http://www.touchstone.bank