Touchstone Bankshares, Inc. Reports Financial Results for the Second Quarter 2024
The Company reported net income available to common shareholders of
The Company's results of operations for the three months ended
For the six months ended
The Company's results of operations for the six months ended
As previously disclosed, on
The Agreement and the transactions contemplated thereby are subject to the approval of the respective shareholders of the Company and
Earnings Analysis
Three Months Ended
As noted above, net income available to common shareholders for the three months ended
Net interest income for the three months ended
The Company recorded
Noninterest income totaled
The following table is a comparison of the components of noninterest income for the three months ended
|
|
For the Three Months Ended |
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|
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
The following table is a comparison of the components of noninterest expense for the three months ended
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For the Three Months Ended |
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||
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|
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 % |
|
|
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
As noted above, net income available to common shareholders for the six months ended
Net interest income for the six months ended
The Company recorded
Noninterest income totaled
The following table is a comparison of the components of noninterest income for the six months ended
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For the Six Months Ended |
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|
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
The following table is a comparison of the components of noninterest expense for the six months ended
|
|
For the Six Months Ended |
|
|
|
|
||
|
|
|
|
|
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|
||
|
|
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 % |
|
|
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
Cash and cash equivalents as of
Investment securities available for sale, at fair value as of
Total loans as of
Total deposits as of
Total subordinated debt, net of issuance costs as of
Total shareholders' equity as of
Asset Quality
The allowance for credit losses as of
Source:
About Touchstone Bankshares, Inc.
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
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Consolidated Financial Highlights |
||||||||||
(unaudited) |
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|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
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(in thousands, except per share data) |
|
|
|
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|
|
|
|
|
|
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 |
|
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|
|
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|
|
|
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|
|
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|
|
|
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|
|
For the Six Months Ended |
|
|
|
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||
|
|
|
|
|
|
|
|
|
|
|
|
|
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 |
|
|
|
|
|
|
|
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Consolidated Financial Highlights (continued) |
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(unaudited) |
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|
|
|
|
|
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|
|
(in thousands, except per share data) |
|
June 30, |
|
March 31, |
|
December 31, |
|
September 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, |
|
|
|
|
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, |
|
|
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) |
|
|
|
|
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 |
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3,271,219 |
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3,271,103 |
Average common shares outstanding, diluted |
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3,300,103 |
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3,300,119 |
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Performance Ratios: |
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Return on average assets (annualized) |
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0.37 % |
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0.42 % |
Return on average common equity (annualized) |
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5.52 % |
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6.14 % |
Overhead efficiency (non-GAAP) |
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83 % |
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84 % |
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(1) Core earnings is determined by methods other than in accordance with |
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accepted accounting principles ("GAAP"). Non-GAAP measures should not be viewed as |
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a substitute for operating results determined in accordance with GAAP, nor are they |
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necessarily comparable to non-GAAP performance measures that may be presented by other |
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companies. |
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