Touchstone Bank Reports Financial Results for the Second Quarter 2019

PRINCE GEORGE, Va., July 29, 2019 /PRNewswire/ -- Touchstone Bank (the "Bank") TSBA reported net income of $836 thousand for the quarter ended June 30, 2019, an increase of $378 thousand, or 82.5%, when compared to the $458 thousand of net income recorded for the same quarter in 2018. Return on average assets was 0.75% for the second quarter of 2019, an increase of 32 basis points when compared to the 0.43% return on average assets recorded for the second quarter of 2018.  Basic and diluted earnings per common share for the quarter ended June 30, 2019 was $0.25. Net income for the six months ended June 30, 2019 was $1.4 million and basic and diluted earnings per common share was $0.41.   

President & CEO James Black stated, "We continued to gain positive momentum in the second quarter as earnings, asset quality and loan growth improved. During the quarter we divested of our largest nonaccrual credit, which represented about half of nonperforming assets.  Our focus remains on investing in customer-facing services, while enhancing productivity and efficiency.  We are optimistic that further efficiencies can be achieved."  

Earnings

Net interest income for the quarter ended June 30, 2019 was $4.3 million, while net interest income was $4.1 million for the same period in 2018. Net interest income for the first quarter of 2019 was $4.2 million. The net interest margin for the second quarter of 2019 was 4.23% compared to 4.31% for the same period in 2018.  The decline in the margin year over year was mainly driven by the increased cost of funds. The net interest margin for the first quarter of 2019 was 4.31%.  Net interest income for the six months ended June 30, 2019 was $8.5 million compared to $8.2 million for the same period in 2018, while the net interest margin declined slightly to 4.27% for the six months ended June 30, 2019 when compared to the 4.31% recorded for the six months ended June 30, 2018.

The Bank recorded an $112 thousand recovery of loan losses in the second quarter of 2019, mainly due to releasing a portion of the reserves it had set aside for its largest problem credit which was divested of during the quarter.  A provision for loan losses of $100 thousand was recorded in the second quarter of 2018.

Noninterest income totaled $797 thousand for the quarter ended June 30, 2019, an increase of $60 thousand, or 8.1%, when compared to the same period in 2018. This increase in non-interest income was recognized in almost all categories as service charges on deposits, secondary market origination fees, and income from bank-owned life insurance all increased year-over-year.  However, partially offsetting these increases was an $83 thousand decline of income from an investment fund when comparing the three months ended June 30, 2019 to the three months ended June 30, 2018. Noninterest income for the six months ended June 30, 2019 and 2018 was $1.4 million.

Noninterest expense for the three months ended June 30, 2019 and 2018 was $4.1 million.  Noninterest expense for the first quarter of 2019 was $4.1 million as well.  For the six months ended June 30, 2019, noninterest expense was $8.3 million, an improvement of $302 thousand when compared to the $8.6 million of noninterest expense recorded in the first half of 2018.

Balance Sheet

At June 30, 2019, total assets were $458.1 million, compared to $427.8 million as of June 30, 2018, an increase of $30.3 million, or 7.1%. Net loans increased $21.9 million, or 6.7%, when comparing net loans of $347.9 million at June 30, 2019 to net loans of $326.0 million at June 30, 2018.  Loan activity throughout our markets remains stable. Deposits totaled $373.9 million at June 30, 2019, as compared to $372.7 million as of June 30, 2018.  Borrowings from the Federal Home Loan Bank totaled $31.0 million at June 30, 2019, compared to $4.2 million at June 30, 2018.  The Bank used the increased borrowings to fund its loan growth.

Total equity at June 30, 2019 was $46.2 million, compared to $44.4 million at June 30, 2018. The Bank remains well capitalized as defined by regulatory guidelines.

Asset Quality

The allowance for loan losses at June 30, 2019 was $2.3 million, or 0.66%, of total loans, compared to $2.0 million, or 0.62% of total loans, at June 30, 2018.  Net recoveries for the quarter ended June 30, 2019, were $81 thousand, bringing the year-to-date total of net recoveries to $95 thousand.  Nonperforming loans were $951 thousand, or 0.27% of total loans, at June 30, 2019.  That is an improvement of $1.4 million, or 59.9%, when compared to nonperforming loans of $2.4 million at June 30, 2018. As mentioned above, the Bank had a single credit which was divested of in the current quarter that comprised about half of the nonperforming loans. Other real estate owned at June 30, 2019 was $166 thousand, an improvement of $573 thousand when compared to the other real estate owned total of $739 thousand at June 30, 2018.    

About Touchstone Bank

Touchstone Bank is a full-service community bank headquartered in Prince George, Virginia, with $458.1 million in total assets.  The Bank has eleven 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

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.

SOURCE Touchstone Bank