FINCASTLE, VA / ACCESSWIRE / February 1, 2018 / The Bank of Fincastle (OTC PINK: BFTL) announced today its quarterly financial report for the fourth quarter of 2017. For the quarter ended December 31, 2017, the Bank had an unaudited net loss of $991,000, compared to the fourth quarter of 2016 net loss of $3,934,000.
The net loss of $991,000 was primarily due to the enactment of the Tax Cuts and Jobs Act (Tax Reform) signed into law at the end of 2017. Excluding the impact of the Tax Reform, quarterly net income would have been $366,000, as compared to net losses of $3,934,000 in the fourth quarter of 2016.
"We have made excellent progress since 2015 and I am optimistic about the future," said Scott Steele, The Bank of Fincastle, President and CEO. "Our loan portfolio quality is improving and we continue to focus on building our core deposits. We value the loyalty of our customers, shareholders, and employees who continue to stand with us."
Key Highlights
- Net Loss of $991,000
- Excluding the Estimated Impact of Tax Reform, Net Income of $366,000
- Asset quality has improved
- Increase in Net Interest Income
- Well Capitalized
Revenue
Total core revenue for the three months ended December 31, 2017 was up 8.26% to $2.04 million, from $1.88 million in the fourth quarter of 2016. Higher core revenues reflected increases in both interest income from the loan portfolio and non-interest income sources, excluding gains on sales of other real estate, gains on sales of other assets, and income from subsidiaries. Growth in commercial lines and loans, commercial real estate loans, personal lines and loans, as well as non-interest income from interchange fees contributed to the increase in total revenue.
Net Interest Income
Net interest income was $1.54 million for the three months ended December 31, 2017, compared to $1.41 million for the three months ended December 31, 2016. This is an increase of $126,000 or 8.9%. The increase in net interest income continues to be directly associated with the Bank's continued loan growth.
Noninterest Income
Core non-interest income decreased 7.61% to $206,000 for the three months ended December 31, 2017 vs. $223,000 during the same period of 2016. The primary change in non-interest income resulted from a decrease in rental income from bank-owned real estate.
Noninterest Expense
Non-interest expense was $2 million for the three months ended December 31, 2017, compared to $1.82 million for the three months ended December 31, 2016. Non-interest expense increased primarily due to legal and audit fees. Personnel expense was at $827,000 for the three months ended December 31, 2017, compared to $805,000 for the three months ended December 31, 2016. The Bank had $205,000 in OREO losses for the three months ended December 31, 2017, as compared to $950,000 for the three months ending December 31, 2016.
Balance Sheet
At December 31, 2017, The Bank of Fincastle total assets were $200.77 million, compared to $206.40 million at December 31, 2016. Total loans were $140.16 million at December 31, 2017, compared to $121.68 million at December 31, 2016. Core Deposits were $173.46 million at December 31, 2017, compared to $190.36 million at December 31, 2016.
Loans
Loans increased 14.41% or $18.03 million to $143.13 million over the twelve months ended December 31, 2017. Overall loan growth was driven by commercial real estate, commercial and industrial lines, and term loans, as well as consumer lines and loans.
Deposits
Total core deposits were up $1.72 million or 1.00% for the last quarter, while the core decreased $16.90 million during the twelve months ended December 31, 2017. The decrease was due to negative publicity regarding the financial performance of the bank prior to the capital raise.
Capital
The Bank of Fincastle's total capital ratios, common equity tier 1 capital, total risk-based capital, tier 1 risk-based capital and tier 1 leverage ratios were 15.29%, 16.56%, 15.29%, and 12.02%, respectively. All ratios continue to exceed the current regulatory standards for well-capitalized institutions. During the Fourth Quarter of 2017, the stock closed as high as $2.35 with an average close of $2.15.
Asset Quality
Asset quality has improved. Nonperforming assets as of December 31, 2017 totaled $9.73 million, compared to $11.25 million as of December 31, 2016. The Bank of Fincastle had $4.11 million in nonaccrual loans as of December 31, 2017, compared to $5.45 million in nonaccrual loans as of December 31, 2016. Other real estate owned totaled $5.62 million at the end of the fourth quarter 2017, compared to $5.37 million at the end of the fourth quarter 2016. At the end of the fourth quarter of 2017, The Bank of Fincastle had two OREO properties under contract totaling $1.57 million.
Nonperforming Assets
OREO balances increased $249,000 or 4.64% during 2017 and decreased $1.33 million, or 19.11%, in the fourth quarter. This resulted in a decline in non-performing assets, excluding performing restructured loans, to 4.85% of total assets at December 31, 2017 vs. 5.66% at December 31, 2016. Non-performing assets, including restructured loans, were also down from 5.66% of total assets at December 31, 2016 to 5.21% at December 31, 2017.
Past Due and Nonaccrual Loans
Nonperforming loans, excluding performing, restructured loans, of $4.85 million were 2.87% of total loans at December 30, 2017 vs. $5.88 million or 4.70% of total loans at December 30, 2016. Past due accruing loans amounted to 0.31% of total loans at December 30, 2017 vs 0.61% in 2016 while nonaccruals decreased to 2.87% of total loans during the fourth quarter of 2017 from 4.35% of total loans at December 30, 2016. Net charge-offs to average loans outstanding at December 30, 2017 were 0.00% for the quarter and 0.36% for the twelve months of 2017 vs. 2.27% and 5.33% in 2016.
Allowance for Loan Losses
The Bank's allowance for loan losses amounted to $2.97 million or 2.07% of total loans at December 31, 2017 vs. $3.42 million and 2.73% of total loans at December 31, 2016.
Below are the financial highlights for comparison:
CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except share and per share data)
|
(Unaudited)
|
(Audited)
|
|||||||
|
December 31, 2017
|
December 31, 2016
|
|||||||
|
ASSETS
|
||||||||
|
Cash and due from banks
|
$ | 3,725 | $ | 5,034 | ||||
|
Interest-bearing deposits with banks
|
3,235 | 4,607 | ||||||
|
Federal funds sold
|
1,088 | 80 | ||||||
|
Investment securities held to maturity
|
- | 51,202 | ||||||
|
Investment securities available for sale
|
30,659 | - | ||||||
|
Restricted investment securities
|
241 | 251 | ||||||
|
Loans held for sale
|
10,073 | 735 | ||||||
|
Loans, net of allowance for loan losses
|
130,087 | 120,948 | ||||||
|
of $2,968 at 2017 and $3,420 at 2016
|
||||||||
|
Premises and equipment, net
|
5,808 | 6,488 | ||||||
|
Accrued interest receivable
|
555 | 410 | ||||||
|
Other real estate owned
|
5,623 | 5,801 | ||||||
|
Other assets
|
9,676 | 10,844 | ||||||
|
Total assets
|
$ | 200,770 | $ | 206,400 | ||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY
|
||||||||
|
Deposits
|
||||||||
|
Noninterest-bearing demand deposits
|
$ | 59,420 | $ | 63,922 | ||||
|
Interest-bearing deposits
|
114,037 | 126,436 | ||||||
|
Total deposits
|
173,457 | 190,358 | ||||||
|
Accrued interest payable
|
59 | 61 | ||||||
|
Federal funds purchased
|
- | - | ||||||
|
Other liabilities
|
2,660 | 825 | ||||||
|
Total liabilities
|
176,176 | 191,244 | ||||||
|
Stockholders' equity
|
||||||||
|
Common stock, $0.04 par value; 10,000,000 shares
|
||||||||
|
authorized, 9,999,999 shares at 2017 and
|
||||||||
|
2,281,915 shares at 2016, issued and outstanding
|
400 | 91 | ||||||
|
Surplus
|
18,119 | 5,058 | ||||||
|
Retained earnings
|
6,075 | 10,007 | ||||||
|
Total stockholders' equity
|
24,594 | 15,156 | ||||||
|
Total liabilities and stockholders' equity
|
$ | 200,770 | $ | 206,400 | ||||
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(In thousands of dollars, except share and per share data)
|
(Unaudited)
|
(Audited)
|
|||||||
|
3 Months Ended
|
||||||||
|
December 31, 2017
|
December 31, 2016
|
|||||||
|
INTEREST INCOME
|
||||||||
|
Interest and fees on loans
|
$ | 1,695 | $ | 1,532 | ||||
|
Interest on investment securities, taxable
|
128 | 85 | ||||||
|
Interest on investment securities, tax-exempt
|
- | 1 | ||||||
|
Interest - other
|
7 | 40 | ||||||
|
Total interest income
|
1,830 | 1,658 | ||||||
|
INTEREST EXPENSE
|
||||||||
|
Interest on deposits
|
160 | 181 | ||||||
|
Other interest expense
|
8 | - | ||||||
|
Total interest expense
|
168 | 181 | ||||||
|
Net interest income
|
1,662 | 1,477 | ||||||
|
PROVISION FOR LOAN LOSSES
|
- | 3,117 | ||||||
|
Net interest income after provision for loan losses
|
1,662 | (1,640 | ) | |||||
|
NONINTEREST INCOME
|
||||||||
|
Service fees
|
46 | 51 | ||||||
|
Rental income
|
42 | 56 | ||||||
|
Bank card and credit card interchange fees
|
87 | 79 | ||||||
|
Other income
|
370 | 80 | ||||||
|
Total noninterest income
|
545 | 266 | ||||||
|
NONINTEREST EXPENSE
|
||||||||
|
Salaries and employee benefits
|
827 | 805 | ||||||
|
Occupancy and equipment
|
171 | 146 | ||||||
|
Data processing expenses
|
325 | 290 | ||||||
|
Legal and professional fees
|
175 | 79 | ||||||
|
Postage, stationery and supplies
|
30 | 28 | ||||||
|
Real estate and other taxes
|
46 | 51 | ||||||
|
FDIC insurance assessment
|
59 | 93 | ||||||
|
Losses on other real estate owned
|
(173 | ) | 950 | |||||
|
Realized losses on available-for-sale securities
|
20 | - | ||||||
|
Expenses of adversely classified items
|
238 | 199 | ||||||
|
Other expenses
|
130 | 128 | ||||||
|
Total noninterest expense
|
1,848 | 2,769 | ||||||
|
LOSS BEFORE INCOME TAXES
|
359 | (4,143 | ) | |||||
|
INCOME TAX (EXPENSE) BENEFIT
|
||||||||
|
Current
|
67 | (9 | ) | |||||
|
Deferred
|
(1,414 | ) | 219 | |||||
|
Total income tax (expense) benefit
|
(1,347 | ) | 210 | |||||
|
NET LOSS
|
$ | (988 | ) | $ | (3,933 | ) | ||
|
Per share data:
|
||||||||
|
Book Value of Stock per Share
|
2.46 | 6.64 | ||||||
|
Loss per share
|
$ | (0.10 | ) | $ | (1.72 | ) | ||
About The Bank of Fincastle
The Bank of Fincastle has been a leading financial services provider for consumers and small businesses since 1875, and offers a full range of banking, lending and investment products. Headquartered in Fincastle, Virginia, the bank has six full-service branches, thirteen ATM locations, three 7 am to 7 pm drive through locations and offers online banking, mobile banking, 24/7 telephone banking and online real estate applications. To reach one of our professionals visit www.bankoffincastle.bank or call 540-473-2761. The Bank of Fincastle is a Member FDIC, Equal Housing Lender and Equal Opportunity Employer.
For additional information, please contact Michael Jasper (Chief Financial Officer) or Scott Steele (President and CEO) at 540-473-2761 or visit us online at https://www.bankoffincastle.bank/investor-relations/.
Information in this press release may contain forward-looking statements that might involve risks and uncertainties that could cause actual results to differ materially. These risks and uncertainties include without limitation, the effects of future economic conditions, governmental fiscal and monetary policies, legislative and regulatory changes, and changes in interest rates.
SOURCE: The Bank of Fincastle