BANKFIRST CAPITAL CORPORATION Reports Fourth Quarter 2021 Earnings of $4.4 Million
By: BankFirst Capital Corporation
BankFirst Capital Corporation (OTCQX: BFCC) ("BankFirst" or the "Company") reported quarterly net income of $4.4 million, or $0.84 per share, for the fourth quarter of 2021, compared to net income of $5.3 million, or $1.01 per share, for the third quarter of 2021, and an increase of 11% compared to net income of $3.9 million, or $0.76 per share, for the fourth quarter of 2020. The Company also reported net income of $18.3 million, or $3.47 per share, for the year ended December 31, 2021, an increase of 36% compared to net income of $13.5 million, or $2.76 per share, for the year ended December 31, 2020.
2021 Fourth Quarter Highlights:
- Net income totaled $4.4 million, or $0.84 per share, in the fourth quarter of 2021 compared to $3.9 million, or $0.76 per share, for the fourth quarter of 2020.
- Earnings per share increased to $3.47 for the year ended December 31, 2021 compared to $2.76 for the year ended December 31, 2020, an increase of 26%.
- On December 10, 2021, the Company paid a cash dividend of $0.68 per share to shareholders of record as of December 1, 2021.
- After the close of business on December 31, 2021, the Company completed its acquisition of The Citizens Bank of Fayette, Fayette, Alabama ("Citizens"), through the merger of Citizens with and into the Company's wholly-owned banking subsidiary, BankFirst Financial Services (the "Bank"). As of December 31, 2021, Citizens had total assets of $206.8 million, loans of $28.0 million, and deposits of $187.8 million. After merging with Citizens, the Bank had total assets of approximately $2.0 billion, gross loans of approximately $1.2 billion and total deposits of approximately $1.7 billion.
- As previously announced, the Company received notice from the U.S. Department of the Treasury ("Treasury") indicating that it is eligible to participate in the Emergency Capital Investment Program ("ECIP") and may receive an ECIP investment from Treasury in an amount up to $175.0 million.
Moak Griffin, President and Chief Executive Officer of the Company and the Bank, stated, "We are pleased to report another strong quarter of earnings and the end to a very positive 2021. Our outlook remains positive for the future with an allocation through the ECIP, our recently completed acquisition of Citizens, and an encouraging pipeline for loan growth in our loan production offices as well as in our core markets."
Financial Condition and Results of Operations
Total assets were $1.82 billion as of December 31, 2021, compared to $1.79 billion at September 30, 2021 and $1.73 billion at December 31, 2020, an increase of 2% and 5%, respectively. The increase in total assets from the prior year was primarily due to organic loan and deposit growth, supported by the Bank's participation in the Paycheck Protection Program ("PPP") created under the Coronavirus Aid, Relief, and Economic Security Act and administered by the U.S. Small Business Administration (the "SBA"). Total loans outstanding, net of the allowance for loan losses, as of December 31, 2021 totaled $1.19 billion, compared to $1.13 billion as of September 30, 2021 and December 31, 2020, respectively, an increase of 6%. Net loans outstanding, excluding PPP loans, as of December 31, 2021 totaled $1.16 billion, compared to $1.09 billion as of September 30, 2021, an increase of 7%, and $1.04 billion as of December 31, 2020, an increase of 11%.
Non-interest-bearing deposits increased to $474 million as of December 31, 2021, compared to $467 million as of September 30, 2021, an increase of 1%, and $432 million as of December 31, 2020, an increase of 10%. Non-interest-bearing deposits represented 30% of total deposits as of December 31, 2021. Total deposits as of December 31, 2021 were $1.6 billion, compared to $1.6 billion as of September 30, 2021, and $1.5 billion as of December 31, 2020, an increase of 4%. Cost of funds as of December 31, 2021 was 0.44% compared to 0.31% as of September 30, 2021, and 0.41% as of December 31, 2020. The increase in cost of funds in the fourth quarter of 2021 is primarily due to the increase in interest expense on Federal Home Loan Bank advances due to early prepayment costs.
The ratio of loans to deposits was 76% as of December 31, 2021 compared to 73% as of September 30, 2021, and 75% as of December 31, 2020. The ratio of loans, net of PPP loans, to deposits was 73% as of December 31, 2021 compared to 69% as of September 30, 2021, and 69% as of December 31, 2020.
Net interest income was $15.5 million for the fourth quarter of 2021, an increase of 10% compared to $14.1 million for the third quarter of 2021. Net interest margin increased to 3.99% in the fourth quarter of 2021, compared to 3.59% in the third quarter of 2021. Yield on earning assets increased 52 basis points to 4.40% in the fourth quarter of 2021, compared to 3.90% during the third quarter of 2021. The increase in yields is primarily due to increased forgiveness of PPP resulting in higher recognition of deferred fees through interest income.
Noninterest income was $4.8 million for the fourth quarter of 2021, compared to $6.7 million for the third quarter of 2021, a decrease of 29%, and $5.7 million for the fourth quarter of 2020, a decrease of 16%. Mortgage banking revenue decreased $314 thousand to $892 thousand in the fourth quarter of 2021 from $1.2 million in the third quarter of 2021, a decrease of 26%, and decreased $878 thousand from $1.7 million in the fourth quarter of 2020, a decrease of 50%. Also, in the third quarter 2021 the Bank received a Community Development Financial Institution Financial Assistance grant of $1.8 million, which is a non-recurring grant.
As of December 31, 2021, tangible book value per share was $22.39. According to OTCQX, there were 715 trades of the Company's shares of common stock during 2021 for a total of 188,828 shares and for a total price of $4,629,672. The closing price of the Company's common stock quoted on OTCQX on December 31, 2021 was $30.00 per share. Based on this closing share price, the Company's market capitalization was $158.54 million as of December 31, 2021.
The Company recorded a provision for credit losses of $400,000 during the fourth quarter of 2021 compared to $322,000 for the third quarter of 2021, and $147,000 for the fourth quarter of 2020. As of December 31, 2021, the allowance for loan losses was equal to 1.30% of gross loans and 1.34% of gross loans, excluding PPP loans. Net loan charge-offs in the fourth quarter of 2021 were $1.04 million compared to $490,000 in the third quarter 2021, and $265,000 in the fourth quarter 2020. Non-performing assets to total assets were 0.80% for the fourth quarter of 2021, an increase of 22 basis points compared to 0.58% for the third quarter of 2021 and an increase of 16 basis points compared to 0.64% for the fourth quarter of 2020. Annualized net charge-offs to average loans for the fourth quarter of 2021 were 0.9%, compared to 0.04% for the third quarter of 2021 and 0.02% for the fourth quarter of 2020.
The Bank participated in the PPP, a $944 billion low-interest business loan program funded by Treasury and administered by the SBA, which officially ended on May 31, 2021. The PPP provided U.S. government guarantees for lenders, as well as loan forgiveness incentives for borrowers that predominately utilize the loan proceeds to cover employee compensation-related business costs. The Bank participated in Rounds 1 and 2 of the PPP during 2020 and in Round 3 of the PPP in 2021 until its expiration on May 31, 2021. In 2020, during Rounds 1 and 2 of the PPP, the Bank originated 1,489 PPP loans totaling $115.6 million. Through December 31, 2021, the Bank has received loan forgiveness payments from the SBA totaling $115 million on PPP loans originated in Rounds 1 and 2 of the PPP. The Bank received approximately $4.4 million in fees (net of expenses) paid by the SBA on PPP loans originated in Rounds 1 and 2 of the PPP, from which we recognized $122 thousand as loan fee income during the fourth quarter of 2021 and recognized $2.2 million as loan fee income for the year ended December 31, 2021, compared to $2.4 million for the year ended December 31, 2020.
In 2021, during Round 3 of the PPP, the Bank originated an additional 1,382 PPP loans totaling $62 million. Through December 31, 2021, the Bank has received forgiveness payments from the SBA totaling $30.1 million on PPP loans originated in Round 3 of the PPP. The Bank received approximately $4 million in fees (net of expenses) paid by the SBA on PPP loans originated in Round 3 of the PPP, from which we recognized $1.8 million as loan fee income during the fourth quarter of 2021 and recognized $2.1 million for the year ended December 31, 2021.
Since the beginning of the novel coronavirus (COVID-19) pandemic in early 2020, the Company regularly takes actions to identify and assess its COVID-19 related credit exposures by asset classes and borrower types. In addition, the Company implemented a loan modification program to assist both consumer and business borrowers that experienced or expect to experience financial hardships due to COVID-19 related challenges. As of December 31, 2021, 0.44% of the Bank's loan portfolio had active COVID-19-related modifications compared to 0.44% as of September 30, 2021 and 2.03% as of December 31, 2020.
Modified loans with deferred payments will continue to accrue interest during the deferral period unless otherwise classified as nonperforming. Consistent with bank regulatory guidance, borrowers that were otherwise current on loan payments that were granted COVID-19 related financial hardship payment deferrals will continue to be reported as current loans throughout the agreed upon deferral periods. COVID-19 related loan modifications are also deemed to be insignificant borrower concessions, and therefore, such modified loans were not classified as troubled-debt restructured loans as of December 31, 2021.
The COVID-19 pandemic continued to impact our financial results, as well as demand for our services and products, during the fourth quarter of 2021 and potentially beyond. The short and long-term implications of the COVID-19 pandemic (and any current or future variants thereof), and related monetary and fiscal stimulus measures, on our future revenues, earnings results, allowance for credit losses, capital reserves and liquidity are unknown at present.
Merger & Acquisition Activity
As previously disclosed, BankFirst completed its acquisition of The Citizens Bank of Fayette, Fayette, Alabama, after the close of business on December 31, 2021. Under the terms of the definitive agreement, the sole shareholder of Citizens was paid a fixed amount of cash merger consideration. Although the Company has not finalized exact amounts of the purchase accounting adjustments, the following table presents the estimated impact on certain financial information for the Company (in thousands, except share data):
The results of operations of Citizens are not included in BankFirst's 2021 consolidated results of operations, but will be included beginning in the first quarter of 2022.
Emergency Capital Investment Program
As previously disclosed, BankFirst received a letter, dated December 14, 2021, from Treasury indicating that it is eligible to participate in the ECIP. Upon the complete execution of ECIP investment and program documentation by BankFirst and Treasury, which has yet to be received from Treasury, BankFirst may receive an ECIP investment in an amount up to $175.0 million in exchange for the issuance by BankFirst of senior perpetual noncumulative preferred stock to Treasury on terms to be established by Treasury.
BankFirst cannot provide any assurance or guarantee concerning whether it will ultimately participate in the ECIP, what the actual amount of ECIP investment, if any, from Treasury it will ultimately accept, what the actual terms, conditions and preferences of the senior perpetual noncumulative preferred stock to be issued to Treasury will be or whether such terms will be acceptable to BankFirst.
ABOUT BANKFIRST CAPITAL CORPORATION
BankFirst Capital Corporation (OTCQX: BFCC) is a registered bank holding company based in Columbus, Mississippi with approximately $2.0 billion in total assets as of January 1, 2022. BankFirst Financial Services, the Company's wholly-owned banking subsidiary, was founded in 1888 that is locally owned, controlled, and operated. The Bank is headquartered in Macon, Mississippi, with additional branch offices in Columbus, Flowood, Hattiesburg, Jackson, Louin, Macon, Madison, Newton, Starkville, and West Point, Mississippi and Addison, Aliceville, Arley, Bear Creek, Carrollton, Curry, Double Springs, Fayette, Gordo, Haleyville, Northport, and Tuscaloosa, Alabama. The Bank also operates three loan production offices, one in each of Brookhaven, Mississippi, Oxford, Mississippi, and Biloxi, Mississippi. BankFirst offers a wide variety of services for businesses and consumers. The Bank also offers internet banking, no-fee ATM access, checking, CD, and money market accounts, merchant services, mortgage loans, remote deposit capture, and more. For more information, visit .
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This press release contains, among other things, certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, without limitation, (i) statements regarding certain of the Company's goals and expectations with respect to future events that are subject to various risks and uncertainties, (ii) statements about the merger of Citizens with and into the Bank (the "acquisition"), and (iii) statements preceded by, followed by, or that include the words "may," "will," "could," "should," "expect," "plan," "project," "intend," "anticipate," "believe," "estimate," "predict," "potential," "pursuant," "target," "continue," and similar expressions. These statements are based upon the current belief and expectations of the Company's management team and are subject to significant risks and uncertainties that are subject to change based on various factors (many of which are beyond the Company's control). Factors that could cause actual results to differ materially from management's projections, forecasts, estimates and expectations include, but are not limited to: the effects of the ongoing COVID-19 pandemic (including any current or future variant thereof), fluctuation in market rates of interest and loan and deposit pricing, adverse changes in the overall national economy as well as adverse economic conditions in our specific market areas, including as a result of the ongoing COVID-19 pandemic, our ability to recognize the expected benefits and synergies of the Citizens acquisition, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. These forward-looking statements are based on current information and/or management's good faith belief as to future events. Although the Company believes that the assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove to be inaccurate. Therefore, the Company can give no assurance that the results contemplated in the forward-looking statements will be realized. Due to these and other possible uncertainties and risks, readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. The inclusion of this forward-looking information should not be construed as a representation by the Company or any person that the future events, plans or expectations contemplated by the Company will be achieved. All subsequent written and oral forward-looking statements attributable to the Company or any person acting on its behalf are expressly qualified in their entirety by the cautionary statements above. The forward-looking statements are made as of the date of this press release. The Company does not undertake any obligation to update any forward-looking statement to reflect circumstances or events that occur after the date the forward-looking statements are made, except as required by law.
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The Company routinely posts important information for investors on its web site (under www.bankfirstfs.com and, more specifically, under the Investor Relations tab at www.bankfirstfs.com/about-us/investors/). The Company intends to use its web site as a means of disclosing material non-public information and for complying with its disclosure obligations under the OTC Markets Group OTCQX Rules for U.S. Banks. Accordingly, investors should monitor the Company's web site, in addition to following the Company's press releases, OTC filings, public conference calls, presentations and webcasts.
The information contained on, or that may be accessed through, the Company's web site is not incorporated by reference into, and is not a part of, this press release.