BankFirst Capital Corporation Reports Third Quarter 2020 Earnings Of $3.3 Million

COLUMBUS, Miss., Oct. 28, 2020 /PRNewswire/ -- BankFirst Capital Corporation (OTCQX: BFCC) (the "Company") reported record net income of $3.3 million for the third quarter of 2020, an increase of 6% over net income of $3.1 million for the third quarter of 2019.  Basic and diluted earnings per share for the third quarter of 2020 and 2019 were $0.64 and $0.70, respectively.  Net income was $9.5 million for nine months ended 2020, an increase of 13% over net income of $8.4 million for nine months ended 2019.  Basic and diluted earnings per share for nine months ended of 2020 and 2019 were $2.00 and $1.95, respectively.

CEO Commentary

Moak Griffin, President and Chief Executive Officer of the Company and BankFirst Financial Services, the Company's wholly-owned subsidiary bank, stated, "We are pleased to report a strong quarter during today's challenging environment. In the quarter, we closed on our most recent acquisition of Traders & Farmers Bancshares, Inc., we earned a record $3.3 million and we contributed an additional loan loss provision of $5.2 million for further adjustments to our qualitative factors to reflect potential negative impacts caused by the COVID-19 pandemic. We are extremely proud of how our employees continue to rise to the occasion to support the financial and other needs of our customers and our communities. As the COVID-19 pandemic continues to unfold during the remainder of 2020, we will stay focused on achieving our long-term strategic goals while increasing our value to our customers, shareholders, and communities."

Financial Condition and Results of Operations

Total assets were $1.7 billion at September 30, 2020, as compared to $1.5 billion at June 30, 2020, an increase of 10%, and $1.3 billion in the third quarter of 2019, an increase of 32%.  The increase in total assets from the prior year was due to organic loan and deposit growth, supported by participation in the Paycheck Protection Program, as well as the acquisition of Traders & Farmers Bancshares, Inc. on July 1, 2020.  Net loans outstanding at September 30, 2020 totaled $1,190 million, as compared to $1,032 million in the second quarter of 2020 an increase of 15%, and $919 million in the third quarter of 2019, an increase of 30%. Net loans outstanding, excluding loans associated with the Payment Protection Program, at September 30, 2020 totaled $1,074 million, as compared to $917 million in the second quarter of 2020 an increase of 17%, and $919 million in the third quarter of 2019, an increase of 17%.  Asset quality remained solid with non-performing assets to total assets at 0.68% as of September 30, 2020, down from 0.79% as of September 30, 2019.   

Non-interest-bearing deposits increased to $417.1 million as of September 30, 2020, as compared to $330.6 million in the second quarter of 2020, an increase of 26% and $239.0 at September 30, 2019, an increase of 75%.  Non-interest-bearing deposits represented 28% of total deposits at September 30, 2020.  Total deposits as of September 30, 2020 were $1.46 billion, as compared to $1.23 billion for the second quarter of 2020, an increase of 19%, and $1.10 billion for the third quarter of 2019, an increase of 33%.

The Company's ratio of loans to deposits was 82.2% at September 30, 2020, compared to 84.6% at June 30, 2020, and 83.9% at September 30. 2019.

We recorded a $5.2 million provision for credit losses during the third quarter 2020 compared to $1.85 million for the second quarter of 2020 and $233,000 for the comparable period of 2019. The Allowance for Loan Losses was equal to 1.40% of gross loans and equal to 1.54% of gross loans less loans originated through the PPP.  Net loan charge-offs (recoveries) in the third quarter 2020 were $136,000, compared to $174,000, in the second quarter 2020, and $473,000, in the third quarter 2019.

As of September 30, 2020, the Company's tangible book value per share was $20.13.  According to OTCQX, there were 69 trades during the third quarter of 2020 for a total of 10,885 shares for a total price of $209,569.  The closing share price on September 30, 2020 was $18.25.  Based on this closing share price, the Company's market cap was $96.0 million as of September 30, 2020.

Merger & Acquisition Activity

BankFirst completed its acquisition of Traders & Farmers Bancshares, Inc. ("Traders & Farmers") and its subsidiary, Traders & Farmers Bank, headquartered in Haleyville, Alabama on July 1, 2020. Traders & Farmers had total assets of $378.1 million, loans of $158.7 million, and deposits of $348.2 million.  Total assets were approximately $1.7 billion upon completion of this transaction.

Therefore, the results of operations of BankFirst and acquired Traders and Farmers are included in BankFirst's consolidated results of operations from the dates of acquisition, and therefore BankFirst's third quarter 2020 results reflect increased levels of average balances, income and expenses compared to its second quarter 2020 and third quarter 2019 results.

COVID-19 Impacts

Operations

As the COVID-19 related events unfolded throughout first nine months of 2020, BankFirst implemented various plans, strategies and protocols to protect our employees, maintain services for clients, assure the functional continuity of our operating systems, controls and processes, and mitigate financial risks posed by changing market conditions. In order to protect employees and assure workforce continuity and operational redundancy, we imposed business travel restrictions, enhanced our sanitizing protocols within our facilities and physically separated, to the extent possible, our critical operations workforce that cannot work remotely. To limit the risk of virus spread, the Company implemented drive-thru only and by appointment operating protocols throughout its bank branch network. We also maintained active communications with our critical vendors to assure all mission-critical activities and functions are being performed in line with our client-service standards.

Capital and Liquidity

Although there is a high degree of uncertainty around the magnitude and duration of the economic impact of the COVID-19 pandemic, management believes that our financial position, including our levels of capital and liquidity, will allow us to successfully endure the negative economic impacts of the crisis. Our capital management activities, coupled with our historical earnings performance and our dividend practices, have allowed us to build and maintain our capital reserves. At September 30, 2020, all BankFirst's regulatory capital ratios exceeded well-capitalized standards.

In addition, management believes the Company's liquidity position is strong. The Company's bank subsidiary maintains a funding base largely comprised of core noninterest bearing demand deposit accounts and low cost interest-bearing transactional deposit accounts with clients that operate or reside within the footprint of its branch bank network. At September 30, 2020, the Company's cash and cash equivalent balances were $49.9 million.

The Company has not experienced significant draws on clients' available commercial lines of credit and home equity lines of credit due to the COVID-19 crisis, nor has it observed any significant or unusual client activity that portends unmanageable levels of stress on our liquidity profile.

Paycheck Protection Program ("PPP")

BankFirst is participating in the Paycheck Protection Program ("PPP"), a $660 billion low-interest business loan program funded by the U.S. Treasury Department and administered by the U.S. Small Business Administration. The PPP Loan Program provides 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. Through September 30, 2020, BankFirst had approved 1,489 PPP loans totaling $115.4 million. In order to provide additional liquidity to the bank while participating in the PPP Program, the Bank also participated in the Paycheck Protection Program Liquidity Facility ("PPPLF") in which it borrowed $104.2 in order to be able to match fund the majority of the PPP loans that were made.  During the third quarter the bank paid back the funds associated with the PPPLF with excess liquidity post acquisition of Traders & Farmers.  

Lending

We have taken actions to identify and assess our COVID-19 related credit exposures by asset classes and borrower types. We implemented a loan modification program to assist both consumer and business borrowers that are experiencing or expect to experience financial hardships due to COVID-19 related challenges. Accordingly, the following table summarizes the aggregate balances of loans with deferred payments that the Company has modified as result of COVID-19 as of September 30, 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 September 30, 2020.

The COVID-19 crisis is expected to continue to impact our financial results, as well as demand for our services and products during the fourth quarter of 2020 and potentially beyond. The short and long-term implications of the COVID-19 crisis, 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.

ABOUT BANKFIRST CAPITAL CORPORATION  

BankFirst Financial Services, the wholly-owned banking subsidiary of BankFirst Capital Corporation, was founded in 1888 and is a $1.7 billion financial institution that is locally owned, controlled, and operated. The Bank is headquartered in Columbus, Mississippi, with additional branch offices in Flowood, Hattiesburg, Jackson, Louin, Macon, Madison, Newton, Starkville, and West Point, Mississippi and Addison, Aliceville, Arley, Bear Creek, Carrollton, Curry, Double Springs, Gordo, Haleyville, Lynn, Northport, and Tuscaloosa, Alabama. The Bank also operates one mortgage production office in Oxford, 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.

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 T&F with and into BankFirst (the "merger"), 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: 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 coronavirus pandemic, our ability to complete the merger and recognize the expected benefits and synergies of the merger, maintenance and development of well-established and valued client relationships and referral source relationships, and acquisition or loss of key production personnel. 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. 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.

NO OFFER OR SOLICITATION

This press release does not constitute an offer to sell or a solicitation of an offer to buy any securities. The shares of common stock of BankFirst are not savings or deposit accounts and are not insured by the Federal Deposit Insurance Corporation or any other government agency.