Community First Bancorporation, Inc. (OTC: CFOK), parent company for Community First Bank, Inc. (the "Bank" or "CFB") and SeaTrust Mortgage Company ("STM"), announced its financial results for the third quarter of 2021. Highlights of the results include:
- Total consolidated earnings were $1,758,000 for the third quarter and $2,681,000 for the nine-month period ended September 30, 2021.
- Net interest income grew by 23.2% year over year for the first nine months of 2021.
- Noninterest income increased 113.7% over the level reported in the first nine months of 2020.
- Total assets as of September 30, 2021 were $663,706,000, an increase of $25,088,000 or 3.9% compared to total assets of $638,618,000 as of June 30, 2021, and an increase of 22.0% compared to total assets of $543,988,000 as of December 31, 2020.
- As of September 30, 2021, total gross loans held for investment were $453,429,000, an increase of 12.6% compared to total gross loans held for investment of $402,600,000 at December 31, 2020. Loans held for investment included $338,000 of the $19,187,000 loans made by the Bank under the Small Business Administration ("SBA") Paycheck Protection Program ("PPP").
- Loans held for sale totaled $18,997,000 as of September 30, 2021.
- Total deposits as of September 30, 2021 were $553,939,000 compared to $442,868,000 as of December 31, 2020, an increase of $111,071,000 or 25.1% over December 31, 2020 totals.
- The Bank completed a data conversion of the newly acquired Security Federal Bank's ("SFB") core banking system during the quarter, welcoming new associates and customers onto the Bank's core banking system.
Total consolidated earnings of $1,758,000 were recorded for the third quarter of 2021 compared to $564,000 for the second quarter of 2021 and $842,000 for the third quarter of 2020. Earnings per common share for the third quarter totaled $0.31 compared to $0.10 for the second quarter of 2021 and $0.15 for the third quarter of 2020. Activity in both STM's mortgage business and the Bank's SBA portfolio generated significant increases in noninterest income in the third quarter.
Net interest income grew by 23.2% year over year for the first nine months of 2021, driven primarily by the March 2021 acquisition of SFB and by growth experienced over the period. Net loans held for investment grew $50,829,000 or 12.6% over the nine months ended September 30, 2021. The growth included $39,319,000 loans acquired by the Bank from SFB. The majority of loans made under the SBA's PPP have been forgiven, and only $338,000 of the $19,187,000 loans made remained outstanding on September 30, 2021. Overall loan yields for the first nine months of 2021 were 4.70% compared to 4.92% in the first nine months of 2020. Lower yields in 2021 were primarily the result of lower overall interest rates following the reduction of interest rates at the start of the pandemic in 2020. The yield on total interest earning assets declined to 3.89% in the first nine months of 2021 compared to 4.31% for the first nine months of 2020. The cost of interest-bearing funds declined by 30 basis points for the first nine months of 2021 compared to the first nine months of 2020. The net interest margin in the first nine months of 2021 was 3.35% compared to 3.56 % in the first nine months of 2020.
Noninterest income for the third quarter of 2021 totaled $4,070,000 compared to $2,461,000 for the second quarter of 2021 and $2,338,000 for the third quarter of 2020. The increase was related to income received from gains on sales of SBA loans, swap fees generated by our commercial loan portfolio, income from interchange fees, servicing income generated from our mortgage portfolio acquired from SFB and sales of loans generated by STM.
Noninterest expense increased to $20,378,000 for the nine-month period ended September 30, 2021 compared to $13,567,000 for the nine-month period ended September 30, 2020. Noninterest expenses were impacted in 2021 by several factors. The SFB merger in March 2021 added two branch locations to CFB's network of twelve full-service offices. STM also increased both its loan origination and processing capabilities throughout 2021. Loan officers of STM are primarily on commission-based compensation arrangements.
President and CEO Richard D. Burleson commented: "The first three quarters of 2021 have been fantastic in many ways for Community First Bancorporation. The growth in our net income, even with merger related expenses, is very exciting for our team. We are very pleased with the successful operational integration of the systems of Security Federal Bank of Elizabethton, Tennessee this quarter. We welcome our new customers and associates to our delivery channels and an expanded slate of products and services. With the acquisition of SFB, we are now a Freddie Mac seller-servicer. This will greatly enhance our in-house mortgage lending capabilities and offerings in our 12 branch footprint, while continuing to allow us to utilize STM for government programs not offered by the Bank such as FHA or VA loans. With our new capabilities as a Freddie Mac seller-servicer, we will be able to expand on the loan servicing portfolio acquired in our SFB acquisition and create an additional income stream for our Bank."
Mr. Burleson continued, "The impact of the pandemic on our associates and customer base has been fairly moderate to date, affecting some lines of our customers' businesses to a greater extent than others. As of September 30, 2021, there were no remaining loans deferring a portion of their payments related to the pandemic, and the Bank continues to have high asset quality. Our nonperforming assets, comprising nonperforming loans and foreclosed assets, decreased slightly to $1,209,000 as of September 30, 2021 from $1,379,000 at June 30, 2021 and $976,000 at December 31, 2020. At September 30, 2021, we had three loans totaling approximately $111,000 in our foreclosure pipeline and our past due percentages remained below .35% on a monthly basis for the quarter. At September 30, 2021, our Allowance for Loan and Lease Losses ("ALLL") totaled $5,155,000 or 1.14% of loans held for investment. The Bank added $306,000 to the ALLL in the first nine months of 2021 compared to additions of $860,000 in the first nine months of 2020. The 2021 increase in the ALLL was primarily due to organic growth in the loan portfolio. Net recoveries for the first nine months of 2021 totaled $38,000 compared to net charge-offs for the first nine months of 2020 of $11,000."
Mr. Burleson closed his comments by noting: "Our highest priority, along with maintaining our well capitalized status, is to provide our shareholders with an increase in the value of their investments while serving our loyal customers and communities. The Bank's Tier 1 Leverage Capital Ratio was 8.94% on September 30, 2021, and liquidity levels remain satisfactory. In addition, this quarter we have been able to achieve the significant increase in earnings that has been our focus over the past several years. Management is continually reviewing economic trends and making the adjustments necessary to allow for the Bank to maximize its profits in the markets we serve. On September 20, 2021, the Bank closed its LPO in Concord, NC. This LPO, originally opened in 2017, became stagnant at the onset of the Pandemic in 2020 and was not able to recover its momentum. All loans were transferred to our Charlotte, North Carolina office for servicing."
Community First Bank has 12 full-service financial centers in North and South Carolina and Tennessee, with two each in Seneca and Anderson and single locations in Greenville, Williamston, Walhalla and Westminster, South Carolina, locations in Dallas and Charlotte, North Carolina, and two locations in Elizabethton, Tennessee. The Company operates loan production offices in Waynesville, North Carolina and Kingsport, Tennessee. In addition, its SeaTrust Mortgage subsidiary operates offices in North Carolina, South Carolina, Florida and Tennessee.
Contact: Richard D. Burleson, Jr. - President and CEO or Jennifer M. Champagne - Executive Vice President and CFO 864-886-0206
Third QTR 2021 Cautionary Notes.pdf
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Original Source: Community First Bancorporation Announces Third Quarter 2021 Financial Results