PRINCE GEORGE, Va., April 11, 2018 /PRNewswire/
-- Touchstone Bank (the "Bank") (OTC Pink: TSBA) today announced net income of $1.3 million,
or $0.63 earnings per share on a fully dilutive basis, for the year ended December 31, 2017 compared to net income of $1.7 million and earnings per share
on a fully dilutive basis of $0.89 for the year ended 2016. Dividend payments for 2017 and
2016 were $0.28 per share of common and preferred stock. Net results for 2017 and other
comparisons in this press release are reflective of the merger of Bank of McKenney with CCB
Bankshares, Inc. effective November 10, 2017, compared to stand-alone results for Bank of
McKenney as of and for the year ended December 31, 2016.
Book value was $13.28 at December 31, 2017, compared to
$13.57 at December 31, 2016, and tangible equity per share at
December 31, 2017 was $12.61.
James R. Black, President and CEO stated, "2017 was a transformative year as we completed the
merger between Bank of McKenney and CCB Bankshares to form Touchstone Bank. We ended the year
solid and reported net income of $1.3 million, which included merger expenses, a bargain purchase
gain and a one-time tax expense for a deferred tax asset adjustment. We expect to have additional merger and related
expenses in the first quarter of 2018 as we get much closer to fully absorbing the cost of the merger. More recently, we
have relocated into our new corporate headquarters, integrated core operating systems and are opening a full-service branch in
Clarksville, Virginia in May. The team has accomplished much since our merger announcement and I
am pleased with our success for 2017. We are better positioned than ever before and I am extremely excited for our future."
The results for the year and quarter ended December 31, 2017 include the effect of the Tax Cuts
and Jobs Act, which was signed into law on December 22, 2017. Income tax expense for 2017
includes a downward adjustment of net deferred tax assets in the amount of $336 thousand, recorded
as a result of enactment. The Act permanently lowers the Federal corporate income tax rate to 21% from the maximum rate
prior to passage of the Act of 34%, effective January 1, 2018.
Earnings
Net interest income for 2017 was $10.1 million compared to $8.4
million for 2016, an increase of $1.7 million or 20.1%. Provision expense of
$240 thousand for 2017 compared to a recovery of provision of $264
thousand in 2016, was fueled by organic loan growth. When including a bargain purchase gain of $1.4 million related to the acquisition of CCB Bankshares, Inc., noninterest income for 2017 was $3.4 million compared to $1.8 million for 2016. Exclusive of this,
non-interest income for 2017 increased by $166 thousand or 9.5% over 2016. Noninterest
expense for 2017 was $11.4 million compared to $7.9 million for 2016.
Non-interest expense for 2017, net of merger expense of $2.9 million, increased by
$683 thousand or 8.6% over 2016, and is reflective of increased operating expenses as a result of
the merger. Return on average common equity was 4.50% for the year ended December 31, 2017
compared to 6.74% for the same period in 2016 and return on average assets was 0.52% compared to 0.78% in 2016. In the fourth
quarter of 2017, net income available to common shareholders was $734 thousand compared to
$615 thousand in the same period in 2016.
The net interest margin declined to 3.88% in 2017 from 4.19% in 2016 primarily as a result of the merger and inherent pricing
differences. Management believes that as it continues to evaluate the impact of the merger, it can offer attractive and
relevant account products and manage the margin effectively.
Balance Sheet
Assets totaled $439.0 million at December 31, 2017, compared to
$222.8 million at December 31, 2016. Net loans at December 31, 2017 were $336.7 million, compared to $155.8
million at December 31, 2016. Net loans excluding the acquired portfolio of
$156.1 million, increased $24.8 million or 16.0% for 2017. Real
estate-related loans comprise 88.2% of the portfolio. The value of the core deposit intangible at December 31, 2017 was $2.2 million.
Total deposits at December 31, 2017 were $382.0 million, compared
to $194.7 million at December 31, 2016. Noninterest
bearing demand deposits comprise 24.4% of the deposit base and grew 84.6% or $42.7 million in
2017. At December 31, 2017, as a result of the merger, borrowed funds increased by
$4.7 million and subordinated debt in the amount of $3.6 million was
acquired.
Total equity at the end of 2017 was $44.1 million, compared to $25.8
million at the end of 2016. This increase of $18.3 million or 70.8% was a result of
capital acquired in connection with the merger. Dividend payments of $0.28 per share on both
preferred and common shares of stock for 2017 and 2016 amounted to $936 thousand and $540 thousand, respectively.
Asset Quality
At December 31, 2017 and 2016, the allowance for loan losses was $1.6
million. The allowance for loan losses represented 0.48% of loans as of December 31,
2017, compared to 1.00% at December 31, 2016. At December 31,
2017, exclusion of acquired loans resulted in an allowance of 0.88%. At December 31,
2017, net charge-offs of $202 thousand were 0.11% of average loans, compared to $766 thousand or 0.49% of total loans at December 31, 2016. Nonperforming
loans at December 31, 2017, which exclude performing troubled debt restructurings, equaled
$1.9 million or 0.58% of loans compared to $2.4 million or 1.55% of
total loans at December 31, 2015. At December 31, 2017 and
2016, there were $472 thousand and $1.1 million in loans 90 days past
due and still accruing interest, respectively.
At December 31, 2017, other real estate owned, net of allowance, was $673
thousand compared with $375 thousand at year end 2016. In aggregate, nonperforming
assets equaled $2.6 million or 0.60% of total assets compared to $2.8
million or 2.22% of total assets at December 31, 2016.
Capital
As of December 31, 2017, the Bank's total risk-based capital was 13.9% compared to 15.0% one
year ago, and Tier 1 leverage was 12.2%, compared to 11.6% at December 31, 2016. For purposes
of determination of risk-based capital, the subordinated debt is a component of Tier 2 capital. Capital ratios continue to
remain above the minimum regulatory requirements for well capitalized institutions.
Touchstone Bank is a full-service community bank with approximately $440 million in total assets
headquartered in Prince George, Virginia. The Bank has ten branches and one loan center
serving Southern and Central Virginia and three branches serving Northern North Carolina. Visit www.touchstone.bank for more information.
Certain statements in this document are "forward-looking statements" within the meaning of the Private Securities Litigation
Reform Act. These statements are based on management's current expectations and are subject to uncertainty and changes in
circumstances. Actual results may differ materially from those included in these statements due to a variety of factors. More
information about these factors is contained in Touchstone Bank's filings with the Board of Governors of the Federal Reserve.
Touchstone Bank
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Financial Highlights
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Unaudited
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(Actual dollars, except per share data)
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December 31
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December 31
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Balance Sheet Data:
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2017
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2016
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Total assets
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$ 439,045,246
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$ 222,818,455
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Loans, net of allowance
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336,695,959
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155,762,052
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Core deposit intangible
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2,226,108
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-
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Deposits
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382,006,539
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194,667,685
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Borrowings
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5,323,837
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666,666
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Subordinated debt
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3,615,401
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-
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Preferred stock
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59,362
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61,692
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Shareholders' equity
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44,053,295
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25,791,239
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Book value per share (1)
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$ 13.28
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$ 13.57
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Tangible book value per share (2)
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$ 12.61
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$ 13.57
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Total shares outstanding
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3,312,914
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1,895,810
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Year ended December 31,
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Performance Ratios:
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2017
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2016
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Return on average assets
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0.52%
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0.78%
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Return on average common equity
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4.50%
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6.74%
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Net interest margin
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3.88%
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4.19%
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Overhead efficiency
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85.25%
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78.02%
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December 31
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December 31
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Asset Quality Data:
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2017
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2016
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Allowance for loan loss
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$ 1,609,650
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$ 1,571,778
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Nonperforming loans (3)
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1,943,317
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2,417,158
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Nonperforming assets
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2,616,325
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2,792,037
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Other real estate owned, net of allowance
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673,008
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374,879
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Net charge-offs (recoveries)
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202,128
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766,450
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Classified loans
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8,439,601
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7,332,000
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Total classified assets
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9,112,609
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7,706,879
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December 31,
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December 31,
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Asset Quality Ratios:
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2017
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2016
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Allowance for loan loss to total loans
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0.48%
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1.00%
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Nonperforming loans to total loans
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0.58%
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1.55%
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Nonperforming assets to total assets
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0.60%
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2.22%
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Net charge-offs (recoveries) to average loans
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0.11%
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0.49%
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Capital Ratios:
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Total risk-based capital
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13.88%
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15.01%
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Tier 1 risk-based capital
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12.35%
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15.92%
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Tier 1 leverage capital
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12.24%
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11.58%
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(1) net of preferred stock
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(2) net of preferred stock and core deposit intangible
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(3) includes non-accrual loans and loans past due over 90 days and still
accruing
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Touchstone Bank - December 31, 2017
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Unaudited
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(Actual dollars, except per share data)
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Three Months Ended December 31
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Year Ended December 31
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Selected Operating Data:
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2017
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2016
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2017
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2016
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Net interest income
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$ 3,509,238
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$ 2,094,113
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$ 10,059,869
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$ 8,378,043
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Provision for (recovery of) loan losses
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-
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(264,106)
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240,000
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(264,106)
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Noninterest income
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2,000,960
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472,923
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3,364,208
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1,750,740
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Noninterest expense
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4,807,478
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1,920,165
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11,444,086
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7,902,110
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Income (loss) before income tax
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702,720
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910,977
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1,739,991
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2,490,779
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Income tax expense (benefit)
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(39,735)
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287,816
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411,328
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765,878
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Net income (loss)
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$ 742,455
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$ 623,161
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$ 1,328,663
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$ 1,724,901
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Less: Preferred dividends
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$ 8,311
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$ 8,637
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$ 8,311
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$ 8,637
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Net income (loss) available to common
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shareholders
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$ 734,144
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$ 614,524
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$ 1,320,352
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$ 1,716,264
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Income (loss) per share available to
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common shareholders:
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Basic
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$0.15
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$0.33
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$0.63
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$0.91
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Diluted
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$0.15
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$0.32
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$0.63
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$0.89
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Average shares outstanding, basic
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1,512,289
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1,895,211
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2,088,409
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1,895,591
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Average shares outstanding, diluted
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1,512,289
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1,926,599
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2,118,695
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1,926,656
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SOURCE Touchstone Bank