BANKFIRST CAPITAL CORPORATION Reports First Quarter 2022 Earnings of $4.5 Million

COLUMBUS, Miss., April 28, 2022 /PRNewswire/ -- BankFirst Capital Corporation (OTCQX: BFCC) ("BankFirst" or the "Company") reported quarterly net income of $4.5 million, or $0.85 per share, for the first quarter of 2022, compared to net income of $4.4 million, or $0.84 per share, for the fourth quarter of 2021, and an increase of 5% compared to net income of $4.3 million, or $0.81 per share, for the first quarter of 2021.

2022 First Quarter Highlights:

• Net income totaled $4.5 million, or $0.85 per share, in the first quarter of 2022 compared to $4.3 million, or $0.81 per share, for the first quarter of 2021.
• Total assets increased 14% to $2.02 billion at March 31, 2022 from $1.78 billion at March 31, 2021
• Total deposits increased 14% to $1.79 billion at March 31, 2022 from $1.57 billion at March 31, 2021
• The Company received a Financial Assistance Award of $701 thousand through the Community Development Financial Institution ("CDFI") Fund in the first quarter of 2022.

Recent Developments

• As previously announced on December 21, 2021, the Company received notice from the U.S. Department of Treasury ("Treasury") indicating that it is eligible to participate in the Emergency Capital Investment Program ("ECIP"). The Company closed on its issuance of $175.0 million of senior perpetual noncumulative stock (the "Senior Preferred") to the Treasury pursuant to the ECIP on April 26, 2022.
• 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"), with the Bank surviving the merger. 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.

CEO Commentary

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 a positive beginning to fiscal year 2022. After the close of business on December 31, 2021, we closed on our most recent acquisition of The Citizens Bank of Fayette. We are pleased with the positive impact that the acquisition has had for BankFirst and our shareholders. Our outlook remains positive for the future with our recent completion of a $175.0 million investment from Treasury through the ECIP and an encouraging pipeline for loan growth in our expanded footprint, loan production offices, and our core markets. In addition, with the recent investment from Treasury, we will look to continue to our growth trends while maintaining higher capital ratios."

Financial Condition and Results of Operations

Total assets were $2.02 billion at March 31, 2022, compared to $1.82 billion at December 31, 2021 and $1.78 billion at March 31, 2021, an increase of 11% and 14%, respectively. The increase in total assets since December 31, 2021 was primarily due to organic loan and deposit growth, as well as the acquisition of Citizens after the close of business on December 31, 2021. Total loans outstanding, net of the allowance for loan losses, as of March 31, 2022 totaled $1.2 billion, compared to $1.19 billion as of December 31, 2021 and $1.12 billion as of March 31, 2021, an increase of 1% and 8%, respectively. Net loans outstanding, excluding Paycheck Protection Program ("PPP") loans, as of March 31, 2022 totaled $1.19 billion, compared to $1.16 billion as of December 31, 2021, an increase of 3%, and $1.03 billion as of March 31, 2021, an increase of 15%.

Non-interest-bearing deposits increased to $494.5 million as of March 31, 2022, compared to $473.6 million as of December 31, 2021, an increase of 4%, and $446.9 million as of March 31, 2021, an increase of 11%. Non-interest-bearing deposits represented 28% of total deposits as of March 31, 2022. Total deposits as of March 31, 2022 were $1.8 billion, compared to $1.6 billion as of December 31, 2021 and as of March 31, 2021, an increase of 13%. Cost of funds as of March 31, 2022 was 0.25% compared to 0.44% as of December 31, 2021, and 0.34% as of March 31, 2021.

The ratio of loans to deposits was 68% as of March 31, 2022 compared to 76% as of December 31, 2021, and 72% as of March 31, 2021. The ratio of loans, excluding PPP loans, to deposits was 67% as of March 31, 2022 compared to 73% as of December 31, 2021, and 66% as of March 31, 2021.

Net interest income was $15.3 million for the first quarter of 2022, a decrease of 1% compared to $15.5 million for the fourth quarter of 2021, and $12.7 million for the first quarter of 2021, an increase of 20%. Net interest margin decreased to 3.75% in the first quarter of 2022, compared to 3.99% in the fourth quarter of 2021, compared to 3.01% in the first quarter of 2021. Yield on earning assets decreased 42 basis points to 4.00% in the first quarter of 2022, compared to 4.42% during the fourth quarter of 2021, and compared to 3.77% during the first quarter of 2021.

Noninterest income was $5.1 million for the first quarter of 2022, compared to $4.8 million for the fourth quarter of 2021, an increase of 6%, and $6.0 million for the first quarter of 2021, a decrease of 16%. Mortgage banking revenue was $682 thousand in the first quarter of 2022, a decrease of $210 thousand from $892 thousand in the fourth quarter of 2021, or 24%, and a decrease of $1.1 million from $1.8 million in the first quarter of 2021, or 63%. During the third quarter of 2021, the Bank implemented a Mortgage Purchase Program to maintain mortgage loans in-house. During the first quarter of 2022, the Bank purchased $5.3 million of the $31.8 million secondary market mortgages originated to hold in-house, compared to $56.9 million secondary market loans originated during the first quarter of 2021, none of which were held in-house. Gross mortgage fees during the first quarter of 2022 were $811 thousand compared to $1.8 million during the first quarter of 2021. In the first quarter 2022, the Bank received a nonrecurring Financial Assistance Award of $701 thousand through the CDFI Fund, compared to a nonrecurring Financial Assistance Award of $888 thousand in the first quarter of 2021.

As of March 31, 2022, tangible book value per share was $20.30. According to OTCQX, there were 163 trades of the Company's shares of common stock during the first quarter of 2022 for a total of 29,687 shares and for a total price of $971,988. The closing price of the Company's common stock quoted on OTCQX on March 31, 2022 was $31.39 per share. Based on this closing share price, the Company's market capitalization was $167.2 million as of March 31, 2022.

Credit Quality

The Company recorded a provision for credit losses of $150 thousand during the first quarter of 2022 compared to $400 thousand for the fourth quarter of 2021, and $246 thousand for the first quarter of 2021. As of March 31, 2022, the allowance for loan losses was equal to 1.30% of gross loans and 1.32% of gross loans, excluding PPP loans. Net loan charge-offs in the first quarter of 2022 were $1 thousand compared to $1.4 million the fourth quarter 2021, and $95 thousand in the first quarter 2021. Non-performing assets to total assets were 0.72% for the first quarter of 2022, a decrease of 8 basis points compared to 0.80% for the fourth quarter of 2021 and an increase of 7 basis points compared to 0.65% for the first quarter of 2021. Annualized net charge-offs to average loans for the first quarter of 2022 were 0.01%, compared to 0.9% for the fourth quarter of 2021 and 0.01% for the first quarter of 2021. 

PPP Loans

The Bank participated in the PPP, a $943.0 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 March 31, 2022, the Bank has received loan forgiveness payments from the SBA totaling $115.4 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 $11 thousand as loan fee income during the first quarter of 2022, compared to $122 thousand as loan fee income for the fourth quarter of 2021, and compared to $665 thousand for the first quarter of 2021.

In 2021, during Round 3 of the PPP, the Bank originated an additional 1,382 PPP loans totaling $62.0 million. Through March 31, 2022, the Bank has received forgiveness payments from the SBA totaling $50.0 million on PPP loans originated in Round 3 of the PPP. The Bank received approximately $4.1 million in fees (net of expenses) paid by the SBA on PPP loans originated in Round 3 of the PPP, from which we recognized $1.6 million as loan fee income during the first quarter of 2022, $1.8 million as loan fee income during the fourth quarter of 2021 and no loan fee income was recognized during the first quarter of 2021.  

Lending

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 March 31, 2022, 0.44% of the Bank's loan portfolio had active COVID-19-related modifications compared to 0.44% as of December 31, 2021 and 2.59% as of March 31, 2021.

Modified loans with deferred payments will continue to accrue interest during the deferral period unless otherwise classified as nonperforming. Consistent with federal 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 March 31, 2022.

Investments

During the first quarter of 2022, the Bank transferred securities, which it intends and has the ability to hold until maturity, with a fair value of $368 million on the date of transfer, from securities available for sale to securities held to maturity. The Bank transferred these securities to held to maturity to reduce the impact of price volatility on stockholders' equity due to recent increases in market interest rates. The securities included net pre-tax unrealized gains of $146 thousand at the date of transfer.

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. The following table presents the impact on certain financial information for the Company (in thousands, except share data):

The results of operations of Citizens are included in BankFirst's consolidated results of operations beginning in the first quarter of 2022.

Emergency Capital Investment Program

As previously disclosed, the Company closed on the issuance of $175.0 million of the Senior Preferred to the Treasury pursuant to the ECIP on April 26, 2022. The ECIP investment from Treasury is intended to qualify as Tier 1 capital of the Company for regulatory capital purposes. The Senior Preferred issued to Treasury will pay non-cumulative dividends, payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year beginning on the first dividend payment date after the two-year anniversary of the date of issuance. The dividend rate to be paid on the Senior Preferred will adjust annually based on certain measurements of the Company's extensions of credit to minority, rural, and urban low-income and underserved communities and low- and moderate-income borrowers. The Company is entitled to redeem the Senior Preferred on or after the fifth anniversary of the issuance of the Senior Preferred, subject to approval by the Board of Governors of the Federal Reserve System and in accordance with applicable regulatory capital regulations.

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 March 31, 2022. BankFirst Financial Services, the Company's wholly-owned banking subsidiary, was founded in 1888 and 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.

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), fluctuations 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.

AVAILABLE INFORMATION

The Company maintains an Internet web site at www.bankfirstfs.com/about-us/investors. The Company makes available, free of charge, on its web site the Company's annual reports, quarterly earnings reports, and other press releases. In addition, the OTC Markets Group maintains an Internet site that contains reports, proxy and information statements, and other information regarding the Company (at www.otcmarkets.com/stock/BFCC/overview).

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.

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