Community First Bancorporation Announces 2020 Financial Results

Community First Bancorporation, Inc. (OTC: CFOK), parent company for Community First Bank, Inc. (the “Bank”) and SeaTrust Mortgage Company (“STM”), announced its financial results for the year 2020. Highlights of the results include:
Total consolidated earnings of $1,801,000 were recorded for the year ended 2020. Total net income rose 57.7% over net income for 2019. Earnings per common share (“EPS”) were $0.30 per share for the year 2020 compared to EPS of $0.19 for the year 2019. The increase was primarily the result of the Company’s growth and the expanded operations of STM. Despite the pandemic that has changed the way businesses across the country have interacted with current and prospective customers, the Company was able to grow earnings. 
Total consolidated earnings of $494,000 were recorded for the fourth quarter of 2020 compared to $842,000 recorded for the third quarter of 2020 and $114,000 for the fourth quarter of 2019. EPS for the fourth quarter of 2020 totaled $0.08 compared to third quarter 2020 EPS of $0.15 and $0.01 for the fourth quarter of 2019. Expanded activity in both STM’s mortgage business and the Bank’s SBA portfolio generated significant increases in noninterest income in the third quarter, but fourth-quarter activity slowed somewhat. Merger-related expenses of $105,300 were also included in the results for the fourth quarter of 2020.  
Net interest income grew by 12.9% in 2020 compared to 2019. The increase was driven by the solid loan growth experienced over the period well as declines in overall cost of funds. Net loans held for investment grew $80,588,000 or 25.0% in 2020 compared to 2019. The growth included a remaining balance of $17.5 million of the $19.2 million of PPP loans made by the Bank. Overall loan yields for 2020 were 4.95% compared to 5.26% in 2019. In addition to the lower rates offered on new loans made in 2020 following the steep decline in short-term interest rates at the start of the pandemic, yields on loans made under the PPP program negatively impacted overall yields on loans during the second, third and fourth quarters of 2020. In addition, the Company deferred recognition of a portion of the net fee income receivable from the SBA on our PPP loans until those loans are forgiven or repaid. As of December 31, 2020, only $1.7 million of PPP loans had been repaid or forgiven, and the majority of unearned fees remained in deferred status as of year-end. Net loan fees on PPP loans totaled approximately $750,000 at origination. These net fees are being amortized over the life of the loans. Declines in market interest rates resulting from the pandemic also negatively impacted overall earning asset yields by approximately 35 basis points in 2020 compared to 2019. Our cost of funds did not decrease by the same magnitude, thereby decreasing our net interest margin by 21 basis points in 2020 compared to 2019. 
Noninterest income for 2020 totaled $6,774,000 compared to $2,549,000 in 2019. The increase was primarily due to loans originated and sold by STM, which began these activities late in the first quarter of 2020. Noninterest income from mortgage banking activities totaled approximately $4.0 million in 2020. An additional positive factor was an increase in gains on sales of SBA loans in 2020 compared to 2019. SBA loan sales generated $186,000 of additional noninterest income in comparison to 2019. 
Noninterest expense increased to $19,270,000 in 2020 from $15,183,000 in 2019 due to several factors, including the opening of our Dallas and Charlotte, North Carolina, branches in the first half of 2020, additional lenders hired to service our Western North Carolina market, expenditures related to the pandemic and merger-related expense. STM increased both its loan origination and processing capabilities throughout 2020. STM began originating loans in the first quarter with locations in Wilmington, North Carolina, as well as Seneca, South Carolina. In the following months, STM added production personnel and expanded its operations to Greensboro, Jacksonville and Charlotte, North Carolina, Nashville, Tennessee, and in Jacksonville and Orlando, Florida, markets. To date, STM has originated over $112.1 million in single-family mortgage loans, primarily in North and South Carolina. 
President and CEO Richard D. Burleson commented: “2020 was a remarkable year in many ways for Community First Bancorporation. Our team of bankers and mortgage lenders has gone above and beyond for the communities we serve during these incredibly difficult times. Although challenged like never before by the global pandemic, we have been able to reap the rewards of previous technology investments and leverage that technology to our benefit in ways never expected before.” 
Burleson commented further on the Bank’s focus on protecting the well-being of its customers and employees: “We have made extraordinary efforts to protect our customers and associates throughout the pandemic. We have been mindful of social distancing and precautions such as enhanced cleaning and masks, but we have felt the effects of the pandemic firsthand in our Company and experienced limited pandemic-related temporary closures of some offices. We continue to be responsive to our customers who need to meet with bankers by serving customers by appointment. We offer exemplary customer service via multiple digital banking channels for those who prefer contactless service, including the ability to offer both deposit and loan account opening remotely.”
Burleson continued, “The financial impact of the pandemic on our customer base has been fairly moderate to date. To assist our customers in dealing with the pandemic’s impact, the Bank granted deferrals of all or a portion of payments on 139 loans with total outstanding balances of approximately $64 million. The majority of loans granted deferrals were with customers in the hardest-hit industries such as retail, hotels and restaurants. Most of these customers have rebounded well and returned to normal payment requirements prior to year-end. As of December 31, 2020, loans to borrowers still deferring a portion of their payments totaled approximately $14,000,000, down 78% from the peak at the end of June 2020.” 
Burleson noted, “The Bank continues to have high asset quality. Our nonperforming assets, comprising nonperforming loans and foreclosed assets, decreased to $976,000 as of December 31, 2020, from $1,384,000 on December 31, 2019. At year-end, we had four loans totaling approximately $314,000 in our foreclosure pipeline and our past-due percentage remained below 0.26% on a monthly basis for the quarter. On December 31, 2020, our Allowance for Loan and Lease Losses (“ALLL”) totaled $4,811,000 or 1.19% of loans held for investment, an increase of 28.6% over the December 31, 2019, level. If our PPP loans were excluded based on the related SBA guarantees, the ALLL would be 1.25% of loans held for investment as of December 31, 2020. The Bank provided $1,100,000 to the ALLL in 2020 compared to $40,000 in 2019. The increase in the ALLL was primarily due to organic growth in the loan portfolio and qualitative adjustments to consider the effects of the pandemic. Net charge-offs for 2020 totaled $29,000. However, the Bank will continue monitoring borrowers’ financial situations to determine if additional provisions to the ALLL are warranted due to adverse changes in the economy resulting from the pandemic.”
Burleson closed his comments by noting: “Our highest priority, along with maintaining our well-capitalized status and satisfactory liquidity levels, is serving our communities during these unsettling times. We are dedicated to maintaining this service commitment. We have pledged to work with all of our customers and, in particular, with those impacted by the pandemic. We expect this may affect the Company over the next several quarters, but management believes we have a duty to be a leader in the communities we serve. This was demonstrated with our origination of 411 PPP loans in the amount of $19,187,000 in the communities we serve, when many of our competitors failed to answer the call to help local businesses.”
The Company’s Tier 1 Leverage Capital Ratio was 9.10% on December 31, 2020. The Bank’s Tier 1 Leverage Capital Ratio declined from 10.6% on December 31, 2019, to its present level primarily because of growth. Additionally, a majority of our PPP loans remain included in the Tier 1 Leverage Capital computation as of December 31, 2020. Along with our capital, liquidity levels remain satisfactory.
Community First Bank has 10 full-service financial centers in North and South Carolina, with two offices each in Seneca and Anderson, and one office in each of Greenville, Williamston, Walhalla and Westminster, South Carolina, and Dallas and Charlotte, North Carolina. The Company operates loan production offices in Concord and Waynesville, North Carolina. In addition, its SeaTrust Mortgage subsidiary operates offices in Wilmington, Greensboro, Jacksonville and Charlotte, North Carolina, Nashville, Tennessee, and Jacksonville and Orlando, Florida. 
Richard D. Burleson, Jr. – President and CEO
Jennifer M. Champagne – Executive Vice President and CFO 
Source: Community First Bancorporation