Sevier County Bank Main Branch Location

SCB | Fourth Quarter 2020 Report

For Immediate Release

Contact:

John M. Presley
Executive Chairman
(865) 774-4772
jpresley@bankscb.com

or

Bobby R. Stoffle
President and CEO
(865) 774-4813
bstoffle@bankscb.com


Sevier County Bancshares, Inc.

Reports Consolidated Net Income of $1,215,630 and Core Earnings of $1,525,780 for the Fourth Quarter of 2020

February 3, 2021, Sevierville, Tennessee – Sevier County Bancshares, Inc. (the “Company”) (Pink Sheets: SVRH) parent company to Sevier County Bank (the “Bank”) reported today its financial results for the fourth quarter of 2020.  For the three months ended December 31, 2020, the Company had a consolidated net income of $1,215,630, or $0.29 per share (wt. avg. outstanding (“WAO”)), compared to a consolidated net income of $36,877, or $0.01 per share for the same period in 2019, representing a 3,196% increase in net income available to common shareholders in the fourth quarter of 2020 compared to the fourth quarter of 2019. Consolidated core earnings (after-tax net income, excluding legacy OREO expenses, loan loss provision (net of actual charge-offs) and other non-recurring expenses, including vesting of certain executive benefits) for the three months ended December 31, 2020 were $1,525,780, or $0.37 per WAO share.

 

Earnings

Consolidated income for the year ended December 31, 2020 was $2,236,517, or $0.54 per WAO share compared to consolidated net loss of $1,935,629, or ($0.76) per share for the same period of 2019; additionally, core earnings for the year ended December 31, 2020 are $3,702,351, or $0.90 per WAO share compared to $2,393,924, or $0.949 per share of core earnings for the same period of 2019.

Factors contributing to the Company’s consolidated net income for the year ended December 31, 2020 include:

  • Holding and other costs net of income related to legacy OREO for the year ended December 31, 2020 resulted in a loss of $169,813, compared to a $4,352,600 loss for the same period of 2019, primarily from the year over year cost savings from the $3.2 million decrease in foreclosed asset holdings and sales of foreclosed property resulting in a $111,410 disposition gain for the year ended December 31, 2020, compared to $3,458,544 in losses on OREO disposals for the same period of 2019.
  • Total Bank income (excluding legacy OREO Charges), which includes interest income and fee income, of $13,992,565, compared to $13,602,493 for the same period last year, a $390,072 or 3% increase.
  • Total Bank operating expenses (excluding loan provision, non-recurring executive benefits and OREO-related items) for the year ended December 31, 2020 of $9,891,752, compared to $11,307,477 for the same period of 2019, a $1.4M or 13% decrease.
  • Bad debt provision of $660,000 for the year ended December 31, 2020, compared to $0 for the same period of 2019.
  • Deferred tax benefit recognition of $2,600,126 for the year ended December 31, 2020, compared to $0 for the same period of 2019.

 

Balance Sheet

Total Assets at the Bank as of December 31, 2020, were $424,030,919 compared to $332,605,828 at December 31, 2019, an increase of $91.4 million or 27%.

Factors contributing to the growth of the Bank and Company and other items of interest include:

  • Total Deposits increased to $384,899,704 at December 31, 2020, compared to $298,412,886 at December 31, 2019, an $86.5 million or 29% increase.
  • Total Company Equity Capital increased to $29,752,538 at December 31, 2020, compared to $26,996.720 at December 31, 2019, a $2.8 million or 10% increase.
  • Total Bank Equity Capital increased to $35,550,416 at December 31, 2020, compared to $30,789,734 at December 31, 2019, a $4.8 million or 15% increase.
  • Total Loans increased to $245,723,735 at December 31, 2020, from $226,229,932 at December 31, 2019, a $19.5 million or 9% increase. $5.5 million of the increase consisted of SBA PPP funded loans yet to be forgiven.
  • Investment securities increased to $66,379,000 at December 31, 2020, compared to $31,793,626 at December 31, 2019, a $34.6 million or 109% increase.
  • Cash and due from Banks increased to $87,054,358 at December 31, 2020, compared to $57,131,552 at December 31, 2019, a $29.9 million or 52% increase.

Asset Quality

Total OREO balance at December 31, 2020 dramatically decreased to $256,800 compared to $3,393,000 at December 31, 2019, primarily due to dispositions. Total past due loans at December 31, 2020 were $2,767,256, or 1.13% of total loans, primarily due to one lending relationship that has since been brought current in early January.  Another loan relationship fell behind during 4Q2020 and was placed on non-accrual status; however, that credit was brought current in December.

The following table reflects details related to asset quality and the allowance for loan losses (in thousands):


Equity

The following tables illustrate graphically the Equity Capital narrative in the Balance Sheet discussion above.

As of December 31, 2020, the Bank is well-capitalized for all regulatory capital ratios.  Unaudited book value per share is $7.19 as of December 31, 2020.

 

Other Significant Events

1. Sevier County, TN has experienced a phenomenal economic recovery from the pandemic impact, especially in the performance of overnight rental cabins and campgrounds, but increasingly in near or above month-over-prior year month performance across most sectors. Most recent unemployment (November) rate is only 3.9%, housing market is hot, delinquency and foreclosure rates statewide strong and several commercial development projects and expansions back underway.

2. During and especially near the end of March 2020, the local economy was increasingly negatively impacted by the global COVID-19 pandemic, as all non-essential businesses were closed and people encouraged to quarantine at home to slow the spread of the disease. Many businesses furloughed employees, at least temporarily offsetting years of positive employment trends and both fixed income and equity markets incurred volatility. The government issued safeguards to lessen any permanent impact to the economy, including the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020. While businesses began to reopen at the beginning of June, continuous Bank evaluation and monitoring of the impact of the pandemic is Steps taken by Bank leadership in regard to COVID-19 include:

  • Implementation of customer and employee safety measures, including remote employment where feasible and internal distancing of mission critical employees in conjunction with our Business Continuity Plan.
  • Various sanitization and distancing measures, including hand sanitizer stations at key areas throughout facilities, separation of operational areas and following CDC protocols.
  • Implementation of employee face mask requirements in the presence of customers and in all situations not conducive to social distancing. Customers entering SCB are also requested to wear a face mask, provided if necessary, when inside the lobbies.
  • Customer and community support consistent with regulatory and treasury guidelines, including temporary loan relief concessions and assisting customers applying for Paycheck Protection Program loans.
  • President Stoffle and Lead Director Wade participated on Governor Lee’s Economic Recovery Bank Working Group.

2. The Bank originated 144 SBA Paycheck Protection Program (PPP) loans totaling $7,552,851. Deferred fee income from these loans totaled $377,643, accreted over 24 months or until loan forgiveness, with $212,470 recognized as of December 31, 2020.

3. As of June 30, 2020, the Bank provided COVID-19 related relief on 89 loans totaling $89,342,000. The relief was in the form of interest-only payments for 120 days on $69,482,000 or 77.8% of the modifications granted. As of December 31, 2020, only five loans covering one relationships and totaling $4,572,306 are receiving continued COVID-19 related relief, all in the form of full interest-only payments through February 2021; the other 84 loans have returned to regular payment schedules. Additionally, four (4) USDA fully-guaranteed loan participations totaling $2,050,736 have received COVID-related relief.

4. On October 21, 2020, the Bank received regulatory permission to open a Loan Production Office (LPO) in Glen Allen, Virginia (Richmond market).

5. On October 26, 2020, the Bank signed a lease on banking space in the Richmond market. The LPO (“Southern Community Bank”) opened in early November.

6. On December 22, 2020, the Company issued $5,000,000 in additional subordinated debt.

 

Subsequent Events

1. The Bank received final regulatory approval for a Richmond market branch in early January; plans are to launch full-service banking services by early 2nd Quarter 2021.

 

Readers are cautioned that this press release contains unaudited financial information and may include forward-looking statements made pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management’s current knowledge, assumptions, and analyses, which it believes are appropriate in the circumstances regarding future events, and may address issues that involve significant risks including, but not limited to: changes in interest rates; changes in accounting principles, policies, or guidelines; significant changes in general economic, competitive, and business conditions; significant changes in or additions to laws and regulatory requirements; and significant changes in securities markets. Additionally, such aforementioned uncertainties, assumptions, and estimates, may cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements.


About Sevier County Bank

Sevier County Bank, the oldest continuously operating business in Sevier County, is a full- service community bank that has served Sevierville and the surrounding area since 1909. Currently at $350 million in assets and with six branch locations, Sevier County Bank offers a full array of banking products and services geared towards the needs of the businesses and citizens in our markets. For more information, visit bankscb.com.