benzinga21d ago
KNOXVILLE, Tenn., Jan. 20, 2026 /PRNewswire/ -- Mountain Commerce Bancorp, Inc. (the "Company") (OTCQX:MCBI), the holding company for century-old Mountain Commerce Bank (the "Bank"), today announced financial results and related data as of and for the three and twelve months ended December 31, 2025.The Company also announced today that its Board of Directors declared a quarterly cash dividend of $0.07 per common share, its twenty-first consecutive quarterly dividend. The dividend is payable on March 2, 2026 to shareholders of record as of the close of business on February 2, 2026. Management CommentaryWilliam E. "Bill" Edwards, III, Chief Executive Officer of the Company, commented as follows:"We are pleased to see our earnings continue to improve with adjusted return on average assets and equity rising to 0.67% and 8.60%, respectively, for the twelve months ended 2025, compared to 0.45% and 6.22%, respectively, for the twelve months ended 2024. We continued to see further improvements in our net interest margin, which improved from 2.01% for the twelve months ended 2024 to 2.44% for the twelve months ended 2025. While we have experienced an increase in non-performing assets in 2025, we believe these assets are well collateralized and do not represent a risk of material loss to the Company. Our adjusted noninterest expense to average assets was 1.52% for the twelve months ended 2025, which continues to be nearly half that of similarly-sized peer banks based on recent call report data. We saw an increase in non-interest expense in the fourth quarter of 2025 primarily attributable to merger-related expenses associated with our proposed merger with Home Bancshares, as well as certain non-recurring repairs and maintenance performed on buildings and properties owned by the Company. Additionally, the Company recognized a provision for credit losses of $0.6 million in the fourth quarter of 2025. Careful management of our dividend and asset growth has allowed our tangible common equity to tangible assets ratio to rise to 8.22% at December 31, 2025 from 7.58% at December 31, 2024, with the Bank's leverage ratio finishing the fourth quarter of 2025 at 9.17%. Additionally, tangible book value per share rose to $22.80 as of December 31, 2025 from $20.70 as of December 31, 2024, marking a 10.15% increase.In summary, we will seek to continue to carefully control our risk and growth while targeting net interest margin expansion and earnings growth in 2026. Our modeling and forecasting suggest continued year-over-year improvement in earnings, assuming the current macro-economic conditions do not deteriorate."Proposed Merger UpdateOn December 8, 2025, the Company and Home Bancshares announced that they had entered into a definitive agreement providing for the acquisition of the Company by Home Bancshares in an all-stock merger transaction with Home Bancshares as the surviving entity. Under the terms of the merger agreement, the Company's shareholders will receive 0.85 shares of Home Bancshares' common stock for each share of the Company's common stock owned by the shareholder at the effective time of the merger. Home Bancshares and its subsidiary bank, Centennial Bank, have filed all required bank regulatory applications related to the proposed merger and Home Bancshares has filed a registration statement with the Securities and Exchange Commission related to the proposed transaction, which has not yet been declared effective by the SEC. The Company's proposed merger with Home Bancshares is expected to close early in the first half of 2026, subject to the satisfaction of customary closing conditions, including receipt of customary regulatory approvals and approval by the Company's shareholders.Regarding the proposed merger, Mr. Edwards commented, "I remain excited for our proposed combination with Home Bancshares and am pleased with the progress we and Home have made in filing the required regulatory applications and our respective initial efforts to develop integration plans that I believe will result in a smooth transaction for our customers and communities. I've also enjoyed talking to our customers about the potential benefits that they will enjoy as a result of our combination with Home and believe our team is thrilled with the idea of combining with a bank of Centennial's caliber and operating philosophy. I also continue to believe that our combination with Home will reward our shareholders, many of whom have been owners of our company since its founding, with, among other benefits, an increased dividend and additional liquidity for their shares." HighlightsThe following tables highlight the trends that the Company believes are most relevant to understanding the performance of the Company as of and for the three and twelve months ended December 31, 2025. As further detailed in Appendix A and Appendix C to this press release, adjusted results (which are non-GAAP financial measures), reflect adjustments for realized and unrealized investment gains and losses, gains and losses from the sale of fixed assets and other real estate owned, corporate and strategic planning expenses, including merger-related expenses, the provision for or recovery of credit losses, and net loan charge-offs or recoveries. See Appendix B to this press release for more information on the Company's tax equivalent net interest margin. All financial information in this press release is unaudited.For the Three Months Ended December 31(Dollars in thousands, except per share data)20252024GAAPAdjusted (1)GAAPAdjusted (1)Net income$2,3042,915$2,0922,481Diluted earnings per share$0.370.46$0.330.39Return on average assets (ROAA)0.52 %0.65 %0.47 %0.56 %Return on average equity6.34 %8.02 %6.32 %7.49 %Noninterest expense to average assets1.67 %1.61 %1.40 %1.40 %Net interest margin (tax equivalent)2.54 %2.54 %2.29 %2.29 %Pre-tax, pre-provision earnings (1)$3,556$3,441Pre-tax, pre-provision ROAA (1)0.80 %0.78 %(1) Represents a non-GAAP financial measure. See Appendix A to this press release for more information.For the Twelve Months Ended December 31(Dollars in thousands, except per share data)20252024GAAPAdjusted (1)GAAPAdjusted (1)Net income$11,18712,025$8,9237,946Diluted earnings per share$1.781.91$1.421.27Return on average assets (ROAA)0.63 %0.67 %0.50 %0.45 %Return on average equity8.00 %8.60 %6.99 %6.22 %Noninterest expense to average assets1.54 %1.52 %1.38 %1.37 %Net interest margin (tax equivalent)2.44 %2.44 %2.01 %2.01 %Pre-tax, pre-provision earnings (1)$14,771$9,756Pre-tax, pre-provision ROAA (1)0.83 %0.55 %(1) Represents a non-GAAP financial measure. See Appendix A to this press release for more information. Five Quarter TrendsFor the Three Months Ended(Dollars in thousands, except per share data)20252024December 31September 30June 30March 31December 31GAAPGAAPGAAPGAAPGAAPNet income$2,3043,8982,8062,1792,092Diluted earnings per share $0.370.620.450.350.33Return on average assets (ROAA) 0.52 %0.87 %0.63 %0.50 %0.47 %Return on average equity 6.34 %11.03 %8.17 %6.43 %6.32 %Noninterest expense to average assets1.67 %1.46 %1.55 %1.50 %1.40 %Net interest margin (tax equivalent)2.54 %2.50 %2.40 %2.31 %2.29 %Yield on interest-earning assets5.57 %5.61 %5.65 %5.58 %5.69 %Cost of funds3.12 %3.19 %3.32 %3.30 %3.48 %20252024December 31September 30June 30March 31December 31Adjusted (1)Adjusted (2)Adjusted (2)Adjusted (2)Adjusted (1)Net income $2,9153,8583,0372,2142,481Diluted earnings per share $0.460.620.480.350.39Return on average assets (ROAA) 0.65 %0.86 %0.68 %0.50 %0.56 %Return on average equity 8.02 %10.92 %8.84 %6.53 %7.49 %Noninterest expense to average assets1.61 %1.46 %1.49 %1.50 %1.40 %Pre-tax, pre-provision earnings$3,5564,7813,6122,8233,441Pre-tax, pre-provision ROAA 0.80 %1.07 %0.81 %0.64 %0.78 %Asset Quality and Other DataAs of and for theAs of and for theAs of and for the3 Months Ended3 Months Ended12 Months EndedDecember 31,September 30,December 31,202520252024(Dollars in thousands, except share data)Asset QualityNon-performing loans$6,058$7,661$1,383Real estate owned$3,103$2,788$2,572Non-performing assets$9,161$10,449$3,955Non-performing loans to total loans0.41 %0.52 %0.09 %Non-performing assets to total assets0.52 %0.58 %0.23 %Year-to-date net charge-offs (recoveries)$158$167$(247)Allowance for credit losses to non-performing loans191.91 %148.40 %835.14 %Allowance for credit losses to total loans 0.78 %0.77 %0.79 %Other DataCash dividends declared and paid$0.070$0.070$0.230Shares outstanding6,385,2866,357,3596,393,081Book and tangible book value per share (2)$22.80$22.50$20.70Accumulated other comprehensive loss (AOCI) per share(1.75)(1.85)(2.37)Book and tangible book value per share, excluding AOCI (1) (2)24.56$24.35$23.07Closing market price per common share$22.85$20.45$21.52Closing price to book value ratio100.20 %90.88 %103.95 %Tangible common equity to tangible assets ratio8.22 %7.94 %7.58 %Bank regulatory leverage ratio9.17 %9.22 %9.31 %(1) As further detailed in Appendix A and Appendix C to this press release, this is a non-GAAP financial measure.(2) The Company does not have any intangible assets.Net Interest IncomeNet interest income increased $1.2 million, or 13.1%, from $9.1 million for the three months ended December 31, 2024 to $10.3 million for the same period in 2025. The change between the periods was primarily the net result of the following factors:Average interest-earning assets increased $15.5 million, or 0.9%, from $1.662 billion to $1.677 billion, driven primarily by increases in taxable loans and interest earning deposits.Average net interest-earning assets increased $3.8 million, or 1.3%, from $294.7 million to $298.5 million, due primarily to $12.8 million increase in shareholders' equity.Cost of funds declined 36 bp from 3.48% to 3.12% resulting in tax-equivalent net interest rate spread expanding by 33 bp to 1.88% from 1.56% and tax-equivalent net interest margin expanding 25 bp to 2.54% from 2.29%. The cost of funds and the yield earned on interest-earning assets over the comparable period last year have been impacted by 100 bp of decreases in short-term interest rates by the Federal Reserve since December 2024.Net interest income increased $7.4 million, or 23.5%, from $31.5 million for the twelve months ended December 31, 2024 to $38.9 million for the same period in 2025. The change between the periods was primarily the net result of the following factors:Average interest-earning assets increased $2.6 million, or 0.2%, from $1.669 billion to $1.672 billion, driven primarily by increases in taxable loans.Average net interest-earning assets increased $6.1 million, or 2.1%, from $285.6 million to $291.6 million, due primarily to a $12.1 million increase in shareholders' equity.Cost of funds declined 45 bp from 3.70% to 3.25% resulting in tax-equivalent net interest rate spread expanding by 51 bp from 1.26% to 1.77% and tax-equivalent net interest margin expanding 43 bp from 2.01 % to 2.44%.Rate SensitivityThe Company has the following assets, derivatives and liabilities subject to contractual repricing of interest rates:(In thousands)December 31, 2025Interest-earning deposits$65,202Investments available for sale14,300Loans receivable460,411Interest rate swaps (notional)260,000$799,913Deposits$105,428Senior debt17,996$123,424Interest Rate SwapsThe Company has the following interest rate swaps designated as hedges as of December 31, 2025:EstimatedFair Annual ReceivePayHedged ItemNotionalValueEarningsTermMaturityRateRate(dollars in thousands)Fixed rate loans$150,000(1,496)(1,356)3 Yrs10/1/20263.79 %4.69 %Fixed rate loans75,000(103)582 Yrs9/1/20263.79 %3.71 %Floating rate deposit 35,000(52)601.5 Yrs10/22/20263.82 %3.65 %$260,000(1,651)(1,239)Provision For (Recovery Of) Credit LossesThe following summarizes the Company's provision for (recovery of) credit losses and net charge-offs (recoveries) for each of the last five quarters:Three Months EndedDecember 31,September 30,June 30,March 31,December 31,(In thousands)20252025202520252024Provision for (recovery of) credit losses$575(33)13864480Net charge-offs (recoveries)(9)5715511The Company continues to experience historically lower levels of specific reserves and net charge-offs which, when combined with minimal changes in economic factors, has resulted in minimal provisions for credit losses during the last five quarters. Given our limited loss history, the Company utilizes peer data in its estimation of expected loan losses.Noninterest IncomeThe following summarizes changes in the Company's noninterest income for the periods indicated:Three Months Ended December 31(In thousands)20252024ChangeService charges and fees$40138615Bank owned life insurance5757-Realized and unrealized gain (loss) on equity securities12(58)70Gain (loss) on sale of loans9-9Wealth management21919920Other26(2)28Total noninterest income$724582142Noninterest income increased to $0.7 million in the fourth quarter of 2025 from $0.6 million in the same quarter of 2024. The following factors had an impact on noninterest income during these periods:Realized and unrealized gain (loss) on equity securities improved by $0.1 million from the fourth quarter of 2024 primarily due to improved equity market conditions.Twelve Months Ended December 31(In thousands)20252024ChangeService charges and fees$1,5421,52814Bank owned life insurance2242231Realized gain (loss) on sale of investment securities available for sale(160)69(229)Realized and unrealized gain (loss) on equity securities30(28)58Gain on sale of loans1538(23)Gain (loss) on sale of fixed assets530(25)Wealth management90181091Swap fees38551334Limited partnership income352-352Other482424Total noninterest income$3,3422,745597Noninterest income increased to $3.3 million during the twelve months ended December 31, 2025 from $2.7 million during the same period of 2024. The following factors had an impact on noninterest income during these periods:Realized gain (loss) on sale of investment securities available for sale declined by $0.2 million from the first twelve months of 2024 due to management's decision during January 2025 to sell a municipal bond at a loss as a risk mitigation measure given that it was issued by a municipality that was in close proximity to the California wildfires.Wealth management fees improved by $0.1 million as a result of an improvement in equity market conditions and assets under management.Swap fees increased $0.3 million due to an increased demand from customers wanting to lock in a fixed interest rate on loans. The Bank receives a fee for delivering the swap to a third party with our borrower as counterparty to the swap, but does not maintain a contractual obligation for the swap other than in the event of a default.Limited partnership income increased $0.4 million from distributions from certain of the Company's investments in limited partnerships, which tend to have distributions towards the end of their life.Noninterest ExpenseThe following summarizes changes in the Company's noninterest expense for the periods indicated:Three Months Ended December 31(In thousands)20252024ChangeCompensation and employee benefits$3,5463,010536Occupancy879742137Furniture and equipment36734819Data processing73163497FDIC insurance3343322Office18817315Advertising13712017Professional fees52145071Real Estate Owned9-9Merger-related expenses255-255Other noninterest expense48439688Total noninterest expense$7,4516,2051,246Noninterest expense increased $1.3 million from $6.2 million for the three months ended December 31, 2024 to $7.5 million in the same period of 2025. The following factors had an impact on noninterest expense during these periods:Compensation and employee benefits expense increased $0.5 million, or 17.8%, due primarily to an increase in incentive accruals and bonuses tied to forecasted 2025 performance, as well as merit increases and an increase in FTE employees from 108 to 110.Merger-related expenses increased $0.3 million due to certain merger-related services received in the fourth quarter of 2025 associated with the proposed merger with Home Bancshares.Twelve Months Ended December 31(In thousands)20252024ChangeCompensation and employee benefits$14,00711,9122,095Occupancy3,1622,753409Furniture and equipment1,2951,182113Data processing2,7382,64395FDIC insurance1,4021,450(48)Office74473311Advertising433443(10)Professional fees1,9902,041(51)Real Estate Owned25-25Merger-related expenses255-255Other noninterest expense1,4721,37894Total noninterest expense$27,52324,5352,988Noninterest expense increased $3.0 million, or 12.2%, from $24.5 million for the twelve months ended December 31, 2024 to $27.5 million in the same period of 2025. The following factors had an impact on changes in noninterest expense during these periods:Compensation and employee benefits expense increased $2.1 million, or 17.6%, due primarily to an increase in incentive accruals and bonuses tied to forecasted 2025 performance, as well as merit increases.Occupancy and furniture and equipment expenses increased by a combined $0.5 million, or 13.3%, due to the opening of the Johnson City financial center on July 1, 2024, offset, in part, by the elimination of expenses for the formerly leased facilities. Additionally, certain non-recurring maintenance and repair services were performed for buildings and properties owned by the Company in the fourth quarter of 2025.Merger-related expenses increased $0.3 million due to certain merger-related services received in the fourth quarter of 2025 associated with the proposed merger with Home Bancshares.Income Taxes The effective tax rates of the Company were as follows for the periods indicated:Three Months Ended December 312025202422.71 %29.35 %Twelve Months Ended December 312025202420.25 %22.58 %The Company's marginal tax rate of 26.14% is favorably impacted by certain sources of non-taxable income, including bank-owned life insurance (BOLI) and investments in tax-free municipal securities, and state tax credits on certain loans. The Company's effective tax rate declined in the 2025 periods compared to comparable periods in 2024 due to higher utilization of state tax credits.Balance Sheet Total assets increased $25.3 million, or 1.45%, from $1.746 billion at December 31, 2024 to $1.771 billion at December 31, 2025. The change was primarily driven by the following factors:Available for sale investment security balances decreased $3.8 million, or 3.41%, primarily due to changes in fair value and contractual maturities.The following summarizes the composition of the Company's available for sale investment securities portfolio (at fair value) as of the periods indicated:December 31, 2025December 31, 2024EstimatedNetEstimatedNetFairUnrealizedFairUnrealizedValueGain (Loss)ValueGain (Loss)(in thousands)Agency MBS / CMO$11,221(1,302)11,560(1,960)Agency multifamily (non-guaranteed)5,867(374)7,081(750)Agency floating rate10,992256,64718Business Development Companies3,665(86)3,522(236)Corporate17,659(633)22,832(1,860)Municipal27,066(5,428)25,987(7,169)Non-agency MBS / CMO33,436(7,293)35,331(8,566)$109,905(15,091)112,960(20,523)Non-agency MBS/CMO have an average credit-enhancement of approximately 35% as of December 31, 2025. Municipal securities are generally rated AA or higher. The Company did not have any securities classified as held-to-maturity as of December 31, 2025 and 2024.Loans receivable increased $27.3 million, or 1.86%, from $1.463 billion at December 31, 2024 to $1.490 billion at December 31, 2025. The Company is intentionally managing its loan growth as it seeks to improve its risk profile by paying down debt, increasing capital, and reducing the amount of its wholesale borrowings. The Company is managing its exposure to commercial real estate and has a regulatory commercial real estate concentration of 335% of total risk-based capital as of December 31, 2025 as compared to 325% at December 31, 2024, while our AD&C concentration remains low at 36% of total risk-based capital as of December 31, 2025 as compared to 43% at December 31, 2024. The following summarizes changes in loan balances over the last five quarters:December 31,September 30,June 30,March 31,December 31,20252025202520252024(in thousands)Residential construction$28,62223,44618,81119,63614,831Other construction35,48633,64251,84651,04760,474Farmland11,90410,5318,1927,5774,513Home equity66,86364,27260,62556,58857,972Residential 431,519430,970445,966444,620449,056Multi-family122,875131,836125,803121,511114,634Owner-occupied commercial 263,722266,357251,842252,764252,615Non-owner occupied commercial405,089403,709395,038389,666382,136Commercial & industrial111,469107,338108,151114,899115,234PPP Program2437506683Consumer12,78611,92412,06811,11211,559$1,490,3591,484,0621,478,3921,469,4861,463,107The following summarizes the industry components of the Company's non-owner occupied commercial real estate loans as of December 31, 2025. Office loans are primarily comprised of low-rise office space.Loan% of Total($ in thousands)BalanceLoansFull story available on Benzinga.com
